Agricultural Trans. Ass'n of Texas v. King

• Decision Date: 13 August 1965
• Docket Number: No. 21243.,21243.
• Citation: 349 F.2d 873
• Parties: AGRICULTURAL TRANSPORTATION ASSOCIATION OF TEXAS, Appellant, v. Wilbur C. KING et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

349 F.2d 873 (1965)

AGRICULTURAL TRANSPORTATION ASSOCIATION OF TEXAS, Appellant, v. Wilbur C. KING et al., Appellees.

No. 21243.

United States Court of Appeals Fifth Circuit.

August 13, 1965.

John H. Cotten, Tallahassee, Fla., Richard T. Churchill, Fort Worth, Tex., Cotten, Shivers, Gwynn & Daniel, Tallahassee, Fla., for appellant.

B. Kenneth Gatlin, Lewis W. Petteway, Tallahassee, Fla., for appellees.

Before JONES and BROWN, Circuit Judges, and SHEEHY, District Judge.

JOHN R. BROWN, Circuit Judge:

Directly involved is the question whether the District Court was correct in denying a permanent injunction against the Florida Public Utility Commission in the enforcement of Florida Motor Truck laws. But wrapped up in the question are a number of competing factors. One, of course, is the strong comity policy, legislatively reflected in 28 U.S.C.A. § 2283 of avoiding Federal Court interference in state judicial proceedings and especially criminal prosecutions. But pulling in the other direction is the fact that the Florida criminal law at stake inescapably has as its core a Federal standard. And that Federal standard calls for interpretation and application of two distinct legislative structures, one the Transportation Act, the other the Agricultural Marketing Act. And pleading always for recognition is the strong policy to facilitate, not thwart, free movement in interstate commerce. Complicating all of it further is the problem of the extent to which the trial Court ought in the past, or should in the future, defer action pending decision of all or a part of the underlying controversy by the Interstate Commerce Commission. In effect, we do not disapprove of the denial of the injunction. But we do vacate the order so that if further relief is sought after the remand, the District Court will refer it initially to the ICC.

I.

Suit for injunction was filed by ATA¹ against FPUC² seeking an order prohibiting the arrest of its driver employees in the operation of trucks on Florida highways in interstate commerce. After a full hearing, the trial Court denied a permanent injunction. It is clear from the record that none of the arrests was for alleged violation of Florida highway safety regulations as to physical operations, speed, weight, or load. On the contrary, the arrests were made because, in the judgment of FPUC the interstate transportation was being effected by owner-drivers and not ATA. Since owner-drivers concededly did not have a Florida certificate, such operation is in violation of § 323.02³ and § 323.35⁴ of the Florida statutes, F.S.A., since it is likewise conceded that such owner-drivers did not have requisite authority from the Interstate Commerce Commission to bring themselves within the exemption of § 323.28(2).⁵

But this is the beginning, not the end, of the problem, for ATA, frankly recognizing this, asserts two things. First, ATA is a Texas nonprofit cooperative association⁶ operating as a "cooperative association" under the Agricultural Marketing Act. As such it is authorized to engage in transportation services for nonmembers provided such "services with or for nonmembers" is not "in an amount greater in value than the total amount of such business transacted by it with or for members."⁷ Second, this brings into play § 203(b) (5) of the Interstate Commerce Act⁸ which exempts from regulation (other than safety) "motor vehicles controlled and operated by" an approved agricultural Co-op.

For the purpose of this case, it was, and is, assumed by all hands that ATA qualified as an authorized co-op under § 203(b) (5).⁹ The controversy raged, therefore, around the question whether owner-driver trucks meet the exemption standard of "motor vehicles controlled and operated by" ATA.

This sets the stage. This reveals that while the immediate problem is compliance with Florida laws, what Florida laws demand presents a Federal question — clearly one proper for a Federal Court — in the application and interpretation of one, and perhaps two, Federal statutes.

II.

At the time of the trial, ATA conducted all of its transportation services through the use of leased rolling stock. Each lease is for a term of one year with a 30-day written cancellation clause. The equipment must, of course, meet ATA's specifications as to size, type, weight, insulation, type of refrigerating equipment. And it must be and remain in operating condition which means that the owner-lessor bears the expense of replacement of tires and other accessory equipment, general repairs to the equipment, depreciation and consequences of ordinary wear and tear. In addition the owner-lessor must provide Texas registration, collision and upset insurance on equipment and the first $500 deductible on cargo insurance.

Lease rentals for the tractors and the refrigerated semi-trailers are computed separately for each completed trip. Under the lease ATA, the lessee, pays the owner-lessor a sum equal to 100% of the gross freight revenue received by ATA for the shipments based on the freight revenues received less two deductions.¹⁰ The first deduction is a constant of 18% of the gross revenue. This is retained by ATA as compensation for administrative overhead and related services, and constitutes the sole source for its profits. The second group covers all operating expenses incurred by ATA (not including overhead covered by the 18%) for the operation of the equipment on the trip involved including, any deadhead on the outward or homeward legs. These operating expenses include all fuel, oil, registration fees, state licenses, road and fuel taxes, fuel bonds, permits, loading and unloading expense, cost of emergency road service or substitute equipment, all signs and identifying material placed on the leased equipment, cargo insurance (above the $500 deductible), public liability insurance, wages, social security, withholding taxes and workmen's compensation insurance on all drivers, the compensation being fixed on a mileage basis without regard to profits of the trip.

It is without any contradiction that all cargo is booked solely by ATA. It alone makes the quotation of rates and terms. It issues all bills of lading, shipping contracts, or documents and invoices and collects all freight charges. The equipment and the drivers are under the positive control of the central dispatch office at Fort Worth. It alone advises drivers where and when to pick up loads, where to deliver them, what routing to use, and what special handling, such as temperature for cargo spaces, specified time of delivery, and the like is required. None of the equipment or the drivers is ever trip-leased to anyone else or used by anyone else but ATA during the time the equipment remains under the lease to it.

III.

Analyzing this briefly summarized arrangement in the light of United States v. Drum, 1962, 368 U.S. 370, 82 S.Ct. 408, 7 L.Ed.2d 360, the trial Judge concluded that the owner-driver-lessors were in effect paying 18% to ATA for cargo solicitation and related services and that ATA's contention of complete control and operation of these trucks through the payment of wages and on the road expenses * * * is a subterfuge * * *."¹¹ Although there was evidence concerning some highly artificial rearrangements of the legal title to some of this leased equipment,¹² we do not understand the Judge to have arrived at the conclusion of a "subterfuge" on the basis of facts showing that the operation was something other than that described in the lease. Rather, he concluded that the terms of the lease if faithfully carried out had this economic impact in fact. This results from the nature of the lease-formula by which nominally ATA pays the operating expenses but which are in fact borne directly by the owner-driver since these are deducted from the 82% of gross revenues before any balance is available to remit to the owner-driver. In this sense, even direct mileage wages paid to the owner-driver are borne by him.¹³

Although ATA specifically challenges this as an erroneous fact finding, we certainly accept the Judge's conclusion on the economic impact. The opprobrium "subterfuge" probably adds little either to help or hinder solution. And in our consideration, we approach it as did the District Court. The record is clear that the arrests were made solely because the trucks were leased from owner-drivers under this particular type of lease agreement.¹⁴ The question was whether ATA could legally do this. And the trial Judge faced directly up to the issue in stating, the "sole and limited issue before this Court is the determination of the legal effect of the factual arrangement between the co-operative and its lessors of rolling stock in the operation and control of the transportation furnished."

IV.

Although strong arguments can be marshalled raising much doubt that Drum is as dispositive of this case as the District Judge thought, little is to be gained by that pursuit. While we make no holding as to the applicability of Drum, we think analysis of the decision in the light of other cases and the statute demonstrates even more graphically that the basic question ought first to be resolved by the ICC.

In the first place, Drum deals with the highly specialized problem of so-called private carriage and the great abuses which led Congress by successive amendments to bolster the ICC's administrative weapons against it. This struggle is traced both in Drum and more recently in Red Ball Motor Freight, Inc. v. Shannon, 1964, 377 U.S. 311, 84 S.Ct. 1260, 12 L.Ed.2d 341. As those cases and that history reflect, at no time was it intended that a "private carrier" should ever be permitted to engage in transportation as such. What, and all, a "private carrier" could do was to carry its own goods.¹⁵ Congress, at the persistent behest of the ICC, made this doubly clear in the 1958 amendments. Even one who is "the owner, lessee, or bailee" of property which is being carried "for the...