Avon Western Corporation v. Bowles

• Decision Date: 22 November 1944
• Docket Number: No. 136.,136.
• Citation: 145 F.2d 473
• Parties: AVON WESTERN CORPORATION et al. v. BOWLES, Price Administrator.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

145 F.2d 473 (1944)

AVON WESTERN CORPORATION et al. v. BOWLES, Price Administrator.

No. 136.

Emergency Court of Appeals.

Heard August 8, 1944.

Decided November 22, 1944.

Milton E. Sahn, of New York City, for complainants.

John O. Honnold, Jr., of Washington, D. C. (Richard H. Field, General Counsel, Nathanial L. Nathanson, Associate General Counsel, and Henry S. Sellin, Attorney, all of Office of Price Administration, all of Washington, D. C., on the brief) for respondent.

Before MARIS, Chief Judge, and MAGRUDER and LAWS, Judges.

Heard at Washington, D. C., August 8, 1944.

MAGRUDER, Judge.

Complainants in this case are a group of live poultry dealers in New York City, engaged in handling live poultry purchased from points outside the City of New York, and mainly from outside the State of New York, for resale to intermediate wholesalers and retailers. They challenge the validity of certain grading provisions relating to live poultry and consequent price differentials contained in Revised Maximum Price Regulation No. 269 — Poultry, as amended.

Revised Maximum Price Regulation No. 269 established dollars-and-cents maximum prices for both live and processed poultry. As originally issued (7 F.R. 10708), the regulation established maximum prices for processed poultry in terms of grades which had been promulgated by the United States Department of Agriculture as "Tentative Grade Specifications for Dressed Poultry"; but the regulation did not prescribe maximum price differentials for grades of live poultry. Later, on March 16, 1943, by amendment No. 6 to the regulation, the Administrator established grades for live poultry as well (8 F.R. 3316). Section 1429.19(k) (3) of the regulation as thus amended provided: "The Tentative U. S. Standards for Grades of Live Poultry now in effect shall apply to all sales, purchases, or deliveries of live poultry covered herein. Revisions promulgated by the U. S. Department of Agriculture shall become concurrently effective for the purposes of this regulation for live poultry sold, purchased, or delivered after the issuance of such revisions."

The U. S. Standards thus incorporated by reference are copied in the footnote.¹ Section 1429.19(h) (1) (i) fixed maximum prices for different classes and weights of grade A poultry items. Section 1429.19 (h) (1) (ii) fixed maximum prices for grade B poultry items, both live and processed, at 1½ cents per pound less than the maximum prices for the corresponding items of grade A poultry, and Section 1429.19(h) (1) (iii) fixed maximum prices for grade C poultry items, both live and processed, at four cents per pound less than the maximum prices for the corresponding grade A items.

At that time the complainants filed no protest against these grading provisions of the regulation.

On July 16, 1943, Congress by Joint Resolution enacted the so-called Taft Amendment, 57 Stat. 566, adding a new subsection (j) to Section 2 of the Emergency Price Control Act of 1942, 50 U.S. C.A.Appendix, § 902(j), reading as follows: "(j) Nothing in this Act shall be construed (1) as authorizing the elimination or any restriction of the use of trade and brand names; (2) as authorizing the Administrator to require the grade labeling of any commodity; (3) as authorizing the Administrator to standardize any commodity, unless the Administrator shall determine, with respect to such standardization, that no practicable alternative exists for securing effective price control with respect to such commodity; or (4) as authorizing any order of the Administrator fixing maximum prices for different kinds, classes, or types of a commodity which are described in terms of specifications or standards, unless such specifications or standards were, prior to such order, in general use in the trade or industry affected, or have previously been promulgated and their use lawfully required by another Government agency."

From the outset, the Administrator has construed the Taft Amendment as authorizing him to establish maximum prices in terms of standards or specifications not only for commodities covered by clause (4), where standards or specifications have been in general use in the trade or industry affected, or have previously been promulgated and their use lawfully required by another Government agency, but also for commodities covered by the separate and distinct provision of clause (3), namely, where the Administrator has determined, with respect to such commodities, that no practicable alternative exists for securing effective price control.² Such interpretation received approval of the court in United States v. Pepper Bros., 1944, 3 Cir., 142 F.2d 340, 343, and is not challenged by complainants here.

In conformity with the new requirement of the Taft Amendment, the Administrator on September 11, 1943, issued Supplementary Order No. 57, which amended the preamble of Revised Maximum Price Regulation No. 269 by adding thereto the following recital: "Insofar as this regulation uses specifications and standards which were not, prior to such use, in general use in the trade or industry affected, or insofar as their use was not lawfully required by another Government agency, the Administrator has determined, with respect to such standardization, that no practicable alternative exists for securing effective price control with respect to the commodities subject to this regulation."

At the same time, the Administrator issued a Supplemental Statement of Considerations to Revised Maximum Price Regulation No. 269, stating why, in his judgment, "no effective price control can be achieved in the poultry industry without the use of grade standards".

On October 9, 1943, complainants filed their joint protest against Supplementary Order No. 57, issued September 11, 1943, and against the provisions of the amended Revised Regulation, above summarized, establishing maximum prices for live poultry in terms of U. S. Standards.³ The protest challenged the grading provisions as being in violation of the Taft Amendment, and asserted that "there was no basis in fact for the determination by the Administrator that there was no practical alternative for securing effective price control with respect to poultry". Accompanying the protest and in support thereof was an affidavit by complainants' attorney, who qualified himself as an expert on the basis of his personal knowledge and study of the industry, in which he had formerly been actively engaged as a slaughterhouse operator in Brooklyn, New York.

By order issued November 24, 1943, the Administrator incorporated into the record of the protest proceedings certain economic data and other facts of which he took official notice. Opportunity was afforded complainants, within thirty days thereafter, to offer evidence in rebuttal or explanation of the economic data so incorporated, and also to offer such further evidence relevant to the objections set forth in the protest as the protestants might desire to present. In response thereto, the protestants offered a rebuttal affidavit by their same attorney.

On March 25, 1944, the Administrator entered an order denying the protest, after which the present complaint was duly filed in this court.

The Administrator made no finding that the prescribed specifications or standards for grading live poultry had been in general use in the industry or had previously been promulgated and their use lawfully required by another Government agency. He bases the challenged grading provisions, not on clause (4) of the Taft Amendment, but rather on clause (3) thereof. Therefore, the main issue is whether the record before us discloses a rational basis for the Administrator's determination that it was necessary to establish maximum prices for live poultry in terms of grade specifications or standards because "no practicable alternative exists for securing effective price control with respect to such commodity." The Administrator's reasons for this conclusion were summarized in a Supplemental Statement of Considerations filed simultaneously with the issuance of Supplementary Order No. 57, as follows (Pike and Fischer OPA Service, 41:-1231-A):

"Although these standards were not in universal use throughout the poultry industry in the United States at the time of the issuance of Revised Maximum Price Regulation 269, nevertheless they had had sufficiently widespread acceptance by members of the poultry industry to make their adoption for price regulation reasonable and practicable.

"It is the opinion of the Administrator that no effective price control can be achieved in the poultry industry without the use of grade standards. The absence of grade standards would permit the poorest quality of poultry to sell at the same price as the finest quality. Consumer protection would be nullified, and the poultry industry, itself, would suffer, because all incentive for producing a premium quality of poultry would be removed."

Complainants' evidence consists solely of an affidavit and a rebuttal affidavit by their attorney. They offer no objection to the grading provisions applicable to dressed poultry, which they concede to be feasible and proper. But they describe in some detail the way in which live poultry is handled in the New York market, and contend that the individual inspection necessary to comply with the grading requirements could only be had at prohibitive cost and undue delay in the marketing process. Also, they point out, the quality of a live bird may change from day to day.

Further, they assert that even with individual handling of the feathered live birds, it is next to impossible to grade them according to the prescribed standards and specifications, because the flesh and condition of the body cannot readily be inspected with the feathers on, and graders might well differ as to the quality of a given bird. This particular objection was directed to the grading specifications which were in the regulation while the...