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Seatrain Lines Inc. v. Pennsylvania Railroad Co.

September 10, 1953


Author: Hastie

Before MARIS MCLAUGHLIN and HASTIE, Circuit Judges.

Opinion of the Court

HASTIE, Circuit Judge:

This is an appeal from an order dismissing on jurisdictional grounds a complaint of violation of the antitrust laws wherein plaintiff, Seatrain Lines, Inc., alleges that the defendant railroads and associations of railroads have injured it by concerted action in restraint of trade. Seatrain seeks both injunctive relief and damages.

The complaint is lengthy, 36 pages of allegations and 8 pages of prayers, in all 44 printed pages in the record on appeal. Hawever, summation of certain important allegations will suffice to place in context and focus the principal contentions of the parties in the district court and on this appeal.

Seatrain is a common carrier by water operating in interstate commerce under certification and sanction of the Interstate Commerce Commission. The present controversy concerns its business of carrying loaded railway freight cars by specially designed and adapted ships between the ports of New York, New Orleans, Texas City and Savannah. At these terminal points loaded cars are delivered to and removed from the dock by railway. Between shipside tracks and the ship itself direct transfer of freight cars is accomplished by special hoisting equipment.

This combined rail and water carriage is competitive with, and in many cases cheaper than, carriage entirely by rail between the same terminal points. To eliminate this competition defendants have engaged in concerted action calculated to hamper the normal conduct of the Seatrain enterprise. Particularly, it is alleged that the defendants have conspired to exclude Seatrain from participating in a nation-wide arrangement of all the railroads for unrestricted interchange among themselves of freight cars owned by any of them. Also, it is said that defendants have conspired to cause individual railroads to deny Seatrain permission to receive and carry their freight cars. A third group of allegations concerns various expedients such as dissemination of misinformation disparaging Seatrain's service, harassment of Seatrain with protracted litigation maintained in bad faith, and refusal to perform various duties of cooperation incumbent upon the defendants under the Interstate Commerce Act in connection with land-sea routings of freight via Seatrain, all said to have been employed by defendants pursuant to a conspiracy to discourage and prevent shippers from shipping via Seatrain. Seatrain says the continuing conspiracy of defendants to boycott and obstruct its business already has cost it more than fifty million dollars. Accordingly, it seeks in this action to recover treble damages under the Clayton Act and to obtain a number of injunctive orders directed against various types of discriminatory and injurious conduct of which it complains.

In determining whether the complaint states a case appropriate for judicial relief we will consider the foregoing principal groups of allegations separately. First, and apparently most important in the contemplation of the parties, are the allegations made and the relief sought with reference to the boycotting of Seatrain in the interchange and use of railroad owned freight cars.

In this major aspect the present lawsuit continues a 20 year controversy between Seatrain and a large part of the railroad industry. In various earlier proceedings before the Interstate Commerce Commission the present parties have contested the issue whether and in what circumstances railroads are required to permit Seatrain to take and transport their freight cars. The railroads have insisted that no railroad is under a duty to permit Seatrain to use and transport its cars. Seatrain has insisted that it is entitled to the same general privilege of unrestricted interchange of cars as exists among the railroads themselves.

Beginning with Investigation of Seatrain Lines, Inc., 1935, 206 I.C.C. 328, the Commission has considered these opposing contentions and has resolved them by taking and adhering to an intermediate position. In the cited proceeding the Commission decided that under the Interstate Commerce Act it could and would require those railroads which choose or by Commission dictate are required to participate with Seatrain in through routes*fn1 to permit the unrestricted use and transportation of their freight cars by Seatrain as one of the procedures essential to the proper operation of through routing arrangements. But it also decided that Congress had not empowered it to impose any such requirement on railroads which were not in through route relationship with Seatrain. These rulings and the distinction they reflect are set out in plain language:

"We find nothing in the act imposing any duty upon or giving us jurisdiction to require a rail carrier to permit delivery of its cars to a water carrier where through routes between such rail and water carriers do not exist. ..."

"There is no duty to interchange cars with Seatrain resting on those defendants who are not parties to through routes with it, ..." 206 I.C.C. at 343

In that proceeding the Commission did not undertake to decide what railroads were or should be participants in through routing arrangements with Seatrain. That problem was considered and appropriate rulings made somewhat later in Seatrain Lines, Inc. v. Akron, Canton & Youngstown Ry., 1938, 226 I.C.C. 7. In that case the Commission again declared the duty of through route participants to permit Seatrain to use their cars.But this still did not settle the matter. For Seatrain soon complained that its service was being hampered by refusals of railroads to make their cars available to it, contrary to the principles and rulings enunciated by the Commission. On Seatrain's motion, the Commission reopened the car service controversy. After hearings the Commission reaffirmed and applied the principles declared in the earlier Investigation of Seatrain Lines and affirmatively ordered those railroads found or required to be in through route relationship with Seatrain to cease and desist from prohibiting the interchange of their cars with Seatrain and to charge Seatrain the same per diem rate as prevailed among the railroads themselves, with other terms and conditions to be negotiated. Hoboken Mfgrs. RR. v. Abilene & So. Ry. Co., 1941, 248 I.C.C. 109.

Dissatisfied with this order, the railroads sought its review in an appropriate proceeding before a statutory three-judge district court in New Jersey. The court sustained the Commission's power and action as to land-sea through routing in interstate commerce, but found that the Commission lacked power to require car exchange where Seatrain moved in foreign commerce. Pennsylvania Ry. v. United States, 1943, 55 F.Supp. 473. The railroads appealed the ruling as to interstate commerce and Seatrain appealed the ruling as to foreign commerce. The Supreme Court held that the Commission had been right as to both interstate and foreign traffic. United States v. Pennsylvania Ry., 1945, 323 U.S. 612. Quite obviously this ruling was limited by the fact that only the obligations among participants in through routing were before the courts. The ...

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