Motion to Affirm — Peerless Stages, Inc. v. United States

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Cases: -

SAB. & W. Transit Cov. United States, 14

. Car. Cases, Par. 81,395..2______-

. [American Trucking Ass’ns v. United States,

3 “344 US. 298. - ats

~ Crescent Express Lines, The: Vv. . United ‘States,

49 F. Supp. 92, affirmed 320 ELS. 401-

. Federal Trade Commission v. S hndard oil Co 0.,

ee Ce sh oes coe we

Hudson Transit Lines, Inc. v. l ‘nited States,

82 F. Supp. 153, affirmed, 338 U.S. 802°

‘ Interstate Commerce Commission v. J- T Fran. 8-

en ar ee SP Oe oe os ose ec -

Interstate Commerce Commission v. "Parker,

326 U.S. ey eae

N ational Bus Traffic Ass’n v. ‘ot Tnited States,

143 F. Supp. 689, affirmed 352 U. S. 1020

| " Regulations Governing Special. or. Chartered

‘Party Service, 29 M.C.C. 26... .-\.-

; Seaboard Air Line RR. Cov. United States, 131

F, Supp. 129, affirmed 349 U.S. 902... ___,

United States v. Detroit and Cleveland Nav. Co.,

326 U.S. 236... __- re iene he WES ees:

655147—62 -

“a

oa Cases —"Cositinued

- United States v. Pierce Auto P "reight Lines, 327 in

7 | ee SAE eS Re eM RRR aes

United States v. Rock lidand Co., 340-U.S. oe... 8

Universal Camera Corp. v. . Labor Board, 340 |

toe: S| tae s eee nit ss dae as ca

Statute and setiaties: Ti "pa - a

Interstate Commerce Act, Part TI, 49 Stat.

543, 49 U.S.C. 301, et seq.: } oh

Section 205(b)s.-.- 2 aii ieesyes ;

; _ Section SN Saimin s pin can cous 2 :

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“Section 208(c)-------- -nighves, ses ee

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AN NNAAMNW -

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on fhe ies Court of the Bited vines

Oc ‘TOBER TERM, 1962

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ae No. 262

ad me

_ PEERLESS Sraas, Inc, APPEL. LANT

| v. : . ‘

Unirep SratEs OF. AMERICA, Ernaie aTE Com MERCE.

Commission, AND THE GREYHOUND Corporation

; 3 e ‘ . *) ge

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR

THE. NORTHERN DISTRICT OF CALIFORNIA

ate TO AFFIRM

¢ . : . oo <3 :

7 ‘Pursuant to Rule 16, paragraph 1c); of the Revised

Rules of this Court; appellees, United, States of |

America and Interstate Commerce Commission, move

that the judgment of the district court be affirmed.

STATEMENT

This i is‘a direct appeal from a final judgment of a

three-judge district court dismissing an action

brought by appellant to set’ aside an order of the

Interstate Commercé Commission, ‘issued in, a con-

solidated proceeding. The order required appellant —

to cease and desist from unlawful charter party opera-

| coms, and denied beta ~ application for a certifi-

o te ae

--g.

cate of public convenience and mea to éxtend its

mofor-ca Yrier bus authority to include special i

charter operations.” .

This litigation involves the transportation of pas-

sengers from points in the SyeFranaisco Bay area to

gambling casinos in the Reno-Carsond'ity-Lake Tahoe

area of Nevada. Prior to the instant proceeding, ap-

- pellant held no specific authority to perform this serv-

ice, but conducted such operations under color of the

incidental charter party provisions of Section 208(c¢)

of the Interstate Commerce Act, 49 Stat. 352, 49 U.S.C.

308(¢).’ On December 3, 1958, appellant applied for a

__ gertificate specifically authorizing special or charter

“rations, over irregular, routes, from the Bay area to

points in Nevada, Arizona, New Mexico and Utah,

On March 16, 1959, lefore ruling on the applic ‘ation;

th® Conuission | instituted ai investigation to dei

mine whether appellants was engaged in the transpor-

J tation of passengers in violation ofgits outstanding

certificate and ,the incidental charter party provisions,

of the Act,’ 49 GS.C. 306(a) and 308(c¢). (J.S, App.

“A, A2-A3). oh ;

“4 Section 208(c. provides : “Any common carrier by motor

vehicle transporting passengers under a certificate issued under

this part may transport in interstate or Sorgigm commerce to

any place special or chartered parties under stich ruies and reg-—

ulations as the Commission shall have*pgescribed.”

* The investigation. also inquired into the activities of one’

Travis and another Parsons, acting as brokers in. vi of

Section 211 6f the Act..49 U.S.C. 311. Travis was f to be

operating as a broker without a license and was ordered to cease

i and desist. He did not appear ag a- ‘party to contest the Com-

mission's order in the district’ court case.

peer. Bee ie. |

After hearing On a consolidated record, a ¢ ‘alif ornia

and Nevada Joint ‘Board established under Section

205(h). of the Act found tHat’ appellant's “operations

were in violation of Section 208(¢) and the regula-

tious issued thereunder, and recommended that a cease

and desist order be issued. In fhe application pro- -

ceeding, a hearing examiner recommended denial of

the certificate on the ground that public CONVEMICNCE.

and necessity do not require the proposed Operations.

On exceptions, Division. 1 of the Commission dis-

posed of both proceedings ina single report, adopting

the recommendations “of the joint’ board and of the

examiner. (J.S. App. A, A2-A17). Jt held GIS.

Apy:.A, A17), that appellant did not transport **spe-

cial or chartered parties” within Section 208(¢) of the

"Act but, on the contrary, its operations violated the

rules and regulations of the Commission issued under

, _thap section and the prov isions of Seetron 206(a). Ap-

pellant was ordered to cease and desist such unlawful |

operations. .The validity of the cease and desist pro--

vision of the order was stistained by the district court

(J.S. App. 3, A18-Al9), and is no longer contested

' + (JS. 2, 7-8, 13).

In the application case, the Commission hel. GO. S.

App. A, A16-A17), that appellant “failed to -

* establish ‘that the present or future cofvenience and

hecessity require the proposed operations.””. Reject-

ing appellant’s challenges, the three-judge . district

court unanimously upheld the order ii a ‘per curiam

judgment (J.S, -App. BB, A18-A19). The court

concluded that the Commission ‘‘applied the proper

standard = determining’ whether or nof ‘there

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¥

: 4

" was a present or future converiience and necessity for

granting complainant a license expatiding:its activities —

and in the application. of said test properly concluded

that there was no. showing that the existing seryice

was not adequate.”’

” ARGUMENT

This appeal presents no substantial question war-

ranting. plenary review by this Court. | It: involves

only, the Commission’s factual determination, affirmed

by the district conrt, that the present or future publie -

convenience and nec essity has not been shown to re-

quire the proposed operation.

_ 1. Appellant initially complains (J.S. 13, 16, 18)

. about being treated ‘as a ‘new competing carrier and

being put to the burden of showing that the existing

earrier (Greyhound) «is unable, of unwilling, | to

furnish adequate service. Recognizing that a pro-

spective competitor must establish the necessity for

granting a- duplicating certificate,” Peerless argues

*The prospective conipetitor must show, not only that a

proposed service is fequired ingthe convenience of the public,

but, alsoy.that it is a necessity, which determination. turns

—

on the a uacy or inadequacy of existing facilities and service’

to meet the transportation needs of the public. Hudson Transit °

Lines, Inc. v. United States, 82 F. Supp. 153 (S.D.N.Y.), af-

firmed, 238 U.S. 802. This standard has been consistently applied

by the Commission, with this Court’s approval, since the original

enactment of Section 207(a)-in 1935. See, ¢.g.,- Interstate

- Commerce Commission v. Parker, 326 U.S. 00, 69; American

Trucking Ass’ns, vy. United “States, 344 U.S. 298, 312-313;

United States v. Pierce Auto Freight Lines, 327 U.S. 515,

535-536; and United States v. Detroit and Cleveland Nav. Co.,

$26 U.S. 236, 241. The ruling in /nterstate Commerce Com-

mission v. J-T Transport Co., 368 1.8. 81, specifically limited

to contract carrier applications under Section 209(b), is inap-

“ ts

that this rule was inapplicable in the premises be-

_ cause, unlike the usual applicant, it was not a new-

comer to the routes or the traffie, having, in fact,

conducted the very opprations in question for some

considerable’ time before its application was filed.

‘The flaw in appellant's argument is that it would

overlook the illegality of the operations sotight to

be relied on. As already noted, the Commission. de-

determined, and the court upheld the ruling, that the

Peerless operations between the San. Francisco Bay |

area and the Nevada gambling casinos were authorized

by neither Secfion 207(a) nor Section 208 () of the

Interstate Commerce Act, but, on the contrary, were

unlawful, violating Section 206(a) and the Commis-

sion’s regulations issued under Section 208(c). Hav-

ing aequiesced in the cease and desist order, appel-

lant cannot now contest that determination. And

since, obviou#y, no carrier can be permitted to gain

an advantage through illegal conduct, appellant is

foréclosed from invoking past operations to overcome

its burden as‘a prospective ¢ompetitor.’

Realizing its predicament, Peerless seems to argue

that, unlike a’ flagrant violator who would have no

standing to pose as an existing carrier, if is a mere

posite. That decision was expressly grounded on @ recent

amendment establishing new and special criteria to control the

disposition of such applications.

Pes is not to say that appeliant’s illegal operations must

be ignored in determining the need for additional service.

The Commission recognized their relevance ‘on this point (J.S-

‘App. A, Al6). But, of course, merely because an interloper

succeeds in enticing business away from the licensed carrier, it

does not follow that two carriers are necessary.

. 4 .

“Cn neeee aN

technical offender, now seeking to regularize its exist-

_ing service, and, accordingly, should not be penalized

- , for past violations. In connection with this contention,

appellant complains about the supposed difficulty of

appreciating the difference between permissible inci- —

dental. ‘special or chartered parties service’ au-

thyrized by Section 208(¢) and the type of operation

for which a special certificate is required under the

- proviso to Section 207(a). It would serve no purpose ©

to repeat ‘all the distinctions. Suffice it to say that

the difference es, on analysis, are quite clear, and are

well ‘retognized in the transportation industry.’ The *

Commission’s finding that Peerless was engaged in

unauthorized operations was based on admitted facts,

~ and its reasoning is fully articulated in its opinion and

need not be reiterated here. The plain. fact is that

appellant cannot acquire standing as an existing car-.

rier on the basis of patently illegal activity.

In denying appellant’s application, the Commission

found (J.S. ‘App. A, A16-A17) that the existing’

‘carrier, Greyhound, holds ‘ authority. to “serve the

—S

* The- hel distinction between “special or chartered parties

service” under Section 208(c) and “special or chartered opera-

tions” under Section 207(a) of the Act, is made abundantly

clear in the report prescribing the Regulations Governing Spe-

cial or Chartered Party Service, 29 M.C.C. 25, 26, 36; in Rule .

VI thereof, 49 C.F.R. 178.6 (J.S. App. C, A21-A22), and in

“numerous Commission and court decisions which appellant is

presumed to know. A. B. & W. Transit Co. v. United States

(E.D. Va.), 14 Fed. Car. Cases, Par. 815395, and cases cited ;

Crescent Express Lines, Inc. ¥. United States, 49 F. Supp. 92, 94

_ (S.D.N.Y.), affirmed, 320 U.S. 401, 406; National Bus Traffic

Ass'n v. United States, 143 F. ~—_ 689, 692 (D. N.J.), af-

— 352 U.S. 1020.

1

= pee tao)

“areas in question in regular ,routé scheduled opera-

‘ations as well as in-special or charter operations, that

it is ‘*willing and able to adapt its service to the

_ publie’s needs’’; and that the witnesses testifying as

to the need for appellant’s proposed ‘service have ng

shown that ‘they “attempted to tise the existing service :

-available-or have. found such service to be inade «quate

in some material réspect.”’

_ On the basis of its owp review of the administra-

tivesrecord, the Court below concluded that the € om-

‘mission applied the proper standard and was sup-'

ported by the record. (J.S. App. B, A18). .There

is no. occasion for a second fe-¢ xamination of that

record by this Court. Seé Federal T rade Commis-

sion v. Standard. Oil Co., 355_ U.S. 396, 401; Uni-

versal Camera Corp. v. _ Labor Board, 340 U.S. 474,

491.

2. Appellant complains (J. S. 14, 15) that the Com- °

mission's ‘action, in effect, condones discrimination and

rebating by the existing carrier, But these charges

have no foundation.

There is nothing in the: record indicating that Grey "y-.

hound dise ‘riminates in rates or* seryices between the

casinos... Much is sought to,be made of the difference

between the’ charge of $8.80 (plus tax) offered to the

Wagon Wheel Casino and the $6.77 (plus tax) charge

to Harrah’s Club. But the simple fact is that the

first price covered normal regular route opetatians and

was quoted before special operations, covered by an

appropriate tariff, were being run from San Fran-

¢ aca to Harrah’s. Club (Tr. 420, 421, 422-423, 450- _

451).*. Since publication of the tariff for special

operations, Greyhound has made the same rates avail-

able to all casinos at any geographical. location (Tr.

338-339, 422-423). In‘addition, Greyhound will make

the same terminal and vehicle facilities available to,

all casinos (Tr. 341, 422-423, 435, 438, 445, 455-456).

_ The claim that Greyhound participates in rebating:

has no foundation in fact. Greyhound collects. its °

total published tariff charge for the service rendered

and)does-not refund any portion to the passengers or

casinos (Tr. 441-442).

3. Finally, appellant alleges (J.S. 15, 17-18) that .°.

the Conumission ‘favored Greyhound by constantly

linking appellant to the gambling easinos ; disregarded

the economic loss. to appellant resulting from denial

of the application; and ignored evidence showing that

the existing traffie would support both carriers.

The first of ‘these charges is plainly beside the

point. In determining the legality of Peerless’ past

operations, its connection with the casinos was ob-

viously relevant. But there was not the slightest sug-

gestion that those operations were held unlawful be-

¢

«

cause they involved transportation to gambling estab-

lishinents, Nor can appellant propetly complain of

losing reyenue derived from unauthorized service. Ter-

mination of unlawful operations does not support a

claim that the Commission arbitrarily caused appel-

lant to lose revenue or unlawfully confiscated its prop-

erty. United States v. Rock Island Co., 340 U.S. 419,

*“Tr.” references are to the certified transcript of the record

before the Commission which has beén filed with this Court.

q

——— as

“9

449; Ame rican Trucking Ass’ ns. v. U nited Stade, 344

U.S, 298, 322 -323:; Seaboard Air Line R. R. Co.

United States, 131. F. ‘Supp. 129, 136 (E.D. Va.), om

firmed, 349 U.S. 902. ‘The last. complaint presents a

purely evidentiary question, which the Commission,

and the court below, resolved against Peerless. The’

determination, supported by substantial evidence, pré-

sents nothing for further review.

CONCLUSION

For the foregoing reasons, it is respectfully. subs

“© anitted that the appeal _prese nts no s#bstatitial Gne s-

____tion warranting farther 1 review and that the judgment

* of the district court is correct and should be affirmed.

. ; ARCHIBALD Cox,

Solicitor General.

Y>, * Lee Loevincer,

“ Assistant Attorney General.

Rosert B. He MMEL, .

Attorne ¥y.

Ropert W. GINNANE,

General Counsel,

Artur J. Cerra, /

Assistant General Counsél, a

é Interstate Commerce Commission. r

Avevst 1962.

ad

US SOVERNMENT PRINTING OFFICE. 1968 ~