1. In No. FF-C-30, respondent found to be engaged in the performance of freight W. S. Pilling and Ann M. Pougiales for respondents. REPORT OF THE COMMISSION DIVISION 1, COMMISSIONERS MURPHY, GRESHAM, AND MURPHY, Commissioner: MACFARLAND These proceedings were heard on separate records and were the subject of separate orders of different Administrative Law Judges. The issues in each are similar, and they will be disposed of here in a single report. In No. FF-C-30, exceptions to the order recommended by the Administrative Law Judge were filed by respondent, and by the Bureau of Enforcement, Interstate Commerce Commission (Bureau); and each replied to the exceptions of the other. Exceptions to the order recommended in the embraced proceeding by the Administrative Law Judge were filed by respondent, and replies there to were filed separately by the 'This report also embraces No. FF-C-47, Pacific Intermountain Express Co.-Investigation of Operations. Bureau and jointly by certain intervening freight forwarders. Our conclusions differ from those recommended in each proceeding. In No. FF-C-30, by order entered January 17, 1969, an investigation was instituted, on this Commission's own motion, under section 403(f) of the Interstate Commerce Act into and concerning the operations of Modern Intermodal Traffic Corporation (MITCO) with a view to determining whether it has been and is engaging in service as a freight forwarder in interstate commerce for compensation in violation of section 410(a) of the act, and to issuing such orders and taking such other and further action as the facts and circumstances may appear to warrant. By order entered July 2, 1971, in No. FF-C-47, a similar investigation was instituted, on this Commission's own motion, under the same statutory provisions into and concerning the operations of Pacific Intermountain Express Co. (PIE), with a view to determining the same issues as to that carrier as those presented in the title proceeding with respect to MITCO. The Bureau was directed to participate in each proceeding. D.C. Andrews, Star, Acme Fast Freight, Republic Carloading and Distributing Company, Clipper Carloading, Inc., International Forwarding Company, and Western Carloading Company were permitted to intervene in the title proceeding; the forwarders listed in footnote 2 were permitted to intervene in No. FF-C-47. FINDINGS OF THE ADMINISTRATIVE LAW JUDGES In No. FF-C-47, the Administrative Law Judge found respondent's operations to constitute freight forwarding within the meaning of section 402(a)(5) of the act. He reasoned that PIE's operation exhibits all of the attributes of freight forwarding as recognized by the industry and as set forth in the statutory definition; that respondent unquestionably consolidates and provides for the distribution of Hawaiian shipments, and assumes responsibility for safe transportation of the property from origin to destination; that even though Kam's Express Co. (Kam's) operates in Hawaii pursuant to a certificate of exemption, that motor carrier still remains subject to part II of the act, inasmuch as the exemption could be revoked at any time by this Commission; and that, therefore, in employing Kam's for delivery in Hawaii, and employing Hawaiian Express Service, Inc., D.C. Andrews International, Inc. (D.C. Andrews), Star Forwarders, Inc. (Star), Aloha Consolidators and Freight Forwarders, and Universal Carloading & Distributing Co., Inc. its own motor carrier service on the mainland, respondent "utilizes" carriers subject to part II of the act in the performance of its through service, and thereby meets all of the requirements of the freight forwarder definition. In the title proceeding, the Administrative Law Judge found that MITCO is a "hybrid" operation exhibiting characteristics of both freight forwarding and brokerage as defined in section 203(a)(18) of the statute. Under Plan A, where respondent issues its own bill of lading, and assumes responsibility for the safe delivery of a shipment from origin to ultimate destination, MITCO's activities were found to resemble freight forwarding; under Plan B, where no such responsibility is assumed, and where shipper and receiver appear as consignor and consignee, respectively, on the shipping documents, he concluded that respondent's status may more accurately be described as that of a broker. Entry of a cease and desist order was recommended in both proceedings. The evidence, the recommendation of each Administrative Law Judge, and the pleadings have been considered in each proceeding. The statements of facts of the Administrative Law Judges are accurate in all material respects; and, as modified or supplemented herein, we adopt them as our own. Inasmuch as our conclusions differ from those recommended, the pertinent facts will be restated to the extent necessary for clarity of discussion at this point in our report. FACTUAL BACKGROUND Respondent in the embraced proceeding, PIE, is a motor common carrier of general commodities (with the usual exceptions) operating over a transcontinental system of regular routes serving the principal population centers of the east coast, Midwest, and west coast, including, as pertinent, New York, N.Y., Philadelphia, Pa., Chicago, Ill., and Los Angeles, San Francisco, Oakland, and Emeryville, Calif. It does not hold authority to serve points in Hawaii, but nevertheless undertakes to arrange for the transportation of freight by land and by water from points in the contiguous United States to Honolulu and other Hawaiian points. In this service it purports to operate successively as a motor common carrier from the inland mainland origins to San Francisco, as a 'non-vessel operating water common carrier" (NVO) for the ocean 66 movement, and as "agent for the shipper" in arranging for delivery in Hawaii by a local carrier. Shippers are offered a complete doorto-door service, single-factor rates, and single-carrier responsibility, the features of which are described in a brochure. The motor carrier facilities of PIE are used for the transportation of shipments from mainland origins on its lines to its terminal at Emeryville (a point within the San Francisco commercial zone), where the traffic is consolidated and loaded into containers. The containers, which typically hold 42,000 pounds of freight or more, are then moved to the San Francisco container yard of The Matson Navigation Company (Matson) for transportation to Honolulu. At that point they are picked up by Kam's, which accomplishes break-bulk and delivery to the Hawaiian consignee. The latter is a motor common carrier of general freight operating between points in Hawaii pursuant to a certificate of exemption granted by this Commission in Motor Carrier Operation in the State of Hawaii, 84 M.C.C. 5 (1960), 49 CFR 1050.* PIE stations full-time employees at Honolulu, who rent an office from Kam's and who furnish the latter with the names and addresses of the consignees, together with PIE's freight bills. Kam's thereafter bills PIE for its services, using the freight bills as delivery receipts. If the bill is marked collect, Kam's collects the entire amount and remits to PIE that amount, less its delivery charges. If the bill is prepaid, PIE collects the entire amount, and remits to Kam's its charges. All of respondent's freight bills, which are tendered to either the shipper or receiver, show the through charge from origin to destination, as well as itemized charges for the mainland, ocean, and Hawaiian transportation. However, no separate charge appears for containerization, or for movement of the container from PIE's to Matson's facilities. The operation functions as follows: Freight originating at points PIE is authorized to serve moves either in respondent's over-theroad vehicles or in trailer-on-flatcar (TOFC) service to respondent's The Federal Maritime Board (predecessor to the Federal Maritime Commission) held, in Determination of Common Carrier Status, 6 F.M.B. 245 (1961), that persons who undertake to transport under their own responsibility, traffic from one port to another in foreign commerce but who do not themselves own any oceangoing equipment, are to be treated as common carriers by water in the foreign commerce of the United States, as defined by the Shipping Act of 1916, and thus subject to the regulatory jurisdiction of the FMC. These "non-vessel operating common carriers by water," commonly referred to as "NVOs” or “NVOCCs," operate in much the same manner as freight forwarders subject to part IV of the Interstate Commerce Act. "Revoked as to the transportation of household goods in Motor Carrier Operation in the State of Hawaii, 115 M.C.C. 228 (1972). The decision is under judicial review. |