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UNITED STATES v. ST. REGIS PAPER CO.

July 24, 1952

UNITED STATES
v.
ST. REGIS PAPER CO. et al.



The opinion of the court was delivered by: WEINFELD

This is an action by the United States of America to enjoin the defendants from violating certain price regulations issued pursuant to the Defense Production Act of 1950, 50 U.S.C.A.Appendix, § 2061 et seq., and to recover treble damages for alleged overcharges.

The defendants move to dismiss the complaint pursuant to Rule 12(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., on the grounds that (a) there is a failure to join an indispensable party plaintiff and (b) the complaint fails to state a claim upon which relief can be granted; or alternatively (c) for a more definite statement of plaintiff's claim pursuant to Rule 12(c); (d) to strike from the complaint certain allegations as tending to prejudice the fair trial of this action (Rule 12(f); and finally (e) to direct plaintiff to separately state and number its claims pursuant to Rule 10(b).

 (a) The defendants' first contention is that the complaint is defective for failure to join the President of the United States as an indispensable party- that the action is improperly brought in the name of the United States of America.

 The enforcement provisions of the Defense Production Act of 1950 appear in Section 409 of Title IV, 50 U.S.C.A.Appendix, § 2109. Section 2109(a) provides that 'Whenever in the judgment of the President any person has engaged * * * in any acts or practices which constitute * * * a violation' of any regulation, 'he may make application' for an injunction. Under Section 2109(c) 'the President may institute * * * (an) * * * action of behalf of the United States' to recover overcharges if the buyer fails to institute action within thirty days from the date of the overcharge.

 The substance of the enforcement provisions parallels that of the Emergency Price Control Act of 1941, 50 U.S.C.A.Appendix, § 925(ec). However, the latter statute directed that actions both for injunctions and for money damages be brought 'on behalf of the United States' by 'the Administrator' of the Office of Price Administration rather than the President. The defendants urge that this is a significant change evidencing Congressional intent that actions to enforce the Defense Production Act and to recover damages be instituted only in the name of the President. In my opinion this contention is without substance in view of the structure of the Defense Production Act which in various sections authorizes the delegation of powers by the President.

 The 1942 Act expressly provided for an 'Office of Price Administration,' 50 U.S.C.A.Appendix, § 921, and constant reference appears throughout to the Administrator who was vested with the powers created by the Act. In contrast, under the Defense Production Act the President is granted broad powers but to be delegated by him to agencies and officials pursuant to Executive Order. Thus, by 50 U.S.C.A.Appendix, § 2103, the President is empowered to create a 'new independent agency' to administer price controls and by 50 U.S.C.A.Appendix, § 2153, to 'delegate any power or authority conferred upon him by this Act to any officer or agency of the Government, including any new agency * * *.' Furthermore, 'The President may make such rules, regulations, and orders as he deems necessary or appropriate to carry out the provisions' of the Act. 50 U.S.C.A.Appendix, § 2154.

 Pursuant to the foregoing sections, the President, by Executive Order 10161, Section 401(a) thereof, 50 U.S.C.A.Appendix, § 2071 note, created the Economic Stabilization Agency to be headed by an Administrator. Section 401(c) of this Order provides:

 'The functions conferred upon the President by Title IV of the Defense Production Act of 1950 are hereby delegated to the Administrator.'

 As already noted, the enforcement sections authorizing the President to institute injunctive and treble damage actions are found in Title IV of the Act. Since the President, acting under the authority granted by the Act, has delegated these powers, he is not an indispensable party plaintiff in this action.

 The question remains whether the United States of America is the proper party plaintiff. Rule 17(a) of the Federal Rules of Civil Procedure provides that 'Every action shall be prosecuted in the name of the real party in interest* * *.' It has been held that in actions on behalf of the United States brought by the Price Administrator pursuant to the enforcement provisions of the Emergency Price Control Act, 50 U.S.C.A.Appendix, § 925(e) the real party in interest is the United States. Northwestern Lumber & Shingle Co. v. United States, 10 Cir., 170 F.2d 692; Woods v. Rose, 9 Cir., 171 F.2d 290. See also Fleming v. Goodwin, 8 Cir., 165 F.2d 334, certiorari denied 334 U.S. 828, 68 S. Ct. 1338, 92 L. Ed. 1755. The fact, which defendants strongly stress, that apparently in all actions brought under the 1942 Act, either for enforcement or treble damages, the party plaintiff was the Administrator, and not the United States of America, is not conclusive of the issue. In United States v. Allied Oil Corp., 341 U.S. 2, 71 S. Ct. 544, 95 L. Ed. 697, the Supreme Court held that an action under the Price Control Act was maintainable in the name of the Government. While it is true that an executive order expressly authorized the Attorney General to institute litigation 'in the name of the United States', the Court significantly stated that, even apart from the express grant of authority:

 ' * * * nothing in § 205(e) (50 U.S.C.A.Appendix, § 925(e)) prevents the Attorney General, who is customarily charged with representing the Government's interests in court, from following his normal procedure of maintaining enforcement suits in the name of the United States itself. * * * Regardless of captions, the issues in these cases could not change and the real party-in-interest plaintiff has always been the same.' supra, page 5 of 341 U.S., page 546 of 71 S. Ct., 95 L. Ed. 697.

 It is here important to note that the Defense Production Act provides that all litigation arising thereunder 'shall be under the supervision and control of the Attorney General.' 50 U.S.C.A.Appendix, § 2156. It follows from this grant to the Attorney General and from the fact that the Government is the real party in interest that this action is properly brought in the name of the United States.

 (b) The defendants next make a two-pronged attack upon the complaint in that it fails to state a claim either for injunctive relief in equity under Section 409(a) or at law for recovery of damages under Section 409(c) of the Act. We first consider the alleged deficiency to state a claim for equitable relief. The substance of this attack is that the regulation which the defendants are charged with violating was not in effect and had not been in effect for some time prior to the commencement of this action in April, 1952, and consequently on the latter date they were not engaged in practices which justify the grant of equitable relief by way of injunction.

 The complaint alleges the sales of Kraft paper above the ceiling price established in General Price Ceiling Regulation (referred to as GCPR) for the period beginning Jan. 26th, 1951, to date (April 10th, 1952) and sales of commodities and products other than Kraft ...


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