Opposition Brief — Safir v. Blackwell

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LIBRARY brproue Cart U.S.

SUPREME COURT, U. S. sis

No. 73-229 SEP @ 1973

AK, JR. CLERK

IN THE ‘ ae

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1973

MARSHALL P. SAFIR, PETITIONER

v.

ROBERT W. BLACKWELL, ET AL.

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ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF IN OPPOSITION FOR RE-

SPONDENTS AMERICAN EXPORT

LINES, INC.; LYKES BROS. STEAM-

SHIP CO., INC.; MOORE-McCORMACK

LINES, INCORPORATED; AND

UNITED STATES LINES, INC.

J. FRANKLIN FORT,

RICHARD S. SALZMAN,

KOMINERS, FORT, SCHLEFER & BOYER,

Tower Building,

Washington, D.C. 20005,

ELMER C. MADDY,

KIRLIN, CAMPBELL & KEATING,

120 Broadway,

New York, New York 10005,

JAMES N. JACOBI,

KURRUS and JACOBI,

2000 K Street, N.W.,

Washington, D.C. 20006,

September 4, 1973 Attorneys for Respondents.

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TABLE OF CONTENTS

OPINIONS BELOW ...... cc cccccccccvccvecs

JURISDICTION .... ccc cccccccccccccccvvccees

STATUTE INVOLVED ........ccccvccscccseees

QUESTIONS PRESENTED .... 1... cccccccccves

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TABLE OF AUTHORITIES

Cases:

Abbott Laboratories v. Gardner, 387 U.S. 136 (1967) ....

American President Lines v. Federal Maritime Board,

112 F. Gape. 6G. DL. TGR) nc cc cce sv wncwes

American President Lines v. Federal Maritime Board,

133 F.Supp. 100 (D. D.C. 1955), affirmed, 235

P26 16 CL. CR. IGSS) oc cee ciccccccncvvcess

Arizona Department of Public Works v. H.E.W., 449

F.2d 456 (9th Cir.), certiorari denied, 405 U.S.

INI ote ne et oe.

Boston Marine Terminal v. Rederiaktiebolaget Trans-

A tO eae

C.A.B. v. American Air Transport, 344 U.S.4 (1952) ....

Citizens to Preserve Overton Park v. Volpe, 401 U.S.

GNP UEE 56s Cha dae sn NAR ew eens ee ee

City of Dallas, Texas v. Rentzel, 172 F.2d 122 (Sth

Cir.), certiorari denied, 333 U.S. 858 (1949) ........

Moore-McCormack Lines, Inc. v. United States, 188

Ct. Cl. 644, 413 F.2d S6B(I9G9) 2... ccc cw eeee

Oceanic Steamship Co. v. United States, 165 Ct. Cl.

| er ee ee Pre rare er ey were

PRT

LEE? SLL LIE IER TIER IONT LLIN O T RI GI E PRE IM

(ii)

Pacific Far East Line, Inc. v. United States, 184 Ct.

oe A ee eee eee 4,7

Rettinger v. F.T.C., 392 F.2d 454 (2d Cir. 1968) ......... 7

Robertson v. F.T.C., 415 F.2d 49 (4th Cir. 1969) ........ 7

Safir v. Blackwell, 469 F.2d 1061 (2nd Cir. 1972) ........ 2

Safir v. Gibson, 432 F.2d 137 (2nd Cir.), certiorari

a es, eee ee 2, 8

Safir v. Gibson, 330 F. Supp. 225 (E.D.N.Y.1971) ...... 2,8

Safir v. Gulick, 297 F. Supp. 630 (E.D.N.Y.),

reversed sub nom. Safir v. Gibson, 417 F.2d 972

eee eee ee ee a?

Schwab v. Quesada, 284 F.2d 140 (3rd Cir. 1960) ........ + |

Sea-Land Service, Inc. v. Connor, 418 F.2d 1142

an ea ee a ae ae 7

Sea-Land Service, Inc. v. Federal Maritime Commis-

ahem, SUS F BOGS CR. CE, FRG) ccc icc cc ncees 9

States Steamship Co. v. United States, 192 Ct. Cl.

pe ts eee Sere eee ee 7

Toilet Goods Association v. Gardner, 387 U.S. 158

i, Nar oer rr ss ests see Se ee ee ee ee ee 9

Statutes:

Administrative Procedure Act, Section 10, 5 U.S.C.

uae RAR CLAN SOK ah be ek eek swe es 8

Merchant Marine Act, 1936, 46 U.S.C. §1101 et seq.:

pT eg 4

meet SOG, 46 UBC. B00 ook cei cece cans 4,7

Miscellaneous:

Department of Commerce Order No. 117, 26 Fed.

ee | ee a ee 4

ELE ES oC

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Department of Commerce Organization Order No.

10-8, 37 Pod. Reg. ISETO CSTE) v0 sis voice eS TS

Reorganization Plan No. 21 of 1950, 64 Stat. 840, 15

id SIT ioc ha careers

Reorganization Plan No. 7 of 1961, 75 Stat. 840, 26

Fod., Reg. 7315 (I9G]) 2... cc wccc ern scccnsencecss

46 CFR. $202.1 (1972 Rev.) on. ccc ccsccccccsccece:

SOR AIT IS

Semen eRe aL

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1973

No. 73-229

MARSHALL P. SAFIR, PETITIONER

v,

ROBERT W. BLACKWELL, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF IN OPPOSITION FOR RE-

SPONDENTS AMERICAN EXPORT

LINES, INC.; LYKES BROS. STEAM-

SHIP CO., INC.; MOORE-McCORMACK

LINES, INCORPORATED; AND

UNITED STATES LINES, INC.

OPINIONS BELOW

The Court of Appeals did not render an opinion; its

order of May 16, 1973 denying petitioner’s ‘‘motion to

recall mandate” (App. la)! is not reported. There is no

district court opinion, petitioner having sought judicial

1“App.” refers to the separately bound appendix which

accompanied the petition for certiorari.

EEL OME LOL MOLD LEE ISLE EG EET OAR BIE DN ERTL EIN IY SIRS BBP OLIN

2

review directly in the court of appeals. The opinion of

the Maritime Subsidy Board, U.S. Department of Com-

merce (App. 15a), is reported at 13 Pike & Fischer

Shipping Regulation Reports (“SRR”) 809 (April 16,

1973).?

JURISDICTION

The order of the court of appeals was entered on May

16, 1973. The petition for a writ of certiorari was filed

on August 2, 1973. The Court’s jurisdiction is invoked

under 28 U.S.C. §1254(1) (1970).

STATUTE INVOLVED

Section 810 of the Merchant Marine Act, 1936, 46

U.S.C. §1227 (1970), provides:

It shall be unlawful for any contractor receiving

an operating-differential subsidy under title VI or

for any charterer of vessels under title VII of this

Act, to continue as a party to or to conform to any

agreement with another carrier or carriers by water,

or 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 on any established

trade route from and to a United States port or

ports.

Other aspects of this litigation have been reported in Safir v.

Gulick, 297 F.Supp. 630 (E.D.N.Y.). rev’d, sub nom. Safir v.

Gibson, 417 F.2d 972 (2nd Cir. 1969); Safir v. Gibson, 432 F.2d

137 (2nd Cir.), certiorari denied, 400 U.S. 850 (1970); Safir v.

Gibson, 330 F. Supp. 225 (E.D.N.Y. 1971); and Safir v. Blackwell,

469 F.2d 1061 (2nd Cir. 1972).

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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 sec-

tion. Any person who shall be injured in his business

or property by reason of anything forbidden by this

section may sue therefor in any district court of the

United States in which the defendant resides or is

found or has an agent, without respect to the

amount in controversy, and shall recover threefold

the damages by him sustained, and the cost of suit,

including a reasonable attorney’s fee.

QUESTIONS PRESENTED

jurisdiction on the courts of appeals to review Maritime

Subsidy Board decisions directly, the United States Court

of Appeals for the Second Circuit was the proper court of

first instance to review a decision of that Board.

2. If the answer to the first question is yes, whether a

1. Whether, in the absence of a statute conferring A

:

a

Maritime Subsidy Board decision which is not final was ;

ripe for judicial review. F

STATEMENT i

This matter stems from an investigation by respond- |

ents Blackwell, ef al., acting as the Maritime Subsidy ~~

Board in the Department of Commerce,? to determine ©

3Congress initially vested responsibility for administration of

the Merchant Marine Act, 1936, in the United States Maritime

Commission. Reorganization Plan No. 21 of 1950 (64 Stat. 1273,

15 Fed. Reg. 3178 (1950)) transferred the Commission’s functions

to the Federal Maritime Board and the Maritime Administration,

Department of Commerce. Reorganization Plan No. 7 of 1961 (75

Stat. 840, 26 Fed. Reg. 7315 (1961)) transferred these functions

at ARERR DSR PLR PR

4

whether steamship companies receiving “‘operating-

differential subsidies” under the Merchant Marine Act,

1936,* violated Section 810 of that Act.5 Section 810

forbids subsidized operators from being party to agree-

ments or engaging in practices with other ocean common

carriers which are “‘unjustly discriminatory or unfair” to

other American-flag steamship operators. The penalty for

such conduct may be the forfeiture of subsidy.°®

The investigation, known as Docket No. S-243,

focused on tariff rate reductions by the Atlantic and Gulf

American-Flag Operators (““AGAFBO”’), a conference of

nineteen subsidized and unsubsidized steamship com-

to the Secretary of Commerce, who subdelegated them in part to

the Maritime Administration and in part to an ex officio Maritime

Subsidy Board within that Administration. Department of Com-

merce Order No. 117 (26 Fed. Reg. 7713 (1961)), as amended,

Department of Commerce Organization Order No. 10-8 (37 Fed.

Reg. 15179 (1972)). (The 1961 reorganization also created a

Federal Maritime Commission and gave it functions not here

relevant.)

446 U.S.C. §§1101 et seq. (1970). In substance, Title VI of the

1936 Act, 46 U.S.C. § § 1171-1183, authorizes the government to

contract with American Steamship Lines to provide regular

shipping services for a 20-year period over essential U.S. foreign

trade routes with modern American ships manned by American

crews; in exchange the lines are paid the difference between their

operating costs using those American vessels and American crews

and the lower operating costs of their foreign-flag competitors, ie.,

the “operating-differential.”” See Moore-McCormack Lines, Inc. v.

United States, 188 Ct. Cl. 644, 650, 413 F.2d 568, 571 (1969);

Pacific Far East Line, Inc. v. United States, 184 Ct. Cl. 169, 394

F.2d 990 (1968).

546 U.S.C. §1227 (1970).

®Section 810 also gives the injured operator a treble damage

remedy patterned after the antitrust laws. This is not involved in

this case.

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panies whose membership included the four respondents

joining in this brief, American Export Lines, Inc., Lykes

Bros. Steamship Co., Inc., Moore-McCormack Lines,

Incorporated, and United States Lines, Inc. For eleven

months in 1965-1966, AGAFBO had reduced its rates for

the transportation of military cargo and military house-

hold goods to match those offered by Sapphire Steam-

ship Lines, Inc., a non-conference American-flag opera-

tor. The issue before the Board was whether the

subsidized carriers’ participation in that rate reduction

violated Section 810 of the 1936 Act and, if so, whether

penalties should be imposed therefor. Petitioner, an

officer and stockholder of Sapphire, these four res-

pondents, and other steamship companies were parties to

that administrative proceeding (App. 16a).

The Board issued a preliminary decision on April 16,

1973, concluding that the subsidized companies had

violated Section 810. (App. 15a-87a).” It determined,

however, that only the lines which competed with

Sapphire for cargo at the reduced rates—the so-called

“trade” lines (including these respondents)—should be

penalized by repaying portions of the subsidy they

received during the period in question, the precise

amounts to be calculated under a formula based on the

volume of military cargo carried at the reduced rates. The

sums subject to repayment under that formula were

substantial (App. 86a-87a), and the Board afforded

respondents opportunity to review the basis of its

preliminary determinations (App. 87a):

Trade respondents, and Public Counsel as he

deems necessary, are to submit on or before May 16,

7The Board’s decision was based on a record developed in a

proceeding before one of its administrative law judges. See

App. 18a-19a.

JEROME

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6

1973, their views and supporting documentation on

the exact [operating-differential subsidy] amounts

recoverable for violation of Section 810 consistent

with the decision herein. Any replies to such

submissions are to be filed within ten days after

service of such submissions. An order determining

final recoveries will thereafter be issued. Upon

issuance of said order on final recoveries this

decision will become final. [Emphasis added. ]

Eleven days later on April 27, 1973, without awaiting

a final Board decision, petitioner pro se filed a “‘motion”

in the Second Circuit to overturn the Board’s action and

require the imposition of greater sanctions on all respond-

ents. Respondents moved to dismiss that “motion” on

the ground that it was outside the court of appeals’

jurisdiction and premature. The court denied petitioner

the relief requested on May 16, 1973 (App. la). The

petition for a writ of certiorari seeks review of that

denial.®

ARGUMENT

The court of appeals declined to entertain petitioner’s

request to review a preliminary decision of the Maritime

Subsidy Board. The court’s ruling is correct and con-

sistent with decisions of this Court and other circuits;

further review is therefore not warranted.

1. Petitioner sought judicial review of a Maritime

Subsidy Board decision directly in the Second Circuit.

8while not named in the petition for certiorari as respondents,

the four steamship companies joining in this brief were parties to

the underlying administrative proceeding and appeared to opposed

petitioner’s “motion” in the court whose judgment is sought to be

reviewed. They are therefore proper parties in this Court under its

Rule 21(4).

EEL AIR CTO LIONS TOF DIL EN LOY BI REPS RAD IEP DIE DY WOO AZ ENTE LE VLD RE TOE Mag

7

The jurisdiction of the court of appeals, however, is

limited to that conferred by Congress; no statute author-

izes that court to entertain such an action as an original

matter and petitioner has cited none. The court of

appeals, like this Court, “does not normally review orders

of administrative agencies in the first instance.” C_A.B. v.

American Air Transport, 344 U.S. 4 (1952); Arizona

Department of Public Works v. H.E.W., 449 F.2d 456,

464 (9th Cir.), certiorari denied, 405 U.S. 919 (1971);

Robertson v. F.T.C., 415 F.2d 49, 54-55 (4th Cir. 1969);

Rettinger v. F.T.C., 392 F.2d 454, 456-457 (2d Cir.

1968); Schwab v. Quesada, 284 F.2d 140, 143 (3d Cir.

1960); City of Dallas, Texas v. Rentzel, 172 F.2d 122,

123 (Sth Cir.), certiorari denied, 333 U.S. 858 (1949).

The court below therefore correctly declined to hear

petitioner’s cause at this time. While Subsidy Board

decisions are not immune from judicial scrutiny, one

seeking that review must follow the prescribed channels.

These begin in the district court or the Court of Claims.

See, States Steamship Co. v. United States, 192 Ct. Cl.

795, 482 F.2d 832 (1970); Sea-Land Service, Inc. v.

Connor, 418 F.2d 1142 (D.C. Cir. 1969); Pacific Far East

Line, Inc. v. United States, 184 Ct. Cl. 169, 394 F.2d 990

(1968); Oceanic Steamship Co. v. United States, 165 Ct.

Cl. 217 (1964); American President Lines v. Federal

Maritime Board, 133 F.Supp. 100 (D. D.C. 1955),

affirmed, 235 F.2d 18 (D.C. Cir. 1956); American

President Lines v. Federal Maritime Board, 112 F. Supp.

346 (D. D.C. 1953).

It is relevant at this point to note that petitioner is

proceeding here pro se. On other occasions, when assisted

by counsel, he has successfully obtained relief against the

Board in suits initiated in the district court. See, Safir v.

Gulick, 297 F. Supp. 630 (E.D.N.Y.), reversed sub nom.

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Safir v. Gibson, 417 F.2d 972 (2d Cir. 1969); Safir v.

Gibson, 432 F.2d 137 (2d Cir.), certiorari denied, 400

U.S. 850 (1970); and Safir v. Gibson, 330 F. Supp. 225

(E.D.N.Y. 1971).

2. An equally sound reason for the lower court’s

refusal to consider petitioner’s “motion” is the inter-

locutory nature of the agency’s action. Not only did the

Board expressly state that its decision was not final, but

it required the parties to submit evidence bearing on the

computation of penalties in accordance with its pre-

liminary decision. (See pp. 5-6, ante). This was no mere

formality. Three respondents have submitted such evi-

dence, which Public (government) Counsel has accepted,

indicating that the subsidies subject to recovery were

substantially overstated in the Board’s preliminary deci-

sion. Should the Board agree, its final decision will differ

significantly from the initial one. In addition, respond-

ents are entitled to petition the Secretary of Commerce

to review the Board’s ultimate action and in all likelihood

will do so. 46 C.F.R. § 202.1 (1972 Rev.).

Section 10 of the Administrative Procedure Act

contemplates judicial review only after “final agency

action”. 5 U.S.C. §703 (1970). This Court has held that

“the relevant considerations in determining finality are

whether the process of administrative decision making

has reached a stage where judicial review will not disrupt

the orderly process of adjudication and whether rights or

obligations have been determined or legal consequences

will flow from the agency action.” Boston Marine

Terminal Assoc. v. Rederiaktiebolaget Transatlantic, 400

U.S. 62, 71 (1970), and cases there cited. The Maritime

Subsidy Board decision here involved is not “final” under

that test. It does not affect any party’s rights or

obligations, no legal consequences flow from it, and

judicial review at this stage would interrupt the Board in

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the midst of preparing its final decision, which is

expected imminently. Whatever limits there may be on

the “finality” doctrine as applied to administrative

agencies, the absence of a formalized administrative

decision with concrete effect makes plain that this case is

not “ripe” for judicial review. The court below therefore

correctly refrained from judicial interference at this

premature stage of the administrative process. Abbott

Laboratories v. Gardner, 387 U.S. 136, 148 (1967);

Toilet Goods Association v. Gardner, 387 U.S. 158,

162-165 (1967); Sea-Land Service, Inc. v. Federal Mari-

time Commission, 402 F.2d 631 (D.C. Cir. 1968).

3. Given the posture of the case, petitioner’s sub-

stantive contentions are not material. Moreover, the court

below has reviewed other aspects of this litigation on

three previous occasions. It is therefore fair to state that

its denial of relief was made in the context of a judicial

appreciation of the issues in and status of the underlying

administrative proceeding. See App. 142a, 152a, and

163a.?

Pepe iedbb bbe Simian iteeatttteetont

Petitioner is mistaken in suggesting that the decision below

conflicts with Citizens to Preserve Overton Park v. Volpe, 401 U.S.

402 (1970). That case did not involve the Merchant Marine Act,

1936, and the cited quotations from the Court’s opinion (Pet. 6)

address a claim of immunity from judicial review, an issue not

present in this case. See page 7, ante.

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CONCLUSION

For the reasons stated the petition for certiorari should

be denied.

Respectfully submitted,

J. FRANKLIN FORT,

RICHARD S. SALZMAN,

KOMINERS, FORT, SCHLEFER & BOYER,

Attorneys for Respondents

Lykes Bros. Steamship Co., Inc. and

Moore-McCormack Lines, Incorporated

ELMER C. MADDY,

KIRLIN, CAMPBELL & KEATING,

Attorneys for Respondent

United States Lines, Inc.

: JAMES N. JACOBI,

% KURRUS and JACOBI,

; Attorneys for Respondent

American Export Lines, Inc.

SPILAREG

September 4, 1973

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