Denver and Rio Grande Western Railroad Co. v. ICC
| Decision Date | 20 April 1964 |
| Docket Number | Civ. A. No. 8046. |
| Citation | 229 F. Supp. 249 |
| Parties | The DENVER AND RIO GRANDE WESTERN RAILROAD COMPANY, Plaintiff, v. INTERSTATE COMMERCE COMMISSION and United States of America, Defendants. Union Pacific Railroad Company and Southern Pacific Company, Intervening Defendants. |
| Court | U.S. District Court — District of Colorado |
T. A. White, Ernest Porter, Denver, Colo., Dennis McCarthy, Salt Lake City, Utah, for plaintiff.
Robert W. Ginnane, Gen. Counsel, Robert S. Burk, Atty., Interstate Commerce Commission, Washington, D. C., for Interstate Commerce Commission.
Lawrence M. Henry, U. S. Atty., for the District of Colorado, Denver, Colo., for the United States.
F. J. Melia, William P. Higgins, Omaha, Neb., Frank E. Barnett, Covington Hardee, New York City, E. G. Knowles, Denver, Colo., for Union Pacific Railroad Co., intervening defendant; Clark, Carr & Ellis, Charles D. Peet, G. Clark Cummings, New York City, of counsel.
Alan C. Furth, Robert L. Pierce, San Francisco, Cal., for Southern Pacific Company, intervening defendant.
Before SETH, Circuit Judge, and ARRAJ and DOYLE, District Judges.
This is an action to set aside and to enjoin enforcement of an order entered by the Interstate Commerce Commission, 317 I.C.C. 469. This order denied plaintiff's petition to modify an earlier order entered in this same docket by the Commission in 1923, 76 I.C.C. 508. Both The Denver and Rio Grande Western Railroad Company, the plaintiff herein, and the Union Pacific Railroad Company, an intervening defendant here, were intervenors in the original proceedings. The Southern Pacific Company was then the petitioner. The Commission in the 1923 order authorized the control by the Southern Pacific Company of the Central Pacific Railway Company, subject to several express conditions. One of these conditions, condition (e), is here involved.
The petition of the plaintiff to the Commission requested that the original proceedings be reopened for further consideration and for a modification of the order entered in 1923. This petition was directed to condition (e) of the Commission's original order, and asserted that because of the change in circumstances since 1923 the condition now causes unreasonable and unlawful discrimination against plaintiff. The petition was later amended to allege that an agreement between the intervening defendants covering the same subject was likewise discriminatory.
Hearings were held upon the plaintiff's petition before an Examiner who filed a report and order recommending the modification of condition (e). The Southern Pacific and the Union Pacific filed exceptions to the Examiner's recommended report and order, and a hearing was had before the Commission. The majority of the Commission reached a different result than did the Examiner, and refused plaintiff relief. A dissenting report was filed by five of the Commissioners who felt that condition (e) should be altered.
In order to properly present the issues, it is necessary to first mention several historical facts by way of background. Congress passed in 1862 and 1864 the Pacific Railroad Acts, 12 Stat. 489 and 13 Stat. 356. These Acts contemplated the construction by private corporations of a transcontinental railroad. The Acts provide among other things that the two companies shall not discriminate against each other, that the transcontinental line shall be operated and used for all purposes of communication, travel and transportation, so far as the public and the Government are concerned, as one connected, continuous line. Such a railroad was constructed by the Central Pacific building east from Sacramento, California, and the Union Pacific building west from Council Bluffs, Iowa. The two lines met near Ogden, Utah, in 1869, and service was commenced. Thereafter the Southern Pacific became the owner of the stock of the Central Pacific and later the Union Pacific acquired a large stock ownership in the Southern Pacific Company. An antitrust action was commenced, and culminated in United States v. Union Pacific R. R. Co., 226 U.S. 61, 33 S.Ct. 53, 57 L.Ed. 124, wherein Union Pacific was ordered to divest itself of its Southern Pacific stock. The Southern Pacific nevertheless remained in control of the Central Pacific, and also had its own southern route to the west coast. However, the Supreme Court in United States v. Southern Pacific Co., 259 U.S. 214, 42 S.Ct. 496, 66 L.Ed. 907, held that this violated the Sherman Act, and the Southern Pacific was directed to terminate its control of the Central Pacific. Before this decision was reached, Congress had passed the Transportation Act of 1920, amending Section 5 of the Interstate Commerce Act. This in part authorized the Interstate Commerce Commission to approve the control of one railroad by another, subject to conditions, and in the event such control was found to be in the public interest. After the decision of the Supreme Court in United States v. Southern Pacific Co., supra, the Southern Pacific Company applied to the Commission pursuant to the new section of the Act for authority to control the Central Pacific. The Commission's decision, Control of Central Pacific by Southern Pacific, Finance Docket No. 2613, 76 I.C.C. 598, resulted. The Commission, as indicated above, attached several conditions to its consent to such control, and we are here concerned with plaintiff's attack on condition (e) thereof. This condition reads as follows:
"(e) That the Southern Pacific Company shall cooperate with the Union Pacific Railroad Company to secure by active solicitation the routing of the maximum of freight traffic via the lines of the Union Pacific Railroad Company and the Central Pacific Railway Company through the Missouri River and Ogden, Utah, as parts of one connected continuous line, between all points in California and Oregon north of and including Caliente and Santa Margarita, Calif., and south of and including the Klamath Falls branch and Kirk, Oreg., on the one hand, and points north and west of a line along the northern boundaries of Oklahoma and Arkansas, to the Mississippi River, thence along the Mississippi and Ohio Rivers (but not including intermediate cities on the Ohio River) to Wheeling, W. Va., and thence on a line drawn just east of Pittsburgh, Pa., and Buffalo, N. Y., to Niagara Falls, N. Y.; * * *" (76 I.C.C. at 530).
Other conditions of the Control Order provide that the Union Pacific and the Southern Pacific cooperate in maintaining schedules, service, and rates over the Central Pacific-Southern Pacific route.
The Rio Grande urges here, as it did before the Commission, that condition (e) of the Commission's order of 1923 and a 1924 contract between the Union Pacific and the Southern Pacific on the same subject are illegal and unlawful because the plaintiff is unduly prejudiced and discriminated against thereby, and further that they are contrary to the Interstate Commerce Act and the Federal antitrust laws. The plaintiff also urges that the proceedings had before the Commission which culminated in its 1963 order, here sought to be set aside, were unduly restricted and narrowed, and that its amended petition was not considered as a complaint proceeding under the Commission's procedures as it should have been.
Since the plaintiff raises the question here as to the proper scope of the administrative proceedings, it is necessary to describe in some detail the issues raised and considered during the proceedings.
The plaintiff, as indicated above, filed a petition with the Commission to reopen the Control Case, supra, for further consideration in the light of present conditions. The plaintiff asserted that the condition (e) now results in unlawful discrimination against it contrary to Sections 3(4) and 15(1) of the Interstate Commerce Act, and it was not "just and reasonable" as required by Section 5 of the Act. Plaintiff asks that condition be modified, and for such other and further relief as the Commission might grant.
The Union Pacific and the Southern Pacific filed motions to dismiss and to Deny and Answer. The Southern Pacific attached a copy of the agreement entered into between it and the Union Pacific in 1924. This agreement, according to the brief of the Commission, was entered into for the purpose of embodying the conditions imposed in the original order in the Control case into a contract stating the parties' common understanding of their meaning.
Following the filing of the motions described above with the contract attached, the plaintiff amended its petition to assert also that this agreement was unlawful for the same reasons that the condition was unlawful. Thereafter the Union Pacific and the Southern Pacific amended their motions to meet the amended allegations of the plaintiff.
In June 1958, the Commission reopened the Control Case. The intervening defendants petitioned for reconsideration of this order of reopening, but the petition was denied. The Order of Reopening recites that the petition to reopen of plaintiff was directed to condition (e) and to the agreement of 1924, and recites further "that there has been presented sufficient justification to warrant the reopening of the proceeding for further consideration of the conditions imposed: * * *." The order portion then states as follows: "It is ordered, That the proceeding be, and it is hereby reopened for further consideration and assigned for hearing at a time and place hereafter to be fixed."
The plaintiff was further permitted by the Examiner, at the commencement of the hearing before him, to further amend its petition to assert that condition (e) and the 1924 contract were not "just and reasonable" as required by Section 5(2) (b) of the Act. The attorney for Union Pacific at the outset of the hearing advised the Examiner that the reopening order limited the issues.
The issues decided by the Examiner were generally as follows:
1. He found that condition (e) was imposed to...
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Southern Pacific Company v. United States
...set aside by the District Court and the proceeding remanded for the Commission to consider additional evidence. Denver & R.G.W. R.R. v. I.C.C., D.C., 229 F.Supp. 249 (1964). Upon reconsideration, the Commission revised its prior holding and modified the condition omitting the Union Pacific'......