341 U.S. 341 (1951), 395, Alabama Public Service Commission v. Southern Railway Co.

Docket Nº:No. 395
Citation:341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002
Party Name:Alabama Public Service Commission v. Southern Railway Co.
Case Date:May 21, 1951
Court:United States Supreme Court
 
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Page 341

341 U.S. 341 (1951)

71 S.Ct. 762, 95 L.Ed. 1002

Alabama Public Service Commission

v.

Southern Railway Co.

No. 395

United States Supreme Court

May 21, 1951

Argued February 27-28, 1951

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

Syllabus

Appellee applied to the Alabama Public Service Commission for a permit to discontinue certain local intrastate trains, on the ground that they were operating at a loss. After a hearing, the Commission found that there was public need for the service, and entered an order denying the permit. Without applying to a state court for the adequate judicial review to which it was entitled as a matter of right under state law, appellee sued in a federal court to enjoin enforcement of the Commission's order. It alleged that its enforcement would result in irreparable injury, either through operating losses resulting from compliance or through severe penalties for violations.

Held: assuming that the federal court had jurisdiction, such jurisdiction should not be exercised in this case as a matter of sound equitable discretion. Pp. 342-351.

(a) The problems raised by the discontinuance of these trains cannot be resolved alone by reference to appellee's loss in their operation, but depend more upon the predominantly local factor of public need for the service rendered. P. 347.

(b) Since adequate state court review of an administrative order based on predominantly local factors is available to appellee, intervention of a federal court is not necessary for the protection of federal rights. P. 349.

(c) In these circumstances, under the usual rule of comity governing the exercise of equitable jurisdiction by federal courts in matters affecting the domestic policies of the states, appellee should be left to pursue through the state courts whatever rights it may have. P. 350.

91 F.Supp. 980, reversed.

In a suit by a railroad, a three-judge federal district court enjoined enforcement of an order of the Alabama Public Service Commission. 91 F.Supp. 980. On appeal to this Court under 28 U.S.C. § 1253, reversed, p. 351.

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VINSON, J., lead opinion

MR. CHIEF JUSTICE VINSON delivered the opinion of the Court.

The Southern Railway Company, appellee, brought this action in the Federal District Court to enjoin the members of the Alabama Public Service Commission and the Attorney General of Alabama, appellants, from enforcing laws of Alabama prohibiting discontinuance of certain railroad passenger service. Appellee's Alabama intrastate service is governed by a statute prohibiting abandonment of

any portion of its service to the public . . . unless and until there shall first have been filed an application for a permit to abandon service and obtained from the commission a permit allowing such abandonment.

Ala.Code, 1940, tit. 48, § 106.1 Severe penalties are prescribed for willful violation of regulatory statutes or orders of the Commission by utilities or their employees. Id., §§ 399, 400, 405.

[71 S.Ct. 765] Appellee operates a railroad system throughout the South. This case, however, involves only that Alabama

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intrastate passenger service furnished by trains Nos. 7 and 8 operated daily between Tuscumbia, Alabama, and Chattanooga, Tennessee, a distance of approximately 145 miles, mainly within Alabama. On September 13, 1948, appellee applied to the Alabama Public Service Commission for permission to discontinue trains Nos. 7 and 8, alleging that public use of the service had so declined that revenues fell far short of meeting direct operating expenses. After hearing evidence at Huntsville, Alabama, one of the communities served by the trains, the Commission entered an order on April 3, 1950, denying permission to discontinue on the grounds that there exists a public need for the service and that appellee had not attempted to reduce losses through adoption of more economical operating methods.

Instead of pursuing its right of appeal to the state courts,2 appellee filed a complaint in the United States District Court alleging diversity of citizenship and that requiring continued operation of trains Nos. 7 and 8 at an out-of-pocket loss amounted to a confiscation of its property in violation of the Due Process Clause of the Fourteenth Amendment. Injunctive relief was prayed to protect appellee from irreparable loss flowing, on the one hand, from operating losses in complying with Alabama law or, on the other, from severe penalties for discontinuance of service in the face of that law. A three-judge court3 heard evidence, made its own findings of fact and entered judgment holding the Commission order void and permanently enjoining appellants from taking any steps to enforce either the Commission order or the penalty

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provisions of the Alabama Code in relation to the discontinuance of trains Nos. 7 and 8.4 91 F.Supp. 980 (1950). The case is properly here on appeal, 28 U.S.C.(Supp.III) § 1253.

Federal jurisdiction in this case is grounded upon diversity of citizenship as well as the allegation of a federal question. Exercise of that jurisdiction does not involve construction of a state statute so ill defined that a federal court should hold the case pending a definitive construction of that statute in the state courts, e.g., Railroad Commission of Texas v. Pullman Co., 312 U.S. 496 (1941); Shipman v. DuPre, 339 U.S. 321 (1950). We also put to one side those cases in which the constitutionality of a state statute itself is drawn into question, e.g., Toomer v. Witsell, 334 U.S. 385 (1948). For, in this case, appellees attack a state administrative order issued under a valid regulatory statute designed to assure the provision of adequate intrastate service by utilities operating within Alabama.5

[71 S.Ct. 766] Appellee takes the position, adopted by the court below, that, whenever a plaintiff can show irreparable loss caused

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by an allegedly invalid state administrative order ripe for judicial review in the state courts the presence of diversity of citizenship or a federal question opens the federal courts to litigation as to the validity of that order, at least so long as no action involving the same subject matter is actually pending in the state courts. But it by no means follows from the fact of district court jurisdiction that such jurisdiction must be exercised in this case.6 As framed by the Court in Burford v. Sun Oil Co., 319 U.S. 315, 318 (1943), the question before us is:

Assuming that the federal district court had jurisdiction, should it, as a matter of sound equitable discretion, have declined to exercise that jurisdiction here?

In assessing the propriety of equitable relief, a review of the regulatory problem involved in this case is appropriate.

Appellee conducts an interstate business over the same tracks and by means of the same trains involved in this case, and such interstate activities are regulated by the Federal Interstate Commerce Commission, 49 U.S.C. § 1 et seq. But it has long been held that this interblending of the interstate and intrastate operations does not deprive the states of their primary authority over intrastate transportation in the absence of congressional action supplementing that authority. Minnesota Rate Cases, 230 U.S. 352 (1913). And Congress has since provided:

That nothing in [the Interstate Commerce Act] shall impair or affect the right of a State, in the exercise of its police power, to require just and reasonable

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freight and passenger service for intrastate business, except insofar as such requirement is inconsistent with any lawful order of the [Interstate Commerce Commission].

49 U.S.C. § 1(17)(a).7

This Court has held that regulation of intrastate railroad service is "primarily the concern of the State." North Carolina v. United States, 325 U.S. 507, 511 (1945) (rates); Palmer v. Massachusetts, 308 U.S. 79 (1939) (discontinuance of local service).

State and federal regulatory agencies have expressed concern over the chronic deficit arising out of passenger train operations as a threat to the financial security of the American railroads, and have recommended drastic action to minimize the deficit, including the discontinuance of unpatronized and unprofitable service.8 However, our concern in this case is limited [71 S.Ct. 767] to the propriety of a federal court injunction enjoining enforcement of a state regulatory order.9

The court below justified the exercise of its jurisdiction with a finding that continued operation of trains Nos.

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7 and 8 would result in confiscation of appellee's property in violation of the Due Process Clause of the Fourteenth Amendment. In pursuing the threshold inquiry whether a federal court should exercise jurisdiction in this case, we find it unnecessary to consider issues relating to the merits of appellee's case, issues which appellants did not see fit to raise in this Court either in their Statement of Jurisdiction or in their briefs. We do note that, in passing upon similar contentions in the past, this Court has recognized that review of an order requiring performance of a particular utility service, even at a pecuniary loss, is subject to considerations quite different from those involved when the return on the entire intrastate operations of a utility is drawn into question. Atlantic Coast Line R. Co. v. North Carolina Corporation Commission, 206 U.S. 1, 24-27. The problems raised by the discontinuance of trains Nos. 7 and 8 cannot be resolved alone by reference to appellee's loss in their operation, but depend more upon the predominantly local factor of public need for the service rendered. Chesapeake & Ohio R. Co. v. Public Service Commission of West Virginia, 242 U.S....

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