Accelerated Transport-Pony Express, Inc. v. United States

• Decision Date: 04 March 1964
• Docket Number: Civ. No. 3883.
• Citation: 227 F. Supp. 815
• Parties: ACCELERATED TRANSPORT-PONY EXPRESS, INC., et al. v. UNITED STATES of America, Interstate Commerce Commission, Lynchburg Traffic Bureau, Intervenor.
• Court: U.S. District Court — District of Vermont

227 F. Supp. 815

ACCELERATED TRANSPORT-PONY EXPRESS, INC., et al. v. UNITED STATES of America, Interstate Commerce Commission, Lynchburg Traffic Bureau, Intervenor.

Civ. No. 3883.

United States District Court D. Vermont.

March 4, 1964.

Louis Lisman, Lisman & Lisman, Burlington, Vt., Bryce Rea, Jr., Rea, Cross & Knebel, Washington, D. C., for plaintiffs.

Joseph F. Radigan, U. S. Atty., Rutland, Vt., for defendant United States.

Robert W. Ginnane, Interstate Commerce Commission, Washington, D. C., for defendant ICC.

Clayton H. Kinney, Rutland, Vt., for intervenor.

Wilbert G. Burnette, Lynchburg, Va., for intervenor.

Arthur A. Arsham, New York, N. Y., for intervenors, The National Small Shipments Traffic Conference, Inc., Drug and Toilet Preparation Traffic Conference, and Eastern Industrial Traffic League, Inc.

John J. C. Martin, New York, N. Y., for intervenors, The National Small Shipments Traffic Conference, Inc., Drug and Toilet Preparation Traffic Conference, and Eastern Industrial Traffic League, Inc.

Dickson R. Loos, Washington, D. C., for intervenors, The National Industrial Traffic League.

Before WATERMAN, Circuit Judge, and GIBSON and BLUMENFELD, District Judges.

BLUMENFELD, District Judge.

The Middle Atlantic Conference¹ filed a schedule of proposed rates with the Commission which would establish a general increase in motor carrier class and commodity rates between points in Middle Atlantic Territory² and between Middle Atlantic and New England Territories.³ On January 13, 1961, the Commission instituted an investigation into the lawfulness of the proposed increases. Pending a final decision by the Commission, the increases became effective on January 16, 1961. Protests to the increased rates were filed by numerous parties, including those who have intervened as defendants in this court proceeding.

This case originated and was conducted as a general revenue proceeding in which the carriers' needs, as a group,⁴ for a general increase in rates⁵ were considered by the Commission, as distinguished from a need of individual carriers for increased rates for specific traffic or different commodities. To effect the increase in revenue, the plaintiffs proposed generally to superimpose flat arbitrary amounts on already existent rates, regardless of classification ratings. It is plain that flat arbitraries would distort traditional percentage relationships between classifications and would result in greater increases percentage-wise and per mile on the shorter hauls and on the lower-rated traffic. The effect of this would be to increase the likelihood of higher rates for short than for long hauls through border points and beyond to territories where the rates are lower.

After an exhaustive hearing before one of the Commission's examiners, and following the submission of briefs by the parties, the examiner issued his recommended report and order. The examiner concluded that the proposed increases generally were just and reasonable.⁶ But he also concluded that, where the effect of the proposed increases resulted in rates which were higher to intermediate border points than to points beyond over the same routes, they were not shown to be just and reasonable. Exceptions to the examiner's report were filed by both the respondents (plaintiffs) and the protestants, and on March 20, 1963 the report of Division 2 of the Commission was issued. This stated:

"With respect to resulting higher rates to border points than to points beyond over the same routes, obviously, in accord with prior decisions of the Commission, such higher rates would be unlawful, and we concur in the conclusion of the examiner in this respect that if a carrier chooses to participate in the lower rates for the longer hauls it should arrange to maintain no higher rates at intermediate border points. To the extent that such maladjustments occur, the increased rates are unjust and unreasonable.

"We find that the increased rates and charges are just and reasonable, except that where the resulting rates to intermediate points are higher than the rates to more distant points over the same routes, the former are not shown to be just and reasonable. The schedules will be ordered canceled to the extent found not shown^* unlawful, without prejudice to their amendment so as to provide for the application of lower rates to more distant points as maxima at intermediate border points in the area here considered. The proceeding will be discontinued." (319 I.C.C. at 177)

The petition of the respondents for reconsideration of the report and order of the Commission insofar as it directed them to reduce their rates to border points, filed on May 15, 1963, was denied by Division 2, acting as an Appellate Division, "for the reason that sufficient grounds have not been presented to warrant granting the action sought."

The respondents thereafter filed this complaint against the United States and Interstate Commerce Commission to set aside and annul the Commission's order, 28 U.S.C. §§ 1336, 1398 (1958), and obtained a temporary restraining order. 28 U.S.C. § 2284(3) (Supp. III, 1959-61). Subsequently, this court of three-judges was convoked as required by 28 U.S.C. § 2325 (1958). The protestants before the Commission were granted leave to intervene in behalf of the defendants. The restraining order was continued in effect only until a hearing was held on plaintiffs' action for final relief. We have concluded that the complaint should be dismissed.

The target of the plaintiffs' argument is that portion of the Commission's decision which holds that such higher rates to intermediate border points are not shown to be just and reasonable. The plaintiffs do not challenge the finding that blanket application of the arbitraries to increase all of the rates would in some cases result in a higher charge for hauling goods to a "border point" located within the Middle Atlantic Territory than for hauling the same goods, over the same route, through the border point, to a point located in a different territory.

The attack proceeds on two grounds: First, that the Commission's reliance upon a presumption that higher rates for shorter distances than for longer distances are unreasonable was unjustified because the "presumption" merely shifted the burden of going forward to the plaintiffs. On that basis they argue that, since they did come forward with evidence, the effect of the presumption was dissipated. Secondly, they contend that "assuming * * * that the fact that some of the plaintiffs' rates for shorter distances are higher than other rates for longer distances has probative value as evidence that they are unreasonable, the evidence as a whole does not support the Commission's finding that they are unreasonable." (Reply Brief for Plaintiffs, p. 9)

These contentions must be considered in light of statutory provisions which govern the rate-making functions of the Commission. Whenever a motor carrier files a tariff containing a new rate, subsection 216(d) of the Motor Carrier Act,⁷ as amended, 49 U.S.C. § 316(d) (1958), requires that it shall be "just and reasonable," and declares that every "unjust and unreasonable charge" is unlawful:

"(d) All charges made for any service rendered or to be rendered by any common carrier by motor vehicle engaged in interstate or foreign commerce in the transportation of passengers or property as aforesaid or in connection therewith shall be just and reasonable, and every unjust and unreasonable charge for such service or any part thereof, is prohibited and declared to be unlawful. It shall be unlawful for any common carrier by motor vehicle engaged in interstate or foreign commerce to make, give, or cause any undue or unreasonable preference or advantage to any particular person, port, gateway, locality, region, district, territory, or description of traffic, in any respect whatsoever; or to subject any particular person, port, gateway, locality, region, district, territory, or description of traffic to any unjust discrimination or undue or unreasonable prejudice or disadvantage in any respect whatsoever; Provided, however, That this subsection shall not be construed to apply to discriminations, prejudice, or disadvantage to the traffic of any other carrier of whatever description."

And whenever, as in this case, a carrier seeks a change in rates, sub-section 216 (g) of the Act, as amended, 49 U.S.C. § 316(g) (1958), places the burden of proof on the carrier:

"At any hearing involving a change in a rate, fare, charge, or classification, or in a rule, regulation, or practice, the burden of proof shall be upon the carrier to show that the proposed changed rate, fare, charge, classification, rule, regulation, or practice is just and reasonable."

These laws are very plain and their application to this case is not difficult. They obviate the need for a critical analysis of the technical refinement of the vocabulary of presumptions urged upon us by the plaintiffs. It has long been established that rates higher for short hauls than for longer hauls, via the same carrier, over the same route, is so significant an element affecting reasonableness as to make such rates unreasonable on their face. In the leading case of Patterson v. Louisville & N. R. R., 269 U.S. 1, 46 S.Ct. 8, 70 L.Ed. 131 (1926), Mr. Justice Brandeis stated: "Apart from statutory enactment, it is prima facie unreasonable to charge more for a shorter than for a longer haul." 269 U.S. at 11, 46 S.Ct. at 10, 70 L.Ed. 131.⁸ Followed in Atlas Portland Cement Co. v. Northampton & B. R.R., 120 I.C.C. 583, 585 (1927); Sun Oil Co. v. Central R.R. Co., 301 I.C.C. 558, 560 (1957). The same principle has been applied by the Commission since the earliest days of its administration of the Motor Carrier Act. In Fifth Class Rates Between Boston and Providence, 2 M.C. C. 530 (1937), it stated:

"In the absence of a sound reason therefor, the maintenance of class rates to intermediate

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