US v. Southern Motor Carriers Rate Conference, Civ. A. No. 76-1909A.

• Court: United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Northern District of Georgia
• Writing for the Court: J. Raymond Clark, Lindsay C. Warren, Jr., Goldsboro, N.C., for Motor Carriers Traffic Ass'n
• Citation: 439 F. Supp. 29
• Parties: UNITED STATES of America v. SOUTHERN MOTOR CARRIERS RATE CONFERENCE et al.
• Docket Number: Civ. A. No. 76-1909A.
• Decision Date: 08 July 1977

439 F. Supp. 29

UNITED STATES of America
v.
SOUTHERN MOTOR CARRIERS RATE CONFERENCE et al.

Civ. A. No. 76-1909A.

United States District Court, N. D. Georgia, Atlanta Division.

July 8, 1977.

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Robert M. Silverman, Robert N. Dempsey, Judy L. Goldstein, Antitrust Div., U.S. Dept. of Justice, Washington, D.C., John W. Stokes, Jr., U.S. Atty., Atlanta, Ga., for the U.S

J. Raymond Clark, Lindsay C. Warren, Jr., Goldsboro, N.C., for Motor Carriers Traffic Ass'n.

Allen I. Hirsch, Ellis G. Arnall, Arnall, Golden & Gregory, Atlanta, Ga., for Southern Motor Carriers Rate Conference; Homer S. Carpenter, Rice, Carpenter & Carraway, Washington, D.C., of counsel.

Charles L. Gowen, King & Spalding, Chas. M. Shaffer, Jr., Atlanta, Ga., for N.C. Motor Carriers Ass'n.

ORDER

RICHARD C. FREEMAN, District Judge.

This is an action brought by the United States Government pursuant to § 4 of the Sherman Act, 15 U.S.C. § 4,¹ seeking to enjoin and restrain alleged continuing violations by the defendants of § 1 of the Sherman Act, 15 U.S.C. § 1.² The gravamen of the instant complaint is that the three rate conference defendants, Southern Motor Carriers Rate Conference, Inc. hereinafter "SMCRC", Motor Carriers Traffic Association, Inc. hereinafter "MCTA", and North Carolina Motor Carriers Association, Inc. hereinafter "NCMCA" and other unnamed coconspirators have engaged in a continuing conspiracy to fix rates charged for intrastate for-hire transportation of commodities within the states of Alabama, Georgia, Mississippi, North Carolina, and Tennessee. The action is presently pending before this court on (1) motions to dismiss filed by defendants SMCRC, NCMCA, and MCTA and (2) on the Government's motion to strike several defenses from the answers of defendants, SMCRC and NCMCA. See Rule 12(f), Fed.R.Civ.P.

DEFENDANTS' MOTIONS TO DISMISS

SMCRC has moved to dismiss the complaint for lack of subject matter jurisdiction, see Rule 12(b)(1), Fed.R.Civ.P., on the grounds that the activities alleged herein to be violative of the federal antitrust laws are subject to the exclusive regulation of the respective states in which such activities are alleged to have occurred and (2) for failure to state a claim because the activities sought to be enjoined constitute neither a material obstruction to nor any anticompetitive interference with the free flow of commerce. See Rule 12(b)(6). The remaining defendants have specifically adopted the arguments and the briefs filed by defendant SMCRC.

SUBJECT MATTER JURISDICTION

All of the defendants herein are rate-making conferences which publish and propose on behalf of their members both interstate and intrastate rates relating to the transportation of general commodities by common carriers within the foregoing states in the southeastern portion of the United States. All three of the defendants are established rate-making conferences under bylaws and rules of procedure approved by the Interstate Commerce Commission hereinafter the "Commission" or the "ICC", pursuant to § 5a of the Interstate Commerce Act, 49 U.S.C. § 5b. The gravamen

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of the government's complaint for injunctive relief is that the collective initiation, proposal, and "establishment" of intrastate rates routinely acquiesced in by state regulatory commissions and the enforcement thereof constitute per se violations of § 1 of the Sherman Act, and that such activities have a substantial anticompetitive effect on interstate commerce. The primary thrust of defendants' motions to dismiss appears to be their contention that Congress did not intend to impose antitrust liability for the collective initiation of intrastate rates which are subjected to state regulation, and has reserved such supervisory and regulatory power expressly to the States

It is well settled that "regulated industries are not per se exempt from the Sherman Act." State of Georgia v. Pennsylvania Railroad Company, 324 U.S. 439, 65 S.Ct. 716, 89 L.Ed. 1051 (1945). However, numerous federal regulatory statutes provide express immunity from antitrust liability for certain conduct approved by the regulatory agency. E. g., Federal Aviation Act, 49 U.S.C. § 1384; Federal Communications Act, 47 U.S.C. §§ 221(a), 222(c)(1); The Shipping Act of 1916, 46 U.S.C. § 814. Section 5a of the Interstate Commerce Act (the Reed-Bullwinkle Act) hereinafter the "Act", 49 U.S.C. § 5b, is one of the express exemptions from the antitrust laws and was added to the Act to counteract the effect of the Georgia v. Pennsylvania Railroad Co. decision. That section provides that any carrier who is a party to an agreement approved by the Commission is "relieved from the operation of the antitrust laws with respect to the making of the agreement" and further with respect to the carrying out of the agreement in conformity with its provisions and in conformity with the terms and conditions prescribed by the Commission. 49 U.S.C. § 5b. The Act also exempts certain unifications, mergers, and acquisitions approved by the Commission. See 49 U.S.C. §§ 5(2), 5(11). Since the complaint herein is specifically addressed to alleged collective fixing of intrastate rates wholly outside the authority of the Commission, neither of these express provisions of antitrust immunity are at issue herein. See generally, Marnell v. United Parcel Service of America, Inc., 260 F.Supp. 391 (N.D.Cal.1966).

Defendants, however, rely on two other provisions of the Part II of the Interstate Commerce Act, the Motor Carrier Act, which deny the ICC rate-making authority with respect to intrastate transportation and reserve such regulation to the state. Accordingly, defendants conclude that a federal court is thereby ousted of jurisdiction to consider whether such intrastate rate-making activities violate federal antitrust law because of the alleged Congressional intent not to regulate such activities. Specifically, defendants rely upon 49 U.S.C. § 302(b) of Part II of the Act, which, in defining the applicability of the Act, provides:

Nothing in this chapter shall be construed to affect the powers of taxation of the several States or to authorize a motor carrier to do an intrastate business on the highways of any State, or to interfere with the exclusive power of regulation of intrastate commerce by motor carriers on the highways thereof.

Similarly, 49 U.S.C. § 316(e), which prescribes the rate-making and regulatory powers of the Commission with respect to interstate commerce, further provides that:

Nothing in this chapter shall empower the Commission to prescribe, or in any manner regulate, the rate, fare, or charge for intrastate transportation, or for any service connected therewith, for the purpose of removing discrimination against interstate commerce or for any other purpose whatever.

Defendants apparently concede that, consistent with the Commerce Clause, Article 1, § 8, U.S.Const., Congress could have authorized the Commission to regulate rates charged by motor carriers between points within a state where such transportation was in the stream of commerce and the rates were found to have a substantial effect on interstate commerce. See Shreveport Rate Cases Houston East & West Texas

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Railway Co. v. United States, 234 U.S. 342, 34 S.Ct. 833, 58 L.Ed. 1341 (1913). However, as defendants correctly note, Congress, in enacting the motor carrier provisions expressly expunged portions of the proposed bill which would have allowed the ICC to cancel intrastate rates which were found to have had a discriminatory effect on interstate commerce. The House Committee report reflected that the Committee had amended the bill to prohibit "the extension of federal regulation in interstate transportation that was exercised under the authority of . . . the Shreveport Case . . ." See H.Rep.No. 1645, 74th Cong. 1st Sess. 4 (1935). See also 74 Cong.Rec. 12204-279 (July 31, 1935)

Reduced to its lowest terms, defendants appear to be arguing that the foregoing provisions of the Motor Carrier Act constitute an implied exemption from the federal antitrust laws since application of these provisions and the antitrust laws to the matters alleged in the complaint would result in a repugnance between the antitrust laws and the regulatory and transportation policy reserving consideration of the reasonableness of intrastate rates exclusively to the individual states.

"It is, of course, a cardinal rule of statutory construction that repeals by implication are not favored." United States v. United Continental Tuna Corp., 425 U.S. 164, 96 S.Ct. 1319, 1323, 47 L.Ed.2d 653 (1976); Radzanower v. Touche Ross & Co., 426 U.S. 148, 96 S.Ct. 1989, 1993, 48 L.Ed.2d 540 (1976). See also Silver v. New York Stock Exchange, 373 U.S. 341, 357, 83 S.Ct. 1246, 10 L.Ed.2d 389 (1963). Likewise, "repeals of the antitrust laws by implication from a regulatory statute are strongly disfavored, and have only been found in cases of plain repugnancy between the antitrust and regulatory provisions." United States v. Philadelphia National Bank, 374 U.S. 321, 350-51, 83 S.Ct. 1715, 1734-35, 10 L.Ed.2d 915 (1963); Gordon v. New York Stock Exchange, 422 U.S. 659, 682, 95 S.Ct. 2598, 45 L.Ed.2d 463 (1975); Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 232, 86 S.Ct. 781, 15 L.Ed.2d 709 (1966). Nevertheless, in certain instances, a regulatory scheme may be so pervasive that it must displace the antitrust laws in particular and discrete instances; however, immunity is to be implied only where necessary to make the regulatory scheme work, and even then only to the minimum extent necessary to afford the agency the ability to carry out its regulatory mandate. E. g., Gordon v. New York Stock Exchange, Inc., supra, 422 U.S. at 682-83, 95 S.Ct. 2598; United States v. National Association of Securities...