Virginia-Carolina Freight Lines, Inc. v. United States

411 F. Supp. 356, 1976 U.S. Dist. LEXIS 16055
CourtDistrict Court, W.D. Virginia
DecidedMarch 19, 1976
DocketCiv. A. No. 74-29
StatusPublished

This text of 411 F. Supp. 356 (Virginia-Carolina Freight Lines, Inc. v. United States) is published on Counsel Stack Legal Research, covering District Court, W.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Virginia-Carolina Freight Lines, Inc. v. United States, 411 F. Supp. 356, 1976 U.S. Dist. LEXIS 16055 (W.D. Va. 1976).

Opinions

OPINION and ORDER

Before WIDENER, Circuit Judge, TURK, Chief District Judge, and DALTON, District Judge.

TURK, Chief District Judge.

This ease is before this three-judge district court pursuant to 28 U.S.C. §§ 2321- and 2325 and 49 U.S.C. § 17(9) and § 305(g) and (h) to enjoin orders of the Interstate Commerce Commission (ICC) which denied the joint application of Virginia-Carolina Freight Lines, Inc. (Virginia-Carolina) and Merit Transport Corporation (Merit) for Virginia-Carolina to purchase the operating authority of Merit. Pursuant to the Freedom of Information Act, 5 U.S.C. § 552(a), plaintiffs also seek to have the court order the ICC to provide certain decisional memoranda related to the dissenting vote of one of the Commissioners in the denial of their application.

On July 17, 1970 the Superior Court of New Jersey, Chancery Division, Hudson County, adjudged Merit insolvent and appointed a receiver who was directed to liquidate the assets of the company. The Certificate of Public Convenience and Necessity was thereafter sold at auction to Virginia-Carolina for $90,000, subject to ICC approval of the transaction. On November 18,1970 Virginia-Carolina and Merit filed a joint application seeking authority under 49 U.S.C. § 5(2)(a) for Virginia-Carolina to purchase Merit’s operating authority. Simultaneously, Virginia-Carolina and Merit filed an application under 49 U.S.C. § 310a(b), for temporary authority to lease the operating authority of Merit to Virginia-Carolina for $100 per month pending a final determination on the purchase application. Temporary authority was granted by the ICC on December 31,1970 and on January 4, 1971 Virginia-Carolina commenced operations under temporary authority.

The purchase application was heard by an administrative law judge on May 25-26, 1971. Pilot Freight Carriers, Inc., Carolina Freight Carriers Corp. and Russell Transfer, Inc. opposed the application and nine shippers or receivers of freight supported it.1 By report and order served August 24, [358]*3581971, the administrative law judge found that the operating rights of Merit were “dormant,” except those exercised in a truck-rail trailer-on-flatcar service; that Virginia-Carolina did not propose to operate the Merit rights in a similar trailer-on-flatcar service, thereby establishing a different pattern of service; and that Virginia-Carolina had failed to demonstrate a public need for the resulting new service.

Virginia-Carolina and Merit filed exceptions to the findings of the administrative law judge with the ICC. On August 28, 1972, Division 3 of the ICC issued a report which concluded that Merit’s operating rights were dormant from July, 1970 to January 4, 1971 when Virginia-Carolina began operations under temporary authority; and that Virginia-Carolina’s operations under the temporary authority were so dissimilar to the previous service provided by Merit as to amount to a new competitive service for which Virginia-Carolina had failed to establish a public need.

On November 14, 1972, Virginia-Carolina and Merit filed another petition with the ICC for reconsideration of its decision or a further hearing. Accompanying this petition plaintiffs submitted seventeen affidavits from customers and a traffic study purporting to show the continuing public need for the service provided by Virginia-Carolina. On January 11, 1974, Division 3, acting as an Appellate Division, entered an order denying this petition on the grounds that plaintiffs had not set forth new material facts or arguments; that the conclusions of the report and order of August 28, 1972 were adequately supported by the evidence; that errors of fact or law had not been demonstrated; and that no showing had been made warranting reconsideration or further hearing. Although not apparent on the face of the order, plaintiffs subsequently learned that one of the Commissioners comprising Division 3 had dissented.

The present suit was filed on February 12, 1974 and on the same date plaintiffs filed a petition with the ICC asking that the challenged proceeding be deemed to involve an issue of “General Transportation Importance” requiring additional consideration. The ICC denied this petition upon finding that no issue of general transportation importance was involved. The ICC did, however, authorize Virginia-Carolina to continue under temporary authority until a final court decision was reached.

On July 18,1974, this court granted plaintiffs’ motion to stay further judicial proceedings in order that they could file yet another petition with the ICC for further hearing or reconsideration because of changed circumstances. Such petition was filed on July 29, 1974 asking for a further hearing to develop the record on the issue of public need. In support of their contention that a substantial public demand existed for the continuation of Virginia-Carolina’s service, plaintiffs submitted statements from forty-two witnesses, most of whom had used Virginia-Carolina’s services under temporary authority. By order dated September 10,1974 Division 3, acting as Appellate Division, denied plaintiffs’ petition for a further hearing.

As noted above, the bases for denying Virginia-Carolina’s application to purchase Merit’s operating rights were (1) that Merit’s authority was dormant; and (2) that Virginia-Carolina’s temporary use of Merit’s authority was so dissimilar from Merit’s previous operations as to amount to a new competitive service which plaintiffs failed to demonstrate met an otherwise unmet public need. The issues of the dormancy of Merit’s authority and the character of the temporary service provided by Virginia-Carolina are matters largely within the discretion and expertise of the ICC if supported by substantial evidence and not arbitrary, capricious, and resulting from an abuse of discretion. See Arkansas-Best Freight System, Inc. v. United States, 364 F.Supp. 1239 (W.D.Ark.1973); Houff Transfer, Inc. v. United States, 291 F.Supp. 831 (W.D.Va.1968). Given this limited standard of review and the present record, it is difficult for this court to accept plaintiffs’ challenges to the substantive findings of the ICC. However, the court does not reach the merits of the ICC’s determinations of [359]*359“dormancy” and “new competitive service” at this time because the court is of the opinion that plaintiffs’ petitions for a further hearing were justified by the circumstances of this ease.

At the initial hearing before the administrative law judge, plaintiff called nine shippers in support of their joint application. The administrative law judge found their testimony to be unpersuasive as a basis for reviving Merit’s dormant rights or justifying the inauguration of a new competitive service. Similarly, Division 3 of the ICC found the shipper’s testimony inadequate to justify the establishment of a new competitive service. In both of these proceedings the primary issues were the dormancy of Merit’s operating authority and whether the service provided by Virginia-Carolina was of a different character than that previously offered by Merit.

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Related

United States v. Pierce Auto Freight Lines, Inc.
327 U.S. 515 (Supreme Court, 1946)
ICC v. Parker
326 U.S. 60 (Supreme Court, 1945)
Arkansas-Best Freight System, Inc. v. United States
364 F. Supp. 1239 (W.D. Arkansas, 1973)
ICC v. Jersey City
322 U.S. 503 (Supreme Court, 1944)
Houff Transfer, Inc. v. United States
291 F. Supp. 831 (W.D. Virginia, 1968)

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Bluebook (online)
411 F. Supp. 356, 1976 U.S. Dist. LEXIS 16055, Counsel Stack Legal Research, https://law.counselstack.com/opinion/virginia-carolina-freight-lines-inc-v-united-states-vawd-1976.