Bison Steamship Corporation v. United States

• Decision Date: 29 March 1960
• Docket Number: Civ. A. No. 35783.
• Citation: 182 F. Supp. 63
• Parties: BISON STEAMSHIP CORPORATION, Cooper Steamship Company, Gartland Steamship Company, Nicholson Transit Company, Oglebay Norton Company, Roen Steamship Company, and Great Lakes Ship Owners Association, Plaintiffs, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.
• Court: U.S. District Court — Northern District of Ohio

182 F. Supp. 63

BISON STEAMSHIP CORPORATION, Cooper Steamship Company, Gartland Steamship Company, Nicholson Transit Company, Oglebay Norton Company, Roen Steamship Company, and Great Lakes Ship Owners Association, Plaintiffs, v. UNITED STATES of America and Interstate Commerce Commission, Defendants.

Civ. A. No. 35783.

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

March 29, 1960.

Andrew C. Hartzell, Jr., and Malvin E. Bank, of Thompson, Hine & Flory, Cleveland, Ohio, for plaintiffs. John H. Eisenhart, Jr., and James L. Givan, Washington, D. C., of counsel on the brief.

Robert W. Ginnane, Gen. Counsel, I. C. C., Francis A. Silver, Associate Gen. Counsel, I. C. C., Washington, D. C., Robert A. Bicks, Acting Asst. Atty. Gen., James H. Durkin, Atty., Dept. of Justice, Washington, D. C., and Russell E. Ake, U. S. Atty., Cleveland, Ohio, for the United States and Interstate Commerce Commission.

Andrew C. Armstrong, Baltimore, Md., T. O. Broker, J. T. Clark, Cleveland, Ohio, L. T. Duerinck, Donald M. Tolmie, Chicago, Ill., and Edward A. Kaier, Philadelphia, Pa., for intervening railroads.

Andrew P. Martin and Charles F. Clarke, Jr., of Squire, Sanders & Dempsey, Cleveland, Ohio, for United States Steel Corp., intervener.

Before WEICK, Circuit Judge, and CONNELL and KALBFLEISCH, District Judges.

CONNELL, District Judge.

This action is before this three-judge statutory court, convened pursuant to 28 U.S.C.A. § 2284, to compel the Interstate Commerce Commission (hereinafter called Commission) either to reject from its files, or, in the alternative, to suspend the operation of certain tariff schedules containing reduced all-rail rates on pig iron moving from Cleveland, Ohio, to Chicago, Illinois, pending an investigation into their lawfulness under the Interstate Commerce Act. The plaintiffs are various individual steamship companies and a ship owners' association. The defendants are the United States of America and the Interstate Commerce Commission. Various railroad carriers, participants in the newly-published rate schedule, have been permitted to intervene in this action, as has The United States Steel Corporation. The defendants have moved this Court to dismiss the complaint for various reasons, discussed below, and the intervening defendants have supported this motion.

The undisputed facts of the case, as gleaned from the well-documented briefs of all the interested parties, are as follows: By rate schedules filed with the Commission to become effective November 1, 1959 (subsequently postponed until December 1, 1959), certain railroads¹ proposed to establish a new, reduced rate of $6.02 per ton, carload minimum of fifty tons, on pig iron moving via all-rail routes from Cleveland to Chicago. Petitions were timely filed with the Commission, pursuant to the provisions of Section 15(7) of the Interstate Commerce Act, 49 U.S.C.A. § 15(7) (hereinafter called the Act), requesting that the aforesaid rate schedules either be rejected or suspended pending an investigation into their lawfulness under the Act. The petitions and requests were first considered by the Board of Suspension and Investigation of the Commission, which declined either to suspend or reject the rate schedules. Thereupon an appeal was filed with Division 2 of the Commission, which also declined to take any action. Under the Commission's Organization Minutes such action by Division 2 was administratively final so far as the question of refusal to suspend was concerned.

The briefs in the case further show that the assailed rate was established by the intervening defendant railroads for the specific purpose of moving the traffic of the American Steel and Wire Division of the United States Steel Corporation, which is located at Cleveland, Ohio. This Division owns and operates a vessel on the Great Lakes known as the S. S. Clifford Hood, and the operational costs which the shipper would incur if it used this vessel to transport its pig iron from Cleveland to Chicago was primarily determinative of the level of the newly-published rate.² Additionally, United States Steel Corporation wholly owns the Elgin, Joliet & Eastern Railway Company, a common carrier by rail as defined in Section 1(3) of the Act. Plaintiffs contend that this railroad is a participating carrier in many of the routes via which the assailed rate would apply, and is a joint party to such rate.

Plaintiffs request this Court to order the Commission to either suspend or reject the rates. They base their request on an allegation that the Commission arbitrarily and capriciously abused its discretion in refusing to take the requested action in that the facts elicited during the informal suspension proceedings clearly showed a violation of, (1) Section 5(14) of the Act (The Panama Canal Act) in that the Elgin, Joliet and Eastern Railway Company and the vessel S. S. Clifford Hood are both owned by the United States Steel Corporation and do or may compete with each other for the traffic under consideration; (2) Section 1(6) of the Act, in that the assailed rate schedules will result in unjust and unreasonable rates, tariffs, regulations and practices; and (3) The National Transportation Policy (49 U.S.C.A. Historical Note preceding Section 1) in that the assailed rate schedules will result in unfair and destructive competitive practices.

Defendants in their joint motion to dismiss, filed pursuant to Rule 12(b) of the Rules of Civil Procedure, 28 U.S.C.A., claim that, (1) the complaint fails to state a claim upon which relief can be granted; (2) the Court lacks jurisdiction over the subject matter, in that (a) the matter complained of is, by the express provisions of the Interstate Commerce Act, committed to the discretion of the Commission and is not subject to review by this Court, (b) there is no order of the Commission involved, thus no review of a Commission order is possible, (c) the rate schedule complained of is already in effect and may only be changed in the manner provided by the Act, and (d) plaintiffs have failed to exhaust their administrative remedies.

Despite the comparatively involved recitation of claims and counterclaims, the issue which squarely confronts the Court is whether Section 15(7) of the Interstate Commerce Act has committed the suspension proceedings involved in this controversy solely to the discretion of the Interstate Commerce Commission so as to deny this Court jurisdiction to review the Commission's refusal to suspend the published rate.

Plaintiffs have admitted in their brief in opposition to defendants' motion to dismiss that generally, in the absence of special circumstances, the Commission's refusal to suspend is not reviewable. Indeed, the authority for this proposition is so overwhelming that any serious argument to the contrary would be legally implausible.³ However, plaintiffs contend that in the suspension proceedings, informal as they may have been, they offered conclusive evidence to the Commission that the Panama Canal Act⁴ had been violated, and that the direct result of this illegal competitive relationship between the S. S. Clifford Hood and the Elgin, Joliet & Eastern Railway Company was the rate which plaintiffs are now attacking. Premising their argument on the above allegations, plaintiffs reach the conclusion that the Commission, under these circumstances, is stripped of any discretion it might have had to refuse to suspend the rates.

Initially it should be noted that the statute contemplates that most rates will be established on the carriers' own initiative simply upon their being filed with the Commission and published.⁵ Thus any rates, thirty days after they are filed and published by the participating railroads, unless overridden or altered by the Commission in the interim, are clothed with legality. While such rates are not Commission-approved, unless and until the Commission takes some positive action the rates continue to be effective. Under 49 U.S.C.A. § 15(7), the Commission may act either when a hearing has been requested by an aggrieved party or on its own motion, and the granting of a suspension order under this Section is simply an interlocutory step preceding a full hearing and final decision as to the reasonableness of the proposed rates. No formal hearing need be held by the Commission in a suspension proceeding under Section 15(7), and no reason need be given for denying a requested suspension.⁶ As a result of this informality, there is no "record" of sworn testimony and exhibits which might be used on review by a court. The Commission reaches its decision under Section 15(7) as a result of its administrative expertise in considering the unsworn and informally elicited information.

Luckenbach S. S. Co. v. United States, D.C.D.Del.1959, 179 F.Supp. 605, and many of the cases cited therein, seem sufficient authority for this Court to grant the motion to dismiss without further discussion. Judge Wright's highly-documented and well-reasoned opinion, if followed to its furthest logical extreme, indicates that under no conceivable circumstance is the Commission's refusal to suspend under Section 15(7) subject to judicial review. However, since such an unlimited reading of the case would appear to put it in conflict with Seatrain Lines, Inc. v. United States, D.C.S.D. N.Y.1958, 168 F.Supp. 819, this Court chooses to base its decision on other grounds.

The pertinent provisions of the Panama Canal Act are found in Sections 5 (14) and 5(15) of the Interstate Commerce Act.⁷ Section 5(14), in pertinent part, reads:

"(I)t shall be unlawful for any carrier * * *, or * * * any person controlling * * * such a carrier to own, lease, operate, control, or have any interest whatsoever * * * in any common carrier by water * * * with which such carrier aforesaid does or may compete for traffic or any vessel carrying freight or passengers * * with which said railroad or other carrier aforesaid does or may compete for traffic; and

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