Opposition Brief — Iversen v. United States

_ GUSTAFUS V. IVERSEN, BT AL, |

JW ON GANS Betas et

THE. UNITED STATES .OF AMERICA, ax THE

INTERSTATE COMMERCE COMMISSION |

‘om APPEAL, ROM THD DOETRLCT CORE OF THE UNITHD #UArRE

nom Fay Deegan OR onssapemen: ;

‘A Haske, Donono, ~*~

Date C. Daios, ©

Asuizy Se.iers, .

Counsel for Appellants.

f

4

INDEX

Brief in Opposition to Motion to Affirm ............

I. The Scope of the Commission’s Emergency

Powers Under Section 1, Paragraph 15,

tN Co ras Somes y

II. The Constitutionality of the Summary Pro-

cedure Contemplated in Section 1, Para-

graph 15, of the Interstate Commerce Act

Has Not Been Adjudicated...

CITATIONS

Cases:

heed Gs S. Bg Te Se ee ws hehe Fe te one

Baltimore & Ohio Railroad Co. v. United States,

Bowles \ v. Willingham, ee le nr vce wes

Consolidated Turnpike Co. v. Norfolk & Ocean

View Railway Co., 228 U.S. 596.............

Equitable Life Assurance Soc. v. Brown, 187

Se EE Tyo cee SoS oe 4 se ante ete oie heed cio}

Griffith v. Connecticut, 218 U.S. 563... ......

Inland Empire Dist. Council, Etc., v. Millis, 325

ee ee tee ea aera ak

Lehigh Valley R. Co. v. U. S. (Pa. 1911), 188 F.

irae ona rac 5 ad hs a ae eae a

Louisville € N. R. Ce. v. Melton, 218 U.S. 36....

New Orleans Water Works v. Louisiana, 185

rr re ey ae

Opp Cotton Mills v. Administrator, 312 U. 8. 126

Peoria & P. Union R. Co. v. U. S., 263 U. 8. 528..

Seaboard Air Line Railway v. Clara v. Padgett,

WG rie pte a ens ees

Turner, Dennis & Lowry Lumber Company v.

Chicago, M. d St. P. Ry. Co., 271 U.S. 259...

—3343

a Db Ne

ii

OO CET ea

INDEX

Page

United States v. Ill. Central R. Co., 291 U. 8.

i A er erry ore e rey Cray Tre 7

Wabash Railroad Co. v. Alexander Flannigan,

, Sg oe Ar rr rrr 2

STATUTES

Interstate Commerce Act, as amended:

NE vig bog VEE s a too & 0 vi set 4

Ns Hl ees Sais k vig Ph 4,5,7

ES pee ene er eee ie 2

NAA op Se ee PO ee Cee 2

Esch Car Service Act of drvcudus 29, 1917, ¢. 23, 40

Stat. 101 ..... % Sah cea es Wath 4

——

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monn}

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1945

No. 917

GUSTAFUS V. IVERSEN, ET AL.,

a Appellants,

THE UNITED STATES OF AMERICA, ayo THE

INTERSTATE COMMERCE COMMISSION

Appellees.

ON APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE DISTRICT OF COLUMBIA

BRIEF OF APPELLANTS IN OPPOSITION TO

MOTION TO AFFIRM

Appellees’ motion to affirm, though concluding with the

familiar phrase ‘‘no substantial question’’, is in reality a

brief on the merits of the question presented on this appeal.

Tempting as is the opportunity seemingly afforded them

to reply in kind, appellants will address themselves to the

substantiality ' rather than to the merits of the question

presented.

'Summarily stated, in the light of the decisions of this Court on the

issue of the existence of a substantial question, the proper inquiry “is not

whether the question relied upon will be found, upon an examination of

the merits, to be unsound”. Louisville d& N. R. Co. v. Melton, 218 U. S.

36, 30 S. Ct. 676, 679. It turns rather upon whether the claim has at

least “eolor” of merit, New Orleans Water Works vy. Louisiana, 185 U. S.

2

Tersely stated, the question here presented is whether

the Interstate Commerce Commission on its own initiative

may issue, without affording to interested persons an op-

portunity to be heard in any manner before such orders

become effective, orders temporarily—

1. reducing the free time, as provided in lawfully

published tariffs of common carriers by railroad, for

the loading and unloading of carload shipments of

perishables in refrigerator cars;

2. increasing the demurrage charges,’ also provided

in such tariffs, for the use of refrigerator cars pending

loading or unloading thereof; and

3. changing the measure of the through rates, like-

wise provided in such tariffs, applicable on carload

shipments of perishables in refrigerator cars held at

points intermediate between the primary origin and

ultimate destination for diversion or reconsignment.

Appellants contend that such orders change or determine

and prescribe ‘‘ rates, fares, or charges’’ within the meaning

of Section 6, paragraph 3, and Section 15, inter alia, of the

336, 22 S. Ct. 291; is “manifestly lacking all color of merit”, Wabash

Railroad Co. y. Alexander Flannigan, 192 U. 8. 29, 24 S. Ct. 224, 226;

is “so wanting in foundation and unsubstantial as to be devoid of all

merit and frivolous”, Seaboard Air Line Railway v. Clara V. Padgett,

236 U. S. 668, 35 S. Ct. 481, 482; is “utterly without merit”, Consolidated

Turnpike Co. v. Norfolk & Ocean View Railway Co., 228 U. S. 596, 33

S. Ct. 605, 606-607; or is “more forma] than substantial”, Equitable Life

Assurance Soc. V. Brown, 187 U. S. 308, 314, 28 S. Ct. 80. The ques-

tion presented has been held to be substantial where “analysis and ex-

pounding are necessary in order to make clear the decisive effect of the

prior decisions” upon the issue currently presented, Louisville & N. R.

Co. v. Melton, supra; or where the question “has not been the subject of

express consideration” in prior decisions of the Court and hence “cannot

be said to have been so explicitly foreclosed to cause the contention on the

subject to be obviously frivolous”, Griffith v. Connecticut. 218 U. S. 563,

31 S. Ct. 132, 134; Louisville & N. R. Co. v. Melton, supra; Consolidated

Turnpike Co. v. Norfolk & Ocean View Railway Co., supra.

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Interstate Commerce Act, and that the Commission has

been empowered to make and enter such orders only in

accordance with the notice or hearing procedure specified in

those sections of the statute. Appellees contend that such

orders suspend ‘‘rules, regulations, and practices * * *

with respect to car service’’ and make ‘‘directions with

respect to car service’’ within the meaning of Section 1

paragraph 15, of the Act, and that the summary manner in

which such orders were promulgated and put into effect is

countenanced by that and no other statutory provision.

Respecting Section 1, paragraph 15, appellants assert (1)

that that provision neither expressly nor by implication

empowers the Commission to determine or prescribe or to

change demurrage or other transportation rates or charges,

and (2) that, if Section 1, paragraph 15, is to be construed

to so empower the Commission, it is unconstitutional in that

it authorizes an administrative agency to fix rates or

2 A quick grasp of the drastic increases in the charges which shippers

and receivers of perishables are required to pay to the railroads as a re-

sult of the Commission’s orders may be obtained from the following com-

parative table:

Normal Charges Established by

Railroads

Cars unloaded within 48 hours,

exclusive of Sundays and bank holi-

days, after the first seven A. M.

(7:00 A. M.) following arrival of

the car at destination—no charge.

For the first two days or fraction

of a day that a car is held after

expiration of the free time—$2.00

per ear per day.

For the third day and each day or

fraction of a day thereafter, after

the expiration of the free time—

$5.50 per ear per day.

Charges Required by Fourth Re-

vised Service Order 180 and Serv-

ice Order 394

Cars unloading within 48 hours,

including Sundays and_ holidays,

after the first seven A. M. (7 A. M.)

following arrival of the car at desti-

nation—no charge.

For the first day after the expira-

tion of the free time—$11.00 per

ear per day.

For the second day after the expi-

ration of the free time—$22.00 per

ear per day.

For the third day and all sue-

cessive days or fraction thereof

after the expiration of the free

time—$44.00 per car per day.

ee ne a

4

charges without affording interested persons an oppor-

tunity to be heard before the rate-order becomes effective,

Kach of appellants’ alternative contentions, the one statu-

tory and the other constitutional, presents a substantial

question,

I

The Scope of the Commission’s Emergency Powers under

Section 1, Paragraph 15, Is Uncertain

Paragraphs 10-17, inclusive, of Section 1 of the Interstate

Commerce Act has their origin in the so-called Esch Car

Service Act of May 29, 1917, ¢. 23, 40 Stat. 101. Un-

doubtedly, those provisions were intended to confer broad

powers upon and to facilitate flexible action by the Commis-

sion in the field of ‘‘car service’’. The boundaries of that

field, although «lim, are neither limitless nor undiscoverable.

This Court had no difficulty in finding the Commission was

inside those boundaries in Avent v. U. S., 265 U. S. 172; or

in finding that the Commission had strayed beyond them

in Peoria & P. Union R. Co. v. U. S., 263 U. S. 928. In the

latter case, the Court set aside a Commission order, issued

under the purported authority of Section 1, paragraph 15,

which directed one carrier to perform switching services

for another. The Court said, at pp. 534-535:

The Transportation Act of 1930 evinces, in many pro-

visions, the intention of Congress to place upon the

Commission the administrative duty of preventing in-

terruptions in traffic. But there is no general grant of

emergency power to that end, and the detail in which

the subjects of such power have been specified precludes

its extension to other subjects by implication.

For at least twenty-five vears after it received the emer-

gency authority under Section 1, paragraph 15, the Com-

thission did not even undertake to exercise it in connection

Se —

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with the rates or charges to be paid by shippers or other

members of the public enjoying railroad services. The

motion to affirm recites appellees’ version of the legislative

history of Section 1, paragraph 15, and the other so-called

‘ear service provisions’’ of the Act. Appellants, if per-

mitted to submit brief and argument before this Court, will

show that the legislative history demonstrably refutes any

contention that these provisions were intended to counte-

nance any such rate making or charge fixing activities.

Even at this late date, appellees admit they have not

staked out the boundaries of the Commission’s powers under

Section 1, paragraph 15. Counsel for the Commission

frankly stated in the course of argument in the court below:

‘oe © * the full power of the Commission under

these emergency provisions has never been defined, and

I don’t know whether it includes a line-haul rate or

not’’ (Tr. p. 65).

The Commission’s position in this case is that, whatever the

authority of the Commission under paragraph 15 of Section

1 to change or prescribe line-haul rates, the Commission

may fix or change demurrage charges on the theory that the

latter are not altogether charges for transportation services

but are, at least in part, penalties assessed against shippers

or receivers for undue detention of cars. The court below,

agreeing with the Commission’s contention, glossed over

the effect of Service Order No. 396 which, whatever the

soundness of a claimed differentiation in kind between

demurrage rates or charges and line-haul rates, definitely

pertains to the latter.

The necessary effect of the judgment of the court below, if

this Court should conclude that ‘‘no substantial question’’

is raised in this appeal, will be to subject to doubt and un-

certainty the entire procedural structure of the Interstate

Commerce Act. The court below evidently deemed it was

avoiding any such result by singling out for comment the

Service Orders dealing exclusively with demurrage charges

and passing lightly over the type of rates or charges—ag-

gregate local versus through rates—affected by Service

Order No. 396 and, further, by concluding that demurrage

charges are not ‘‘rates as that term is used in connection

with rate-making’’. Admittedly, demurrage charges have

a somewhat different purpose than some of the other types

of ‘‘rates, fares, or charges’’ comprehended by the Inter-

state Commerce Act, but, at least until publication of the

opinion of the court below, it appeared to be well established

that demurrage charges are ‘‘rates, fares, or charges’’

within the meaning of the Act and could be determined and

prescribed by the Commission only in accordance with the

hearing procedure specified by the Act to accompany the

determination and prescription of ‘‘ rates, fares, or charges”’

generally.

Indeed, this conclusion of the court below, to which, inter

alia, appellants’ assignment of errors is directed, presents

a ‘‘substantial question’’ in and of itself. While it may

appear to have a subsidiary aspect herein in that the deter-

mination of this question is a principal starting-point to-

ward the determination of the scope of Section 1, paragraph

15, it has an independent and substantial significance of its

own. The opinion of the lower court in this connection

is squarely at variance with the conclusions reached in

Turner, Dennis € Lowry Lumber Company v. Chicago M.

d St. P. Ry. Co., 271 U. S. 259, 262, 46 S. Ct. 530, 531;

Lehigh Valley R. Co. v. U. S. (Pa. 1911), 188 F. 879, 110

Cc. C. A. 513 (affirming [D. C. 1910] 184 F. 543), and cases

cited therein.

_—

The Constitutionality of the Summary Procedure Con-

templated in Section 1, Paragraph 15, of the Interstate

Commerce Act Has Not Been Adjudicated.

Appellants urge that, if Section 1, paragraph 15, em-

powers the Commission to order increases in rates or

charges without affording opportunity for hearing before

the increases become effective, that provision of the Act

violates the Due Process Clause. Appellants’ contention

was alleged in its petition for injunction and was vigorously

pressed upon the court below. Unaccountably, under these

circumstances, the court below ignored the entire question;

its opinion does not even mention the point.

This question, we submit, is basic. In term after term

of this Court it has received the Court’s attention in one

form or another, and in no instance has this Court ruled that

an administrative agency may be empowered to fix rates

| or charges without affording interested persons an oppor-

| tunity to be heard before the rates or charges become ef-

| fective. At least three times during the last ten years and

once within the last year, this Court has expressed itself as

follows:

The demands of due process do not require a hearing

at the initial stage or at any particular point or at more

than one point in an administrative proceeding so long

as the requisite hearing is held before the final order

becomes effective.. (Emphasis supplied.) Opp Cotton

Mills vy. Administrator, 312 U.S. 126, 152, 153, 61 S. Ct.

524, 536, 85 L. Ed. 624; United States v. Ill. Central R.

Co., 291 U.S. 457, 463, 54 8S. Ct. 471, 473; Inland Em-

pire Dist. Council, Ete. v. Millis, 325 U. 8. 697, 710, 65

S. ('t. 1316, 1323, decided June 11, 1945.

Appellants are mindful that, in Bowles v. Willingham,

321 U. S. 503, 519, 521, 64'S. Ct. 641, 649, 650, this Court

RAL:

8

held that the Administrator of the Office of Price Adminis-

tration under a wartime statute could fix rents without the

necessity of hearing at the administrative level. It might be

argued that the rationale of this decision is, to some extent,

inconsistent with that of the cases previously cited. It is

only necessary to say that, if there be this inconsistency, it

serves here only to demonstrate the substantiality of the

question now presented.* On the other hand, if the excerpt

quoted above from the Opp Cotton Mills case is still the

law of this Court as far as rate making procedure is con- [

cerned, the judgment of the court below becomes even more

imperatively the concern of this Court.

The court below, in completely ignoring the constitutional

issue in the case, undoubtedly makes more difficult the ap-

pellants’ task in securing the ear of this Court on that

issue. Appellees have seized on this temporary advantage

and, in their motion to affirm, endeavor further to distract

this Court’s attention by the following single-sentence ref-

erence to the question:

TOT

Other points urged by appellants require no con-

sideration. The allegations of unconstitutionality ad-

vanced by appellants amount merely to a restatement

in different form of their claim that the Commission

acted without statutory authority. Baltimore & Ohio

Railroad Co. v. United States, 305 U.S. 507, 526.

An examination of this sole decision cited by appellees

serves only to corroborate the shallowness of appellees’ ef-

fort to avoid judicial scrutiny of the constitutional ques-

tion presented here. In the Baltimore & Ohio Case, it was

claimed that a cease-and-desist order of the Commission

was a Violation of substantive due process. The reasonable-

ness of the order was the sole question involved. No

procedural rights were even alleged to have been invaded.

5 Note 1, supra, p. 1.

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In the case at hand, the reasonableness of the Commission’s

orders is not in issue; the matter here presented is the

power of Congress to sanction the issuance of any order

at all in the manner in which the orders were issued. The

lack of analogy of a case dealing with substantive power to

the problem of procedural due process here presented is

apparent.

Respectfully submitted,

Haske, Donono,

Date C. Ditton,

Asuiey SE.Lers,

Counsel for Appellants,

111 Kellogg Building,

Washington, D.C.

March 6, 1946.