Trade association code of conduct found unobjectionable

No. 373. Trade association code of conduct found unobjectionable. The Commission advised a trade association of shippers' agents that the aims of its proposed Code of Conduct appear unobjectionable and that adherence by members to its provisions should not operate to effect any unreasonable restraints of trade so long as it is implemented in a fair and nondiscriminatory manner. A "shippers' agent " as defined in the Interstate Commerce Act (49 u. A. 1002(c) (2)) and the proposed Code, is one whose operation consists solely of "consolidating or distributing pool cars, (andJ whose services and responsibilities to shippers in connection with such operations are confined to the terminal area in which such operations are performed. " Under this provision of law a shipper s agent' s responsibility is confined to the consolidation of freight for proper shipment. He does not "break bulk" nor is he responsible for the ultimate distribution of freight. Were he to engage in this latter activity he would, by definition, no longer be a shippers' agent eligible for association membership. According to the requesting party the Code is intended primarily as a preventive measure to assure that members wil conduct their business operations within the Act's limitations. One provision of the Code requires that members indicate , in advertising and elsewhere , that their services and responsibilities to shippers are confined to the terminal area in which they operate. This follows the limitation of the Act and if adhered to by members, will serve to truthfully inform shipper-customers concerning this status. Another provision requires that a member shall avoid any action or statement which could be construed as imputing to him a common carrier status or a status other than that embodied in the Act. This assures that members do not falsely imply to shippers that they take a greater respol1sibility for the shipment and distribution of freight than is permitted by their status under the Act.

Other provisions provide in general terms that the members conduct sha1l be characterized by "candor and fairness " in their relationships among themselves and with the public, and that they sha1l properly discharge their obligations and duties to the shippers who employ them.

It is a condition to membership in the Association that a shippers' agent agrees to subscribe to and abide by the Code. Repeated failure to discharge his obligations thereunder will, upon notice and a probationary period , constitute cause for expulsiol1 of an offel1ding member by the Board of Directors of the Association. Such expe1led member may, however, exercise his right of appeal before the fu1l membership.

While the Code contains provisions restricting the business operations of members, it appears from the materials submitted that the purpose of these restrictions is to insure that members remain within the Act's limitations and respect the confidential agency status created in their dealings with shipper-customers. The purpose is also to encourage Association members voluntarily to refrain from unfair or deceptive practices. In this context there is a greater public interest in protecting shippers from dishonest shippers' agents than there is in condemning the minimal restraints that might result from application of the Code. Undoubtedly, unreasonable and therefore unlawful restraints might result if an Association member is arbitrarily or improperly expe1led from memhership, but the Commission believes that there is ample public interest in effectively encouraging Association members to refrain from the c1early pernicious practices condemned by the Code. On the assumption that the Code wil be administered in such a way as to promote this end, and not so as to place unreasonable restraint on the ability of members to do business , the provision permitting the Association to expel non-conforming members is approved. The Commission also noted that it had confined itself in its opinion to so much of the request as fa1ls within its jurisdiction. The extent, if any, to which another governmental agency may be concerned with the Association s activity is a matter to be determined by reference to that agency. (File No. 703 7030 Released October 9 1969) ADVISORY OPINION DIGESTS 1109