FEDERAL MARITIME COM'N v. New York Terminal Conference

• Citation: 262 F. Supp. 225
• Decision Date: 01 December 1966
• Docket Number: Misc. No. 18-304.
• Parties: FEDERAL MARITIME COMMISSION, Petitioner, v. NEW YORK TERMINAL CONFERENCE et al., Respondents.
• Court: U.S. District Court — Southern District of New York

262 F. Supp. 225

FEDERAL MARITIME COMMISSION, Petitioner, v. NEW YORK TERMINAL CONFERENCE et al., Respondents.

Misc. No. 18-304.

United States District Court S. D. New York.

December 1, 1966.

Robert M. Morgenthau, U. S. Atty., Southern District of New York, H. B. Mutter, Asst. Sol., Joseph F. Kelly, Jr., Attorney, Federal Maritime Commission, Washington, D. C., and Gilbert S. Fleischer, Attorney, Admiralty & Shipping Section Department of Justice, New York City, for petitioner.

Burlingham, Underwood, Barron, Wright & White, New York City, for respondent, New York Terminal Conference; Elkan Turk, Jr., New York City, of counsel.

Kirlin, Campbell & Keating, New York City, for respondent, United States Lines Co.; Elmer C. Maddy, New York City, of counsel.

LEVET, District Judge.

By order to show cause, dated August 26, 1966, the Federal Maritime Commission submitted a petition of said Commission to enforce certain subpoenas theretofore served upon the New York Terminal Conference and certain of its members and upon United States Lines Company and issued in a certain proceeding entitled, "Empire State Highway Transportation Association, Inc. v. American Export Lines, Inc., et al., Docket No. 65-39 and Truck Loading and Unloading Rates at New York Harbor, Docket No. 65-46."

THE BACKGROUND OF PROCEEDINGS

The petition sets forth the following:

1. The Federal Maritime Commission is an agency of the United States, responsible, among other things, for regulating the shipping and related industries pursuant to the Shipping Act, 1916 (46 U.S.C. § 801 et seq). (Par. II)

2. On October 5, 1965, Empire State Highway Transportation Association, Inc. (hereinafter "Empire State") filed a complaint with the Federal Maritime Commission pursuant to the provisions of Section 22 of the Shipping Act, 1916 (46 U.S.C. § 821) against named respondents herein alleging, inter alia, that said respondents were violating Sections 15 and 17 of the Shipping Act, 1916 (46 U.S.C. §§ 814 and 816). (A copy of the complaint was attached and marked as Exhibit A.) (Par. III)

3. Thereafter, the Federal Maritime Commission, pursuant to said Section 22 of the Shipping Act, 1916, instituted a proceeding entitled, "Empire State Highway Transportation, Inc. v. American Export Lines, Inc., et al., Docket No. 65-39," to adjudicate the issues therein presented. (Par. IV)

4. On December 14, 1965 the Federal Maritime Commission on its own initiative, pursuant to Section 22 of the Shipping Act aforesaid, instituted an investigation to determine, inter alia, whether named respondents were violating Sections 15, 16 and 17 of the Shipping Act, 1916 (46 U.S.C. §§ 814, 815 and 816). (A copy of the Order of Investigation entitled, "Truck Loading and Unloading at New York Harbor, Docket No. 65-46" as amended was attached thereto and marked as Exhibit B.) (Par. V)

5. On the motion of the Federal Maritime Commission counsel, the proceeding in Dockets No. 65-39 and 65-46 were consolidated upon the representations that matters of common interest were involved. (Par. VI)

6. Individual respondents herein are common carriers by water operating in the commerce of the United States or are engaged in the business of furnishing wharfage, dock, warehouse, and other terminal facilities or services in connection with common carriers by water. (Par. VII)

7. Respondent, New York Terminal Conference, operates under and by virtue of an agreement (No. 8005) approved and sanctioned by the Federal Maritime Commission under authority of Section 15 of the Shipping Act, 1916 (46 U.S.C. § 814). (Par. VIII)

8. Pursuant to the Federal Maritime Commission Rules of Practice and Procedure (46 CFR 502.131) on the application of complainant, Empire State, and Federal Maritime Commission counsel subpoenas were regularly made and duly issued to and upon the respondents calling for the production of documentary evidence in the consolidated proceedings. (Par. IX, marked "IV")

9. Motions to quash the subpoenas were filed with the hearing examiner, who subsequently denied said motions. (A copy of the ruling was attached, marked as Exhibit C.) (Par. X)

10. By further order of the hearing examiner, the subpoenas were made returnable at a hearing on August 24, 1966, whereupon the respondents failed and refused to comply with the subpoenas in any respect. (Par. XI)

11. The petitioner, Federal Maritime Commission, seeks enforcement of the subpoenas issued on the application of its hearing counsel, who is charged with the representation of the public interest pursuant to the Federal Maritime Commission Rules of Practice and Procedure (46 CFR 502.42). (A copy of the subpoenas served upon each of the respondents was attached and marked as Exhibit D.) (Par. XII)

The petition also alleges that non-compliance with the subpoenas adversely affects the adjudicatory responsibilities of the Federal Maritime Commission and prevents the complainant, Empire State, from producing evidence in its complaint case and, therefore, the Commission seeks the aid of this court for enforcement of the subpoenas. (Par. XIII)

DISCUSSION

Respondent, New York Terminal Conference (hereinafter "Conference"), in its memorandum in opposition to the petition, and respondent, United States Lines Company, in its answering affidavit and memorandum, acknowledge the Commission's authority to administer the provisions of the Shipping Act of 1916 (Par. II of petition), and they admit issuance of the subpoenas (Par. IX, marked "IV"), denial of the motion to quash by the hearing examiner (Par. X), and their own refusal to comply with the subpoenas (Par. XI). Respondents concede that they are common carriers or within the term "other person subject to" the Shipping Act under Section 1, 46 U.S.C. § 801. (Par. VII) Respondents then raise certain issues and defenses, as follows:

1. Both respondents contend that the inquiry which the Commission has started is beyond its power and that any subpoena in aid of it is invalid.

2. Both further contend that the information subpoenaed is irrelevant to any inquiry within the power of the Commission.

3. (a) Both contend that the documentary evidence is confidential and privileged business information; and

(b) The Conference contends that Item 4 of the subpoena is meaningless and void as worded.

4. United States Lines contends that the procedure of the Commission in issuing its subpoenas violates the Administrative Procedure Act and denies them a fair hearing under the Fifth Amendment of the Constitution.

5. The Conference contends that the court has no jurisdiction in the enforcement proceeding (a) because it was not initiated by a summons and complaint, and (b) because the Commission has not authorized it.

I consider these contentions in the order stated.

I.

The investigation undertaken by the Commission is proper. Respondents claim that the proceedings before the Commission in which the subpoenas were issued is directed solely to prescription of just and reasonable rates for truck loading and unloading, that is, a limitation on respondents' profits. To prove this objective, respondents point to the Commission's order initiating the proceedings and to statements by the hearing counsel and the hearing examiner at the agency hearing on the motions to quash. They further contend that the Commission has no power to control the reasonableness of such rates and that charging unreasonable rates is not a violation of the Shipping Act within the meaning of Section 22, 46 U.S.C. § 821.

The Federal Maritime Commission is an independent regulatory agency having, among other powers, primary jurisdiction and responsibility to obtain and enforce compliance with the provisions of the Shipping Act of 1916. United States Navigation Co. v. Cunard Steamship Co., 284 U.S. 474, 52 S.Ct. 247, 76 L.Ed. 408 (1932); Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576 (1952); Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 220, 86 S.Ct. 781, 15 L.Ed. 2d 709 (1966).

A complaint proceeding under Section 22, 46 U.S.C. § 821 is deemed to be one way of supervising Conference activities. Ludlow Corporation v. DeSmedt, 249 F.Supp. 496 (S.D.N.Y., Ryan, Chief Judge) aff'd sub nom. Federal Maritime Commission v. DeSmedt, 366 F.2d 464 (2nd Cir. 1966).

Granting that the Shipping Act gives the Commission the power to prescribe just and reasonable rates, in haec verba, only with regard to carriers, Section 18, 46 U.S.C. § 817, this does not preclude the regulation of rates charged by other persons subject to the Act under other provisions. Rates charged by the Conference are expressly made subject to Commission review by Section 15, 46 U.S.C. § 814, and the rates of individual carriers may be discriminatory under Section 16 First, 46 U.S.C. § 815 First, or may constitute unreasonable practices under Section 17, 46 U.S.C. § 816. State of California v. United States, 320 U.S. 577, 64 S.Ct. 352, 88 L.Ed. 322 (1944). The order of the Commission duly alleges such violations and the investigation of them is thus proper under Section 22 of the Act.

II.

The information subpoenaed is relevant to the proceeding presently before the Commission which, as shown above, is within its power, so the subpoenas are valid under United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 94 L.Ed. 401 (1950), and Federal Maritime Commission v. Caragher, 364 F.2d 709 (2nd Cir. 1966).

Under Section 15, the Commission is inquiring whether the rates set by the Conference agreement are "unjustly discriminatory or unfair as between carriers, shippers, exporters, importers, or ports, or between exporters from the United States and their foreign competitors, cr * * * operate to the detriment of the commerce of the United States, or are contrary to the public interest * * *." As the respondents argue, these standards "relate to the impact of the respondents' activities upon third parties" (Memorandum...