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July 31, 1987

National Railroad Passenger Corporation, Plaintiff,
Consolidated Rail Corporation, Defendant


The opinion of the court was delivered by: GASCH


 On January 4, 1987, a northbound freight train controlled by an engineer and a brakeman and owned by the Consolidated Rail Corporation ("Conrail"), failed to heed a series of slow and stop signals at a track juncture near Chase, Maryland. *fn1" Consequently the Conrail train entered the path of a high speed northbound passenger train operated by the National Railroad Passenger Corporation ("Amtrak"). A collision ensued, resulting in sixteen deaths, several hundred injuries, and millions of dollars in property damage. Since the accident, at least 38 lawsuits have been filed naming Amtrak, Conrail or both as defendants. Sixteen lawsuits filed against both railroads allege negligence, gross negligence, or wanton and reckless misconduct. Twelve lawsuits seek punitive damages totalling $ 500 million. *fn2"

Amtrak agrees to indemnify and save harmless Conrail and Conrail Employees, irrespective of any negligence or fault of Conrail or Conrail Employees, or howsoever the same shall occur or be caused, from any and all liability for injuries to or death of any Amtrak Passenger and for loss of, damage to, or destruction of any property of any such passenger.

 Moreover, the Agreement provides that the indemnifying party shall defend all such suits. See Freight Operating Agreement § 5.16. On the basis of these provisions, Conrail has demanded that Amtrak defend and indemnify it for any claims and damages arising out of the accident at Chase, Maryland. Despite the obvious breadth of the Agreement's indemnification provision, Amtrak claims that it is not obligated to reimburse Conrail for all damages. Amtrak maintains that it need not indemnify Conrail for conduct determined to be reckless, wanton, willful, or grossly negligent. Amtrak contends that an indemnification agreement embracing such conduct is unenforceable as against public policy. Similarly, Amtrak argues that there can be no indemnification for punitive damages. Amtrak seeks a declaratory judgment to this effect. See 28 U.S.C. § 2201. *fn3"


 The provision of the Freight Operating Agreement at issue in this case is an indemnity clause. *fn4" Accordingly, Amtrak's legal obligation under the clause does not arise unless and until Conrail is found at least to have negligently caused the Chase, Maryland collision and liability attaches to such a finding. Amtrak does not here dispute that if Conrail is found merely to be negligent that the indemnity clause will be triggered and will be fully enforceable. Amtrak only disputes its obligation to indemnify Conrail if a trier of fact concludes that Conrail is liable to passengers for wanton, willful, reckless or grossly negligent conduct of its employees or in the event that Conrail is subject to an award of punitive damages in favor of a passenger. Complaint at paras. 9, 15-26. It is undisputed that no such finding has yet been made. The defendant maintains that the scope of the Declaratory Judgment Act is not so broad as to allow the Court to address questions founded on an event which may never occur. For reasons hereafter provided, the Court disagrees and finds that declaratory judgment relief is proper in this case.

 The Declaratory Judgment Act ("the Act") provides, in pertinent part, that

in a case of actual controversy within its jurisdiction . . . any Court in the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration. . . .

 28 U.S.C. § 2201(a). Cf. Fed. R. Civ. P. 57. This statute was enacted, at least in part, to "enable[] litigants to narrow the issue, speed the decision, and settle the controversy before an accumulation of differences and hostility [] engendered a wide and general conflict, involving numerous collateral issues." S. Rep. No. 1005, 73d Cong., 2d Sess. 3 (1934) ("Senate Report"). To facilitate these ends, courts have repeatedly stated that the Act should have a liberal interpretation. See, e.g., Simmonds Aerocessories, Ltd. v. Elastic Stop Nut Corp. of Am., 257 F.2d 485, 489 (3d Cir. 1958); M. Swift & Sons, Inc. v. Lemon, 24 F.R.D. 43, 46 (S.D.N.Y. 1959). Nevertheless, a federal court's power to issue a declaratory judgment is not unlimited. The Act is expressly applied only to cases of "actual controversy." This limitation is not unique; it merely incorporates Article III's requirement that federal courts may only entertain "cases or controversies." See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-40, 81 L. Ed. 617, 57 S. Ct. 461, reh'g denied, 300 U.S. 687, 81 L. Ed. 889, 57 S. Ct. 667 (1937).

 In determining whether a declaratory judgment is a proper way of proceeding, the first question presented is whether Amtrak's complaint states a constitutional controversy. Id. The Supreme Court has observed that,

a justiciable controversy is thus distinguished from a difference or dispute of a hypothetical or abstract character; [or] from one that is academic or moot. The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests. It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.

 Id. at 240-41 (citations omitted). This statement makes clear that courts should not be "umpire[s] to debates concerning harmless, empty shadows." Poe v. Ullman, 367 U.S. 497, 508, 6 L. Ed. 2d 989, 81 S. Ct. 1752, reh'g denied, 368 U.S. 869, 7 L. Ed. 2d 69, 82 S. Ct. 21 (1961). However, the Supreme Court has recognized that it is not possible to fashion a "precise test" to determine the adequacy of a particular controversy. See Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 85 L. Ed. 826, 61 S. Ct. 510 (1941). Thus, "the propriety of declaratory relief in a particular case will depend upon a circumspect sense of its fitness informed by the teachings and experience concerning the functions and extent of federal judicial power." Public Service Comm'n of Utah v. Wycoff Co., Inc., 344 U.S. 237, 243, 97 L. Ed. 291, 73 S. Ct. 236 (1952). To aid courts in this endeavor, the Supreme Court has set out a somewhat more workable test:

the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.

 Maryland Casualty Co., supra, 312 U.S. at 273. Reliance on this test, and the more general concerns ...

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