Feature Film Service, Inc. v. United States, IP 70-C-184

Citation349 F. Supp. 191
Decision Date25 September 1972
Docket Number70-C-185.,No. IP 70-C-184,IP 70-C-184
PartiesFEATURE FILM SERVICE, INC. v. UNITED STATES of America et al. (two cases).
CourtUnited States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)

Alki E. Scopelitis, Sommer, Tinkham, Barnard & Freiberger, Indianapolis, Ind., for plaintiff.

John H. D. Wigger, Dept. of Justice, Washington, D. C., Richard L. Darst, Asst. U. S. Atty., Indianapolis, Ind., James F. Tao, Interstate Commerce Comm., Washington, D. C., for defendants the United States and Interstate Commerce Comm.

Rudy Yessin, Frankfort, Ky., for defendant Indiana Transit Service, Inc.

Before CUMMINGS, Circuit Judge, and STECKLER and DILLIN, District Judges.

PER CURIAM.

These are separate actions brought before this three-judge court to annul and set aside two decisions of the Interstate Commerce Commission. There is no issue as to the court's jurisdiction of the parties and the subject matter.

In Cause No. IP 70-C-185, Feature Film Service, Inc., hereinafter referred to as Feature Film, attacks a decision of the Commission1 holding that the transportation by plaintiff of motion picture film between points in Indiana is transportation in interstate commerce for which appropriate Commission authority is required. In Cause No. IP 70-C-184, Feature Film challenges a decision of the Commission2 denying plaintiff's application for a certificate of public convenience and necessity authorizing the transportation of motion picture film, supplies, equipment and advertising material used in motion picture theaters between points in Indiana.

Feature Film, a motor common carrier operating solely within the State of Indiana, is engaged in the transportation of motion picture film, equipment, supplies, accessories, and advertising materials used in motion picture theaters pursuant to authority issued by the Public Service Commission of Indiana.

In reviewing an order of the Interstate Commerce Commission, as with any other administrative agency order, the Court is limited in scope by settled principles of administrative law. See Eastern Express, Inc., v. United States, 198 F.Supp. 256 (S.D.Ind.1961), affirmed per curiam, 369 U.S. 37, 82 S.Ct. 640, 7 L.Ed.2d 548 (1962); Chicago & E. I. R. Co. v. United States, 107 F. Supp. 118 (S.D.Ind.1952), affirmed per curiam, 344 U.S. 917, 73 S.Ct. 346, 97 L.Ed. 707 (1953). The Commission is presumed to have properly performed its official duties, and this presumption supports its actions in the absence of clear evidence to the contrary. Accelerated Transport-Pony Express, Inc., et al. v. United States, 227 F.Supp. 815 (D.Vermont 1964), affirmed 379 U.S. 4, 85 S.Ct. 43, 13 L.Ed.2d 21 (1964). This presumption stems from the deference due the Commission because of its familiarity with conditions in the industry which it regulates.

With the Commission's expertise in mind, it is the duty of this court to review the record and the conclusions reached by the Commission as governed by Section 10 of the Administrative Procedure Act, 5 U.S.C. §§ 701-706.

Unless in some specific respect there has been a prejudicial departure from requirements of law or an abuse of the Commission's discretion, the reviewing court is without authority to intervene, United States v. Pierce Auto Freight Lines, 327 U.S. 515, 66 S. Ct. 687, 90 L.Ed. 821 (1946), or, in other words, orders of the Commission are not to be overturned on judicial review unless they were based on a mistake of law, or made without a hearing, exceed constitutional limits, are unsupported by the evidence, or for some other reason amount to an abuse of power. Oklahoma Corporation Commission v. United States, 235 F.Supp. 803 (W.D.Okla. 1964); State Corporation Commission of Kansas v. United States, 184 F.Supp. 691 (D.Kan.1959). If the order of the Commission lies within the scope of the statute which the Commission is authorized to administer and enforce, and if the order is based on adequate findings which in turn are supported by substantial evidence, the order may not be set aside by the court on review, even though the court may disagree with the Commission's conclusions. Chicago & E. I. R. Co. v. United States, 107 F.Supp. 118 (S.D.Ind.1952), affirmed per curiam, 344 U.S. 917, 73 S.Ct. 346, 97 L.Ed. 707 (1953).

The court's review of the evidence is, of course, governed by the "substantial evidence rule," and therefore the court's inquiry is limited to determining whether there is substantial evidence to support the findings or orders of the Commission. Findings or orders so supported are conclusive and binding on the court and may not, in the absence of some irregularity in the proceedings before the Commission or error in the application of rules of law, be set aside. Chicago & North Western Railway Co., et al. v. Atchison, Topeka & Santa Fe Railway Co., et al., 387 U.S. 326, 87 S.Ct. 1585, 18 L.Ed.2d 803 (1967). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. National Labor Relations Board, 340 U. S. 474 at 477, 71 S.Ct. 456 at 459, 95 L. Ed. 456 (1951); Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197 at 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938).

Indiana Transit Service, Inc., hereinafter referred to as Indiana Transit, filed a complaint with the Commission on October 14, 1966, alleging that Feature Film in transporting motion picture film between points in Indiana was operating as a common carrier in interstate commerce without authorization from the Commission as required by Section 206(a)(1) of the Interstate Commerce Act, 49 U.S.C. § 306(a)(1). The matter was assigned for handling under the Commission's "modified procedure," a system whereby evidence and arguments of the parties are submitted to the Commission in written rather than oral form.

Following a hearing in the Complaint Case before Hearing Examiner Edith H. Cockrill, the Examiner found that Feature Film was not in violation of the Interstate Commerce Act and recommended that the complaint of Indiana Transit Service, Inc. be dismissed.

The Examiner's findings disclose that Indiana Transit is a motor common carrier and holds authority from the Commission to transport motion picture film between points in Indiana, Kentucky, and Ohio. Prior to the time that Feature Film commenced operations in October 1965, Indiana Transit had approximately 150 film accounts in the State of Indiana, and at the time of the hearing leading to the Examiner's report and recommendation, served April 14, 1967, it had only two of these accounts. For the nine-month period beginning January 1, 1965, Indiana Transit's revenue from the transportation of film was $120,298.00, and for the comparable period of 1966 it had realized only $2,617.00.

Feature Film denied that it was operating in interstate commerce, and therefore, subject to the provisions of the Interstate Commerce Act. The issues before the Examiner were whether the operations of Feature Film were interstate or intrastate, and if interstate, whether Indiana Transit was entitled to collect damages.

The Examiner found that the film was in all cases produced at points outside the State of Indiana, located generally on the West and East Coasts; that the film was consigned to the local distributor and was shipped to a distributor's exchange at Indianapolis by truck, rail or air. The film was then shipped to an exhibitor (a local theater) at some point within the State pursuant to a contract entered into between the exhibitor and the local distributor as agent for the producer. The contract provided that the exhibitor designate the carrier which would transport the film from the exchange, be responsible for all transportation charges and return the film to the distributor or to another exhibitor as the distributor might direct. The Examiner found that the film was shipped by the producer to the distributor on a so-called "quota" basis which was explained to mean that the local distributor received a certain amount of film on a permanent basis and was responsible for selling it to exhibitors. The Examiner found that in 90 percent of the cases when exhibitors contracted for the film it was already in the State of Indiana or was due there as a part of the distributor's "quota" stock. The film might be stored at the exchange or it might be being shown by another exhibitor. The Examiner found that the "quota" film received by the distributor at the exchange was not destined to any particular exhibitor or group of exhibitors, and the producer or original shipper had no knowledge of the ultimate exhibitors. The local distributor determined when films had no more selling potential, and the films were either returned to the producer or delivered to salvage companies. The Examiner found that Feature Film acted as carrier of the film on behalf of the exhibitors which designated it as carrier, picking up film at the distributor's exchange, delivering it to the first contracting exhibitor and subsequently to another exhibitor or returning the film to the exchange.

In the hearing before the Examiner, Indiana Transit contended that the film was shipped to Indianapolis from outside the State of Indiana for use by exhibitors throughout the State with the understanding and intent that the film would be used in cities throughout the State and that it would not remain at Indianapolis, the movement being as continuous as practicable, and therefore an interstate movement.

By Report and Order of the Commission served April 14, 1967, the Examiner found that Feature Film's operations did not constitute interstate commerce and recommended that the complaint of Indiana Transit against Feature Film be dismissed. Indiana Transit filed exceptions to the Report and Order of the Commission, and in addition, by Order of the Commission served June 28, 1967, Film Carriers Conference of America Trucking...

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