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UNITED STATES v. AMERICAN UNION TRANSP.

August 17, 1964

UNITED STATES of America
v.
AMERICAN UNION TRANSPORT, INC., Transamerican Steamship Corporation, Edwin A. Vargas, Swan Products Export Corporation and Alvin Gross, Defendants



The opinion of the court was delivered by: WORTENDYKE

In a twenty-count Information, filed March 6, 1963, the Government charges the defendants with violations of section 16 of the Shipping Act, 1916, 46 U.S.C. § 815. The pertinent language of the section provides:

'It shall be unlawful for any common carrier by water, or other person subject to this chapter, either alone or in conjunction with any other person, directly or indirectly --

 'First. To make or give any undue or unreasonable preference or advantage to any particular person, locality, or description of traffic in any respect whatsoever, or to subject any particular person, locality or description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever.

 'Second. To allow any person to obtain transportation for property at less than the regular rates or charges then established and enforced on the line of such carrier by means of false billing, false classification, false weighing, false report of weight, or by any other unjust or unfair device or means. * * *

 'Whoever violates any provision of this section shall be guilty of a misdemeanor punishable by a fine of not more than $ 5,000 for each offense.'

 Defendant American Union Transport, Inc., hereafter Carrier, is alleged to have been, at all relevant times, a common carrier by water. Defendant Transamerican Steamship Corporation, hereinafter Transamerican, is alleged to have been acting as operating agent for ships owned by Carrier. Defendant Edwin A. Vargas, hereinafter Vargas, is alleged to have been Transamerican's Traffic Manager. Defendant Swan Products Export Corporation is hereinafter referred to as the Shipper.

 The Information charges that Carrier, Transamerican and Vargas unlawfully allowed Shipper to obtain transportation for property at less than actual and regular established rates by Carrier's acceptance of Shipper's false measurements of the shipments 'well knowing such measurements to be false' whereby 'an undue and unreasonable preference advantage' was obtained by Shipper reflected in resultant underpaid freight charges. Each of the first ten counts of the Information charges Carrier, Transamerican and Vargas with a separate violation of the Section upon a different date. In Counts Eleven through Twenty, respectively, a separate violation of the Section, upon the same dates, is charged against Shipper and against defendant Alvin Gross, hereinafter Gross, Shipper's Export Manager, consisting of their having 'unlawfully, knowingly, and willfully, by means of false measurements and false billing, obtained transportation of shipments of sanitary ware products from the Port of Newark to Puerto Rico * * * for less than the applicable rates and charges established by the Carrier' with resultant underpaid freight charges.

 The defendants Carrier, Transamerican and Vargas have moved for a dismissal of the Information upon the ground that the Federal Maritime Commission, hereinafter Commission, has exclusive, primary jurisdiction to determine whether Carrier's alleged acceptance of Shipper's measurements (a) constituted a 'knowing' acceptance of Shipper's allegedly false measurements, and (b) resulted in an 'undue and unreasonable preference and advantage being given to the Shipper.' The defendant Shipper, having pleaded nolo contendere on June 5, 1964 to Counts 13, 16 and 20 of the Information, does not appear as a party to the instant motion.

 The Federal Maritime Commission was created by Reorganization Plan No. 7 of 1961, pursuant to the provisions of the Reorganization Act of 1949, 63 Stat. 203, as amended, 46 U.S.C. § 1111, note, and to that Commission were transferred functions previously vested in the Federal Maritime Board under Sections 14-20, inclusive, of the Shipping Act, 1916, as amended (46 U.S.C. §§ 812-819 and 821-832), including such functions with respect to the regulation and control of rates, services, practices, and agreements of common carriers by water and of other persons.

 Sections 821 through 829 of Title 46 empower the Commission to investigate, on the complaint of any person or on its own motion, any violation of the Shipping Act, 1916, including § 815, and to make, after a hearing, an order to remedy any violation found. There is also given the power to make an order directing the payment of a reparation to the complainant injured by a violation. The Commission is also empowered, inter alia: (1) to order the discontinuance of any discriminatory rates and charges or unreasonable regulations or practices by common carriers in foreign and in interstate commerce, and to prescribe what it determines to be just and reasonable rates or regulations, 46 U.S.C. §§ 816-817; (2) to disapprove or modify any agreement between carriers by water, or persons carrying on business connected with carriers, which it finds discriminatory, 46 U.S.C. § 814; and (3) to determine whether there has been a violation of 46 U.S.C. § 812, which prohibits rebates and discrimination by carriers in respect of transportation between this country and foreign ports, and to certify the fact of such violation to the Commissioner of Customs who will then refuse the right of entry to such carrier's ships, 46 U.S.C. § 813.

 There is, however, no provision in the Act which gives the Commission the power to determine the guilt or innocence of a person charged with a violation of any of the criminal provisions of the Act, including 46 U.S.C. § 815, nor the power to impose a penalty for any such violations. With respect to an alleged violation of 46 U.S.C. § 815, the Commission does have the power, as described above, to refuse reparations sought by a violator of that section, American Union Transport v. United States, 1958, 103 U.S.App.D.C. 229, 257 F.2d 607, cert. den. 1958, 358 U.S. 828, 79 S. Ct. 46, 3 L. Ed. 2d 67, and to order that such violations cease in the future. *fn1"

 While it is true that the doctrine of primary jurisdiction, which compels a court to dismiss or defer an action because exclusive jurisdiction over all or part of the subject matter has been given to an administrative agency, is applicable to criminal prosecutions as well as to civil actions, united States v. Pacific & Arctic Co., 1913, 228 U.S. 87, 106-108, 33 S. Ct. 443, 57 L. Ed. 742; United States v. Alaska Steamship Co., D.C.Wash.1952, 110 F.Supp. 104, 111; In re Grand Jury Investigation of the Shipping Industry, D.C.D.C., 1960, 186 F.Supp. 298, 309, the determination of whether or not exclusive primary jurisdiction of a criminal prosecution rests with an administrative agency, including the question of the importance of the agency's experience, is based on the purposes of the statute which created the agency and the relation thereto of the facts and issues presented by the particular case, Jaffe, 'Primary Jurisdiction,' 77 Harvard Law Review, 1037, 1040-1041 (1964). See Pan American World Airways v. United States, 1963, 371 U.S. 296, 305, 83 S. Ct. 476, 9 L. Ed. 2d 325; United States v. R.C.A., 1959, 358 U.S. 334, 347, 79 S. Ct. 457, 3 L. Ed. 2d 354. In United States v. Borden Co., 1939, 308 U.S. 188, 205-206, 60 S. Ct. 182, 84 L. Ed. 181, the Court found that the Capper-Volstead Act, which gave the Secretary of Agriculture certain powers of control over the production and marketing of agricultural products, did not supersede the criminal provisions of the Sherman Act, and the Secretary therefore did not have exclusive primary jurisdiction over a prosecution alleging violation of the Sherman Act.

 In the language of the Shipping Act, 1916, there is nothing expressed or implied which suggests that the Commission has exclusive, primary jurisdiction over violations of 46 U.S.C. § 815. The Commission's regulatory powers under §§ 816-817 give it the power to determine the justness and reasonableness of the rates charged by or the regulations and practices of the carriers, and to prescribe what it deems to be reasonable and just rates and regulations. § 815, on the other hand, prohibits certain conduct which involves the evasion of the proper application of the rates which would otherwise be applicable. The Commission has no power to regulate such conduct because it is specifically prohibited by the statute. The Commission's regulatory power would in no way be affected by a prosecution seeking to punish past violations of the Act. Moreover, the Commission is not even given the express power to determine whether a violation of § 815 has occurred as it is by § 813 to determine whether there has been a violation of § 812.

 More significantly, there is nothing in the allegations of the present Information to suggest that this case involves a complex factual picture which should first be examined by the Commission because it has developed special expertness in this area. Here there are merely ten alleged instances of the carrier's knowing acceptance of the shipper's allegedly false measurements. ...


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