La Porte v. Bitker

• Decision Date: 04 April 1944
• Docket Number: Civil Action No. 1299.
• Citation: 55 F. Supp. 882
• Parties: LA PORTE et al. v. BITKER, O. P. A. District Director, et al.
• Court: U.S. District Court — Eastern District of Wisconsin

55 F. Supp. 882

LA PORTE et al. v. BITKER, O. P. A. District Director, et al.

Civil Action No. 1299.

District Court, E. D. Wisconsin.

April 4, 1944.

Karon & Weinberg, of Milwaukee, Wis., for plaintiffs.

Fleming James, Jr., Director of Litigation Division, and Atwood Cranston, Sp. Litigation Atty., O. P. A., both of Washington, D. C., Lee K. Beznor, O. P. A. District Enforcement Atty., of Milwaukee, Wis., and John F. Manierre, O. P. A. Regional Enforcement Atty., of Chicago, Ill., for defendants.

DUFFY, District Judge.

This is an action for a permanent injunction to restrain defendants from enforcing a suspension order issued by the Office of Price Administration which would close plaintiffs' business for one year. The matter now before the court is plaintiffs' motion for an injunction pendente lite.

Plaintiffs LaPorte have been engaged for many years in the gasoline and oil business, operating a bulk station and three filling stations in Milwaukee. Plaintiff Szukalski owns and operates a filling station in Milwaukee. The defendants are various officials of the Office of Price Administration, hereafter referred to as O. P. A.

On August 6, 1943, plaintiffs were served with notices of hearing issued by the defendant Elson, Regional Attorney for O. P. A. at Chicago, charging plaintiffs with violations of rationing regulations, known as Ration Order 5C. These notices required plaintiffs to appear for a hearing at Milwaukee before defendant McFarland, hearing commissioner, or any other presiding officer designated by McFarland, to show cause why a suspension order should not be issued against plaintiffs prohibiting them from further engaging in the gasoline business or handling other rationed products. The hearing was held August 9th before one Allen, who had been designated by defendant McFarland to act as presiding officer.

Plaintiffs objected to the jurisdiction of O. P. A. to conduct the proceeding, which objection was overruled. The hearing continued for four days, during which Allen swore witnesses, ruled upon objections, passed upon exhibits, etc. Allen thereafter filed a report with McFarland recommending a suspension order against plaintiffs. O. P. A. attorneys objected that Allen's recommendations were too lenient. Plaintiffs filed objections to the report upon jurisdictional and other grounds. McFarland filed an opinion modifying Allen's "Findings and Conclusions" and issued a suspension order which suspended plaintiffs' right to deal in gasoline for one year. Reiterating their objection to the jurisdiction of O. P. A., plaintiffs appealed to the Hearing Administrator at Washington, D. C., but he affirmed the suspension order and directed that it be enforced commencing December 15, 1943.

Although the charges against the plaintiffs arose largely from their contention that naphtha or "white gas" was not rationed, it is not here contended that the evidence received on the hearing is not sufficient to form a proper basis for the suspension order. Plaintiffs make their stand upon their vigorously asserted claim that O. P. A. had no jurisdiction or power to issue the suspension order. In the alternative, they raised the question of lack of due process because of the manner in which the hearing was conducted and the procedure by which the decision was made. The complaint directly challenges the power of O. P. A. to create its own court, staffed by its own employees. It also challenges the right of O. P. A. official McFarland to decide the case and issue the suspension order when another official presided at the hearing.

The Second War Powers Act, Sec. 2(a), 56 Stat. 176, 50 U.S.C.A.Appendix § 633, subdivision (2), provides: "Whenever the President is satisfied that the fulfillment of requirements for the defense of the United States will result in a shortage in the supply of any material * * * the President may allocate such material * * * in such manner, upon such conditions and to such extent as he shall deem necessary or appropriate in the public interest and to promote the national defense." The act further provides in subsection (6) that the district courts of the United States shall have jurisdiction of violations of subsection (a) or any rule, regulation or order thereunder and of all civil actions under said subsection. The act further provides that a willful violation may be punished in criminal proceedings in the district courts. Subsection (8) provides: "The President may exercise any power, authority, or discretion conferred on him by this subsection (a), through such department, agency, or officer of the Government as he may direct and in conformity with any rules or regulations which he may prescribe."

Plaintiffs contend that there is a wide difference between the authority in the President to allocate critical materials and the power to suspend a person's right to deal in such materials. They contend that the authority given to the courts to enforce penalties is exclusive, and that suspending the plaintiffs from business for one year was imposing a penalty.

The courts which have passed upon the authority of O. P. A. to issue suspension orders are divided in their conclusions. In Wilemon v. Brown, D.C.N.D.Tex., 51 F. Supp. 978, Judge Atwell held that the O. P. A. suspension order restraining retail dealers from making sales of gasoline for a period of two weeks was invalid as fixing a penalty, without delegation of such power by Congress. The same Judge reached a similar conclusion in Jacobson v. Bowles, 53 F.Supp. 532.

In Sims v. Talbert, D.C.E.D.S.C., 52 F. Supp. 688, Judge Timmerman held that the suspension order was in effect an injunction; that the jurisdiction conferred by the act on the courts impliedly, if not directly, denied such jurisdiction to the administrative agency; that even assuming the hearing commissioner had the power on proper showing to issue the suspension order, no proper showing was made.

In B. Simon Hardware Co. v. Nelson, D.C.D.C., 52 F.Supp. 474, Justice Bailey held that the War Production Board's suspension order was not an allotment under the Board's power to allocate materials, but was an unauthorized penalty for violations of the Board's regulations.

Conclusions to the contrary have been reached by Judge Lovett in Perkins v. Brown, D.C.S.D.Ga., 53 F.Supp. 176; by Judge Rifkind in Panteleo v. Brown, D.C. S.D.N.Y., 53 F.Supp. 209; by Judge Holly in Joliet Oil Corp. v. Brown, D.C.N.D. Ill., 55 F.Supp. 876; by Justice Bailey in L. P. Steuart & Bro., Inc., v. Bowles, D.C., 55 F.Supp. 336, which latter decision was affirmed on February 18, 1944, by the U. S. Court of Appeals for the District of Columbia. 140 F.2d 703. Furthermore, the decision in the Wilemon case, supra, has been reversed in Brown v. Wilemon, 5 Cir., 139 F.2d 730.

Several law writers who have discussed the powers of the administrative bodies created under the Second War Powers Act have apparently concluded that the revocation of licenses to procure or sell allocated materials are within the scope of the powers granted by Congress. 55 Harv. Law Review, 427, 467; 42 Col. Law Review, 1170, 1177; 43 Col. Law Review, 213, 217. To the contrary, see "The Challenge of the Administrative Process" by Dean Roscoe Pound in the March, 1944, issue of the American Bar Association Journal.

I am of the opinion that there was no unlawful or invalid delegation of power. The Second War Powers Act provided: "The President may allocate such (critical) material * * * in such manner, upon such conditions and to such extent as he shall deem necessary or appropriate." It further provides: "The President may exercise any power, authority, or discretion conferred on him * * * through such department, agency, or officer of the Government as he may direct * * *."

No one disputes that gasoline is critical material in the conduct of the present war. Allocation, or rationing as it is more commonly called, has for its purpose, the use of vital war materials in the manner which will be most helpful to our war effort. It is extremely important that when a scarcity exists in such material, there should be an equitable distribution thereof. Rationing, or allocation, is absolutely essential to the successful prosecution of the war effort. In my opinion, Congress had the power to enact this legislation as an appropriate means to a permitted end under the War Powers (Article I, Section 8) of the Constitution. Congress expressly authorized the President to sub-delegate this power. See: Opp Cotton Mills v. Administrator of Wage and Hour Division of Department of Labor, 312 U.S. 126, 61 S.Ct. 524, 85 L.Ed. 624; Sunshine Anthracite Coal Co. v. Atkins, 310 U.S. 381, 60 S.Ct. 907, 84 L.Ed. 1263. In times of war such legislation must of necessity be expressed in broad terms.

The Court of Appeals for the Second Circuit recently held that the provisions of the Second War Powers Act, pursuant to which Ration Order 5C was issued, are not invalid as constituting an invalid delegation of power. United States...