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Safir v. United States Lines

May 27, 1986

MARSHALL P. SAFIR, PLAINTIFF-APPELLANT,
v.
UNITED STATES LINES INC., LYKES BROS. STEAMSHIP CO., INC., MOORE MCCORMACK LINES, INC., AMERICAN PRESIDENT LINES, LTD., FARRELL LINES, INC., AMERICAN EXPORT LINES, INC., PRUDENTIAL LINES, INC., PRUDENTIAL-GRACE LINES, INC., DEFENDANTS-APPELLEES



Marshall Safir appeals from a judgment of the United States District Court for the Eastern District of New York (Nickerson, J.) denying his request for a preliminary injunction, dismissing his complaint brought under section 810 of the Merchant Marine Act of 1936, and enjoining him from instituting any new action in federal court arising from or relating to the subject matter of his present claim. Affirmed, as modified.

Author: Miner

Before: NEWMAN, KEARSE and MINER, Circuit Judges.

MINER, Circuit Judge :

This lawsuit marks yet another episode in Marshall Safir's quest to obtain additional relief for the wrongs committed in 1965 and 1966 against his now bankrupt shipping company. During that period, defendants and other engaged in predatory pricing practices for the sole purpose of forcing Safir's company, Sapphire Shipping Lines, Inc. ("Sapphire"), out of business. The instant suit is the eleventh federal court action that Safir or his defunct company has filed against the defendants relating to those pricing practices. Unlike two of Safir's earlier lawsuits, however, the current one lacks merit entirely.

I. BACKGROUND

In early 1965, Sapphire began operations as an unsubsidized common carrier by water. Sapphire undercut the rates of various competitor carriers that were members of a shipping conference known as the Atlantic and Gulf American Flag Berth Operators ("AGAFBO"). The members of AGAFBO, by agreement, drastically reduced their rates to an admittedly unfair, unreasonable, and non-compensatory level. The sole purpose of these reductions was to drive Sapphire out of business. On March 1, 1966, AGAFBO raised its rates to their former levels. Sapphire, having already experienced irreversible setbacks, went out of business the following March and was adjudged a bankrupt that May.

In December of 1967, the Federal Maritime Commission issued a report finding that AGAFBO, by engaging in these pricing practices, had violated section 15 of the Shipping Act of 1916, 46 U.S.C. § 814 (1982). At about this time, Safir commenced upon the litigious journey that brings him to our court today. First, in 1966, Sapphire instituted a "corporate treble damage suit" against the instant defendants and others, which ultimately was settled by the bankruptcy trustee with all defendants for approximately $2.5 million.

Safir also requested the Acting Maritime Administrator and the Maritime Subsidy Board to terminate subsidy payments to members of AGAFBO and to institute action to recover subsidies paid during the period of illegal practices. The request was based on section 810 of the Merchant Marine Act of 1936, 46 U.S.C. § 1227 (1982). Eventually, Safir commenced suit in the Eastern District of New York seeking a declaration that section 810 barred subsidy payments and an order compelling the government to stop such payments and to take appropriate legal action to recover subsidies paid during the period of violation.

In our first encounter with the litigation stemming from the above-described events, we reversed the district court's dismissal of Safir's suit and held that his complaint stated a claim under section 810, that he had standing to prosecute that claim, and that the Maritime Administration could not decline to recapture past subsidies that were legally recoverable without making a considered decision to adopt that course. Safir v. Gibson, 417 F.2d 972 (2d Cir. 1969), cert. denied, 400 U.S. 850, 91 S. Ct. 57, 27 L. Ed. 2d 88 (1970) (" Safir I ").

Ultimately, the Secretary of Commerce directed recovery of approximately $1 million in subsidies paid to the four AGAFBO lines that had completed directly with Sapphire. The Secretary also affirmed the Maritime administration's finding that the three AGAFBO lines that had not severed the same routes as Sapphire had engaged in a "technical violation" of section 810, but nevertheless should not be required to repay subsidies that they had received during the period of violation. Safir appealed the Secretary's order to the United States District Court for the District of Columbia, arguing that the Secretary should recover all subsidies paid during the period of violation (more than $225 million). Safir's appeal was dismissed on the ground that he lacked standing, since it had become clear that he was not likely ever again to be in competition with the carriers that had engaged in the wrongful practices. Safir v. Dole, 231 U.S. App. D.C. 63, 718 F.2d 475 (D.C. Cir. 1983), cert. denied, 467 U.S. 1206, 81 L. Ed. 2d 347, 104 S. Ct. 2389 (1984).

Had the above claims represented the totality of Safir's legal battle against these defendants, this case would be unexceptional. Over the years, however, Safir has multiplied the number of legal proceedings aimed at redressing the injuries suffered by Sapphire. Many of these proceeding sought to enjoin various business transactions of defendants on the ground that such transactions would deplete defendants' assets and thereby deprive Safir of the recovery he ultimately might receive against them. Safir's legal strategy at times has been novel and occasionally successful, but by and large it has been meritless, duplicative, and burdensome to the defendants and the courts.

Safir commenced the instant action against United States Lines, Inc., Lykes Bros. Steamship Co., Inc., Moore McCormack Lines, Inc., American President Lines, Ltd., Farrell Lines, Inc., American Export Lines, Inc., Prudential Lines, Inc., and Prudential Grace Lines, Inc., alleging an implied private right of action under section 810 of the Merchant Marine Act of 1936, 46 U.S.C. § 1227 (1982), to pursue a "restitutionary remedy in the form of disgorgement of the illegal earnings" that defendants had received as subsidy payments in 1965 and 1966. Safir also sought a preliminary injunction preventing Farrell from taking any action to sell the S.S. Austral Lightning, or in the alternative, requiring Farrell to set aside the proceeds of the sale pending a decision on the merits.

The United States District Court for the Eastern District of New York (Nickerson, J.) denied Safir's motion for a preliminary injunction on the grounds that Safir had not established either "a likelihood of success on the merits" or "a sufficiently serious ground for litigation and a balance of hardships tipping decidedly in [his] favor." The district court subsequently dismissed Safir's complaint on the grounds that section 810 does not afford private citizens a private right of action for "restitution" of subsidies paid by the government, Safir v. United States Lines, Inc., 616 F. Supp. 613, 615-17 (E.D.N.Y. 1985), and it denied his post-judgment motion for leave to amend his complaint to state a claim under section 810, in his individual capacity, for treble damages. Finally, the district court permanently enjoined Safir from (1) proceeding further in the instant action except to seek appellate review or a writ of certiorari, or to submit papers responding to applications by defendants and (2) asserting in any federal court any new claims related to, or arising out of the events of 1965 and 1966. We fully agree with the district court's denial of Safir's preliminary injunction motion and its dismissal of Safir's complaint. We also agree with the district court that an injunction restricting Safir's future federal litigation was warranted; however, we believe the injunction, as it ...


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