The opinion of the court was delivered by: JONES
In this action, REA Express, Inc. [REA] has sued Travelers Insurance Company [Travelers], twenty-two railroad companies [railroad defendants], the National Railway Labor Conference [NRLC], the Eastern Carriers' Conference [ECC], and the Eastern Carriers' Conference Committee [ECCC]. Counts I and II allege, respectively, violations of Section 10 of the Clayton Act, 15 U.S.C. § 20 (1970), and Section 1 of the Sherman Act, 15 U.S.C. § 1 (1970). Counts III through IX allege common law causes of action based on breach of fiduciary duty, unjust enrichment, wrongful interference with business relations, and breach of contract. REA has moved for partial summary judgment with respect to the issue of defendants' liability under Section 1 of the Sherman Act for alleged price-fixing. The railroad defendants, the ECCC and the NRLC have jointly moved for summary judgment with respect to the entire case. Travelers has separately moved for complete summary judgment. Finally, ECCC and NRLC have moved for summary judgment with respect to Counts III through IX, the common law claims. The various motions now pending before the Court raise numerous issues with respect to the various defendants' liability. Those motions have been fully briefed and the Court has heard argument of counsel. The Court need not reach the merits of those issues, however, since one threshold issue -- REA's standing in equity to sue these defendants -- is dispositive of REA's complaint.
In January 1929, substantially all the railroads in the United States joined to form the Railway Express Agency, now REA Express, Inc., to conduct the railway express business in this country. The railroads accomplished this result by purchasing all the assets of the sole express agency then operating, the American Railway Express Company, and transferring these assets to the newly formed REA. All of the capital stock in REA was sold to 85 participating railroads, and operating agreements were executed between REA and the railroads using the express service. These agreements provided that REA would be the exclusive express agency of the railroads and that annual revenues of REA, after deduction of operating expenses, would be distributed to the railroads executing the operating agreements in proportion to their express business. On February 11, 1929, the ICC approved in certain respects this arrangement. 150 ICC 423 (1929).
Until June 1968, all the capital stock in REA continued to be owned by the various railroads. Moreover, while the agreement for division of earnings had been modified or replaced between 1929 and 1968, the sole beneficiaries of REA's earnings were the railroads.
In June 1968, in order to prepare for sale of REA, the stockholding railroads deposited their stock in a voting trust. The voting trustees took over formal management of REA in June, and continued in such position until the sale of REA's stock on August 21, 1969. The stock was sold to the REA Holding Corporation, which was formed by a group of REA executive officers who had been employed by the voting trustees in 1968 and 1969. The Holding Corporation presently owns more than 99 per cent of the REA stock.
In 1965, GA 23000 was amended to provide life insurance benefits. It is REA's contention that those benefits vested immediately in employees who were covered by the plan and later retired, a contention which Travelers and the railroad defendants disputed in 1968. Therefore, in March 1968, the railroads and REA, acting at the behest of the Board and through its agent, the ECCC, approved Amendment 16 to GA 23000, which provided that life insurance benefits did not vest in the retired employees, and that such benefits would lapse if any participant withdrew from the policy. Since certain REA officers had previously voiced their intention to seek REA's withdrawal from GA 23000, REA contends that this action constituted illegal monopolization by Travelers of the railroad insurance market, as well as waste and mismanagement by the REA Board.
REA withdrew from participation on March 31, 1968, except as to a small number of employees represented by the International Association of Machinists.
It claims that Amendment 16 has forced it to seek life insurance for its 4,000 retired employees to replace the allegedly vested benefits they enjoyed prior to approval of the amendment.
REA'S STANDING IN EQUITY TO SUE
With one exception to be addressed later, the factual posture of this case is almost identical to that in Bangor Punta Operations v. Bangor & A.R. Co., 417 U.S. 703, 41 L. Ed. 2d 418, 94 S. Ct. 2578 (1974). There the Supreme Court held that the plaintiff had no standing in equity to sue, a result which this Court feels compelled to reach in this case as well.
In Bangor Punta, the following factual setting was presented. In 1964, Bangor Punta acquired through a subsidiary 98.3% of the stock of the Bangor and Aroostook Railroad. It thereafter controlled and directed the railroad until 1969, when it sold its entire stock interest to the Amoskeag Company. Then in 1971, the railroad filed suit against Bangor Punta and its predecessor in interest for mismanagement, misappropriation, and waste of the railroad's assets during the period of Bangor Punta's ownership of the railroad. Damages were also sought for violations of Section 10 of the Clayton Act and Section 10 of the Securities and Exchange Act.
Without analyzing the merits of any of the railroad's claims, the Court immediately framed the issue as Amoskeag's
standing in equity to sue Bangor Punta for violations of the Clayton Act and ...