Pinney Dock & Transport Co. v. Penn Cent. Corp.

• Decision Date: 20 March 1984
• Docket Number: No. C80-1733.,C80-1733.
• Citation: 600 F. Supp. 859
• Court: U.S. District Court — Northern District of Ohio
• Parties: PINNEY DOCK & TRANSPORT COMPANY, Plaintiff, v. PENN CENTRAL CORPORATION, et al., Defendants and Third-Party Plaintiffs, v. CONSOLIDATED RAIL CORPORATION, Third-Party Defendant.

600 F. Supp. 859

PINNEY DOCK & TRANSPORT COMPANY, Plaintiff, v. PENN CENTRAL CORPORATION, et al., Defendants and Third-Party Plaintiffs, v. CONSOLIDATED RAIL CORPORATION, Third-Party Defendant.

No. C80-1733.

United States District Court, N.D. Ohio, E.D.

June 21, 1983.

On Reconsideration March 20, 1984.

COPYRIGHT MATERIAL OMITTED

Richard T. Colman, William T. Garcia, Howrey & Simon, Washington, D.C., Harry C. Nester, Hahn, Loeser, Freedheim, Dean & Wellman, Cleveland, Ohio, for Pinney Dock.

John Doar, John Doar Law Offices, New York City, Stephen J. Pollak, Richard T. Conway, Shea & Gardner, Washington, D.C., Roland W. Donnem, Sr. Vice President?€”Law, Charles C. Rettberg, Jr., Cleveland, Ohio, for Chessie (C & O, B & O, Ohio Ry. Chessie Syst. and CSX).

Richard J. Flynn, Stephen S. Hill, Thomas H. Yancey, Sidley & Austin, Washington, D.C., Byron D. Fair, Arter & Hadden, Cleveland, Ohio, Richard W. Kienle, Roanoke, Va., for Norfolk & Western.

Kenneth C. Anderson, Sean Boland, Timothy W. Bergin, Squire, Sanders & Dempsey, Washington, D.C., Eben G. Crawford, Squire, Sanders & Dempsey, Cleveland, Ohio, for Bessemer & Lake Erie; John D. Morrison (Gen. Counsel), William C. Leiper, Monroeville, Pa., of counsel.

Kenneth N. Hart, Donovan, Leisure, Newton & Irvine, New York City, Carl L. Steinhouse, Stephen Squeri, Jones, Day, Reavis & Pogue, Cleveland, Ohio, Robert J. Siverd, New York City, for Penn Cent.

Myron N. Krotinger, Burke, Haber & Berick, Cleveland, Ohio, Laurence Z. Shiekman, Sylvia Brown, Robert E. Heideck, Richard M. Bernstein, Pepper, Hamilton & Scheetz, Bruce B. Wilson, Philadelphia, Pa., for Consolidated Rail.

MEMORANDUM AND ORDER

WILLIAM K. THOMAS, Senior District Judge.

In separate but related motions filed on April 15, 1982, defendants Baltimore & Ohio Railroad Company (B & O), Chesapeake & Ohio Railway Company (C & O), CSX Corporation, Chessie Systems, Inc. (sometimes collectively referred to as Chessie), Norfolk & Western Railway Company (N & W), and Bessemer & Lake Erie Railroad Company (B & LE) move to dismiss plaintiff Pinney Dock & Transport Company's (Pinney) complaint seeking damages for alleged

injuries to plaintiff's business and property caused by defendants' violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. ?? 1 and 2, section 3 of the Clayton Act, 15 U.S.C. ? 14 ... and Ohio's Valentine Act.¹

Each defendant argues that the alleged activities underlying plaintiff's claims are expressly and impliedly immunized from the antitrust laws by the Interstate Commerce Act (ICA), and that the Interstate Commerce Commission (ICC) has exclusive jurisdiction over the substance of plaintiff's claims. Each defendant additionally asserts that plaintiff's treble damage claims are barred by the doctrine of Keogh v. Chicago & Northwestern Ry., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922). Defendant B & LE further contends that certain of plaintiff's claims should be dismissed either for lack of standing or "because they could not as a matter of law have caused direct or cognizable injury to plaintiffs." Finally, each defendant asserts that if this court does not dismiss plaintiff's complaint, "the case should be referred to the ICC under the doctrine of primary jurisdiction."

Since each of the parties has submitted factual exhibits in arguing the various issues, the court will apply Rule 56 of the Federal Rules of Civil Procedure's summary judgment standards. Defendants' motions will be granted only if "there is no genuine issue as to any material fact and defendants are entitled to a judgment as a matter of law."

Before analyzing the various branches of defendants' motions, it is essential to review the principal allegations in this antitrust case.

Plaintiff, an Ohio corporation, provides dock and terminal services in Ashtabula, Ohio for goods moving over the Great Lakes. In its first amended complaint, plaintiff alleges that "from at least the mid-1950's" the defendants conspired and acted to monopolize "the business of providing dock services for iron ore and other goods moving over docks on the lower Great Lakes, and the business of providing land transportation for iron ore and other goods moving over such docks." Plaintiff further alleges that defendants concomitantly conspired and acted to "restrain trade in the business of providing water carriage for iron ore and other goods moving over docks on the lower Great Lakes, and in the business of building ships for such carriage."

Plaintiff asserts that defendants advanced the ends of the alleged conspiracy through a series of overt acts and practices, some of which are specifically set forth in the first amended complaint. The alleged overt acts include refusing to grant a competitive rail rate for the carriage of iron ore from Pinney Dock, arbitrarily placing Pinney Dock in a switching district where it was ineligible for competitive rail rates, and imposing unjustifiably high switching charges on the cars of a railroad competitor which sought to carry iron ore from Pinney Dock at competitive rail rates. Defendants are additionally accused of "deliberately and purposefully foreclosing Pinney Dock's development as an iron ore handling facility by ... preventing and postponing the construction and use of the self-unloading vessels which Pinney Dock was designed to serve."

Plaintiff maintains that the above alleged overt acts and practices (and others) were planned and carried out through a series of unauthorized secret meetings and discussions and that coercion and intimidation were used to

(1) force railroads to forego their right of independent action with respect to rail rates and services and other matters;

(2) force railroads not to serve self-unloading vessels at railroad-owned docks; and

(3) force railroads not to lower their dock handling charges on iron ore.

Plaintiff charges that defendants' alleged antitrust violations have effectively stifled technological progress and development in the construction and use of efficient dock facilities and vessels and impeded and prevented the development of nonrail modes of land transportation. Additional effects allegedly resulting from the charged conspiracy are: (1) that shippers were subjected to artificially and unjustifiably high rates and charges for dock and land transport services; and (2) that needed improvements in the efficiency, economy and competitiveness of dock and transport facilities were subverted.

Plaintiff further states that

as a direct and proximate result of the foregoing acts and violations, plaintiff has been greatly injured in its business and property because it was forestalled and excluded from participating in the business of providing dock services for various commodities, including iron ore, coal, and coke.

Plaintiff seeks treble damages under the federal antitrust laws and an order enjoining defendants from further violations of the federal and state antitrust laws.

I.

The court first addresses defendants' separate but parallel contentions that "the complaint should be dismissed because the matters at issue are within the exclusive jurisdiction of the Interstate Commerce Commission." Defendants argue that the Interstate Commerce Commission's pervasive regulation of railroad ratemaking activities supersedes the federal antitrust laws as to all "matters concerning the establishment of railroad rates." More precisely, defendants contend that the existence of the Interstate Commerce Act impliedly immunizes them from plaintiff's present antitrust action.

In support of their argument, defendants point out that the Interstate Commerce Act seeks to substitute collective action among the railroads under the supervision of the Interstate Commerce Commission for unrestrained competition between the railroads. Without question, the nature of the railroad industry necessitates collective action among competing carriers. For example, it is frequently necessary for one railroad to deliver freight to a destination located on the tracks of a competitor. Thus, under 49 U.S.C. ? 1(4), the railroads are required to "provide and furnish transportation upon reasonable request therefore, and to establish reasonable through routes with other such carriers, and just and reasonable rates, fares, charges, and classifications applicable thereto...." Similarly, 49 U.S.C. ? 1(10) and (11) mandate that the railroads establish reasonable rules with respect to the interchange of locomotives, rail cars, and other railroad property.²

However, despite the need for cooperation between the railroads and notwithstanding the ICC's oversight of that cooperation, the Interstate Commerce Act does not necessarily provide an impermeable shield of implied immunity from the antitrust laws for the railroad industry. In Gordon v. New York Stock Exchange, 422 U.S. 659, 682-83, 95 S.Ct. 2598, 2611, 45 L.Ed.2d 463 (1975), the Supreme Court quoted language which has been oft repeated in the context of antitrust cases involving regulated industries:

Certain axioms of construction are now clearly established. Repeal of the antitrust laws by implication is not favored and not casually to be allowed. Only where there is a `plain repugnancy between the antitrust and regulatory provisions' will repeal be implied....

With that language in mind, the court turns to the relevant case law.

In Georgia v. Pennsylvania R. Co., 324 U.S. 439, 65 S.Ct. 716, 89 L.Ed. 1051 (1945), the state of Georgia filed an antitrust suit against approximately 20 railroad companies³ alleging that the defendants conspired to fix railroad rates so as to discriminate against the state of Georgia and that the defendants used coercion in the fixing of discriminatory joint through rates. After examining selected provisions of the Interstate Commerce Act, including 49 U.S.C. ?? 1(4) and 6, the Court addressed the defendants' contention that the ICC had exclusive jurisdiction over railroad rate cases. Unequivocally...