Electronic Industries Association v. United States, Civ. A. No. 1059-69.

• Citation: 310 F. Supp. 1286
• Decision Date: 02 April 1970
• Docket Number: Civ. A. No. 1059-69.
• Parties: ELECTRONIC INDUSTRIES ASSOCIATION, Plaintiffs, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, Aberdeen and Rockfish Railroad Company et al., Intervenors as Defendants.
• Court: U.S. District Court — District of Columbia

310 F. Supp. 1286

ELECTRONIC INDUSTRIES ASSOCIATION, Plaintiffs, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, Aberdeen and Rockfish Railroad Company et al., Intervenors as Defendants.

Civ. A. No. 1059-69.

United States District Court, District of Columbia.

April 2, 1970.

Robert N. Kharasch, William J. Lippman, Samuel B. Nemirow and Graham W. McGowan, Washington, D. C., for plaintiffs.

Robert W. Ginnane, Arthur J. Cerra and Philip W. Getts, Washington, D. C., for defendants.

Edward A. Kaier, Richard J. Murphy, Philadelphia, Pa., James L. Tapley, Washington, D. C., Louis E. Torinus, Jr., St. Paul, Minn., and Paul F. McArdle, Washington, D. C., for intervenors as defendants.

Before WILBUR K. MILLER, Senior Circuit Judge, ROBB, Circuit Judge, and BRYANT, District Judge.

OPINION

BRYANT, District Judge:

In a proceeding entitled "Ex Parte 259, Increased Freight Rates, 1968" the Interstate Commerce Commission made an order which permitted the Class I railroads of the United States to put into effect a general increase in their freight rates and charges to offset the increase in expenses which had occurred in 1967-68. Plaintiff, Electronic Industries Association, is the national organization of manufacturers of electronic products whose membership of some 300 companies ship more than 90% of such products made in the United States; and seeks to enjoin, annul, and set aside only that portion of the Commission's order permitting increased rates on the two items which include its products, i. e. #880 (Radio and Television Sets) and #1045 (Electronic Components or Accessories).

Plaintiff claims that the 7% increase over prior rates for those items is arbitrary, and in addition is based on an arbitrary selection of commodities to bear increased rates.

The Commission and the intervening railroads have moved to dismiss the actions under Rule 12(d) Fed.R.Civ.P., asserting that plaintiff has failed to state a claim upon which relief can be granted. Their position is that plaintiff has failed to exhaust its administrative remedies under 49 U.S.C. §§ 13 and 15 which specifically provide a means for attacking the justness and reasonableness of rates as they apply to specific commodities.

We agree, and dismiss the complaint for the reasons which follow.

After the railroads presented their new rate schedule containing an overall projected increase in revenues of five percent, the Commission suspended all increases in excess of three percent on June 19, 1968 and ordered hearings and investigation. The investigation was divided into a number of parts, designated as "sub numbers." Sub-"No. 2" was concerned with "cost and revenue need;" there, the Commission found that the railroads did indeed have an increased revenue need, a finding not challenged by plaintiff in this proceeding. In addition, the Commission took testimony from both the railroads and shippers in the other ten "sub number" hearings, each concerned with the rate increase for a separate commodity grouping.

At Sub-"No. 11" plaintiff offered the testimony of two expert witnesses to show that the proposed increased rates applicable to members of its association bore no relationship to increased costs in shipping their products. In its final report the Commission rejected the relevance of this type of proof in determining the just and reasonableness of the railroad's proposed general revenue increase.¹

There is no doubt that the Commission is correct that its action was in the nature of a general revenue proceeding. Atlantic City Electric Co. v. United States, 306 F.Supp. 338 (S.D.N.Y. 1969), Alabama Power Company v. United States, D.C.D.C., Civil Action No. 2970-68 decided December 4, 1969. As the Atlantic City court pointed out:

`The Commission was concerned primarily with the "need, in the public interest, of adequate and efficient railway transportation service" and with the railroad's "need of revenues sufficient to enable the carriers, under honest, economical, and efficient management to provide such service." 49 U.S.C. § 15a(2). The increases in rates were general, even though the percentage increase varied from commodity to commodity. * * * It is true that the Commission found these general increases, on an overall basis, to be just and reasonable. But the Commission did not purport to pass upon individual rates as contrasted with the general level.' Atlantic at 341.

The plaintiff concedes that if the Commission in its discretion refused to suspend any rates, then under the time honored legal precedent of Algoma Coal & Coke Co. v. United States, 11 F.Supp. 487 (E.D.Va.1935), it would be required to make its attack first under §§ 13 and 15 of the Act.

With much emphasis, however, plaintiff argues that when the Commission exercised its discretion to suspend all increases in excess of three percent on June 19, 1968, it committed itself to holding hearings and making findings pursuant to § 15(7) of 49 U.S.C.; and these findings, according to plaintiff, are the proper subject for...