International Detective Service, Inc. v. I. C. C.

• Decision Date: 12 December 1979
• Docket Number: 78-2154 and 79-1045,Nos. 78-1812,s. 78-1812
• Citation: 198 U.S.App.D.C. 334,613 F.2d 1067
• Parties: INTERNATIONAL DETECTIVE SERVICE, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents. Wells Fargo Armored Service Corporation, Intervenor. PUROLATOR SECURITY, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents. Armored Transport, Inc., Intervenor. INTERNATIONAL DETECTIVE SERVICE, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents. Purolator Security, Inc., Brink's Inc., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1067

613 F.2d 1067

198 U.S.App.D.C. 334

INTERNATIONAL DETECTIVE SERVICE, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents.

Wells Fargo Armored Service Corporation, Intervenor.

PUROLATOR SECURITY, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents.

Armored Transport, Inc., Intervenor.

INTERNATIONAL DETECTIVE SERVICE, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents.

Purolator Security, Inc., Brink's Inc., Intervenors.

Nos. 78-1812, 78-2154 and 79-1045.

United States Court of Appeals District of Columbia Circuit.

Argued June 20, 1979.

Decided Dec. 12, 1979.

Morris J. Levin, with whom Levin & Toomey, Washington, D. C., were on the brief, for petitioner in No. 78-1812 and No. 79-1045.

Peter A. Greene, Washington, D. C., with whom Norman J. Philion, III and Thompson, Hine, Caldwell & Greene, Washington, D. C., were on the brief, for Purolator Security, Inc.

H. Glenn Scammel, Atty., I. C. C., Washington, D. C., with whom Mark L. Evans, Gen. Counsel, Kenneth G. Caplan, Deputy Associate Counsel, I. C. C., John H. Shenefield, Asst. Atty. Gen., Barry Grossman, Chief, Appellate Section, and Robert J. Wiggers, Atty., Antitrust Division, Dept. of Justice, Washington, D. C., were on the brief, for respondents in No. 78-1812.

H. Glenn Scammel, Atty., I. C. C., Washington, D. C., with whom Mark L. Evans, Gen. Counsel, Kenneth G. Caplan, Deputy Associate Gen. Counsel, I. C. C., John H. Shenefield, Asst. Atty. Gen., John J. Powers, III, Asst. Chief, Appellate Section, and J. Mark Manner, Atty., Antitrust Division, Dept. of Justice, Washington, D. C., were on the brief, for respondents in No. 79-1045.

Harry J. Jordan, David E. Wells, and MacDonald & McInerny, Washington, D. C., were on the brief for intervenor, Wells Fargo Armored Service Corporation, in No. 78-1812.

Theodore W. Russell, Robert W. Hancock, and Russell, Schureman & Hancock, Los Angeles, Cal., were on the brief for intervenor, Armored Transport, Inc., in No. 78-2154.

Chandler L. van Orman and Wheeler & Wheeler, Washington, D. C., were on the brief for intervenor Brink's Incorporated, in No. 79-1045.

Before ROBINSON and MacKINNON, Circuit Judges, and DAVIS, ^* Judge, United States Court of Claims.

Opinion for the Court filed by Judge DAVIS.

DAVIS, Judge:

These three related motor carrier cases involve Interstate Commerce Commission decisions which reflect a new stress on the shipper's need for competition. In each case the ICC granted applications for contract carrier permits providing for new entry into routes served by the armored carrier industry. Not surprisingly the existing carriers in those fields have challenged the Commission. We conclude that the agency adequately considered the statutory provisions in approving these new motor contract carrier permits, and that the final policy choice in favor of increased competition was within administrative discretion.

The armored service segment of the motor carrier industry includes a limited number of firms ¹ which provide the specialized handling, insurance requirements, and storage facilities for transporting high value commodities, including securities and money. A significant demand for such interstate transportation comes from the various Federal Reserve banks, which have traditionally undertaken to provide both member and nonmember banks in their regions with coin and currency. ² The two Reserve Banks involved in these three cases, Boston and San Francisco, rely primarily on armored carriers to ship the currency, arranging for service on the basis of long-term contracts. ³ Both banks have desired and sought competitive bidding on their hauling contracts, but both have required that a bidder have prior certification by the ICC. ⁴ In Nos. 78-1812 and 79-1045, concerning the Boston Federal Reserve Bank, before the grant of the permits challenged here there was only one authorized carrier (Brink's) for most of the northeastern routes, with a second carrier (International Detective) authorized to make interstate deliveries in Connecticut and Rhode Island. In No. 78-2154, in which the San Francisco Reserve Bank was the shipper, there was only one authorized carrier, Purolator, for the Los Angeles to Arizona routes.

I

The three cases considered in this opinion were handled by the Commission under its modified procedure which calls for decision on written submissions (including verified statements or affidavits) instead of an oral hearing involving testimony.

Nos. 78-1812 and 79-1045: The facts in these two cases are virtually identical. In both International Detective Service, a pre-existing common carrier in the area, attacks Commission motor contract carrier permits for Federal Reserve routes between Boston and various places in Connecticut and Rhode Island. In No. 78-1812 the Commission issued such a permit to Wells Fargo Armored Service Corporation ("Wells Fargo"); in No. 79-1045 a permit was granted for similar northeastern routes to Purolator Security, Inc. ("Purolator"). ⁵ Each applicant set forth the usual data demonstrating its fitness and ability to serve as a contract carrier in the armored truck business. The Federal Reserve Bank of Boston served as the supporting shipper in both applications, avowing that increasing the number of certified carriers would provide more flexible schedules, more reliable service, and reduce costs. The Bank supported its prediction of reduced costs by citing evidence of lower costs (due to competitive bidding) on intrastate rates, where no ICC certification is required. ⁶ Much of the Bank's evidence for the need of more competition addressed the areas where Brink's had a monopoly. However, in aid of the Purolator application the Bank specifically mentioned the Boston to Connecticut situation where two carriers (Brink's and International Detective) were already authorized: "Even where two competitors are present the absence of additional competitors may lead to costs greater than they otherwise would be." The Bank bolstered its appeal for cost savings by noting that any surplus earned by the Bank is remitted to the U.S. Treasury.

International Detective, protesting both applications, ⁷ claimed before the Commission (as it does now in this court) that, whatever competitive deficiencies existed in areas of Brink's monopoly, they did not exist for the Connecticut and Rhode Island routes where International Detective served as a willing and able competitor. In both instances petitioner argued that granting the permit would "have severe detrimental affects (Sic ) upon International."

The Commission's decision on the Wells Fargo application (ultimately considered by the entire Commission) also governed the outcome of Purolator's application. In each case, after holding the applicant qualified as a contract carrier under the statutory definition, the Commission found the "central issue" was the balance between possible benefits to the shipper and carrier and possible harm to the protestants. Wells Fargo Armored Service Corp., Extension Boston, Mass., 129 M.C.C. 615, 617 (1978) (hereafter Wells Fargo ); See Purolator Security, Inc., Extension Three States, No. MC-114896 (Sub-No. 49) (July 27, 1978) (unpublished opinion). The majority of the Commission struck the balance in favor of more competition, holding in Wells Fargo :

The Federal Reserve Bank of Boston has been faced with a difficult situation. It desires to award transportation contracts on the basis of competitive bids. To bid on a contract, the carrier must have the proper contract carrier authority. If we preclude new entrants on the ground that existing service is reasonably adequate, then the applicant cannot participate in the bidding. Thus a restrictive entry policy would frustrate the competitive bid process, and would not be in the public interest. Section 209(b) requires a balancing of the evidence in the light of its criteria, and we are convinced that in the long run the benefits accruing directly to the bank and ultimately to the public outweigh any detriments to protestants. Especially in an industry such as the armored car industry, which is not characterized by an abundance of qualified carriers, we should promote an environment for effective competition. 129 M.C.C. 615, 619 (1978).

The Commission came to the same conclusion in Purolator's application, citing Wells Fargo.

No. 78-2154: This case is essentially similar, bringing before us Purolator's challenge to a contract carrier permit awarded to Armored Transport, Inc. ("Armored") for contracts from the San Francisco Reserve Bank on its Los Angeles to Arizona routes. The Reserve Bank supported Armored's application, stating that although Armored had underbid Purolator by approximately $214,000 on these routes, the Bank was compelled to accept Purolator as the only certified interstate carrier. ⁸ The evidence of lack of competition was even stronger than in Wells Fargo because only one carrier (Purolator) had authority, as opposed to the two authorized carriers (Brink's and International Detective) on some of the Wells Fargo routes. Purolator protested the proposed new entry, challenging Armored's ability to handle the traffic at such a low cost and alleging that the loss of the Reserve business would "threaten the continued viability of PSI's (Purolator's) operations in California and Arizona . . . " Division 2 of the Commission reconsidered Armored's application in the light of Wells Fargo, and concluded that that decision mandated approval of a new entrant here. Armored Transport, Inc., Extension-Arizona, No. MC-117072 (Sub-No. 4) (August 15, 1978) (unpublished opinion). ⁹

II

The essential issue in these three cases is whether the Commission could properly give as much weight as it did to the professed need of the Boston and San Francisco Reserve Banks for greater competition in the carriage...