Volkswagenwerk Aktiengesellschaft v. Federal Maritime Commission

PETITIONER:Volkswagenwerk Aktiengesellschaft
RESPONDENT:Federal Maritime Commission
LOCATION:Street Corner

DOCKET NO.: 69
DECIDED BY: Warren Court (1967-1969)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 390 US 261 (1968)
ARGUED: Nov 13, 1967
DECIDED: Mar 06, 1968

Facts of the case

Question

Audio Transcription for Oral Argument – November 13, 1967 in Volkswagenwerk Aktiengesellschaft v. Federal Maritime Commission

Earl Warren:

Volkswagen, Petitioner, versus Federal Maritime Commission et al.

Walter Herzfeld:

Mr. Chief Justice.

Earl Warren:

Mr. Herzfeld.

Walter Herzfeld:

Mr. Chief Justice and may it please the Court.

This is a writ of certiorari to the Court of Appeals for the District of Columbia to review the affirmance by that court of an order of the Federal Maritime dismi — Commission which dismissed the complaint of the present petitioner, Volkswagenwerk which had been bought Volkswagen in its capacity as a large shipper for the mobiles.

The case raises issues in the three provisions of the Shipping Act of 1916 as amended Sections 15, 16 and 17.

The United States as a statutory party to this review proceeding has filed a brief in support of the position of the petitioner and I have agreed with counsel for the Solicitor General here on a division of the argument in such a way that it will be my task to briefly outline the facts and to present the issues arising in the Sections 16 and 17 of the Shipping Act by counsel for the Solicitor will then argue the case with respect to Section 15.

My statement as to the facts will rely throughout on findings of the Commission except that in two occasions which I will identify them, I come to them and rely on undisputed evidence on which no finding was made.

Pacific Maritime Association, the intervener in the proceedings below and here is an association of shipping lines, common carriers by water, stevedores and terminal operators, operating at the United States Pacific Coast.

The purpose of the Association is to negotiate and administer collective bargaining agreements with the various unions involved in the shipping industry.

In 1960 and 1961, a number of agreements were entered into — between Pacific Maritime Associations, the intervener and International Longshoremen’s and Warehousemen’s Union, the bargaining representatives of all the onshore laborers, the stevedoring and terminal labor on the Pacific Coast.

The agreements so far as here relevant provided in substance that the union would waive its prior objections to restrict the — both practices and federal bidding and that the union would consent to the application by the employers of automation and labor-saving devices in return for the creation of the so-called mechanization and modernization fund, both of which certain benefits there to be paid to members of the union.

The mechanization fund under the agreement was to reach over a period of five and a half year an amount of altogether $29 million, $5 million a year was to be raised for the period from — the beginning of 1961 to the middle of 1966.

After these agreements were entered into the employer association, PMA, considered the method by which the contribution to the fund is $5 million contribution should be raised and as a result of PMA’s internal procedures, the recommendation by special committee appointed to this purpose, recommendation by the Board, both of the membership and the final decision of the Board of PMA as a result of all of this, a method was devised which in effect provided that every stevedoring or terminal operator member of PMA should pay a certain amount.

At the beginning that was $27 and a half cent to PMA for each ton of cargo discharged or loaded at the Pacific Coast.

It is this tonnage tax imposed by PMA which is under attack in this proceeding so far as it applies to automobiles.

Before considering the impact of the tonnage tax on automobiles, it is necessary for me to briefly present the competitive relationship between the parties here.

Pacific Maritime Association is dominated by shipping lines and common carriers.

There is testimony in the record by the vice president and treasurer of PMA to the effect that as long he was with the Association for some 19 years, the liners had the majority on the Board.

There’s an admission in one of the earlier briefs by counsel for PMA that members of PMA are not philanthropist and that they vote in membership meetings in their own self-interest.

Without going any deeper in the evidence, I think it is clear that if the liners had the majority of the Board and if that is the result of vote in the self-interest of the members, that the liners have a dominating position in PMA.

There are substantially more evidence on this which I like to skip in order to focus more quickly.

In any event, we have made throughout the contention that the liners control PMA and this contention is been completely ignored both by the trial examiner and by the Commission.

It finally was vindicated in a Footnote in the opinion of the Court of Appeals where the Court summarizes the evidence which I just outlined and some more, and then very dryly edit.

The trial examiner made a statement to the effect that there was no substantial evidence to show liner domination of PMA.

I submit that undisputed evidence although no finding established this right of fact.

The disregard of this fact by the examiner and by the Commission that was in the — first of four serious defects which in my opinion affects the administrative determination here and I will point out here the defect as I come to them.

While PMA is liner dominated, Volkswagen for its very large shipments to the Pacific Coast uses primarily chartered vessels.

Obviously, the chartering by a shipper or vessels is a form of transportation which is entirely competitive with the business of common carriers and liners.

Volkswagen — and this was found is the largest shipper of dry cargo to the Pacific Coast on chartered vessels and obviously, Volkswagen is a party which the liner interest in control of PMS do not precisely like because all business which goes to Volkswagen is business which the liners are using.

William J. Brennan, Jr.:

Mr. Herzfeld, is there a difference between a liner and a common carrier?

Walter Herzfeld:

As I understand it, a liner is a common carrier having scheduled sailings where there might be a common carrier with sporadic sailings.

William J. Brennan, Jr.:

Which are both — they’re both common carrier.

Walter Herzfeld:

Both are common carriers.

William J. Brennan, Jr.:

As distinguished, you say, from a chartered carrier.

Walter Herzfeld:

Right.

With this spectrum, I now approach the impact of the tonnage tax to automobiles.

And this is the second point where I find the administrative proceedings entirely defective.

Earl Warren:

May I interrupt just a moment to ask you, is that difference between a liner and a common carrier has anything to do with this case?

Does it —

Walter Herzfeld:

No, Mr. Chief Justice.

Earl Warren:

Why not?

Walter Herzfeld:

The case would be the same if —

Earl Warren:

Either.

Walter Herzfeld:

— common carriers be in control of PMA.

The second defect which I suggest to — occurred in the administrative proceedings is that the most fundamental allegation which we made in the case, the heart of our case was completely ignored both by the examiner and by the Commission.

According to the complaint and according to our evidence and our briefs, reports this proceeding because a tonnage tax imposes a 10 times higher burden on automobiles than on other cargo.

That was the heart of our case.

The reason why we went to the Commission and by the evidence again, and this is entirely undisputed and well indeed our allegation somewhat, I believe, I think recognition in the Court of Appeals, the Commission and the examiner studiously avoid it to refer to this cause-effect of the case at all.

Without detailing the evidence to any great extent, I just — will point out what it shows in this respect.

The people of — the members of Pacific Maritime Association for stevedoring and terminal labor fr the year 1962, amounted to about $102 million.

$5 million was raised by the tonnage tax, it follows that for the average commodity, the tonnage tax represented the cost of a fringe benefit of 5% of the total labor cost.

The record shows that as to Volkswagen, the tonnage tax represents 56% of total labor so that I’m still modest if I claim that this is only a 10 times heavier burden on — as in on average general cargo.

There’s one last fact which I have to present and which is vital in connection with this one, namely that automobiles did not derive any benefit more than average cargo from the arrangement which led to the tonnage tax.

On this, one day, a clear findings throughout, the examiner, the Commission and the Court.

They had the average benefit of this — they replaced was the arrangement with the union.

There’ll be a less work stoppages and slow downs, there were no strikes.

We were working in a much improved atmosphere as everybody else but there was — is not even a contention of any additional or special benefit which automobiles derived it from the arrangement even though automobiles were subjected to a 10 times larger tax.

That brings me to the legal discussion so far as I have undertaken to present it to the Court.

Section 17 of the Shipping Act provides an essence that carriers and other regulated person, including stevedores and terminal operators, may not engage in unreasonable practices and that it’s a duty of the Commission if it finds unreasonable practices to go back to them and to prescribe reasonable practices.

Walter Herzfeld:

My submission is that a charge 10 times heavier with the same benefit which was extended to all as a cargo is on its face an unreasonable practice.

The Commissioner — I’m sorry, the Commission and the examiner never passed on this issue at all.

They refused to face the issue on — under the pretext that the petitioner in the proceeding had challenged only the practices of the technical respondent here, a stevedore who is serving Volkswagen and have not challenged the practice of Pacific Maritime Association and its members in devising and levying this tonnage tax.

This statement that our attack had been directed only against the stevedore who tried to pass the tonnage tax onto us has no foundation whatsoever in the reading of the complaints of our proposed findings of our exceptions, of our briefs which shows this and indeed the Court of Appeals stated again in a Footnote but very strongly that it rejected at the outset the contention that our attack in this case was directed only at the practices of the respondent stevedore.

And then the Court of Appeals proceeded to examine our contention under Section 17 on the merits.

In doing so —

William J. Brennan, Jr.:

Mr. Herzfeld, if we were to agree with you on Section 15, would it be necessary to reach the 17 or 16 argument?

Walter Herzfeld:

No, Mr. Justice Brennan, it would not be necessary but if the Court have to agree with this us on Section 15 at first, a proceeding would have to be started by PMA to get the agreement approved.

And I believe that the handling of the case in the Commission in this case shows that it would be vital if it had some guidance from the opinion of the Court here in that case.

William J. Brennan, Jr.:

On Section 17 and 16.

Walter Herzfeld:

Yes.

Section 15 provides that the Commission may not approve an agreement, if it violates any other provision of the Act.

So if the Court as this matter is — before the Court, any of you should find that 17 or 16 —

William J. Brennan, Jr.:

But then again in Section 15 proceeding, might there not be considerations that the — in the way of other evidence that might be brought before the Commission that might make a 16 or 17 expression from us premature?

Walter Herzfeld:

It seems to me that you have a complete record so far as the Volkswagen charge goes under 16 and 17 and I admit the Court certainly is not — would not be compelled to pass on this but I believe it would —

William J. Brennan, Jr.:

Why wouldn’t it — would there on a Section 15 proceeding perhaps be evidence that might bear on the application of 16 or 17?

Walter Herzfeld:

Certainly, because one of the arguments in 15 would be that the agreement violates as a provision of the Act.

There would be evidence but I assume as to Volkswagen or as to automobiles, it would be the same evidence as we have now.

William J. Brennan, Jr.:

Already?

Potter Stewart:

But don’t you think that if we agreed with you on 15 that we would have to say some things that would bear heavily on 16 and 17 even if we didn’t get to them expressly.

Walter Herzfeld:

Not necessarily.

It seems to me that the Court could determine the 16 — Section 15 issue just on the holding that this was a cooperative agreement whether good or bad or an agreement regulating competition whether discriminatory or not.

I admit that depending on how the Court belieev for Section 15, it may or may not refer to 16 and 17 too but not necessarily I believe.

Earl Warren:

Well, Mr. Herzfeld, if the Court should hold that this agreement does not require to be filed under 15, would that change your argument or would your argument be that 16 and 17 still apply?

Walter Herzfeld:

In that case, I believe the Court must pass on 16 and 17 and it’s indeed my contention that they would apply.

Earl Warren:

They would apply even though 15 did not.

Walter Herzfeld:

Definitely and that’s the case where I believe the Court will have to face the issue which was based either by saying, “I believe as Mr. Justice Brennan’s report, may or may not refer to Sections 15 — 16 and 17”.

But if he had not made a case under 15, then the Court is confronted without charge to say that any event is unreasonable and a discriminatory arrangement.

I said a moment ago that the examiner and the Commission just failed to consider our contention under 17 on the grounds which have no basis in effect that we haven’t directed a contention against PMA but only against our stevedore and carrier.

The Court of Appeals agreeing on this was asked then went on and decided the Section 17 issue on its merits.

Walter Herzfeld:

And in doing so, I submit that the Court of Appeals fell into the error which had been pointed out in this Court by a decision such as Securities and Exchange Commission versus Chenery Corporation or more recently, Burlington Truck Lands versus United States, namely that a reviewing — a Court reviewing an administrative action should not substitute its own reasons for those of the agency.

The Commission which Congress had appointed to pass in the first instant with its expert knowledge on discretion have not made any determination as to whether or not the PMA arrangement as such violated 17.

The Court of Appeals therefore I believe should not have reached this issue — or but should’ve remand it.

Neither as it may, the reason which the Court gave in order to sustain the PMA tonnage tax under Section 17, in my opinion is not convincing.

The thrust of the opinion of the Court of Appeals is to the effect that this tonnage tax was a rough-and-ready measure to resolve a problem and that a rough-and-ready formula for the distribution of charges is permissible even though it results for some in a wholly disproportionate burden.

One reason which the Court invoked to support this was that a rough-and-ready tax formula might be desirable and (Inaudible) of administrative experience and of expense and collection.

This reason, isn’t it born out to the best that they could.

PMA already levies a tax which requires all stevedores and terminal operators to file tonnage reports but the tax itself is graduated.

So, there is one charge, $27 and a half cents in 1961 for general cargo.

There’s another charge, $5 and a half cent for bulk cargo and for scrap metal.

And there is still rate for coast rice cargo and coast rice transportation and the lowest of all is for lumber and lowest in the coast rice trade.

Now, whether the stevedores who in all of these trades reports a tonnage then figure out the tax at the rate of $27 and a half which is assessed against Volkswagen or at another rate obviously is not a problem which can create administrative difficulty or additional expense in collection.

So that it seems the second argument of the Court of Appeals is not attainable in any event, is not sustained by the record.

Abe Fortas:

Well, is there a basic agreement as your — are you telling us that there’s a basic agreement among the PMA members with respect to a basic charge to be made and then in addition to that, there is this special agreement resulting from the circumstances of the agreement with the unions.

Walter Herzfeld:

Well, I’m considering only the tax which follows the agreement with the unions.

Abe Fortas:

Well, I understand that —

Walter Herzfeld:

(Inaudible)

Abe Fortas:

— but my question to you is whether the logic of your argument would not require that the basic agreement also be filed under Section 15?

Walter Herzfeld:

The agreement with the union itself, I don’t believe.

I believe that the entire —

Abe Fortas:

Not the agreement with the union but any agreement among PMA members with respect to charges to be made.

Walter Herzfeld:

Absolutely.

Our contention is that the agreement as to the charge in its entirety, not only as to automobiles should’ve been filed.

Abe Fortas:

And not all — and not only agreements that followed the agreement with the union of which you’re now a complaining.

Walter Herzfeld:

Everything which was done by PMA after it made the agreement with the union which (Voice Overlap) —

Abe Fortas:

How about before — how about before?

Was there anything that PMA did before the agreement with the union which you think ought to be filed with the Commission?

Walter Herzfeld:

No, Mr. Justice Fortas.

Abe Fortas:

Why not?

Walter Herzfeld:

The agreement with the union nearly upholds the liability of $5 million a year on PMA and its members.

Abe Fortas:

Well, had he — (Inaudible) before that was an operating organization, wasn’t it?

Walter Herzfeld:

Yes, sir.

Abe Fortas:

And it collected assessments or money in some form from its member, doesn’t it?

Walter Herzfeld:

That’s right.

Abe Fortas:

Is it your contention that that basic agreement to have it referred to as a basic agreement, does or does not have to be filed with the Commission?

Walter Herzfeld:

He hadn’t made any contention of that in this case (Voice Overlap) —

Abe Fortas:

(Inaudible)

Walter Herzfeld:

— because the case doesn’t require it.

Abe Fortas:

I understand that but that’s what bothers me because what I’m really asking is whether the logic of your position here is not such as to require that all of — all agreements be filed.

Walter Herzfeld:

Well the Civil Aeronautics both acting on — under a parallel statute, parallel to Section 15, found indeed — said a collective bargaining association of employers as such had to file and it was formed and many took any action.

I believe that the cases in the Federal Maritime Commission would permit to avoid this on a essentially de minimis basis as — and quite a bit of law in the Commission that minor division or secretaries or smaller expenses, does not require a filing.

Abe Fortas:

But you’re — and you not say — telling me that the logic of your argument would require this basic agreement to be filed as well as the agreement following the understanding with the union —

Walter Herzfeld:

Sub —

Abe Fortas:

— but that it is de minimis and therefore can the — they can be excused from filing.

Walter Herzfeld:

Yes, sir.

Abe Fortas:

That’s your position?

Walter Herzfeld:

Indeed, yes.

For that matter, Congress enacted Section 15 in 1966 and permitted the Commission by general order to exempt certain non-competitive agreements on filing.

So, I could imagine that involved Section 15 point is sustained, the Commission might exempt the mere formation of the association and its current membership views from filing a general order because all of this is de minimis and has no competitive effect of any significance.

Returning very briefly to my argument on 17, the idea of the Court of Appeals that a rough-and-ready formula was reasonable, in my opinion is vitiated by this undisputed fact.

We have no rough-and-ready formula.

Bulk cargo in particular with a preference rate, paying only $5 and a half cents instead of $27 and a half for automobiles.

And the reason by bulk cargo gets this favor was that bulk cargo is a commodity which is discharged with very little labor.

And as to what the — the labor expense is low, why should this employer contribute a very high sum to the labor fund — grant which is perfectly acceptable but which is equally applicable to automobiles.

It seems to me that when PMA left the rough-and-ready formula and started to make classifications, bulk cargo has little labor content, bulk cargo accordingly pays a lower rate then it was compelled if it acted reasonable to take the same attitude as to automobiles.

The record is (Inaudible) as it’s showing that automobiles have a very low labor content and for the same reason as bulk cargo, once a classification is made, its unreason — not to extend it to automobiles.

Very briefly to Section 16 which prohibits discriminatory practices and undue advantages, here, again, we just did not get our day in Court in the Commission.

The recommission cases which are now abandoned into the effect that Section 16, can it come into play only if it says discrimination, it might be competing types of cargo.

We conceded that the cargo involved here, automobiles, was treated equally and we claimed that there was a discrimination against automobiles in favor of other types of cargo.

Having made this concession before the examiner, we urged the Commission to abandon this competitive cargo requirement.

Walter Herzfeld:

The Commission, however, did not consider Section 16 merely on the account of our admission that its prior cases on this point had been unfavorable to us.

What concerns me very much is at the time we filed our briefs, the trial commission cases were indeed against us on this.

But then the Commission made a decision and refused to consider our contention under Section 16.

It had already changed its position and it had successfully urged the Second Circuit to abandon this requirement under Section 16 that there’d be discrimination among competing cargos.

Having abandoned that position and this is our request that this issue should — would be reconsidered.

I believe the Commission did not do its duty in just saying, “Volkswagen has relied on the old cases.

We don’t owe Volkswagen makes the examination of this issue in the light of our new position.”

If I tie all of these together then I come to this.

The two most crucial factual contentions that’s — which he made, namely that PMA was dominated by the liners and that automobiles pay ten times more than — as a cargo despite undisputed evidence that — disregarded by the Commission.

Our two legal contentions here, Section 16 and 17, they’re also not considered by the Commission at all.

On 17, the Commission had claimed and wrongly that our attack had not been against PMA.

The Court of Appeals found that in our favor.

On 16, the Court order — the Commission held us to an alleged admission that its prior cases were controlling which we never made so that the administrative proceedings here suffer from four fundamental defects.

Our two contention that never been considered by the Commission and I believe that the Court of Appeals urged in affirming an adjudication which was made this way.

I also respectfully submit that the record as it stands now before the Court affirmatively shows a right to believe under Sections 17 and 16.

Earl Warren:

Mr. Herzfeld, do you — you answered me that as I recall it that in the event the Court felt that the — this agreement need not be filed that 16 and 17 would be before us.

Suppose the Court was to find that it was necessary to file under Section 15, would the merits of the case then be before us?

Walter Herzfeld:

The Courts would not be compelled to rule on Section 16 and 17 but I suggested in answer to a question from Justice Brennan —

Earl Warren:

Yes.

Walter Herzfeld:

— that I think it would be highly desirable if the Court would express some opinion on this because the question will come up again in the Commission and I believe the Commission needs the guidance of this Court in order to decide it.

Earl Warren:

Just give you an advisory opinion?

Walter Herzfeld:

I’m only suggesting it would be desirable —

Earl Warren:

Yes.

Walter Herzfeld:

— and sure, the Court doesn’t have to.

Earl Warren:

Very well.

Walter Herzfeld:

Thank you very much.

Earl Warren:

Mr. Posner, may I — before you get into your argument, that may I ask you that question, in the event we should decide that this agreement should have been filed under 15.

Should we reach 16 — the merits on 16 and 17?

Richard A. Posner:

I think it — Mr. Chief Justice, may it please the Court.

I think it’s almost certain that the same issues under 16 and 17 will recur in the Section 15 proceeding and since they are ripe for decision now and a full record has been made by them, I think it would be completely appropriate for the Court to indicate its view on the application of those provisions.

Richard A. Posner:

Indeed, if the Court found in Section 16 and 17 had been violated, it would then be clear that the Commission could not approve the agreement under Section 15 because may not approve an agreement that violates the Act.

Potter Stewart:

Well, I gather Mr. Posner, that’s on the premise that there’s already a full record?

If this had to go back, because I asked Mr. Herzfeld before, because the agreement was a fileable agreement, might there not be a difference or additional record that bears on 16 to 17 made in that proceeding?

Richard A. Posner:

Yes, there might indeed and we would see no impropriety to the Commissions taking additional evidence relating to the 16 and 17 issues.

On the other hand, if the Court were to suggest some principles to guide Section 16 and 17 controversies it would then simplify the remanded proceedings and perhaps —

Potter Stewart:

It might not but end up in just an advisory opinion if there is a different record made on the claim?

Richard A. Posner:

Conceivably and we are not pressing for that course.

It would however avoid the necessity for a second proceeding which the identical issues came back to the Court.

Now, I shall address myself briefly to this issue whether the agreement must be filed under Section 15 and two issues are involved in this.

The first and quite the simpler, is whether looking solely to the policies of the Shipping Act, an agreement of this sort ought to be filed.

And the second and more difficult is whether bringing into the picture the policies of — policies relating to labor relations and collective bargaining.

Some special exemption should be recognized here because of the labor relations implications.

Now, the Section 15 requires the filing of every agreement which among other things regulates competition or gives special advantages or provides for a preferential arrangement or in any manner provides very cooperative working arrangement.

And I think it is common ground among the parties here that the purpose of this was to subject to administrative scrutiny and force into the open all concerted action in the shipping industry which might invade the interest protected by the Shipping Act foremost among them the protection of shippers.

And when as here, the terminal companies and shipping lines dominating the entire West Coast get together and agree upon a quite substantial tax on tonnage handle in order to establish this $30 million mechanization fund.

This is plainly an agreement that can have a very large impact on shippers and therefore the Commission should look at it in advance.

If the fact did —

Abe Fortas:

You will not, would you — you will not take the position would you that all collective bargaining agreements made by PMA have to be filed under 15?

Richard A. Posner:

We don’t suggest that any collective bargaining agreement need be filed.

In a moment, I will explain our view of the relationship between labor relation agreements and the scope of Section 15.

Abe Fortas:

Well, this is not — what you’re saying is that this is severable from the collective bargaining arrangement with the agreement.

Richard A. Posner:

Yes.

The collective bargaining agreement says nothing about how the Maritime affirms the employers shall raise the $30 million fund.

The agreement among themselves establishing this tonnage tax is wholly separate and the union disclaimed any control over how that was done and it’s only the latter agreement that we say should be filed.

As Mr. Herzfeld has urged —

Potter Stewart:

How about the original agreement creating PMA?

Richard A. Posner:

The agreement created the Maritime Association as a instrumentality for (Voice Overlap) —

Potter Stewart:

For (Voice Overlap) —

Richard A. Posner:

— for collective bargaining.

Potter Stewart:

For industry wide collective bargaining —

Richard A. Posner:

Collective bargaining.

Potter Stewart:

— any way in that area, wasn’t it?

Richard A. Posner:

Yes.

We assumed that although an argument could be made at the formation of a multi-employer group for bargaining is something the Commission should be concerned.

We assume for this case (Voice Overlap) —

Potter Stewart:

It certainly anticompetitive, isn’t it?

Richard A. Posner:

It is a form of —

Potter Stewart:

Because it did — the purpose of it is to prevent the unions from a so-called “Whipsaw collective bargaining”, is it not?

Richard A. Posner:

Yes.

But we assume that the propriety of multi-employer units presents a collective bargaining issue and that the Maritime Commission was not intended to supervise the process of collective bargaining.

So —

Potter Stewart:

The CAB certainly took a different view back 20 years ago, didn’t it?

Richard A. Posner:

It has and it is conceivable that in a case which presented the issue, the Court might reach the same result.

But here, we need to go so far to say that the Maritime firms had to get the Commission’s permission to bargain as a unit because here, it’s not the multi-employer bargaining that is an issue at all.

It is simply a quite separate agreement among the members of the association as to how to raise a particular fund.

They would — they decided to do so by placing a tax on each ton of cargo handled.

And as Mr. Herzfeld has argued, it is certainly possible, it is the argument that this is a punitive measure directed against Volkswagen by reason of its use of private charter vessels instead of the lines represented in the Maritime Association.

Whether this is true or not, we don’t know at this stage but it suggests that they are the kind of dangers here which are traditionally associated with collective boycotts and that’s precisely the kind of evil that led to the Shipping Act into the filing requirement of Section 15.

Now, there’s — some concern has been expressed that if this agreement must be filed because of its impact on shippers, every cooperative agreement among shipping firms must be filed and that of course is the literal force of the Act and that I don’t think there would necessarily be anything shocking or unmanageable about that.

I don’t know how many cooperative arrangements there are in the industry.

But in any event, the Commission thus have power under the Act and has already by regulation established categories of agreements which because of their minimal impact on Shipping Act policies need not be filed and the Commission could certainly deal with this type of agreement in that fashion.

But this agreement which establishes this $30 million fund and which involves this very direct and palpable effect on the charges that the shipper pays.

It can’t be equated to a secretarial pool or the other examples of trivial agreements.

It can’t possibly be led out by some kind of a de minimis excetion to Section 15.

Byron R. White:

Well, Mr. Posner, didn’t the Commission expressly find that the allocation of the tax would have no compete — anticompetitive effect or any competitive effect on — among those who entered into the agreement or in any other ways as far as I could see?

They did — that was their judgment anyway.

Richard A. Posner:

The actual critical finding of the Commission on this point which we don’t dispute although one could, is that there was no agreement, no further agreement among the members of the association to impose — to pass on the tonnage assessment to the shipper.

That is they didn’t say terminal company, you must collect this charge or you may collect this charge from the shipper but if — we view that as a meaningless formalism because in the shipping industry as in every industry, prices, fares are determined according to cost.

And when the furnisher of the services, the terminal company is — incurs a very large cost in relation to the charge, relation to other cost, $2 and 35 cents out of a total charge of $10 and 45 cents.

That cost has to effect in some way the shippers’ rates.

Richard A. Posner:

It can’t be absorbed by the —

Byron R. White:

Oh, I understand that argument but the Commission nevertheless said that absent in agreement passed on which you didn’t file, just the allocation agreement itself would not affect outsiders and would not affect competition and that is what you disagree with.

Richard A. Posner:

Yes.

I — that seems to me just —

Byron R. White:

So you knew to that effect, disagreement on —

Richard A. Posner:

Yes.

Byron R. White:

— on the — on assessing the consequences in disagreement.

Richard A. Posner:

Yes.

Well, it just — it seems to us and there is no analysis in the Commission opinion which would contradict this.

It is just patently unsound to assume that at least where there are some competitions among terminal operators.

They are somehow going to absorb a heavy new cost item so it has to affect shippers.

Byron R. White:

So the — is this — and then is this a Universal Camera problem?

Richard A. Posner:

I don’t think so because the Commission adopted a — it seems to me not a factual but a legal ruling that the — that Section 15 simply has no impact unless there is — unless shippers are expressly subjected to the burdens of an agreement.

That is their ruling, limiting the scope of Section 15.

We say that that’s an unreal limitation.

Byron R. White:

Well, Mr. Posner, let’s assume that the parties had agreed expressly to do what happened here, namely, to — that in the case of automobiles the — they are to be done on a measurement basis and the tax passed on, would you understand the — that the Commission would then hold that that agreement was fileable?

Richard A. Posner:

Definitely.

Byron R. White:

And how would you suppose the Commission would say that that affected competition when it applied to all automobiles alike.

Richard A. Posner:

Well, I think there are two separate points being mixed up here.

When the Commission discussed the bearing of Section 16 which prescribes unreasonable preferences and prejudices, it said that that only applies to competitive cargos.

But on Section 15, it said that any agreement must be filed which has an impact on shippers but it seems to believe that an agreement only has an impact on shippers when shippers are expressly involved any agreement.

Byron R. White:

Well, the Commission said a showing has been required that they have some impact upon the competitive relationships to those that are into them.

Now that’s in with respect to 15.

Richard A. Posner:

Well, the — there, it would be referring to the members of the Association itself.

Byron R. White:

Well, how would — how do you suggest that if that — if the — what you’re saying is that if that — this — that the facts are such that it — that they are the same as though there had been an expressed agreement to pass on the automobile passed.

Richard A. Posner:

Yes.

Byron R. White:

Now, how do you say that that affects some kind of a competitive position?

Richard A. Posner:

Well, I think anytime once the price of a service one is offering is changed when the price of unloading Volkswagen rises or fails to decline as much as it would but for the assessment, there can be a competitive impact.

Maybe that Volkswagen will cease to use these terminal operators.

It will open its — or that it will switch its patronage to —

Byron R. White:

To another port?

Richard A. Posner:

— common carriers or another port.

So as long as it is clear, as it is perfectly clear here that we are not dealing with a trivial item, a dollar a month dues to the Association, something that couldn’t have any effect on what shippers pay in their — regardless of whether there is an agreement to impose this burden on Volkswagen, there is going to be some effect inevitably.

Byron R. White:

So your standard is just an impact on outsiders not anything — you don’t need anything further in terms of the impact or extent of impact on competition, just on impact on outsiders, is that the Commission standard to you?

Richard A. Posner:

The Commission articulated that standard but seems to have adopted the view which I think is clearly unsound that if there is no agreement which mentions an outsider, the outsider is not affected and we think that highly unrealistic.

I just want to mention very briefly return to the question of the bearing of labor policies on this case.

I have said that the collective bargaining agreement, even the agreement to form a multi-employer association and bargained as one, is not in our view a concern of the Commission.

Its concern arises only where after the agreement is made, the employers work out a method of raising this — the benefit provided in the agreement, in a fashion that may affect the interest protected by the shippers — Shipping Act.

The respondents have objected to the one we draw by suggesting that if under our view, the parties need do — to insolate this from the Commission scrutiny as to put the allocation formula in the collective bargaining agreement.

But we don’t suggest that that would be decisive even if the method of allocation were provided by agreement.

One would still have to ask, was there a substantial collective bargaining interest in the — of the union or was this simply a guise for avoiding the Commission’s scrutiny.

Earl Warren:

Mr. Katz.

Robert N. Katz:

Mr. Chief Justice Warren, excuse me, may it please the Court.

At this juncture, it appears abundantly clear that there is some confusion as to the impact concerning filing or non-filing under Section 15 of the Shipping Act.

I think it’s interesting to note that Mr. Herzfeld urges that the Commission needs some guidelines from this Court and urges that the Commission denied them their day in court.

Yet he is urging that the Commission be given even broader and more extensive powers than the Commission itself has ever sought.

I will primarily address myself to consideration of the question of the impact of filing or non-filing under Section 15.

Mr. Torre representing PMA will primarily address himself to clarify in the confusion which the petitioner has sought to create by obfuscation of the facts and the record in this case.

The petitioner and the Solicitor General would open a veritable Pandora’s Box if the interpretation given to this Shipping Act or to be accepted by this Court and if this Court were — as result of the hearing today to completely reverse the wisdom of its decision in the case of Carnation Company versus Pacific Westbound Conference cited in our brief.

Not only would a Pandora’s Box be opened but acceptance of the petitioner’s interpretation of the Shipping Act would completely derogate an important segment of the antitrust laws.

Now, we know why Volkswagen is in this Court today.

They said that they’re in the Court challenging the position of the Commission as to Section 15.

They’re really on this Court as a result of an attempt to lower their price by persuading their supplier to remove from their cost base a segment of their cost.

William J. Brennan, Jr.:

Why is United States here Mr. Katz?

Robert N. Katz:

Why is the United State here?

The Maritime Commission here Mr. Justice Brennan —

William J. Brennan, Jr.:

That’s the Maritime Commission but I gather Mr. Posner is speaking for someone else here?

Robert N. Katz:

He is speaking for the United States, yes sir.

The Maritime Commission is here to defend the decision sustained by the Court of Appeals.

William J. Brennan, Jr.:

But the United States is — your opposing that as at least (Inaudible) —

Robert N. Katz:

Yes, sir.

And that gets the point that I was going to bring up next.

We can’t understand why the Department of Justice is attempting to channel to an independent regulatory agency enforcement of antitrust laws in the area of the maritime industry where exemption from the antitrust laws would not be inimical to the purposes of the Shipping Act.

Now, the question was raised earlier by I believe Mr. Posner, a comment as to the purpose of the Shipping Act 1916.

The purpose of that Act was not necessarily or solely to bring under scrutiny of the Commission the activities of this industry.

No, it was instead to provide a system for granting an exemption to that industry coupled with surveillance.

Now, it’s not the position of this Court.

It has — not in the position of this Court nor the Commission that a blanket-wide industry exemption must be given with blanket-wide surveillance.

We submit that the lines joined by the Court and the Commission finding more appropriate so that there not be a blanket-wide exemption.

Byron R. White:

I know but — I’m not sure I understand.

I thought it was quite clear that if an agreement is approved, do they really have antitrust laws.

Robert N. Katz:

Yes, sir, Mr. Justice White.

Byron R. White:

And I didn’t know that automatically — that filing automatically brought an approval.

Robert N. Katz:

No, Your Honor but —

Byron R. White:

I was sure, I thought the Commission considered that a competitive factor is involved in that agreement.

Robert N. Katz:

They do Mr. Justice White, (Voice Overlap) —

Earl Warren:

(Inaudible)

Byron R. White:

They inquired (Voice Overlap) —

Robert N. Katz:

They inquired to that as one of the standards set forth.

Byron R. White:

How do you know this agreement would be approved?

Robert N. Katz:

I’ll get to that in a moment Mr. White, if I’m — Justice White if I may.

I think that’s a very valid and pertinent question because I think we must look at the standards to which the Commission would apply.

Byron R. White:

And if it would approve it after considering these things why that’s the pattern of the law.

Robert N. Katz:

They’re within an antitrust exemption, that’s correct.

Byron R. White:

Well, why —

Robert N. Katz:

Now —

Byron R. White:

Why do you take it strange that the Department of Justice would want to follow what the statute requires?

Robert N. Katz:

Well, the statute — first, Mr. Justice White, does not require a blanket-wide exemption for the industry if —

Byron R. White:

Nobody —

Robert N. Katz:

— it’s non-competitive —

Byron R. White:

I didn’t —

Robert N. Katz:

— or it’s non-antitrust.

Byron R. White:

(Inaudible) doesn’t suggest that as far as I know it.

Robert N. Katz:

In their brief, they indicate that every matter posing a Sherman Act situation should be submitted to the Commission for prior approval.

Byron R. White:

What’s wrong with that?

Robert N. Katz:

We think not.

We think that every agreement which would presuppose the possibility of an exemption in the interest of conference system to be required to be submitted for a possible exemption but there is no intent of Congress to grant a broad exemption.

William J. Brennan, Jr.:

Is that to suggest if it’s not a submittable agreement then the parties to it might be vulnerable to antitrust problem?

Robert N. Katz:

Yes, sir.

That is correct.

Byron R. White:

Well, even if the Act doesn’t provide for any exemption for the antitrust law still — unless there’s an approval.

Robert N. Katz:

Yes, Mr. Justice White, that’s correct.

Now we submit that if it’s not inimical to the Maritime industry on a situation such as this were — there is no removal of the competition which would otherwise exist between the parties by this agreement that the antitrust division of the Department of Justice would be more appropriate to be concern with this.

Abe Fortas:

What you’re really saying as I understand it is that petitioner here must concede its remedy that not being the petitioner here is not a carrier or within the protected ambit of the Act as administered by the Commission that the petitioner here had available to him through it an antitrust action in the Courts and the defendants in that action would not be sheltered by any granted immunity.

Robert N. Katz:

Mr. Justice Fortas, that is absolutely correct.

That is our position.

Byron R. White:

So if you win, a couple of damage action may follow.

Robert N. Katz:

That is correct.

Now, the petitioner and the Solicitor General would urge that all these standards of —

William J. Brennan, Jr.:

Well, I suppose the real question for us to decide is whether you like it or not, the Act requires you to act on this agreement, does it?

Robert N. Katz:

Yes Your Honor.

I think the Commission would probably double or triple its size and the — now it’s considerably larger but we don’t believe that that’s the position we should adhere to.

The key point is that filing under Section 15 does presuppose the possibility or susceptibility of the grant of an exemption.

Now, it’s true that after filing under Section 15, there is surveillance of the activities by the Federal Maritime Commission.

However, we would hope that in the absence of surveillance by a specific regulatory agency, the antitrust division of the Department of Justice is still enforcing the antitrust laws against violation of those laws.

If not, perhaps the Commission should increase its surveillance not only over the maritime industry but perhaps other industries.

The petitioners have not given one sound logical reason why the industry must receive a blanket-wide antitrust exemption nor how they point it to a single decision of this Court or indeed a single phrase of the legislative history which would indicate that there was the intention for a blanket exemption for this industry.

Abe Fortas:

Well, in fact, that — when you put it that way, I confess a — you confuse me with that.

Is there anything — I don’t remember, is there anything in the Commission opinion that indicates that a Commission’s decision was motivated by its desire not to give antitrust immunity to this agreement?

Robert N. Katz:

No, sir, Your Honor.

Robert N. Katz:

The basic rationale, the Commission’s decision was that if — would look at those agreements and determine whether or not there was a removal of the competitive relationship or the competition which otherwise exist absent to that agreement.

That was stated on page 676 — 674 of the record in the Commission’s opinion according to its earlier decision in the Roach case.

Abe Fortas:

Well, but you’re saying to us now that it’s a good thing that the Commission does not — I think this agreement is not filed and that the Commission doesn’t pass on this — Commission did pass on it, that would give it an antitrust exemption.

Robert N. Katz:

It would give an antitrust exemption.

As what any agreement filed were and approved by the Commission.

Now, in those de minimis matters which the other side has mentioned, parties may sometimes still want to come to the Commission for approval so if they will have the antitrust exemption.

In the petitioner’s brief, they mentioned the recent repeal of the Shipping Act in the last session of Congress to provide for exemption from filing a certain category of agreements but the parties could still come into the Commission, seek that approval and if granted it, would then receive the antitrust exemption.

Potter Stewart:

May I ask Mr. Katz, its just a matter of a factual inquiry whether this is still going on by its original terms if it’s to expire about now after the accumulation of about the $29 million?

Robert N. Katz:

Mr. Justice Stewart, I believe that it would be more appropriate for me to differ that —

Potter Stewart:

Alright.

Robert N. Katz:

— to Mr. Torre who is —

Potter Stewart:

Very well, fine.

Robert N. Katz:

— in the industry.

Potter Stewart:

Fine.

Robert N. Katz:

Now in searching for justification for the position that the petitioners have set forth today, the petitioner and the Solicitor General have argued that the parties maybe hesitant to enter into agreements involving the maritime industry and may desire to remove the clout of antitrust violation from their activities.

Now, it’s inconceivable to us that this Court would endorse a position that the way to remove the clout of antitrust violation or law violation from an industry or from certain parties would be to exempt them from the laws that they may well be violating.

William J. Brennan, Jr.:

Well, would the Commission be receptive if PMA had come in and said we want approval of this agreement?

Would you have been receptive of passing on it in order to give them the approval or to give them the exemption?

Robert N. Katz:

Your Honor, I’m not sure just what the Commission would have done in that situation.

They may well have said this as not the type of agreement, this is — does not remove the competitive impact therefore we will not accept it for filing.

They may have said notwithstanding that this is not an agreement susceptible of the antitrust exemption.

We will look at other aspects of it and comment on 16 and 17 potential violations.

Now in the past, the Commission in wanting —

William J. Brennan, Jr.:

I thought you said earlier that’s why I asked the question.

Robert N. Katz:

Yes, Mr. Justice.

William J. Brennan, Jr.:

Perhaps, I misunderstood you Mr. Katz.

I thought you said earlier, PMA had come in and sought approval in order to protect themselves against antitrust prosecution that treble down the (Voice Overlap) —

Robert N. Katz:

No, they had not.

They might well have done that.

William J. Brennan, Jr.:

If I may — I thought you have said, if they had done that, they might have got their approval.

Robert N. Katz:

They may well have but it would be a moot if there is in fact no antitrust violation that they just would’ve gotten when they — would be similar to a —

Abe Fortas:

I don’t see — it seems to me that’s a little inconsistent.

Robert N. Katz:

Well, it would be similar to them perhaps —

William J. Brennan, Jr.:

If you’re receptive to a request for an approval, it seems to me that of itself establishes that indeed it’s an agreement of false (Inaudible).

Robert N. Katz:

Mr. Justice Brennan, the Commission would — could well say this is not the type of agreement that we must look at therefore we will — it’s not necessary if I will not accept it for filing, not grant the —

Byron R. White:

But if you would I —

Robert N. Katz:

— antitrust exemption.

Byron R. White:

The Commission takes the view that a disagreement had not only allocated the burden that said it shall be passed on to whoever uses the facility that it would necessarily be fileable and if — right?

Robert N. Katz:

Yes.

Byron R. White:

Now, why?

Robert N. Katz:

Because in that event, there would have been a removal of the competitive situation which would have existed otherwise absent the agreement.

The members of the PMA, the terminal operators would not have had the option of passing on or not passing on of prorate in the cost or not bringing the cost to — its entirely up to the membership and vigilant —

Byron R. White:

What standard does the — in testing the fileability of these agreements as if the Maritime Commission used in this case was the standard that the agreement didn’t call for any passing on that there was no expressed calling — no expressed provision — for an impact on outsiders, is that what you —

Robert N. Katz:

That is correct Mr. Justice White.

The Commission found specifically that there was no agreement to pass on, no understanding to pass on.

Byron R. White:

Now, what if a necessary impact had to be that it would be passed on in some circumstance?

Robert N. Katz:

Now that’s the position that the Solicitor General in its brief urged —

Byron R. White:

Let’s assume that that was so that the necessary impact although one stated was that it had to be passed on.

Robert N. Katz:

Well, it’s hard for me to say what the Commission would have done in that situation because it did not find that here but had it found that, it may well have said, yes, we — that this does involve Section 15 situation.

Byron R. White:

Without any further analysis as to the effect on competition or (Voice Overlap) —

Robert N. Katz:

If it would remove the competition which would exist between the parties.

Now, if the —

Byron R. White:

Between what parties?

Robert N. Katz:

Alright.

Here, there were the — the competition among the members of PMA, like MTC and other terminal operators, other stevedores.

They did not change the competition between them.

They were still in a position to compete equally for the off loading in (Voice Overlap) —

Byron R. White:

Well, what if it didn’t affect the competition among the shippers?

Robert N. Katz:

I think if it did affect competition among shippers, I think that the Commission would be compelled to say, yes, this is —

Byron R. White:

And what about competition among carriers?

Robert N. Katz:

In a competition among carriers, no question about that.

Byron R. White:

And among stevedores?

Robert N. Katz:

And among stevedores?

Byron R. White:

How about the (Voice Overlap) —

Robert N. Katz:

If they were party to this agreement, yes.

Byron R. White:

How about between ports?

Robert N. Katz:

Between ports?

Section 16 clearly covers that.

Byron R. White:

Well, how about the 15?

How about the fileability of an agreement though that if that’s not —

Robert N. Katz:

If an agreement between carriers was in derogation of the right of ports to compete for cargo?

Yes, I think in that situation.

The Commission would say this was a 15 type of agreement.

William J. Brennan, Jr.:

Between — a competition between charter, hire and common carriers?

Robert N. Katz:

I believe it would.

The Commission found none of that here.

William J. Brennan, Jr.:

Well, it didn’t really cover that much (Voice Overlap) —

Robert N. Katz:

Well, no.

No, sir.

But there was an extensive —

William J. Brennan, Jr.:

Have you thought about the competition between the parties to the agreement, that’s all —

Robert N. Katz:

Yes sir.

William J. Brennan, Jr.:

— it talked about.

Robert N. Katz:

Yes.

Now, there was —

William J. Brennan, Jr.:

Although you concede —

Robert N. Katz:

— an extensive dissent filed at the Commission so the Commission did — have before these contentions but they rejected them all.

William J. Brennan, Jr.:

You mean Commissioner Patterson (ph)?

Robert N. Katz:

Yes, sir.

William J. Brennan, Jr.:

Did the Commission — so how do you really deal this argument?

Robert N. Katz:

They didn’t answer them specifically but in so — the voting and the way they did, they obviously rejected his contentions.

Earl Warren:

Do I understand you to say that — to Mr. Justice Brennan that if the association had presented this agreement to the Commission, the Commission could or could not in his discretion have considered the validity of it in relation to the antitrust —

Robert N. Katz:

If the Commission determined that it did not affect the competitive relationship, it would —

Earl Warren:

I beg your pardon?

Robert N. Katz:

If the Commission determined that that agreement did not affect the competitive relationship they would otherwise have existed absent, the agreement.

The Commission would say that this is not the type of agreement that would be susceptible to issuance of an antitrust exemption and therefore it will not accept it for filing.

William J. Brennan, Jr.:

Yes.

Robert N. Katz:

What could happen if this — the Commission did not have this discretion, parties in the industry — companies in the industry could form an agreement between themselves, two or three carriers to engage in another type of industry perhaps a lumber industry or manufacturing or any number of industries that we alluded to this in our brief.

They could file their agreement that covered ocean shipping and then seek an antitrust exemption of this other activities of theirs.

This would be incomprehensible to us to assume that the Commission should be compelled to approve that or accept that for filing.

Now, on the other hand by the standards under which the Commission must determine whether or not an agreement violates the Shipping Act.

These incidental items, the antitrust violations in other areas, non-maritime would not be detrimental to ocean foreign commerce, it would not be detrimental to shippers, to competitors.

It’s reducing the cost of ocean transportation if the — or permit to engage in this antitrust violation that’s been sanctioned by the Commission on the maritime aspects.

So I think that basically in response to your question, yes, the Commission would say, this is not the type of agreement that we can approve.

Earl Warren:

Is that the — is that filing of the fact that if — what you believe brings you under the Universal Camera case?

Robert N. Katz:

I believe it would, Your Honor.

Earl Warren:

Isn’t that an interpretation of the statute on which the whole thing is based rather than on finding of facts?

Robert N. Katz:

Well, Your Honor, the Commission in reaching it’s conclusion on this case relied upon the interpretation of the statute given by this Court in the Carnation case.

Earl Warren:

What?

Robert N. Katz:

In the Carnation case.

Earl Warren:

Carnation case?

Robert N. Katz:

Yes, sir.

Now, the petitioners have expressed the fear that non-requiring, a filing under Section 15 would result in these parties not being under any government surveillance or regulatory surveillance.

But that’s not so, they would still be of course would not be placed beyond the tail of government regulation as we have point out that the antitrust division of the Department of Justice would instead be surveilling this.

Now, we mentioned earlier or it is mentioned earlier that there are three possible agreements here, one, the labor agreement or the agreement between PMA and the union.

The second agreement, the agreement between among the membership of PMA as to how this cost would be collected.

And the third agreement which Volkswagen asserts us here is agreement to pass on the cost.

Now, the Commission — the third can be dispensed off really.

The Commission found clearly that there was no agreement to pass on.

The Solicitor argues in its brief that it links reality to suggest (Inaudible) that this cost would not affect shippers.

Robert N. Katz:

Now, surely the Solicitor General is not urging as a national economic policy or philosophy that every wage increase and that’s what’s involve here must result in a corresponding price increase.

The Solicitor General has acknowledged that if the agreement among PMA membership is an integral part of collective bargaining, it would have to be exempt from filing under Section 15 and Mr. Torre will address himself to this that the Commission clearly felt that this agreement was not inimical to the purposes of the Shipping Act.

Now in their brief, the Solicitor General also urges that one who would carve out an exemption from the broad statutory language of Section 15 must sustain the burden.

We think not.

We think that this Court has indicated that the burden is instead upon one who would carve out an exemption from the antitrust laws and that — that’s what’s involved here.

The brief were in — the few moments remaining concerning the alleged violations of Section 16 and 17, it’s indeed regrettable that this Court has to dwell at this juncture on a simple burden of proof issue.

It is clear that the petitioner, Volkswagen did not prove before the Commission nor was there a sufficient evidence for the Commission to find that there had been a violation of 16 and 17.

Concededly, conduct may well be discriminatory and prejudicial but it is up to the regulatory agency with the expertise knowledge of the workings of the industry, the needs of the industry and the activity of the industry to determine whether or not the conduct involved is — in the words of the statute undue, unreasonable or unjust.

Byron R. White:

Well, Mr. Katz, do you agree that — or what is your position if — that if we assume this Court finds against the Commission on 15, it says that the agreement should’ve been filed.

What should the Court do about 16 and 17?

Do you think the record is complete and ready for a decision on 16 and 17?

Robert N. Katz:

I would think that if the petitioner is willing to rely on the record in 16 and 17, fine, because I do not believe they maintain the record to show violation of 16 and 17.

But Mr. Justice White in response to your question, I think the proper situation in that respect would be a remand to the Commission for a taking of evidence on the issue of 16 and 17 violations.

Byron R. White:

You don’t think the Commission has said almost to say about 16 and 17 (Voice Overlap)?

Robert N. Katz:

I believe on the record before it had found that there was no showing of a violation of 16 and 17.

Byron R. White:

(Inaudible) It was tried out, both issues were tried out before.

Robert N. Katz:

They may well come to the same conclusion again.

William J. Brennan, Jr.:

Even if they became significant if we were to say that this was a fileable agreement therefore you had to go through a procedure (Voice Overlap) —

Robert N. Katz:

It may well be a different type of case then.

William J. Brennan, Jr.:

Well, that’s why I wonder.

There’s something of a primary jurisdiction problem involved and whether we should decide the 16 and 17 on this record if we disagree with you on 15?

Robert N. Katz:

If you disagree with us on 15, I would believe that this Court would want to remand for a different record on 16 and 17.

Potter Stewart:

The Commission itself has changed its mind since its decision in this case with respect to the necessity of having a competitive freight under 16, has it not?

Robert N. Katz:

Not really.

In the decision cited by the petitioner, the Commission was very careful to narrowly construe the change from it, full change from its prior position.

In those situations, what were involved — in those cases what were involved were free storage time where — we’re talking about the same commodity.

And as we mentioned in our brief space is space.

The Commission said, in those situation on the — I believe it’s a (Inaudible) on the specific facts of this case, we changed our prior position.

It didn’t say we change carte blanche or a our prior position.

So, I don’t believe that we could completely say at the Commission has reversed its prior holdings.

Potter Stewart:

Hold out your right.

But at least there has been enough of a shift in the position so that makes him appropriate —

Robert N. Katz:

If Volkswagen may well want to be tried.

Potter Stewart:

The Commission itself should reconsider this case under 16 in light of its — at least partial shift to position.

Robert N. Katz:

I could certainly understand Volkswagen.

For example, wanting to go back to the Commission and urging that the Commission has changed its position, yes sir.

Potter Stewart:

And the Commission is perhaps should be given an opportunity to consider —

Robert N. Katz:

Well, of course, we feel that there’s enough in the record to justify the decision reached by the Commission previously but the Commission is not reluctant to your case which should properly be before it.

Now, Volkswagen has never submitted to the Commission, a showing of what its cost were with respect to the various stevedores or what the cost history had actually been before or after MTC included as a part of its cost, increased labor cost which it sustained in connection with the net fund.

In their reply brief, they mentioned that they were estopped from submitting this evidence but I think the record would indicate this information concerning what their cost were should’ve been in their possession, could’ve been submitted on by themselves in the hearing.

There is evidence that MTC’s total labor cost declined as a result of implementation of this foresighted and farsighted agreement that was negotiated by Mr. St. Sure in the interest of inline management labor relations.

And in conclusion, to answer the question which the petitioners have presented to this Court as to why the Commission interpreted Section 15 so narrowly, the answer Your Honors is very simple because this Court has said it should.

Earl Warren:

We’ll recess now.

Gary J. Torre:

I’m speaking for the Pacific Maritime Association, the intervenor in this case and I hope I can clear up some of the confusions that obviously had been created.

I’d like to answer Mr. Justice Stewart’s question.

I think it’s the easiest one, the answer as to whether there is an ongoing obligation with respect to the mechanization fund, my answer is, yes, there is.

The contract was renegotiated during the bargaining session that was concluded last summer with the ILWU renewed for an additional five years.

There’s an additional $33 million being paid in employee benefits, substantially retirement, health — not health, disability and death benefits.

The period of time over which it — while the contract is for five years, the benefits will be paid over a total of eight years from last July.

Potter Stewart:

Does it still have the rate of $5 million a year?

Gary J. Torre:

It’s at a slightly higher rate than $5 million a year but I’d like to explain that the $5 million a year is the maximum rate and it will never be and has — in the first three years, it was collected at that rate but it cannot be collected at that rate and paid out at that rate, it will be — always the lower rate.

The reason for that is that one of the benefits that is known as the vesting benefit is essentially — it’s been determined by the Internal Revenue Service at any rate to be an early retirement benefit.

And the manner in which the plan was set up, it was impossible to fund that benefit with prior funding as the industry wish to do.

They wish to set up this early retirement benefit and fund it within the five-year period.

This could not be done and established the right to deduct the sums of money that were being put into the vesting benefit trust.

We have been compelled in order to get the tax result upon which the plan was dependent to establish what is known as a current payment pension plan.

We only therefore — therefore, we only collect the amount of money that is necessary to pay current vesting benefits.

We have several thousand men who have retired and more are continually retiring where they are looking forward to getting those who retired under the initial plan, $220 a month and until they’ve received approximately $8000, they have claims against the trust and we collect currently to pay this benefit.

Now this means, since some men will retire in the last months of the plan, it means, we have to have provisions where we will be collecting three years later because it’s paid out over a three-year term.

And our maximum annual amount is reduced in order to make the provision for this later collection.

Gary J. Torre:

So, the rates in the first three years were $5 million but they’ve gone down which of course means that the rate on the tonnage assessment goes down for everybody who is subject to it.

Also, as the cargo increases in volume, the rate goes down.

So —

Hugo L. Black:

May I ask you if (Voice Overlap) —

Gary J. Torre:

Yes, sir.

Hugo L. Black:

— of the way you are operating this plan is because it took all an extraordinary burden on Volkswagen?

Gary J. Torre:

I do not think so Your Honor.

I do not think it imposes extraordinary burdens on Volkswagen.

Hugo L. Black:

Suppose it did?

Gary J. Torre:

If it did cause Volkswagen to be burdened — I’m not sure I understand your question sir.

Hugo L. Black:

Well, what I’m talking about is it seems that at least the argument seems to be implicit if not stated open.

What this does is to use a plan, works alright for some but falls to such a heavy burden on Volkswagen that it puts the burden on it that is practically impossible for it to bear.

Gary J. Torre:

Well, Volkswagen has alleged that.

They had a trial on that and they didn’t prove that Your Honor.

Hugo L. Black:

But who —

Gary J. Torre:

But —

Hugo L. Black:

— held — they didn’t prove it?

Gary J. Torre:

The trial examiner who —

Hugo L. Black:

Well, that might —

Gary J. Torre:

— listened to the evidence.

Hugo L. Black:

But that might be wrong.

Gary J. Torre:

I think not because it is supported by uncontroverted evidence.

What the record in this case shows is that the cause of discharging Volkswagen did not go up.

The Solicitor in his brief —

Hugo L. Black:

Both — it has been charged some other way than the way you charged it.

If you charge it one way on the basis of weight and one way on the basis of finding, there’s a tremendous difference, isn’t it?

Gary J. Torre:

There is but that difference exist for everyone.

If I may explain where that comes from Your Honor, the revenue tons that a vessel collects will always generally, and this is common carriers, will always be computed on the basis of weight or measurement whichever is greater.

The reason they select whichever is greater is because the carrying capacity of a ship is limited by two factors, the size of the hold and the displacement of the vessel.

Some cargos, they do not take up as much space will be heavier.

Gary J. Torre:

Cargos that take up as both — as automobiles generally, it isn’t just Volkswagen.

A large cube will be lighter in terms of the proportion of space and weight.

Now, if a vessel did not take the larger of the two measures the result would be — while a cargo that took up a lot of space so they couldn’t carry the full displacement if they computed it on the revenue tons on the basis of weight, the vessel would have not been able to be compensated for its carrying capacity.

William J. Brennan, Jr.:

Mr. Torre, is there a correlation in the sense that the space taken by a Volkswagen could carry nine times as much heavy stuff as —

Gary J. Torre:

Yes.

Yes, sir.

William J. Brennan, Jr.:

That — is that the correlation?

Gary J. Torre:

It’s 10 to 1 on an automobile — on an automobile generally quicksilver, the weight to something like 14 to 1 which — what I mean is that the weight measurement for quicksilver is 14 times the space it will take up just because quicksilver is heavier.

Now, we have for generation collected the portion of our membership dues that this Association is charging.

Incidentally, this is not a de minimis item.

The Pacific Maritime Association is a very large organization that deals with something like eight unions that covers the entire Pacific Coast.

It maintains hiring halls and very costly facilities and while the figure isn’t in the record, the cost of running this association is quite comparable to the annual cost of the mechanization fund.

At any rate, there is no basis for this Court to presume it’s a de minimis item as I sat here hearing this morning.

I can assure you my — our members don’t think so and there is some evidence in this record that Volkswagen doesn’t think its de minimis.

Their stevedore contractor testified that the representative from Germany complained about the amount of membership dues that marine terminals was incurring as a member of the Pacific Maritime Association.

They were incurring it on a measure — their membership dues on a membership — on a measurement basis and the German representative wanted it to be computed on the weight basis which would have been one tenth, he would’ve divided the due factor from —

Byron R. White:

Is the dues passed on expressly —

Gary J. Torre:

All —

Byron R. White:

— as a separate item.

Gary J. Torre:

No, not as a separate item.

All clause that our members incurred whether they are basic wages, overtime wages, pensions, mechanization cost, membership dues, we assume our members take into account in their total cost mix in figuring what the rates of their services are going to be.

If they don’t, they’ll go broke.

There — this seems self-evident.

It does not follow that every member will take those clauses into account in the same fashion.

Abe Fortas:

Is this the rule —

Gary J. Torre:

It is the — pardon.

Abe Fortas:

I beg your pardon.

Is this rule about which Volkswagen complains applicable to all automobiles —

Gary J. Torre:

Yes, sir.

Abe Fortas:

— in that category?

Gary J. Torre:

Yes, sir.

Abe Fortas:

Are other automobiles that come into the affected ports?

Gary J. Torre:

Yes, sir.

Abe Fortas:

In substantial volume?

Gary J. Torre:

I can’t say in the substantial point as the Volkswagen do because they account from 66% I think of all foreign automobiles imported into the United States but we do have Fiats, Renaults, Mercedes-Benz, and Rolls Royce.

William J. Brennan, Jr.:

Do they come by common carrier or by charter?

Gary J. Torre:

The — I think Volkswagen is the only one that comes in by charter, it does Your Honor.

William J. Brennan, Jr.:

And Fiat coming by common carrier (Voice Overlap) —

Gary J. Torre:

Yes, sir.

William J. Brennan, Jr.:

– at the same time (Inaudible)?

Gary J. Torre:

No, Fiat — Fiat does not hire stevedores.

The ship carrying the Fiat in, hires stevedores —

William J. Brennan, Jr.:

Well, how about their law — there are something else that does hire stevedores?

Gary J. Torre:

No other manufacturer of automobiles imports them into such quantities that they have chartered ships that require them to hire stevedores.

Hugo L. Black:

Do they send them into the Pacific Coast?

Gary J. Torre:

Oh, yes, sir.

Hugo L. Black:

They do.

Gary J. Torre:

Yes, sir.

And —

Potter Stewart:

What is this?

They come from Europe and through the Panama Canal, is that it?

Gary J. Torre:

Yes sir.

As what I understand that is so.

And I’d like to comment on that at this moment.

You’ve heard about how PMA is dominated by liners.

I want to remind this Court that the liners who are members of PMA that are important are Matson who service Hawaii, the Japanese flag ships, it service the Pacific, APL which services the Pacific States Line, PFEL.

The amount of service to Northern Europe to the Pacific, there’s nothing in this record showing how much it is but it should be rather common knowledge that the liners on the Pacific Coast are servicing the Pacific Coast trades and not the Northern European trade.

William J. Brennan, Jr.:

But Mr. Torre, even if they don’t come in by charter, one of your members must have some part that is — is not in the unloading of a liner or of a carrier or —

Gary J. Torre:

Probably sir, not necessarily.

There are stevedores on the —

Potter Stewart:

Well, when there — when it does happen, what is your member assessed, say for adoption or some other Japanese probability.

Gary J. Torre:

I have the slightest idea.

It depends upon what is efficiency of taking a vessel off — a car off of a vessel will be.

I can tell you what his labor cost are but I don’t know how efficiently he uses his labor.

I — the Association —

William J. Brennan, Jr.:

But doesn’t he make a contribution to this fund?

Gary J. Torre:

He —

William J. Brennan, Jr.:

Who makes the contribution?

Gary J. Torre:

He makes the contribution.

William J. Brennan, Jr.:

Who does?

Gary J. Torre:

The — any employer or dock workers which is — would be a stevedore contractor or marine terminal.

William J. Brennan, Jr.:

Alright, now.

What I’m trying to get at —

Gary J. Torre:

Alright.

William J. Brennan, Jr.:

— is you bring a lot of Japanese automobiles coming in.

Volkswagen is going to have the hump itself I gather with the competition of Japanese cars —

Gary J. Torre:

Yes.

William J. Brennan, Jr.:

— isn’t it?

And they apparently come in on common carriers?

Gary J. Torre:

Yes.

William J. Brennan, Jr.:

Somebody has to pay an assessment, does he not in your association —

Gary J. Torre:

Yes.

William J. Brennan, Jr.:

— for the charge of unloading this?

Gary J. Torre:

If an association stevedore unloads the Datsun, he will have a charge measured by the volume of the Datsun that he will have to contribute to the mechanization fund.

What the carrier — who hires him pays — I haven’t the slightest idea.

William J. Brennan, Jr.:

Well, I’m not concerned with that.

But the assessment to the fund —

Gary J. Torre:

Yes.

William J. Brennan, Jr.:

— collected by your association is on precisely the same basis for the Datsun —

Gary J. Torre:

Exactly.

William J. Brennan, Jr.:

— as it is for the Volkswagen.

Gary J. Torre:

Exactly, yes.

In fact, all general cargo will be on the same cent rate and it will be determined under the same rule by which we collect our PMA dues.

Now this, you’ve heard three things mentioned.

One, the differential of both carriers — both cargos, well, PMA tonnage dues have had that differential for over 40 years.

You’ve heard scrap metal mentioned.

Scrap metal is a bulk cargo the way in which it is loaded today, the way in which scrap metal is handled with magnets has been determined to be a bulk cargo.

Potter Stewart:

That’s much more a reason with that determination is it not?

Gary J. Torre:

It came up — yes, it came up in 1959 — 1961 sir.

Potter Stewart:

Right.

Gary J. Torre:

Now you’ve heard about coastwise lumber which does have a special rate.

Coastwise lumber is a general cargo and I’d like to explain that because it is extremely important that it be understood that this Court could make a serious error on — if it is not understood.

Most of the carriers and handlers, the Coastwise Lumber are all companies that are not members of the Pacific Maritime Association.

They conduct their own private negotiations with the ILWU as do some other organizations but it’s very important on the Coastwise Lumber to recognize that they’re all, except one and it’s not the important one are outside of the association.

The plan, not — like all the rest of the plans we have is set up to allow those members of the industry who are not a member of our association if they want to participate through their negotiations with the ILWU who will be able to participate the pension plan, the welfare plans, the vacation plans, the Mech plan.

If they couldn’t, we would be running the risk of running them out of business by cutting them out of a facility that employees would want the benefits of it, it wouldn’t work for them.

ILWU negotiated a lower rate than our rate with the Coastwise Lumber people.

And we were confronted with saying to nonmembers, pay our rate or don’t participate in the plan or reducing the rate.

We reduced the rate.

In other words, we did just the opposite of what this Court condemned in the Pennington and Jewel Tea cases.

I think we had an obligation to reduce the rate but I certainly don’t want to be condemned for keeping the plan open to nonmembers to participate on rates to get Longshore employees that they negotiated with the ILWU.

I see that my time is closing, I’m — one point I wish to make, Justice Fortas asked this very early in the argument.

This case presents as we have said in our briefs and there is just no question of it in our mind whether there’s any residual jurisdiction in the Maritime Commission to supervise labor management relations.

The findings of six — page 637 of this record, make absolutely clear that he only thing PMA members were doing were implementing a collective commitment that it guaranteed benefits to employees and they were collecting the money to pay those benefits.

Now, I think it’s a very usual thing in America, in industry wide bargaining today to set up industry plans where you guarantee benefits to the union in your negotiation and you fund them as — seems a reasonable fashion among the employer group.

If we can’t do that, we’re being treated differently than the rest of the industry in America and we’ve got to know why because we have to accommodate our entire collective bargaining process to those standards.

We can’t work this out on a case by case basis.

We — our bargaining relationships are pretty volatile and dynamic and we have to know when we go into our negotiations with the maritime unions, the areas where we can say yes or no or we have to say maybe depending upon what the Maritime Commission is going to say.

If we don’t know that, we’re going to be charged with bargaining in bad faith by these unions and will be hold up before the NLRB ultimately to have to defend ourselves.

Now, I don’t think there’s anything in the Maritime Shipping Act that was intended to treat the maritime industry differently than industry in general in this area.

Gary J. Torre:

So what I’m really asserting is, if our implementing, a fringe benefit program where we guarantee benefits in anyway violates an antitrust policy.

It does under the Sherman Act in other industries too.

And I hope this Court will appreciate what it is deciding here.

It’s not just one of little small questions affecting one of the smaller industries.

You’re deciding a question under the antitrust laws that affect industry in general I believe.

William O. Douglas:

Is there any chunk of the labor relations in maritime field or is there — decided by Congress to the maritime cases?

Gary J. Torre:

Never in the past Your Honor that I know of, never.

I —

William O. Douglas:

There is or was or wasn’t there some conciliatory —

Gary J. Torre:

The Maritime Labor Board that existed for several years in the late 30s and ended with the war when war shipping took over that I’ve referred the Court to in our brief had a conciliatory jurisdiction.

William O. Douglas:

Is that nonexistent then?

Gary J. Torre:

It’s not.

It has — its no longer existent Your Honor.

But even then, that Board was supposed to be implementing the policies of the NLRA.

It was not — it was not given any special policies to implement it.

It was just — this was a time when you’re having to sit down, strike some boarded ships and it was deprived in —

Byron R. White:

Mr. Torre, do I understand you to say that there isn’t any chance of holding an agreement to be fileable with the Commission unless it had some antitrust implications?

Gary J. Torre:

That’s correct and I want to be very clear.

I don’t think we could immunize a price fixing scheme by putting it into a collective —

William J. Brennan, Jr.:

But I —

Gary J. Torre:

— agreement.

William J. Brennan, Jr.:

I really — let us assume — you can’t concede of the situation that wouldn’t have antitrust implications if the agreement is held fileable.

Gary J. Torre:

No, I won’t go that far.

I have to say in the labor field, yes, but speaking generally.

William J. Brennan, Jr.:

But the Commission’s standard for fileability or it’s — or if its standard should be that just impact on outsiders requires filing, that doesn’t necessarily raise some —

Gary J. Torre:

I think —

William J. Brennan, Jr.:

— habeas antitrust problem.

Gary J. Torre:

Excuse me sir, but I think outsiders will suffer an impact even though you’re fixing the price of an insider.

I think that if you have a scheme fixing the price of terminal operators charging carriers, this is ultimately going to affect shippers and I think that’s all the Commission’s talking about when it’s starting an impact on outsiders.

William J. Brennan, Jr.:

Do you say that that shouldn’t be the test for fileability then?

Gary J. Torre:

I think it’s inevitably always determines that.

I think the —

William J. Brennan, Jr.:

Well, that doesn’t necessarily raise an antitrust problem?

Gary J. Torre:

I think price fixing does.

William J. Brennan, Jr.:

Oh, I agree with that but not just — not just any kind of a general cost item that would necessarily raise the —

Gary J. Torre:

Oh!

William J. Brennan, Jr.:

— question of service outside —

Gary J. Torre:

No, I don’t think that agreements that create cost items create price fixing agreements.

I quite agree, no, I don’t, no.

But I don’t think they should have to be —

Byron R. White:

Filed —

Gary J. Torre:

— filed or approved either but certainly, in the labor field, not at all.

Earl Warren:

Mr. Torre, in the event that the Court should determine that this was a fileable agreement and it remanded the case to the Commission to do whatever is necessary in such a situation.

What damage would — what injury would your people suffer from that?

Gary J. Torre:

Oh, I think it would be a disaster.

The — I hesitate to position my client be it — here are some of the things that could happen to us.

There is a policy of law that says that tax deductions will be denied if they violate fundamental public policies.

We’ve been in violation if this is something that has to go back to the Commission.

It will be going back to the Commission in an area where antitrust is involved and I would think that’s a fundamental public policy and I think the Commissioner might be encouraged to want to start denying what is — probably about $26 million of tax deductions that have been taken by not the carriers, by their stevedore contractors and I don’t know whether the Commissioner could prevail on that suit but if he did, it would mean bankruptcy for many of them.

Now, you’ve been told in the briefs filed by the Solicitor that surely the members of PMA who have acquiesced in this, the courts would let them lie where they are but the army has in the last five or six years, I think moved approximately 25% to 30% of the tonnage that’s crossed the docks.

Their accounting for this and they have hired stevedores who’ve incurred cost to the mechanization fund that have not yet been approved and I suppose the controller general could say to the army, if your stevedore charge had any cost in there that the Maritime Commission had to approve and it wasn’t approved, you better (Voice Overlap) back again.

Now, of course that money is all been collected and has been used to pay benefits to longshoremen and marine clerks.

These are some of the questions that we would be confronted with.

Earl Warren:

Would that danger be a much greater than to — it would be faced with the possibility of a treble-damage suits in the event that we decide the other way?

Gary J. Torre:

Your Honor, we’ve always had been faced with treble-damage suits and we avoid them by staying within the law in the Sherman Act.

Whenever an association of employers sit down and make agreements on a matter that is important as the cost of maritime labor is to ultimate charges, somebody can come along and challenge it.

And we try to very carefully stay within the law.

And when you have 120 members who are being advised by most of the law firms in the Pacific Coast, you have to prove that you’re within the law because the —

Earl Warren:

Why?

I suppose you’d have the same situation here.

Earl Warren:

You’ve tried to protect yourself under the antitrust laws.

Why wouldn’t you — would you face any greater danger —

Gary J. Torre:

We — Your Honor —

Earl Warren:

What we do here —

Gary J. Torre:

Your Honor, what we did here, we’ve been doing for about 40 years and no one has suggested that we were covered by the Shipping Act.

Now, this cart is being asked to take a law that’s been on the books and construe it in the fashion that nobody in this industry on any coast has ever thought applied.

Now —

Earl Warren:

Have you always had an agreement like this?

Gary J. Torre:

We — this agreement is no different than our dues collection.

Earl Warren:

I beg your pardon.

Gary J. Torre:

This agreement is no — is not a bit different than the collection of dues to pay for our expenses except the money we collected here, we used to pay employee benefits.

We —

Hugo L. Black:

You’re not collecting at all for the members like you collect their dues, the members (Voice Overlap) —

Gary J. Torre:

We are only collecting these sums Your Honor from members.

Hugo L. Black:

Well, if the — is Volkswagen a member?

Gary J. Torre:

Volkswagen is not contributing to our plan Your Honor.

Earl Warren:

Contributing to the fund.

Gary J. Torre:

No, it is not Your Honor.

Its stevedore contractor that it hires under privately negotiated contracts is the party contributing to our fund.Volkswagen is not contributing to our fund because —

Hugo L. Black:

(Inaudible) the one the burden falls on.

Gary J. Torre:

Your Honor, whether the burden falls on it, I don’t know because the record indicates their cost of discharge may have gone down and I may point out to you that they know what their cost of discharge are.

They have five or six, I’m not sure of the number, stevedore contractors in three to four ports on the Pacific Coast and they pay them all a different figure per automobile and they know what it is and they could have produced the evidence and they did not produce the evidence.

William J. Brennan, Jr.:

But did you say earlier Mr. Torre that they’d go bankrupt if they didn’t reflect in their cost to service to Volkswagen, the $2 and 35 cent assessment that stevedoring member has to pay to your association.

Gary J. Torre:

I don’t know what savings they’ve incurred.

William J. Brennan, Jr.:

You mean —

Gary J. Torre:

I’ve —

William J. Brennan, Jr.:

Are you suggesting that perhaps they’re absorbing the — the stevedore is the one who was committed to make the contribution, isn’t he?

Gary J. Torre:

At page 627 of the record, the trial examiner found that that was the case and based it upon testimony of the marine terminals’ vice president which was adopted by the Pacific Coast representative of Volkswagen.

Why didn’t Volkswagen tell us what their cost was if they were being damaged?

Potter Stewart:

Well, what are they complaining about for heaven’s sake?

Gary J. Torre:

They’re creating — this case is here to retry and argue evidentiary matters.

They have created an inference throughout this case, the $2 and 35 cents was twice the profit and as the Solicitor says, it surely brings reality that we didn’t know the cost wasn’t going up by $2 and 35 cents.

That was a very easy thing to prove if it were true.

They had all the figures, what is more at page 161 of the record when Mr. Peter Curtis is testifying.

He indicates that he knows what all of the cost the (Voice Overlap) —

William J. Brennan, Jr.:

But Mr. Torre, certainly marine terminals charges Volkswagen a price that must include the $2 and 35 cents per unit, isn’t it?

Gary J. Torre:

It certainly does.

William J. Brennan, Jr.:

(Inaudible)

Gary J. Torre:

But that doesn’t mean the price was higher than $10 and 45 cents.

I don’t know.

It may have been but one thing I do know is that it was not $12 and 80 cents because that’s what the price they were collecting per automobile, $10 and 45 cents in the year immediately before the negotiation of the plan.

A new cost item, $2 and 35 cents was incurred and I will certainly say all cost are reflective but I will challenge anyone to assert or say that $2 and 35 cents was added to $10 and 45 cents to create a cost of $12.80.

There is no evidence in this record and I am certain it would be in the record if it were true because it’s available to Volkswagen.

Volkswagen knows what it’s being charged by stevedore contractors to take a car off of its vessels.

These are — these contracts are negotiated on a cost plus basis and Mr. Curtis indicates he knows what all of the cost of his stevedores are, their membership dues, their basic wages, their overtime wages, I’m imposing upon the Court and I’m sorry.

Hugo L. Black:

If this had been applied to be filed that under Section 16, would the Commission have been compelled to hold a hearing and determine whether or not he may impose exceptional burdens on —

Gary J. Torre:

Oh, yes, Your Honor.

Hugo L. Black:

It would have.

Gary J. Torre:

Yes, Your Honor.

Hugo L. Black:

That’s what you’re arguing, that — and you get that passed on by the Commission, was it?

Gary J. Torre:

I think the hearing was held though.

I think the —

Hugo L. Black:

A hearing on that — under the 6 — Sections 16 —

Gary J. Torre:

He had full opportunity to produce —

Hugo L. Black:

By this hearing under Section 15?

William J. Brennan, Jr.:

From 25?

Gary J. Torre:

Yes, sir.

I think he had a hearing on Section 15, 16 and 17 to make his case up.

We sat and took evidence for four days.

William J. Brennan, Jr.:

Well, what does his sentence in the Commission’s report means Mr. Torre?

William J. Brennan, Jr.:

This form of assessment increased Volkswagen’s cost of discharge some 25%.

Gary J. Torre:

What that means is the $2 and 35 cents is 25% of $10 and 45cents.

$10 and 45 cents was the cost of discharge immediately before the plan went into effect.

$2 and 35 cents is what the mechanization assessment upon —

William O. Douglas:

But they say Volkswagen’s cost of discharge.

Gary J. Torre:

I can’t believe that the Commission in that statement is saying that the $2.35 is 25% of a figure that was never put into the (Voice Overlap) —

Byron R. White:

Well, how are we suppose to read this opinion and act on it if a — I mean, that’s what it says that Volkswagen’s cost was —

Gary J. Torre:

I think that the finding of fact of the trial examiner on page 627 is not been overruled and he said the cost decrease.

I think they have to reconciled statements.

I don’t think —

William J. Brennan, Jr.:

So which one (Voice Overlap) —

Gary J. Torre:

— that’s how this is ever been written.

William J. Brennan, Jr.:

Which one do we believe?

Gary J. Torre:

Well, I think they can be reconciled Your Honor.

I think to assume — I think that’s a careless statement and I admit it caused me a lot of trouble obviously.

But I think that the — I think to assume that the Commission is holding that the cost of discharging automobiles went up 25% when what the cost of discharging is, is not been put in the record by Volkswagen is to assume that the Commission was being irrational.

Hugo L. Black:

But as a matter of fact — it did go up, isn’t it?

Gary J. Torre:

I don’t know Your Honor.

Hugo L. Black:

Doesn’t it go up whether the amount that you had to pay the stevedore for this fund?

Gary J. Torre:

No, sir.

That I know it did not do.

Hugo L. Black:

Why it didn’t it?

Because (Voice Overlap) —

Gary J. Torre:

Because there were savings.

There were savings that —

Hugo L. Black:

Do they have to pay it?

Gary J. Torre:

The purpose of this plan was to reduce cost.

Hugo L. Black:

But do they have to pay it?

Gary J. Torre:

To pay —

Hugo L. Black:

Volkswagen.

Gary J. Torre:

I don’t see any statement —

Hugo L. Black:

Do they have to pay the amount which is necessary to make up that (Voice Overlap) —

Gary J. Torre:

No, sir.

They do not.

They pay a commodity rate to their stevedore.

Hugo L. Black:

Well, then why — what is that commodity rate?

Gary J. Torre:

I do not know sir.

Hugo L. Black:

But you would know if it has been filed with the Commission, wouldn’t it and they had the hearings on them.

Gary J. Torre:

We had a hearing where they were given an opportunity.

Hugo L. Black:

Then why didn’t you (Inaudible)?

Gary J. Torre:

They didn’t put the evidence in.

It was their burden.

They have the evidence, it’s their burden.

Earl Warren:

Mr. Torre, may I ask you this question.

You used — it’s your position that Volkswagen has had a hearing under Section 15, Section 16 and Section 17.

Gary J. Torre:

Yes, sir.

Earl Warren:

Alright.

Now, does that — are we entitled to infer from that that the Commission must give them a hearing under 15 and 16 and 17?

Gary J. Torre:

No, sir.

Earl Warren:

Why?

Gary J. Torre:

The Commission had to give them a hearing on one of the questions that they raised certainly and that was whether or not they — the stevedores were compelled to add to establish rates, a new cost because that would’ve been price fixing and they were given a hearing to find out that they could prove that and they didn’t prove it.

The Commission says the record is devoid of any evidence proving that.

Earl Warren:

But do you — do you mean from that that the Commission has the discretion to determine whether it will give a hearing under 15, 16 or 17 or to —

Gary J. Torre:

No.

Earl Warren:

— ignore it.

Gary J. Torre:

No, sir.

I do not mean that.

I mean that if we — if an allegation is made in an area that is within the Commission’s jurisdiction, they have to give a hearing certainly.

And I think that an allegation to the effect that we arrange under the guise of implementing the collective bargaining agreement to fix the prices of terminal operators would raise a question within their jurisdiction.

I do not think the funding of a collectively bargained labor commitment raises a question within their jurisdiction.

Gary J. Torre:

Two challenges have been presented here.

One was within their jurisdiction, the other was not.

They’ve had a full hearing, four days of it, full briefing.

Earl Warren:

Very well.

Thank you.

Walter Herzfeld:

I have one thing —

Earl Warren:

We’ve taken all the time we could take for this case.

You had your full time Mr. Herzfeld.