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LONG ISLAND RAIL RD. CO. v. UNITED STATES

November 13, 1969

The LONG ISLAND RAIL ROAD COMPANY, Plaintiff,
v.
UNITED STATES of America and Interstate Commerce Commission, Defendants, and American Paper Institute, Inc., Georgia Pacific Corporation, National Industrial Traffic League, and U.S. Plywood-Champion Papers, Inc., Intervening Defendants



The opinion of the court was delivered by: TRAVIA

TRAVIA, District Judge.

For the purpose of maximum utilization of boxcar equipment incentive rates were offered by the Long Island Rail Road as a result of which shippers frequently load boxcars so that one door of the car is blocked. From a practical standpoint, unloading at the point of destination must be accomplished through the same door as is used for loading. If the car arrives with the "open door" side facing the consignee's platform, no turning of the car is necessary. If, however, the car arrives in the opposite position, a problem arises as to unloading unless it is turned.

 The plaintiff, Long Island Rail Road (LIRR), filed schedules, effective date November 29, 1967, proposing rates for the performance of car turning services at specified stations. Upon protests, the Board of Suspension of the Interstate Commerce Commission (ICC) suspended the operation of the proposed schedules until June 28, 1968.

 An investigation, utilizing the ICC's "modified procedure," 49 C.F.R. § 1100.45, et seq., was instituted and, on May 8, 1968, Review Board No. 4 found that car turning was a special service and that a reasonable charge could be made for such service. Review Board No. 4 permitted new schedules to be filed without differential in charges for turning "placarded" as opposed to "unplacarded" freight cars. New schedules were filed to take effect June 28, 1968.

 Protests were then filed to the order of May 8, 1968. The plaintiff voluntarily cancelled the amended schedules pending a final decision in the proceeding.

 Appellate Division 2 of the ICC on January 7, 1969, reversed the findings of Review Board No. 4 and found that the obligation of the LIRR, when previously notified by placards on cars and notices in bills of lading, to turn freight cars is a part of the transportation service covered by the "linehaul" charges and that such service is not a "special" service, for which additional charges may be made. This decision was reported as Car Turning Charge, at Points on Long Island, N.Y., 332 ICC 795. A petition for a rehearing was denied on May 9, 1969. Since the LIRR had already voluntarily suspended its proposed tariffs, it was not necessary for the ICC to issue an order requiring the withdrawal of the tariffs. Instead the ICC merely ordered that the "* * * proceeding be, and it is hereby discontinued." 332 ICC at 800. However, the decision of the ICC concerning the validity of the tariffs was on the merits and we shall thus treat its decision as an order declaring the proposed tariffs illegal.

 A complaint filed in this Court, as amended on June 19, 1969, seeks review of the determination by Appellate Division 2. Plaintiff's motion for a temporary restraining order was denied by Judge Travia on May 26, 1969, and a motion for a preliminary injunction was denied on July 7, 1969 by this Three-Judge District Court, convened pursuant to 28 U.S.C.A. §§ 2325, 2284. Answers were filed by the defendants and intervenors. The plaintiff's action for judgment setting aside the Division 2 orders as "* * * not supported by the evidence of record, * * * arbitrary and capricious, and * * * without warrant in law * * *," for enjoining enforcement of the order, and for remanding the case "* * * to the I.C.C. for further proceedings * * *" was heard upon extensive briefs and oral argument of counsel before this Court on October 28, 1969.

 The issues are:

 First, whether the Appellate Division 2 findings are invalid in that they change existing tariffs contrary to law to the extent that they find that freight cars must be turned without charge if they are placarded and have notice in the bills of lading. The parties are in agreement that there are no express specific tariffs of the LIRR providing for the placarding of cars and putting of notices in bills of lading;

 Second, whether the Appellate Division 2 findings were based upon evidence outside the record, thereby depriving plaintiff of the opportunity of rebutting the allegedly crucial material;

 Third, whether the LIRR is being deprived of its property without due process of law and contrary to the Administrative Procedure Act, 5 U.S.C.A. § 500 et seq., in that the findings of the ICC will increase the responsibilities, costs and expenses of the railroad; and

 Fourth, whether the findings and order of the ICC is void for "indefiniteness, lack of certainty" and "because they affect tariffs and situations not then before the ICC."

 After the commencement of this action, the LIRR filed a tariff with the ICC, denominated in these proceedings as Note 817 to Supplement 29, to Official List of Open and Prepay Stations 83, ICC A-48 [hereafter "Note 817"]. Motions were filed by the government, the ICC, and the intervenors, seeking a writ under 28 U.S.C.A. § 1651(a) enjoining the railroad from acting under Note 817, or leave to amend the answer to include a cause of action under 49 U.S.C.A. § 20 par. (9) for substantially the same relief. These motions were disposed of by the agreement of the LIRR voluntarily to withdraw the tariff with Note 817 by a Special Supplement, to be effective Friday, November 7, 1969.

 I

 The Appellate Division based its decision upon an interpretation of what line-haul delivery should include, in the changed circumstances of one-sided loading resulting from incentive rates, in order to complete a "practical delivery." *fn1"

 There is no dispute that the ICC has discretion to decide whether a given service should be deemed a part of the line-haul service and covered by the line-haul rate or a ...


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