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.
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. ...