author: J. SKELLY WRIGHT, Circuit Judge:

text:
    RICHMOND POWER AND LIGHT OF the CITY OF RICHMOND, INDIANA, Petitioner v. FEDERAL POWER COMMISSION, Respondent Indiana & Michigan Electric Company, Intervenor ANDERSON POWER AND LIGHT OF the CITY OF ANDERSON, INDIANA, Petitioner v. FEDERAL POWER COMMISSION, Respondent Indiana & Michigan Electric Company, Intervenor
    Nos. 72-1963, 72-2035.
    United States Court of Appeals, District of Columbia Circuit.
    Argued April 26, 1973.
    Decided May 25, 1973.
    Rehearing Denied June 21, 1973.
    Sandra J. Strebel, Washington, D. C., with whom George Spiegel, Washington, D. C., was on the brief, for petitioner in No. 72-1963.

      Wallace L. Duncan, Washington, D. C., with whom Frederick D. Palmer, Washington, D. C., was on the brief, for petitioner in No. 72-2035.
    Platt W. Davis, III, Atty. F.P.C., with whom Leo E. Forquer, Gen. Counsel, and George W. McHenry, Jr., Acting Sol., F.P.C., were on the brief, for respondent.
    Peter J. Schlesinger, New York City, for intervenor. Edwin L. Weisl, Jr., Washington, D. C., also entered an appearance for intervenor.
    Before WRIGHT and ROBB, Circuit Judges, and DAVIES, Senior District Judge.

       Of the United States District Court for the District of North Dakota, sitting by designation pursuant to 28 U.S.C. § 294 (d) (1970).

   J. SKELLY WRIGHT, Circuit Judge:

Petitioners in these consolidated cases, two municipal power companies, seek review of an order of the Federal Power Commission accepting for filing tariffs tendered by intervenor, a public utility which sells petitioners electric power at wholesale. Petitioners contend that the tariffs, which implemented a rate increase and changed certain conditions of service, were inconsistent with existing contracts between petitioners and intervenor and therefore should have been rejected by the Commission. We agree and reverse.

I. LEGAL SETTING

The Federal Power Act, 16 U.S.C. § 824 et seq. (1970), pertinent provisions of which are set forth in the margin, requires in Section 205(c) that public utilities file all rates and contracts with the Commission for sales subject to the Commission’s jurisdiction. Section 206(a) authorizes the Commission to modify any rate or contract which it determines, after a hearing, to be “unjust, unreasonable, unduly discriminatory or preferential * * Under Section 205(d) changes in previously filed rates must be filed with the Commission at least 30 days before they are to go into effect, and under Section 205(e) the Commission may suspend operation of the new rate for up to five months pending a determination of its reasonableness.

The Supreme Court of the United States has held that if a public utility, subsequent to entering into a contract for the sale of power, unilaterally files with the Commission under Section 205(d) a new tariff inconsistent with its contractual obligations, the newly filed tariff is a nullity and does not abrogate or supersede the contract. See United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 76 S.Ct. 373, 100 L. Ed. 373 (1956); FPC v. Sierra Pacific Power Co., 350 U.S. 348, 76 S.Ct. 368, 100 L.Ed. 388 (1956).

Mobile concerned provisions of the Natural Gas Act virtually identical with the provisions of the Federal Power Act summarized above. There a regulated natural gas company entered into a 10-year contract to supply natural gas at a single fixed price. Subsequently the company, without the consent of the buyer, filed new schedules with the Commission purporting to increase the rate. The Court held that the new schedule “was a nullity insofar as it purported to change the rate set by [the] contract” and “that the contract rate remained the only lawful rate.” 350 U.S. at 347, 76 S.Ct. at 382. It reasoned that the Natural Gas Act evidenced no purpose to abrogate private rate contracts, and expressly recognized that rates to particular customers may be set by individual contracts. 350 U.S. at 338, 76 S.Ct. 373. This interpretation of the statutory scheme, according to the Court, did not impair the regulatory powers of the Commission, for the Commission could at any time enter into a proceeding to determine that the contract rate was unreasonable and could modify it if it so found. See 350 U.S. at 344-345, 76 S.Ct. 373. The Sierra case expressly adopted Mobile’.s reasoning and holding in a similar situation arising under the Federal Power Act.

The Sierra — Mobile problem came before the Supreme Court again in United Gas Pipe Line Co. v. Memphis Light, Gas & Water Division, 358 U.S. 103, 79 S.Ct. 194, 3 L.Ed.2d 153 (1958). There a regulated gas pipeline company had entered into long-term sale agreements. These agreements, unlike the ones in Sierra and Mobile, did not provide for a single fixed rate, but provided that “[a] 11 gas delivered hereunder shall be paid for by Buyer under Seller’s Rate Schedule * * * or any effective superseding rate schedules, on file with the Federal Power Commission.” 358 U.S. at 105, 79 S.Ct. at 196. (Emphasis by the Court.) The seller filed a new rate schedule purporting to increase rates over the last previously filed schedule. The Court held that the newly filed rate was the effective rate, and distinguished the case from Mobile. Interpreting the contract between the parties, the Commission had concluded that the seller “bound itself to furnish gas to these customers during the life of the agreements not at a single fixed rate, as in Mobile, but at what in effect amounted to its current ‘going’ rate.” 358 U.S. at 110, 79 S.Ct. 194. (Emphasis in original.) The Supreme Court, after scrutinizing the record, concluded that there was ample support for the Commission’s interpretation of the contract, both factually and legally. See 358 U.S. at 114, 79 S.Ct. 194. The Court therefore held that, rather than seeking unilaterally to abrogate its contractual undertaking, the seller in Memphis sought “simply to assert, in accordance with the procedures specified by the Act, rights expressly reserved to it by contract.” 358 U.S. at 112, 79 S.Ct. at 199. It was therefore concluded that the seller could, consistent with its contractual undertaking, unilaterally increase its rate by filing a new tariff with the Commission.

The rule of Sierra, Mobile and Memphis is refreshingly simple: The contract between the parties governs the legality of the filing. Rate filings consistent with contractual obligations are valid; rate filings inconsistent with contractual obligations are invalid. The two cases before us concern application of this rule to two slightly different contractual undertakings. Although the Commission dealt with both cases in the same order, we will consider them separately because of these differences.

II. RICHMOND POWER AND LIGHT OF THE CITY OF RICHMOND, INDIANA

Richmond Power and Light (hereinafter Richmond) is a municipally owned electric power company selling electricity to various retail customers. It generates part of the electric energy it sells and purchases the remainder of its requirements from intervenor Indiana & Michigan Electric Company (hereinafter I & M) pursuant to a 10-year contract dated November 15, 1965. I & M is a public utility subject to the jurisdiction of the Federal Power Commission, see Indiana & Michigan Electric Co., 33 FPC 739 (1965), affirmed, 7 Cir., 365 F.2d 180, cert. denied, 385 U.S. 972, 87 S.Ct. 509, 17 L.Ed.2d 435 (1966), and its sales to Richmond are subject to the Commission’s jurisdiction. I & M also has retail customers of its own in certain parts of Indiana, including many industrial users, and its sales to these customers are not subject to regulation under the Federal Power Act as the Act applies only “to the sale of electric energy at wholesale in interstate commerce * * Instead, I & M’s sales to its retail customers are subject to the jurisdiction of the Indiana Public Service Commission.

Since the Federal Power Commission had jurisdiction over I & M’s sale of electricity to Richmond, the contract between I & M and Richmond was filed with the Commission under Section 205(c) of the Act, and was designated Rate Schedule FPC No. 58. As is common practice, the contract between I & M and Richmond does not itself contain a price term, but rather refers to a rate tariff of general applicability. In this case the contract provides that electric energy will be provided “at the rate and under the provisions of Company’s [I & M’s] Tariff I.P. as regularly filed with the Public Service Commission of Indiana, said tariff being selected by the Customer [Richmond], as long as said tariff is in effect * * The Tariff IP referred to in the contract is an industrial tariff that I & M negotiated for many of its municipal power company wholesale buyers as well as for many of its larger industrial retail customers. Tariff IP was on file with the Public Service Commission of Indiana when this contract was negotiated. Pursuant to the terms of the Richmond — I & M contract, the same Tariff IP as was then on file with the Public Service Commission of Indiana was attached to the contract when it was filed with the Federal Power Commission and became a supplement thereto. As a result, I & M’s industrial retail customers, whose rates were governed directly by the Tariff IP on file with the Indiana Public Service Commission, and Richmond, whose rates were governed by the contract on file with the Federal Power Commission which expressly incorporated the Tariff IP on file with the Public Service Commission of Indiana, all received electric power subject to the same rate formula.

It is conceded that, consistent with the Richmond- — I & M contract, I & M had the right to seek rate increases in the Tariff IP on file with the Indiana Commission. The contract language “Tariff I.P. as regularly filed with the Public Service Commission of Indiana” obviously recognizes this possibility. Indeed, the contract expressly provides “and in the event said tariff is replaced by a new or revised tariff incorporating higher or lower rates than those stipulated in the aforementioned tariff, the Company will continue to furnish service as stipulated in the Agreement and the Customer will pay for such service at the higher or lower rates from and after the date when such rates are made effective.” Acting consistently with the contract, then, I & M obtained from the Indiana Public Service Commission approval for a new Tariff IP which went into effect on March 29, 1972, implementing a rate increase of about 10 per cent. Richmond also concedes that at this point, consistent with I & M’s contractual obligation, I & M could have filed the new Tariff IP as a superseding supplement to the Richmond — I & M contract on file with the Federal Power Commission. But I & M did not take this step. Instead, it filed with the Federal Power Commission, as a superseding supplement to the Richmond — I & M contract, a Rate Schedule WS which effected a rate increase estimated at 45 per cent and also changed certain conditions of service. Richmond’s basic position on this appeal is that I & M’s filing of Rate Schedule WS was inconsistent with its contractual undertaking to sell Richmond electricity “at the rate and under the provisions of Company’s Tariff I.P. as regularly filed with the Public Service Commission of Indiana * * * as long as said tariff is in effect * * *.”

On its face Richmond’s position appears unassailable. But in its order accepting Rate Schedule WS for filing, and in a subsequent order denying a rehearing, the Federal Power Commission has attempted what may charitably be termed an “end run” around that position; the Commission has made an effort to interpret the Richmond — I & M contract in a way that avoids compliance with the command of the Mobile■ — Sierra —Memphis cases.

The Commission’s analysis of the contract begins with this observation:

«* * -x- The contract provisions cited * * * indicate that,- at the time the agreements were made, the Public Service Commission of Indiana was regarded as the regulatory body with jurisdiction and that rate changes were contemplated by the order or with the approval of that Commission. This Commission’s jurisdiction over I & M’s wholesale rates has since been asserted and confirmed, Indiana & Michigan Electric Company, 33 FPC 739 (1965), affirmed, 365 F.2d 180 (C.A.7, 1966), cert. denied, 385 U.S. 972 [87 S.Ct. 509, 17 L.Ed.2d 435] (1966). * * *”

From this, the Commission argues in its brief that

“It is inconceivable that the parties intended to establish a rate for sales subject to the jurisdiction of the Federal Power Commission. Indeed, it is more likely that the parties intended that the contracts be subject to the ratemaking authority of the appropriate regulatory body. That organization is now the Federal Power Commission and its rate-changing procedures apply in full.”

Brief for respondent at 15-16 (footnote omitted).

The problem with this whole argument is that, as applied to the Richmond —I & M contract, its first premise is factually incorrect. True, there was a time when it was assumed that I & M’s sales to Richmond were subject to the jurisdiction of the Indiana Public Service Commission rather than the Federal Power Commission. But the contract between Richmond and I & M was entered into on November 15, 1965, and the Federal Power Commission’s decision holding that it had jurisdiction over I & M’s wholesale transactions had issued on April 15, 1965 after a lengthy investigation and hearing. By July 1965 I & M had already commenced filing its wholesale for resale rate schedules with the Federal Power Commission pursuant to Section 205(c) of the Act. The contract was thus entered into with full knowledge that it was the Federal Power Commission, not the Indiana Public Service Commission, which had ultimate jurisdiction over the transactions covered in the contract.

Richmond has given a most plausible explanation why Richmond and I & M, even though knowing that the Federal Power Commission had ultimate jurisdiction over their contract, agreed that the rate for electricity would be governed by the Tariff IP on file with the Public Service Commission of Indiana. According to Richmond, I & M and Richmond are competitors in certain respects: each tries to attract new industrial retail customers to its service territory and to keep existing industrial retail customers. The Richmond — I & M contract ensures that Richmond receives the same rate that I & M charges its own industrial retail customers. In other words, the contract ensures that Richmond, when it resells power to its industrial retail buyers, will be able to price itself competitively with the retail rates I & M offers to its own industrial customers. Absent such protection, I & M could offer a lower price to its industrial retail customers than Richmond would be able to offer, thereby directing new industries away from Richmond’s service territory and into I & M’s retail service territory. And because of concerns relating to such matters as employment and the property tax base, Richmond, a municipally owned company, had an interest in encouraging industries to locate in its service territory.

The Commission’s order next states that this was not a “fixed-rate” contract under the Mobile and Sierra cases, as it permitted some change in the rates. Since rate changes were contemplated, the Commission argues, the case is properly controlled by the Supreme Court’s decision in Memphis, where a unilateral filing was effective to change the rates. But this argument misperceives the rationale of the Court's holdings. Because the wholesale transactions regulated under the Natural Gas Act and the Federal Power Act “require substantial investment in capacity and facilities for the service of a particular distributor,” both acts provide for individual arrangements between sellers and wholesale buyers, with the relations between the parties established initially by contract. See United Gas Pipe Line Co. v. Mobile Gas Service Corp., supra, 350 U.S. at 339, 76 S.Ct. at 378. By ensuring that contractual obligations cannot be circumvented by one party to the contract unilaterally filing with the Commission a new tariff inconsistent with those obligations, the Mobile — Sierra—Memphis doctrine “preserv[es] the integrity of contracts” and “permits the stability of supply arrangements which all agree is essential to the health of * * * industry.” Id. at 344, 76 S.Ct. at 380. These principles apply whether the parties agree to a specific rate or whether they agree to a rate changeable in a specific manner. In either case the contract is binding, and a unilateral filing is ineffective to change it. The parties to this particular contract each had certain interests it sought to protect in drafting the provision under discussion. I & M, no doubt, wanted to be able to change its industrial tariff to reflect increased costs, inflation, and so forth, Richmond, in turn, wanted to ensure that it would not be placed in a competitive squeeze with respect to resale to industrial customers. The accommodation reached in the contract serves both these interests by permitting I & M to seek changes in its Tariff IP on file with the Public Service Commission of Indiana, but requiring that Richmond be served under the same tariff as that used by I & M for its own industrial retail customers. We see no reason why the integrity of this contractual undertaking is any less deserving of protection under the Act than one for a single fixed rate.

In its order denying a rehearing, the Commission adverted to Richmond’s argument that the contract represented agreement by I & M that its wholesale rates to Richmond would be the same as I & M’s retail rates in its Tariff IP on file with the Indiana Commission. The Federal Power Commission answers:

“This Commission has exclusive jurisdiction over I & M’s wholesale sales to * * * [Richmond], and I & M is obligated to charge those rates which are on file with this Commission. This Commission’s jurisdiction cannot be limited or avoided by private contract. * * ”

This response is most troubling, for it shows that the Commission simply does not understand, or more likely is not willing to abide by, the fundamental principle of the Sierra — Mobile—Memphis decisions. As the Supreme Court emphasized in Mobile in response to similar arguments, “[Djenying to natural gas companies the power unilaterally to change their contracts in no way impairs the regulatory powers of the Commission, for the contracts remain fully subject to the paramount power of the Commission to modify them when necessary in the public interest.” 350 U.S. at 344, 76 S.Ct. at 381. Thus, in our own case, the Commission always remains free, upon its own motion, to enter into a proceeding under Section 206(a) of the Act to determine whether the contract rate between Richmond and I & M is “unjust, unreasonable, unduly discriminatory or preferential * * *.” If it so determines, it can order the rate changed. If the Federal Power Commission believes that the Public Service Commission of Indiana is being niggardly in approving rate increases in Tariff IP, it is free to enter into a proceeding to require Richmond or any other wholesale buyer to pay a higher rate. In summary, the Richmond — I & M contract, like the contracts in Mobile and Sierra, does not limit the Commission’s jurisdiction, for under the Act the Commission has no jurisdiction to change contract rates except after determining, through a proceeding under Section 206(a), that the contract rate is unreasonable.

The Commission’s brief argues:

“ * * * If public utilities were prohibited from filing rates believed to be consistent with the Federal Power Act, the company might lose revenues to which it is entitled by statute for the period between the termination of suspension and the Commission’s ultimate decision on the just and reasonable rate. * * * ”

Brief for respondent at 17. But surely this argument proves too much, for it also cuts against the holding in the Sierra case. There, after the seller unilaterally filed its rate increase, the Commission accepted the rate for filing but suspended it for five months pending the outcome of a Section 206(a) proceeding to determine its reasonableness. The Commission ultimately found that the new rate was reasonable (thereby implying that the contract rate was unreasonable), but the order embodying this finding did not issue until some nine months after termination of the five-month suspension. Since the Commission had accepted the new rate for filing, the new rate became the effective rate during this nine-month period. The Court expressly held that the filing should have been rejected, as inconsistent with contractual obligations, and that the Section 206(a) determination “can effect no change prior to the date of the order * * 350 U.S. at 353, 76 S.Ct. at 371. Thus the Court recognized that the contract rate, even if it was ultimately determined to be unreasonably low, remained the only lawful rate until the date of the Commission’s order in the Section 206(a) proceeding. Nor is there anything particularly inequitable about this result, since it was the seller after all who, through arm’s length negotiation, entered into the contract in the first place. And, as stated in Mobile, this result was simply part of the “reasonable accommodation” afforded by the Act “between the conflicting interests of contract stability on the one hand and public regulation on the other.” 350 U.S. at 344, 76 S.Ct. at 381.

III. ANDERSON POWER AND LIGHT OF THE CITY OF ANDERSON, INDIANA

Anderson Power and Light (hereinafter Anderson) is also a municipally owned electric power company selling electricity to assorted retail customers. Unlike Richmond, it no longer generates any electricity but purchases all of its requirements from I & M pursuant to a long-term agreement. In matters relevant to the issues before us, the Anderson — I & M contract is identical with the Richmond — I & M contract except in two respects. First, and most importantly, the Anderson — I & M contract was entered into on April 17, 1957 at a time when both parties to the contract admittedly assumed that the Public Service Commission of Indiana, not the Federal Power Commission, had ultimate jurisdiction over the contract. In addition, the relevant contract language is slightly different. Whereas the Richmond — I & M contract referred to the “Tariff I.P. as regularly filed with the Public Service Commission of Indiana,” the Anderson — I & M contract provides, in pertinent part, that I & M will provide electric energy “at the rate and under the provisions of the regularly filed and published tariff selected by the Customer [Anderson] and known as Tariff I.P. (a copy of which is attached hereto), as long as said tariff is in effect * * In other respects the Anderson case is identical with the Richmond case. Here too I & M filed with the Federal Power Commission the new Rate Schedule WS purporting to increase Anderson’s rates, and here too Anderson claims that since there is a Tariff IP still in effect before the Indiana Public Service Commission I & M’s filing violates its contractual commitment to serve Anderson “at the rate and under the provisions of the regularly filed and published tariff * * * known as Tariff I.P. * * * as long as said tariff is in effect * *

We do not believe either of the differences between the Anderson contract and the Richmond contract affects the outcome of the case, though we reach that conclusion through reasoning quite different from that used in the previous section to discredit the Commission’s interpretation of the Richmond — I & M contract.

We begin our analysis again by reference to the Commission’s order accepting I & M’s Rate Schedule WS for filing. After recognizing, correctly in this case, that the contract was entered into at a time when it was assumed the Public Service Commission of Indiana had jurisdiction over the transaction, the order notes “that rate changes were contemplated by the order or with the approval of that Commission.” The order then refers to another recently decided case, concerning another Indiana wholesale power contract, wherein the Commission stated:

“Our review indicates that when read in their entirety, the subject contracts by their express provisions contemplate changes in the rates and charges for electrical power by or with the approval of the Public Service Commission of Indiana. Since 1965 sales under such contracts have been expressly held to be subject to the jurisdiction of the Federal Power Commission. We therefore find that because the contracts contemplate changes in rates and charges by the appropriate regulatory authority, [the seller] is not precluded from filing for an increase in its filed rates, and the rate filing procedures of Section 205 of the Federal Power Act are applicable to this proceeding. The Sierra and Mobile cases, swpra, do not therefore apply. United Gas Pipeline Company v. Memphis Light, Gas and Water Division, et al., 358 U.S. 103, [79 S.Ct. 194, 3 L.Ed.2d 153] (1958). We shall therefore deny the motions [to reject the filing].”

The Commission seems to be saying that it is simply interpreting the contract, in light of changed circumstances, to accomplish what the parties intended. And we have no quarrel in principle with this approach to contract interpretation. But the Commission’s analysis of what the parties intended in this instance, and its attempt to fit this case within the Memphis mold, will not stand scrutiny. The Commission says that the parties contemplated rate changes “by the order or with the approval of” the appropriate regulatory commission. This may well be true, but it is beside the point. The issue under Memphis is not whether the parties contemplated change by the appropriate regulatory authority, for under the law every electric power contract must contemplate such change. Instead, the question is whether the parties contemplated that the seller could unilaterally effect a change in the rate simply by filing a new tariff with the appropriate regulatory agency. And if we begin with the Commission’s observation that the parties to the Anderson — I & M contract contemplated that Indiana law rather than the Federal Power Act governed their contract, we can see that the parties never contemplated anything of the sort.

Under Indiana law no change can be made in any public utility rate schedule except upon approval by the Public Service Commission of Indiana. A public utility may file a petition requesting an increase in its own rate, and the Commission must then proceed with an investigation into the lawfulness of the rates. But no order affecting the rates can be entered by the Commission without a formal public hearing, and no rate change is effected until there is an order by the Commission approving the increase. In other words, no rate could be increased under Indiana law without going through a procedure similar in many respects to the procedure established in 'Section 206(a) of the Federal Power Act. The mere act of filing a rate increase did not effect a rate increase under Indiana law. There had to be affirmative approval of the increase by the Public Service Commission, after an investigation and a hearing. Indeed, in the instant case when I & M sought a 10 per cent increase in Tariff IP before the Public Service Commission these procedural requirements apparently were followed. I & M filed an application with the Public Service Commission to increase its rates in July 1971. The matter came on for a hearing before the Public Service Commission in January 1972. On March 24, 1972 the Commission approved the rate increase by order. Only then was it permitted to take effect.

We think that if one is to construe the Anderson — I & M contract, in light of changed circumstances, to reflect as nearly as one can the intentions of the parties to the contract, the only possible result is to construe it as not permitting I & M to change the rate simply by filing a new tariff with the Federal Power Commission. This case, then, is critically different from Memphis, where it was ■evident that the parties to the contract contemplated that the seller could unilaterally change the rate by filing a superseding tariff with the Commission. See 358 U.S. at 105, 114-115, & n.9, 79 S.Ct. 194. See also Pacific Natural Gas Co. v. FPC, 9 Cir., 276 F.2d 350, 351 (1960).

The obvious truth of the matter is that Anderson, like Richmond, intended to key its rates to those charged by I & M to its own industrial customers in order to protect itself against the same competitive squeeze that concerned Richmond. Any uncertainties one might have as to what the contracting parties intended are set to rest by the fact that in 1969, some four years after it had become clear that the Federal Power Commission was the appropriate regulatory body, I & M tendered to Anderson for its approval a new contract which provided, in terms identical with the Richmond — I & M contract, that electricity would be furnished “at the rate and under the provisions of Company’s Tariff I.P. as regularly filed with the Public Service Commission of Indiana *

The parties to both the Richmond and the Anderson contracts intended that the municipal buyers receive electricity under the same tariff that governed I & M’s industrial retail customers. While they contemplated changes in Tariff IP, they never contemplated that those changes could be effected merely by I & M’s filing a new tariff. As a result, I & M’s filing of Rate Schedule WS as a superseding supplement to both contracts was inconsistent with its contractual obligations and those filings should have been rejected. Accordingly, we remand these cases to the Commission with directions to reject I & M’s filings and to initiate such proceedings as may be necessary to secure refunds of the incremental amounts paid by Richmond and Anderson to I & M since the time Rate Schedule WS was erroneously allowed to become effective.

So ordered.

      . 16 U.S.C. § 824d(c) — (e) (1970) :
      “(c) Under such rules and regulations as the Commission may prescribe, every public utility shall file with the Commission, within such time and in such form as the Commission may designate, and shall keep open in convenient form and place for public inspection schedules showing all rates and charges for any transmission or sale subject to the jurisdiction of the Commission, and the classifications, practices, and regulations affecting such rates and charges, together with all contracts which in any manner affect or relate to such rates, charges, classifications, and services.
      “(d) Unless the Commission otherwise orders, no change shall be made by any public utility in any such rate, charge, classification, or service, or in any rule, regulation, or contract relating thereto, except after thirty days’ notice to the Commission and to the public. Such notice shall be given by filing with the Commission and keeping open for public inspection new schedules stating plainly the change or changes to be made in the schedule or schedules then in force and the time when the change or changes will go into effect. The Commission, for good cause shown, may allow changes to take effect without requiring the thirty days’ notice herein provided for by an order specifying the changes so to be made and the time when they shall take effect and the manner in which they shall be filed and published.
      “ (e) Whenever any such new schedule is filed the Commission shall have authority, either upon complaint or upon its own initiative without complaint, at once, and, if it so orders, without answer or formal pleading by the public utility, but upon reasonable notice, to enter upon a hearing concerning the lawfulness of such rate, charge, classification, or service; and, pending such hearing and the decision thereon, the Commission, upon filing with such schedules and delivering to the public utility affected thereby a statement in writing of its reasons for such suspension, may suspend the operation of such schedule and defer the use of such rate, charge, classification, or service, but not for a longer period than five months beyond the time when it would otherwise go into effect; and after full hearings, either completed before or after the rate, charge, classification, or service goes into effect, the Commission may make such orders with reference thereto t as would be proper in a proceeding initiated after it had become effective. If the proceeding has not been concluded and an order made at the expiration of such five months, the proposed change of rate, charge, classification, or service shall go into effect at the end of such period, but in case of a proposed increased' rate or charge, the Commission may by order require the interested public utility or public utilities to keep accurate account in detail of all amounts received by reason of such increase, specifying by whom and in whose behalf such amounts are paid, and upon completion of the hearing and decision may by further order require such public utility or public utilities to refund with interest to the persons in whose behalf such amounts were paid, such portion of such increased rates or charges as by its decision shall be found not justified. At any hearing involving a rate or charge sought to be increased, the burden of proof to show that the increased rate or charge is just and reasonable shall be upon the public utility, and the Commission shall give to the hearing and decision of such questions preference over other questions pending before it and decide the same as speedily as possible.”
      16 U.S.C. § 824e(a) (1970) :
      “(a) Whenever the Commission, after a hearing had upon its own motion or upon complaint, shall find that any rate, charge, or classification, demanded, observed, charged, or collected by any public utility for any transmission or sale subject to the jurisdiction of the Commission, or that any rule, regulation, practice, or contract affect [ing] such rate, charge, or classification is unjust, unreasonable, unduly discriminatory or preferential, the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force, and shall fix the same by order.”

      . See also Portsmouth Gas Co. v. FPC, 101 U.S.App.D.C. 99, 247 F.2d 90 (1957) ; Shell Oil Co. v. FPC, 3 Cir., 334 F.2d 1002, 1007 (1964).

      . Under its terms, the contract went into effect on January 1, 1966 and will expire on January 1, 1976 unless altered by agreement of both parties before that date.

      . 16 U.S.C. § 824(b) (1970) (emphasis added).

      . See United Gas Pipe Line Co. v. Memphis Light, Gas & Water Division, 358 U.S. 103, 115 n. 8, 79 S.Ct. 194, 3 L.Ed.2d 153 (1958).

      . See text at p. 500 infra.

      . Richmond also claims that the filing violated a provision of the contract requiring notice and negotiation of any proposed modifications to the contract. The pertinent provision reads:
      “At any time from the date of this Agreement either party, by giving not less than ninety days written notice to the other party, may from time to time call for a reconsideration of the terms and conditions of this Agreement, in-eluding, but without limiting the generality of the foregoing, any change in the facilities to be provided by the parties and/or the operation of such facilities. If such reconsideration is called for, the authorized representatives of the parties shall meet promptly and discuss any changed conditions not foreseen or reasonably foreseeable at the date of this Agreement or at the conclusion of the next previous reconsideration, if any, and any other factors which might cause any inequities. Any agreement modifying such terms and conditions shall specify the date such modification shall become effective.”
      I & M argues that changes in the appropriate tariff do not fall within this provision since it applies only to “changed conditions not foreseen or reasonably foreseeable at the date of this Agreement” and the contract admittedly foresees changes in Tariff IP. Since we find that I & M’s filing violates the contract in other respects, we need not reach this question of contract interpretation.

      . The FPC has recently revealed its disagreement with the Mobile and Sierra decisions. In Carolina Power and Light Co., 47 FPC 1, 4 (1972), the Commission stated:
      “The conclusions expressed by [the presiding examiner] and affirmed by this Opinion and order are, in our judgment, the only conclusions available to us, given the current state of the law as interpreted in Mobile, Sierra, and Memphis. We feel constrained, however, to express our misgivings with respect to these conclusions and to state that in our judgment the Mobile-Sierra rule is inconsistent with sound regulatory policy. That rule has the effect of limiting our authority under Section 206(a) of the Federal Power Act.
      The FPC reiterated this position in Philadelphia Electric Co., Susquehanna Electric Co., Docket No. E-7726, Aug. 31, 1972, slip op. at 4.

      . See Indiana & Michigan Electric Co., 33 FPC 739 (1965), affirmed, 7 Cir., 365 F.2d 180, cert. denied, 385 U.S. 972, 87 S.Ct. 509, 17 L.Ed.2d 435 (1966).

      . Indiana & Michigan Electric Co., 35 FPC 298 (1966).

      . I & M argues that, even though the FPC order assuming juridiction over I & M’s wholesale transactions had issued in 1965, the matter was still strongly contested on appeal, and it was not until the Supreme Court denied a writ of certiorari that the matter was considered settled. I & M contends, therefore, that even when Richmond’s contract was negotiated the parties assumed that Indiana law rather than the Federal Power Act governed the contract. We find it hard to believe that sophisticated commercial entities such as I & M and Richmond would rest important long-term contractual obligations upon the hope that a court would reverse the FPC’s order. In any event, for the reasons discussed in text infra at i>p. 498-501, even if the parties both assumed in 1965 that Indiana law governed, we would still be constrained to interpret the contract as barring I & M from effecting changes in rates simply by filing a new tariff with the appropriate regulatory authority.

      . In this respect the relationship between the parties differs from that in United Gas Pipe Line Co. v. Memphis Light, Gas & Water Division, supra note 5. There the buyers argued that it would be unreasonable to find that they intended, in signing the contract, to permit the seller to change its rate by unilaterally filing a new tariff. See 358 U.S. at 115-116 n. 10, 79 S.Ct. 194. The Court disagreed since it appeared, inter alia, that the buyers were entitled by contract with their customers to pass on any rate increases effected by the seller. Ibid. We may assume that such is the case here, although there is nothing in the record on the matter. This factor is not controlling here, however, since Richmond’s alleged interest is not in having the rate remain static, but in having it remain in parity with the rates charged other industrial customers of I & M, thereby ensuring that I & M will not be able to have a competitive advantage in encouraging new industrial loads to locate in its service territory. Richmond thus had an interest in barring unilateral rate increases even if it could pass rate increases on to it customers.

      . The FPC has already entered into one investigation of the rates charged by I & M to its municipally owned wholesale customers. See Indiana & Michigan Electric Co., supra note 10. An order approving an offer of settlement, to which all parties agreed, was issued some two years later. See Indiana & Michigan Electric Co., 39 FPC 272 (1968). Under the settlement, each municipal wholesale buyer was given the option of switching from its present tariff to a new Tariff MRS, thereby obtaining a rate reduction. Evidently most municipalities availed themselves of this option, since when I & M tendered its Rate Schedule WS for filing in June 1972 the tender indicates that out of 16 municipal wholesale customers the rates of 12 were governed in June 1972 by Tariff MRS. Notably, Richmond and Anderson were among those municipal buyers that did not take advantage of the option and I & M’s June 1972 tender states that their rates -were still governed by Tariff IP.

      . Public Service Co. of Indiana, Inc.,FPC -, - (Docket No. E-7645, Feb. 25, 1972) (slip op. at 2) (footnote omitted).

      . See W. C. Shepherd Co. v. Royal Indemnity Co., 5 Cir., 192 F.2d 710, 715 (1951) ; Pacific Portland Cement Co. v. Food Machinery & Chemical Corp., 9 Cir., 178 F.2d 541, 551-553 (1949) ; Restatement of Contracts § 235, Comment e & Illustration 8, at 324-325 (1932).

      . See United Gas Pipe Line Co. v. Memphis Light, Gas & Water Division, supra note 5, 358 U.S. at 110, 79 S.Ct. 194.

      . Change of rates, how made.- — No change
      shall thereafter be made in any schedule, including schedules of joint rates, except upon thirty [30] days’ notice to the commission and approval by the commission and all such changes shall be plainly indicated upon existing schedules or by filing new schedules in lieu thereof thirty [30] days prior to the time the same are to take effect * * *.
      10 Burns Ind.Stat.Ann. § 54-317 (1951 Replacement Yol.), IC 1971, 8-1-2-42 (emphasis added).

      . Complaint by public utility. — Any public utility may. make complaint as to any matter affecting its own rates or service with like effect as though made by any mercantile, agricultural or manufacturing society, body politic or municipal organization or by any ten [10] persons, firms, corporations or associations. Whenever any public utility shall file a complaint or petition as to any matter concerning an increase of its own rates, affecting its patrons in any county in which such public utility renders service, the public utility shall publish a notice of the filing of such petition or complaint in a newspaper of general circulation published in such county.
      10 Burns Ind.Stat.Ann. § 54^415 (1972 Cum.Pocket Supp.), IO 1971, 8-1-2-61.

      . Complaints — Investigation "and hearing. —Upon a complaint made against any public utility by any mercantile, agricultural or manufacturing society or by any body politic or municipal organization or by ten [10] persons, firms, corporations or associations, or ten [10] complainants of all or any of the aforementioned classes, or by any public utility, that any of the rates, tolls, charges or schedules or any joint rate or rates in which such petitioner is directly interested are in any respect unreasonable or unjustly discriminatory, or that any regulation, measurement, practice or act whatsoever affecting or relating to the service of any public utility, or any service in connection therewith, is in any respect unreasonable, unsafe, insufficient or unjustly discriminatory, or that any service is inadequate or can not be obtained, the commission shall proceed, with or without notice, to make such investigation as it may deem necessary or convenient. But no order affecting said rates, tolls, charges, schedules, regulations, measurements, practice or act, complained of, shall be entered by the commission without a formal public hearing.
      10 Burns Ind.Stat.Ann. § 54-408 (1951 Replacement Vol), IO 1971, 8-1-2-54.

      . See note 19 supra.

      . See notes 17 & 19 supra.

      . Reply brief of Petitioner Anderson Power and Light, Exhibit A-l, at 3-a. Anderson never approved the tendered contract and it is therefore not binding as such. It is indicative, however, of the intentions of the parties to the 1957 agreement, as manifested in subsquent conduct. See generally S. Williston, Contracts § 723 (3d ed. 1961). See also Restatement of Contracts, supra note 15, § 235(e). Gf. note 13 supra.


source: Caselaw Access Project

author: LEVENTHAL, Circuit Judge: BAZELON, Chief Judge SPOTTSWOOD W. ROBINSON, III, Circuit Judge

license: Public Domain

text:
    Emmett J. STEBBINS, Appellant, v. KEYSTONE INSURANCE COMPANY et al. Emmett J. STEBBINS, Appellant, v. INSURANCE COMPANY OF NORTH AMERICA et al.
    Nos. 24658, 71-1043. No. 24658
    United States Court of Appeals, District of Columbia Circuit.
    Argued Oct. 22, 1971.
    Decided June 5, 1973.

      Emmett J. Stebbins, appellant pro se. James F. Bromley, Washington, D. C., with whom James C. Gregg, Washington, D. C., was on the brief, for appellee, Keystone Ins. Co. and others in No. 24,-658.
    Thomas C. Matthews, Jr., and William R. Weissman, Washington, D. C., were on the brief for appellee, Ins. Co. of North America, and others in No. 71-1043.
    Charles L. Reischel, Atty., E. E. O. C., with whom Julia P. Cooper, Chief, Appellate Section, George H. Weiler and Philip B. Sklover, Attys., E. E. O. C., as amicus curiae urging reversal.
    Before BAZELON, Chief Judge, and LEVENTHAL and ROBINSON, Circuit Judges.
   LEVENTHAL, Circuit Judge:

These are consolidated appeals in two separate actions brought by Emmett J. Stebbins, in which he alleged inter alia that the defendant insurance companies had refused to employ him on account of his race. Both claims were dismissed by the District Court, which relied on the res judicata effect of an earlier judgment that Stebbins was “so lacking in elementary financial prudence, candor, stability, meaningful interest in the business world, and definite career direction that no prudent insurance company could reasonably offer to employ him in a position of fiscal trust. . . .” Finding that, in the context of this litigation, the doctrine of collateral estoppel was improperly applied in both of these cases, we reverse.

1. BACKGROUND: THE FIRST INA LITIGATION

In late 1969, Stebbins filed a class action (Civil Action No. 2848-69) against the Insurance Company of North America (INA), claiming racially discriminatory denial of job opportunities to himself and other blacks, in contravention of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., and section 16 of the Civil Rights Act of 1870, 42 U.S.C. § 1981. He alleged that, as part of INA’s discriminatory practices, the company had refused to employ him or provide him with information concerning the positions of Claims Examiner, Adjuster, Supervisor, Technical Representative, and Manager.

On a record consisting of a deposition of Stebbins taken by INA, exhibits introduced by INA during this deposition, and affidavits from the company's officers, INA moved for summary judgment on three separate grounds: First, since Stebbins did not allege that he had ever applied for employment, he could not claim there had been a refusal to hire him. Moreover, the exhibits showed that INA had responded directly to his requests for job specifications and had repeatedly asked him to complete an application form, which had been mailed to him.

Second, INA contended that the record demonstrated Stebbins was unemployable in any position of fiscal trust in the insurance industry.

Third, it was claimed that Stebbins had no standing to represent a class of aggrieved persons unless he himself had been the subject of unlawful discrimination.

The Equal Employment Opportunities Commission (EEOC) appeared at a hearing on June 17, 1970, as amicus curiae in support of INA’s motion for summary judgment. Its counsel stated in oral argument that, since Stebbins had never applied for a position, the record demonstrated no Title VII violation as to him. The Commission also agreed that Stebbins’ deposition showed he was unqualified for employment as an insurance adjuster or in a supervisory capacity. Finally, the EEOC argued that the court should strike the class action claims — not because Stebbins had failed to prove discrimination against himself — but because he was not a competent class representative as required by Rule 23(a)(4), Fed.R.Civ.P.

INA recognized the heavy burden it carried in seeking summary judgment on the broad ground of Stebbins’ unemployability. It pointed out that Stebbins had not offered any counteraffidavits and had failed to respond to INA’s statement of undisputed material facts. In short, Stebbins failed to contest any of the issues upon which INA sought judgment, and his only opposition was based on his stated desire to conduct extensive discovery proceedings against INA — without intimating what relationship this might bear to INA’s proffered defenses.

At the conclusion of the June 17 hearing, the trial court orally advised Stebbins that the motion for summary judgment would be granted on the grounds that Stebbins had not applied for a job and was “not employable in the insurance industry.” One June 30, 1970, the court issued a memorandum delineating the facts established by INA that were not in dispute. Based on these facts, the court concluded that the defendants had not engaged in unlawful employment practices under section 703(a)(1) of the Civil Rights Act of 1964, 42 U.S.C. § 2000e — 2(a) (1). Two separate grounds were cited for this conclusion: “by reason of the fact that plaintiff has refused to file an application for employment with INA,” and because “plaintiff is so lacking in elementary financial prudence, candor, stability, meaningful interest in the business world and definite career direction that no prudent insurance company could reasonably employ him in a position of fiscal trust. . . . ”

Stebbins took no appeal from this judgment.

II. THE PRESENT APPEALS

A. The INA and EEOC Litigation

On July 8, 1970, Stebbins filed an independent action, which he styled “Complaint in the Nature of a Bill of Review,” against INA and its subsidiaries, the EEOC, and certain of its officials (Civil Action No. 2036-70). He alleged that various improprieties had occurred in the earlier litigation, which vitiated its effect. In addition, he set forth a new claim, alleging that on June 18, 1970 — one day after the trial judge had stated from the bench that summary judgment would be granted in the first INA suit — he had filed a formal employment application with INA and that the company had refused to hire him.

The District Court dismissed this action as to INA on November 9, 1970, relying on the res judicata effect of the June 30 judgment to bar Stebbins from relitigating the issue of his employability against the same defendants. Stebbins then filed a notice of appeal in for-ma pauperis, which the trial court denied as patently frivolous. Subsequently, when his claim against the EEOC was dismissed on January 5, 1971, Stebbins filed another notice of appeal and paid the filing fee on January 18.

This case has consistently been treated as a joint appeal against both INA and the EEOC. We pass by the motions aseribable to Stebbins’ limited means, and examine the issues he has raised.

B. The Keystone Litigation

On December 19, 1969, Stebbins filed suit against the Keystone Insurance Company (Keystone) and its affiliates (Civil Action No. 3588-69), also alleging violations of Title VII and 42 U.S.C. § 1981. His complaint focused on two letters he had received from Keystone — in May of 1968 and in November of 1969 —refusing to employ him. This suit and Stebbins’ first action against INA were pursued concurrently in different trial courts. Stebbins and Keystone cross-moved for summary judgment; and their motions were heard on July 1, 1970 — the day after the memorandum was issued in the INA case.

The court ruled orally — and in writing on July 8, 1970 — that Keystone’s refusal to hire, based on the fact that Stebbins had engaged in litigation against the company, violated 42 U.S.C. § 2000e— 3 (a); and Stebbins was granted partial summary judgment. But the remainder of Stebbins’ complaint was dismissed on the ground that, as a predicate to claiming discrimination in hiring, the plaintiff must be qualified for the position he seeks. The court held that the issue of Stebbins’ employability had been decided adversely in the first INA case and that Stebbins was therefore collaterally es-topped to relitigate the matter against Keystone, citing Lober v. Moore, 135 U.S.App.D.C. 146, 417 F.2d 714 (1969). Finally, the court stated that “plain-, tiff’s lack of qualifications deprive him of any right to claim damages under any aspect of the complaint.”

Stebbins appeals from: (1) the ruling on collateral estoppel; (2) failure to award injunctive relief or punitive damages; and (3) failure to award counsel fees.

III. THE ISSUES PRESENTED

A. Collateral Estoppel

The central question, common to both appeals, is whether the judgment entered on June 30, 1970, in the first suit against INA bars Stebbins from relitigating the issue of his employability in the cases presently before us, his second action against INA, and his action against Keystone. Both of these cases relate to instances of discrimination distinct from that involved in the first INA suit. This question must be settled under principles not of res judicata, but of collateral estoppel, the doctrine that governs the impact of the disposition of one controversy upon a different cause between the same parties, and which had led to an extension of that doctrine, invoked by Keystone (as a different party), that sameness of issue suffices if the party seeking to relitigate has already lost it after full opportunity to make his maximum effort.

Broadly speaking, collateral estoppel bars a party from contesting in a subsequent proceeding any issue of fact actually litigated in and determined by a previous final judgment rendered by a court of competent jurisdiction. The judgment is not conclusive, however, as to issues that might have been litigated and determined in the earlier action, but were not; nor as to any matter not essential to judgment in the prior adjudication.

For years, the commentators have put it that, when a judgment is expressly rested on two (or more) independent grounds, any ground that is sufficient to sustain the result may be used as the basis for a claim of collateral estoppel in a subsequent litigation. But the text writers have stated this proposition as though it were self-evident and have not offered any persuasive supporting rationale. The handful of precedents customarily cited, none recent and the most of them readily distinguishable, likewise provide a mere mechanical recitation of the purported rule.

In 1970, the rule was called into question, thoroughly re-examined, and rejected by the Second Circuit in Halpern v. Schwartz, 426 F.2d 102, the only case in the past 20 years to consider the question. The court squarely addressed the issue of whether a judgment expressly rested on three independent grounds gave rise to collateral estoppel on each of the grounds, or none of them. It concluded that, under the circumstances-, no estoppel should be permitted. The court pointed out the inconsistency between the purported rule and the general principle limiting collateral estoppel to matters “essential to judgment.” It distinguished the authorities cited in the texts; and it noted that, when the judgment rests on multiple grounds: (1) the court initially rendering judgment is less likely to have given full consideration to all the alternative bases when it appears that one of the grounds advanced is unassailable; and (2) there is no incentive to appeal when the losing party recognizes that one of the grounds is “solid,” even if one or more of the alternative grounds is infirm.

Collateral estoppel has shown itself to be an extremely useful device for reducing the crush of litigation in the trial courts, and it goes a long way toward eliminating inconsistent decisions in cases with identical fact patterns and a common party. In part for these reasons, the recent trend has been to broaden the scope of its application. Halpern, of course, runs against this current. The Halpern rule was evolved in the context of a bankruptcy case. We need not decide whether the Halpern approach is sound if applied as a general rule to a wide range of matters. We are convinced that it is properly applied in the situation before us, where one of the grounds urged by the prevailing party, and accepted by the court, was the failure of the losing party to make an extra-judicial request or demand, or pursue a non-judicial remedy, prior to presenting his claim to the court. In Stebbins’ initial suit for employment discrimination, brought on the ground that INA had refused to hire him because of his race, the District Court held that failure to plead and prove that he had sought employment with INA was fatal to his cause of action. The first INA judgment was not appealed; and we need not and do not consider on the merits the District Court’s ruling that, as a matter of law, a Title VII plaintiff must file a formal employment application as a precondition to bringing suit. That ruling, right or wrong, was of no crucial significance to Stebbins— he could readily cure the defect found by the trial court, as he did, by filing an employment application with INA and beginning another action upon the denial of employment.

The settled rule that collateral estoppel applies only to matters that have ■been actually litigated, has plain justification: when the parties to a lawsuit actively contest an issue, the resulting judgment bears sufficient reliability to preclude subsequent inquiry; and re-litigation of the same issue would be wasteful of judicial resources. It is, however, standing that principle on its head to maintain, in effect, that a party must fully litigate each and every issue solely for the purpose of avoiding collateral estoppel. If the doctrine of collateral estoppel were applicable to this kind of case, it would compel extensive and unnecessary litigation in both the trial and the appellate courts. Though confronted with an easily remediable defense of failure to exhaust non-judicial remedies, a plaintiff would have to wage battle on the merits, both in the trial court with affidavits, proffers, discovery, motions, and trial if permitted, and in the appellate court. Here, INA’s exhaustion defense was at least plausible —it was supported by EEOC. But in any event it was remediable. We can see no merit in a doctrine of collateral estoppel that would require Stebbins to appeal an adverse judgment and say, in effect: “May it please the court, since I can institute a new action merely by filing an employment application, it is immaterial to me whether the judgment is affirmed or reversed on this ground; but I have taken this appeal to make certain that the affirmance will not give rise to collateral estoppel on the alternate ground of unemployability.”

In our view, the doctrine of collateral estoppel is not applicable where, as in this case, one ground of the judgment does not finally adjudicate the case on its merits but operates, much like a common law plea in abatement, to permit continued or further litigation upon an appropriate amendment or refiling, if relief continues to be withheld. In that event, a party may acquiesce in the judgment and take whatever steps are necessary to keep alive or rekindle his prayer for relief without being bound or estopped by any alternative ruling on the merits, and without being required to burden the appellate courts with an essentially futile appeal.

So stating, we do no more than to apply, with some difference in articulation and context, the approach laid down in Bland v. Connally, 110 U.S.App.D. C. 375, 293 F.2d 852 (1961), and Horner v. Ferron, 362 F.2d 224 (9th. Cir.) cert. denied, 385 U.S. 958, 87 S.Ct. 397, 17 L.Ed.2d 305 (1966).

The initial action Stebbins brought against INA alleged a policy of racially discriminatory hiring. Although this claim carries overtones of continuing injury, the cause of action itself arose from a specific instance in which INA had allegedly refused to hire Stebbins. The defense that Stebbins failed to prove he had applied for employment, was sufficient, in the view of INA, EEOC, and the trial court for a final judgment of dismissal as to the particular instance of alleged discrimination. It did not put to rest the underlying grievance that Stebbins complained of. It permitted a kind of intermediate disposition similar, in effect, to the dismissal in Bland for failure to exhaust administrative remedies, and in Horner for the failure to make the statutorily required demand for cure. Stebbins remedied this defect forthwith by filing the formal application and demand for employment. INA’s refusal was likewise prompt and unequivocal; and Stebbins thereupon filed his action anew. Technically, this was a new cause of action, rooted in a different instance of alleged discrimination. Its practical effect was merely to continue Stebbins’ ongoing controversy with INA after a futile demand.

-X- * *

We are pleased to supplement our opinion by taking note of the subsequently-obtained Tentative Draft No. 1 of Chapter 3 of Restatement, Second, Judgments, approved not only by the Council of the American Law Institute, but also in principle by its membership, at a session held May 17, 1963, after the foregoing was set in type. The approach of the Tentative Draft on the exceptions to the rules of res judicata and issue preclusion is clearly supportive of both our approach and result in this case, though there may be divergences in our jurisprudence in other aspects of the problem.

B. Other Issues

* -X- -X-

We concur in the trial court’s conclusion that the other issues raised by Stebbins in No. 71-1043 are without merit.

1. Stebbins’ challenge to the EEOCls authority to appear as amicus curiae at the hearing on INA’s motion to dismiss is frivolous. Section 705(h) of Title VII, 42 U.S.C. § 2000e — 4(g), specifically authorizes EEOC attorneys to represent the Commission as a party or as amicus curiae. This is in no wise undercut by the independent power to refer cases to the Attorney General under 42 U.S.C. § 2000e — 4(f)(6). EEOC did not exceed its authority in commenting, as it did on the legal consequences of the record before the District Court. It was not required to develop its own administrative record in order to proffer its expertise to the court as amicus curiae. The District Court properly dismissed Stebbins’ claim that EEOC’s counsel committed perjury in the District Court. The record is clear that counsel was appearing purely as an advocate presenting oral argument and was not offering testimony.

2. Matters relating to INA.

a. Stebbins’ claim that INA committed fraud on the court, that INA had altered his deposition and had submitted fraudulent affidavits, was treated as a motion under Rule 60(b), Fed.R. Civ.P., for relief from judgment, and dismissed November 9, 1970, on the ground that Stebbins had consistently refused to specify what portions of these documents had been altered or falsified. We affirm. Stebbins had made similar claims of fraud, without particularity, in a motion to dismiss these documents; and he had been repeatedly instructed that his claims of fraud must be made specific. INA submitted affidavits that the documents in question had not been tampered with. It was within the discretion of the trial judge to dismiss claims of fraud consisting wholly of conclusory assertions without any supporting evidence.

b. In the context of Stebbins’ ongoing litigation with INA, the trial court correctly found that there was nothing unreasonable, unfair, or retaliatory about the letter of June 19, 1970, from INA’s counsel, requesting that Stebbins conduct all further business with INA through its attorney. Nothing in this letter in any way inhibited Stebbins from seeking employment with or communicating with the defendant, so long as he proceeded through INA’s counsel.

IV. DISPOSITION

The judgments in both No. 24,658 and No. 71-1043 are reversed and remanded for further proceedings not inconsistent with this opinion.

So ordered.

BAZELON, Chief Judge

(concurring) :

I concur in the result reached by the majority opinion, but on somewhat different grounds. I agree that the judgment of June 30, 1970, should not estop Stebbins from relitigating the issue of his employability in the course of pressing his claims of racial discrimination against members of the insurance industry. But that Stebbins appeared pro se in the first INA litigation is of crucial significance for me.

It is true that a person appearing on his own behalf is entitled to no special privileges or rights unavailable to parties represented by counsel. I am aware that Stebbins’ litigious history and two years of legal training have caused courts in the past to rule against him on procedural and technical matters. The question of employability, however, is a matter of such importance that Stebbins’ actual understanding of the consequences of the course of action he took must be considered.

It appears from the record in the IN A litigation that Stebbins thought he had a right to. proceed with discovery against IN A before his case would be dismissed from court. Indeed, the interrogatories he wanted answered contained the core of his discrimination claim. Since discovery is usually the cornerstone of any successful discrimination complaint, Stebbins is not to be faulted for actively pursuing discovery.

It further appears that in failing to contest INA’s motion for summary judgment, Stebbins was not engaging in a deliberate, willful or contemptuous attempt to frustrate the proceedings. Nor was he refusing to comply with an order of the court.

Given these facts, I do not believe that Stebbins had any knowledge of the collateral consequences of the IN A judgment. The actual foreseeability of these consequences is an important factor for this court to consider in deciding whether the effect of the INA judgment should be collaterally extended against him.

Also, in the area of employment discrimination, these consequences are particularly severe. Stebbins is literally barred from pressing any of his claims in court. His suits have been dismissed in another Circuit, seemingly without any analysis of whether changed circumstances or the passage of time affected the applicability of the June 30th judgment.

Stebbins is attempting to prove claims of an extremely sensitive nature against a number of large insurance companies. We must be especially cautious not to place unwarranted roadblocks in the way of discrimination litigation which is commonly brought by indigent or pro se members of minority groups.

To avoid this problem, the trial court could have given Stebbins a minimal amount of information about the consequences of his failure to contest the motion for summary judgment. I do not think that it is the duty of the court to fully educate a litigant who continuously appears pro se, but neither is it fair or just for the court to ignore palpable ignorance in rendering a judgment with such drastic consequences.

SPOTTSWOOD W. ROBINSON, III, Circuit Judge

(concurring) :

I join in Judge Leventhal’s opinion in to to but I believe Judge Bazelon also makes a strong point. It simply cannot be assumed that an ordinary pro se litigant is conversant with the intricacies of collateral estoppel or summary judgment. That is not to suggest that these wholesome doctrines are to be cast aside simply because the litigant is a layman. It is to say, however, that the presence of such a litigant may summon the court to the minor effort needed to make sure that they do not become traps for the legally unlearned.

We have long recognized that laymen cannot be held to the standards of. performance expected of members of the bar. Collateral estoppel is not an inexorable rule of law, and where a lay litigant may not be aware of the need to oppose an assertion of fact, the court’s failure to indicate the consequences may promote just that ■ kind of unfairness which gives reason for refusing to recognize a bar from the ensuing judgment.

I think, then, that if the fact that Stebbins was an unrepresented layman were the only pivotal consideration in the case, we would have to proceed, as Judge Bazelon does, to determine whether Stebbins was so knowledgeable that the absence of such a warning was nonprejudicial. I do not reach that question, however, because I agree with Judge Leventhal that an estoppel could not arise here, and reversal is in any event required.

      . On October 22, 1971, this court heard oral argument in No. 24,658, Stebbins v. Keystone Insurance Co. At that time, it became apparent that the court would be materially assisted by examining the record and the issues raised in No. 71-1043, then pending, before determining the Keystone appeal. The court therefore consolidated the two appeals for disposition; and, on February 3, 1972, an order was issued that No. 71-1043 would be decided without oral argument.

      . Named as codefendants were two INA affiliates, the Life Insurance Company of North America and the INA Life Insurance Company of New York.

      . This provision was based on § 1 of the Civil Rights Act of 1866, 14 Stat. 27.

      . INA based this contention on Stebbins’ own statements taken by deposition. For example, “he testified that one of the prerequisites for any job that he would accept would be a good library so that he could continue his research for suits against [INA’s] competitors. He further testified that the . . . suit against INA is but one step in what he termed his ‘procedure plan’ to raise procedural disputes, to obtain conflicts between various courts, and ultimately to have the pleasure of arguing in the Supreme Court of the United States. INA also argued that “ [h] is testimony on deposition that he has held no steady job since 1966 [it then being 1970] demonstrates a lack of direction and interest in employment which would be necessary for a position as a responsible claims adjuster.” In addition, INA pointed out, “[Stebbins testified that he went to law school, spent two years there, not with any intent of learning to be a lawyer but because he ‘wanted to set up a criminal racket and I felt if I knew the law I would be able to do it much better.’ ” INA conceded, however, that the latter statement, though made under oath, may have been in jest. Transcript of June 17, 1970, Hearing on INA’s Motion for Summary Judgment, at 5, 7, 8 (Reproduced as Appendix B to Brief of EEOC in No. 71-1043).
      Finally, INA submitted an affidavit from its personnel specialist, which concluded that Stebbins was unemployable in a position of fiscal trust in the insurance industry. See id. at 6.

      . The EEOC was apparently concerned to avoid a ruling on standing that might hamper the bringing of test cases. See id. at 11-13.

      . Stebbins v. Insurance Co. of North America, 3 F.E.P.Cas. 246 (D.D.C., 1970).

      . The court rested its jurisdiction on § 706 of the 1964 Act, 42 U.S.C. § 2000e-5 (e), and intimated no view of whether the Civil Rights Act of 1870 provided an alternate basis for relief. Also, the District Court apparently declined to treat Stebbins as the representative of a class of aggrieved persons, though the court’s opinion is silent on this point; and the grounds for this decision are nowhere stated.

      . Concluding that INA had, in fact, furnished Stebbins with all the information he had sought as to job descriptions and employee selection criteria, the District Court rejected on the merits Stebbins’ assertion that INA had discriminatorily refused to provide him with employment information.

      . On May 27, 1971, INA moved to require Stebbins to file a supplemental appendix. By our order of June 15, 1971, this court directed Stebbins to file such an appendix including those items designated by INA and EEOC which had been omitted from the joint appendix. Stebbins moved on June 22 to vacate this order, but by per curiam order of July 21, 1971, we denied his motion. On July 23, Stebbins moved to require INA and EEOC to pre-pay the costs of printing the supplemental appendix; and on July 29, INA moved to compel Stebbins to file a cost bond. This court on October 15, 1971, issued a per curiam order denying Stebbins’ motion of July 23 and directing him to show cause why the appeal should not be dismissed. On October 12, Stebbins responded to the show cause order by stating, in summary, that he was appealing in forma pauperis and could pay no costs. By per curiam order of December 14, 1971, Stebbins’ reply to the show cause order, appellees’ response thereto, and Stebbins’ supplemental response were referred to the merits division. We resolve the matter by treating the appeal as one in forma pauperis, 28 U.S.C.. § 1915, except as to any fees or costs hitherto paid.

      . See Lawlor v. National Screen Serv. Corp., 349 U.S. 322, 75 S.Ct. 865, 99 L. Ed. 1122 (1955) ; International Paper Co. v. Maddox, 203 F.2d 88 (5th Cir. 1953). Cf. Commissioner v. Sunnen, 333 U.S. 591, 68 S.Ct. 715, 92 L.Ed. 898 (1948) ; People ex rel. Watchtower Bible & Tract Soc’y v. Haring, 286 App.Div. 676, 146 N.Y.S.2d 151 (3d Dep’t, 1955).

      . See Blonder-Tongue Labs., Inc. v. University of Ill. Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971) ; Lober v. Moore, supra, 135 U.S.App. D.C. at 148-152, 417 F.2d at 716-720 (and authorities cited therein) ; Smith v. Hood, 130 U.S.App.D.C. 43, 44, 396 F.2d 692, 693 (1968) (There is a “trend towards barring relitigation of an issue by a one-time loser. . . . ”).

      . See Cromwell v. County of Sac, 94 U.S. (4 Otto) 351, 24 L.Ed. 195 (1877) ; F. James, Civil Procedure § 11.19 (1965) ; Restatement of the Law of Judgments § 68 (1942) ; Developments in the Law— Res Judicata, 65 Harv.L.Rev. 818, 840 (1952).

      . IB J. Moore, Federal Practice ¶ 0.443 [5] ; Restatement of Judgments supra § 68, comment n; Polasky, Collateral Estoppel — Effects of Prior Litigation, 39 Iowa L.Rev. 217, n. 32 at 225 (1954) ; Scott, Collateral Estoppel by Judgment, 56 Harv.L.Rev. 1, 10-15 (1942) ; Developments Note supra, 65 Harv.L.Rev. at 845.
      Application of the rule is confined to cases in which both issues were expressly relied on by the court in the earlier action. If the basis for the first judgment is uncertain, then no estoppel is created as to any of the issues, even though they were actually litigated. Russell v. Place, 94 U.S. (4 Otto) 606, 24 L.Ed. 214 (1877) ; Horner v. Ferron, 362 F.2d 224, 230 (9th Cir.), cert. denied, 385 U.S. 958, 87 S.Ct. 397, 17 L.Ed.2d 305 (19.66) ; Security Ins. Co. v. Johnson, 276 F.2d 182 (10th Cir., 1960).
      Similarly, when a judgment specifically rested on alternative grounds is appealed, only those issues expressly considered by the appellate court can be used, as the basis for a plea of collateral estoppel. International Refugee Organization v. Republic S.S. Corp., 189 F.2d 858, 862 (4th Cir., 1951) ; Restatement of Judgments supra § 69, comment b; IB J. Moore supra ¶ 0.443 [5] n. 10. See Allegheny County v. Maryland Cas. Co., 146 F.2d 633 (3d Cir., 1944), cert. denied, 325 U.S. 855, 65 S.Ct. 1184, 89 L.Ed. 1975 (1945).

      . E. g., Patterson v. Saunders, 194 Va. 607, 74 S.E.2d 204 (1953) (the most recent case) ; Bank of America v. McLaughlin Land & Livestock Co., 40 Cal.App.2d 620, 105 P.2d 607 (1940) (the next most recent).

      . Norton v. Larney, 266 U.S. 511, 45 S. Ct. 145, 69 L.Ed. 413 (1925) ; Eastern Foundation Co. v. Creswell, 154 U.S.App.D.C. 240, 475 F.2d 351 (1973) ; Fibreboard Paper Prods. Co. v. Machinists Local 1304, 344 F.2d 300, 306 (9th Cir.), cert. denied, 382 U.S. 826, 86 S.Ct. 61, 15 L.Ed.2d 71 (1965) ; Restatement of Judgments supra § 68, comment o.

      . E. g., Lober v. Moore supra; Bernhard v. Bank of America Nat’l Trust & Sav. Ass’n, 19 Cal.2d 807, 122 P.2d 892 (1942) (per Traynor, J.) ; B. R. DeWitt, Inc. v. Hall, 19 N.Y.2d 141, 278 N.Y.S.2d 596, 225 N.E.2d 195 (1967).

      . Stebbins’ additional claim that INA refused to provide him with information concerning employment opportunities (see note 8 supra) has no bearing upon the collateral estoppel issue raised on this appeal.

      . Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 671, 64 S.Ct. 268, 88 L.Ed. 376 (1944) ; Cromwell v. County of Sac supra 94 U.S. at 353, 24 L.Ed. 195; Restatement of Judgments supra § 68(2) & comments c-f; IB J. Moore supra ¶¶ 0.443 [1] at n. 4, 0.443 [3],

      . In Bland we considered the merits of a challenge by a reserve officer to the Navy’s action in giving him a qualified discharge. The suit was held maintainable despite a prior ruling by the Ninth Circuit refusing to enjoin the Navy’s action on the ground that Bland had not exhausted his administrative remedies, even though the Ninth Circuit had also rejected on the merits plaintiff’s claim that his status as an inactive reservist deprived the Navy of jurisdiction to issue him a discharge under conditions other than honorable, Bland v. Hartman, 245 F.2d 311 (9th Cir., 1957). This court reversed a dismissal of the complaint that had been entered on grounds of res judicata and held that the judgment of the Ninth Circuit must be confined to the issue of exhaustion of remedies and that, this defect having been cured, Bland was free to proceed in a second action going to the merits of his claim.

      . In Horner it was held that suit could be maintained against certain District and National union officers for breach of fiduciary duties, even though, in a prior action against local officials, the District Court had refused to join the District and National officers as additional parties because the plaintiffs had failed to make a demand on these defendants to cure the alleged irregularities. The Ninth Circuit, citing Bland, held that the earlier judgment related to “a procedural [defect] which is capable of correction.” Assuming there was also a ruling on the merits, the court said this “could not, by operation of the doctrine of res judicata or collateral estoppel, prevent [the plaintiffs] from correcting the procedural mistake in a subsequent and independent action. ...” 362 F.2d at 230.

      . 29 U.S.C. § 501(b). Gf. Rule 23.1, Fed. R.Civ.P. (demand on directors as a precondition to instituting shareholders’ derivative suit) ; 3B J. Moore supra ¶ 23.-1.19.

      . The distinguished Reporters, Professors Benjamin Kaplan (now Associate Justice of the Supreme Judicial Court of Mssachusetts) and David Shapiro, have pertinent discussion at several places in the draft chapter. Concerning the bar effect of a prior judgment in favor of the defendant on the same claim (res judicata) :
      § 48.1 Judgment for Defendant — Exception to the General Rule of Bar.

        (2) A valid and final personal judgment for the defendant which rests on the prematurity of the action or on the plaintiff’s failure to satisfy a precondition to suit, does not bar another action by the plaintiff instituted after the claim has matured, or the precondition has been satisfied, unless a second action is precluded by operation of the substantive law, or the circumstances are such that it would be manifestly unfair to subject the defendant to such an action.
      And in the Comments:
      e. Alternative Determinations.

      A dismissal may be based on two or more determinations, at least one of which, standing alone, would not render the judgment a bar to another action on the same claim. In such a case, if the judgment is one rendered by a court of first instance, it should not operate as a bar. . . . Even if another of the determinations, standing alone, would render the judgment a bar, that determination may not have been as carefully or rigorously considered as it would have if it had been necessary to the result, and in that sense it has some of the characteristics of dicta. And, of critical importance, the losing party, although entitled to appeal from both determinations, may be dissuaded from doing so as to the determination going to the “merits” because the alternative determination, which in itself does not preclude a second action, is clearly correct. The rules of res judicata should not encourage or foster appeals in such instances.
      This Draft uses new terminology — “issue preclusion” — to embrace direct estoppel and collateral estoppel. The broad principle is set forth in § 68 :
      § 68. Issue Preclusion — General Rule
      When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.
      But in Comment i, the Draft provides :

        i. Alternative determinations by court of first instance. If a judgment of a court of first instance is based on determinations of two issues, either of which standing independently would be sufficient to support the result, the judgment is not conclusive with respect to either issue standing alone. (. Of. § 48.1, Comment e.)
      There are, however, persuasive reasons for analogizing the case to that of the nonessential determination. . First, a determination in the alternative may not have been as carefully or rigorously considered as it would have if it had been necessary to the result, and in that sense it has some of the characteristics of dicta. Second, and of critical importance, the losing party, although entitled to appeal from both determinations, might be dissuaded from doing so because of the likelihood that at least one of them would be upheld and the others not even reached. If he were to appeal solely for the purpose of avoiding the application of the rule of issue preclusion, then the rule might be responsible for increasing the burdens of litigation on the parties and the courts rather than lightening those burdens.
      The Tentative Draft finds an exception to issue preclusion in case of alternative determinations by a trial court even when both were on the merits. We need not consider that problem, for here the alternative determination was on a correctible defect of failure to satisfy a precondition to suit, and that is so clear a matter that the Tentative Draft considers it not to bar relitigation of the same claim, see § 48.1(2) and Comment e. The Tentative Draft concludes that the general rule of issue preclusion should apply when there are alternative determinations by a court of appeals, as distinguished by a court of first instance. See § 68, Comment o. But Comment o does not specifically take up the situation in Bland, supra note 19, where one of the grounds of the appellate court was a correctible lack of precondition of suit. We have no occasion to reconsider the appropriate rule for that particular situation.

      . See Mastini v. American Tel. & Tel. Co., 369 F.2d 378 (2d Cir., 1966), cert. denied, 387 U.S. 933, 87 S.Ct. 2055, 18 L.Ed.2d 994 (1967) ; Atchison, T. & S. F. Ry. v. Barrett, 246 F.2d 846 (9th Cir., 1957) ; Assmann v. Fleming, 159 F.2d 332 (8th Cir., 1947) ; 7 J., Moore supra ¶ 60.24[5]. Gf. Rule 9(b), Fed.R.Civ.P. (allegations of fraud to be made with particularity in pleadings).

      . The question of damages and attorney’s fees must also be reconsidered, since the trial court rested its judgment disallowing such compensation on the assumed fact of Stebbins’ unemployability.

      . See Mazique v. Mazique, 123 U.S.App.D.C. 48, 356 F.2d 801, cert. denied, 384 U.S. 981, 86 S.Ct. 1882, 16 L.Ed.2d 691 (1966) ; Barnes v. United States, 241 F.2d 252 (9th Cir. 1956).

      . See Stebbins v. Nationwide Mutual Ins. Co., 469 F.2d 268, (4th Cir. 1972) ; Stebbins v. Continental Ins. Cos., 143 U.S. App.D.C. 121, 442 F.2d 843 (1971) ; Stebbins v. State Farm Mutual Automobile Ins. Co., 134 U.S.App.D.C. 193, 413 F.2d 1100, cert. denied, 396 U.S. 895, 90 S.Ct. 194, 24 L.Ed.2d 173 (1969) ; Stebbins v. Nationwide Mutual Ins. Co., 382 F.2d 267 (4th Cir. 1967).

      . See, e. g., Lea v. Cone Mills Corp., 301 F.Supp. 97 (M.D.N.C.1969), aff’d in part and vacated in part, 438 F.2d 86 (4th Cir. 1971).

      . Compare Stebbins v. State Farm Mutual Automobile Ins. Co., 134 U.S.App.D.C. 193, 413 F.2d 1100 (1969).

      . See generally, Polasky, Collateral Estoppel — Effects of Prior Litigation, 39 Iowa L.Rev. 217, 221; Developments in the Law — Res Judicata, 65 Harv.L.Rev. 818, 841^42 (1952).

      . Stebbins v. Nationwide Mutual Ins. Co., 469 F.2d 268 (4th Cir. 1972), affirming Civil Action No. 373-69-A (E.D.Ya., Sept. 9, 1971).

      . Cf. Macklin v. Spector Freight Systems, Inc., 156 U.S.App.D.C. 69, 478 F.2d 979 (issued May 9, 1973).

      . Cf. Carrigan v. California State Legislature, 263 F.2d 560 (9th Cir.), cert. denied, 359 U.S. 980, 79 S.Ct. 901, 3 L.Ed.2d 929 (1959).

      . Compare Amsden v. United States, 175 F.Supp. 147, 148-149, 146 Ct.Cl. 809 (1959) ; Adams v. Pearson, 411 Ill. 431, 104 N.E.2d 267, 272 (1952) ; State ex rel. White Pine Sash Co. v. Superior Court, 145 Wash. 576, 261 P. 110, 111 (1927) ; White v. Adler, 289 N.Y. 34, 43 N.E.2d 798, 802 (1942).

      . See Johnson v. United States, supra note 1; Fulwood v. Clemmer, 111 U.S.App.D.C. 184, 186 n. 5, 295 F.2d 171, 173 n. 5 (1961) ; Smith v. United States, 106 U.S.App.D.C. 169, 170, 270 F.2d 921, 922 (en bane 1959).

      . Compare Johnson v. United States, 132 U.S.App.D.C. 4, 405 F.2d 1072 (1968).