Chicago and North Western Transportation Company v. Kalo Brick Tile Company

• Decision Date: 09 March 1981
• Docket Number: No. 79-1336,79-1336
• Citation: 67 L.Ed.2d 258,101 S.Ct. 1124,450 U.S. 311
• Parties: CHICAGO AND NORTH WESTERN TRANSPORTATION COMPANY, Petitioner, v. KALO BRICK & TILE COMPANY
• Court: U.S. Supreme Court

450 U.S. 311

101 S.Ct. 1124

67 L.Ed.2d 258

CHICAGO AND NORTH WESTERN TRANSPORTATION COMPANY, Petitioner,

v KALO BRICK & TILE COMPANY.

No. 79-1336.

Argued Dec. 9, 1980.

Decided March 9, 1981.

Syllabus

The Interstate Commerce Act authorizes the Interstate Commerce Commission (ICC) to regulate interstate rail carriers' abandonment of railroad lines, including branch lines. Under the Act, no such carrier may abandon a line unless it first obtains a certificate from the ICC that the present or future public convenience and necessity permit such an abandonment. After petitioner interstate rail carrier's branch line in Iowa had been damaged by mud slides, it ultimately decided not to repair, and to stop using, the line, so notified respondent brick manufacturer, which had shipped its products over the line, and applied to the ICC for a certificate permitting it to abandon the line. The ICC granted the application, finding that petitioner had abandoned the line due to conditions beyond its control, that further repairs would not have been sufficient to insure continuous operation, that the abandonment was not "willful," that respondent had no right to insist that the line be maintained solely for its use, and that continued operation would be an unnecessary burden on petitioner and on interstate commerce. Respondent had appeared to oppose the application but never perfected its filing before the ICC and did not seek judicial review of the ICC's decision, but, instead, brought a damages action in an Iowa state court while the abandonment application was still pending. It alleged that petitioner had violated an Iowa statute and state common law by refusing to provide cars on the branch line, by negligently failing to maintain the roadbed, and by tortiously interfering with respondent's contractual relations with its customers. The state trial court dismissed the action on the ground that the Interstate Commerce Act pre-empted state law as to the matters in contention. The Iowa Court of Appeals reversed, ruling that the state abandonment law was not pre-empted and that the state and federal schemes complemented one another.

Held: The Interstate Commerce Act precludes a shipper from pressing a state-court action for damages against a regulated rail carrier when, as here, the ICC, in approving the carrier's application for abandonment, reaches the merits of the matters the shipper seeks to raise in state court. Pp. 317-332.

(a) "[T]here can be no divided authority over interstate commerce, and . . . the acts of Congress on that subject are supreme and exclusive." Missouri Pacific R. Co. v. Stroud, 267 U.S. 404, 408, 45 S.Ct. 243, 245, 69 L.Ed. 683. Consequently, state efforts to regulate commerce must fall when they conflict with or interfere with federal authority over the same activity. Pp. 317-319.

(b) The ICC's authority under the Interstate Commerce Act to regulate railroad line abandonments is exclusive and plenary. This authority is critical to the congressional scheme, which contemplates comprehensive administrative regulation of interstate commerce. The Act's structure makes it clear that Congress intended that an aggrieved shipper should seek relief in the first instance from the ICC. Pp. 319-323.

(c) Both the letter and spirit of the Interstate Commerce Act are inconsistent with Iowa law as construed by the Iowa Court of Appeals. That court's decision amounts to a holding that a State can impose sanctions upon a regulated carrier for doing that which only the ICC has the power to declare unlawful or unreasonable. A system under which each State could, through its courts, impose on railroad carriers its own version of reasonable service requirements could hardly be more at odds with the uniformity contemplated by Congress in enacting the Interstate Commerce Act. Even though the abandonment approval did not come here until after respondent filed its civil suit, it would be contrary to the language of the statute to permit litigation challenging the lawfulness of the carrier's actions to go forward when the ICC has expressly found them to be reasonable. Accordingly, Iowa's statutory cause of action for failure to furnish cars cannot be asserted against an interstate rail carrier on the facts of this case. The same reasoning applies to respondent's asserted common-law causes of action, because they, too, are essentially attempts to litigate the issues underlying petitioner's abandonment of the branch line in issue. The questions respondent seeks to raise in the state court—whether roadbed maintenance was negligent or reasonable and whether petitioner abandoned its line with some tortious motive—are precisely the sorts of concerns that Congress intended the ICC to address in weighing abandonment requests. Consequently, on the facts of this case, the Interstate Commerce Act also pre-empts Iowa's common-law causes of action when the judgments of fact and of reasonableness necessary to the decision have already been made by the ICC. Pp. 324-331.

Iowa App., 295 N.W.2d 467, reversed and remanded.

Bruce E. Johnson, Des Moines, Iowa, for petitioner.

Henri F. Rush, Washington D.C., for United States and I.C.C. as amici curiae, by special leave of Court.

M. Gene Blackburn, Fort Dodge, Iowa, for respondent.

Justice MARSHALL delivered the opinion of the Court.

Through the Interstate Commerce Act and its amendments, Congress has granted to the Interstate Commerce Commission authority to regulate various activities of interstate rail carriers, including their decisions to cease service on their branch lines. Under Iowa state law, a shipper by rail who is injured as the result of a common carrier's failure to provide adequate rail service has available several causes of action for damages. In this case we are called upon to decide whether these state-law actions may be asserted against a regulated carrier when the Commission has approved its decision to abandon the line in question.

I

Petitioner, an interstate common carrier by rail, is subject to the jurisdiction of the Interstate Commerce Commission. For some time prior to April 1973, petitioner operated a 5.6-mile railroad branch line between the towns of Kalo and Fort Dodge in Iowa. Respondent operated a brick manufacturing plant near Kalo, and used petitioner's railroad cars and branch line to transport its products to Fort Dodge and outward in interstate commerce.¹

During the 1960's, the tracks on the Kalo-Fort Dodge branch line were damaged by three mud slides. Petitioner made repairs after the first two slides, but following the last slide in 1967, when portions of the embankment wholly vanished under the waters of the Des Moines River, petitioner decided to stop using the branch line. Petitioner instead leased part of another railroad's parallel branch line to connect Kalo with Fort Dodge. In April 1973, the leased line was also damaged by a mud slide. By that time, respondent was the only shipper using the Kalo-Fort Dodge line. After inspecting the damage to the leased line, petitioner decided not to repair it. Petitioner then notified respondent that it would no longer provide service on the Kalo-Fort Dodge line, although it would continue to make cars available at Fort Dodge if respondent would ship its goods there by truck. Respondent determined that shipment by truck was not economically feasible, and notified its customers that it would complete existing contracts and then go out of business.²

In November 1973, petitioner filed with the Commission an application for a certificate declaring that the public convenience and necessity permitted it to abandon the Kalo-Fort Dodge branch line. The United States Government intervened in support of petitioner's application. Respondent was the sole party appearing in opposition to the request, but failed to perfect its filing before the Commission.³ In a decision issued in April 1976, the Commission found that petitioner had abandoned the line due to conditions beyond its control and granted the request for a certificate. Chicago & N. W. Transp. Co. Abandonment, AB1, Sub. No. 24 (Jan. 11, 1976), App. to Pet. for Cert. 34a. Respondent made no attempt to comply with the provisions of the Interstate Commerce Act regarding judicial review of the Commission's decision.⁴ Instead, while the abandonment request was still pending before the Commission, respondent filed this damages action against petitioner in state court. The complaint alleged that petitioner had violated Iowa Code §§ 479.3, 479.122 (1971) and state common law by refusing to provide cars on the branch line, by negligently failing to maintain the roadbed, and by tortiously interfering with respondent's contractual relations with its customers.⁵ The state trial court, holding that the Interstate Commerce Act wholly pre-empted state law as to the matters in contention, dismissed the action. The Iowa Court of Appeals reversed, ruling that state abandonment law was not pre-empted and that the state and federal schemes represented "complimentary [sic], alternative means of relief for injured parties.' ⁶ 295 N.W 2d 467, 469 (1979). After the Supreme Court of Iowa denied petitioner's application for review, we granted certiorari, 446 U.S. 951, 100 S.Ct. 2915, 64 L.Ed.2d 807 (1980). We reverse.

II

Pre-emption of state law by federal statute or regulation is not favored "in the absence of persuasive reasons—either that the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained." Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963). See De Canas v. Bica, 424 U.S. 351, 356, 96 S.Ct. 933, 936, 47 L.Ed.2d 43 (1976). The underlying rationale of the pre-emption doctrine, as stated more than a century and a half ago, is that the Supremacy Clause invalidates state laws that "interfere with or are contrary to, the laws of congress. . . ." Gibbons...