Keller Industries, Inc. v. United States, 29864.

• Decision Date: 28 October 1971
• Docket Number: No. 29864.,29864.
• Citation: 449 F.2d 163
• Parties: KELLER INDUSTRIES, INC., et al., Plaintiffs-Appellants, v. UNITED STATES of America and Interstate Commerce Commission, Defendants-Appellees, National Motor, Freight Traffic Association, Inc., et al., Intervening Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

449 F.2d 163 (1971)

KELLER INDUSTRIES, INC., et al., Plaintiffs-Appellants, v. UNITED STATES of America and Interstate Commerce Commission, Defendants-Appellees National Motor, Freight Traffic Association, Inc., et al., Intervening Defendants-Appellees.

No. 29864.

United States Court of Appeals, Fifth Circuit.

September 20, 1971.

Rehearing and Rehearing Denied October 28, 1971.

John W. Prunty, Bernard C. Pestcoe, Prunty, Ross & Olsen, Miami, Fla., for appellants.

Prentice P. Pruitt, Chief Staff Counsel, Lewis W. Petteway, Tallahassee, Fla., for Fla. Pub. Serv. Commission.

Ford L. Thompson, Tallahassee, Fla., Bryce Rea, Jr., Washington, D. C., for National Motor Freight Traffic Association, Inc., Common Carrier Conference — Irregular Route and Regular Common Carrier Conference; Rea, Cross & Knebel, Washington, D. C., of counsel.

William P. Sullivan, Robert M. Sielaty, Washington, D. C., for Contract Carrier Conference of American Trucking Associations, Inc.; Todd, Dillon & Sullivan, Washington, D. C., of counsel.

Clinton Ashmore, Asst. U. S. Atty., Tallahassee, Fla., John H. D. Wigger, Lee A. Rau, Attys., Dept. of Justice, Charles H. White, Jr., Asst. U. S. Atty., Washington, D. C., Walker B. Comegys, Acting Asst. Atty. Gen., William H. Stafford, U. S. Atty., Tallahassee, Fla., for the United States.

Arthur J. Cerra, Acting Gen. Counsel, Raymond M. Zimmet, Atty., I.C.C., Washington, D. C., for the Interstate Commerce Commission.

Before JOHN R. BROWN, Chief Judge, and TUTTLE and GODBOLD, Circuit Judges.

Rehearing and Rehearing En Banc Denied October 28, 1971.

JOHN R. BROWN, Chief Judge:

This appeal presents one of the most frequently litigated questions of transportation law — whether a certain method of transportation is "for-hire" or "private carriage." The new wrinkle, cf. Mike Hooks, Inc. v. Pena, 5 Cir., 1963, 313 F.2d 696, 1963 A.M.C. 1463, is the employment of a joint venture between an upbound and a downbound shipper through the use of jointly leased vehicles operated by drivers ostensibly under the complete control of the momentary user in order to eliminate the abhorrent and uneconomical deadhead backhaul.

The District Court, after a primary jurisdiction reference¹ to the ICC, upheld the ICC's determination that the scheme followed was transportation for compensation and not exempt private carriage. We agree and affirm.

I. How It All Came About

This litigation began when the shipper participants in the joint venture sought injunctive relief against the Florida Public Service Commission (FPSC), which had been arresting drivers employed by the joint venturers. As in Agricultural Transportation Assn. of Texas v. King, 5 Cir., 1965, 349 F.2d 873, the arrests were for the transporters' failure to have valid ICC certificates or permits as required by §§ 323.02 and 323.28 of the Florida Statutes, F.S.A. The District Court granted a preliminary injunction but determined — quite properly — that the case was one within the special expertise of the ICC and accordingly referred the case to that body for initial disposition under the doctrine of primary jurisdiction.

Keller and the other shippers with whom it had made these agreements then petitioned the Commission to declare that its activities were "private carriage" and therefore exempt from ICC and hence Florida certification requirements. The FPSA as well as several motor carrier associations and conferences intervened,² urging that this transportation arrangement be deemed "for-hire" carriage and thus subject to certification requirements pertaining to interstate motor operations. After submission under the modified procedure Division 1 of the ICC decided by a 2-1 vote that the operation of the joint venturers constituted "for-hire" carriage and thus was impermissible without the authorization of the Commission. Keller Industries, Inc., Request for Declaratory Order Regarding Legality of Operations, 1966, 103 M.C.C. 520. Upon request for reconsideration the case was re-heard by the full Commission as a matter of general transportation importance. By an 8-3 vote the ICC upheld the decision of Division 1. Keller Industries, Inc., et al., Request for Declaratory Order Regarding Legality of Operation, 1968, 107 M.C.C. 75. In keeping with the Court's earlier direction the commission certified its record and decision to the District Court.

II. One Judge? Three Judge?

The shippers filed a new complaint³ seeking review of the ICC orders and requested that it be heard by a three-Judge court under 28 U.S.C.A. § 2325.⁴ A three-Judge court was convened, but it concluded that under 28 U.S.C.A. § 1336(b) and 1398(b)⁵ jurisdiction was properly before one and not three Judges. Keller Industries, Inc. v. United States, N.D.Fla., 1969, 304 F.Supp. 852. No appeal was taken from this order. The single District Judge then proceeded to hear the case on the ICC record and to affirm the Commission. Keller Industries, Inc. v. United States, N.D.Fla., 1970, 311 F.Supp. 384.

The threshold question is a jurisdictional one, since the shippers continue to urge that the orders and reports of the ICC had to be reviewed by a three Judge rather than a one-Judge court in accordance with the dictates of 28 U.S. C.A. § 2325, note 4, supra. We find this contention unpersuasive.

As the three-Judge Court correctly pointed out, before 1964 the shippers' proposed procedure was clearly the correct one. "Prior to the enactment of this statute whenever the Court of Claims or District Court referred the issue to the Interstate Commerce Commission for a resolution, the Commission order emanating therefrom was subject to judicial review by a three judge district court, pursuant to 28 U.S.C. §§ 1336, 1398, 2284, 2321-2325, rather than by the referring court. Consequently, the referring court had to await the decision of the three judge court, the Supreme Court, if an appeal was taken, and any other proceedings which might result from such judicial decisions, before it could proceed to final judgment. See Pennsylvania R. R. v. United States, 363 U.S. 202, 80 S.Ct. 1131, 4 L.Ed.2d 1165 (1960)." Keller Industries, Inc. v. United States, N.D. Fla.1969, 304 F.Supp. 852, 854. But Congress became aware of this "cumbersome and inefficient" procedure, S.Rep. No. 1394, 88th Cong., 2d Sess.; H.R. Rep. No. 1015, 88th Cong., 1st Sess., 1964 U.S.Code Cong. & Admin.News 3235, 3236, observing that one case remained on the docket of the Court of Claims "for 10 years while full review of the Commission's order is being effected." Report, supra at 3237. The remedy devised by Congress was the "1964 amendment to 28 U.S.C. §§ 1336 and 1398, Public Law 88-513, authorizing the referring court to have exclusive jurisdiction to review the Commission's order resulting from the referral, * * * Thus, since the 1964 amendment, the referring court, rather than a three judge district court, has reviewed the Commission's order because of its exclusive jurisdiction. See McLean Trucking Co. v. United States, 387 F.2d 657, 659-660, 181 Ct.Cl. 170 (1967) (`The 1964 amendment was to provide a more streamlined procedure for judicial review of questions that involve the primary jurisdiction of the Interstate Commerce Commission and are referred to it for a preliminary determination'); Seaboard Air Line R. R. v. United States, 387 F.2d 651, 654-655, 181 Ct.Cl. 719 (1967)." Keller, supra, 304 F.Supp. at 854-855.⁶

We are aware that in Agricultural Transportation Association of Texas v. King, supra, 349 F.2d 873, 884-885, we adopted a contrary position, but that was prior to the ICC reference and later report. The issue was not then squarely presented, and the opinion of the dissolved three-Judge court persuades us that the initial forecast was mistaken.

We need only add that since §§ 1336(b) and 1398(b), note 5 supra, parallel the Court of Claims and the District Courts with respect to referrals to the ICC, Congress could not have meant to prescribe a three-Judge review if referred by a single Judge but a Court of Claims review if referred by the Court of Claims. Our reading likewise recognizes the peculiar nature of the role of the administrative agency in a "primary jurisdiction" referral. Agency determinations are sought as an aid in judicial determinations, not as a complete substitute for them.⁷ Since the judicial remedy sought is the granting of an injunction against allegedly unauthorized acts of State officers — ordinarily a matter for a single Judge — the single Judge Court must employ the agency's determination and hence may properly review it for acceptability.

We hold that 1336(b) and 1398(b) mean in effect that Congress has created an exception to § 2325 and has declared that a referral case is not one for three Judges. Thus the review of the ICC orders was properly for the referring Judge.

III. The Joint Venture

Cook and Keller Get Together

Keller Industries, a large integrated company with activities in a number of different states,⁸ is located primarily in Miami and is essentially a northward bound shipper of finished aluminum products. See Scroll, Inc. v. Commissioner of Internal Revenue, 5 Cir., 1971, 447 F.2d 612. But Keller always has had the problem of an empty backhaul from Northern cities to Miami. Then E. N. Cook (since deceased) entered the scene. Cook was an old hand at figuring up schemes — commercially successful but almost invariably held to be illegal⁹ — by which upbound and downbound shippers of their own goods were brought together to keep the trucks full both ways. Cook proposed to coordinate Keller's shipping with that of companies in Florida who imported their material from the North. Basically his idea was to permit other companies, unrelated to Keller, to ship to Florida using the same truck and driver that Keller had used to ship from Florida. To carry out the scheme Keller employed Cook as Traffic Coordinator. He was to solicit the downbound participants for the operation, to...