North Carolina State Ports Authority v. Dart Containerline Co. Ltd., AFL-CI

Citation592 F.2d 749
Decision Date15 February 1979
Docket NumberAFL-CI,No. 78-1278,L,78-1278
PartiesNORTH CAROLINA STATE PORTS AUTHORITY, International Longshoremen's Association,ocal 1426, International Longshoremen's Association,ocal 1426-A, Warehousemen, Appellees, v. DART CONTAINERLINE COMPANY LIMITED, Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

Allan J. Berdon, New York City (Edwin Longcope, New York City, Rountree & Newton, Wilmington, N. C., Hill, Betts & Nash, New York City, on brief), for appellant.

George J. Oliver, Asst. Atty. Gen., Raleigh, N. C. (Rufus L. Edmisten, Atty. Gen., Raleigh, N. C., on brief), for appellee.

Before WINTER, BUTZNER and RUSSELL, Circuit Judges.

WINTER, Circuit Judge:

Pending a resolution of a tariff controversy before the Federal Maritime Commission, the district court preliminarily enjoined Dart Containerline Company Limited (Dart), a common carrier by water, from putting into effect the substitute service provisions of its Freight Tariff No. 1 FMC 28 pursuant to which it offered port-to-port carriage of unmanufactured tobacco from Wilmington, North Carolina, to designated European ports by direct sailing or by water or overland substitute service. The substitute service that Dart desires to offer is to issue a Wilmington bill of lading to shippers providing unmanufactured tobacco cargo at a Dart collection point in Wilmington, and thence to transport the tobacco cargo overland by motor carrier, at its own expense from Wilmington to Dart's facility at Norfolk, Virginia, for loading upon a Dart vessel for carriage overseas.

Because we do not think that the record supports the finding that plaintiffs, North Carolina State Ports Authority; International Longshoremen's Association, AFL-CIO, Local 1426; and International Longshoremen's Association, AFL-CIO, Local 1426-A, Warehousemen (hereafter Ports Authority) will suffer irreparable injury unless Dart is so enjoined, and because plaintiffs have not demonstrated a substantial likelihood of success in the proceedings instituted by them before the Federal Maritime Commission to invalidate the tariff, we reverse the judgment and direct that the injunction be vacated.

I.

So that the significance of the facts will be more apparent, we precede them with a review of the applicable rules of law as they have been developed in this circuit. The parties agree that our decisions in Fort Sumter Tours, Inc. v. Andrus, 564 F.2d 1119 (4 Cir. 1977), and Blackwelder Furniture Co. v. Seilig Manufacturing Co., 550 F.2d 189 (4 Cir. 1977), are controlling.

Summarized, the principles laid down in those cases are that in this circuit the trial court standard for interlocutory relief is the balance-of-hardship test. Four factors enter into the determination of whether to grant or to withhold interim injunctive relief: (a) plaintiff's likelihood of success in the underlying dispute between the parties; (b) whether plaintiff will suffer irreparable injury if interim relief is denied; (c) the injury to defendant if an injunction is issued; and (d) the public interest. There is a correlation between the likelihood of plaintiff's success and the probability of irreparable injury to him. If the likelihood of success is great, the need for showing the probability of irreparable harm is less. Conversely, if the likelihood of success is remote, there must be a strong showing of the probability of irreparable injury to justify issuance of the injunction. Of all the factors, the two most important are those of probable irreparable injury to the plaintiff if an injunction is not issued and likely harm to the defendant if an injunction is issued. If, upon weighing them, the balance is struck in favor of plaintiff, a preliminary injunction should issue if, at least, grave or serious questions are presented.

With this explanation in mind, we turn to the facts.

II.
A. Injury to Dart

Dart never had the opportunity to put its new tariff into effect. The tariff became effective on September 19, 1977, but on October 14, 1977, Ports Authority filed a complaint against Dart with the Federal Maritime Commission requesting the Commission to declare the substitute service provisions unlawful under §§ 16 and 17 of the Shipping Act of 1916, 46 U.S.C. §§ 815 and 816, and § 8 of the Merchant Marine Act of 1920, 46 U.S.C. § 867. On the same day it filed the instant action, and an immediate temporary restraining order was granted.

If the tariff is valid, Dart will lost whatever revenues it might be able to generate thereunder until the injunction is dissolved. As the district court found, the time required for the Commission to reach a final decision may be years. Although Dart has been prohibited from implementing the tariff, it has made a substantial investment in anticipation of its operation. Its annual expenditure for the part of its Norfolk office used for promotion of tobacco shipments amounts to $38,000, and it purchased 150 specially designed tobacco containers at an aggregate cost of $450,000 to equip itself to perform this service. Dart has no other present use for them, but it may be presumed that they would have some unknown resale value were Dart to elect to dispose of them. If Dart is obliged or undertakes to offer service from Wilmington, North Carolina, but is prohibited from transporting tobacco cargo overland by motor carrier at its own expense from Wilmington to Norfolk, it would cost Dart about $16,000 to $20,000 per day for each of an additional four days to have its ships call at Wilmington, and that move would disrupt Dart's present schedules and its competitive position. 1 In short, Dart, by reason of the injunction, will sustain not insubstantial injuries.

B. Injury to Ports Authority

To show probable injury to it, Ports Authority proved the multi-million dollar investment in port facilities at Wilmington, including the facilities for container service, and the planned expenditure of $6.5 million more for container facilities. Its evidence showed that, at the present time, approximately 4,000 containers of unmanufactured tobacco pass through the port of Wilmington annually for transportation overseas by two water carriers, other than Dart, who presently serve the port. If the substitute service provision of Dart's tobacco tariff becomes effective, Ports Authority's deputy director believed that some tobacco cargo would be diverted to Norfolk; and if the entire 4,000 annual container shipments were lost by Wilmington, Ports Authority would suffer an annual loss of revenues of over $100,000. Other evidence showed that such a loss would endanger the livelihood of longshoremen working at the port.

The deficiency in Ports Authority's proof was the absence of specific evidence to show that Dart's substitute service tariff would divert any cargo from Wilmington to Norfolk and, if so, how much. The witness who testified as to the economic impact of a diversion of 4,000 container shipments annually was frank to admit that his figure of 4,000 was an assumption and not an informed estimate. Short of an actual basis on which to estimate the possible diversion, there was no proof of the ocean rates out of Wilmington and Norfolk, or negotiated inland transportation rates, or the relationship between each, from which any inference could be drawn as to the likelihood that a shipper which had heretofore used Wilmington as the point of shipment would divert its traffic to Norfolk by use of Dart's substitute service tariff. In short, while Ports Authority raised the spectre of possible irreparable harm to it, it fell far short of proving the...

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