Flota Mercante Grancolombiana v. FEDERAL MARITIME COM'N

• Decision Date: 17 December 1964
• Docket Number: 18235.,No. 18230,18230
• Citation: 342 F.2d 924
• Parties: FLOTA MERCANTE GRANCOLOMBIANA, S.A., Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Philip R. Consolo, Intervenor. Philip R. CONSOLO, Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Flota Mercante Grancolombiana, S.A., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

342 F.2d 924 (1964)

FLOTA MERCANTE GRANCOLOMBIANA, S.A., Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Philip R. Consolo, Intervenor.

Philip R. CONSOLO, Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Flota Mercante Grancolombiana, S.A., Intervenor.

Nos. 18230, 18235.

United States Court of Appeals District of Columbia Circuit.

Argued May 4, 1964.

Decided December 17, 1964.

Certiorari Granted June 1, 1965.

Mr. J. Alton Boyer, Washington, D. C., with whom Mr. Odell Kominers, Washington, D. C., was on the brief, for petitioner in No. 18,230 and intervenor in No. 18,235.

Mr. Robert N. Kharasch, Washington, D. C., with whom Mr. William J. Lippman and Mrs. Amy Scupi, Washington, D. C., were on the brief, for petitioner in No. 18,235 and intervenor in No. 18,230.

Mr. David P. Simerman, Atty., Federal Maritime Commission, of the bar of the Court of Appeals of New York, pro hac vice, by special leave of court, with whom Asst. Atty. Gen., William H. Orrick, Jr., and Messrs. James L. Pimper, Gen. Counsel, Robert E. Mitchell, Deputy Gen. Counsel, Federal Maritime Commission, and Irwin A. Seibel, Atty., Dept. of Justice, were on the brief, for respondents.

Before BAZELON, Chief Judge, WILBUR K. MILLER, Senior Circuit Judge, and WASHINGTON, Circuit Judge.

Certiorari Granted June 1, 1965. See 85 S.Ct. 1764.

WASHINGTON, Circuit Judge:

This litigation is before us a second time. The background of the case is set forth in our first opinion, at 112 U.S. App.D.C. 302, 302 F.2d 887 (1962). In that opinion we concluded (1) that the Federal Maritime Board properly had before it the issue whether Flota had violated Section 14, Fourth, and Section 16, First, of the Shipping Act, 46 U.S.C. § 812 and 46 U.S.C. § 815, as well as the question whether Flota was a common carrier; (2) that the Board could properly find, as it did, that (a) Flota was a common carrier, (b) its contract with Panama Ecuador and its refusal to grant space to Consolo were unreasonable and unjust, and (c) it was therefore in violation of the Shipping Act; (3) that we have jurisdiction to review reparation orders to the extent necessary to determine their validity; (4) that the Board was within its discretion in (a) denying prejudgment interest to Consolo, (b) refusing to begin the reparation period before Consolo had requested from Flota a fair and equitable portion of space, and (c) selecting 18.46% as the percentage allotment of Flota's banana-carrying capacity and thus the percentage of shipper's total computed net profit to which Consolo was entitled; (5) that there was sufficient evidence to support a finding of competition between Consolo and Panama Ecuador. We did, however, hold that "the Board failed to give adequate consideration" to the question whether "the cumulative weight of all the circumstances * * * rendered it inequitable to require reparations." Our remand to the Federal Maritime Commission instructed it to consider this last question. Supra, 112 U.S.App.D.C. at 311, 302 F.2d at 896.¹

In remanding we indicated our view that Flota had marshalled substantial evidence in support of its contention that the imposition of reparations would be inequitable. We indicated our view that the law was unsettled during the period for which reparations were assessed and said that the Board's conclusion that the law was settled by the Grace Line cases was a "doubtful assumption." We pointed out that the evidence of factual differences between Flota's situation and that of the Grace Line "might well lead to the conclusion that Flota in good faith believed that the Grace Line case was distinguishable." We also suggested that the time period of the Flota-Panama Ecuador contract might have seemed to be a reasonable one in light of the Grace Line decisions. We noted that Flota had reason to fear liability to Panama Ecuador had it complied with Consolo's demands for space in the absence of a declaratory order by the Board. Finally, we stated that "Flota * * * complained, with some justification, of the two-year delay of the Board in rendering a declaratory order," and that "The result here is that the Board is making Flota pay reparations for the period of the Board's delay." Supra at 311, 302 F.2d at 896.

These observations and expressions of opinion on our part were intended to serve as authoritative guidelines for the further deliberations of the Commission, to which we remanded the case for further proceedings not inconsistent with our opinion. We had hoped that further analysis or findings by the Commission would throw light on our initial impressions. We were prepared to affirm the Commission if it could establish that the circumstances were such as not to make it unfair to assess damages against Flota.

The Commission's opinion, presently under review, suggested that Flota had not acted in good faith and concluded that substantial equities in its favor were lacking. A careful examination of that opinion, the evidence relied on by the Commission and the other evidence in the case constrains us to hold that the Commission's determination ignores not only the guideposts of our original decision but also the substantial weight of the evidence before it.

Notwithstanding our conclusion to the contrary, the Commission asserted that the law was not unsettled when Flota executed the contract with Panama Ecuador in May of 1957. Instead of considering whether Flota could in good faith believe that the structural differences in its ships would make a difference to the Board, the Commission asserted: "To rely upon their structural differences as an excuse to avoid common carrier obligations would go far toward eliminating such obligations." The Commission dismissed Flota's filing a petition for declaratory order as a self-serving act made to preserve appearances long after its wrongdoing. The Commission rejected our suggestion that Flota is being made to pay for the Board's own delay. It also rejected our suggestion that Flota might have believed in good faith that its three-year contract with Panama Ecuador would be acceptable to the Board, in view of the 1957 Grace Line opinion authorizing a two-year contract. The Commission said "we find it impossible to understand how Flota could have held any such belief."

The reparation provision of the Shipping Act, 46 U.S.C. § 821, is not the ordinary mode for the Commission's regulation of the shipping industry. The grant of reparations is discretionary. This agency, like the Interstate Commerce Commission, has a large range of enforcement powers to regulate its area of the economy.² If a party has good faith doubts about the applicability of a prior administrative adjudication to it, the party need not be its own judge. It can seek information from the agency about the applicability of the ruling to it. In our prior decision, we noted that "a primary purpose envisaged for it a declaratory order by the agency under the Administrative Procedure Act — is to assist a party in governing its conduct without rendering itself liable to suit. See Administrative Procedure Act § 5 (d), 5 U.S.C.A. § 1004(d)." Supra at 311, n. 15, 302 F.2d at 896, n. 15. If the course of action a party follows while the administrative determination is pending injures another and enriches itself, reparations to the injured party are frequently allowed. But if the course of action taken does not unduly enrich the party, and the asserted injury to another is only the loss of speculative profits, a real question arises whether reparations should be granted for the period of agency deliberation. Courts and agencies should be sensitive to the considerations of equity which may make reparations an inappropriate remedy in such cases.

We think that an objective and rational examination of all the evidence reveals such equitable factors in this case. It seems clear that Flota entertained serious doubts as to its legal obligations when Panama Ecuador exercised its renewal option in May 1957 and when Flota rejected Consolo's demand for space in August 1957. Flota's petition to the Board for a declaratory order in October 1957 is strong evidence of its good faith. The Commission found that Flota could not have acted in good faith, since its legal obligations were clear under existing law. We do not agree. We consider Flota's conduct completely consistent with its asserted good faith belief that prior Board decisions did not compel it to break its contract with Panama Ecuador.

The reasonableness of Flota's behavior in 1957 must of course be viewed in the context of the legal situation which it was then confronting. The question facing Flota in May 1957 was not whether to undertake a new contractual obligation with Panama Ecuador, as the Commission implies, but whether to comply with its previously acquired contractual obligation to Panama Ecuador which had perfected its option for a three-year renewal under its 1955 contract with Flota. In 1955, at the time of the original contract, the only relevant Board statement was the 1953 Grace Line report. The report found Grace to be a common carrier of bananas and its exclusive contractual undertaking to be an unlawful discrimination, in violation of its statutory duty to apportion its facilities ratably among shippers; but the Board issued no order pursuant to its report. It discontinued the proceedings against Grace, even though Grace did not cancel its future booking contracts. Furthermore, the Board tacitly approved a two-year advance booking contract between Grace and the complainant Consolo despite the fact that the Board's report stated that six months was the "limit of reasonableness" for advance booking. 4 F.M.C. at 304. In short, the Board discontinued its proceeding in the face of an arrangement at odds with the principles laid down in its report. The lack of precedential value of the 1953 Grace Line report is suggested...