Consolidated Rail Corporation v. Grand Trunk Western Railroad

607 F. App'x 484
CourtCourt of Appeals for the Sixth Circuit
DecidedApril 15, 2015
Docket13-2269
StatusUnpublished
Cited by4 cases

This text of 607 F. App'x 484 (Consolidated Rail Corporation v. Grand Trunk Western Railroad) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Consolidated Rail Corporation v. Grand Trunk Western Railroad, 607 F. App'x 484 (6th Cir. 2015).

Opinion

OPINION

HELENE N. WHITE, Circuit Judge.

Grand Trunk Western Railroad Company (GTW) appeals a jury verdict in favor of Plaintiffs Consolidated Rail Corporation (Conrail) and Norfolk Southern Railway Company (NS) and Third-Party Defendant CSX Transportation, Inc. (CSX), and the denial of its post-judgment motion for judgment as a matter of law, a new trial, or remittitur, in this action arising from a dispute regarding the right to cross and use a segment of GTW’s railroad track. We AFFIRM.

BACKGROUND

A. The 1897 Agreement

Beginning in 1873, Conrail 1 operated parallel railroad tracks that ran south from Trenton, Michigan, and north to Detroit, *487 Michigan. In 1897, GTW sought to extend its existing tracks northeastward to Detroit via two railroad tracks that would, in areas relevant here, flank Conrail’s existing tracks before crossing the Conrail tracks in the vicinity of Trenton (FN Interlocking) and then continue to flank Conrail’s tracks, north towards Detroit. The resulting GTW tracks would block Conrail’s access to areas east and west ■ of Conrad’s tracks near Trenton.

To construct the interlocking system GTW had to obtain permission to cross Conrad’s tracks. In exchange for this permission, Conrail sought to preserve its ability to reach locations in the Trenton area by securing the right to cross GTW’s tracks. The parties thus entered into the November 11, 1897 Agreement (1897 Agreement), which allowed GTW to install its interlocking system “at or near Trenton” in order to cross Conrad’s tracks. The 1897 Agreement also identified a segment of GTW’s new track that Conrail could cross at any point to reach Trenton-area destinations to the east and west, and contained provisions authorizing Conrail to build additional tracks that would cross over the GTW tracks. The agreement was executed, and GTW built the tracks as proposed.

B. The Trackage Rights Agreement

Since the mid-1970s, Huron Valley Steel (HVS), also known as Trenton Steel Storage and Processing (Trenton Steel Storage), has owned and operated a steel-processing facility on a contiguous, 85-acre parcel of land in Trenton. In 1993, Conrail attempted to exercise its rights under the 1897 Agreement to build its own crossing over GTWs track to deliver freight to HVS. Specifically, Conrail informed GTW that it would “cross the GTW tracks to access existing or new industry on [Conrail’s] Detroit-Toledo corridor.” Although HVS had its own private track, known as the “private industry track,” Conrail needed to cross a portion of GTW’s tracks to gain access to the HVS track. Conrail initially proposed building its own specialty track over GTW’s lines to effectuate the crossing.

GTW rejected these requests as beyond the scope of Conrad’s rights under the 1897 Agreement and a dispute ensued. GTW and Conrail agreed to arbitrate the issue whether the 1897 Agreement permitted Conrail’s proposed crossing of the GTW track. Further, GTW and Conrail agreed in June 1994 that should Conrail prevail in the arbitration, GTW would allow Conrail to use its existing track rather than have Conrail install its own crossing diamond, a type of special track, to access the “premises” (1994 Arbitration Agreement or 1994 Agreement). Specifically, the agreement provided:

In the event the arbitrators decide that Conrail may cross GTW to serve Trenton Steel Warehouse, GTW will permit Conrail immediate access to Trenton Steel Warehouse. GTW agrees that Conrail will effect the crossing and access to Trenton Steel Warehouse by operating over GTW trackage to the extent necessary to cross from Conrail’s right-of-way to the premises of Trenton Steel Warehouse in an operationally practicable and efficient way that is consonant with Conrad’s desire to provide rail service....

The 1994 Agreement defined “Trenton Steel Warehouse” as “the facility of Trenton Steel Processing and Storage, d/b/a Huron Valley Steel Corporation (and its successors and assigns) (“Trenton Steel Warehouse”), located in the Trenton Commercial Industrial Park.”

On January 21, 1996, the arbitrators found in favor of Conrail. After negotiations over the specific language of the *488 agreement, GTW and Conrail executed the Trackage Rights Agreement (TRA) on May 1, 1996. As explained by David Wilson, former GTW Vice President of Operations, a trackage rights agreement is usually an agreement that allows one railroad to traverse over the track of another railroad from a “Point A” to “Point B.” The TRA granted “Conrail the right to operate its trains, locomotives, cars, and equipment” over designated sections of GTW’s track in the Trenton area (Trackage Rights). The section of track designated for Conrail’s use was named the “Track-age.” The TRA further specified that the “Trackage Rights” are “for the sole purpose of serving Trenton Steel Warehouse or its successor.” However, the TRA does not define “Trenton Steel Warehouse.”

C. Surface Transportation Board Decision No. 89

A year after the TRA was executed, the Surface Transportation Board (STB) issued Decision 89, approving NS’ and CSX’s acquisition of Conrail. CSX Corp. & CSX Tramp., Inc., Norfolk S. Corp. & Norfolk S. Ry. Co. Control & Operating Leases/agreements-Conrail Inc. & Consol. Rail Corp., 3 S.T.B. 196 page 5 (1998) (Decision 89) (“except as otherwise indicated, we are approving the primary application in its entirety”). Congress established the STB in 1996 to assume some of the regulatory functions that had been administered by the Interstate Commerce Commission (ICC) before the ICC was abolished. STB Website, Overview of the STB, http://www.stb.dot.gov/stb/about/ overview.html (“The STB is an economic regulatory agency that Congress charged with resolving railroad rate and service disputes and reviewing proposed railroad mergers.”). The STB now has jurisdiction over a range of disputes related to railroads, including approving all mergers of Class I railroads and preserving competition between railroads that merge:

The Board shall approve and authorize a transaction under this section when it finds the transaction is consistent with the public interest. The Board may impose conditions governing the transaction, including the divestiture of parallel tracks or requiring the granting of trackage rights and access to other facilities. Any trackage rights and related conditions imposed to alleviate anti-competitive effects of the transaction shall provide for operating terms and compensation levels to ensure that such effects are alleviated.

49 U.S.C.A. § 11324(c) (emphasis added). GTW does not challenge the STB’s authority to supersede anti-assignment provisions in merger contracts and effectively render one party an assignee of another. 2

In Decision 89, the STB determined that Conrail would exist solely as an agent for NS and CSX:

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Bluebook (online)
607 F. App'x 484, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consolidated-rail-corporation-v-grand-trunk-western-railroad-ca6-2015.