Luckenbach Steamship Company v. United States

• Decision Date: 14 December 1959
• Docket Number: Civ. A. No. 2144.
• Citation: 179 F. Supp. 605
• Parties: LUCKENBACH STEAMSHIP COMPANY, Inc., Plaintiff, v. UNITED STATES of America and Baltimore and Ohio Railroad Company, Chicago, Rock Island and Pacific Railroad Company, Denver and Rio Grande Western Railroad Company, Pennsylvania Railroad Company, Reading Company, Southern Pacific Company, and Toledo, Peoria & Western Railroad Company, Defendants.
• Court: U.S. District Court — District of Delaware

179 F. Supp. 605

LUCKENBACH STEAMSHIP COMPANY, Inc., Plaintiff, v. UNITED STATES of America and Baltimore and Ohio Railroad Company, Chicago, Rock Island and Pacific Railroad Company, Denver and Rio Grande Western Railroad Company, Pennsylvania Railroad Company, Reading Company, Southern Pacific Company, and Toledo, Peoria & Western Railroad Company, Defendants.

Civ. A. No. 2144.

United States District Court D. Delaware.

December 14, 1959.

S. Samuel Arsht and Andrew B. Kirkpatrick, Jr., of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., Mark P. Schlefer, John Cunningham and Israel Convisser of Kominers & Fort, Washington, D. C., for plaintiff.

Leonard G. Hagner, U. S. Dist. Atty., Wilmington, Del., Robert A. Bicks, Acting Asst. Atty. Gen., and John H. D. Wigger, Atty., Dept. of Justice, Washington, D. C., for defendant, United States.

Robert W. Ginnane, Gen. Counsel, I.C. C. and H. Neil Garson, Associate Gen. Counsel, I.C.C., Washington, D. C., for Interstate Commerce Commission.

William S. Potter and Henry R. Horsey, of Berl, Potter & Anderson, Wilmington, Del., Jeremiah C. Waterman and Edward M. Reidy, Washington, D. C., Andrew C. Armstrong, Baltimore, Md., and Charles Burkett, Jr., San Francisco, Cal., for above-listed Railroad defendants.

Charles McD. Gillan, Jr., Baltimore, Md., for intervenor, North Atlantic Ports Conference.

Aaron Finger and E. Norman Veasey of Richards, Layton & Finger, Wilmington, Del., Alvin J. Rockwell and Willis R. Deming of Brobeck, Phleger & Harrison, San Francisco, Cal., and Washington, D. C., for intervenor, Pacific American Steamship Ass'n.

John P. Daley, Wilmington, Del., and Raymond A. Negus of Cake & Negus, Washington, D. C., for intervenors, Northwest Canners and Freezers Assn., Inc., and Canners League of Calif.

William Prickett, Sr., and William Prickett, Jr., of Prickett & Prickett, Wilmington, Del., for defendants, Baltimore & Ohio Railroad Co., and Reading Co.

Before BIGGS, Circuit Judge, and WRIGHT and RODNEY, District Judges.

CALEB M. WRIGHT, District Judge.

This injunction action initiated by plaintiff, Luckenbach Steamship Company, Inc. (Luckenbach) against the United States and certain railroads, seeks: "(1) to enjoin, set aside, annul, suspend or rescind the action and order of the Interstate Commerce Commission, an agency of said defendant United States, denying plaintiff's petition for suspension * * * of certain railroad rates published to become effective October 23, 1959", and "(2) to direct the said defendant United States through its agency the Commission, to suspend the operation of said rates;" and to direct the defendant railroads, "parties to such rates, to refrain from doing and/or continuing the actions and things herein complained of, designed (1) to monopolize the transportation of canned goods from Pacific coast origins to Atlantic coast destinations and (2) to drive plaintiff from the business."¹

On October 22, 1959 the District Court issued a temporary restraining order staying the action of the Interstate Commerce Commission (Commission) denying plaintiff's petition for suspension and ordering the Commission to suspend the proposed rail rate. Thereafter, a three-judge statutory court was convened pursuant to 28 U.S.C.A. §§ 2325 and 2284.

Jurisdiction is alleged under the provisions of 28 U.S.C.A. §§ 1336-1337, 1398, 2284 and 2321-2325; Section 10 of the Administrative Procedure Act (5 U. S.C.A. § 1009); Sections 1, 2 and 3 of the Sherman Act (15 U.S.C.A. §§ 1, 2, 3); and Sections 12 and 16 of the Clayton Act (15 U.S.C.A. §§ 22, 26).

The matters now before the court are plaintiff's motion for an interlocutory injunction and defendants' motion to dismiss the complaint and dissolve the temporary restraining order.

The essential allegations of plaintiff's complaint and amendment thereof to which defendants' dismissal motion is addressed may be summarized as follows:²

Luckenbach, the only general cargo carrier in the intercoastal trade, is the low cost carrier of canned goods. Its rate on this traffic, without which it cannot exist, fully covers cost plus a return. The proposed rail rate is below cost. Apart from its effect on Luckenbach, it will substantially reduce present railroad revenues now being earned on the large volume of canned goods moving by rail. The reduced rail rate will either deprive Luckenbach of its backbone traffic or force its rate to a point below cost, and drive the more efficient carrier out of the trade, exposing the public to later rail rate increases. The railroads have expressly limited the rate reduction to a term of one year at the end of which the present rate will automatically be restored. The Commission ordered an investigation, thus placing upon the railroads the burden of sustaining it. But the investigation could be, and in the light of the injury to Luckenbach, probably would be nullified by the failure to suspend the rate. For if, upon conclusion of the investigation, the Commission should find that the rate was unlawful, the elimination of Luckenbach from the trade might make permanent and irremediable the interim violation of the National Transportation Policy and the Sherman Anti-Trust Act. The Commission's failure to suspend was inconsistent with its order of investigation. This was compounded by its silence as to its reasons.

Plaintiff asserts that the immediate consequences in permitting the proposed rail rate to become effective would be: "(1) to violate and frustrate the mandate of the National Transportation Policy, 49 U.S.C. preceding § 1; (2) to violate the Sherman Anti-Trust Act under the doctrine of State of Georgia v. Pennsylvania R. R., 324 U.S. 439 65 S. Ct. 716, 89 L.Ed. 1051 (1945); and (3) to subject Luckenbach, a major water carrier under the Commission's jurisdiction, to immediate, incalculable and irreparable injury."³

The defendants have moved for dismissal on the ground that this court is without jurisdiction to review a Commission decision not to suspend the operation of new rate tariffs.

Plaintiff urges that Section 10(e) of the Administrative Procedure Act⁴ plainly confers jurisdiction on the court to review the Commission's failure to suspend as it is authorized to do under Section 15(7) of the Interstate Commerce Act,⁵ the material portion of which reads as follows:

"(7) Whenever there shall be filed with the Commission any schedule stating a new individual or joint rate, fare, or charge, or any new individual or joint classification, or any new individual or joint regulation or practice affecting any rate, fare, or charge, the Commission shall have, and it is given, authority, either upon complaint or upon its own initiative without complaint, at once, and if it so orders without answer or other formal pleading by the interested carrier or carriers, but upon reasonable notice, to enter upon a hearing concerning the lawfulness of such rate, fare, charge, classification, regulation, or practice; and pending such hearing and the decision thereon the Commission, upon filing with such schedule and delivering to the carrier or carriers affected thereby a statement in writing of its reasons for such suspension, may from time to time suspend the operation of such schedule and defer the use of such rate, fare, charge, classification, regulation, or practice, but not for a longer period than seven months beyond the time when it would otherwise go into effect; * * *."

Section 10 of the Administrative Procedure Act⁶ provides in part:

"Except so far as (1) statutes preclude judicial review or (2) agency action is by law committed to agency discretion * * * (c) Every agency action made reviewable by statute and every final agency action for which there is no other adequate remedy in any court shall be subject to judicial review * *."

The wording of the Administrative Procedure Act apparently makes no change in the law of reviewability. Section 10 is so worded that it is obvious that the introductory clause modifies each of the subsections. Thus agency action is left unreviewable if the statute precludes review or to the extent agency action is by law committed to agency discretion. These two reasons were the only ones precluding review of administrative action by the court before the Administrative Procedure Act was enacted and the wording of the Act has brought about no change.⁷

Whatever the scope of review of subsection (e)⁸ is when read alone, the scope of review is certainly narrowed by that portion of the introductory clause, "Except so far as * * * (2) agency action is by law committed to agency discretion." Thus, although subsection (e) provides that the reviewing court shall set aside agency action⁹ found to be "arbitrary or capricious", it may not set aside arbitrary or capricious action so far as agency action is by law committed to agency discretion. So far as the action is by law committed to agency discretion it is not reviewable— even for arbitrariness or abuse of discretion. Whether or not agency action is reviewable, for a limited purpose or otherwise, depends upon what is committed by the statutes and common law to agency discretion.¹⁰

The Supreme Court in discussing the legislative history of the Act and how extensively, if at all, Section 10 changed the prior law on judicial review said:¹¹

"* * * No easy answer is found in our decisions on the subject. Each statute in question must be examined individually; its purpose and history as well as its text are to be considered in deciding whether the courts were intended to provide relief for those aggrieved by administrative action. Mere failure to provide for judicial intervention is not conclusive; neither is the presence of language which appears to bar it."

Section 15(7) of the present Transportation Act¹² authorizing the Commission to suspend rates, pending a hearing to determine the lawfulness of the filed rate was added to the original Interstate Commerce Act of February 4, 1887 by Act...