472 F.2d 1065 (Fed. Cir. 1972), 9-1, University of Southern California v. Cost of Living Council

• Citation: 472 F.2d 1065
• Party Name: UNIVERSITY OF SOUTHERN CALIFORNIA, a nonprofit corporation, Appellee, v. COST OF LIVING COUNCIL and Office of Emergency Preparedness, Agencies of the Government of the United States, Appellants.
• Case Date: September 18, 1972
• Court: United States Courts of Appeals, U.S. Court of Appeals — Federal Circuit

Page 1065

472 F.2d 1065 (Fed. Cir. 1972)

UNIVERSITY OF SOUTHERN CALIFORNIA, a nonprofit corporation, Appellee,

v.

COST OF LIVING COUNCIL and Office of Emergency Preparedness, Agencies of the Government of the United States, Appellants.

No. 9-1.

Temporary Emergency Court of Appeals.

Sept. 18, 1972

Rehearing Denied Nov. 8, 1972.

Certiorari Denied Feb. 20, 1973.

See 93 S.Ct. 1364.

William E. Nelson, Washington, D. C. (Harlington Wood, Jr., Washington, D. C., William D. Keller, U. S. Atty., Los Angeles, Cal., William C. McCorriston, San Marino, Cal., Joseph DiStefano, Washington, D. C., on the brief), for appellant.

Jeffrey A. Berman, Los Angeles, Cal. (Musick, Peeler & Garrett, Gerald G. Kelly, Robert J. Heil, and James B. Bertero, Los Angeles, Cal., on the brief), for appellee.

Before TAMM, Chief Judge, and CARTER and CHRISTENSEN, Judges.

TAMM, Chief Judge.

Appellee, the University of Southern California (U.S.C.), on October 7, 1971, initiated suit in the district court seeking to restrain appellant agencies from instituting any action over USC's increase in its reserved seat ticket prices for the 1971 football season. Appellants, the Cost of Living Council (CLC), and the Office of Emergency Preparedness

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(OEP), had informed U.S.C. that the price increase violated the wage-price freeze announced by President Nixon on August 15, 1971. On May 12, 1972, the district court, 342 F.Supp. 606, finding that there were no material issues of fact and that appellee was entitled to judgment as a matter of law, granted appellee's motion for summary judgment. For the reasons stated below, we reverse the decision of the trial court, and remand for further proceedings consistent with this opinion.

I. FACTS

On January 28, 1971, USC's "Ticket Committee" met and by official resolution increased the price of reserved seats for each home football game by 50¢ above the 1970 level. This resulted in an increase to $6.50 per ticket for all games in the 1971 season with the exception of the gridiron classic, the USC-UCLA game, for which the ticket price was increased from $7.00 to $7.50. Prior to July 16, 1971 (the beginning of the thirty-day "base period" established by the President's Order) approximately 127, 500 tickets were sold for games to be played during the freeze period (August 15 through November 13, 1971). During the thirty-day base period an additional 5, 000 tickets were sold. Ultimately a total of 176, 099 reserve seat tickets for the games in question were sold at the increased rate, placing the amount in controversy in excess of $88, 000. ¹

Executive Order No. 11615 (Order), 3 C.F.R. 199 (1971), issued on August 15, 1971, "froze" the prices that could be charged for commodities and services to levels in existence at certain periods prior thereto. On October 5, 1971, USC's business office was notified by the OEP that the ticket price increase was not in compliance with the Order, that the prices would have to be reduced to the levels in existence during the 1970 season, and that "refunds to those who have purchased tickets for played games [the Alabama and Illinois games, on September 10 and 25, respectively] as well as for future games" were in order. If such actions were not carried out by USC, the OEP warned that "further action by the government [would] be required." ² Two days later the declaratory judgment action in the district court was filed, seeking to restrain the CLC and OEP from instituting any action against U.S.C. for its refusal to discontinue selling tickets at the reduced rate, or refund any amounts already received.

II. EXECUTIVE ORDER 11615 AND ITS PROGENY

When President Nixon initially addressed the nation concerning the matter of economic controls, he spoke of taking decisive action to "break the vicious circle of spiraling prices and costs, " and ordered a "freeze on all prices and wages throughout the United States for a period of 90 days." Executive Order No. 11615, issued concurrently with the Presdent's address and under the authority of the Economic Stabilization Act of 1970, ³ was the means to that end. The regulatory section of the Order was but one paragraph in length, and provided:

Section 1. (a) Prices, rents, wages and salaries shall be stabilized for a period of 90 days from the date hereof at levels not greater than the highest of those pertaining to a substantial volume of actual transactions by each individual, business, firm or other entity of any kind during the 30-day period ending August 14, 1971, for like or similar commodities or services. If no transactions occurred in that period,

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the ceiling will be the highest price, rent, salary or wage in the nearest preceding 30-day period in which transactions did occur. No person shall charge, assess, or receive, directly or indirectly in any transaction prices or rents in any form higher than those permitted hereunder, and no person shall, directly or indirectly, pay or agree to pay in any transaction wages or salaries in any form, or to use any means to obtain payment of wages or salaries in any form, higher than those permitted hereunder, whether by retroactive increase or otherwise.

The Order further established a Cost of Living Council, to which was delegated all of the President's power under the Economic Stabilization Act of 1970, and the power to issue rules and regulations, prescribe definitions, and grant exemptions. Thus the task of filling in the interstices of the skeletal outline provided by the Order, and of literally injecting life into the program, was consigned to the CLC. ⁴

The CLC, on August 17, 1971, in Cost of Living Order No. 1, 36 Fed.Reg. 16215 (Aug. 20, 1971), effectively delegated the above powers to the Director of the Office of Emergency Preparedness. The Director promptly issued, on August 20, 1971, Economic Stabilization Regulation No. 1 (hereinafter "Regulation"), 32A C.F.R. 35 (1972), which, as amended, became the only "regulation" issued throughout the 90 day freeze. The Regulation, itself very brief and basic in content, had as its stated purpose providing the "initial guidance and procedures for implementing the stabilization of prices . . . ." On August 24, 1971, the first amendment to the Regulation was published in the Federal Register stating, inter alia, that "OEP shall from time to time issue circulars containing implementing instructional material which shall be set forth in Appendix I to this regulation." E.S.Reg. 1, § 11(b), 32A C.F.R. 39 (1972). Between August 24 and November 13, 1971, twenty-six such circulars were issued and published.

All circulars contained the following statement of purpose:

This circular is designed for general information only. The statements herein are intended solely as general guides drawn from OEP Economic Stabilization Regulation No. 1 and from specific determinations by the Cost of Living Council and do not constitute legal rulings applicable to cases which do not conform to the situations clearly intended to be covered by such guides.

Note: Provisions of this and subsequent circulars are subject to clarification, revision, or revocation.

(Emphasis supplied.)

Circular No. 7, published September 2, provided in pertinent part:

A transaction takes place when the seller ships the product to the buyer, not when the order is received. In the case of a service, the transaction takes place when the service is performed.

(36 Fed.Reg. 17578, Sept. 2, 1971) (emphasis supplied).

Circular No. 11, published September 11, 1971, provided in pertinent part:

The freeze applies to prices of advance sale tickets for sporting events occurring during the freeze.

(36 Fed.Reg. 18315, Sept. 11, 1971).

Nowhere in the Order, Regulation, or circulars is there an express denomination of a sporting event as a "service, " nor in the Order or Regulation is there a definition of "transaction."

The district court found the "fundamental legal issue in this case [to be] the meaning of the word, 'transactions, ' as it is used in the Executive Order and the ensuing regulations." University of Southern California v. Cost of Living Council, 342 F.Supp. 606, 608 (C.D.Cal.1972).

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While U.S.C. urged that the transaction involved was the sale of the tickets, the OEP and CLC opined that the sale of the tickets was merely preparatory to the performance of a service, namely the playing of the football game, and that as "[i]n the case of a service the transaction takes place when the service is performed, " U.S.C. would be obliged to look to the 1970 football season for its ceiling price. That is, since no transactions-football games-occurred during the 30-day period ending August 14, 1971, the ceiling would have to be "the highest price . . . in the nearest preceding 30-day period in which transactions did occur." Executive Order No. 11615, supra.

The district court flatly rejected the agencies' position and ruling, finding "no suggestion in the order or in the administrative regulation based upon it . . . that such controls would have retroactive effect and require refunds of prices charged in transactions that antedated the Executive Order." The court rebuffed the contention that the "pertinent transactions" took place with the playing of the games rather than the selling of the tickets, and found Circular No. 11 "not in harmony with the purposes and provisions of the Executive Order and Regulation No. 1" and "inconsistent with other rulings of the Cost of Living Council." 342 F.Supp. at 607-608, 609.

III. SCOPE OF REVIEW

The Executive Order of August 15 left the Cost of Living Council (and by its delegation the Office of Emergency Preparedness) with a "gargantuan" task. ⁵ In delegating to the agencies the duty to develop the very definitions of the words used in the Order, the broadest possible delegation of power was given. As this court recently stated in United States v. Lieb, ...