Pacific Westbound Conference v. United States

• Decision Date: 30 April 1964
• Docket Number: No. 19167.,19167.
• Citation: 332 F.2d 49
• Parties: PACIFIC WESTBOUND CONFERENCE, Petitioner, v. UNITED STATES of America and Federal Maritime Commission, Respondents.
• Court: U.S. Court of Appeals — Ninth Circuit

332 F.2d 49 (1964)

PACIFIC WESTBOUND CONFERENCE, Petitioner, v. UNITED STATES of America and Federal Maritime Commission, Respondents.

No. 19167.

United States Court of Appeals Ninth Circuit.

April 30, 1964.

Lillick, Geary, Wheat, Adams & Charles, Frank L. Adamson, San Francisco, Cal., for petitioner.

William H. Orrick, Jr., Asst. Atty. Gen., Irwin A. Seibel, Dept. of Justice, Antitrust Division; and James L. Pimper, Gen. Counsel, Robert E. Mitchell, Deputy Gen. Counsel, Gordon M. Shaw and William J. Smith, Attys., Federal Maritime Commission; Washington, D. C., for respondents.

Before HAMLEY, KOELSCH and BROWNING, Circuit Judges.

HAMLEY, Circuit Judge:

On March 2, 1964, Pacific Westbound Conference (Conference), proceeding under the Review Act of 1950, as amended 64 Stat. 1129 et seq., 68 Stat. 961 et seq., 5 U.S.C. § 1031 et seq. (1958), petitioned this court to review Part I of an order issued by the Federal Maritime Commission on December 27, 1963. At the same time the Conference applied for an interlocutory injunction, and for a temporary stay.

The petitioner, representing twenty-five members, exists as a conference of common carriers by water engaged in the foreign water-borne commerce of the United States. The Commission order which it seeks to have reviewed is entitled: "Amended Section 21 Order — Study — The Trade from U. S. Pacific Coast Ports to Ports in Japan — Foreign Trade Study 63-11," referred to herein as "Section 21 Order."¹ Part I of that order required the Conference to produce at the Commission's offices in Washington, D. C., not later than February 20, 1964, two categories of documents described in the order, as quoted in the margin.² The Commission thereafter extended the time for compliance with Part I of the order to March 2, 1964. The grounds upon which relief from Part I of this order was sought, as stated in the petition for review, are set out in the margin.³

On March 2, 1964, this court granted a temporary stay pending hearing on the application for interlocutory injunction, to expire at 5:00 P.M. on March 17, 1964. At the same time the application for an interlocutory injunction was set for hearing on March 16, 1964. The United States and the Commission filed a memorandum in opposition to the application. A hearing on the application was held as calendared, and thereafter, on the same date, this court entered an order extending the temporary stay to 5:00 P.M. on March 30, 1964, and denying the application for an interlocutory injunction, "as of 5:00 P.M. on March 30, 1964."

The reason for denial of the application for an interlocutory injunction, as stated in the order, was that it appeared "* * * that there is no probability that petitioner may prevail on the merits, and no showing that irreparable damage would otherwise ensue." While it does not appear in the order of March 16, 1964, the reason why the temporary stay was extended to March 30, 1964, and the denial of the application for an interlocutory injunction was made effective as of that date, was so that petitioner would have this much additional time in which to comply with the questioned Commission order without risking the one hundred dollar per day penalty provided for in section 21 of the Shipping Act, 1916.⁴

Petitioner did not thereafter take any steps to comply with the section 21 order, notwithstanding the fact that the temporary stay expired on March 17, 1964. Since that date, it has been subject to the one hundred dollar a day forfeiture provision of section 21. Instead, it proceeded to take the steps called for by our Rule 34 in perfecting the review.

On April 11, 1964, the United States and the Commission moved in this court to dismiss the petition for review on the ground that the appeal is insubstantial and frivolous.⁵ Petitioner filed a memorandum in opposition thereto, and the motion was argued orally on April 28, 1964.

The contention of the Conference that the section 21 order in question is not authorized or supported in whole or in part by the statutes referred to in the order, is insubstantial and frivolous.⁶ In this section 21 order the Commission institutes no proceeding against the Conference, accuses it of nothing, nor determines any rights. It only directs the Conference to supply specified information to the agency charged by law with regulating its activities. It has long been established that section 21 gives the Commission power to demand, for this purpose, documents of the kind specified in the challenged order. See Isbrandtsen-Moller Co. v. United States, 300 U.S. 139, 144-145, 57 S.Ct. 407, 81 L.Ed. 562; Montship Lines, Ltd. v. Federal Maritime Board, 111 U.S.App.D.C. 160, 295 F.2d 147, 152-153; Kerr Steamship Co. v. United States, 2 Cir., 284 F.2d 61, 62-63.

Likewise insubstantial and frivolous is the contention of the Conference that the section 21 order does not state the purpose for which it was issued.

In Montship, 295 F.2d at pages 154-155, it was held that, to enable a reviewing court to determine the relevancy of the information demanded in an order issued under section 21, the purpose for which the information is sought must be apparent from the order itself.⁷ In Montship, the order under review contained no indication whatsoever of the agency's purpose and for that reason the order was vacated and the case was remanded to the agency.

In Hellenic Lines, Ltd. v. Federal Maritime Board, 111 U.S.App.D.C. 151, 295 F. 2d 138, decided on the same day as Montship, an order issued under section 21, although containing something in the nature of a statement of purpose,⁸ was vacated on the ground that the statement of purpose was inadequate.

The statement of purpose set forth in the order here under review, quoted in the margin,⁹ is far more comprehensive than that which was found inadequate in Hellenic Lines, Ltd. That statement of purpose appears to us to be about as complete and specific as it could possibly be, considering the fact that, as the Commission had a right to do, it had not yet determined that any agreements, rates or fares were unlawful but was seeking information to ascertain the measure of compliance with the named regulatory statutes and the need of future Commission action in fulfillment of its statutory duties.

The Conference's real objection on the score of "purpose" appears not to be that the order fails to state a purpose, or states the purpose inadequately, but that the purpose stated — to obtain information which will enable it to perform its regulatory function with respect to particular statutes, concerning which there is no pending investigation proceeding or finding of probable cause that violations have occurred, is not a proper statutory purpose.

Thus the Conference calls attention to section 6(b) of the Administrative Procedure Act, 60 Stat. 240, 5 U.S.C. § 1005 (b), the first sentence of which requires that no process, requirement of a report, inspection, or other investigative act or demand shall be issued, made, or enforced in any manner or for any purpose "* * * except as authorized by law." In this connection the Conference also makes reference to a comment contained in the Report of the House Committee on the Judiciary concerning this sentence of section 6(b), quoted below.¹⁰

As heretofore stated, the section 21 order in question requires the production of documents in a manner and for a purpose provided for in section 21 of the Shipping Act, 1916, namely to determine whether specified statutes which the Commission is charged with enforcing, are being complied with and, if not, what agency action should be taken. It follows that the exception to the proscription contained in the first sentence of section 6 (b) of the Administrative Procedure Act applies, i. e., the production is being required in a manner and for a purpose "authorized by law," is applicable.

The first sentence of the part of the Committee Report in note 10 does not manifest the intention of Congress that, under section 6(b) of the Administrative Procedure Act, all so-called "fishing expeditions" will be prohibited, but only those which, as in the case of any other investigations, are "beyond jurisdiction or authority." As this court said in DeMasters v. Arend, 9 Cir., 313 F.2d 79, 88:

"The investigative power granted administrative agencies is inquisitorial in nature; its exercise does not depend upon a showing of probable cause to believe that a violation of law has occurred."

In its memorandum of points and authorities in support of the application for an interlocutory injunction, the Conference intimates that the real purpose of the Commission in issuing the order is to gather documents and data for delivery to the Congressional Joint Economic Committee which has assertedly interested itself in conferences of this kind and in ocean shipping in general. The Conference contends that this would be an improper purpose for a demand under section 21.

We need not determine whether this would be an improper purpose, for it is not one which is stated in the section 21 order, and the purposes there stated are proper and adequate. Persons made subject to a section 21 order valid on its face may not, at least in the absence of a factual allegation of fraud, obtain judicial inquiry into the question of whether the proper and sufficient purposes therein stated are the real purposes, or all of the real purposes, which motivated the agency.¹¹

Lastly, the Conference's contention that the order should be set aside and its enforcement enjoined because it is "unreasonable and oppressive," is insubstantial and frivolous.¹²

In an affidavit filed in support of the application for an interlocutory injunction it is estimated that the search for, and duplication of, the documents called for in the section 21 order " * * * would require a period of ten days to two weeks if the other activities of the Conference are not to be disrupted thereby." The courts have upheld orders far...