author: FAIRCHILD, Circuit Judge. CUMMINGS, Circuit Judge

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Maxine WILSON et al., Defendants-Appellants.
    Nos. 73-1308 to 73-1311.
    United States Court of Appeals, Seventh Circuit.
    Argued Feb. 26, 1974.
    Decided Nov. 13, 1974.

      Nicholas M. Karzen, Walter Williams, Ronald S. Samuels, Thomas J. Cachor, Chicago, 111., for defendants-appellants.
    James R. Thompson, U. S. Atty., Gary L. Starkman and Michael D. Groark, Asst. U. S. Attys., Chicago, 111., for plaintiff-appellee.
    Before FAIRCHILD and CUMMINGS, Circuit Judges, and JAMESON, Senior District Judge.

       Senior Judge William J. Jameson of the District of Montana is sitting by designation.

   FAIRCHILD, Circuit Judge.

Four defendants, Wilson, Evans, Collins, and Patton appeal from judgments on conviction of counts charging participation in a mail fraud scheme. 18 U.S.C. § 1341.

Each count of thirteen, some of which did not involve these defendants, described a scheme to defraud the American Oil Company in which Travis W. Allen obtained possession of checks of American Oil Company issued to reimburse its dealers for sales made to credit card customers, and these defendants and others would negotiate the checks by depositing them in existing checking and savings accounts or accounts opened in fictitious names and then withdrawing the proceeds. Each count charged that Allen alone or with another defendant mailed an American Oil check to a bank (or in one instance to an individual) for the purpose of executing the scheme.

I. PROOF OF THE ALLEN SCHEME AND PARTICIPATION BY THE DEFENDANTS.

Defendant Allen and one other were fugitives at the time of trial. Other defendants pleaded guilty early in the trial. The trial then proceeded on two counts charging Collins and one count charging each of the other three defendants now appealing. There was eye-witness testimony as to the association between the defendant Collins and Allen, but the Government relied wholly on circumstantial evidence to connect defendants Wilson, Evans and Patton with Allen. The latter three argue on appeal that the evidence was insufficient to prove that they had guilty knowledge concerning the checks and acted in concert as part of one common scheme.

Taking the view of the evidence most favorable to the Government, it is summarized as follows.

On various dates in October and December, 1971, American Oil Company issued at Chicago and processed for mailing a number of checks payable to retail dealers. The checks involved in this case were issued to dealers at points distant from Chicago and were deposited to various bank accounts in the Chicago area within a short period after the dates of issuance. Although the Government did not produce any of the payees to testify that the checks had not been received or that the indorsements were forged, the cashier of the American Oil Company testified that in each instance the Company had issued replacement checks and requested the First National Bank of Chicago, on which they were drawn, to stop payment on the original checks. Presumably personnel of the Company were satisfied that the checks had gone astray.

Ronald Hayes testified that in October, 1971, Allen told him that if Hayes would permit Allen to deposit a check in Hayes’ bank account, they would split the proceeds. If asked about the check, Hayes was to say that he won it gambling. Hayes gave Allen a deposit slip for Hayes’ account and Allen later told Hayes that Allen had deposited a check. These conversations occurred approximately Ocober 26.

On October 27, First National Bank received by mail a deposit slip and check for deposit to the savings account of defendant Marie Evans. The check was American Oil Company Check # 766789, dated October 13, 1971, in the amount of $3,982.77. It was payable to Peter Fuel Co., Oakland, Maryland and was indorsed “Peter Fuel Corp. — F. W. Peters Dist. Marie Evans.” Her balance before the deposit was $52.27. On November 1, she withdrew $3,900.00 in cash and the withdrawal slip bears the notation “Refund Check.” On November 4, she withdrew $134.04 in cash, leaving a balance of $1.00, the minimum required to keep the account open. When questioned later by postal authorities, she said she deposited the check as a favor to a man she had recently met in the company of Johnnie Mae Wilson and who had said he won it gambling. She said she had given him the proceeds but had not seen him again. The mailing of the deposit to the bank was the mailing charged in Count 2 on which Mrs. Evans was found guilty.

On October 23, there was a deposit to the cheeking account of Johnnie Mae Wilson (not a defendant, presumably because the deposit was not made by mail). The deposit consisted of an American Oil Company Check # 768874, dated October 21, 1971, in the amount of $6,199.40. It was payable to Laurie Kirby, Lake City, Florida and indorsed “Laurie Kirby Johnnie M. Wilson.”

On October 29, the Standard Bank received by mail a deposit slip and check for deposit to the checking account of Albert Wilson, Jr. and Idell Wilson, the parents of defendant Maxine Wilson. The check was American Oil Company Check #768875, dated October 21, 1971, in the amount of $3,877.17. It was payable to Knoxoil Co., Knoxville, Tennessee and was indorsed “Knoxoil Co. Frank Marcus Pres. Albert Wilson Jr.” On November 9, the Standard Bank processed a check on the Wilson account payable to cash in the amount of $3,800.00. When later questioned, defendant Wilson said she had deposited the check to her father’s account as a favor to a man she had recently met and who said he had won it gambling. She had given him $3,800.00 of the proceeds and had not seen him again. The mailing of the deposit was the mailing charged in Count 7, on which Miss Wilson was found guilty.

Lee Davis (named in the indictment as a participant but not a defendant) testified that in late November, 1971, he met defendant Collins while looking for work. A few days later, Collins introduced Davis to Allen. Collins told Davis in Allen’s presence that he could make some money by opening a bank account and turning over the deposit slips to Allen. On December 11, Davis opened a checking account under the name of Harry T. Bell at the Olympia State Bank and brought the slips and envelopes to Collins. Collins told Davis he would contact Allen and checks would be deposited in the bank account by mail. When notified that the checks had cleared, Davis was to arrange for people to withdraw from the account.

On December 30, 1971, Olympia State Bank received by mail a deposit slip and check for deposit to the Bell account. The check was American Oil Company Check # 782134, dated December 22, 1971, in the amount of $1,131.37. It was payable to R. L. Maxwell, Ruleville, Mississippi and was indorsed “R. L. Maxwell Pay to the Order of Harry T. Bell Harry T. Bell.” Collins later instructed Davis to withdraw $1,000.00 and Davis wrote a check for $1,000.00 payable to his uncle who cashed it at the bank on January 8, 1972. Davis, kept $300.00 and gave the balance to Collins and Allen. The mailing of the deposit was the mailing charged in Count 8, on which Collins was found guilty.

On January 4, Olympia State Bank received by mail a deposit slip and check for deposit to the Bell account. The check was American Oil Company Check #782135, dated December 22, 1971, in the amount of $1,644.66. It was payable to R. B. McCorkle, Greenville, South Carolina and was indorsed “R. B. Mc-Corkle Pay to the Order of Harry T. Bell Harry T. Bell.” Shortly before, Davis had mailed a bank envelope at Collins' request. Later, Collins instructed Davis to withdraw the proceeds. On January 13, Davis cashed a Bell check for $1,500.00, payable to cash, and took $1,100.00 to Collins and Allen. The mailing of the deposit was the mailing-charged in Count 9, on which Collins was found guilty.

At the time Davis turned over the $1,100.00, Allen indicated he was mailing a $3,000.00 deposit to the Bell account. On January 14, Olympia State Bank received a deposit slip and check for deposit to the Bell account. The check was American Oil Company Check #782176, dated December 22, 1971, in the amount of $3,050.21. It was payable to Tom M. Phillips, Jasper, Georgia and was indorsed “Tom M. Phillips, Harry T. Bell For Deposit Only.” Unlike the other checks involved, the American Oil Company stop payment order arrived in time to prevent the clearing of this check at First National Bank and it was returned to Olympia State Bank on January 19. Collins told Davis to have people make withdrawals of $1,000.00 each, but when Davis sent a friend to the Olympia State Bank on January 23 to cash a check, the friend was arrested.

On January 10, the North Shore National Bank received by mail an American Oil Company Check #782177, dated December 22, 1971, in the amount of $7,285.62. It was payable to Geo. W. Pickering Co., Salem, Massachusetts and was indorsed “Geo. W. Pickering Pres Mary A. Patton Savings Account #124772.” Because there was no deposit slip, a teller made one out for deposit to the savings account of defendant Mary Patton. The correct account number was 149118. The previous balance had been $327.94, $3.87 more than a loan outstanding against the account. On January 28, Mary Patton withdrew $5,000.00, $4,500.00 in cash and a $500.-00 personal money order. She told the teller she was going to buy a ear. On January 31, she withdrew $2,289.49, leaving a balance of $324.07, the exact amount of the loan held against the account. Also, on January 31, the $500.00 personal money order was cashed in the name of Cleveland Compton. The mailing of the deposit was the mailing charged in Count 11, on which Mrs. Patton was found guilty.

Preston Hawkins, Jr. testified that in late December, 1971, he won $1,000.00 •from Allen gambling. Allen offered him an American Oil Company cheek but Hawkins refused it and Allen later paid him by other means. Hawkins saw that Allen had a number of American Oil Company checks drawn to different names and Allen said Hawkins could make money by cashing one of them. Hawkins refused. Hawkins also testified that defendant Evans was his neighbor and Cleveland Compton and Johnnie Mae Wilson, who lived together, also were neighbors and also visited back and forth. Hawkins had seen Allen talking with Compton and had seen Compton with several American Oil Company checks in large amount.

It seems clear that Allen had a means for obtaining recently issued American Oil Company checks at times during October and December, 1971. Since they were to be mailed to dealers in distant locations, it could be expected that some period would elapse before the failure to receive the check could be reported to American Oil. In the interim, checks could be deposited in personal accounts of confederates, the time allowed for clearance would expire, and the money could be withdrawn. There is ample evidence that defendant Collins joined Allen (and Davis) in the enterprise. Indeed, Collins makes no claim on appeal that the evidence was insufficient.

We think there is sufficient circumstantial evidence to link the other defendants with Allen in knowing participation in his scheme.

Similarities between the Evans, Maxine Wilson and Mary Patton transactions, on the one hand, and the Collins transaction in which Allen’s participation was directly shown, and the transactions which Allen proposed to Hayes and Hawkins are themselves persuasive that there was an Allen scheme in which each defendant participated. The checks involved are all of one maker and all came promptly into the possession of the persons depositing them. This fact with other circumstances indicates that all the checks came through Allen. Defendant Evans, Johnnie Mae Wilson and Cleveland Compton knew each other. Compton’s contact with Allen and possession of American Oil Company checks were directly established. Defendant Evans’ implausible exculpatory statement indicated that Johnnie Mae Wilson may have had a similar experience and was similar to the exculpatory statement given by Maxine Wilson and the explanation suggested by Allen to Hayes. The similar Johnnie Mae Wilson transaction involved a check of the same date and immediately prior in sequence to the check deposited by the defendant Maxine Wilson in her parents’ account. The check deposited by defendant Mary Patton was issued the same date and immediately followed in sequence the cheek deposited by Allen in the Bell account on January 14. The $500.00 personal money order which represented part of the proceeds of the check deposited into the Patton account was cashed by Cleveland Compton. Although the failure of the payees to receive the checks and the forgery of their indorsements was not directly proved, the fact that these several cheeks payable to persons considerable distances from Chicago were negotiated in the Chicago area within a short period after issuance, and the willingness of American Oil Company to issue replacement checks are a sufficient basis for the inference that they were stolen, and, of course, recently stolen so as to permit the inference of guilty knowledge on the part of the defendants into whose accounts they went without plausible explanation.

We think these circumstances sufficiently establish the existence of an integral Allen scheme in which each defendant knowingly participated and either mailed or caused the mailing charged against him or her, whether each defendant was aware of the identity and participation of the other defendants or not.

Even where a number of defendants are charged with having conspired together, the Government need not prove that defendants knew each other’s identity or had direct contact with each other, although they must know of each other’s existence. United States v. Varelli, 407 F.2d 735, 742 (7th Cir. 1969); United States v. Nasse, 432 F.2d 1293, 1297 (7th Cir. 1970), cert. denied, 401 U.S. 938, 91 S.Ct. 927, 28 L.Ed.2d 217.

Here the indictment did not charge conspiracy. In each count, one defendant on trial is charged, together with Allen, with having deposited and caused to be deposited certain mail in execution of a described scheme. It is alleged that the defendants on trial, Allen, and others devised the scheme. The identity of the Allen scheme being sufficiently established, and also the knowing participation in it by the defendant in a particular count, we think there is no sound reason why that defendant need be proved to have known of the activities of other defendants other than Allen in order to prove that defendant’s guilt on that count.

It is not essential that the indictment contain a separate count charging conspiracy in order to take advantage of the doctrines peculiar to conspiracy. United States v. Joyce, 499 F.2d 9, 16 (7th Cir. 1974). In a prosecution for mail fraud, once agreement to a scheme has been adequately established, any party to the agreement is responsible for the acts and declarations of another party in furtherance of the common scheme, whether or not he knew of or agreed to any specific mailing. United States v. Joyce, supra.

II. SEVERANCE.

Defendants Collins, Wilson and Patton argue that each was prejudiced by being tried jointly with the others. The Government’s short answer is that none of them requested severance. Moreover, a good deal, if not all, of the same evidence would have been admissible to show the character of the Allen scheme in a separate trial of Collins and probably not only admissible, but essential because of the circumstantial nature of the proof, in the separate trial of each of the others. We are unable to discern prejudice in a joint trial.

III. REFUSAL OF REQUESTED INSTRUCTION.

Defendants requested an instruction as follows:

The Government has charged that the defendants joined with each other and with Travis Allen in a scheme to defraud the American Oil Company. That is, the Government has alleged that the defendants acted together or jointly, in furtherance of a single common scheme to defraud. I instruct you that you may not find any of the defendants guilty unless you first find that the Government has proved beyond a reasonable doubt that there was such a single common scheme to defraud.
If you find that a reasonable doubt exists as to whether there was, or may have been, a series of separate and distinct schemes, then you must find all defendants not guilty.
If you find that the defendants were not acting as part of the same scheme, then you must find them not guilty, even if you find that they, or any of them, acted with intent to defraud.

The court did not give the instruction in the form requested. It did, however, instruct that the Government must prove beyond a reasonable doubt that defendants or any one or more of them participated in a scheme to defraud and that the mails were used in furtherance of it. It instructed at some length concerning the meaning of a “joint enterprise mail fraud scheme” or the proof required to establish that there was such a scheme and that a defendant was knowingly a member of it; that the jury should first determine whether or not “the mail fraud joint enterprise existed as alleged in the indictment”; and then whether a defendant willfully becomes a member of it. After pointing out that “one may become a member of a criminal joint enterprise without full knowledge of the full details” but that “a person that has no knowledge of such joint enterprise, but happens to act in a way which furthers some object or purpose of the said joint enterprise, does not thereby become a member.” The court stated that before a finding of membership could be made “the evidence in the case must show beyond a reasonable doubt that the joint enterprise was knowingly formed and that defendant or any other person “who is claimed to have been a member willfully participated in the unlawful plan with the intent to advance or further some object or purpose of the joint enterprise.”

For reasons indicated above in Part I, the instructions given by the court may have been more favorable to defendants than the law required, but in any event they adequately covered in substance the instructions requested by the defendants.

IV. ALLEGED CONFUSION AT TRIAL

All defendants on this appeal argue that they were prejudiced by what they termed confusing, inconsistent and disorderly conduct of the trial. It is clear, of course, that the Government labored under difficulties in the absence of Allen who was a central figure. Evidence that might readily have been admissible against him was admissible against the defendants on trial only conditionally and upon a representation that when all the evidence was in its relevancy and probative force against defendants on trial, would become apparent. The same was true of evidence of transactions by other persons not on trial but allegedly establishing a similar pattern with such clarity as to be circumstantial evidence that the transactions in which the defendants were directly involved were part of the same overall scheme. Evidence as to the activity of one defendant was not only immediately admissible against that defendant but when combined with a cumulation of evidence of the activity of others could properly be considered circumstantially as evidence against all defendants.

The Government began the trial by offering various items of proof with the representation that they would ultimately be connected up. At first the district court accepted this procedure. Counsel for defendants meticulously objected to all proof not obviously and directly relevant to the respective defendants. The district court carefully sought during the course of trial to restrict for the time being the consideration of evidence offered by the Government to the defendant directly involved. In several instances the district court sustained defense objections to evidence of transactions which might, we think, within the court’s proper discretion, have been admitted conditionally. The court did not instruct the jury at any time during trial that the Government had made a prima facie case of joint enterprise sufficient to permit consideration of evidence admitted against one defendant against others, but in the instructions after the close of trial the court told the jury that, subject to the usual qualifications, statements and acts by any person found to be a member of a criminal joint enterprise may be considered by the jury as evidence as to any defendant found to have been a member of the criminal joint enterprise.

Our own reading of the record persuades us that the evidence and rulings made in the presence of the jury did not result in confusion likely to cause the jury to misapprehend the issues and the proofs. Surely the defense is in no position to object to rulings or instructions more favorable than the law requires.

The peculiarity of this case as against all defendants except Collins, as to whose transactions with Allen there was eyewitness testimony, is that the jury could not convict unless it considered the characteristics of the transactions of all defendants as circumstantial evidence sufficient to establish the participation of that defendant with Allen in his scheme.

Notwithstanding the fact that much of the evidence was admitted with the limitation that it was to be considered against only one defendant, and that limiting instruction was not withdrawn during trial, we think the jury must have done what common sense would clearly require, and have considered all the similarities between the transactions and the other facts tending circumstantially to link the transactions together, set forth under Part I, in order to determine whether there was an Allen scheme as described in the indictment, adhered to by each defendant on trial, and furthered by the particular mailing charged to each defendant.

V. DISPARITY OF SENTENCE.

Defendant Collins was sentenced to imprisonment for five years on each count to run consecutively. Proof as to him indicated a very active role in the Allen enterprise. Defendants Evans, Wilson and Patton, each of whom negotiated one check, were sentenced to imprisonment for one year. Defendants who had pleaded guilty in the early stages of the trial had been placed on probation. Defendants Evans, Wilson and Patton argue that the disparity between their sentences and the sentences of probation constituted punishment for exercising their right to stand trial.

It has been held that a disparity between a sentence imposed on a defendant who pleads guilty and on another who is convicted after trial is not, standing alone, enough to establish that the latter has been punished for exercising a constitutional right.

The one year sentence imposed here cannot be deemed severe for the type of activity of which these defendants were convicted. Although a heavier sentence for one who has been convicted after trial and a lighter sentence for one who pleads guilty are in a sense two sides of the same coin, it is within proper bounds for the court to preserve some leeway so that it is able to extend leniency in consideration of the cooperation and at least superficial penitence evidence by one who pleads guilty. Here, as in United States v. Lehman, 468 F.2d 93, at 109 (7th Cir. 1972), the district court made remarks suggesting that these defendants might have enjoyed the same leniency extended to those who pleaded guilty, but we think the discussion in Lehman applies here, as well.

Although we do not agree with the claims of the three defendants who received one year sentences, just discussed, we do conclude that in the particular circumstances it was an abuse of discretion to dispense with a presentence investigation and impose a sentence of imprisonment on these three without the benefit of a report.

The information about these three defendants available to the district court and bearing upon an appropriate sentence was unusually limited. Evidence concerning their transactions was entirely circumstantial, revealing nothing more about their character than the fact of guilt and that Mrs. Evans and Miss Wilson, but not Mrs. Patton, gave false explanations to postal authorities. They did not testify, and except for brief allocution, the court had little opportunity to evaluate them as individuals. None of them had a criminal record except in connection with the transactions at bar.

Counsel brought out that Miss Wilson is 22 years old, unmarried, lives with her parents, and has been steadily employed since leaving high school. Mrs. Patton is 40, married but separated, is regularly employed, and has supported four children and her mother. Mrs. Evans is 33, married, and with two children.

Dispensing with a presentence investigation is discretionary under present Rule 32(c), F.R.Cr.P., although an amendment, proposed by the Supreme Court, but not yet effective, would require the court to state its reasons for not having such investigation. Review of the failure to call for one has usually resulted in a determination that the court's discretion was not abused, United States v. Rosciano, 499 F.2d 166 (7th Cir. 1974), and cases cited therein.- We think, however, that the paucity of relevant information about these three defendants, in the light of the amount of information which would probably have been produced in a presentence report, made it an abuse of discretion to dispense with one.

VI. CLAIMS OF ERROR RAISED BY DEFENDANT EVANS.

A. Sufficiency of the Indictment.

Count 2 charged in summary that Allen and others including Evans devised a scheme to defraud American Oil Company in which Allen would obtain stolen checks and would “request, persuade, inform and otherwise arrange for” each of the other defendants to assist in negotiating the checks by depositing them in accounts and withdrawing the proceeds, and that Allen and Evans for the purpose of executing the scheme, knowingly and willfully mailed and caused to be mailed a specific American Oil Company check to the First National Bank.

If we understand defendant Evans’ argument, it is that since her deposit of the stolen check may have been otherwise arranged for, the element of guilty intent on her part has not been sufficiently charged. Count 2 did, however, charge her with participation in devising the scheme to defraud .and knowingly and willfully using the mail to execute it. We can find no defect in the indictment.

B. Bill of Particulars.

Defendant Evans sought a particularization of certain elements of the indictment. She asked that the Government be required to state whether Allen requested, persuaded, informed or otherwise arranged for her to assist in negotiating the checks; to define what “otherwise arrange for” means; to state the false and fraudulent pretentions, representations and promises referred to, who made them, to whom made, and when made; and to state whether Allen or Evans is alleged to have stolen the checks.

Defendant Evans concedes that ordering a bill of particulars is within the court’s discretion. Here the documentary evidence in respect to Evans was made available to her in advance of the trial. The Government was apparently unprepared to show the details as to how Allen obtained Evans’ assistance, by whom the checks were stolen, nor the false pretenses involved other than those implicit in depositing a check with a forged indorsement. As already set forth, the proof that these things must have happened was circumstantial. It has not been demonstrated that there was any surprise on her part at the evidence during the course of trial nor other prejudice as a result of the denial of the requested particulars.

C. Inadvertent Misdirection by Court

During the course of testimony by the postal inspector relating successive interviews with defendants Collins, Evans and Wilson, the court inadvertently named Evans rather than Wilson as the person to whose case certain testimony should be limited. The misunderstanding and misstatement were corrected. We consider frivolous the claim that the jury was misled.

On the appeal of defendant Collins, the judgment of conviction and sentence are affirmed. On the appeals of defendants Wilson, Evans, and Patton, the judgments of conviction are affirmed, but the sentences are vacated and the causes remanded for resentencing after investigations and reports under Rule 32, F.R.Cr.P.

CUMMINGS, Circuit Judge

(dissenting in part).

I concur in Judge Fairchild’s opinion with the exception of the sua sponte remandment for resentencing after a presentence investigation and report are completed as to defendants Wilson, Patton and Evans. Surely seasoned counsel would have presented this argument if warranted on this record. In my view, there was no abuse of discretion in not ordering a presentenee investigation and report for each of these three defendants, even though it is generally the better practice to do so. United States v. Rosciano, 499 F.2d 166, 169 (7th Cir. 1974). Therefore, I would affirm the judgments.

      . The jury may “make common sense inferences from proven facts.” Webb v. United States, 347 F.2d 363, 364 (10th Cir. 1965); United States v. Hines, 256 F.2d 561, 564 (2d Cir. 1958). See United States v. Zimple, 318 F.2d 676, 680 (7th Cir. 1963), cert. denied, 375 U.S. 868, 84 S.Ct. 128, 11 L.Ed.2d 95.

      . Barnes v. United States, 412 U.S. 837, 845, 93 S.Ct. 2357, 37 L.Ed.2d 380 (1973).

      . United States v. Melendez, 355 F.2d 914, 917 (7th Cir. 1965); Simpson v. United States, 342 F.2d 643, 645 (7th Cir. 1965).

      . See United States v. Hutul, 416 F.2d 607, 625 (7th Cir. 1969), cert. denied, 396 U.S. 1012, 90 S.Ct. 573. 24 L.Ed.2d 504 and United States v. Wells, 387 F.2d 807, at 808 (7th Cir. 1967).


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    ESTATE of William LE BARON, Sr., et al., Plaintiffs-Appellants, v. ROHM AND HAAS COMPANY, and Monsanto Company, Defendants-Appellees.
    No. 74-1351.
    United States Court of Appeals, Ninth Circuit.
    Nov. 1, 1974.

      Lawrence E. Alioto (argued), of the Law Offices of Joseph L. Alioto, San Francisco, Cal., for plaintiffs-appellants.
    Richard J. MacLaury (argued), of Pillsbury, Madison & Sutro, San Francisco, Cal., for defendants-appellees.
   OPINION

Before HAMLEY, BROWNING and WALLACE, Circuit Judges.

PER CURIAM:

This private treble damage anti-trust action is here for the second time. See Estate of Le Baron, Sr., et al. v. Rohm and Haas Company and Monsanto Company, 441 F.2d 575 (9th Cir. 1971). The issue presented is a further evolvement of the evidentiary question addressed in the first appeal.

In accordance with the directions given in our prior opinion, the district court, upon remand of the proceedings, permitted plaintiff rice growers full discovery of the cost and profit data for Stam and Rogue, trade names of defendants Rohm and Haas, and Monsanto, respectively, for the herbicide propanil. The district court, in addition, permitted full discovery of the cost and profit data for a large number of other agricultural chemicals manufactured and sold by defendants.

In accordance with the procedures outlined in our prior opinion, the district court also held a hearing to determine the admissibility of the evidence offered by plaintiffs as a result of this discovery. The district court determined that the tendered evidence is inadmissible, and re-entered judgment in favor of defendants. Thereafter, the district court denied plaintiffs’ motion for reconsideration, whereupon plaintiffs took this appeal. We affirm.

In holding the proffered evidence inadmissible, the district court determined that the evidence is not probative of the existence of a conspiracy between defendants, and that any probative value such evidence might have is substantially outweighed by the complexities and confusion the introduction of the evidence would engender. On the motion for reconsideration, the district court also held that the evidence offered is not admissible as a basis for cross-examining defendants’ expert witness. On appeal plaintiffs take issue with each of these determinations.

In our view, the district court did not abuse its discretion in holding the evidence in question inadmissible. See Continental Baking Co. v. United States, 281 F.2d 187, 145-146 (6th Cir. 1960). The probative value of the evidence, slight at most, tends to show that the profit margins on Stam and Rogue are somewhat above the average gross and net profit margins of all agricultural chemicals manufactured and sold by defendants. But it falls short of demonstrating the “high profit margins” which, in our prior opinion, we said would be especially probative of the existence of a conspiracy. Moreover, there appear to be serious deficiencies in the tendered evidence. With reference to Monsanto, the discovered accounting records show only gross profits. As the district court pointed out, only the direct cost of manufacture is reflected in these figures, thereby excluding selling costs, administrative costs, research and development costs and other miscellaneous costs. In addition, there is reason to believe, as Rohm and Haas contends, that its net profit margin for all agricultural chemicals, to which the profit margin of Stam is compared, is understated. Both defendants attack the plaintiffs’ profit margin comparisons by asserting that evidence exists to show that, to be accurate, comparative analysis must be between products having similar market characteristics, e. g., products on the market a similar length of time.

As compared to this questionable probative value of the proffered evidence, the admission thereof at a jury trial would have resulted in extensive cross-examination and substantial countering evidence leading to obliteration of the basic issues of the case and confusion of the jury.

As the district court observed, each defendant would be entitled to make a detailed explanation of its accounting system, entailing expert testimony and cross-examination. Monsanto would be entitled to amplify the gross profits figures submitted for it by plaintiffs, by establishing the indirect costs involved in the manufacture and sale of Rogue. Both defendants would also be entitled to submit evidence bearing upon the understatement of profit margins caused by the pricing of the by-products and the inaccurate comparison analysis referred to above. While the cost and profit data submitted to the court may have had some probative value on the question of the existence of a conspiracy, such value was slight and was clearly outweighed by the difficulties the submission of this evidence would have brought to a jury trial. See Rule 403, Proposed Rules of Evidence for the United States Courts and Magistrates.

Plaintiffs’ main attack on this portion of the district court's holding is that the tendered evidence consists of contemporaneous business records of the defendants which reflect comparative profit margins which as a matter of law are relevant to the issue of competition, and thus conspiracy, and therefore must be admitted. Under this view, the district court has no discretion as to its admission, and all the court’s and the defendants’ objections go to the weight of the evidence and not its admissibility.

Plaintiffs rely primarily on Continental Baking Co. v. United States, 281 F.2d 137 (6th Cir. 1960). But the issue in Continental Baking, as in the prior appeal in this case, was whether evidence on profit margin and cost should necessarily be excluded as irrelevant, not the right of the trial judge, in the exercise of discretion, to exclude evidence where its probative value is slight and is outweighed by the difficulties its introduction will produce. In fact, the court in Continental Baking apears to affirm the discretion of the district court, on remand, to exclude the evidence, if unreliable. 281 F.2d at 145-146.

Moreover, this argument was settled adversely to plaintiffs on the prior appeal and that ruling is now the law of the case. In our prior opinion we stated: “At that time [on remand] the trial court in the exercise of its discretion may control the introduction of evidence so as to minimize problems of time and confusion. See United States v. Krulewitch, 145 F.2d 76, 80 (2d Cir. 1944).” 441 F.2d at 578.

We also hold that the district court did not abuse its discretion in ruling that the proffered evidence is not admissible as a basis for cross-examination of defendants’ expert witness.

Plaintiffs argue that the tendered cost and profit evidence is necessary to cross-examine effectively defendants’ expert witness. That witness, plaintiffs contend, “was permitted to make an important judgment for the jury-— whether defendants’ profit margins tended to prove the absence of price competition.”

The expert expressed an opinion as to whether a high margin of profits indicated a conspiracy under these circumstances. But he did not base his opinion on the data which plaintiffs are attempting to introduce, nor in fact on any profit data of the defendant companies. In essence, the expert concluded that, no matter what the margin'of profit, in a duopoly situation the two prices would be identical and as high as possible. In addition, as defendants point out, it was the appellants’ attorney, himself, who initiated the questions concerning the cost information of the products and profit margins. The expert stated throughout that he did not rely on any cost or profit data, nor would his opinion change if he had received such data.

In controlling the scope of cross-examination the district court has wide discretion. Harries v. United States, 350 F.2d 231, 236 (9th Cir. 1965). The primary reasons which dictated that the court not allow the data introduced as evidence of conspiracy, undue confusion and consumption of time, support the decision not to allow the material as a basis for cross-examination.

Affirmed.

      . In this opinion, we will assume familiarity with the holding and the litigation as described in our prior opinion.

      . During the period of the alleged conspiracy there is evidence that both defendants marketed a number of products, including products with substantial volume, with profit margins comparable to or exceeding those of Stam and Rogue.

      . Plaintiffs tendered net profits data concerning Stam, Rohm and Haas’ i>roduct, and approximately fifty other agricultural chemical products produced and sold by Rohm and Haas. But, as in the case of Rogue, these figures do not demonstate such high profits on Stam, as compared to the net profits on the company’s other products, as to be strongly probative on the issue of conspiracy.

      . As the district court pointed out, for internal accounting reasons, Rohm and Haas assigns a “cost” of ninety percent and a “profit” of ten percent to the by-products sold by its agricultural department whereas, the oomi>any asserts, there is actually no cost in in-oducing a by-product. Accordingy, an accurate reflection of by-product costs would substantially narrow the difference between the average net profit of agricultural chemicals manufactured and sold by Rohm and Haas, and the net profit on Stam.

      . According to defendants, additional factors of this kind include the product’s uniqueness, it value to the user, the seller’s risk of liability for crop damage, and the amount of customer service required.


author: WILKEY, Circuit Judge: MacKINNON, Circuit Judge

text:
    The BALTIMORE AND OHIO RAILROAD COMPANY et al., Appellants, v. The ALABAMA GREAT SOUTHERN RAILROAD COMPANY et al.
    No. 73-1017.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Jan. 30, 1974.
    Decided Oct. 1, 1974.

      Harry G. Silleck, Jr., New York City, with whom John L. Altieri, Jr., New York City, was on the brief, for appellants. Robert H. Huey, New York City, also entered an appearance for appellants.
    Howard J. Trienens, Chicago, 111., of the bar of the Supreme Court of Illinois, pro hac vice, by special leave of Court, with whom Richard J. Flynn, Chicago, 111., was on the brief, for appellees, Southern Railroads.
    Carl E. Sanders, Augusta, Ga., of the bar of the Supreme Court of Georgia, pro hac vice, by special leave of court, with whom Jay W. Freedman, Washington, D. C., was on the brief, for intervenors.
    Before LEVENTHAL, MacKINNON and WILKEY, Circuit Judges.
   WILKEY, Circuit Judge:

This case concerns intricacies of the Interstate Commerce Act and the relationship of the Act to the common law and judicial equitable discretion. The precise question is whether this court should order a retroactive readjustment of divisions of agreed joint rates. We agree, although for somewhat different reasons, with the District Judge that this question should be answered in the negative.

I. THE NORTH-SOUTH DISPUTE

At issue in this case is the proper division of joint rates on freight shipped between North and South. When freight is shipped between the two regions, a single (joint) rate is charged. This rate is divided between the northern and southern railroads involved, according to the prescribed “division.” This allows the railroads better to coordinate their freight service.

Since 1953 the division between the northern railroads, such as the Baltimore & Ohio, and the southern railroads, such as the Alabama Great Southern, has been set on an equal-factor basis. Hence, the relative share of the joint rate is the same as the relative share covered by each railroad of the total mileage which an item is shipped. If freight is shipped an equal distance on northern and southern lines, the two share equally in the joint rate charged.

In 1956, eighteen years ago, the northern railroads requested the ICC grant them higher divisions than the ratio under the equal-factor scheme, because of their belief that their costs had increased relative to the southern railroads’ costs. After nine years, the ICC granted a new division, giving the northern lines an increase in their share. This ICC decision was based largely on its finding of increased territorial average costs on all traffic in the North vis-a-vis the South. On review of the ICC order, however, the Supreme Court affirmed a lower court finding that there was no substantial evidence that territorial average costs were the same as comparative costs of North-South traffic, and the case was thereafter remanded to the ICC for further hearings.

The ICC issued a new order in 1970, which was set aside by a three-judge federal district court in Louisiana. After remand to the ICC, the proceedings were dismissed (without prejudice) by the ICC in 1971, on the grounds that the record was stale, as it was based upon evidence of costs in 1956-59.

The northern railroads began anew in 1972, and once more requested that the ICC change the division so as to increase their share. Recognizing that the ICC could only change divisions for the future, the northern railroads brought suit in U.S. District Court to obtain a retroactive readjustment of divisions. Considering the 16 years which by then had elapsed since the northern railroads brought their complaint against discriminatory divisions to the ICC, their desire to get into court with a prayer for retroactive, or at least contemporary, relief is understandable. As is made clear below, our difficulty is not incompassion with the equities of appellants’ plight, but a deference to the clear statutory intent plus discernible countervailing equities. In particular the northern railroads sought damages for the southern railroads’ “violations of their statutory and common law duties to maintain reasonable divisions during the period of the pending administrative proceeding.” The northern lines additionally suggested that determination of the reasonableness of the division during the pendency of administrative proceedings be referred to the ICC, under a primary jurisdiction theory.

The southern railroads filed an answer and a motion for summary judgment seeking dismissal for failure to state a claim upon which relief can be granted. The District Court ordered dismissal of the complaint, on the ground that section 15(6) of the Interstate Commerce Act prohibits the courts as well as the ICC from awarding retroactive changes in divisions where joint rates are agreed on by the parties rather than imposed by the ICC. We affirm the dismissal for the reasons hereinafter explored.

11. THE UNDERLYING LEGAL FRAMEWORK

The Interstate Commerce Act deals specifically with the question of divisions of joint freight rates in section 15(6). In pertinent part this section provides:

Whenever, after full hearing upon complaint or upon its own initiative, the Commission is of opinion that the divisions of joint rates, fares, or charges, applicable to the transportation of passengers or property, are or will be unjust, unreasonable, inequitable, or unduly preferential or prejudicial as between the carriers parties thereto (whether agreed upon by such carriers, or any of them, or otherwise established), the Commission shall by order prescribe the just, reasonable, and equitable divisions thereof to be received by the several carriers, and • in cases where the joint rate, fare, or charge was established pursuant to a finding or order of the Commission and the divisions thereof are found by it to have been unjust, unreasonable, or inequitable, or unduly preferential or prejudicial, the Commission may also by order determine what (for the period subsequent to the filing of the complaint or petition or the making of the order of investigation) would have been the just, reasonable, and equitable divisions thereof to be received by the several carriers, and require adjustment to be made in accordance therewith.

Thus, section 15(6) gives the ICC the power to change divisions of joint rates when it finds them to have been unreasonable. If the joint rates were established pursuant to an ICC order, then the change of divisions may be effective as of the date of the filing of the complaint or the date of the ICC order of investigátion. But if the joint rates were not established by the ICC, i. e., were agreed rates, then the ICC can only order a prospective change of divisions.

In the case at bar, it is conceded that the rates are agreed rates, and the ICC itself cannot order a retroactive change of divisions. The question is whether the courts can or should award retroactive relief from allegedly unreasonable divisions, when the ICC is prohibited from so doing by statute.

The Supreme Court explored the scope of section 15(6) in 1928 in Brimstone R.R. v. United States. The Court noted “the studied purpose [of Congress] to grant no power to require readjustments of past receipts from agreed joint rates.” In the Court’s view, railroads might assent to rates only because of the divisions made; allowing retroactive revision of the division would destroy the basis on which the agreement was made. Since the power retroactively to change divisions is so enormous, the Court felt it important carefully to preserve the distinction drawn by Congress between agreed and ICC-established rates.

The Brimstone ease and section 15(6) deal explicitly only with the power of the ICC; Brimstone as binding authority could easily be distinguished from the instant case where the court’s power is sought to be invoked. However, we believe that the principles inherent in the Brimstone opinion are equally applicable in the current proceeding.

III. APPLICATION TO THE NORTH-SOUTH DISPUTE

A. Brimstone and Section 15(6)

Railroads often agree among themselves to establish joint rates. Behind the agreement lies an expectation of each railroad as to the division it will receive. Railroads would be hesitant to agree to low joint rates if they thought their division might be reduced retroactively. In this case, as in Brimstone, it would be “exceedingly harsh if not wholly unreasonable” to destroy retroactively the basis for the agreed rates.

We think the Brimstone analysis is controlling in the case before us. Where joint rates are agreed upon by the parties, we will not retroactively upset the division, on the equitable grounds that railroads might not agree on such rates if they suspected the possibility of court-imposed retroactive change. We reach this result taking into account the action of Congress in ruling out retro-activity where agreed rates are involved, and the philosophy of Brimstone in avoiding the “exceedingly harsh” consequences of a ruling that carriers agreeing to divisions could have imposed on them an open-ended contingent liability of enormous proportions.

If a railroad believes the division of agreed joint rates to be unreasonable or unfair, it may apply to the ICC for a prospective adjustment of the division. The adjustment would be effective as of the date of the ICC order of adjustment. We must give deference to the overall scheme of Congress to place railroad rate regulation in the hands of the ICC. But it did not see fit to confer upon the ICC the power to adjust retroactively divisions of rates agreed upon by the carriers, for the reasons enunciated in Brimstone and here. The plight of the northern lines arises from the obviously foreseeable situation we have here. Whether relief in this and similar cases, present and future, should come from a revision of the statute, or an acceleration of the glacial movement at the ICC, is not for us to say. We do not hold that under no circumstance could a court exercise its equitable judicial discretion, for neither Congress in the statute nor the Supreme Court in Brimstone treated of this, but here we think it unwise to permit a railroad to circumvent the limitation on the ICC’s power of retroactive adjustment by seeking an award of damages from this court for the period between the initiation of a complaint and a possible award of future relief by the ICC. There are no allegations of deliberate delaying tactics by the opposing carriers, nor of anything but the time-honored tardigrade pace at the ICC; in the event of obvious protracted dalliance our judgment might well be contrary.

B. Related Provisions of the ICC Act and Common Law Remedies

We do not believe that other provisions of the Interstate Commerce Act dictate a result different from the one which we reach. The northern railroads’ argument that sections 1(4), 8, 9, and 22 suggest the court should order retroactive relief here is unpersuasive.

In brief, the pertinent provisions of the sections are as follows. Section 1(4) requires railroads to establish “just and reasonable rates” and “just, reasonable, and equitable divisions” of joint rates. Section 8 provides that railroads failing to perform according to the Act are liable for damages due to such violations. Section 9 allows those damaged by violations to sue in court for recovery of damages. Section 22 states that “nothing in this part contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this part are in addition to such remedies . . . .” Finally, a 1940 amendment to the Act declares the policy of Congress is “[to] foster sound economic conditions in transportation and among the several carriers ... all to the end of developing, coordinating, and preserving a national transportation system ...”

Construing these provisions broadly, we cannot agree with the northern railroads that they compel award here of retroactive damages by this court. First, it is not at all clear that our national transportation system would be better served under the approach suggested by the northern railroads than by refusing the sharp disruptions due to retroactive division changes. Second, it would appear irrational to hold the southern railroads as violating section 1(4)’s requirement of reasonable divisions when the divisions have been approved by the ICC. Insofar as there is a statutory obligation to provide reasonable divisions and rates, the statutory framework and context define a duty as implemented by orders of the ICC, a duty which is necessarily prospective in the case of agreed rates.

Furthermore, we do not accept the northern railroads’ contention that a common law remedy should be adopted here. While section 22 does explicitly retain common law remedies, it does so with the implicit understanding that only such remedies as are consistent with the statute are to be retained. As noted long ago by the Second Circuit, “from the passage of the Interstate Commerce Act previously existing common-law remedies, inconsistent with the statute, were supplanted.”

The Second Circuit concluded in 1936 that a common law remedy should not be applied in a case which was similar in many ways to the case at bar. In the case before the Second Circuit, the ICC had prescribed new joint rates but not the percentage of division thereof. The northern railroads thereafter refused to accept the previously agreed-upon division. The southern railroads sought a more favorable division from the ICC, which ordered a change in percentage of division effective on the date of the filing of the complaint, not at the earlier date of the new joint rates. The southern railroads then sought relief from the court for the period from the time the ICC prescribed the joint rates until the date the complaint was filed. The Second Circuit denied such relief, stating that

Section 15(6) clearly indicates an intention to limit the operation of retroactive adjustments of divisions. . It is not enough to say that, because of established principles of equity and common law, a reasonable share of the proceeds of the transportation was due the appellants for the services performed. The remedy conferred by the Interstate Commerce Act and the one by which the appellants’ rights are governed defined the procedure by which justice could be obtained.

While the Second Circuit dealt with prescribed rates and we deal with agreed rates, there is a key similai’ity: both cases involve retroactive application of a remedy by a court, a remedy which is clearly proscribed in section 15(6) with regard to the ICC. We follow the route charted by the Second Circuit and deny a common law remedy here. We think that route preferable to the approach taken by district courts in Maryland and Pennsylvania in 1935 cases.

Contrary to the suggestion of the northern railroads, we do not believe that the Supreme Court decision in Hewitt-Robins, Inc. v. Eastern Freight-Ways, Inc. mandates application of a common law remedy by us. As to “the survival of a judicial remedy under the saving clause,” the Court held:

Survival depends on the effect of the exercise of the remedy upon the statutory scheme of regulation. According to [the saving clause], if the remedy is inconsistent with that scheme it does not survive. . . . Here, . the exercise of the judicial remedy supports its overall purposes and is nowise inconsistent with the congressional scheme embodied within its four corners.

The same could not be said in our case; we deny the judicial l'emedy as “inconsistent with the congressional scheme” in the situation at bar.

Furthermore, the Court in Hewitt-Robins rested its decision on the particular factors involved there in carrier routing practices, and specifically distinguished the case from challenges regarding reasonableness of rates. Thus, the doctrine of T.I.M.E., Inc. v. United States was left standing when questions of the reasonableness of charges were at issue. It is important to note also that both cases dealt with the Motor Carrier Act rather than the portion of the Interstate Commerce Act at issue in the case at bar.

We thus conclude that it would be inconsistent with the thrust of section 15(6) and prior judicial decisions to grant the relief sought by the northern railroads. Under the circumstances of this case, retroactive changes in divisions should not be judicially ordered. The decision below granting summary judgment to appellees and dismissing appellants’ complaint is hereby

Affirmed.

MacKINNON, Circuit Judge

(concurring) :

The foregoing opinion affirms the judgment of the District Court dismissing the action by the northern railroads against the southern railroads for alleged unfair division of the revenues received from inter-area freight traffic. In my view this produces an inequitable result.

The southern railroads since 1956 have refused to agree to any changes in the divisions of joint rates because the existing divisions are apparently more favorable to them, and because of the history of the rates involved they stand to profit greatly by the long delay necessary to a Commission decision. To remedy the allegedly unfair and discriminatory rate divisions, the northern railroads in 1956 initiated a proceeding before the ICC. Nine long years later the ICC concluded that the rate divisions were indeed unfair and ordered a substantial readjustment of the divisions in favor of the northern lines. However, the case was remanded to the ICC after the Supreme Court determined that the ICC had not applied proper standards. In 1971, since the evidence had become stale, the 1956 proceedings were aborted.

In 1972 the northern railroads renewed their battle by initiating another ICC proceeding based on the then current factual situation. Simultaneously the northern railroads began the instant common law action to correct what they allege is a grossly unjust condition that has continued for over 16 years.

Under section 15(6) of the Interstate Commerce Act, adjustments by the ICC of rate divisions of agreed rates can only operate prospectively from the date of the ICC order determining the proper divisions. Had the rates been prescribed by the ICC, the Commission would have the power to adjust rate divisions retroactively from the time of the filing of the complaint. Thus, while the northern railroads’ complaint to the ICC was filed on March 27, 1972, and it may be many years before the ICC resolves the question, the Commission is powerless under the statute to effectuate fair divisions for the interim period between March 1972 and the eventual date of the final order.

In the 1956 proceeding between these same parties nine years elapsed from the filing of the complaint to the date of the final ICC order. Recognizing that a considerable number of years may elapse before there is a final order in the present proceeding, the northern railroads seek by the instant common law action for damages to secure equitable divisions (if the ICC eventually determines that present divisions are unjust, unreasonable and inequitable) for the interim years between the filing of the complaint and the final decision of the ICC. There is nothing inequitable or harsh in recognizing the validity of a lawsuit that would provide reparations for this interim period if it is ultimately determined that the divisions during this period were unfair. Indeed, if appellants can prove the allegations in their complaint, it would be inequitable and harsh to deny relief on a claim which involves not only many millions of dollars but may also involve the very solvency of some of the northern railroads. For the purpose of this appeal from the District Court’s dismissal of the complaint for failure to state a claim, the factual allegations in the complaint must be assumed valid, including the following allegation:

Such refusal by the Southern lines to adjust the Divisions has deprived the Northern lines of several million dollars a year and unjustly enriched the Southern lines by a like annual amount. This deprivation has contributed to the bankruptcy or near bankruptcy of several of the Northern lines thus jeopardizing the continuing viability of the National Transportation System.

Complaint, Jt.App. at 23a.

•Elaborating on this allegation, appellants’ brief sets forth the following statistics showing the rates of return on net investment for the Class I railroads by territorial group. The figures for the Eastern District relate primarily to the railroads here referred to as the Northern Lines:

1967 1968 1969 1970 1971 12 Mos. Ending 9/30/72
Eastern District 1.58 1.27 1.10 Deficit Deficit Deficit
Southern District 3.86 3.79 4.17 4.50 4.93 5.26
Western District 2.75 3.01 2.81 3.02 3.90 4.00
United States 2.46 2.44 2.36 1.73 2.47 2.57

Appellants’ brief further states:

Six of the major, i. e. Class I, Northern carriers are now in bankruptcy. The Chairman of the InterState Commerce Commission has testified before the Congress that at least eight other major Northern roads are “marginal roads” on the brink of financial collapse. The Southern roads, on the other hand, are as a group the most profitable in the nation, earning a 4.93% rate of return for 1971 as contrasted with the Northern lines’ deficit for that year, and not a single one of the Southern Class I roads is described by the Chairman of the Commission in the aforementioned testimony as a marginal road. The millions of dollars of revenues which the Southern roads receive in unfair divisions at the expense of the Northern roads obviously contribute to the plight of the Northern roads.

Brief for Appellants at 8-9 (footnotes omitted). The news media recently carried the following report which updates some of this data concerning one of the principal southern railroads:

SOUTHERN RAILWAY POSTS RECORD NET
[Southern Railway System] . . . reported record quarterly and six-month earnings yesterday.
* * *- -X- -x- *
Southern earned $29,991,000, or $2.-01 a share, compared with $20,246,000 or $1.36 for the second 1973 quarter.
AT THE SAME TIME, Southern’s board raised the dividend on common stock a nickel a share to 53 cents for the quarter, payable Sept. 16 to shareholders of record Aug. 15.
Southern President W. Graham Clayton, Jr. [sic] predicted the railroad’s earning would increase still further, largely as a result of a 10 percent general freight rate increase that became effective June 20.
FOR THE FIRST HALF of 1974, Southern earned $49,498,000 or $3.29 a share, up 48.1 percent over the $38,556,000 and $2.58 in the first half of 1973.
Total operating revenues for the latest quarter were $233,126,000, up 16.6 percent from the 1973 quarter, and for the six months totaled $444,990,000, a 14.1 percent gain.

Washington STAR-NEWS, July 24, 1974.

Section 1(4) of the Interstate Commerce Act prescribes a substantive standard which requires every common carrier to establish “just, reasonable and equitable divisions” of joint rates. 49 U.S.C. § 1(4) (1970). Sections 8 and 9 provide a means to enforce the duty established by section 1(4). Section 8 makes a carrier who fails to comply with section 1(4) responsible for the “damages sustained in consequence of any such violation,” and section 9 provides that the injured party may “make complaint to the Commission or may bring suit ... in any district court of the United States of competent jurisdiction.” Id. §§ 8, 9. Additionally, since the enactment of the original statute in 1887, section 22 has guaranteed the availability of all common law remedies:

[N]othing in this act contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this act are in addition to such remedies

Id. § 22(1). It would seem that broader protection of common law remedies could not be fashioned.

The Act is thus explicit and complete, insofar as its specific language is concerned, in preserving all common law remedies, and it emphasizes such intent by stating that the Commission remedies are “in addition” to the previously existing common law and statutory remedies. Nevertheless, the foregoing opinion concludes that because the statute denies the Commission authority to grant relief from inequitable divisions of agreed rates for the interim period between the filing of the complaint and the decision by the Commission, the courts similarly lack such power.

It would not be inequitable to grant retroactive relief against the southern railroads because they are placed on notice from the date of the service of the complaint that their income may be excessive, and they can establish appropriate reserves and contingent accounts. It is much more inequitable to perpetuate unjust enrichment to the extent of millions of dollars. What this situation resolves itself into is a claim that appellants have a right to a tremendous sum of money but the courts have presently held that no remedy exists to collect it.

The ICC lacks the power retroactively to adjust divisions of agreed rates because of section 15(6) which provides:

(6) Commission to establish just divisions of joint rates, fares, or charges —Adjustments.—Whenever, after full hearing upon complaint or upon its own initiative, the Commission is of opinion that the divisions of joint rates, fares, or charges, applicable to the transportation of passengers or property, are or will be unjust, unreasonable, inequitable, or unduly preferential or prejudicial as between the carriers parties thereto (whether agreed upon by such carriers, or any of them, or otherwise established), the Commission shall by order prescribe the just, reasonable, and equitable divisions thereof to be received by the several carriers, and in cases where the joint rate, fare, or charge was established pursuant to a finding or order of the Commission and the divisions thereof are found by it to have been unjust, unreasonable, or inequitable, or unduly preferential or prejudicial, the commission may also by order determine what (for the period subsequent to the filing of the complaint or petition or the making of the order of investigation) would have been the just, reasonable, and equitable divisions thereof to be received by the several carriers, and require adjustment to be made in accordance therewith.

Id. § 15(6) (emphasis added). While Congress clearly intended to circumscribe the authority conferred upon the ICC, there is no indication in the specific language used that Congress intended to limit the traditional powers of the courts in common law actions. To the contrary, the statute explicitly states that everything in the Act is “in addition to” the common law remedies and that the Act does not “in any way” abridge or alter the common law remedies. Id. § 22. The construction placed on section 15(6) by the foregoing opinion effectively nullifies section 1(4) and section 8 of the statute which require all carriers to establish equitable divisions of joint rates and make carriers who fail in this responsibility liable for the damages sustained in consequence of any such violation. How can a carrier who violates section 1(4) be liable in damages under sections 8 and 9 if the damaged parties cannot collect the damages? Yet that is the effect of the decisions cited by the foregoing opinion, particularly the Brimstone case and Atlantic Coast Line R.R. v. Delaware & H.R. Corp. in the Second Circuit.

However, other courts have held that section 15(6) does not prevent a common law action for damages resulting from unreasonable division of joint through rates. In Atlantic Coast Line R.R. v. Baltimore & Ohio R.R., 12 F.Supp. 711 (D.Md.1935), Judge Chestnut reasoned:

After a review of the cases, I reach the conclusion that the controlling consideration as to whether the court has jurisdiction in this case is to be found in the answer to the question whether the exercise of this jurisdiction would necessarily be inconsistent with the Interstate Commerce Act as a whole (49 USCA § 1 et seq.). And in my opinion this question must be answered in the negative. Conceding that it would have been preferable for Congress to have committed the readjustment of the rates with respect to the period now in question primarily to the Commission, and that the Commission as an expert body constantly dealing with matters of this kind is much better equipped to pass on the question than the courts, it still does not follow that the plaintiff ought to be remediless in this case; nor that the essential purposes of the Interstate Commerce Act would be frustrated by the exercise of jurisdiction here.

Id. at 716.

Although the strict language of the statute preserves the common law action, the foregoing opinion correctly perceives the effect of the specific holding in Brimstone as ruling out such an action in eases seeking retroactive divisions, even though Brimstone never really faced up to the conflict of its holding with the language of sections 1(4), 8 and 22. In the face of Brimstone, however, it is my opinion that the situation must be corrected, if at all, by the Supreme Court or by Congress. Congress has been informed of the problem and the Northern Lines testified that they were prepared to submit corrective legislation.

The northern railroads appear to be locked into their continuing deficits by the recalcitrant attitude of the southern railroads. It may be true that the present divisions are fair, but they may not be. If a court trial were held, the justness of the rates could be determined. The primary jurisdiction doctrine would require the ICC first to fix proper divisions and the trial court would then determine whether equity requires that whole or partial retroactivity be applied. But the Brimstone decision indicates that there is no remedy for this wrong which is allegedly substantial, of long duration and likely to continue.

I thus concur reluctantly in what I consider to be a most inequitable result as dictated by the Brimstone decision.

      . As used in this opinion, North refers to the northeast quadrant of the United States, and South refers to the southeast quadrant.

      . Official-Southern Divisions, 287 L.C.C. 497, 289 L.C.C. 4 (1953). Prior to 1953 the southern railroads received higher divisions than the northern roads, due in part to higher costs at the time. Divisions of Rates, Official and Southern Territories, 234 L.C.C. 175 (1939). The Supreme Court, however, found the entire rate system discriminatory against the South in New York v. United States, 331 U.S. 284, 67 S.Ct. 1207, 91 L.Ed. 1492 (1947).

      . Official-Southern Divisions, 325 L.C.C. 1, modified, 325 L.C.C. 449 (1965).

      . Baltimore & Ohio R.R. v. Aberdeen & Rockfish R.R., 393 U.S. 87, 91, 89 S.Ct. 280. 21 L.Ed.2d 219 (1968), aff’g and modifying Aberdeen & Rockfish R.R. v. United States, 270 F.Supp. 695 (E.D.La.1967).

      . Order of three-judge court, E.D.La., reprinted in Brief for Appellees at A-5.

      . Official-Southern Divisions, 337 I.C.C. 74 (1970).

      . Unpublished order.

      . ICC Orders 29885, 29799, reprinted in Appendix at 6-a.

      . ICC Docket No. 35585.

      . See text at note 13 infra.

      . Brief for Appellants at 10 (emphasis supplied). The complaint filed by the northern railroads sought relief as of 1 January 1972, whereas the proceeding before the ICC was not commenced until 17 March 1972. No reason has been given for the change of date for starting to compute relief requested in the northern railroads’ brief before this court.

      . 350 F.Supp. 719 (D.D.C.1972).

      . 49 U.S.C. § 15(6).

      . See Brief for Appellants at 10 n. 9; Brief for Appellees at 6-7.
      Rates are considered agreed rates unless they are specifically set by the ICO. If mere ICC approval of a private agreement were sufficient to make rates prescribed rates, the intent of Congress in distinguishing between the two would be violated. See Brimstone R.R. v. United States, 276 U.S. 104, 122-123, 48 S.Ct. 282, 72 L.Ed. 487 (1928).

      . 276 U.S. 104, 48 S.Ct. 282, 72 L.Ed. 487, (1928).

      . Id. at 121, 48 S.Ct. at 287.

      . Id. at 122, 48 S.Ct. at 287.

      . When the northern railroads first sought a change in divisions, it took nine years before the ICC entered an order. This strikes the court as an unreasonably long time, notwithstanding the fact that three of those years resulted from a request by the parties for a delay. See Brief for Appellant at 6 n. 3.
      There is presently pending in the House of Representatives a proposed amendment to the Surface Transportation Act which would require the ICC to hand down a ruling on these divisional questions within 32 months.

      . These sections are also codified in Title 49, U.S.Code.

      . Cf: Holloway v. Bristol-Myers, 158 U.S.App.D.C. 207, 485 F.2d 986 (1973). While both the divisions and the rates were originally prescribed by the ICO, rate increases, leaving the divisions untouched, have made the rates “agreed rates.”
      It is interesting to note the Supreme Court’s statement in Alton R.R. v. United States, 287 U.S. 229, 235-236, 53 S.Ct. 124, 126, 77 L.Ed. 275 (1932) :
      So long as the joint rates voluntarily established remain in force, each carrier is entitled as of right to the division originally agreed upon, unless a readjustment of the divisions has been made either by the parties or by the Commission pursuant to the power conferred by paragraph 6 of § 15. ... If they deemed its divisions unreasonably large, they could have invoked the power of the Commission to make a reduction.

      . Atlantic Coast Line R.R. v. Delaware & H.R. Corp., 86 F.2d 721, 723 (2d Cir. 1936). See also Texas & Pac. Ry. v. Abilene Cotton Oil Co., 204 U.S. 426, 446-447, 27 S.Ct. 350, 51 L.Ed. 553 (1907), where the Supreme Court stated,
      [Section 22] cannot in reason be construed as continuing in shippers a common-law right, the continued existence of which would be absolutely inconsistent with the provisions of the act. In other words, the act cannot be held to destroy itself. The clause is concerned alone with rights recognized in or duties imposed by the act, and the manifest purpose of the provision in question was to make plain the intention that any specific remedy given by the act should be regarded as cumulative, when other appropriate common-law or statutory remedies existed for the redress of the particular grievance or wrong dealt with in the act.

      . Atlantic Coast Line R.R. v. Delaware & H.R. Corp., 86 F.2d 721.

      . Id. at 724.

      . This route was also taken in Atlantic Coast Line R.R. v. Boston & M. R. R., 18 F.Supp. 886 (D.Mass.1937).

      . The Maryland District Court in Atlantic Coast Line R.R. v. Baltimore & Ohio R.R., 12 F.Supp. 711, seemed to rely on a distinction from the Brimstone case, vis., that there were agreed rates in Brimstone but not in the Maryland case. Such distinction, even assuming it valid, is inapplicable here. The Pennsylvania District Court opinion in Atlantic Coast Line R.R. v. Pennsylvania R.R., 12 F.Supp. 720, is inconsistent with the logic we find persuasive here.

      . 371 U.S. 84, 89, 83 S.Ct. 157, 160, 9 L.Ed.2d 142 (1962).

      . 359 U.S. 464, 79 S.Ct. 904, 3 L.Ed.2d 952 (1959).

      . Had the $8 million in annual damages that the ICC determined in 1965 been paid to the northern railroads from the date of the complaint (1956) to the present time, the northern railroads would have received approximately $144 million in damages.

      . Brief for Appellants at 9. Sources: Association of American Railroads, Railroad Facts, 1972, at 18: Tabulations prepared by Economics and Finance Department, Association of American Railroads : Property Investment and Condensed Income Accounts, .1971; Railroad Revenues, Expenses, and Income, Third Quarter 1972.

      . See text supra at 1273.

      . Brimstone R.R. v. United States, 276 U.S. 104, 122-123, 48 S.Ct. 282, 72 L.Ed. 487 (1928).

      . 86 F.2d 721 (2d Cir. 1936).

      . Atlantic Coast Line R.R. v. Baltimore & Ohio R.R., 16 F.Supp. 647 (D.Md.1936); Atlantic Coast Line R.R. v. Baltimore & Ohio R.R., 12 F.Supp. 711 (D.Md.1935); Atlantic Coast Line R.R. v. Pennsylvania R.R., 12 F.Supp. 720 (E.D.Pa.1935).

      . Hearing before the Subcommittee on Transportation and Aeronautics of the House Committee on Interstate and Foreign Commerce on H.R. 6591, et al. (Northeast Rail Transportation), May 8, 1973, pp. 280-83 (93d Cong., 1st Sess.) :
      Mr. Langdon. We have, in our situation, sir, in considering the Northeast as a whole, as we compute it, a deficit of about $100 to $125 million a year arising from what we regard as improper divisions of rates applying to and from the West and the South.
      * * :¡: * *
      Mr. Langdon. Yes, sir, that has been drafted and we are prepared to submit it. What it does is give the Commission power to fix divisions retroactively.


author: FAHY, Senior Circuit Judge: MacKINNON, Circuit Judge

text:
    Malvin SCHECHTER, Appellant, v. Caspar W. WEINBERGER, Secretary of Health, Education and Welfare, Appellee.
    No. 73-1797.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Dec. 19, 1973.
    Decided Oct. 3, 1974.

      See also, D.C.Cir., 498 F.2d 1015.
    Ronald L. Plesser, Washington, D. C., with whom Alan B. Morrison, Washington, D. C., was on the brief, for appellant.
    Michael Kimmel, Atty., Dept, of Justice, with whom Harold H. Titus, Jr., U. S. Atty., at the time the brief was filed, and Leonard Schaitman, Atty., Dept, of Justice, were on the brief for appellee. Walter H. Fleischer, Atty., Dept, of Justice, also entered an appearance for appellee.
    Before FAHY, Senior Circuit Judge, and WRIGHT and MacKINNON, Circuit Judges.
   FAHY, Senior Circuit Judge:

The Secretary of Health, Education and Welfare denied appellant an opportunity to inspect and copy certain survey reports prepared by state agencies dealing with Medicare services at a Portland, Orgeon medical laboratory and a Boston hospital. The Secretary’s refusal of access to these reports was due in part to his reliance upon section 1106(a) of the Social Security Act, 42 U.S.C. § 1306(a). Appellant sued the Secretary in our District Court to compel disclosure of the reports. On the Secretary’s motion the court granted summary judgment in his favor by order of June 7, 1973. In its order the court held that the documents requested “are exempt from disclosure by 5 U.S.C. § 552(b)(3) [Exemption 3 of the Freedom of Information Act] by virtue of the provisions of section 1106 of the Social Security Act, 42 U.S.C. § 1306. . . . ” This Exemption 3 protects from disclosure “matters that are . . . specifically exempted from disclosure by statute.”

Pending our consideration of this appeal from the judgment of the District Court, the United States Court of Appeals for the Third Circuit, in a case presenting the same legal question, reached a decision contrary to that of our District Court in this case, Stretch v. Weinberger, 495 F.2d 639 (3rd Cir. 1974); so too has the United States Court of Appeals for the Fifth Circuit in Serchuk v. Weinberger, 493 F.2d 663 (5th Cir. 1974), where the decision is listed among “Decisions Without Published Opinions.” The Serchuk court cites Stretch v. Weinberger, supra. And in Dellums v. Weinberger, Civil Action No. 181-72, Judge Jones of our District Court has held that 42 U.S.C. § 1306(a):

does not specifically exempt the documents sought from disclosure, but rather is a blanket exclusion on disclosure of all files, records and reports compiled under the Social Security Act. That blanket exemption is in direct contravention of the liberal disclosure requirement of the Freedom of Information Act, and cannot qualify as a specific exemption within the meaning of the Act. Schecter [sic] v. Richardson, Civil Action No. 710-72 (D.D.C. July 17, 1972); Serchuk v. Richardson, No. 72-1212-Civ—PF (S.D.Fla., Nov. 28, 1972). But see [People of the State of] California v. Richardson, 351 F.Supp. 733 (N.D. Cal.1972).

See also, Robertson v. Butterfield, 162 U.S.App.D.C. 298, 498 F.2d 1031 (1974), and the memorandum opinion of Judge Gesell of our District Court in Cutler v. C.A.B., 375 F.Supp. 722 (D.D.C.1974).

We agree with the reasoning of the Court of Appeals for the Third Circuit involving 42 U.S.C. § 1306(a) in the Stretch case, which seems to have met the approval of the Court of Appeals for the Fifth Circuit in Serchuk, We agree also with the reasoning of our District Court with respect to the same statute in the Dellums case. We shall accordingly reverse.

We may add that were the opening non-disclosure language of 42 U.S.C. § 1306(a) amenable to a construction as a specific statutory exemption, the language of the section which follows, with which the former must be construed, would destroy such specificity. Read as a whole, section 1306 vests complete, uncharted discretion with respect to disclosure in the Secretary rather than being a specific exemption by statute.

Reversed and remanded for further proceedings consistent with this opinion.

MacKINNON, Circuit Judge

(dissenting) :

I dissent in accordance with my views in this case previously set forth in Schechter v. Weinberger, 162 U.S.App.D.C. 282, 498 F.2d 1015 (1974).

      . 42 U.S.C. § 1306(a) in pertinent part provides as follows:
      No disclosure ... of any file, record, report or other paper, or any information, obtained at any time by the Secretary of Ilealth, Education, and Welfare ... in the course of discharging [his] . . . duties under this chapter . . . shall be made except as the Secretary of Health, Education, and Welfare . may by regulations prescribe.

      . The Social Security Amendments of 1972, Pub.L. 92-603, 86 Stat. 1329, require disclosure of survey reports compiled after January 31, 1973. See, 20 C.F.R. 401.3(v)(1). The reports requested by appellants had been compiled prior to January 31, 1973.

      . The Department of Justice courteously advised this court of the Stretch decision before its availability in the published report of the case.

      . A copy of the action of the Fifth Circuit furnished this court by the United States shows the action of that Circuit as follows:
      April 29, 1974
      Before Wisdom, Coleman and Simpson, Circuit Judges.
      Per Curiam:
      AFFIRMED. See Local Rule 21. And see Stretch v. Weinberger, 3 Cir., 1974, [495 F.2d 639]. (Footnote omitted.)

      . See footnote 4, supra.

      . To the contrary is People of the State of California v. Richardson, 351 F.Supp. 733 (N.D.Cal.1972).