Baggett Transportation Company v. United States

• Decision Date: 28 May 1962
• Docket Number: Civ. A. No. 9984.
• Citation: 206 F. Supp. 835
• Parties: BAGGETT TRANSPORTATION COMPANY, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.
• Court: U.S. District Court — Northern District of Alabama

206 F. Supp. 835

BAGGETT TRANSPORTATION COMPANY, Plaintiff, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.

Civ. A. No. 9984.

United States District Court N. D. Alabama, S. D.

May 28, 1962.

Lange, Simpson, Robinson & Somerville, J. A. Simpson and Ormond Somerville, Birmingham, Ala., James W. Wrape and James N. Clay, III, of Wrape & Hernly, Memphis, Tenn., and Washington, D. C., for plaintiff.

Lee Loevinger, Asst. Atty. Gen., John H. D. Wigger, Attorney, Department of Justice, Washington, D. C., and Macon L. Weaver, U. S. Atty., Birmingham, Ala., and Robert W. Ginnane, General Counsel and H. Neil Garson, Associate General Counsel, for Interstate Commerce Commission, Washington, D. C., for defendants.

Before RIVES, Circuit Judge, and LYNNE and GROOMS, District Judges.

GROOMS, District Judge.

This action was brought by Baggett Transportation Company under 28 U.S. C.A. §§ 2321-2325, to enjoin, annul and set aside certain orders of the Interstate Commerce Commission issued in Baggett Transportation Company Purchase — Hunt Freight Lines, Inc., Docket No. Mc-F-6034. The question presented is whether the Commission had the power after issuing a certificate of convenience and necessity on August 30, 1960, to amend certain orders entered prior to the issuance of the certificate, thereby imposing protective labor provisions for Hunt's employees.

On July 25, 1955, Baggett and Hunt filed a joint verified application with the Commission seeking the approval of the purchase by Baggett of certain certificates of convenience and necessity and specified properties owned by Hunt. Included in the application were the following sworn statements:

"Transferee (Baggett) would employ all of transferor's (Hunt) employees.

"The approval of this transaction will not adversely affect the interests of the carrier employees of Hunt. While it is contemplated that common terminals will be eliminated, the employees of Hunt in such terminals will be absorbed by Baggett." (This language was italicized in the original application.)

Under the General Rule of Practice No. 1.19 of the Commission, such statements are taken as part of the record and accepted as evidence unless specifically denied in a counterpleading.¹ Baggett claims that these statements were specifically denied by the protest of Malone Freight Lines, an intervenor, who specifically denied all the allegations of the application. We question whether a general denial of all the allegations in the application puts all the allegations in issue merely by including the word "specifically," but in any case, we need not face that issue since we are of the opinion that Hunt's employees represented no valid interest of the intervenor so that Malone had no standing to put these sworn promises in issue. Hearings on this application and one other between Baggett and Holloway Transfer Co., Inc., were held in Birmingham, Alabama, on December 4-8, 1955. The testimony in the Hunt hearing with respect to the issue of Hunt's employees was brief. Whatever the Baggett officials intended their testimony given at the hearing to mean, it cannot be interpreted as a denial of the statements in the application.²

From this record, the Examiner indicated in his report of May 24, 1956, that "Baggett would employ those employees of Hunt and Holloway which meet its standards." In actual fact there was nothing in the Baggett-Hunt record which withdrew the promises to employ all of Hunt's employees; the "standards" qualification appears only in testimony with respect to the Holloway transaction. The Commission in its later reports of October 22, 1956, and March 1, 1957,³ approved the transfer without any mention of Hunt's employees.

On May 18, 1957, Baggett consummated the transaction with Hunt. Ten days later, by means of a Petition for Leave to Intervene and Motion to Vacate Order or Afford Relief, the Union representing Hunt's employees objected to the approval of the transaction on the ground that Hunt's employees were adversely affected contrary to the promises in the application. It is alleged that on May 7, nine days prior to the consummation of the transaction, Hunt discharged all its drivers and warehousemen and that Baggett refused to employ them. This petition for leave to intervene was denied by Commissioner Mitchell on behalf of the Commission on July 17, 1957, "for the reason that the proceeding is closed and intervention in the proceeding is not warranted at this late date." On August 16, 1957, the Union filed a Petition for Reconsideration by the entire Commission. On August 30, however, and pending disposition of said petition, a certificate of convenience and necessity covering the rights purchased was issued by Division 1 of the Commission.

On September 3, 1957, Baggett answered the petition for reconsideration and on December 6 the Commission, Division 4, granted the petition and reopened the proceeding on the then existing record. On April 9, 1958, Division 4 rendered a report upholding the Union and recommending that Hunt's employees be given three months' severance pay. This report and order was vacated by the full Commission and remanded for a hearing by an Examiner since the dispute involved evidence not a part of the record. After a full hearing in July, 1959, the Examiner issued a report on March 25, 1960, affirming the former recommendations of Division 4 that, due to the failure of Baggett to live up to the statements made in its application, protective labor provisions should be added to the earlier orders providing for three months' severance pay for Hunt's employees. The Examiner's report was affirmed on March 29, 1961, by the full Commission.

From the evidence already outlined, supra, we are satisfied that Baggett never withdrew the sworn statements in its application prior to the final approval of the transaction by the Commission in its order of March 1, 1957. If Baggett had intended to withdraw or modify these statements at the hearing, it should have done so clearly and expressly. As noted, these statements were part of the record under Rule No. 1.19 and could be relied on by the Commission. Under the statutory standards for the approval of this transaction found in Section 5(2) (c) of the Interstate Commerce Act, 49 U.S.C.A. § 5(2) (c), it was the duty of the Commission to give weight to the following consideration, among others: "(4) the interest of the carrier employees affected." We are, therefore, of the opinion that the Commission relied upon the sworn statements in the application in its determination that this transaction was in the "public interest."

Baggett first argues that it actually lived up to the statements made in the application. It would appear undisputed, however, that there were 25 employees on Hunt's last full payroll, 17 of which were represented by the Union. Of these, two managerial employees were hired by Baggett, but none of the others received unqualified employment offers. At best, four of Hunt's drivers were offered contracts to serve Baggett as individual owner-operators, provided they were willing to purchase their own tractor-trailers (which Baggett offered to help finance). This is clearly not an unrestricted offer of employment. Baggett argues, however, that unrestricted offers were made to all of Hunt's employees by Chattanooga Service, Inc., who, as of May 1, 1957, handled all of Baggett's terminal operations as an independent contractor. This first became clear to the Commission during the July 1959 hearings. At that time, Howard Durden, Baggett's Vice President, testified that during 1957 Baggett changed its former mode of operations and, instead of conducting its own terminal operations as represented in its application, it hired Chattanooga Service as an independent contractor to take them over. Assuming that an offer made by Chattanooga Service may be considered to be an offer by Baggett, Baggett indicates in its brief, with citations to the record, that Chattanooga Service offered employment to five Hunt employees (other than the two managerial employees mentioned above) during May, 1957. Most of these had left by June, however, due to fear of Union reprisals. This leaves some 17 Hunt employees who never received an unqualified offer of employment by either Baggett or Chattanooga Service prior to June, 1957. Upon these facts, the Commission was entitled to conclude that Baggett had not lived up to the statements made in the application.

Baggett contends that Chattanooga Service sent out offers of employment to all the rest of Hunt's employees in late September, 1957 (after it appeared that the Union petition to intervene might be entertained). This offer, six months after Hunt's employees were fired, could correctly be ignored by the Commission as too late to have any practical effect; further, testimony cited by the Government indicates that Chattanooga Service could only have hired two or three of them at that time and that the effort was made for the record only.

For the reasons presently indicated, we are of the opinion that, notwithstanding the issuance of the certificate of convenience and necessity, the Commission had authority to modify and supplement the report and order of Division 4, of October 22, 1956, notice and hearing having been had, by imposing an employee protective condition for the failure of Baggett to abide by material statements asserted in its application.

At the conclusion of its report and order of March 29, 1961, the Commission stated:

"We are reluctant to institute revocation proceedings or even move to temporarily suspend the certificate issued to Baggett with the ensuing loss of customers and interruption of employment for employees, especially since it has been the established policy of the Commission to go no further than to require 3 months' severance pay for displaced employees.

"Upon further hearing we affirm the findings in the prior report, decided

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