The opinion of the court was delivered by: FULLAM
Before going into reorganization under § 77 of the Bankruptcy Act on June 21, 1970, the Debtor had filed applications with the Interstate Commerce Commission for the discontinuance of various passenger trains. On September 22, 1970 (served September 30, 1970) the ICC entered an order at Finance Docket No. 26106, authorizing, inter alia, the discontinuance of 16 trains.
This order was appealed to a statutory three-judge court in the Western District of Pennsylvania (Civil Actions Nos. 70-1156 and 70-1157). In those proceedings, a temporary restraining order was entered on September 30, 1970, later expanded into an interlocutory injunction, restraining the discontinuance of the 16 trains. The Trustees of the Debtor sought unsuccessfully to challenge the jurisdiction of the three-judge court, with respect to four of the trains running through Canada; and initially, for a brief period, attempted to assert that this Court, by reason of the reorganization proceedings, had exclusive jurisdiction.
The Trustees appealed the decision of the three-judge court, insofar as it related to the four Canadian trains, to the Supreme Court of the United States.
On October 30, 1970, the Rail Passenger Service Act of 1970, P.L. 91-518, 45 U.S.C. 501 et seq., was enacted into law. Section 802 of that statute reads as follows:
'Section 802. Effect on pending proceedings. Upon enactment of this Act, no railroad may discontinue any intercity rail passenger service whatsoever other than in accordance with the provisions of this chapter, notwithstanding the provisions of any other Act, the laws or constitution of any State, or the decision or order of, or the pendency of any proceeding before, any Federal or State court, agency, or authority.'
Accordingly, on February 22, 1971, the Supreme Court disposed of the pending appeal from the three-judge court interlocutory injunction as follows:
'Judgment vacated and case is remanded to the United States District Court for the Western District of Pennsylvania with instructions to vacate the interlocutory injunction appealed from because the injunction, together with the underlying cause, has become moot.' Baker v. Pennsylvania, 401 U.S. 902, 91 S. Ct. 875, 27 L. Ed. 2d 801.
Pursuant to the Supreme Court's mandate, the three-judge District Court, on March 25, 1971, entered the following order in each of the two cases:
'AND NOW, this 25th day of March, 1971, for the reasons heretofore set forth, it is ORDERED that the preliminary injunction heretofore entered be and the same is VACATED and the complaint be and the same is DISMISSED for mootness.'
Meanwhile, on March 19, 1971, a group of 16 plaintiffs,
all of whom had been parties to one of the cases in the three-judge court, instituted a new action (Civil Action No. 71-282) in the United States District Court for the Western District of Pennsylvania, seeking a preliminary, and ultimately a final, injunction against the discontinuance of the 16 passenger trains which had been involved in the proceeding before the statutory court. The complaint alleges, on information and belief, that there is as yet no contract in effect between the Debtor and the National Rail Passenger Service Corporation ('Railpax'), and that discontinuance of these trains would be a violation of the National Rail Passenger Service Act of 1970, supra.
The Trustees thereupon filed in this Court a petition and obtained an order (No. 214) on the plaintiffs in this latest action to show cause why they should not be restrained from proceeding further with the new litigation unless and until they should seek, and obtain, leave of this Court to proceed with the suit. A hearing has been held, in April 15, 1971, and extensive oral argument has been heard.
It is to be noted that the new litigation in the Western District, Civil Action No. 71-282, clearly is not, and does not purport to be, an appeal from any ICC order to a statutory court. Nor can it be viewed as an action for damages arising out of the operation of trains, within the meaning of § 77(j) of the Bankruptcy Act. It would seem reasonably certain, therefore, that the filing of this action is in contravention of Order No. 1 entered in these proceedings.
Since the respondent are, for the most part, governmental entities seeking only to protect a public interest, the technical violation of Order No. 1 will be disregarded and the 'response' filed, and arguments advanced, on behalf of the respondents will be treated as either a request that Order No. 1 be interpreted as not prohibiting the litigation they have filed, or as a request pursuant to Order No. 1, for leave to proceed with it.
The real issues raised by the pending petition and response, are (1) whether this Court has the power to restrain the prosecution of the litigation in question, and (2) if so, whether ...