Alterman Transport Lines, Inc. v. United States

• Decision Date: 20 July 1973
• Docket Number: Civ. No. 72-68.
• Citation: 361 F. Supp. 664
• Parties: ALTERMAN TRANSPORT LINES, INC., et al., Plaintiffs, v. UNITED STATES of America, and the Interstate Commerce Commission, Defendants.
• Court: U.S. District Court — Middle District of Florida

361 F. Supp. 664

ALTERMAN TRANSPORT LINES, INC., et al., Plaintiffs, v. UNITED STATES of America, and the Interstate Commerce Commission, Defendants.

Civ. No. 72-68.

United States District Court, M. D. Florida, Orlando Division.

July 20, 1973.

Gregory A. Presnell and Thomas C. Garwood, Jr., of Akerman, Senterfitt, Eidson & Wharton, Orlando, Fla., for plaintiffs.

L. Agnew Myers, Jr., Washington, D. C., Raymond M. Zimmet, I.C.C., Washington, D. C., John H. D. Wigger, Dept. of Justice, Washington, D. C., Whitaker & Koepke & Asso., Orlando, Fla., for Fla.-Texas Freight and Armellini Exp. Lines Inc.

Wilmer B. Hill, of Ames, Hill & Ames, Washington, D. C., for Armellini Exp. Lines Inc., for defendants.

Before DYER, Circuit Judge, and YOUNG and HODGES, District Judges.

DYER, Circuit Judge:

We are asked by the plaintiffs, pursuant to 28 U.S.C.A. §§ 1336, 1398, 2284 and 2321-2325, to set aside a decision of the Interstate Commerce Commission granting a motor carrier certificate to Armellini Express Lines, issued on October 19, 1971, (operations having been theretofore conducted under temporary authority served November 7, 1967, MC-105636 Sub 27TA) to handle freight forwarder traffic moving from the northeastern section of the United States to Florida destinations.¹ Armellini Express Lines, Inc., Extension— Freight Forwarder Traffic, 113 M.C.C. 603 (1971). We decline to do so and dismiss the complaint.

Armellini's application was supported by Florida-Texas, Inc., a freight forwarder. The latter assembled and consolidated shipments and provided break-bulk and delivery services for the shipping public. As a forwarder it specialized in the transportation of small shipments and, under its own name and responsibility, provided through transportation service from point of origin to destination, but was prohibited from performing the actual line haul movement of the shipments it accepted for transportation. Plaintiffs and Armellini are common carriers by motor who perform the underlying line-haul transportation. Florida-Texas had been primarily using rail carriers to transport its traffic, but due to equipment shortages and delivery delays by the railroads it found that the rail service was unsatisfactory. On the other hand, during the time Florida-Texas used Armellini's service, under the temporary motor authority granted to the carrier, Armellini's service had been superior to any other Florida-Texas had previously received. The plaintiffs opposed the application, but no rail carrier took such action.

After the initial hearing, the examiner by order served May 6, 1968, recommended that the application be granted, excepting, however, service from Boston, New York City, and Jersey City. The examiner, we think, properly summarized the case as follows:

Since Florida-Texas presently has available, by rail, rates which meet its requirements, but it does not find that rail service is satisfactory for all of its traffic, it desires to have available for its use motor carrier service. No service can be used by Florida-Texas unless a rate is available to it below the rate charged to its customers. Such a rate is available by rail but is not shown to be available by motor, therefore, as a practical matter, the existing motor carrier service is not available to Florida-Texas. The question presented is whether the lack of available suitable rates is a service deficiency warranting a grant of additional authority, or whether there is here merely a question of the level of the rates which is not a proper matter for consideration in a motor common carrier application proceeding, unless the level is such as to constitute an embargo. . . .

The examiner concluded that without "freight-all-kinds" (FAK) rates, the traffic could not move by motor carrier no matter what the level of the "less-than-truckload" (LTL) rates that would have to be used might be, and consequently that the forwarder's requirement for a particular type rate was a service requirement and not a level of rate requirement. The examiner thus decided that the plaintiffs did not have suitable rates available to the freight forwarder which would permit it to move its traffic and that they were therefore not providing a necessary service with the result that there was a demonstrated public need for Armellini's service. The examiner concluded that:

To find otherwise would leave the forwarder at the mercy of its competitors, insofar as motor service is required, and thus effectively prevent it from expanding and being a competitive factor in the transportation scheme.

Subsequently, a majority of Review Board No. 2, holding that it could not determine from the record whether plaintiffs' rates constituted an embargo against the freight forwarder's traffic, denied Armellini's motor application on the ground that it had failed to carry its burden to establish that fact.

In September 1969, three members of the Commission, acting as an Appellate Division, sua sponte ordered that the proceeding be reopened for further hearings, limited to evidence concerning the issue of whether plaintiffs' rates would preclude their use by the freight forwarder.

In August 1970, a different examiner, at the further hearing, found that the level of plaintiffs' rates and the absence of suitable type forwarder rates were rate problems for which a more appropriate corrective procedure was available under the Act. Alternatively, the examiner suggested that Florida-Texas could apply for a premium rate and thus bear the plaintiffs' existing rates. Review Board No. 2 again, by a split decision, affirmed the examiner's recommendation, holding, in effect, that the matter was a rate question and not a service problem and thus was not a proper matter for consideration unless the level of rates was shown to constitute an embargo. Finding that there was no embargo, the Board concluded that the application should be denied.

On June 4, 1971, Appellate Division 1 reopened the matter and on reconsideration granted the application in its entirety. The Commission concluded that the freight forwarder was dependent upon other carriers to move its traffic and, absent their offer to do so at adequate rates to the forwarder to move its traffic profitably, the existence of freight forwarders could be jeopardized. Further, the Commission found that the plaintiff's rates were too high and "structurally ill suited" to move freight forwarder traffic. Moreover, it found that the plaintiffs had not attempted to negotiate lower rates but had taken an adamant position that Florida-Texas should increase its rates. The Commission also determined that the plaintiffs would not be adversely affected by its decision because they had demonstrated a willingness to forego the traffic. Finally, it concluded that plaintiffs' existing rates effectually precluded Florida-Texas from using their services and under these circumstances the failure to hold out their services to the freight forwarder constituted an embargo of its traffic.

The plaintiffs attack the Commission's findings of fact as insufficient to resolve the embargo issue and attack its conclusion that their traffic involved would not be subject to diversion. Finally, they urge upon us that the Commission's conclusion that plaintiffs had embargoed the freight forwarder's traffic is not supported by competent, substantial evidence upon the record as a whole. We are unimpressed with all of these contentions.

We start with the well established premise that the Commission has broad discretion under 49 U.S.C.A. § 307(a) in determining whether the public convenience and necessity warrants certification of a proposed carrier service. ICC v. Parker, 1945, 326 U.S. 60, 65 S.Ct. 1490, 89 L.Ed. 2051; Florida Terminals and Trucking Co. v. United States, M.D.Fla.1972, 363 F.Supp. 1355; Redwing Carriers, Inc. v. United States, M.D.Fla.1967, 271 F.Supp. 685; Petroleum Carrier Corp. v. United States, M.D. Fla.1966, 258 F.Supp. 611; R-C Motor Lines, Inc. v. United States, M.D.Fla. 1965, 241 F.Supp. 124. We must then determine whether the findings and order of the Commission are arbitrary, capricious, or unsupported by substantial evidence. Consolo v. FMC, 1966, 383 U. S. 607, 86 S.Ct. 1018, 16 L.Ed.2d 131; ICC v. Louisville & Nashville R. R., 1913, 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431; Accelerated Transport-Pony Express, Inc. v. United States, D.C.Vt.1964, 227 F.Supp. 815, affirmed per curiam, 379 U.S. 4, 85 S.Ct. 43, 13 L.Ed.2d 21.

The plaintiffs somewhat obliquely argue that because the support for Armellini's motor application came from a freight forwarder who is "another regulated carrier," this is a case of first impression. We disagree. In Florida Terminals, supra, the support for a grant of a motor carrier certificate to a carrier authorizing it to handle freight forwarder traffic came from regulated forwarders. Surely they must be allowed to testify in support of applications for motor authority since motor carriage is one form of transportation that they must depend upon to move the freight of individual shippers tendered to them. See, e. g., Central Forwarding Inc., Ext.—Household Goods, 107 M.C.C. 706, 714 (1968), modified on other grounds, 110 M.C.C. 29; Dobbert Common Carrier Application, 73 M.C.C. 711 (1957).

Turning to plaintiffs' argument that the Commission's findings of fact are insufficient to resolve the embargo issue, the Commission found that the plaintiffs provided only token solicitation for freight forwarder traffic; plaintiffs' rates were too high and structurally ill suited to move the freight forwarder's traffic; and that plaintiffs did not attempt to negotiate lower rates but were willing to forego this traffic. Plaintiffs counter that they were "reserved and cautious" in making any rate concessions because they were in competition with Florida-Texas. Furthermore, they assert that Florida-Texas should have adjusted its own rate structure upward. Finally,...