Benmar Transport & Leasing Corp. v. I. C. C.

• Decision Date: 11 June 1980
• Docket Number: D,No. 1401,1401
• Parties: BENMAR TRANSPORT & LEASING CORP., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, and Consolidated Truck Service, Inc., Intervenor-Respondent. ocket 78-4005. . Originally
• Court: U.S. Court of Appeals — Second Circuit

Page 740

623 F.2d 740

BENMAR TRANSPORT & LEASING CORP., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents,

and

Consolidated Truck Service, Inc., Intervenor-Respondent.

No. 1401, Docket 78-4005.

United States Court of Appeals, Second Circuit.

Originally Argued July 17, 1978.

Decided Aug. 16, 1978.

On Remand from the Supreme Court of The United States.

Submitted March 3, 1980.

Decided June 11, 1980.

Eugene M. Malkin, New York City, for petitioner.

Carl E. Howe, Jr., Atty., I. C. C., Washington, D. C. (Mark L. Evans, Gen. Counsel, Henry F. Rush, Associate Gen. Counsel, I. C. C., Washington, D. C., John H. Shenefield, Asst. Atty. Gen., Robert L. Thompson, Atty., Dept. of Justice, Washington, D. C., of counsel), for respondents I. C. C. and U. S. A.

Charles W. Beinhauer, New York City (Beinhauer & Rouhana, New York City, of counsel), for intervenor-respondent Consolidated Truck Service, Inc.

Before MESKILL, Circuit Judge, and DUMBAULD ^* and PORT, ^** District Judges.

MESKILL, Circuit Judge:

This action, now before us on remand from the Supreme Court, was initiated by Benmar Transport and Leasing Corp., a contract carrier seeking judicial review of certain orders of the Interstate Commerce Commission. ¹ The orders appealed from are affirmed.

BACKGROUND

Although the rather convoluted procedural history of this case has been determined by the Supreme Court to be largely irrelevant to its proper disposition, a summary of that history is necessary to set the stage for today's decision.

On July 21, 1976, Consolidated Truck Service, Inc. filed with the Interstate Commerce Commission an application for authority to operate as a contract carrier by motor vehicle. See Section 203(a)(15) of the Interstate Commerce Act, 49 U.S.C. § 303(a)(15) (repealed October 17, 1978). ² Specifically, Consolidated requested a permit to transport "such commodities as are dealt in by department stores," between certain listed locations, under a continuing contract with Jubilee Shops, Inc. of New Jersey, a retail merchandiser.

Although Benmar had previously handled all of Jubilee's trucking requirements, Jubilee Consolidated filed a petition for reconsideration. Division 1, acting as an Appellate Division, reversed the order of the Review Board and granted the application, stating, in an order served October 14, 1977, that the changing character of Jubilee's requirements was a significant factor and that a denial of Consolidated's application would have an adverse effect upon Jubilee by burdening its product line expansion. ⁵ When Benmar's petition for reconsideration of the order of Division 1 was denied, Benmar filed a petition for judicial review in this Court.

                supported Consolidated's application on the ground that Benmar was not authorized to provide the augmented service necessary to support the shipper's planned expansion into new lines of merchandise.  3 In its papers in opposition to Consolidated's application Benmar disagreed, contending that it was indeed authorized by permit to transport all the commodities that Jubilee shipped or could reasonably expect to ship in the future.  Commission Review Board No. 1, evaluating the evidence in light of the criteria set out in Section 209(b) of the Act, 4 determined that a grant "would almost certainly divert traffic" from Benmar and that the evidence was not sufficient to demonstrate that the changing nature of Jubilee's requirements was a significant factor.  Accordingly, Consolidated's application was denied by order dated May 12, 1977
                

Subsequent to that filing in this Court the Commission reopened the proceeding on its own motion to consider the issue of dual operations by Consolidated as both a common carrier and a contract carrier. ⁶ Such dual operations were approved in a modified order served January 27, 1978. After its petition for reconsideration of the Commission's modified order was denied on April 18, 1978, Benmar filed an amended petition for review in this Court.

Ruling that only the initial October 5th order of Division 1 was properly before us, we granted Benmar's petition, vacated the October 5th order and remanded the case to the Commission for further proceedings. The Supreme Court granted certiorari and reversed, holding that we had erred in refusing to consider the two Commission orders served on January 27, 1978, and April 18, 1978. United States v. Benmar Transport and Leasing Corp., 444 U.S. 4, 100 S.Ct. 16, 62 L.Ed.2d 5 (1979) (per curiam). Pursuant to the directions of the Supreme Court we now shift our focus from the timing of the Commission's orders to their merit.

DISCUSSION

The only issue now remaining in the case is the propriety of the Commission's grant of Consolidated's application for contract carrier authority. Consolidated ⁷ and the Commission ⁸ take the position that the grant was reasonable, lawful and supported by substantial evidence and therefore must be upheld. Because we regard Benmar's claims to the contrary as lacking in merit, we affirm.

Standard of Review

Our scope of review is narrow. The Administrative Procedure Act, 5 U.S.C. § 706 provides that:

The reviewing court shall

(2) hold unlawful and set aside agency action, findings, and conclusions found to be

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law . . . .

(or)

(E) unsupported by substantial evidence . . . .

See Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285-86, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974); Cross-Sound Ferry Services, Inc. v. United States, 573 F.2d 725 (2d Cir. 1978).

Once it has been determined that decisions are supported by substantial evidence,

(a) reviewing court must "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. . . . Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency."

The test here is primarily one of rationality. If the Commission based its order on substantial relevant evidence, fairly ascertained, and if it has made no clear error of judgment, this court is not authorized to overturn that order.

Cross-Sound Ferry Services, Inc. v. United States, supra, 573 F.2d at 729-30, quoting

Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., supra, 419 U.S. at 285-86, 95 S.Ct. at 441-442 (citations omitted). Cf. International Detective Service, Inc. v. I. C. C., 613 F.2d 1067, 1073 n. 13 (D.C.Cir. 1979). With this standard in mind, we consider Benmar's attack on the Commission's orders.

The Scope of Benmar's Authority

Benmar contends that the Commission's action in regard to Consolidated was premised on an arbitrary construction of the permits under which Benmar had been serving Jubilee since 1972. At the time of the Commission's decision in regard to Consolidated, Benmar's existing authority as described in its permits embraced "such commodities as are dealt in by ready-to-wear apparel stores and supplies used in the conduct of such business." The Commission concluded, based on the shipper's uncontradicted presentation, that Jubilee wished to ship several types of merchandise which are beyond the scope of "ready-to-wear apparel" authority, such as sporting goods and lamps.

Benmar argues that the evidence shows that Jubilee and Benmar had always intended the generic "ready-to-wear apparel" rubric "to embrace the complete line of Jubilee's merchandise, and to obviate the need to modify or expand the commodity description each time a new line or product was added to shipper's store inventory." Brief at 16. Not surprisingly, Benmar has offered no authority for the proposition that the intent of the parties to a permit overrides the plain language selected as an expression of that intent. Cf. Sims Motor Transport Lines, Inc. Revocation of Certificate, 72 M.C.C. 355, 359 (1957) (where no patent ambiguity in certificate, no need to go behind it to ascertain intent).

Although many retailers have diversified their operations in recent years and consumers have become accustomed to finding food sold in pharmacies and drugs sold in grocery stores, for example we cannot say that the Commission has acted improperly in determining that a distinction yet remains between ready-to-wear apparel stores and department stores. The cases relied on by Benmar demonstrate only that in the face of this trend the Commission has attempted to be both flexible and realistic in interpreting the authority of contract carriers to provide expanded transportation services for shippers undergoing growth or diversification at a rate typical of such enterprises. These cases do not indicate that the distinctions among various types of merchandisers or generic commodity descriptions have been abolished. Nor do they indicate, more particularly, that the Commission has on other occasions declared sporting goods and lamps, for example, to be within the authority of a permit restricted to ready-to-wear apparel. Compare Docket No. MC-115212, H. M. H. Motor Service Petition for Interpretation of Permit, served August 4, 1964 (unpublished) and Renner Motor Lines, Inc. Declaratory Order, 94 M.C.C. 605 (1964), with Russell Transfer, Inc. Petition for Declaratory Order, 118 M.C.C. 862 (1973). Benmar has failed to demonstrate the arbitrary nature of the Commission's performance of its line drawing responsibility in the case at bar. Under the circumstances, we cannot substitute our judgment for that of the agency. Cf. Andrew G. Nelson, Inc. v. United States, 355 U.S. 554, 558, 78 S.Ct. 496, 499, 2 L.Ed.2d 484 (1958); Hilt Truck Line, Inc. v. United States, 605 F.2d 1080 (8th Cir. 1979); Pre-Fab Transit Co. v. United States, 595 F.2d 384 (7th Cir. 1979); Chem-Haulers, Inc. v. I. C. C., 594 F.2d 166 (5th Cir. 1979); Dart Transit Co. v....