The opinion of the court was delivered by: SIRICA
On August 8, 1958, the United States Court of Appeals for the District of Columbia remanded this case to the District Court with directions to vacate its order of May 26, 1958, and to reconsider petitioners' motion to suspend proceedings in the light of said order.
In the early part of 1958, petitioners moved to suspend all proceedings in this antitrust litigation except discovery not connected with this motion, and urged the Court to refer to the Interstate Commerce Commission one of the issues set forth in the complaint regarding ratemaking, pursuant to agreements on procedure filed with the Commission, so that the Court might obtain a ruling on whether these joint rate reductions were immunized from the operation of the antitrust laws. Extensive briefs were filed and the Court heard oral arguments. After delivering an oral opinion from the bench, the Court denied the motion in an order entered May 26, 1958. Relying strongly on a recent Supreme Court decision not mentioned by the Court in its oral opinion, most of the railroad defendants then petitioned for a writ of certiorari from the Court of Appeals and asked that Court to reverse this Court's order and to direct this Court to suspend proceedings and refer the above issue to the Commission. The Court of Appeals granted the writ, F.2d , but declined to rule on the merits. Instead, it remanded the case to this Court with directions to vacate the order of May 26, and to reconsider petitioners' motion in the light of its order and of the Supreme Court's recent holding in Federal Maritime Board v. Isbrandtsen Co., 1958, 356 U.S. 481, 78 S. Ct. 851, 2 L. Ed. 2d 926.
Petitioners then requested the Court of Appeals to clarify certain language in its order of August 8, 1958. F.2d . The Court granted this request in an order dated December 16, 1958. F.2d .
In 1954, Riss & Company, Inc., a common carrier by motor vehicle in interstate commerce, filed this civil antitrust suit, seeking an injunction and $ 90,000,000 in treble damages. It alleged that beginning in or about 1950, defendants, most of whom are railroad companies, had agreed and conspired in unreasonable restraint of trade and commerce to injure or destroy plaintiff's business and to acquire a monopoly of land transportation of property in the United States, and had thus violated Sections 1 and 2 of the Sherman Act (15 U.S.C.A. §§ 1, 2).
Plaintiff alleges it has been a common carrier of property by motor vehicle since 1927 and operates as authorized by the Interstate Commerce Commission throughout 22 states plus the District of Columbia. It uses over 800 truck units and employs over 2,000 persons. Riss also has alleged that during the years from 1950 to 1953, inclusive, it was one of the five largest interstate motor carriers in the United States in terms of gross revenues and is, and has been for several years, one of the largest motor carriers of military supplies, including ammunition and explosives, for the Armed Forces. About 58 first class railroad companies, several joint railroad organizations and trade associations and one public relations firm are defendants in this action.
In order to effectuate the object of the alleged conspiracy, plaintiff charges that defendants employed various means, some of which are cited as examples in the complaint. Defendants are accused of having carried on a program of soliciting, directly as well as indirectly through 'front' organizations, the elected and appointed officials of various states to take steps leading to the revocation and cancellation of the interstate operating authority held by plaintiff. In 1952, it is alleged that some of the defendants employed a public relations expert to persuade the Public Utilities Commission of Ohio to file proceedings before the Interstate Commerce Commission looking toward the cancellation of plaintiff's operating authority.
Defendants also are alleged to have abused their privilege of intervention in proceedings before the Interstate Commerce Commission. According to plaintiff, defendants joined together to carry on an extensive and vicious campaign of anti-truck propaganda in order to persuade citizens' groups, automobile clubs and other neutral organizations to register their complaints against Riss in the course of proceedings started by Riss before the I.C.C. to obtain new operating authorizations. Other unfair competitive practices, such as circulating and publishing false and malicious statements about Riss and its officers are also charged in the complaint.
According to the complaint, defendants used railroad groups in their public relations campaign as well as 'front' organizations whose connection with the railroads would not be known to the public. It is also asserted that defendants tried to infiltrate and make use of several independent public organizations such as the Illinois Parent-Teachers Association and the Congress of Parents and Teachers of Oklahoma in order to achieve their unlawful objectives. Chief reliance, however, is alleged to have been placed on such instrumentalities as 'Competitive Transportation Research', 'Motor Carrier Bureau' and 'Committee on Motor Transportation' set up by defendants, as well as upon other temporary committees and organizations. Plaintiff claims that defendants spent large sums of money, estimated at about $ 1,000,000 in carrying out their unlawful activities.
In January, 1958, with the permission of the Court, plaintiff filed a supplement to its complaint which is embodied in paragraph 18. Plaintiff claims therein that, pursuant to the unlawful plan described above, defendant railroads submitted to traffic officials of the Department of Defense in 1955 a 40 per cent reduction in rate on the carriage of explosives totaling more than 50,000 pounds by railroads competing with Riss for the same kind of traffic. It is plaintiff's claim that this reduction was intended to accomplish one of the principal objects of the conspiracy; i.e., to exclude plaintiff from the explosives traffic and it has allegedly had that effect with respect to the principal points served by the plaintiff.
Plaintiff further alleges that defendants' conduct has caused serious damage to its business and to its reputation and has forced plaintiff to spend large sums to counteract the effects of defendants' conduct. By way of relief, plaintiff demands the following:
'1. Injunctive relief permanently enjoining and restraining AAR, Western Railways, Presidents Conference and Eastern Railroads, and each of them, from creating or continuing any committees, subcommittees, bureaus, departments, sections, divisions, subdivisions, or other association activity the principal purpose of which is to restrain, impede, impair, hamper, harass or eliminate the competition of plaintiff and of other motor carriers;
'2. Injunctive relief permanently enjoining, restraining and prohibiting defendants and each of them and their officers, directors, agents, servants and employees from agreeing, conspiring or combining to restrain the competition of plaintiff and from conspiring, combining and attempting to monopolize land transportation by the elimination of plaintiff and from performing any acts in furtherance of such unlawful objects and purpose;
'3. Judgment against defendants and each of them for $ 90,000,000, being the amount equal to three times the damages sustained by plaintiff;
'4. Judgment against defendants and each of them for the amount of reasonable attorneys' fees and costs of this action;
'5. Such other and further relief as to the Court may appear just and proper; and
'6. Injunctive relief enjoining the defendant railroads from accepting traffic pursuant to the illegal quotation described in paragraph 18 hereof.'
This is a summary of plaintiff's allegations. In their motion to suspend and to refer the rate reduction issue to the I.C.C., defendants seek to invoke the doctrine of 'primary administrative jurisdiction'. The defendants contend that a new issue was raised which involves the primary, if not the exclusive, jurisdiction of the Interstate Commerce Commission when plaintiff was allowed by the Court to supplement its complaint and to include in paragraph 18 the allegation that the uniform and concerted rate reduction, which took effect on or about November 20, 1955, was intended to exclude the plaintiff from the business of carrying such shipments of explosives; that said quotation was made for the purpose of effectuating one of the principal objects of the conspiracy, that is the elimination of the plaintiff as a competitor with the railroads for explosives traffic. As a defense to this allegation, it is also argued that the new rates are reasonable and compensatory when all the cost factors are taken into consideration and that, furthermore, the rate quotation was set up according to procedural agreements approved by the Commission and thus is immunized from the operation of the antitrust laws by virtue of 49 U.S.C.A. § 5b(9). It is defendants' position that this matter is extremely technical and complex and thus the Court should obtain the expert opinion of the Commission with respect to defendants' contentions before the case goes to trial.
Plaintiff argues, on the other hand, that it is immaterial whether defendants' act of reducing rates, considered by itself, is covered by prior procedural agreements approved by the Commission or is immunized from the antitrust laws because it is a well-settled principle of law that a lawful act may be properly alleged as a means of effectuating one of the principal objects of the alleged conspiracy; that is, the elimination of plaintiff as a competitor with the railroads for explosives traffic.
These, then, are the basic legal issues before the Court. Certain practical considerations also enter into the case. This private antitrust suit against almost 60 defendants has been on the docket over four years. During that time, five different judges have made rulings on various preliminary motions. In the interest of finally resolving the complex and serious issues raised by this case and of doing so in the spirit of Rule 1 of F.R.Civ.P., 28 U.S.C.A., this Court has set October, 1959, as a tentative time for trial. A great deal of work by both Court and counsel will yet have to be done in order to meet such a schedule, and this date may be delayed because of the recent proceedings in our Court of Appeals. Both sides have requested trial by jury, and have estimated that the trial will last from four to six months. The Court's basic problem is this: Should this important antitrust suit, already more than four years old, and involving issues of serious importance to the national transportation industry, be further delayed for one of perhaps several years in order that the Court might request the expert opinion of the Interstate Commerce Commission as to whether one of many overt acts alleged to have been committed pursuant to a Sherman Act conspiracy ought to be immunized from the operation of the antitrust laws?
'18. On or about Oct. 20, 1955, the railroad defendants herein caused to be submitted to traffic officials employed by the Department of Defense a uniform, unpublished rate quotation, by and on behalf of the railroads engaged in carrying explosives traffic in competition with the plaintiff. Said quotation established railroad rates for carrying explosive shipments totalling more than 50,000 pounds which were nearly forty percent below the general level of such rates prevailing for the previous eight years. Said uniform and concerted rate reduction, which took effect on or about November 20, 1955, was intended to exclude the plaintiff from the business of carrying such shipments of explosives and has had that effect with respect to the principal points served by the plaintiff. Said quotation was made for the purpose of effectuating one of the principal objects of the conspiracy charged herein, to wit, the elimination of the plaintiff as a competitor with the railroads for explosives traffic and has substantially injured the plaintiff's business. The Interstate Commerce Commission has no jurisdiction over said quotation and plaintiff will continue to suffer substantial and irreparable injury from said illegal quotation until and unless the acceptance of traffic pursuant thereto is enjoined by this Court.'
In its earlier ruling on this motion, this Court was strongly influenced by the decision in Atchison, Topeka and Santa Fe Railway Co. v. Aircoach Transportation Association, Inc., 1958, 102 U.S.App.D.C. 355, 253 F.2d 877, hereinafter referred to as ACTA. On motions by both sides for summary judgment, the District Court, there 154 F.Supp. 106, had ruled that the concerted quotation by railroads under Section 22 of the I.C.C. Act, 49 U.S.C.A. § 22, of certain variable rates and package bids for military passenger traffic were per se illegal under the antitrust laws, and that 49 U.S.C.A. § 5b(9) did not grant immunity from these laws.
In reversing, the Court of Appeals held that it could not be said as a matter of law that all joint rate reductions under section 22 must be excluded from the class of concerted actions covered by prior procedural agreements approved by the Commission under 49 U.S.C.A. § 5b(9) and, therefore, it was error to hold that all such reductions in rate must be denied immunity from the antitrust laws under 49 U.S.C.A. § 5b(9). Hence, some section 22 rates arrived at by joint action might be within the coverage of prior approved arrangements for rate making and hence might be immunized from the antitrust laws. The Court of Appeals felt that the Commission's prior rulings as to the possible or actual coverage of defendants' conduct by procedural agreements or as to the Commission's power to decide these very questions were not clear and decisive. The Court observed, 253 F.2d at page 885:
'Nevertheless, the questions are appropriate for Commission consideration, even though, as we believe, exclusive primary jurisdiction over either of them does not reside in the Commission by reason of section 5a(7) (49 U.S.C.A. 5b(7)).'
The Court of Appeals then ruled that the District Court should, in its discretion, withhold decision on the interpretation of the I.C.C. Act and the approved procedural agreements until the Commission has had a chance to decide initially whether, in its opinion, the railroad rate reductions can be relieved from the antitrust laws because of coverage by approved agreements.
After discussing the relationship of defendants' practices to unlawful pricefixing, the Court of Appeals then set a limitation on the power of the Commission to resolve the antitrust aspect of the rate practices. It said, 102 U.S.App.D.C. at page 365, 253 F.2d at page 887:
'One further substantive legal question must be considered. Even though it should be found in the end that the practices as such have been validly immunized by section 5a approved agreements, nevertheless, if they are part of an effort by Railroads in combination or conspiracy to eliminate the competition of Aircoach, rather than used merely to meet that competition, the practices would be removed from the protection of section 5a(9). We do not think the Act or any agreement which has been approved under it can be construed as authorizing the use of such practices for the purpose of eliminating the competition of Aircoach for the section 22 transportation involved. See, by analogy, American Tobacco Co. v. United States, 328 U.S. 781, 809, 66 S. Ct. 1125, 90 L. Ed. 1575; State of Georgia v. Pennsylvania R., supra, 324 U.S. 439, at page 458, 65 S. Ct. 716, at page 726, 89 L. Ed. 1051; Kobe, Inc. v. Dempsey Pump Co., 10 Cir., 198 F.2d 416, 422; Noerr Motor Freight, Inc. v. Eastern R.R. Pres. Conf., D.C.E.D.Pa., 155 F.Supp. 768, 814-816, 822-825; Parmelee Transp. Co. v. Keeshin, D.C.N.D.Ill., 144 F.Supp. 480, 484; Noerr Motor Freight, Inc. v. Eastern R.R. Pres. Conf., D.C.E.D.Pa., 113 F.Supp. 737, 742-744; Slick Airways, Inc. v. American Airlines, Inc., D.C.D.N.J., 107 F.Supp. 199, 214, appeal dismissed sub nom. American Airlines, Inc. v. Forman, 3 Cir., 204 F.2d 230, certiorari denied 346 U.S. 806, 74 S. Ct. 54, 98 L. Ed. 336; United States v. Association of American Railroads, D.C.D.Neb., 4 F.R.D. 510, 526. * * * The motion of Railroads is not to be construed as admitting factual allegations in regard to a purpose to destroy competition which would have the legal result of removing Railroads from any possible protection from the antitrust laws; nor can Aircoach's motion be construed as abandoning those allegations. Thus, on this aspect of the case, there remains a factual dispute. Moreover, this aspect of the case need not be submitted for consideration or initial decision by the Commission as to either questions of fact or of law.
'There thus arises a matter of procedure. As to this, a discretion must be left to the District Court after hearing the parties. It might be considered preferable, if Aircoach desires to pursue the assertions regarding a purpose to destroy competition, that this branch of the case should be the subject of a hearing, limited to that problem. Should Aircoach prevail Railroads would be liable in damages, and an appropriate injunction also could be granted. Or proceedings in the District Court on this subject could await reference to the Commission of the questions of coverage by statute or approved agreement.' (Emphasis supplied.)
The case of American Tobacco Company v. United States, 328 U.S. 781, 809, 66 S. Ct. 1125, 1126, 90 L. Ed. 1575, decided in 1946 and cited above was a criminal action brought under the Sherman Act and the defendants, who were officers of large tobacco companies, were convicted on four counts of an indictment charging conspiracy in restraint of trade, monopolization, attempting to monopolize, and conspiracy to monopolize. In the petition for certiorari the question was limited to 'whether actual exclusion of competitors is necessary to the crime of monopolization under Section 2 of the Sherman Act.'
At page 809 of 328 U.S., at page 1139 of 66 S. Ct. the Court said:
The case of State of Georgia v. Pennsylvania Railroad Company, 324 U.S. 439, 65 S. Ct. 716, 89 L. Ed. 1051, decided in 1945, was a suit by a state charging that the defendant railroads had set up rates that discriminated against the ports and cities of Georgia and greatly hampered the industrial and economic development of the entire state, in violation of the antitrust laws.
One of the defendants' contentions was that the I.C.C. had jurisdiction over these rate matters and had actually approved these rates under I.C.C. Act standards. The court held that carriers are also subject to the antitrust laws. Even though the rates had to be cleared through the I.C.C., it may be that circumstances make these rate agreements restrictive rather than competitive. The court said that a conspiracy to fix rates might be illegal though the rates fixed were reasonable and nondiscriminatory, and, as Mr. Justice Brandeis had said in the Keogh case, Keogh v. Chicago & N.W.R. Co., 260 U.S. 156, 43 S. Ct. 47, 67 L. Ed. 183, the fact that rates had been approved by the I.C.C. would not, it seems, bar proceedings by the Government.
'It is sufficient here to note that we find no warrant in the Interstate Commerce Act and the Sherman Act for saying that the authority to fix joint through rates clothes with legality a conspiracy to discriminate against a State or a region, to use coercion in the fixing of rates, or to put in the hands of a combination of carriers a veto power over ...