Atchison, Topeka & SF Ry. Co. v. Aircoach Transp. Ass'n

• Decision Date: 25 February 1958
• Docket Number: No. 14053-14056.,14053-14056.
• Citation: 253 F.2d 877
• Parties: ATCHISON, TOPEKA AND SANTA FE RAILWAY CO. et al., Appellants, v. AIRCOACH TRANSPORT ASSOCIATION, Inc., et al., Appellees. BALTIMORE AND OHIO RAILROAD COMPANY et al., Appellants, v. AIRCOACH TRANSPORT ASSOCIATION, Inc., et al., Appellees. PENNSYLVANIA RAILROAD COMPANY et al., Appellants, v. AIRCOACH TRANSPORT ASSOCIATION, Inc., et al., Appellees. NEW YORK CENTRAL RAILROAD COMPANY, Appellant, v. AIRCOACH TRANSPORT ASSOCIATION, Inc., et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

253 F.2d 877 (1958)

ATCHISON, TOPEKA AND SANTA FE RAILWAY CO. et al., Appellants, v. AIRCOACH TRANSPORT ASSOCIATION, Inc., et al., Appellees.

BALTIMORE AND OHIO RAILROAD COMPANY et al., Appellants, v. AIRCOACH TRANSPORT ASSOCIATION, Inc., et al., Appellees.

PENNSYLVANIA RAILROAD COMPANY et al., Appellants, v. AIRCOACH TRANSPORT ASSOCIATION, Inc., et al., Appellees.

NEW YORK CENTRAL RAILROAD COMPANY, Appellant, v. AIRCOACH TRANSPORT ASSOCIATION, Inc., et al., Appellees.

Nos. 14053-14056.

United States Court of Appeals District of Columbia Circuit.

Argued September 9, 1957.

Decided February 25, 1958.

COPYRIGHT MATERIAL OMITTED

Mr. Douglas F. Smith, Chicago, Ill., of the bar of the Supreme Court of Illinois, pro hac vice, by special leave of Court, with whom Messrs. Richard J. Flynn, Amos M. Mathews, Joseph D. Feeney, Jr., Chicago, Ill., and John Bodner, Jr., Washington, D. C., were on the brief, for appellants in No. 14053, and Mr. Hugh B. Cox, with whom Mr. Paul F. McArdle, Washington, D. C., was on the brief, for appellants in No. 14055, argued for all appellants.

Messrs. William E. Miller, Stephen Ailes and Richard A. Whiting, Washington, D. C., were on the brief for appellants in No. 14054.

Mr. James C. McKay, Washington, D. C., also entered an appearance for appellants in No. 14055.

Mr. Edward K. Wheeler, Washington, D. C., was on the brief for appellants in No. 14056.

Mr. David I. Shapiro, New York City, of the bar of the Court of Appeals of New York, pro hac vice, by special leave of Court, with whom Mr. Gerhard P. Van Arkel, Washington, D. C., was on the brief, for appellees.

Before WILBUR K. MILLER, BAZELON and FAHY, Circuit Judges.

FAHY, Circuit Judge.

Plaintiffs in the District Court, appellees, hereinafter called Aircoach, are four supplemental air carriers and the Aircoach Transportation Association, Inc., to which they belong. They sued forty railroads and two unincorporated rate committees,¹ hereinafter jointly called the Railroads, appellants, for treble damages and a permanent injunction under the Clayton Antitrust Act,² alleging facts which would ordinarily constitute violations of sections 1 and 2 of the Sherman Antitrust Act³ by reason of practices of the Railroads in connection with their charges for military traffic of the United States.

The case was decided by the District Court on cross motions for summary judgment, which were heard on the pleadings, exhibits and affidavits filed by the parties. The essential undisputed facts we think may be briefly summarized as follows:

During World War II and through 1948 the railroads handled some 97 per cent of the military passenger traffic. Beginning in 1949 buses and air carriers began to compete for this traffic. By 1954 the railroads' share dropped to 48 per cent and the nonscheduled air carriers received 34 per cent.

In 1953 the Railroads adopted two rate practices complained of in this action. One is the concerted quotation of "variable spot bids." Through a joint agent the Railroads bid for military traffic at variable rates which might drop to fifty per cent below their published commercial schedules. The joint agent acts not only for connecting but also for competing Railroads in offering the single price. The second practice is the making of "package bids," involving movements from a single starting point to a number of different destinations. The air carriers are unable to participate in portions of these movements because of the short distance involved, lack of airfield facilities, or size of the movement. The Railroads, through their joint agent, make "package bids" in which they agree to transport the military personnel in these movements on an "all or nothing" or "package" basis. The prorated bid of the Railroads might be higher than that of the air carriers on those portions of the movement where the latter are able to compete, but the Railroads receive the entire contract.

As the complaint alleges, since 1914 certain railroads have negotiated special rates with the military agencies of the Government for the transportation of personnel by overall contracts. The contract currently in effect, Joint Military Passenger Agreement No. 29, provides that the railroads shall deal through joint agents and shall give the military agencies a standard reduction of ten per cent below commercial rates. The Agreement also provides that the railroads may make through their joint agent "separate special arrangements * * * more advantageous to the Government."

The Railroads raised several defenses of law, which may be summarized: (1) that the quotations complained of were made pursuant to section 22 of the Interstate Commerce Act⁴ and have been immunized from the operation of the antitrust laws by an agreement approved by the Interstate Commerce Commission pursuant to section 5a of that Act.⁵ Section 22 provides that nothing in the Act "shall prevent the carriage * * * of property free or at reduced rates for the United States * * * or the transportation of persons for the United States Government free or at reduced rates." Section 5a(2) provides that any carrier subject to the Act, "party to an agreement between * * * two or more carriers relating to rates * * * may * * * apply to the Interstate Commerce Commission for approval of the agreement," and if such approval is forthcoming section 5a(9) relieves the parties thereto "from the operation of the antitrust laws with respect to the making * * * and * * * carrying out of such agreement * * *." Further, the Railroads contend that agreements which the Commission had approved covered the challenged practices; (2) that the Interstate Commerce Commission has exclusive primary jurisdiction over the subject matter involved.

The District Court granted the motion of Aircoach for summary judgment, leaving open, however, the amount of damages, and holding that the antitrust immunity of section 5a does not apply to concerted section 22 quotations, that the Interstate Commerce Commission does not have exclusive primary jurisdiction, and that the concerted section 22 quotations complained of are illegal per se under the antitrust laws. The court permanently enjoined the Railroads from offering to the military agencies variable spot rate and package rate quotations arrived at in concert. The injunction was limited, however, so as not to apply to such concerted quotations for through transportation over a single route operated by two or more railroads. This court suspended the injunction pending the appeals. The several appeals, consolidated in this court, are from the same order of the District Court.

We first consider whether any reduced rates permitted by section 22 may be made the subject of an agreement which the Commission may approve under section 5a. If not, and if the challenged practices are illegal per se, the judgment of the District Court should be affirmed.

No entirely convincing answer to the first of these questions seems possible as of the time of the order of the District Court. Shortly thereafter, by an Act effective August 31, 1957, Pub.L. No. 85-246, 85th Cong., 1st Sess., 71 Stat. 564, Congress amended section 22 to make clear that thenceforth the provisions of paragraph (9) of section 5a, carrying relief from the antitrust laws, should apply to quotations or tenders of rates, fares, or charges made under section 22. The Amendment, however, explicitly provides that nothing in it "shall affect any liability or cause of action which may have accrued prior to" its effective date. We accordingly must decide this case without regard to the Amendment, unless it bears somehow on the meaning of the pre-existing terms of the Act. As to this, on the one hand it refers to "quotations or tenders of rates, fares or charges" for the transportation of property or persons free or at reduced rates, which the Amendment now for the first time requires to be in writing or to be confirmed in writing, with a copy submitted to the Commission by the carrier. Only upon submittal of a quotation or tender made pursuant to an agreement approved under section 5a shall paragraph (9) of that section apply, with consequent relief from the antitrust laws. On the other hand, the Amendment states that these provisions, presumably those of paragraph (9) of section 5a, "shall continue" to apply as to any such approved agreement under which any such quotation or tender was made prior to the Amendment. The several terms referred to would appear to neutralize the Amendment insofar as it bears on this case. See note 14, infra.

The general scheme of the Interstate Commerce Act is that rates, fares, and charges shall be filed with the Commission⁶ and shall not be changed when filed and published except upon thirty days notice to the Commission and to the public,⁷ and, when schedules stating a new rate, fare, or charge are filed, that there is authority in the Commission either upon complaint or upon its own initiative to suspend the same.⁸ These provisions illustrate the general plan for regulation and supervision of rates for public protection; and this plan is not applicable to the questioned section 22 practices used by the Railroads during the period here involved.⁹ Aircoach accordingly urges that those practices are not rates which may be the subject of an agreement approved under section 5a, as Congress did not mean to exempt from the antitrust laws concerted action with respect to rates which are not subject to the regulation and supervision of the Commission.

Legislative history,¹⁰ in addition to the general scheme of the Act, is cited to support this position.¹¹ Representative Bulwinkle, in explaining the section 5a provisions, which took his name, indicated they would not permit two carriers to bypass the Commission in establishing rates; the carriers would still be required to file their rate proposals with the Commission, which was not so with respect to section 22 rates prior to the Amendment of...