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G. & T. TERMINAL PACKAGING CO. v. CONRAIL

October 24, 1986

G. & T. TERMINAL PACKAGING CO., INC., and Anthony Spinale
v.
CONSOLIDATED RAIL CORPORATION



The opinion of the court was delivered by: LECHNER

 Plaintiffs are engaged in the business of shipping agricultural goods by railroad. They commenced this action in 1984 seeking recovery of allegedly discriminatory rates paid by plaintiffs to defendant railroad company, and an injunction against future discriminatory rates. Judge Ackerman has previously dismissed all counts of the complaint except those alleging a common law cause of action against defendant. *fn1" Presently two motions are before the Court: (1) defendant's motion to dismiss the remaining common law claim and (2) plaintiffs' motion to restore two counts of the complaint asserting that defendant's allegedly discriminatory rates were designed to unlawfully inhibit plaintiffs from pursuing legal remedies for shipped goods lost or damaged by defendant railroad company.

 Facts

 G. & T. Terminal Packaging Co, Inc. ("G & T") is a New York corporation engaged in the business of shipping potatoes from the west coast to the New York City area. Anthony Spinale ("Spinale") is President and sole stockholder of G & T. Consolidated Rail Corporation ("Conrail") is a Pennsylvania corporation engaged in the railroad business.

 It appears that since at least 1983, Conrail has delivered G & T's potatoes from the west coast to G & T's terminals located in Kingsbridge and Hunts Point, New York. G & T alleges that in June, 1983, Conrail imposed an additional freight charge for transportation of G & T's potatoes which caused the rate charged G & T to exceed the rate charged other comparable shippers by some $500 to $600 per carload of potatoes. G & T has objected to the additional charges but Conrail has refused to reduce them.

 By letter, dated September 30, 1983, counsel for G & T wrote to the chairman of the Interstate Commerce Commission ("ICC") to inquire whether the ICC had jurisdiction to entertain a legal action brought by G & T against Conrail challenging the allegedly discriminatory rates. By letter, dated October 11, 1983, the Director of the ICC's Office of Proceedings responded to the inquiry and indicated that because the ICC had exempted railroad carriers of fresh fruits and vegetables from virtually all previous forms of economic regulation (see discussion, infra) the ICC would not have jurisdiction to entertain G & T's suit. The letter indicated G & T would have to seek relief in the courts.

 By complaint filed with this Court on March 26, 1984, G & T commenced this action asserting that Conrail's allegedly discriminatory rates violated provisions of the Interstate Commerce Act, 49 U.S.C. ยง 10101 et seq. (the "Act"), the common law, the antitrust laws and the United States Constitution. In opinions issued at hearings held on September 28, 1984 and April 8, 1985, Judge Ackerman dismissed G & T's claims under the Act and the Constitution and expressly ruled that G & T could assert its common law claims against Conrail in this Court. By stipulation of the parties filed January 2, 1985, G & T's antitrust claims were dismissed. Thus, the only cause of action remaining in this action is based on a common law claim of rate discrimination.

 It appears that on September 27, 1985, Conrail filed a petition with the ICC seeking a declaratory judgment that G & T's common law remedies in this action were pre-empted by provisions of the Act. On March 5, 1986, the ICC issued a decision concluding, contrary to its October 11, 1983 letter, that it retained jurisdiction over all allegations of rate discrimination (the "March 5, 1986 Decision"). In addition, the ICC ruled that under its interpretation of the Act, G & T had no independent common law cause of action against Conrail.

 Citing the ICC decision and a recent Supreme Court case, Conrail brings the present motion for summary judgment dismissing G & T's remaining common law claim. G & T has opposed Conrail's motion and has moved the Court to restore two counts of the complaint which Judge Ackerman previously dismissed. These two counts arise under provisions of the Act forbidding common carriers from taking steps to evade liability for damage suffered by goods shipped. G & T has submitted documents and evidence uncovered during the course of discovery in support of its claim that Conrail raised G & T's rates to inhibit G & T from pursuing liability claims against Conrail for damaged goods.

 Regulatory Framework

 Originally enacted by Congress in 1887, the Interstate Commerce Act is the basic legislation governing Federal regulation of common carriers. One of the core regulatory functions of the Act is to provide a mechanism for establishing the rates common carriers are allowed to charge shippers using the carriers. The original act required the ICC to determine "just and reasonable charges," either in response to complaints of discriminatory or unreasonable rates filed by shippers against carriers, or in response to carrier requests for rate increases. See H.Rep. No. 1035, 96th Cong., 2d Sess. Appendix, reprinted in 1980 U.S. Code Cong. & Ad.News 3978, 4025, 4029-31.

 The Act was amended by the Staggers Rail Act of 1980, Pub.L. No. 96-448, 94 Stat. 1898, in which Congress made plain its intention that the railroad industry be significantly deregulated. The policy subsection of the Staggers Act states:

 
In regulating the railroad industry, it is the policy of the United States Government --
 
(1) to allow, to the maximum extent possible, competition and the demand for services to establish reasonable rates for transportation by rail;
 
(2) to minimize the need for Federal regulatory control over the rail transportation system and to require fair and expeditious regulatory decisions when regulation is required;
 
* * * *
 
(4) to ensure the development and continuation of a sound rail transportation system with effective competition among rail carriers and with other modes, to meet the ...

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