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Fleming v. Huebsch Laundry Corp.

February 3, 1947


Author: Evans

Before EVANS and MAJOR, Circuit Judges, and LINDLEY, District Judge.

EVANS, Circuit Judge.

Refusal to vacate a consent judgment, entered in an OPA treble damage suit, is the basis of the grievance which defendant brings to us for review.

A short statement of the specific facts follows: Defendant is in the family laundry business in and about Milwaukee. It employs a number of driver salesmen, whose duties are to pick up bundles as directed by its customers, and take them to the laundry where the services are performed. When the laundry service is completed, the driver delivers the packages to the customers, and collects the charges made. He is paid a commission. Another method of doing business - which method is the particular subjectmatter of this suit - is the maintenance by defendant of a number of agents or laundry substations, in various communities located near, or in, the City of Milwaukee. Individuals bring their laundry to the agents where it is picked up by defendant's employee; defendant performs its laundry service, and the bundles are then returned to the agent, with a statement listing the charges of each customer's bundle. The agent is billed for the total amount, less commission, which is agreed upon by the defendant and the agent and varies with the volume of laundry which the agent solicits.

A reduction of this commission to the agents, below what it had been in March, 1942 - without a change in the price to the customer was the alleged violation of the Act upon which this suit was based.

The OPA Administrator brought suit against defendant, April 4, 1946, charging a violation of Sec. 4(a) of the Emergency Price Control Act, 50 U.S.C.A. Appendix, ยง 904(a), in that it allegedly violated Revised Maximum Price Regulation No. 165, which concerns the sale of services. Section 2 of the Regulation prohibits the sale of a service covered by the Regulation at a price higher than the maximum price established in the Regulation. It was charged that defendant violated this Regulation from March 22, 1945 to March 21, 1946. Allegedly a "spot check" revealed that the reduction in the agents' commissions brought the defendant the sum of $4,995.64, and the Government demanded treble damages, amounting to $14,986.92. The Government also sought an injunction.

A stipulation was entered into on the same day between the OPA and the defendant which stated that the violations alleged in the complaint resulted in overcharges in the amount of $4,995.64, and the claim for treble damages of $14,986.92 is settled, subject to the approval of the court, for $7,493.46. There was also consent to the entry of a final judgment against the defendant for the latter sum and for the entry of an injunction.

The District Court entered its judgment the same day, in accordance with, and on, this stipulation. One installment of the judgment, to-wit $2,497.82, has been paid.

On May 17, 1946, and at the same term of court at which the judgment was entered, a petition was filed in the District Court asking that the judgment be vacated on the ground that defendant was unfamiliar with the Regulations involved and did not know plaintiff had no valid cause of action against it. The trial court denied this petition, June 1, 1946, and this appeal is taken from the original judgment and the denial of defendant's motion to vacate.

The questions are: (1) May a consent decree ever be vacated? (2) Did the trial judge abuse his discretion in denying the motion to vacate this consent judgment?

The petition to vacate alleged that defendant's president, in January, 1943, called at the Milwaukee District Office of the OPA and was advised by a price specialist in that office that the defendant could lower the commissions paid to the agents without violating any provisions of the Act, or any of the Regulations issued thereunder, so long as it did not raise the price of the services to its customers. Acting upon such advice the defendant reduced the commissions which were allowed its agents. It did not in any manner increase the prices charged its customers. It never charged a price in excess of the price it had charged during the critical month of March, 1942. Later, in March, 1946, however, it was advised by the OPA that it was violating the Regulations becuase it was receiving more money for its services than it did in March, 1942. In other words, it paid the agent less, therefore it received more then before, the charge to the customer remaining the same.

After making the first payment on the judgment, defendant consulted other counsel as to the possibility of having the reduction of commission to its agents formally approved by the OPA.The new counsel advised the defendant that such reduction, if made, would not, and did not, violate the Act, nor any Regulation thereunder. Thereafter, defendant conferred with the Milwaukee Office of Price Administration and was granted authority to decrease the commissions formerly paid to its agents. "The amount of the decrease permitted was the same amount which the Office of Price Administration formerly claimed as an overcharge."

On the question of the violation of the Act or Regulation No. 165, we are of the opinion that the defendant was without guilt. It never violated the Act or the Regulation. It never charged more than the ceiling price at any time. It never raised its price to the customer. It effected a reduction in the cost of doing its business by reducing the commission paid to the agent without passing on that reduction to the customer. We think it was not required to do so. If required to pass on that saving in the operation of its business, could it have added to its price the increased cost of labor?Clearly not. It was the ceiling price which marked the line that determined legal from illegal charges. It had to so conduct its business as to keep within the ceiling price. This it did. The price to the customer remained the same. At all times it was within the ceiling price fixed by OPA.

This brings us to the second and perhaps the closer question. May defendant be relieved of a judgment entered upon its consent with all facts available to ...

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