Opposition Brief — Carnation Co. v. Pacific Westbound Conference

_ ae

JOHN F. DAWS,

In the Supreme Court of the

United States

Octoser Term, 1964

No 20

CarNnaTION CoMPANY, a corporation,

Petitioner,

vs.

Paciric WestBouND CoNFERENCE, an unin-

corporated association, Far East Con-

FERENCE, an unincorporated association,

and other named persons, defendants,

and Federal Maritime Commission,

intervener,

Respondents.

Brief in Opposition to Petition

fora io sa

Epwarp D. Ransom

R. Freperic Fisner

Liuick, Geary, Wueat, Apams &

CHARLES

311 California Street

San Francisco, California 94104

Attorneys for Respondent

Pacific Westbound Conference,

and its member lines.

SORG PRINTING COMPANY OF CALIFORNIA, 160 FIRST STREKT, SAN FRANCISCO 5

i

a ak MM OU an a tg ec Ra

SUBJECT INDEX

Page

Ol icant clam dedndterelpnreptnaanieepeeneiaaiaomntiaistae 1

SD OE ie Gi iiiriciccnenciccirecsininntcrctetnniniticdanpenens 2

2 UIIINRE TENEOND ».snsidivsecerenineseoarietionnitionenipertmonenmmits 2

Tn. “CHEMIE - 1 caraitel ws aeaiiasensbanneanilignsiptanieiensinsmiannguanarmndondeltenmianore 3

III. Question Presented and Summary of Position.................... 7

IV. Argument in Opposition to Allowance of the Writ............ 10

A. The Cunard and Far East Cases Hold That the Anti-

trust Laws Are Inapplicable to Agreements Subject

to Section 15 of the Shipping Act.......................-...-0-- 11

B. Congress Subjected Persons Violating the Shipping

Act to the Act’s Sanctions, Not to Parallel Treble

Pe DGCIIING cecsccersctsrsneessesqremernenecinnsececsequitionnesonmuemaes 18

C. The Wrongs Charged in Petitioner's Complaint as

Antitrust Violations Are Precise Ingredients of the

Federal Maritime Commission’s Authority Under the

anes UE eichisicitntantinivicguiesiterntiaibiaionvabes 21

D. The Complaint Raises Issues Requiring Prior Resort

to a Specialized and Expert Administrative Agency 24

E. The Pervasive Regulatory Scheme of the Shipping

Act Is Inconsistent with Allowance of Any Antitrust

DIONE: .trvtcicasntasnimnityiaiiionsidpiibahianisidiniaandaneniiechenie 30

F. Dismissal Is the Only Proper Course Here.................. 32

I. sinsniseneesmsrectednequncienisnapinetbenhinntaiioenatenteuhiimnanerimian 34

Certificate of Service of Reply to Petition for a Writ of

SI IIIIIIIIIIE, ciss si achssniasnasdondeinalipdeieanasnrethbrerdeaiaidelicciestanpsacibaldtigsstneidadatabnedeutee

th nate

TABLE OF AUTHORITIES CITED

CASES Pages

Agreement No. 8200, Docket 872, 2 Shipping Regulation Re-

ports (Pike & Fischer) 900 (1963) .......0.0....cccecccceceeceeeeseoeeee se 29, 30

American Union Transp. vy. River Plate & Brazil Conferences,

222 F.2d 369 (2d Cir. 1955) affirming on opinion below in

26 F. Bape. 82 (GOY. 066)... 8, 15, 33

American Union Transp., Ine. v. River Plate & Brazil Confer-

ences, 5 F.M.B. 216 (1957) aff'd sub nome... .eseceeceeeeee- 18

American Union Transp. v. United States, 257 F.2d 607

TEI, i I icc st ccc cee alas eee aca cal oh eas oe 18

California v. Federal Power Comm'n, 369 U.S. 482, 8 L.ed.

| ee APL ao EI Cmte Rees oe 22, 31

Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 99 L.ed.

GR CD iccnisieiacacind cee ee 18

Far East Conference v. United States, 342 U.S. 570, 96 L.ed.

SU CRD ectttet ates Cited Throughout

Federal Maritime Bd. v. Isbrandtsen Co., 356 U.S. 481, 2 L.ed.

an Ce Ae oe 12, 13, 21, 22, 25, 31

(ieorgia v. Pennsylvania R.R., 324 U.S. 439, 89 Led. 1051

(TROND: sctsdicednepsinsiepacandinscctee ald cee 13, 14

Kempner v. Federal Maritime Comm'n, 313 F.2d 582 (D.C.

CS BE ash cnssapiaasiie capaho ee 18

Keogh v. Chieago & N.W. Ry., 260 U.S. 156, 67 L.ed. 183

CED Svnhiecomusaplaindennimiiaidae es ce ee 8, 13, 14, 31

Pan American World Airways, Inc. v. United States, 371 U.S.

296, 9 L.ed. 2d 325 (1963) .................... 8, 9, 13, 14, 22, 24, 30, 31, 33

Rivoli Trucking Corp. v. New York Shipping Ass‘n., 167 F.

| ne ee IRE 16, 33

Rivoli Trucking Corp. v. New York Shipping Ass’n, 167 F.

Sopa GE CB Fai Fe Deescsieneeoedceinnniicaiidiianias 16, 33

Riveli Trucking Corp. v. American Export Lines, 167 F.

AE 8 DG A ESR oN TS 33

NEN P CAG LS BO ISLA GBI IL, ELE LENE NL NHL ESOT

—

TaBLe OF AUTHORITIES CITED iii

Pages

Section 15 Inquiry, 1 U.S.S.B. 121 (1927)........-.-..----.-eeeeeee 27

Silver v. New York Stock Exchange, 373 U.S. 341, 358-59,

le ee eS | a or 22

Swayne & Hoyt v. Kerr Gifford & Co., 14 F. Sune. 805 (E.D.

Titi BIR) wanna ences en ce cesesonenconecorentoneoroynorensnsorensonensesesouscerersene 16, 33

Swift & Co. v. Federal Maritime Comm'n., 306 F.2d 277

CIT, Ge TD oaecrccesorerietemnciineniestamtentanaitynaatoremtaveenngens 18

Swift & Co. v. Gulf & So. Atl. Havana Conference, 6 F.M.B.

yg FL | a aan ee 18

Terminal Warehouse Co. v. Pennsylvania R.R., 297 U.S. 500,

OP § |) Re Dane e eee enn ss awe 14

Texas & P. Ry. v. Abilene Cotton Oil Co., 204 U.S. 426, 51

Bi lk TR 1 TINE sicsccossisieceerrcresceseestedorninsetreesnirtcstecilivnieniartnnteatotns 8,17

United States Nav. Co. v. Cunard, S.S. Co., 50 F.2d 83 (2d

a > | atic eens ane Ranier eMC my Mewes ere erre lr re 19

United States Nav. Co. v. Cunard S.S. Co., 284 U.S. 474, 76

A A CID cdcencsntsniniuisasiephtconaeciiominntonioncaesimniited Cited Throughout

United States v. Alaska S.S. Co., 110 F. Supp. 104 (W.D

ee i ccsdinesses erence ncencepnsernesonsieoneiceremnttaientelmaatnieatal 16, 33

United States v. Borax Consolidated Ltd., 141 F. Supp. 396

I I ii onicsee csniseucechemn meeeto hectiengsaaeninnasiecetiaaniachonmneth 16, 33

United States v. Philadelphia Nat. Bank, 374 U.S. 321, 10

Bl TE Te 1 ID sesictcesesonisenniiniesnciny mecnnciqniciniitiehiciaaianieaaceion 23

United States v. Radio Corp. of Aneta, 358 U.S. 334, 3 L.ed.

2d 354 (1959) i sittnib pcan

Wisconsin & Mich. Transp. Co. v. Pere Marquette L.S., 67

WG GUE CTU Cole, SI) nisin cretrceiorcinenemsccionensrmentnnnonmnions 16, 33

STATUTES AND Court RULES

Clayton Act Section 4 (15 U.S.C. § 15)... -eeeeeeeeeeeeeeeeeeeeteeeeee 2

ey ee a | ee 32

Interstate Commerce Act (49 U.S.C. . Ss ff Sanaa 30

Interstate Commerce Act § 22, (49 U.S.C. § 22)... 20

Judicial Code:

a ee Bis Te | eee 2

a Bk a | one 2

—

iv TABLE OF AUTHORITIES CITED

Pages

Rules of the Supreme Court:

I a Nila ib Ssh tsk scleccsdcaamieonitiarinasiiovetmeseietctes 1

Rule 19 PLoS VAD SEROTEC LAUR aE See ee oO 8

Sherman Act Sections 1 and 2 (15 U.S.C. §§ 1, 2)... 9

Shipping Act, 1916 (46 U.S.C. §§ 801, et seq.)......Cited Throughout

Section 14 (46 U.S.C. § 812) TE IEEE RC TR 13

Section 15 (46 U.S.C. § 814)......3, 5, 9, 11, 12, 16, 17, 18, 20, 25, 26

NN MN SO I OD Fic isveicncdnenscenseitrtoenebcetininiorseyementine tin 12, 18

ee SE | | a cee ee 18

TEXT

von Mehren, The Antitrust Laws and Regulated Industries:

The Doctrine of Primary Jurisdiction, 67 Harv. L. Rev.

929 (1954) iabdiraaiapldieiainnlabaepiiiestinddicsisaduinhirsdiiaenitens 11,17

All emphasis is ours unless otherwise indicated.

References to the Record are indicated by the letter “R”

followed by the corresponding page number.

References to the Petition for a Writ of Certiorari are

indicated by the word “Petition” followed by the appropri-

ate page therein.

OR, aS ae Lila ail

In the Supreme Court of the

United States

Octoser TERM, 1964

No. 657

Carnation CoMPANyY, a corporation,

Petitioner,

vs.

Paciric WesTBoUND CoNFERENCE, an unin-

corporated association, Far East Con-

FERENCE, an unincorporated association,

and other named persons, defendants,

and Federal Maritime Commission,

intervener,

Respondents.

Brief in Opposition to Petition

for a Writ of Certiorari

I.

Pursuant to Supreme Court Rule 40(3), respondent

Pacific Westbound Conference (PWC) omits matters ade-

quately covered in sections I, II, and IV of the Petition and

in the appendices thereto.

2

Il.

STATEMENT OF THE CASE

Respondent PWC agrees that petitioner’s statement of

the case is in most respects correct. Respondent does take

exception to important aspects of that statement, however,

and accordingly offers the following statement of the case.

A. Proceeding Below

Petitioner (plaintiff below) commenced this action on

December 5, 1963 by filing its complaint under the Anti-

trust Acts’ in the United States District Court for the

Northern District of California, Southern Division, against

PWC and the Far East Conference (FEC) (R. 6-22).

On March 1, 1963 a motion was filed on behalf of the

Pacifie Westbound Conference, its Chairman, and its mem-

bers individually, to dismiss the action on the ground that

the District Court was without jurisdiction to proceed a:

the matter was and is subject to the exclusive primary jur-

isdiction of the Federal Maritime Commission (R. 28-31).

A similar motion was filed on behalf of the Far East Con-

ference, its members and former members (R. 23-27), and

by the Federal Maritime Commission which additionally

moved for leave to intervene in the proceeding (R. 32-35).

All motions were supported by lengthy memoranda on

points and authorities. By order of April 30, 1963, the

Court granted the m ‘tion of the Federal Maritime Commis-

sion to intervene and requested further argument on the

question of whether the Shipping Act, 1916? provides a

1. Jurisdiction of the District Court was alleged under Sections

1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, Seetion 4 of the

Clayton Act, 15 U.S.C. § 15, and Sections 1331, as amended, and

1337 of the Judicial Code, 28 U.S.C. §§ 1331, 1337).

2. 46U.S.C. §§ 801, et seq.

3

remedy to appellant (R. 61-62). Supplemental memoranda

were filed by all parties and on June 11, 1963, further

argument was held.

On June 21, 1963, in a Memorandum of Opinion the Dis-

trict Court concluded that petitioner’s complaint tendered

the issue whether the defendant carriers (respondents) had

carried out a rate agreement prior to approval by the Com-

mission in violation of Section 15 of the Shipping Act,

that the Act provides a remedy for any violation thereof,

and that the Supreme Court has held that the antitrust laws

are superseded to the extent that the Shipping Act provides

a remedy, citing: “United States Navigation Co. v. Cunard,

984 U.S. 474 (1931); Far East Conference v. United States,

342 U.S. 570 (1951); See also American Union Transport

v. River Plate, 126 F. Supp. 91 (S.D. N.Y., 1954), aff'd

999 F.2d 369 (2d Cir. 1955); Rivoli v. New York, 167 F.

Supp. 940, 943 (S.D. N.Y., 1956); United States v. Alaska

S.S. Co., 110 F. Supp. 104 (W.D. Wash. 1952).” (R. 63-64)

Petitioner appealed to the Court of Appeals for the Ninth

Cireuit (R. 67). That Court affirmed the judgment below

and denied a petition for rehearing (R. 92-120, 122-24).

B. Facts

We adopt that part of petitioner’s statement (Petition

pp. 10, 11) which says:

“Carnation Company, was a shipper of evaporated

milk from the Pacifie Coast to the Philippine Islands

by defendant common carriers, members of defendant

Pacific Westbound Conference (PWC) (R. 9, 10, 21).

Defendant common carriers to the Far East (R. 9,

10-13) fell into 3 groups, (1) those operating only from

Pacific Coast ports (R. 10-11), (2) those operating only

from the Atlantic Coast and/or Gulf of Mexico ports

(R. 11), and (3) those operating both from Atlantic

Coast and/or Gulf ports and from Pacific Coast ports

4

(R. 11-13). Those operating from Pacific Coast ports

were the only carriers providing general cargo and

regular berth service on substantially regular routes

and with regular sailings and were the only carriers

by whom the plaintiff could ship to Manila (R. 14, 21).

Before January 1953 the carriers from Pacifie ports

associated themselves under Pacifie Westbound Con-

ference Agreement No. 57 to form the Pacifie West-

bound Conference for the purpose, among other things,

of fixing the rates at which Conference members would

serve the trade. Agreement No. 57 provided that PWC

should fix the rates. The Agreement was filed with, and

approved by, the United States Shipping Board under

Shipping Act, 1916, § 15 (46 U.S.C. § 814). Thereafter

those rates were fixed by PWC, except as stated below.

Only carriers operating from Pacifie Coast ports were

members of PWC (R. 13-14). No carrier operating only

from Pacific Coast ports was a member of the Far East

Conference (FEC) (R. 14).

Before January 1953 the carriers from the Atlantic

and Gulf ports to the Far East formed the Far East

Conference (FEC) for the purpose, among other

things, of fixing rates to be charged by its members.

Only earriers operating from Atlantic or Gulf ports

were members of FEC. No carrier operating from only

Atlantie and/or Gulf ports was a member of PWC (R.

14-15).

Carriers operating from Atlantic or Gulf ports and

Pacific ports were members of both Conferences (R.

13-15).

Trade from the Atlantic and Gulf to the Far East

was competitive with that from the Pacifie Coast. PWC

and FEC served different trades that were competitive

and their services were competitive except as re-

strained as stated below (R. 15)” (emphasis as in

original; ref. to Complaint converted to Record ref.)

The balance of petitioner’s factual statement requires,

in our view, different emphasis. In November 1952, mem-

5

rs of the Pacifie Westbound Conference (PWC) and Far

ist Conference (FEC) agreed in writing to “establish

e rates to be charged for the transportation of commodi-

1s, and the rules and regulations governing the applica-

yn of said rates...” The rates were to be established by

he parties” and not by the conferences separately (R. 48).

The agreement further provided for an “initial meeting”

‘the parties to carry out the approved basic agreement.

he initial meeting, it was provided, “shall make rules, not

consistent with the provisions of this agreement, for the

nduct of all meetings to be held hereunder, and for the

ansaction of such other business as the parties may be

srmitted to conduct by virtue hereof, including the pro-

sion of the machinery for the change of any rates, rules

- regulations adopted at the initial meeting or at any

ibsequent meeting.” (R. 48)

The agreement further provided for the right of inde-

ondent action by either party (R. 49).*

This joint agreement, known as Agreement 8200, was filed

ith and approved by the Federal Maritime Board* (R. 47)

nd thereby exempted specifically by statute from the oper-

tion of the antitrust laws. (Shipping Act, 1916 § 15; 46

S.C. § 814)

The agreements described in petitioner's complaint were

llegedly entered at the initial meeting in January, 1963

rovided for in Agreement 8200 (R. 16-17).

3. This provision provides an escape valve by which conferences

an proceed independently if there is no concurrence pursuant to

he agreement and it is to the best interest of that conference to

et independently.

4. Now the Federal Maritime Commission; hereinafter, the Com-

lission’s predecessor agencies, including the Federal Maritime

soard, the United States Maritime Commission, and the United

‘tates Shipping Board are referred to as the Federal Maritime

‘ommission, or “the Commission.”

6

In 1959 the Federal Maritime Commission instituted an

investigation “to determine whether said Agreement No.

8200 is a true and complete agreement of the parties within

the meaning of said Section 15 and whether it is being

carried out in a manner which makes it unjustly discrimina-

tory or unfair.” On September 8, 1960, petitioner was

granted leave to intervene in that proceeding. That pro-

ceeding was designated Docket 872 (R. 40-41, see R, 38-56).

As the Court of Appeals stated: “The issues presented

at this hearing by Carnation and others included in gen-

eral the same matters and claims set forth in Carnation’s

complaint in this case” (R. 95-96). Those “same matters

and claims” were, as alleged by petitioner in its complaint:

1. Defendants [respondents] illegally conspired

and agreed to restrain foreign commerce (R. 16).

2. Defendants illegally conspired and agreed to fix

rates (R. 16).

3. Defendants illegally conspired and agreed not to

disclose to any shipper information regarding rate

changes and/or the position of either Conference or

of any member of either Conference regarding rate

requests (R. 16-17).

4. Defendants illegally conspired and agreed that

PWC would pretend to set and apply rates which had

been jointly agreed upon (R. 17).

5. Defendants illegally conspired and agreed that

PWC would make no changes in rates agreed to with-

out the coneurrence of the FEC except rates on the

PWC initiative list (R. 17).

6. Defendants illegally conspired and agreed to

establish a “list of initiative items” which would per-

mit the Conference with the initiative to set rates with-

5. The Order instituting Docket 872 as well as other informa-

tion concerning it is contained in the Lisi Affidavit and attachments

(R. 38-56). The proceeding is described in inadvertent error by

petitioner as “certain proceedings before the Federal Trade [sic]

Commission’’, (Petition, p. 10).

——

7

out the concurrence of the other Conference. The list

of initiative items did not include evaporated milk until

May 1961 (R. 17-18).

7. Defendants PWC and FEC illegally conspired

and agreed that the rate for evaporated milk from

Pacifie Coast ports to the Philippine Islands should be

increased by $2.50 per ton (R. 18-19).

8. Defendant PWC, “pretending to act agreeably

to the provisions of said Agreement No. 57”, illegally

conspired and agreed to state and circulate the $2.50

increase (R. 19).

9. Defendant PWC pursuant to its alleged agree-

ments with the FEC in fact announced, circulated and

charged a rate for evaporated milk increased by $2.50

(R. 19).

‘0 efendant PWC because of its alleged agree-

mew with the FEC not to grant a reduction unless the

FEC concurred, refused to grant a reduction of $2.50

per ton requested by Carnation in the rate for evapo-

rated milk (R. 20).

IIL.

QUESTION PRESENTED AND SUMMARY OF POSITION

Petitioner’s complaint in the District Court stated viola-

tions of the Shipping Act, 1916 (46 U.S.C. § 801 et seq.).

The complaint also stated a claim for treble damages under

the antitrust laws, absent the regulatory scheme pertaining

to the shipping industry under the Shipping Act, 1916.

The Court of Appeals affirmed the District Court’s dis-

missal of the complaint on the doctrine of supersession

and exclusive primary jurisdiction as enunciated in United

States Nav. Co. v. Cunard S.S. Co., 284 U.S. 474, 76 L.ed.

408 (1932) and Far East Conference v. United States, 342

U.S. 570, 96 L.ed. 576 (1952). The opinion of the Court

of Appeals demonstrates that its decision was based on the

ground that governed the Cunard and Far East cases,

8

namely, the Shipping Act, 1916 provides the exclusive

remedy for the wrongs alleged in the complaint and the

Federal Maritime Commission has the primary jurisdiction®

to decide the matter.

The Petition in questioning the decision of the District

Court and the Court of Appeals presents the question

whether that principle becomes inapplicable if the com.

plaint is for treble damages rather than for an injunction.’

None of the “special and important reasons” why the

Court should grant certiorari which are suggested in Su-

preme Court Rule 19 exist here.

There is no contention in the Petition that the Court of

Appeals decided this question in conflict with the decision

of another Court of Appeals.* Since the Court of Appeals

expressly followed the cases of United States Nav. Co. v.

Cunard S.S. Co., 284 U.S. 474, 76 L.ed. 408 (1932) and Far

East Conference v. United States, 342 U.S. 570, 96 Lied.

576 (1952) and applied the ruling in Pan American World

Airways, Inc. v. United States, 371 U.S. 296, 9 Lied. 2d

325 (1963) which are the three principal cases dealing with

the issues involved, there can be no assertion that the Court

of Appeals decided a federal question in conflict with ap-

plicable decisions of this Court. Rather, the thrust of the

petition is to comb the facts of those decisions in search

6. The term is somewhat misleading. Under the doctrine the

Commission has exclusive original jurisdiction subject to appeal

to the Courts.

7. Petitioner’s statement of questions also raises the question of

a right to trial by jury. Nowhere does the Petition diseuss this

issue. Indeed, it was settled as long ago as 1907 in Texas & P. Ry.

v. Abilene Cotton Oil Co., 204 U.S. 426, 51 L.ed. 553 and Keogh v.

Chicago & N.W. Ry., 260 U.S. 156, 67 L.ed. 183 (1922).

8. Indeed, the instant case was decided exactly the same as a

decision in the Seeond Cireuit presenting identical questions.

(.imerican Union Transp. v. River Plate & Brazil Conferences,

222 F.2d 369 (2d Cir. 1955) affirming on opinion below in 126

F. Supp. 91 (S.D.N.Y. 1954).

APPS LEENON NE ONIN MER NTIS BET BY NITES MORES Ree

_

9

of possible distinctions between the ruling cases and the

case at bar. These minute distinctions are thereafter pre-

sented as if they constituted important questions of fed-

eral law that have not been but should be decided by this

Court. There are, however, no new or important issues

presented by the instant case. The question has been

thoroughly considered and carefully answered by the Court

on numerous occasions and particularly in the three cases

cited above.

The Cunard and Far East cases held that a complaint

seeking an injunction under the Sherman Act against an

agreement allegedly unfiled under Section 15 of the Ship-

ping Act (46 U.S.C. $814) should be dismissed because

“the Shipping Act covers the dominant facts alleged in

the present case as constituting a violation of the Anti-

trust Act” and “the remedy is that afforded by the Ship-

ping Act, which to that extent supersedes the anti-trust

laws”. Petitioner seeks to distinguish these cases on the

ground that the instant action sought treble damages rather

than an injunction and that accordingly 1) Cunard and

Far East involved prospective relief rather than relief

looking to past acts, and 2) Cunard and Far East are in-

applicable because the Shipping Act does not grant reme-

dies yielding a dollar recovery equal to a treble damage

recovery while administrative powers are deemed equiva-

lent to an injunctive remedy.

9 United States Nav. Co. v. Cunard 8.8. Co., 284 US. 474, 483;

76 L.ed. 408, 413 (1932). A similar holding as regards unapproved

practices under the Federal Aviation Act may be found in Pan

American World Airways, Inc. v. United States, 371 U.S. 296,

9 L.ed. 2d 325 (1963).

10. Ibid at 485, 76 L.ed. at 414, quoted as governing principle

in Far East Conference v. United States, 342 US. 570, 574, 96

L.ed. 576, 582 (1952).

10

Respondents reply that a suit for treble damages under

eae antitrust laws falls squarely within the rule of Cunard

and Far Kast; that holdings of the Supreme Court and

lower courts in other cases make this clear; that the Ship-

ping Act provides penalties and remedies comparable to

a treble damage recovery; and that the policy of the stat-

utes in question and of the primary jurisdiction doctrine

require the result reached by the District Court and the

Court of Appeals.

Petitioner further asserts that the doctrine of primary

Jurisdiction is inapplicable because there are no questions

for the administrative agency to decide, Respondents point

out to the contrary that the administrative ageney must

decide such matters as; (1) whether the alleged agreements

were in fact made, (2) to what extent may parties imple-

ment an approved agreement without requiring further

agency approval, (3) whether or not the alleged agreements

fall within the scope of an already approved agreement

tiled with the Commission, (4) whether the Shipping Act,

1916 was otherwise violated, (5) assuming the agreement

violated the Act because untiled and unapproved, should

the Commission now appreve the agreement as it stands or

as modified, and (6) assuming a violation, the extent of

reparations, if any, to be awarded,

IV.

ARGUMENT IN OPPOSITION TO ALLOWANCE OF THE WRIT

The purpose of the doctrine of exclusive primary juris-

diction is to accommodate contlicting statutory schemes:

here the proscription of limitations on competition con-

tained in the antitrust laws and the encouragement of such

limitations under governmental supervision pursuant. to

the Shipping Act, LO16!' The doctrine

HW. 46 USC. 8 SOL ef seg. Citations to the Shipping Act, 1916

herein are to the Act as it stood at the time the matters giving rise

Ss Se i alee ee) oe my

=—7"—"

11

“is designed ... to assure that the substantive exemp-

tions from the antitrust laws created by Congress or

required by the logic and structure of the regulatory

scheme are not destroyed through by-passing the forum

chiefly concerned with the regulatioa of the industry

in question.” (von Mehren, The Antitrust Laws and

Regulated Industries: The Doctrine of Primary Juris-

diction, 67 Harv, L. Rev, 929, 982 (1954) ).

A. The Cunard and Far East Cases Hold That the Antitrust Laws

Are inapplicable to Agreements Subject to Section 15 of the

Shipping Act.

As the Court of Appeals stated, the agreements alleged

in the instant treble damage complaint as violations of the

antitrust laws were also agreements subject to Section 1

of the Shipping Act.’ This section requires that such agree-

to the complaint allegedly transpired, The amendments by P.h,

STAG, Oct. 3, 1961 are omitted,

IZ. KR. 95-96, Section 15 reads ;

“Every common carrier by waver, or other person subject to

this chapter, shall file immediately with the Federal Maritime

Board a true copy, or, if oral, a true and complete memo-

randum, of every agreement, with another such carrier or

other person subject to this chapter, or modifieation er can-

collation thereef, te whieh it may be a party or conform in °

whole or in part, fixing or regulating transportation rates or

fares; giving or receiving special rates, accommodations, or

other special privileges or advantages; controlling, regulating,

preventing, or destroying competition; pooling or apportion-

ing earnings, losses, or traffle; allotting ports or restricting or

otherwise regulating the number and character of sailings

between ports; limiting or regulating in any way the volume

or character of freight or passenger traffic to be carried; or

in any manner providing for an exclusive, preferential, er

cooperative working arradgement, The term ‘agreement’ in

this section ineludes understandings, conferences, and other

arrangements,

The Board may by order disapprove, cancel, or modify any

agreement, or any modification or cancellation thereof, whether

or hot previously approved by it, that it finds to be unjustly

diseriminatory or unfair as between carriers, shippers, ex-

porters, importers, or ports, or between exporters from the

United States and their foreign competiters or to operate to

12

ments be filed with and approved by the Federal Maritime

Commission. If approved, they are expressly exempted from

the antitrust laws. If unapproved or unfiled the parties

thereto are subjected to specific penalties, and injured per-

sons are entitled, under Section 22 of the Shipping Act

(46 U.S.C. § 821), to reparations for losses suffered.

The Cunard and Far East eases hold that there can be

no injunctive relief under the antitrust laws against agree-

ments subject to Section 15 of the Shipping Act and al-

legedly unfiled under that section because the remedies of

the Act supersede the antitrust laws. (United States Nav.

Co. v. Cunard S.S. Co., 284 U.S. 474, 485-86, 76 L.ed. 408,

414-15 (1932) followed in Far East Conference v. United

States, 342 U.S. 570, 573-74, 96 L.ed. 576, 581-82 (1952)).

The Court has never questioned the holdings of these

cases** and as recently as 1963 the Court reaffirmed their

the detriment of the commerce of the United States, or to be

in violation of this chapter, and shall approve all other agree-

ments, modifications, or cancellations.

Agreements existing at the time of the organization of the

Board shall be lawful until disapproved by the Board. It shall

be unlawful to carry out any agreement or any portion thereof

disapproved by the Board.

All agreements, modifications, or cancellations made after

the organization of the Board shall be lawful only when and

as long as approved by the Board, and before approval or

after disapproval it shall be unlawful to carry out in whole or

in part, directly or indirectly, any such agreement, modifica-

tion, or cancellation.

Every agreement, modification, or cancellation lawful under

this section shall be excepted from the provisions of sections

1-11 and 15 of Title 15, and amendments and Acts supple-

mentary thereto.

Whoever violates any provision of this section shall be liable

to a penalty of $1,000 for each day such violation continues,

to be recovered by the United States in a civil action.”

13. Petitioner has contended throughout this case that Federal

Maritime Bd. v. Isbrandtsen Co., 356 U.S. 481, 2 Lied. 2d

926 (1958) in some way limits the holdings of the Cunard and

Far East eases. (See e.g. Petition pp. 34-36, 39). The Court in

Batak WI LEMAR DCM aM HATA CTS ARS doy Sere TE 5 5 Hap Rey, The pata EMatathic) sneered Toes dort eee cea —

sh a ie SE Ae AN cele ie VPN Sa Nos Vines Rte yin oats St MAREE ENR ae NAA) 5) Sera PRN OLS eR hve Lo ee,

13

principle and cited them in its support. (Pan American

World Airways, Ine. v. United States, 371 U.S. 296, 313

n. 19, 9 L.ed. 2d 325, 337 (1963) ).

The reasoning in these cases had no special relevance to

the fact that the antitrust remedy sought was an injunction.

Supreme Court cases decided both before and after Cunard

and holdings by the lower federal courts compel the conclu-

sion that there is no distinction between injunctive and

treble damage relief for purposes of either the supersession

of remedies doctrine or primary jurisdiction. Because

petitioner so vigorously urges this as a distinction, how-

ever, and because it is the only ground on which Cunard

and Far East at all differ from this case, we feel it is

important to discuss the matter in detail.

The Court in Keogh v. Chicago & N.W. Ry., (260 US.

156, 67 L.ed. 183 (1922)), concluded that the remedy for

injury resulting from unreasonably high rail rates set by

Isbrandtsen held that dual rate contracts similar to those involved

in Far East and Cunard violated Section 14 Third of the Shipping

Act (46 U.S.C. § 812) and hence eonld noi be approved under

Section 15. There was no suggestion in Isbrandtsen that the anti-

trust laws were applicable to this Shipping Act question, and the

Court diseussed the Far East ease solely on the question of legality

under Section 14 Third of dual rate contract systems. As the

Court of Appeals in the instant ease stated regarding petitioner's

Isbrandtsen argument, “We think that appellants’ effort to assert

the lack of continuing authority of Cunard and Far East is en-

tirely fallacious and altogether unsupportable.” (R. 103). The

Court then supports this statement in footnote 12 which gives a

clear explanation of petitioner’s argument and the reasons why it

is “entirely fallacious.”

14. Unless it be that supersession is less likely to be found if

the prayer is for an injunction. In Georgia v. Pennsylvania R.R.,

324 U.S. 439, 89 L.ed. 1051 (1945) the Supreme Court held that

an alleged rail rate conspiracy could be enjoined but affirmed

dismissal of the treble damage complaint. The author of that

opinion has stated that it would probably be decided differently

as to the injunctive aspect of the complaint under present laws.

(See Pan American World Airways, Inc. v. United States, 371

U.S. 296, 306.n. 11; 9 L.ed. 325, 333 (1963) ).

Ronse arg, pe = SIE Besar

Sa A Sid NE Ne OO a a a AE OE

- o- saeco

14

an alleged illegal conspiracy is that contained in the Inter-

state Commerce Act rather than a damage action under the

antitrust laws, The Court stressed the need to maintain a

uniform rate structure and equality of treatment of dif.

ferent shippers.

Thus, when the Cunard case was brought some years

later, it was already established that administrative reme-

dies prevailed as to damage actions. The complaint. in

Cunard sought only an injunction which was not, strictly

speaking, a remedy that the administrative ageney could

grant. Nonetheless, the Shipping Act remedy was deemed

exclusive.

The later eases of Terminal Warchouse Co. v. Pennsul.

vania RR. 297 US. 500, 80 Led. 827 (1986) and Georgia

Pennsylvania R.R., 324 US. 4389, 89 Lied. 1051 (1945)

further stress that treble damage actions may not be

brought where the administrative scheme provides a rem-

edy. The Terminal Warehouse case specifically states that

this principle is applicable to the Shipping Act, citing the

Cunard case (297 U.S. at 514-15, 80 Lied. at 885-36) ;

“Certain then it is that the Anti-Trust Laws are in-

applicable in all their apparent breadth to carriers by

rail or water, A consignor or consignee aggrieved by

such a wrong must resort to the appropriate adminis-

trative ageney, at least for many purposes, If he is

remitted to the Commerce Act or the Shipping Act to

cancel the illegal preference, may he pass over those

acts and revert to the Clayton or the Sherman Act for

the purpose of recovering damages? The Commerce

1. The Heogh ease, a treble damage action, was cited in the

1963 Pan American decision, (871 U.S. at 210, 9 Led. 2d at 335.

36) for the proposition that a regulatory seheme “leaves . . . all

questions of injunctive relief against” certain anti-competitive prac-

tiees to the administrative body, Thus, the Supreme Court indicated

that treble damage actions present identical questions of super-

session,

15

Act like the Shipping Act embodies a remedial system

that is complete and self-contained, It provides the

means for ascertaining the existence of a preference,

but it does not stop at that point, As already shown in

this opinion, it gives a cause of action for damages not

only against the carrier, but also against shippers and

consignees who have incited or abetted. For the wrongs

that it denounces it prescribes a fitting remedy which,

we think, was meant to be exclusive. If another remedy

is sought under cover of another statute, there must

be a showing of another wrong, not canceled or re-

dressed by the recovery of damages for the wrong

explicitly denounced. The opinions of this court in

their fair and natural extension point to that con-

clusion.”

The lower federal courts have held that the rule of the

Cunard and Far East cases applies to treble damage ac-

tions. American Union Transp. v. River Plate & Brazil

Conferences, 126 F, Supp. 91 (S.D. N.Y. 1954), afd on

opinion below, 222 F.2d 369 (2d Cir, 1955) is precisely in

point. A treble damage action alleging a conspiracy by

carrier members of a steamship conference was dismissed

on the ground that the allegation of an agreement untiled

with and unapproved by the Federal Maritime Board con-

stituted a Shipping Act question for the regulatory agency,

The same attempt to distinguish Cunard and Far Fast on

the basis that they involved injunctive actions was rejected,

the Court holding that those cases compelled the dismissal."

16. In reliance upon Cunard the District Court said:

“Therefore, assuming the illegality of the procedure of ef-

fectuating an unfiled and unapproved agreement, it remains

for the board to determine the substantive questions raised by

the agreement under the Shipping Act, and the remedy of

the complaining party for substantive violations remains

under the Shipping Act. The language of the Supreme Court

Roe Terr s pe eA ER REE SAT ORC ee PERE TIEN ET UTES

e aS

16

A number of other cases in following the Supreme Court

reach the same result."?

Cunard and Far East also dispose of the contention that

since only approved agreements are expressly exempted by

Section 15, unapproved agreements are not. Since petitioner

persists in this position (Petition pp. 22-24) it is well to

emphasize the reasons why it has been rejected by the Court.

Even a superficial reading of Section 15 discloses that Con-

gress provided two distinct functions under that provision:

(1) Approval of agreements falling within the first para-

graph of Section 15 and (2) Policing and penalties for those

who carry out such agreements before approval or after

disapproval. Thus, the second paragraph of Section 15

gives the Commission power to “disapprove, cancel, or

modify any agreement ... whether or not previously ap-

proved by it;” the fourth paragraph provides that “before

approval, or after disapproval, it shall be unlawful to carry

out” any agreement; and the final paragraph subjects the

parties who violate the prohibitions of the fourth paragraph

to a penalty of $1000 per day.

in the United States Navigation ease precludes the considera-

tion of the factual distinetion urged by the plaintiff.”

Referring to Far East, the court concluded:

“the clear language of the Supreme Court authoritatively

compels the decision.” (126 F. Supp. at 93).

The Seeond Cireuit (Clark, Medina and Dimock, J.J.) was so

satisfied with the District Court’s view of the holding of Cunard

and Far East that it unanimously “Affirmed on the opinion of

District Judge Edelstein. . . .”” (222 F.2d at 370).

17. Rivoli Trucking Corp. v. New York Shipping Ass’n., 167

I. Supp. 940 (S.D. N.Y. 1956) ; Rivoli Trucking Corp. v. New York

Shipping Ass’n., 167 F. Supp. 943 (S.D. N.Y. 1957); United

States v. Alaska S.S. Co., 110 F. Supp. 104 (W.D. Wash. 1952).

See Swayne & Hoyt v. Kerr Gifford & Co., 14 F. Supp. 805 (E.D.

La., 1935); Wisconsin & Mich. Transp. Co. v. Pere Marquette L.S.,

67 F.2d 937 (7th Cir. 1933); United States v. Borax Consolidated

Ltd., 141 F. Supp. 396 (N.D. Cal. 1955).

SIE LTS SEALS LEER LOPE DEEL orem

17

If it were intended that Section 15 agreements be ex-

empted from the antitrust acts only if approved, the en-

forcement provisions of Section 15 would be meaningless.

There would have been no necessity to include a provision

in Section 15 making the carrying out of unapproved agree-

ments unlawful. If approval were not sought and obtained

under the Shipping Act, the penalties and remedies already

provided by Congress under the antitrust acts for the un-

approved and, hence, illegal agreement would pertain.

The fact that the Act does contain penalty provisions

relating to unapproved agreements demonstrates that Con-

gress did not desire to treat the matter piecemeal leaving

the function of approval to the Commission but dealing with

the enforcement problem either administratively or under

the antitrust acts depending on whether the Commission or

a private litigant were the more fleet of foot. Since by the

time the Shipping Act was passed the doctrine of primary

jurisdiction and supersession of remedies was firmly estab-

lished,’* it was not necessary for Congress to provide ex-

press exemption from the then existing antitrust acts for

acting under unapproved Section 15-type agreements.

By contrast it was necessary to include an exemption

after approval because once the agreement is approved, it

no longer constitutes a violation of the Shipping Act and

there is, accordingly, no penalty or remedy provided which

would supersede the penalties or remedies of the antitrust

acts. There would be a conflict between the approved agree-

ment which is not in violation of the Shipping Act and the

antitrust laws of which it would still constitute a violation.

As a consequence, in order to avoid the very problem of

18. See e.g., Texas & Pac. Ry. v. Abilene Cotton Oil Co., 204

US. 426, 51 Led. 553 (1907) and eases cited in von Mehren,

supra, p. 11 at 935, nn, 23 and 27.

“ eee _|

18

accommodation which petitioner raises, it was necessary to

include the specific exemption for approved agreements,

B. Congress Subjected Persons Violating the Shipping Act to the

Act's Sanctions, Not to Parallel Treble Damage Actions.

Petitioner correctly characterizes the treble damage

remedy under the antitrust laws as including both compen-

satory and punitive elements. The compensatory one-third

is designed to make the plaintiff whole while the punitive

two-thirds is designed to discourage violations of the law

by defendant and to encourage plaintiffs to bring such

actions,."® The penalties and remedies provided in place of

such recovery by the Shipping Act follow a very similar

pattern,

The private remedy provisions of the Shipping Act offer

strong evidence of Congressional intention to supersede

the application of antitrust remedies with respect to mat-

ters covered by the Act. Violation of Section 15 of the

Shipping Act by reason of the carrying out of an untiled

and unapproved Section 15-type agreement gives an injured

party a right to reparations under Section 22 to the extent

that he can prove damages, This is so even though the

Comission would have approved the agreement had it been

filed? Petitioner, while alleging violation of Section 15 of

19. See Petition, p. 15. Notably, the punitive two-thirds of

such a recovery is taxable as ordinary income rather than as a

tax-free return of capital (Commissioner v. Glenshaw Glass Co.,

348 ULS. 426, 99 Lied, 483 (1955) ).

20. See American Union Transp., Inc. vo River Plate & Brazil

Conferences, 5 F.M.B. 216 (1957) aff'd sub nom.; American Union

Transp, v. United States, 257 F.2d 607 (D.C. Cir, 1958); Swift

& Co. v. Gulf & So, Atl Havana Conference, 6 F.M.B. 215;

rev'd sub nom.; Swift & Co. v. Federal Maritime Comm’'n., 306

F.2d 277 (D.C. Cir. 1962), see 7 FMC. 431 (1962) (Settlement

agreement on reparations); Kempner v. Federal Maritime Comm'n,

S313 F.2d S82 (D.C. Cir, 1963). Tf the Commission orders repara-

tions, the order may be enforced in a Distriet Court and attorneys’

fees and costs recovered (Shipping Act, 1916, § 30, 46 U.S.C. § 829).

A eg RET PART ASD RE RAR PADRE ROE ETAL OY SRR INE EE BIE RE —————————

19

the Shipping Act (R. 16-18), for reasons known to it deter-

mined not to pursue its administrative remedy, but to seek

treble damages under the antitrust acts, (See Petition, p.

19, n. 30).

As stated by Judge Augustus Hand for the Second Cir-

cuit in the Cunard ease:

“It is difficult to suppose that Congress ever intended

to give private parties two sets of remedies, under

each of which reparation as well as other relief might

be had, and still harder to imagine that these remedies

might be pursued pari passu.

* * «

“No doubt, if the allegations in the amended bill are

found to be correet, the Anti-Trust Acts have been vio-

lated, but the Shipping Act has been violated as well.

Though the remedies under the Anti-Trust Acts are

thought by plaintiff's counsel to apply, it does not fol-

low that they do, where the frame of the Shipping

Act indicates another procedure. We find that all the

wrongs alleged are violations of the Shipping Act, and

hold that the plaintiff must seek its remedy there-

under.” (United States Nav. Co. v. Cunard S.S. Co.,

DO F.2d 838, 90 (2d Cir, 1981).

Petitioner’s assertion that it is entitled to seek treble

damages unless an equal amount would be recoverable under

the Shipping Act assumes that antitrust remedies are only

superseded if exactly equivalent remedies are provided.

Although the Shipping Act penalties and reparations are

roughly comparable to the punitive and remedial portions

of antitrust recoveries, petitioner's assertion is incorrect.

Supersession of the antitrust laws by another statutory

scheme does not operate only if it secures the remedy most

financially favorable to plaintiffs; nor is an antitrust treble

damage remedy a constitutional right which cannot be taken

-_ a

20

away by a different: statutory provision, Supersession

merely reconciles conflicting statutory patterns such as the

Shipping Act and the antitrust laws, by giving effect to

Congressional intent under the regulatory statute.

Under Section 15 of the Shipping Act, Congress amply

provided the deterrent and took care ef the punitive factor

by setting the severe penalty of $1,000 per day for each

day of violation, Further, Congress provided that punitive

aspects of Shipping Act sanctions should be penalties pay-

able to the United States rather than to the injured party

under the Act. Reparations under Section 22 were to be

handled administratively”? doubtless to insure that all ship-

pers would obtain like reparations without discrimination

and would not obtain what, in effeet, would be rebates in

the form of punitive damages. The heart of the Shipping

Act is prevention of discrimination and preference between

shippers similarly situated. Treble damage recoveries would

upset this basic regulatory purpose and disturb uniformity

by offering through the vagaries of jury verdicts the oppor-

tunity for windfalls to some shippers and no recovery or

less recovery to others, The Court of Appeals astutely

analyzed the situation when it stated:

“To permit the maintenance of an action such as this

would in our view produce for the shipping industry

confusion worse confounded, destroy uniformity of in-

terpretation and enforcement of the Shipping Act, and

bring about the very type of discrimination which that

Act was designed to avoid. We may assume that Car-

nation is not the only shipper who dislikes the rates

fixed for shipment of its product. Carnation might win

its suit and another similar concern, making a similar

claim, might lose.” (R. 111).

21. The Shipping Act, unlike the Interstate Commerce Act, con-

tains no saving clause preserving other remedies, (See Interstate

Commerce Act § 22. 49 U.S.C. § 22),

TO Tae SOMALI GA EESTI ERIN A RE le wh eee ae mm

21

This points up the converse of petitioner’s persistent

argument that while supersession and primary jurisdiction

may be applicable to injunctive proceedings (as in the

Cunard and Far Kast cases) they are not to damages for

past actions, An injunction would in fact be less disruptive

than to allow a treble damage suit because an injunction

would but nullify the carriers’ agreement in futuro enabling

them to make a new agreement that did satisfy the Ship-

ping Act whereas, as stated above, award of treble damages

would create discrimination as to past acts,

C. The Wrongs Charged in Petitioner's Complaint as Antitrust

Violations Are Precise Ingredients of the Federal Maritime

Commission's Authority Under the Shipping Act.

Cunard particularly emphasized the following test for

granting a motion to dismiss on grounds that a complaint

charges violation of a regulatory statute:

“4A comparison of the enumeration of wrongs charged

in the bill with the provisions of the sections of the

Shipping Act above outlined conclusively shows, with-

out going into detail, that the allegations either con-

stitute direct and basie charges of violations of these

provisions or are so interrelated with such charges as

to be in effect a component part of them; and the rem-

edy is that afforded by the Shipping Act, which to that

extent supersedes the anti-trust laws.” (United States

Nar. Co. v. Cunard S.S. Co,, 284 U.S. 474, 485, 76 Lied.

408, 414).

This test was followed in Far East Conference v. United

States, 342 U.S. 570, 574: 96 Leed. S76, S82 (1952)7*

~The Far wast and Cunard eases applied this principle de-

spite the fact that: (1) It was a that the agreements

alleged had not been filed and approved; (2) The agreements, the

Supreme Court later held, _ not be approved by the Commis.

sion, (Federal Maritime Bd. v. Isbrandtsen Co., 356 U.S. 481,

ER RS RS BSP R ERO AGO LIT ILENE RS BTM LS ME

22

More recently, the Court has paraphrased the test in Pan

American World Airways, Inc. v. United States, 371 U.S.

296, 305, 9 L.ed. 2d 325, 333 (1963) as follows:

“The acts charged in this civil suit as anti-trust viola-

tions are precise ingredients of the Board’s authority

in granting, qualifying, or denying certificates to air

carriers, in modifying, suspending, or revoking them,

and in allowing or disallowing affiliations between com-

mon carriers and air carriers.’**

The wrongs that petitioner charges in its complaint may

be summarized:

(1) An agreement to restrain foreign commerce (R.

16).

(2) An agreement to fix rates (R. 16).

L.ed. 2d 926 (1958) ). Thus, the instant facts present an even clearer

ease than did Cunard and Far East. The Pan American ease ex-

tended the rule to cover even the situation in which the administra-

tive agency did not believe it had power over the agreements alleged

in the antitrust complaint and had requested the Attorney General

to bring the complaint. Notably also, the District Court in the Pan

American case refused to dismiss the antitrust complaint and found

a violation of the antitrust laws. In the instant case, there is a

strong question whether the alleged Agreement need be filed or

whether it was already covered by Agreement 8200. There is no

question that it may properly be approved by the Commission. The

administrative agency intervened in the antitrust action to support

the motion to dismiss, and the District Court, after lenthy argument

and memoranda were considered, granted the motion.

23. By contrast, the nature of administrative authority was far

more limited in cases holding there should be no primary jurisdiec-

tion in the administrative agency. In California v. Federal Power

Comm’n, 369 U.S. 482, 8 L.ed. 2d 54 (1962) the Commission’s

authority was limited to a finding of public convenience and neces-

sity; it was not specifically concerned with the subject matter of

the antitrust laws.

In United States v. Radio Corp. of America, 358 U.S. 334, 3 Led.

2d 354 (1959) the administrative authority was similiar. The Court

contrasted the limived regulatory scheme and absence of adminis-

tratively supervised rate structures with the shipping industry,

citing the Cunard and Far East cases (355 U.S. at 347, 3 Lied.

2d at 363).

In Silver v. New York Stock Exchange, 373 U.S. 341, 358-59,

10 L.ed. 2d 389, 401 (1963) the Court noted: “By providing no

—————

23

(3) An agreement not to disclose to shippers infor-

mation regarding rate changes or rate requests

(R. 16-17).

(4) An agreement that respondent PWC would pre-

(9)

(6)

(9)

(10)

tend to set rates itself that had been jointly

agreed upon (R. 17).

An agreement that PWC would make no rate

changes without concurrence of FEC (R. 17).

An agreement to establish a “list of initiative

items” permitting the Conference with the initia-

tive to set rates without the concurrence of the

other conference. The list did not include evapo-

rated milk until May, 1961 (R. 17-18).

An agreement that the rate on evaporated milk

from the Pacific Coast to the Philippines would

be increased by $2.50 per ton (R. 18-19).

An agreement that respondent PWC “pretending

to act agreeably to the provisions of said Agree-

ment No. 57” would state and circulate the $2.50

increase (R. 19).

That respondeht PWC in fact so announced, cir-

culated, and charged this rate as agreed (R. 19).

Respondent PWC acting pursuant to its agree-

ment with FEC refused to grant a reduction of

$2.50 per ton requested by Carnation in the rate

for evaporated milk (R. 20).

ageney check on exchange behavior in particular cases, Congress

left the regulatory scheme subject to ‘the influences of .. . [im-

proper collective action] over which the Commission has no au-

thority . .

,99

.

In United States v. Philadelphia Nat. Bank, 374 U.S. 321, 351-53,

10 L.ed. 2d 915, 937-39 (1963), administrative powers under the

Bank Merger Act did not extend to matters covered by the anti-

trust laws. The Court contrasted the Pan American case and the

Far East

properly applied.

ease as areas in which the primary jurisdiction doctrine

24

Whether these agreements in fact exist, their meaning,

their coverage by agreements already on file with the Com-

mission, their legality under various provisions of the Ship-

ping Act, whether they should be approved or modified, and

the consequences of any interim failure to comply with the

Act are all Shipping Act questions within the responsibility

of the Commission; al! are “precise ingredients” of the

Commission’s authority. The Commission has full powers

to consider them and to apply the Shipping Act to them.

If the agreements alleged exist and also violate the stand-

ards set up by Congress the Commission has full power

to take appropriate action with respect to the violation.

Accordingly, under the tests of Cunard, Far East and Pan

American, the antitrust laws are superseded with respect

to the agreements alleged. The nature of the remedy pleaded

in an antitrust complaint cannot defeat this principle laid

down by the Court. .

D. The Complaint Raises Issues Requiring Prior Resort to a

Specialized and Expert Administrative Agency.

In the Far East case, the Court carefully elaborated the

primary jurisdiction doctrine, which it characterized as

“firmly established”:

“.. In eases raising issues of fact not within the con-

ventional experience of judges or cases requiring the

exercise of administrative discretion, agencies created

by Congress for regulating the subject matter should

not be passed over, This is so even though the facts

after they have been appraised by specialized compe-

tence serve as a premise for legal consequences to be

judicially defined. Uniformity and consistency in the

regulation of business entrusted to a particular agency

are secured, and the limited functions of review by the

judiciary are more rationally exercised, by preliminary

resort for ascertaining and interpreting the circum-

—

25

stances underlying legal issues to agencies that are

better equipped than courts by specialization, by in-

sight gained through experience, and by more flexible

procedure.”

(Far East Conference v. United States, 342 U.S. 570,

574-75; 95 L. ed. 576, 582 (1952).

In affirming dismissal of an antitrust complaint that also

alleged the carrying out of an unapproved Section 15 agree-

ment in violation of the Shipping Act, the Court concluded

that “initial submission to the Federal Maritime peared: is

required” (Ibid at 576; 96 L. ed. 583).

Petitioner asserts that this rule is inapplicable because

“the only possible questions are of law” and “there is no

action which the Commission could take which would give it

[the conduct alleged] legality” (Petition, p. 36). The Far

East and Cunard cases themselves reject petitioner’s asser-

tion. Those cases involved an agreement to establish a dual

rate system under which shippers binding themselves to use

only conference vessels paid lower rates than other ship-

pers. One is hard put to find purely factual questions in

these cases, though there are Shipping Act questions of

policy and law. The Court held that the Commission must

first decide the Shipping Act questions. Federal Maritime

Bd. v. Isbrandtsen Co. (356 U.S. 481. at 497-98, 2 L. ed. 2d

926 at 937-38 (1958) ) emphasizes that this is the holding of

those cases.

The several agreements charged in petitioner’s complaint

pose factual and Shipping Act policy questions that are

24. The Far East and Cunard cases, among others, have already

determined that the Federal Maritime Commission is, as the Court

of Appeals characterized it: a body specializing in and thoroughly

familiar with ocean transportation, rates, agreements, practices, and

shipping conditions (R. 101, 109-10, 115, 118). The Court there

found these considerations particularly pertinent to the very ques-

tions presented in the instant ease (R. 115, 118).

|

26

more complex and extensive than those in Cunard and Far

East. Accordingly, their consideration by the Commission is

even more imperative than was that consideration in

Cunard and Far East. Furthermore, as in those cases, if

the Commission should determine that the alleged agree-

ments here need not be filed under Section 15 because al-

ready covered by Commission approved Agreements Nos.

57 and 8200, the agreements are specifically exempted by

Section 15 from the antitrust laws, and no penalties weuld

attach under the Shipping Act. This then clearly is “action

the Commission could take which would give . . . legality”

to charges made in the complaint.

But the basic question whether the alleged agreements

fall within the scope of Agreements 57 and 8200 is not the

only one that the Commission must decide. [t is for the

Commission to determine: (1) Whether the alleged agree-

ments were in fact made. (2) What were the specific con-

tents of those agreements if they were made? (3) Whether,

if not included within Agreements 57 and 8200 the alleged

agreements should be approved, with or without modifica-

tion. (4) Whether, if not included within Agreements 57

and 8200, the alleged agreements violated other provisions

of the Act than the filing requirements uf Section 15. (5)

The extent of reparations, if any, to award to persons

injured by any violation found.

The principal Shipping Act question posed by the several

agreements charged in petitioner’s complaint is one that

the Commission has pondered and interpreted since the

early days of its existence. The complaint alleges that after

approval of Agreement 8200 the parties held a meeting at

which ten or more alleged agreements regarding procedures

for fixing rates were made. These allegedly were outside of

the approved agreement (R. 16-18).

27

But Agreement 8200 as approved by the Commission

expressly calls for an “initial meeting” at which such rules

shall be made including “the provision of the machinery for

the change of any rates, rules and regulations.” Are the

procedures allegedly adopted at the “Santa Barbara meet-

ing” authorized by Agreement 8200? To what extent may

parties to an approved agreement adopt procedures imple-

menting the approved agreement without further approval?

Regarding unfiled agreements questionably subject to filing,

how severely should a carrier be treated if it is later deter-

mined that an agreement should have been, but was not,

filed? These knotty problems are central to the entire

scheme of regulation of the shipping industry and are the

first concern of the Commission which must enforce the

Shipping Act.”

Standards regarding the extent to which a basic agree-

ment covers subsidiary or routine matters or implementing

agreements must be uniform for the whole industry and not,

vary with every case, as would result if antitrust suits

bringing particular agreements into question were enter-

tained. This uniformity is best obtained by submitting the

question to the Commission. This was the result reached

by the Court of Appeals and the District Court in the

instant case and required by the Supreme Court in the

Cunard and Far East cases.

25. By way of example, the statute states that every agreement

must be filed. But the Commission with its expertise recognized

that a too liberal interpretation of the word “every” would deluge

the Commission with routine matters merely implementing basic

agreements. In Section 15 Inquiry, 1 U.S.S.B. 121 (1927) the Com-

mission determined that “routine” matters carrying out a basic

agreement need not be filed. What is or is not a routine agreement

or amendment to an agreement has proven to be a most taxing

question, requiring the expertise of persons thoroughly familiar

with the industry.

|

28

Other questions requiring the need for uniform treatment

are here involved. The complaint charged an agreement

not to disclose to shippers how Conference members voted

on rate requests at meetings (R. 16-17). Significantly, the

question of disclosure of the voting on such Conference

matters is currently the subject of a proposed rule being

considered by the Commission, although the proposed rule,

for excellent reasons, does not go so far as to require

disclosure of the votes of individual carriers.** Manifestly,

this question is one for the agency regulating the industry

and not one for a court dealing primarily with the anti-

trust aspect of the matter.

The charge that Conference members agreed that no

changes in rates would be made without concurrence of

both Conferences (R. 17) raises, as the Court of Appeals

recognized (R. 115), the question whether this alleged

agreement fails within the approved provision in Agree-

ment 8200 which states that the parties “shall establish

the rates to be charged . . . from time to time, and the

rules and regulations governing the application of said

rates” and they shall take certain action only by coneur-

rence of the two Conferences. (See R. 48-49). This is a

question for the Commission in the first instance. Similarly,

the charge in the complaint that the Pacifie Westbound

Conference agreed to pretend falsely to act under Agree-

ment 57, its basic agreement, in announcing rates, presents

a question initially for the Commission,

26. Docket 1194—(The Proposed Rules are set forth in the Fed-

eral Register of August 6, 1964, p. 11384). As the Court of Appeals

pointed out (R. 115) such disclosure would be “likely to result in

the shippers granting their preferences in shipments to carriers

who voted for rate reduction.” This, in turn, would place intense

pressures on the delicately balanced rate pattern in the industry

and likely result in preferential treatment of powerful shippers

despite the proseriptions of the Act.

29

As the Court of Appeals properly found with respect to

these and other charges in the complaint: “these matters

presented questions of fact and policy properly for the

specialized competence of the Commission” (R. 118). The

court, therefore, affirmed the dismissal of the complaint

under the authority of the Cunard and Far East cases.

The fact is the Commission is currently considering the

precise issues of fact, policy and law under the Shipping

Act that are pleaded in the complaint. Before petitioner

brought the complaint in the instant case the Commission

initiated an investigation into Agreement 8200 to determine

whether it was a true and complete memorandum of the

agreement between the parties to it. As the Court of Ap-

peals pointed out: “The issues presented at this hearing

by Carnation [petitioner] and others included in general

the same matters and claims set forth in Carnation’s com-

plaint in this ease” (R. 95-96). Petitioner participated in

the administrative hearing but chose to bring suit for treble

damages under the antitrust laws although it could have

sought reparations under the Shipping Act (Petition, p. 19,

n. 30).

The Commission at the time petitioner’s complaint was

dismissed had not and still has not finally determined

whether all or any of the agreements alleged fell within

the scope of approved Agreeinents 57 and 8200. In an

Initial Decision in the investigatory proceeding, however,

the Examiner concluded (contrary to the complaint’s charge

that agreement of the two Conferences to concur on rates

was outside the scope of the approved agreements) that

the agreement to concur ts authorized by Agreement 8200.

The Examiner found other agreements to be outside the

scope of Agreement 8200, but recommended that these be

approved with modifications (see Agreement No. 8200,

Docket 872, 2 Shipping Regulation Reports (Pike & Fischer)

|

30

900 (1963); the Examiner’s opinion was issued in mimeo-

graphed form by the Commission. Aug. 30, 1963).

Should any or all of the alleged agreements be found

by the Commission (1) not to have been made, or (2) made

but included within the scope of approved Agreements 57

or 8200, it would be anomalous that a court could have

imposed treble damages in the meantime (see Pan Ameri-

can World Airways, Inc, v. United States, 371 U.S. 296,

309, 9 L. ed. 2d 325, 335 (1963)). Even more serious, a true

collision of regimes would occur in that a court by deciding

both the existence of the alleged agreements and their

coverage under Agreements 57 and 8200 would have de-

termined the very Shipping Act questions that the Com-

mission is charged with enforcing.

E. The Pervasive Regulatory Scheme of the Shipping Act Is In-

consistent With Allowance of Any Antitrust Actions.

With the possible exception of the Interstate Commerce

Act, we are satisfied there is no regulatory statute that

is fully comparable to the Shipping Act in its provision

for supervised agreement on rates, in its provision for

policing unfair competitive practices, in its sanctions for

violation of substantive provisions, and in its provision

for relief to those .injured by violation of the Act. The

Cireuit Court’s summary of Shipping Act regulations, as

the decision itself observes, “discloses the extremely broad

range of regulatory powers” (R. 104). The provisions of

the Act and particularly Section 15, which is the corner-

stone of the regulatory scheme, confirm the comprehensive

or pervasive nature of the Act noted by the Court in the

Cunard case.”*

27. “The Shipping Act is a comprehensive measure bearing a

relation to common carriers by water substantiaily the same as

that borne by the Interstate Commerce Act to interstate common

earriers by land.” (284 U.S. at 480, 76 L.ed. at 412).

ENLYAPE RIEL INEST OM. DETTE LEO RIA BOT RSE OR RINT! i

31

The Shipping Act represents the decision of Congress

that maintenance of stable rate patterns in the shipping

industry by intercarrier agreement and subject to govern-

mental supervision and control was in the national interest

and that application of the antitrust laws to the industry

would injure that interest (Federal Maritime Bd. v.

Isbrandtsen Co., 356 U.S. 481, 489-90, 2 L.ed. 2d 926, 933

(1958)). Accordingly, Congress created an entire regime

based on economie and regulatory postulates inconsistent

with the antitrust laws. The Shipping Act provides its own

standards of economic behavior and its own penalties and

remedies upon violation of those standards.

Upon finding such a regulatory scheme, the Court has

consistently applied the doctrine of primary jurisdiction

to protect the integrity of the regulatory scheme without

regard to whether the antitrust remedy asserted is for

damages or for injunctive relief. (See Keogh v. Chicago

& N.W. Ry., 260 U.S. 156, 67 L.ed. 183 (1922) (treble dam-

age action superseded by remedies of Interstate Commerce

Act); Pan American World Airways, Inc. v. United States,

371 U.S. 296, 9 L.ed. 2d 325 (1963) (injunctive relief super-

seded by Federal Aviation Act) ; United States Nav. Co. v.

Cunard S.S. Co., 284 U.S. 474, 76 L.ed. 408 (1932) (injune-

tive relief superseded by Shipping Act remedies) ). Deci-

sions in which the doctrine of primary jurisdiction is found

inapplicable have involved industries having regulatory

schemes of limited scope. (E.9., California v. Federal

Power Comm'n, 369 U.S. 482, 8 L.ed. 2d 54 (1962) ; United

States v. Radio Corp. of America, 358 U.S. 334, 3 Lied. 2d

354 (1959) ).** In such cases there is no danger, as here, of

a collision of statutory regimes founded on inconsistent

principles. There is, correspondingly, no danger of defeat-

28. See n. 23 supra, where these cases are discussed.

sta iid

32

ing Congressional purposes such as there is in the instant

case where Congress created a Commission with full regu-

latory powers over the industry.

F. Dismissal Is the Only Proper Course Here.

The Court of Appeals while properly concluding that dis-

missal is the right course evinced some lingering doubt

whether the District Court should retain jurisdiction of the

case pending action by the Commission. Petitioner while

never advocating such a solution hints at its possibility

(Petition, pp. 25 and 37). There may be situations where

that is the appropriate course, as where doubt exists that

the complaint states a cause cognizable by the ageney under

its regulatory statute and the agency is given the oppor-

tunity in the first instance to determine its jurisdiction, But

this case is one where dismissal is the only proper course.

It is unquestioned that the complaint charges matters

which are all within the Shipping Act. The Shipping Act

provides a remedy for the wrongs charged. That remedy

has superseded the judicial remedy under the antitrust acts.

If given the opportunity, the Commission ean deal fully

with each issue and claim. There is not one thing left over

that could come bavk to a district court for disposition. The

Commission's decision is, of course, fully reviewable by the

courts of appeal under the Hobbs Act (5 U.S.C. $$ 1031-

1042). In such a review the full record before the Commis-

sion is before the Court of Appeals (5 U.S.C. § 1037).

Hence, the primary or original jurisdiction is in the Com-

mission with full opportunity for court review. Dismissal is

the correct action. A recent statement on the question by the

Supreme Court is determinative :

“Dismissal of antitrust suits, where an administra-

tive remedy has superseded the judicial one, is the

usual course. See United States Nav. Co. v. Cunard

A AEE TEIE REDE TT ONC IL DIMRERO TORE imi RATIRUR INP RORDENES YOUNGER COVER GRMN OPED TET NN TCL ORT —

33

S. S. Co. 284 US 474, 76 L ed 408, 52.8 Ct 247; Far

Kast Conference v United States, 342 US 570, 577, 96

L ed 576, 583, 728 Ct 492."

(Pan American World Airways v. United States, 371

U.S, 296, 312 n. 19; 9 Leed, 2d 825, 3887-388, n, 19).7"

2), Additional eases holding dismissal is the proper action

include;

American Union Transp, v. River Plate & Brazil Confer-

ences, 126 FP. Supp. 91 (S.D. N.Y. 1954); afd 222 F.2d

869 (2d Cir., 1955);

Rivoli Trucking Corp. v. American Export Lines, 167 F.

Supp. 987 (E.D. N.Y. 1958), in whieh the court at p. 940

gives primary jurisdiction as an alternative ground for

dismissal ;

Rivoli Trucking Corp. v. New York Shipping Ass'n, 167 F.

Supp. $40 (S.D. N.Y. 1956); and see also

Rivoli Trucking Corp, v. New York Shipping Ass'n, 167 F.

Supp. 43 (S.D. N.Y. 1957), whieh cites the 1956 dis-

missal in refusing motion for leave to file an amended and

supplemental complaint;

United States v. Alaska SS. Co., 110 F. Supp. 104 (W.D.

Wash, 1952);

Wisconsin & Mich. Transp. Co. v. Pere Marquette LS.,

67 F.2d 937 (7th Cir. 1933), affirming dismissal by Dis-

triet Court, opinion unreported;

Swayne & Hoyt v. Kerr Gifford & Co., 14 F.Supp. 805

(E.D. La. 1935) ;

United States v. Borax Consolidated Ltd., 141 F.Supp. 396

(N.D. Cal. 1955).

34

CONCLUSION

We respectfully submit that the issues presented by the

instant Petition confront the Court with no conflicts betweer

circuits, with no new questions requiring consideration by

the Court and with no questions of public importance. The

issues presented have been fully settled by the Cunard and

Far East cases which the Court of Appeals here correctly

applied. Those cases are wholly consistent with other deci

sions announced by the Court on related questions under

different regulatory schemes. Accordingly, the instant Peti

tion for a Writ of Certiorari should be denied.

Dated: December 3, 1964.

Epwarp D. Ransom

R. Freperic FisHer

Linuick, Geary, Wueat, Apams &

CHARLES

Attorneys for Respondent

Pacific Westbound Conference

and its member lines.

35

CERTIFICATE OF SERVICE OF REPLY TO PETITION

FOR A WRIT OF CERTIORARI

I, Edward D, Ransom, the undersigned, certify as follows:

I am a member of the Bar of the Supreme Court of the

United States and represent Pacifie Westbound Conference,

one of the respondents in the within case in its Reply to

Petition for a Writ of Certiorari to the United States Court

of Appeals for the Ninth Circuit on whose behalf service is

hereby certified to was affected.

I certify that on December 3, 1964 I served three (3)

copies of the within Reply to Petition for a Writ of Certio-

rari upon petitioner through its attorneys whose appearance

have been entered herein and upon other parties respondent

through the attorneys who have heretofore appeared for

them, by mailing same first class mail at San Francisco,

California, postage prepaid, as follows:

Arthur B. Dunne, Esq.

James R. Baird, Jr., Esq.

333 Montgomery Street

San Francisco, California 94104

Attorneys for Petitioner, Carnation Company

Elkan Turk, Jr., Esq.

120 Broadway

New York, New York 10005

Attorneys for Respondent Far East Conference

James L. Pimper, Esq.

Yeneral Counsel

Federal Maritime Commission

1321 H Street, N.W.

Washington, D.C.

Attorney for Respondent Federal Maritime Commission

Epwarp D. Ransom