Court Opinion

ID: 9476799
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:05:49.980739+00
Date Added: 2024-06-11T17:45:31.161097
License: Public Domain

ALDISERT, Circuit Judge,
dissenting.
What divides this court is a straightforward disagreement. We are not fencing with glancing blows. Our divergent views meet a single controlling issue head on: Does federal law preempt state common law claims against rail carriers for discriminatory conduct practiced during the period in which the Interstate Commerce Commission, pursuant to the Staggers Rail Act of 1980, has exempted relevant rail traffic from regulation? The majority says common law remedies are preempted in these circumstances. I say they are not. Accordingly, I dissent and would reverse the judgment- of the district court.
I.
I begin by stating certain universal precepts that govern this case. To decide a federal preemption issue is to determine Congressional intent. Wardair Canada, Inc. v. Florida Dep’t of Revenue, 477 U.S. 1, 106 S.Ct. 2369, 91 L.Ed.2d 1 (1986); Louisiana Pub. Serv. Comm’n v. FCC, 476 U.S. 355, -, 106 S.Ct. 1890, 1898, 90 L.Ed.2d 369 (1986). In the context of federal regulation of rail carriers, repeals of common law remedies by implication are not favored: a statute will not be construed as taking away a common law right unless the right is so repugnant that it renders the statute’s provisions nugatory. Texas & Pac. Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 437, 27 S.Ct. 350, 354, 51 L.Ed. 553 (1907). These precepts strongly influence my approach to this case. Therefore, I begin with an examination of Congressional intent.
II.
Congress enacted the Staggers Act of 1980, Pub.L. No. 96-448, 94 Stat. 1898, to dismantle the regulatory scheme estab*1237lished by the Interstate Commerce Act of 1887 (ICA). Influenced by nearly 100 years of railroad experience, Congress came to the conclusion that “[mjodernization of economic regulation of railroads, with greater reliance on the marketplace, is essential to achieve maximum utilization of railroads, to save energy and to combat inflation.” H.Conf.Rep. No. 1430, 96th Cong., 2d Sess., reprinted in 1980 U.S. Code Cong. & Admin.News 4110, 4111. In overhauling the federal regulatory scheme, Congress desired “to allow, to the maximum extent possible, competition and the demand for services to establish reasonable rates for transportation by rail.” 49 U.S.C. § 10101(a); see ICC v. Texas, —U.S.-, -, 107 S.Ct. 787, 793, 93 L.Ed.2d 809 (1987); Consolidated Rail Corp. v. United States, 812 F.2d 1444, 1449 (3d Cir.1987).
In choosing to allow competition to play an important role in establishing rail rates, Congress granted the ICC authority to exempt from regulation categories of rail transportation when the Commission concluded that such regulation was not necessary to carry out the transportation policy as expressed in section 10101a. See 49 U.S.C. § 10505. To “ensure that the price and service flexibility and revenue adequacy goals of the Act are not undermined by state regulation of rules, practices, etc.,” the Act “preempt[ed] state authority over rail rates, classifications, rules and practices.” H.Conf.Rep. No. 1430, reprinted in 1980 U.S.Code Cong. & Admin.News at 4138.
Congress, however, also expressed the desire “to prohibit unlawful discrimination.” 49 U.S.C. § 10101a(13). With respect to the existence of common law claims, Congress amended 49 U.S.C. § 10103 to state:
Except as otherwise provided in this subtitle, the remedies provided under this subtitle are in addition to remedies existing under another law or at common law.
Thus, two conclusions are inescapable: where there is no federal regulation of rates because of the promulgation of exemptions, (1) no state may fill the void by imposing regulation of its own; and (2) common law remedies are available inter alia to prohibit unlawful discrimination.
A.
It cannot be denied that prior to the enactment of the ICA and ICC, several states recognized a common law action on behalf of a shipper against a railroad for discriminatory conduct practiced by the carrier. In Messenger v. Pennsylvania R.R. Co., 37 N.J.L. 531 (1874), the New Jersey Court of Errors and Appeals determined that railroads by virtue of their common carrier status are bound to use their franchise with fairness and for the common good. “A common carrier owes an equal duty to all and it cannot be discharged if he is allowed to make unequal preferences, and thereby prevent or impair the enjoyment of the common right____” Id. at 535. The court noted that a railroad contract that gave to certain persons an exclusive advantage over all other transporters in the transportation of goods was unjust and could not be legally enforced. “For a like service, the public are entitled to a like price.” Id. at 536.
In McDuffee v. Portland and Rochester R.R., 52 N.H. 430 (1873), the Supreme Judicial Court of New Hampshire recognized that a rail carrier’s service is a common as well as a public right, belonging to every individual as well as to the state. The court then stated:
the commonness of the right necessarily implies an equality of right, in the sense of freedom from unreasonable discrimination; and any practical invasion of the common right by an unreasonable discrimination practiced by a carrier held to the common service, is insubordination and mutiny, for which he is liable, to the extent of the damage inflicted, in an action of case at common law.
Id. at 450; see also 2 J. Kent, Commentaries on American Law 983 (Holmes ed. 1896) (“Even at common law a carrier is bound to make only reasonable charges, and perhaps there is a further obligation not to charge two persons differently for exactly the same service.”). The common law right of the shipper to be free from *1238unjust discrimination at the hands of a rail carrier has roots in English law. In London & N.W. Ry. Co. v. Evershed, 3 App. Cas. 1029, 1035 (House of Lords 1878), Lord Chancellor Cairns stated that “[t]he one right, to my mind, the clear and undoubted right, of a public trader is to see that he is receiving from a railway company equal treatment with other traders of the same kind doing the same business and supplying the same traffic.” It bears emphasis that these cases and holdings were decided in an era that preceded the imposition of federal railroad regulation.
B.
Our inquiry, then, must follow a very narrow compass: if common law remedies were preempted when and because the ICC assumed regulation of the railroad industry, are they still preempted when the ICC abdicates its regulation by promulgating an exemption? To ask this question is also to answer it, yet the answer seems best expressed by Karl Llewellyn:
[T]he rule follows where its reason leads; where the reason stops, there stops the rule.
K. Llewellyn, The Bramble Bush 157-58 (1960). The reason for the rule of federal preemption was the interposition of federal regulation. When that regulation disappears, the reason for preemption must fall with it. I think Congress intended precisely that. Both the language and scheme of the Staggers Act compel this conclusion.
III.
Regulated rail carriers subject to the jurisdiction of the ICC are generally prohibited from unreasonably discriminating between shippers when providing substantially the same service. See 49 U.S.C. § 10741. An aggrieved shipper may seek relief from unreasonable discrimination by filing a complaint with the Commission pursuant to 49 U.S.C. § 11701. When the ICC exempts a field of rail transportation from regulation, however, the prohibitions of section 10741 do not apply to deregulated carriers because their traffic is no longer subject to the jurisdiction of the ICC. See 49 U.S.C. § 10741. Yet, in light of Congress’ policy “to prohibit unlawful discrimination,” 49 U.S.C. § 10101a(13), it seems to me that Congress did not intend to leave shippers without a remedy for discriminatory conduct practiced by rail carriers exempted from regulation. A common law action would provide such a remedy. And Congress expressly anticipated this under the savings clause of the Staggers Act, 49 U.S.C. § 10103.
IV.
A remedy is a procedure that gives to one who has been hurt, by another’s violation of an obligation imposed by contract or by law, a right to seek actual or substituted redress. A remedy does not guarantee redress, but does guarantee the opportunity to seek it. Conrail’s interpretation of the Staggers Act falls woefully short of providing a shipper with a remedy. Under the most generous view of Conrail’s argument, the shipper never has an absolute right to be heard on the merits. At the very least, the shipper is only given the right to petition the ICC to withdraw its exemption and restore regulation of the entire railroad industry’s transportation of potatoes. A proceeding to restore regulation of the entire railroad industry is not the mirror image of a proceeding to prove discrimination against a particular potato shipper by a particular carrier. The jargon of produce is especially apt here: you cannot compare the apples of an application to impose industry-wide regulation with the oranges of a claim by one shipper against one railroad for one product.
Thus, the possibility that the ICC, under 49 U.S.C. § 10505(d), may revoke a previously-issued exemption and reimpose regulation does not, as Conrail contends, guarantee an “after the fact” remedy to address the accused discrimination here. In petitioning the ICC to revoke an applicable exemption, the shipper would first have to overcome the slated Congressional goals “to minimize the need for Federal regulatory control over the rail transportation system” and “to promote a safe and efficient rail transportation system.” 49 U.S.C. *1239§ 10101a(2), (3). Although Staggers invests the ICC with discretion to restore regulatory control, the proceedings before the Commission would not take place in a judicially-neutral ambience; the petitioner would have the very high burden of overcoming the legislatively-declared public policy of minimal Federal regulatory control. Should the ICC follow its previous decision respecting and reflecting that Congressional policy, the shipper would never have a right to be heard anywhere on its charge of discrimination. I do not think Congress intended such a draconian denial of a remedy, especially under a statute that specifically provides for “remedies ... at common law.” 49 U.S.C. § 10103.
But let us assume the best case scenario under Conrail’s theory of an exclusive statutory remedy. That best case would not afford complete redress to the shipper. Even if the exemption were revoked and new regulatory controls were instituted in futuro, there is no apparent vehicle to provide retroactive relief, a relief that seems mandatory here if primitive notions of justice are to be served. The ICC would have no power to award damages for discriminatory rates charged by rail carriers during the interim exemption period, because the prohibitions of section 10741 do not apply to carriers not subject to the jurisdiction of the ICC. This is the black hole in Conrail’s theory. I simply cannot believe that Congress intended to deny such relief to victims of discrimination.
I do not accept a statutory construction that dictates that shippers, like G & T, are denied an adequate remedy for a carrier’s unfair conduct during an exemption period, or an interpretation that would require shippers to seek alternate and obviously more expensive means of shipping, such as motor or air freight. When it is considered that shippers could be damaged irreparably or forced to dissolve their businesses because of this lack of a remedy, it becomes obvious that Congress intended no such outrage. Conrail's “after the fact” remedy is in truth no remedy.
I think that the statute means only this: as long as shippers have access to the ICC to seek redress under section 10741 for a carrier’s discriminatory conduct because either the ICC still regulates the rail transportation involved or has abrogated an applicable exemption, the shipper has no common law remedy; the shipper must go to the ICC and not the courts. But where, as here, the Commission has surrendered its jurisdiction over a field of rail transportation by granting an exemption pursuant to the Staggers Act, a common law remedy exists under the savings clause of the Act to remedy unlawful discrimination practiced by rail carriers during the exemption period. See First Pa. Bank v. Eastern Airlines, Inc., 731 F.2d 1113, 1120 (3d Cir.1984) (deregulation stripping the Civil Aeronautics Board of its powers left the courts “free to proceed without circuity to apply directly the familiar federal common law rules relating to the subject matter of released value rates”). Although I believe the foregoing is sufficient to justify the reversal of the district court’s judgment, I nevertheless will address other arguments presented to us.
V.
Conrail’s argument that the teaching of Texas & Pac. Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553 (1907), precludes recourse to common law is a contention that warrants analysis. The centerpiece of this allegation is that the presence of a common law remedy would conflict with the federal regulatory scheme, creating a lack of uniformity from state to state. See Transcontinental Gas Pipe Line Corp. v. State Oil & Gas Bd., 474 U.S. 409, 423, 106 S.Ct. 709, 717, 88 L.Ed.2d 732 (1986) (preemption analysis should consider whether state regulation would disrupt the federal regulatory scheme); Louisiana Pub. Serv. Comm’n, 476 U.S. at-, 106 S.Ct. at 1899 (preemption occurs when there is an outright or actual conflict between federal and state law). I have two responses to Conrail’s argument.
First, a common law remedy for a deregulated rail carrier’s discriminatory conduct will not conflict with the ICC’s authority *1240under 49 U.S.C. § 10741 to proscribe such conduct — or with the Commission’s power under 49 U.S.C. § 10701a to determine the reasonableness of a rate charged by a carrier — because the common law remedy will exist only when an ICC exemption for the relevant traffic remains in effect. In Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 96 S.Ct. 1978, 48 L.Ed.2d 643 (1976), the Court permitted plaintiff’s common law claims against an air carrier to go forward without requiring the plaintiff to first present them to the Civil Aeronautics Board for determination. In noting that there was no irreconcilable conflict between the relevant Act’s regulatory scheme and the common law remedy, the Court distinguished Abilene in language notably applicable to the present case:
In Abilene the carrier, if subject to both agency and court sanctions, would be put in an untenable position when the agency and a court disagreed on the reasonableness of a rate. The carrier could not abide by the rate filed with the Commission, as required by statute, and also comply with a court’s determination that the rate was excessive. The conflict between the court’s common-law authority and the agency’s ratemaking power was direct and unambiguous. The court in the present case, in contrast, is not called upon to substitute its judgment for the agency’s on the reasonableness of a rate — or, indeed, on the reasonableness of any carrier practice.
Id. at 299-300, 96 S.Ct. at 1984-85 (emphasis supplied).
Similarly, there is no irreconcilable conflict between a common law remedy here and the ICC’s jurisdiction as provided by Congress. Because the common law action is available only when the ICC surrenders its jurisdiction over the relevant traffic by granting an exemption, the courts will not substitute their judgment for that of the agency’s on the reasonableness of any carrier practice. As contemplated by the savings clause of the Staggers Act, 49 U.S.C. § 10103, a common law remedy may coexist with the role of the ICC in regulating rail transportation.
If the ICC subsequently determines that rail carriers are abusing an exemption or that common law actions are advancing results inconsistent with the national transportation policy as expressed in 49 U.S.C. § 10101a, the Commission can revoke the exemption and reimpose regulation on the relevant rail traffic. See 49 U.S.C. § 10505(d). In this event, common law actions initiated after the exemption has been revoked would be preempted as inconsistent with the federal regulatory scheme. Abilene, 204 U.S. at 446, 27 S.Ct. at 357. But where the ICC has surrendered its regulatory jurisdiction, common law actions survive to provide a remedy to shippers injured by unjust discrimination at the hands of a rail carrier.
Conrail’s argument also blurs the distinction between regulation of rail rates and adjudication of a tort between two parties. Citing Transcontinental Gas Pipe Line Corp. v. State Oil & Gas Bd., 474 U.S. 409, 106 S.Ct. 709, 88 L.Ed.2d 732 (1986), Conrail contends that recognizing a common law action for discriminatory rates would amount to de facto regulation of rail carriers. Conrail’s reliance upon Transcontinental does not withstand analysis.
In Transcontinental, the Court decided whether state regulation was preempted by the deregulation of natural gas under the Natural Gas Policy Act of 1978. The Court did not consider whether the deregulated industry was freed from the obligations imposed by common law. Furthermore, the policy concerns of Transcontinental do not apply to the case at bar because courts adjudicate — they do not regulate. The power to regulate involves the power to develop legislatively-created standards and maxims before a dispute arises and to set rates and rules to be followed in the future. By contrast, the judicial exercise attempts to do justice between two parties in the limited context of a dispute that has already occurred. In the present case, the district court was called upon to adjudicate a tort claim filed by a shipper against a rail carrier for a discriminatory surcharge imposed on past shipments. As aptly stated by Professor Dworkin:
*1241[J]udges neither should be nor are deputy legislators, and the familiar assumption, that when they go beyond political decisions already made by someone else they are legislating, is misleading. It misses the importance of a fundamental distinction ... between arguments of principle on the one hand and arguments of policy on the other.
Dworkin, Hard Cases, 88 Harv.L.Rev. 1057, 1058-62 (1975).
A decision by Congress that an area is best left unregulated takes away the regulatory authority of both federal and state regulatory agencies. See Transcontinental, 474 U.S. at 422, 106 S.Ct. at 717; Illinois Comm. Comm’n v. ICC, 749 F.2d 875, 877-78 (D.C.Cir.1984), cert. denied, 474 U.S. 820, 106 S.Ct. 70, 88 L.Ed.2d 57 (1985). But I refuse to make the quantum leap from there to a conclusion that Congress has also closed the door to all judicial remedies when deregulation sets in. In enacting the Staggers Act, Congress did not intend to emasculate a body of common law, specifically contemplated by the savings clause of the Act, that was designed to remedy the discriminatory conduct Congress clearly intended to prevent. If Congress had intended to remove the common law remedy, it would have done so plainly and said so clearly.
VI.
For the reasons presented, I would reverse the district court’s grant of summary judgment.