Opinion · Supreme Court of the United States

Far East Conference v. United States

342 U.S. 570

Type
Opinion
Court
Supreme Court of the United States
Jurisdiction
Federal
Date
1952-04-28
Topic
general

How later courts describe this case

  • holding that claims had to be brought before agency before court could consider them because their resolution required “a high degree of expert and technical knowledge” and the agency therefore would be better able to deal with these issues
  • holding that the Federal Maritime Board’s primary jurisdiction over matters concerning the Shipping Act of 1916 precluded the District Court for New Jersey from passing on the merits of the lawsuit, which was brought under the Sherman Anti-Trust Act
  • concluding that dismissal was proper and a stay was not necessary for a claim seeking to enjoin violations of antitrust law because the claim could be appealed to the courts after the agency proceeding and any future claim could be "easily initiated later"
  • applying the doctrine in favor of the Federal Maritime Board in the context of federal claims
  • applying the primary jurisdiction doctrine to abstain from hearing Comprehensive Environmental, Response, Compensation and Liability Act (CERCLA
  • determining dismissal was appropriate where case involved only questions within the scope of agency jurisdiction, judicial review of an agency order would be available, and similar suit could be easily initiated later
  • calling the creation of the doctrine “one of those creative judicial labors whereby modern administrative law is being developed as part of our traditional system of law”
  • ordering an antitrust action brought by the United States as a shipper dismissed pursuant to the doctrine of primary jurisdiction following the intervention of, and motion to dismiss by, the Maritime Board, the relevant federal agency

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Headnotes

  1. Administrative Law — Primary Jurisdiction Where a suit raises issues of fact not within the conventional experience of judges or requires the exercise of administrative discretion, agencies created by Congress to regulate the subject matter should not be bypassed; preliminary resort to the agency is required for ascertaining and interpreting the circumstances underlying legal issues, even though the facts as appraised by specialized competence may later serve as the premise for judicially defined legal consequences. 342 U.S. 570, 574-575
  2. Antitrust & Competition Law — Shipping Act — Exclusive Preliminary Jurisdiction A dual-rate system enforced in concert by steamship carriers engaged in foreign trade, whose agreement was approved by the Federal Maritime Board's predecessor under the Shipping Act of 1916, falls within the exclusive preliminary jurisdiction of the Federal Maritime Board; a district court cannot pass on the merits of a Sherman Act complaint challenging such a system before the Board has first considered the matter. 342 U.S. 570, 573-574 (citing United States Navigation Co. v. Cunard S. S. Co., 284 U.S. 474)
  3. Antitrust & Competition Law — Shipping Act — Jurisdiction The fact that the Government, rather than a private shipper, invokes the antitrust laws does not alter the requirement of initial resort to the Federal Maritime Board; the same considerations of administrative expertise apply whoever initiates the action, and the same antitrust laws and Shipping Act govern the same dual-rate system. 342 U.S. 570, 576
  4. Administrative Law — Standing The United States is a "person" who may file a complaint with the Federal Maritime Board under § 22 of the Shipping Act, and the Government may not avoid initial resort to the Board on the ground that it lacks standing to complain there. 342 U.S. 570, 576
  5. Administrative Law — Primary Jurisdiction — Remedy Where a case involves questions within the general scope of an administrative agency's jurisdiction, the district court proceeding should be dismissed rather than retained on the docket pending the agency's action; an order of the agency is subject to review by a court of appeals with further review on certiorari, and a similar suit may easily be initiated later if appropriate. 342 U.S. 570, 576-577
FAR EAST CONF.v. UNITED STATES,342 U.S. 570(1952)
72 S.Ct. 492
FAR EAST CONFERENCE ET AL.v. UNITED STATES ET AL.
CERTIORARI TO THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW JERSEY.
No. 15, Misc.
Argued January 30, 1952.
Decided March 10, 1952.
The United States brought this suit in the District Court to enjoin alleged violations of the Sherman Antitrust Act. The defendants were the Far East Conference, a voluntary association, and its constituent members, steamship companies engaged in "outbound Far East trade." The agreement under which the Conference operated was approved by the predecessor of the Federal Maritime Board, exercising authority under the Shipping Act of 1916, as amended. Under this agreement the Conference established a dual system of rates, whereby shippers who agreed to use exclusively bottoms of Conference members paid one rate, while those who did not so bind themselves paid a fixed higher rate. This dual system of rates constituted the gravamen of the Government's suit.Held:
1. The case is initially within the exclusive jurisdiction of the Federal Maritime Board.United States Navigation Co. v.CunardS. S. Co.,284 U.S. 474. Pp. 573-576.
(a) A different result from that reached in theCunardcase is not required by the fact that there a private shipper invoked the Antitrust Acts whereas here it is the Government. P. 576.
(b) The United States is a "person" who under § 22 of the Shipping Act may file a complaint with the Federal Maritime Board. P. 576.
2. Rather than order the case retained on the District Court docket pending action by the Board, this Court orders dismissal of the proceeding brought in the District Court. Pp. 576-577.
94 F. Supp. 900, reversed.
In a suit brought by the United States to enjoin alleged
violations of the Sherman Act, the District Court denied
the defendants' motion to dismiss.94 F. Supp. 900.
This Court granted certiorari.342 U.S. 811.Reversed,
p. 577.
Page 571
Elkan Turkargued the cause for the Far East Conference et al., petitioners. With him on the brief wereJohn MiltonandSeymour H. Kligler.John W. Davisargued the cause for the Isthmian Steamship Co., petitioner. With him on the brief wasJosiah Stryker.J. Roger Wollenbergargued the cause for the United States. With him on the brief wereSolicitor GeneralPerlmanandAssistant Attorney General Morison.Arthur M. Boalargued the cause for the Federal Maritime Board, respondent. With him on the brief wereFrancis S. WalkerandGeorge F. Galland.
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
This is a suit in the District Court for New Jersey to enjoin violations of the Sherman Law.126 Stat. 209,15 U.S.C. § 1and2. The defendants were the Far East Conference, a voluntary association, and its constituent members, steamship companies engaged in what is known as the "outbound Far East trade." The Conference was organized in 1922, and the Conference Agreement under which it operates was approved by the United States Shipping Board,2exercising authority under the ShippingPage 572Act of 1916, as amended.3Under this Agreement there has been established a dual system of rates, called the contract and noncontract rate system.4Shippers who agreed to use exclusively bottoms of Conference members paid one rate; those who did not bind themselves by such exclusive patronage contract paid a fixed higher rate. Shippers who adhered to the exclusive patronage contract were not tied to a particular carrier; they were free to choose among Conference carriers. The Conference members, however, were obligated to supply facilities sufficient to handle freight destined for the Far East. This system of two levels of freight rates constituted the gravamen of the Government's suit.

Admitting the dual-rate system, the defendants justified on the merits but moved that the complaint be dismissed on the ground that the nature of the issues required that resort must first be had to the Federal Maritime Board before a District Court could adjudicate the Government's complaint. The Board, as intervenor, joined in this motion. It was denied by the District Court,94 F. Supp. 900, and we brought the case here, under § 262 of the Judicial Code,28 U.S.C. § 1651(a), because there are in issue important questions regarding the relation between the Sherman Law and the Shipping Act.342 U.S. 811.Page 573

At the threshold we must decide whether, in a suit brought by the United States to enjoin a dual-rate system enforced in concert by steamship carriers engaged in foreign trade, a District Court can pass on the merits of the complaint before the Federal Maritime Board has passed upon the question. We see no reason to depart fromUnited States Navigation Co. v.Cunard SteamshipCo.,284 U.S. 474. That case answers our problem. There a competing carrier invoked the Antitrust Acts for an injunction against a combination of carriers in the North Atlantic trade which were alleged to operate a dual-rate system similar to that here involved. The plaintiff had not previously challenged the offending practice before the United States Shipping Board, the predecessor in authority of the present Maritime Board. This Court sustained the two lower courts,39 F.2d 204(D.C. S.D. N. Y.) and50 F.2d 83(C.A. 2d Cir.), dismissing the bill because initial consideration by the Shipping Board of the circumstances in controversy had not been sought. After a detailed analysis of the provisions of the Shipping Act and their relation to the construction theretofore given to the Interstate Commerce Act, this was the conclusion:
"The [Shipping] act is restrictive in its operation upon some of the activities of common carriers by water, and permissive in respect of others. Their business involves questions of an exceptional character, the solution of which may call for the exercise of a high degree of expert and technical knowledge. Whether a given agreement among such carriers should be held to contravene the act may depend upon a consideration of economic relations, of facts peculiar to the business or its history, of competitive conditions in respect of the shipping of foreign countries, and of other relevant circumstances, generally unfamiliar to a judicial tribunal, but well understoodPage 574by an administrative body especially trained and experienced in the intricate and technical facts and usages of the shipping trade; and with which that body, consequently, is better able to deal. CompareChicago Board of Tradev.United States,246 U.S. 231,238;United Statesv.Hamburgh-AmericanS. S. Line, 216 F. 971.
"A comparison of the enumeration of wrongs charged in the bill with the provisions of the sections of the Shipping Act above outlined conclusively shows, without going into detail, that the allegations either constitute direct and basic charges of violations of these provisions or are so interrelated with such charges as to be in effect a component part of them; and the remedy is that afforded by the Shipping Act, which to that extent supersedes the antitrust laws. CompareKeoghv.Chicago N.W. Ry.Co., supra[260 U.S. 156], at p. 162. The matter, therefore, is within the exclusive preliminary jurisdiction of the Shipping Board. The scope and evident purpose of the Shipping Act, as in the case of the Interstate Commerce Act, are demonstrative of this conclusion."284 U.S. 474,485.


The Court thus applied a principle, now firmly established, that in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over. This is so even though the facts after they have been appraised by specialized competence serve as a premise for legal consequences to be judicially defined. Uniformity and consistency in the regulation of business entrusted to a particular agency are secured, and the limited functions of review by the judiciary are more rationally exercised, by preliminary resort for ascertainingPage 575and interpreting the circumstances underlying legal issues to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure.

It is significant that this mode of accommodating the complementary roles of courts and administrative agencies in the enforcement of law was originally applied in a situation where the face of the statute gave the Interstate Commerce Commission and the courts concurrent jurisdiction. "The pioneer work of Chief Justice White" inTexas Pacific R. Co. v.Abilene Cotton OilCo.,204 U.S. 426, as his successor characterized it, 257 U.S. XXVI, was one of those creative judicial labors whereby modern administrative law is being developed as part of our traditional system of law. In this case we are merely applying the philosophy which was put in memorable words by Mr. Justice (as he then was) Stone:
". . . court and agency are not to be regarded as wholly independent and unrelated instrumentalities of justice, each acting in the performance of its prescribed statutory duty without regard to the appropriate function of the other in securing the plainly indicated objects of the statute. Court and agency are the means adopted to attain the prescribed end, and so far as their duties are defined by the words of the statute, those words should be construed so as to attain that end through coordinated action. Neither body should repeat in this day the mistake made by the courts of law when equity was struggling for recognition as an ameliorating system of justice; neither can rightly be regarded by the other as an alien intruder, to be tolerated if must be, but never to be encouraged or aided by the other in the attainment of the common aim."United Statesv.Morgan,307 U.S. 183,191.
Page 576

The sole distinction between theCunardcase and this is that there a private shipper invoked the Antitrust Acts and here it is the Government. This difference does not touch the factors that determined theCunardcase. The same considerations of administrative expertise apply, whoever initiates the action. The same Antitrust Laws and the same Shipping Act apply to the same dual-rate system. To the same extent they define the appropriate orbits of action as between court and Maritime Board.

But the Government argues that it should not be forced to go first to the Board because the United States may not be deemed a "person" who under § 22 of the Shipping Act may file a complaint with the Maritime Board.5Surely the large question here in issue ought not to turn on such a debating point. It is almost frivolous to suggest that the Maritime Board would deny standing to the United States as a complainant. The Board has consistently treated the United States as a "person" within its rule for intervention. We ought not to dally longer with this objection, considering the fact that the United States, as a matter of common knowledge, is today one of the largest shippers in the Far East trade. The matter seems to be disposed of byUnited Statesv.InterstateCommerce Commission,337 U.S. 426,430et seq., involving similar provisions of the Interstate Commerce Act.

Having concluded that initial submission to the Federal Maritime Board is required, we may either order the case retained on the District Court docket pending the Board's action,General American Tank Car Corp. v.El DoradoTerminal Co.,308 U.S. 422,432-433;El Dorado OilWorksv.United States,328 U.S. 12,17; seeUnited Statesv.Interstate Commerce Commission, supra, at 465, n. 12, or order dismissal of the proceeding brought in the DistrictPage 577Court. As distinguished from the situation presented by the firstEl Doradocase,supra, which was a contract action raising only incidentally a question proper for initial administrative decision, the present case involves questions within the general scope of the Maritime Board's jurisdiction. Shipping Act of 1916, §§ 14, 15,39 Stat. 728, 733, 46 U.S.C. § 812, 814. An order of the Board will be subject to review by a United States Court of Appeals, with opportunity for further review in this Court on writ of certiorari. Pub.L. No. 901, 81st Cong., 2d Sess., §§ 2, 10,64 Stat. 1129, 1132. If the Board's order is favorable to the United States, it can be enforced by process of the District Court on the Attorney General's application.39 Stat. 728, 737, 46 U.S.C. § 828. We believe that no purpose will here be served to hold the present action in abeyance in the District Court while the proceeding before the Board and subsequent judicial review or enforcement of its order are being pursued. A similar suit is easily initiated later, if appropriate. Business-like procedure counsels that the Government's complaint should now be dismissed, as was the complaint inUnited States Navigation Co. v.Cunard Steamship Co.,supra.

The judgment of the District Court must beReversed.

MR. JUSTICE CLARK took no part in the consideration or decision of this case.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BLACK concurs, dissenting.
The Shipping Act would have to be amended for me to reach the result of the majority. The Conference agreement, approved by the Board in 1922, provides for the adoption by the Conference of a tariff of rates and charges.Page 578It states that there shall be no unjust discrimination against shippers and no rebates paid to them. There is no provision in the agreement for dual rates — no arrangement for allowing one rate to shippers who give all their business to the members and for retaliations against nonsubscribing shippers by exacting from them a higher rate. Nevertheless petitioners have prescribed this dual rate system for the purpose of barring from the outbound Far East trade steamship lines that are not members of the combination. At least these are the facts if we are to believe the allegations of the complaint, as we must on the motion to dismiss.

If the Board had expressly approved the dual rate system, and the dual rate system did not violate the Shipping Act, then there would be immunity from the Sherman Act, since § 15 of the Shipping Act,39 Stat. 733, as amended, 46 U.S.C. § 814, gives the Board authority to approve agreements fixing or regulating rates, in effect makes "lawful" the rates so approved, and exempts from the Sherman Act every "lawful" agreement concerning them. But that exemption from the Sherman Act can be acquired only in the manner prescribed by § 15. Here no effort was made to obtain it. Hence the petitioners are at large, subject to all of the restraints of the Sherman Act.

Why should the Department of Justice be remitted to the Board for its remedy? The Board has no authority to enforce the Sherman Act.1If the rates were filed, of course the Board would have exclusive jurisdiction to pass on them. But even then it is restricted. Section 14, Third, for example, makes unlawful retaliation against any shipper by resort to discriminatory or unfair tactics because a shipper has patronized another carrier. And itPage 579would seem plain that when a shipper is charged one rate if he gives the Conference a monopoly of his business and another and higher rate if the shipper uses a carrier not a member of the Conference, the shipper is being retaliated against for shopping around among carriers.

Petitioners, therefore, operate outside the law not only because they have failed to submit their schedule of rates to the Board but also because the rates adopted would, if approved, be illegal.2The steamship companies, therefore, flout the law as plainly as if they used rates that had been disapproved by the Board. In either case the public interest needs protection if the Sherman Act is to be enforced — whether it be represented in a criminal prosecution or, as here, in a civil proceeding brought by the United States.

The jurisdiction of the Department of Justice must commence at this point, unless we are to amend the Act by granting an anti-trust exemption to rate fixing not only when the rates are filed by the companies and approved by the Board but also when they are not filed at all or are rates which, if filed, could not be approved. I would read the Act as written and require the steamship companies to obtain the anti-trust exemption in the precise way Congress has provided.Page 580
  1. Page 571 The jurisdiction of the District Court was based on § 4 of the Sherman Law: "The several district courts of the United States are invested with jurisdiction to prevent and restrain violations of sections 1-7 of this title . . . ."26 Stat. 209,15 U.S.C. § 4. ↩
  2. Page 571 Section 3 of the Shipping Act of 1916 created the Shipping Board.39 Stat. 728, 729. Through several steps its functions have come to its present successor, the Federal Maritime Board. By Executive Order No. 6166, June 10, 1933, § 12, its functions were transferred to the United States Shipping Board Bureau in the Department of Commerce. In 1936 Congress created the United States Maritime Commission,49 Stat. 1985, 1987, 46 U.S.C. § 1114; and in 1950 the present Federal Maritime Board was established. Reorganization Plan No. 21 of 1950,15 Fed. Reg. 3178-3180. ↩
  3. Page 57239 Stat. 728, 46 U.S.C. § 801et seq. ↩
  4. Page 572 The irrelevance of the failure to file the rates themselves with the Board was laid bare inUnited States Navigation Co. v.Cunard SteamshipCo.,284 U.S. 474,486-487:

    "If there be a failure to file an agreement as required by § 15, the board, as in the case of other violations of the act, is fully authorized by § 22,supra, to afford relief upon complaint or upon its own motion. Its orders, in that respect, as in other respects, are then, under § 31, for the first time, open to a judicial proceeding to enforce, suspend or set them aside in accordance, generally, with the rules and limitations announced by this court in respect of like orders made by the Interstate Commerce Commission." ↩
  5. Page 57639 Stat. 728, 736, 46 U.S.C. § 821. ↩
  6. Page 578 The remedy provided by § 22 of the Shipping Act is for "any violation of this Act." The charge in the present case is a violation of the Sherman Act. ↩
  7. Page 579 There is less room for expertise where the rates used by the steamship companies are unfiled rates or unlawful rates. Cf.U.S. NavigationCo. v.Cunard S. S. Co.,284 U.S. 474. ↩