On Appeal from Petition for Review of the Interstate Commerce Commission, (ICC Docket No. MC-C-30003).
Higginbotham, Stapleton and Scirica, Circuit Judges.
A. LEON HIGGINBOTHAM, JR., Circuit Judge
The current proceeding is the most recent skirmish in an adversarial relationship between Ralph J. Zola and the Interstate Commerce Commission ("ICC" or "Commission") that has continued for almost two decades. In the order now under review, the ICC revoked the operating certificate of the North American Transport Co., Inc. ("Natco"), a carrier owned and operated by Zola. The Commission also prohibited Zola from engaging in any transportation activities within its jurisdiction. We will vacate the Commission's order only insofar as it bars Zola from conducting transportation activities that are wholly unrelated to those at issue in the present and prior I.C.C. proceedings. In all other respects, we will deny the petition for review.
The present case is the culmination of almost two decades of I.C.C. proceedings involving Ralph J. Zola and his businesses. These proceedings began in 1971, when the ICC commenced an investigation of AAACon Auto Transport, Inc. ("AAACon"), an interstate carrier owned and operated by Zola. AAACon's automobile "driveaway" service hired out drivers to transport customers' automobiles, pursuant to an ICC certificate permitting it to operate as a motor common carrier in the transportation of used passenger automobiles in the continental United States. In November 1973, an ICC administrative law judge ("ALJ") issued an initial decision finding the AAACon was not a fit carrier because of, inter alia, its handling of customers' damage and loss claims, improper provisions in its bills of lading, misrepresentations concerning its insurance coverage and bonding of drivers, and performance of acts not authorized by its ICC certificate (e.g., transporting repossessed, stolen, or abandoned automobiles, and performing driveaway services for automobile dealers). The ALJ ordered AAACon to cease and desist from these practices. AAACon Auto Transport, Inc., I.C.C. No. MC-C-7287 (November 30, 1973), reprinted in Respondents' Addendum ("Add.") B at 13-16. The ALJ also noted Zola's close involvement with AAACon, stating that Zola served as vice president, director, treasurer, principal shareholder, and counsel for the corporation. Add. B at 10. Zola, who is an attorney, practiced with his brother in a law firm which maintained offices in common with AAACon and which handled the company's legal matters, including claim settlement. Add. B at 6.
The ICC affirmed the ALJ's cease and desist order and the United States Court of Appeals for the Second Circuit dismissed AAACon's petition for review, stating that the findings of "unjust and unreasonable practices" were supported by substantial evidence and that the application and scope of sanctions were proper. AAACon Auto Transport, Inc., 124 M.C.C. 493 (1976), aff'd sub nom. AAACon Auto Transport, Inc. v. I.C.C., No. 76-4147 (2d Cir. 1977) (Add. C).
After receiving numerous complaints from the public, the ICC reopened its investigation of AAACon. In a February 1983 decision and order ("AAACon revocation order"), an ALJ found that AAACon had repeatedly and willfully violated the terms of the cease and desist order and, as a result, that AAACon's certificate should be revoked.*fn1 Zola's role in the corporation was again described by the ALJ:
When one considers the record as a whole (i.e. the oral testimony of the complaining witnesses and those witnesses sponsored by AAACon, as well as the exhibits sponsored by the parties), it is apparent that the sustaining force behind [AAACon] is that of its president; and it is his views which dominate and permeate the entire company from the very top to its lowest levels. . . .
The evidence reflects that when [AAACon's] Review Committee (composed of Messrs. Zola, Blackman, and Silvestri) meet to discuss and decide the larger claims, it is Mr. Zola's view which prevails even when such view is not in accord with those of Messrs. Blackman and Silvestri. It is apparent to this Judge that what is lacking is not guidance from the Commission, but a commitment from [Zola] to a firm adherence to the Commission's cease and desist order and making certain that AAACon's officials, employees, agents, and drivers understand that violations of that order will not be tolerated.
On appeal, the AAACon revocation order was affirmed by the ICC and the United States Court of Appeals for the District of Columbia Circuit. In its August 1984 decision, the ICC noted:
The record reveals that even the entry of the cease and desist order in 1976 did not dissuade AAACon from continuing to engage in activities of the type proscribed. Indeed, it appears that respondent simply masked certain prohibited activities and continued them. Consumer fraud, abuse, and harassment continued . . . . Respondent, far from demonstrating compliance, has shown disdain and contumacy.
AAACon Auto Transport, Inc., Investigation and Revocation of Certificate, ICC No. MC-C-7287 (July 30, 1984), Add. F at 21-22. In affirming the ICC, the D.C. Circuit remarked that "'[substantial]' does not do justice to the extent of the evidence of Aaacon's violations of the 1976 order -- 'overwhelming' is perhaps a more appropriate adjective." AAACon Auto Transport, Inc. v. Interstate Commerce Commission, 253 U.S. App. D.C. 202, 792 F.2d 1156, 1160 (D.C.Cir. 1986), cert. denied, 481 U.S. 1048, 95 L. Ed. 2d 834, 107 S. Ct. 2178 (1987).
Simultaneous with his legal challenge to the AAACon revocation order, Zola was actively pursuing extra-judicial means of escaping the effect of the Commission's order. Following the ALJ's initial decision, two of Zola's relatives unsuccessfully sought ICC interstate transportation licenses. On June 6, 1983, Irving Zola, Ralph Zola's father, applied for an ICC certificate for a non-operating company called "AA Babcock." The ICC originally granted the application, but cancelled the certificate in a January 1986 Decision and Order after finding that the AA Babcock was a "paper corporation" set up to allow the Zolas to continue operating AAACon's auto driveaway service.*fn2 AA Babcock Transport, Inc. Common Carrier Application, I.C.C. No. MC-168499 (January 24, 1986) (Add. G.), aff'd sub nom., AA Babcock Transport, Inc. v. Interstate Commerce Commission, 261 U.S. App. D.C. 333, 821 F.2d 821 (D.C.Cir. 1987). On October 20, 1983, a company called "AA Aaron", owned by Marion Zola, Ralph Zola's sister (who was a 20% AAACon shareholder), applied for a license as a broker for the interstate transportation of general commodities. However, after the ICC issued a decision scheduling a hearing on the applicant's fitness, Add. J,*fn3 this application was withdrawn.*fn4
On October 8, 1984, the same date that the revocation of AAACon became effective,*fn5 Zola -- proceeding under the corporate name Watermill Corporation -- closed on a contract to purchase the stock of Natco. At the time, Natco was an operationally defunct entity whose only significant asset was an ICC certificate of public convenience and necessity permitting it to transport general commodities. Zola paid the $12,000 purchase price with a check from his personal account. Respondents' Appendix ("Resp. App.") at 2-3. In October 1984, Zola's law firm filed articles of incorporation for Auto Caravan Corp. ("Auto Caravan"), listing Ralph Zola as sole shareholder, officer, and director. See id. at 7-8.
Zola then engaged in what may appropriately be described as a "shell game" to enable Natco and Auto Caravan to resume AAACon's operations without interruption. His strategy was mapped out at a September 1984 convention of AAACon agents and office managers.*fn6 At the meeting, Zola stated that Auto Caravan would issue new agency agreements, explaining: "the intent of the agreements, I can tell you right now, will be to put you in the same position you were under AAACon's operation, with zero changes." Resp.App. at 64. Zola explained that the "tariffs, charges, and the contract terms, with a very, very few technical exceptions . . . will be exactly the same as now used by AAACon . . . . You will hardly even notice the difference in the forms except the name itself." Id. at 57. He also stated that the phone numbers used by AAACon would remain the same. Id. at 61.
Zola reassured the AAACon agents and employees:
So again, you are going to end up on October 8th where you are on October 7th, hopefully, if this thing comes off the way it is supposed to. . . .
When I say if this goes off as planned, I mean the printing gets distributed by United Parcel to every office and the contracts don't have the word "AAACON" where it doesn't belong. The rights are already -- how can I put this legally -- arranged for in a way that is legally binding. So on October 8th, Auto Caravan shall, like Phoenix, arise from the ashes, and there is no way to stop it. Okay?
Zola instructed his audience on how to describe to the public the relationship between the old AAACon and the new Auto Caravan:
Now, if you are called up and asked about AAACon and they probe, well, what is the relationship of Auto Caravan to AAACon, undoubtedly that is only one of two people, it's the ICC or it's a competitor. The public, God bless them, doesn't know from nothing. They want their car shipped. They know the name in the phone book. . . .
If someone finally says, "Is this AAACon Auto Transport" and pushes you that way, you say, "I used to be an agent for them, now I'm an agent for Auto Caravan." Stick your chin right out because all you are doing is getting it from someone who is pulling your strings.
Zola offered further public relations suggestions in the following ...