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AD HOC COMM. ON CONSUMER PROTECTION v. UNITED STAT

March 30, 1970

AD HOC COMMITTEE ON CONSUMER PROTECTION, Plaintiff,
v.
The UNITED STATES of America, the Interstate Commerce Commission, and the Penn-Central Railroad, et al., Defendants



Per Curiam

1. Plaintiff is organized and functions as a non-profit unincorporated consumer protection association to help protect consumers who reside in the District of Columbia, and has been granted leave to proceed in this proceeding in forma pauperis.

2. Defendants are the United States of America, the Interstate Commerce Commission and several railroads engaged in the transcontinental transportation of fresh vegetables and melons from origins in western states to all of the principal eastern cities, including the District of Columbia.

 3. Defendant railroads had published certain tariffs, to be effective August 2, 1969, applicable to the transcontinental rail-car and trailer-on-flat-car movement of vegetables and melons. Such tariffs would have restructured the rates applicable to the subject traffic by eliminating for the first time all 100-pound rates and continuing in effect only per-car charges, which in most instances were substantially increased.

 4. Several interested parties, including several food chains and plaintiff herein, filed protests in July of 1969 with the Commission requesting that the subject tariffs be suspended and placed under investigation. By order of July 30, 1969, the Interstate Commerce Commission's Suspension Board, acting pursuant to Section 15(7) of the Interstate Commerce Act, 49 U.S.C. § 15(7), suspended the subject rates and ordered an investigation therein. The investigation proceeding was entitled Vegetables and Melons, Transcontinental Eastbound, I & S Docket No. 8486.

 5. Pursuant to a request by the protestants, Division 2 of the Commission, by order of October 10, 1969, ordered the Commission's Bureau of Enforcement to participate in the proceedings for the purpose of developing the record with respect to certain practices that respondents alleged to be improper and unlawful. In its order, the Division noted:

 6. Hearings were held in the I & S 8486 proceeding in Washington, D.C., on December 2-5, 8-11, and 16, 1969. At the hearings, defendant railroads admitted, as also shown by undisputed documents taken from their files and entered into evidence by the Commission's Bureau of Enforcement, that as a condition to the effectiveness of the subject rates the practice was to be resumed by the eastern railroads of making market decline damage payments with respect to portions of the subject traffic received by the eastern wholesale markets. These payments were to be made, notwithstanding any question of negligence on the part of the railroad, with respect to produce which failed to arrive at market in accordance with guaranteed schedules, and the market price for the commodity on the date of arrival is lower than the price on the "guaranteed" date of arrival.

 7. These market decline damage payments were not applicable to approximately 80% of the vegetables and melons destined for eastern markets which were purchased by the major food chains F.O.B. origin. However, it is estimated, and verified by defendant railroads' own documents admitted into evidence in the I & S 8486 proceeding, that the amount of the payments to be made could exceed millions of dollars annually.

 8. Before the Commission, plaintiffs and other protestants argued that the payment of these market decline damages was unlawful in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; Section 1 of the Elkins Act, 49 U.S.C. § 41; and Section 6 of the Interstate Commerce Act, 49 U.S.C. § 6. Specifically, they argued that the market decline damage payments violated the Elkins Act in that they were rebates to a limited class of shipping interests and that since they were not set forth in the tariffs of the railroads, they violated Section 6 of the Interstate Commerce Act. Finally, they argued that since the railroads were acting in concert to set the rates and to resume the market decline damage payments as a condition thereof, such was violative of Section 1 of the Sherman Act since they --

 
(a) Were entered into outside the scope of their antitrust immunity agreements under Section 5a of the Interstate Commerce Act, 49 U.S.C. § 5b;
 
(b) Were in any event unlawful and not immunizable under Section 5a; and
 
(c) That the rate bureaus failed to use the procedures set forth in their Section 5a agreements in establishing the rates.

 9. On January 26, 1970, a petition was filed with the Commission to reject the tariffs as per se unlawful. The petition was denied on February 9, 1970. Thereafter, on February 25, 1970, a petition for reconsideration of that denial was filed, but to date no action has been taken thereon.

 10. In its complaint filed herein, plaintiff has attached a copy of a newspaper article, which appeared in the February 25, 1970 Washington Evening Star, which reports that on February 24, 1970, the Chairman of the Board and President of the Penn Central Railroad met in a private meeting with the Commissioners of the ...


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