Volkswagenwerk Aktiengesellschaft v. Federal Maritime Commission, 69

• Decision Date: 06 March 1968
• Docket Number: No. 69,69
• Citation: 390 U.S. 261,19 L.Ed.2d 1090,88 S.Ct. 929
• Parties: VOLKSWAGENWERK AKTIENGESELLSCHAFT, Petitioner, v. FEDERAL MARITIME COMMISSION et al
• Court: U.S. Supreme Court

390 U.S. 261

88 S.Ct. 929

19 L.Ed.2d 1090

VOLKSWAGENWERK AKTIENGESELLSCHAFT, Petitioner,

v FEDERAL MARITIME COMMISSION et al.

No. 69.

Argued Nov. 13, 1967.

Decided March 6, 1968.

[Syllabus from pages 261-262 intentionally omitted] Walter Herzfeld, New York City, and Richard A. Posner, Washington, D.C., for petitioner.

Robert N. Katz, Sol., Federal Maritime Commission, Washington, D.C., and Gary J. Torre, San Francisco, for respondents.

Mr. Justice STEWART delivered the opinion of the Court.

The petitioner, a German manufacturer of automobiles, is one of the largest users of the ports on the West Coast of the United States, delivering through them more than 40,000 vehicles each year, the majority transported there by vessels chartered by the petitioner rather than by common carrier. This case grows out of the petitioner's claim that charges imposed upon the unloading of its automobiles at Pacific Coast ports are in violation of the Shipping Act, 1916, as amended. 39 Stat. 728, 46 U.S.C. § 801 et seq. The dispute has a long and somewhat complicated history.

The Pacific Maritime Association (the Association) is an employer organization of some 120 principal common carriers by water, stevedoring contractors, and marine terminal operators, representing the Pacific Coast shipping industry. The primary function of the Association is to negotiate and administer collective bargaining contracts with unions representing its members' employees, of which the International Longshoremen's and Warehousemen's Union (ILWU) is one. in late 1960 the Association and ILWU reached a milestone agreement which, it was hoped, would end a long and troubled history of labor discord on the West Coast waterfront.¹ The ILWU agreed to the introduction of labor-saving devices and the elimination of certain restrictive work practices. In return, the Association agreed to create over the period from 1961 to 1966 a 'Mechanization and Modernization Fund' of $29,000,000 (the Mech Fund) to be used to mitigate the impact upon employees of technological unemployment.² The agreement specifically reserved to the Association alone the right to determine how to raise the Mech Fund from its members, at the rate of some $5,000,000 a year.

A committee of the Association investigated various possible formulas for collecting the Fund from the stevedoring contractors and terminal operators—i.e., those Association members who were employers of workers represented by the ILWU. A majority of the committee recommended that the Mech Fund assessment be based solely on tonnage handled, and this recommendation was adopted by the Association membership.³ Under this formula, general cargo was assessed at 27 1/2¢ per 'revenue ton.'⁴ A revenue ton is based either on weight (2,000 1bs.=one ton) or measurement (40 cu. ft.=one ton). Whether tonnage declarations on a particular item of cargo were to be by weight or by measurement was to depend, with one exception, upon how that cargo had customarily been manifested (and reported to the Association for dues purposes) in 1959. The one exception was automobiles, for which there had been no uniform manifesting custom.⁵ The Association decided that automobiles were to be declared by measurement for Mech Fund purposes, regardless of how they were or had been manifested.

Unlike shippers by common carrier, the petitioner must arrange and pay for the unloading of its own chartered vessels upon their arrival in port. For this purpose it has since 1954 contracted with Marine Terminals Corporation and Marine Terminals Corporation of Los Angeles (Terminals), which are members of the Association, for the performance of stevedoring and related services in unloading vehicles from the petitioner's chartered ships in West Coast ports, at a negotiated price. Prior to the Mech Fund assessment agreement, Terminals' charge to the petitioner for these unloading services was $10.45 per vehicle, of which about a dollar represented Terminals' profit. When the vehicles were assessed for the Mech Fund by measurement, the assessment came to $2.35 per vehicle—representing, if passed on to the peti- tioner, an increase in unloading costs of 22.5%.⁶ If the vehicles had been assessed by weight (0.9 tons) rather than by measurement (8.7 tons),⁷ the assessment would have been 25¢ per vehicle—an increase of about 2.4%, comparable to the average Mech Fund assessment of 2.2% for all other general cargo. Assessment by measurement rather than by weight thus resulted in an assessment rate for the petitioner's automobiles of 10 times that for other West Coast cargo—although automobiles had less to gain than other cargo from the Mech Fund agreement. ⁸ The petitioner and Terminals both protested these seeming inequities to a committee of the Association set up to handle such claims, but without success. ⁹

The petitioner refused to pay any additional charge resulting from the Association's levy, and Terminals, while continuing to unload Volkswagen automobiles for the petitioner, did not pay its resulting assessment to the Association. The Association sued Terminals in a federal court in California for its failure to pay the Mech Fund assessments; Terminals admitted all the allegations of the complaint and impleaded the petitioner as a defendant. The petitioner then obtained a stay of that action to permit it to invoke the primary jurisdiction of the Federal Maritime Commission, in order to determine the following issues:

'1. Whether the assessments claimed from (the petitioner) are being claimed pursuant to an agreement or understanding which is required to be filed with and approved by the Federal Maritime Commission under Section 15 of the Shipping Act, 1916, as amended, 46 U.S.C. 814 (1961), before it is lawful to take any action thereunder, which agreement has not been so filed and approved.

'2. Whether the assessments claimed from (the petitioner) result in subjecting the automobile cargoes of (the petitioner) to undue or unreasonable prejudice or disadvantage in violation of Section 16 of the Shipping Act, 1916, as amended, 46 U.S.C. 815 (1961).

'3. Whether the assessments claimed from (the petitioner) constitute an unjust and unreasonable practice in violation of Section 17 of the Shipping Act, 1916, as amended, 46 U.S.C. 816 (1961).'

The petitioner then began the present proceedings by filing a complaint with the Commission raising the above issues. The petitioner alleged that the Association was dominated by common carriers¹⁰ which had agreed upon the assessment formula in order to shift a disproportionate share of the Mech Fund assessment onto the peti- tioner, which did not patronize those common carriers. ¹¹ The Commission, after a hearing, upheld the initial decision of its examiner and dismissed the complaint, with two dissents.¹² The Court of Appeals for the District of Columbia Circuit affirmed,¹³ and we granted certiorari to consider important questions under the Shipping Act.¹⁴

I.

The petitioner's primary contention—supported by the United States, a party-respondent—is that implementation of the Association's formula for levying the Mech Fund assessments was unenforceable, because the agreement among Association members imposing that formula was not filed with the Commission in accord with § 15 of the Act. That section provides that there be filed with the Commission 'every agreement' among persons subject to the Act

'fixing or regulating transportation rates or fares; giving or receiving special rates, accommodations, or other special privileges or advantages; controlling, regulating, preventing or destroying competition pooling or apportioning earnings, losses, or traffic; allotting ports or restricting or otherwise regulating the number and character of sailing between ports; limiting or regulating in any way the volume or character of freight or passenger traffic to be carried; or in any manner providing for an exclusive, preferential, or cooperative working arrangement. * * *'¹⁵

Until submitted to and approved by the Commission, 'it shall be unlawful to carry out in whole or in part, directly or indirectly, any such agreement * * *.'¹⁶ The Commission is directed to disapprove any agreement

'that it finds to be unjustly discriminatory or unfair as between carriers, shippers, exporters, importers or ports, or between exporters from the United States and their foreign competitors, or to operate to the detriment of the commerce of the United States, or to be contrary to the public interest, or to be in violation of (the Act) * * *.'¹⁷ An agreement filed with and approved by the Commission is immunized from challenge under the antitrust laws.¹⁸

The Commission held that, although the Mech Fund assessment formula was a 'cooperative working agreement' clearly within the plain language of § 15, it nonetheless was not the kind of agreement required to be filed with the Commission under that section:

'Although the literal language of section 15 is broad enough to encompass any 'cooperative working arrangement' entered into by persons subject to the Act, the legislative history is clear that the statute was intended by Congress to apply only to those agreements involving practices which affect that competition which in the absence of the agreement would exist between the parties when dealing with the shipping or traveling public or their representatives.

'It is not contested that the membership of (the Association) entered into an agreement as to the manner of assessing its own membership for the collection of the 'Mech' fund. Such an agreement, however, does not fall within the confines of section 15 as, standing by itself, it has no impact upon outsiders. What must be demonstrated before a section 15 agreement may be said to exist is that there was an additional agreement by the (Association) membership to pass on all or a portion of its assessments to the carriers and shippers served by the terminal operators.' 9 F.M.C., ...