Mohawk Motor, Inc. v. United States

399 F. Supp. 581
CourtDistrict Court, E.D. Michigan
DecidedAugust 21, 1975
DocketCiv. A. No. 4-72092
StatusPublished

This text of 399 F. Supp. 581 (Mohawk Motor, Inc. v. United States) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mohawk Motor, Inc. v. United States, 399 F. Supp. 581 (E.D. Mich. 1975).

Opinion

MEMORANDUM OPINION

Before McCREE, Circuit Judge, and FREEMAN and FEIKENS, District Judges.

FEIKENS, District Judge.

Plaintiff, Mohawk Motor, Inc. (Mohawk), seeks to enjoin and set aside [582]*582certain orders of the Interstate Commerce Commission (Commission). By reason of the requirement of 28 U.S.C. § 2284, a three-judge district court was convened. International Cartage, Inc. (ICI) is an intervening plaintiff and Associated Truck Lines, Inc., Jones Transfer Company and White Star Trucking, Inc. are common motor carriers and intervening defendants. Central Transport, Inc., a common motor carrier of general commodities (Central), now owns Mohawk.

Central, in 1968, operated exclusively within the state of Michigan. At that time, Central sought authority from the Commission to acquire control of Mohawk through purchase of its capital stock. It ultimately contemplated merger. Mohawk, also a motor common carrier, possessed the authority to operate in Michigan, Indiana and Ohio. Mohawk's routes extend from Detroit, Michigan on the north, Cleveland, Ohio on the east, Cincinnati, Ohio on the south and Fort Wayne, Indiana on the west.

In June of 1968, while the Central-Mohawk application was pending before the Commission, Central filed an application with the Commission for authority to temporarily lease and to permanently acquire a portion of the operating rights of Norwalk Truck Lines, Inc. (Norwalk) of Littleton, Colorado. These rights involve routes extending from Pontiac, Michigan on the north, Akron, Ohio on the east, Mansfield, Ohio on the south and Fort Wayne, Indiana on the west. They duplicate in substantial measure the portions of the Mohawk authority involved in the proposed sale to ICI. In July of 1969, the Commission granted Central authority to temporarily lease these Norwalk operating rights.

In December of 1969, the Commission approved Central’s application to purchase Mohawk’s capital stock and to merge Mohawk into Central. Central purchased the stock but postponed merger, with the Commission's consent, pending clarification of its effect on the operating rights since duplicative rights are lost through merger.

In November of 1970, Michigan Express, Inc. (MX) of Grand Rapids, Michigan, a motor common carrier, filed a petition for reorganization in the United States District Court for the Western District of Michigan. The court appointed Central as receiver, subject to Commission approval, which was obtained. Central then applied to the Commission for authority to purchase MX’s capital stock and thus acquire control of its operating rights and property. MX possesses authority to operate in several midwestem states. Its authority includes routes between Detroit, Michigan and Akron, Ohio, serving the intermediate and off-route points of Akron, Toledo and Cleveland, Ohio, among others.

In summary, by the end of 1970 Central possessed the authority to acquire the operating rights of Mohawk. It operated through temporary lease a portion of Norwalk’s operating rights and had applications pending before the Commission to permanently acquire the Norwalk rights and to purchase MX’s operating rights and property. Thus, Central found itself in the position in which, if all the applications were granted by the Commission, it would have authority to acquire operating rights that, while more extensive, would substantially duplicate Mohawk’s operating rights.

On May 6, 1971, Mohawk and ICI filed a joint application with the Commission in which ICI sought authority under 49 U.S.C. § 5 to purchase certain operating rights and property of Mohawk. Mohawk , possesses regular route general commodity authority over three routes between Detroit, Michigan and Toledo, Ohio, over two routes between Toledo, Ohio and Fort Wayne, Indiana and over one route between Toledo, Ohio and Cleveland, Ohio. The application proposed the sale by Mohawk to ICI of one route between [583]*583Detroit and Toledo, one route between Toledo and Fort Wayne and the one route between Toledo and Cleveland. Mohawk proposed to retain one route between Detroit and Toledo and between Toledo and Fort Wayne and to cancel the third route between Detroit and Toledo. Mohawk was authorized to service all intermediate points along its routes but only certain specified intermediate points were proposed to be transferred to ICI.

Hearings on this application were held before an administrative law judge. There the intervening defendants opposed the application contending its grant would create a new competitive service without any showing of public necessity and convenience.

In his recommendation (Report and Order) the administrative law judge found that a grant of Mohawk’s petition would cause an unlawful splitting of Mohawk’s operating authority. Commenting on the Detroit-Toledo route and the Toledo-Fort Wayne route which Mohawk proposed to sell while it retained other routes between these points, he concluded:

“The sale of the route to ICI would not interfere with or materially diminish the continuation of the Mohawk operation between the involved points. In turn, ICI would be purchasing nothing more than bare operating rights without the goodwill and traffic that forms the basis of approval of transactions under section 5. It is thus concluded that the described splitting of Mohawk’s operating rights would result in two motor carrier services rather than the one now operating between the described points, and that the creation of a new motor carrier service as described would not be consistent with the public interest unless there has been shown a public need therefor.’’ Report and Order at 17.

ICI and Mohawk filed exceptions with the Commission to the recommended Report and Order in which they sought to eliminate the objectionable splitting by making modifications and cancellations in the operating authority to be transferred and retained. The Commission having treated plaintiff’s proposed modifications and cancellations as amendments to its basic application, nonetheless held that they failed to cure the objectionable features and plaintiff’s application was denied. The Commission also denied a petition for reconsideration of its decision and denied plaintiff’s petition to reopen for further hearings. At that point plaintiff filed this suit.

In a lengthy opinion (Report) the Commission adopted the statement of facts in the report of the administrative law judge and addressed three issues: (1) the unlawful splitting of duplicating operating authority through the transaction over the Detroit-Toledo and Toledo-Fort Wayne routes; (2) the creation of a new competitive service; and (3) trafficking in operating authority. As to the issue of trafficking in operating authority, the Commission made a comment in its decision but did not use this as a reason, for its decision.

The Commission adopted the administrative law judge’s finding that the sale of Mohawk’s U.S. 25 route authority between Detroit and Toledo combined with the retention of its U. S. 24 route authority constituted an unlawful splitting of authority. The Commission also concluded that as to the Toledo-Fort Wayne route there would likewise be an unlawful splitting of authority and further that such a split would result in the creation of a new competitive service for which no meaningful public need was demonstrated.

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399 F. Supp. 581, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mohawk-motor-inc-v-united-states-mied-1975.