A. E. Staley Mfg. Co. v. United States

310 F. Supp. 485, 1970 U.S. Dist. LEXIS 13022
CourtDistrict Court, D. Minnesota
DecidedJanuary 29, 1970
DocketNo. 4-69 Civ. 459
StatusPublished
Cited by6 cases

This text of 310 F. Supp. 485 (A. E. Staley Mfg. Co. v. United States) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A. E. Staley Mfg. Co. v. United States, 310 F. Supp. 485, 1970 U.S. Dist. LEXIS 13022 (mnd 1970).

Opinion

MEMORANDUM

PER CURIAM.

The plaintiffs request this Court to issue a temporary injunction restraining the Interstate Commerce Commission from enforcing what the plaintiffs describe as an “order” of the Commission issued on October 20, 1969. The “order” as later interpreted obligated the plaintiffs as consignees of grain shipments to remove non-reusable paper grain doors from unloaded railroad cars. (See Appendix A) It also obligated the rail carriers to refuse to move cars from which the paper grain doors had not been removed by consignees or to charge consignees for the removal of the doors.

Affidavits and counter affidavits were filed by the parties. No oral testimony was presented to the Court. The affidavits, as explained and clarified by the parties at oral argument, show that: The plaintiffs receive shipments of grain at various elevators in the United States. The grain is shipped in ordinary box cars. The box cars are modified by installing temporary grain doors inside the permanent sliding doors so as to prevent leakage. The grain doors are made of wood or reinforced paper. The paper doors can ordinarily be substituted for the wooden ones at the carrier’s option. The carrier has an obligation to furnish the doors and the shipper has an obligation to install them. Rules 14 and 27 (See Appendix B) are said to govern the consignees’ obligation to unload rail cars. For at least twenty-five years, the railroads have removed the paper grain doors at their expense. This practice was known to the Commission. When the plaintiffs received the “order” of October 20, 1969, they caused immediate inquiry to be made as to whether it was to be construed so as to require consignees to remove the paper grain doors at their expense. Representatives of the Commission answered this question in the affirmative.1 The railroads implemented the “order” rapidly. Consignees are now either paying for the removal of the paper doors or having them removed at their expense in 50% of the cases. The cost of removing the doors ranges from $5 to $10 per car.

The plaintiffs contend that the “order” was issued by the Commission without notice to the plaintiffs and with[487]*487out giving them an opportunity to be heard with respect to it as required by Section 553 of the Administrative Procedure Act, Title 5 U.S.C. They argue that even though the “order” was entitled “Notice”, and subsequently described as a “press release”, it is, in fact, an “order” of the Commission which was an unwarranted interpretation of Rules 14 and 27 and has the effect of amending an established tariff which is reviewable by this Court under 28 U.S.C. § 1336. They further contend that the “order” deprives them of property without due process of law.

The Commission requests that the complaint be dismissed because this Court lacks jurisdiction over the subject matter and because the complaint fails to state a claim upon which relief can be granted. It, alternatively, opposes the motion for a preliminary injunction on the grounds that the right to equitable relief has not been shown. It specifically argues: (1) that the “press release” was not an order of the Commission and is not reviewable by this Court; (2) that the plaintiffs have not exhausted their administrative remedies; (3) that the plaintiffs have alternative means of testing the requirements sought to be enforced by the Commission; and (4) that the Commission’s interpretation of Rules 14 and 27 is a reasonable one and is in the public interest.

The intervening defendants join in the motion for dismissal and in opposition to the plaintiffs’ motion. They advance substantially the same arguments as the Commission, and additionally urge that the relief sought by the plaintiffs is inappropriate and that the plaintiffs will not be irreparably damaged if this Court refuses to grant the relief sought. They further urge that all shippers by rail will be harmed by the issuance of a restraining order.

On the basis of this record, we believe that the Commission’s notice of October 20, 1969, was more than a “press release”. It was, in effect, an order which by its interpretation effectively and substantially amended an existing tariff or promulgated a new one. Tariffs 14 and 27, which the Commission said it was interpreting, do not fix the responsibility for the removal of the paper grain doors on the consignees.2 Although these tariffs have been in effect for many years, they have never been construed or interpreted to require consignees to remove the paper grain doors from box cars. Indeed, the railroads, with the knowledge of the Commission, have removed the paper grain doors at their expense for at least twenty-five years. While the cited tariffs require the “owner” (consignee) to remove the freight being shipped, the grain doors, whether wood or paper are not freight. They are furnished by the railroad and are considered a part of the box car which is owned by the railroad not the consignee.

The impact of the “order” is not inconsequential. The direct cost of removing paper grain doors from each box car is significant and the cumulative cost is great. Significant additional indirect costs will be incurred by consignees in holding and moving cars. Additionally, substantial changes in employment patterns may have to be developed.

The penalties for violating the “order”, prosecution under the Elkins Act and Section 6(7) of the Interstate Commerce Act, are clearly spelled out in the “order” and are substantial.3

[488]*488As the notice was in fact an “order” of the Commission, which had the effect of amending an existing tariff and as it was issued without notice or hearing and without benefit of record or finding, it cannot be permitted to stand.4

We are not persuaded by the defendants’ argument that the plaintiffs must be denied relief because they failed to exhaust their administrative remedies before proceeding in this Court. They made inquiries of the Commission5 which indicated that the Commission did not believe that the notice was one which was subject to review or reconsideration. Furthermore, we are not aware of any principle of law which requires that a party request an administrative agency to reconsider or review an action of the administrative agency which is issued in violation of the agency's rules, the Administrative Procedures Act and without any semblance of a notice or hearing.

Nor are we persuaded that the plaintiffs were required to test the Commission’s “order” by any of the alternatives suggested by the Commission. The plaintiffs need not, under the circumstances of this case, lay themselves open to numerous criminal prosecutions or bring numerous actions for damages against the railroads as a condition to seeking relief against this “order” of the Commission issued without notice or hearing.

On the basis of this record, we find no support for the Commission’s view that its interpretation of Rules 14 and 27 is a reasonable one and in the public interest. This is not to say, however, that there is no evidence in the record to support the view that the public inter[489]*489est would be better served, primarily by increasing box car availability, if existing tariffs were modified or a new tariff adopted which would require the consignee to remove the paper grain doors, but that is not the issue before us.

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Bluebook (online)
310 F. Supp. 485, 1970 U.S. Dist. LEXIS 13022, Counsel Stack Legal Research, https://law.counselstack.com/opinion/a-e-staley-mfg-co-v-united-states-mnd-1970.