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ATLANTIC & GULF/WEST COAST OF CENT. AMERICA v. UNI

November 24, 1950

ATLANTIC & GULF/WEST COAST OF CENTRAL AMERICA AND MEXICO CONFERENCE (NO. 2743), et al.
v.
UNITED STATES et al.



The opinion of the court was delivered by: FRANK

McGOHEY, District Judge.

This is an action to annul and set aside an order of the United States Maritime Commission and for a permanent injunction against its enforcement.

 Plaintiffs are certain individual steamship lines and the conferences which they have established by means of agreements authorized by § 15 of the Shipping Act, 1916, *fn1" and previously approved by the Commission. Plaintiffs' trades are between east coast ports of the United States and ports in the Caribbean area, Central and South America.

 The defendants are the United States, the Federal Maritime Board *fn2" and two organizations of foreign freight forwarders. *fn3"

 The Maritime Commission, on April 1, 1947, on its own initiative, ordered the investigation which resulted in the challenged order. The order directing investigation provided:

 'ORDERED that the Commission institute public hearings with respect to the payment and non-payment of brokerage by carriers subject to its jurisdiction, and that at such hearings, evidence be received as to whether conference agreements and regulations adopted thereunder, prohibiting the payment of brokerage, are contrary to law or unjustly discriminatory or unfair as between carriers, shippers, importers, exporters, or ports, or detrimental to the commerce of the United States; and it is further

 'ORDERED that respondents show cause before the Commission why conference agreements (including regulations, understandings and other arrangements) to which respondents or any of them are parties, which prohibit the payment of brokerage, should not be disapproved.'

 Public hearings were held in New York and San Francisco. Plaintiffs appeared as did other carriers and their conferences as well as freight forwarders and their associations. The Commission's examiners found that agreements not to pay brokerage *fn4" were detrimental to the commerce of the United States. Plaintiffs' exceptions to the examiners' report were heard and rejected by the Commission which issued its report *fn5" November 17, 1949. The Commission said (p. 177):

 'We find that concerted prohibition against the payment of brokerage results in detriment to the commerce of the United States in that it has had and will have a serious effect upon the forwarding industry. We are not impressed with the argument that removal of the ban against the payment of brokerage necessarily will result in increases in rates. Respondents should remove all such prohibitions whether contained in their basic conference agreements, the rules and regulations of their tariffs, or both.

 'Nothing herein is to be construed as a directive that individual carriers must pay brokerage nor as any limitation as to the amount of brokerage that may be paid by such individual carriers, provided the payments do not result in violations of applicable statutes. A carrier should be free within limits to pay brokerage or not as its individual managerial discretion dictates. Nor is anything herein to be construed as a prohibition against carriers, acting under a conference agreement, from establishing all reasonable rules or regulations which will prevent the payment of brokerage under circumstances which would violate the Act, or as a prohibition against such carriers from placing limitations upon the amounts which they may pay. On the other hand, as we have found that a prohibition against any payment of brokerage results in detriment to the commerce of the United States, we believe that any limitation below 1 1/4 percent of the freight involved, which is the amount generally paid by carriers in the various trades over a period of years, would circumvent our finding and result in the detriment condemned. * * *

 'No order will be entered at the present time, thus giving respondents an opportunity to take necessary steps to accomplish the removal of the prohibitions condemned.'

 Plaintiffs, on January 30, 1950, petitioned for reargument and reconsideration. This was denied by the Commission which, on March 8, 1950, ordered 'That respondents herein be, and they are hereby directed, within thirty days after the date of this order, to modify their conference agreements, regulations, and tariffs so as to remove the prohibitions condemned.'

 This is the order presently under attack.

 This action was commenced April 6, 1950. Plaintiffs' application for an interlocutory injunction was heard on May 9, 1950, and denied by our order of June 9, 1950, D.C., 90 F.Supp. 554. On June 15, 1950, Mr. Justice Jackson refused to ...


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