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ICC v. INTERNATIONAL SHIPPERS ASSN. OF NEW JERSEY

December 9, 1965

Interstate Commerce Commission, Plaintiff
v.
International Shippers Association of New Jersey, Inc., Vince DeWitt, Barth Smelting Corp., and International Granite & Marble Corp., Defendants


Coolahan, District Judge.


The opinion of the court was delivered by: COOLAHAN

This is an action by the Interstate Commerce Commission to obtain a permanent injunction against the defendants, International Shippers Association of New Jersey, Inc., (Association) and Vince DeWitt, the Executive Director of the Association (DeWitt). In addition permanent restraint is being sought against two members of the Association, Barth Smelting Corporation (Barth) and International Granite & Marble Corp. (Granite). The action was brought pursuant to 49 U.S.C.A. §§ 42 and 322(b). The defendants are all located within the confines of the State of New Jersey and the matter is properly before this Forum for decision.

 The plaintiff contends that the defendant Association should be enjoined from transporting property in interstate and foreign commerce as a for-hire carrier by motor vehicle since such operation is in violation of 49 U.S.C.A. §§ 303(c), 306(a)(1) and 309(a)(1). They further contend that the other defendants who are members of the Association have been acting in concert and participating with the Association and its officer in the violation of the aforesaid provisions.

 The defendants, Association, DeWitt and Granite, contend that a non-profit shippers association and its members is entirely exempt from economic regulation under any part of the Interstate Commerce Act, pursuant to exemption afforded by 49 U.S.C.A. § 1002 (c); and that the Association falls within the definition of a private carrier of property by motor vehicle as contained in 49 U.S.C.A. § 303(a)(17).

 The defendant Barth alleges it should not be enjoined since it became a member of the Association based upon representations that only certificated carriers would be utilized to transport its property but when it became aware that such procedure was not followed it withdrew from the Association. Barth also states that no danger exists that it would in the future violate the statute.

 The matter was tried before the Court without a jury and was taken under advisement to enable a thorough study of the pleadings, evidence, exhibits, stipulations and briefs submitted by the parties involved.

 The Association was formed in January of 1962, with fourteen members in the original group. Since March of 1962, twelve additional members have joined bringing the total to about twenty-five of which approximately fifteen have been utilizing the Association's transportation service. These members were charged a $25.00 membership fee although evidence was presented that two or three of the members paid no fee at all. Membership was not solicited as such by the Association but applications were forwarded to those shippers recommended by members to the Association's administration. DeWitt is the administrative head of the Association and makes the bulk of policy determinations and operational decisions upon his own authority. The formal meetings and other membership functions are irregularly run.

 Article V-a of the Association's By-laws provides the following:

 
"The purpose of this Corporation or Association shall be based on all rules and regulations of the Interstate Commerce Commission pertaining to same, enabling applicant's shipments to be assembled and/or consolidated with those of other Members of the Association and thereafter shipped in carload, truckload, or other quantity lots, properly and adequately insured, thereby securing to any Member and all Members of this Association the benefits of carload, truckload and other quantity rates, shipped via railroad or certificated carriers, common or otherwise, directly benefit (sic) to a transportation savings cost to the member of this Association only, and any certificated carrier shall be entitled to propose or publish rates benefiting said Association upon application of said Association."

 However, since its inception and throughout its history of between 500 and 600 shipments of member property in interstate commerce no certificated carrier was used to transport the property handled. Neither the Association nor its director currently holds a certificate of public convenience and necessity, permit or other appropriate authority issued by the Interstate Commerce Commission authorizing for-hire transportation by motor vehicle in interstate or foreign commerce. Instead the Association transported the goods in vehicles leased for the trip by the Association; employing drivers placed on the Association's payroll who worked directly for the Association during the trip. The Association in fact issued a certificate of rental to the driver certifying the described vehicle as being rented to the Association to carry merchandise of its members only and that said driver was a bona fide employee of the Association. The Association shipped to points in Pennsylvania, California, Illinois, Michigan and many other States. The shipments were composed of such varied commodities as bronze ingots, carpeting, chemicals and toilet preparations.

 The member shippers of the Association were charged 3 to 5% above the Association's costs including equipment, driver and transportation expenses (tolls, licenses and insurance). However, no charge was included for office overhead or administration expense. There is no set tariff rate but prices were generally 10 to 15% lower than rates charged by certificated motor carriers. On at least one occasion, a non-member was provided with transportation by the Association.

 Title to the goods shipped always remained vested in the shipper and at no time passed to the Association. Following delivery an invoice was presented to the shipper billing the freight charge.

 Defendant Barth was solicited for membership and joined the Association subsequent to its organization. However, Barth withdrew from the Association and is no longer functioning under such a shipping procedure.

 The basic issue presented for determination by this Court is whether the exclusion contained in 49 U.S.C.A. § 1002(c)(1) exempts such an association as described herein from economic regulation under the Interstate Commerce Act with respect to whether it may lawfully transport property by motor vehicle in interstate commerce for compensation without having obtained a certificate of public convenience and necessity, permit or ...


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