United States District Court, Northern District of Illinois, E.D
March 18, 1968
B.D.C. CORPORATION, PLAINTIFF,
UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, DEFENDANTS. AMERICAN COURIER CORPORATION, INTERVENING DEFENDANT.
Before Schnackenberg, Circuit Judge, and Robson and Will,
The opinion of the court was delivered by: Robson, District Judge:
MEMORANDUM AND ORDER
Plaintiff, B.D.C. Corporation, seeks the vacation and annulment
of an order of the Interstate Commerce Commission, and an
injunction against its enforcement. It invokes this three-judge
court pursuant to 28 U.S.C. § 2325. For the reasons set out
below, the court concludes that the order of the Interstate
Commerce Commission should be affirmed.
The major issue in this case is whether the Interstate Commerce
Commission's order was based on substantial evidence. Plaintiff
argues that the ruling was arbitrary and without sufficient
evidentiary foundation. Defendants contend that the order is
within the broad discretion and expertise of the Commission and
is based on substantial evidence on the record as a whole.
By application filed March 8, 1963, American Courier
Corporation (formerly the Armored Carrier Corporation) of
Bayside, New York, sought a permit authorizing operations in
interstate or foreign commerce as a commercial carrier by motor
vehicle, over irregular routes, of (1) described commercial
papers and documents ("cash letters"), and (2) audit and
accounting media, and business papers and records between
Chicago, Illinois, and points in Indiana
and Michigan. Plaintiff, an Illinois corporation, was the only
carrier opposing the application.
Hearings were held before Joint Board No. 73 in 1963 in
Chicago. This board in its report and recommended order found
that no need existed for the proposed services. (Exhibit B,
Complaint.) On December 16, 1966, the I.C.C. (Operating Rights
Review Board No. 2) affirmed the joint board's recommended denial
of part 1 ("cash letters") of the application, but found that the
public convenience and necessity required the services proposed
under part 2 (audit media) of the application. The latter order
was affirmed by the Commission, Division 1, Acting as an
Appellate Division, on July 14, 1967. The intervening defendant
(applicant below), the American Courier Corporation, did not
appeal from the denial of its application for authority to carry
"cash letters," but the plaintiff herein did appeal and is here
attacking the Commission's order with respect to its grant of
authority to American Courier to carry audit media.
In the course of its opinion, the I.C.C. admitted that
plaintiff's services were not shown to be inadequate and that
plaintiff would stand to lose traffic if the requested authority
were granted to the American Courier Corporation. American
Courier Corporation Extension — Northern Indiana Points, 103
M.C.C. 298 (1966) (Exhibit A, Complaint). The Commission further
assumed there was a need for the services in the geographical
area requested. Normally, said the Commission, the plaintiff
would "be entitled to protection against additional competition."
"However," it continued, "this policy is not absolute."
The I.C.C. said that in this case, an "unusual" situation was
presented "of a protestant [the plaintiff] commonly controlled
through management with a competitor [Banker's Dispatch
Corporation] of one of the supporting shippers [Statistical
Tabulating Corporation — S.T.C.]." The president of plaintiff,
one Jerry Stergios, was at the time of the hearing also the
president of Banker's Data Center, a data-processing company in
competition with Statistical Tabulating Corporation, one of
American Courier's supporting shippers. Mr. Stergios also owned
about 70% of a holding company which owned or controlled about
18,000 shares of Banker's Data Center (the competitor of S.T.C.)
and 100% of B.D.C. (the carrier-plaintiff herein). The Commission
"[S.T.C.] is unwilling to tender traffic [to
B.D.C.] for fear that information concerning the
identity and location of customers necessarily
revealed to this carrier would be used to its
disadvantage [as a competitor of Banker's Data
Center]. As protestant [B.D.C.] is the only motor
carrier offering a feasible audit media service, the
shipper's only alternatives are private carriage or
less desirable forms of transportation." (Id., at
The Commission then stated that it has long been watchful lest
situations arise which have a potential for discrimination, and
that it had denied applications by carriers "controlled or
closely related to the supporting shippers." The I.C.C.
emphasized that the opportunities for discrimination had to be
more than "insubstantial."
The opinion went on to apply these principles to this case:
"The situation before us differs from the cited
decisions in that the controlled carrier [plaintiff
B.D.C.] is a protestant attempting to protect its
position rather than an applicant seeking authority.
* * * The possibilities for discrimination and
favoritism are not only the same as in the cited
decisions. They are enhanced by the fact that
[plaintiff B.D.C.] is the only carrier offering the
type of service proposed, and even though there is
no evidence that B.D.C. has, or would, abuse its
position, it is conceivable
that at some future time, the pressure to favoritism
and discriminatory practices might become
irresistible." (Emphasis added.) Id., at 304.
Even though the Commission was overruling the opinion of a lower
board, it was not disputing the facts found by that lower board.
It is clear that the Commission was giving added weight to this
admitted factor, and in so doing was using its "expertise" in the
Generally, an order of the I.C.C., or any other administrative
body, will be upheld if it is based upon appropriate findings
supported by substantial evidence on the record as a whole, even
though the reviewing court might disagree with the Commission's
conclusions or consider them contrary to the weight of the
evidence. E.g., Universal Camera Corp. v. National Labor
Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951);
Interstate Commerce Commission v. Union Pacific R.R. Co.,
222 U.S. 541, 32 S.Ct. 108, 56 L.Ed. 308 (1912); United States v.
Pierce Auto Freight Lines, Inc., 327 U.S. 515, 66 S.Ct. 687, 90
L.Ed. 821 (1946); Armored Carrier Corp. v. United States,
260 F. Supp. 612, 617 (E.D.N.Y. 1966); Administrative Procedure Act §
10(e), 5 U.S.C. § 706.
Although an agency has used its expertise to make a decision,
substantial evidence must nevertheless exist to support that
decision. It is clear, however, that once substantial evidence is
found to support the agency's ruling, the reviewing court should
be very reluctant to overturn an agency's use of expertise. E.g.,
United States v. Detroit & Cleveland Navigation Co.,
326 U.S. 236, 241, 66 S.Ct. 75, 90 L.Ed. 38 (1945); Consolo v. Federal
Maritime Commission, 383 U.S. 607, 620-621, 86 S.Ct. 1018, 16
L.Ed.2d 131 (1966). Some courts have even demanded that the
agency's ruling be "clearly erroneous" before they would disturb
the order. E.g., Converse v. United States, 109 F. Supp. 807
(N.D.Cal. 1953). While this test may not be entirely appropriate,
it is clear that in this case the I.C.C. was exercising its
expertise in determining that there were possibilities for future
discrimination because of the relationship between B.D.C. and
Banker's Data Center. This court must therefore decide whether
there exists substantial evidence on the record as a whole to
support this determination. Along with this inquiry, this court
must judge whether the I.C.C. went beyond the bounds of reason in
granting the authority to American Courier to carry audit media.
Reference is made in the transcript (p. 204) to the fact that
Mr. Stergios was then president of both B.D.C. and Banker's Data
Center.*fn* This fact is not disputed by the plaintiff
(plaintiff's brief, pp. 16-17). Also mentioned at the same page
is evidence of the need for the services of American Courier in
the audit media field. The witness for Statistical Tabulating
Corporation was asked whether it would use the services of B.D.C.
"No, I would not. * * * Mr. Sturges [sic] is the
president of an organization that is in competition
with us. * * * [A]t one time he asked me over the
telephone if we could avail ourselves of his
services, and I told him I would be most reluctant to
do so in view of his being the principal of a
competing organization. If a competitor supplies
delivery services to our clients, you can appreciate
our concern, maybe the work we are waiting for winds
up in our competitor's place of business.
Furthermore, we, no more than United States
Steel is [sic] interested in having their competitors
know where their clients reside or who they are, so I
would most naturally be very adverse to using the
other service for the reasons as stated."
Although this witness admitted that they had used B.D.C. when
their clients requested it, and for some of their own interplant
deliveries, he did emphasize that they intended to stop all use
of plaintiff, B.D.C.
As outlined above, the Commission used this evidence to show
that the plaintiff could not fill the needs of at least this
class of shippers, which class was in competition with Banker's
Data Center. The Commission took the position that adding another
carrier would best serve the public convenience and necessity.
This court cannot say that this conclusion is unreasonable or
arbitrary. This is so especially since B.D.C. still has a
monopoly in the carriage of "cash letters." It is also important
to note that American Courier did not appeal this portion of the
ruling. B.D.C.'s contention at the oral argument that its
competitive position is effectively destroyed, since cash letters
and audit media go hand in hand, and that if you get one you get
the other, falls by its own weight since American Courier cannot,
by virtue of the denial of part 1 of their application, carry
cash letters. Therefore, if anyone is favored, it is the
plaintiff, since it is the only company which can carry both
items without violating its operating authority.
It thus appears that there exists substantial evidence to
support the Commission's conclusions and that it did not abuse
its discretion in granting limited operating authority to the
American Courier Corporation. On this basis, therefore, the
ruling of the Interstate Commerce Commission is hereby affirmed,
and the application of plaintiff to enjoin the operation of that
order is hereby denied.