Petition — United States v. Sea-Land Service, Inc.

Supreme Court, U. S

FILED

we. 7B EN

OCT 28 1978

Iu the Supreme Court of the Unithr Seas oe

OCTOBER TERM, 1978

UNITED STATES OF AMERICA, PETITIONER

Vv.

SEA-LAND SERVICE, INC.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

WADE H. MCCREE, JR.

Solic:tor General

BARBARA ALLEN BABCOCK

Assistant Attorney General

SARA SUN BEALE

Assistant to the Solicitor

General

LEONARD SCHAITMAN

ELOISE E. DAVIES

Attorneys

Department of Justice

Washington, D.C. 20530

JOSEPH N. INGOLIA

General Counsel

EDWARD G. GRUIS

Deputy General Counse!

CAROL J. NEUSTADT

Attorney

Federal Maritime Commission

Washington, D.C. 20573

INDEX

Page

RN NIE oacenckst nessictsnitantnatenmuateents re 7 1

RE Ea eee Ae ee eee sss 1

RENE BOR Rn 2

I I cis ct scciinssicaissinisdenehdctaclaaneaadaeaneneid 2

I ol i eee 2

Reasons for granting the petition .._____. 7

RE NE OER od oe Sd ce rte | 14

CITATIONS

Cases:

Artvale, Inc. v. Rugby Fabrics sig 303

F. 2d 283 _ ee 10

Ashcroft v. Mattis, 431 US. 171: cee 9

Bankers Trust Co. v. Mallis, 435 U.S.

ERE Ra SE Nee PR oR eel 8

Bray v. United States, 423 U.S. 73 10

Browder v. Director, 434 U.S. 257 8

Chase Manhattan Bank v. South Acres

Development Co., 434 U.S. 236 9

Coopers & Lybrand v. Livesay, No. 76-

es (ane Sk, TS) 8

Crowe v. Cherokee Wonderland Inc., 379

II teienes secon Saasclais acon ebaealcklvamell 10

Day & Zimmerman, Inc. v. Challoner, 423

EE REE, odieero stor Re beeen AT RRA 10

diLeo v. Greenfield, 541 F. 2d 949 13

Donovan v. Penn Shipping Co., 429 U.S.

ER Re RE nO ORE ee Bienes 9

Gadsen v. Fripp, 330 F. 2d 545 12

II

Cases—Continued

Gravitt v. Southwestern Bell caso

Co., 480 U.S. 723 _ net

Hawaiian Paradise Park Corp. v. _ Friend-

ly Broadcasting Co., 414 F. 2d 750_.

Mancusi v. Stubbs, 408 if = |

Massachusetts Mutual Life Insurance Co.

v. Ludwig, 426 U.S. 479

Morales v. Turman, 430 U.S. 322

National Bank of North America v. Asso-

ciates of Obstetrics, 425 U.S. 460...

National Hockey League v. Metropolitan

Hockey Club, Inc., 427 U.S. 689

Proctor v. Warden, No. 77-5898 _

17, 1978) . |

Redevelopment ‘Comm’n. . of Greenville’ v.

Hannaford, 29 N.C. App. 1, 222 S.E.

2d 753 | PPR .

Smith v. Digmon, 434 US. 332 - She '

Traveler's Insurance Co. v. United States,

Re ERS eeas a ne

United States v. Dieter, 429 US. 6 -

United States v. F. D. Rich Co., 525 F.

2d 760

United States v. Hougham, 364 U. S. 310.

United States v. ITT Continental Baking

hg ee I hc sea na

United States v. Kellum, 523 F, 2d 1284.

United States v. Morrison, 429 U.S. 1...

United States v. Southern — 278 F.

Supp. 60 mtr: eciiceseinie

Page

10

10

Statutes : Page

Shipping Acts:

46 U.S.C. (Supp. V) 831(c) —....... 2,3, 4

46 U.S.C. (Supp. V) 844 _....._.... 2,3, 4

Se I ees auasannecaee 2

Miscellaneous:

9 Moore’s Federal Practice (2d ed. 1973) 13

Gu the Supreme Court of the United States

OCTOBER TERM, 1978

No.

UNITED STATES OF AMERICA, PETITIONER

Vv.

SEA-LAND SERVICE, INC.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

The Solicitor General, on behalf of the United

States, petitions for a writ of certiorari to review

the judgment of the United States Court of Appeals

for the Third Circuit.

OPINIONS BELOW

The court of appeals’ order (App. A, infra, la-2a)

is unreported. The district court’s opinion (App. C,

infra, 4a-15a) is reported at 424 F. Supp. 1008.

JURISDICTION

The judgment of the court of appeals was entered

on May 22, 1978 (App. A, wfra, la-2a). A petition

for rehearing was denied on June 30, 1978 (App. B,

(1)

2

infra, 3a). On September 19, 1978, Mr. Justice

Brennan extended the time in which to file a petition

for a writ of certiorari to and including October 28,

1978. The jurisdiction of this Court is invoked under

28 U.S.C. 1254(1).

QUESTION PRESENTED

Whether a court of appeals has jurisdiction to hear

an appeal from a judgment drawn up by government

counsel at the district judge’s request, where the

United States accepted payment in satisfaction of

the portion of the judgment that was no longer in

dispute.

STATUTE INVOLVED

28 U.S.C. 1291 provides that “[t]he courts of

appeals shall have jurisdiction of appeals from all

final decisions of the district courts of the United

States, * * * except where a direct review may be

had in the Supreme Court.”

STATEMENT

The United States brought this action against Sea-

Land Service, Inc., a water carrier engaged in the

Atlantic Coast-Puerto Rico trade, seeking to recover

civil penalties authorized by the Shipping Acts (46

U.S.C. (Supp. V) 831(c) and 844). The statutes

authorize a penalty of as much as $1,000 for each

day of a continuing violation. The United States

argued that respondent violated its tariff throughout

a 151-day period by refusing to provide containers to

“consolidators,” persons who aggregate small ship-

ments so that they fill a shipping container. Respond-

ee eee ee

mere oy wea.

3

ent had filed a tariff amendment that would have

allowed it to refuse to provide the containers, but the

Federal Maritime Commission suspended this pro-

posed change and instituted an investigation. Never-

theless respondent, which had signed a labor agree-

ment in which it agreed to refuse to supply contain-

ers, abided by the labor agreement rather than by

the terms of its tariff.

Respondent argued that there had been evidence

of only five instances in which it had refused par-

ticular requests for containers during this 151-

day period. The United States responded that this

was not controlling because respondent would have

refused any request, and its public unwillingness to

supply containers made requests unlikely. The prin-

cipal question for the district court, therefore, was

whether the maximum fine was $151,000 ($1,000 for

each day during which respondent adhered to the

labor agreement that bound it to refuse to supply

containers) or $5,000 ($1,000 for each express re-

fusal to comply with an explicit request by a con-

solidator for containers) .*

1 This is the first action instituted on behalf of the Federal

Maritime Commission against a carrier in which the continu-

ing nature of the violation and the meaning of the statutory

language authorizing penalties “for each day such violation

continues” (46 U.S.C. (Supp. V) 831(c), 844) has been placed

in issue. Both Sections authorize a civil penalty of up to $1,000

for each day that a violation continues. The district court’s

opinion, which holds that a specific request for and denial of a

service which the carrier has agreed to provide by its tariff

must be shown for each day that a violation is alleged to have

continued, will severely restrict the reach of these provisions.

The Federal Maritime Commission believes that proof of

a carrier’s adherence to an announced policy terminating

4

The district court agreed with respondent (App.

C, infra, 4a-15a), and it instructed government coun-

sel to submit an appropriate order (id. at 15a). In

accordance with the court’s opinion, government

counsel drew up an order awarding the United States

“$5,000, with interest to be computed from the date

of this judgment” (App. D, infra, 16a). Both par-

ties subscribed their “consent to the entry” of that

judgment, which was then entered by the district

court (ibid.).

Within ten days after the district court clerk’s

entry of the judgment* the United States moved for

reconsideration of the court’s decision insofar as it

had declined to find respondent guilty of a continuing

151-day violation of the Shipping Acts (see App. G,

infra, 21a-22a). At the hearing on this motion, the

district court commented in passing that the form of

the order was ambiguous and could be read as giving

consent to the substance of the judgment, as well as

the services in question should be sufficient to establish a con-

tinuing violation for so long as the carrier adheres to that

policy, or its tariff remains unchanged. If it were otherwise,

proof of continuing violations would present an insurmount-

able hurdle for the Commission, because there will be few re-

quests by consumers for services that a carrier has publicly

announced that it will not provide. The question of what con-

stitutes a continuing violation is therefore one of importance

to the Commission.

? The clerk’s entry read (App. E, infra, 18a):

There was entered on the docket on 3-22-77 a consent

(judgment) for $5,000 with costs.

a

5

the form of the order.* Neither party responded to

this comment. The ccurt then considered the motion

on its merits and orally reaffirmed its opinion and

judoment.” The court subsequently advised the par-

ties by letter to disregard its suggestion during the

course of'the hearing that the motion for rehearing

might not have been timely; the court reiterated that

it was denying the government’s motion for the rea- -

sons stated at the hearing, “which go to the merits

of the issue raised” (id. at 22a). Respondent then

tendered and the government accepted payment of

$5,000 in satisfaction of the portion of the govern-

ment’s claim that was no longer at issue (App. F,

infra, 19a-20a).

The United States then filed a timely notice of

appeal. Its appellate brief raised the question whether

the violation had continued throughout the 151-day

period, making a fine of $151,000 appropriate. Re-

spondent’s brief, in addition to addressing the merits,

argued that the parties had entered a “consent judg-

ment,” which had been paid and satisfied, from which

’ The court commented:

Parenthetically I note that counsel said we hereby con-

sent to the entry of the foregoing judgment.

I wonder if that was really meant to be only to the form

of it, because counsel has consented to a $5,000 judgment.

It looks like he acquiesced in a decision. I will leave that

for another day.

C.T. App. 558. (“C.T. App.” refers to the Appendix filed in the

court of appeals.)

*C.T. App. 558-561.

6

no appeal would lie.’ The government argued in reply

that the judgment was not a “consent judgment,” be-

cause it was not a judgment arrived at by agreement

of the parties, but rather was a judgment rendered

by the court to which the parties had merely sub-

scribed their formal consent. The government also

urged that its acceptance of payment of $5,000 for

the five discrete violations no longer in dispute had

not foreclosed its right of appeal from the court’s

denial of its claim for an additional $146,000.°

The court of appeals limited orai argument to the

jurisdictional issue; the judges indicated that they

were disturbed both by the form of the judgment

entered, which did not indicate on its face that gov-

ernment counsel’s consent was “as to form only,”

and by the government’s acceptance of the $5,000

payment. On the day of argument the court entered

a judgment order dismissing the appeal, without opin-

ion, for lack of jurisdiction (App. A, infra, la-2a).

The government filed a timely petition for rehear-

ing and an affidavit from its counsel explaining the

circumstances of the entry of judgment and his ac-

ceptance of payment (App. H, infra, 24a-27a). Coun-

sel stated that “the judgment was intended to show

that counsel agreed to the statement of the Court’s

decision” (id. at 25a) and that he had accepted pay-

ment of the $5,000 at respondent’s request so that

® Appellee’s Brief at 11-12. This was the first time respond-

ent had characterized the judgment as a “consent judgment.”

* Appellant’s Reply Brief at 1-2; 4-7.

a .

7

respondent could avoid an obligation to pay interest

on the judgment (id. at 26a). Counsel’s affidavit

concluded (id. at 26a-27a):

Admittedly, the pleadings entered in the Dis-

trict Court could have been more appropriately

phrased. There was, however, no intent at any

time by the Government to acknowledge any

agreement with or acceptance of the decision by

the District Court in this case. I am of the firm

conviction that no such intent was ever commu-

nicated to counsel for [respondent] and I am

also of the firm conviction that they were fully

aware throughout that I myself, and counsel for

the Federal Maritime Commission, disagreed

with the District Court’s opinion and that no

actions by me were in any way intended to pre-

clude the Government from moving for recon-

sideration or appealing the decision of Judge

Meanor.

The court of appeals denied the petition for re-

hearing without requesting a response (App. B, infra,

3a).

REASONS FOR GRANTING THE PETITION

1. The principal dispute in this case has been

about $146,000—the difference between the maximum

fine on the United States’ theory of the case and the

maximum fine on respondent’s theory of the case.

The district court, having agreed with respondent,

ordered government counsel to prepare an appropri-

ate judgment that would award the United States

only $5,000. Counsel did so, and the judgment was

entered. Respondent paid the sum no longer in dis-

8

pute, and the United States appealed, seeking en-

largement of the judgment by the disputed $146,000.

Without explaining why it did so, the court of appeals

dismissed the appeal.

The court of appeals apparently determined that

the United States had somehow unwittingly forfeited

its right to appeal. Because the court did not write

an opinion, however, the United States, which files

hundreds of appeals every year, does not know what

is required to prevent the dismissal of appeals in the

future. It does not know whether it must refuse to

draft the judgment, refuse to accept payment of a

judgment, or file a paper denying that it consents to

the judgment it wrote. A dismissal for want of juris-

diction is of special concern to the United States be-

cause of the volume of litigation it conducts. Indeed,

it should be of concern to all litigants for, as this Court

has repeatedly stated, the rules governing the scope of

appellate jurisdiction should be clear and capable of

mechanical application.’ It is anything but clear,

however, why the court of appeals dismissed the ap-

peal here.

The judges of the court of appeals expressed two

concerns at oral argument. They asked whether the

judgment, drawn up by government counsel, might

be a consent judgment that the parties cannot later

appeal. They also asked whether the United States’

7 See, e.g., Coopers & Lybrand v. Livesay, No. 76-1836 (June

21, 1978), slip op. 7-10; Bankers Trust Co. v. Mallis, 485 U.S.

381, 386-387 (1978); Browder v. Director, 434 U.S. 257, 264,

268-271 (1978).

9

acceptance of $5,000 in satisfaction of the portion of

the claim that is no longer in dispute would bar an

appeal from the district court’s refusal to award a

larger sum. As we argue below, neither of these

concerns affects the court’s jurisdiction. Indeed,

principles that have been understood for many dec-

ades establish that the court of appeals was required

to decide the case on the merits. Because the disposi-

tion of this case draws into question the court of

appeals’ adherence to settled principles, and because

its unexplained order introduces:an element of real

doubt into the standards of appellate jurisdiction,

this Court should grant review and remove the un-

certainty. In our view, the court of appeals’ error

is so clear that it would be appropriate for the Court

summarily to reverse the judgment, as it has done in

numerous recent cases involving questions of juris-

diction and judicial administration.‘

8 See, e.g., Proctor v. Warden, No. 77-5898 (April 17, 1978)

(court of appeals’ issuance of opinion showing that it may not

have considered the case); Smith v. Digmon, 434 U.S. 332

(1978) (district court jurisdiction of petitions for habeas

corpus); Chase Manhattan Bank v. South Acres Development

Co., 484 U.S. 236 (1978) (jurisdiction of the District Court of

Guam); Ashcroft v. Mattis, 431 U.S. 171 (1977) (federal

jurisdiction to issue declaratory judgment); Gravitt v. South-

western Bell Telephone Co., 430 U.S. 723 (1977) (appellate

jurisdiction to review orders remanding cases to state courts) ;

Morales Vv. Turman, 430 U.S. 322 (1977) (appellate jurisdic-

tion to review declaratory judgment invalidating state prac-

tices); Donovan v. Penn Shipping Co., 429 U.S. 648 (1977)

(appellate jurisdiction to review remittitur); United States

v. Dieter, 429 U.S. 6 (1976) (appellate jurisdiction when

notice of appeal is filed after district court denies reconsider-

10

2. The record in the district court, as supplemented

by the uncontradicted affidavit of the government’s

attorney, establishes that the judgment of that court

is not a “consent judgment.” A consent judgment is

one whose terms and conditions are settled and agreed

to by the parties; it is, in essence, an agreement or

contract between the parties that is entered with the

sanction or approva! of the court.’ There was no such

agreement here. The case was fully litigated, and

the terms of the order were set by the court. At the

court’s express request government counsel drafted

an order that—whatever ambiguities were introduced

by the use of the word “consent”—was understood

by respondent and the district court as stating the

ation); United States v. Morrison, 429 U.S. 1 (1976) (appel-

late jurisdiction to review acquittal in criminal case) ; National

Hockey League V. Metropolitan Hockey Club, Inc., 427 U.S.

639 (1976) (scope of appellate authority to review dismissal

for failure to make discovery); Massachusetts Mutual Life

Insurance Co. V. Ludwig, 426 U.S. 479 (1976) (scope of argu-

ments open to appellee); National Bank of North America V.

Associates of Obstetrics, 425 U.S. 460 (1976) (venue in na-

tional bank cases); Bray v. United States, 423 U.S. 73 (1975)

(appellate jurisdiction of Temporary Emergency Court of

Appeals); Day & Zimmerman, Inc. Vv. Challoner, 423 U.S. 3

(1975) (choice of law rules in diversity cases).

® United States v. Kellum, 523 F.2d 1284, 1287 (5th Cir.

1975); Crowe Vv. Cherokee Wonderland, Inc., 379 F.2d 51, 54

(4th Cir. 1967); Artvale, Inc. V. Rugby Fabrics Corp., 303 F.2d

283, 284 (2d Cir. 1962); Traveler's Insurance Co. v. United

States, 283 F. Supp. 14, 28 (S.D. Tex. 1968); United States v.

Southern Ry., 278 F. Supp. 60 (W.D. N.C. 1967); Redevelop-

ment Comm’n. of Greenville Vv. Hannaford, 29 N.C. App. 1, 222

S.E. 2d 752, 753 (1976). See United States v. ITT Continental

Baking Co., 420 U.S. 223, 236 n.10 (1975).

atin adeineee ——

|

11

government’s consent to the form of the judgment

only.

The United States vigorously pressed its argument

that respondent had been guilty of a continuing vio-

lation, and within days of the court’s opinion reject-

ing that argument counsel discussed the procedures

for the government’s appeal (App. H, infra, 24a-25a).

Government counsel drafted the order only because

he was directed to do so by the district court (App.

C, infra, 15a). Within 10 days of the entry of the

judgment, the government filed a motion for recon-

sideration. Respondent did not oppose that motion on

the ground that a consent judgment had been entered

—even when the court noted that the order was

ambiguous and could be read as a consent judgment.

Nor did the district court treat the judgment as a

consent judgment; to the contrary, it explicitly de-

nied the government’s motion for reconsideration “for

* * * reasons * * * which go to the merits of the issue

raised” (App. G, infra, 22a).° The United States

promptly appealed. It is inconceivable that this se-

quence of events refiects the consent of the United

States to the extinguishment of its claim.

3. It is equally clear that the government’s ac-

ceptance of payment of the $5,000 judgment did not

affect the court of appeals’ jurisdiction. As this Court

stated in United States v. Hougham, 364 U.S. 310,

312 (1960):

1 Accordingly, the clerk’s docket entry characterizing the

judgment as a consent judgment (App. E, infra, 18a) is not

controlling.

12

It is a generally accepted rule of law that where

a judgment is appealed on the ground that the

damages awarded are inadequate, acceptance of

payment of the amount of the unsatisfactory

judgment does not, standing alone, amount to an

accord and satisfaction of the entire claim.

See also Mancusi v. Stubbs, 408 U.S. 204, 206-207

(1972). Government counsel’s uncontradicted affi-

davit stated that, after the district court’s initial

opinion, respondent’s counsel requested the United

States to accept payment of the $5,000 that was no

longer in dispute, to avoid the accumulation of in-

terest on that sum (App. H, infra, 26a). The gov-

ernment’s counsel agreed “with the understanding

that it did not preclude us from filing an appeal,”

and respondent’s counsel indicated he “understood

[the government’s] position” (7bid.).

It is well established that acceptance of the benefits

of a judgment where, as here, there is no intention

to settle a disputed claim, does not forfeit the right

to appeal. As the court of appeals stated in Gadsen

v. Fripp, 330 F.2d 545, 548 (4th Cir. 1964):

When a payment of a judgment is made and ac-

cepted under such circumstances as to indicate

an intention to finally compromise and settle a

disputed claim, an appeal may be foreclosed, but,

under such circumstances, it is the mutual mani-

festation of an intention to bring the litigation

to a definite conclusion upon a basis acceptable

to all parties which bars a subsequent appeal,

not the bare fact of payment of the judgment.

13

Accord, United States v. F. D. Rich Co., 525 F.2d

760, 764-765 (7th Cir. 1975); diLeo v. Greenfield,

541 F.2d 949, 952-954 (2d Cir. 1976); Hawaiian

Paradise Park Corp. v. Friendly Broadcasting Co.,

414 F.2d 750, 752 (9th Cir. 1969); 9 Moore’s Fed-

eral Practice § 203.06 at 718-719 (2d ed. 1973). In-

deed, in United States v. F. D. Rich Co., supra, a case

remarkably similar to the present one, the Seventh

Circuit held that payment of a judgment to avoid

accrual of interest would not foreclose an appeal.

4. Because neither of the grounds that troubled

the court of appeals could affect its jurisdiction, the

court’s unexplained dismissal of the government’s

appeal violates settled principles regarding appellate

jurisdiction. Review by this Court is necessary to

remove the troubling uncertainty regarding the

standards for appellate jurisdiction that has been

created by the Third Circuit’s summary action.

14

CONCLUSION

The petition for a writ of certiorari should be

granted. The Court may wish to consider summary

reversal.

Respectfully submitted.

WADE H. MCCREE, JR.

Solicitor General

BARBARA ALLEN BABCOCK

Assistant Attorney General

SARA SUN BEALE

Assistant to the Solicitor

General

LEONARD SCHAITMAN

ELOISE E. DAVIES

Attorneys

JOSEPH N. INGOLIA

General Counsel "

EDWARD G. GRUIS

Deputy General Counsel

CAROL J. NEUSTADT

Attorney

Federal Maritime Commission

OCTOBER 1978

a

la

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 77-2142

UNITED STATES OF AMERICA, APPELLANT,

v8.

SEA-LAND SERVICE, INC.

Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil No. 74-1664)

Argued May 22, 1978

Before: ALDISERT, GIBBONS and HIGGINBOTHAM,

Circuit Judges.

JUDGMENT ORDER

After consideration of all contentions raised by

appellant, it is

2a

ADJUDGED AND ORDERED that the appeal be

and is hereby dismissed for lack of jurisdiction.

Costs taxed against appellant.

By THE CourT,

/s/ Aldisert

Circuit Judge

Costs taxed in favor of appellee as follows:

aaa sa dan nies renieitbins $181.28

/s/ Thomas F, Quinn

THOMAS F.. QUINN

Clerk

DATED: May 22, 1978

Certified as a true copy and issued in lieu of a formal

mandate on July 10, 1978.

Test:

THOMAS F.. QUINN

Clerk, United States

Court of Appeals for

the Third Circuit

38a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 77-2142

UNITED STATES OF AMERICA, APPELLANT,

vs.

SEA-LAND SERVICE, INC.

Present: ALDISERT, GIBBONS and HIGGINBOTHAM,

Circuit Judges.

ORDER

After consideration of appellant’s petition for re-

hearing before the original panel, it is ORDERED

that said petition be and the same is hereby denied.

By THE Court,

/s/ Aldisert

Circuit Judge

DATED: June 30, 1978

4a

APPENDIX C

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

Civil Action No. 74-1664

UNITED STATES OF AMERICA, PLAINTIFF,

v.

SEA-LAND SERVICE, INC., DEFENDANT

Appearances:

Jonathan L. Goldstein, Esq.

United States Attorney

Attorney for Plaintiff

By: Warren A. Schneider, Esq.

U.S. Department of Justice

Admiralty and Shipping Section

(New York, New York)

and

Carol J. Neustadt, Esq.

Federal Maritime Commission

(Washington, D.C.)

Meyner, Landis & Verdon

Attorneys for Defendant

By: Jeffrey L. Reiner, Esq.

and

Ragan & Mason, Esgqs.

(Of Counsel, D.C. Bar)

By: Gerald A. Malia, Esq.

OPINION

MEANOR, District Judge.

This is a civil action wherein the United States

seeks to recover a civil penalty for certain acts of

5a

the defendant which are alleged to violate (1) the

terms of its tariff on file with the Federal Maritime

Commission (FMC), and (2) a suspension order

issued by the FMC,

Sea-Land Service (SLS) is a common carrier by

water. Before and during the relevant dates at issue

it provided, among other services, containership serv-

ices between Elizabeth, New Jersey, and Puerto Rico.

This action concerns SLS’s activities with certain

“consolidators,” or non-vessel-owning common car-

riers.

Consolidators are in the business of receiving small

or less than container-load shipments from shippers,

consolidating such shipments and “stuffing” them into

containers furnished by carriers, and then forward-

ing the loaded containers to the carrier’s terminal for

ultimate transportation. SLS was a furnisher of such

containers, and provided containership service accord-

ing to tariff provisions filed by SLS with the FMC

which were in effect at all times relevant herein.

Typically, consolidators are not located on the water-

front, and containers, full or empty as the case may

be, are conveyed by land transportation between the

consolidation site and the docks.

Consolidation activities became a concern to the

International Longshoremen’s Association (ILA)

which viewed the inland consolidation work as prop-

erly belonging to ILA members at the waterfront.

In January 1973, the ILA met with the association

representing SLS and other carriers, and an agree-

ment was reached wherein the carriers agreed not

6a

to supply containers to consolidators’ facilities within

50 miles of a port unless such facilities were located

on a pier where vessels normally dock. The carriers

further agreed to pay penalties for containers furn-

ished in contravention of the agreement.

On March 15, 1973, SLS commenced observance of

the above agreement and denied containers tc consoli-

dators within a 50-mile radius. On the same date,

SLS filed proposed amendments to its tariff with the

FMC which were scheduled to become effective on

April 14, 1973. The proposed amendments included

the terms of the agreement made with the ILA. The

amendments also included a provision authorizing

SLS to pass on any penalty it incurred by supplying

containers in breach of the ILA agreement to the con-

solidator receiving the containers.

On April 18, 1973, the FMC ordered an investiza-

tion into the lawfulness of the submitted tariff amend-

ments, and also ordered the suspension of the amend-

ments until August 18, 1973. The order did not sus-

pend the tariff in effect prior to the submission of

the amendments.

During the period between April 13 and August

14, 1973, SLS complied with the terms of the ILA

agreement. Actual requests for containers which

SLS refused to honor during this period, as reflected

in the record before me, appear to be limited to five

requests by a single consolidator, Consolidated Ex-

press, Inc. The record also reflects that during the

first six months of 1973, SLS was assessed, and it

7a

paid, $102,000 in penalties for alleged violations of

the ILA agreement. These penalties were not passed

on to the individual consolidators involved. The par-

ties have stipulated that in refusing to supply con-

tainers, SLS acted not in reliance on the tariff provi-

sions which had been suspended by the FMC, but

rather on its labor agreement and on its tariff which

predated the amendments and the suspension order.

On July 12, 1978, the consolidators’ association

filed a petition with the FMC alleging that SLS

had not complied with the suspension order, and

sought to have that order enforced. The FMC, realiz-

ing that the suspension order had effect for only one

more month, and also aware that the NLRB was

about to seek an injunction against the future ob-

servance of the ILA agreement, pursued no judicial

relief at that time.’

On November 20, 1973, the FMC gave notice to

SLS of a claim and demand for recovery of $120,000

for 120 or more alleged violations of its April 13

suspension order. On October 24, 1974, the United

States instituted this action against SLS asserting

a claim for alleged violations of §2 of the Inter-

coastal Shipping Act, 46 U.S.C. §§ 844, and § 32 of

the Shipping Act, 46 U.S.C. § 831.

1The ILA agreement was ultimately enjoined by the NLRB

on December 4, 1975, and that action has been affirmed by the

Second Circuit. ILA v. NLRB, 537 F.2d 706 (2d Cir. 1976).

8a

I

46 U.S.C. § 844 requires all common carriers by

water in intercoastal commerce to file tariffs with

the FMC, and provides that no common carrier shall

deny to any person any privilege or facility,

except in accordance with

said tariffs. This provisions goes on to state that

(w)hoever violates any provision of this sec-

tion shall be subject to a civil penalty of not

more than $1,000 for each day such violation

continues.

46 U.S.C. § 831(c) provides that

(w)hoever violates any order, rule, or regu-

lation of the Federal Maritime Commission made

or issued in the exercise of its powers, duties, or

functions, shall be subject to a civil penalty of

not more than $1,000 for each day such viola-

tion continues.

In its complaint, the United States has charged that

the defendant’s compliance with the ILA agreement,

despite the FMC suspension order during the 151-

day period from March 15, 1973 to August 13, 1973,

constitutes a violation of both of the above statutory

provisions, and renders the defendant liable for a

penalty of $151,000.

II

I find it unnecessary to yo tc the question of

whether the defendant is liable for any penalty under

46 U.S.C. § 831 predicated on a violation of the FMC

suspension order. For reasons stated below, I find

9a

that the defendant has violated the terms of its tariff

filed with the FMC. This alone is sufficient to justify

the imposition of a penalty in this case.

I do not believe that Congress intended by adoption

of both 46 U.S.C. § 831 and § 844 to render a car-

rier subject to liability for double penalties on facts

such as presented in this case. From my reading of

the complaint herein, which appears to set forth al-

ternative theories for but a single recovery, the

United States would seem to agree. Furthermore, I

believe that the sole effect of the April 13 suspension

order was to negate the viability of the proposed tariff

amendments which the defendant had filed in March.

This order created no affirmative duty on the part of

the defendant in addition to those which otherwise

existed by virtue of the defendant’s tariff which pre-

dated the amendments, and which was unaffected by

the suspension order. As such, the issue of liability

in this case appropriately rests on the question £

whether the acts of the defendant constitute a breach

of the terms of its tariff in violation of 46 U.S.C.

§ 844, and not whether these acts violated the FMC

suspension order.

III

Preliminarily, it should be noted that the obliga-

tion of common carriers to provide services is one

which is rooted in our early common law. American

Trucking Ass’ns, Inc. v. Atchison, T., & S. F. Ry.,

387 U.S. 397, 406 (1967). This duty runs not only

to shippers, but to the public. As such, a carrier owes

the public a continuing duty to exercise reasonable

10a

efforts to maintain services, even when beset by labor

controversies. Railway Employees v. Florida East

Coast Ry., 384 U.S. 238, 245 (1966). Congress has

found it appropriate to codify this common law duty

with respect to intercoastal carriers by requiring

them to file tariffs with a regulatory agency, and

subjecting them to suit by the United States for civil

penalties if they should deny services in derogation

of these tariffs. 46 U.S.C. § 844.

Item 570 of the defendant’s tariff (Section 1-1st

revised page 124), entitled “REMOVAL OF CAR-

RIER’S TRAILER BY SHIPPER OR CONSIGNEE

FOR LOADING OR UNLOADING” controls the in-

stant action. It provides in part:

When prior arrangements have been made with

the carrier, trailers may be removed from the

terminals of the carrier, by Shipper or Consignee

for loading and unloading....

The defendant has maintained that the “prior ar-

rangements” language of this provision affords a

certain measure of discretion in whether it is obli-

gated to comply with requests for containership serv-

ices. The parties have stipulated that such requests

would be declined under this provision for reasons of:

A) lack of container at the particular time,

B) vessel capacity,

C) failure of customer to pay previous

charges, and

D) lack of labor.

lla

Statement of Facts not in Dispute, paras. 44, 45.

Defendant argues that if it had supplied containers

in violation of the ILA agreement, a general strike

by the ILA which could have closed the port might

have ensued. This threat, defendant urges, justified

its denial of containers in adherence to its labor

agreement. I find this position to be untenable.

Any ambiguity in a tariff must be construed

against the carrier since the carrier drafted the tariff.

Chicago & N.W. Ry. v. Hunt-Wesson Foods, 504 F.2d

905, 908 (7th Cir. 1974); Penn Central Co. v. Gen-

eral Mills, Inc., 439 F.2d 1338, 1341 (8th Cir. 1971).

It is entirely reasonable, and consistent with the gen-

eral policy aimed at assuring the public adequate

carrier service, to construe Item 570 of defendant’s

tariff as vesting no discretion in the defendant to

deny consolidators requested containership services,

within the bounds of reasonable possibility. A car-

rier is not required to perform the impossible.

“(T)he law, of course, exacts only what is reasonable

from a carrier.” Minneapolis & St. L. Ry. v. Pacific

Gamble Robinson Co., 215 F.2d 126, 134 (8th Cir.

1954). It is evident from the facts of this case that

the defendant, in denying containership services, was

not constrained by factors which rendered its per-

formance impossible. The parties have stipulated

that prior to March 1973, the defendant had routinely

made containers available to consolidators. Statement

of Facts not in Dispute, para. 30. They have also

stipulated that notwithstanding defendant’s present

assertion that Item 570 of its tariff vests it with dis-

12a

certion to deny containership services, this provision

had never been exercised with regard to Consolidated

Express, Inc. before March 1973. Id., para. 32. It

is evident that the defendant denied containership

services solely in reliance on its labor agreement and

the belief that its tariff authorized such conduct. In-

asmuch as a labor agreement cannot relieve a car-

rier from performing its duties, even where there

exists the threat of a strike, Montgomery Ward &

Co. v. Northern Pacific Terminal Co., 128 F.Supp.

475, 516 n.92 (D. Ore. 1953), that belief was un-

founded. I, therefore, find that by denying contain-

ership services to consolidators, the defendant failed

to observe the provisions of its tariff then in effect,

in violation of 46 U.S.C. § 844.’

2 This finding is not disturbed by the fact that at the time

relevant to this case Consolidated Express, Inc. may or may

not have been engaged in consolidation activities without an

appropriate license from the Interstate Commerce Commis-

sion. There may be situations where a carrier with actual

knowledge of wrong-doing by a shipper may be justified, or

obligated to withhold carrier services. See, e.g., North Ameri-

can Van Lines, Inc. V. Heller, 371 F.2d 629 (5th Cir. 1967)

(where carrier had actual knowledge that one tendering goods

for shipment was not in rightful possession of such goods,

carrier was not bound to receive the property for shipment).

There is no evidence in the instant case that the defendant

had such actual knowledge of possible wrongdoing by Con-

solidated Express, Inc. at the time it withheld requested con-

tainers, nor any evidence that if it had such knowledge, it

denied containers in reliance thereon. To the contrary, the

defendant has stipulated that it denied containers in reliance

on its labor agreement and its tariff on file with the FMC.

13a

IV

The next issue to be resolved is whether the acts

of the defendant constitute a continuing violation of

46 U.S.C. § 844 so as to render it liable for daily

penalties for the 151-day period in question, or wheth-

er these acts constitute a series of periodic violations

rendering it liable for a penalty for each documented

act of refusing to supply requested containers. Pre-

cisely what constitutes a continuing violation within

the meaning of 46 U.S.C. § 844 has not been judi-

cially determined. This question has been dealt with

in the context of another civil penalty statute, 15

U.S.C. § 45(l), which penalizes violations of Federal

Trade Commission cease and desist orders. In United

States v. ITT Continental Baking Co., 420 U.S. 223

(1975), the Supreme Court held that the acquisition

by the defendant of the assets of certain businesses

in violation of a FTC order constituted a continuing

violation of 15 U.S.C. § 45(1) so long as the assets

were retained. In dictum, the court indicated that

continuing violations would also include continuing

conspiracies to fix prices or control production, main-

tenance of a billboard in defiance of an order pro-

hibiting false advertising, failure to dissolve an ille-

gal merger, and failure to eliminate an interlocking

directorate. Id. at 231. Each of these violations in-

jure the public and inure to the benefit of the violator

until an act of abatement is taken. On the other

hand, it has been held that there is no continuing

violation in a situation involving price discrimination

by means of illegal discounts, where each discrimina-

l4a

tory transaction was an independent and separately

identifiable act. FTC v. Consolidated Foods Corp.,

396 F. Supp. 1353 (S.D.N.Y. 1975).

I find the facts of this case to be more akin to the

situation in Consolidated Foods than to the examples

listed by the Supreme Court in ITT Continental Bak-

ing. The parties herein have stipulated that actual

requests for containers which the defendant failed

to honor consist of “approximately five telephone calls,

confirmed by telegrams, by Consolidated Express, Inc.

for one or two containers.” Statement of Facts not

in Dispute, para. 38. The parties have also stipulated

that during the first six months of 1973 the defend-

ant paid $102,000 in penalties allegedly for providing

containers to consolidators in violation of the ILA

agreement. Id., para. 21. In my mind, this is suffi-

cient to indicate that each decision to supply or with-

hold requested containers was an independent act. I,

therefore, find no continuing violation of 46 U.S.C.

§ 844 on the facts of this case. I find that each of

the five occasions to which the parties have stipulated

that the defendant denied containers to Consolidated

Express, Inc. constitutes a single violation of 46

U.S.C. § 844.

Vv

The amount of penalties to be assessed for each

violation by the defendant is a matter within the

court’s discretion. Factors commonly taken into ac-

count in assessing civil penalties include the good or

bad faith of the violator, the ability of the violator

to pay, the degree of public injury engendered by the

eS

15a

violations, and the degree to which the violator prof-

ited from his acts. See FTC v. Consolidated Foods

Corp., supra, 396 F. Supp. at 1356-57. However, civil

penalty statutes should be applied in a manner which

promotes their deterrent effect. See United States v.

ITT Continental Baking Co., supra, 420 U.S. at 231-

32. Indeed, when the punitive provision of 46 U.S.C.

§ 844 was amended in 1972 to provide for civil rather

than criminal penalties, Congress sought to maximize

the deterrent value of the statute. S. Rep. No. 92-

1014, 92d Cong., 2d Sess. reprinted in [1972] U.S.

Code Cong. & Ad. News 3121. Taking the above fac-

tors into account, I find it appropriate to assess the

defendant a penalty of $1,000 for each of its five

violations. Judgment is, therefore, rendered in favor

of the United States in the amount of $5,000.

The United States should submit an appropriate

order.

DATED: January 138, 1977.

16a

APPENDIX D

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

Civil Action No. 74-1664

UNITED STATES OF AMERICA, PLAINTIFF,

against

SEA-LAND SERVICE, INC., DEFENDANT

FINAL JUDGMENT

This action having duly come on for trial before

the Court, the Honorable H. Curtis Meanor, District

Judge, presiding, and the Court, after due delibera-

tion having rendered its decision in writing on Janu-

ary 138, 1977, the Court having decided that the de-

fendant, Sea-Land Service, Inc. was in violation of

Section 844, Title 46, U.S. Code on five separate oc-

casions, having assessed a penalty in the sum of

$5,000 for the aforesaid, violations, it is

ORDERED AND ADJUDGED that the United

States of America recover of and from the defendant,

Sea-Land Service, Inc. the sum of $5,000, with in-

terest to be computed from the date of this judgment

and costs.

Dated: Newark, New Jersey

Mar. 16, 1977

/s/ H. Curtis Meanor

U.S.D.J.

17a

We hereby consent to the entry of the foregoing

judgment,

By: /s/

By: /s/

JONATHAN L. GOLDSTEIN

United States Attorney

GILBERT 8. FLEISCHER

Attorney in Charge

Admiralty & Shipping Section

Department of Justice

26 Federal Plaza, Room 4048

New York, New York 10007

Attorneys for Plaintiff

WARREN A, SCHNEIDER

RAGAN & MASON

Attorneys for Defendant

Gerald A. Malia

GERALD A. MALIA

[Original Filed Mar. 17, 1977

Angelo W. Locascio, Clerk]

18a

APPENDIX E

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

OFFICE OF THE CLERK

Newark, N.J. 07102

Civil Action No. 74-1664

UNITED STATES OF AMERICA

Vv.

SEA-LAND SERVICE, INC.

There was entered on the docket on 3-22-77 consent

(judgment) for $5,000. with costs.

ANGELO W. LOCASCIO

Clerk

19a

APPENDIX F

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

Civil Action No. 74-1664

UNITED STATES OF AMERICA, PLAINTIFF,

against

SEA-LAND SERVICE, INC., DEFENDANT.

(Meanor, J.)

SATISFACTION OF JUDGMENT

WHEREAS a final judgment was entered on

March 22, 1977, providing that plaintiff, United

States of America, recover of and from defendant,

Sea-Land Service, Inc., the sum of $5,000, plus in-

terest and cost, and

WHEREAS said judgment and interest having

been paid, and no cost having been entered,

THEREFORE, satisfaction of said judgment is

hereby acknowledged, and the Clerk is hereby au-

thorized and directed to make a proper entry of said

Satisfaction in the judgment docket.

20a

Dated: New York, New York

May 13, 1977

JONATHAN L. GOLDSTEIN

United States Attorney

GILBERT S, FLEISCHER

Attorney in Charge

Admiralty & Shipping Section

Department of Justice

Attorney for Plaintiff, USA

By: /s/

WARREN A. SCHNEIDER

STATE OF NEW YORK )

te ) ss.:

CouNTY oF NEW YoRK )

On the 13th day of May 1977, before me person-

ally came Warren A. Schneider, Department of Jus-

tice, Admiralty & Shipping Section, representing the

United States of America, to be known and known

to me to be the individual described in and who exe-

cuted the foregoing instrument and acknowledged

that he executed the same.

GILBERT S, FLEISCHER

Notary Public, State of New York

2la

APPENDIX G

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

Chambers of 311 United States Court House

H. Curtis Meanor Newark, N. J. 07101

Judge

May 13, 1977

RE: United States of America

v. Sea-Land Service, Inc.

Civil Action No. 74-1664

Warren A. Schneider, Esq.

U.S. Department of Justice

Admiralty and Shipping Section

26 Federal Plaza

New York, New York, 10007

Carol J. Henstadt, Esq.

Federal Maritime Commission

1100 L Street, N.W.

Washington, D.C., 20573

Jeffrey L. Reiner, Esq.

Meyner, Landis & Verdon

Gateway 1

Newark, New Jersey, 07102

Gerald A. Malia, Esq.

Ragan & Mason

900 Seventeenth Street, N.W.

Washington, D.C., 20006

Dear Counsel:

In response to Mr. Schneider’s letter dated May

11, 1977, regarding the timeliness of the Govern-

22a

ment’s motion under Rule 52(b) in the above cap-

tioned matter, I have inspected the docket sheet of

this case which is maintained by the Clerk of this

Court. A copy of a portion of that docket sheet is

included herewith. The docket sheet clearly reflects

that the judgment constituting the subject matter of

the Government’s motion was indeed recorded on the

docket sheet, and thus, for Rule 52(b) purposes, was

“entered,” on March 22, 1977. See Fed. R. Civ. P.

79(a) (requiring the Clerk to maintain “civil dock-

ets”); Fed. R. Civ. P. 58 (“A judgment is effective

only when so set forth and when entered as provided

in Rule 79(a).”). Since the Government’s motion

was filed with the Clerk of the Court on April 1,

1977, there can be no question that the 10-day time

limit set by Rule 52(b) was met. Any comments by

me in my oral opinion rendered May 9, 1977, to the

contrary, see Tr. 5/9/77, at 5-7, 13-14, are to be

disregarded as this letter is intended to amend that

opinion. My comments at that time were predicated

on the notion that a judgment order signed by me

March 16, 1977, and filed in the Clerk’s office the

next day (March 17), would be entered onto the civil

docket maintained in that same office on the date of

filing, and not five days later. That motion was

clearly erroneous in this case. As a result, the oral

opinion of the Court of May 9, 1977 is hereby amend-

ed to deny the Government’s motion for the reasons

then stated which go to the merits of the issue raised.

Defendant should submit an order consistent with

the Court’s oral opinion as modified by this letter.

se ~ ie Ne arene

23a

The original of this letter will be filed by the Court.

Very truly yours,

/s/ H. Curtis Meanor

H. CURTIS MEANOR

U.S.D.J.

HCM :el

Enc.

24a

APPENDIX H

UNITED STATES OF AMERICA, PLAINTIFF-APPELLANT

Vv.

SEA-LAND SERVICE, INC., DEFENDANT-APPELLEE

AFFIDAVIT OF

WARREN A. SCHNEIDER

CITY AND COUNTY OF SAN FRANCISCO _)

) ss

STATE OF CALIFORNIA )

1. I, Warren A. Schneider, was the attorney for

the Government on the trial of this action in the

United States District Court for the District of New

Jersey.

2. After oral argument at trial on the stipulated

facts, the District Court decided that the United

States was entitled to recover $5,000 representing

the maximum $1,000 per violation penalty for vio-

lation of the Shipping Act. The Court rejected the

Government’s contention that the conduct of Sea-

Land constituted a continuing violation of the stat-

utes. The Court ordered that the Government submit

an appropriate order.

3. After the Court’s decision, I had a couple of

telephone conversations with Gerald A. Malia, de-

fendant’s counsel, concerning the decision. I indi-

cated at that point that we were considering the

possibility of either requesting reconsideration by the

District Court or appealing directly to the Court of

i MMMM

ee

ants test tasty tae tA

25a

Appeals for the Third Circuit. I indicated that we

would probably file a notice of appeal within the re-

quired time frame after entry of judgment pending

a final decision by the appropriate officials of the

Department of Justice as to whether or not an appeal

should be perfected.

4. Subsequently, I prepared a proposed form of

judgment stating the decision by the District Court

awarding the Government recovery of $5,000 penalty,

which as a matter of fact, though not expressly

stated, obviously denied full recovery of the Govern-

ment’s claim for $151,000 in civil penalties. While

undoubtedly inartistically stated, the judgment was

intended to show that counsel agreed to the state-

ment of the Court’s decision and did not consent that

the $5,000 award was in full settlement of the Gov-

ernment’s complaint. As drafted, the document was

entitled “Final Judgment” as distinguished from the

normal terminology of “Consent Judgment” used

when agreement is reached between counsel rather

than as an expression of the District Court’s opinion.

When the Government subsequently moved within

the ten day time limit for reconsideration of this

judgment, defense counsel did not raise the issue

that the Government was barred due to the entry of

a consent judgment, thus clearly manifesting their

understanding based on previous conversations that

the judgment entered by the Court upon “consent” of

the parties did not indicate that the Government in

fact agreed with the District Court’s determination

as to the maximum allowable penalties.

26a

5. At oral argument of the motion for reconsider-

ation, the Court commented that it had questions as

to whether or not it had jurisdiction because of the

entry of the so-called consent judgment, but did not

decide the motion for reconsideration on that basis,

nor was it urged to do so by defendant’s counsel.

6. After oral decision by the District Court deny-

ing the Government’s motion for reconsideration,

Jeffrey Reiner, one of the counsel for the defendant,

stated to me that they would appreciate it if we

would accept payment of the $5,000 that was clearly

not in dispute, plus whatever interest was payable, to

avoid the continuing running of interest expenses. I

stated to Mr. Reiner that I understood his desires

and would be willing to consent to that with the un-

derstanding that it did not preclude -us from filing

an appeal. I indicated at that point that, while such

a determination would have to be made by other offi-

cials in the Department of Justice, I would recom-

mend that an appeal be taken and that I understood

that the Federal Maritime Commission would also so

recommend. Mr. Reiner indicated that he understood

our position. On that basis, I agreed that payment

could be made solely to prevent additional costs to

the defendant. When payment was received, satis-

faction of that payment was acknowledged without

any intended implication that it was full satisfaction

of the judgment that the Government was ultimately

entitled to.

7. Admittedly, the pleadings entered in the Dis-

trict Court could have been more appropriately

Oe

ATR ROR eats bs ae ee

27a

phrased. There was, however, no intent at any time

by the Government to acknowledge any agreement

with or acceptance of the decision by the District

Court in this case. I am of the firm conviction that

no such intent was ever communicated to counsel for

the defendant and I am also of the firm conviction

that they were fully aware throughout that I myself,

and counsel for the Federal Maritime Commission,

disagreed with the District Court’s opinion and that

no actions by me were in any way intended to pre-

clude the Government from moving for reconsidera-

tion or appealing the decision of Judge Meanor.

WX ov. S. GOVERNMENT PRINTING OFFICE; 1976 276227 166