Court Opinion

ID: 9461255
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:09:46.415525+00
Date Added: 2024-06-11T17:36:58.106261
License: Public Domain

MacKINNON, Circuit Judge
(concurring) :
The foregoing opinion affirms the judgment of the District Court dismissing the action by the northern railroads against the southern railroads for alleged unfair division of the revenues received from inter-area freight traffic. In my view this produces an inequitable result.
The southern railroads since 1956 have refused to agree to any changes in the divisions of joint rates because the existing divisions are apparently more favorable to them, and because of the history of the rates involved they stand to profit greatly by the long delay necessary to a Commission decision. To remedy the allegedly unfair and discriminatory rate divisions, the northern railroads in 1956 initiated a proceeding before the ICC. Nine long years later the ICC concluded that the rate divisions were indeed unfair and ordered a substantial readjustment of the divisions in *1272favor of the northern lines. However, the case was remanded to the ICC after the Supreme Court determined that the ICC had not applied proper standards. In 1971, since the evidence had become stale, the 1956 proceedings were aborted.
In 1972 the northern railroads renewed their battle by initiating another ICC proceeding based on the then current factual situation. Simultaneously the northern railroads began the instant common law action to correct what they allege is a grossly unjust condition that has continued for over 16 years.
Under section 15(6) of the Interstate Commerce Act, adjustments by the ICC of rate divisions of agreed rates can only operate prospectively from the date of the ICC order determining the proper divisions. Had the rates been prescribed by the ICC, the Commission would have the power to adjust rate divisions retroactively from the time of the filing of the complaint. Thus, while the northern railroads’ complaint to the ICC was filed on March 27, 1972, and it may be many years before the ICC resolves the question, the Commission is powerless under the statute to effectuate fair divisions for the interim period between March 1972 and the eventual date of the final order.
In the 1956 proceeding between these same parties nine years elapsed from the filing of the complaint to the date of the final ICC order. Recognizing that a considerable number of years may elapse before there is a final order in the present proceeding, the northern railroads seek by the instant common law action for damages to secure equitable divisions (if the ICC eventually determines that present divisions are unjust, unreasonable and inequitable) for the interim years between the filing of the complaint and the final decision of the ICC. There is nothing inequitable or harsh in recognizing the validity of a lawsuit that would provide reparations for this interim period if it is ultimately determined that the divisions during this period were unfair. Indeed, if appellants can prove the allegations in their complaint, it would be inequitable and harsh to deny relief on a claim which involves not only many millions of dollars 1 but may also involve the very solvency of some of the northern railroads. For the purpose of this appeal from the District Court’s dismissal of the complaint for failure to state a claim, the factual allegations in the complaint must be assumed valid, including the following allegation:
Such refusal by the Southern lines to adjust the Divisions has deprived the Northern lines of several million dollars a year and unjustly enriched the Southern lines by a like annual amount. This deprivation has contributed to the bankruptcy or near bankruptcy of several of the Northern lines thus jeopardizing the continuing viability of the National Transportation System.
Complaint, Jt.App. at 23a.
•Elaborating on this allegation, appellants’ brief sets forth the following statistics showing the rates of return on net investment for the Class I railroads by territorial group. The figures for the Eastern District relate primarily to the railroads here referred to as the Northern Lines:
1967 1968 1969 1970 1971 12 Mos. Ending 9/30/72
Eastern District 1.58 1.27 1.10 Deficit Deficit Deficit
Southern District 3.86 3.79 4.17 4.50 4.93 5.26
Western District 2.75 3.01 2.81 3.02 3.90 4.00
United States 2.46 2.44 2.36 1.73 2.47 2.57 2
*1273Appellants’ brief further states:
Six of the major, i. e. Class I, Northern carriers are now in bankruptcy. The Chairman of the InterState Commerce Commission has testified before the Congress that at least eight other major Northern roads are “marginal roads” on the brink of financial collapse. The Southern roads, on the other hand, are as a group the most profitable in the nation, earning a 4.93% rate of return for 1971 as contrasted with the Northern lines’ deficit for that year, and not a single one of the Southern Class I roads is described by the Chairman of the Commission in the aforementioned testimony as a marginal road. The millions of dollars of revenues which the Southern roads receive in unfair divisions at the expense of the Northern roads obviously contribute to the plight of the Northern roads.
Brief for Appellants at 8-9 (footnotes omitted). The news media recently carried the following report which updates some of this data concerning one of the principal southern railroads:
SOUTHERN RAILWAY POSTS RECORD NET
[Southern Railway System] . . . reported record quarterly and six-month earnings yesterday.
* * *- -X- -x- *
Southern earned $29,991,000, or $2.-01 a share, compared with $20,246,000 or $1.36 for the second 1973 quarter.
AT THE SAME TIME, Southern’s board raised the dividend on common stock a nickel a share to 53 cents for the quarter, payable Sept. 16 to shareholders of record Aug. 15.
Southern President W. Graham Clayton, Jr. [sic] predicted the railroad’s earning would increase still further, largely as a result of a 10 percent general freight rate increase that became effective June 20.
FOR THE FIRST HALF of 1974, Southern earned $49,498,000 or $3.29 a share, up 48.1 percent over the $38,556,000 and $2.58 in the first half of 1973.
Total operating revenues for the latest quarter were $233,126,000, up 16.6 percent from the 1973 quarter, and for the six months totaled $444,990,000, a 14.1 percent gain.
Washington STAR-NEWS, July 24, 1974.
Section 1(4) of the Interstate Commerce Act prescribes a substantive standard which requires every common carrier to establish “just, reasonable and equitable divisions” of joint rates. 49 U.S.C. § 1(4) (1970). Sections 8 and 9 provide a means to enforce the duty established by section 1(4). Section 8 makes a carrier who fails to comply with section 1(4) responsible for the “damages sustained in consequence of any such violation,” and section 9 provides that the injured party may “make complaint to the Commission or may bring suit ... in any district court of the United States of competent jurisdiction.” Id. §§ 8, 9. Additionally, since the enactment of the original statute in 1887, section 22 has guaranteed the availability of all common law remedies:
[N]othing in this act contained 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
Id. § 22(1). It would seem that broader protection of common law remedies could not be fashioned.
The Act is thus explicit and complete, insofar as its specific language is concerned, in preserving all common law remedies, and it emphasizes such intent by stating that the Commission remedies are “in addition” to the previously existing common law and statutory remedies. *1274Nevertheless, the foregoing opinion concludes that because the statute denies the Commission authority to grant relief from inequitable divisions of agreed rates for the interim period between the filing of the complaint and the decision by the Commission, the courts similarly lack such power.
It would not be inequitable to grant retroactive relief against the southern railroads because they are placed on notice from the date of the service of the complaint that their income may be excessive, and they can establish appropriate reserves and contingent accounts. It is much more inequitable to perpetuate unjust enrichment to the extent of millions of dollars. What this situation resolves itself into is a claim that appellants have a right to a tremendous sum of money but the courts have presently held that no remedy exists to collect it.
The ICC lacks the power retroactively to adjust divisions of agreed rates because of section 15(6) which provides:
(6) Commission to establish just divisions of joint rates, fares, or charges —Adjustments.—Whenever, after full hearing upon complaint or upon its own initiative, the Commission is of opinion that the divisions of joint rates, fares, or charges, applicable to the transportation of passengers or property, are or will be unjust, unreasonable, inequitable, or unduly preferential or prejudicial as between the carriers parties thereto (whether agreed upon by such carriers, or any of them, or otherwise established), the Commission shall by order prescribe the just, reasonable, and equitable divisions thereof to be received by the several carriers, and in cases where the joint rate, fare, or charge was established pursuant to a finding or order of the Commission and the divisions thereof are found by it to have been unjust, unreasonable, or inequitable, or unduly preferential or prejudicial, the commission may also by order determine what (for the period subsequent to the filing of the complaint or petition or the making of the order of investigation) would have been the just, reasonable, and equitable divisions thereof to be received by the several carriers, and require adjustment to be made in accordance therewith.
Id. § 15(6) (emphasis added). While Congress clearly intended to circumscribe the authority conferred upon the ICC, there is no indication in the specific language used that Congress intended to limit the traditional powers of the courts in common law actions. To the contrary, the statute explicitly states that everything in the Act is “in addition to” the common law remedies and that the Act does not “in any way” abridge or alter the common law remedies. Id. § 22. The construction placed on section 15(6) by the foregoing opinion effectively nullifies section 1(4) and section 8 of the statute which require all carriers to establish equitable divisions of joint rates and make carriers who fail in this responsibility liable for the damages sustained in consequence of any such violation.3 How can a carrier who violates section 1(4) be liable in damages under sections 8 and 9 if the damaged parties cannot collect the damages? Yet that is the effect of the decisions cited by the foregoing opinion, particularly the Brimstone case4 and Atlantic Coast Line R.R. v. Delaware & H.R. Corp.5 in the Second Circuit.
However, other courts have held that section 15(6) does not prevent a common law action for damages resulting from unreasonable division of joint through rates.6 In Atlantic Coast Line R.R. v. *1275Baltimore & Ohio R.R., 12 F.Supp. 711 (D.Md.1935), Judge Chestnut reasoned:
After a review of the cases, I reach the conclusion that the controlling consideration as to whether the court has jurisdiction in this case is to be found in the answer to the question whether the exercise of this jurisdiction would necessarily be inconsistent with the Interstate Commerce Act as a whole (49 USCA § 1 et seq.). And in my opinion this question must be answered in the negative. Conceding that it would have been preferable for Congress to have committed the readjustment of the rates with respect to the period now in question primarily to the Commission, and that the Commission as an expert body constantly dealing with matters of this kind is much better equipped to pass on the question than the courts, it still does not follow that the plaintiff ought to be remediless in this case; nor that the essential purposes of the Interstate Commerce Act would be frustrated by the exercise of jurisdiction here.
Id. at 716.
Although the strict language of the statute preserves the common law action, the foregoing opinion correctly perceives the effect of the specific holding in Brimstone as ruling out such an action in eases seeking retroactive divisions, even though Brimstone never really faced up to the conflict of its holding with the language of sections 1(4), 8 and 22. In the face of Brimstone, however, it is my opinion that the situation must be corrected, if at all, by the Supreme Court or by Congress. Congress has been informed of the problem and the Northern Lines testified that they were prepared to submit corrective legislation.7
The northern railroads appear to be locked into their continuing deficits by the recalcitrant attitude of the southern railroads. It may be true that the present divisions are fair, but they may not be. If a court trial were held, the justness of the rates could be determined. The primary jurisdiction doctrine would require the ICC first to fix proper divisions and the trial court would then determine whether equity requires that whole or partial retroactivity be applied. But the Brimstone decision indicates that there is no remedy for this wrong which is allegedly substantial, of long duration and likely to continue.
I thus concur reluctantly in what I consider to be a most inequitable result as dictated by the Brimstone decision.

. Had the $8 million in annual damages that the ICC determined in 1965 been paid to the northern railroads from the date of the complaint (1956) to the present time, the northern railroads would have received approximately $144 million in damages.

. Brief for Appellants at 9. Sources: Association of American Railroads, Railroad *1273Facts, 1972, at 18: Tabulations prepared by Economics and Finance Department, Association of American Railroads : Property Investment and Condensed Income Accounts, .1971; Railroad Revenues, Expenses, and Income, Third Quarter 1972.

. See text supra at 1273.

. Brimstone R.R. v. United States, 276 U.S. 104, 122-123, 48 S.Ct. 282, 72 L.Ed. 487 (1928).

. 86 F.2d 721 (2d Cir. 1936).

. Atlantic Coast Line R.R. v. Baltimore & Ohio R.R., 16 F.Supp. 647 (D.Md.1936); Atlantic Coast Line R.R. v. Baltimore & Ohio R.R., 12 F.Supp. 711 (D.Md.1935); Atlantic Coast Line R.R. v. Pennsylvania R.R., 12 F.Supp. 720 (E.D.Pa.1935).

. Hearing before the Subcommittee on Transportation and Aeronautics of the House Committee on Interstate and Foreign Commerce on H.R. 6591, et al. (Northeast Rail Transportation), May 8, 1973, pp. 280-83 (93d Cong., 1st Sess.) :
Mr. Langdon. We have, in our situation, sir, in considering the Northeast as a whole, as we compute it, a deficit of about $100 to $125 million a year arising from what we regard as improper divisions of rates applying to and from the West and the South.
* * :¡: * *
Mr. Langdon. Yes, sir, that has been drafted and we are prepared to submit it. What it does is give the Commission power to fix divisions retroactively.