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SQUARE D CO. v. NIAGARA FRONTIER TARIFF BUR. INC.

September 25, 1984

SQUARE D COMPANY and BIG D BUILDING SUPPLY CORP., Plaintiffs,
v.
NIAGARA FRONTIER TARIFF BUREAU INC.; BONDY CARTAGE LIMITED; DOMINION-CONSOLIDATED TRUCK LINES LIMITED; ICL INTERNATIONAL CARRIERS LIMITED; INTER-CITY TRUCK LINES (CANADA) INC.; TNT CANADA INC., Defendants.



The opinion of the court was delivered by: CURTIN

The court has deferred ruling on various pending discovery motions and a motion for class certification. Before the court is defendants' motion to dismiss. Fed.R.Civ.P. 12(c) and 12(h)(2).

The allegations in the complaint may be summarized as follows. The Niagara Frontier Tariff Bureau, Inc. [NFTB] is a motor carrier rate bureau with headquarters in Buffalo, New York. It is organized and operates under an agreement which has been filed with and approved by the Interstate Commerce Commission [ICC]. The NFTB is a defendant, along with various named common carrier defendants that are defendants that are members of NFTB. These carrier defendants move goods between the United States and Canada.

 Plaintiffs now allege that beginning in 1966 and continuing until about 1981, the defendants and their coconspirators entered into a conspiracy to fix prices and to eliminate or restrict competition for the transportation of goods between the United States and the Province of Ontario.

 Specifically, the plaintiffs allege that the defendants and their coconspirators "[p]articipated in a Principals Committee which was comprised of the senior management officials of NFTB carriers" but which "was not authorized or approved by the ICC to engage in rate-making conduct. [Complaint, P23(a).] Plaintiffs allege that this Committee was used to set rates and inhibit competition. This, the plaintiffs allege, was done by way of threats, coercion, and retaliatory rate reductions. Plaintiffs allege that all of this was accomplished in secret; none of these activities was disclosed to the ICC.

 As a result, the plaintiffs claim violations of section 1 of the Sherman Act [15 U.S.C. § 1] and sections 4 and 16 of the Clayton Act [15 U.S.C. §§ 15, 26] and seek treble damages for the loss of benefit of legitimately competitive rates.

 Although two separate actions were filed by Square D Company and Big D Building Supply Corp., this court's order of June 27, 1984, directed that these two actions proceed as a consolidated suit. A third and similar action filed by the United States against NFTB has been discontinued by consent of the parties and by order of this court, United States v. NFTB, 1984-2 Trade Cas. (CCH) P66,167 (W.D.N.Y. 1984). All that remains is this consolidated civil antitrust suit.

 I.

 The defendants now move to dismiss, arguing failure to state a claim, and seek judgment on the pleadings. Defendants insist that Keogh v. Chicago & Northwestern Railway Co., 260 U.S. 156, 67 L. Ed. 183, 43 S. Ct. 47 (1922), and its progeny completely bar plaintiffs' antitrust damage claims.

 Keogh, like the plaintiffs in this case, was a shipper. The defendant railroads in the Keogh case formed an association and agreed to certain interstate freight rates which the ICC determined were reasonable and not discriminatory. Failing to convince the ICC that the defendants' rates were unlawful, Keogh filed a suit in federal court challenging the rates under the Sherman Act. The Court held that Keogh could not obtain antitrust damage against the defendant carriers based upon a carrier conspiracy to fix tariff rates which were filed with the ICC and subject to that agency's regulatory control.

 The reasoning of Keogh was followed in Georgia v. Pennsylvania Railway Co., 324 U.S. 439, 89 L. Ed. 1051, 65 S. Ct. 716 (1945). Georgia sought money damages as well as injunctive relief. The Supreme Court held that in light of Keogh, there was no basis for the recovery of money damages, even if the conspiracy alleged were shown to exist. The complaint in Georgia also alleged coercion and discrimination, but the Court held that this did not create a basis for shipper antitrust damage claim against carriers. An injunctive action, and even a criminal prosecution, may go forward, but a claim for treble damages under the antitrust statute may not.

 To avoid the directives of the Supreme Court, plaintiffs now argue that Keogh does not apply because 1) subsequent legislation has diffused the authority of Keogh, and 2) the facts of the instant case amount to a "broader conspiracy" that does not fall within the purview of Keogh.

 II.

 First, the legislative activity since Keogh has defined and preserved antitrust immunity where a rate agreement was implemented "in conformity with its provisions and in conformity with the terms and conditions prescribed by the Commission." Reed-Bulwinkle Act, 62 Stat. 472 (1948). The House Report supporting this legislation states that:

 [t]he bill leaves the antitrust laws to apply with full force and effect to carriers, so far as they are now applicable, except as to joint agreements or arrangements between them as may have been ...


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