Greyhound Lines, Inc. v. United States

• Citation: 308 F. Supp. 1033
• Decision Date: 05 February 1970
• Docket Number: No. 69 C 1148.,69 C 1148.
• Parties: GREYHOUND LINES, INC., and the Greyhound Corporation, Plaintiffs, v. UNITED STATES of America, and Interstate Commerce Commission, Defendants. Mt. Hood Stages, Inc., d/b/a Pacific Trailways, Public Utility Commissioner of Oregon, and National Trailways Bus System, Intervening Defendants.
• Court: U.S. District Court — Northern District of Illinois

308 F. Supp. 1033

GREYHOUND LINES, INC., and the Greyhound Corporation, Plaintiffs, v. UNITED STATES of America, and Interstate Commerce Commission, Defendants Mt. Hood Stages, Inc., d/b/a Pacific Trailways, Public Utility Commissioner of Oregon, and National Trailways Bus System, Intervening Defendants.

No. 69 C 1148.

United States District Court, N. D. Illinois, E. D.

February 5, 1970.

Amos M. Mathews and Robert J. Bernard, Chicago, Ill., for plaintiffs.

Richard W. McLaren, Asst. Atty. Gen., Thomas A. Foran, U. S. Atty., and John H. D. Wigger, Atty., for the United States.

Robert W. Ginnane, Gen. Counsel, and Barry Roberts, Atty., for the Interstate Commerce Commission.

Masuda, Spivack & Funai, Chicago, Ill., Thomas Y. Higashi, Asst. Atty. Gen., Salem, Or., for The Public Utility Comsioner of Oregon.

Eugene L. Cohn, Chicago, Ill., and Donald A. Schafer, Portland, Or., for Mt. Hood Stages, Inc.

Eugene L. Cohn, Chicago, Ill., and James E. Wilson, Bruce E. Mitchell, Washington, D. C., for National Trailways Bus System.

Before KILEY, Circuit Judge, and ROBSON and AUSTIN, District Judges.

DECISION ON THE MERITS

PER CURIAM.

This action is brought by Greyhound Lines, Inc. and The Greyhound Corporation (Greyhound) to set aside an order¹ of the Interstate Commerce Commission (ICC) which requires Greyhound to cease and desist from certain practices found to be in violation of representations made to the ICC by Greyhound in earlier approved acquisition proceedings. The ICC in turn has filed a counterclaim seeking to enforce its order, and three companies — Mt. Hood Stages, Inc. (Mt. Hood), National Trailways Bus System, and the Public Utilities Commission of Oregon — have been permitted to intervene pursuant to 28 U.S.C. § 2323. This three-judge court has jurisdiction under 28 U.S.C. §§ 1336 and 2325.²

Greyhound is the largest common carrier of passengers by motor vehicle in the United States, authorized to operate throughout most of the country. Mt. Hood, doing business as Pacific Trailways, is a similar carrier authorized to operate in Oregon, Idaho, and Utah. It is affiliated with the National Trailways Bus System, a nonprofit association of bus companies operating throughout the United States who are principal competitors of Greyhound.

From 1947 to 1956, in separate proceedings, before the ICC, Greyhound acquired eight bus companies in the western United States. These acquisitions were approved after hearings by orders of the ICC³ under Section 5(2) of the Interstate Commerce Act (ICA), 49 U. S.C. § 5(2), and Greyhound was then issued certificates of convenience and necessity as to the acquired routes. Mt. Hood opposed the first and second acquisitions (combined in one order) and the fifth and the sixth. It withdrew its opposition to the fifth proceeding after Greyhound officers represented that Greyhound had no intention of abandoning present through bus connections with Mt. Hood.

Mt. Hood holds a certificate of convenience and necessity for a bus route between Klamath Falls and Biggs (The Dalles), Oregon, which is a north-south route passing roughly through the center of Oregon, a sparsely populated, scenic area of the state. Mt. Hood's remaining certificates (except for special charter certificates not relevant here) are for east-west routes through central Oregon, one of which passes into Idaho, through Boise, to Salt Lake City, Utah. The bus routes acquired by Greyhound in the above proceedings, together with its original routes, completely encircle Mt. Hood, enabling Greyhound to by-pass the north-south route of Mt. Hood through Central Oregon by using its own route along the Oregon coast through Portland. In this way, Greyhound is able to service points in Washington and Montana from California and vice versa without need of Mt. Hood, whose only link to points north and south of Oregon is Greyhound.

From 1949 to 1964, Greyhound and Mt. Hood maintained a through bus agreement cancelable by either party on 60 days' notice. The through bus, on lease to Mt. Hood and driven by its drivers, operated between San Francisco, California, and Spokane, Washington, using the Mt. Hood route between Klamath Falls and Biggs, Oregon. This arrangement had proved profitable to both sides.

During a strike against Mt. Hood, in 1964, Greyhound instituted a San Francisco to Spokane bus using its own coastal route. After the strike was over, Greyhound canceled the through bus agreement with 60 days' notice and permanently rerouted its San Francisco-Spokane bus along the wholly Greyhound route through Portland. This lengthened the San Francisco-Spokane trip by 110 miles and several hours, and has created a situation in which Mt. Hood's shorter and faster central route, now wholly dependent on Greyhound connecting buses at Klamath Falls and Biggs, Oregon, has fallen dramatically in popularity.

Mt. Hood then brought a petition before the ICC on October 7, 1964, for reconsideration of the seven prior acquisition orders. It sought a supplemental order under Section 5(9) of the ICA, 49 U.S.C., "specifically enforcing the promises, representations, and assurances relied upon by the commission in approving the said acquisitions." Section 5(9) provides:

"The Commission may from time to time, for good cause shown, make such orders, supplemental to any order made under paragraph * * * (2), * * * as it may deem necessary or appropriate."

Mt. Hood argued that Greyhound had achieved a planned encirclement of Mt. Hood to put it out of business or to force a sale to Greyhound. It urged that approval by the ICC of Greyhound's acquisitions was induced or furthered by representations of Greyhound, of record in those proceedings, that it would not disturb existing traffic patterns or adversely affect existing carriers, that it was not Greyhound policy to route passengers circuitously over its lines, that Greyhound agents were instructed to sell via the most direct route even if it was over a competing line, that Greyhound would continue to show Mt. Hood's schedules in its folders and that the through bus would be continued. To show that Greyhound had violated those representations, Mt. Hood introduced evidence that the through bus had been discontinued unreasonably, that since its discontinuance Greyhound had arranged its north and south connecting schedules so as to destroy the advantages of Mt. Hood's route (i. e., by creating long layovers at points on the Klamath Falls route and by eliminating local stops on its own Portland route to equalize time differentials), that Greyhound agents would not voluntarily quote shorter or cheaper Mt. Hood routes to prospective passengers and when asked would quote them inaccurately, that Greyhound had ceased showing Mt. Hood routes on its schedules while it continued to show those of other competitors, and that Greyhound indulged in other similar practices designed to stifle Mt. Hood as a competitor.⁴

The trial examiner agreed with Mt. Hood that Greyhound had made specific representations in prior acquisition proceedings, which generally amounted to assurances of public benefit and interest and no harm to existing carriers or service. He further found that Greyhound was and is engaging in practices unreasonable and inconsistent with the above representations, principally (1) the discontinuance of the through bus, (2) the revision of schedules with long layovers at Mt. Hood connecting points, and (3) the involuntary and inaccurate quoting of joint through rates by Greyhound agents. The examiner recommended the issuance of a supplemental order under Section 5(9), which he found "fits the bill."

On review by Division Three of the ICC, the examiner's findings concerning representations that were made and practices that violated them were affirmed. The commissioners particularly found that statements made at the fifth proceeding amounted to a commitment not to disrupt traffic patterns unreasonably without regard to the effect on Mt. Hood. They found that "the only reasonable inference that can be drawn from the record is that the cancellation of the through bus and revision of time schedules were inspired by a desire to stifle competition." 104 M.C.C. at 461. It was further stated that the failure of Greyhound to abide by its commitments without sound reason constituted destructive competition in contravention of the national transportation policy. The Division held that Section 5(9) authorized the entry of a supplemental order, but no specific order was entered, since the commissioners decided to give Greyhound time voluntarily to conform its practices to its representations.

Greyhound did not voluntarily conform. Thus on petition for reconsideration by Greyhound, the entire Commission specifically ordered Greyhound

"to cease and desist forthwith, and thereafter to refrain and abstain, from all practices of the character found in the prior reports of Division 3 and the hearing examiner to be unreasonable and inconsistent with respondent's representations in the above-entitled proceedings, as of the date of hearing in No. MC-F-5190, The Greyhound Corp. — Control and Merger — Interstate Transit Lines, et al., 58 M.C.C. 809 (not printed in full), decided July 30, 1952, and to restore practices and traffic patterns, existing or in contemplation as of that date, which have resulted in (1) principally, (a) the discontinuance of the San Francisco, Calif.-Spokane, Wash., through bus service via Klamath Falls, and Briggs (sic) (The Dalles), (b) the revision of schedules with long layovers at those and other intermediate points, and (c) its agents' failure to quote voluntarily, and often accurately or responsive to prospective passengers joint through routes and fares, and (2) such other discriminatory and destructive practices which foreclose competitive and traffic patterns unreasonably or unnecessarily, without regard for adverse effects on Mt. Hood, doing business as Pacific Trailways."

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