Transkentucky Transportation Railroad v. Louisville & Nashville Railroad

581 F. Supp. 759, 1983 U.S. Dist. LEXIS 15906
CourtDistrict Court, E.D. Kentucky
DecidedJune 28, 1983
DocketCiv. A. No. 82-271
StatusPublished
Cited by4 cases

This text of 581 F. Supp. 759 (Transkentucky Transportation Railroad v. Louisville & Nashville Railroad) is published on Counsel Stack Legal Research, covering District Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Transkentucky Transportation Railroad v. Louisville & Nashville Railroad, 581 F. Supp. 759, 1983 U.S. Dist. LEXIS 15906 (E.D. Ky. 1983).

Opinion

MEMORANDUM OPINION AND ORDER

SCOTT REED, District Judge.

This action, brought under §§ 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 1px solid var(--green-border)">2, is currently before the Court on the motion of defendants to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)l for lack of subject matter jurisdiction, and pursuant to Fed.R.Civ.P. 12(b)6 for failure to state a claim upon which relief can be granted.

The plaintiffs in this action (hereinafter referred to as TTI) are three corporations organized in the late 1970’s to transport coal from central Kentucky to the Ohio River, where the coal would be transferred to barges for shipment to domestic and foreign consumers. Defendant L & N is a corporation whose principal business is to operate a railroad in a thirteen-state region between Chicago and the Gulf of Mexico. Defendant C & 0 is a corporation operating a railroad in the northeast quadrant of the United States. L & N and C & 0 are wholly-owned subsidiaries of defendant CSX, which also owns the Baltimore & Ohio Railway Company.

According to plaintiffs, the purpose of the TTI project was to open up the inland waterways system as a significant avenue of commerce for Kentucky bituminous steam coal and as an alternative to rail transportation on defendants’ lines. Plaintiffs currently own and operate a fifty-mile railroad line which they purchased in abandonment proceedings from defendant L & N in 1979. Plaintiffs claim to have invested several million dollars in improvements to the line. They originally planned to use this line to feed a large rail-to-barge coal transfer facility which they sought to build on land they obtained in Charleston Bottoms, Kentucky.

The success of plaintiffs’ scheme apparently hinged on the cooperation of defendants L & N and C & 0. Cars carried on the TTI line cannot reach the Ohio River [763]*763without crossing C & 0 lines and property. In order for coal to reach the beginning of the TTI line at Paris, Kentucky, it must be hauled from the mine origins via the L & N. Plaintiffs’ plans have been foiled, the complaint alleges, by the illegal acts and obstructive tactics of the defendants, their competitors. Plaintiffs never built the Charleston Bottoms terminal and currently use a smaller, less efficient coal transfer facility at Maysville, Kentucky. Plaintiffs allege that their project is currently losing some half-million dollars per month.

From virtually their first day of operation, plaintiffs have been embroiled in various disputes with defendants, including numerous proceedings before the Interstate Commerce Commission (ICC), the Kentucky Railroad Commission (KRC), and the Kentucky courts. Dissatisfied with the results of those proceedings, plaintiffs filed this action on December 6, 1982, seeking relief under the federal antitrust laws.

In their complaint, plaintiffs allege that defendants, individually and in concert with each other, have sought to maintain, extend, or acquire monopoly power over the transportation of Kentucky coal, in violation of §§ 1 and 2 of the Sherman Antitrust Act. Defendants allegedly violated the Sherman Act by refusing to set rates for some shippers attempting to use the TTI project; by establishing rates and charges designed to discriminate against TTI and to exclude it from the marketplace; by refusing to provide access to TTI’s proposed terminal site at Charleston Bottoms; and by instituting sham proceedings before the KRC, ICC and the Kentucky courts designed to harass and impede plaintiffs. Plaintiffs also assert against defendants various state law claims for breach of contract, fraud, harassment, monopoly, and restraint of trade.

Defendants characterize plaintiffs’ antitrust claims as an attack on the level of defendants’ rates; since rate levels are actively regulated by the ICC and KRC and are within the exclusive jurisdiction of those agencies, defendants argue, the Court must dismiss these claims for lack of subject matter jurisdiction. Defendants also argue that the abuse of process claims must be dismissed because they seek to attack petitioning activity which is immune from antitrust scrutiny under the First Amendment. Finally, defendants assert that, once the federal antitrust claims are dismissed, the claims under state law must likewise be dismissed for lack of pendent jurisdiction.

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THE RATE-RELATED. CLAIMS

Defendants begin by asserting that conduct regulated by an administrative agency under a statutory public interest standard is not subject to the antitrust laws. This sweeping assertion is not supported by the specific holdings of the cases cited by defendants and is contrary to well-accepted principles of statutory construction.

In a long line of eases, commencing with United States v. Trans-Missouri Freight Association, 166 U.S. 290, 17 S.Ct. 540, 41 L.Ed. 1007 (1897), the Supreme Court has repeatedly rejected the notion that regulated industries are exempt from the antitrust laws. See, e.g., Georgia v. Pennsylvania R.R., 324 U.S. 439, 456, 65 S.Ct. 716, 725, 89 L.Ed. 1051 (1944). The Supreme Court has never held that a regulatory act has completely displaced the antitrust laws in the sweeping manner suggested by defendants. See Marnell v. United Parcel Service, 260 F.Supp. 391, 400 (N.D.Calif. 1966) and cases cited therein.

To determine whether conduct subject to administrative regulation is thereby exempt from the antitrust laws, courts must refer to the intent of Congress. Congress has exempted certain transactions and activities by carriers from scrutiny under the antitrust laws. See, e.g., 49 U.S.C. §§ 10706 and 11343. Such express exemptions are strictly and narrowly construed. Federal Maritime Commission v. Seatrain Lines, 411 U.S. 726, 733, 93 S.Ct. 1773, 1778, 36 L.Ed.2d 620 (1973). Defendants do not assert that any of these express exemptions are applicable to the conduct at issue herein. Instead, [764]*764their position is that such immunity must be implied from the all-encompassing nature of the regulatory scheme.

Repeals by implication are disfavored in the law. Because of the “fundamental national policies embodied in the antitrust laws,” Otter Tail Power Co. v. United States, 410 U.S. 366, 374, 93 S.Ct. 1022, 1028, 35 L.Ed.2d 359 (1973), courts hesitate to find that Congress implicitly repealed those laws simply by adopting a regulatory scheme. U.S. v. Philadelphia National Bank,

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Related

Delaware & Hudson Railway Co. v. Consolidated Rail Corp.
654 F. Supp. 1195 (N.D. New York, 1987)
In Re Wheat Rail Freight Rate Antitrust Litigation
579 F. Supp. 517 (N.D. Illinois, 1984)
TransKentucky Transp. v. L. & NR Co.
581 F. Supp. 759 (E.D. Kentucky, 1983)

Cite This Page — Counsel Stack

Bluebook (online)
581 F. Supp. 759, 1983 U.S. Dist. LEXIS 15906, Counsel Stack Legal Research, https://law.counselstack.com/opinion/transkentucky-transportation-railroad-v-louisville-nashville-railroad-kyed-1983.