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BANGOR & AROOSTOOK R.R. CO. v. MAINE CENT. R.R. CO

May 10, 1973

BANGOR AND AROOSTOOK RAILROAD COMPANY, Plaintiff,
v.
MAINE CENTRAL RAILROAD COMPANY, Defendant


Corcoran, District Judge.


The opinion of the court was delivered by: CORCORAN

Corcoran, District Judge.

 I

 This action was brought by the Bangor and Aroostook Railroad Company (herein the BAR) against the Maine Central Railroad Company (herein the Maine Central) pursuant to the provisions of 9 U.S.C. Sec. 9 to enforce an award by an arbitration committee of the Association of American Railroads (herein AAR) of which both parties are members. The defendant has challenged this Court's jurisdiction over the subject matter of the complaint and alternatively its jurisdiction over the person of the defendants pursuant to Rule 12(b) of the Federal Rules of Civil Procedure. The Court finds both arguments persuasive and grants the defendant's motion to dismiss.

 II

 At the time, both railroads were members of the AAR, an organization devoted to promulgating rules involving business transacted between member railroads. Among such rules are the so-called "Interchange Rules" which are intended to serve as a guide to the proper handling of matters arising from the interchange of freight traffic between such members. The BAR's tender of 20 cars to the Maine Central for incorporation in the derailed train was such an interchange.

 BAR sought reimbursement from the Maine Central for the alleged damages to the BAR equipment by reason of the derailment. Settlement negotiations between the two railroads proved fruitless and BAR thereupon submitted its claim to the Arbitration Committee of the Mechanical Division of the AAR (Arbitration Case No. 1899) under the arbitration provisions of Rule 122 of that organization. The Committee met in the District of Columbia. The defendant did not appear. The plaintiff prevailed and was awarded $162,450.22.

 BAR now asks this Court to enforce the arbitration award.

 III

 As a Court of limited jurisdiction, this Court must first determine whether it has the power to enforce the arbitration award. Since both parties are Maine corporations there is, of course, no basis for diversity jurisdiction. The question becomes therefore whether there is merit to plaintiff's claim that Sec. 9 of the Arbitration Act vests this Court with jurisdiction under 28 U.S.C. 1331, i.e. does the BAR here seek to assert a right arising under a law of the United States?

 Section 9 provides:

 
If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made. Notice of the application shall be served upon the adverse party, and thereupon the court shall have jurisdiction of such party as though he had appeared generally in the proceeding. If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. If the adverse party shall be a nonresident, then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court.

 The clear weight of authority holds that the Arbitration Act as a whole does not vest independent jurisdiction in a Federal District Court. The Second Circuit Court of Appeals has said, "suits involving the application of the Arbitration Act do not furnish an independent basis of federal jurisdiction." Robert Lawrence Company v. Devonshire Fabrics, 271 F.2d 402, 408 (2d Cir. 1959) Medina, J. "The mere presence of a 'contract evidencing a transaction involving commerce' will not ground Federal jurisdiction. In addition there must be diversity or a right arising under a law of the United States," 29 Corn. L.Q. 74 n. 2 (1953). Judge Learned Hand elaborated on this theme saying, ". . . a citizen of New York may not come to the District Court to enforce arbitration against another citizen of that state (i.e. absent diversity) though the goods must be shipped across a state line." Krauss Bros. Lumber Co. v. Louis Bossert and Sons Inc., 62 F.2d 1004 (2d Cir. 1933). This need for independent jurisdictional grounds has also ...


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