author: BENNETT, Judge. SKELTON, Judge

text:
    UNION PACIFIC RAILROAD COMPANY v. The UNITED STATES.
    No. 316-68.
    United States Court of Claims.
    Jan. 23, 1974.
    Martin Sterenbueh, Washington, D. C., atty. of record, for plaintiff; Cake & Sterenbueh, Washington, D. C., of counsel.
    Michael J. Rubin, Washington, D. C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant.
    Before COWEN, Chief Judge, and SKELTON and BENNETT, Judges.
   OPINION

BENNETT, Judge.

This transportation case comes before us from the Trial Division on a decision by Trial Judge Willi. We adopt his findings of fact, with modifications, but reach a different legal conclusion for reasons which hereafter appear, and conclude that plaintiff is entitled to judgment and that the counterclaim should be dismissed.

Plaintiff, Union Pacific Railroad Company, a Utah corporation, filed this suit on October 16, 1968, to recover unpaid demurrage charges of $5,385 which it had billed the Commodity Credit Corporation (CCC), an agency of the United States, on carlot shipments of wheat hauled by plaintiff from various Kansas points of origin to Denver, Colorado, during July and August 1966. On January 17, 1969, the United States, filed its answer denying liability on the claim asserted and stating a counterclaim of $7,880, plus interest. The counterclaim concerned demurrage charges assessed against CCC on wheat consigned to CCC at Denver and hauled there by plaintiff in July and August 1964.

For purposes of this decision, the court concludes that the facts respecting defendant’s counterclaim are substantially identical to the facts respecting plaintiff’s claim, except that the counterclaim shipments were in July and August 1964 and the demurrage charges, totaling $7,880, were paid by the CCC.

In the years in suit, unprocessed wheat was valued in the market place on the basis of federal grade and protein content. In a given transaction these value indices were determined by laboratory analysis of a sample drawn from the bulk quantity of wheat involved. Since laboratory facilities under authorized management and supervision were essential to these determinations, trade practice found rail carriers typically affording carlot shippers of unprocessed wheat in-transit inspection privileges so that official grade and protein analysis could be conducted at relatively few focal points of rail movement rather than at myriad points of origin and final destination. Denver served as such a point for the large volume of wheat grown in Kansas in 1964 and 1966.

Because of its route structure, plaintiff carried the bulk of wheat that came into Denver by rail in the mid-1960’s. Peak movement occurred each year during July and August in the wake of harvest. The temporary congestion of rail facilities inherent in this seasonal pattern of wheat traffic was increased in 1964 and 1966 because in July and August of those years CCC routed approximately 10 million bushels of wheat through Denver to Portland, Oregon, for export sale to Japan. Most of this grain originated along plaintiff’s lines.

Plaintiff had an inspection yard in the Denver terminal area with a capacity of nearly 200 cars during the years in suit. Under normal traffic conditions plaintiff’s cars carrying CCC wheat under a Denver billing were brought into the terminal area and placed on plaintiff’s inspection tracks. Plaintiff would notify the Denver Grain Exchange (DGE), the agent of the CCC in Denver, of the arrival of each individual car. The DGE would then send one of its inspectors to the yard to draw a grain sample for grade and protein analysis at DGE’s Denver laboratory. When the test results were available, the DGE would telephone them to the CCC office in Kansas City and that office would telephone disposition instructions to plaintiff at Denver. Thereafter, the car would proceed to its final destination. In due course, the CCC Kansas City office would confirm in writing its telephone advice to plaintiff.

In the months of July and August 1964 and 1966, plaintiff’s grain traffic into Denver was so great that its inspection yard was unable to accommodate all of the incoming CCC cars. In these circumstances, plaintiff placed many cars at hold points at distances ranging from 3 to 55 miles short of the Denver terminal area. In some instances these cars overstayed the “free time” allotted by tariff for inspection purposes, and the demurrage charges in suit here were assessed.

The arrangement whereby incoming grain cars were placed at hold points short of Denver when the Denver inspection tracks were filled had been agreed upon by plaintiff and the DGE management long prior to the time periods in suit. This practice had been allowed for more than 20 years prior to this suit. In agreeing to inspect cars at such outlying points, DGE officials expected that plaintiff would use this accommodation only when space was not available in the Denver terminal area. Though it appears that plaintiff did not always limit its use of this procedure to instances of yard congestion, neither the CCC nor the DGE ever chose to make a formal complaint to plaintiff or the ICC regarding such deviations.

Within 24 hours of arrival at the Denver terminal area or at a hold point short of the Denver terminal of a car on which the disputed demurrage was imposed, plaintiff mailed a written notice of arrival to “Commodity Credit Corporation, Denver, Colorado.” Plaintiff also prepared a bulletin notice respecting every car of CCC wheat consigned to Denver regardless of whether the car was placed in the terminal area or was stopped short at a hold point. These bulletin notices listed the number and location of all cars received in the Denver area since the previous bulletin notice. Though the written notices were all returned to plaintiff because CCC had no mailing address in Denver, the bulletin notices were received by the DGE inspectors daily, except Saturday and Sunday, before 7 a. m. As DGE was CCC’s authorized agent in Denver, notice to it was the same as notice to the CCC. An excerpt from a January 7, 1954 CCC letter indicated that CCC accepted bulletining as adequate notice of car arrivals at stations, such as Denver, where official inspection was performed :

This office has always accepted bulletining of cars of grain, seeds or soybeans billed to CCC for inspection and disposition as due notice of arrival at stations in the states of Missouri, Kansas, Nebraska, Colorado and Wyoming, where' bulletining and official inspection is provided. However, our attention has been directed to some instances where carrier agents cannot locate on file a written notice from this office of acceptance of bulletining as notice of arrival as prescribed in Rule 2 of Demurrage Tariff 4-A.
Therefore, in order to insure that the agents of the individual carriers at all stations concerned have a proper record on file, this letter shall constitute notification that this office accepts the bulletining of cars described above as due and adequate notice of arrival at stations where official inspection is performed.

Accordingly, this court concludes that the bulletin notice given by plaintiff and received by the DGE constituted good and adequate notice for purposes of this case.

When a car was stopped at a hold point outside Denver, the inspector and the DGE followed the same procedure as that employed in the case of CCC ears brought into the Denver terminal area for inspection. Except for the limited additional travel time to and from the various hold points, the CCC was not substantially prejudiced by the fact that cars consigned to Denver were stopped short of inspection at the terminal itself.

The single question confronting the court in this case concerns whether or not the demurrage charges assessed by plaintiff were proper. This inquiry concerns the construction, rather than the reasonableness, of a tariff or service order. Any question regarding reasonableness is properly the concern of an administrative tribunal. United States v. Western Pac. R. R., 352 U.S. 59, 63-65, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956); United States v. Southern Ry., 380 F.2d 49, 53-54 (4th Cir. 1967); United States v. Southern Ry., 364 F.2d 86, 91 (5th Cir. 1966); see also Union Pac. R. R. v. United States, 111 F.Supp. 266, 125 Ct.Cl. 390 (1953). To determine whether the demurrage charges were proper, the court must consider the language of Item 905, § D, of ICC Freight Tariff 4-G, issued September 18, 1964, by H. R. Hinsch, a railroad agent of Chicago, Illinois, and the terms of ICC Car Service Order 947, 28 Fed.Reg. 12127 (1963), and Second Revised Service Order 975, 31 Fed.Reg. 6058 (1966). Freight Tariff 4-G listed demurrage rules and charges established separately by each of the participating carriers, including plaintiff. The service orders were issued by the ICC and contained rules, regulations and procedures regarding freight car utilization. Both S. 0. 947 and 2d Rev.S.O. 975 were issued without notice or public procedure because of emergencies regarding freight car utilization at the time of their issuance. The preamble to S.O. 947 stated that—

* * * an acute shortage of freight cars exists in all sections of the country; * * * cars loaded and empty are unduly delayed in terminals and in placement at, or removal from industries; the present rules, regulations, and practices * * * are insufficient to promote the most efficient utilization of cars; * * *. [28 Fed.Reg. at 12127.]

The preamble to 2d Rev.S.O. 975 noted that—

* * * the unprecedented level of the economy is placing tremendous pressures on railroad transportation facilities, causing such acute shortages of freight cars in all sections of the country as to close industrial plants, impede the movements of agricultural products and other goods to market; * * *. [31 Fed.Reg. at 6058.]

Subparagraphs (a)(l)(iv) of each of the two service orders contained language applicable to plaintiff’s claim and defendant’s counterclaim. Subpara-graph (a)(l)(iv) of 2d Rev.S.O. 975 provided that — ■

(iv) Loaded cars held at destination for accessorial terminal services described in the applicable tariffs, such as holding for orders or inspection, shall be placed on unloading, hold or inspection tracks, and proper notice given within 24 hours, exclusive of Saturdays, Sundays, and holidays, after arrival at destination. On cars set off and held short of billed destination, or on ears held at destination and short of inspection tracks, a written notice shall be sent or given to consignee or other party entitled to receive such notice, within 24 hours of arrival, exclusive of Saturdays, Sundays, and holidays, at the hold point. Time and charges shall be computed from the first 7 a. m., following such notice and demurrage assessed in accordance with provisions of Service Order No. 979. [31 Fed.Reg. at 6059.]

Subparagraph (a)(l)(iv) of S.O. 947 provided that—

(iv) Loaded cars held at billed destination for accessorial terminal services described in the applicable tariffs, such as holding for orders or inspection, shall be placed on carrier’s or consignee’s unloading or inspection tracks, within 24 hours, exclusive of Saturdays, Sundays, and holidays, after arrival at billed destination. On cars set off and held short of billed destination, a written notice shall be sent or given to consignee within 24 hours following the first 7:00 a. m. after arrival at hold point. [28 Fed. Reg. at 12127.]

Section D of Item 905 of Freight Tariff 4-G, applicable in July and August 1966, provided in pertinent part:

On cars of grain * * * held in transit and placed for inspection or grading, including reconsignment or other disposition orders, the free time for disposition will expire at 6:00 p. m. of the day following notice. •>:• * *

While this section might by its terms also contemplate ears set off and held short of billed destination, a review of subparagraphs (a)(1)(iv) of S.O. 947 and 2d Rev.S.O. 975 reveals that both of these paragraphs make specific reference to “cars set off and held short * * Since this case concerns freight cars “set off and held short” it seems proper for this court to rely on the aforementioned service orders for purposes of deciding this controversy. Carrier tariffs are normally controlling except insofar as they are in conflict with the terms of ICC car service orders. Fort Worth & Denver Ry. v. Goodpasture, Inc., 442 F.2d 1294, 1298 (5th Cir. 1971), aff’g Dist.Ct. opin. (S. D.Tex.); Reading Co. v. Commodity Credit Corporation, 289 F.2d 744 (3rd Cir. 1961). In employing this analysis, the court does not infer that Item 905, § D, is in conflict with subparagraphs (a)(1)(iv) of the two service orders nor inconsistent with the result we reach in this case. It only determines that the two aforementioned orders contain language much more specific than that found in Item 905, § D, and, accordingly, lend more guidance to the court’s consideration of the issue before it without at the same time being in conflict therewith. It is clear from the language of subparagraphs (a)(1)(iv) that they apply to “[ljoaded cars held at [or short of] billed destination for accessorial terminal services * * * such as holding for orders or inspection.” This was precisely the situation in the instant case since plaintiff’s cars were held at or near Denver for inspection and disposition instructions. The subparagraphs required that written notice of arrival at destination be sent within 24 hours after car arrival regardless of whether the car arrived at its destination terminal or was “set off and held short of billed destination.”

Bulletin notice of car arrival was also to be posted by 9 a. m. each day. This notice was to include all car arrivals since the previous bulletin. See Freight Tariff 4-B, issued Sept. 18, 1964, Item 905, § D, p. 57. No distinction was made in either the written notice or bulletin notice provisions between cars held short of destination and ears brought into the terminal. Notice of arrival was sent or posted regardless of whether a freight car actually made it within the terminal area or whether it was set off and held short of destination.

Defendant argues that questions regarding notice are not dispositive of the issue upon which this case turns. Even accepting that notice was good, defendant would argue that “demurrage cannot be exacted by a carrier unless the shipper or consignee is clearly at fault.” Defendant also argues that the facts of the present case indicate that plaintiff was at fault and consequently no demur-rage charges can be levied.

Defendant is wrong in its assertions for four principal reasons. In the first place, the assessment of demurrage charges in no way depends upon a finding of shipper or consignee fault. No reference to fault is contained anywhere in subparagraphs (a)(1)(iv) of S.O. 947 and 2d Rev.S.O. 975. Subparagraphs (a)(1)(iv) apply to accessorial terminal services performed not for the benefit of the carrier, but for the benefit of the shipper or consignee. As such, a requirement of shipper or consignee fault as a condition precedent to demurrage charges would amount to a complete reinterpretation by this court of subparagraphs (a)(1)(iv). Such a judicial undertaking would be bejond the competence of this court. United States v. Western Pac. R. R., supra; Great North. Ry. v. Merchants Elevator Co., 259 U.S. 285, 42 S.Ct. 477, 66 L.Ed. 943 (1922). If such an interpretation were allowed, a shipper or consignee would be able to benefit from the accessorial services provided for in the subparagraphs while at the same time avoiding payment for such services.

Second, the decisions of the ICC do not support the proposition set forth by plaintiff regarding the matter of shipper or consignee fault. In Chrysler Corp. v. New York Cent. R. R., 234 I.C.C. 755 (1939), Chrysler was required to pay demurrage assessed against it by defendant when defendant was prevented from removing its cars from Chrysler property on account of a take-over strike at a number of Chrysler plants. The commission found that as between Chrysler and defendant “it was primarily complainant’s right and duty to open its gates, * * 234 I.C.C. at 757. The commission rejected Chrysler’s proposed interpretation of the applicable demurrage tariff and concluded that—

* * * [demurrage may properly be assessed where the detention occurs through no fault of the shipper, even though the cause of detention is beyond the shipper’s control. [234 I.C.C. at 758.]

Similarly, in Pennsylvania R. R. v. Moore-McCormack Lines, Inc., 370 F.2d 430 (2d Cir. 1966), aff’g 246 F.Supp. 143 (S.D.N.Y.1965), demurrage charges levied pursuant to an ICC tariff were determined to have been properly assessed. There, a strike of the consignee’s sea-going employees caused independent stevedores to refuse to cross picket lines to unload plaintiff-carrier’s lighters so that cargo would be delivered to defendant-consignee for export. In upholding plaintiff’s demurrage assessments, the court stated that the—

* * * general rule is that de-murrage is extended freight and, where there has been an excess of lay days over those stipulated, the consignee is liable to pay demurrage for those excess days regardless * * * except * * * (2) where the delay is the fault of the carrier * * *. [370 F.2d at 432.]

As in Chrysler, the court found that the strike was not the carrier’s fault and that defendant-consignee was not thereby relieved of its obligation to pay de-murrage. The court also noted that “absence of fault in the shipper or consignee [was] not sufficient to excuse it from liability for demurrage.” Id. In reaching this determination, the court noted in a footnote that “[a] few courts have held to the contrary, e. g., St. Louis, Southwestern R. R. v. Mays, 177 F.Supp. 182 (E.D.Ark.1959); Southern R. R. v. Alcoa, 119 F.Supp. 389 (E.D. Tenn.1951), affirmed 210 F.2d 139 (6 Cir. 1954). * * [370 F.2d at 432.]

Defendant has cited both Mays and Alcoa for the proposition that fault is necessary for demurrage assessment. Both cases, however, express the minority rule and can be distinguished. Both cases involved demurrage charges assessed under a carrier tariff on cars held for loading and unloading rather than demurrage charges resulting from accessorial terminal services beneficial to a shipper or consignee under an explicit provision of an ICC car service order. In Mays, plaintiff filed a motion for summary judgment for the assessment of demurrage charges. Defendant answered, alleging that plaintiff’s employees contributed to the delay, and hence caused the assessment of demur-rage charges. This allegation raised factual issues which, if true, would have led to a denial of plaintiff’s claim. The district court accordingly denied the motion for summary judgment so that the factual matters raised by defendant could be resolved. Alcoa was a case which turned on the interpretation given, over an extended period of time, by a carrier and a shipper-consignee to a carrier-drawn tariff provision.

At oral argument defendant called the court’s attention to a decision of the ICC, Holding of Loaded Grain Cars— Texas Gulf Ports, Export, 321 I.C.C. 328 (1963), said to be consistent with Alcoa and Mays. There, the ICC opined that “to allow the collection of demurrage charges by * * * respondents as a result of their own disability at these ports would be to permit them to profit through their own fault.” 321 I.C.C. at 330. Accordingly, the ICC considered and approved a tariff for the special circumstances surrounding the Galveston, Texas situation. The tariff provided that the notice sent when a shipment reached the Galveston yards would not issue until the freight car was actually brought into the Galveston yards. Since time did not run on a shipment until notice was sent, the new Galveston rule prevented the expiration of free time and the accrual of demurrage charges until a freight car was actually brought into the yards. Apparently, the slightest rumors of overcrowding at Galveston had been enough to send grain shippers scurrying for other lines over which to ship their grain. Since it was impractical for the railroads to enlarge the Galveston yards in order to accommodate peak periods, the next best practical solution was to change the notice time so that shippers would not be inclined to redirect their shipments. In its analysis the ICC noted that the “periods of congestion * * * [were] few at Galveston.” For this reason, the ICC found that “there [was] nothing to indicate that the proposed rules would actually tend to increase the use of rail ears * * 321 I.C.C. at 330.

The TGP administrative decision has no bearing here for several reasons: (a) No determination has been made by this court that plaintiff was responsible for delays caused by its lack of terminal facilities. On the contrary, this court has found that the overcrowded conditions at Denver were the result of a peak in harvest and the routing of unusually large shipments of grain through Denver to Japan, (b) The peculiar circumstances at Galveston are not found in this case. Regular inspection procedures at Denver contemplated the taking of grain samples from cars brought into the Denver terminal as well as from cars set off and held short of the terminal. Notice issued as soon as a car was brought to the Denver area and placed at the terminal or at a hold point away from the terminal. (c) The TGP ruling concerned the reasonableness of a carrier-proposed tariff. As has already been noted, such a matter must first be considered by an administrative tribunal charged with such duty by Congress. United States v. Western Pac. R.R., supra, (d) The TGP carrier tariff proposal was provoked by a tariff section similar to 2d Rev.S.O. 975(a)(1)(iii). In TGP the two railroads sought to delay notice so that bottlenecks occurring at their terminal facilities would not give rise to immediate assessment of demurrage charges. As is noted below, subpara-graphs (a)(1) (iii) were not applicable to the facts of this ease.

The Chrysler — Moore-McCormack rationale that absence of shipper or consignee fault was not sufficient to excuse it from liability for demurrage was followed by the Fifth Circuit in Port Terminal R.R. Ass’n v. Connell Rice & Sugar Co., 387 F.2d 355 (5th Cir. 1967), and noted favorably in Houston Belt & Terminal R.R. v. Connell Rice & Sugar Co., 411 F.2d 1220 (5th Cir. 1969), cert, denied, 397 U.S. 908, 90 S.Ct. 905, 25 L.Ed.2d 89 (1970).

Third, there have been other instances in transportation law where fault has had little relation to assessment of tariff charges. Even though a carrier might erroneously quote a price to be charged for shipment of goods, the shipper or consignee is nevertheless liable for the actual published tariff rate and not the price erroneously quoted to it. This is true despite the fault of the carrier. 49 U.S.C. § 6(7); Atchison, Topeka & Santa Fe Ry. v. Bouziden, 307 F.2d 230, 234 (10th Cir. 1962).

Fourth, a reference to shipper or consignee fault is found in subparagraphs (a) (1) (iii), but these subparagraphs are inapplicable to the present case. Sub-paragraphs (iii) reference car delivery to “an industrial interchange track or to other than a public delivery track * * No such deliveries, however, were contemplated or made by plaintiff in this case. Reference to subpara-graphs (iii) in this case can only have arisen from a mistaken reading of the applicable service orders. Subpara-graphs (iii) state that if car delivery cannot be made to a particular type of track on account of the fault of a shipper or consignee, the car will be held back, notice will be sent, and demurrage charges will begin to accrue. Though subparagraphs (iii) are fully in keeping with the purpose of promoting efficient car utilization in that they encourage shippers and consignees to remove obstacles to ear delivery or face the consequence of demurrage charges, they are nevertheless, by their terms inapplicable to the circumstances of this case. Sub-paragraphs (iii) only apply to a particular set of circumstances; that is, instances where terminal bottlenecks, attributable to shipper or consignee fault, make it impossible for cars in transit to be brought to their final destination point. Demurrage charges for ears which arrive at a terminal area for loading or unloading, but then are held beyond their allotted “free time” are assessed under subparagraphs (a)(2) of the applicable service orders. See S.O. 947(a)(2), 28 Fed.Reg. at 12127; 2d Rev.S.O. 975(a)(2), 31 Fed.Reg. at 6059.

For the reasons stated, this court concludes that judgment in the amount of $5,385 should be entered for plaintiff and that defendant’s counterclaim should be dismissed.

SKELTON, Judge

(dissenting):

I respectfully dissent. The railroad cars in this case were not delivered to the defendant consignee in Denver, Colorado, due to the fault of the plaintiff railroad in failing to have sufficient trackage in Denver to accommodate the cars. A number of cases have held that the lack of trackage or other facilities to handle cars is the fault of the railroad. This identical question was decided by the Interstate Commerce Commission (ICC) in the case of Holding of Loaded Grain Cars — Texas Gulf Ports, Export, 321 I.C.C. 328 (1963). In that case the railroad lacked sufficient facilities at Galveston, Texas, to accommodate railroad cars consigned to such city. The question involved was whether or not the railroad could collect demurrage on cars held short of destination because of the lack of facilities of the railroad at Galveston. The ICC held that such de-murrage charges could not be made because that would allow the railroad to profit through its own fault. The ICC opinion states:

* * * [T]o allow the collection of demurrage charges by * * * respondents as a result of their own disability at these ports would be to permit them to profit through their own fault. * * * [Id. at 330.]

See also, Staten Island Rapid Transit Ry. v. Marshall, 136 App.Div. 571, 121 N.Y.S. 82 (N.Y.Supreme Ct.1910) where the court held that demurrage could not be collected on cars held short of destination because of the fault of the railroad in having its tracks congested at the point of destination.

These cases show clearly that in the instant case the lack of trackage at Denver was the fault of the railroad and consequently, its failure to deliver the cars to Denver was also its fault. Certainly, no one could argue that the lack of trackage in Denver was the fault of the consignee.

The fault of the railroad in failing to deliver the cars at destination having been established, the controlling question in this case is whether or not the railroad can charge and collect demurrage on cars held by it at points short of destination sometimes as far away as 55 miles, due solely to the fault of the railroad. The correct rule under these circumstances is set forth in the case of St. Louis, Southwestern R. R. v. Mays, 177 F.Supp. 182 (E.D.Ark.1959), where the court said:

* * * In order for a liability for demurrage to exist, however, the failure to load or unload the cars within the free time must be the fault of the shipper or consignee; and, conversely demurrage cannot be charged where such failure was due to the fault of the carrier. 9 Am.Jur., supra, [Carriers] § 606; Southern R. Co. v. White, supra [6 Cir., 284 F. 560, 26 A.L.R. 1429]; Southern Ry. Co. v. Aluminum Co. of America, D.C.Tenn., 119 F.Supp. 389, affirmed 6 Cir., 210 F.2d 139. [Id. at 184.]

This rule is also set forth in the ease of Southern Ry. v. Aluminum Co. of America, 119 F.Supp. 389 (E.D.Tenn. 1951), aff’d 210 F.2d 139 (6th Cir. 1954), where the court said:

No demurrage can be exacted by a carrier unless the delay in loading is clearly attributable to the fault of the shipper or consignee. United States Fidelity & Guaranty Co. v. Central of Georgia R. Co., supra [226 Ala. 606, 147 So. 891, 87 A.L.R. 1028.] [Id. 119 F.Supp. at 396.]

This rule is also stated in 13 C.J.S. Carriers § 345 (1939) as follows:

§ 345. Excuses for Nonpayment Payment of demurrage is usually excused or avoided if the detention or delay in unloading for which the charge is sought to be made was due to the fault of the carrier rather than a default or breach of duty of the consignee or shipper; * * *. [Id. at 810.]

See also, 13 Am.Jur.2d Carriers §§ 484, 485 (1964); Louisville & Nashville R.R. v. Camody, 203 Ala. 522, 84 So. 824 (1919); Granger v. Davis, 2 F.2d 695 (6th Cir. 1924); Staten Island Rapid Transit R.R. v. Marshall, supra; Pennsylvania R.R. v. Moore-McCormack Lines, Inc., 370 F.2d 430 (2d Cir. 1966), aff’g 246 F.Supp. 143 (S.D.N.Y.1965); and Port Terminal R.R. v. Connell Rice & Sugar Co., 387 F.2d 355 (5th Cir. 1967).

The majority opinion cites the case of Chrysler Corp. v. New York Cent. R.R., 234 I.C.C. 755 (1939) in opposition to the foregoing rule. Actually, the case is inapposite because there the railroad was unable to deliver its cars to the consignee, the Chrysler Corporation, because of a strike of Chrysler’s employees. There was no fault whatever on the part of the railroad and consequently it was entitled to charge demur-rage because of the strike of Chrysler’s employees. That decision has no application to the instant case.

The majority also cites Pennsylvania R.R. v. Moore-McCormack Lines, Inc., supra, as being contrary to the general rule stated above. That case also involved a strike of the consignee’s employees which prevented the railroad from delivering the ears. There was no fault on the part of the railroad and it was entitled to collect demurrage. The decision of the court is actually authority for the defendant in the instant case, because the court stated in its opinion as follows:

The general rule is that demurrage is extended freight and, where there has been an excess of lay days over those stipulated, the consignee is liable to pay demurrage for those excess days regardless of what brought about the delay except * * * (2) where the delay is the fault of the carrier or those for whom he is responsible; * * *. [Id., 370 F.2d at 432.] [Emphasis supplied.]

The majority also cites the case of Port Terminal R.R. v. Connell Rice & Sugar Co., supra, as being against the general rule. Actually it supports the general rule and is definitely authority in favor of the defendant in the instant case. In that case, the railroad was unable to deliver 21 cars because of a strike of its own employees. The court held that this was the fault of the railroad and by reason thereof, it was not entitled to charge demurrage on the cars held short of destination. In this regard, the court stated:

Turning now to the 21 cars that arrived in plaintiff’s yards in December, I am of the opinion that the defendant is not liable for demurrage on these cars. While the consignee normally is liable for demurrage regardless of what brought about the delay, there are some exceptions. One of the exceptions is applicable here; namely, where the delay is the fault of the carrier or those for whom the carrier is responsible. See, Pennsylvania R. R. Co. v. Moore-McCormack Lines, Inc., supra. [370 F.2d 430 (2d Cir. 1966), aff’g 246 F.Supp. 143 (S.D.N.Y.1965)]. [Emphasis supplied.] [Id., 387 F.2d at 357.]

As can be seen from the decision of the court, that case is definite authority for the defendant in the instant case. The court in the case last cited went on to discuss the strike cases so heavily relied on by the majority in the instant case which seems to me to show that this reliance by the majority on the strike cases is misplaced. In this regard, the court said:

The parties have not cited nor has the Court found any eases involving facts similar to those involved here. All of the “strike delay” cases are concerned with only one strike by employees of the consignee or a third party. See, e. g., Reading Co. v. Dexter-Carpenter Coal Co., 96 F.Supp. 650 (S.D.N.Y.1951); Chicago, B. & Q. R. Co. v. Blunk, 101 F.Supp. 219 (S.D. Iowa 1951). These cases are easily distinguishable from the instant case in that the primary cause of the delay here was the action taken by plaintiff’s employees. Had plaintiff’s employees not struck, it is obvious that the cars could have been unloaded long before the longshoremen began their strike. The defendant should not be penalized for the delay caused by the longshoremen’s strike when there would have been no delay at all had it not been for the strike of plaintiff’s employees. [Id., 387 F.2d at 357.]

The case of Houston Belt & Terminal R.R. v. Connell Rice & Sugar Co., 411 F.2d 1220 (5th Cir. 1969), cert, denied, 397 U.S. 908, 90 S.Ct. 905, 25 L.Ed.2d 89 (1970), cited by the majority is not in point in the instant case because it involves the constructive placement of cars short of destination due to the fault of the consignee. The railroad was not at fault. Consequently, demurrage was allowed. Those facts do not exist here. There is no fault on the part of the consignee; there was no constructive placement by the railroad; and all of the fault lies with the railroad.

Turning now to a consideration of the tariffs in the instant case, it should be pointed out that all of the provisions of a tariff must be considered in determining the meaning of each of its provisions. See Southern Pacific Transportation Co. v. United States, 454 F.2d 740, 197 Ct.Cl. 143 (1972), where we held:

* * * A corollary rule of tariff and document interpretation, equally axiomatic, is that all provisions of a tariff or document are to be considered in determining the meaning to be ascribed to one provision thereof, and that meaning should be given which will give reasonable meaning to all provisions and not render a part thereof mere surplusage or create conflicts. Container Transp. Int’l v. United States, 437 F.2d 1365, [194 Ct.Cl. 320] (1971); Southern Ry. v. United States, 156 F.Supp. 740, 742, [140 Ct.Cl. 413, 416] (1957) ; United States v. Missouri-Kan.-Tex. R.R., 194 F.2d 777, 778 (5th Cir. 1952). [Id., 454 F.2d at 745, 197 Ct.Cl. at 151.]

Trial Judge George Willi correctly applied this rule in interpreting the tariff in the instant case. In this regard, it should be noted that the ICC Second Revised Service Order No. 975, as amended, provides in paragraph (l)(i) that loaded ears will be subject to demurrage after placement following arrival at destination.

Paragraph (1) (ii) provides that actual placement means placing of a car on industrial interchange tracks or other than public delivery tracks serving the consignee or on public delivery tracks.

Paragraph (1) (iii) provides that where the railroad is unable to deliver a car because of the fault of the consignor or consignee, it can make a constructive placement at a hold place short of destination.

The trial judge correctly interpreted the foregoing paragraphs of the service order as meaning that cars are subject to demurrage when actual placement is made at destination or where a constructive placement is made at a hold point short of destination due .to the fault of the consignor or consignee.

Paragraph (1) (iv) of the service order mentions cars set off and held short of destination by the railroad, but says nothing about the right of the railroad to collect demurrage when it holds cars short of destination due to its own fault. It is axiomatic and well-established that a railroad can only collect charges that are provided for and authorized in the tariff which’it has filed with the ICC. The trial judge correctly decided that since the tariffs here do not provide that a railroad can charge demurrage on cars held short of destination due to its own fault, the railroad is not entitled to collect such charges. Of course, that is exactly the situation in the instant case.

It is well settled that a tariff must be given a reasonable interpretation, and if there is any ambiguity, it must be resolved against the carrier and in favor of the shipper or consignee. See C & H Transportation Co. v. United States, 436 F.2d 480, 193 Ct.Cl. 872 (1971) and Hughes Transportation, Inc. v. United States, 169 Ct.Cl. 63 (1965).

According to these authorities, if there is any vagueness or ambiguity in the tariff, it must be resolved in favor of the defendant. We held in the Hughes Transportation Inc. case, supra:

We must give the tariff a fair reading, and cannot impart any unreasonable ambiguities. * * * [Id. at 68.]

In my opinion, it is clearly unreasonable to interpret the tariff in the instant case in such a way as to authorize the railroad to hold cars as far away as 55 miles from destination due to its own fault and recover demurrage when it does so. By way of illustration, this is equivalent to saying that if a car had New York City as its destination, the railroad could hold it in the vicinity of Philadephia and collect demurrage even though the holding of such car is due to its own fault. Such a procedure is contrary to our established rules governing the charging and collecting of demurrage by railroads, and is a strained and unreasonable interpretation of the tariffs in the instant case.

The reliance by the majority on Section D of Item 905 of Freight Tariff 4-G, applicable in July and August 1966, providing as follows, is misplaced:

On cars of grain * * * held in transit and placed for inspection or grading, including reeonsignment or other disposition orders, the free time for disposition will expire at 6:00 p. m. of the day following notice. [Emphasis supplied.]

This provision clearly means and applies to cars held for these purposes on orders of the consignor or consignee. There were no such orders in this case. If this tariff is interpreted to mean that the railroad can arbitrarily hold a car at a point as far from destination as 55 miles because it lacks trackage facilities at destination and thereafter charge de-murrage, what is to prevent it from holding the car 75 or 100 miles short of destination or even further? This cannot be the law. Also, I emphasize that there is nothing in this part of the tariff, or any other part, that authorizes the railroad to collect demurrage when it holds a car short of the destination due to its own fault.

Finally, it is significant that the majority has not cited a single case, and I have not found one, holding that a railroad can collect demurrage on a car it held short of destination due solely to its own fault. On the other hand, the cases uniformly hold, as shown above, that demurrage cannot be collected under these circumstances.

Accordingly, I would enter judgment in favor of the defendant and would dismiss the plaintiff’s suit. I would also allow defendant to recover on its counterclaim.

      . 7 U.S.C. § 76 (1964), ch. 313, part B, § 4, 39 Stat. 483 (1916). This section was amended in 1968. By this amendment Congress adhered to the recommendation of the Department of Agriculture and made the inspection requirement permissive instead of mandatory. Pub.L. 90-487, 7 U.S.C. § 76 (1970), 82 Stat. 762 (1968).


source: Caselaw Access Project

author: RICH, Presiding Judge.

license: Public Domain

text:
    STANADYNE, INC., Appellant, v. Albert LINS, Appellee.
    Patent Appeal No. 9145.
    United States Court of Customs and Patent Appeals.
    Feb. 14, 1974.
    Daniel C. McEachran, Parker, Plyer & McEachran, Chicago, Ill., attorneys of record, for appellant.
    Walter C. Farley, Roylance, Abrams, Kruger, Berdo & Kaul, Washington, D. C., attorneys of record, for appellee.
    Before RICH, Presiding Judge, BALDWIN, LANE and MILLER, Judges, and KASHIWA, Judge, United States Court of Claims, sitting by designation.
   RICH, Presiding Judge.

This appeal is from the decision of the Patent Office Trademark Trial and Appeal Board dismissing four consolidated oppositions, opinion published in full at 175 U.S.P.Q. 365 (1972). Familiarity with the opinion below will be assumed. We reverse.

As the board’s opinion shows, appellant-opposer, while it sells its plumbing products to plumbing, heating, and cooling wholesalers, also advertises its products, under its double water-drop mark, in consumer magazines of national circulation. Appellant’s priority is not contested. Although third-party registrations introduced by appellee show that several others have registered trademarks including as a feature a single conventionalized “water drop,” none of them shows two overlapping “wa-terdrops,” which is one of the features common to the marks of the parties here. Each of appellee’s marks features the color red for the left drop and blue for the right drop, which are partially overlapped, thus producing the color purple in the area of overlap. Appellant has made extensive use of the red and blue color scheme, though also using other color schemes. As the board found, the goods of the parties would move through the same trade channels to the same class of purchasers. These are the salient facts as fairly set forth in the opinion of the board before it reaches the question whether there would be a likelihood of confusion from assumed concurrent use of the marks of the parties on their respective goods. The board observed that the resolution of that question is “purely a subjective one.”

On the subjective resolution, we disagree with the board. Because it was a subjective determination by the board, we cannot with certainty point out wherein or why the board erred, other than in its ultimate conclusion. The following points seem to us to be reasonable possibilities on the basis of what the board said in its opinion.

While we do not know how much weight the board gave to the third-party registrations, it is possible it gave too much. Aside from the point above mentioned that no registration shows a double-drop mark, we reiterate, as we most recently did in AMF Inc. v. American Leisure Products, Inc., 474 F.2d 1403 (Cust. & Pat.App.1973), that, in the absence of evidence of the extent of actual continuing use of registered marks, mere registrations are entitled to little weight in establishing whether there is likely to be confusion because registrations by themselves do not indicate how the public mind may have been conditioned.

It appears to us that the board was somewhat inconsistent in holding that another of opposer’s marks, “MOEN,” is not to be considered as an integral part of opposer’s double-drop mark (which would change it into a mere part of a composite mark) and in thereafter holding that “any secondary meaning which has been created by opposer would be in the composite mark most frequently used by opposer rather than in the design mark alone.” Since, as was also noted by the board, opposer has a registration on the design mark alone, on the Principal Register, which entitles opposer to the benefits of § 7(b) of the Trademark Act (15 U.S.C. § 1057(b)) with respect to that mark, we see no question of “secondary meaning” in this case, especially since opposer’s registered double-drop mark is an entirely arbitrary, origin-indieating design mark. It was error in our view, to think in terms of “secondary” meaning for such a mark. A mark of this kind has no primary meaning calling for the establishment of secondary meaning to give it trademark status.

We do not regard the presence of the word “temperfix” on three of appellee’s four marks as tending to eliminate likelihood of confusion. It could well be taken, when associated with the red and blue water drops, as indicating another item in opposer’s line of plumbing fixtures.

Finally, we feel that this case is one particularly amenable to application of the well-established rule of trademark law that in case of doubt about likelihood of confusion, the doubt should be resolved against the newcomer.

Since we feel that the evidence is sufficient to support a finding of likelihood of confusion, the decision of the board in all four oppositions is reversed.

Reversed.


author: ESTES, Judge. HASTIE, Judge

text:
    LEAGUE OF VOLUNTARY HOSPITALS AND HOMES OF NEW YORK et al., and the Cost of Living Council, Plaintiffs-Appellees, v. LOCAL 1199, DRUG AND HOSPITAL UNION et al., Defendants-Appellants.
    No. 2-10.
    Temporary Emergency Court of Appeals.
    Dec. 20, 1973.

      Leonard B. Boudin, Rabinowitz, Bou-din & Standard, New York City (Sipser, Weinstock, Harper & Dorn, New York City, on the brief), for defendants-appellants.
    Allen W. Hausman, Atty., U. S. Dept, of Justice, Washington, D. C. (Irving Jaffe, Acting Asst. Atty. Gen., Paul J. Curran, U. S. Atty., Steven J. Glassman, Asst. U. S. Atty., William E. Nelson, Bruce G. Forrest, Attys., Dept, of Justice, on the brief), Howard L. Ganz, Proskauer, Rose, Goetz & Mendelsohn, New York City (William J. Abelow, New York City, on the brief), for plaintiffs-appellees.
    Before TAMM, Chief Judge, and HASTIE and ESTES, Judges.
   ESTES, Judge.

This is an appeal, pursuant to Section 211 of the Economic Stabilization Act of 1970, as amended, (the Act) from orders entered on November. 9, 1973, by the United States District Court for* the Southern District of New York granting plaintiffs a preliminary injunction enjoining the defendant Local 1199, Drug and Hospital Union (Union) and its officers from continuing a strike at the hospitals represented by the plaintiff League of Voluntary Hospitals and Homes of New York (League), and adjudging the Union and its officers in civil contempt for violations of a temporary restraining order.

The Union has been in contractual relations with the League since 1968. The Union has about 50,000 employees engaged in maintenance, technical, clerical, and professional work. The League is an unincorporated association of approximately 33 voluntary hospitals and homes which provide medical treatment and cai'e for some 20,000 resident patients.

On June 29, 1972 an arbitration panel issued an award pursuant to Section 716 of the New York State Labor Law providing for a two-year contract between the League and the Union. The contract provides for wage increases of $12 per week or 7%%, whichever is greater, on July 1, 1972 and July 1, 1973. The first year’s wage increase was approved after consideration by the Cost of Living Council (CLC), as required by Subpart I (Special Rules Applicable to Providers of Health Services) of 6 C.F.R. Part 150 (Phase IV Price Regulations). Approval of the second year’s wage increase was sought on July 23, 1973. The application was placed on the agenda of the Tripartite Health Industry Wage and Salary Committee (Committee) for its September 12, 1973 meeting. In order to gain additional information on the wage structure in the New York area, action was deferred to the October 12, 1973 meeting. At the request of the labor members of the Committee, action was further deferred to the October 25, 1973 meeting, which was later postponed until October 30, 1973. At this meeting the staff of the CLC’s Health Division presented the case, and reported that none of the employees covered by the arbitration award came within the statutory exemption for employees earning substandard wages [Section 203(d) of the Act], Action on the application was deferred at the request of the labor members until the scheduled November 30, 1973 meeting.

On November 1, 1973, the League filed a complaint in district court, pursuant in part to Section 210 of the Act, applying for injunctive relief to prevent the Union from organizing, inducing, or encouraging a work stoppage which was being threatened in an attempt to compel the League to pay the unapproved wage increase. Plaintiff’s claim was also based upon Sections 713 and 716 of the New York Labor Law which prohibits and provides for the enjoining of strikes at plaintiff hospitals, justifying the exercise of pendent jurisdiction by the trial court. United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). A temporary restraining order (t. r. o.) was issued, pending the determination of the motion, forbidding interference with the operation of League members and directing the Union to take all appropriate measures to prevent the threatened work stoppage and to inform its members of the order. On November 5, 1973, a hearing was held on the application for a preliminary injunction, at which the Union moved to dismiss the complaint and vacate the t. r. o. on grounds that Subpart I of 6 C.F.R. Part 150 invidiously discriminates against it and lacks any rational relationship to the expressed purpose of the Act and is thus unconstitutional. The League moved for an order adjudging the Union in contempt of court for striking in violation of the t. r. o. The court extended the t. r. o. and set both motions for hearing on November 8, 1973. At the November 8 hearing, the Cost of Living Council (CLC) was made a party plaintiff, and affidavits were introduced in support of the decision to retain mandatory controls on the health industry. The court then announced that it was issuing the preliminary injunction requested, adjudicating the Union in contempt for violating the t. r. o., and imposing fines which the Union was excused from paying if it immediately ended the strike. The CLC was ordered to meet no later than November 10, 1973 to consider and determine the application for a wage increase. Such orders were filed on November 9, 1973. On November 10, 1973, the CLC applied for and received a stay pending appeal granted by Chief Judge Tamm of this Court. On November 11, 1973, CLC met and approved a wage increase substantially less than that provided by the arbitration award. On November 12, 1973, the strike was ended after a Union membership vote. Notice of appeal was filed with this Court by CLC on November 10, 1973 from that part of the district court’s order which directed it to determine the wage increase application, but that appeal has been dismissed by stipulation of the parties and the issue is not before us. On November 16, 1973, the Union and its officers filed their notice of appeal with this Court. As provided by this Court’s order granting CLC’s motion for a stay of the district court’s orders, the parties were required to adhere to an expedited briefing schedule and oral argument was set for December 14, 1973. Defendants filed a motion and affidavits opposing this procedure, and plaintiffs filed affidavits supporting it. On November 28, 1973, this Court entered an order denying defendants’ motion.

The defendants raise numerous issues on this appeal. Regarding their challenge of the district court’s grant of preliminary injunctive relief to plaintiffs, district courts must apply the following standards:

The movant must show a substantial likelihood of success on the merits, and that irreparable harm would flow from the denial of an injunction. In addition, the trial judge must consider the inconvenience that an injunction would cause the opposing party, and must weigh the public interest as well.

McGuire Shaft & Tunnel Corp. v. Local Union 1791, 475 F.2d 1209, 1215-1216 (T.E.C.A.), cert, denied, 412 U.S. 958, 93 S.Ct. 3008, 37 L.Ed.2d 1009 (1973). In accord, Pacific Coast Meat Jobbers Ass’n, Inc. v. Cost of Living Council, 481 F.2d 1388 (T.E.C.A.1973). Appellate review of the district court’s determination is limited, because the issuance of a preliminary injunction is a matter committed to the sound judicial discretion of the trial court, Public Service Comm’n v. Wisconsin Telephone Co., 289 U.S. 67, 53 S.Ct. 514, 77 L.Ed. 1036 (1933); and can be overturned by an appellate court only where it has been a clear abuse of discretion. A Quaker Action Group v. Hickel, 137 U.S.App.D.C. 176, 421 F.2d 1111 (1969); McGuire, supra, 475 F.2d at 1216.

The first issue raised by defendants, a preliminary one, is the contention that they were denied due process because of this Court’s order reducing their briefing time, which they allege was in violation of the Court’s own rules. We find this contention to be without merit. Section 211(b) (1) of the Act provides that this Court “shall . expedite the determination of cases over which it has jurisdiction . . . Rule 31(a) of the Federal Rules of Appellate Procedure, made applicable by this Courts General Rule 1 and authorized by Section 211(b)(1) of the Act, specifically empowers this Court, if it is “prepared to consider cases on the merits promptly after briefs are filed, and its practice is to do so,” to shorten the time for the service and filing of briefs by, inter alia, “order for specific eases.”

The second issue raised by defendants is that the Norris-LaGuardia Act, 29 U.S.C. § 107, prohibits the issuance of injunctions in labor disputes, and thus it should have been applied by the court below by refusing to grant plaintiffs the injunctive relief ’ they sought. This Court has rejected this contention in a case involving a fact situation quite similar to this one. McGuire Shaft & Tunnel Corp. v. Local Union No. 1791, 475 F.2d 1209 (T.E.C.A.), cert, denied, 412 U.S. 958, 93 S.Ct. 3008, 37 L.Ed.2d 1009 (1973).

The third issue raised by defendants is the validity of the CLC’s regulations which impose mandatory controls on the wages of workers in the health industry. They contend that the regulations were not issued in accordance with the congressional mandate, and that the maintenance of mandatory controls on the health industry while lifting them from most of the economy is an arbitrary and capricious classification lacking a rational justification, in violation of the Fifth Amendment. In regard to the contention that the regulations are invalid because not issued in accordance with the requirements of the Act, defendants point principally to Section 202(b) of the May 1971 amendments to the Act (P.L. 92-15) and present Section 203. Former Section 202(b) (of the May 1971 amendments) provided:

(b) The authority conferred on the President by this section shall not be exercised with respect to a particular industry or segment of the economy unless the President determines, after taking into account the seasonal nature of employment, the rate of employment or underemployment, and other mitigating factors, that prices or wages in that industry or segment of the economy have increased at a rate which is grossly disproportionate to the rate at which prices or wages have increased in the economy generally.

However, Section 202(b) is no longer in the Act; it was replaced by the December 1971 amendments (P.L. 92-210). Under Section 203(a), the President “is authorized to issue such orders and regulations as he deems appropriate, accompanied by a statement of reasons for such orders and regulations, . . . ” to stabilize prices, etc. Defendants argue that no formal findings were made or reasons stated by the President or CLC in support of the retention of controls on the health industry. They point out that the Phase III Executive Order (No. 11695) and the Phase III and IV regulations do not contain formal findings or reasons. The CLC Phase IV regulations now in effect provide that the health industry remains subject to the mandatory controls in effect on January 10, 1973, that is, the Phase II controls. A White House background paper on Phase II announced the establishment of a Committee on the Health Services Industry, emphasizing that “costs of medical care have been a dramatically rising part of the family budget,” and that the application of controls to health care costs presented “special difficulties . . . .” Phase III regulations, 6 C.F.R. §§ 130 et seq., were issued on January 11, 1973, and lifted mandatory controls except those over the food, health, and construction industries. These regulations, together with a Presidential message to Congress and a White House fact sheet on Phase III, were published at 38 Fed.Reg. 1479. In his message to Congress, the President noted that the requirement for prior approval of changes in prices and wages was being limited to “special problem areas.” According to the President, the continuation of controls in these areas required “special efforts” to combat inflation. We hold that the President has adequately indicated the reasons, as prescribed by Section 203, for retention of controls on the health industry, and that he has exercised his authority after making the appropriate determination as would have been required by former Section 202(b). The affidavit of Dr. John T. Dunlop, Executive Director of the CLC, considered by the district court, contains detailed reasons why such a determination was made. Therefore, the regulations were not issued in violation of the statutory mandate. Similar selective controls have been upheld by this Court as not arbitrary or capricious or in excess of statutory authority when the evidence showed that the controls were an attempt to reduce inflation in an area of the economy that had been particularly inflationary. Pacific Coast Meat Jobbers Association, Inc. v. Cost of Living Council, 481 F.2d 1388 (T.E.C.A.1973).

In regard to defendants’ argument that the regulations are an unconstitutional discrimination against workers in the health industry, we must determine whether there is a rational basis for the discrimination. Dandridge v. Williams, 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970), quoted in Richardson v. Belcher, 404 U.S. 78, 92 S.Ct. 254, 30 L.Ed.2d 231 (1971). While there was conflicting evidence in the court below, that court decided that the controls were a reasonable attempt to reduce inflation, and not unconstitutional. Without detailing the evidence, it is sufficient to say that the decision of the district court is supported by substantial evidence in the record. This Court has held that selective controls similar to those in this ease are not unconstitutional if a rational basis is shown. Western States Meat Packers Association v. Dunlop, 482 F.2d 1401 (T.E.C.A. 1973); Local Union No. 11, I. B. E. W. v. Boldt, 481 F.2d 1392 (T.E.C.A.1973).

The defendants also contend that the district court erred in not certifying to this Court the constitutional questions they raised. Section 211(c) requires, and this Court’s Rules 32 and 33 provide, such a procedure where the district court determines that “substantial” constitutional issues are being raised. In the proceedings below, the district court, “based upon a review of the case law, legislative history, and relevant background material, [was] unable to conclude that the regulation is clearly unconstitutional or presents a substantial constitutional issue.” The district court therefore properly declined to certify the constitutional issues.

Finally, defendants argue on various grounds that the contempt fines imposed by the court below are invalid. None of these grounds was raised in the court below. The district court found that the defendants, with full knowledge of the t. r. o., organized, encouraged, and began a strike on November 5, 1973, and continúed the strike until November 12, 1973. There were also undisputed findings that acts of violence were committed by union members, that hospital personnel were accosted and threatened, that picket lines around League hospitals were preventing the delivery of needed medical supplies, food, and fuel, and that the City of New York had declared a health emergency. The court imposed a $500,000 fine on Local 1199, a $10,000 fine on defendant Davis, the president of the local, and fines of $7,500 each on the other officers of the local. The district court’s order imposing the fines explicitly stated that they were designed solely “to secure compliance” with the court’s orders. All of the fines were to be suspended if the strike were ended immediately. Additional lesser fines were to be imposed for each day the strike continued. Defendants contend that these coercive fines are illegal because of the court’s failure to follow the mandate of the Supreme Court to “consider the amount of defendant’s financial resources and consequent seriousness of the burden to that particular defendant.” United States v. United Mine Workers of America, 330 U.S. 258, 304, 67 S.Ct. 677, 701, 91 L.Ed. 884 (1947). While there was no hearing expressly directed to this particular factor, there was in the record substantial information concerning the organization and finances of the Union from which the court could have concluded that the fines were not excessive. Defendants did not contest the amounts of the fines or seek to introduce testimony as to their burden. Instead, they deliberately chose to continue the strike in violation of both the New York Labor Law and the t. r. o. In view of the grave emergency that was facing the district court, the contumacy of the defendants, the fact that the court had evidence before it of the defendants’ ability to pay, and the fact that the fines would have been suspended if defendants had complied with the t. r. o., we hold that the fines imposed were not excessive.

On November 7, 1973, the district court entered an order extending the t. r. o. “pending the determination of plaintiffs’ motion for a preliminary injunction or until the expiration of five days after the entry of this order, whichever is sooner. . . . ” Thus, under Rule 65 of the Federal Rules of Civil Procedure, there is no question that the t. r. o. was in full force and effect until the preliminary injunction issued. During the proceedings on November 8, 1973, the court, in stating his decision, first indicated his determination that a preliminary injunction would issue, and then dealt with the matter of contempt. Defendants make the argument that .the court was without power to fine them for contempt of the t. r. o., since it was no longer in effect, they assert, because it had been continued only until the determination of the motion for a preliminary injunction. We reject this contention. The defendants were under one uninterrupted injunctive restraint. The decision to impose contempt penalties was made during the same proceedings in which the decision was made to grant the application for preliminary injunction. Separate orders imposing the fines and issuing the preliminary injunction were entered on November 9, 1973. The defendants could have avoided all penalties by simply complying with the preliminary injunction. It is undisputed, in fact, conceded, by defendants, that they deliberately violated — “flouted”—the t. r. o. and the preliminary injunction and that defendants were fully apprised of the seriousness of breaching the court’s orders. The Union’s president, defendant Davis, stated when the court’s order was announced, “We can either accept it or face the penalties.” Record at p. Q-lll. We hold it was within the court’s lawful authority to give the Union the choice either to stop the illegal strike as they had been ordered to do or to face fines for their past and continuing contumacious acts.

In the circumstances that existed when the defendants were adjudged in contempt, the large fines imposed by the court as a means of compelling compliance with its orders were appropriate and in no way arbitrary. However, if the defendants believe that the settlement of the controversy and the consequent termination of the defendants’ strike warrant some substantial remitti-tur of fines, the district court will be free after our decision to consider and, within its discretion, to act favorably upon any such request.

The judgment of the trial court is affirmed.

HASTIE, Judge

(concurring).

I join in the decision of the court but find it unnecessary to rule upon the constitutionality of the challenged regulation of the Cost of Living Council. The district court made no final ruling on this issue and settlement of the underlying labor dispute which had led to a controversial strike and a preliminary injunction against its continuance has now mooted all questions except the propriety of the contempt adjudication and the attendant imposition of heavy coercive fines.

With the outstanding issue thus limited, the action of the district court was clearly proper. When this case came on for hearing on motion for a preliminary injunction, a temporary restraining order was in effect and the defendants were on strike in open defiance of that order. The record, as it appeared at the conclusion of that hearing, established sufficient likelihood that the plaintiffs would ultimately prevail to justify preliminary injunctive relief. Moreover, since the defendants were even then in defiant violation of the restraining order and manifestly disposed to continue their contumacy, the court had compelling reason to adjudge them in contempt and to attempt to overcome their defiance by specifying and imposing heavy civil fines to be paid if the defendants should persist, as they did for several days, in their strike.

      . Section 211(b) of the Act provides that, with exceptions not relevant, this Court “shall have the powers of a circuit court of appeals with respect to the jurisdiction conferred on it by this title. The court shall exercise its powers and prescribe rules governing its procedure in such manner as to expedite the determination of cases over which it has jurisdiction under this title.”

      . “The Supreme Court, in Richardson v. Belcher, 404 U.S. 78, 92 S.Ct. 254, 30 L.Ed. 2d 231 (1971), holds that federal statutes are consistent with the due process clause of the Fifth Amendment if they meet the rational basis test enunciated in Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970), as follows :
      ‘In the areas of economics and social welfare, a State does not violate the Equal Protection Clause merely because the classifications made by its laws are imperfect. If the classification lias some “reasonable basis,” it does not offend the Constitution simply because the classification “is not made with mathematical nicety or because in practice it results in some inequality.” ‘The problems of government are practical ones and may justify, if they do not require, rough accommodations — illogical, it may be, and unscientific.’ “A statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it.” ’ ”
      Western States Meat Packers Ass’n, Inc. v. Dunlop, 482 F.2d 1401, 1405 (T.E.C.A.1973).

      . “Classifications such as those involved in the instant case must be upheld if the court can perceive any rational basis for the distinctions which they draw. ‘It is enough that the [Government’s] action be rationally based and free from invidious discrimination.’ Dandridge v. Williams, 397 U.S. 471, 487, 90 S.Ct. 1153, 1162, 25 L.Ed.2d 491 (1970). The burden is upon Local 11 to show that the treatment or classification made is without rational basis or invidious in nature. Dandridge v. Williams, supra; Williamson v. Lee Optical Co., 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563 (1955) ; Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct. 337, 55 L.Ed. 369 (1911). * * * “As stated in Williamson v. Lee Optical Co., supra:
      ‘The day is gone when this Court uses the Due Process Clause of the Fourteenth Amendment to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought.
      :¡: * *
      ‘The problem of legislative classification is a perennial one, admitting of no doctrinaire definition. Evils in the same field may be of different dimensions and proportions, requiring different remedies. Or so the legislature may think. Tigner v. Texas, 310 U.S. 141, 60 S.Ct. 879, 84 L.Ed. 1124. Or the reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind. Semler v. Dental Examiners, 294 U.S. 608, 55 S.Ct. 570, 79 L.Ed. 1086. The legislature may select one phase of one field and apply a remedy there, neglecting the others. A.F. of L. v. American Sash Co., 335 U.S. 538, 69 S.Ct. 258, 93 L.Ed. 222. The prohibition of the Equal Protection Clause goes no further than the invidious discrimination. . . .’ 348 U.S. 488, 489, 75 S.Ct. 464, 465. See also Developments in the Law — Equal Protection, 82 Harv.L.Rev. 1065, 1077-87.
      “The classifications apparent in the instant case certainly comport with the expansive due process and equal protection standards set forth in Williamson and other similar Supreme- Court cases.” Id., 481 F.2d at 1395.


author: GOLDBERG; Circuit Judge:

text:
    Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellant-Cross Appellee, v. Mark HEARD, Jr., Individually, et al., Defendants-Appellees-Cross Appellants.
    No. 73-1228.
    United States Court of Appeals, Fifth Circuit.
    March 14, 1974.

      Donald S. Shire, U. S. Dept. of Labor, Richard F. Schubert, Sol. of Labor, U. S. Dept. of Labor, Carin Ann Clauss, Associate Sol., Washington, D. C., Beverley R. Worrell, Regional Sol., U. S. Dept. of Labor, James H. Woodson, Atty., Stephen J. Simko, Atlanta, Ga., Jacob I. Karro, U. S. Dept. of Labor, Office of the Sol., Washington, D. C., for appellant.
    W. Woodrow Stewart, Gainesville, Ga., Leon Boling, Cumming, Ga., for appellees.
    Before BROWN, Chief Judge, and GEWIN and GOLDBERG, Circuit Judges.
   GOLDBERG; Circuit Judge:

This action was initiated by the Secretary of Labor to enjoin defendants, Mark Heard, Jr. and Mark Heard Fuel Company, from violating the Fair Labor Standards Act (FLSA) in the operation of their poultry and gas producing enterprises by withholding from their employees sums due under the minimum wage and overtime provisions of the Act. The district court found willful violations of the FLSA in defendants’ wage and bookkeeping practices in the poultry business and entered an order enjoining future violations and directing the payment of back wages. The trial court, however, reduced the back pay awards by amounts owed the defendants by employees and their spouses and refused to tax certain witness fees against defendants as part of the costs.

The Secretary appeals from the allowance of set-offs and from the restrictions on witness fees. Defendants appeal from the finding of willful violation of the Act and the consequent application of the three year limitations period on back pay. We affirm the district court in its finding of willfulness, but reverse the judgment below insofar as it permitted set-offs and denied witness fees.

I. Willful Violation

29 U.S.C. § 255, as amended in 1966, provides that “any cause of action for unpaid minimum wages, unpaid overtime compensation, or liquidated damages . . . shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued.” The district court found that defendants had willfully violated the FLSA wage and overtime requirements. Defendants do not contest the correctness of the underlying decision on liability, but rather argue vigorously that Heard’s unlawful conduct was a consequence of ignorance and inadvertence, and that back pay should therefore be awarded only for the two year period prior to the filing of suit.

Defendants contend that in order for a violation of the FLSA to be willful, the employer must have proceeded with knowledge that his actions were contrary to the requirements of the Act. This statutory interpretation cannot withstand the decisions of this Court in Coleman v. Jiffy June Farms, Inc., 5 Cir. 1972, 458 F.2d 1139, and Brennan v. J. M. Fields, Inc., 5 Cir. 1973, 488 F.2d 443. Those eases establish that neither a good faith belief in the lawfulness of his wage and overtime regulations nor complete ignorance of their invalidity shields the employer from the additional year of liability. Such nescience and naivete are not determinative on the question of willfulness under this Act. An employer acts willfully and subjects himself to the three year liability provision if he knows, or has reason to know, that his conduct is governed by the Fair Labor Standards Act.

“Stated most simply, we think the test should be: Did the employer know the FLSA was in the picture? The entire legislative history of the 1966 amendments of the FLSA indicates a liberalizing intention on the part of Congress. Requiring employers to have more than awareness of the possible applicability of the FLSA would be inconsistent with that intent.”

Coleman v. Jiffy June Farms, Inc., 458 F.2d at 1142.

The record amply supports, indeed it compels, a finding .of willfulness in this case. The individual defendant, Heard, president of defendant Fuel Company, testified that he knew of the existence of the Fair Labor Standards Act and had “heard talk” that recent amendments had extended coverage to those in the position of his employees. Defendant’s unwillingness to make further inquiries and to determine the exact parameters of his statutory obligation affords him no protection. An ostrichlike cultivation of ignorance has never been considered a defense to liability for willful violation of the Act. See Mitchell v. Hausman, 5 Cir. 1958, 261 F.2d 778, 780.

II. Set-offs

The district court permitted set-offs against the amount due in back pay for the value of goods, including gas and supplies from the company store, furnished by Heard to his employees. As a result of these deductions the final awards to many of defendants’ workers dropped below the minimum payments required by the Act. In Brennan v. Veterans Cleaning Service, Inc., 5 Cir. 1973, 482 F.2d 1362, this Court held that payroll deductions to compensate for debts owed by an employee to his employer were impermissible if they operated to reduce income below the wage floor prescribed by the FLSA. Congress’ express purpose in passing the Act had been to enable a substantial portion of the American work force to maintain a minimum standard of living, see Brooklyn Savings Bank v. O’Neil, 1945, 324 U.S. 697, 706-707, 65 S.Ct. 895, 89 L.Ed. 1296; and we recognized in Veterans Cleaning that to accomplish this end, “the minimum wage required must normally be paid ‘free and clear’ ... . . ” 482 F.2d at 1369.

Congress has determined that the individual worker should have both the freedom and the responsibility to allocate his minimum wage among competing economic and personal interests. Defendants succeeded below in preventing the full exercise of that employee discretion, which has been mandated by the FLSA and specifically recognized by this Court. Brennan v. Veterans Cleaning Service, Inc., supra, at 1369. The FLSA decrees a minimum unconditional payment and the commands of that Act are not to be vitiated by an employer, either acting alone or through the agency of a federal court. The federal courts were not designated by the FLSA to be .either collection agents or arbitrators for an employee’s creditors. Their sole function and duty under the Act is to assure to the employees of a covered company a minimum level of wages. Arguments and disputations over claims against those wages are foreign to the genesis, history, interpretation, and philosophy of the Act. The only economic feud contemplated by the FLSA involves the employer’s obedience to minimum wage and overtime standards. To clutter these proceedings with the minutiae of other employer-employee relationships woud be antithetical to the purpose of the Act. Set-offs against back pay awards deprive the employee of the "cash in hand” contemplated by the Act, and are therefore inappropriate in any proceeding brought to enforce the FLSA minimum wage and overtime provisions, whether the suit is initiated by individual employees or by the Secretary of Labor.

III. Witness Fees

The district court taxed costs to the defendants, but excluded from the award any fees for employee-witnesses who would receive back pay as a result of its judgment. This decision was based on the court’s conclusion that defendants’ employees are the “real parties at interest” in this litigation and therefore are not entitled to any additional payment as witnesses. This determination that the individual employees, and not the Secretary acting on behalf of the United States, are real parties to this law suit ignores the clear import of Section 16 of the Fair Labor Standards Act.

Though the employees remain the statutory beneficiaries of any back pay awards, section 16(b) establishes that “the right provided by this subsection to bring an action by or on behalf of any employee and the right of any employee to become a party plaintiff to any such action, shall terminate upon the filing of a complaint by the Secretary of Labor .” The formal appearance of the Secretary destroys the private character of any previous dispute between workers and their employer over wages and hours. The vindication of any personal interest in back pay is subordinated to the protection of the national interest in proper enforcement of the Act. Given this exclusion of the employees from participation in the suit and the public nature of the litigation, the court below abused its discretion by excluding witness fees for defendants’ employees from the calculation of costs.

The judgment of the district court is reversed insofar as it allowed set-offs against the back pay found owing under the wage and overtime provisions of the FLSA and excluded certain witness fees from the costs. The case is remanded with instructions to enter judgment for the full amount of back pay and to make a full assessment of costs. In all other respects the judgment of the court below is affirmed.

Affirmed in part, reversed and remanded in part.

      . 29 U.S.C. § 201 et seq.

      . The Court outlined three exceptions to this requirement of “cash in hand,” none applicable to the set-offs at issue in this case:
      (1) 29 U.S.C. § 203 (m) includes in the definition of wage “the reasonable cost . . . to the employer of furnishing such employee with board, lodging, or other facilities, if such board, lodging, or other facilities are customarily furnished by such employer to his employees.” The parties stipulated to the rental value of the homes furnished by defendants; and, although its brief is hardly a model of clarity, the Government evidently raises no objection to counting these sums as part of the wages already paid.
      (2) Where the employee has previously misappropriated funds, temporary reductions below the statutory minimum have been permitted in order that the employer might recoup the losses. “In such a case there would be no violation of the Act because the employee has taken more than the amount of his wage and the return could in no way reduce his wage below the minimum.” Mayhue’s Super Liquor Stores, Inc. v. Hodgson, 5 Cir. 1972, 464 F.2d 1196, 1198, cert. denied, 409 U.S. 1108, 93 S.Ct. 908, 34 L.Ed.2d 688.
      ts) An employer may also count as wages any sums paid to a third party at the request of the employee. “[T]he payment by the employer to the third party is equivalent to a loan to the employee, or an advance against his salary. Accordingly, deductions to recoup the outlay must be counted as wages.” Brennan v. Veterans Cleaning Service, Inc., 482 F.2d at 1369.

      . If the court below was indeed proceeding on the theory of real party in interest, the distinction made between employees who will receive back pay through this suit and those who will not is difficult to understand. Presumably all of defendants’ workers considered in the litigation had an interest in its outcome. Satisfaction with the result has never before been considered a standard for judging interest in a suit.

      . 29 U.S.C. § 216(b).


author: COLEMAN, Circuit Judge: WISDOM and INGRAHAM, Circuit Judges RONEY, Circuit Judge

text:
    SOUTH GWINNETT VENTURE, a Partnership composed of South Gwinnett Apartments, Inc., et al., Plaintiffs-Appellants, v. W. R. (Dudge) PRUITT et al., Defendants-Appellees. ROCKBRIDGE ASSOCIATES, LTD., a Georgia Limited Partnership, Plaintiff-Appellant, v. W. R. (Dudge) PRUITT et al., Defendants-Appellees.
    Nos. 71-3420, 71-3421.
    United States Court of Appeals, Fifth Circuit.
    March 14, 1974.
    Certiorari Denied April 1, 1974.
    See 94 S.Ct. 1625.

      Robert F. Cook, Dean Booth, Atlanta, Ga., for plaintiffs-appellants.
    Homer M. Stark, Lawrenceville, Ga., for defendants-appellees.
    Before BROWN, Chief Judge, and WISDOM, GEWIN, BELL, THORN-BERRY, COLEMAN, GOLDBERG, AINSWORTH, GODBOLD, DYER, SIMPSON, MORGAN, CLARK, INGRAHAM, RONEY and GEE, Circuit Judges.

       Judge Ingraham sat as a member of the original panel in this case and thus was a member of the en banc court, Allen v. Johnson, 5 Cir., 1968, 391 F.2d 527.

   COLEMAN, Circuit Judge:

In 1970, plaintiffs-appellants were the owners of land in Gwinnett County, Georgia, zoned partly residential and partly commercial. They applied to the Gwinnett County Planning Commission to have the property rezoned to an apartment classification. The Planning Commission recommended the change, but the Gwinnett County Commissioners denied it. Suit was brought, alleging that the action of the County Commissioners violated equal protection and due process rights guaranteed the plaintiffs by the Fourteenth Amendment; that is, the decision was arbitrary, capricious, and without due process.

After a hearing, the District Court dismissed the complaint on the ground that it presented no substantial federal question, Rockbridge Associates, Ltd. v. Pruitt (N.D.Ga., 1971), 341 F.Supp. 703. The District Court specifically held that it was not the function of federal district courts to serve as zoning appeal boards; that the decision of local zoning authorities is an exercise of judgment legislative in character; and that these decisions are subject to judicial control “only if arbitrary or if interested parties have been denied procedural due process”, 341 F.Supp. at 705. In its reported opinion, the District Court held that the County Commissioners had assigned reasons for the denial of the zoning change, that the reasons were consistent with the objectives of the zoning resolution, and that the action taken was not arbitrary because there was evidence to support it.

Upon appeal, a Panel of this Court, by a divided vote, reversed the District Court, South Gwinnett Venture v. Pruitt and Rockbridge Associates, Ltd. v. Pruitt, 5 Cir., 1973, 482 F.2d 389. It was the opinion of the Panel majority that the denial of the rezoning application without a statement of reasons and by recourse to evidence which was not in the record was invalid for failure to adhere to concepts of minimal due process. The Panel duly noted the opinion of this Court in Higginbotham v. Barrett, 5 Cir., 1973, 473 F.2d 745, which held “that the zoning of property, including the preparation of comprehensive land use plans, involves the exercise of judgment which is legislative in character and is subject to judicial control only if arbitrary and without a rational basis”. The Panel sought to distinguish Higginbotham, however, by saying that the adoption of a legislative plan for the entire community differs from a petition for reclassification under such a plan. Consideration of rezoning petitions was described as “an exercise of legislative power in a case by case adjudicative setting”, therefore, rezoning decisions require an adherence “to concepts of minimal due process”, citing Hornsby v. Allen, 5 Cir., 1964, 326 F.2d 605. The judgment of the District Court was reversed and the cause remanded for further proceedings consistent therewith.

Pursuant to an appropriate order the case has been reheard en banc. We affirm the judgment of the District Court.

We adhere to the teachings of Higginbotham v. Barrett, 5 Cir., 1973, 473 F.2d 745, in which it was held that local zoning is a quasi-legislative procedure, not subject to federal juridical consideration in the absence of arbitrary action.

Moreover, we see no viable distinction between zoning board functions involved in the adoption of a comprehensive zoning plan and those exercised in the reclassification of a piece of property under an existing plan, see Shenk v. Zoning Commission of the District of Columbia, 1971, 142 U.S.App.D.C. 267, 440 F.2d 295, cited in Higginbotham, supra.

In Shenk, the landowners wanted to rezone property from “single family” to “small apartments”. Litigation ultimately led to the enunciation of principles to be applied to federal court review of rezoning cases. A zoning commission is a quasi-legislative body. It is not required to make findings of fact or state the reasons for the action taken. Its actions are entitled to a presumption of validity. The only question which federal district courts may consider is whether the action of the zoning commission is arbitrary and capricious, having no substantial relation to the general welfare. It necessarily follows that upon a factual showing of arbitrariness there must be some basis in fact and law to justify the zoning action as consistent with reasonableness.

In the cases presently before us, the County Commissioners did state the reasons for refusing the application to rezone, which were the inadequacy of sewage facilities, roads and schools in the area, plus the adverse affect on existing residential areas.

We agree with the District Court that the plaintiffs simply failed to present a substantial federal question and that the complaints should have been dismissed. In reaching this conclusion, we see no constitutional significance in the consultations between the county commissioners and the county engineer or other public officials. We accordingly decline, in the context of this litigation, to apply the “secret” label to any information thus obtained.

The judgment of the District Court is

Affirmed.

WISDOM and INGRAHAM, Circuit Judges

(dissenting):

We respectfully dissent for the reasons stated in the panel majority opinion. South Gwinnett Venture v. Pruitt and Rockbridge Associates, Ltd. v. Pruitt, 5 Cir., 1973, 482 F.2d 389.

RONEY, Circuit Judge

(specially concurring) :

I concur in the result reached by the majority for what may be a slightly different reason. Although I am not sure of the legal difference between arbitrary and capricious conduct and the denial of certain elements of due process, I agree with Judges Wisdom and Ingraham as to a distinction between the necessary action for adoption of a comprehensive zoning plan and the treatment that must be accorded a landowner in consideration of his petition to reclassify a specific tract of land under an existing plan. For want of better words, it seems appropriate to say that in the latter instance, the decision maker must accord the petitioner minimal due process.

As revealed, however, by the opinion of Judge Edenfield in the trial court, the dissenting opinion of Judge Bootle sitting with the panel on our court, and the opinion of Judge Coleman for the en banc court, the plaintiffs were accorded minimal due process in this case.

I concur, therefore, in the dismissal of the cause by the trial court not because plaintiffs were entitled to no more than if a comprehensive plan were being adopted, but because they received the more to which they were entitled.

      . Whatever vitality remains in Hornsby for licensing cases, cf. Atlanta Bowling Center, Inc. v. Allen, 5 Cir., 1968, 389 F.2d 713, its holding will not be extended to zoning cases.