Federal Maritime Commission v. Port of Seattle

• Decision Date: 31 July 1975
• Docket Number: No. 74-1393,74-1393
• Citation: 521 F.2d 431
• Parties: FEDERAL MARITIME COMMISSION, Petitioner-Appellant, v. PORT OF SEATTLE, Respondent-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 431

521 F.2d 431

FEDERAL MARITIME COMMISSION, Petitioner-Appellant, v. PORT OF SEATTLE, Respondent-Appellee.

No. 74-1393.

United States Court of Appeals, Ninth Circuit.

July 31, 1975.

Eloise E. Davies, Atty. (argued), Dept. of Justice, Washington, D. C., for petitioner-appellant.

Peter D. Byrnes (argued), Seattle, Wash., for respondent-appellee.

OPINION

Before BROWNING and DUNIWAY, Circuit Judges, and ORRICK, ^* District Judge.

ORRICK, District Judge:

This case presents a question we had thought settled by the Supreme Court thirty-five years ago, namely, whether a district court has jurisdiction to deny the enforcement of a subpoena issued by an administrative agency on the ground that the agency lacked jurisdiction over the subject matter of the inquiry. Since the Supreme Court has held that a district court's function in enforcing an administrative subpoena extends no further than to ascertain whether the information sought is "not plainly incompetent or irrelevant to any lawful purpose" of the administrative authority (Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509, 63 S.Ct. 339, 343, 87 L.Ed. 424 (1943)), we reverse the ruling of the district court.

The Federal Maritime Commission (the "Commission") appeals from an order of the United States District Court for the Western District of Washington denying the Commission's application for the enforcement of certain discovery orders of its Administrative Law Judge against the Port of Seattle (the "Port") on the grounds, first, that the district court was under a duty to enforce the Commission's discovery orders without requiring a showing of statutory coverage of the subject matter of the investigation, and, second, that in any event the Commission had not exceeded its investigatory authority since the Port's consolidation service is within the coverage of the Shipping Act of 1916 (46 U.S.C. § 801 et seq.) (the "Act"). Since we reverse on the first ground, we need not reach the second.

I.

The Commission is an independent regulatory agency of the United States charged with the administration and enforcement of the Act. The Act vests the Commission with broad regulatory powers. Section 17 (46 U.S.C. § 816) provides that every carrier and every other person subject to the Act shall establish, observe and enforce just and reasonable regulations and practices relating to or connected with the receiving, handling, storing or delivering of property and gives the Commission power whenever it makes a finding that any such regulation or practice is unjust or unreasonable to determine, prescribe and order enforced a just and reasonable regulation or practice. ¹

Congress further conferred upon the Commission broad investigatory powers. Section 22 of the Act (46 U.S.C. § 821) gives the Commission the power to investigate complaints made to it and the power to investigate complaints upon its own motion. Under Section 27 (46 U.S.C. § 826) of the Act, the Commission may compel the attendance of witnesses and the production of books, papers, documents and other evidence by subpoena in such manner and to such an extent as the Commission may by rule or regulation require. Under Section 29 of the Act (46 U.S.C. § 828), if any order of the Commission is violated, the commission may apply to a district court having jurisdiction over the parties to have its orders enforced by injunction or other proper process.

The Port, a public port district organized under the laws of the State of Washington, owns and operates extensive wharfage, dock, warehouse and other terminal facilities used in connection with ocean-going common carriers arriving at Seattle. The Port is subject to the jurisdiction of the Commission by the definitions as set forth in Section 1 of the Act (46 U.S.C. § 801). ² The Port owns a substantial number of marine terminals, warehouses and container freight stations. All of these facilities are operated under published tariffs approved by the Commission.

The Port is also a service organization providing a number of services for the community, including consolidation services for OCP (Overland Common Points) cargo arriving by ocean carrier and moving inland from Seattle. Utilizing sophisticated computer equipment, the Port matches shipments stored in its warehouses and at other terminal facilities for consolidation with other inbound shipments arriving by ocean carrier and having a common inland destination. The Port arranges for inland carriers to combine their "short" shipments into full container or full carload lots and thus obtain the most favorable inland freight rates. As part of this consolidation service the Port performs most of the paperwork connected with the storage and the movement and transfer of the OCP cargo to the inland carrier.

On December 16, 1970, the Commission entered an order that, pursuant to Sections 17 and 22 of the Act, an investigation be instituted to determine whether the Port's consolidation service and any other services performed in connection therewith may be prohibited by Section 17 as being unjust or unreasonable. The Commission directed the Administrative Law Judge and the parties to address themselves to the following issues Inter alia :

"1. Whether the Port's practices in providing consolidation services and any other services in connection therewith free of charge and only for inbound OCP shipments is permissible under Section 17, Shipping Act, 1916.

3. Whether the failure of the Port to indicate the availability of its consolidation service in its terminal tariff is contrary to the Commission's General Order 15, 46 C.F.R. § 533, and Section 17, Shipping Act, 1916."

With respect to those issues, counsel for the Commission submitted interrogatories and requested the production of documents. The Port raised objections to the jurisdiction of the Commission to investigate the Port's consolidation services claiming that such services did not constitute and were not related to its marine terminal or warehousing activities. The Administrative Law Judge overruled these jurisdictional objections and directed the Port to provide the answers. The Port refused to do so, and the Commission accordingly made application to the district court pursuant to Sections 27 and 29 for an order enforcing the discovery orders of the Administrative Law Judge compelling answers to interrogatories and ordering the production of documents.

The district court limited the discovery to only those facts necessary to determine the Commission's jurisdiction to investigate the Port's consolidation services, and refused to let the Commission inquire into the "details" of the consolidation practices. ³ In effect, the court held that the district court should first determine the Commission's jurisdiction before enforcing the discovery order.

II.

It is beyond cavil that the very backbone of an administrative agency's effectiveness in carrying out the congressionally mandated duties of industry regulation is the rapid exercise of the power to investigate the activities of the entities over which it has jurisdiction and the right under the appropriate conditions to have district courts enforce its subpoenas. This is not to say that a district court must grant all applications from administrative agencies to enforce their subpoenas not at all. But, the Congress and the Supreme Court have effectively narrowed the scope of the district courts' powers to ascertaining "whether the information sought is relevant to any lawful purpose of the administrative authority". 1 K. Davis, Administrative Law Treatise, § 3.12, at 220(1958 ed.). Or, as Justice Jackson put in in Endicott Johnson Corp. v. Perkins, supra, 317 U.S., at 509, 63 S.Ct. 339, whether the evidence sought by the subpoena was not "plainly incompetent or irrelevant" to "any lawful purpose" of the agency. If it is not, the district court is obligated to compel production of the documents. In the case at bar, Congress specifically limited the power of the district court in Section 29 of the Act to determining "that the order was regularly made and duly issued". If it was so made, Congress commanded the district court to enforce the subpoena by providing, as it did, in Section 29 "it Shall enforce obedience thereto by a writ of injunction or other proper process, mandatory or otherwise" (emphasis added).

Thus, it was early determined that each independent regulatory administrative agency has the power to obtain the facts requisite to determining whether it has jurisdiction over the matter sought to be investigated. After the agency has determined its jurisdiction, that determination may be reviewed by the appropriate court.

The practical reasons for this rule are self-evident. From the spawning of the so-called "alphabet soup" independent administrative regulatory agencies in the early New Deal days, efforts have never ceased to try to limit the scope of the agencies' powers. No better method can be devised than that of limiting the investigative power and thus crippling the effectiveness of the agency. The case at bar is a good example. Plainly, to make a responsible determination of its jurisdiction, the Commission must have access to information in the care, custody and control of the Port. There is no way the Commission can make a credible showing of its statutory coverage without such information. The matter is at an impasse.

The situation is not new. In at least five Supreme Court decisions, and in decisions by most of the courts of appeals, this question has been decided adversely to appellees and the decision of the court below. The seminal case is Justice Jackson's opinion in Endicott Johnson Corp. v. Perkins, supra. That case involved a dispute over the Secretary of Labor's authority to obtain corporate records for an investigation under the Public Contracts Act which the Secretary administered. The corporation resisted surrendering its records, asserting the Secretary's...