United States v. Far East Conference

• Decision Date: 18 January 1951
• Docket Number: Civ. No. 11546.
• Parties: UNITED STATES v. FAR EAST CONFERENCE et al.
• Court: U.S. District Court — District of New Jersey

94 F. Supp. 900

UNITED STATES v. FAR EAST CONFERENCE et al.

Civ. No. 11546.

United States District Court T.D. New Jersey.

January 18, 1951.

J. Howard McGrath, Atty. Gen., Paul D. Page, Jr., Solicitor, U. S. Maritime Commission, Washington, D. C., for United States.

Stryker, Tams & Horner, Newark, N. J., for defendant Ishmian SS Co.

Milton, McNulty & Augelli, Jersey City, N. J., for all other defendants.

SMITH, District Judge.

This is a civil action for injunctive relief under Section 4 of the Sherman Act, 15 U.S.C.A. § 4. The defendants are the Far East Conference, a voluntary association of common carriers by water engaged in foreign trade, and the members of the association. The complaint, following a common pattern, charges that the defendants are "engaged in an unlawful combination and conspiracy in restraint of trade and commerce of the United States with foreign nations in the transportation of property in the outbound Far East trade," in violation of Section 1 of the Act, 15 U.S.C.A. § 1. The defendants, except the Isthmian Steamship Company, have filed a joint answer; the Isthmian Steamship Company has filed a separate answer.

The action is before the Court at this time on two motions: first, a motion for judgment on the pleadings, filed by the plaintiff pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, 28 U.S. C.A., and second, a motion to dismiss the action, filed by the defendants pursuant to Rule 12(b) of the Federal Rules of Civil Procedure. We shall restrict this opinion to a discussion of the questions raised by the latter motion, in support of which there are two grounds urged: the lack of jurisdiction in the court, and the failure of the complaint to state a claim upon which relief can be granted. It should be noted that a similar motion has been filed by the United States Maritime Commission,¹ hereinafter identified as the Commission, which has been granted leave to intervene.

The jurisdiction of this Court is defined with particularity by Section 4 of the Sherman Act, 15 U.S.C.A. § 4, which provides: "The several district courts of the United States are invested with jurisdiction to prevent and restrain violations of sections 1-7 and 15 of this title." (Emphasis by the Court.) It should be noted that this section not only vests the district courts with equity jurisdiction but also imposes upon "the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General," the duty "to institute proceedings in equity to prevent and restrain such violations." The language of the statute is free from ambiguity and there can be no doubt as to either the right of the United States to maintain suits under the antitrust laws or the jurisdiction of this court to entertain them.

The defendants do not deny that the allegations of the complaint are sufficient to charge violations of Section 1 of the Sherman Act. They argue that notwithstanding the express provisions of Section 4 of the said Act, supra, the exclusive primary jurisdiction of the present controversy is in the Commission under the Shipping Act of 1916, 46 U.S.C.A. §§ 801-842. We cannot agree. The latter Act is a comprehensive measure which vests in the Commission plenary authority to regulate common carriers by water engaged in foreign commerce, but even this authority is subject to the limitations prescribed by the Act. The mere fact that the shipping industry is subject to governmental regulation does not wholly exempt those engaged in it from the provisions of the Sherman Act. Georgia v. Pennsylvania Railroad Co., 324 U.S. 439, 456, 65 S.Ct. 716, 89 L.Ed. 1051; see also United States Alkali Ass'n v. United States, 325 U.S. 196, 205, 206, et seq., 65 S.Ct. 1120, 89 L.Ed. 1554; United States v. Borden Co., 308 U.S. 188, 198, et seq., 60 S.Ct. 182, 84 L.Ed. 181; Keogh v. Chicago & N. W. Ry. Co., 260 U.S. 156, 161, et seq., 43 S.Ct. 47, 67 L.Ed. 183; United States v. Pacific & Arctic Co., 228 U.S. 87, 102, 105, 33 S.Ct. 443, 57 L.Ed. 742. The only exemption is that which is granted by a specific provision of the Shipping Act, but even this exemption may not be construed as a restriction on the jurisdiction of this court.

It is further argued that the conduct of the defendants and the practices in which they are concertedly engaged, here alleged to be in violation of the antitrust laws, are exempt under Section 15 of the Shipping Act, 46 U.S.C.A. § 814. (The pertinent provisions of the statute are quoted in the annexed appendix.) This argument is based upon the admitted fact that the "Conference Agreement," pursuant to which the Conference was organized and under which its members have adopted a uniform system of dual rates, was approved by the Commission's predecessor, the Shipping Board, and conforms to the requirements of the said section. We concede that the Conference Agreement, having been approved by the Shipping Board, may be within the purview of the statutory exemption, but it does not follow that all conduct of the defendants and the practices in which they may be concertedly engaged are exempt from the provisions of Section 1 of the Sherman Act. See the cases hereinabove cited.

The defendants apparently misconceive the scope of the exemption granted them by Section 15 of the Shipping Act. This section vests in the Commission a limited authority to approve only certain agreements² to which common carriers by water, or other persons subject to the act, are parties and combinations organized pursuant thereto, agreements and combinations which might otherwise be illegal under Section 1 of the Sherman Act. (Emphasis by the Court). The exemption is conterminous with this limited authority and extends only to agreements lawful under the section. The exemption does not extend to other agreements and combinations not clearly within its purview, agreements and combinations which may violate Section 1 of the Sherman Act.

The defendants likewise misconceive the effect of the specific immunity granted by the statute. They construe the exemptive provision, read in the light of the other provisions of the section, as a limitation on the jurisdiction of the court. We cannot adopt this construction. The exemptive provision makes available to the defendants a legal defense not otherwise available, but it does not curtail the authority vested in this court by the specific provisions of Section 4 of the Sherman Act, United States v. Borden Co., supra, 308 U.S. 201, 60 S.Ct. 182. The provisions of the Shipping Act, considered in the light most favorable to the defendants, may not be interpreted as an implied repeal pro tanto of the jurisdictional provisions of the Sherman Act. It is well established that repeals by implication are not favored. United States Alkali Ass'n v. United States, supra, 325 U.S. 209, 65 S.Ct. 1120; United States v. Borden Co., supra, 308 U.S. 198, et seq., 60 S.Ct. 182.

The second ground urged in support of the motion, to wit, failure of the complaint to state a claim upon which relief can be granted, is predicated substantially on the arguments hereinabove discussed. The defendants challenge the right of the United States to maintain this action, and for the same reasons urged in support of their attack upon the jurisdiction of the court. These arguments are without merit. The right of the United States to maintain this action, like the jurisdiction of this court, is derived from Section 4 of the Sherman Act. The exemption granted by Section 15 of the Shipping Act may be interposed as a substantive defense but it may not be raised as a procedural bar to the right of the United States to prosecute this action.

It is urged, but not argued too strenuously, that the only remedy available to the United States is that accorded by the Shipping Act. We find no provision therein which grants to the United States either the right or the privilege to invoke the jurisdiction of the Commission. Section 22 of the Act, 46 U.S.C.A. § 821, reserves to "any person" a right to file "a sworn complaint setting forth any violation of" the Act, "and asking reparation for the injury, if any, caused thereby." The term "person" as therein used "includes corporations, partnerships, and associations, existing under or authorized by" law, but it does not include the United States. The term "person" does not ...