Delaware River Port Authority v. Transamerican Trailer Transport, Inc.

• Citation: 501 F.2d 917
• Decision Date: 30 July 1974
• Docket Number: No. 74-1214,74-1214
• Parties: DELAWARE RIVER PORT AUTHORITY et al. v. TRANSAMERICAN TRAILER TRANSPORT, INC., Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 917

501 F.2d 917

DELAWARE RIVER PORT AUTHORITY et al. v. TRANSAMERICAN TRAILER TRANSPORT, INC., Appellant.

No. 74-1214.

United States Court of Appeals, Third Circuit.

Argued May 28, 1974.

Decided July 30, 1974.

John G. Harkins, Jr., Marjorie G. Marinoff, Pepper, Hamilton & Scheetz, Philadelphia, Pa., Amy Scupi, Olga Boikess, Galland, Kharasch, Calkins & Brown, Washington, D.C., for appellant.

Abraham E. Freedman, Freedman, Borowsky & Lorry, Philadelphia, Pa., for ILA, Phila. District Council.

Martin A. Heckscher, Duane, Morris & Heckscher, Philadelphia, Pa., for Delaware River Port Authority.

Israel Packel, Harrisburg. Pa., Gordon P. MacDougall, Washington, D.C., for Commonwealth of Pennsylvania.

Francis A. Scanlan, Deasey, Scanlan & Bender, Ltd., Philadelphia, Pa., for Phila. Marine Trade Assn. and Port of Phila. Marine Terminal Assn M. Carton Dittmann, Jr., Ballard, Spahr, Andrews & Ingersoll, Philadelphia, Pa., for Phila. Port Corp. and Greater Phila. Chamber of Commerce.

Martin Weinberg, Herbert Smolen, Philadelphia, Pa., for City of Philadelphia.

James L. Pimper, Gen. Counsel, Douglas N. Jones, Atty., Federal Maritime Commission, Francis B. Burch, Atty. Gen., of Maryland, Eldred N. Bell, Jr., Baltimore, Md., Director of Transp. for Maryland Port Administration, for amicus curiae.

OPINION OF THE COURT

Before ROSENN and HUNTER, Circuit Judges, and HANNUM, ^* District Judge.

ROSENN, Circuit Judge.

This appeal involves a novel issue of considerable importance to the shipping industry and to American maritime ports. The plaintiffs are parties interested in the promotion of the shipping industry in the Port of Philadelphia. The defendant, Transamerican Trailer Transport, Inc. (TTT), is a steamship company and common carrier by water. ¹ TTT ships do not call at the Port of Philadelphia, but TTT maintains steamship service between New York and San Juan, Puerto Rico, and between Baltimore and San Juan. The plaintiffs contended before the district court that solicitation of cargo by TTT illegally encourages certain shippers of Puerto Rico-bound containerized cargo to ship their cargo from the TTT port facilities in New York or Baltimore, rather than from another carrier's Philadelphia port facilities.

The district court, in an action not contested on this appeal, held that the merits of the contention by the plaintiffs should first be considered by the Federal Maritime Commission (FMC) under the doctrine of primary jurisdiction. In addition, however, the district court entered a preliminary injunction prohibiting TTT from the 'solicitation of cargo' which is 'naturally tributary to the Port of Philadelphia' ² and which is destined for Puerto Rico, pending ultimate resolution of the controversy by the FMC and the appellate courts. ³

TTT appeals from the grant of the preliminary injunction. ⁴ The FMC and the Maryland Port Administration, as amicus curiae, have filed briefs supporting reversal of the injunction. For the reasons expressed below, we reverse.

Underlying our consideration of the issues is the proposition that,

As a prerequisite to the issuance of a preliminary injunction the moving party must generally show: (1) a reasonable probability of eventual success in the litigation, and (2) that it will be irreparably injured pendente lite if relief is not granted to prevent a change in the status quo.

A.L.K. Corp. v. Columbia Pictures Industries, Inc., 440 F.2d 761, 763 (3d Cir. 1971). Moreover, this court has repeatedly stated that the district court, in considering whether to grant a preliminary injunction, should take into account, when they are relevant, (3) the possibility of harm to other interested persons from the grant or denial of the injunction, and (4) the public interest. ⁵ It is also clear, however, that consideration of these factors by the district court requires a 'delicate balancing,' and that the district court's grant or denial of a preliminary injunction will be reversed only for an abuse of discretion. See, e.g., Scooper Dooper, Inc. v. Kraftco Corp., 460 F.2d 1204 (3d Cir. 1972), and cases cited therein. We must determine, therefore, whether the grant of a preliminary injunction in this case was an abuse of discretion.

We first consider whether the plaintiffs have shown 'a reasonable probability of eventual success in the litigation.' The district court found, without further discussion of this issue, that the plaintiffs were 'likely to prevail' before the FMC. Our consideration of this issue requires a review of the factual background of the case and of the legal theory upon which the plaintiffs rely.

The findings of fact made by the district court included the following:

7. The Holt Hauling and Warehousing Company, (Holt) maintaining its principal office in Philadelphia, Pennsylvania is the agent of TTT in approximately a five state territory from Pittsburgh, Pennsylvania to as far south as Washington, D.C. and as far east as the Atlantic seaboard.

8. As the agent for TTT, acting through its sales force and advertising, Holt solicited shipping business in the aforesaid territorial limits.

9. The purpose of said solicitation is to have shippers move their shipment by over-the-land motor carriers to the port of New York or Baltimore and there to be loaded upon the ocean carriers of the defendant. The ultimate destination for the loads to be delivered is San Juan, Puerto Rico.

10. As a result of the combined advertising and sales program carried on by TTT and Holt between thirty (30) and one hundred (100) truckloads of ocean freight (per week) is transported from various inland points to New York or Baltimore.

11. In the ordinary course of business a substantial part of the shipments bound for Puerto Rico would be carried via the Port of Philadelphia.

6. TTT does not pay any part of the inland transportation charge for cargo coming to its vessels from the Philadelphia Port area said charges being paid entirely by the shipper, according to tariffs on file with the Interstate Commerce Commission.

The specific practices by TTT of which the plaintiffs complain is not entirely clear from the record. ⁶ It appears however, that at issue are the employment by TTT and Holt of sales and marketing personnel in the Philadelphia area, TTT advertising in the Philadelphia area concerning the availability of its service from New York and Baltimore, and the relationship between TTT and Holt pursuant to which Holt solicits business for TTT in the Philadelphia area and also trucks the cargo to TTT's port facilities in New York and Baltimore. ⁷

The plaintiffs contend that these practices are illegal under the Shipping Act of 1916, 46 U.S.C. 801 et seq., and the Merchant Marine Act of 1920, 46 U.S.C. 861 et seq. In their complaint presently pending before the FMC, they point to three statutory provisions allegedly violated by TTT. First, they cite section 16 of the Shipping Act, 46 U.S.C. 815, which makes it unlawful for a common carrier by water to 'subject any particular . . . locality . . . to any undue or unreasonable prejudice or disadvantage in any respect whatsoever.' ⁸ Second, they point to section 17 of the Shipping Act, 46 U.S.C. 816, which prohibits carriers by water in foreign commerce from 'demand(ing), charg(ing) or collect(ing) any rate, fare, or charge which is unjustly discriminatory between . . . ports . . ..' ⁹

Finally, they rely upon section 8 of the Merchant Marine Act, 46 U.S.C. 867, which imposes upon the Secretary of Commerce the duty, inter alia, 'to investigate any . . . matter that may tend to promote and encourage the use by vessels of ports adequate to care for the freight which would naturally pass through such ports.' ¹⁰

In support of their contention that the TTT practices are detrimental, discriminatory and unduly prejudicial to the Port of Philadelphia and to businesses dependent upon that port, plaintiffs rely primarily upon several decisions of the FMC, particularly Intermodal Service to Portland, Oregon, 17 F.M.C. , 14 P. & F Shipping Reg. 107 (1973). ¹¹ Plaintiffs conclude that 'a water carrier which does not bring its ships into the Port of Philadelphia may (not) send salesmen into the Philadelphia area and solicit cargo business which is naturally tributary to Philadelphia, and then move it overland to the Port of New York or Baltimore, and there load it aboard its vessel.'

The cases relied upon by the plaintiffs, however, do not strongly support their position. Each differs from the instant case in one respect. In each case, the practice held to violate the Shipping Act involved absorption by a water carrier of shippers' overland transportation costs. The FMC, summarizing the principle for which these cases stand, recently stated:

Port equalization means the allowance or absorption by the ocean carrier of such amount as will make the shipper's cost of overland transportation identical, or substantially so, from his inland point of origin to any one of two or more ports. Its purpose is to enable the ocean carrier to compete for cargo without calling at the port closest to, or enjoying the lowest inland transportation costs from, the point where the cargo originates. The most recent decisions of the Commission hold that port equalization violates section 16 of the (Shipping) Act where it (1) diverts traffic from a port to which the area of origin is naturally tributary, to a port in which the area is not naturally tributary, and (2) is not justified, in the shipper's interest, by lack of adequate service out of the port from which traffic is so diverted.

Sea-Land Services, Inc. v. South Atlantic & Caribbean Line, Inc., 9 F.M.C. 338, 344 (1966).

There is no contention in this case that TTT absorbs the inland freight charges of the shippers and thus engages in port equalization. As noted above, the district court expressly found to the contrary in its sixth finding of fact. The challenged practices are simply the use of...