United States v. United States

• Decision Date: 24 February 1969
• Docket Number: Civ. A. No. 1132-68.
• Citation: 296 F. Supp. 853
• Parties: UNITED STATES of America, Plaintiff, Charles E. Brundage, Bradford F. Story, Samuel C. Williams, Jr., Warren Clark, constituting the Northern Pacific Stockholders' Protective Committee, Board of Railroad Commissioners of the State of Montana, State of Washington, City of Auburn, Public Service Commission of the State of Minnesota, Livingston Anti-Merger Committee, Intervenor-Plaintiffs, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, Great Northern Railway Company, Northern Pacific Railway Company, Chicago, Burlington & Quincy Railroad Company, Spokane, Portland and Seattle Railway Company, Pacific Coast Railroad Company, Great Northern Pacific & Burlington Lines, Inc., Chicago, Milwaukee, St. Paul & Pacific Railroad Company, 230 Pacific Northwest Shippers, Public Utility Commissioners of Oregon, Intervenor-Defendants.
• Court: U.S. District Court — District of Columbia

296 F. Supp. 853

UNITED STATES of America, Plaintiff Charles E. Brundage, Bradford F. Story, Samuel C. Williams, Jr., Warren Clark, constituting the Northern Pacific Stockholders' Protective Committee, Board of Railroad Commissioners of the State of Montana, State of Washington, City of Auburn, Public Service Commission of the State of Minnesota, Livingston Anti-Merger Committee, Intervenor-Plaintiffs, v. UNITED STATES of America and Interstate Commerce Commission, Defendants Great Northern Railway Company, Northern Pacific Railway Company, Chicago, Burlington & Quincy Railroad Company, Spokane, Portland and Seattle Railway Company, Pacific Coast Railroad Company, Great Northern Pacific & Burlington Lines, Inc., Chicago, Milwaukee, St. Paul & Pacific Railroad Company, 230 Pacific Northwest Shippers, Public Utility Commissioners of Oregon, Intervenor-Defendants.

Civ. A. No. 1132-68.

United States District Court District of Columbia.

November 20, 1968.

Probable Jurisdiction Noted February 24, 1969.

Donald F. Turner, Special Asst. Atty. Gen., for plaintiffs. With him on briefs were Asst. Atty. Gen., Edwin M. Zimmerman, David G. Bress, U. S. Atty., Robert A. Hammond, III, Howard E. Shapiro, B. Barry Grossman, Washington, D. C., and Arthur I. Cantor, Silver Spring, Md.

Robert W. Ginnane, Gen. Counsel, I. C. C., for defendants. With him on briefs were Fritz R. Kahn, Jerome Nelson, Betty Jo Christian, Nahum Litt, and Raymond M. Zimmet, Washington, D. C.

Louis B. Dailey, New York City, for Charles E. Brundage, Bradford F. Story, Samuel C. Williams, Jr., Warren Clark, constituting The Northern Pacific Stockholders' Protective Committee, intervenor-plaintiff. With him on briefs was Harry Tyson Carter, Washington, D. C.

John C. Sheehy, Billings, Mont., for Bd. of Railroad Commissioners of the State of Montana, intervenor-plaintiff. With him on briefs were William T. O'Leary, Helena, Mont., and Marvin J. Sonosky, Washington, D. C.

Patrick McEligot, Asst. Atty. Gen., for State of Washington, intervenor-plaintiff. With him on briefs were John J. O'Connell, Atty. Gen., and Frank P. Hayes, Asst. Atty. Gen.

Joel E. Hoffman, Washington, D. C., for City of Auburn, intervenor-plaintiff. With him on briefs were Robert L. Wald, Washington, D. C., and Alva C. Long, Auburn, Wash.

Valentine B. Deale, Washington, D. C., for Livingston Anti-Merger Committee, intervenor-plaintiff.

Robert E. Sher, Washington, D. C., for Public Service Commission of the State of Minnesota, intervenor-plaintiff. With him on complaint was Richard Musenbrock, Minneapolis, Minn., Special Counsel to the Public Service Commission of State of Minnesota.

D. Robert Thomas, Chicago, Ill., for Great Northern Railway Co., Northern Pacific Railway Co., Chicago, Burlington & Quincy Railroad Co., Spokane, Portland & Seattle Railway Co., Pacific Coast Railroad Co., and Great Northern Pacific & Burlington Lines, Inc., intervenor-defendants. With him on briefs were Ray Garrett, Lee B. McTurnan, Eldon Martin, R. T. Cubbage, Chicago, Ill., Anthony Kane, L. E. Torinus, Jr., Earl F. Requa, Frank S. Farrell, St. Paul, Minn., and Richard J. Flynn, Washington, D. C.

Raymond K. Merrill, Chicago, Ill., for Chicago, Milwaukee, St. Paul & Pacific Railroad Co., intervenor-defendant. With him on briefs were Edwin O. Schiewe, Thomas H. Ploss, Chicago, Ill., and Patrick H. Corcoran, Washington, D. C.

Fred H. Tolan, Seattle, Wash., for 230 Pacific Northwest Shippers, intervenor-defendant. With him on briefs was Alan F. Wohlstetter, Washington, D. C.

Henri F. Rush, Jr., Special Asst. Atty. Gen., of Oregon, for Public Utility Commissioner of Oregon, intervenor-defendant. On briefs were Robert Y. Thornton, Atty. Gen., of Oregon, Richard W. Sabin, Salem, Or., Dale T. Crabtree, Klamath Falls, Ore., and William I. Harkaway, Washington, D. C.

Before BAZELON,^* Chief Circuit Judge, FAHY,^* Senior Circuit Judge, and CURRAN, Chief District Judge.

Probable Jurisdiction Noted February 24, 1969. See 89 S.Ct. 874.

OPINION

FAHY, Senior Circuit Judge:

This suit arose on complaint of the United States, acting through the Department of Justice, to enjoin and set aside orders of the Interstate Commerce Commission of November 30, 1967, April 11, 1968, and June 17, 1968.¹ The first of these orders approved, with conditions, applications of the railroad companies hereinafter named to merge and to complete related transactions. The approval followed reconsideration of the "Report of the Commission" (First Report) of March 31, 1966, which had denied the merger applications as not consistent with the public interest.² The April 11, 1968 order denied petitions for reconsideration of the order of November 30, 1967, except in relatively minor respects which modified the Commission's retention of jurisdiction and certain of the Commission's protective conditions. The order of April 11, 1968 is not now independently contested.

The Interstate Commerce Commission answered the complaint, opposing the relief sought by the Department of Justice. Other parties, as set forth in the margin,³ have intervened, some as plaintiffs, some as defendants, the latter including the applicant railroad companies.

After preliminary proceedings resulting in a stay of the orders pending either decision on the merits or further order of the court the case was submitted to this three-judge District Court designated in accordance with 28 U.S.C. §§ 2325, 2284 for decision on the record before the Commission, the pleadings, briefs, memoranda and oral arguments.

We sustain the Commission's approval of the merger and related transactions. The history and nature of the case lead to an opinion which explains our reasons at some length. We review the elaborate decision of the Commission. We conclude that in giving its approval the Commission was guided by the applicable legal principles and made findings, supported by substantial evidence, requisite to the validity of its action. We recognize that some of those findings are necessarily conclusional. These we hold to be reasonable. A number of conditions are attached by the Commission to its approval. These in our view are just and reasonable, as well as reassuring.

Our opinion also considers the objections raised by the Department of Justice, the State of Washington, the City of Auburn, the Board of Railroad Commissioners of the State of Montana, and the Livingston Anti-merger Committee. We devote special attention to whether the competitive situation to result from the unification, conditioned as it will be, is inconsistent with the public interest, or, as we believe, is consistent therewith in light of the national transportation policy formulated by Congress. We conclude, also, that the ratio of stock exchange approved by the Commission is just and reasonable, that the employee problem is satisfactorily solved and, as will appear, that other contentions against the merger do not override the benefits, including savings and better service, which are projected in the reasoned judgment of the agency charged with primary governmental responsibility. We note with approval the retention by the Commission of jurisdiction to enable it to make such readjustments as may appear to be desirable, including those which may arise from pending proceedings affecting other railroads in the vast territory involved.

The orders in question⁴ eventuated from applications filed February 17, 1961,⁵ under 49 U.S.C. § 5⁶ by Great Northern Railway Company (Great Northern), Northern Pacific Railway Company (Northern Pacific), these companies being sometimes referred to as Northern Lines, the Pacific Coast R. R. Co. (Pacific Coast or PC), the Chicago, Burlington & Quincy Railroad Company (Burlington), and the Spokane, Portland and Seattle Railway Company (SP&S), these latter two companies being subsidiaries of the Northern Lines, all common carriers by railroad subject to Part 1 of the Interstate Commerce Act, and Great Northern Pacific & Burlington Lines, Inc., (New Company or NuCo), which is not a carrier. The carriers applied to merge into New Company, and for lease by the latter of SP&S, with control of subsidiaries and the completion of other transactions better to effectuate the merger and lease.⁷

Extensive proceedings ensued before the Commission, including public hearings and an examiner's report served August, 1964, which recommended approval of the applications, but with which the Commission did not agree. On applicants' petition of July 27, 1966,⁸ the Commission reopened the proceedings on January 4, 1967, for reconsideration and oral argument on all issues and for limited further hearing to determine, on the basis of current information readily available, the amount of estimated savings resulting from the proposed merger in light of (1) agreements entered into between the applicants, on the one hand, and, on the other, the Milwaukee and North Western and (2) the effect of relevant financial, operational and other changes related to savings, which had occurred subsequent to close of the hearings. Those matters were referred to an examiner for hearing.

The reconsideration resulted in the decision of November 30, 1967, accompanied by the exhaustive "Report of the Commission on Reconsideration and Further Hearing" (Second Report), with appropriate order approving the applications and related transactions.

New Company in consequence would achieve unified control and operation of a network of railroads of almost 27,000 miles of tracks extending from the Great Lakes and Mississippi River through the Northern Tier States to the Pacific Northwest and California, and reaching through affiliates⁹ to the Gulf of Mexico. Great Northern operates some 8200 miles of road located in ten states and two Canadian provinces. Northern Pacific operates some 6800 miles of road with lines in seven states and one Canadian province. These roads extend from the Twin Cities across the Northern Tier States to...