United States v. Interlink Systems, Inc.

984 F.2d 79, 1993 WL 11724
Court of Appeals for the Second Circuit·Decided January 22, 1993·No. No. 243, Docket 92-6123·Published·Cited by 6 cases

Opinion

ALTIMARI, Circuit Judge:

Defendants-appellants Martyn C. Merritt and Ariel Maritime Group (“Ariel”) appeal from a judgment of the United States District Court for the Southern District of New York (Griesa, J.) enforcing an order of the Federal Maritime Commission (the “FMC”). The order directed Merritt and Ariel to pay $335,000 in fines pursuant to the Shipping Act of 1984 (the “Shipping Act”), 46 U.S.C.App. § 1712 (1984). On appeal, Merritt and Ariel contend that the district court erred in holding that it was without jurisdiction to hear the merits of the appellants’ challenges to the FMC’s order.

For the reasons set forth below, we affirm the judgment of the district court.

BACKGROUND

On December 14, 1984, plaintiff-appellee the FMC issued an order directing that an investigation be made of Merritt and Ariel, among others. Merritt is the president of Ariel, a shipping company, and the aim of the FMC’s investigation was to determine whether they had violated 46 U.S.C.App. § 815 (1988), which regulates interstate shipping rates. The FMC suspected Ariel of misdeclaring or underdeclaring shipments and engaging in false billing and rating practices. The FMC further directed that, if violations were established, civil penalties should be considered pursuant to 46 U.S.C.App. § 1712 (1988).

[81] On June 12, 1985, the Administrative Law Judge (“AU”) assigned to the matter found various defendants had violated § 815 and imposed civil fines. The AU determined that there was insufficient evidence that either Merritt or Ariel had committed such violations. The AU did not, however, foreclose the possibility that further investigation would.reveal that both Ariel and Merritt were involved in violating the statute.

The FMC reviewed the AU’s initial decision and concluded that the factual findings were inadequate. Accordingly, the FMC remanded the case on December 16, 1985 for further development of the record. The FMC included four pages of factual questions for the AU to investigate.

On February 11, 1987, the AU supplemented his initial decision with expansive factual findings on the roles and responsibilities of all parties in the violation of § 815. The AU concluded, on the basis of the more detailed record, that all defendants were in violation. Specifically, the AU found that Merritt had orchestrated the activities of all defendants and had personally controlled the operations of all corporate defendants. Accordingly, the AU recommended the imposition of $335,-000 in fines on Ariel jointly and severally with the other corporate defendants. The AU declined to pierce the corporate veil and hold Merritt personally responsible for the civil penalties.

The FMC issued a final order on September 24, 1987 in which it affirmed in part the AU’s decision but reversed the determination not to hold Merritt personally liable. Instead, the FMC, pursuant to 46 U.S.C.App. § 1712(a), held Merritt jointly and severally liable for all fines levied by the AU. Although Merritt and Ariel both had a statutory right to appeal the imposition of the fine under § 1712(d), no such appeal was taken by either defendant.

Almost one year later, on August 31, 1988, the United States commenced an action under § 1712(e) in the United States District Court for the Southern District of New York (Griesa, J.). The United States sought enforcement of the final order of the FMC and payment of the $335,000 in fines. Merritt and Ariel moved to dismiss the action on the ground that the FMC’s order was not properly made. Specifically, they argued that the FMC failed to take into account their inability to pay when calculating the fines, as required by § 1712(c).

The district court denied their motion to dismiss on April 12, 1990, determining that authority of direct review of the FMC’s final order was vested exclusively in the. United States Courts of Appeals. Accordingly, the district court held that it was precluded from reviewing any issues going to the merits of the FMC’s order.

On May 24,1990, the district court issued an order enforcing the FMC’s determination and denying Merritt’s oral motion to stay the order pending appeal. The order of the district court was docketed on May 25, 1990. However, due to an administrative error by a clerk, a separate final judgment in the FMC’s favor was not docketed until March 18, 1992.

Merritt and Ariel did not attempt to appeal the district court’s order for over two years. On May 14, 1992, 57 days after final judgment was entered, Merritt and Ariel filed notices of appeal from the district court’s order. On appeal, they argue that the district court erred in holding: (1) that it did not have the authority to review on its merits the order of the FMC imposing civil penalties on Merritt; and (2) that the exclusive jurisdiction for direct substantive review of orders of the FMC rests in the Courts of Appeals.

DISCUSSION

I,- Timeliness of the Appeal.

Initially, we must consider the FMC’s contention that this appeal is not timely, since the appellants filed their appeal of the district court’s enforcement order almost two years after the docketing of the order directing that judgment be entered. The FMC argues that the May 1990 order was a final judgment that was immediately appealable. According to the FMC, the failure to appeal that order for two [82] years until the judgment itself was docketed in March 1992 bars an appeal now. In opposition, Merritt and Ariel argue that under the final judgment rule they were not required to appeal until final judgment was entered.

Fed.R.Civ.P. 58 provides that “[ejvery judgment shall be set forth on a separate document” and that “[a] judgment is effective only when so set forth and when entered.” This Court has held, however, that a party can appeal an order that has not been entered as a judgment if no further proceedings are contemplated. John Doe Corp. v. John Doe Agency, 850 F.2d 105, 108 (2d Cir.1988) (“[T]he failure to embody the order in a separate judgment ... will not prevent our exercising jurisdiction in light of the fact that no further proceedings in the district court were contemplat-ed_”), rev’d on other grounds, 493 U.S. 146, 110 S.Ct. 471, 107 L.Ed.2d 462 (1989). The FMC contends that since Merritt could have appealed the district court’s enforcement order, the failure to do so for two years renders the appeal untimely. We disagree.-

Although it is true that the appellants could have appealed the underlying order without waiting for judgment to be entered, that does not mean that a failure to appeal constituted a waiver. We stated in John Doe that the failure to enter judgment will not “prevent” an appeal. Id. This does not mean that a party must appeal the underlying order without waiting for judgment to be entered. Such a construction would render Fed.R.Civ.P. 58 meaningless, since the finality of an entered judgment would lose effect if parties could not appeal that judgment for failure to appeal the underlying order.

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United States v. Interlink Systems, Inc., 984 F.2d 79, 1993 WL 11724 (2d Cir. 1993).

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United States v. Interlink Systems, Inc.
984 F.2d 79 (Second Circuit, 1993)