United States District Court, Northern District of Illinois, E.D
September 17, 1964
CHICAGO SOUTH SHORE AND SOUTH BEND RAILROAD, W.P. COLITON AND ROBERT C. GASSER, PLAINTIFFS,
MONON RAILROAD, WILLIAM C. COLEMAN, JOHN B. GOODRICH, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Marovitz, District Judge.
Defendants' motion to dismiss the Count I of complaint.
This action is before the Court today pursuant to plaintiff's
motion to temporarily restrain and enjoin defendants from making
further purchases of stock in plaintiff railroad, until such time
as the Interstate Commerce Commission (ICC) may determine the
legality of said acquisition. Defendant has moved, in response,
for a dismissal order, on the grounds that the Court lacks
jurisdiction over the subject matter of the complaint.
Count I alleges that plaintiffs have filed a complaint before
the ICC alleging violations by defendants of Sections 5(2) and
5(4) of Part I of the Interstate Commerce Act (ICA). (Secs. 5(2),
5(4), Title 49 U.S.C.) Said Sections prohibit the acquiring of
"control" of one "carrier" by another, without prior ICC
More specifically, it is alleged that the defendants are
presently engaged in, and will continue to engage in the
acquisition of shares of the capital stock of the plaintiff
railroad in such amounts, that, in the absence of an injunction
order, the capital stock of plaintiff will be concentrated into
a single large block, so as to preclude the South Shore from ever
again being an independent railroad, even upon divestiture by the
Count II is brought under Section 16(a) of the Securities
Exchange Act of 1934, and alleges that the aforesaid acquisition
by defendants has not been reported as required by Statute.
Plaintiffs seek injunctive relief pendente lite, to maintain
the status quo in the matter until such time as the ICC may
determine the merits of the aforementioned complaint filed with
The issue raised by defendants' motion to dismiss concerns the
jurisdiction of this Court over the cause before us. Section
5(11) of the ICA specifically states that "[t]he authority
conferred by this section (to the ICC) shall be exclusive and
plenary * * *." Despite this unequivocal language, plaintiffs
seek an injunction today, to "preserve the status quo," arguing
that such action would not interfere with the primary
jurisdiction of the ICC, but would merely prevent irreparable
injury until such time as the ICC may fully determine the merits
of the complaint brought before it.
This Court cannot agree. A preliminary injunction will not be
granted, merely on a balancing of the equities, as plaintiffs
propose, but rather upon a showing of probable cause for ultimate
relief on the merits. Acme Fast Freight v. United States
(D.C.Del. 1955) 135 F. Supp. 823; Corica v. Ragen, (7th Cir.,
1944) 140 F.2d 496; Vergas v. Shaughnessy, (D.C., N.Y., 1951)
97 F. Supp. 335.
Sections 5(4), 5(5), and 5(6) of the ICA are replete with
narrow legalisms and terms of art. The phrases "control" and
"carrier" are defined by the circumstances in which they arise,
and are best applied by the administrative agency to whose care
they have been entrusted. The Supreme Court has stated in
Gilbertville Trucking Co. v. United States, 371 U.S. 115, 122,
125, 83 S.Ct. 217, 222, 223, 224, 9 L.Ed.2d 177 (1962):
"Section 5(4) is part of a comprehensive legislative
scheme designed to place ownership, management, and
operational control over common carriers within the
regulatory jurisdiction of the Commission."
"We * * * have left to the agency charged with
enforcement, the determination from the facts whether
`control' exists, subject to normal standards of
review. * * * In this manner, the Commission may
adapt § 5(4) to the actualities and current practices
of the industry involved and apply it to the extent
it feels necessary to protect its jurisdiction
under § 5(2) * * *."
Congress has wisely placed great confidence in the expertise of
our regulatory agencies. That its intent was to create exclusive
primary jurisdiction in the ICC in "control" matters of this kind
is abundantly clear from the statutory scheme of the Act.
In Section 1(20) of the ICA, Congress gave the Commission
authority to permit, or to prohibit the construction, acquisition
or extension of a railroad line. Alongside this authority,
however, the right of injunction of any contrary act was granted
to the United States Courts, upon suit by the United States, the
Commission, any affected regulatory body, or any party in
interest. Under this provision, it has been held that a competing
railroad may bring suit in a U.S. Court to enjoin a proposed
expansion. Bremner v. Mason City and C.L.R. Co. (D.C.Del. 1931)
48 F.2d 615.
Similarly, Congress has authorized injunctive actions brought
by interested parties in U.S. Courts, to prevent enforcement of
ICC orders. See Section 2321-2325, Title 28, U.S.C. Thus,
Congress has twice granted private parties the right to seek
injunctive relief in the Courts, while withholding such right
with respect to Section 5 proceedings. When coupled with the
specific authority granted to the ICC under Section 5(8) to
obtain an injunction from a U.S. District Court, this information
clearly demonstrates Congress' intention to bar such actions by
Turning next to judicial pronouncements, we reach the same
conclusion. In United States Nav. Co. v. Cunard S.S. Co.,
284 U.S. 474, 482, 52 S.Ct. 247, 249, 76 L.Ed. 408 (1932), the
Supreme Court reaffirmed the principle we today adopt. In
discussing Board of Railroad Com'rs of State of North Dakota v.
Great Northern Ry. Co., 281 U.S. 412, 50 S.Ct. 391, 74 L.Ed. 936
(1930), the Court stated:
"`The inquiry,' we said (pages 421, 422, of 281 U.S.
[50 S.Ct. 391, 393]), `would necessarily relate to
technical and intricate matters of fact, and the
solution of the question would demand the exercise of
sound administrative discretion. The accomplishment
of the purpose of Congress could not be had without
the comprehensive study of an expert body
continuously employed in administrative
supervision. * * *'
"[T]he judicial function does not entitle one to judicial
relief until the prescribed administrative remedy has been
exhausted." North Carolina Natural Gas Corp. v. United States
(D.C.Del., 1961) 200 F. Supp. 745. A similar pronouncement by
Judge Swan was quoted in the above case:
"`What the plaintiffs ask is that the court declare
the rates unlawful without waiting for the Commission
to have a hearing and render an opinion as to their
we may not do. The present application to the court
is premature. The plaintiffs still have their
administrative remedy of attacking the rates by
formal complaint." National Water Carrier's Ass'n. v.
United States, D.C., 126 F. Supp. 87, 90.
See also Akers Motor Lines v. Malone Freight Lines (D.C.Ala.,
1950) 88 F. Supp. 654.
The most recent Supreme Court pronouncement in this area came
in Arrow Transp. Co. v. Southern R. Co., 372 U.S. 658, 83 S.Ct.
984, 10 L.Ed.2d 52 (1963). In that case, the District Court
refused to enjoin respondent rail carriers from putting into
effect a reduced rate schedule, despite the "grave danger that
irreparable injury, loss or damage may be inflicted on"
petitioners, for which they would have no adequate remedy at law.
The Supreme Court, on certiorari, affirmed, stating at pp. 669,
670, 671, at pp. 990, 991 of 83 S.Ct.:
"A court's disposition of an application for
injunctive relief would seem to require at least some
consideration of the applicant's claim that the
carrier's proposed rates are unreasonable. But such
consideration would create the hazard of forbidden
judicial intrusion into the administrative
domain. * * *
"Moreover, such a procedure would permit a single
judge to pass before final Commission action upon the
question of reasonableness of a rate, which the
statute expressly entrusts only to a court of three
judges reviewing the Commission's completed
And so it must be today. This Court has been asked, under a
"status quo" label to enjoin the defendants from acquiring
"control" of plaintiff railroad. We are being asked to define
that term, and to apply it in our search for probable cause. We
are asked to usurp the function of a specialized agency uniquely
qualified to deal with these matters. We cannot, and will not
Plaintiffs rely heavily, indeed almost exclusively, on
Pennsylvania Motor Truck Ass'n v. Port of Philadelphia M.T. Ass'n
(D.C., Pa., 1960) 183 F. Supp. 910. That case may be
distinguished, as the Court clearly indicated the scope of its
decision. After asserting at the outset, that jurisdiction to
pass upon the "merits" of the basic controversy lay in the
Federal Maritime Board, the Court decided that these "merits"
were not before it.
"[T]he decision called for in the instant controversy
is in no way contingent upon the expertise of the
Federal Maritime Board." (at p. 914) (Emphasis
Indeed, the Court there, being faced only with determining the
existence of an agreement and the non-approval thereof by the
Maritime Commission characterized its decision as being "no more
difficult than [determining] the score of yesterday's baseball
game." (at p. 915, quoting from River Plate and Brazil
Conferences v. Pressed Steel Car Co. (2d Cir., 1955) 227 F.2d 60
This is a broad step away from the issues now before this
Court. By nature of the factual situation before it, the
Pennsylvania Court felt unhindered by Justice Frankfurter's words
in Far East Conference v. United States, 342 U.S. 570, 72 S.Ct.
492, 96 L.Ed. 576 (1952). Faced with a variety of complexities,
we feel constrained to listen:
"The Court thus applied a principle, now firmly
established, that in cases raising issues of fact not
within the conventional experience of judges or cases
requiring the exercise of administrative discretion,
agencies created by Congress for regulating the
subject matter should not be passed over." (Emphasis
We do not reach the question of substantial harm. But even here
the Court would defer to the ICC and the Supreme Court, which
characterize "divestiture" as a "drastic" remedy capable of
restoring an injured party to the status quo
ante. Gilbertville Trucking Co. v. United States, supra, 371 U.S.
at pp. 129, 130, 83 S.Ct. 217.
While we seek as an end at all times to effect substantial
justice, the Court must be bound by jurisdictional limitations,
if we are to maintain an orderly framework from which to operate.
Accordingly, we must yield to the primary jurisdiction of the
ICC, prescribed by Congress, and dismiss Count I of the complaint
before this Court.
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