Consolo v. Federal Maritime Commission

PETITIONER:Consolo
RESPONDENT:Federal Maritime Commission
LOCATION:Baconsfield Park

DOCKET NO.: 63
DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 383 US 607 (1966)
ARGUED: Dec 06, 1965 / Dec 07, 1965
DECIDED: Mar 22, 1966

Facts of the case

Question

  • Oral Argument – December 07, 1965
  • Audio Transcription for Oral Argument – December 07, 1965 in Consolo v. Federal Maritime Commission

    Audio Transcription for Oral Argument – December 06, 1965 in Consolo v. Federal Maritime Commission

    Earl Warren:

    Number 63, Philip R. Consolo, Petitioner, versus Federal Maritime Commission et al.

    Mr. (Inaudible)

    Mr. Chief Justice, I move the admission of Richard A. Posner of the New York Bar for the purpose of arguing in this case for the United States.

    Earl Warren:

    Your motion is granted.

    Mr. Posner.

    Isn’t it — oh, Mr. Kharasch.

    Robert N. Kharasch:

    Mr. Chief Justice and members of the Court.

    We have here a case which is, in one way similar to the Atlantic Coastline case just argued and in several ways rather more far reaching.

    This case involves a duty of a common carrier to carry for all shippers, a duty which has been recognized for centuries.

    At common law, when a carrier refused to carry, the remedy was swift and it was simple.

    The shipper sued the carrier and collected damages.

    Under the Shipping Act, there is now a statutory remedy of reparation for shippers injured by water carrier’s violation of the Act.

    The questions presented in this Consolo case involved a future vitality of the reparation remedy in three very basic ways.

    First, there is a question of jurisdiction to review a reparation order of an agency.

    This question involves not only the question presented in the Atlantic Coastline case just argued, but also the question whether the review procedure for Maritime Commission orders is going to be so violently complex as to defeat the statutory reparation remedy.

    Second, there is presented a question of the standards to be followed by an agency in awarding reparation.

    Is there, as the statute says there is reparation, for unjust and unreasonable discrimination or is there hidden in the statute some license to discriminate against shippers with impunity because of some never before known and unarticulated doctrine of equities which defeat the remedy for flagrant discrimination?

    Essentially, the question is whether this Maritime statute has in it some vague equitable concept like the concept of misconduct in Pennsylvania discussed earlier today.

    Third, and equally important for the future of the law of reparation, the Consolo case presents an important question of the standards of review.

    If there is a standard of equity in awarding reparation, who judges the equities, is it to be the agency passing on the facts or reviewing Court making fact findings for itself?

    The facts of this case are relatively simple.

    Philip R. Consolo is an independent importer of bananas.

    As an independent importer, he needed supplies of bananas from Ecuador which is the country supplying bananas to the independents who don’t own the plantation.

    Second, he required regular service to carry bananas to the United States by a common carrier which had refrigerated space available in its ships.

    It was carrying bananas as well as hundreds of other commodities.

    At relevant times, there were two common carriers in the trade from Ecuador to the United States, the Grace Line and Flota Mercante Grancolombiana, which is the respondent here.

    The common law duty of an ocean carrier to carry for all shippers was continued under the Shipping Act, and the agency administering the Shipping Act had twice held, once in 1953 again in 1957, that the Grace Line had to carry for all shippers.

    In 1955, Flota had given all its refrigerated space to a single preferred shipper.

    In 1957, which is the time it becomes relevant here, this carrier knew that this shipper wanted space but Flota had secretly determined to give all of its refrigerated space to the preferred shipper.

    Consolo, in order to get space on Flota, in order to attempt to receive the reparation provided by statute, had to go through the two-step procedure.

    Robert N. Kharasch:

    He first had to go to the agency and prove that the carrier had unjustly discriminated against him.

    That caused the agency to make a finding of unjust, unfair discrimination which was effective for the future and it issued a cease and desist order to this carrier.

    That cease and desist order has been reviewed and upheld, finding of unjust discrimination is unquestioned here.

    Next, Consolo had to go back to the agency and begin the process of proving his entitlement to reparation.

    He had to show the damages for each sailing from which he was excluded.

    The Board’s examiner decided, after reviewing this extensive detailed evidence that Consolo was entitled to reparation in the amount of about $260,000.

    At this point, the carrier began to offer a lot of excuses for its conduct.

    The Maritime Board, which reviewed the examiner’s decision, entered an award of $143,000.

    At this point, both Flota and Consolo went to the United States Court of Appeals for the District of Columbia Circuit.

    Consolo claiming that the Commission had cut down the award wrongly, the carrier claimed that the award was too large.

    Consolo followed a decision in what is in the Piazza case which is discussed at some length in the brief.

    The Court of Appeals held on its first review that it had jurisdiction to review the reparation award and to consider the carrier’s attacks on the award.

    However, while the Court had held and affirmed the Commission that there was an unjust illegal discrimination against Consolo, the Court also held, this time without any citation of authority, that the Board had made an error because the Maritime Board had defined not only that the shutting out of Consolo was unjust and unreasonable, but also that the Maritime Board had to make a specific finding that it would be equitable to award reparation.

    I’d like just to pause here and point out that, in the course of this litigation, Consolo was still far away from the place where he had to go to collect any money because he’s — where at this point, he’s talking about what is only a piece of prima facie evidence in the District Court.

    The injured shipper has got to get a piece of evidence and get to the District Court with it.

    And, all that’s going around in the Court of Appeals was just about something that becomes a piece of prima facie evidence.

    In any event, the Court of Appeals held that it had jurisdiction to review the award at the carrier’s instance and the Court of Appeals sent the case back to the Maritime Board for a finding as to whether it would be equitable to pay the shipper for the damages he suffered.

    The Maritime Board had, by that time, turned into the Maritime Commission and the Maritime Commission, on remand, found that all the equities were in favor of the shipper but they didn’t face — they did not fail to reduce the award again by another slice off the top for the third time.

    Abe Fortas:

    Mr. Kharasch, you said that the Court of Appeals held that it had jurisdiction at the instance of the carriers.

    I have forgotten, did the Court of Appeals also take jurisdiction of the shipper’s action?

    Robert N. Kharasch:

    The Court of Appeals recognized that it does not have power under the Hobbs Act to enforce the reparation order.

    We’re litigating in a situation where, “heads, the shipper can lose, but tails, he can’t win,” said the Court of Appeals.

    It couldn’t enforce the order but it held that it did have jurisdiction to consider the shipper’s attack on the order as being too small, as well as the carrier’s attack that it was too large.

    Abe Fortas:

    So, it did take jurisdiction on the carrier’s appeal.

    Robert N. Kharasch:

    It took jurisdiction on the carrier’s —

    Abe Fortas:

    I mean — on the shipper’s appeal.

    Robert N. Kharasch:

    It did, under the Piazza case which —

    Abe Fortas:

    It took jurisdiction of both of them.

    Robert N. Kharasch:

    Yes, Your Honor.

    On remand–

    Potter Stewart:

    Where was the Piazza case from, the same Court?

    Robert N. Kharasch:

    No, a Second Circuit case, Your Honor.

    Potter Stewart:

    And that was the one that held that the Court of Appeals did have power to review reparations order to be passed to the shipper claiming it was too small, right?

    Robert N. Kharasch:

    It held that the Hobbs Act gave that jurisdiction to the Courts of Appeals, although this Court had held in United States v. Interstate Commerce Commission that the jurisdiction was in a single-judge District Court.

    Now, it’s our position here that all these reparation fights ought to take place before a single judge in the United States District Court.

    Potter Stewart:

    Well then, you’ve changed your position.

    Robert N. Kharasch:

    In effect, we have — but we’re not trying to get any advantage from it, when we filed in the Court of Appeals —

    Potter Stewart:

    Usually, it works the other way.

    Robert N. Kharasch:

    I would like that, but when we field in the Court of Appeals, the Piazza case was on the book and it said that we should go to a Court of Appeals because if we claimed that the award was too small.

    Potter Stewart:

    And is your thought, on the basis of that case, that the — a single-judge District Court would not have power to award anything more than the reparations ordered by the Commission — by the Board?

    Robert N. Kharasch:

    I think that’s a very interesting question because it depends on a case not yet decided by this Court but which someday must be, which is whether the “negative order” doctrine, it still has any vitality.

    I, myself, believe — and this may come up if we get back to District Court and sue on this order — that what the statute says is that a reparation order is a piece of evidence.

    We take the piece of evidence.

    We’ve got to have that much piece to get to Court.

    Potter Stewart:

    To go to District Court with?

    Robert N. Kharasch:

    When we get to District Court, that’s the place for both sides to adjust it up or down, that the —

    Potter Stewart:

    Well, with that you mean — can that — the “negative order” doctrine, that’s comparable to what we’ve dealt within Price case under the counterpart, maybe the (Inaudible)?

    Robert N. Kharasch:

    In the United States — if we return to United States versus Interstate Commerce Commission, the doctrine had been rather clearly that if a shipper didn’t succeed in getting a reparation order out of the Commission —

    Potter Stewart:

    You mean, they didn’t get a motion for it?

    Robert N. Kharasch:

    No judicial —

    Potter Stewart:

    They didn’t get a money award though.

    Robert N. Kharasch:

    From the Commission?

    Potter Stewart:

    Yes.

    Robert N. Kharasch:

    He had no judicial review. U.S. v. ICC said that was a piece of the old “negative order” doctrine, no longer valid.

    Therefore, the shipper, in that case the United States, may get a review of the denial of this award.

    What I was suggesting was that there is — we have not yet had the case where the question arises, whether the “negative order” doctrine limits the shipper in the District Court reparation proceedings, the enforcement proceedings to exactly the — that’s a ceiling.

    It has been held by lower courts to be a ceiling, but at the time of “negative order” case.

    I return to the progress of the case we had here.

    The Maritime Commission said the equities were in favor of the injured shipper.

    And then, on the second review by the Court of Appeals, which had asked the Commission to say whether or not the equities were in the shipper’s favor, the Court of Appeals again decided, and again without citation of any authority, that it thought it would be inequitable to award reparation, and they reverse the reward, and the shipper, at the moment it comes here with absolutely nothing, no piece of evidence to the District Court, where in the District Court, undoubtedly, we’re going to litigate some more.

    Robert N. Kharasch:

    Turning for just one moment to the jurisdictional issue, I think it would be helpful to make it clear after the Atlantic Coastline argument what the general view of all Courts — Federal Courts has been as to the nature of a reparation order and the crispest statement was in the District of Columbia Court of Appeals in the second time around on United States versus ICC.

    The Court said there in a footnote, it said describing a reparation order, it says “By statute, such an order is not a binding administrative determination but is simply to be considered prima facie evidence of the findings embodied in it in an independent action at law against the carrier”, citing Section 16 (2) of the Interstate Commerce Act.

    “Thus, it happens that no such order has ever been subject to direct judicial review.”

    That is the Court of Appeals speaking as to what has been, for 50 years, the unquestioned view of the nature of a reparation order.

    It’s a piece of evidence the injured shipper has to take to a District Court.

    Abe Fortas:

    Well, that would mean that this order in your case was not an order from which either the shipper or the carrier could take an appeal.

    Is that your position?

    Robert N. Kharasch:

    Yes, sir.

    But I’m not at all taking the position that the order is not reviewable when it gets to the District Court, but it’s reviewable in the course of a suit where the shipper sues and the carrier says, “No, I don’t want to pay.”

    Abe Fortas:

    But suppose that position were correct in the view of this Court.

    What would that mean that the order of the Court of Appeals here was a nullity because you wrongly appealed?

    Robert N. Kharasch:

    As far as our appeal goes?

    Abe Fortas:

    Yes.

    Robert N. Kharasch:

    I say, sir, that we are not trying to — we brought the appeal and I think we have litigated that point with this carrier.

    We are not entitled to go to District Court with an order in any larger amount than that amount which —

    Abe Fortas:

    Well now, at the moment —

    Robert N. Kharasch:

    Weren’t sustained against —

    Abe Fortas:

    At the moment, you can’t go to a District Court for — with an order in that amount, can you?

    Robert N. Kharasch:

    That’s right, and that is because the Court of Appeals has announced a couple of brand new doctrines which really cut the heart out of the reparation remedy.

    Abe Fortas:

    And that would be hard right there.

    Now — so what you’re asking us to do, if I’m correct in following your part here, is to rule that the United States Court of Appeals had no jurisdiction over either your appeal or the carrier’s appeal.

    Robert N. Kharasch:

    Sir, we brought the petitioner for certiorari in respect of the carrier’s petition for review, which was the first petition for review ever entertained by a Court of Appeals, for direct review for reparation order under the Shipping Act.

    Our petition for cert is not directed to the Court’s action below with respect to our petition for review, which was forced upon us by this Piazza case.

    We ask the Court here to — and we think it’s more important for the future of the law of reparation that this Court deal with each of the three questions as to which cert was granted, because each is vitally important.

    It’s the question of whether the statute has some newly discovered doctrine after 50 years that a shipper can be discriminated against, and shut out absolutely and get no space on a carrier but he can’t get reparation unless there is equity in awarding the reparation, whatever that mean, is very harmful to all shipper’s right.

    And, the action of the Court of Appeals here in making its own determinations as to what would be equitable is destructive of the entire doctrines of judicial review, which apportion duties between agencies and Courts.

    William J. Brennan, Jr.:

    But if we — if we were to agree that the Court of Appeals should not have taken any of these issues at all and agree with you that we had to weigh 16 (2) procedure in the District Court, we would agree with you about that.

    Wouldn’t that wash out everything, that the District Court — the District of Columbia Court of Appeals said on these other issues?

    Robert N. Kharasch:

    I hope it would washout — I don’t know whether it would wash out what it said.

    William J. Brennan, Jr.:

    Well, why should we —

    Robert N. Kharasch:

    To washout the effect of it.

    William J. Brennan, Jr.:

    Well, that — if we were to tell to the Court of Appeals, “You had no jurisdiction to do anything” and then dispose of the case that way, why do we have to go on and reach these other issues?

    Robert N. Kharasch:

    Of course, we do not — sir, I’m suggesting that there is policy — an important policy and not leaving on the books a view for these reparation cases, which imports a brand new fuzzy standard into the statutes and which permits the reviewing Court, which would in this case properly be a district judge, to follow the decision of the Court of Appeals and say, “I, the District Judge, will decide whether it was equitable to give this shipper reparation”.

    Both of those are pernicious doctrines that should be, we suggest, expressly struck out.

    William J. Brennan, Jr.:

    But is there a case in controversy before us to weigh if we take that first?

    Robert N. Kharasch:

    If it’s (Voice Overlap) —

    William J. Brennan, Jr.:

    — If you are saying that Court of Appeals has no business in this case at all, is it that?

    Robert N. Kharasch:

    There’s a case in controversy presented this afternoon before you, which may be decided on more than one ground.

    We suggest three grounds.

    And we’re suggesting that the Court’s opinion on each of the three grounds is very valuable to the future of the law of reparation.

    If a shipper is to make anything out of that remedy which Congress has provided, as the case now stands, the path to collect for damages done by a carrier is so long and so torturous, it’s not workable.

    And as the case stands, the carrier is allowed to put in whatever it pleases and to stretch out the administrative procedure now by indicating something is equitable or inequitable.

    The shipper who’s excluded cannot collect because of anything.

    And thirdly, this new equitable doctrine appears as a real threat to the standard of judicial review in these cases.

    The Court of Appeals here very definitely made its own fact-findings, which the usual standards always applied, and say it had no business doing it.

    Earl Warren:

    Mr. Posner.

    Richard A. Posner:

    Mr. Chief Justice and May it please the Court.

    I’d like to take my three minutes this afternoon to try to clarify this question of the status of the reparations order in the enforcement action.

    It is not a piece of evidence in that enforcement action to be put in with a mass of other evidence.

    Insofar as issues are involved in the reparations proceeding within the primary jurisdiction of the Commission, the reparations order is final and there can be no new evidence or reexamination de novo in the Section 16 (2) enforcement — or, in this context, Section 30 enforcement action, by the same —

    Abe Fortas:

    Well, the statute doesn’t say that, does it?

    Richard A. Posner:

    No, and I think it’s true —

    Abe Fortas:

    And this is an inference on your part and on Mr. Jennings(ph) part, as I understand it, in the prior case based on what, on the Primary Jurisdiction Doctrine?

    Richard A. Posner:

    Yes, I think it’s the same kind of jurisdiction that this Court was compelled to draw in the early primary jurisdiction cases with respect to direct actions between shipper and carrier under Section 9 of the Interstate Commerce Act.

    There’s nothing in the statute —

    Abe Fortas:

    But the question —

    Richard A. Posner:

    — that requires–

    Abe Fortas:

    — But the first question to decide is not whether that ICC has jurisdiction and jurisdiction to do what?

    Now, it’s obviously got jurisdiction here, but it’s jurisdiction to do what?

    To enter an effective order?

    Abe Fortas:

    And if it’s not jurisdiction to enter an effective order, an enforceable order or primary order, there’s a primary jurisdiction to grant prior to that.

    Richard A. Posner:

    It seems to me that the primary jurisdiction principle depends on the nature of the issue.

    In order to collect reparations, you’d have to establish a violation of the Shipping Act, and questions of violation are for the agency to decide.

    And once they have been decided, a District Court can’t take additional evidence, a jury couldn’t reexamine the question de novo.

    Abe Fortas:

    Well, I don’t certainly mean to make a pertinent observation, but I’m terribly worried about this because it seems that you maybe trying to have it both ways, and that it’s an order that can be entered but it’s not a reviewable order.

    Richard A. Posner:

    Well, it is fully reviewable in our view in the Shipper’s Section 30 enforcement action.

    There, the carrier can get the same kind of review, he could, could he challenge it.

    William J. Brennan, Jr.:

    But, Mr. Posner, you say fully reviewable but only on the record before the — before the Board?

    Richard A. Posner:

    That is — that would be also true in a Court of Appeals action.

    William J. Brennan, Jr.:

    Yes, in either instance — I thought I understood Mr. Jenning(ph) to suggest that it was not in the area of other case.

    That under 16 (2) proceeding, there might be even additional evidence taken —

    Richard A. Posner:

    Well, it seems to me–

    William J. Brennan, Jr.:

    — supplementing the record before we —

    Richard A. Posner:

    No.

    Insofar as the Commission’s reparations order depends, as it must depend on a finding that the carrier violated the Shipping Act, this is a determination within the primary jurisdiction of the agency and there cannot be additional evidence introduced in a District Court action.

    That’s the fundamental principle of primary jurisdiction.

    Now, there might be some residual questions in an enforcement action having to do purely with a computation of damages —

    William J. Brennan, Jr.:

    Amount?

    Richard A. Posner:

    — where supplementary evidence might be appropriate.

    Earl Warren:

    We’ll recess now.