Opinion · Supreme Court of the United States
United States v. Drum
United States v. Drum, 7 L. Ed. 2d 360 (1962)
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1962-01-15
- Topic
- general
emphasizing use of totalities and noting that indicia are "instruments of decision, not touchstones"; "Commission allowably dealt with this novel situation as an integral and unique problem in judgment, rather than simply as an exercise in counting commonplaces" | emphasizing use of totalities and noting that indicia are “instruments of decision, not touchstones”; “Commission allowably dealt with this novel situation as an integral and unique problem in judgment, rather than simply as an exercise in counting commonplaces” | formulation of private carriage in Drum is recent instance of Commission's developing technique of decision | Commission's belief that financial risks are a significant burden of transportation is well within range of responsibility assigned to Commission | Commission's current resolution of problem does not violate coherence of body of administrative and judicial precedents so far developed in this area | Commission’s belief that financial risks are a significant burden of transportation is well within range of responsibility assigned to Commission | formulation of private carriage in Drum is recent instance of Commission’s developing technique of decision | Commission’s current resolution of problem does not violate coherence of body of administrative and judicial precedents so far developed in this area | transaction between trucking company and its employee-drivers was sale of transportation services, not self-use | under the MCA, a “shipper is free to transport his own goods without utilizing a regulated instrumentality,” but may not use “for compensation or for-hire transportation purchased from a person not licensed” by the ICC | transaction between trucking company and its employee-drivers was sale of transportation services, not self-use | a“civil case brought to set aside the Commission’s cease and desist order
Citator
- Cited by
- 71 opinions
delivered the opinion of the Court.
In an investigation initiated by it under 49 U. S. C. § 304 (c),1 the Interstate Commerce Commission held that appellees who leased their motor vehicles and hired
The Motor Carrier Act of 19356 subjected many aspects of interstate motor carriage — including entry of
From the beginning underlying principles have been, and have remained, clear. A primary objective of the scheme of economic regulation is to assure that shippers generally will be provided a healthy system of motor carriage to which they may resort to get their goods to market. This is the goal not only of Commission sur
It was a wish to rid itself of certain burdens of its existing transportation operation which caused Oklahoma to enter into the arrangement here involved. Prior to 1952 Oklahoma, a manufacturer of low-cost furniture, had maintained a full fleet of tractors and trailers in which all its furniture was shipped. A full crew of drivers was employed. Oklahoma absorbed all the expenses, and carried all the risks, of its transportation operation. It utilized a system of delivered pricing which eliminated transportation charges as an identifiable element of the price of its furniture. Its status as a private carrier exempt from licensing requirements was never questioned under the- pre-1952 arrangement. But that method of operation was found to incorporate certain burdensome disadvantages. Oklahoma discovered that its employee-drivers were embezzling its funds through the misuse of
In an effort to eliminate these disadvantages, Oklahoma in 1952 altered its modus opemndi. It decided to terminate its investment in tractors for long hauls and, instead, to lease them from the drivers. The original lease agreements encountered difficulty when, in 1956, the Supreme Court of Arkansas held that the resultant operation constituted for-hire carriage by the owner-operators which required licensing under the applicable Arkansas statutes.13 Following this turn of events, Oklahoma revised the leases, and also entered into a collective agreement with the union representing its workers setting forth the terms under which the owner-operators were to be employed as drivers. The current lease and collective agreement provide the factual predicate of the present litigation.
The Company presently owns 26 trailers and 6 tractors. It leases 11 tractors for long-haul use in connection with the trailers which it owns. It is solely in connection with the 11 leased tractors and the services of their owner-operators that the Commission discerned the provision of for-hire transportation. The leases are for renewable terms of one year, but they are terminable by either party on 30 days’ notice. Oklahoma is granted the sole right to control the use of the tractor through drivers employed by it; in return, it covenants that such use will be lawful and will be confined to the transportation of the Company’s property. Oklahoma pays for its
Under agreement covering the drivers among its employees, the drivers enjoy certain common employment privileges such as collective bargaining, seniority rights, death benefits, immunity from discharge except for cause, military-service protection, and vacation pay in an amount based on their average weekly pay. Owner-drivers may be discharged for cause.14 Their remuneration is calculated strictly on a mileage basis, and they are obliged to pay their own living expenses while on the road. No minimum weekly pay or mileage is guaranteed.15 Drivers are required to maintain their trucks in good running condition at all times.
Oklahoma’s actual operations were a generally faithful reflection of the leases and the collective agreement. Certain matters, not explicitly or unambiguously covered by the written instruments, are of significance. Ordinarily the drivers were assigned to their own tractors,
In sum, Oklahoma’s operation possessed a number of the hallmarks of a genuine lease of equipment and a genuine employment arrangement.
Still, the Company was able to spare itself — and pass to the owner-operators — certain characteristic burdens of the transportation business. The large capital investment in the tractors and the risk of their premature depreciation or catastrophic loss, was borne by the owner-operators, not by the Company. The owner-operators, rather than Oklahoma, stood the risk of a rise in variable costs such as fuel, repairs and maintenance of the tractors in good operating condition, and living expenses, although the thirty-day cancellation privilege, taken together with the possible bargaining power of the owner-operators en bloc, may have affected the degree to which that burden was actually shifted. Finally, Oklahoma was able
The question before the Commission was whether, under these particular facts, Oklahoma had so far emancipated itself from the burdens of transportation that to permit it, on such terms, to secure a transportation service from these unlicensed owner-operators would be inconsistent with the statutory scheme. The Commission resolved the issue adversely to Oklahoma and the owner-operators. Division 1, one Commissioner dissenting, held that the owner-operators were engaged in contract carriage and ordered them to cease and desist from the activities thus found to be unlawful until such time as they had secured the necessary permits from the Commission. Applications for such permits were invited, the Division’s Report observing that the activities presently condemned should not prejudice such applications.18 This disposition was approved by the full Commission on reconsideration.19
Latterly, the Commission has begun to move away from “control” as the verbal embodiment of its manifold inquiry.28 The Commission thus accords explicit recognition to a premise which has long been implicit in its deci
“Here each owner-operator assigns his motor vehicle for a continuing period of time to the exclusive use of the company, furnishing a service designed to meet the distinct need of the company. He provides a service in which the equipment is furnished, maintained, and driven by the owners thereof to transport property in interstate commerce. He guarantees a fixed and definite cost for the transportation, bears the risk of profit or loss from such transportation hazards as delays in transit, breakdowns of equipment, and highway detours, and meets all of the cost of operation including appropriate licenses and trip expenses.” 79 M. C. C., at 412.
It is evident that the Commission here refused to allow Oklahoma the status of a private carrier because of its belief that financial risks are a significant burden of transportation, and its belief that such risks had been shifted by Oklahoma to the owner-operators to an extent which rendered the sanctioning of the operation as private carriage a departure from the statutory design. We think that such conclusions were well within the range of the responsibility Congress assigned to the Commission. The District Court explicitly recognized the propriety of the Commission’s inquiring into the substance of the arrangements. Yet the court’s conclusion that “what is involved here is private carriage on the part of the Company, rather than transportation for-hire by the owner-operators,” 193 F. Supp., at 281, rests on no articulated premise other than that Oklahoma did have control. If the court intended to hold that the Commission is confined to the “control” test, we think it clearly in error in view of the
Reversed.
Interstate Commerce Act § 204 (c), 49 Stat. 547, as amended, 49 U. S. C. § 304 (c):
“Upon complaint in writing to the Commission by any person, State board, organization, or body politic, or upon its own initiative without complaint, the Commission may investigate whether any motor carrier or broker has failed to comply with any provision of this chapter, or with any requirement established pursuant thereto. If the Commission, after notice and hearing, finds upon any such investigation that the motor carrier or broker has failed to comply with any such provision or requirement, the Commission shall issue an appropriate order to compel the carrier or broker to comply therewith. Whenever the Commission is of opinion that any complaint does not state reasonable grounds for investigation and action on its part, it may dismiss such complaint.”
Interstate Commerce Act § 203 (a) (15), 49 Stat. 544, as amended, 49 U. S. C. § 303 (a) (15):
“The term ‘contract carrier by motor vehicle’ means any person which engages in transportation by motor vehicle of passengers or property in interstate or foreign commerce, for compensation (other than transportation referred to in paragraph (14) of this section and the exception therein), under continuing contracts with one person or a limited number of persons either (a) for the furnishing of transportation services through the assignment of motor vehicles for a continuing period of time to the exclusive use of each person served or (b) for the furnishing of transportation services designed to meet the distinct need of each individual customer.”
Interstate Commerce Act §203 (a) (14), 49 Stat. 544, as amended, 49 U. S. C. § 303 (a) (14), defines “common carrier” as follows:
“The term 'common carrier by motor vehicle’ means any person which holds itself out to the general public to engage in the transportation by motor vehicle in interstate or foreign commerce of passengers or property or any class or classes thereof for compensation, whether over regular or irregular routes, except transportation by motor vehicle by an express company to the extent that such transportation has heretofore been subject to chapter 1 of this title, to which extent such transportation shall continue to be considered to be and shall be regulated as transportation subject to chapter 1 of this title.”
Interstate Commerce Act § 209 (a) (1), 49 Stat. 552, as amended, 49 U. S. C. §309 (a)(1);
“Except as otherwise provided in this section and in section 310a of this title [exceptions not here pertinent], no person shall engage in the business of a contract carrier by motor vehicle in interstate or foreign commerce on any public highway or within any reservation under the exclusive jurisdiction of the United States unless there is in force with respect to such carrier a permit issued by the Commission, authorizing such person to engage in such business . . . .”
See also Interstate Commerce Act §203 (c), 71 Stat. 411, as amended, 49 U. S. C. § 303 (c) :
“Except as provided in section 302 (c) of this title, subsection (b) of this section, in the exception in subsection (a) (14) of this section,*373 and in the second proviso in section 306 (a) (1) of this title [none of which exceptions are here pertinent], no person shall engage in any for-hire transportation business by motor vehicle, in interstate or foreign commerce, on any public highway or within any reservation under the exclusive jurisdiction of the United States, unless there is in force with respect to such person a certificate or a permit issued by the Commission authorizing such transportation, nor shall any person engaged in any other business enterprise transport property by motor vehicle in interstate or foreign commerce for business purposes unless such transportation is within the scope, and in furtherance, of a primary business enterprise (other than transportation) of such person.'’
The United States intervened as defendant, 28 U. S. C. §2322, and appellee Weather-Seal and appellant Regular Common Carrier Conference intervened as plaintiff and defendant respectively, 28 U. S. C. § 2323.
Interstate Commerce Act § 203 (a) (17), 49 Stat. 545, 49 U. S. C. § 303 (a)(17):
“The term 'private carrier of property by motor vehicle’ means any person not included in the terms ‘common carrier by motor vehicle' or ‘contract carrier by motor vehicle’, who or which transports in interstate or foreign commerce by motor vehicle property of which such person is the owner, lessee, or bailee, when such transportation is for the purpose of sale, lease, rent, or bailment, or in furtherance of any commercial enterprise.”
49 Stat. 543-567, as amended, 49 U. S. C. §§ 301-327.
See S. Rep. No. 482, 74th Cong., 1st Sess. 2; H. R. Rep. No. 1645, 74th Cong., 1st Sess. 3; S. Doc. No. 152, 73d Cong., 2d Sess. 14-15, 22-23 (Report of Federal Coordinator of Transportation on the Regulation of Transportation Agencies).
Id., at 14.
See S. Rep. No. 482, 74th Cong., 1st Sess. 1; H. R. Rep. No. 1645, 74th Cong., 1st Sess. 4; H. R. Doc. No. 89, 74th Cong., 1st Sess. 17 (Report of Federal Coordinator of Transportation on Transportation Legislation).
See notes 2, 5, supra.
See note 3, supra.
See S. Doc. No. 152, 73d Cong., 2d Sess. 33 (Report of Federal Coordinator of Transportation on the Regulation of Transportation Agencies). That concern has found recent legislative expression in a 1958 amendment designed to curb so-called “buy-sell” evasions by purported or “pseudo” private carriers. 72 Stat. 568, 574, amending the Interstate Commerce Act §203 (c), 49 U. S. C. §303 (c). See S. Rep. No. 1647, 85th Cong., 2d Sess. 23-24; H. R. Rep. No. 1922, 85th Cong., 2d Sess. 17-19.
Robinson v. Woodard, 227 Ark. 102, 296 S. W. 2d 672.
While such a discharge would not automatically terminate the affected driver’s truck-lease agreement, it seems obvious that he would immediately exercise his 30-day cancellation privilege and thus remove his truck from Oklahoma’s service.
In contrast, the short-haul drivers of company-owned tractors received $50 per week plus two cents per mile.
The provision of the collective agreement that the owner-drivers “shall be required to maintain the truck in good running condition” superseded, in the parties’ practice, Oklahoma’s undertaking in the lease agreement “to keep and maintain said motor vehicle equipment at all times while in operation under this lease agreement, in first class operating condition and in complete compliance with all safety rules and regulations of all State and Federal regulatory bodies.” See 79 M. C. C., at 406, 407; 193 F. Supp., at 278.
Oklahoma paid an extra three cents per mile rental when there was a load of raw materials in the backhaul. This differential was explained as covering the cost of additional wear and tear and fuel purchases occasioned by the heavier raw materials transported on the return trips. At least to the extent that the differential was in fact absorbed by such incremental costs, it cannot be said to have represented the shifting of any financial risk.
79 M. C. C., at 415. Appellees assert that there is no presently licensed carrier able or willing to provide the type of service essential to Oklahoma's survival as a competitor. See Brief for Henry E. Drum et al., at 3. That circumstance should be presented to and considered by the I. C. C. in passing on appellees’ permit applications ; but it is not a reason for bypassing the Commission’s licensing power if Oklahoma is not a private carrier.
R. 167.
79 M. C. C., at 409-410.
79 M. C. C., at 411.
See Brief for the United States and Interstate Commerce Commission at 17, n. 8:
“In this appeal, we do not challenge the district court’s conclusion that the evidence did not warrant a finding that Oklahoma lacked full control of the details of the operation. Nor do we argue as to whether the court below gave too narrow a meaning to the Commission’s control test. We assume, for present purposes, that the court below correctly applied that test as relating only to the operational aspects of the transportation.”
We need not and we do not now pass on the Commission’s view that if the shipper does not direct the details of the operation he cannot be a private carrier.
The leading case is H. B. Church Truck Service Co., 27 M. C. C. 191, 195:
"Essentially the issue is as to who has the right to control, direct, and dominate the performance of the service. If that right remains in the carrier, the carriage is carriage for hire and subject to regulation. If it rests in the shipper, it is private carriage and not subject to regulation
It was the H. B. Church case which established the presumption that a lease of equipment results in for-hire carriage. The presumption was said to “yield to a showing that the shipper has the exclusive right and privilege of directing and controlling the transportation service, as, for example, if the equipment were operated by the shipper’s employee.” 27 M. C. C., at 196.
See, e. g., Watson Mfg. Co., 51 M. C. C. 223, 226; R. N. G. Commercial Auto Renters, Inc., 73 M. C. C. 665, 670.
Teamsters Union v. Oliver, 358 U. S. 283, did not, as appellees suggest (Brief for Henry E. Drum et al., at 29), hold that owner-operators are in any sense "employees.” That case held that a bargaining unit including an overwhelming majority of concededly employed drivers of carrier-owned equipment was entitled, under § 8 (d) of the National Labor Relations Act, 61 Stat. 142, 29 U. S. C. § 158 (d), to bargain to impasse concerning minimum rentals to be received by owner-drivers. It was not necessary to determine
See, e. g., Edward Allen Carroll, 1 M. C. C. 788; Centre Trucking Co., 32 M. C. C. 313; William A. Shields, 41 M. C. C. 100; John J. Casale, Inc., 44 M. C. C. 45; Motor Haulage Co., 46 M. C. C. 107; Jacobs Transfer Co., 46 M. C. C. 265; John J. Casale, Inc., 49 M. C. C. 15; R. N. G. Commercial Auto Renters, Inc., 73 M. C. C. 665.
See Pacific Diesel Rental Co., 78 M. C. C. 161, 172-173:
“The primary question here . . . can be asked in two forms; namely (1) Is the transportation here involved such that any person or persons other than the purported private carriers have any right to control, direct, and dominate it, or (2) Are any persons here, in substance, engaged in the business of interstate or foreign transportation of property on the public highways for hire? . . . We are convinced here that, even if all the responsibilities of an employer with respect to the driver are assumed by a shipper, the service offered . . . is, in substance, for-hire motor carriage subject to regulation under part II of the act. To hold otherwise would be inconsistent with the remedial purpose of part II and would be in contravention of our duty, imposed by Congress .... It is evident that, were we to hold that the shipper’s assumption (as an employer) of certain responsibilities which more normally fall upon a carrier, transforms an operation which, apart from such assumption, is clearly a for-hire carrier service, into an operation different in substance, we would open the door to unfair and destructive competitive practices contrary to the national transportation policy declared by Congress.”
The courts have commonly articulated their plotting of the boundary between private and regulated carriage in leased equipment cases in terms of over-all substance, rather than simply in terms of “control.” See Georgia Truck System, Inc., v. I. C. C., 123 F. 2d 210, 212 (“[A]ppellant, in substance and in reality, operates a transportation business.”); A. W. Stickle & Co. v. I. C. C., 128 F. 2d 155, 160, 161 (test of “substance and reality”); Lamb v. I. C. C., 259 F. 2d 358, 360 (“Simply stated [the issue] ... is who was transporting the goods in question.”); B & C Truck Leasing, Inc., v. I. C. C., 283 F. 2d 163, 165 (test of “substance and effect"); I. C. C. v. Isner, 92 F. Supp. 582; United States v. La Tuff Transfer Service, 95 F. Supp. 375; I. C. C. v. Werner, 106 F. Supp. 497; cf. Bridge Auto Renting Corp. v. Pedrick, 174 F. 2d 733; John J. Casale, Inc., v. United States, 114 Ct. Cl. 599, 86 F. Supp. 167. But cf. Earle v. Babler, 180 F. 2d 1016; Vincze v. I. C. C., 267 F. 2d 577; Motor Haulage Co. v. United States, 70 F. Supp. 17, affirmed, 331 U. S. 784; I. C. C. v. Gannoe, 100 F. Supp. 790; Allen v. United States, 187 F. Supp. 625.