Opposition Brief — Pennsylvania Railroad v. United States

IN THE

Supreme Court of the United States.

/

Octoser TERM, 1965.

No. 556.

THE PENNSYLVANIA RAILROAD COMPANY,

ET AL.,

Appellants,

Vv.

UNITED STATES OF AMERICA AND THE INTER-

STATE COMMERCE COMMISSION, ET AL.,

Appellees.

On AppeaL From tHE Unitep States District Court ror

THE Eastern. District or PENNSYLVANIA.

' BRIEF eae: MOTIONS TO AFFIRM. ~

I. The Motion of the United States, the Secretary «

‘Agriculture and the I.C.C.

The Government argues (p. 6) that there is no merit

“to appellants’ contention that the Commission could find.

undue prejudice only if’ there was substantial similarity

of transportation conditions as between the points alleged

‘to be preferred and those alleged to be prejudiced.

This is contrary to United States v. Illinois Central

R.R., 263 U.S. 515, 524 (1924) ; New York v. United States,

331 U.S. 284, 315-316, 350 (1947); State Corporation

. ri

oe ie Brief Opposing Motions to Affirm

Comm’n of Kansas v. United States, 184 F. Supp. 691, 698

(1959), and Atchison, Topeka & Santa Fe Railway Co. v.

United States, 218 F. Supp. 359, 366 (1963).

“The rule, as stated in United States v. Illinois Cen-

tral R.R., supra, at p. 524, is that |

‘To bring a difference in rates within the prohibi-

tion of § 3, it must be shown that the discrimina-

tion ‘practiced is unjust when ,measured by the

transportation standard. In other words, the dif-

ference in rates cannot be held illegal, unless it is

shown that. it is not justified by the cost of the

respective services, by their values, or by other

transportation conditions.’ ”’

In Atchison; a EY recent case, the Court stated at p. 366:

‘As plaintiffs have shown, and defendants [the

United States and the Inferst

' sion] do not dispute, bgth the Interstate Commerce

Commission’ and the federal courts have ruled that ©

undue prejudice or preference does not exist unless the

transportation conditions with regard to the preju-

diced and preferred points are substantially similar.

“*Tt follows that the correct test of ‘undue’ prefer-

ence or prejudice is whether those circumstances exist |

under substantially similar transportation conditions;

it also follows that a finding of such transportation

conditions is essential to the Commission’s authority

_ to find a section 3 violation.’? —

Illinois Central and Atchison were cited with approval

on this point by this Court’s decision of December 7, 1965

in Western Pacific Railroad Company. v. United States, No.

12, October term, 1965. In construing the provision _of

Section 3(4) of the Act, relating to discrimination between

connecting carriers, the Court stated:

Commerce Commis- —

Brief sai Wiad Motions to Affirm 3

“Relief i is wartwated only if it also appears that dif-

ferential treatment is not justified by differences in

operating conditions that substantially affect’ the -al-

legedly discriminating carrier. See United States v.

Illinois Central R.-Co., supra, at p. 521; Atchison,

Topeka & Santa.Fe R. Co. v. United States, 218 F.

Supp. 359, 369.’’ : ,

The case upon which the Government principally relies

for its contention is Ayrshire Collieries Corp. v. United

- States, 335 U.S. 573, 594 (1949). There, however, the Com-

mission had made the precise finding that is lacking in the

decision here under review:

“©. . the Commission found that. the icadamweietion

conditions over the single-line routes do not differ ma-

terially from those over the joint-line routes to the |

same destinations from other mines in the same group.

.’? (335 U.S. at 586) |

It is not contended by appellants that the Commission

must determine the lawfulness of rate relations in exact

accordance with cost relations. It may disregard minor

variations in cost, but the rule has-been that substantial

similarity, to be found by the Commission, is requisite to

an order commanding rate equality. It is obvious that

there is a point beyond which the disregard of cost differ-

ences would be arbitrary.! This is especially true when

rates are very low, as in the present case, where the rates

under attack were found by the Commission to be below

out-of-pocket costs. .Such rates (like short-haul rates) do.

1. The importance attached by this Court to the element of cost

differences in applying anti-discrimination provisions is well illustrated

by the decision in J.C.C. v. Mechling, 330 U.S. 567, at 577:.“Con-

cretely, the provisions mean in this case that Chicago-to-the-east

‘railroads cannot lawfully charge more for carrying ex-barge than for

carrying ex-lake or ex-rail grains to and from the same localities, ©

unless the eastern. haul of the ex-barge’ grain costs the eastern rail-

roads more to haul than does ex-rail or ex-lake" grain” (J.S. 17,

footnote. ) s

4 + — Brief Opposing Motions to Affirm

not yield sufficient revenue to permit of disregarding the

greater expenses to the higher-cost point.

On page 5 of its Motion to Affirm, the Government says

that in Ayrshire this Court held that in grouping stations

and fixing rate differences between station groups, -the

Commission could consider ‘the desirability of maintaining

competitive opportunity among shippers ‘‘so long as it also

took account of differing transportation conditions.’’ 1n

the present case, the Commission did not take account of

differing transportation conditions as to the matter which

controlled its decision, namely the supposed need to permit

of the selection of a new location for the Washington Mar-

ket on the basis of its having an equality ‘of rates with all

other points in the New York Metropolitan area (J.S. 48a).”

This consideration was, inherently, one which would exclude

- consideration of comparative transportation conditions.

The location of: the new market place was unknown. Rep-

resentatives of the City could not state where the new prod-

uce terminal would be located (Tr. 171). Indeed, as pointed.

out in the Jurisdictional Statement, counsel tor the City

and counsel allied with them took the position that trans-

portation conditions to the site of a possible new produce

terminal were immaterial (J.S. 17).

The Commission, therefore, made no finding of simi-

larity of transportation conditions, and the record would

not have permitted it to make such a finding.

. None of these matters is denied in the Government’s

Motion to Affirm. Rather, taking noté that the City has-now

decided upon the location (Hunt’s Point).for its new termi-

nal market, the Government states that it does not read

the Commission’s order as precluding appellants from filing

2. The Government concedes that this consideration was deemed

by the Commission to be “especially important” (Motion p..4) and

the City of New York stated in its brief in the court below (R. 427)

that the gonclusion of undue prejudice “ . was bottomed upon

the disadvantage of New York City, as a locality, in competing with

municipalities in the same commercial and urbanized metropolitan area

for the relocation of the fresh fruit and vegetable market” (J.S. 10).

Brief Opposing Motions to Affirm | 5

-new rates to Hunt’s Point when service thereto begins on

a regular basis, that the lawfylness of those rates will

present a separate question, not decided here, and that

'. appellants may then introduce cost data relevant to that

service (Motion p.7). We shall comment on this statement

infra. At this point, it is, sufficient to notice that there

is no challenge to the validity of the grounds of appellants’

point concerning the lack of knowledge, consideration by .

the Commission, or finding, relating to comparatiye trans-

portation conditions as between points alleged’to be unduly

preferred and a possible point at which a new produce

terminal might be built by the City. -Hence, even on the

Government’s statement of the rule .(referring -to the.

Ayrshire case) that the Commission may consider the de-—

sirability of maintaining competitive opportunity among .

shippers ‘‘so long as it also took account of differing

transportation conditions,’’? the Commission’s order here

must be held invalid; it did not take account of compara-

tive transportation conditions in reaching its conclusion

that a finding of undue prejudice should be entered so that

the decision as to relocation of the Washington Market

could be made on the basis. of — equality for any location

that might be selected.

With respect to the comparative _— which the Com- _—

mission did discuss, namely those in terminating produce :

at the Pennsylvania Produce Terminal (called the ‘‘Man-

hattan Piers’’ in the Government Motion) in relation to.a

typical New Jersey point, the Commission found, as the

Government admits (Motion p. 3), that there was a cost.

differential of $63.25. This compares with rate differen-

tials ranging from $33 to $57 per car (J.S. 12). It found

also that all of the services embraced by the rates to the-

Pennsylvania Produce Terminal were lawfully included in

such rates (J.S. 38a); hence the cost attributable to all

such services was—as to this station—the relevant cost.

It. found also that no undue prejudice was shown to persons

‘receiving shipments at that station (J.S. 47a). And-even

1

.

oN ew, —

eo Brief Opposing Motions to-Affirm

the author of the majority opinion agreed that the City

and its co-complainant failed to make out a case of undue

_Rrejudice from the standpoint of possible loss of tax reve-

/ nud or employment (J.S. 22a). Hence, the only thing unac-

re / counted for is the matter of the removal of the market.

; \\ A/finding of undue prejudice with respect to rates to the

PR nsylvania Produce Terminal obviously could not have

\_beén based upon the necessity of rate equality to that point

as a possible site for relocation of the produce market; the

idea was to move the produce market away from that ter-

minal. Yet the Commission found undue prejudice in the

relation between the rates to this important station and

those to b typical New Jersey station as to which it found

transportation costs to be $63.25 per car lower.

RE ee the cost evidence, the Commission disre-

gardefi a difference of $14.14 in the cost of switching and

floating to the Pennsylvania Produce Terminal as compared

with switching to a typical New Jersey point—Henderson

Street team tracks, Jersey City—on the ground that a dif-

_Aerence of this amount may be found in any large rate —

group (J.S. 38a). It disregarded without explanation an

additional difference of $12.29 between station: costs at

Jersey City and what it arbitrarily assigned as station costs

for normal delivery at the Pennsylvania Produce Terminal .

(Appendix C, p. 37a). As to this, the Government states

(Motion p. 6) that although the Commission ‘‘did not

specifically mention this differential’? its decision shows

that it was aware of the total cost differential at the

Produce Terminal ‘‘and it concluded that this amount was

insufficient to outweigh the factors: favoring the grouping

of the New Jersey and New York stations.’’ And it is 2

argued that the ‘‘general considerations’’ relied upon to

sustain the Commission’s order are not affected. by - evi-

dence ‘‘of an added small cost of this sort’’ (Motion p. 6).

This, of course, views the $12.29 in isolation from. other

cost differences. The Commission had dismissed the $14.14 |

* cost difference for switching and floating, as mentioned

Brief Opposing Motions to — 7

above, on the ground that. it was not wneud to find dif-

ferences of this amount in any rate group. When $12.29 °

is added to that amount, there is, based upon these two

factors alone, a difference of $26.43. The Commission

did not say. that such a difference may be found in any

group. It just left the matter hanging. Moreover, the

$12.29 differential in ‘‘normal delivery’’ costs resulted .

from a split of the station expenses by the Commission

wholly without evidence, a matter.to which we now turn.

The Government does not deny that the Commission

made the apportionment of station costs between “normal.

delivery’ and ‘‘extraordinary’’ costs without evidence. It

says that appellants attack the Commission’s apportion-

ment of station costs under the misapprehension that the-

Commission’s purpose in making the apportionment was

to ascertain the cost of making team track delivery at

_ New York so as to know station costs at the site of the new

produce market, but that, in fact, the Commission’s purpose |

was to discover whether a substantial part of the cost

differential between the Manhattan piers and New. Jersey

could be recovered by an accessorial charge. ‘The Gov-

ernment says that: aos :

‘‘For this limited purpose, precise apportionment was

unnecessary. All the Commission sought to shgw was -

that a ‘substantial’ amount of the station costs were

recoverable, leaving a much smaller unrecovered cost

differential to weigh against the factors favoring the

group rate.’’ (Motion p. 7)

‘Here, therefore, the Government is urging that while the

. Commission ascertained both costs. (without evidence) it

gave consideration to only one, that relating to a possible .

charge not in issue. The report in no way indicates that the

Commission considered only the costs relating to such a

possible charge and ignored that part of its apportionment

which did relate to the rates in issue, the cost for ordinary

8 _ Brief Opposing Motions to Affirm

services under the line-haul rates. The Commission stated

(J.S. 39a) that:

e

“In view of the conclusions. expressed above, it

is necessary to determine whether the station costs of ©

$62.65 are attributable solely to extraordinary pier

services and facilities or whether a part of such costs:

would have been incurred in conneétion with ordinary

station delivery.” __ | \

; e

Manifestly, it cannot properly be said that the Com-

mission, in making the apportionment, had no interest in

the cost for ordinary station delivery. This. same conclu-

sion is compelled by the title of the appendix in which the.

arbitrary cost apportionment was made (J.S. 53a) and by

the statement of the Commission thht an ‘*. . . estimate:

of what is delivery cost at the New York piers and costs

of normal station services has been made .-. .”’ (J.S. 53a).

The statement that the Commission’s purpose was to

examine the extent of the extraordinary costs alone is the

statement of counsel, not that of the Commission: The deci-

sion must be judged-as it was written. Securities.and Ex-

change Comm’n v. Chenery Corp., 322 U.S. 194, 196 (1948).

Moreover, the contention that the Commission considered

only the costs for extraordinary services and completely dis-

regarded its finding as to the cost of normal delivery is,

at the very least, subject to the criticism of. the findings

condemned. in United States v. Chicago, M., St. P. € P.R.R.

Co., 294 U.S. 499 (1935), with respect to which the Court

found ‘‘lurking’’ in the report some phrases that tended

_to give-support to the interpretation favored by the Gov-

ernment, but stated that: |

_. “The difficulty is. that it-has not said so with the sim-

plicity and clearness through which a halting. impres-.

sion ripens into reasonabie certitude. In the end we

are left to spell out, to argue, to choose. between con-

flicting inferences. Something more precise is’ requi-

—_ =

<

Brief Opposing Motions to Affirm *

site in the quasi-jurisdictional findings of an adminis-

trative agency.’

_ That ruling should be. det here. Decision .should

also be guided by United States v. Abilene & So. Ry. Co.,

265, 274 (1924) :

‘‘The matter improperiy treated as evidence may have ,

been an important factor in the conclusions reached

by the Commission. The order must, therefore, be.

held void.’’. (p. 290)

All of the foregoing, we submit, dumsnutabias that the

Government’s Motion to Affirm does not validly answer

the basic contentions set forth in the Jurisdictional State-

ment. And nothing said in the motion answers ‘appellants’

arguments as to the importance of the questions involved

(J. S. 16-22). Notwithstanding these facts, further proceed-

ings before the Commission at this stage may. substitute for.

plenary consideration by the Court, a matter to which we

now turn.

j The Government’ s concession that the appellants are

entitled to a hearing for the introduction of cost data rele-

’ vant to transportation to Hunt’s Point is, of course, an

important concession to one of. the basic contentions ad-

vanced by appellants. If this concession had been made

. in'the court below, the order of the three-judge court may

well have been quite different than thatentered. , ;

; More than this concession) however, i is required for the

proper protection of appellants’ rights. If the hearing for

the reception of evidence of the cost of serving Hunt’s Point

were to be limited to.a consideration of Hunt’s Point alone

(in relation to the New Jersey Points), appellants would

not be assured of the right to a real and substantial con-

sideration of the effect which should be given to transpor-

tation costs in determining upon rates” toe Hunt’s. Point.

This is because it would unquestionably be argued that the

Commission has already found that the rates to all New

\ \

10... ——>- Brief Opposing Motions to Affirm

York City points presently served shall be the same as to

‘the New Jersey points involved, and that with this finding

standing (as it would stand with an affirmance of the

lower court’s decision) Hunt’s Point should not be singled’

‘out as the lone place in New York City having rates higher

than those applicable to the group in general.

Since, under the Commission's theory of decision. (the |

necessity for rate equality in ‘the selection of a docation for

the new produce market) it is Hunt's Point which has

‘proved to be the erucial place, the Commission's finding of

undue prejudice to the miscellancous: stations in New York

(which have proved to be of no consequence, none having

been selected as the location for the new produce terminal)

should not be permitted to render superficial and insubstan-

tial its consideration of the costs and rates to Hunt’s Point

in relation to the New Jersey points.involved. The ¢on-

sideration of the rates to the important new ‘produce ter-

minal, therefore, should be made with the entire rate ad-

justment to the New York area before the Commission,

Accordingly; in the light of the concession made by the

Government and the relation thereof to the Commission’s

theory of decision, appellants respectfully suggest that the

Court forthwith enter an order vacating the judgment of

the three-judge court, with directions to remand the case -

to the Commission for further hearing and a finding of the

comparative cost as between transportation to Hunt’s Point

(and any other relevant New York points) and the destina-

tions alleged to be unduly preferred, and a. determination

of the lawfulness of rate relations as between Hunt’s Point

and other New York points, on the one hand, and New Jer-

sey points, on the other. Inthe alternative, appellants

respectfully request that probable jurisdiction be noted so;

that plenary consideration may be given to the questions

presented in the jurisdictional statement.

Brief Opposing Motions to Affirm - 11

“IL. The Motion of the New York Port Authority and

| | New York City. cae .

This motion puts much emphasis upon the traditional .

maintenance of rate groups at large cities, such as Ne®

York. However, the fact that stations have been grouped

as to rates in general does not mean that. variations with

respect to rates on given commodities, sich as fruits and

vegetables, moving on exceedingly. low rates, result in undue

prejudice and preference in violation of Section 3(1) or

that in determining whether they do so result, basic require-

ments for establishing a violation of Section 3(1) may be

disregarded. (See J.S. 19.) th ?

It is a common thing to have exceptions to the gen-

eral practice of maintaining terminal group rates. The

evidence shows examples of such exceptions at New York

as well as at terminal groups of other cities (Tr. 314-323, _

Exs. 55, 56). In publishing the assailed rates on fruits and

vegetables. to New York, the railroads did not, suggest a —

general departure from the practice of maintaining a com-

mon rate to the New York group. They simply filed an

additional exception, and they did so because of the very

low level of the rates involved. This was specifically ap-

proved. by the shippers and reeeivers of the fruits and

vegetables, those truly concerned with the rates.

These appellees do not relate their discussion of the

group matter to the legal deficiencies in the Commission’s

order as raised in the. Jurisdictional Statement. _ They

3. It is said on page 8 of the Port Authority Motion that the -

Commission found that the rate differential could cause the removal

of the “wholesale trade” from New York to New Jerséy, that the -

wholesale trade is sometimes referred to in the Commission’s report

as the “wholesale market” and that this is not an organization over

which the City of New York has any control. The Commission re-’

ferred to “the decision” as to relocation of “the wholesale produce’

' market” (J.S. 48a). Also, the author-of the majority report; in his

dissent to the division report, spoke of “the produce terminal” and

said that: ~ ° .

“A new produce market is only one of many facilities that may

require community planning . . . and a hige investment

12 —_ Brief Opposing Motions to Affirm

_ state that all pertinent principles of-law have been settled

by the decisions cited on’pages 10 and 11 of their motion.

One of these, Baltimore & Ohio R. Co. v. United States, 345

U.S. 146 is not pertinent. It dealt with reasonableness and

not undue prejudice. The lower court sustained the order

involved in the present case on the Commission’s finding of

undue prejudice alone (J.S. 8a).

Each of the other cases cited on pages 10 and 11 of

the New York Motion did deal with undue prejudice, and

, each ‘of the Commission’s orders reviewed in those cases

was supported by the finding of similarity of transportation

- conditions ,which-is lacking in the order now under review.

We have already noted this (supra, p. 3) as to Ayrshire.

The next case cited is Illinois Commerce Commission v.

United States, 292 U.S. 474. In that opinion the Court

stated at page 482:

‘«, . , the Commission found that the transportation

_ conditions throughout the Chieago Switching District

~are substantially similar; that they are no more favor-

able to interstate movements than to intrastate move-

ments within the District... .’’

The next decision cited is Virginian Railway v. United

States, 272 U.S. 658. In that case 45 mines on the Virginian

Railway had the group rate to the West. The remaining °

54 mines on the Virginian had rates so high as to be char-

acterized by Virginian’s counsel as ‘‘impossible’’ (98 L.C.C.

488, 491). At page 665 the Court said:

“These 45 mines to which the western market has been

thus opened, obviously, enjoy thereby an advantage

aver the 54 mines, fownd to be similarly situated, to

which the market’ is closed. And the Commission has

secured in part by public credit. The location of such facilities

is not decided by happenstance . ...”, (J.S. 24a, italics added.) |

It is clear that the concept of ‘ ‘wholesale’ trade” is counsel’s, not the

Commission’s.

Brief Opposing Motions to Affirm 13

tonal that the preference is ‘unjust. In essence, the

situation is the same,as that considered in United

States v. Illinois Central R.R., 263 U.S. 515, 523, and

_ United States v. Pennsylvania R.R., 266 U.S. 191, 199.”

’ (Italics supplied.)

- And at page 666:

‘‘It was shown that a huge coal traffic moves from this

territory, under like operating conditions, at the blan-

ket rates which were voluntarily established by

carriers to serve mines similarly located.’’ (Italie:

supplied. }

. ‘ the final case in aapellee’ list; New York v. United

States, 331 U.S. 284, wherein the Commission had found

that rates in general between the North and the South,

higher in level than those’ within the North, were unduly

prejudicial to the South, the Court stated, at page 315:

» Fifth. .The Commission found that conditions

peculiar to the respective territories did not justify the

differences in the territorial class-rate structures. In

reaching that conclusion it first inquired whether the

differences in the costs of furnishing the railroad

service in the several rate territories justified the ex-

isting differences in the levels and patterns of the class

rate scales. The basis of its inquiry was a cost study

submitted by its staff,’’ :

The Commission’s conclusion was that there was little sig-

nificant difference in the cost of furnishing transportation ~

in the South as compared with the East (p. 322).

The New York appellees do not argue that the Com-

mission, in the case now under review, made a finding simi- .

lar to that made in the foregoing cases. Rather, they con-

tend that the transportation is for very long hauls and

that it is identical except as to terminal services in serving

6

14 Brief Opposing Motions to Affirm

New York as compared with New Jersey points.* Terminal

operations are always very expensive. They have increased

by 439% since the beginning of the period of inflatien which

started with World War II, while line-haul rates have in-

ereased‘only 91% (Exhibit 68). When rates are cut to the

bone in an effort to recapture business lost to. competing

forms of transportation—as were the rates here involved—

these terminal cost differences obviously have great signifi-

cance to the lines which incur them and to their ability to

meet competition by rate reduction. The Commission does

not know what the costs are to the new produce terminal

and, as shown above in response to the Government motion,

its findings with respect to the costs in effecting delivery at

the Pennsylvania Produce Terminal in Manhattan are

fatally defective.

The Port Authority also states that appellants’ argu-

ment as to the necessity for finding substantial similarity

of transportation conditions amounts to a contention that

the Commission may not require rate uniformity within a

group where ‘‘any”’ variation of costs is shown in serving

different stations. This argument has not been made by

appellants. It is erected by these appellees to be knocked

down by them. Appellants argue that substantial varia-

tions in costs mgy be reflected in rates, especially when the

rates are on extremely low levels: They say also that, at

the very least, the Commission should know what the cost

4. Appellees say (p. 3) that the complaint named 396 railroads

as defendants ‘(all but a few having no connection with the rates in-

volved) that the Southern and Western lines took no part in the

proceedings and that New York Central and Erie favored uniform

rates. Southern-and Western lines have no substantial interest in the

substance of the complaint, the matter of equality as between New

York and New Jersey. As is customary, they left the defense to the

lines having the real interest. Central and Erie have little interest, if

any, from the South, as to which’ the Pennsylvania is virtually the

exclusive carrier (Tr. 381, 633, 634). Moreover, the position of

these *two roads may well have been dictated by their position in the

port differential controversy in which it would have been against their

" interests, as lines predominantly serving New York, among the Ports,

to have shown their high costs in. New York harbor. .

Brief Opposing Motions to Affirm a

difference is before it orders the railroads to waive it. It

does not know that cost as to the point which controlled its

decision, the place at which the new produce terminal |

might be located, now known to be Hunt’s Point.®

These appellees say that appellants*contend that the

complainants before the Commission had the burden of

showing the costs involved in serving the 24 stations in

New York City other than the Pennsylvania Produce Ter-

minal and they refer, in support of that assertion, to page

14 of the Jurisdictional Statement. A reference to that

page will show that no such contention has been made.by.

appellants. They argued that the complainants before the

Commission offered no evidence to prove competition or

injury from the rate relation, with respect.to the 24 miscel-

laneous stations and that, therefore, an Sancta to show

costs with respect to those stations never arose.® |

. New York appellees (p. 14) answer meoeiiente’ argu- -

ment concerning the Commission’s having acted: without -

evidence in dividing the station costs between those for nor-

5. The “chaotic rate situation” and the “impractical and unwork-

able rate structure” envisioned by appellees (Motion, p. 13) has -no

relation to the present case. Here the rates were agreed upon by the -

people. who use them, the shippers and receivers of freight and the

railroads. There is no evidence that they have found them to be in

_- any respect impractical or unworkable. * *

6. The Port Authority endeavors to show (p. 7) the traffic im-

_ portance of the 24 miscellaneous stations in “New_York City” by

reference to a finding that 1100 cars of vegetables subject to the $57

differential were delivered at stations “east of the Hudson River other

than the piers” and another unsupported statement of the Commission.

The $57 per car differential applies to many stations “east of the

‘Hudson River” which are not in New York City. The Pennsylvania,

which is substantially the only terminating railroad from the South to

New York (Tr. 381, 633, 634), in practice delivers perishables in

New York only at the piers, its produce terminal (Tr. 385), From |

the Southwest, the $57 differential does not apply at stations in New

York other than the piers (Tr.°71-72). It is difficulf to see, there-

fore, how vegetables in substantial volume and subject to differentially

higher rates could be delivered to New York statiops other than the

piers from the origin territories the rates from*Which are in issue

in this case. ee

16 - Brief Opposing Motions to Affirm

mal services and those for ieninney services by stating

. that the Commission might have rejected, ‘‘as did the Hear-

ing Examiner,’’ the railroads’ cost ‘showing on the ground

that their figures failed to show ‘‘the necessary separation’’

as between costs of ordinary station services and extraordi-

nary, and that instead of rejecting them as ‘‘flawed and un-

acceptable,” the Commission, ‘‘in the interest -of the rail-

roads themselves,’’ analyzed the ‘‘faulty figures’’ and

developed accessorial costs. This attempt to excuse the

Commission’s having acted without evidence will not bear

scrutiny: The Examiner had held that the railroads’ evi-

dence of station costs at the P.R.R. produce terminal cov-

ered services ‘‘not properly includible in_ the line-haul

rate’’ (J.S. 37a). If this was correct, obviously the figures

were faulty. But the entire Commission specifically held

that the Examiner was not correct:

“Contrary to the view. expressed in the recom-

mended report, ‘it is not unlawful for the defendants

to publish tariffs. which extend to shippers, under the

line-haul rate or charge, pier services and facilities

which are accessorial in character. In this connection,

section 6(1) of the Interstate Commerce Act ‘provides

that tariffs ‘shall also state separately ‘all terminal

charges ** * and all other charges which the Com- |

mission may require.’ In other words, there is no re-

quirement. that all such charges must be nagaearitagh

stated, but only such as ‘the Commission may require.’

‘Ina number of proceedings, the Commission has re-

fused to require the separate’ statement of accessorial

charges. See, for example, City of Philadelphia v.

Baltimore & O. R. Co., 231 1.0.C. 21.’’ (J.S. 38a) .-

Obviously, therefore, the appellees point that the rail-

roads were required to and failed to make a separation of

the costs, and that ‘the Commission generously did it for

them, is incorrect.

Brief aia Motions to Afirm oe

These appellees also alate (p. 15) that the iiabiiaae

authorized the railroads to recover $36.82 of the costs at the ©

produce terminal by a new: charge, and they again refer’

to the fragmentary cost difference of $14.14 as if it were

the only remaining cost difference disregarded by the Com-

mission; but it is not, as was pointed out in discussing the

Governments motion (supra, pp. 6-7): Moreover, the es-

tablishment of an accessorial charge at the produce terminal

would have no relation to the matter of securing proper

compensation for transportation to Hunt’s Point. |

It is urged, without relevance to the issues raised, that

the Commission’ S order ‘permits the railroads to establish

equality by i increasing thé rates to the New Ji ersey destina-

tions. As the Commission found, the present charges ‘‘were

established to enable the defendant carriers to regain traf-

fic from unregulated motor ‘carriers . . -’’ (J.S. 32a).

And as the lower court pointed out, ‘“. . . the record does

not show how much rates can be increased without undue

injury to the competitive position of rail shipment in rela-

tion to trucking.’’ (J.S. 6a) The Florida interests, in their

brief before the Commission, stated that: :

“The rail rates to destinations generally ents.

- out Officiél Territory cannot be increased, in the light’

of the intensive motor-truck competition. Even the

present level of rates does not permit the rails to share

equally in the traffic, and any increase surely would

deter a free movement of the traffic by rail.’’ (p. 23) ©

Nothing in the motion of the New York appellees meets |

the legal points presented in the Jurisdictional Statement.

ITI. Conclusion.

It is respectfully submitted that the Court should

enter the order suggested above, at. the end of the discus-

sion of the Government’s motion, that is, that the Motions

to Affirm be denied and (a) the judgment of the lower court

be forthwith vacated, with directions to remand the case to

| 18 Brief Opposing Motions to Affirm

the Commission for further hearing and a finding of the

comparative cost as between transportation to Hunt’s Point

(and any other relevant New York points) and the destina-_

tions alleged to be unduly preferred, and a determination of

the lawfulness of rate relations as between Hunt’s Point >

d other New York points, on the one hand, and New Jer-

Satan on the other; or (b), in the alternative, that

probable jurisdiction be noted and the case be set down for

plenary consideration by the Court. |

Respectfully submitted,

-Anprew C. ARMSTRONG,

Pau. R. Dux,

Epwarp A. Kater,

. Attorneys for Appellants.

1138 Six Penn Center Plaza,

Philadelphia, Pa. 19104.

December 17, 1965. —

a