Western Pacific Railroad Company v. United States

• Decision Date: 22 November 1966
• Docket Number: Civ. No. 41779.
• Citation: 263 F. Supp. 140
• Parties: The WESTERN PACIFIC RAILROAD COMPANY et al., Plaintiffs, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Northern District of California

263 F. Supp. 140

The WESTERN PACIFIC RAILROAD COMPANY et al., Plaintiffs, v. UNITED STATES of America, Defendant.

Civ. No. 41779.

United States District Court N. D. California.

November 22, 1966.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

E. L. Van Dellen, Walter G. Treanor, San Francisco, Cal., E. Barrett Prettyman, Jr., Hogan & Hartson, Washington D. C., for plaintiffs The Western Pacific Railroad Co., Sacramento Northern Railway, Tidewater Southern Railway Co.

Charles W. Burkett, W. Harney Wilson, Gary S. Anderson, San Francisco, Ca., for intervening defendant Southern Pacific Co.

F. J. Melia, J. H. Anderson, William P. Higgins, Omaha, Neb., and Robert N. Lowry, Brobeck, Phleger & Harrison, San Francisco, Cal., for intervening defendant Union Pacific Railroad Co.

Vaughan, Paul & Lyons, Varnum Paul, San Francisco, Cal., Earl F. Requa, Frank S. Farrell, Saint Paul, Minn., for intervenor-defendants Northern Pacific Railway Co., and others.

Donald F. Turner, Asst. Atty. Gen., Joseph J. Saunders, John H. Dougherty, Attys. Dept. of Justice, Washington, D. C., for defendant.

Robert W. Ginnane, Gen. Counsel, Robert S. Burk, Atty., Interstate Commerce Commission, Washington, D. C., for intervening defendant Interstate Commerce Commission.

Before MERRILL, Circuit Judge, SWEIGERT and ZIRPOLI, District Judges.

ORDER SETTING ASIDE REPORT AND ORDER OF THE INTERSTATE COMMERCE COMMISSION

SWEIGERT, District Judge.

This case, which is before this Court on remand from the decision of the United States Supreme Court in Western Pacific R. R. Co. v. United States, 382 U.S. 237, 86 S.Ct. 338, 15 L.Ed.2d 294 (1965), is an action brought under the provisions of 28 U.S.C. §§ 1336, 1398, 2284, 2321-2325 (1964) to enjoin, annul and set aside a report and order of the Interstate Commerce Commission (Commission).

The question presented herein is whether the Commission erred in holding that defendants Northern Pacific Railway Co., Union Pacific Railroad Co. and certain of their short-line connections¹ did not violate Section 3(4) of the Interstate Commerce Act, 24 Stat. 380 (1887), as amended, 49 U.S.C. § 3(4) (1964) by refusing to establish through routes and joint rates with plaintiffs² between points in the Pacific Northwest served by defendants and points in California served by plaintiff via Portland, Oregon, on the same basis as those maintained by defendants with the Southern Pacific Company through Portland, Oregon. Western Pac. R. R. Co. v. Camas Prairie R. R. Co., 316 I.C.C. 795 (1962).

Section 3(4) provides in substance that all carriers shall afford all reasonable, proper and equal facilities for the interchange of traffic between their respective lines and connection lines and shall not discriminate in their rates, fares and charges between connecting lines or unduly prejudice any connecting line in the distribution of traffic that is not specifically routed by the shipper.

In its earlier opinion, this Court affirmed the Commission's decision on the ground that the plaintiff was not a connecting line of the Northern Pacific and the Union Pacific at Portland, Oregon, within the meaning of Section 3(4) and therefore did not have standing to complain of alleged discrimination under Section 3(4). Western Pac. R. R. Co. v. United States, 230 F.Supp. 852 (N.D.Cal. 1964).³ Having found that plaintiff was not eligible to complain of alleged discrimination, this Court did not reach the question of whether the Commission was correct in concluding that, even if plaintiff had standing to complain, defendants had not violated Section 3(4).

On direct appeal, the Supreme Court held that plaintiff was a "connecting line" and therefore eligible to attack the alleged discrimination. In the course of its decision the Supreme Court, after pointing out that such a construction of "connecting line" does not interfere with the function of the Interstate Commerce Commission under § 15(3) of the Interstate Commerce Act, 54 Stat. 911, 49 U.S.C. § 15(3) (1964) to require joint through routes and rates in the public interest, said at 382 U.S. 245-246, 86 S. Ct. at 344:

"Section 3(4) is applicable only to a narrower range of situations involving discrimination at a common interchange. Moreover, the remedy in § 3(4) situations need not entail the establishment of through routes, joint rates, or indeed any particular form of relief. All that is required is the elimination of discriminatory treatment. See Chicago, Indianapolis & Louisville R. Co. v. United States, 270 U.S. 287, 292-293 46 S.Ct. 226, 70 L.Ed. 590; United States v. Illinois Central R. Co., 263 U.S. 515, 520-521 44 S.Ct. 189, 68 L.Ed. 417. Finally, our holding does no more than to define the characteristics of a carrier eligible to complain. Relief is warranted only if it also appears that differential treatment is not justified by differences in operating conditions that substantially affect the allegedly discriminating carrier. See United States v. Illinois Central R. Co., supra 263 U.S. at p. 521 44 S.Ct. at p. 192; Atchison, Topeka & Santa Fe R. Co. v. United States, D.C., 218 F.Supp. 359, 360." (emphasis added).

The Supreme Court has plainly established as the law of this case that differential treatment of plaintiff Western Pacific by defendants Northern Pacific and Union Pacific can be justified only by differences in operating conditions "that substantially affect the allegedly discriminating carriers", Northern Pacific and Union Pacific. (emphasis added).

That the statement of this test by the Supreme Court was made purposely and not merely as meaningless surplusage is indicated by the statute, itself, 49 U.S.C. § 3(4). This statute establishes the basic rule that carriers "shall not discriminate in their rates, fares and charges between connecting lines."

Such discrimination exists when a carrier (in this case Northern Pacific or Union Pacific) enters into a joint through rate arrangement with another connecting line carrier (in this case Southern Pacific), but refuses to enter into the same rate arrangement with another connecting line (in this case Western Pacific).

Certainly it would border on the absurd to hold that dissimilar operating conditions on the two competing routes (in this case the Bieber route and Southern Pacific route) could justify what would be otherwise a breach of the statutory prohibition when such dissimilar conditions, while possibly affecting Southern Pacific and the Bieber route carriers, do not affect the allegedly discriminating carriers.

There must be something in the dissimilarity of operating conditions which would make it unfair, or unjust to require an allegedly discriminating carrier to extend to a connecting carrier the same joint through rate arrangement which it maintains with another connecting carrier. Otherwise, there would be nothing to justify the discrimination.

Although the two cases cited by the Supreme Court involved Section 3(1) of the Interstate Commerce Act, not Section 3(4), they do establish the principle that preferences to shippers or localities mentioned in Section 3(1) are proper only when a lack of similarity of conditions "justifies" the preferences. See Atchison, Topeka & Santa Fe R. Co. v. United States, supra, 218 F.Supp. at 369.

Dissimilar operating conditions do not always and necessarily affect the allegedly discriminating carrier in such manner that it should be allowed to claim such dissimilarities as justification for the discrimination. Therefore, dissimilar operating conditions between the two routes involved here (Southern Pacific route and the Bieber route) do not, per se, justify the alleged discrimination.

As the opinion of the Supreme Court notes, this is not a case in which the Commission is called upon to decide under Section 15(3) whether in the public interest a carrier, such as Northern Pacific or Union Pacific, should be required to establish, or for that matter to eliminate, through routes and rate arrangements with either the Western Pacific or Southern Pacific.

In this case, Northern Pacific and Union Pacific have voluntarily entered into a joint through route arrangement with Southern Pacific and could terminate such arrangement at any time the parties see fit.

Western Pacific is simply contending that, so long as this voluntary joint through rate arrangement is maintained by Northern Pacific and Union Pacific with Southern Pacific, then Northern Pacific and Union Pacific must not, in violation of Section 3(4), discriminatorily refuse to extend the arrangement to Western Pacific.

The Commission has rejected this contention solely upon the ground that "the evidence of record does not establish the similarity of circumstances and conditions which justifies equality of treatment."

The very form of this finding suggests that the decision of the Commission in this case was based upon a test quite different from, and far more lenient in favor of defendants, than the test stated by the Supreme Court, which is, not whether similarity of circumstances and conditions justify equality of treatment, but whether dissimilarity of conditions and circumstances justify the discrimination.

The burden of proof is not upon Western Pacific to show similarity of circumstances to justify their claim for equality of treatment, but only to show that a discrimination is practiced by defendants as between Western Pacific and the other Bieber route carriers, on the one hand, and the Southern Pacific, on the other, in respect to the existing joint through rate arrangement. The burden of proceeding would then shift to defendants to prove some dissimilarity of operating conditions that would substantially affect them in the event they were required to grant equality of treatment. See Seatrain Lines, Inc. v. United States, 233 F.Supp. 199, 210 (D.N.J.1964); Atchison, Topeka & Santa Fe R. Co. v. United States, supra at 374.

The complaint alleges that the defendants, Northern Pacific and...