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February 21, 1974

UNITED STATES of America and Interstate Commerce Commission, Defendants, United Van Lines, Inc., Intervening Defendant

Coolahan, District Judge.

The opinion of the court was delivered by: COOLAHAN

The instant case comes before this Court pursuant to 28 U.S.C. § 2325 *fn1" requiring a District Court of three judges to be convened in suits attacking orders of the Interstate Commerce Commission. Plaintiff, Engel Van Lines, Inc. (Engel), is a corporation organized in New Jersey and has its principal office in Elizabeth, New Jersey. This District is thus a proper venue. 28 U.S.C. § 1398. *fn2"

 Engel is a motor common carrier, transporting household goods in interstate and foreign commerce, and as such is subject to the jurisdiction of defendant Interstate Commerce Commission (Commission). 49 U.S.C. § 1 et seq. On August 24, 1970 Engel applied to the Commission for a certificate of "public convenience and necessity" to operate without gateway requirements *fn3" in eight States in which Engel has restricted operating rights. Engel further applied for unlimited operating right in five States in which it had not operated previously. Engel's desire is to have its vans traverse the States immediately west of the Mississippi River and travel into the southwestern States without having to travel through selective cities -- thereby avoiding the greater distances and costs attendant to the "gateway" requirements. The petition before the Commission was opposed by certain motor common carriers of household goods and was supported by several of Engel's potential corporate customers as well as by the Department of Defense.

 After six days of hearings and the filing of briefs by the parties and others having interest in the application, the Hearing Examiner filed his report and recommended order denying Engel's application. Engel thereupon filed exceptions to the report and recommended order, but the conclusions of the Hearing Examiner were affirmed and adopted by Division 1 of the Commission. The full Commission later denied a petition filed by Engel for a Finding of General Transportation Importance, thereby affirming the rejection of Engel's entire application.

 The requirement that a motor common carrier obtain a certificate of "public convenience and necessity" from the Commission prior to engaging in interstate commerce is created by section 306 of the Interstate Commerce Act, 49 U.S.C. § 306(a). *fn4" The Act, 49 U.S.C. § 307(a), sets out the criteria to be used by the Commission in issuing certificates of public convenience and necessity:

". . . a certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operations covered by the application, if it is found that the applicant is fit, willing, and able properly to perform the service proposed and to conform to the provisions of this chapter and the requirements, rules and regulations of the Commission thereunder, and that the proposed service to the extent to be authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied."

 Engel rests primarily on Fifth Amendment due process grounds. Engel avers that the Commission, in reviewing its application was required to follow -- and did not properly follow -- the doctrine of Fernstrom Storage & Van Co., 107 M.C.C. 556 (1968), 110 M.C.C. 452 (1969), aff'd sub nom. Aero Mayflower Transit v. United States, CCH Fed. Carr. Cas. P 82.308 (S.D. Ind. 1971), appeal denied, 409 U.S. 904, 93 S. Ct. 216, 34 L. Ed. 2d 166 (1972), which, Engel claims, set standards "less exacting" for household movers to obtain certificates of public convenience and necessity than for other motor common carriers.

 The Fernstrom case, like the instant action, had two stages: a decision by Division 1 of the Commission, reported at 107 M.C. 556 (1968), and a decision of the entire Commission, reported at 110 M.C.C. 452 (1969). Unlike the instant action, however, the full Commission reversed the decision of Division 1, thereby granting the authority requested by the moving van operator. It is the contention of Engel that the Commission in Fernstrom created a new doctrine for grants of certificates of public convenience and necessity to household movers wherein "the Commission granted the application and did not consider the ability of existing carriers to provide the service" (Engel brief at p. 12). Engel apparently bases its interpretation on the fact that the Commission overturned Division 1's ruling in Fernstrom without specifically disavowing Division 1's decision "that there was no dearth of available existing service."

 The decision by Division 1 in Fernstrom, however, indicates that there was a substantial amount of evidence presented for the proposition that existing services were inadequate. See the summary of this evidence at 107 M.C.C. 561. The Commission in Fernstrom merely exercised its prerogative to accord greater weight to this evidence than did Division 1. That the Commission based its decision substantially on a finding of inadequacy of existing service may be seen in its holding that:

". . . the salient deficiency which emerges from all the testimony is the seeming inability of existing carriers to provide timely service, or, in many cases, to even make timely commitments to perform a service which the public is entitled to and for which the demand is ever increasing, particularly with respect to prompt pickup and delivery of household goods. It is our conclusion, therefore, that the existing household goods carriers are not able to provide the service which we deem to be reasonably adequate in many instances, particularly during peak periods of the moving season . . ..
We also cannot overlook the dramatic population growth within the last two decades and the fact that the population is more mobile . . ." [ 110 M.C.C. at 455]

 It can be seen from this language that while the full Commission did not depart from Division 1's evaluation of the quality of existing service, there was a difference in view as to how much service was meeting existing needs.

 Engel lastly contends that it has been denied due process in that the Commission did not follow Fernstrom but instead relied on the case of King Van Lines, Ext. 48 States, 114 M.C.C. 866 (1972), decided after all evidence had been presented in the instant matter but before the Hearing Examiner had rendered his written opinion. It is contended that the Commission in King returned to the pre- Fernstrom standard, wherein household movers were again required to show a greater degree of public convenience and necessity, i.e., a greater inadequacy of existing service.

 If the King decision represented a departure from the reasoning of Fernstrom, such a change was not reflected in the outcome of the King case itself. The Commission in granting the extension of service requested by King clearly found that "existing household goods carriers are not able to provide reasonably adequate service in many instances, particularly during peak periods of the moving season." 114 M.C.C. at 870. In addition, the ...

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