Source: https://supreme.justia.com/cases/federal/us/450/311/
Timestamp: 2019-04-19 20:25:13+00:00

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Chicago & North Western Transportation Co. v. Kalo Brick & Tile Co.
The Interstate Commerce Act authorizes the Interstate Commerce Commission (ICC) to regulate interstate rail carriers' abandonment of railroad lines, including branch lines. Under the Act, no such carrier may abandon a line unless it first obtains a certificate from the ICC that the present or future public convenience and necessity permit such an abandonment. After petitioner interstate rail carrier's branch line in Iowa had been damaged by mud slides, it ultimately decided not to repair, and to stop using, the line, so notified respondent brick manufacturer, which had shipped its products over the line, and applied to the ICC for a certificate permitting it to abandon the line. The ICC granted the application, finding that petitioner had abandoned the line due to conditions beyond its control, that further repairs would not have been sufficient to insure continuous operation, that the abandonment was not "willful," that respondent had no right to insist that the line be maintained solely for its use, and that continued operation would be an unnecessary burden on petitioner and on interstate commerce. Respondent had appeared to oppose the application, but never perfected its filing before the ICC and did not seek judicial review of the ICC's decision, but, instead, brought a damages action in an Iowa state court while the abandonment application was still pending. It alleged that petitioner had violated an Iowa statute and state common law by refusing to provide cars on the branch line, by negligently failing to maintain the roadbed, and by tortiously interfering with respondent's contractual relations with its customers. The state trial court dismissed the action on the ground that the Interstate Commerce Act preempted state law as to the matters in contention. The Iowa Court of Appeals reversed, ruling that the state abandonment law was not preempted and that the state and federal schemes complemented one another.
Held: The Interstate Commerce Act precludes a shipper from pressing a state court action for danages against a regulated rail carrier when, as here, the ICC, in approving the carrier' application for abandonment, reaches the merit of the matter the shipper seeks to raise in state court. Pp. 450 U. S. 317-332.
(a) "[T]here can be no divided authority over interstate commerce, and . . . the acts of Congress on that subject are supreme and exclusive." Missouri Pacific R. Co. v. Stroud, 267 U. S. 404, 267 U. S. 408. Consequently, state efforts to regulate commerce must fall when they conflict with or interfere with federal authority over the same activity. Pp. 450 U. S. 317-319.
(b) The ICC's authority under the Interstate Commerce Act to regulate railroad line abandonments is exclusive and plenary. This authority is critical to the congresfional scheme, which contemplates comprehensive administrative regulation of interstate commerce. The Act's structure makes it clear that Congress intended that an aggrieved shipper should seek relief in the first instance from the ICC. Pp. 450 U. S. 319-323.
(c) Both the letter and spirit of the Interstate Commerce Act are inconsistent with Iowa law as construed by the Iowa Court of Appeals. That court's decision amounts to a holding that a State can impose sanctions upon a regulated carrier for doing that which only the ICC has the power to declare unlawful or unreasonable. A system under which each State could, through its courts, impose on railroad carriers its own version of reasonable service requirements could hardly be more at odds with the uniformity contemplated by Congress in enacting the Interstate Commerce Act. Even though the abandonment approval did not come here until after respondent filed its civil suit, it would be contrary to the language of the statute to permit litigation challenging the lawfulness of the carrier's actions to go forward when the ICC has expressly found them to be reasonable. Accordingly, Iowa's statutory cause of action for failure to furnish cars cannot be asserted against an interstate rail carrier on the facts of this case. The same reasoning applies to respondent's asserted common law causes of action, because they, too, are essentially attempts to litigate the issues underlying petitioner's abandonment of the branch line in issue. The questions respondent seeks to raise in the state court -- whether roadbed maintenance was negligent or reasonable and whether petitioner abandoned its line with some tortious motive -- are precisely the sorts of concerns that Congress intended the ICC to address in weighing abandonment requests. Consequently, on the facts of this case, the Interstate Commerce Act also preempts Iowa's common law causes of action when the judgments of fact and of reasonableness necessary to the decision havc already been made by the ICC. Pp. 450 U. S. 324-331.
295 N.W.2d 467, reversed and remanded.
JUSTICE MARSALL delivered the opinion of the Court.
Through the Interstate Commerce Act and its amendments, Congress has granted to the Interstate Commerce Commission authority to regulate various activities of interstate rail carriers, including their decisions to cease service on their branch lines. Under Iowa state law, a shipper by rail who is injured as the result of a common carrier's failure to provide adequate rail service has available several causes of action for damages. In this case, we are called upon to decide whether these state law actions may be asserted against a regulated carrier when the Commission has approved its decision to abandon the line in question.
467, 469 (1979). After the Supreme Court of Iowa denied petitioner's application for review, we granted certiorari, 446 U.S. 951 (1980). We reverse.
"is essentially a two-step process of first ascertaining the construction of the two statutes and then determining the constitutional question whether they are in conflict."
which the States have sought to regulate, rather than on the method of regulation adopted." San Diego Building Trades Council v. Garmon, supra at 359 U. S. 243.
267 U. S. 404, 267 U. S. 408 (1925). Consequently, state efforts to regulate commerce must fall when they conflict with or interfere with federal authority over the same activity.
In deciding whether respondent's state law damages action is preempted, we must determine what Congress has said about a carrier's ability to abandon a line, what Iowa state law provides on the same subject, and whether the two are inconsistent. To these tasks we now turn.
The Interstate Commerce Commission has been endowed by Congress with broad power to regulate a carrier's permanent or temporary cessation of service over lines used for interstate commerce. Under §§ 1(4) and 1(11) of the Interstate Commerce Act, recodified at 49 U.S.C. §§ 11101(a) and 11121(a) (1976 ed., Supp. III), [Footnote 7] the Commission is empowered both to pass on the reasonableness of a carrier's temporary suspension of its service and, if necessary, to order it resumed. See ICC v. Chicago N.W. Transp. Co., 533 F.2d 1025, 1027, n. 2 (CA8 1976); ICC v. Maine Central R. Co., 505 F.2d 590, 593-594 (CA2 1974). In addition, and most relevant here, the Act endows the Commission with broad authority over abandonments, or permanent cessations of service.
"[N]o carrier by railroad subject to this chapter shall abandon all or any portion of a line of railroad, or the operation thereof, unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity permit of such abandonment."
"construed to make federal authority effective to the full extent that it has been exerted and with a view of eliminating the evils that Congress intended to abate."
"Congress has power to assume not only some control, but paramount control, insofar as interstate commerce is involved. It may determine to what extent and in what manner intrastate service must be subordinated in order that interstate service may be adequately rendered. The power to make the determination inheres in the United States as an incident of its power over interstate commerce. The making of this determination involves an exercise of judgment upon the facts of the particular case. The authority to find the facts and to exercise thereon the judgment whether abandonment is consistent with public convenience and necessity, Congress conferred upon the Commission."
271 U.S. at 271 U. S. 165-166.
"the interests of those now served by the present line, on the one hand, and the interests of the carrier and the transportation system, on the other."
Purcell v. United States, 315 U. S. 381, 315 U. S. 384 (1942). Once the Commission has struck that balance, its conclusion is entitled to considerable deference.
"The weight to be given to cost of a relocated line, as against the adverse effects upon those served by the abandoned line, is a matter which the experience of the Commission qualifies it to decide. And, under the statute, it is not a matter for judicial redecision."
Id. at 315 U. S. 385.
that has been approved by the Commission. [Footnote 10] The structure of the Act thus makes plain that Congress intended that an aggrieved shipper should seek relief in the first instance from the Commission.
In sum, the construction of the applicable federal law is straightforward and unambiguous. Congress granted to the Commission plenary authority to regulate, in the interest of interstate commerce, rail carriers' cessations of service on their lines. And at least as to abandonments, this authority is exclusive.
with respondent's customers. 295 N.W.2d at 471-472. The negligehce count, as outlined in respondent's complaint, claimed $150,000 in damages based on petitioner's alleged failure "to maintain the track in a proper manner" and "to properly maintain the railroad right-of-way." App. 79-80. The tort count alleged that, "at all times material hereto, it was the avowed and publicized purpose of [petitioner] to close all unproductive lines under its control," and that this plan interfered with respondent's contracts, and damaged it in the amount of $100,000. Id. at 81. These, then, are the claims that the Iowa Court of Appeals held properly cognizable in the state courts.
Respondent's main cause of action alleges an improper failure to furnish cars on the Kalo-Fort Dodge branch line. In Missouri Pacific R. Co. v. Stroud, 267 U. S. 404 (1925), this Court confronted the precise question whether a state court damages action would lie for a carrier's failure to furnish cars to carry a shipper's goods in interstate commerce. [Footnote 12] The Court held that, because the lumber shipped by the carrier moved in interstate, rather than intrastate, commerce, "[t]he state law has no application. . . ." Id. at 267 U. S. 408. In the instant case, the bricks that respondent here shipped in petitioner's cars, like the lumber in Missouri Pacific, were moving in interstate commerce. [Footnote 13] Respondent, in essence, seeks to use state law to compel petitioner to furnish cars in spite of the congressional decision to leave regulation of car service to the Commission. But "[t]he duty to provide cars is not absolute," and the law "exacts only what is reasonable of the railroads under the existing circumstances.'" Milmine Grain Co. v. Norfolk $ Western R. Co., 352 I.C.C. 575, 585 (1976), citing Elgin Coal Co. v. Louisville & Nashville R. Co., 277 F.Supp. 247, 250 (ED Tenn.1967). See Midland Valley R. Co. v. Barkley, 276 U. S. 482, 276 U. S. 484 (1928). The judgment as to what constitutes reasonableness belongs exclusively to the Commission. Cf. Purcell v. United States, 315 U.S. at 315 U. S. 384-385. It would vitiate the overarching congressional intent of creating "an efficient and nationally integrated railroad system," ICC v.
Railway Labor Executives Assn., 315 U. S. 373, 315 U. S. 376 (1942), to permit the State of Iowa to use the threat of damages to require a carrier to do exactly what the Commission is empowered to excuse. A system under which each State could, through its courts, impose on railroad carriers its own version of reasonable service requirements could hardly be more at odds with the uniformity contemplated by Congress in enacting the Interstate Commerce Act.
The conclusion that a suit under state law conflicts with the purposes of the Act is merely bolstered when, as here, the Commission has actually approved the abandonment. In reaching its decision, the Commission expressly found that "the cessation of service occurred because of conditions over which [petitioner] had no control." App. to Pet. for Cert. 35a. Because Congress granted the exclusive discretion to make such judgments to the Commission, there is no further role that the state court could play. Even though the approval did not come until after respondent filed its civil suit, it would be contrary to the language of the statute to permit litigation challenging the lawfulness of the carrier's actions to go forward when the Commission has expressly found them to be reasonable. See 49 U.S.C. § 1(17)(a), recodified at 49 U.S.C. § 10501(c) (1976 ed., Supp. III). We therefore hold that Iowa's statutory cause of action for failure to furnish cars cannot be asserted against an interstate rail carrier on the facts of this case.
subject to its regulation. [Footnote 14] See Purcell v. United States, supra at 315 U. S. 385; Chesapeake & Ohio R. Co. v. United States, 283 U. S. 35, 283 U. S. 42 (1931). That alone might be enough to prohibit respondent from raising them in a state court. Cf. Pennsylvania R. Co. v. Clark Bros. Coal Mining Co., 238 U. S. 456, 238 U. S. 469 (1915) (no damages action may be brought for car distribution practices until Commission has ruled them unlawful).
But we need not decide whether a state court suit is barred when the Commission is empowered to rule on the underlying issues, because here the Commission has actually addressed the matters respondent wishes to raise in state court. The Commission's order approving the abandonment application found that, after the first two landslides, petitioner "made necessary repairs to enable continuation of service," that further repairs after the 1967 slide would not have been "sufficient to insure continuous operations," that the abandonment was not "willful," that respondent has no right to "insist that a burdensome line be maintained solely for its own use," and that "continued operation of the line would be an unnecessary burden on [petitioner] and on interstate commerce." App to Pet. for Cert. 35a-36a. These findings by the Commission, made pursuant to the authority delegated by Congress, simply leave no room for further litigation over the matters respondent seeks to raise in state court. Consequently, we hold that, on the facts of this case, the Intertate Commerce Act also preempts Iowa's common law causes of action for damages stemming from a carrier's negligence and tort when the judgments of fact and of reasonableness necesary to the decision have already been made by the Commission.
"shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this act are in addition to such remedies."
"it might have been claimed that Congress having entered the field, the whole subject of liability of carrier to shippers in interstate commerce had been withdrawn from the jurisdiction of the state courts,"
so § 22 was added to make plain that the Act "was not intended to deprive the state courts of their general and concurrent jurisdiction." Id. at 237 U. S. 130. The Iowa Court of Appeals relied on this broad-sounding language in concluding that respondent's causes of action survived the enactment of and the various amendments to the Interstate Commerce Act. Respondent urges essentially the same point in this Court.
"[I]t must be borne in mind that there are two forms of discrimination, -- one in the rule, and the other in the manner of its enforcement; one in promulgating a discriminatory rule, the other in the unfair enforcement of a reasonable rule. In a suit where the rule of practice itself is attacked as unfair or discriminatory, a question is raised which calls for the exercise of the judgment and discretion of the administrative power which has been vested by Congress in the Commission. . . . Until that body has declared the practice to be discriminatory and unjust, no court has jurisdiction of a suit against an interstate carrier for damages occasioned by its enforcement. . . ."
no administrative question involved, the courts being called upon to decide a mere question of fact."
the Puritan anaiysis has any application here, it supports petitioner's and the Commission's arguments that the Iowa courts lack jurisdiction to entertain respondent's suit for damages arising from petitioner's abandonment of the Kalo-Fort Dodge branch line.
Our decision today does not leave a shipper in respondent's position without a remedy if it is truly harmed. On the contrary, an aggrieved shipper is still free to pursue the avenues for relief set forth in the statute. Respondent could have gone to the Commission and challenged petitioner's refusal to provide service before any abandonment application was filed, but it did not. After petitioner filed its request for a certificate, respondent had the opportunity to present evidence to the Commission in support of its allegation, but failed to do so. Having lost its battle there, respondent could have followed the congressionally prescribed path by seeking review in the appropriate United States court of appeals. This, too, respondent failed to do. The Act creates no other express remedies for a shipper who is damaged by a carrier's abandonment of a line. In particular, nothing in the Act suggests that Congress contemplated permitting a shipper to bring a civil damages action in state court. And such a right to sue, with its implied threat of sanctions for failure to comply with what the courts of each State consider reasonable policies, is plainly contrary to the purposes of the Act. We are thus not free to assume that it has been preserved.
in state court. We reserve for another day the question whether such a cause of action lies when no application is made to the Commission. The judgment of the Iowa Court of Appeals is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.
Repondent used petitioner' branch line only for the shipment of brick that were traveling in interstate commerce. All of the bricks that respondent shipped intratate traveled by truck.
It is undisputed that, at this time, petitioner had not made a decision whether to abandon the Kalo-Fort Dodge branch line. An abandonment "is characterized by an intention of the carrier to cease permanently or indefinitely all transportation service on the relevant line." ICC v. Chicago & N.W. Transp. Co., 533 F.2d 1025, 1028 (CA8 1976). See ICC v. Chicago, R. I. & P. R. Co., 501 F.2d 908, 911 (CA8 1974), cert. denied, 420 U.S. 972 (1975). An embargo, by contrast, is a temporary emergency suspension of service initiated by filing of a notice with the Commission. ICC v. Chicago & N.W. Transp. Co., supra, at 1027, n. 2.
In particular, respondent "did not file a verified statement in opposition, as required," and was therefore "deemed to be in default and entitled to no further formal proceedings." Chicago & N.W. Tranp. Co. Abandonment, AB1, Sub. No. 24 (Jan. 11, 1976), App. to Pet. for Cert. 34a-35a. The reason for this default, according to respondent, was that it had gone out of business, and therefore had no continuing interest in forcing petitioner to continue its service on the branch line.
See 28 U.S.C. §§ 2321(a), 2342(5), 2343, 2344.
"Every railway corporation shall upon reasonable notice, and within a reasonable time, furnish suitable cars to any and all persons who may apply therefor, for the transportation of any and all kinds of freight, and receive and tranport such freight with all reasonable dispatch. . . ."
"Every corporation operating a railway shall be liable for all damages sustained by any person, including employees of such corporation, in consequence of the neglect of the agents, or by any mismanagement of the engineers, or other employees thereof, and in consequence of the willful wrongs, whether of commission or omission, of such agents, engineers, or other employees, when such wrongs are in any manner connected with the use and operation of any railway on or about which they shall be employed, and no contract which restricts such liability shall be legal or binding."
The conclusion that these statute create a state court damages action for failure to provide proper ervice is not a new one under Iowa law. See, e.g., Baird Bros. v. Minneapolis & St. L. R., 181 Iowa 1104, 165 N.W. 412 (1917).
After respondent filed its state court action, petitioner sought to remove the case to federal court, but the federal court, finding that diversity of citizenship was lacking, remanded the case to state court. The Iowa Court of Appeals correctly held that this federal court ruling had no relevance to its inquiry into whether the preemption doctrine barred the state courts from exercising their jurisdiction. 295 N.W.2d 467, 468-469 (1979). See Brancadora v. Federal Nat. Mortgage Assn., 344 F.2d 933, 935 (CA9 1965); Alaska v. K & L Distributors, Inc., 318 F.2d 498, (CA9 1963).
"[T]he survival of a judicial remedy . . . cannot be determined on the presence or absence in the Commission of primary jurisdiction to decide the basic question on which relief depends. Survival depends on the effect of the exercise of the remedy upon the statutory scheme of regulation."
Hewitt-Robins Inc. v. Eastern Freight-Ways, Inc., 371 U. S. 84, 371 U. S. 89 (1962). Even if the primary jurisdiction doctrine were applicable here, it would, at best, require the state courts to postpone any action until the Commission had an opportunity to address the administrative questions raised in the civil damages action. But here the Commission has actually ruled, and the state trial on liability and damages has not yet taken place. Consequently, the requirements of the doctrine have been complied with in spirit, even if not through any intent of respondent. We save for a later case a decision on the proper application of the primary jurisdiction doctrine when the Commission has not yet ruled.
Under Pub.L. 9573, 92 Stat. 1337, the Interstate Commerce Act and its various amendments have been completely recodified as Subtitle IV of Title 49 of the United States Code. In the main, this recodification is without substantive change. In this opinion, we cite to the original Act for ease in referring to the decision below and to our precedents. Where appropriate, we also give parallel cites to the Act as recodified.
A carrier who files an application for a certificate permitting abandonment must make reasonable efforts to give notice to all shippers who have used the line in the past 12 months. 49 U.S.C. § 10904(a)(3)(D) (1976 ed., Supp. III). See In re Chicago, M., St. P. & P. R. Co., 611 F.2d 662, 668 (CA7 1979).
Section 1(20), which was, like § 1(18), added by the Transportation Act of 1920, provided that "any court of competent jurisdiction" could enjoin a carrier's abandonment of a line when application for approval has not been made to the Commission. The right of a private party to seek an injunction was repealed by the Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. 94-210, 90 Stat. 127-130. Under the Act as amended and recodified, only the United States, the government of a State, or the Commission itself may sue to enjoin most illegal abandonments. See 49 U.S.C. §§ 11505 (action by state), 11702 (action by the Commission), 11703 (action by the United States) (1976 ed., Supp. III). A private person may seek injunctive relief only to prevent illegal abandonment of a freight forwarding service. See 49 U.S.C. § 11704 (1976 ed., Supp. III). The fact that shippers in the position of respondent no longer have available the remedy of injunction does not affect our decision, because numerous other remedies for improper cessations of service still exist.
"[T]he absence of any judicial remedy [would] plac[e] the shipper entirely at the mercy of the carrier, contrary to the overriding purpose of the Act."
Hewitt-Robins, Inc. v. Eastern Freight-Ways, Inc., 371 U.S. at 371 U. S. 88 (emphasis added).
Although §§ 8 and 9, recodified at 49 U.S.C. § 11705 (1976 ed., Supp. III), provide a general right to seek damages when injured by a carrier's violation of the Act, this Court stated, in Powell v. United States, 300 U. S. 276, 300 U. S. 287 (1937), that the injunctive remedy, see n 9, supra, was "the only method for enforcing" what was then § 1(18) of the Act. Because the carrier's actions here have been approved by the Commission, there has been no violation of the Act, and this damages remedy could have no application to this case. We therefore need not decide whether the language of Powell means that a damages action can never be brought for an illegal abandonment, or, if such an action can be brought, whether Congress might have intended that state and federal courts have concurrent jurisdiction. We thus reserve those questions for a proper case.
The fact that respondent did not perfect its filing before the Corrmission, see n 3, supra, does not affect either the validity or the finality of the Commission's findings with respect to the reasonableness of petitioner's actions. These findings remain valid if supported by substantial evidence, see Illinois Central R. Co. v. Norfolk & Western R. Co., 385 U. S. 57, 385 U. S. 66 (1966), and, in any case, are not ordinarily subject to revision via collateral attack in a civil action.
The Commission's authority over furnishing cars was reflected in §§ 1(4) and 1(11) of the Act, recodified at 49 U.S.C. §§ 11101(a) and 11121(a) (1976 ed., Supp. III).
Most of the Commision's abandonment decisions turn in part on factors such as those respondent wishes the state court to decide. See, e.g., Chicago & N.W. Transp. Co. Abandonment, 354 I.C.C. 121, 125-126 (1977); Baltimore & Annapolis R. Co. Abandonment, 348 I.C.C. 678, 700-703 (1976); Missouri Pacific R. Co. Abandonment, 342 I.C.C. 643, 644 (1972).
See 49 U.S.C. § 10103 (197 ed., Supp. III).
The Transportation Act of 1920, moreover, also added to the Interstate Commerce Act a new § 1(17)(a), recodified at 49 U.S.C. § 10501(c) (1976 ed., Supp. III), which expressly invalidates state remedies when they are "inconsistent with an order of the Commission" or prohibited under any provision of the Act. See supra at 450 U. S. 326. The Puritan Court obviously could not have considered this provision when deciding that a shipper could, in some circumstances, bring a state court action for failure to furnish cars.
"the sole issue for determination is whether or not the service was terminated by compelling circumstances beyond the control of the carrier."
Brief for Respondent 6 (emphasis in original). That is exactly the kind of question Congress intended that the Commission decide, and, in the case before us, the Commission has, of course, already decided it.
Respondent's reliance on ICC v. Chicago N.W. Transp. Co., 533 F.2d 1025 (CA8 1976), is also misplaced. That case held only that a federal court suit seeking injunctive relief on behalf of the Commission, which is among the express remedies enumerated in the Act, could go forward without awaiting the Commission's decision on a pending request for an abandonment. We express no opinion as to the merits of that case, but we do note that its facts bear little relation to those before us.

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