Bangor & Aroostook Railroad v. Interstate Commerce Commission

574 F.2d 1096
CourtCourt of Appeals for the First Circuit
DecidedMarch 30, 1978
DocketNos. 77-1082, 77-1105 and 77-1108
StatusPublished
Cited by1 cases

This text of 574 F.2d 1096 (Bangor & Aroostook Railroad v. Interstate Commerce Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bangor & Aroostook Railroad v. Interstate Commerce Commission, 574 F.2d 1096 (1st Cir. 1978).

Opinion

LEVIN H. CAMPBELL, Circuit Judge.

These are consolidated petitions to review cease and desist orders and damage awards entered by the Interstate Commerce Commission in a report and order of February 4, 1977. 28 U.S.C. §§ 2321, 2342, 2344. The Commission’s actions followed administrative proceedings concerning the legality of interchange arrangements between the Bangor and Aroostook Railroad Co. (BAR) and Canadian Pacific Ltd. (CP). Initiated in 1973 by the Commission itself, the proceedings focused upon complaints which Maine Central Railroad (MEC) and the Boston and Maine Corporation (B&M) filed in 1974 seeking damages on account of BAR’s purportedly unlawful preference of CP.

In agreement with an administrative law judge, the Commission concluded that BAR, “aided” by CP, had “unduly prejudiced [1101]*1101Maine Central Railroad Co. and Boston and Maine Corporation ... in the distribution of traffic in violation of section 3(4) of the Interstate Commerce Act [the Act],” 49 U.S.C. § 3(4).1

Acting under authority of § 16(1) of the Act, 49 U.S.C. § 16(1), the Commission held BAR liable in damages to the two complaining carriers. But the Commission’s assessment of the amount of damages was considerably lower than the ALJ’s. It ordered BAR to pay damages of $176,323 to MEC and $86,917 to B&M, with 4% interest.2

BAR here challenges the Commission’s ruling that it was guilty of conduct viola-tive of § 3(4). It also challenges the Commission’s awarding damages to MEC and B&M and the amounts assessed. In separate petitions, MEC and B&M also contest the amount of damages, claiming that the ALJ’s higher assessments should have been adopted.

We conclude that the Commission had ample basis to find that BAR violated § 3(4) and that its conduct damaged MEC and B&M. We also sustain the Commission’s determination of damages. However, since we find the cease and desist orders to be overly broad, we vacate those orders and remand that aspect of the case for clarification.

I

At the heart of BAR’s allegedly improper conduct is a formal agreement that BAR and CP concluded in July, 1970, initiating a shipper solicitation program in an attempt to divert “as much traffic as possible” from MEC and B&M3 onto BAR’s alternative connecting line, CP. The facts we state are drawn from the opinions of the ALJ and the Commission. Except as noted, they are substantially undisputed.

BAR’s track network spans 541 miles in Maine. It connects with CP at Brownville Junction, located 45.3 miles north of Northern Maine Junction, where BAR interchanges with MEC. MEC connects further on with B&M.4 These four railroads skirt and cross the Canadian border in the northeastern reaches of Maine, offering alternative through routes for shippers with goods to be transported across the region. Paper, frozen vegetables, starch, clay, and wood-pulp, primarily, are shipped over these lines. Depending on a shipper’s origination and destination points, he may have the option of routing his traffic via BAR and CP, or via BAR with MEC and B&M.5 BAR is primarily an originating carrier, receiving goods directly from shippers rather than from other railroads, and shipping them out toward destinations not reached by its lines.

In October of 1969, the Amoskeag Co., a company controlled by a “voluntary association” known as Dumaines, purchased 99 percent of BAR stock. Frederic C. Du-maine, who controls Dumaines, became a director and chief executive officer of BAR after the purchase. When this purchase was made, Amoskeag owned 26 percent of MEC stock as well; the Commission found that “word of an impending merger between MEC and BAR became widespread” after the acquisition. In early November, 1969, the president of BAR (who had stayed on at the request of Dumaine) asked that BAR’s general freight manager prepare a traffic study showing which of the cars presently traveling via Northern Maine Junction could instead be interchanged at Brownville Junction, without modifying [1102]*1102their destinations. A series of memos on this subject followed; most were passed on to Dumaine by the president of BAR, in late November and early December of 1969. The memos detailed the commodities and numbers of carloads that were subject to such a diversion; one set forth the estimated loss, about $2.8 million per year, that was predicted to accrue to MEC and B&M should all 24,000 such carloads successfully be rerouted. Another memo, circulated in mid-December, compared transit times for goods traveling the alternative routes, and showed little over-all difference between the two routes.

Negotiations between CP and BAR to arrange a cooperative effort in support of a freight diversion plan were initiated late in 1969, and continued through the first half of 1970. Salient features of the negotiations were BAR’s undertaking to furnish CP origin and destination statistics of all traffic subject to diversion, CP’s duty aggressively to solicit new traffic, and CP’s agreement to expand and improve its interchange facilities at Brownville Junction in order to handle the expected additional traffic. CP also indicated by letter its understanding that any agreement regarding concerted solicitation efforts that was ultimately concluded would be “long-term and not subject to any reversal of policy” by BAR.

In mid-January, BAR investigated the potential financial impact on BAR of the proposed re-routing efforts: it compared the divisions that it would receive from additional traffic of different commodities when shipped over CP instead of over MEC. The investigation showed that diversion would decrease BAR’s revenues in some cases and induced CP to offer to pay BAR a “car allowance” for every additional car moving over its lines that would otherwise give BAR a diminished division.

After further discussion and correspondence, the terms of an agreement were reached in early June of 1970, and activity pursuant to that agreement intensified.6 Under the heading “PRIVATE” a written confirmation of the agreement set forth inter alia that BAR had,

“agree[d] to interline with CP Rail via Brownville Junction as many cars of paper products and potatoes as it is possible for it so to interline and anticipates that by reason of this agreement such interline traffic will be increased by approximately 24,000 cars annually as follows:
“Forwarded to CP Rail
Paper 11,000
Potatoes 4,500
Other 3,500
Sub-total 19,000
Received from CP Rail
Misc. 5,000”

The agreement described the allowances that CP agreed to pay BAR on additional carloads of potatoes and paper products that would be interlined at Brownville Junction; those payments were to be made “quarterly by check through the Claims Section of the Auditor of Freight Claims”. CP also formally undertook to improve its interchange facilities.

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574 F.2d 1096, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bangor-aroostook-railroad-v-interstate-commerce-commission-ca1-1978.