Safir v. United States Lines, Inc.

• Decision Date: 23 August 1985
• Docket Number: No. 85 C 0864.,85 C 0864.
• Citation: 616 F. Supp. 613
• Parties: Marshall P. SAFIR, Plaintiff, v. UNITED STATES LINES, INC., Lykes Bros. Steamship Co., Inc., Moore McCormack Lines, Inc., American President Lines, Inc., Farrell Lines, Inc., American Export Lines, Inc., Prudential Lines, Inc., Prudential-Grace Lines, Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

616 F. Supp. 613

Marshall P. SAFIR, Plaintiff, v. UNITED STATES LINES, INC., Lykes Bros. Steamship Co., Inc., Moore McCormack Lines, Inc., American President Lines, Inc., Farrell Lines, Inc., American Export Lines, Inc., Prudential Lines, Inc., Prudential-Grace Lines, Inc., Defendants.

No. 85 C 0864.

United States District Court, E.D. New York.

August 23, 1985.

Marshall P. Safir, pro se.

Walter, Conston & Schurtman, P.C., New York City (William Schurtman, Gregory F. Hauser, New York City, of counsel), Foley, Hoag & Eliot, Boston, Mass. (Verne W. Vance, Jr., Boston, Mass., of counsel), for defendants Farrell Lines, Inc. and American Export Lines, Inc.

Kominers, Fort, Schlefer & Boyer, Washington, D.C. (T.S.L. Perlman, William H. Fort, Washington, D.C., of counsel), for defendants Lykes Bros. S.S. Co., Inc.

Haight, Gardner, Poor & Havens, Washington, D.C. (John W. McConnell, Jr., Washington, D.C., of counsel), for defendants U.S. Lines, Inc. and U.S. Lines (S.A.), Inc. (formerly Moore McCormack Lines, Inc.).

Haight, Gardner, Poor & Havens, New York City (Richard G. Ashworth, New York City, of counsel), for defendants Lykes Bros. S.S. Co., Inc., U.S. Lines, Inc. and U.S. Lines (S.A.), Inc. (formerly Moore McCormack Lines, Inc.).

Shea & Gardner, Washington, D.C. (Robert T. Basseches, William R. Hanlon, Washington, D.C., of counsel), Hill, Betts & Nash, New York City, for defendant American President Lines, Ltd.

David P. Howe, New York City, for defendants Prudential Lines, Inc. and Prudential-Grace Lines, Inc.

MEMORANDUM AND ORDER

NICKERSON, District Judge.

Plaintiff's complaint alleges a private right of action implied from section 810 of the Merchant Marine Act, 46 U.S.C. § 1227, to recover a "restitutionary remedy in the form of disgorgement of the illegal earnings" of defendants. He seeks (a) $227,686,369.33 in subsidies paid by the United States to defendant steamship companies during 1965 and 1966 when they were engaged in unlawful conduct, (b) interest, compounded quarterly, on that amount, and (c) over $2 billion in profits defendants allegedly earned from the use of the subsidies.

Defendants move to dismiss the complaint. They cite three grounds: (1) section 810 affords plaintiff no private right of action for "restitution"; (2) plaintiff lacks standing; and (3) this action, brought almost twenty years after the unlawful conduct occurred, is barred by the applicable statute of limitation. Defendant American President Lines, Ltd., which did not compete with Sapphire Lines, recites a further ground, namely, that the complaint does not allege a prior administrative or judicial determination of a statutory violation upon which a claim for restitution against the non-competing shipping lines could be based. Defendants also move to enjoin plaintiff permanently from pursuing any further vexatious litigation relating to their pricing conduct in 1965 and 1966. Plaintiff cross-moves for summary judgment.

I

The undisputed facts are as follows. Sapphire Steamship Lines, Inc. (Sapphire Lines) was an unsubsidized shipping corporation, in which plaintiff held fifty percent of the stock and for which he was a guarantor of many of its debts. Defendants are shipping lines that received government subsidies in 1965 and 1966. To defeat competition by Sapphire Lines on certain trade routes, defendants temporarily, in 1965 and 1966, lowered their rates for military cargo on those routes.

In 1966 Sapphire Lines sued defendants for treble damages under the antitrust laws, based upon defendants' pricing conduct. In 1967 Sapphire Lines was adjudicated a bankrupt, and later, in 1973, its trustee settled the treble damage suit with all defendants for $2.5 million.

Meanwhile, in 1967, the Federal Maritime Commission determined that defendants' conduct violated the Shipping Act of 1916, 46 U.S.C. § 814. Sapphire Lines, plaintiff, and the other shareholder then began an action in this court against Maritime Administration officials seeking an order declaring that section 810 of the Merchant Marine Act (the Act), 46 U.S.C. § 1227, barred subsidy payments to defendants and compelling those officials to recover all subsidies paid to defendants during 1965 and 1966. This court dismissed for failure to state a claim.

The Court of Appeals for the Second Circuit reversed and held that (a) plaintiffs had standing to bring the suit, (b) the Act authorized the Maritime Administrator to recover subsidies paid in the past to shipping lines while they were violating section 810, and, (c) while the Maritime Administrator had some discretion in determining whether to seek such recovery, he could not refuse to do so without considering the interests of victims of the unlawful conduct. Safir v. Gibson (Safir I), 417 F.2d 972 (2d Cir.1969), cert. denied, 400 U.S. 850, 91 S.Ct. 57, 27 L.Ed.2d 88 (1970).

After this decision the Maritime Commission directed its chief hearing examiner to compile a public record to provide a basis for determining whether defendants had violated section 810 of the Act and, if so, what action should be taken. This court then denied an injunction sought by plaintiff and his fellow litigants to restrain the Maritime Commission from paying any further subsidies to the shipping lines. The Court of Appeals affirmed insofar as the order refused to enjoin current subsidy payments, but directed the Maritime Administration not to redetermine that the conduct of the shipping lines in 1965 and 1966 violated section 810 of the Act to the injury of Sapphire Lines. Safir v. Gibson (Safir II), 432 F.2d 137 (2d Cir.), cert. denied, 400 U.S. 942, 91 S.Ct. 241, 27 L.Ed.2d 246 (1970).

Thereafter the Secretary of Commerce proceeded to recover from the defendants that had competed with Sapphire Lines about $1.1 million (representing only a part of their subsidies for 1965 and 1966), but declined to obtain refunds of subsidies from those defendants that had not so competed. This decision was ultimately sustained in Safir v. Dole, 718 F.2d 475 (D.C. Cir.1983), cert. denied, ___ U.S. ___, 104 S.Ct. 2389, 81 L.Ed.2d 347 (1984).

II

The Court of Appeals for the Second Circuit has held that plaintiff had three available remedies in the late 1960's. He could have (1) brought an action for treble damages, (2) withheld some information from the government and brought a qui tam action under the False Claims Act, or (3) sued to compel officials of the Maritime Administration to recover subsidies paid to carriers that violated section 810. Safir v. Blackwell, 579 F.2d 742, 747 (2d Cir.1978), cert. denied, 441 U.S. 943, 99 S.Ct. 2160, 60 L.Ed.2d 1044 (1979). He now urges that he had and still has a further remedy, that is, a claim under section 810 to recover personally those subsidies paid to defendants during 1965 and 1966 that the government chose not to recover.

Section 810 does not explicitly afford this private remedy, and the question is whether it is implicit. See Transamerica Mortgage Advisors, Inc. (TAMA) v. Lewis, 444 U.S. 11, 15, 100 S.Ct. 242, 245, 62 L.Ed.2d 146 (1979); Touche Ross & Co. v. Redington, 442 U.S. 560, 575-76, 99 S.Ct. 2479, 2488-89, 61 L.Ed.2d 82 (1979) (citing Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087, 45 L.Ed.2d 26 (1975) ).

Section 810 provides:

It shall be unlawful for any contractor receiving an operating-differential subsidy ... to engage in any practice in concert with another carrier or carriers by water, which is unjustly discriminatory or unfair to any other citizen of the United States who operates a common carrier by water exclusively employing vessels registered under the laws of the United States.

46 U.S.C. § 1227. The section contains both a public remedy, that "no payment or subsidy of any kind shall be paid directly or indirectly out of funds of the United States or any agency of the United States to any contractor or charterer who shall violate this section," and a private remedy, that "any person who shall be injured in his business or property by reason of anything forbidden by this section may sue therefor ... and shall recover threefold the damages by him sustained."

Where a statute expressly provides for particular remedies, the court is slow to read in others. TAMA, 444 U.S. at 19, 100 S.Ct. at 246. The court, unless it finds in the legislative history clear indications of a contrary congressional purpose, will conclude "that Congress provided precisely the remedies it considered appropriate." Middlesex County Sewerage Auth. v. National Sea Clammers Ass'n, 453 U.S. 1, 15, 101 S.Ct. 2615, 2623, 69 L.Ed.2d 435 (1981). The history of the Act shows no purpose to grant private litigants any right to claim money beyond the treble damages expressly provided.

During the Senate debate Senator O'Mahoney discussed a subsidized American carrier that took part in putting an unsubsidized American carrier out of business. The injured carrier said that withdrawing the subsidy from the line engaging in anti-competitive conduct would enable it to compete. 80 Cong.Rec. 9921 (1936). The Senator then introduced an amendment, enacted as section 810, to make clear Congress' intention not to pay subsidies to lines that acted to crush American competition. He said further that:

In order to give an opportunity to those who may be injured by illegal combinations of the kind I have described to protect themselves I have incorporated in this amendment the principle of section 4 of the Clayton Act which permits the victim of such unfair practices to sue for treble damages.

80 Cong.Rec. 10075-76 (1936).

Thus Congress focused on the matter of remedying victims and permitted them to bring suits for treble damages, while requiring the government to withhold current subsidies (thereby improving the competitive position of the victims). It is fair to assume that had Congress intended to allow private litigants to recover past subsidies Congress would have said so.

Although section 810 does not...