Isbrandtsen Co. v. United States

• Decision Date: 21 January 1954
• Docket Number: No. 11679.,11679.
• Parties: ISBRANDTSEN CO., Inc. v. UNITED STATES et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

211 F.2d 51 (1954)

ISBRANDTSEN CO., Inc. v. UNITED STATES et al.

No. 11679.

United States Court of Appeals, District of Columbia Circuit.

Argued October 20, 1953.

Decided January 21, 1954.

Writ of Certiorari Denied June 1, 1954.

Mr. William L. McGovern, Washington, D. C., Messrs. John J. O'Connor, Thurman Arnold and Abe Krash, Washington, D. C., on the brief, for petitioner.

Mr. Ralph S. Spritzer, Special Asst. to the Atty. Gen., a member of the bar of the Court of Appeals of New York, pro hac vice, by special leave of Court, Mr. Charles H. Weston, Special Asst. to the Atty. Gen., on the brief, for respondent United States.

Mr. Max E. Halpern, Asst. Gen. Counsel, Federal Maritime Board, Washington, D. C., a member of the bar of the Supreme Court of New York, pro hac vice, by special leave of Court, Mr. Allen C. Dawson, Washington, D. C., on the brief, for respondent Federal Maritime Board.

Mr. Elkan Turk, New York City, Messrs. Elkan Turk, Jr., Brooklyn, N. Y., and George F. Galland, Washington, D. C., on the brief, for intervenors Japan-Atlantic and Gulf Freight Conference, et al.

Mr. Neil Brooks, Associate Solicitor, Washington, D. C., Mr. Donald A. Campbell, Attorney, United States Department of Agriculture, Washington, D. C., on the brief, for intervenor Ezra Taft Benson, Secretary of Agriculture of the United States.

Before PRETTYMAN, BAZELON and FAHY, Circuit Judges.

Writ of Certiorari Denied June 1, 1954. See 74 S.Ct. 852.

BAZELON, Circuit Judge.

Petitioner, Isbrandtsen, is a steamship company flying the flag of the United States and engaged in the transportation of freight from Japan, Korea and Okinawa to the Gulf-Atlantic ports of the United States. It competes with the Japan-Atlantic and Gulf Freight Conference on this route. The Conference is a voluntary association composed of eighteen common carrier steamship lines, thirteen of which are lines sailing under foreign flags and five of which are United States registered lines. It exists primarily to establish, by concerted action, uniform rates to be charged by the member lines. The basic agreement under which the Conference operates was first approved by the United States Maritime Commission in 1934 under § 15 of the Shipping Act of 1916.¹ Isbrandtsen is neither a signatory to this agreement nor a member of the Conference.

On December 24, 1952, the Conference filed a statement with the Board, pursuant to the requirements of General Order 76, proposing initiation on January 23, 1953 of an exclusive patronage contract/noncontract dual rate system² in the Japan-Atlantic trade.³ Under the proposed system, shippers who refused to agree in writing to employ Conference lines exclusively would be charged, for the identical transportation and service, tariffs which were nine and one-half per cent higher than those charged shippers who had executed such agreements with Conference lines. And once this exclusive patronage contract had been entered into, even a single shipment with any non-Conference carrier would result in the shipper's being required to pay the Conference, as liquidated damages, fifty per cent of the freight charge which the shipper would have paid had such shipment been made in a Conference vessel. If such violations occurred more than once in any year, the shipper's contract with the Conference would be cancelled and he would not be permitted to enter into a new agreement until the liquidated damages had been paid in full. Since Isbrandtsen, carrying slightly less than one third of the total volume of trade on the Japan-Atlantic route, is the only non-member line competing with Conference vessels, the impact of this system upon Isbrandtsen is readily apparent.

In accordance with Board procedure, notice of the filing of the Conference's proposal was published in the Federal Register.⁴ Isbrandtsen and the Attorney General, on behalf of the United States, filed written comments with the Board and requested a hearing, as provided in General Order 76.⁵ They charged that the proposed agreement for a dual rate system was unlawful and that the Board lacked the authority to approve such a system. Isbrandtsen also charged that irreparable injury would be inflicted upon it if this dual rate system were permitted to go into effect.

So far as the particulars of the arguments pro and con before the Board are concerned, Isbrandtsen, on the one hand, contended that the purpose of this system was to drive it out of business by imposing a penalty upon any shippers who used its line; and that the Conference had failed to justify the reasonableness of the differential in accordance with statutory requirements.⁶ On the other hand, the Conference, in defending its proposal, maintained that such exclusive patronage rates had previously been used by the Conference; that the Conference steamship lines have provided the trade with stability, freedom from rate wars, and progressive improvements in services; and that the nine and one-half per cent differential between contract and non-contract shippers was reasonable because Isbrandtsen's rates are computed at ten per cent below Conference rates. On January 21, 1953, without a hearing, and based upon the information and comments filed pursuant to General Order 76,⁷ the Board issued the order under attack here. The order permitted the proposed dual rate system to go into effect within forty-eight hours.⁸ It also denied the requests by Isbrandtsen and the Attorney General for an immediate hearing of the issues prior to the initiation of the system and for suspension of the system pending such a hearing. It did, however, grant a hearing at a date subsequent to institution of the system.

On January 22, 1953, the day following entry of the Board's order, Isbrandtsen filed this review petition under 5 U.S.C.A. § 1032⁹ and on the same day we granted a temporary stay of the order under attack until Isbrandtsen's application for an interlocutory injunction could be heard and determined. This application was later granted, staying so much of the Board's order as purported to approve institution of the dual rate system agreement.¹⁰ Petitions for certiorari, filed by the Board and the Conference, were denied by the Supreme Court of the United States.¹¹

The United States, here as respondent under 5 U.S.C.A. § 1034,¹² and represented by the Attorney General, is in substantial accord with the position of Isbrandtsen. Its primary concern relates to the inconsistency of the dual rate system with the Sherman Act's¹³ protection of the freedom of the market place. The Secretary of Agriculture of the United States, here as an intervenor, adopts the position of Isbrandtsen. His interest is that of a large shipper of goods attempting to obtain the best competitive price, a price which he believes to be threatened by the proposed dual rate system agreement. The Conference, here as an intervenor, supports the position of the Board.

We think there are only two issues to be decided: (1) does the challenged order possess the requisite finality for judicial review? and (2) does the Shipping Act require Board approval of the dual rate system before it can become effective?

This court has jurisdiction to review only final orders of the Board.¹⁴ Whether or not the statutory requirements of finality are satisfied in any given case depends not upon the label affixed to its action by the administrative agency but rather upon a realistic appraisal of the consequences of such action. "The ultimate test of reviewability is not to be found in an overrefined technique, but in the need of the review to protect from the irreparable injury threatened in the exceptional case by administrative rulings which attach legal consequences to action taken in advance of other hearings and adjudications that may follow, the results of which the regulations purport to control."¹⁵ Thus, administrative orders are ordinarily reviewable when "they impose an obligation, deny a right, or fix some legal relationship as a consummation of the administrative process."¹⁶ Under this test, a final order need not necessarily be the very last order.¹⁷

We think the order under review meets the test of finality. The Board insists "that in declining to suspend the rates, it took only interlocutory action of a discretionary nature such as is not ordinarily reviewable."¹⁸ That action, however, attaches grave consequences to contractual and other business relations of Isbrandtsen. By denying Isbrandtsen's request to postpone operation of the dual rate system and to grant an immediate hearing, the Board virtually removed Isbrandtsen from the shipping market involved. Whether this removal was temporary or permanent, Isbrandtsen would inevitably suffer "real, immediate and incalculable" harm.¹⁹ The Board's action was just as determinative of Isbrandtsen's rights as it would have been had the Board specifically and affirmatively approved the dual rate system agreement in accordance with the statutory requirements which we discuss next, or ruled that such approval was not required. "In these circumstances, it can hardly be said that the action assailed is not ripe for review, or that the Unions here, Isbrandtsen should be required to exhaust a dubious opportunity for hearing offered to them after the ax had fallen * * *."²⁰

Since we view the order as final for purposes of our review, we must next determine whether the Shipping Act requires Board approval of dual rate system agreements before they can become operative. The Board's position here is that it may allow the agreement to go into effect in advance of formal approval because the basic Conference agreement authorizes dual rate system agreements. It maintains that the basic Conference agreement carries with it the "cover of authority" for subsequent changes of rates since the language of the basic agreement is as broad as that of the statute itself. If this is so, then no additional approval would be necessary to...