PETITION FOR REVIEW INTERSTATE COMMERCE COMMISSION.
Aldisert and Higginbotham, Circuit Judges, and H. Curtis Meanor, District Judge.*fn*
This petition, filed by a protesting minority shareholder, asks us to review the Interstate Commerce Commission's approval of a transaction of the Kansas City Southern Railway Company involving a reverse stock split coupled with the purchase of any resulting fractional shares. We are required to decide: whether there is substantial evidence in the record as a whole to support the Commission's findings that the transaction was for a proper corporate purpose and that adequate compensation was offered for the fractional shares; whether the Commission selected the proper legal precepts in determining that the transaction was for a lawful corporate object; and whether the Commission abused its discretion in denying Petitioner's requests for extensive discovery and an oral hearing. Because we conclude that the Commission neither erred nor abused its discretion, we will deny the petition.
The Kansas City Southern Railway Company, a Missouri corporation and Intervenor here, had 1,440,000 shares of stock outstanding; of these, 420,000 were preferred shares and 1,020,000 were common. Kansas City Southern Industries, Inc., the railway company's parent company, owned or controlled 98% of the preferred stock and 99% of common. Seventy minority shareholders held the remaining 7,418 preferred shares and twenty-eight minority shareholders held the remaining 1,948 common shares. On February 26, 1981, the railway company filed an application with the ICC, pursuant to 49 U.S.C. § 11301, for authority to reissue its securities to effect a reverse stock split.*fn1 The proposal would allow the railway company to issue one share of new preferred stock for every 7,000 shares of old preferred and one share of new common stock for every 2,000 shares of old common. The plan also called for the purchase, by the railway company, of any resulting fractional shares at $30 per share for the preferred and $210 per share for the common. It is not disputed that this transaction would eliminate all minority shareholders.
Petitioner Frank J. Laird, a Pennsylvania resident, owned 1,069 shares of the railway company's common stock and opposed ICC approval of the transaction. He claimed that the evidence was insufficient to support a finding either that the transaction was for a proper "corporate purpose" or that the proposed compensation for fractional shares was adequate (and thus the transaction was not "reasonably appropriate" for that corporate purpose); that the transaction was not for a "lawful object"; and that the Commission abused its discretion in denying his motions for extensive discovery and an oral hearing. Laird argues these same points on appeal. The first two claims relate to the manner in which the Commission fulfilled its statutory duty under 49 U.S.C. § 11301.*fn2 The third refers to the manner in which the Commission applied its own procedural rules.
On February 8, 1982, after determining that the transaction met federal statutory standards and was legal under the corporation law of Missouri, and after granting Laird limited discovery but denying his request for an oral hearing, the ICC approved the transaction. Laird then filed this petition for review.
This court has jurisdiction under 28 U.S.C. § 2342(5) to review the Commission's order.*fn3 We have permitted the railway company to intervene.
Laird first asserts that there was insufficient evidence to support the Commission's findings either that the stock split was for a proper corporate purpose of the carrier or that the compensation offered for fractional shares was adequate. In considering the sufficiency of evidence in support of an agency ruling our review is limited. The Commission's order will be upheld unless it is found to be arbitrary, capricious, an abuse of discretion, or unsupported by substantial evidence. 5 U.S.C. § 706(2) (A), (E); see Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285, 42 L. Ed. 2d 447, 95 S. Ct. 438 (1974). Further, in reviewing an ICC order, this court will not reweigh the evidence presented before the Commission. It is for the Commission, as the trier of fact, to weigh the evidence and draw the appropriate inferences therefrom. Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 102 S. Ct. 2182, 2190, 72 L. Ed. 2d 606, (50 U.S.L.W. 4592, 4596, 1982); Ralston Purina v. Louisville & N.R.R., 426 U.S. 476, 48 L. Ed. 2d 781, 96 S. Ct. 2160 (1976); Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 103 (3d Cir. 1981). Our task is merely to determine if there is substantial evidence in the record to support the basic and inferred facts found by the ...