The opinion of the court was delivered by: WHIPPLE
Rule 15 provides for amendment to the pleadings when "justice so requires." Leave to amend pleadings may be properly denied by the Court when the claim sought to be interposed is legally inappropriate. Phila. Housing Authority v. Am. Radiator & Std. Sanitary Corp., 309 F. Supp. 1057 (E.D.Pa.1969). Defendant, Amtrak, argues that it is an instrumentality of the United States Government, and therefore, as a matter of law, cannot be held liable for punitive damages. For the reasons stated herein, this Court finds to the contrary, and grants plaintiffs leave to amend their complaint and seek recovery of a punitive award.
Although at least one court has allowed awards of punitive damages against Amtrak, Hanback v. Seaboard Coastline Railroad & N. R. C. P., 396 F. Supp. 80 (D.S.C.1975), and others have indicated that such exemplary awards would be appropriate if proved, Thompson v. N. R. P. C., 621 F.2d 814 (6th Cir.), cert. denied, 449 U.S. 1035, 101 S. Ct. 611, 66 L. Ed. 2d 497 (1980); Cooper v. N. R. P. C., et al., 45 Cal.App.3d 389, 119 Cal.Rptr. 541 (1975), none of these courts have squarely and explicitly addressed and rendered an opinion on the issue raised here4-i.e., whether Amtrak is an instrumentality of the United States government and therefore insulated from punitive civil judgments.
In this instance, the issue is properly before the Court which is not in a position at this early stage in these proceedings to dispose of the claim for a punitive award alternatively on factual grounds.
It is clear that the United States, its agencies and instrumentalities may not be subject to liability for punitive damages without the express consent of Congress. Missouri Pac. R. R. v. Ault, 256 U.S. 554, 41 S. Ct. 593, 65 L. Ed. 1087 (1921); Reconstruction Finance Corp. v. State of Texas, 229 F.2d 9 (5th Cir.), cert. denied, 351 U.S. 907, 76 S. Ct. 695, 100 L. Ed. 1442 (1956). The threshold question, then, is whether or not Amtrak is an instrumentality of the United States government. Only if this first inquiry is resolved in the affirmative does the issue of Congressional consent to punitive liability arise.
Amtrak was created in 1970 under provisions of the Rail Passenger Service Act, § 101 et seq., 45 U.S.C. § 501, et seq. § 541, titled "Establishment of the corporation," provides in full:
There is authorized to be created a National Railroad Passenger Corporation. The Corporation shall be a for profit corporation, the purpose of which shall be to provide intercity rail passenger service, employing innovative operating and marketing concepts so as to fully develop the potential of modern rail service in meeting the Nation's intercity passenger transportation requirements. The Corporation will not be an agency or establishment of the United States Government. It shall be subject to the provisions of this chapter and, to the extent consistent with this chapter, to the District of Columbia Business Corporation Act. The right to repeal, alter, or amend this chapter at any time is expressly reserved.
45 U.S.C. § 541 (emphasis supplied). The clear intent of Congress, explicitly stated in § 541, is also reflected in the legislative history. Report No. 81-1580 of the House Interstate & Foreign Commerce Committee twice states: "The corporation would not be an agency or establishment
of the United States Government," 3 U.S.Code Cong. & Ad.News 4739 and 4742 (1970) (emphasis in original, at 4739). Despite numerous amendments to and extensions of the original Act, Congress has not altered the fundamental character of Amtrak as a non-governmental entity, specifically a "mixed ownership" corporation (defined at 31 U.S.C. § 856) to be operated for profit under the provisions of the District of Columbia Business Corp. Act, 29 D.C.Code § 901 et seq.
Amtrak has previously sought to arrogate to itself the fiscal protection afforded when an entity is recognized as an instrumentality of the United States government. In N. R. P. C. v. Miller, 358 F. Supp. 1321 (D.Kan.) (three judge court), aff'd, 414 U.S. 948, 94 S. Ct. 285, 38 L. Ed. 2d 205 (1973), Amtrak sought to be relieved of regulation and taxation under Kansas liquor laws. As an essential element of its case, Amtrak argued, as it does here, that it is an instrumentality of the United States. The three judge court flatly rejected this argument, stating that:
... (Amtrak) is not a government agency or establishment but is a private corporation operated for profit. The Act under which plaintiff was incorporated so provides. Thus plaintiff's position is no different than that of any private corporation organized under federal law....
Id., at 1328. Thus, the unmistakable intent of Congress, and the ruling of this Court in accordance therewith, has gained federal judicial recognition in the past. Amtrak is not a United States government agency, establishment or instrumentality, and therefore may be subject to liability for punitive damages.
That Congress has chosen to leave Amtrak exposed to punitive liability, despite undeniable monetary and managerial dominance of the corporation by the United States,
is not surprising or incongruous. Section 546(a) of Title 45 denominates Amtrak to be a "common carrier", and makes it subject to provisions of the Interstate Commerce Act, 49 U.S.C. § 1 et seq. As noted in United States v. Marshall, 230 F.2d 183, 188 (9th Cir. 1956),
Rail carriers have traditionally been held to a high standard of care with respect to the safety of their passengers. See, e.g., Meyonberg v. Penn. R. Co., 165 F.2d 50 (3d Cir. 1948); Pager v. Penn. R. Co., 165 F.2d 56, 56 (2d Cir. 1948). Congress must certainly have decided that the threat of punitive liability would aid the paramount purpose of securing the utmost vigilance by Amtrak in protecting those who commit themselves to its carriage. Regardless of the source from which any punitive damages might ultimately be paid, such liability is calculated to sensitize Amtrak's managers and the corporation's controlling interests, whether they be private or public, to the requirement of maintaining adequate standards of safety. To the extent that the United States Treasury bears the expense of punitive liability for any misdeed by Amtrak, the ...