Springfield Terminal Ry. Co. v. Canadian Pacific Ltd.
| Decision Date | 05 November 1997 |
| Docket Number | No. 97-1783,97-1783 |
| Citation | 133 F.3d 103 |
| Parties | 1997-2 Trade Cases P 72,003 SPRINGFIELD TERMINAL RAILWAY COMPANY, et al., Plaintiffs, Appellants, v. CANADIAN PACIFIC LIMITED, dba, CP Rail System, Defendant, Appellee. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Robert S. Frank, Jr., with whom Robert M. Buchanan, Jr., Eric J. Marandett, Kenneth E. Steinfield, and Joshua A. Engel, Boston, MA, were on brief, for appellants.
Terence M. Hynes with whom Michael Fehner, Washington, DC, was on brief, for appellee.
Before SELYA, Circuit Judge, COFFIN, Senior Circuit Judge, and STAHL, Circuit Judge.
This is an appeal from a summary judgment for defendant in a civil antitrust action brought under Section 2 of the Sherman Act, 15 U.S.C. § 2, seeking damages for an "attempt to monopolize ... any part of the trade or commerce among the several States." The appeal also challenges the district court's refusal to exercise its supplemental jurisdiction over one count of the complaint charging violation of the Massachusetts Antitrust Act, Mass. Gen. L. ch. 93, § 5, and another count charging tortious interference with prospective business advantage.
The plaintiffs are three railroad companies owned by Guilford Transportation Industries, Inc., with principal offices in New Hampshire. They are the Boston and Maine Corporation (B & M), the Maine Central Railroad Company, and the Springfield Terminal Railway Company, which collectively comprise the Guilford Rail System. We shall refer to plaintiffs-appellants simply as Guilford. The defendant-appellee is Canadian Pacific Ltd., with principal offices in Montreal, Quebec. We shall refer to it as CP. Guilford's lines run from New England to New York; CP's relevant line runs through central Maine between the Canadian provinces of New Brunswick and Quebec.
The market subject to the alleged attempted monopolization is, for purposes of this case, assumed to be that of rail transportation to and from northern New England. The principal customers are thirty plants producing building materials, wood pulp, and paper located in Maine, New Hampshire, and Vermont, and their suppliers and customers. Incoming traffic consists of clay, chlorine, and other supplies; outgoing traffic consists of paper, pulp, and building materials. Of the thirty plants, twenty-three are on Guilford's lines; three are on a line of the Bangor and Aroostook Railroad in Maine; one is on the short-line Aroostook Valley Railroad in northern Maine; and three are on the St. Lawrence & Atlantic Railroad in Vermont. CP and Guilford compete for plants on the Bangor and Aroostook line; neither serves mills on the St. Lawrence & Atlantic Railroad. There are no plants on a CP line.
The basic theme of the complaint, filed on August 1, 1994, is that CP, a corporation with some $10 billion in revenues, attempted to drive out of business or force the sale of Guilford, which was in fragile financial circumstances, thereby destroying competition in the market above described. In submitting its motion for summary judgment, CP assumed the truth of facts alleged in the complaint. Therefore, the relevant market, the intent to monopolize, and the existence of predatory conduct--three of the four requisites of an attempt to monopolize--are not in issue. What is to be decided is whether the complaint and affidavits raise a genuine issue of fact as to the existence of "a dangerous probability of achieving monopoly power." Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113 S.Ct. 884, 890-91, 122 L.Ed.2d 247 (1993).
We take the facts as alleged in the complaint. Although we review a summary judgment decision in which the district court considered both the complaint and an affidavit from each party, the affidavits submitted do not assert any facts that are relevant to our decision.
After covering the material we already have briefly described, the complaint addresses CP's underlying motive. It alleges: (1) on May 15, 1990, CP agreed to purchase the Delaware and Hudson Railway Company (D & H); (2) before this purchase, Guilford linked much of its traffic to and from points outside New England through D & H lines, amounting to 68 percent of Guilford's traffic in 1988, and dropping to 43 percent in 1989; (3) in 1990, at some unidentified time, the figure dropped to 27 percent; (4) CP's purchase of D & H was "predicated upon D & H/CP retaining the share of interchange traffic D & H had historically had with [Guilford];" (5) D & H/CP has sustained subsequent yearly losses of some $8 million; and (6) therefore, since retaining the Guilford interchange business was essential to D & H's health, CP "entered into a series of transactions" to weaken Guilford, force a lease, sale, or bankruptcy, "from which CP and others would be able to acquire its lines."
Four activities were alleged under the caption of "Defendant's Unlawful Conduct." The first was a 1989 request to obtain trackage rights over Conrail lines in Pennsylvania and Maryland as a prerequisite to the acquisition of D & H lines. Conrail refused.
In early 1990, an effort was made, in connection with CP's planned acquisition of D & H, to increase the level of traffic interchange between Guilford and D & H through a proposal to acquire trackage rights, with an option to purchase, over Guilford's line between Mechanicville, New York, and Fitchburg, Massachusetts. Guilford rejected the proposal.
At the same time, in April and May, 1990, CP sought the assistance of the Federal Railroad Administration (FRA) in obtaining the consent of Guilford to CP's proposal. FRA allegedly cooperated by threatening to default Guilford's subsidiary, Boston and Maine, under a preference share agreement with FRA, which would trigger a B & M obligation to pay FRA some $26 million. FRA senior management also allegedly stated that Guilford would regret it if the company turned down CP's proposal. In late 1990, FRA notified B & M that its "reconfiguration" of part of a line (i.e., removal of tracks) violated the preference share agreement. Had FRA called a default, CP knew that Guilford would face bankruptcy and be subject to acquisition by CP on favorable terms. But no default is alleged to have been declared.
These three instances of alleged efforts, while evidence of intent, produced no results adverse to Guilford. Only the fourth alleged incident describes an effort ripening into conduct. Both CP and Guilford submitted bids to a large paper-making facility, the Great Northern plants, for transport of 4,744 carloads of paper to 165 locations between January 1, 1991 and April 30, 1993. CP's bids were for less than its estimated average variable cost; for example, the average variable cost for one bid involving more than a fourth of the total traffic was estimated at $1,000 per carload while the expected revenue was less than $350. In December 1990, CP was awarded a contract for 4,204 carloads.
The complaint alleged that this conduct was "intended to divert revenues from the Guilford Rail System" so as to weaken it and permit CP "or others collaborating with CP" to acquire it. The essential part of the complaint concluded with the allegation that CP, once it had acquired Guilford, could recoup the costs of such predatory pricing through restoring the interchange traffic and increasing rail rates. The high barriers to new entry in the market and the weakened condition of Guilford allegedly contributed to the likelihood that CP would accomplish this goal.
CP's motion for summary judgment urged three grounds. First, accepting the truth of all allegations, CP claimed exemption from antitrust liability under 49 U.S.C. § 11321(a), which provides that ICC approval of a purchase of one carrier by another creates an exemption "from the antitrust laws and from all other law ... as necessary to let that person carry out the transaction, hold, maintain, and operate property...." Second, CP claimed that there existed no dangerous probability of monopoly in any event because it was not alleged that CP had any market power, and it had not been shown probable that Guilford would agree to sell to CP or that the ICC would approve such a purchase. Third, CP argued that the state law claims, resting on the district court's supplemental jurisdiction, should be dismissed along with the federal claim.
The district court, after an unfortunate two year hiatus during which apparently no progress was made in resolving the case, rested its summary judgment on the following conclusions: deeming market share a "highly significant" though not exclusive factor in assessing the probability of successful monopolization, it reasoned that at most CP controlled little more than ten percent of the market, which was not "sufficiently 'proximate' to monopoly;" that nothing in the record indicated that, if Guilford were forced to sell its rail lines, it would sell to CP; and that the record failed to demonstrate that ICC approval would be forthcoming. Finding the federal antitrust claim unsupported by sufficient factual allegations to create a genuine issue, the court in its discretion declined to exercise its supplemental jurisdiction over the state claims.
Standards. The familiar standards of summary judgment review apply here. Some are in appellants' favor: review is plenary, Steinke v. SunGard Financial Systems, 121 F.3d 763, 768 (1st Cir.1997); a genuine issue of fact that is truly material will defeat the motion, Celotex Corp. v. Catrett, 477 U.S. 317, 325-27, 106 S.Ct. 2548, 2553-55, 91 L.Ed.2d 265 (1986); and facts and reasonable inferences therefrom must be taken favorably to the non-movant, Blanchard v. Peerless Ins. Co., 958 F.2d 483, 490 (1st Cir.1992).
But other standards have come to hold in check too ready a creation of a factual issue. Unsupported assessments, conclusory...
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