United States District Court, Northern District of Illinois, E.D
November 7, 1974
CHICAGO & EASTERN ILLINOIS RAILROAD COMPANY ET AL., PLAINTIFFS,
UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, DEFENDANTS, AND BOARD OF TRADE OF THE CITY OF CHICAGO ET AL., INTERVENING DEFENDANTS.
Before Sprecher, Circuit Judge, Perry, Senior District
Judge, and Marshall, District Judge.
The opinion of the court was delivered by: Per Curiam.
OPINION AND ORDER
This proceeding commenced on October 23, 1963, when the
Board of Trade of the City of Chicago filed a complaint with
the Interstate Commerce Commission, alleging that certain
rates on soybeans maintained by four railroads*fn1 were
unjust and unreasonable in violation of section 1(5) of the
Interstate Commerce Act,*fn2 and were unduly prejudicial
to Chicago and unduly preferential to Gulf ports in violation
of section 3(1) of the Act.*fn3
When the complaint was filed in 1963, the rail carriers
maintained rates on soybeans, when for export, from origins in
central and southern Illinois to the port of Chicago on a
level approximately 150 percent of the level of the rates on
soybeans, when for export, from the same origins to Gulf
ports, relative transportation services considered. The rates
from southern Illinois to Chicago were actually higher in
cents per 100 pounds than the rates to New Orleans although
the distances to New Orleans averaged about two and one-half
those to Chicago.
The initial report of the Commission Division 2, dated May
10, 1965, affirmed the finding of an administrative law judge
that the export rates on soybeans to Chicago were not shown to
be unjust and unreasonable under section 1(5), but found such
rates unduly prejudicial to the port of Chicago and unduly
preferential of the Gulf ports to the extent that the rates to
Chicago were higher than the corresponding export rates on
soybeans from the same origins to the Gulf ports. Board of
Trade of the City of Chicago v. Illinois Central R.R. Co., 325
I.C.C. 412 (1965).
The proceeding was reopened for reconsideration by the
Commission on its own motion. On March 13, 1967, the entire
Commission affirmed the Division 2 findings. Board of Trade of
the City of Chicago v. Illinois Central R.R. Co., 329 I.C.C.
The Board of Trade and City of Chicago brought an action
under 28 U.S.C. § 1336 to set aside, annul and enjoin the
Commission's reports and orders of 1965 and 1967. The
three-judge court required under 28 U.S.C. § 2325, vacated and
remanded the Commission's orders on July 25, 1968, for failure
to make adequate findings to justify its conclusions. City of
Chicago v. United States, 291 F. Supp. 858 (N.D.Ill. 1968),
aff'd per curiam, 394 U.S. 717, 89 S.Ct. 1457, 22 L.Ed.2d 672
The Commission reopened the proceeding for further hearing,
whereupon the record was updated by rate and statistical data.
The Board of Trade sought rates on soybeans for export to
Chicago based upon 7 percent of the docket No. 28300
The Commission issued its current report and order on
December 4, 1973. It concluded that "the assailed export rates
on soybeans from central and southern Illinois to Chicago are
not shown to exceed a maximum reasonable level in violation of
section 1(5) of the act." Board of Trade of the City of
Chicago v. Illinois Central R.R. Co., 344 I.C.C. 818, 830
To support a finding of a violation of section 3(1), it must
be shown (1) that there is a disparity in rates, (2) that the
complaining party is competitively injured, actually or
potentially, (3) that the carriers are the common source of
both the allegedly prejudicial and preferential treatment, and
(4) that the disparity in rates is not justified by
transportation conditions. The complaining party has the
burden of proving the presence of the first three factors and
the carriers have the burden of justifying the disparity, if
connection with the fourth factor. Big River Industries, Inc.
v. Aberdeen & Rockfish R.R. Co., 329 I.C.C. 539 (1967).
(1) The Commission found that a disparity in rate levels
existed. Relying upon its decision in Cudahy Packing Co. v.
Akron, C. & Y.R. Co., 318 I.C.C. 229 (1962), it concluded that
comparisons with docket No. 28300 first-class rates were
proper inasmuch as "a class-rate structure affords a
standardization of rate relationships, and . . . where an
assailed misalinement [sic] of rates is shown to be
unjustified, recourse may be had to such a structure to
determine a proper basic relationship." Cudahy Packing Co.,
supra at 245. On this factor, the Commission concluded:
The docket No. 28300 scale primarily reflects
distance, but it gives proportionate effect to
terminal expenses, so that the scale progresses
at a slower rate as distance increases; in other
words, the rate per mile is higher for shorter
distances. Distance, other things being equal, is
the best measure of the transportation service
actually performed, recognizing, of course, that
carriers are free to group points for rate
purposes within reasonable limits.
344 I.C.C. at 833.
(2) The Commission noted that in 1968, 16.3 million bushels
of soybeans moved through Chicago for export while in the same
year 46.8 million bushels moved through New Orleans, and
concluded that "the gulf ports and Chicago are in a
competitive posture for export traffic from . . . [Illinois]
origins, and we so find." Id. at 833.
(3) The Commission said that "[t]here is no dispute
concerning the existence of common control . . . and we find
that there is common control." Id. at 834.
(4) The Commission found "that there are insufficient
differences in . . . [transportation] conditions and
circumstances to justify the disparity in rates;" the fact
that processors at central Illinois origins often outbid
Chicago exporters for the soybeans are "[m]arketing
practices . . . subject to change" and not a difference in
transportation conditions; and the carriers "have not
established that the disparity in rates here assailed is
justified by different transportation conditions or
circumstances. . . ." Id. at 835.
The Commission ordered the carriers to cease and desist from
practicing further undue prejudice and preference and that
they maintain and apply rates which will prevent and avoid the
undue prejudice and preference found to exist. Id. at 837.
This action was brought by the railroads to set aside the
Commission's December 4, 1973 report and order.
Where adequate findings supported by substantial evidence
upon the record as a whole are made by the Commission, a
reviewing court must affirm.*fn4 The Commission's findings
are adequate and are supported by substantial evidence upon
the record as a whole.
The complaint is dismissed and the Commission's report and
order, 344 I.C.C. 818-51 are affirmed.