Volkswagenwerk AG v. FMC
390 U.S. 261 (1968)

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U.S. Supreme Court

Volkswagenwerk AG v. FMC, 390 U.S. 261 (1968)

Volkswagenwerk Aktiengesellschaft v.

Federal Maritime Commission

No. 69

Argued November 13, 1967

Decided March 6, 1968

390 U.S. 261

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Syllabus

The Pacific Maritime Association (PMA), representing the Pacific Coast shipping industry employers, and the International Longshoremen's and Warehousemen's Union reached an agreement whereby the union consented to the use of labor-saving devices and the elimination of certain restrictive work practices in return for PMA's promise to create a $29,000,000 fund to mitigate the effect of technological unemployment. The agreement reserved to PMA the right to determine how to raise the fund from its members. PMA approved an assessment per "revenue ton," based either on weight (2,000 pounds) or measurement (40 cubic feet), determined by the manner in which cargo had customarily been manifested, with the exception of automobiles, which were to be declared by measurement. For petitioner's automobiles, the assessment came to $2.35 per vehicle, an increase in unloading costs of 22.5%, rather than 25 cents under an assessment by weight, or about 2.4% increase in costs, comparable to the average fund assessment of 2.2% for all other general cargo. Petitioner obtained a stay of the action brought by PMA to collect the assessment from the terminal company unloading petitioner's automobiles, to permit it to invoke the primary jurisdiction of the Federal Maritime Commission (FMC) to determine whether the assessments were claimed under an agreement required to be filed with and approved by the FMC under § 15 of the Shipping Act, 1916, and whether the assessments violated §§ 16 and 17 of that Act. The FMC dismissed petitioner's complaint, holding that the agreement did not "affect competition," and did not come within § 15 in the absence of an additional agreement by PMA to pass on all or a portion of the assessments to the carriers and shippers served by the terminal operators; that § 16 was not violated, since petitioner had not shown any unequal treatment between its cars and other automobiles or cargo competitive therewith, and that there was no violation of § 17, since the petitioner

Page 390 U. S. 262

had received "substantial benefits" in return for the assessment. The Court of Appeals affirmed.

Held:

1. The agreement was required to be filed with the FMC under § 15 of the Act. Pp. 390 U. S. 268-278.

(a) The FMC recognized that the assessment formula was a "cooperative working agreement" clearly within the plain language of § 15. P. 390 U. S. 271.

(b) In holding that the agreement did not "affect competition," the FMC ignored economic realities which required most of the assessments to be passed on. P. 390 U. S. 273.

(c) The FMC has not previously limited § 15 to horizontal agreements among competitors, but has applied it to other agreements within its literal terms. P. 390 U. S. 274.

(d) The legislative history of this broad statute indicates that Congress intended to subject to the scrutiny of a specialized agency the myriad of restrictive maritime agreements. Pp. 390 U. S. 275-276.

(e) While the FMC may determine that some de minimis or routine agreements need not be filed under § 15, this agreement, levying $29,000,000, binding the whole Pacific Coast shipping industry, and resulting in substantially increased stevedoring and terminal charges, was neither de minimis nor routine. Pp. 390 U. S. 276-277.

(f) The only agreement involved here is the one among PMA members allocating the impact of the fund levy, and only the assessment on automobiles is challenged. P. 390 U. S. 278.

2. When the agreement is filed, the FMC may consider anew whether the mere absence of a competitive relationship should foreclose inquiry under § 16. Pp. 390 U. S. 279-280.

3. The proper inquiry under § 17 is whether the charge levied is reasonably related to the service rendered. Pp. 390 U. S. 280-282.

125 U.S.App.D.C. 282, 371 F.2d 747, reversed and remanded.

Page 390 U. S. 263

MR. JUSTICE STEWART delivered the opinion of the Court.

The petitioner, a German manufacturer of automobiles, is one of the largest users of the ports on the West Coast of the United States, delivering through them more than 40,000 vehicles each year, the majority transported there by vessels chartered by the petitioner, rather than by common carrier. This case grows out of the petitioner's claim that charges imposed upon the unloading of its automobiles at Pacific Coast ports are in violation of the Shipping Act, 1916, as amended. 39 Stat. 728, 46 U.S.C. § 801 et seq. The dispute has a long and somewhat complicated history.

The Pacific Maritime Association (the Association) is an employer organization of some 120 principal common carriers by water, stevedoring contractors, and marine terminal operators, representing the Pacific Coast shipping industry. The primary function of the Association is to negotiate and administer collective bargaining contracts with unions representing its members' employees, of which the International Longshoremen's and Warehousemen's Union (ILWU) is one. In late 1960, the

Page 390 U. S. 264

Association and ILWU reached a milestone agreement which, it was hoped, would end a long and troubled history of labor discord on the West Coast waterfront. [Footnote 1] The ILWU agreed to the introduction of labor-saving devices and the elimination of certain restrictive work practices. In return. the Association agreed to create, over the period from 1961 to 1966, a "Mechanization and Modernization Fund" of $29,000,000 (the Mech Fund) to be used to mitigate the impact upon employees of technological unemployment. [Footnote 2] The agreement specifically reserved to the Association alone the right to determine how to raise the Mech Fund from its members, at the rate of some $5,000,000 a year.

A committee of the Association investigated various possible formulas for collecting the Fund from the stevedoring contractors and terminal operators -- i.e., those Association members who were employers of workers represented by the ILWU. A majority of the committee recommended that the Mech Fund assessment be based solely on tonnage handled, and this recommendation was adopted by the Association membership. [Footnote 3] Under this

Page 390 U. S. 265

formula, general cargo was assessed at 27 1/2

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