Source: http://openjurist.org/664/f2d/594/hanna-mining-company-v-escanaba-and-lake-superior-railroad-company
Timestamp: 2016-12-08 22:14:33
Document Index: 390252567

Matched Legal Cases: ['§ 10101', '§ 901', '§ 10707', '§ 10713', '§ 10713', '§ 10701']

664 F2d 594 Hanna Mining Company v. Escanaba and Lake Superior Railroad Company | OpenJurist
664 F. 2d 594 - Hanna Mining Company v. Escanaba and Lake Superior Railroad Company HomeFederal Reporter, Second Series 664 F.2d.
664 F2d 594 Hanna Mining Company v. Escanaba and Lake Superior Railroad Company 664 F.2d 594
The HANNA MINING COMPANY, a Delaware Corporation, Plaintiff-Appellant,v.The ESCANABA AND LAKE SUPERIOR RAILROAD COMPANY, a MichiganCorporation, Defendant-Appellee.
Argued Feb. 5, 1981.Decided Nov. 20, 1981.
The underlying issue in this appeal is the extent to which, if any, rate-setting agreements between a carrier and a shipper, entered into prior to October 1, 1980, are to be enforced in either state or federal court. Resolving this question requires this court to discuss the jurisdiction and authority of the Interstate Commerce Commission and the courts, both before and after the enactment of the Staggers Rail Act of 1980, Pub.L.No. 96-448, 94 Stat. 1895. 49 U.S.C.A. § 10101 et seq. (1981 pamphlet), in the field of regulating railroad freight rates.
Hanna Mining Company (Hanna) appeals from a judgment of the district court, 498 F.Supp. 1267, denying a preliminary injunction and dismissing its complaint for declaratory and injunctive relief against the Escanaba and Lake Superior Railroad Company (E & LS). That complaint sought to enjoin E & LS from charging certain tariffs which were greater than those agreed upon by Hanna and E & LS's predecessors in interest.
On March 8, 1980, E & LS purchased the "Milwaukee Road" segment of the joint haul, pursuant to the authority of the Milwaukee Road Restructuring Act, Pub.L.No. 96-101, 93 Stat. 736, 45 U.S.C. § 901 et seq. (1979 Supp. III). E & LS represented to the ICC, in seeking approval of the purchase, that it had "every intention of fulfilling its obligations to the Hanna Mining Company" under the existing contract. Nevertheless, on August 13, 1980, E & LS proposed a new tariff that effectively increased the rate above and beyond the level established by the contract. As found by the trial judge, the result of this action was to cancel E & LS's participation with CNW in the then-escalated joint rate of $1.80 per ton, and to establish a new rate of $.90 per ton applicable to the 12.2 mile segment from Randville to Iron Mountain, Michigan.
After having originally issued a temporary restraining order, United States District Judge Philip Pratt, in a memorandum opinion filed on October 1, 1980, concluded that under the then existing law, the district court was without jurisdiction to enjoin any alleged breach of the contract, either permanently or temporarily, pending the ICC investigation. The court reasoned that judicial intervention was precluded by the primary jurisdiction vested by Congress in the ICC to determine the lawfulness and reasonableness of railroad rates under relevant portions of the Interstate Commerce Act. Because the ICC had the power to suspend or withhold suspending the proposed date pending an investigation, 49 U.S.C. § 10707, Judge Pratt concluded that any district court injunctive action to suspend the rate was foreclosed because the ICC had already exercised its authority under the statute not to suspend the rate. Judge Pratt based his decision primarily upon Arrow Transportation Co. v. Southern Railway Co., 372 U.S. 658, 83 S.Ct. 984, 10 L.Ed.2d 52 (1963); United States v. SCRAP, 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973); and Southern Railway Co. v. Seaboard Allied Milling Corp., 442 U.S. 444, 99 S.Ct. 2388, 60 L.Ed.2d 1017 (1979). The trial court relied especially upon the language in Southern Railway, supra, that it was "absolutely clear" that Congress intended to commit the rate suspension power to the "unfettered discretion" of the ICC. Id., at 460 n.14, 99 S.Ct. at 2397 n.14.
Hanna has relied, before the district court and here, upon Iowa Power & Light Co. v. Burlington Northern, Inc., 647 F.2d 796 (8th Cir. 1980), and Southwestern Electric Power Co. v. Burlington Northern, 475 F.Supp. 510 (E.D.Tex 1979) (SWEPCO), as authority that a railroad may be injunctively compelled to abide by a contractual freight rate, at least until such time as the ICC determines that the contract rate has become unlawful or no longer falls within the zone of reasonableness. In declining to follow those cases, Judge Pratt noted that in both Iowa Power and SWEPCO, the ICC had expressly declined to consider the force and effect of the parties' pre-existing agreement in making its reasonableness determination, declaring that this was a matter for the courts to decide. Therefore, in accepting jurisdiction, the courts in Iowa Power and SWEPCO appeared to be carrying out the ICC's wishes by exercising the power which the ICC itself did not possess or was at least unwilling to exercise-that is, the power to enforce the rate agreements.
The Staggers Rail Act of 1980 represents a significant change in policy with respect to the regulation of the nation's railroad system. The developing financial instability of that system had been recognized earlier by the Regional Rail Reorganization Act of 1973, Pub.L. No. 93-236, 87 Stat. 985, under which the Congress endeavored to stave off the threatened bankruptcy of the Penn Central and other railroads in the northeastern United States, and the Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. No. 94-210, 90 Stat. 31, under which Congress sought to ensure that railroads would receive adequate revenues and returns on capital. The Staggers Rail Act attempts a more long-range solution to the ills of the railway system by eliminating what Congress deemed to be unnecessary and inefficient government regulation. The findings and goals of this new statute are expressed in sections 2 and 3.2
We have further held that with respect to those rates that are finally adjudicated through the review process and thus are found to be in effect on October 1, 1980, and where those rates are established by agreements between a shipper and carrier that were in existence before the Staggers Rail Act, such rates and agreements are subject to treatment as any other contract rate agreement filed with the ICC pursuant to section 208 of the new Act with any enforcement remedies thereafter vested in the appropriate federal or state court. Correspondingly, we have rejected the position of the ICC that it retains some residual jurisdiction to review pre-Staggers Rail Act rate agreements and to establish maximum reasonable rates for traffic covered by such agreements, where such rates and agreements then in effect were not the subject of proceedings before the Commission or on review as of October 1, 1980.7 The question of the legality and existence of such contracts remains subject to challenge by either of the parties to that alleged contract in the appropriate state or federal district court as provided for by subsection 208(j), 49 U.S.C.A. § 10713(j). It is not thereafter subject to further review by the ICC, notwithstanding its claim to the contrary, see 49 U.S.C.A. § 10713(i)(1).
See, e. g., 49 U.S.C.A. §§ 10701a(b)(3), 10704 (1981 pamphlet)