CSX Transp., Inc. v. Forst

• Decision Date: 06 November 1991
• Docket Number: Civ. A. No. 3:91CV00488.
• Citation: 777 F. Supp. 435
• Court: U.S. District Court — Eastern District of Virginia
• Parties: CSX TRANSPORTATION, INC.; and Carolina, Clinchfield & Ohio Railway, Plaintiffs, v. William H. FORST, Tax Commissioner, Virginia Department of Taxation, His Successors in Office, Defendant.

777 F. Supp. 435

CSX TRANSPORTATION, INC.; and Carolina, Clinchfield & Ohio Railway, Plaintiffs, v. William H. FORST, Tax Commissioner, Virginia Department of Taxation, His Successors in Office, Defendant.

Civ. A. No. 3:91CV00488.

United States District Court, E.D. Virginia, Richmond Division.

November 6, 1991.

James W. McBride, Anne M. Stolee, Laughlin, Halle, McBride, Lunsford & Fletcher, Washington, D.C., for plaintiffs.

Courtney George, CSX Transp., Inc., Jacksonville, Fla., for CSX Transp.

James Linwood Sanderlin, McGuire, Woods, Battle & Boothe, Richmond, Va., for CSX Transp., Inc. and Carolina, Clinchfield & Ohio Ry.

James G. Council, Christopher D. Eib, John Patrick Griffin, Office of Atty. Gen., Richmond, Va., for Virginia Dept. of Taxation, William Forst, Tax Com'r.

Thomas W. McCandlish, Timothy M. Kaine, Mark B. Rhoads, Mezzullo & McCandlish, Richmond, Va., for City of Richmond, Va., County of Hanover, Va., City of Newport News, Va., County of Henrico, Va., County of Chesterfield, Va., City of Alexandria, Va Steven L. Micas, County Atty., Steven L. Myers, Asst. County Atty., Chesterfield, Va., for County of Chesterfield.

MEMORANDUM

MERHIGE, District Judge.

This matter is before the Court on plaintiffs' motion for a preliminary injunction and on defendant's motion to dismiss. Both motions have been fully briefed and argued and are ripe for disposition. Jurisdiction is based on 28 U.S.C. §§ 1331 and 1337, and on 49 U.S.C. § 11503.

Motion for Preliminary Injunction

Plaintiffs seek a preliminary injunction restraining and enjoining the defendant, and all those acting in concert and participation with him, from assessing plaintiffs' rail transportation property for the 1988 tax year at a higher ratio of assessed value to true market value than the ratio of assessed value to true market value of other industrial property in Virginia, or from levying or collecting taxes based upon such assessments. Plaintiffs argue that a preliminary injunction should be issued by this Court for two reasons. First, plaintiffs offer a verified complaint with supporting affidavits that arguably show that defendant has violated, or is about to violate, Section 306 of the Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. No. 94-210, 90 Stat. 54 (Feb. 5, 1976), recodified at 49 U.S.C. § 11503 (hereinafter "Section 306" and "4R-Act"). Second, plaintiffs assert that the issuance of a preliminary injunction will best effectuate the purposes of Congress in enacting Section 306.

The first question this Court must address concerns the prerequisites for the issuance of preliminary injunctive relief in Section 306 cases. In most instances, the issuance of injunctive relief is governed by the "balance-of-hardship" test. Guerra v. Scruggs, 942 F.2d 270, 273 (4th Cir.1991). See Jones v. Board of Governors of University of North Carolina, 704 F.2d 713 (4th Cir.1983); Blackwelder Furniture Co. v. Seilig Mfg. Co., Inc., 550 F.2d 189 (4th Cir.1977). Under this test, to demonstrate an entitlement to preliminary relief, a plaintiff must show that it likely will be subject to irreparable harm in the absence of an injunction, and that such harm will outweigh the probable harm to the defendant resulting from the grant of interim relief. However, while the balance-of-hardship test for injunctive relief is well settled law in this and other circuits, the Fourth Circuit Court of Appeals has never addressed the question of whether preliminary relief in a Section 306 case can be granted absent a review of traditional equitable criteria. Several federal courts have found, however, that the issuance of injunctive relief in Section 306 cases need not be governed by the traditional equitable criteria normally applicable in actions between private litigants. In Atchison, Topeka & Santa Fe Ry. Co. v. Lennen, 640 F.2d 255 (10th Cir.1981), the Tenth Circuit held that it was unnecessary for the railroad seeking an injunction in a Section 306 case to prove irreparable harm in order to obtain injunctive relief. The Lennen Court reasoned that when the evidence shows that a "defendant is engaged in, or is about to engage in, the act or practices prohibited by a statute that provides for injunctive relief to prevent such violations, irreparable harm need not be shown." Id. at 259. Section 306 does confer upon federal district courts the power to "grant such mandatory or prohibitive injunctive relief, interim equitable relief, and declaratory judgements as may be necessary to prevent, restrain or terminate any acts in violation of Section 306."¹ According to the court in Lennen, therefore, where a trial court finds reasonable cause to believe that a violation of Section 306 has been, or is about to be, committed, an injunction should be granted to prevent that violation. Id. at 260.

When faced with cases involving violations of Section 306, a number of federal courts have found it appropriate to follow the standard for injunctive relief set forth in Lennen. This Court is somewhat reluctant to follow Lennen in its entirety, however, given the Supreme Court's decision in Weinberger v. Romero-Barcelo, 456 U.S. 305, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982). In Romero-Barcelo, which incidentally was decided post-Lennen, the Supreme Court stated that the statutory grant of jurisdiction to a court to protect against statutory violations does not mean that a federal judge is obligated to grant an injunction for every violation of law. Id. at 313, 102 S.Ct. at 1803-04. The Romero-Barcelo Court went on to outline the narrow circumstances in which the traditional equitable criteria for granting an injunction should be abandoned:

Considerations applicable to cases in which injunctions are sought reflect a "practice with a background of several hundred years of history," Hecht Co. v. Bowles, 321 U.S. 321 64 S.Ct. 587, 88 L.Ed. 754 (1944), a practice of which Congress is assuredly well aware. Of course, Congress may intervene and guide or control the exercise of the courts' discretion, but we do not lightly assume that Congress has intended to depart from established principles.... "Unless a statute in so many words or by a necessary and inescapable inference, restricts the court's jurisdiction in equity, the full scope of that jurisdiction is to be recognized and applied."

Weinberger v. Romero-Barcelo, 456 U.S. at 313, 102 S.Ct. at 1803-04 (quoting Porter v. Warner Holding Co., 328 U.S. 395, 398, 66 S.Ct. 1086, 1089, 90 L.Ed. 1332 (1946)).

Nothing in the language of Section 306 suggests that courts should abandon traditional equitable criteria when making a determination of the appropriateness of injunctive relief. The statute does not direct courts to grant an injunction when a court finds that "reasonable cause to believe" that a violation of the statute has been, or is about to be, committed. Lennen, 640 F.2d at 260. The statute merely authorizes courts to grant injunctive relief "as may be necessary" to prevent violations of Section 306.

Despite the absence of a clear statutory directive, the Lennen Court and others have determined that courts should follow a "reasonable cause" standard when granting injunctive relief under section 306. See Burlington Northern R.R. Co. v. Department of Revenue, 934 F.2d 1064, 1074-75 (9th Cir.1991) (citing Lennen and finding that grant of preliminary injunctive relief against taxation of railroad which is allegedly in violation of the Railroad Revitalization and Regulatory Reform Act is not governed by traditional equitable criteria). The Lennen court apparently found the reasonable cause standard appropriate under the 4-R Act given that under other statutory schemes courts have granted equitable relief upon a showing that there was a reasonable cause to believe that a violation of the Act at issue might occur. For example, the Labor Management Relations Act (LMRA) gives courts the power to grant injunctive relief when faced with an unfair labor charge. See National Labor Relations Act, § 10(l) as amended 29 U.S.C. § 160(l). Courts have interpreted the LMRA to mean that an injunction may be granted where there is reasonable cause to believe that an unfair labor charge has been committed. See e.g., Humphrey v. International Longshoremen's Ass'n AFL-CIO, 548 F.2d 494 (4th Cir.1977); National Labor Relations Board v. Acker Industries, 460 F.2d 649 (10th Cir.1972); Sachs v. Local 48, Journeyman and Apprentices, 454 F.2d 879 (4th Cir.1972); Retail, Wholesale and Department Store Union v. Rains, 266 F.2d 503 (5th Cir. 1959).

In analogizing the standard for issuing injunctions under the LMRA to the proper standard under Section 306, however, the Lennen Court failed to point out the difference in the language of the two statutes. "Reasonable cause" language is specifically included in provisions dealing with the grant of preliminary injunctive relief under the LMRA, while Section 306 contains no express reference to an alternative standard for the grant of injunctive relief. Compare 29 U.S.C. § 160(l), with 49 U.S.C. § 11503(c). Additionally, the "reasonable cause" standard of the LMRA is applicable only when the National Labor Relations Board or an attorney acting on its behalf presents to the court that there is "reasonable cause" that the unfair labor charge is true and thus that an injunction should issue. The Lennen court did not analyze the difference between a government-initiated suit under the LMRA and the litigation between private parties that is contemplated under Section 306.

This Court rejects Lennen and its progeny insofar as the Tenth Circuit's opinion in Lennen suggests that a reasonable cause standard can be imputed into Section 306 because that standard may be appropriate in other statutory injunction contexts. In absence of a clear statutory mandate as to the standard to be applied in granting injunctive relief under Section 306, this Court must apply a standard that effectuates the...