Western Pacific Railroad Company v. United States/Opinion of the Court

by Potter Stewart

United States Supreme Court

382 U.S. 237

Western Pacific Railroad Company  v.  United States

 Argued: Oct. 19, 1965. --- Decided: Dec 7, 1965

Section 3(4) of the Interstate Commerce Act, as amended, 54 Stat. 902, 49 U.S.C. § 3(4) (1964 ed.), commands that 'All carriers subject to the provisions of this chapter * * * shall not discriminate in their rates, fares, and charges between connecting lines * * *.' ^[1] The meaning of the term 'connecting lines' is the crucial question in this controversy between the Western Pacific Railroad Company, on the one hand, and the Union Pacific Railroad Company and the Northern Pacific Railway Company, on the other. Western Pacific contends that it is a 'connecting line' in relation to these carriers and that, therefore, it is entitled to invoke against them the provisions of § 3(4) prohibiting discriminatory rates. The Interstate Commerce Commission and the District Court held otherwise.

Western Pacific filed a complaint with the Commission, alleging, in part, that Union Pacific and Northern Pacific practice rate discrimination against it. ^[2] The alleged discrimination consists in the refusal of these carriers, except with respect to a few commodities, to enter into joint through rates via Portland, Oregon, with the route of which Western Pacific is part, although they maintain a full line of such rates with a competitor, the Southern Pacific Company. The hearing examiner found in favor of Western Pacific, but Division 2 of the Commission reversed. The Division found both that Western Pacific could not invoke the provisions of § 3(4) because it was not a 'connecting line,' and that, even if it were, the evidence did not establish the 'similarity of circumstances and conditions' that would compel rate treatment equal to that accorded to Southern Pacific. The Division refused to accord Western Pacific 'connecting line' status on the ground that it neither physically connects with the allegedly discriminating carriers at the point of discrimination, nor participates in existing through routes with them through that point. Western Pacific R. Co. v. Camas Prairie R. Co., 316 I.C.C. 795. When the full Commission denied further hearing, Western Pacific brought this action in the United States District Court for the Northern District of California to set aside the Commission's order. The three-judge court dismissed the complaint solely on the ground that Western Pacific was not a 'connecting line.' Western Pacific R. Co. v. United States, D.C., 230 F.Supp. 852. It agreed with the Commission's limited definition of the term and said, 'Any further liberalization of the present definition will have to come from the Supreme Court.' Id., at 855. We noted probable jurisdiction. 379 U.S. 956, 85 S.Ct. 656, 13 L.Ed.2d 553.

Analysis of 'connecting line' status in this case is closely tied to the geographical, structural, and economic relationships among the railroads involved. Union Pacific, Northern Pacific and their short-line connections provide exclusive rail service between many points in the Pacific Northwest and Portland, Oregon. From Portland, the two competitive routes in question descend, at times parallel, at times intertwined, to Southern California. The route closest to the seacoast consists largely of Southern Pacific. To the east of this route lies the so-called Bieber route whose completion in 1931 was authorized by the Commission to provide competition with Southern Pacific. ^[3] The Bieber route is composed of the end-to-end connections of three different companies: the Great Northern Railway from Portland to Bieber, California; the Western Pacific from Bieber to Stockton; and the Atchison, Topeka & Santa Fe from Stockton to Southern California. Thus the Bieber route and Southern Pacific both connect with the allegedly discriminating carriers at Portland where facilities for the interchange of traffic exist.

The Bieber route carriers presently enjoy joint through rates among themselves. Moreover, the other two participants in that route have expressed willingness to join with Western Pacific in the joint rates it seeks with Union Pacific and Northern Pacific. Union Pacific and Northern Pacific, for over 50 years, have maintained through routes and a full line of joint rates with Southern Pacific via Portland. They have refused, however, except for a few commodities, to offer through routes and joint rates on traffic moving on the Bieber route through Portland. The joint rates established with Southern Pacific are lower than the combination of local rates that would otherwise apply. Since the Bieber route carriers can offer joint rates only with respect to a few commodities, they cannot match the lower rates offered by Southern Pacific to shippers of most commodities between points in California and points in the Pacific Northwest exclusively served by Union Pacific and Northern Pacific via Portland.

The Commission and the District Court held, however, that even under these circumstances, Western Pacific is not a 'connecting line' eligible to complain of the alleged discrimination. In argument here the Commission and the appellee railroads contend that to qualify for that status Western Pacific must show more than that it participates in an established through route that connects with Union Pacific and Northern Pacific, and that all the participants in the route stand willing to cooperate with these carriers in establishing joint through rates. ^[4] We are urged to hold that to qualify under § 3(4) as a complainant 'connecting line' a railroad must either itself make a direct connection with the discriminating carrier, or be part of a through route that already includes the carrier. We cannot accept such a construction of the statute.

The literal meaning of the statute does not require that construction. To be sure, the term 'connecting lines' suggests the requirement of an actual physical connection between the complainant and the discriminating carrier. The term 'line,' however, admits of more than a single meaning limited to the track owned exclusively by one railroad company. It may also be interpreted reasonably to include a functional railroad unit such as the Bieber through route involved here. Moreover, all parties in this litigation recognize that in Atlantic Coast Line R. Co. v. United States, 284 U.S. 288, 52 S.Ct. 171, 76 L.Ed. 298, this Court rejected the contention that 'connecting line' is a term limited to the meaning that the statutory language might initially suggest. Mr. Justice Brandeis, speaking for a unanimous Court, wrote, 'There is no warrant for limiting the meaning of 'connecting lines' to those having a direct physical connection * * *. The term is commonly used as referring to all the lines making up a through route.' Id., at 293, 52 S.Ct. at 173.

There also is no warrant for limiting the meaning of 'connecting lines' to the lines making up a through route that already includes the discriminating carrier. We have been referred to no previous judicial or administrative decisions compelling that conclusion. The Atlantic Coast Line case, supra, imposes no such limitation. It established that the term 'connecting lines' extends beyond physical connection to encompass lines participating in a through route, but it does not even hint of any limitation on the nature of the through route, much less hold that the through route must already include the discriminating carrier. ^[5] Our subsequent definition of 'through route' in Thompson v. United States, 343 U.S. 549, 72 S.Ct. 978, 96 L.Ed. 1134 adds no more to an analysis of 'connecting line' under § 3(4). In that case, which arose under §§ 15(3) and 15(4) of the Act, we held that the Commission had improperly applied the test of the existence of a through route: '* * * whether the participating carriers hold themselves out as offering through transportation service.' 343 U.S., at 557, 72 S.Ct., at 983. Section 3(4) does not use the term 'through route.' But even if, after Atlantic Coast Line, a carrier may qualify as a 'connecting line' if it is one of the 'lines making up a through route,' 284 U.S., at 293, 52 S.Ct., at 173, the Thompson test offers no solution to the problem presented here. It simply does not speak to the question whether the discriminating carrier must be one of the participating carriers offering through service in conjunction with the carrier seeking 'connecting line' status.

The reason the issue presented in this case has not been decided before now ^[6] may be that discrimination of the sort complained of here is uncommon. In most instances it is to the advantage of railroads such as Union Pacific and Northern Pacific to encourage the movement of traffic over their lines from as many sources as possible. ^[7] Moreover, when such discrimination does occur the railroad connecting directly with the discriminating carrier is likely to take the lead as complainant.

In the absence of any settled construction of § 3(4), then, its manifest purpose to deprive railroads of discretion to apportion economic advantage among competitors at a common interchange must be the basic guide to decision. Just such discretion would be conferred upon railroads in a position to discriminate if we were to hold that their decisions not to enter through route relationships with connecting through routes could bar nonadjacent participants in such through routes from eligibility to complain. Indeed such a holding would result in an anomalous set of circumstances clearly illustrated in the present context. No one doubts that Southern Pacific, by virtue of its direct physical connection, would be eligible to complain of rate discrimination if it were practiced in favor of the Bieber route. It is also undisputed that Great Northern would be eligible to complain of the present discrimination, not merely as it affects its segment of the Bieber route, but on behalf of the route as a whole. Moreover, it is clear that if Union Pacific and Northern Pacific had entered a through route relationship with the Bieber route and then had decided to abandon it, or to set rates somewhat higher than those set for Southern Pacific, any participant in the Bieber route could complain of that discrimination. We cannot therefore construe § 3(4) to bar these participants from eligibility to complain solely because they have been put to an even greater competitive disadvantage by the refusal of the allegedly discriminating carriers to enter a through route relationship with them comparable to the one established with Southern Pacific. Hence, we hold that to qualify as a 'connecting line,' in the absence of physical connection, a carrier need only show that it participates in an established through route, making connection at the point of common interchange, all of whose participants stand willing to cooperate in the arrangements necessary to eliminate the alleged discrimination.

Such a construction of 'connecting line' does not interfere with the function of the Commission under § 15(3) of the Act, 54 Stat. 911, 49 U.S.C. § 15(3), (1964 ed.), to require the establishment of through routes and joint rates 'in the public interest.' ^[8] Section, 3(4) is applicable only to a narrower range of situations involving discrimination at a common interchange. Moreover, the remedy in § 3(4) situations need not entail the establishment of through routes, joint rates, or indeed any particular form of relief. All that is required is the elimination of discriminatory treatment. See Chicago, Indianapolis & Louisville R. Co. v. United States, 270 U.S. 287, 292-293, 46 S.Ct. 226, 228, 70 L.Ed. 590; United States v. Illinois Central R. Co., 263 U.S. 515, 520-521, 44 S.Ct. 189, 191, 68 L.Ed. 417. Finally our holding does no more than to define the characteristics of a carrier eligible to complain. Relief is warranted only if it also appears that differential treatment is not justified by differences in operating conditions that substantially affect the allegedly discriminating carrier. See United States v. Illinois Central R. Co., supra, 263 U.S. at p. 521, 44 S.Ct. at p. 192; Atchison, Topeka & Santa Fe R. Co. v. United States, D.C., 218 F.Supp. 359, 369.

In the present case, having found that Western Pacific was not eligible to complain, the District Court did not reach the question whether it was entitled to relief. We therefore vacate the judgment and remand this case to the District Court for further proceedings consistent with this opinion. It is so ordered.

Judgment Vacated and Case Remanded with Directions.

Mr. Justice DOUGLAS, dissenting.

Notes

1. Section 3(4) provides in full:
2. Western Pacific and its subsidiaries named as defendants: The Northern Pacific Railway Company, The Union Pacific Railroad Company, and certain of their short-line connections. These railroads denied the allegations of the complaint. The Southern Pacific Company intervened in opposition to the complaint. The complaint also named as defendants: The Atchison, Topeka & Santa Fe Railway Company, The Great Northern Railway Company, and certain short-line connections. These railroads answered expressing willingness to join in the relief sought by Western Pacific.
3. Great Northern R. Co. Construction, 166 I.C.C. 3, 39; 170 I.C.C. 399.
4. Pursuant to 28 U.S.C. § 2322 (1964 ed.), the United States was named as defendant in the District Court. It did not, however, join with the Commission in defense of the Commission's order, and it supports Western Pacific in this Court.
5. In the Atlantic Coast Line case, certain railroads leasing the Carolina, Clinchfield & Ohio Railway with the approval of the Commission filed restrictive schedules designed ultimately to exclude an as yet incomplete extension of the Georgia & Florida Railroad from participating, when completed, in joint rates over the Clinchfield. The Commission ordered the schedules canceled on the ground that they violated terms in the lease, accepted by the lessees, on which the Commission had conditioned its approval. One condition required the lessees to permit the Clinchfield to be used as a link for through traffic with 'such other carriers, now connecting, or which may hereafter connect, with (it) * * *.' 284 U.S., at 292, note 3, 52 S.Ct. at 172. The extension of the Georgia & Florida made connection with the Clinchfield only via the rails of an intermediate carrier. This Court sustained the Commission's order, however, and held that the Georgia & Florida was a carrier connecting with the Clinchfield because it was one of the 'lines making up a through route.' 284 U.S., at 293, 52 S.Ct. at 173. Even assuming that the through route referred to was not one limited to the complaining carrier and the intermediate carrier, it is clear that this Court was not faced with the question whether the complaining railroad would be regarded as a 'connecting line' if the through route establishing the connection did not also encompass the Clinchfield. In short, Atlantic Coast Line did not present the issue squarely before us now.
6. Although we do not regard Chicago, Indianapolis & Louisville R. Co. v. United States, 270 U.S. 287, 46 S.Ct. 226, 70 L.Ed. 590, as dispositive of the question presented, that case, on its facts, supports the conclusion we reach.
7. In response to an inquiry at oral argument, the parties have submitted memoranda agreeing that through routes and joint rates are ordinarily established by voluntary agreement, and that a railroad usually interchanges traffic on a comparable basis with competing railroads at a common interchange. See also Thompson v. United States, 343 U.S. 549, 554, 72 S.Ct. 978, 981, 96 L.Ed. 1134.
8. Section 15(3) provides in relevant part:

'The Commission may, and it shall whenever deemed by it to be necessary or desirable in the public interest, after full hearing upon complaint or upon its own initiative without complaint, establish through routes, joint classifications, and joint rates, fares, or charges, applicable to the transportation of passengers or property by carriers subject to this chapter * * * or the maxima or minima, or maxima and minima, to be charged, and the divisions of such rates, fares, or charges as hereinafter provided, and the terms and conditions under which such through routes shall be operated.'