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April 15, 1982

United States of America, Plaintiff,
Baltimore and Ohio Railroad, et al., Defendants

The opinion of the court was delivered by: PARKER


In this proceeding several major railroad companies are charged with criminal conduct in violation of Section 1 of the Sherman Act, 15 U.S.C.§ 1 (1977). The defendants, Baltimore and Ohio Railroad Company, Inc. (B&O), Bessemer and Lake Erie Railroad Company, Inc. (B&LE), Chesapeake and Ohio Railway Company, Inc. (C&O), and Norfolk and Western Railway Company, Inc. (N&W), are charged with engaging in a combination and conspiracy in unreasonable restraint of trade and commerce which inhibited or eliminated competition among dock companies and motor and rail carriers involved in the transshipment of iron ore on Lake Erie and from Lake Erie docks to the steel mills. A grand jury empanelled by the United States District Court for the District of Columbia returned on October 13, 1981, a single-count indictment against the four rail carriers, *fn1" charging antitrust law violations from 1956 to 1978.

The defendants responded to the indictment by filing a series of motions: (1) a joint motion of all defendants to dismiss the indictment for improper venue or, alternatively, transfer of the proceeding to the Northern District of Ohio; (2) a motion by B&LE to dismiss the indictment for duplicity and misjoinder or, alternatively, severance of defendants and separate trials; (3) a motion by N&W to sever its trial and transfer the proceeding to the Western District of Virginia; (4) a joint motion of all defendants to dismiss on the ground that the conduct alleged in the indictment is immune from antitrust prosecution or, alternatively, referral of the immunity question to the Interstate Commerce Commission (ICC); and (5) a joint motion of all defendants for a pretrial ruling on whether a per se or rule of reason analysis is appropriate for this case.

 For the reasons set forth below, this Court rejects the several motions of the defendants and also determines that the per se standard is appropriate for the trial of this proceeding.


 The government's allegations in the indictment and bill of particulars can be briefly summarized. Most of the iron ore supplied to mills in the steelmaking belt encompassing parts of Ohio, Pennsylvania, West Virginia and Kentucky is mined in the states adjacent to Lake Superior and Lake Michigan -- Wisconsin, Michigan and Minnesota. Transport of the ore from mines in these states to the mills is a three-step process: rail carrier to the Great Lakes, across the lakes by freighters, and rail carrier to the mills.

 The conspiracy alleged in the indictment involves the second and third steps of this movement. Traditionally, heavy cranes called "huletts" were positioned on Lake Erie docks to transfer unprocessed ore from the freighters to rail cars for transport to the mills. Except for a few steel companies operating lakeside mills, the railroads owned all of the Great Lakes docks which contained huletts. In the early 1950's, however, a new technology was developed for conversion of unprocessed ore into small pellets. This method permitted shipment of iron ore in a new type of freighter which discharged the pellets directly from the vessel to the rail cars through the use of a series of conveyor belts. These new ships, called "self-unloaders," did not require use of the huletts and could unload iron ore at virtually any stable dock.

 This development posed a threat to the defendants' domination of the iron ore unloading business. The government claims that, in response, the defendants conspired at a meeting in Cleveland, Ohio, in 1956 to block use of the self-unloaders. Unlike many criminal conspirators, who might secretively plot their illegal activities in a barber shop, *fn2" a luncheonette, *fn3" or a restaurant, *fn4" the meeting in Cleveland, and others that followed over the ensuing 22 years, took place in various industry conference rooms with an official stamp of approval from the ICC. *fn5"

 The indictment charges that the defendants' collusion actions were illegal under the antitrust laws, dispite Commission authorization, because the defendants plotted to "inhibit" or "eliminate" competition from non-railroad-owned docks and from motor carriers. The defendants achieved this goal by filing tariffs with the Commission which extended iron ore hauling rates exclusively to railroad-owned docks. In addition, the indictment recites that the defendants charged the same fees for handling iron ore from self-unloaders as from the freighters even though fewer services were necessary, and that the defendants refused to lease railroad-owned dock space to a company which sought to handle iron ore from self-unloaders. The defendants also agreed to forego the right of independent action with respect to the charges for handling iron ore from self-unloaders without seeking or obtaining ICC approval, as required by the 5a agreement (Ind. P22(a), (b), 23(a)-(f)).

 In addition to trying to block competition from non-railroad-owned docks, the defendants allegedly took steps to "inhibit or eliminate competition from motor carriers in the transportation of iron ore from docks on Lake Erie to steel mills" (Ind. P22(c)). They accomplished this objective by "refraining from independently or collectively reducing line-haul rates for rail movements or iron ore in order to meet truck competition" and by taking steps, such as requiring motor carriers to pay an arbitrary usage charge, designed to bar the trucking of iron ore from Lake Erie docks (Ind. P23(g)-(i)).

 Legal Analysis


 Joint Motion to Dismiss for Improper Venue or to Transfer.

 1. Motion to dismiss. Venue, for purposes of "continuing offenses" such as a conspiracy, is governed by 18 U.S.C. § 3237. In relevant part the section provides that "any offense against the United States begun in one district... may be inquired of and prosecuted in any district in which such offense was begun, continued, or completed." This language restricts venue to the district in which the conspiracy was formed or where one or more overt acts in furtherance of the conspiracy occurred. Hyde v. United States, 225 U.S. 347, 56 L. Ed. 1114, 32 S. Ct. 793 (1912); United States v. Anderson, 611 F.2d 504 (4th Cir. 1979).

 The government's voluntary bill of particulars alleges that two types of overt acts in furtherance of the conspiracy occurred in this District. First, the defendants filed several tariffs and amendments thereof with the Commission (B of P P3, 10, 11, 45). Later, on July 6, 1976, the defendants held a meeting in Washington, D.C., to discuss truck competition (B of P P50). The defendants claim that, for several reasons, these acts cannot provide the basis for venue in this District. Thus, they seek dismissal for lack of venue pursuant to Article III, section 2, cl. 3 of the Sixth Amendment of the United States Constitution and Rule 18 of the Federal Rules of Criminal Procedure.

 The railroads first advance the argument that the acts which allegedly establish venue were immunized by section 5a of the Interstate Commerce Act, and, as immune acts, they cannot provide the basis for venue. Caribe Trailers Systems v. Puerto Rico Maritime, 475 F. Supp. 711, 719 (D.D.C. 1979). However, as will be seen below, this Court agrees with the government. Section 5a does not immunize rate-making agreements which are intended to inhibit or eliminate competition. Because the tariffs and amendments were allegedly filed for anti-competitive and predatory reasons, the filings are not immune from the prohibitory reach of the Sherman Act and thus constitute "overt acts" for venue purposes.

 The railroads also contend that the tariff filings cannot establish venue because they were made under legal compulsion. They cite section 6(1) of the IC Act, 49 U.S.C. § 7(1), which provides that common carriers subject to the jurisdiction of the ICC cannot offer rail services unless rates and charges are filed with the ICC. The argument, however, confuses procedure with substance; nothing in the Act mandates the filing of a tariff which furthers an illegal purpose. The filing of a tariff which is the product of an illegal conspiracy is no more "legally compelled" than is, for instance, the filing of false and misleading documents with the Securities and Exchange Commission. See e.g., SEC v. National Student Marketing Corp., 360 F. Supp. 284, 292-93 (D.D.C. 1973). *fn6"

 A third argument advanced is that venue is lacking because none of the acts asserted as the basis for venue took place within the District of Columbia during the five-year limitations period prescribed by 18 U.S.C. § 3282. The defendants cite two cases for support of their position, United States v. Luros, 243 F. Supp. 160 (N.D. Iowa), cert. denied sub nom., Luros v. Hanson, 382 U.S. 956, 15 L. Ed. 2d 361, 86 S. Ct. 433 (1965), and United States v. Kane, 243 F. Supp. 746 (S.D.N.Y. 1965). Even if they are correct in their readings of these cases, this Court does not concur. The law is clear: "[Venue] as to prosecution of all members of a conspiracy lies either in the jurisdiction in which the conspiratorial agreement was formed or in any jurisdiction in which an overt act in furtherance of the conspiracy was committed by any of the conspirators." United States v. Overshon, 494 F.2d 894, 900 (8th Cir.), cert. denied, 419 U.S. 853, 42 L. Ed. 2d 85, 95 S. Ct. 96 (1974). This principle stems from the basic character of a conspiracy as a continuing crime involving conduct over a period of time and, very often, in more than one place. Imposition of a limitations requirement would bifurcate a conspiracy into two sets of events -- those within the limitations period and those without -- and thereby conflict with the fundamental nature of a "continuing crime." Absent an explicit congressional mandate, such an additional hurdle for establishing venue in a conspiracy case should not be imposed.

 Moreover, even if the defendants are correct in their view of the venue statute, the government has, in fact, pointed to the filing of an ICC tariff in this District in March 1978. That filing, within the limitations period, constitutes an overt act in furtherance of the conspiracy, and all of the defendants are therefore chargeable with it, including those who took no part in its filing. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 253-54, 84 L. Ed. 1129, 60 S. Ct. 811 (1940).

 2. Motion to transfer. The defendants have moved alternatively to transfer this proceeding to the Northern District of Ohio ...

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