B. F. Goodrich Co. v. Northwest Industries, Inc.

303 F. Supp. 53, 1969 U.S. Dist. LEXIS 10743, 1969 WL 177901
CourtDistrict Court, D. Delaware
DecidedAugust 11, 1969
DocketCiv. A. No. 3752
StatusPublished
Cited by6 cases

This text of 303 F. Supp. 53 (B. F. Goodrich Co. v. Northwest Industries, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
B. F. Goodrich Co. v. Northwest Industries, Inc., 303 F. Supp. 53, 1969 U.S. Dist. LEXIS 10743, 1969 WL 177901 (D. Del. 1969).

Opinion

OPINION

STEEL, District Judge.

The complaint, purportedly filed under sections 1337 and 2201 of the Judicial Code, 28 U.S.C. §§ 1337 and 2201, prays for a determination by this Court that it would be unlawful under section 5 (4) of the Interstate Commerce Act, 49 U.S.C. § 5(4) for the defendant, Northwest Industries, Inc., (hereafter "Industries”) to acquire control of the plaintiff, B. F. Goodrich Company (hereafter “Goodrich”), and through it, Motor Freight Corporation without first obtaining the authorization and approval of the Interstate Commerce Commission. The complaint also seeks an injunction, both permanent and temporary, under section 2202 of the Judicial Code, 28 U.S.C. § 2202, prohibiting such acquisition of control, until authorization therefor (thus far not obtained) has been secured from the Interstate Commerce Commission, pursuant to section 5(2) (b) of the Interstate Commerce Act, 49 U.S.C. § 5(2) (b).

The Interstate Commerce Commission has intervened in the action, and has filed a motion to dismiss the complaint on the grounds that this Court lacks jurisdiction over the subject matter and the complaint fails to state a claim upon which relief can be granted.

As a basis for the declaratory and injunctive relief sought the complaint alleges :

Goodrich owns all of the outstanding shares of Motor Freight Corporation and so controls it. Motor Freight is a motor common carrier subject to Part II of the Interstate Commerce Act and operates under certificates of convenience and necessity issued by the Commission. Goodrich also owns 100 shares of Industries. Industries owns, among other things, approximately 99 per cent of the voting stock of Chicago & North Western Railway Co. (hereafter “North Western”) and controls it. North Western is a common carrier by rail subject to Part I of the Act.

Industries has made a tender offer to stockholders of Goodrich to acquire their common stock in Goodrich. The offer has been extended to August 11, 1969. Industries has placed no limit ón the number of shares sought to be acquired. As of April 17, 1969, Industries owned approximately 700,000 shares which it purchased in the open market. Industries has stated it intends to acquire more than 50 per cent of the outstanding common stock of Goodrich and to obtain effective control of it. By obtaining control of Goodrich, Industries will obtain control of another carrier, Motor Freight.

The complaint alleges that it will be unlawful under section 5(4) of the Act for Industries to obtain control of Goodrich and Motor Freight without prior approval of the Commission under section 5(2) (b). It asserts that Industries has not done this, and publicly has indicated it is not required and does not intend to do it. The complaint further alleges that Industries has announced that simultaneously with its acquisition of control of Goodrich, Industries will sell the stock of Motor Freight or place the control of Motor Freight with an independent voting trustee. This, according to the complaint, would not prevent the proposed transaction, without prior Commission approval and authorization, from violating section 5(4) of the Act.

Finally, the complaint avers that an actual controversy exists between Industries and Goodrich as to whether the transaction referred to, if carried out without the approval and authorization of the Commission, will violate section 5(4) of the Act, and that if it is so carried out will cause irreparable damage to Goodrich for which no adequate remedy at law exists.

The case is before the Court upon plaintiff’s motion for a preliminary injunction as prayed for in the complaint. Also before the Court is the Commis[56]*56sion’s motion to dismiss. Affidavits for and against the motions have been filed and two documents were received in evidence at the hearing on August 6, 1969.

Jurisdiction

Industries and the Commission both assert that the resolution of the issue presented by the complaint reposes exclusively with the Commission and this Court, therefore, is without jurisdiction to decide it. Counsel for Goodrich and for the Commission admit that they know of no decision in which a District Court has entertained an action by a private litigant to secure relief for a violation of the Interstate Commerce Act, except in instances where the Act expressly authorizes such judicial action. These statutory authorizations are specified in Chicago, South Shore & South Bend Railroad v. Monon Railroad, 235 F.Supp. 984, 986 (N.D.Ill.1964). Furthermore, in the Monon case, the Court held that a District Court was without jurisdiction to grant any relief in a case virtually identical with that at bar and dismissed the action.

Plaintiff argues that jurisdiction should be upheld on the basis of Pennsylvania Motor Truck Ass’n v. Port of Philadelphia Marine Terminal Ass’n, 183 F.Supp. 910 (E.D.Pa.1960). An analysis of that case and the provisions of the Act itself demonstrates its inapplicability to the instant case. Pennsylvania Motor Truck arose under the Shipping Act of 1916, not the Interstate Commerce Act. But this circumstance apart, the injunction there granted in favor of one private litigant against another was to maintain the status quo pending the processing of the merits of the dispute then pending before the Federal Maritime Board.1 In the case at bar the merits of the dispute are not pending before the Commission, and hence there is no basis for plaintiff to seek a status quo order while the dispute is being resolved in a pending administrative proceeding. Here, the Court is asked to resolve the merits of the controversy, i. e., whether the challenged transaction can be legally carried out without Commission approval and authorization.

Furthermore, in the Pennsylvania Motor Truck case the Court had merely to determine whether the provisions of a tariff constituted an “agreement”, “modification” or “cancellation” as those terms were used in § 15 of the Shipping Act. The Court said that this determination called for no expertise on the part of the Federal Maritime Board and hence a judicial determination would not do violence to the role of the administrative agency.

In this respect the Pennsylvania Motor Truck case contrasts sharply with that at bar. The basic vice which plaintiff seeks protection against is Industries’ obtaining “control” of Goodrich and Motor Freight without the authority and approval of the Commission. Plaintiff plants its case upon the provisions of section 5(2) and section 5(4) of the Act. The former provides:

“(a) It shall be lawful, with the approval and authorization of the Commission, as provided in subdivision (b) of this paragraph—
(i) * * * for a person which is not a carrier and which has control of one or more carriers to acquire control of another carrier through ownership of its stock or otherwise.”

Section 5(2) does not state what transactions are illegal; section 5(4) does this.

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Cite This Page — Counsel Stack

Bluebook (online)
303 F. Supp. 53, 1969 U.S. Dist. LEXIS 10743, 1969 WL 177901, Counsel Stack Legal Research, https://law.counselstack.com/opinion/b-f-goodrich-co-v-northwest-industries-inc-ded-1969.