Federal Maritime Commission v. DeSmedt

Citation366 F.2d 464
Decision Date29 August 1966
Docket NumberDockets 30321,30322.,No. 363-364,363-364
PartiesFEDERAL MARITIME COMMISSION, Petitioner-Appellee, and Ludlow Corporation, Intervenor-Appellee, v. A. T. DeSMEDT, President, American Export Isbrandtsen Lines, Inc., American Export Lines, et al., Respondents-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

COPYRIGHT MATERIAL OMITTED

David L. Rose, Atty., Dept. of Justice, J. William Doolittle, Acting Asst. Atty. Gen., Robert M. Morgenthau, U. S. Atty., Jack H. Weiner, Atty., Dept. of Justice, James L. Pimper, Gen. Counsel, H. B. Mutter, Acting Sol., Federal Maritime Commission, for appellee Federal Maritime Commission.

Peter J. Nickles, Covington & Burling, Washington, D. C., for appellee Ludlow Corp.

John J. Williams, Kirlin, Campbell & Keating, Elmer C. Maddy, New York City, for respondents-appellants.

Before WATERMAN, MOORE and FRIENDLY, Circuit Judges.

Certiorari Denied December 5, 1966. See 87 S.Ct. 513.

FRIENDLY, Circuit Judge:

This action was commenced in the District Court for the Southern District of New York by the Federal Maritime Commission (hereinafter the Commission) to enforce subpoenas duces tecum issued pursuant to Section 27 of the Shipping Act of 1916, 46 U.S.C. § 826,1 to Respondents-Appellants (hereinafter Respondents). Each of the respondents is either an officer or an agent of certain common carriers by water, which in turn are all members of the Calcutta, East Coast of India and East Pakistan/U. S. A. Conference (the Calcutta Conference) engaged in the transportation of commodities by water from East India and Pakistan ports to United States Atlantic and Gulf of Mexico ports.

On July 6, 1965 the Calcutta Conference filed with the Federal Maritime Commission notice of a general across-the-board rate increase to become effective as of October 11, 1965. Shortly thereafter Ludlow Corporation, a shipper of jute and jute products from Indian ports served by the Calcutta Conference and obligated by virtue of a dual-rate contract to ship all of its imports with member carriers, filed a formal complaint with the Commission pursuant to Section 22 of the Shipping Act, 46 U.S.C. § 821. The complaint alleged that as of October 11, 1965 — the effective date of the Calcutta Conference rate increase — Ludlow faced the payment of ocean transportation rates on certain jute products that were in violation of § 18(b) (5) of the Shipping Act of 1916, 46 U.S.C. § 817(b) (5), as "so unreasonably high * * * as to be detrimental to the commerce of the United States"; of § 15 of the Act, 46 U.S.C. § 814, in that the Calcutta Conference's rate-fixing agreement was being so used as to "operate to the detriment of the commerce of the United States" and "to be contrary to the public interest"; and of § 14b of the Act, 46 U.S.C. § 813a, in that the Calcutta Conference's dual-rate agreement was being so used as to be "detrimental to the commerce of the United States" and "contrary to the public interest."2

Ludlow first unsuccessfully attempted to secure from the members of the Calcutta Conference on a voluntary basis information it believed relevant to the reasonableness of the increased rates. Thereafter Ludlow applied to the Commission for issuance of subpoenas pursuant to § 27 in order to compel production of this information. This application was granted by the Hearing Examiner on October 18, 1965. Each subpoena was identical in scope and required production for the period covering January 1, 1963 through June 30, 1965 of all records establishing: (1) the total revenue tons of cargo carried; the total gross and net freight revenue earned; the total revenue tons of "Jute Backing for tufted rugs and Jute Mesh in rolls," "Jute bagging for cotton bales covering only," "Jute Yarn," and "Jute Webbing" carried; and the gross and net freight revenue earned from the carriage of these jute commodities; (2) a list of the fifteen commodities carried in the largest volume of revenue tons; the number of revenue tons of each such commodity; a statement of the gross and net freight revenue earned from each; the costs, stated separately, for stevedoring, cargo handling, brokerage fees, and cargo commissions at each of the ports served by the member line's vessels in the covered trade; and whether any of these costs had changed during the relevant period; and (3) the total usable but unused free space available on vessels operated by the member line in the covered trade. For the period covering January 1, 1964 through June 30, 1965 the subpoenas also required production of all records establishing: (1) the rates applicable to the carriage of cargo, and vessel operating costs, including costs of stevedoring, cargo handling, brokerage fees and other commission; and (2) all correspondence between the member lines concerning policies or principles, or instructions with respect to determining the level of freight rates in the trade covered, both in general and on specific commodities moving in the trade.3

On October 19, 1965 the Hearing Examiner issued a "Clarification of Ruling on Application for Subpoena Duces Tecum" to the effect that his initial ruling was not to be construed "to require production of documents from any place not in the United States," because Commission policy required that the Commission itself pass on all requests for documents located abroad. Ludlow then applied to the Commission for issuance of subpoenas relating to documents not in the United States and the application was granted on November 12, 1965.

A hearing on the underlying investigation was scheduled for December 7, 1965 to give respondents time to collect the subpoenaed materials. On December 2, 1965, respondents informed the Hearing Examiner they would not comply with the subpoenas. When hearing was held on December 7, 1965 and respondents failed to appear and produce the materials subpoenaed, the hearing was recessed indefinitely and the Examiner certified to the Commission the fact of respondents' noncompliance. Both Ludlow and the Commission, pursuant to § 29 of the Shipping Act, applied to the court below for enforcement of the subpoenas.4

The district court, having first consolidated the two enforcement proceedings, directed full compliance with the subpoenas, see 249 F.Supp. 496. It held that the requirement of § 27 that there be an "alleged violation" of the Shipping Act of 1916 was satisfied by Ludlow's complaint, which alleged that certain practices of the Calcutta Conference violated the standards established by §§ 14b, 15, and 18(b) (5) of the Act. It held that § 27 authorized the Commission to subpoena documents wherever located, and that the words "from any place in the United States" were designed to expand the Commission's subpoena power beyond the territorial limits once imposed by the Judicial Code and presently by Fed.R. Civ.P. 45(e), rather than to restrict the Commission's subpoena power to documents located in the United States. It also held respondents had not objected to relevancy in a timely fashion at the administrative level and, therefore, could not raise that objection before a court. From the order directing compliance with the subpoenas, respondents appeal. We affirm.

We need spend little time on several of respondents' contentions. The claim that the Commission lacked § 27 subpoena power in the investigation that has given rise to this proceeding because the practices of the Calcutta Conference, which Ludlow alleged to transgress the standards established by §§ 14b, 15, and 18(b) (5), are not in terms stated in the Shipping Act to be "unlawful," or "violations" of that Act, is substantially the same point unsuccessfully urged in Federal Maritime Commission v. Caragher, 364 F.2d 709 (2 Cir.1966). To be sure, in contrast to Caragher, the rates here are challenged as unreasonable and contrary to the public interest by a shipper rather than by a competing carrier, and they are claimed to be unreasonably high rather than unreasonably low. But these are distinctions without a difference; the 1916 Shipping Act and the 1961 amendments were designed to benefit both shippers and carriers. See Note, Rate Regulation in Ocean Shipping, 78 Harv. L.Rev. 635 (1965). The only other distinction, that here the investigation into the rates charged by a conference was instigated by the filing of a formal complaint with the Commission by an aggrieved party, whereas in Caragher the Commission commenced an investigation on its own motion after receiving an informal complaint, also should not lead to any difference in result; as we explained in Caragher, 364 F.2d at 709, § 22 expressly gives the Commission identical powers, "except as to orders for the payment of money," in proceedings instituted upon its own motion and in proceedings begun by complaint. These considerations likewise dispose of respondents' argument that the documentary evidence subpoenaed by the Commission is not relevant to the underlying investigation since the Commission does not have the power to establish reasonable rates for the foreign water commerce of the United States, as it does under § 18(a) of the Act for interstate water commerce. The Commission is directed to disapprove unreasonable rates, and cost data and revenue information are highly relevant to that issue. Far East Conference v. Federal Maritime Comm'n, 337 F.2d 146, 150-151 (D.C.Cir.1964), cert. denied sub nom. Pacific Coast European Conference v. Federal Maritime Comm'n, 379 U.S. 991, 85 S.Ct. 704, 13 L.Ed.2d 611 (1965).5

The remaining contention, that the Commission is without power to issue a subpoena requiring the production of evidence from outside the United States, is surprising as a matter of common sense. If an ocean shipping line, American or foreign, was defending an ordinary civil action in a district court for damages to persons or property, or prosecuting a suit for unpaid...

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