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SAFIR v. UNITED STATES LINES

August 23, 1985

MARSHALL P. SAFIR, Plaintiff, against UNITED STATES LINES, INC., LYKES BROS. STEAMSHIP CO., INC., MOORE McCORMACK LINES, INC., AMERICAN PRESIDENT LINES, INC., FARRELL LINES, INC., AMERICAN EXPORT LINES, INC., PRUDENTIAL LINES, INC., PRUDENTIAL-GRACE LINES, INC., Defendants.


The opinion of the court was delivered by: NICKERSON

MEMORANDUM AND ORDER

NICKERSON, District Judge.

 Plaintiff's complaint alleges a private right of action implied from section 810 of the Merchant Marine Act, 46 U.S.C. § 1227, to recover a "restitutionary remedy in the form of disgorgement of the illegal earnings" of defendants. He seeks (a) $227,686,369.33 in subsidies paid by the United States to defendant steamship companies during 1965 and 1966 when they were engaged in unlawful conduct, (b) interest, compounded quarterly, on that amount, and (c) over $2 billion in profits defendants allegedly earned from the use of the subsidies.

 Defendants move to dismiss the complaint. They cite three gounds: (1) section 810 affords plaintiff no private right of action for "restitution"; (2) plaintiff lacks standing; and (3) this action, brought almost twenty years after the unlawful conduct occurred, is barred by the applicable statute of limitation. Defendant American President Lines, Ltd., which did not compete with Sapphire Lines, recites a further ground, namely, that the complaint does not allege a prior administrative or judicial determination of a statutory violation upon which a claim for restitution against the non-competing shipping lines could be based. Defendants also move to enjoin plaintiff permanently from pursuing any further vexatious litigation relating to their pricing conduct in 1965 and 1966. Plaintiff cross-moves for summary judgment.

 I

 The undisputed facts are as follows. Sapphire Steamship Lines, Inc. (Sapphire Lines) was an unsubsidized shipping corporation, in which plaintiff held fifty percent of the stock and for which he was a guarantor of many of its debts. Defendants are shipping lines that received government subsidies in 1965 and 1966. To defeat competition by Sapphire Lines on certain trade routes, defendants temporarily, in 1965 and 1966, lowered their rates for military cargo on those routes.

 In 1966 Sapphire Lines sued defendants for treble damages under the antitrust laws, based upon defendants' pricing conduct. In 1967 Sapphire Lines was adjudicated a bankrupt, and later, in 1973, its trustee settled the treble damage suit with all defendants for $2.5 million.

 Meanwhile, in 1967, the Federal Maritime Commission determined that defendants' conduct violated the Shipping Act of 1916, 46 U.S.C. § 814. Sapphire Lines, plaintiff, and the other shareholder then began an action in this court against Maritime Administration officials seeking an order declaring that section 810 of the Merchant Marine Act (the Act), 46 U.S.C. § 1227, barred subsidy payments to defendants and compelling those officials to recover all subsidies paid to defendant during 1965 and 1966. This court dismissed for failure to state a claim.

 The Court of Appeals for the Second Circuit reversed and held that (a) plaintiffs had standing to bring the suit, (b) the Act authorized the Maritime Administrator to recover subsidies paid in the past to shipping lines while they were violating section 810, and, (c) while the Maritime Administrator had some discretion in determining whether to seek such recovery, he could not refuse to do so without considering the interests of victims of the unlawful conduct. Safir v. Gibson (Safir I), 417 F.2d 972 (2d Cir. 1969), cert. denied, 400 U.S. 850, 27 L. Ed. 2d 88, 91 S. Ct. 57 (1970).

 After this decision the Maritime Commission directed its chief hearing examiner to compile a public record to provide a basis for determining whether defendants had violated section 810 of the Act and, if so, what action should be taken. This court then denied an injunction sought by plaintiff and his fellow litigants to restrain the Maritime Commission from paying any further subsidies to the shipping lines. The Court of Appeals affirmed insofar as the order refused to enjoin current subsidy payments, but directed the Maritime Administration not to redetermine that the conduct of the shipping lines in 1965 and 1966 violated section 810 of the Act to the injury of Sapphire Lines. Safir v. Gibson (Safir II), 432 F.2d 137 (2d Cir.), cert. denied, 400 U.S. 942, 91 S. Ct. 241, 27 L. Ed. 2d 246 (1970).

 Thereafter the Secretary of Commerce proceeded to recover from the defendants that had competed with Sapphire Lines about $1.1 million (representing only a part of their subsidies for 1965 and 1966), but declined to obtain refunds of subsidies from those defendants that had not so competed. This decision was ultimately sustained in Safir v. Dole, 231 U.S. App. D.C. 63, 718 F.2d 475 (D.C. Cir. 1983), cert. denied, 467 U.S. 1206, 104 S. Ct. 2389, 81 L. Ed. 2d 347 (1984).

 II

 The Court of Appeals for the Second Circuit has held that plaintiff had three available remedies in the late 1960's. He could have (1) brought an action for treble damages, (2) withheld some information from the government and brought a qui tam action under the False Claims Act, or (3) sued to compel officials of the Maritime Administration to recover subsidies paid to carriers that violated section 810. Safir v. Blackwell, 579 F.2d 742, 747 (2d Cir. 1978), cert. denied, 441 U.S. 943, 60 L. Ed. 2d 1044, 99 S. Ct. 2160 (1979). He now urges that he had and still has a further remedy, that is, a claim under section 810 to recover personally those subsidies paid to defendants during 1965 and 1966 that the government chose not to recover.

 Section 810 does not explicitly afford this private remedy, and the question is whether it is implicit. See Transamerica Mortgage Advisors, Inc. (TAMA) v. Lewis, 444 U.S. 11, 15, 62 L. Ed. 2d 146, 100 S. Ct. 242 (1979); Touche Ross & Co. v. Redington, 442 U.S. 560, 575-76, 61 L. Ed. 2d 82, 99 S. Ct. 2479 (1979) ...


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