holding that the Shipping Act supersedes the antitrust laws and vests the Shipping Board with "exclusive preliminary jurisdiction"Summary of this case from Metronet Services v. U.S. West Communications
Argued January 8, 11, 1932. Decided February 15, 1932.
1. The relation of the Shipping Act to carriers by water is substantially the same as the relation of the Interstate Commerce Act to carriers by land; and owing to the close parallelism between the two, the construction of the Interstate Commerce Act, settled when the Shipping Act was passed, must be applied to the latter, unless, in particular instances, there be something peculiar in the question under consideration, or dissimilarity in the terms of the Act relating thereto, requiring a different conclusion. P. 480. 2. Questions essentially of fact, and those involving the exercise of administrative discretion, which are within the jurisdiction of the Shipping Board, are primarily within its exclusive jurisdiction, and private remedies must, in general, be sought from the Board before the jurisdiction of the courts can be invoked. P. 481. 3. A steamship company, by its bill for an injunction under the Sherman and Clayton Acts, alleged that certain of its competitors were in a combination and conspiracy to exclude it from the business of carrying general cargo between the United States and certain foreign countries and to monopolize such business themselves. The means alleged included: coercion of shippers by exaction of much higher rates from those who did than from those who did not agree to use the defendants' lines exclusively; giving rebates; spreading false rumors that the plaintiff was about to discontinue its service; use of defendants' combined economic bargaining power to coerce shippers who were also producers of commodities used in large quantities by the defendants, to enter into joint exclusive contracts with them; and threats to blacklist forwarders, and refuse to pay them joint brokerage fees, unless they discontinued making, or advising shippers to make, shipments in plaintiff's ships. Held: (1) The case is remediable under the Shipping Act, since the allegations either constitute direct and basic charges of violations of that Act (§§ 14, 14a, 16 and 17), or are so interrelated with such charges as to be in effect a component part of them. P. 483. (2) The Shipping Act, to this extent, supersedes the antitrust laws. P. 485. (3) The matter is within the exclusive preliminary jurisdiction of the Shipping Board. Id. 4. Section 15 of the Shipping Act requires that agreements between carriers "in any manner providing for an exclusive, preferential, or cooperative working arrangement," shall be filed immediately with the Board; and thereupon, the Board is authorized to disapprove, cancel or modify any such agreement, "whether or not previously approved by it," which it finds to be unjustly discriminatory or unfair as between carriers, shippers, etc., "or to operate to the detriment of the commerce of the United States, or to be in violation of this Act." Held: (1) That failure to file such an agreement with the Board will not afford ground for an injunction under § 16 of the Clayton Act at the suit of a private party. P. 486. (2) In case of such failure, § 22 of the Shipping Act authorizes the Board to afford relief upon complaint or upon its own motion; and its orders are then, under § 31, for the first time, open to a judicial proceeding to enforce, suspend or set them aside in accordance, generally, with the rules and limitations announced by this Court in respect of like orders made by the Interstate Commerce Commission. Id. (3) Even though an agreement, as described in a bill for an injunction, be such that it could not legally be approved, the Board has primary original jurisdiction to consider the case upon a full hearing and with regard to the peculiar nature of ocean traffic, and to "disapprove, cancel or modify" the agreement that it finds was made. P. 487. (4) A decision by the Board adjudging an agreement unlawful under the Shipping Act after full hearing, will not justify the courts in entertaining a bill for an injunction with respect to another agreement between other parties, although, as described by the bill, it be similar to the agreement that the Board held unlawful. P. 488. 50 F.2d 83, affirmed.
Mr. Mark W. Maclay, with whom Mr. John Tilney Carpenter was on the brief, for petitioner.
The Shipping Act expressly confines the powers of the Board to the provisions of the Act itself and confers no general jurisdiction over monopolies and restraints in respect of ocean carriers.
The only reference to monopolies and restraints is in § 15, relieving approved agreements from the operation of the antitrust laws, — an exemption which does not apply to the subject-matter of this suit.
The exception in § 16 of the Clayton Act, denying injunctive relief against land carriers in respect of matters subject to the jurisdiction of the Interstate Commerce Commission, should not be extended by implication to ocean carriage.
The circumstance that the facts alleged were, or may have been, also violations of the Shipping Act, is not a sufficient reason for depriving the petitioner of its legal or equitable remedies under the antitrust laws, or for confining it to proceedings before the Shipping Board under the Shipping Act.
Relief has been given under the Sherman Act, at common law, and in admiralty, in cases where the facts included violations of the Shipping Act. Buyer v. Guillan, 271 F. 65; European Commercial Co. v. International Mercantile Co., 1923 A.M.C. 211; New Orleans Box Co. v. Luckenbach S.S. Co., No. 19,745, Dist. Ct., U.S., E. Dist. La., Nov. 7, 1930; American Pitch Co. v. Dixie S.S. Co., No. 20,871, Dist. Ct. U.S., E. Dist. La., December 24, 1931; Burgess Bros. Co. v. Stewart, 114 Misc. (N.Y.) 673; Prince Line v. American Exports Co., 45 F.2d 242.
The mere existence of a remedy at the hands of the Interstate Commerce Commission has not been considered a bar to relief under the Sherman Act, other remedial statutes, or on common law principles. United States v. Pacific Arctic Co., 228 U.S. 87; United States v. Union Pacific R. Co., 226 U.S. 61; United States v. Joint Traffic Assn., 171 U.S. 505; United States v. Trans-Missouri Freight Assn., 166 U.S. 290; Meeker v. Lehigh Valley R. Co., 183 F. 548. Distinguishing Keogh v. Chicago N.W. Ry. Co., 260 U.S. 156.
The requirement of prior resort to the administrative body depends upon the kind of function to be exercised, or upon the nature of the question and of the inquiry needed to solve it. Great Northern Ry. Co. v. Merchants Elevator Co., 259 U.S. 285, 291. The character of the party plaintiff, whether private or governmental, is irrelevant. Cf. United States v. Pacific Arctic Co., 228 U.S. 87.
If the Shipping Act repealed or made inapplicable the remedial provisions of the Sherman and Clayton Acts, then the situation from the point of view of remedy becomes what it was before either of those Acts was passed; and at that stage a private party could obtain an injunction against a group of ocean carriers giving preferential treatment in consideration of exclusive patronage. Menacho v. Ward, 27 F. 529.
Notwithstanding the jurisdiction of the Interstate Commerce Commission, the courts have repeatedly held that state and federal common law and statutory provisions apply to and will be enforced by the courts against illegal practices, at the instance of private parties. Pennsylvania R. Co. v. Puritan Coal Co., 237 U.S. 121, 134; Louisville N.R. Co. v. Cook Brewing Co., 223 U.S. 70; Great Northern Ry. Co. v. Merchants Elevator Co., 259 U.S. 285; Pennsylvania R. Co. v. Sonman Coal Co., 242 U.S. 120; Pennsylvania R. Co. v. International Coal Co., 230 U.S. 184; China Fire Ins. Co. v. Davis, 50 F.2d 389.
The court has jurisdiction without preliminary resort to the regulatory body in the absence of a question of an administrative nature or of complex facts calling for experience in technical matters. Texas Pac. Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426; Great Northern Ry. Co. v. Merchants Elevator Co., 259 U.S. 285; Texas Pac. Ry. Co. v. Gulf, C. S.F. Ry. Co., 270 U.S. 266.
The questions in this case are not of an administrative character and their adjudication does not require reference either to any standard of factual reasonableness or to any standard of the welfare of the industry. Cf. Menacho v. Ward, 25 F. 529; United States v. Pacific Arctic Co., 228 U.S. 87; United States v. Great Lakes Towing Co., 208 F. 733; Thomsen v. Cayser, 243 U.S. 66. Eden Mining Co. v. Bluefields Fruit S.S. Co., 1 U.S.S.B. 41.
The agreements and understandings complained of could not legally be approved by the Shipping Board.
Refusal to carry at a given rate except in consideration of exclusive patronage has already been held unlawful by the Board.
The acts complained of are unlawful by the express terms of the Shipping Act itself.
Mr. Roscoe H. Hupper, with whom Mr. Charles C. Burlingham was on the brief, for respondents.
The United States Navigation Company is a corporation operating ships in foreign commerce. It brought this suit in the federal district court for the southern district of New York to enjoin respondents from continuing an alleged combination and conspiracy in violation of the Sherman Antitrust Act, c. 647, 26 Stat. 209, Title 15, U.S.C. § 1-7, and of the Clayton Act, c. 323, 38 Stat. 730, Title 15, U.S.C. § 12-27. The district court granted a motion to dismiss the amended bill on the ground, principally, that the matters complained of were within the exclusive jurisdiction of the United States Shipping Board, under the Shipping Act of 1916, c. 451, 39 Stat. 728, Title 46, U.S.C. § 801-842, as amended by the Merchant Marine Act of 1920, c. 250, 41 Stat. 988. 39 F.2d 204. The circuit court of appeals affirmed. 50 F.2d 83.
For present purposes, the substance of the pertinent allegations of the bill may be stated as follows: The petitioner, during the time mentioned in the bill, operated steamships for the carriage of general cargo between the port of New York and specified foreign ports. The respondents are corporations also engaged in foreign commerce between the United States and specified foreign countries, carrying ninety-five per cent. of the general cargo trade from North Atlantic ports in the United States to the ports of Great Britain and Ireland. These corporations and the petitioner are the only lines maintaining general cargo services in that trade. Respondents have entered into and are engaged in a combination and conspiracy to restrain the foreign trade and commerce of the United States in respect of the carriage of general cargo from the United States to the foreign ports named, with the object and purpose of driving the petitioner and all others not parties to the combination out of, and of monopolizing, such trade and commerce. The conspiracy involves the establishment of a general tariff rate and a lower contract rate, the latter to be made available only to shippers who agree to confine their shipments to the lines of respondents. The differentials thus created between the two rates are not predicated upon volume of traffic or frequency or regularity of shipment, but are purely arbitrary and wholly disproportionate to any difference in service rendered, the sole consideration being their effect as a coercive measure. The tariff rate in numerous instances is as much as one hundred per cent. higher than the contract rate. The disproportionately wide spread of these differentials is wholly arbitrary and unreasonable. The respondents have put into effect what is called a scheme of joint exclusive patronage contracts, by which shippers are required to agree to ship exclusively by their lines, and to refrain from offering any shipments to petitioner. Unless they so agree, the shippers are forced to pay the far higher general tariff rates. This plan is resorted to for the purpose of coercing shippers to deal exclusively with respondents and refrain from shipping by the vessels of petitioner, and thus exclude it entirely from the carrying trade between the United States and Great Britain.
Other means to accomplish the same end are alleged, such as, giving rebates; spreading false rumors and falsely stating that petitioner is about to discontinue its service; making use of their combined economic bargaining power to coerce various shippers, who are also producers of commodities used in large quantities by respondents, to enter into joint exclusive contracts with them; and threatening to blacklist forwarders and refuse to pay them joint brokerage fees unless they discontinue making, or advising shippers to make, shipments in petitioner's ships. Certain overt acts are alleged as being in furtherance of the combination, conspiracy, and attempt to monopolize. A more detailed analysis of the amended bill, is embodied in the statement of the case which precedes the opinion of the court below.
It may be conceded that, looking alone to the Sherman Antitrust Act, the bill states a cause of action under §§ 1 and 2 of that act, and, consequently, furnishes ground for an injunction under § 16 of the Clayton Act, unless the Shipping Act stands in the way; and this was the view of both courts below.
The Shipping Act is a comprehensive measure bearing a relation to common carriers by water substantially the same as that borne by the Interstate Commerce Act to interstate common carriers by land. When the Shipping Act was passed, the Interstate Commerce Act had been in force in its original form or in amended forms for more than a generation. Its provisions had been applied to a great variety of situations, and had been judicially construed in a large number and variety of cases. The rule had become settled, that questions essentially of fact and those involving the exercise of administrative discretion, which were within the jurisdiction of the Interstate Commerce Commission, were primarily within its exclusive jurisdiction, and, with certain exceptions not applicable here, that a remedy must be sought from the commission before the jurisdiction of the courts could be invoked. In this situation the Shipping Act was passed. In its general scope and purpose, as well as in its terms, that act closely parallels the Interstate Commerce Act; and we cannot escape the conclusion that Congress intended that the two acts, each in its own field, should have like interpretation, application and effect. It follows that the settled construction in respect of the earlier act must be applied to the later one, unless, in particular instances, there be something peculiar in the question under consideration, or dissimilarity in the terms of the act relating thereto, requiring a different conclusion.
The decisions of this court which deal with the subject under the Interstate Commerce Act are fully reviewed by the court below in an able and carefully drawn opinion. It is enough for us here to refer to a few illustrative cases. In Great Northern Ry. Co. v. Merchants Elevator Co., 259 U.S. 285, 291, the general rule and an exception to it are considered. The immediate question there at issue concerned merely the legal construction of an interstate tariff, no question of fact, either as an aid to the construction, or in any other respect, and no question of administrative discretion, being involved. It was held that the issue was within the jurisdiction of the courts without preliminary resort to the commission. But the distinction between that case and one where preliminary resort to the commission is necessary was definitely stated. Such resort, it was said, must be had where a rate, rule or practice is attacked as unreasonable or as unjustly discriminatory, and also where it is necessary, in the construction of a tariff, to determine upon evidence the peculiar meaning of words or the existence of incidents alleged to be attached by usage to the transaction. In all such cases the uniformity which it is the purpose of the Commerce Act to secure could not be obtained without a preliminary determination by the commission. Preliminary resort to the commission "is required because the enquiry is essentially one of fact and of discretion in technical matters; and uniformity can be secured only if its determination is left to the Commission. Moreover, that determination is reached ordinarily upon voluminous and conflicting evidence, for the adequate appreciation of which acquaintance with many intricate facts of transportation is indispensable; and such acquaintance is commonly to be found only in a body of experts. But what construction shall be given to a railroad tariff presents ordinarily a question of law which does not differ in character from those presented when the construction of any other document is in dispute."
In Board v. Great Northern Ry. Co., 281 U.S. 412, an interlocutory injunction had been granted by a federal district court of three judges in a suit assailing intrastate railroad rates as working undue and unreasonable discrimination against interstate commerce. The order granting the injunction was reversed on the ground that the district court was without power to entertain the suit in advance of a determination of the question by the Interstate Commerce Commission.
"The inquiry," we said (pp. 421-422), "would necessarily relate to technical and intricate matters of fact, and the solution of the question would demand the exercise of sound administrative discretion. The accomplishment of the purpose of Congress could not be had without the comprehensive study of an expert body continuously employed in administrative supervision. Only through the action of such a body could there be secured the uniformity of ruling upon which appropriate protection from unreasonable exactions and unjust discriminations must depend."
So the rule has been applied where recovery was sought by a shipper for unreasonable and excessive freight rates not found to be unreasonable by the commission, Texas Pac. Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426; where the question was as to the reasonableness of the carrier's practice in distributing cars, Midland Valley R. Co. v. Barkley, 276 U.S. 482; where the reasonableness of a particular practice of routing was involved, Northern Pacific Ry. Co. v. Solum, 247 U.S. 477, 483; where the continuance of service on an industrial track was assailed as unduly discriminatory, Western Atlantic R. Co. v. Public Service Comm., 267 U.S. 493, 497; and where an action was brought under § 7 of the Antitrust Act, based upon an alleged conspiracy among carriers to fix rates, Keogh v. Chicago N.W. Ry. Co., 260 U.S. 156. In the case last cited it was pointed out (p. 163) that if a shipper were permitted to recover under the Antitrust Act, the amount recovered might, like a rebate, operate to give him a preference over his trade competitors. "Uniform treatment would not result, even if all sued, unless the highly improbable happened, and the several juries and courts gave to each the same measure of relief."
That the Shipping Act covers the dominant facts alleged in the present case as constituting a violation of the Antitrust Act is clear. Section 14 prohibits retaliation by a common carrier by water against any shipper by resort to discriminating or unfair methods because the shipper has patronized another carrier; and § 14a confers power upon the board to determine the question. The latter section also confers similar power on the board in respect of any combination, agreement or understanding involving transportation of passengers or property between foreign ports, deferred rebates, or any other unfair practice designated in § 14. Section 16 makes it unlawful for any such carrier, alone or in conjunction with another, to give any undue or unreasonable preference or advantage to any particular person, locality or description of traffic, or to subject any such person, locality or traffic to undue or unreasonable prejudice or disadvantage in any respect, or to allow any person to obtain transportation for property at less than the regular rates by any unjust or unfair device or means. Section 17 prohibits any charge or rate unjustly discriminatory between shippers or ports, etc., and gives the board authority to alter the same to the extent necessary to correct the discrimination or prejudice, and to order the carrier to discontinue. Section 22 authorizes any person to file with the board a complaint, setting forth any violation of the act by a common carrier by water, and asking reparation for the injury. Copy of the complaint is to be furnished to the carrier, who is required to satisfy the complaint or answer it in writing. If not satisfied, the board is authorized to investigate the case and make such order as it deems proper, and the board may direct payment of full reparation for the injury caused by such violation. The board is also authorized, upon its own motion, except as to orders for the payment of money, to investigate any violation of the act. We need not pursue the analysis further. These and other provisions of the Shipping Act clearly exhibit the close parallelism between that act and its prototype, the Interstate Commerce Act, and the applicability to both of like principles of construction and administration.
The act is restrictive in its operation upon some of the activities of common carriers by water, and permissive in respect of others. Their business involves questions of an exceptional character, the solution of which may call for the exercise of a high degree of expert and technical knowledge. Whether a given agreement among such carriers should be held to contravene the act may depend upon a consideration of economic relations, of facts peculiar to the business or its history, of competitive conditions in respect of the shipping of foreign countries, and of other relevant circumstances generally unfamiliar to a judicial tribunal, but well understood by an administrative body especially trained and experienced in the intricate and technical facts and usages of the shipping trade; and with which that body consequently, is better able to deal. Compare Chicago Board of Trade v. United States, 246 U.S. 231, 238; United States v. Hamburgh-American S.S. Line, 216 F. 971.
A comparison of the enumeration of wrongs charged in the bill with the provisions of the sections of the Shipping Act above outlined conclusively shows, without going into detail, that the allegations either constitute direct and basic 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 remedy is that afforded by the Shipping Act, which to that extent supersedes the antitrust laws. Compare Keogh v. Chicago N.W. Ry. Co., supra, at p. 162. The matter, therefore, is within the exclusive preliminary jurisdiction of the Shipping Board. The scope and evident purpose of the Shipping Act, as in the case of the Interstate Commerce Act, are demonstrative of this conclusion. Indeed, if there be a difference, the conclusion as to the first named act rests upon stronger ground, since the decisions of this court compelling a preliminary resort to the commission were made in the face of a clause in § 22 of the Interstate Commerce Act, that nothing therein contained should in any way abridge or alter existing common law or statutory remedies, but that the provisions of the act were in addition to such remedies ( Mitchell Coal Co. v. Pennsylvania R. Co., 230 U.S. 247, 256); a clause that finds no counterpart in the Shipping Act.
There is nothing in § 15 of the Shipping Act which militates against the foregoing views. That section requires that agreements between carriers, or others subject to the act, in respect of a number of enumerated matters, or "in any manner providing for an exclusive, preferential, or cooperative working arrangement," shall be filed immediately with the board; and that the term "agreement" shall include understandings, conferences, and other arrangements. Thereupon, the board is authorized to disapprove, cancel or modify any such agreement, "whether or not previously approved by it," which it finds to be unjustly discriminatory or unfair as between carriers, shippers, etc., "or to operate to the detriment of the commerce of the United States, or to be in violation of this Act." But a failure to file such an agreement with the board will not afford ground for an injunction under § 16 of the Clayton Act at the suit of private parties — whatever, in that event, may be the rights of the government — since the maintenance of such a suit, being predicated upon a violation of the antitrust laws, depends upon the right to seek a remedy under those laws, a right which, as we have seen, does not here exist. If there be a failure to file an agreement as required by § 15, the board, as in the case of other violations of the act, is fully authorized by § 22, supra, to afford relief upon complaint or upon its own motion. Its orders, in that respect, as in other respects, are then, under § 31, for the first time, open to a judicial proceeding to enforce, suspend or set them aside in accordance, generally, with the rules and limitations announced by this court in respect of like orders made by the Interstate Commerce Commission.
It is said that the agreement referred to in the bill of complaint cannot legally be approved. But this is by no means clear. In the first place, while the allegations of the bill must be taken as true upon the motion to dismiss, they still are subject to challenge by pleading and proof if the motion be denied. We cannot assume that, in a proceeding before the board in which the whole case would be open, similar allegations will not be denied or met by countervailing affirmative averments. In any event, it reasonably cannot be thought that Congress intended to strip the board of its primary original jurisdiction to consider such an agreement and "disapprove, cancel, or modify" it, because of a failure of the contracting parties to file it as § 15 requires. A contention to that effect is clearly out of harmony with the fundamental purposes of the act and specifically with the provision of § 22 authorizing the board to investigate any violation of the act upon complaint or upon its own motion and make such order as it deems proper. And whatever may be the form of the agreement, and whether it be lawful or unlawful upon its face, Congress undoubtedly intended that the board should possess the authority primarily to hear and adjudge the matter. For the courts to take jurisdiction in advance of such hearing and determination would be to usurp that authority. Moreover, having regard to the peculiar nature of ocean traffic, it is not impossible that, although an agreement be apparently bad on its face, it properly might, upon a full consideration of all the attending circumstances, be approved or allowed to stand with modifications.
Petitioner contends that the Shipping Board has already determined that an agreement similar to the one here involved is unlawful under the Shipping Act, Eden Mining Co. v. Bluefields Fruit S.S. Co., 1 U.S.S.B. 41, and, therefore, that the courts may take jurisdiction of the case without further preliminary resort to the board. In support of this contention we are referred to Mitchell Coal Co. v. Pennsylvania R. Co., supra, (see p. 257), and National Pole Co. v. Chicago N.W. Ry. Co., 211 F. 65, 72. Without stopping to consider the general principle thus invoked, it is enough to say that the Eden case did not involve this agreement or these parties, and it was decided after a full hearing upon issue joined. Here we have only the allegations of the bill before us. If there be a formal written agreement, it is not set out; and it is pleaded, apparently, only according to the pleader's conception of its legal effect. There is at present no answer, and the question before us arises upon a motion to dismiss, which admits the facts, so far as they are well pleaded, only for the sake of the argument. What might be disclosed by an answer and upon a hearing, we do not know and are not permitted to conjecture. It may be, for aught that now appears, that in an original proceeding before the board, the allegations upon which petitioner relies may not be sustained, or may be so qualified as to render the Eden decision entirely inapplicable. Whatever might be the rule to be applied under other circumstances, we are of opinion that in the state of the present record the ordinary primary jurisdiction of the board has not been superseded by its decision in the Eden case. To hold otherwise would be to create the doubtful, and perhaps dangerous, precedent that a decision of the board in respect of one agreement definitely establishes that the rule of that decision must, without more, be applied to all other agreements alleged to be of a similar character, although it may turn out upon investigation that the allegations are not warranted, or the facts and circumstances of and surrounding the transaction are so wholly different as to afford ground for a different result.