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February 2, 1976

REA EXPRESS, INC., Plaintiff

The opinion of the court was delivered by: JONES


 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.


 Between 1929 and June 1968, the Board of Directors of REA consisted of officers or directors of various of the stockholding railroads. Although REA's complaint is framed in a number of different legal theories involving both federal and common law causes of action, at bottom it is a typical suit seeking recovery for waste and mismanagement by the Board of Directors. REA challenges two transactions undertaken by the REA Board in 1956 and 1968. In 1956, the Board approved REA participation in GA 23000, then a health insurance policy written by Travelers and held by the railroads for the benefit of their employees. REA was directed to participate at a premium rate which was identical to the rate paid by all other participating railroads. REA claims that this uniform premium provision denied it the benefit of a higher experience rating *fn1" which it allegedly enjoyed. To force REA's participation in GA 23000 at this uniform premium rate, according to REA, constituted illegal price-fixing, waste, and mismanagement. Further, REA claims that the railroad defendants violated Section 10 of the Clayton Act by failing to require competitive bidding before awarding the insurance contract to Travelers.

 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. *fn2" 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.


 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 *fn3" standing in equity to sue Bangor Punta for violations of the Clayton Act and ...

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