Meat Packers Express, Inc. v. United States

• Decision Date: 03 August 1965
• Citation: 244 F. Supp. 642
• Parties: MEAT PACKERS EXPRESS, INC., Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, Midwest Coast Transport, Inc., and Colonial & Pacific Frigidways, Inc., Intervening Defendants.
• Court: U.S. District Court — District of Nebraska

244 F. Supp. 642

MEAT PACKERS EXPRESS, INC., Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, Midwest Coast Transport, Inc., and Colonial & Pacific Frigidways, Inc., Intervening Defendants.

Civ. 740L.

United States District Court D. Nebraska.

August 3, 1965.

COPYRIGHT MATERIAL OMITTED

Richard A. Peterson, of Nelson, Harding & Acklie, Lincoln, Neb., for plaintiff.

Thomas H. Ploss, Atty., Dept. of Justice, Washington, D. C., for defendants United States and I. C. C.

Marshall D. Becker, Omaha, Neb., for intervening defendants, Midwest Coast Transport, Inc. and Colonial & Pacific Frigidways, Inc.

Before JOHNSEN, Circuit Judge, and ROBINSON and VAN PELT, District Judges.

VAN PELT, District Judge.

Meat Packers Express, Inc. (plaintiff or Meat Packers) requested authority from the Interstate Commerce Commission (Commission) to operate over irregular routes as a contract carrier in accordance with the provisions of Section 209 of the Interstate Commerce Act. (49 U.S.C. § 309). Meat Packers proposes to operate as a contract carrier for Farmbest, Inc. of Denison, Iowa (Farmbest), and in such capacity intends to transport by motor vehicle certain meat and dairy products from Denison, Iowa to points in California, Arizona, Nevada, Oregon and Washington. This three judge court was convened to consider plaintiff's action to enjoin, annul and set aside a report and order of the Commission entered September 25, 1963. In its order the Commission adopted the report and order of its examiner recommending the denial of the contract carrier authority requested by Meat Packers.

I

The court is initially confronted with a procedural question raised by intervenors. In its complaint the plaintiff alleges exhaustion of administrative remedies, and although admitted by the defendants United States and Interstate Commerce Commission the allegation is denied by the intervening defendants Midwest Coast Transport, Inc. (Midwest) and Colonial and Pacific Frigidways, Inc. (Colonial). These intervening defendants¹ take the position that plaintiff should have filed a petition under Section 1.101(a)(4) of the General Rules of Practice of the Commission² seeking a finding of an issue of general transportation importance and ultimately a rehearing before the Commission en banc. We disagree.

The record before this court is sufficient to entitle plaintiff to a review of the Commission's order, and additional efforts directed toward securing a rehearing before the entire Commission were unnecessary insofar as exhaustion of administrative remedies is concerned. Following the hearing examiner's report and recommended order wherein it was concluded that the granting of the authority sought by plaintiff would not be consistent with the public interest and the national transportation policy, exceptions thereto were filed on behalf of the plaintiff. On September 25, 1963 the Commission, Division 1, entered its order which affirmed and adopted the findings and conclusions of the examiner and denied the plaintiff's application. The proceeding before the Commission and its order were administratively final; no further action was required of plaintiff. Malone Freight Lines, Inc. v. United States, 204 F.Supp. 745 (N.D.Ala.1960); State of Arizona v. United States, 220 F.Supp. 337 (D.Ariz.1963).

II

As previously observed, the plaintiff seeks authority as a westbound contract carrier over irregular routes for Farmbest, Inc. of Denison, Iowa. Farmbest operates as a pork packer, shipping dressed carcass meat as well as offal and the resultant by-products of grease and lard from its Denison plant. The carcasses are shipped 80 to 90 per cent fresh, unfrozen, while the offal per cent is reversed and 90 per cent is shipped frozen. The evidence adduced before the examiner and set forth in his report indicates that at the time of the hearing³ the Denison plant processed a total of over 100 million pounds of meat per year, approximately 40 per cent of which was transported to the western states here involved. And correlatively, the evidence further developed the fact that facilities at the Denison plant are being expanded which will in turn, of course, reflect an increase in total production.

The examiner upon a review of the evidence reached the conclusion that,

"while the definition of a `contract carrier by motor vehicle' is one other than a common carrier, for furnishing transportation services through assignment of motor vehicles for a continuing period of time, for exclusive use of a shipper or for the furnishing of services designed to meet the distinct needs of the shipper, here the exclusive assignment is present. And while some services rendered may possibly be deemed for certain distinct needs, the examiner does not so find, as the needs here are those ordinarily met and served by common carriers."

This finding is attacked by plaintiff on two grounds. Initially it is asserted that the finding in regard to "distinct need" was an unnecessary prejudicial coloration of the Section 209(b) criteria since the plaintiff had already qualified as a contract carrier under the alternative disjunctive portion of Section 203(a) (15) (a) of the Act, i. e., engaged in the motor vehicle transportation under a continuing contract" for the furnishing of transportation services through the assignment of motor vehicles for a continuing period of time to the exclusive use of each person served." It is also urged by plaintiff that the finding itself of no distinct need was erroneous and not supported by the evidence before the examiner and the Commission.

A review of the 1957 amendments to the contract carrier provisions to the Interstate Commerce Act, and specifically sections 203(a)(15) and 209(b) of the Act, is necessary as a background for the later comment herein. The history, both legislative and judicial, surrounding the enactment of these provisions has been the subject of considerable juridical comment.⁴

Our starting point is the decision of the Supreme Court in United States v. Contract Steel Carriers, 350 U.S. 409, 76 S.Ct. 461, 100 L.Ed. 482 (1956), which was the acknowledged precipitant of the 1957 legislation. See Interstate Commerce Commission v. J-T Transport Co., Inc., 368 U.S. 81, 82 S.Ct. 204, 7 L.Ed.2d 147 (1961); 1957 U.S. Code Cong. & Admin. News pp. 1599, 1601.⁵ Fears were expressed that the effect of the decision would be the destruction of any existing distinction between contract and common carriers, and in order to avoid a situation whereby the line of demarcation between the two types of motor carrier service would be vanquished, legislation was proposed by the Commission. The original legislation would have changed the definition of a contract carrier to one who engages in transportation by motor vehicle

"* * * under continuing contracts with one person or a limited number of persons for the furnishing of transportation services of a special and individual nature required by the customer and not provided by common carriers."

At the same time, presumably intended as a supplement to the proposed definition, a bill was introduced which would have amended § 209(b) by the inclusion of a provision that a permit would issue when it appeared, inter alia, "that existing common carriers are unwilling or unable to provide the type of service for which a need has been shown."

The dual requirement that the proposed contract carriage service be of a special nature not provided by common carriers and that a showing be made that existing common carriers are unwilling or unable to provide the service was vigorously opposed.

"Opposition to the definition centered largely on the claimed difficulty of administration and on the belief that it might destroy contract carriage as presently conducted. It was pointed out that many contract carriers have only one contract, that sometimes they perform a service similar to common carriage, and that a definition excluding such transportation would exclude these carriers or possibly force them to seek common carrier certificates." 1957 U.S. Code Cong. & Admin. News 1599, p. 1602.

The initial proposed amendments were ultimately abandoned in favor of the existing legislation, and in fact the Commission changed its position by recommending that the words "and not provided by common carriers" be deleted from the definition clause, noting that "these words are not necessary to carry out the purpose of the bill. * * *"

The resulting amended definition of contract carrier, which constitutes the present statutory language and is governing herein, reads as follows:

"The term `contract carrier by motor vehicle' means any person which engages in transportation by motor vehicle of passengers or property in interstate or foreign commerce, for compensation (other than transportation referred to in paragraph (14) of this subsection and the exception therein), under continuing contracts with one person or a limited number of persons either (a) for the furnishing of transportation services through the assignment of motor vehicles for a continuing period of time to the exclusive use of each person served or (b) for the furnishing of transportation services designed to meet the distinct need of each individual customer." 49 U. S.C. § 303(a)(15).

In the same legislation § 209(b) of the Act 49 U.S.C. § 309(b), which is basically the provision setting forth the terms and conditions under which a contract carrier permit will be issued, was amended by inclusion of the following determinative considerations:

"In determining whether issuance of a permit will be consistent with the public interest and the national transportation policy declared in this Act, the Commission shall consider (1) the number of shippers to be served by the applicant, (2) the nature of the service proposed, (3) the effect which granting the permit would have upon the services of the protesting carriers and (4) the effect

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