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KOPPERS CO. v. UNITED STATES

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF PENNSYLVANIA


June 7, 1955

KOPPERS COMPANY, Inc., Plaintiff,
v.
UNITED STATES of America, Defendant, and The Interstate Commerce Commission et al., Intervening Defendants

The opinion of the court was delivered by: GOURLEY

This is a suit to enjoin, set aside and annul an order entered by the Interstate Commerce Commission on October 4, 1954, 28 U.S.C. §§ 1331, 1336, 2284, 2321-2325.

It came on to be heard before a specially constituted statutory court pursuant to the provisions of Title 28 U.S.C. §§ 2284 and 2321-2325.

 In addition to the United States as statutory defendant, the Interstate Commerce Commission and certain common carriers have intervened as defendants.

 The answers of the Interstate Commerce Commission, The Chesapeake and Ohio Railway, The Virginian Railway Company and The Norfolk and Western Railway Company all plead a 'First Defense,' asserting in substance plaintiff's failure to state a claim upon which relief can be granted. *fn1"

 The complaint in this case followed the denial by the Commission of plaintiff's petition for reconsideration of its order of April 11, 1952. The first defense was lodged, which defense, if sufficient, will dispose of the proceeding and eliminate the necessity of considering the arguments upon the merits. If the defense is insufficient, it should be stricken to leave the way clear for a determination of the plaintiff's claim upon the merits.

 The following is the chronology of events:

 On January 16, 1951, the Class I common carrier railroads petitioned the Interstate Commerce Commission for approval of a general increase in freight rates. The petition was docketed Ex Parte No. 175, Increased Freight Rates, 1951, and resulted, inter alia, in an order entered on April 11, 1952, permitting rate rail increases as to coal with a limitation maximum of 40 cents per net ton; provided, however, that the increased rail freight rates on coal from the Southern Mines to Hampton Roads could be no higher than 20 cents per net ton when the coal was destined for subsequent movement by water in coastwise service to New England ports. The effect of said permissive order was to bestow upon receivers of coal located at New England ports a 20 cents lower rail rate for the transportation of coal from the mines to Hampton Roads ports than competing receivers located at less distant ports, including New York, New Jersey, and Philadelphia. On May 8, 1952, the plaintiff, which operates its coke plant at Seaboard, New Jersey, filed a petition for intervention in Ex Parte No. 175, and for reconsideration and modification of the April 11, 1952, order.

 On May 28, 1952, Consolidated Edison Company of New York, Inc., filed with the Commission a complaint against the Virginian Railway Company and The Chesapeake and Ohio Railway Company, which was assigned Docket No. 31045, it being claimed the permissive coal rate increases were unfair and discriminatory. The Koppers Company did not intervene or become a party to the proceeding on the complaint in Docket No. 31045, Consolidated Edison Company of New York, Inc. v. The Virginian Railway Company, et al.

 Plaintiff's petitions for reconsideration and intervention were related only to Ex Parte No. 175, Increased Freight Rates, 1951, and participated as an intervenor restricted to the ex parte proceeding alone. *fn2"

 On May 12, 1953, plaintiff filed a complaint before the Interstate Commerce Commission against the southern railroads, which proceeding has been assigned docket No. 31264, seeking to have the rates involved in the instant action declared invalid and also seeking reparations for the alleged illegal charges by The Chesapeake and Ohio Railway Company and others for coal shipped from the southern mines to Hampton Roads for movement by water in coastwise service to plaintiff's Seaboard plant. Said complaint is presently pending before the Commission.

 Plaintiff's suit before this court seeks to have the court direct the Commission to grant the relief sought in plaintiff's petition for reconsideration initially filed before the Commission, which is to require the southern carriers to maintain the same rate on transportation of coal from the southern mines to Hampton Roads ports for subsequent transshipment by water, whether the ultimate destination is the plaintiff's plant at Seaboard, New Jersey, or its competitors located at New England ports.

 It is contended that the Commission's report and order 'Ex parte No. 175, Increased Freight Rates, 1951; resulting from the findings of the Commission in that proceeding, whereby permissive increases in tariff form had become effective bestowing upon receivers of coal located at New England ports a twenty-cent lower rail rate for the transportation of coal from the mines to Hampton Roads ports than competing receivers located at less distant points, was unreasonable, discriminatory and unduly prejudicial.

 The crucial issue, therefore, is whether this court may set aside and annul a permissive order entered by the Commission when plaintiff has failed to exhaust his remedy under Sections 13 and 15 of the Interstate Commerce Act, but has interceded as an intervenor for reconsideration and modification of the Commission's findings.

  In the case of a permissive order, the carrier is the only necessary party to the proceeding. The Commission represents the public. While it is proper and customary for shippers interested to participate in hearings, there exists no provision for notice to them. They are not bound by the order entered and the tariffs filed. If the rates made by tariffs filed under the authority granted seem to them unreasonable, or unjustly discriminatory, Sections 13 and 15 afford ample remedy. To permit shippers to seek redress for such grievances in the courts would invade and often nullify the administrative authority vested in the Commission. The attempt of the court to remove some alleged unjust discrimination might result in creating more. United States v. Merchants' & Manufacturers' Traffic Association, 1916, 242 U.S. 178, 37 S. Ct. 24, 61 L. Ed. 233.

 Sections 13 and 15 of the Act speak with clarity, and explicitly specify the procedure which complaints must pursue before the Commission in order to seek redress of grievances. *fn3"

 The plaintiff has mistaken its remedy in the statutory scheme of railroad rate making. Its contention is that the Commission, without sufficient evidence or proper findings of fact, has determined or fixed particular rates for the plaintiff's particular traffic. But this misconceives what the Commission has actually done. It was not dealing finally with particular rates for particular traffic, but permitting increased rates for selected commodities, by a general order affecting all the railroads in the country.

 If the increased rates as applied to the plaintiff's particular situation can be shown to be unjust and unreasonable, its remedy is clearly by proceedings under Sections 13 and 15 of the Act for individual relief, and for reparation orders under the Act of Congress. 49 U.S.C.A. § 16(1); Brimstone R. & Canal Co. v. United States, 1928, 276 U.S. 104, 48 S. Ct. 282, 72 L. Ed. 487; Alexander Sprunt & Son v. United States, 1930, 281 U.S. 249, 50 S. Ct. 315, 74 L. Ed. 832; Eagle Cotton Oil Co. v. Southern R. Co., 5 Cir., 51 F.2d 443, certiorari denied, 1931, 284 U.S. 675, 52 S. Ct. 130, 76 L. Ed. 571; Algoma Coal & Coke Co. v. United States, D.C.E.D.Va.1935, 11 F.Supp. 487. The plaintiff must proceed to exhaust its administrative remedies by challenging the rates filed by the railroads pursuant to the authorization granted it by the Commission in the ex parte proceeding.

 The plaintiff has filed such a complaint which was assigned Docket No. 31264. The plaintiff must pursue this complaint to a final conclusion before the Commission before it may maintain an action in this court attacking the rates now in dispute.

 It is not for this court to tinker with the delicate and fragile machinery of rate fixing and rate apportionment until the administrative process has been meticulously and stringently followed and exhausted in accordance with statutory requirement. The Commission must be afforded every available opportunity to utilize its vast reservoir of knowledge, experience, and know-how -- in a proceeding wherein an unequivocal compliance with Sections 13 and 15 has been made with a complaint filed and defendant or defendants served, and clear-cut adversary contests evaluates and conclusively ruled upon, before the arm of the court should intercede upon the merits.

 It is our considered judgment that the motion of plaintiff to strike the First Defense asserted by the Commission and the intervening railroads should be refused.

 An appropriate order is entered.


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