UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
November 17, 1954
ABC FREIGHT FORWARDING CORPORATION, Plaintiff,
UNITED STATES of America and Interstate Commerce Commission, Defendants
The opinion of the court was delivered by: DAWSON
On November 20, 1951, an application of ABC Freight Forwarding Corporation to the Interstate Commerce Commission for a permit to allow it to extend its services into new geographical areas, including Florida, was granted, but the effective date of the permit was January 12, 1952. 285 I.C.C. 91. Before the effective date of the permit, protestants asked the Commission to reconsider the application because of allegedly illegal activities of the applicant. The Interstate Commerce Commission agreed to reopen the proceedings, postponed the effective date of the permit, and, after new hearings, reversed its prior decision and, on April 21, 1953, denied the application for a permit. 285 I.C.C. 276. The ABC Corporation unsuccessfully petitioned the entire Commission for reconsideration and/or further hearings. In this action it seeks a reversal of the denial of its permit.
The Interstate Commerce Commission's authority over freight forwarding permits is defined in § 410 of the Interstate Commerce Act, 49 U.S.C.A. § 1010. Such permits are to be issued 'if the Commission finds that the applicant is ready, able, and willing properly to perform the service proposed, and that the proposed service, to the extent authorized by the permit, is or will be consistent with the public interest and the national transportation policy declared in the Interstate Commerce Act; otherwise such application shall be denied.'
The Commission based its denial of the permit on findings that plaintiff aided and abetted the formation, in January, 1952, of the Florida Shippers Association; that the activities of Florida Shippers Association were freight-forwarder operations, as distinguished from operations of a shipper's association (which would be exempt from the provisions of the Act regulating freight-forwarders; see Sec. 1002(c), Tit. 49 U.S.C.A.); that the operations of Florida Shippers Association had been conducted deliberately and without authority; that plaintiff aided and abetted the unlawful operations of Florida Shippers Association; and that by reason of such facts, plaintiff had failed to establish that it was a qualified applicant or that its proposed extension of service would be consistent with the public interest and the national transportation policy.
In a long line of cases, beginning with Interstate Commerce Commission v. Union Pac. R. Co., 222 U.S. 541, 22 S. Ct. 108, 56 L. Ed. 308, the Supreme Court has laid down the rule that the courts must sustain an order of the Interstate Commerce Commission if it is based upon substantial evidence and is not arbitrary nor erroneous as a matter of law. See Lang Transportation Corp. v. United States, D.C.S.D.Cal.1948, 75 F.Supp. 915, 926. It is against this well established principle of law that we must consider the contentions of the plaintiff.
Plaintiff seeks to review and set aside the order of the Commission on two principal grounds:
(1) That the evidence before the Commission was not sufficient to establish that the Florida Shippers Association was the 'alter ego' of plaintiff so as to attribute to plaintiff the responsibility for any unlawful conduct of that Association; and
(2) That the Commission erred in finding from the facts that the plaintiff was not a qualified applicant and that the proposed service would not be consistent with the public interest and the national transportation policy.
The only question for this Court on the first point is whether, on the entire record, there was substantial evidence which would justify the findings of the Commission. Although we might differ as to the effect to be given to the evidence, we cannot conclude that the Commission is mistaken in its findings if there was substantial evidence in the entire record from which the Commission reasonably could have reached those findings. Interstate Commerce Commission v. Union Pac. R. Co., 222 U.S. 541, 32 S. Ct. 108, 56 L. Ed. 308; Baltimore Transfer Co. v. Interstate Commerce Commission, D.C., 114 F.Supp. 558, affirmed 346 U.S. 890, 74 S. Ct. 225, rehearing denied 347 U.S. 908, 74 S. Ct. 426.
There was sufficient evidence from which the Commission reasonably could have reached its findings as to the illegal activities of Florida Shippers Association and its findings that the plaintiff had aided and abetted in the formation of this Association and its unlawful operations. There was sufficient evidence to justify the Commission in concluding that Florida Shippers Association was de facto, if not de jure, a creature of plaintiff.
This leads to the important question as to whether the Commission could, within its lawful authority, conclude from these facts that plaintiff was not a qualified applicant and that extension of the freight-forwarding business of the plaintiff, under such circumstances, would not be consistent with the public interest and the national transportation policy. Put another way, this question is:
Does the fact that an applicant for a permit for extension of services has participated, through concealment, in illegal activities relating to the object for which the permit is sought, make the applicant unqualified to extend his services, or make an extension of services by such applicant contrary to public interest and the national transportation policy?
A court might reach a different conclusion on this point than a commission; a court conceivably might conclude that proof of previous illegal conduct by an applicant would not be sufficient for it to conclude that the applicant was unqualified or that an extension of its services would be contrary to the public interest.
But that issue is not before this Court. We are not here at liberty to consider what this Court might decide if it were trying the case de novo. The issue for the Court is whether the action of the Commission is arbitrary or capricious. As the Supreme Court said in Federal Communications Commission v. WOKO, Inc., 329 U.S. 223, at page 229, 67 S. Ct. 213, at page 216, 91 L. Ed. 204:
'But it is the Commission, not the courts, which must be satisfied that the public interest will be served by renewing the license. And the fact that we might not have made the same determination on the same facts does not warrant a substitution of judicial for administrative discretion since Congress has confided the problem to the latter.'
In that case, a corporation which had operated a radio station for some years and had appeared to have rendered public service of acceptable quality and to be able to continue to do so, was denied a renewal of its license by the Federal Communications Commission on the ground that it could not be entrusted with the responsibilities of a license, because the Commission found that it had misrepresented the true ownership of its capital stock in applications and testimony before the Commission over a period of years. The court held that the denial of the license was not arbitrary or capricious even though the Commission failed to find that the concealment was of material facts or had influenced the Commission in making any decision or that it would have acted differently had it known the true facts, or that it marked a departure from the course which the Commission had taken in dealing with misstatements and applications in other cases. See also United States v. Pierce Auto Freight Lines, 327 U.S. 515, 66 S. Ct. 687, 90 L. Ed. 821.
The Commission is better equipped than a court to reach a determination on the issues which have been entrusted to it. The Commission is charged with the determination as to whether granting the application would be consistent with the 'national transportation policy'. Part of that policy as enunciated by Congress is 'to provide for fair and impartial regulation of all modes of transportation.' It may well be that it would not be consistent with this policy to reward an applicant who has flouted the regulatory authority by extending its activities, illegally and through subterfuge, into an area for which no authority had yet been obtained. So, too, the Commission in its administrative capacity may take notice of its previous opinion in which the same applicant had been reprimanded for extending its services at a time when no permit had been obtained for such extension. Arthur J. Brown Freight Forwarder Application -- Extension of Operations, 265 I.C.C. 41 (1946).
It cannot be concluded that the Commission was arbitrary or capricious in reaching its determination. Judgment should be granted for the defendants.
CLARK, Chief Judge, concurs.