1Traffic identified as moving between regular-route points in Indiana and Michigan is not understood as having been transported by way of applicant's irregular-route authority in Ohio, and evidence relating to such traffic is, therefore, not considered as probative with respect to the issues involved

No. MC-138018 (SUB-NO. 8)

REFRIGERATED FOODS, INC., EXTENSION-
CONVERSION PROCEEDING

Decided December 8, 1976

Public convenience and necessity found to require operation by applicant as a common carrier by motor vehicle, over irregular routes, of specified commodities, between specified points in the Western United States, subject to certain restrictions. Issuance of a certificate authorized upon compliance by applicant with certain conditions, and application in all other respects denied.

Donald L. Stern for applicant.

Thomas J. Burke, Jr., Edward T. Lyons, Jr., and Richard A. Peterson for protestants.

REPORT OF THE COMMISSION

DIVISION 1, COMMISSIONERS MURPHY. GRESHAM, AND MACFARLAND

MURPHY, Commissioner:

Exceptions to the initial decision of the Administrative Law Judge were filed by the applicant, and both protestants, Curtis, Inc. (Curtis), and Denver Albuquerque Motor Transport, Inc. (D-A), have replied thereto. Our conclusions differ substantially from those recommended by the Administrative Law Judge.

By application filed March 1, 1974, as amended, Refrigerated Foods, Inc., of Denver, Colo. (applicant), seeks a certificate of public convenience and necessity authorizing operations, in interstate or foreign commerce, as a common carrier by motor vehicle, over irregular routes, of the commodities and between the points as set forth in appendix A hereto.

The Administrative Law Judge recommended denying the application on the basis that applicant had failed to supply shipper evidence of a need for applicant's services as a common carrier. Specifically, the Administrative Law Judge found that a grant of the application would actually result in less service being available to supporting shippers because thereby they would lose applicant's

specialized contract carrier services; that the shipper support for the application was based on mere preference for applicant's services; and that applicant had failed to meet the requirements for a grant of motor carrier authority, specifically the criteria discussed in Novak Contract Carrier Application, 103 M.C.C. 555 (1967). In finding that applicant had failed to meet the Novak criteria the Administrative Law Judge concluded that supporting shippers had particularly failed to identify the points to which their commodities moved or to establish any deficiencies in existing services.

On exceptions, applicant's leading contention is that the Administrative Law Judge erred in requiring it to show a need for its services as a common rather than a contract carrier. Applicant contends that it was compelled to seek conversion in order to alleviate dual operations problems resulting from its seeking Commission approval to control Kodiak Refrigerated Lines, Inc., Refrigerated Foods, Inc.-Control-Kodiak, 116 M.C.C. 805 (1974).' Under such circumstances, applicant asserts, it is not required to show a need for its services as a common rather than a contract carrier, citing Ferree Moving and Storage, Inc., Conversion Applic., 110 M.C.C. 375 (1969), and Mellow Truck Exp., Inc., Com. Car. Applic., 124 M.C.C. 71 (1975). Applicant also requests that we take notice of a number of proceedings wherein issuance of certificates is being held up pending conversion of its contract to common carrier authority.2 Applicant assigns two other errors. It argues that the Administrative Law Judge erred in receiving into evidence protestant Curtis' testimony regarding alleged interline connections with unrepresented carriers, contending that admission of such evidence results in the false. implication that protestant Curtis offers service from all the involved origins to all the sought destinations.3 Applicant also argues that the Administrative Law Judge erred in finding that the

'While the printed report in the cited proceeding denied the control application because of dual operations problems, by supplemental order dated March 4, 1976, the application was granted subject to the imposition of certain restrictions in the certificates of Kodiak Refrigerated Lines, Inc.

'Applicant has been granted common carrier authority in No. MC-138018 (Sub-Nos. 4, 5, 16, and 24), conditioned upon conversion or cancellation of all existing permits in order to remove objectionable dual operations resulting from the grants of common carrier authority.

"We do not believe the Administrative Law Judge erred in admitting this evidence. Because the interlining carriers were not present at the hearing, and no substantive evidence of any traffic moving under these arrangements has been presented, this evidence is entitled to little weight. Curtis, Inc., Extension-Greeley, Colo., 92 M.C.C. 34, 35-36 (1961). Such evidence is nonetheless admissible, and may be considered in the disposition of the proceeding, providing opposing parties have proper notice that protestant's opposition is so based. Compare Eckley Contract Carrier Application, 112 M.C.C. 753, 756 (1971).

conversion would result in less service being available to the supporting shippers. Applicant contends that the service to be provided under the proposed common carrier operation would be no different from that now offered as a contract carrier.

In reply, protestants generally dispute applicant's contentions and encourage adoption of the initial decision. Both argue specifically that the instant application preceded any asserted dual operations problems, which in any event, they assert, have since been resolved, and both contend that the affiliation between applicant and supporting shipper Pepper Packing Co., should bar a grant of common carrier authority.

The evidence, the Administrative Law Judge's initial decision, the exceptions, and replies thereto have been considered. We find the Administrative Law Judge's statement of facts to be correct in all material respects, and we adopt it as our own. Pertinent facts will be restated and supplemented only to the extent necessary for clarity of discussion.

PERTINENT FACTS

Applicant is both a contract and common motor carrier. As a motor contract carrier holding permanent authority in No. MC124377 and subnumbers thereto, applicant is authorized to serve six contracting persons (shippers) in the same manner set forth in appendix B hereto. Operations under these permits, in terms of commodities transported and points served, coincide with the proposed common carrier service. While there is some conflicting testimony concerning which of the alternative criteria of section 203(a)(15) qualifies applicant as a contract carrier, it appears that applicant has not recently dedicated equipment to each of its contracting shippers. Applicant's position is that while it provides the contracting shippers with a specialized service, this is no different from that service which it provides as a common carrier. Under certificates issued in No. MC-138018 and subnumbers thereto, applicant operates as a common carrier of the considered commodities from and to specified points in the United States. It offers to surrender each of its permits for cancellation upon being granted the sought common carrier authority.

Applicant offers evidence of past lawful operations in appendix VIII to exhibit 1, which lists all shipments handled under its permits from May 24, 1974, through May 24, 1975. The appendix shows the shipper, origin and destination points, volume, and commodity

involved in each movement. No traffic moved under the Sub-No. 5 and Sub-No. 11 permits (parts (2) and (5) of the proposed service), but witnesses for the two shippers authorized to be served under these permits state that they will need these services within the near future, and that they desire applicant to retain the ability to provide them. With these two exceptions, the evidence indicates that applicant has recently conducted substantial operations under its outstanding permits.

The application is supported by the shippers authorized to be served under applicant's contract carrier authority. Needed features and qualities of applicant's services include (1) eight rail trailers allowing faster unloading and better circulation of cooling air, (2) keystop and peddle delivery service, (3) excellent tracing service, (4) equipment in good condition and readily available, (5) trailer pools at shippers' locations, (6) well-trained and courteous drivers, and (7) timed deliveries. Each supporting shipper expresses satisfaction with applicant's services as a contract carrier and each states that it will continue to use applicant should the conversion to common carriage be permitted, providing applicant maintains the high-quality service it has rendered in the past. Several of the supporting shippers have used protestants' services on a limited basis. Comparing these services to those of applicant these shippers have found applicant's to be superior. A number of complaints are voiced with regard to protestants' services, including late deliveries, poor tracing service, and lack of equipment. However, it is clear from the testimony and other evidence provided by shippers that failure to use other existing services is primarily the result of the high quality of applicant's service and their satisfaction with it.

Marvin, Freeman, and Joe Pepper are controlling stockholders of supporting shipper Pepper Packing Co. (Pepper Co.). Each of the Peppers owns 11 percent of applicant's outstanding voting stock. The remaining stock of applicant is held as follows: 56 percent is held by Mel Smookler and 11 percent by Ralph Lemberg. The Peppers have not taken an active part in applicant's management for the past 25 years, and by their own testimony, the relationship between applicant and Pepper Co., has not affected the selection of carriers by shipper's personnel or caused applicant to favor shipper with special treatment. During the period August 1974 to February 1975, of the 1,833 loads handled by applicant for its contracting shippers, 1.20 percent moved on the account of Pepper Co. Of the 3,201 loads represented in the evidence of past operations presented in this proceeding, only 73, or 2.28 percent moved for