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HUDSON TRANSIT LINES, INC. v. UNITED STATES

May 9, 1970

HUDSON TRANSIT LINES, INC., et al., Plaintiffs, and The National Association of Motor Bus Owners, Plaintiff-Intervenor,
v.
UNITED STATES of America and the Interstate Commerce Commission, Defendants, and Monarch Associates, Inc., Defendant-Intervenor



The opinion of the court was delivered by: COHEN

Plaintiffs, Hudson Transit Lines, Inc. and various other transportation companies, in these five consolidated actions, are interstate common carriers of passengers, operating buses in and beyond the metropolitan areas of New Jersey and New York. They, together with an intervening national trade association of bus owners, seek to set aside an order of the Interstate Commerce Commission issued May 2, 1968 to defendant-intervenor, Monarch Associates, Inc., a small family corporation, granting it a certificate of public convenience and necessity authorizing its continued operation of a car pool commuter transportation service over irregular routes, between points north of Highway No. 4, in Bergen County, New Jersey, and Manhattan, New York, and between Manhattan and Rockland County, New York. Monarch had been operating this car pool commuter service since early 1964, under the mistaken assumption that it was not subject to regulation by the Commission. Its commercial activities involved a pool of nine members, each of whom was required to enter into a one-year contract with Monarch, whereby he paid a flat weekly rate, regardless of his use of the service on any particular day of the five-day work week. The pool members selected a driver from among themselves, somewhat on a rotation basis, while for its part, Monarch supplied the motor vehicles and incurred all expenses including gas, tolls, parking charges, insurance, repair and maintenance.

Upon ascertainment that it was subject to ICC regulations, Monarch filed an application on June 26, 1964 with the Commission for a certificate of authority to conduct the type of passenger transportation here in issue. An Examiner conducted hearings on March 29 and 30, and on November 29 and 30, and December 1, 2 and 3, 1965 at New York City. Several common carriers and the intervening bus association opposed the application. *fn1" Twenty-three car pool commuters testified in support of the application, demonstrating their unanimous preference for Monarch's type of service over other available modes of commuter transportation. *fn2" These witnesses related at length their unhappy experiences with the use of bus service, e.g. routes not convenient to their residences and places of work, long waits, delays, lengthy time-consuming rides with overcrowded conditions and discomfort, etc. Many of these witnesses lived quite some distance from any regular bus stop -- a mile or more. Significantly, most of them had been infrequent bus passengers and, prior to Monarch, used private car pools rather than buses. In fact, some of Monarch's present car pools consist largely of former members of long standing, privately organized pools, who have taken advantage of Monarch's service to avoid tying up family automobiles. All witnesses testified that Monarch's service was faster, more convenient, easier to use, more congenial, more comfortable and, although more expensive than buses, well worth the difference. These witnesses asserted that if Monarch's service was discontinued, they would return to privately operated car pools rather than to public bus transportation.

 By the end of the hearings in 1965, Monarch had organized and was operating 14 commuter groups serving a total of 112 members. *fn3"

 By report and order of July 24, 1967, the Examiner recommended to the Commission that Monarch's operations were subject to regulation, but that in his opinion the application for a certificate of authority should be denied for lack of public convenience and necessity. He also concluded that Monarch was financially unable to comply with mandatory safety regulations requiring driver medical examinations and fitness reports and the maintenance of daily travel logs. Thereupon, Monarch filed exceptions and various protestants replied thereto.

 The aforesaid report and order were reviewed by Division I of the Commission, which sustained the Examiner's finding that Monarch's activity was subject to ICC regulations, but adopted a contrary view regarding the public need and convenience for the issuance of a certificate of authority (107 M.C.C. 277). On May 2, 1968, the Commission granted authority *fn4" to Monarch to transfer 'passengers and their baggage, in round trip special operations, limited to the transportation of not more than nine passengers in any one vehicle, between points in Rockland County, New York and Bergen County, New Jersey, north of New Jersey Highway 4, on the one hand, and, on the other, points in the Borough of Manhattan, New York, N.Y.'

 Petitions for reconsideration were filed by various protestants, which were denied January 8, 1969, except that the Monarch certificate was corrected in order to eliminate the authority of transportation to and from points on New Jersey Highway No. 4. Reconsideration was again sought and once more denied by the Commission's order of May 2, 1969. Thereafter, new petitions were filed with the Commission seeking a declaration that the proceeding involved an issue of general transportation importance, which request was denied June 5, 1969. On July 30, 1969, the Commission issued its certificate authorizing Monarch's special operation over irregular routes, with an amendment providing for its automatic expiration after two years, subject to Monarch's right of reapplication.

 The central issue to be here resolved is whether or not the Commission's decision is rational, is supported by substantial evidence, and whether it contains adequate findings upon which to support its conclusion.

 The function of this Court, and the scope of its review, is limited to a determination of whether the Commission's findings are supported by substantial evidence contained in the record as a whole, and whether its conclusion as to the existence of a public convenience and necessity for Monarch's services, has a rational basis in fact and is permissible as a matter of law. Administrative Procedure Act, 5 U.S.C. ¬ß 706; Illinois Central Railroad Co. v. Norfolk & Western Railway Co., 385 U.S. 57, 66, 87 S. Ct. 255, 17 L. Ed. 2d 162 (1966); Gilbertville Trucking Co., Inc. v. United States, 371 U.S. 115, 126, 83 S. Ct. 217, 9 L. Ed. 2d 177 (1962); Miss. Valley Barge Line Co. v. United States, 292 U.S. 282, 54 S. Ct. 692, 78 L. Ed. 1260 (1934).

 The Commission was created by Congress to act as the guardian of the public interest in matters of interstate transportation. Congress has entrusted it with a broad discretion, in the exercise of its expertise, for the grant or denial of authority for a particular operation provided, always, that there is warrant in the record. Accordingly, the Commission and not this court is the arbiter of the public interest. It is only if the action of the Commission is unwarranted in law or fact that 'the reviewing court (has) authority to intervene. It cannot substitute its own view concerning what should be done. * * *' United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515, 536, 66 S. Ct. 687, 698, 90 L. Ed. 821 (1946). See also, Schaffer Transportation Co. v. United States, 355 U.S. 83, 78 S. Ct. 173, 2 L. Ed. 2d 117 (1957); Connecticut Limousine Service, Inc. v. United States, 295 F.Supp. 1335 (D.Conn.1969); Salem Transportation Co. v. United States, 285 F.Supp. 322 (S.D.N.Y.1969); National Bus Traffic Association v. United States, 284 F.Supp. 270 (N.D.Ill., E.D.1967).

 Gauging our review by the aforesaid norm, we conclude that a rational basis for the Commission's orders was amply contained in the record.

 'The proposed door-to-door service, with all expenses paid, eliminates the inconvenience experienced by commuters in transferring from one carrier to another, ofttimes accompanied by delays; the need of using private transportation or walking some distance to reach the existing service; and, will permit the passengers to enjoy all the comforts of personal transportation without the attendant disadvantages, a service which cannot be made available to the general public served by the protestants. Applicant desires * * * flexibility in choosing the least congested highways for entering or leaving New York City under various traffic conditions.' (107 M.C.C. at 284-285).

 The plaintiffs urge on this review that the Commission is not authorized by statute to classify regular commuter transportation as 'special operations.' *fn5" Plaintiffs would unduly restrict the Commission's classification under the statute. The phrase 'special or charter operations' used therein is a 'catchall' category. Arrow Line, Inc. v. United States, 256 F.Supp. 608 (D.Conn.1966); Asbury Park-New York Transit Corporation v. Bingler Vacation Tours, Inc., 63 M.C.C. 731 (1954), affirmed Bingler Vacation Tours, Inc. v. United States, 132 F.Supp. 793 (D.N.J.1955), affirmed 350 U.S. 921, 76 S. Ct. 211, 100 L. Ed. 806 (1955). As was said by the Commission in Bingler, supra, 'it does not necessarily follow * * * that because an operation may appropriately be designed as 'special' that it may not also possess many of the characteristics of an 'ordinary regular-route operation." The Commission's broad discretion to decide that a particular service is a special operation under the statute need only be exercised rationally. We think the Commission has met this standard here by validly differentiating Monarch's service from that offered by the plaintiffs.

 Furthermore, contrary to the argument advanced by plaintiffs, the statutory provision of special or charter operation over irregular routes does not defeat the National Transportation policy of protecting regular carriers against competing carriers using irregular routes. For Monarch's special service over irregular routes is not destructive competition with regular route bus carriers, nor does it do violence to the rule in Lincoln Tunnel Application, 12 M.C.C. 184 (1939), which restricted commuter carriers in the metropolitan New York-New Jersey areas to fixed ...


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