Carnation Company v. Pacific Westbound Conference

• Decision Date: 28 September 1964
• Docket Number: No. 18926.,18926.
• Citation: 336 F.2d 650
• Parties: CARNATION COMPANY, a corporation, Appellant, v. PACIFIC WESTBOUND CONFERENCE, Far East Conference and the Federal Maritime Commission, et al., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

336 F.2d 650 (1964)

CARNATION COMPANY, a corporation, Appellant, v. PACIFIC WESTBOUND CONFERENCE, Far East Conference and the Federal Maritime Commission, et al., Appellees.

No. 18926.

United States Court of Appeals Ninth Circuit.

July 30, 1964.

Rehearing Denied September 28, 1964.

Arthur B. Dunne, Wallace R. Peck, San Francisco, Cal., James R. Baird, Jr., William H. Birnie, Los Angeles, Cal., Dunne, Bledsoe, Smith, Phelps, Cathcart & Johnson, San Francisco, Cal., for appellant.

Herman Goldman, Elkan Turk, Jr., Sol. D. Bromberg, New York City, for appellees Far East Conference and members and former members thereof.

Edward D. Ransom, William H. King, Lillick, Geary, Wheat, Adams & Charles, San Francisco, Cal., for appellees Pacific Westbound Conference and others.

James L. Pimper, Gen. Counsel, Robert E. Mitchell, Deputy Gen. Counsel, Robert B. Hood, Jr., and John E. Cograve, Attys., Federal Maritime Commission, Washington, D. C., for appellee Federal Maritime Commission.

Before CHAMBERS, POPE and JERTBERG, Circuit Judges.

POPE, Circuit Judge.

On December 5, 1962, the appellant Carnation Company filed in the court below its complaint against Pacific Westbound Conference and Far East Conference, and numerous individual shipping lines, members of those conferences, seeking recovery of treble damages under the antitrust acts¹ on account of damages claimed to have been suffered by Carnation through an alleged unlawful combination fixing prices and rates for shipment of Carnation's manufactured products to the Philippine Islands, pursuant to agreements among them which had not been filed with or approved by the Federal Maritime Commission.² This appeal is from an order dismissing the action on the ground that the matters complained of were within the primary jurisdiction of the Commission.

Each of the defendant conferences had on file with the Maritime Commission an approved agreement of the kind referred to in Sec. 15 of the Shipping Act. Pacific Westbound Conference's approved agreement known as No. 57, was designed, among other things, to carry out the purpose of that Conference to fix the rates at which conference members would serve shippers in foreign commerce westbound from Pacific Coast ports. The Far East Conference had a similar approved agreement designated as No. 17 on the records of the Commission. In addition, the members of the two conferences had another agreement providing for joint fixing of rates by both conferences, known as No. 8200, which was approved on December 29, 1952. The burden of the complaint of Carnation is that a certain increased rate fixed and put into effect, relating to plaintiff's product and its rates for shipping over the routes traversed by the members of the Pacific Westbound Conference, was established between the members of both conferences, not pursuant to Agreement No. 57, nor pursuant to Agreement No. 8200, the approved agreements, but pursuant to another agreement which was not presented to or approved by the Commission. Accordingly, it is said the fixing of that rate was a per se violation of the Sherman Act. This forms the basis for Carnation's claim for treble damages.

Prior to the institution of the present action, on October 26, 1959, the Federal Maritime Board, predecessor agency to the Federal Maritime Commission,³ ordered an investigatory proceeding entitled "No. 872, Agreement No. 8200 — Joint Agreement Between the Member Lines of the Far East Conference and the Member Lines of the Pacific Westbound Conference" instituted pursuant to Sections 15, 16, 17 and 22⁴ of the Shipping Act. The order directed that the Board "enter upon an investigation and hearing to determine whether said Agreement No. 8200 is a true and complete agreement of the parties within the meaning of said Sec. 15, and whether it is being carried out in a manner which makes it unjustly discriminatory or unfair," etc.

The Carnation Company on September 3, 1960, petitioned the Board for leave to intervene in that proceeding, and on September 8, following, leave so to intervene was granted.⁵

Hearing was had in this matter before an examiner and extensive sessions were held in San Francisco, New Orleans and Washington. The examiner filed an initial decision on August 30, 1963, which is reported in 2 Pike & Fischer, Ship. Reg.Rep. 900. The issues presented at this hearing by Carnation and others included in general the same matters and claims set forth in Carnation's complaint in this case.

That complaint alleges that in January, 1953, defendants met at Santa Barbara, California, and then and there secretly conspired and agreed to fix rates for transportation of commodities by members of the Pacific Westbound Conference from Pacific Coast ports of the United States to the Far East "not as provided in said Agreement No. 57 and not as provided in said Agreement No. 8200", and thereafter met and secretly renewed said association and agreement and agreed as follows: (a) Neither Conference nor any member thereof "should disclose to any shipper information regarding rate changes and/or the position of either Conference or of any member of either Conference regarding rate requests;" (b) Both Conferences would fix and agree upon the rates for transportation of commodities by water by members of Pacific Westbound Conference in trade from Pacific Coast ports to the Far East including the Philippine Islands; and that the rate so fixed should be given out by Pacific West Coast "falsely pretending to act as such and under said Agreement No. 57;" (c) Pacific Westbound Conference, contrary to the provisions of Agreement 57 and Agreement 8200 would make no change in any rate established by it or fixed as aforesaid, without the concurrence of the Far East Conference with the exception of the commodities placed on a "list of initiative items", which did not include condensed or evaporated milk; that rates for evaporated milk were agreed upon and issued. The complaint further states that the Conferences and their members, acting pursuant to the agreement alleged, agreed to increase rates on evaporated milk from the United States to the Philippine Islands by $2.50 per ton, purportedly pursuant to the provisions of Agreement No. 57, and these rates were put into effect over the plaintiff's protest; that this was done pursuant to the above described secret agreement which was never submitted to the Commission and that carrying it out was an unlawful combination and conspiracy in restraint of trade.

It was alleged further that in November, 1957, plaintiffs requested Pacific Westbound Conference to reduce such rate by $2.50 per ton to the rate previously established; that the Pacific Westbound Conference was willing to grant that request subject to the concurrence of the Far East Conference; that the defendant Far East Conference declined to grant such concurrence; that in advising plaintiff of its denial of the request for reduction Pacific Westbound Conference represented that the members of that Conference, after long and careful study, though initially disposed to grant a reduction, denied the same; that this statement was false in that the request for reduction was in fact declined by reason of Far East Conference's refusal to concur in the reduction; and that plaintiff did not learn of these matters until disclosure thereof was made in May, 1961, in the course of the proceedings before the Commission which is described above.

It thus appears that prior to and at the time of the institution of this action the Commission had under investigation substantially the same question as that sought to be raised by the complaint filed under the antitrust laws. The Federal Maritime Commission was granted leave to intervene in this action in the court below. Intervener and all defendants moved to dismiss the action on the ground that the Shipping Act provided the exclusive remedy for the wrongs alleged in the complaint, and that the court was without jurisdiction to proceed.⁶ The motion to dismiss was granted.

In dismissing the action, the court below relied upon the decisions in the cases of United States Nav. Co. v. Cunard Steamship Co., 284 U.S. 474, 52 S.Ct. 247, 76 L.Ed. 408, and Far East Conf. v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576. It seems plain to us that both of these decisions support and require the action of the court below.

In Cunard the action was brought by the Navigation Company to enjoin the respondent steamship companies from continuing an alleged combination and conspiracy in violation of the Sherman Act and the Clayton Act. The trial court there granted a motion to dismiss on the ground that the matters complained of were within the exclusive jurisdiction of the United States Shipping Board under the Shipping Act of 1916. The bill there alleged that the defendant corporations were engaged in carrying 95 percent of the cargo trade from Atlantic ports of the United States to the ports of Great Britain and Ireland and those defendants and the plaintiff were the only lines maintaining general cargo services in that trade. It was charged that the defendants had entered into a combination and conspiracy to restrain the foreign trade and commerce of the United States in respect to carriage of cargo over the routes mentioned and with the object and purpose of driving the petitioner and all others not parties to the combination out of such trade and commerce. The conspiracy was said to involve the establishment of a general tariff rate and a lower contract rate, the lower rate to be made available only to shippers who agreed to confine their shipments to the lines of the defendants. These were alleged to be coercive measures not predicated upon differences in volume or frequency of service but rather to be wholly arbitrary.

It was conceded that looking to the Sherman Anti-Trust Act alone the bill stated a cause of action under Secs. 1 and 2 of the Sherman Act which would...