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August 8, 1967

Interstate Distributing Company
United States of America, Interstate Commerce Commission, Los Angeles-Seattle Motor Express et al.

The opinion of the court was delivered by: POPE

In this matter the Commission denied the application of Interstate Distributing Company for a permit authorizing the operation as a contract carrier by motor vehicle over irregular routes for the account of West Coast Grocery Company of Tacoma. West Coast is one of the three largest grocery distributors in the Northwest dealing in all kinds of merchandise such as is ordinarily dealt in by wholesale and retail grocery establishments. Heretofore the precise service sought to be performed by the applicant was secured by West Coast through use of leased motor vehicles and trucks between points in California, on the one hand, and Tacoma, Aberdeen and Chehalis, Washington, on the other. West Coast main headquarters was at Tacoma but it had branches at Chehalis and Aberdeen to which deliveries of grocery products were required. In brief, the proposal presented was that Interstate Distributing procure a permit authorizing it to operate as a contract carrier exclusively for West Coast Grocery providing the same transportation which West Coast had previously conducted for itself through the vehicles which it had leased from Interstate Distributing.

The transportation for which permit was sought was by no means a large portion of the transportation requirements of West Coast. West Coast used, and proposed to continue to use, rail, piggyback rail, common carrier truck transportation, and some ocean transportation to procure its needs of grocery products from California and deliver them to its Tacoma, Aberdeen and Chehalis warehouses. The testimony showed that between 15% and 20% of such transportation needs was through common carrier trucks; some 40% was by rail and piggyback rail, while the private equipment mentioned was used normally to transfer approximately eight truckloads a week out of California to the warehouses mentioned.

 The applicant for the permit, and the shipper in aid of the applicant, made an attempt to show that the shipper had a specialized or particular need for the service which Interstate Distributing Company proposed to supply under its permit, a need which had prompted the establishment of the private carriage above described, and which was supposed to be supplanted through the procuring of the permit sought here.

 The Commission found against those claims saying that the applicant's "proposal does not appear to involve anything which might be termed 'specialized' or 'personalized' service tailored to a shipper's distinct needs."

 An examination of the record discloses that that finding is unsupported by substantial evidence. There is clear and uncontradicted evidence that although the bulk of West Coast's requirements of California products may be supplied by rail or other common carrier, yet it had the unique and special requirement for the sort of service which it had usually been obtaining through the use of its leased equipment. The manner in which this sort of service was required was detailed at length by West Coast. One respect in which this need existed related to West Coast's practice of shopping around among purchasers for preferred items. "We shop from cannery to cannery to get the best merchandise we can so consequently we send the truck in to make the pickup of specific items at a desirable cannery. Having split pickups allows us to buy the items we want when we want them rather than having to compromise and consolidate in a single cannery pickup." This would not be possible if shipment were made by rail. It would appear that having independent control of trucks which might roll from place to place always with the same driver and taking in places not on the standard routes of the common carriers, West Coast could make this selective buy which it could not do if ordered from a single producer with directions to ship by common carrier.

 Another specialized need arose from a service which West Coast undertook to perform for groups of independent advertising chains of grocers. This turned upon the advertising practices of these retailers who advertised specialties from week to week. *fn1" The Commission makes no finding whatever concerning this aspect of the shipper's specialized needs and its finding last referred to is therefore unsupported by substantial evidence.

 Also wholly unsupported is the further finding that protestants have shown that they can provide "the same service proposed by applicant on grocery shipments from the California points of origin to the points of destination in Washington." The applicant showed that the same drivers previously used by West Coast would be employed by them and the desirability of utilizing such drivers to meet the type of emergency mentioned in the last footnote is plain. The necessity of West Coast having absolute control of when and where the truck calls at the supplier's place of business is plain. The evidence shows without contradiction that West Coast requires pickups from towns off the main highways and off the routes of common carriers. *fn2"

 Witnesses for the protestant common carriers testified that they did not even know where some of these towns were. Thus P.I.E. stipulated that it had no general commodity authority in six of these listed towns and no direct general commodity authority to and from Aberdeen. The witness for West Coast was asked to name a typical example of a schedule that involved different points of pickup and the answer was as follows: "A. On the 20th we picked up a lot of 27,775 pounds from Hunts at Tracy and added to that 18,600 pounds from Albers at Sebastopol - that was a noon pickup and it was unloaded on the 24th which was Friday of that same week. That would be typical." Interestingly enough, some of the protesting carriers had no notion where Sebastopol was located much less were certified to serve it and the witness for Consolidated Freightways said his concern could not serve it. *fn3"

 This sort of thing was shown to be particularly serious. If a carrier has no authority to serve a certain place he cannot effectively furnish the required service by arranging for shipment by another carrier licensed to serve the place. That would involve transshipment and rehandling of the commodity. West Coast testified to the disadvantages of this stating that handling certain perishable commodities makes them less saleable. *fn4"

 An attempt to utilize existing common carriers to provide the sort of services anticipated to be furnished by this applicant would present other difficulties which are noted in the record. Thus if the applicant had a permit as sought here West Coast could obtain delivery of any desired goods merely by notifying the contract carrier where to pick up the commodities and where to deliver them. To accomplish the same result with the common carriers with fixed routes and specified authority would present well-nigh insuperable difficulties for West Coast. West Coast representative would have to ascertain which carrier had the appropriate authority covering the point of origin, how far that authority would permit carriage in the desired direction, and to what other authorized carrier the commodities would have to be transferred while enroute to Aberdeen, Chehalis or Tacoma. This is an additional factor showing the shipper's need for the contract carriage. *fn5"

 Upon none of these matters do we find any findings by the Commission although the questions here presented are obviously susceptible of findings. The report of the Commission recites as follows: "Thus, we conclude that the record fails to show that the shipper has any need, distinct or otherwise, which can be better met by applicant than by the protestants." In our view, this conclusion is not supported by substantial evidence and it flies in the face of the undisputed evidence in the case. The evidence is that if the permit were granted, West Coast would have absolute control over the trucks carrying its commodities. It could divert them from the initial course to pick up merchandise needed in an emergency. The truck would be operated by the same drivers previously used under the lease arrangement who would be familiar with West Coast's specialized needs. Split pick-ups and deliveries would be simple; commodities could be picked up from towns unknown to common carriers, or not upon their routes, and brought to destination without rehandling.

 In dealing with the question of the effect which granting the permit would have upon the services of protesting carriers, the Commission has indulged in some poor speculation. The Commission's report notes that the "shipper asserts that if the application is granted it does not intend to divert to applicant that traffic now handled by existing rail and motor common carriers." Obviously the Commission cannot find anything in the record to contradict that assertion, but it speculates by quoting from a prior report the statement that "a grant of authority might well work to the detriment of the protestants' services as it would enable the supporting shipper to divert to the applicant a substantial line of traffic now being handled by them." The Commission also states "Closer scrutiny of the involved circumstances impels us to recognize the possibility that at some future time there might be a substantial diversion of traffic."

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