Federal Exp. Corp. v. TENN. PUBLIC SERVICE COM'N

• Decision Date: 23 April 1990
• Docket Number: No. 3:87-0633.,3:87-0633.
• Citation: 738 F. Supp. 1140
• Parties: FEDERAL EXPRESS CORPORATION v. TENNESSEE PUBLIC SERVICE COMMISSION, et al.
• Court: U.S. District Court — Middle District of Tennessee

738 F. Supp. 1140

FEDERAL EXPRESS CORPORATION v. TENNESSEE PUBLIC SERVICE COMMISSION, et al.

No. 3:87-0633.

United States District Court, M.D. Tennessee, Nashville Division.

April 23, 1990.

William R. Willis, Jr., Marian F. Harrison, Willis & Knight, and Jeffrey Rappuhn, Nashville, Tenn., for plaintiff.

Deputy Gen. Counsel, Henry Walker, Tennessee Public Service Com'n, Nashville, Tenn., for defendants.

Val Sanford, Gullett, Sanford, Robinson & Martin, Nashville, Tenn., and Peter A. Greene, Thompson, Hine & Flory, Washington, D.C., for purolator.

MEMORANDUM

WISEMAN, Chief Judge,

This matter is before the Court on remand from the Sixth Circuit Court of Appeals. The Sixth Circuit reversed this court's holding that it did not have subject matter jurisdiction to determine the merits of Federal Express' claim. See Federal Express Corp. v. Tennessee Public Service Comm'n, 693 F.Supp. 598 (M.D.Tenn.1988), aff'd 878 F.2d 381 (6th Cir.1989) (table), rev'd on petition for rehearing, No. 88-5974, Slip op. (6th Cir. 10/6/89). In remanding, the Sixth Circuit instructed this court to consider the question of abstention in view of CSXT, Inc. v. Pitz, 883 F.2d 468 (6th Cir.1989).

CSXT held that traditional abstention analysis applies even where preemption is the primary constitutional question. 883 F.2d at 473. See also New Orleans Public Service, Inc. v. Council of New Orleans, ___ U.S. ___, 109 S.Ct. 2506, 105 L.Ed.2d 298, reversing 798 F.2d 858 (5th Cir.1986) (rejecting argument that presence of preemption question bars District Court from abstaining under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971)). Traditional analysis of whether Younger abstention is appropriate follows a three-step framework.

Abstention is appropriate only where a court can answer all three of the following questions in the affirmative:

First, do the relevant state proceedings ... constitute an ongoing state judicial proceeding; second, do the proceedings implicate important state interests; and third, is there an adequate opportunity in the state proceedings to raise constitutional challenges.

Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432, 102 S.Ct. 2515, 2521, 73 L.Ed.2d 116 (1982).

CSXT, 883 F.2d at 474 (parallel citations omitted; brackets supplied in CSXT).

Federal Express' dispute with defendant, Tennessee Public Service Commission (TPSC), has had a lengthy sojourn in the state administrative process, resulting in TPSC issuing a Show Cause Order on June 9, 1987.¹ The Show Cause Order rejected Federal Express' challenges to the applicability and constitutionality of a state requirement that all intrastate motor carriers apply for a certificate of convenience and necessity, and affirmed an ALJ's decision that Federal Express was an intrastate motor carrier under Tennessee law and was required to obtain a certificate. The TPSC gave Federal Express thirty days to comply with its order, but later extended the deadline to August 25, 1987. Federal Express subsequently filed a petition for review and an application for immediate stay with the Tennessee Court of Appeals, seeking to delay its application for a certificate pending state review of the order. The Court of Appeals denied the stay on August 6, 1987.

Federal Express filed its federal complaint on August 7, alleging, as it did in the state administrative proceedings, that the state regulations were expressly preempted by the Airline Deregulation Act of 1978 and impliedly preempted by the Commerce Clause. On August 10, 1987, this court entered a TRO, forestalling application for the certificate. On August 12, Federal Express moved for entry of a preliminary injunction without further hearing or for delineation of the issues to be presented at the hearing. On August 18, defendant moved to consolidate the preliminary injunction hearing with a hearing on the merits. Two days later, this court consolidated the injunction hearing with the hearing on the merits, extended the TRO to September 10, 1987, the date set for the consolidated hearing, and invited the parties to brief the issue of whether abstention was appropriate. On September 9, the day before the consolidated hearing, Federal Express dismissed its state appeal.

After hearing the matter on September 10 and 11, the Court granted the preliminary injunction for an indefinite period, took the decision on the merits under advisement, and requested additional briefs on the issue of abstention. Although the abstention issued was argued squarely in the hearing and in the pre- and post-trial briefs, the Court did not reach the issue because it found the prerequisite to abstention, subject-matter jurisdiction, lacking. The Sixth Circuit reversed that holding, however, compelling this court now to address the abstention issue.

Applying the traditional, three-step framework with sensitivity to the federalism concerns underlying Younger abstention, the Court finds that it must abstain from determining the merits of this dispute. Consequently, the Court dismisses plaintiff's claim and lifts the injunction against TPSC.

I. THE STATE PROCEEDINGS CONSTITUTE AN "ONGOING JUDICIAL PROCEEDING".

Where the state proceeding "investigates, declares and enforces liabilities as they stand on present and past facts and under laws supposed already to exist," it is judicial. NOPSI, ___ U.S. at ___, 109 S.Ct. at 2519, 105 L.Ed.2d at 318 (quoting Prentis v. Atlantic Coast Line Co., 211 U.S. 210, 226, 29 S.Ct. 67, 69, 53 L.Ed. 150 (1908)). Accord CSXT, 883 F.2d at 474. Both Federal Express and TPSC, agree, as they must, that the proceedings out of which this suit grew are "judicial," as defined in NOPSI. The more difficult issue is whether the proceedings are "ongoing" given that plaintiff has dismissed its state appeal.

As a general rule, the proper point of reference for determining whether state proceedings are "ongoing" is the date the federal complaint is filed. In Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 107 S.Ct. 1519, 95 L.Ed.2d 1 (1987), the Court applied the day-of-filing rule and held that abstention was appropriate, even though the state proceedings had run their course by the time the matter reached the Supreme Court and dismissal would leave Texaco without any state remedy. 481 U.S. at 17-18, 107 S.Ct. at 1529-30. Similarly, in Zalman v. Armstrong, 802 F.2d 199 (6th Cir.1986), the court held that "the proper time of reference for determining the applicability of Younger abstention is the time the federal complaint is filed." Id. at 204. The court vacated the District Court's judgment in favor of the federal plaintiff, even though the state criminal proceedings against him had been dismissed before the appeal was filed. Id. at 206-07. See also Huffman v. Pursue, Ltd., 420 U.S. 592, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975) (rejecting argument that state judicial proceedings had ended by time federal complaint was filed); Steffel v. Thompson, 415 U.S. 452, 462, 94 S.Ct. 1209, 1217, 39 L.Ed.2d 505 (1974) (holding that Younger principles did not apply where no state criminal proceeding is pending when federal complaint is filed); Thomas v. Texas State Bd. of Medical Exam., 807 F.2d 453 (5th Cir.1987) (abstention not appropriate where plaintiff voluntarily dismisses state claim before filing federal suit).

Federal Express argues that insisting upon the day-of-filing rule in this case is merely a rote argument because the federalism concerns underlying Younger no longer applied after the state appeal was dismissed. Federal Express is correct in arguing that courts must apply the three-step framework with sensitivity to the concerns that animate the Younger rule. See Zalman, 802 F.2d at 202. But contrary to Federal Express' argument, applying the day-of-filing rule to this case properly balances those concerns.

The Younger line of authority is concerned primarily with respecting the sovereignty, integrity, and competence of state systems, and with allowing the state systems to operate without undue interference from the federal government. See, e.g., Younger, 401 U.S. at 44, 91 S.Ct. at 750; Huffman, 420 U.S. at 601-04, 95 S.Ct. at 1206-08. This line of authority admonishes federal courts to refrain from intruding into the state process in a manner that "reflects negatively upon the state court's ability to enforce constitutional principles." Cf. Huffman, 420 U.S. at 604, 95 S.Ct. at 1208; Steffel, 415 U.S. at 462, 94 S.Ct. at 1217. In determining whether particular actions improperly interfere with the state process, the Supreme Court has not distinguished between courts' decisions to issue injunctions against the state and litigants' decisions to forego available state remedies. For example, in Huffman, the Court held that proceedings are "ongoing" and, absent exceptional circumstances, courts must abstain where a losing state litigant has failed to exhaust his state appellate remedies. 420 U.S. at 608-10, 95 S.Ct. at 1210-11. As explained in NOPSI,

For Younger purposes, the state's trial-and-appeals process is treated as a unitary system, and for a federal court to disrupt its integrity by intervening in mid-process would demonstrate a lack of respect for the State as sovereign. For the same reason, a party may not procure federal intervention by terminating the state judicial process prematurely —foregoing the state appeal to attack the trial court's judgment in federal court. `A necessary concomitant of Younger is that a party wishing to contest in federal court the judgment of a state judicial tribunal must exhaust his state appellate remedies before seeking relief in the District Court.' Huffman, 420 U.S. at 608 95 S.Ct. at 1210.

___ U.S. at ___, 109 S.Ct. at 2518, 105 L.Ed.2d at 317 (emphasis supplied).

Given the system of judicial review of administrative proceedings established in Tennessee's Uniform Administrative Procedures Act, Tenn.Code Ann. §§ 4-5-101 through -324, this court...