Court Opinion

ID: 8774268
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:56:03.861626+00
Date Added: 2024-06-11T17:02:26.147700
License: Public Domain

JOHN E. MILLER, Senior District Judge
(dissenting).
I respectfully dissent from the reasoning and conclusions of the majority as set forth in the memorandum and order filed today. I would grant the motion for interlocutory relief for the reasons stated below.
I completely agree with the majority that the issue before the court is whether the Commission had in the administrative record sufficient evidence to support its grant of temporary authority to Yellow. Section 210a(b) of the Act, 49 U.S.C. § 310a(b), contains two alternative conditions precedent. The Commission may approve the temporary operation of one motor carrier by another where an application for approval of acquisition under Section 5(2).of the Act, 49 U.S.C. § 5(2), is pending, and (1) the delay-in passing on the Section 5(2) application might result in injury to the motor carrier properties, or (2) adequate and continuous service to the public is endangered.
The record reveals that in 1964, Red Arrow received revenues of $872,000 and sustained a loss of $118,000. In 1965, revenues amounted to $330,000, resulting in a loss of $105,000. For the first six months of 1966, Red Arrow had revenues of $202,570 and a loss of $227,917. On July 2, 1966, the Commission granted Bos Lines, Inc., (Bos) temporary authority to operate Red Arrow, which authority was renewed from time to time until June 1968, when Bos withdrew its application for permanent authority then pending before the Commission. For the last six months of 1966, under the management of Bos, Red Arrow had revenues of $347,692 and a loss of $42,-854. In 1967, under the management of Bos, revenues amounted to $852,771, resulting in a loss of $67,820. Revenues for the first five months of 1968 were $338,733.84, with a loss of $40,451.92.
At the time of the filing of the petition in bankruptcy, Red Arrow listed liabilities in excess of $500,000 and tangible assets having a worth of less than $5,000. It had no cash on hand and its liabilities included unpaid wages to employees, unpaid withholding and Social Security taxes, plus various general creditors, including interline carriers and several secured creditors. The equipment of the company was subject to liens and was repossessed. All of the operating authority was subject to liens.
As stated in the majority opinion, the only motor carrier property Yellow seeks to acquire from Red Arrow is Red Arrow’s certificates of public convenience. These certificates clearly cannot be destroyed by the passage of time and cannot be revoked by the Commission pending the determination of a Section 5(2) application. Bekins Moving & Storage Co. — Purchase—Farrington, 65 M.C.C. 56 (1955). But even if Yellow sought to acquire all of the motor carrier properties belonging to Red Arrow, it is abundantly clear that the conceivable limit of injury to, or destruction of, Red Arrow has already been reached. In fact, the last date to file claims in connection with the bankrupt estate was March 27, 1969.1 The Commission contends, however, that an injunction would reduce the value to Yellow of the operating authority it seeks to acquire, as customers of Red Arrow will be forced to utilize other carrier service. I can only conclude that the Commission has reference to customers that Yellow has acquired from other carriers since commencing operations under its temporary authority on February 10, 1969, as no operations pursuant to Red Arrow’s authority were carried on by anyone for a period of at least four months prior to that date. In any event, there is absolutely *240nothing in the record to indicate that Yellow is faring any better than its predecessors in the operation of Red Arrow. Thus, any possible reduction in value of the operating authority resulting from an injunction lies purely in the realm of conjecture. In addition, the creditors of Red Arrow are protected by the contract between the Trustee and Yellow, which allows renegotiation of the purchase price only if the Commission grants Yellow permanent authority upon conditions that in some fashion restrict its use of the operating rights, a matter wholly unrelated to the issues presently before the court. As would be expected, the contract between the Trustee and Yellow states that it shall be deemed null and void if the Commission denies altogether Yellow’s application under Section 5(2) for approval of acquisition, but that, too, is a matter which does not concern this court. With all due deference, I am forced to conclude that there is no evidential support for the Commission’s finding that failure to grant temporary authority might result in destruction of, or injury to, the motor carrier properties sought to be acquired.
There is also no support for the Commission’s finding that a failure to grant temporary authority might substantially interfere with the future usefulness of the motor carrier properties in the performance of adequate and continuous service to the public. We are simply not dealing with a situation in which an existing carrier is in danger of going under, and the grant of temporary authority to another carrier will insure adequate and continuous service to the public. As heretofore stated, no operations under the Red Arrow authority were carried on by anyone for at least four months prior to the date temporary authority was granted to Yellow. In fact, defendants’ supplemental exhibit B-7 shows July 18, 1968, as the last date shipments were transported, which indicates a cessation of service of over six months. On August 1, 1968, the Receiver was authorized by court order to operate Red Arrow for a period of 60 days. The record does not, however, reveal the extent of the operations, if any, conducted by the Receiver. It is also significant that there is no allegation and absolutely no evidence in the record before the Commission that the shipping public is in need of the operations instituted by Yellow. Indeed, the only reasonable inference to be drawn from the erratic and, ultimately, nonexistent service provided under the Red Arrow authority is that the shipping public has gone elsewhere for service. Certainly, facts bearing on the adequacy and continuity of service rendered in the past and the absence of information as to present need are relevant to the question whether the performance of adequate and continuous service to the public is in danger of substantial interference.
I am of the view that, if Congress contemplated that a carrier seeking temporary authority under Section 210a (a) of the Act would come forward and make a showing that existing carrier facilities in the area are inadequate, Schenley Distillers Corp. v. United States (D.Del.1943) 50 F.Supp. 491, 494; Merchants Delivery Co. v. United States (W.D.Mo.1967) 265 F.Supp. 669, 672, it must also have contemplated that a carrier seeking temporary authority under Section 210a (b) would come forward and make a showing that injury to the subject motor carrier properties is imminent or that adequate and continuous service to the public is endangered. The defendants have utterly failed in this respect. The House Subcommittee which held hearings on the then proposed Section 210a(b) reported it with the following comment:
“The amendment which proposes the addition of a new subsection [210 a(b)] to Section 9 of the bill would permit the Commission to approve temporarily the operation of the properties of one motor carrier by another in a case where an application for approval of the acquisition is pending, and the delay in passing on the application might result in injury to the *241motor carrier operations or the cessation of service.” (Emphasis added.) H.Rep. 2714, 75th Cong., 3d Sess., p. 5 (1938).
It is the duty of the court to discover and comply with the intent of Congress in passing Section 210a(b). I do not believe, however, that Congress intended the courts to rely on nothing more than the predilections of the Commission. I am of the view that the Commission, in a proceeding under Section 210a(b), is not bound to comply with the provisions of 5 U.S.C. § 557, but if the Commission chooses to rely on a bare recitation of the statute, it is incumbent' upon the courts to closely scrutinize the administrative record to discover a rational basis for the Commission’s conclusion. Moreover, I perceive a great deal of difference between the instant case, in which operations lapsed and the carrier cannot be revitalized, and one in which the grant of temporary authority might actually breathe new life into a floundering concern. North American Van Lines, Inc. v. United States (N.D.Ind. 1965) 240 F.Supp. 464. Here, the orders of the Commission can only serve the purpose of diverting customers and revenue from existing carriers conducting operations in the area. Plaintiffs are certainly not entitled to blanket insulation from competition, but they are entitled to protection from orders of the Commission having no rational basis in fact.
The majority concedes that the statutory language “ * * * if it shall appear that failure to grant such temporary approval may result in destruction of or injury to such motor carrier properties sought to be acquired, or to interfere substantially with their future usefulness in the performance of adequate and continuous service to the public,” limits and qualifies the Commission’s discretionary power to grant temporary authority. Yet no fact or reason is cited, other than the discretion of the Commission, for denying the motion for an injunction. Certainly the fact that Bos operated Red Arrow for a period of two years at a tremendous loss does not supply a basis in fact for the present action of the Commission. Red Arrow has literally been destroyed, and the cessation of service was an accomplished fact. Thus, neither prerequisite contained in Section 210a (b) has been met. The holding of the majority has the practical effect of denying meaningful judicial review in these cases.
Plaintiffs’ motion should be granted, and the orders complained of should be restrained and enjoined.

. The temporary operation of Red Arrow by Yellow will provide small comfort to the creditors of Red Arrow, as the agreed rental for the period of the lease is $100.00.