Opinion ID: 305102
Heading Depth: 1
Heading Rank: 5

Heading: equitable intervention

Text: 43 Although jurisdiction exists, a federal court: 44 . . . may, in its sound discretion, whether its jurisdiction is invoked on the ground of diversity of citizenship or otherwise, 'refuse to enforce or protect legal rights, the exercise of which may be prejudicial to the public interest.' 45 (citations omitted; emphasis supplied) Burford v. Sun Oil Co., 319 U.S. 315, 317-318, 63 S.Ct. 1098, 1099, 87 L.Ed. 1424 (1943). 46 The district court believed that this was such a case and therefore abstained. It held that where a private party seeks either declaratory or injunctive relief against a state administrative agency, federal courts ordinarily should abstain from exercising their powers in the interest of federal-state comity. Allegheny Airlines, Inc. v. Pennsylvania PUC, supra, 319 F.Supp. at 412. The court concluded that where an order of the state agency predominately affects local matters, if there is available to the aggrieved party adequate state judicial review, the federal courts should refuse to exercise their equity powers to restrain enforcement of the administrative order, thus avoiding unnecessary federal-state conflict. Id., at 413. It noted that in the instant case the dispute between the PUC and Allegheny predominately affects local matters, i. e., intrastate air service and the scope of authority and procedures of the state administrative agency. Id. We agree. 3 47 The district court's holding was grounded on Alabama Public Service Comm. v. Southern Ry. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 (1951). There a railroad company applied to the Alabama Public Service Commission for permission to eliminate certain local passenger service. The Commission refused to allow discontinuance, citing local needs. The company, rather than taking an appeal through the state court system as provided for under state law, filed a complaint in federal district court seeking injunctive relief. Jurisdiction was grounded on diversity of citizenship and the presence of a federal question. A three judge court entered judgment holding the Commission order void and enjoining the Commission from enforcing its order or any penalty provisions of the applicable law. 48 On appeal the Supreme Court reversed. The crux of its holding was that: 49 Equitable relief may be granted only when the District Court, in its sound discretion exercised with the 'scrupulous regard for the rightful independence of state governments which should at all times actuate the federal courts,' is convinced that the asserted federal rights cannot be preserved except by granting the 'extraordinary relief of an injunction in the federal courts.' Considering that '[f]ew public interests have a higher claim upon the discretion of a federal chancellor than the avoidance of needless friction with state policies,' the usual rule of comity must govern the exercise of equitable jurisdiction by the District Court in this case. 50 (emphasis supplied; citations omitted) Id., at 349-350, 71 S.Ct. at 768. 51 The same critical factors of Southern Ry.-that the case involved significant state concerns, and an early entry of a federal court into the area might promote needless friction between state and federal jurisdiction-have formed the basis for absention in numerous other cases. See, e. g., Burford v. Sun Oil Co., supra, 319 U.S. at 332, 63 S.Ct. 1098; Great Lakes Dredge & Dock Co. v. Hufflman, 319 U.S. 293, 298, 63 S.Ct. 1070, 87 L.Ed. 1407 (1943); Railroad Commission v. Rowan & Nichols Oil Co., 310 U.S. 573, 580, 60 S.Ct. 1021, 84 L.Ed. 1368 (1940); Pennsylvania v. Williams, 294 U.S. 176, 185, 55 S.Ct. 380, 79 L.Ed. 841 (1935). 52 As commentators construing the Alabama decision have noted, . . . the Court must be considered to have ordered abstention solely for the purpose of avoiding federal-state friction, Abstention, 59 Col.L.Rev. 749, 759 (1958) (emphasis supplied). Whether or not the exercise of equitable abstention will, in a particular case, create federal-state friction, is a question for which there is no one simple test. Thus, equitable abstention has not produced clearly defined rules, as has the traditional and more common ground for abstention enunciated in Railroad Comm. of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). 4 However, the primary concern running through the cases in which the Court has abstained for equitable principles seems to be the possibility of friction caused by interference with the orderly procedures and rules of state regulatory bodies. See, e. g., Alabama, supra, Burford, supra. The instant case presents just such a threat: a serious possibility of disturbing the orderly state system of agency regulation of transportation within Pennsylvania. 53 Allegheny has contended here that it was not required to comply with the procedural regulations of the Commission for discontinuance of service because it was also an interstate air carrier. The Commission, on the other hand, has argued that once a carrier seeks and accepts state certification to render an intrastate service, it accepts the corresponding obligation to settle disputes as provided under state law and the rules and regulations of the Commission. Its primary position is that a certificated carrier may not discontinue the service without making an application to do so under Commission regulations and thereby giving affected parties an opportunity to be heard. 54 Stripped of the efforts to drape this case with federal questions, the facts show that Allegheny, without any attempt on the part of the PUC to extend its regulatory powers over it, made a written application to the PUC for a certificate of public convenience as an intrastate carrier to transport passengers between certain cities in Pennsylvania, including Harrisburg and Williamsport. The service it offered to provide was found by that Commission, after a hearing and an opportunity for affected parties to be heard, to be necessary to the public interest. A certificate of public convenience was granted and it is now held by Allegheny. Under the rules of the Commission, all or part of this service may be discontinued upon application by the carrier to the PUC and that agency's approval. Additionally, matters such as this which go to the jurisdiction of the PUC may be tested in special proceedings before the Pennsylvania Commonwealth court. 66 P.S. Sec. 1441. The thrust of these Pennsylvania rules and laws is that, once certified, a carrier must test these issues before service is discontinued. 55 The issue, thus, is not, at this stage, whether the airline may or may not discontinue the service in question because federal legislation has preempted the field. The issue is whether a state certificated public utility may arbitrarily ignore the procedural rules of the Commission which require that issues, including jurisdictional issues, be raised before discontinuance of service. We note that Allegheny might have sought federal declaratory relief before discontinuing the air service. 5 In the alternative, of course, Allegheny might have sought state consideration of its federal preemption argument before discontinuing the air service. It did neither: with no prior warning, and in total disregard of the state policy, it abruptly terminated the state certificated flight. If Allegheny can discontinue state certificated service with no notice and then forestall state action by proceeding to the federal courts, other state certificated carriers may attempt similar action. The carefully regulated state transportation system could be thrown into chaos. For this court to reach the merits of Allegheny's contentions would be to ignore the state regulatory body in the same manner the airline has. This is precisely the kind of action that the Supreme Court has counseled against. See, e. g., Alabama, supra. 56 There are several additional factors, perhaps unique to this case, which also dictate our conclusion that the district court correctly exercised its discretion. First, we note that the state concerns, in terms of the subject matter in question here, are significant. Commercial carriers can operate only if airports, runways, and related facilities are provided. These often require large expenditures, particularly in densely populated areas, frequently at considerable community sacrifice and effort. The communities involved here may have come to depend on the direct air service which Allegheny has supplied in the past. If this be true, the arbitrary discontinuance of direct air service without notice, an opportunity to be heard, or time in which to secure other means of transportation, may leave them isolated. We can only suggest, and not document, the local needs because of Allegheny's decision to discontinue the air service without first approaching the Commission. However, in any case, under the applicable Pennsylvania law, a presumption exists that certificated public utility service is needed and vital, until a public utility itself proves otherwise. Hostetter v. Pennsylvania Public Utility Comm., 160 Pa.Super. 94, 49 A.2d 862 (1946). 57 Secondly, Allegheny has presented no evidence which suggests that it would have been harmed had it had to resort to the state agency forum, or Commonwealth courts, before discontinuing the air service in question. It has approached the PUC for route changes many times, and it appears that all the airline's requests have been granted. 6 In any case, Allegheny may be able to raise its preemption arguments, should the PUC proceed to state court to enforce the order of June 23. Cf. Jones Motor Co. v. Pennsylvania Public Utility Comm., 188 Pa.Super. 449, 149 A.2d 491, reversed on other grounds, 361 U.S. 11, 80 S.Ct. 60, 4 L.Ed.2d 50 (1959). 58 Thirdly, if local communities have come to rely upon the services provided by Allegheny, such reliance would be reasonable in light of the affirmative action of the airline itself. Approximately thirty years ago, the airline sought and was granted, rights to transport property on intra-Pennsylvania routes; approximately twenty years ago, it sought, and was granted the right by the PUC to transport persons as well as property between points in Pennsylvania. From that date, until the action delineated here, the airline has complied with the procedural requirements of Pennsylvania law. Thus, this case is significantly different-and poses a greater danger of exacerbating federal state relations-than the case of an airline which has never approached a state commission, and finds that a state commission is attempting to regulate it for the first time on the supposition that it is engaging in intrastate operations. See e. g., Public Util. Comm. v. United Air Lines, 346 U.S. 402, 74 S.Ct. 151, 98 L.Ed. 140 (1953). 59 Fourthly, the danger of creating federal-state friction is intensified because of the peculiar nature of the relief requested by the airline. At oral argument, the district court pointed out that Allegheny was seeking the best of all possible worlds. It wished to retain its state rights and, at the same time, to be relieved by federal injunction of its state duties. 7 This is precisely what the airline desires. It asks for a perpetual injunction which would enjoin the PUC from any action or proceeding for any violation of the laws of the Commonwealth of Pennsylvania based upon action by Allegheny in changing its patterns of service. Yet, if this relief be granted, the PUC would be unable to terminate the airline's state certificates of public convenience. The airline, while not being subject to state regulation, would maintain whatever benefits accrue to holders of state public utility certificates. The case therefore is different from that of an interstate carrier whose routes contain several short intrastate segments, and who wishes to surrender its state certificate and remove itself totally from the state jurisdiction. 60 Finally, we do not believe that there are significant federal concerns which would override the other factors mentioned above. Even if it should be ultimately determined that the state does not have power to regulate the actions which precipitated this suit, a temporary co-existence of federal-state regulation will not frustrate any immediate goals or policies of the Federal Aviation Act. At least a residual power to regulate air transportation lies with the states. The scheme of federal control has not been hampered, even though some areas exist over which the states exercise sole or concurrent control. 8 See, e. g., Colorado Anti-Discrimination Comm. v. Continental Air Lines, Inc., 372 U.S. 714, 83 S.Ct. 1022, 10 L.Ed.2d 84 (1962); Public Util. Comm. v. United Air Lines, 346 U.S. 402, 74 S.Ct. 151, 98 L.Ed. 140 (1953); Loma Portal Civic Club v. American Airlines, Inc., 61 Cal.2d 582, 39 Cal.Rptr. 708, 394 P.2d 548 (1964); People v. Western Air Lines, 42 Cal.2d 621, 268 P.2d 723 (1954). 61 For the reasons outlined above, we conclude that the district court did not abuse its discretion in refusing to exercise its power to intervene. 62 The judgment will be affirmed.