RIEGEL TEXTILE CORP. "AY 19, 1949.-Committed to the Committee of the Whole House and ordered to be printed Mr. FRAZIER, from the Committee on the Judiciary, submitted the following REPORT To accompany H. R. 1054 The Committee on the Judiciary, to whom was referred the bill (H. R. 1054) for the relief of Riegel Textile Corp., having considered the same, report favorably thereon with amendment and recommend that the bill do pass. The amendment is as follows: At the end of bill insert: Provided, That no part of the amount appropriated in this Act in excess of 10 per centum thereof shall be paid or delivered to or received by any agent or attorney on account of services rendered in connection with this claim, and the same shall be unlawful, any contract to the contrary notwithstanding. Any person violating the provisions of this Act shall be deemed guilty of a misdemeano and upon conviction thereof shall be fined in any sum not exceeding $1.000. The purpose of the proposed legislation is to pay the sum of $130,000 to the Riegel Textile Corp., of Georgia. Payment of such sum shall be in full settlement of all claims against the United States on account of payments by the company in connection with a controversy with the Office of Price Administration respecting the pricing of work gloves. STATEMENT OF FACTS It appears that the Riegel Textile Corp., successor to the Trion Co., of Trion, Ga., and to Ware Shoals Manufacturing Co., of Ware Shoals. S. C., which had been affiliated for many vears prior to the organization of the new corporation. Riegel Textile Corp., and before it the Trion Co., operated at Trion a cotton spinning and weaving mill. a finishing plant, and a glove fabricating plant, employing approximately 4,000 people. The glove plant normally employed from 600 to 800 people and produced from one-sixth to one-fifth of the total revenue of the Trion plant. The glove plant produced approximately 70 styles of work gloves made of canton flannel, knitted jersey, and combinations of flannel and leather. Trion gloves were sold principally to the larger distributors, such as mail-order houses, chain stores and large jobbers, with the result that the gloves were customarily sold for delivery in the distant future. During March 1942 the Trion Co., in common with the other principal glove manufacturers, raised the price list to reflect the increased cost of raw materials and labor. Because of existing contract requirements, very few styles of work gloves were actually shipped during March 1942 at the higher list price. In April 1942, OPA issued the general maximum price regulation which became effective in May 1942 and was intended to freeze prices at the March 1942 level until such time as the Administrator could determine and establish specific ceiling prices for each product or commodity. The general maximum price regulation provided that ceiling prices should be the prices at which goods were delivered or offered for delivery during the month of March. The price structure in the work glove industry has always been based on a series of differentials between various styles of work gloves, a 10-ounce canton flannel glove selling at a recognized premium over an 8-ounce canton flannel glove, etc. If the regulation meant that the ceiling price for each individual style of work glove was the highest price at which such style was delivered during the month of March, certain styles would have been priced at the levels prevailing in March 1942; other styles at the price prevailing in December 1941; and others at the prices prevailing as early as September 1941. Representatives of all the major units in the industry requested a ruling from OPA whether the delivery of certain styles in March 1942 at the new price list constituted establishment of the entire list. The Trion Co. filed a formal appeal with OPA on May 21, 1942, which was never answered. In June 1942 Mr. E. Glenn Elliott, acting chief of the Work Clothing Unit Division of OPA, stated to representatives of the work glove industry that their established ceiling prices were the prices in their March 1942 price lists. Mr. Elliott subsequently furnished Wells-Lamont Corp., one of the large glove manufacturers, an affidavit, copy of which is attached hereto, and made a part of this report. In March 1942 the Trion Co. had a backlog of unfilled orders equivalent to approximately 37 weeks' normal production. In the hope of obtaining a specific ruling in writing from OPA, no new orders were taken at any price, except for nominal orders for a few styles for spot delivery, until October 1942. These nominal orders were taken on a memorandum basis, the price to be determined at a later date. In October 1942 it became necessary for the company to take orders to keep the plant running. Representatives of the Trion Co. were assured by Mr. Elliott that a definite ruling would be forthcoming immediately from OPA establishing the March 1942 list prices as the ceiling prices, and therefore orders were solicited and accepted on that basis. However, the specific price order was not issued until January 17, 1944. During the late spring or summer of 1943, OPA changed its interpretation of the general maximum price regulation and entered suit against several of the large glove manufacturers for triple damages. OPA made an audit of the records of the Trion Co. (Riegel Textile Corp.) and determined alleged violations for the period from May 11, 1942 through September 30, 1943, ranging in amount from $192,672.47 to $236,332.84, depending upon the basis of computation. No formal action was started against the Trion Co. (Riegel Textile Corp.), but representatives of OPA for the Atlanta district stated to representatives of the company that a more complete examination of the records of the corporation would undoubtedly disclose additional violations, and that a triple damage suit for an amount as high as $900,000 or $1,000,000 could be instituted against the company. The company determined, as a result of conferences with OPA representatives, that a settlement in the amount of $130,000 could be made. In view of the substantial risk involved in litigation, and in view of the unfortunate psychological effect of such litigation on the employees of a corporation engaged primarily in war production, it was decided to make the settlement. From the records it appears there was only one other glove manufacturer who made a similar settlement, the amount being relatively small. All other major glove manufacturers fought the action. In the spring of 1946, with the result that section 205 (e) of the Emergency Price Control Act was amended, the matter was brought to the attention of Congress; the amendment designed specifically to stop pending and forbid new enforcement actions against glove manufacturers for alleged violations arising out of this situation. As a result of the passage of this amendment, all pending cases against glove manufacturers were dropped and no payments were made by such manufacturers. This bill provides for the payment of $130,000 to the Riegel Textile Corp. on the grounds that it is inequitable to relieve certain glove manufacturers of payment and penalize one manufacturer for alleged violations of the same nature occurring at the same time. Your committee held hearings on this claim and from the evidence submitted and statements made by the officers of the claimant company strongly indicate that if this company had gone into the courts in protest of the OPA regulations, as other companies did, they would not have been penalized this $130,000. However, as set forth in Mr. Evans' statement, the company felt that its loyalty might be questioned if they protested this assessment, and paid. Your committee feels that this company has been penalized and discriminated against and should be reimbursed the amount paid the OPA, and recommends favorable consideration of the bill. THE SECRETARY OF COMMERCE, Hon. EARL C. MICHENER, Chairman, Committee on the Judiciary, House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: This letter is in reply to your communication of August 31, 1948, requesting of the Department its comments concerning H. R. 3743, a bill for the relief of the Riegel Textile Corp. The enclosed report of the Director of the Division of Liquidation, Department of Commerce, commenting adversely on H. R. 3743, is submitted to the committee with the endorsement of the Department. If we can be of further assistance to the committee on this matter, please feel free to call upon us. I have been advised by the Bureau of the Budget that there is no objection to the submission of this report to your Committee as the enactment of the proposed legislation would not be in accord with the program of the President. Sincerely yours. CHARLES SAWYER, MEMORANDUM To: I. N. P. Stokes, Solicitor, Department of Commerce. AUGUST 11, 1948. Subject: H. R. 3743, a bill for the relief of the Riegel Textile Corp. By memorandum dated July 28, 1948, you requested my view regarding the above-mentioned bill. I have considered the matter on the basis of the proposed report of the Department of Justice, copy of which report was annexed to your memorandum. It appears that subject company, on whose behalf the bill in question was introduced, is the successor in interest of Trion Co. which was in the business of manufacturing work gloves and which at various times, including the period October 1942 to October 1943, was required to make sales at prices no higher than those established under regulations promulgated by the Office of Price Adminis tration. During the period October 1942 to October 1943 Trion's maximum prices were governed by the general maximum price regulation. It further appears that Trion sold at prices in excess of its maximum prices thus established and became liable in enforcement proceedings for damages in the sum of $192,000. After some 5 months of negotiation between Trion and the Office of Price Administration Enforcement Division, a settlement was entered into and concluded on February 19, 1944 whereupon Trion voluntarily paid the sum of $130,000 into the Treasury and the Office of Price Administration thereupon released its claim. About 4 months prior to the settlement just described the Office of Price Administration issued Maximum Price Regulation 506 to supersede the general maximum price regulation with respect to the pricing of work gloves. Maximum Price Regulation 506, it is understood, granted in substantial part price increases previously requested by Trion and certain other manufacturers. It is to be noted that Maximum Price Regulation 506 operated prospectively and was promulgated in the light of conditions existing at the time of its issuance. More that 2 years after Trion had paid into the Treasury the sum of $130,000 in voluntary settlement of the claim of the Office of Price Administration, section 205 (e) of the Emergency Price Control Act of 1942, was amended by the addition thereto of a paragraph on which, I understand, subject's claim is predicated. That paragraph reads as follows: "The Administrator shall not institute or maintain any enforcement action under this subsection against any manufacturer of apparel items where the Administrator shall determine (1) that the transactions on which such proceeding is based consisted of the manufacturerer's selling such an item at his published March 1942 price list prices instead of his March 1942 delivered prices and (2) that the seller's customary pricing patterns for related apparel items would be distorted by a requirement that his ceilings be the March 1942 delivered prices. The Administrator's determinations under this paragraph shall be subject to review by the Emergency Court of Appeals in accordance with sections 203 and 204." It will be observed first that the quoted provision applies only to "any enforcement action." Second, it was intended to operate only with respect to current or prospective enforcement actions. Plainly it omitted any requirement that the Administrator vacate judgments previously entered in due course or refund damages paid by virtue of such judgments. It is obvious that the provision in question was not intended to require the Administrator to restore amounts previously paid in voluntary settlements. Worth noting in this connection is the fact that there are probably many thousands of instances in which judgments were collected and settlements accepted based on violations of regulations even though those regu lations were in one degree or another and for one reason or another, corrected to the prospective benefit of the affected parties. Effective administration is in The validity of the general maximum price regulation as it affected work glove manufacturers of Trion's type was upheld (to the extent challenged) in Wells Lamont Corporation v. Chester Bowles. Price Adminis 'rator. (149 F. (2d) 364), decided January 19, 1945. separable from compliance. The fact that a valid regulation or law is changed so as to provide benefits or exemptions where there were none before, cannot absolve persons who were violators prior to the change. A policy not following that principle encourages violation by fostering the hope that any violation may be cured by later amendments, howsoever prospective in their operation those amendments may be. Such a policy, which would render the enforcement sanction a dubious one, was not followed by the Office of Price Administration. To adopt it now, for the purpose of granting subject special relief would, in my opinion, bring forth a flood of similar requests from many thousands of violators who long ago paid or settled their accounts with what everyone had assumed to be finality. Subject's claim is based upon the alleged unfairness of a statutory exemption from liability at one point in time without a similar exemption from liability for violations allegedly of the same type, occuring previously. Apart from the administrative impossibility of reinvestigating many thousands of closed cases which would require reopening if the kind of equality sought by subject company were regarded as appropriate, a more important consideration, it seems to me, requires a negative position on the proposed bill. This consideration is to my mind paramount and is based upon the previous determination by the Office of Price Administration enforcement officials that the legislative provision on which subject company relies would not have had any application to it even had it been in force 2 years prior to its enactment, at the time the Office of Price Administration was asserting its claim for damages against the subject company. It is to be noted that the amendment to section 205 (e) was enacted for the protection of a special group of sellers whose prices, frozen under the general maximum price regulation, were distorted because some of those prices represented "delivered" prices on sales made from a former published price list and others represented "delivered" prices on sales made from a later published price list in existence in March 1942. The Department of Justice report, which no doubt is based upon the file in this case, reveals that subject company's violation prices were not those contained on its published March 1942 price list. The statement is made that the company did not in March 1942 have a "price list" setting forth the prices which it charged, but actually withdrew its existing price list and later issued a new one listing a scale of prices higher than those at which it sold and delivered in March 1942. In summary, it seems to me that: (1) Whatever equitable consideration there could be in subject's favor would necessarily grow out of the assumption that the provision of section 205 (e) here involved would have applied to the facts of subject's case had that provision been in force at the time the Office of Price Administration claim was settled. The assumption is incorrect since the provision in question does not apply to the facts of subject's case; (2) In any case, the provision under discussion, enacted more than 2 years after the violation and settlement, has no retroactive effect; (3) Any equitable consideration which might possibly exist in favor of the bill would be outweighed greatly by the consequences of its enactment. The finality of settlements unreservedly arrived at and the conclusiveness of judgments validly entered in thousands of cases would be open to question, open to reversal, and would entail in each case an extensive reinvestigation and reevaluation of all of the facts.2 For these reasons I recommend that the Department indicate its disapproval of H. R. 3743. STATE OF GEORGIA, County of Chattooga, ss: N. Barnard Murphy, being duly sworn, deposes and says: 1. That he is a resident of Trion, Ga., and that he is vice president and general manager of the Trion division of Riegel Textile Corp. and a director of the corporation. 2. That from April 1941 until the dissolution of the Trion Co. in 1946, he was president of the Trion Co. 3. That this affidavit is submitted in support of H. R. 1054, Eighty-first Congress, first session. 4. That H. R. 1054 provides for the payment of $130,000 to Riegel Textile Corp., a Delaware corporation, the successor of the Trion Co. I call your attention to the fact that practically all "closed" OPA enforcement case files have been destroyed under appropriate congressional authorization. |