Merritt v. U.S., No. 514

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Writing for the CourtMESKILL
Citation960 F.2d 15
Docket NumberD,No. 514
Decision Date27 March 1992
PartiesMartyn MERRITT, Petitioner, v. UNITED STATES of America; Federal Maritime Commission, Respondents. ocket 91-4112.

Page 15

960 F.2d 15
Martyn MERRITT, Petitioner,
v.
UNITED STATES of America; Federal Maritime Commission, Respondents.
No. 514, Docket 91-4112.
United States Court of Appeals,
Second Circuit.
Argued Nov. 22, 1991.
Decided March 27, 1992.

Page 16

Erwin J. Shustak, New York City (Ruth H. Landstrom, Bizar Shustak Martin & Schneider, of counsel), for petitioner.

Carol J. Neustadt, Federal Maritime Com'n, Washington, D.C. (Robert D. Bourgoin, General Counsel, Federal Maritime Com'n, James F. Rill, Asst. Atty. Gen., John J. Powers, III, Robert J. Wiggers, Dept. of Justice, of counsel), for respondents.

Before: OAKES, Chief Judge, FEINBERG and MESKILL, Circuit Judges.

MESKILL, Circuit Judge:

This is a petition for review of an order of the Federal Maritime Commission (Commission) that, inter alia, assessed a $395,000 fine against petitioner Martyn Merritt for violations of the Shipping Act of 1984, 46 U.S.C. app. § 1701 et seq. (Shipping Act). Merritt argues that we should vacate the fine and remand this case because the Commission failed to follow a statutory mandate to consider Merritt's ability to pay. We agree.

We vacate that part of the Commission's order that imposes a fine on Merritt and remand for proceedings not inconsistent with this opinion.

BACKGROUND

On December 18, 1989, the Commission ordered an investigation and hearing to consider allegations that Merritt and corporations under his control had committed flagrant violations of the Shipping Act. Merritt, whom the Commission previously had penalized, assiduously avoided participating in the proceeding before the administrative law judge (ALJ). On several occasions Merritt refused even to accept notices of proceedings sent to him by certified mail.

After the close of the record, but before the ALJ ruled, Merritt wrote two letters to the Commission's Secretary. The first of these letters stressed Merritt's lack of resources and requested a hearing on his ability to pay any fine that the Commission might assess against him. The other matters that Merritt addressed in his letters are unimportant to this appeal.

Subsequently, the ALJ issued an opinion in Merritt's case. In this opinion, referred to by the ALJ and the Commission as the "Initial Decision," the ALJ emphasized (1) that Merritt had tried to delay the proceedings against him, and (2) that Merritt had avoided participating in hearings of which he was aware. The ALJ listed the factors that the Shipping Act requires the Commission to consider before imposing a fine, including ability to pay, and noted that

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"one often must weigh the ... danger of being too harsh and too impractical so as to place a person or a business in jeopardy." The ALJ then stated that "no ... extenuating circumstances can be found" in this case. However, the Initial Decision did not set forth any specific findings on Merritt's ability to pay the fine that the ALJ imposed.

The ALJ also considered Merritt's request for a hearing on his ability to pay a fine. Again stressing Merritt's behavior in this case and noting that Merritt had not requested a hearing until after the record had been closed, the ALJ decided not to grant such a hearing:

[I]f the Respondents wish to mitigate penalties on the basis of inability to pay they may do so in settlement discussions with Hearing Counsel, or, if the Commission on review so desires, the inability to pay question can be considered on remand.

Appealing the Initial Decision to the Commission, Merritt excepted, inter alia, to the ALJ's failure to consider whether Merritt had the ability to pay the fines assessed against him. The Commission adopted the Initial Decision, finding that the ALJ had adequately considered all the factors that the Shipping Act required, including ability to pay.

On appeal, Merritt asks that we vacate the fine imposed on him and remand this case for reconsideration after production of evidence going to his ability to pay a fine. Merritt insists that neither the ALJ nor the Commission considered his individual ability to pay and that this omission constitutes a clear error of law.

46 U.S.C. app. § 1713 and 28 U.S.C. § 2342 provide us with jurisdiction over this appeal.

DISCUSSION

Where an agency finds a violation, the choice of a sanction is largely within the agency's discretion. See American Power Co. v. SEC, 329 U.S. 90, 112, 67 S.Ct. 133, 1145, 91 L.Ed. 103 (1946) (" '[T]he relation of remedy to policy is peculiarly a matter for administrative competence.' ") (citation omitted). A reviewing court may overturn an agency-imposed sanction only if it is unwarranted in law or...

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12 practice notes
  • Surface coal mining hearings and appeals; special rules,
    • United States
    • Federal Register March 20, 2003
    • March 20, 2003
    ...provided by statute. 5 U.S.C. 556(d). In cases of civil penalties, the agency is the proponent of the rule or order. See Merrit v. U.S., 960 F.2d 15 (2nd Cir. 1992) (stating that the Shipping Act of 1984 allocates burden of proof according to APA Sec. 556(d) and that the Federal Maritime Co......
  • Office of Workers' Compensation, v. Greenwich Collieries, 93744
    • United States
    • United States Supreme Court
    • June 20, 1994
    ...of going forward with a prima facie case"), cert. denied, 498 U.S. 849, 111 S.Ct. 139, 112 L.Ed.2d 106 (1990); Merritt v. United States, 960 F.2d 15, 18 (CA2 1992) ("refers only to the burden of going forward with evidence, not the burden of persuasion"); Bosma v. United States Dept. of Agr......
  • Seidman, Matter of, No. 92-3722
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • September 14, 1994
    ...the burden of production and proof were present. See, e.g., Dazzio v. FDIC, 970 F.2d 71, 75 (5th Cir.1992); Merritt v. United States, 960 F.2d 15, 18 (2d 1 As the court noted in Groos Nat'l Bank v. Comptroller of Currency, 573 F.2d 889, 897 (5th Cir.1978): [t]he phrase "unsafe or unsound ba......
  • Ward v. Derwinski, No. 92-CV-6346L.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • December 22, 1992
    ...determines that a violation has occurred, the choice of a penalty is largely within the agency's discretion. Merritt v. United States, 960 F.2d 15, 17 (2d Cir.1992). It will not be upset on review unless it is deemed to be arbitrary and capricious. De La Nueces v. United States, 778 F.Supp.......
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11 cases
  • Office of Workers' Compensation, v. Greenwich Collieries, 93744
    • United States
    • United States Supreme Court
    • June 20, 1994
    ...of going forward with a prima facie case"), cert. denied, 498 U.S. 849, 111 S.Ct. 139, 112 L.Ed.2d 106 (1990); Merritt v. United States, 960 F.2d 15, 18 (CA2 1992) ("refers only to the burden of going forward with evidence, not the burden of persuasion"); Bosma v. United States Dept. of Agr......
  • Seidman, Matter of, No. 92-3722
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • September 14, 1994
    ...the burden of production and proof were present. See, e.g., Dazzio v. FDIC, 970 F.2d 71, 75 (5th Cir.1992); Merritt v. United States, 960 F.2d 15, 18 (2d 1 As the court noted in Groos Nat'l Bank v. Comptroller of Currency, 573 F.2d 889, 897 (5th Cir.1978): [t]he phrase "unsafe or unsound ba......
  • Ward v. Derwinski, No. 92-CV-6346L.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • December 22, 1992
    ...determines that a violation has occurred, the choice of a penalty is largely within the agency's discretion. Merritt v. United States, 960 F.2d 15, 17 (2d Cir.1992). It will not be upset on review unless it is deemed to be arbitrary and capricious. De La Nueces v. United States, 778 F.Supp.......
  • Diehl v. Franklin, Civ. No. 92-4084 (GEB).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • July 15, 1993
    ...was the agency, not plaintiff, who had to come forward with evidence of plaintiff's ability to pay a fine. See Merritt v. United States, 960 F.2d 15, 18 (2d Cir.1992); Bosma v. United States Dep't of Agric., 754 F.2d 804, 810 (9th Cir. 1984). The agency failed to meet its burden, as the ALJ......
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