150 F.2d 273 | D.D.C. | 1945
Lead Opinion
This suit was brought by appellee, the Administrator of the Office of Price Administration, against appellant Rainbow Dyeing and Cleaning Co., Inc., to recover three times the amount of certain overcharges. Appellant is in the wholesale dry cleaning business. During March 1942 appellant regularly charged certain customers certain prices and other customers higher prices for the same services. In the ordinary sense of the words, all these customers appear to have been in the same class. The price differences appear to have been
Maximum Price Regulation 165, § 1499.-102, prohibits dealing in consumer services at prices higher than the highest prices which the seller charged during March 1942 to a “purchaser of the same class.” The quotation marks, as well as the quoted words, are used in the Regulation itself. It thereby draws attention to the fact that it does not use the words “purchaser of the same class” in their ordinary sense but in a special sense which it defines. Section 1499.116 supplies the definition: “‘Purchaser of the same class’ refers to the practice adopted by the seller in setting different prices for consumer services for sales to different purchasers or kinds of purchasers * * * or for purchasers located in different areas or for different quantities or grades or under different conditions of sale.”
It follows from the definition Just quoted that appellant’s price increases violated the Regulation. The definition indicates that a seller’s practice “in setting different prices * * * to different purchasers” puts each purchaser who pays a different price according to this practice in a different "class.”
It has been urged in support of appellant’s position that if the words “different purchasers” do mean what they say, they cover all possible ground and the remainder of the definition, which refers to different kinds of purchasers, etc., becomes a mere collection of illustrations or examples of “different purchasers.” Even if this were true it would not be important. A reading which makes certain words illustrations or examples of other words does no such violence to a document as a reading which requires that certain words be eliminated or ignored. It is more in accordance with tradition and sense to construe a document as explaining what it says than as saying what it does not mean. However, the words “different purchasers” do not in fact cover, by any means, all the ground which the definition covers. On the contrary, if the definition stopped immediately after the words “different purchasers” it would be incomplete and absurd. For the only purchasers who would then be in any “class” would, apparently, be those purchasers as to whom a particular dealer had, in March 1942, adopted a “practice” of “setting different prices.” Since all after-acquired customers, and also all old customers as to whom no such practice was in force in March 1942, would be in no “class,” and since the Maximum Price Regulation is expressed in terms of “class,” it follows that a dealer would be free, under the suggested short definition, to raise his prices without limit to all such customers. The final portion of the actual definition therefore remains very important when the phrase “different purchasers” has been given its full meaning.
Again, it has been urged that low rates to favored customers should disappear because the competitive conditions which produced them have disappeared. As an economic argument, this attacks the whole theory and purpose of price regulation, which are to prevent changes in competitive conditions from producing the price increases which they would produce in the absence of regulation. As a legal argument, it conflicts with Maximum Price Regulation 165. A purchaser may change from wholesaler to retailer, for example; but no one can change from a purchaser who did to one who did not, in March 1942, regularly pay “different prices” from other purchasers. Accordingly, classification on the one basis may change but classification on the other basis cannot. When members
Shortly after the Regulation was issued, the Administrator published Maximum Price Regulation No. 165, Manual No. 2, in which.he said.(p. 21): “Whether one class of customer is or is not the same as another class depends principally on your own business practice. If you customarily recognized one class as differing from another by charging different prices, you will be required to continue treating them as different classes.” Again, on September 22, 1942, the Administrator issued the following official statement: “Frequently, of course, a seller may have had the practice of giving a customer special low prices with the complete absence of any criteria which can be objectively applied * * *. In such a case, this buyer is in a separate class by himself; his class was established by the seller’s practice of giving him a lower price.”
Though the definition, and therefore the Regulation, were clear on analysis, they may have been somewhat ambiguous on casual reading, in the limited sense that some casual readers might overlook the words “different purchasers.” But this does not aid appellant. The fact that a casual reader may eliminate words from a document does not justify a court in doing so. Moreover, on August 26 and again on November 16, 1943, the Office of Price Administration expressly told appellant
Affirmed.
7 Fed.Reg. 4734, 4737, June 25, 1942. Italics supplied.
Bowles, Adm’r. v. Nu Way Laundry Co., 10 Cir., 144 F.2d 741.
Office of Price Administration Service, p. 11:968.
In July 1943, an O.P.A. inspector erroneously told appellant that its price increases were lawful. But appellant made the increases before it got this erroneous advice, and continued them in effect after it got correct advice. It is therefore clear that the increases were not due to the erroneous advice. Appellant does not suggest that its conduct was influenced, at any time, by any advice from the Office of Price Administration. Moreover the inspector had no power to bind the Office of Priee Administration. Revised Procedural Regulation No. 1, §§ 1300.51-1300.52, 7 Fed.Reg. 8961, 8965, amended 8 Fed.Reg. 3313; cf. Nichols & Co. v. Secretary of Agriculture, 1 Cir., 131 F.2d 651, 658, 659, reversed on other grounds, 136 F.2d 503.
Concurrence Opinion
(concurring).
I am far from thinking that Section 1499.102(10) of Maximum Price Regulation No. 165 is as clear as a bell. But it is clear that a year before this proceeding was begun the Administrator removed the uncertainties in the original by an “official interpretation,”
O.P.A. Service, 11:969; Sept. 22, 1942: “Thus if a laundry customarily charged two customers different prices at the same time the two customers are in a separate class even if one customer sometimes paid more than the other and sometimes less.”
Dissenting Opinion
(dissenting).
If this were an ordinary case for interpretation of an administrative regulation I should feel inclined to follow the majority opinion. That opinion adopts the interpretation put on an admittedly ambiguous regulation by the administrative body which had the duty of enforcing it. Ordinarily such an administrative interpretation should be followed by the court even though a contrary interpretation of the regulation is equally reasonable and plausible.
But this is not an ordinary case. The statute as it existed at the time of the transactions here was a peculiar one. It put an extreme hazard upon the small merchant.
Every reason of morals and fair dealing between a government and its citizens favors a strict construction of those unusual regulations imposing liability regardless of actual fault. A contrary rule would turn every ambiguity created by an administrative agency into a dangerous trap. Furthermore, whether the administrative agency chooses to spring such a trap becomes a matter of the whim of the particular enforcing officer. This is illustrated by the enforcement of the very regulation we are interpreting here. In the case of Bowles v. Nu Way Laundry Company
The concurring opinion attempts to justify this hardship by saying that the Administrator removed the uncertainty by an official interpretation of the regulation. This sounds simple and just until one examines how it actually works out. When we turn to the so-called “Official Interpretations” we find not one but three sets of interpretations. One is a manual bearing the reassuring title “What Every Retailer Should Know About the General Maximum Price Regulation”. A second manual is entitled “How The Service Price Regulation Applies To The Service Trades”. These two interpretations are in handy. form. They are the kind of pamphlets which the retailer might be expected to use. Then, in addition to these manuals, there is a loose leaf service for more profound students. It is entitled “General Maximum Pricé Regulations — Interpretations”. It is a continuing selection and digest of the hundreds of thousands of field decisions compiled by the Office of General Counsel with its comment. Like the brook, this service runs on forever, constantly increasing in volume as cases are decided in the field. All three of these publications are issued by the Office of Price Administration; each is as official as the other.
The ruling of the majority is that the small retailer cannot rely on the wording of the regulations. He must at the peril of treble damages also keep up with all three of these publications. If he fails to do so he becomes liable at the whim of the administrative officer for three times the cost of his mistake. The harsh character of such a rule is emphasized by the fact that the record here shows even the employees of the Office of Price Administration are unable to keep up with all this interpretative literature. In this very case
I had always thought that judicial review of administrative decisions was a protection against this sort of arbitrary administrative injustice. For that reason it is difficult for me to imagine why this court refuses to apply the rule that, in the unusual case where a retailer is liable at his peril for misconstruing a regulation, ambiguities in such a regulation should be construed in his favor.
In this unusual situation no other rule of construction is fair to the small merchant who cannot afford the expert service necessary to guide him through the maze of administrative interpretation. For example, suppose that the appellant here had read and analyzed all of the interpretative publications issued by the Office of Price Administration. Even then it is doubtful if it could have escaped a treble penalty for the overcharges which an Office of Price Administration official liad told it were correct prices. It would have found in the pamphlet with the reassuring title “What Every Retailer Should Know About the General Maximum Price Regulation” the following statement:
“A retailer who, on and after May 18, sells goods which are the same as those he delivered during March is bound by his highest March prices. That is, he cannot charge more than the highest price charged by him for the same goods during March. Some customers may not have paid as much as other customers on deliveries made during March, but the retailer is entitled to charge all his customers the highest price charged to any customer for such goods during that period.
“However, if lower prices or discounts were normally allowed for large quantities or for special classes of customers or under different conditions of sale, these must be continued after May 18. The mere fact that a retailer may have sold merchandise to a particular customer during March at a price lower than the price he charged other customers does not necessarily make that purchaser a separate class of purchaser. Thus, if a retailer charged all his customers a certain price in March, but in order to induce a particular customer to buy some merchandise he sold it to him at a lower price, he is not required to continue to sell to such customer at a lower price.” Gen. Max. Price Reg. Bulletin No. 2 (May, 1942), p. 3.
This statement affirmatively supports appellant’s practice. It exactly covers appellant’s case because it says that if it sells to some of its customers at a lower price in order to induce them to buy it need not continue that practice. Now suppose appellant searches the voluminous loose leaf service with its compilation of field decisions and the General Counsel’s comment. This service tells appellant that the regulation is intended to establish two kinds of classes, one subjective and the other objective.
The concurring opinion avoids this dilemma by assuming without supporting reasons that the official interpretations in the official manuals are less official than those made by the General Counsel and, therefore, need not be reconciled. I am not complaining about that because I believe that the ingenuity of the majority would be sufficient to reconcile the two sets of interpretations with its opinion if it used the necessary time and patience. My complaint is with the principle of construction that penalizes a small retailer because he has not the requisite training to erect such an elaborate logical edifice.
I, therefore, insist that the power to assess involuntary penalties should be so construed as to create the obligation on the part of the administrative body not to write ambiguous regulations. It is true that eventually the Office of Price Administration got around to repudiating the advice of its subordinate official that appellant’s prices were correct. It finally instructed appellant in the mysteries of subjective classes containing only a single person. But even for that portion of the time why should appellant be charged three times its alleged overcharge for the privilege of having a court decide a highly ambiguous case ? I am unable to answer that question and the majority opinion does not attempt to do so.
It would seem that good faith and good administrative practice would require the Office of Price Administration to amend its regulation so that it was dear what it meant before it demanded treble damages. The Office of Price Administration subsequent to this case actually did amend the regulation so that today its meaning is clear without recourse to interpretative services.
The original definition which we are construing here read as follows :
“ ‘Purchaser of the same class’ refers to the practice adopted by the seller in setting different prices for services for sales to different purchasers or kinds of purchasers (for example, wholesaler, jobber, retailer, government agency, public institution, individual consumer) or for purchasers located in different areas or for different quantities or grades or under different conditions of sale.”
The subsequent amendment removing the superfluous, misleading and ambiguous words now reads :
“(10) ‘Purchaser of the same class* means a purchaser belonging to the same price class, that is, to a group of purchasers to whom it was your established practice in March 1942 to supply or offer to supply the same service at a particular price. If in March 1942 you customarily supplied or offered to supply the same service to any purchaser at a price different from the price at which you supplied or offered to supply the same service to all other pur
The very fact that an amendment was made by the Office of Price Administration is evidence that it felt that an amendment rather than an interpretation was necessary. Yet the majority lays down a principle which imposes a penalty on a small businessman because he was unable to see in the original regulation the dim outlines of the later amendment.
This case has no significance in the present administration of price regulations. The amended act in force today does not impose penalties regardless of the good faith of the seller.
Recently this court, following the same attitude of disregard for the equities of the situation before it, held that an injunction was mandatory in a case where a price regulation had been violated regardless of the seller’s good faith and his honest attempt to comply.
On Appellee’s Motion to Vacate Judgment June 18, 1945.
On May 28, 1945, we affirmed a judgment of the District Court which awarded the Administrator three times the amount which appellant was adjudged to have overcharged its customers. Both appellant and the Administrator had argued the appeal on the, theory that it involved only one question, namely, whether appellant had violated Regulation 165. But the Administrator now points out that the Stabilization Extension Act of 1944, passed while this appeal was pending, limits recovery to the amount of overcharges or $25, whichever is greater, if the defendant proves that his violation of a regulation “was neither wilfull nor the result of failure to take practicable precautions against the occurrence of the violation.”
Judgment vacated and cause remanded.
I emphasize the hardship on the small businessman, because the large concern can afford the expert services which minimize this kind of risk.
Bowles v. Franceschini, 1 Cir.1944, 145 F.2d 510.
10 Cir.1944, 144 F.2d 741.
“Frequently, of course, a seller may have had the practice of giving a customer special low prices with the complete absence of any criteria which can be objectively applied. Thus a seller may have customarily given one customer — who by all objective tests was exactly like many other customers — a special low price out of friendship, or habit, or whim, or because the particular customer was exceptionally good at haggling. In such a case, this buyer is in a separate class by himself; his class was established by the seller’s practice of giving him a lower price. However, because the criterion (friendship, habit, whim, ability to haggle, etc.) is one which can not be objectively applied or duplicated and depends primarily on the seller’s emotions, the class is ‘non-admissible.’ Other persons need not be admitted to the class, even though they claim, for example, to be as good friends of the seller as the favored buyer. The criterion of friendship is not one which OPA can be expected to' apply. By the same token, however, OPA can not be expected to pass upon the disappearance of the subjective criterion. The ‘friend’ is in a separate
“Accordingly, a view, sometimes expressed, that classes can be established only if a ‘business reason’ exists for the classification is not well founded.” Office of Price Administration Service, 11:968 and 969.
Maximum Price Regulation No. 165, Sec. 1499.116(a) (10), 7 Fed.Reg. 4734 (1942).
9 Fed.Reg. 7443 (1944).
Stabilization Extension Act of 1944, § 108, 58 Stat. 640, 50 U.S.C.A.Appendix, § 925(b, c).
Brown v. Hecht Co., 1943, 78 U.S.App.D.C. 98, 137 F.2d 689.
Hecht Co. v. Bowles, 1944, 321 U.S. 321, 64 S.Ct. 587, 88 L.Ed. 754.
Tit. I, § 108 (b), 58 Stat. 640, 50 U.S.C.A.Appendix, § 925 (e); made applicable to pending proceedings, Tit. I, § 108 (c), 50 U.S.C.A.Appendix, § 925 note.
Bowles v. Franceschini, 1 Cir., 145 F.2d 510; Bowles v. Glick Bros. Lumber Co., 9 Cir., 146 F.2d 566; Speten v. Bowles, 8 Cir., 146 F.2d 602; Bowles v. Hasting, 5 Cir., 146 F.2d 94.
Cf. Felton v. United States, 1 Cir., 96 U.S. 699, 24 L.Ed. 875; United States v. Murdock, 290 U.S. 389, 54 S.Ct. 223, 78 L.Ed. 381; State of California v. Latimer, 305 U.S. 255, 261, 59 S.Ct. 166. 83 L.Ed. 159; Spies v. United States, 317 U.S. 492, 496, 63 S.Ct. 364, 87 L.Ed. 418; Commissioner of Internal Revenue v. Clarion Oil Co., — U.S.App.D.C. —, 148 F.2d 671.