Swift & Company v. Federal Maritime Commission

• Decision Date: 24 May 1962
• Docket Number: No. 16288,16444,16455.,16288
• Citation: 306 F.2d 277
• Parties: SWIFT & COMPANY, Swift & Company Packers, Petitioners, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, West India Fruit & Steamship Co., Inc., Gulf and South Atlantic Havana Steamship Conference, et al., Intervenors. GULF AND SOUTH ATLANTIC HAVANA STEAMSHIP CONFERENCE et al., Petitioners, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Swift & Company and Swift & Company Packers, American Waterways Operators, Inc., National Industrial Traffic League, Intervenors. WEST INDIA FRUIT & STEAMSHIP CO., Inc., Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Swift & Company and Swift & Company Packers, American Waterways Operators, Inc., National Industrial Traffic League, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

306 F.2d 277 (1962)

SWIFT & COMPANY, Swift & Company Packers, Petitioners, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, West India Fruit & Steamship Co., Inc., Gulf and South Atlantic Havana Steamship Conference, et al., Intervenors.

GULF AND SOUTH ATLANTIC HAVANA STEAMSHIP CONFERENCE et al., Petitioners, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Swift & Company and Swift & Company Packers, American Waterways Operators, Inc., National Industrial Traffic League, Intervenors.

WEST INDIA FRUIT & STEAMSHIP CO., Inc., Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Swift & Company and Swift & Company Packers, American Waterways Operators, Inc., National Industrial Traffic League, Intervenors.

Nos. 16288, 16444, 16455.

United States Court of Appeals District of Columbia Circuit.

Argued March 5, 1962.

Decided May 24, 1962.

Mr. George F. Galland, Washington, D. C., with whom Mr. Robert N. Kharasch, Washington, D. C., was on the brief, for petitioners in No. 16,288 and intervenors Swift & Co., Swift & Co. Packers and National Industrial Traffic League in Nos. 16,444 and 16,455. Mrs. Amy Scupi, Washington, D. C., was also on the brief for petitioners in No. 16,288.

Mr. Edward S. Bagley, New Orleans, La., of the bar of the Supreme Court of Louisiana, pro hac vice, by special leave of court, for petitioner in No. 16,444. Mr. Joseph M. Rault, New Orleans, La., also entered an appearance for petitioner in No. 16,444.

Mr. J. Alton Boyer, Washington, D. C., with whom Mr. Odell Kominers, Washington, D. C., was on the brief, for petitioner in No. 16,455.

Mr. Harold L. Witsaman, Atty., Federal Maritime Commission, of the bar of the Supreme Court of Ohio, pro hac vice, by special leave of court, with whom Messrs. James L. Pimper, Gen. Counsel, and Robert E. Mitchell, Deputy Gen. Counsel, Federal Maritime Commission, were on the brief, for respondent Commission. Mr. Richard A. Solomon, Atty., Dept. of Justice, at the time the brief for respondent United States was filed, was on its brief. Mr. Edward Aptaker, Asst. Gen. Counsel for the Commission at the time the record was filed, entered an appearance for the Commission. Mr. Irwin A. Seibel, Atty., Dept. of Justice, entered an appearance for respondent United States.

Mr. Gerald D. Morgan, Washington, D. C., with whom Mr. John H. Eisenhart, Jr., Washington, D. C., was on the brief, for intervenor American Waterways Operators, Inc.

Mr. T. S. L. Perlman, Washington, D. C., entered an appearance for intervenor West India Fruit & Steamship Co., Inc., in No. 16,288.

Mr. H. F. Gillis, Washington, D. C., also entered an appearance for intervenor National Industrial Traffic League.

Before EDGERTON, FAHY and WASHINGTON, Circuit Judges.

WASHINGTON, Circuit Judge.

This opinion deals with three related appeals arising out of a Report and Order issued by the Federal Maritime Board¹ on February 3, 1961, which found that the West India Fruit & Steamship Company ("West India") and other members of a steamship conference had violated various provisions of the Shipping Act, and directed hearings to allow a complaining shipper to prove damages for a specified period. The principal issue before the Board was whether the conference unlawfully attempted to control freight movements from St. Louis, a port not specifically named in the conference agreement.

I.

Since 1935, the major steamship lines engaged in the ocean carriage of cargo from United States Gulf and South Atlantic ports to Cuba have been operating together under a rate-fixing agreement approved by the Federal Maritime Board pursuant to Section 15 of the Shipping Act of 1916, 46 U.S.C.A. § 814. This organization of steamship lines, called the Gulf and South Atlantic Havana Steamship Conference ("Conference"), has, long employed "dual rates," whereby companies agreeing to ship only on members' vessels were charged lower rates than other shippers. Swift & Company, with its subsidiary Swift & Company Packers (herein collectively "Swift"), was during 1958 and for some years previously a party to such a dual-rate contract, under which Swift promised to use Conference carriers for all goods "shipped directly or indirectly from Gulf and South Atlantic ports of the United States" to Cuba, in return for a lower rate.

Swift had long shipped lard to Cuba via railroad tank car to Florida and from there in freight cars on West India's car ferry. In the spring of 1958 Swift, with another company, formed a barge company and commenced shipping bulk lard via barge from St. Louis, Missouri, to Cuba.² Swift thus eliminated both the inland rail freight and West India's ocean freight. The barge service was suspended in October 1958 by decree of the Cuban government. On July 10, 1958, however, the Conference informed Swift that it considered the barge shipments a violation of Swift's agreement to utilize Conference members' ships. Swift denied the breach, and arbitration on the question, pursuant to the 1958 Agreement, commenced in March 1959. The majority of the arbitrators, on June 10, 1959, found that Swift "had violated the agreement with the Conference" and "is to pay the Conference the sum due as damages under the terms of the agreement."

Meanwhile, in October 1958, the Conference changed the language in its 1959 Freighting Agreement so that it would specifically apply to movements such as that undertaken by Swift from St. Louis. On December 31, 1958, Swift refused to sign the 1959 Agreement until the new language (paragraph (b)) which specifically covered shipments from St. Louis had been removed and the interpretation of Article 1 giving it such effect revoked. The Conference refused both conditions.

On January 12, 1959, the Federal Maritime Board issued an order stating (1) that the new paragraph (b) appeared to be a new agreement requiring approval by the Board under Section 15 of the Shipping Act, (2) that the new paragraph may violate Sections 14, 15, 16 and 17 of the Act, and (3) ordering the Conference to "cease and desist from effectuating" the new provision. The order initiated an investigation set for hearing as Docket No. 849.³

Notwithstanding its argument that the 1958 Agreement covered St. Louis, the Conference also filed the 1959 Agreement for Board approval, presumably as a modification of the Conference Agreement. Docket No. 851 was then initiated to determine if Article 1 was a new agreement which must be approved pursuant to Section 15. In other words, Docket No. 851 was to consider the entire Article 1 of the 1959 Agreement, while Docket No. 849 was to consider only the interpretation in paragraph (b) thereof. On May 21, 1959, Swift filed with the Board a complaint against the Conference and its members. It asserted, inter alia, that the 1959 Agreement was unlawful, and requested reparations. This complaint, and a later amendment, were set for hearing as Docket No. 854. All three proceedings were consolidated.

The Conference on March 10, 1959, notified all of its contract shippers (not including Swift) that it would comply with the January 12 and February 19, 1959, cease and desist orders and "give no effect" to the new clause in the 1959 Agreement. Swift was notified on April 27, 1959. On May 8, 1959, Swift signed the 1959 Agreement effective May 11, 1959. Between January 1, 1959, and May 10, 1959, Swift continued to ship to Cuba on West India's car ferries, and not having signed a dual-rate contract for that time, Swift paid the higher "non-contract" rates.

On February 3, 1961, the Board found that West India and other Conference members had, in seeking to extend the dual-rate system to ports such as St. Louis, violated various provisions of the Shipping Act. The Report fixed the period of reparations, but directed additional "proceedings to determine the exact amount of the reparations * * *." In Nos. 16,444 and 16,455 the Conference and West India seek review of both the February 3 Report and Order and the denial of subsequent petitions for reconsideration and clarification. In No. 16,288, Swift asserts that the Board improperly denied a portion of its claim for reparation.

II.

The basic issue in Nos. 16,444 and 16,455 is the legality of the actions of the Conference and its members with respect to the movement of Swift's freight from St. Louis. In substance, the Board found that the Conference was attempting to assert control over cargo commencing a through-water movement from St. Louis in the same manner (and in a way as detrimental to commerce) as if St. Louis were a port within the scope of the agreement. To quote the Board:

"The Conference by letter dated July 10, 1958 told Swift it considered Swift\'s shipments by such barges a violation of its agreement to ship on Conference members\' ships because St. Louis was a Gulf and South Atlantic port covered by the agreement * * *.

* * * * * *

"* * * The 1958 Agreement contains no provision naming St. Louis * * * but the respondents argue it reasonably may be interpreted to extend to this port because of the word `indirectly\' as applied to cargo shipped from Gulf and South Atlantic ports. * * * Since the restriction is invalid, the Examiner correctly held the agreement did not apply to shipments from St. Louis, nor is it applicable to shipments through New Orleans.

* * * * * *

"* * * The 1958 and 1959 Agreements do not name any port located on an inland waterway or not located on the Atlantic or Gulf coast.

It is argued that, nevertheless, the 1958 Agreement, as interpreted, or as revised in 1959 implies that, without naming the port, it covers the carriage of cargo originating at or from any inland port, in this case St. Louis, exported by way of any river, flowing through any Gulf port such as New Orleans, i.e., the Mississippi River.

* * * * * *

"The basis for the Examiner\'s conclusion was that the restriction by the respondent common carriers by water

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