State of Tex. v. Seatrain Intern., S. A.

• Decision Date: 28 August 1975
• Docket Number: No. 75-1319,75-1319
• Parties: STATE OF TEXAS et al., Plaintiffs-Appellees, v. SEATRAIN INTERNATIONAL, S. A., et al., Defendants-Appellants, Southern Railway Company et al., Intervenors-Appellants, South Carolina State Ports Authority, Intervenor-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 175

518 F.2d 175

STATE OF TEXAS et al., Plaintiffs-Appellees, v. SEATRAIN INTERNATIONAL, S. A., et al., Defendants-Appellants Southern Railway Company et al., Intervenors-Appellants South Carolina State Ports Authority, Intervenor-Appellant.

No. 75-1319.

United States Court of Appeals, Fifth Circuit.

Aug. 28, 1975.

Owen W. Cecil, Houston, Tex., Edward G. Gruis, Douglas N. Jones, Federal Maritime Comm., Neal M. Mayer, Washington, D. C., Eugene A. Spector, Philadelphia, Pa., for Seatrain Intl.

Charles A. Horsky, Michael Boudin, James L. Tapley, Washington, D. C., for So. Railway Co.

Warner F. Brock, Houston, Tex., John L. Hill, Atty. Gen. of Tex., David Hughes, Rex H. White, Jr., Asst. Attys. Gen., Austin, Tex., for plaintiffs-appellees.

William H. Vaughan, Jr., Charleston, S. C., for S. C. State Ports auth.

Cyrus C. Guidry, New Orleans, La., amicus curiae, for Port of New Orleans.

Peter A. Fitzpatrick, Atty., Interstate Commerce Commission, Washington, D. C., amicus curiae, for appellants.

Appeals from the United States District Court for the Eastern District of Texas, Beaumont Division.

Before GODBOLD, Circuit Judge, SKELTON, Associate Judge, ^* and GEE, Circuit Judge.

GEE, Circuit Judge:

The Euro-Gulf minibridge is an intermodal transportation service offered by Seatrain International, S.A. It affords shippers in the Houston, Galveston and Beaumont areas a cargo route to and from Northern Europe alternative to the all-water route from those three ports. Minibridge handles only containerized cargo. Freight shipped via minibridge travels by rail between the Texas ports and Charleston, South Carolina, through New Orleans. Seatrain's container ships move the cargo between Charleston and Northern Europe. A major innovation of the system is that the shipper pays only a single tariff known as a joint rate, ¹ and the freight travels under a single bill of lading. This greatly simplifies the paper work formerly involved in a sea/rail shipment. Because Seatrain's ships sail from Charleston more frequently than do those of Lykes Brothers from the Gulf ports and because Charleston is closer in sea miles to Northern Europe than are the Gulf ports, freight shipped via minibridge may arrive at its destination sooner than that sent via the all-water route. Yet the cost to the shipper is approximately the same whether he utilizes the all-water service or minibridge. (Minibridge does appear to have at least one disadvantage extra cargo handling.) Because the minibridge service involves not only sea but also rail, it comes under the jurisdiction of the Interstate Commerce Commission (ICC) and the Federal Maritime Commission (FMC) as well. As a result, the tariffs are filed with both the ICC and the FMC. ²

Plaintiffs ³ below, whom we shall refer to as the Texas Ports Interests, successfully sought what they term a preliminary injunction in aid of the administrative processes of the FMC. The court's intervention was necessary, they claim, since the FMC has no independent power to suspend the operation of tariffs filed with it pending decision on their legality and because the joint sea/rail tariffs filed by Seatrain violate Section 16, 17 and 18 of the Shipping Act of 1916, 46 U.S.C. §§ 815, 816, 817 and 8 of the Merchant Marine Act of 1920, ⁴ 46 U.S.C. § 867. In a nutshell, the complaint of the Texas Ports Interests is that the joint tariff illegally gives undue and unreasonable preference to one locality (Charleston) by diverting to it traffic naturally tributary to another (the Texas ports). This diversion, they allege, causes them irreparable injury. Thus, they say, the operation of the tariffs which foster it should be enjoined during the continuance of the administrative process, currently ongoing, which will determine their legality. The pro-minibridge forces, Seatrain, as defendant, the Southern Railway Company, the Alabama Great Southern Railroad Company, the Southern Pacific Transportation Company, and the South Carolina State Ports Authority, as intervenors, opposed the injunction, as did the FMC and the ICC, who have participated throughout the proceedings as amici curiae. Since we are convinced that the trial court abused its discretion in issuing the preliminary injunction, we reverse.

At the outset, we confront a jurisdictional problem. The Federal Maritime Commission has no power to enjoin, prior to a final determination of their validity, rates or conduct which might violate the Shipping Act of 1916, Trans-Pacific Freight Conference of Japan v. Federal Maritime Board, 112 U.S.App.D.C. 290, 302 F.2d 875, 878-80 (1962), 46 U.S.C. § 821. However, the federal courts have long held that they may, in the exercise of their general equitable powers, entertain actions filed either by the Commission or by private parties for preliminary injunctions to maintain the status quo and prevent irreparable injury pending the outcome of the oft-times protracted administrative process of the FMC. Delaware River Port Authority v. Transamerican Trailer Transport, Inc., 501 F.2d 917 (3d Cir. 1974) (cited hereafter as TTT); West India Fruit & Steamship Co. v. Seatrain Lines, 170 F.2d 775 (2d Cir. 1948), dism'd, 336 U.S. 908, 69 S.Ct. 514, 93 L.Ed. 1072 (1949); F. M. C. v. Australia/U. S. Atlantic & Gulf Conf., 337 F.Supp. 1032 (S.D.N.Y.1972); Delaware River Port Authority v. United States Lines, Inc., 331 F.Supp. 441 (E.D.Pa.1971); Federal Maritime Commission v. Atlantic & Gulf/Panama Canal Zone, 241 F.Supp. 766 (S.D.N.Y.1965); Penn. Motor Truck Ass'n v. Port of Philadelphia Marine Terminal Ass'n, 183 F.Supp. 910 (E.D.Pa.1960); Isbrandtsen Co. v. United States, 81 F.Supp. 544 (S.D.N.Y.1948) appeal dismissed sub nom. A/S J. Ludwig Mowinckels Rederi v. Isbrandtsen Co., 336 U.S. 941, 69 S.Ct. 813, 93 L.Ed. 1099 (1949). The Interstate Commerce Commission, on the other hand, is vested with power to suspend, at its discretion, for a period of seven months, rates filed with it pending hearing and decision on their lawfulness. 49 U.S.C. § 15(7). The existence of this power in the ICC, it has been held, evinces the deliberate decision of Congress to extinguish judicial power to grant any injunction which interferes with the Commission's discretionary decision to suspend rates filed with it at anytime before the Commission finally determines the lawfulness of the rates. United States v. Scrap, 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973); Arrow Transportation Co. v. Southern R. Co., 372 U.S. 658, 83 S.Ct. 984, 10 L.Ed.2d 52 (1963). The pro-minibridge forces, supported by the ICC as amicus curiae, while conceding the district court's jurisdiction to consider issuing a preliminary injunction against the implementation or continuation of a rate filed with the FMC in a "normal" case, urge that jurisdiction is absent here because these joint rates were filed with the ICC. We refuse to embrace so mechanical an approach.

The district court was asked to issue a preliminary injunction against activity of defendant Seatrain which, as a common carrier by water, is subject to the jurisdiction of the FMC. The ICC, according to its own stated policy, neither has nor makes claim to have jurisdiction over the ocean portion of the rates charged by water carriers, International Joint Rates and Through Routes, 337 I.C.C. 625 (1970) and 341 I.C.C. 246 (1972); nor is it concerned with the activity or conduct of those carriers. Further, the ICC was not constituted to regulate ocean shipping practices (or rates) and has neither power nor responsibility to enforce the provisions of the Shipping Act of 1916 (or any other act relating to shipping). The injunction sought was aimed solely at conduct by Seatrain which allegedly violates certain sections of the Shipping Act of 1916 and the policy of Section 8 of the Merchant Marine Act of 1920. In a joint rate case any preliminary injunction issued against a water carrier does, of course, encroach to some degree upon the ICC's domain of discretionary authority to suspend the rail portion of that rate. We have concluded, however, that this incidental effect does not prevent a court's exercising inherent equity powers to prevent irreparable injury, where persons allegedly protected by the shipping acts show injury caused by alleged violations of those acts by persons clearly subject to their prohibitions and who are in no wise subject to ICC control or regulation. Such a result would be nonsense in light of the fact that a permanent order of the FMC banning the ocean carrier's collection of the joint rate would have the identical incidental effect on the ICC's discretion; yet it is obvious that the FMC may forbid activity which violates the Shipping Act and clear that Congress never intended 49 U.S.C. § 15(7) to divest the FMC of this power. Here the district court was asked to act temporarily as an adjunct of the FMC, in an area clearly subject to FMC jurisdiction and control. The complaint filed with it was of Shipping Act violations which do not concern the ICC. We hold that there is nothing in 49 U.S.C. § 15(7) nor in the rationale of Arrow or Scrap which stripped the court of jurisdiction to consider the case. Section 15(7) gives the ICC exclusive control within its own domain, not over any into which it may be thrust.

We may review the district court's grant of its preliminary injunction for abuse of discretion only. Johnson v. Radford, 449 F.2d 115 (5th Cir. 1971). In our review, however, we must remember that granting a preliminary injunction is the exception rather than the rule. As we said in Canal Authority of State of Florida v. Callaway, 489 F.2d 567 (5th Cir. 1974), it is an extraordinary and drastic remedy which should not be granted unless the movant has clearly carried the burden of persuasion concerning the existence and application of what we have recognized as the four prerequisites to such relief. These are: (1) a substantial likelihood that the movant will eventually...