# Petition — White v. United States, 162 Ct. Cl. 876 (1963) (No. 77-60) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2196%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1963 ## Text IN THE JUL 12 «1977 : Supreme Court of the United REDBAK, JR. CLERK hi OCTOBER TERM, 1977 - -T7-60 NATIONAL RatLroaD PassENGER CORPORATION, ) Petitioner, Vv. Rosert W. Buancuette, RicsarpC. Bonn} and Jonn H. McArruvur, Trustees of the Property of Penn Central Transportation Company, Respondents. | PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT Kar J. ScrPHER Cuarwes T. RICHARDSON Baker & DANIELS 810 Fletcher Trust Building Indianapolis, IN 46204 (317) 636-4535 F. HastineGs GriFFin, JR. DecHeErT Price & RHoaDs 3400 Centre Square West 1500 Market Street Philadelphia, PA 19102 (215) 972-3400 NATHANIEL H. Goopricx E.yse G. WANDER ) Antuony L. MonDELLO NATIONAL RAILROAD PASSENGER CORPORATION 955 L’Enfant Plaza North, S.W. Washington, D.C. 20024 (202) 484-7100 Counsel for the Petitioner a C. E. Pauley & Co., Inc., Indianapolis Page tN e Noe NTE NED LED (A Wc ea cutbindeieaecane 2 Questions Presented for Review ...............2..0...-.-...----0----+ 3 Statutes and Constitutional Provisions Involved .......... 5 NE EAR ES Soe a a DO a Ia scasennsnnponiitinnnl 13 Fact 1. Background and the Contractual Relation- ship Between Amtrak and Penn Central ...... 17 Fact 2. Penn Central Breached the Agreement ...... 20 Fact 3. The Arbitration Award of the National ELLER ET CO 22 Fact 4. The Confirmation Judgment ......................... 23 Fact 5. The Rail Act and the April 1, 1976, Con- ON soe 25 Fact 6. Amtrak’s Petition to the Reorganization Court and Penn Central’s Answer ................ 27 Fact 7. The Declaratory Judgment Action .............. 28 Fact 8. The Decision of the Reorganization Court 30 Fact 9. The Decision of the Seventh Cireuit ............ 31 Reasons for Granting the Writ 2.200000. 32 Summary of Reasons for Granting the Writ —............ 32 1. The Indiana Court Had Jurisdiction Under the Declaratory Judgment Act to Declare the Valid- ity, Finality and Legal Significance of Its Own Prior Confirmation Judgment ................................ 36 2. In Entering the Declaratory Judgment, the Indi- ana Court Did Not Interfere with the Proper Jurisdiction of the Reorganization Court. The Reorganization Court Does Not Have the Power to Go Behind the Confirmation Judgment and Rehear All Defenses of Penn Central to the Arbi- RE GRINDS NCSA SUE A ae ee 44 3. The Indiana Court’s Declaratory Judgment Cor- rectly Decided that the Confirmation Judgment Was Res Judicata on Penn Central’s Rail Act eae ener en new eee leas Pa eect Pao CoO) IAG OED) Roe 58 NP IIEETE OOUD OTe PERG MIELE EN DENN Ore Oe) OTe 63 Page Appendix A 2/15/77 Decision of the United States Court of Appeals for the Seventh Circuit, 551 F.2d 127 (7th Cir. 1977) ............ 65 Appendix B 6/25/76 Judgment Entry, Memorandum Order, Findings of Fact and Conclusions of Law of the United States District Court for the Southern District of Indiana, Indianapolis Division (De- claratory Judgment) ........................ 81 Appendix C 3/24/76 Order of Confirmation Concerning NAP Case No. 11; In Re: Level of Rail Utility Final Decision and Award as to Penn Central of the United States District Court for the Southern District of Indiana, Indi- anapolis Division (Confirmation ID saceciikichnesbabiinideninegdienneiiedites 89 Arbitration Award ...................... 91 Appendix D 9/30/76 Memorandum and Order No. 2569 of and the United States District Court for 10/1/76 the Eastern District of Pennsyl- vania, 422 F.Supp. 67 (E.D. Pa. TIA Gdn ae EERE Seen 109 Appendix E 3/4/77 Decision of the United States Court of Appeals for the Seventh Circuit in the Related Case Involving the Chesapeake and Ohio Railway Com- pany, 551 F.2d 136 (7th Cir. 1977) 123 ill TABLE OF AUTHORITIES CITED CasEs Page Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 57 S.Ct. ee Ea A Aa teri oy agen ea ee ew 36, 37, 38 Aetna Life Ins. Co. v. Martin, 108 F.2d 824 (8th Cir. a ainamsoions 41 Allstate Ins. Co. v. Employers Liability Assur. Corp., I PEE CUED CD, BCE sciiscccieccitccrcnecessstoncremninonie 42 Armstrong v. Alliance Trust Co., Ltd., 112 F.2d 114 SO es iccceaniiebcthemanamnaincenton 47 Avery Freight Lines, Inc. v. White, 245 Ala. 618, 18 So.2d 394 (1944) ........ a adalithadeetaleliadbedindpsiaieaimsedhoidnmediinneees 42 Baker v. Gold Seal Liquors, Inc., 417 U.S. 467, 94A I a cslaneiceteinbaeesnniananill 45, 46 Barnes v. Pierce, 36 Tenn.App. 181, 253 S.W.2d 33 SIE Si detiasaisensschcaheiussaicieeieshcesdbomedineedananidinitcueblasa ements 42 Beach v. Beach, 57 Ohio App. 294, 13 N.E.2d 581 (1937) 42 Bengtson v. Setterberg, 227 Minn. 337, 35 N.W.2d 623 SUE “aadineseser oe REED RRR NO Roh I ne 42 Boman v. Belyeu, 255 Ala. 281, 51 So.2d 27 (1951) ........ 41 Boynton v. Ball, 121 U.S. 457, 7 S.Ct. 981 (1887) -........... 49 Brown v. Bridgeport Rolling Mills Co., 245 F.Supp. 41 I I i catia 62 Chicot County Drainage District v. Baxter State Bank, fk Be eT te eg) Reena 49, 53 City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, Se I TI i inueste 43 Cohens v. Virginia, 6 Wheaton 264 (1821) —.....000......... 44 Commissioner of Internal Revenue v. Sunnen, 333 U.S. SU alii 59 Connecticut Sav. Bank v. First Nat. Bank & Trust Co., 133 Conn. 403, 51 A.2d 907 (1947) .............0......ccccccecseeeee 41 County of Lancaster v. Philadelphia Electric Co., 386 of BR ED EP 62 De Veau v. Braisted, 336 U.S. 144, 80A S.Ct. 1146 RR RIT EEG ESIC Fe SSS AA ee Ae A RT OR 43 Diners Club, Ine. v. Bumb, 421 F.2d 396 (9th Cir. 1970) 48 Donovan v. City of Dallas, 377 U.S. 408, 84A S.Ct. ERNE SAI AIT ENE LET Stee STONe SONIA 43 Fischer v. Pauline Oil & Gas Co., 309 U.S. 294, 60 S.Ct. ARREARS TET SPCR ESAS 2 Sy ONO Sa ESRC a 49 iv Page Flynn v. St. Bd. of Chiro. Exam., 418 F.2d 668 (9th CBR. RGD) nnnennsesinssninssnsssiectn 11 subject thereto; and the provisions of this chapter shall not affect the title and interests of any lessor, equipment trust trustee, or conditional sale vendee or assignee under such conditional sale agreement, equipment trust agreement or lease under section 205(j) of Title 11.’’ 45 U.S.C. § 743(a) and (b). United States Constitution, Art. I, §8: ‘*Section 8. The congress shall have power * * * ‘.* * @ ‘*To establish an uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States ; ‘ - a in a proceeding to confirm an award not only may an opposing party object upon grounds which might be urged in support of a proceeding to vacate an award; he must do so, or he waives his right to do so.’’? 245 F.Supp. at 45. (Court’s em- phasis). Penn Central was required to raise its Rail Act conten- tions in Indiana before the entry of judgment or it waived its right to do so. See Flynn vy. St. Bd. of Chiro. Exvam.., 418 F.2d 668 (9th Cir. 1969) ; Meyer v. Lavelle, 389 F.Supp. 972, 976 (E.D. Pa. 1975); and County of Lancaster v. Philadelphia Electric Co., 386 F.Supp. 934, 937-38 (1.D. Pa. 1975). In accord, In Re Universal Display & Sign Co., 541 F.2d 142, 144 (3d Cir. 1976). Even a consent judgment is entitled to res judicata effect. See Wallace Clark & Co. v. Acheson Industries, Inc., 532 F.2d 846, 848 (2d Cir.), cert. denied, — U.S, —, 96 S.Ct. 2177 (1976) and the cases cited therein. Thus, Penn Central cannot under the law have a chance for a second bite at the apple, when it gave ‘up its oppor- tunity to take the first bite. The confirmation judgment is res judicata on the Rail Act defense and the Indiana court’s declaratory judgment is correct. This Court should grant a writ of certiorari and reverse the Seventh Circuit’s decision, with the direction to reinstate the Indiana court’s declaratory judgment. If that occurs, the proper boundary between the duties of the Indiana court and the reorgani- zation court will have been marked and the reorganization court can proceed with its job of fitting Amtrak’s con- firmation judgment into the administration of the estate and deciding how and when Amtrak’s legal rights under a judgment of a United States district court will be recognized. 63 CONCLUSION The legal issues here are novel and deserve the attention of the Supreme Court, not only because those issues touch the life blood of Amtrak, but also because of the jurisdic- tional questions implicit in the Seventh Cireuit’s decision. This case is of utmost importance to the future of Amtrak in the Midwest which has been deprived of the intercity rail passenger service contemplated by Congress in the Amtrak Act, and also in other parts of the nation where Penn Central operated. Amtrak believes the Seventh Circuit erred for three basic reasons: (1) the Indiana court did have declaratory judg- ment jurisdiction; (2) the Indiana court’s entry of the declaratory judgment did not interfere with the proper jurisdiction of the reorganization court; and (3) the de- claratory judgment correctly decided that the confirmation judgment barred Penn Central’s Rail Act defense. The Seventh Cireuit’s contrary decision sanctions such a departure from the accepted and usual course of judicial proceedings that this case calls for an exercise of the Court’s power of supervision. Accordingly, a writ of cer- tiorari should issue to review the decision of the Seventh Circuit. Respectfully submitted, KARL J. STIPHER CHARLES T. RICHARDSON Baker & DANIELS 810 Fletcher Trust Building Indianapolis, IN 46204 (317) 636-4535 F. Hastines Grirrin, Jr. Decuert Price & Ruoaps 3400 Centre Square West 1500 Market Street Philadelphia, PA 19102 (215) 972-3400 NATHANIEL H. Goopricu E.yse G. WANDER AntTuony L. MONDELLO NATIONAL RAILROAD PASSENGER CORPORATION ; 955 L’Enfant Plaza North, S.W. Washington, D.C. 20024 (202) 484-7100 Counsel for the Petitioner Appendix A IN THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT No. 76-1829 NaTionaL RarLroap PassENGER CORPORATION, Plaintiff-A ppellee, v. Rosert W. BuLancHette, Rionarp C. Bonp and Joun H. Mc- ArtuurR, Trustees Or THe Property Or Penn CENTRAL TRANSPORTATION Company, Destor, Defendants-Appellants. Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division No. IP 76-274-C — William E. Steckler, Chief Judge. ArcuEep OctToser 29, 1976—Decipep Frsruary 15, 1977 Before Hastines, Senior Circuit Judge, Moorr, Senior Circuit Judge*, and Sprecuer, Circuit Judge. Hastines, Senior Circuit Judge.** We are concerned here with various issues arising out of an order by the district court,’ entered on March 24, 1976, confirming an arbitration award compelling the restoration of certain * The Honorable Leonard P. Moore, Senior United States Cireuit Judge of the United States Court of Appeals for the Second Circuit, is sitting by designation. ** This opinion was written and approved by the panel and sent to Mid- west Law Printing Co., Inc., for printing prior to Judge Hastings’ death on February 7, 1977. 1 United States District Court for the Southern District of Indiana, Indianapolis Division, the Honorable William E. Steckler, Chief Judge, presiding. 65 66 tracks by Penn Central Transportation Company (Penn Central); and also with the judgment entry and memoran- dum order by the district court entered on June 25, 1976, granting the motion of the National Railroad Passenger Corporation (Amtrak) for summary judgment in a declara- tory judgment action, thereby enforcing the district court’s previous order of confirmation. Penn Central has appealed. I For purposes of clarity we first mention three relevant substantive legislative enactments of the Congress: 1. The Bankruptey Act of 1898, which was amended in 1933 by adding Section 77 thereto, which provided for the reorganization of railroads. Section 77 furnished the structural framework by which Penn Central commenced its reorganization proceedings before the United States District Court for the Eastern District of Pennsylvania (Reorganization Court). Bankruptey Act of 1898, as amended, 11 U.S.C. § 205, Reorganization of Railroads. 2. The Rail Passenger Service Act of 1970, 45 U.S.C. § 501, et seg., which created the National Railroad Passen- ger Corporation, a for-profit corporation, pursuant to the District of Columbia Business Corporation Act, to provide intercity rail passenger service over a designated basic national rail passenger system, as a private enterprise, but with federal financial assistance. The need for such a corporation arose from the specifie Congressional finding that a modern, efficient, intercity railroad passenger service was a necessary part of a balanced transportation system and was in the national interest. The National Railroad Passenger Corporation (Amtrak) was authorized to con- tract with each railroad operating passenger trains in a basic system, for use by Amtrak of railroad tracks, facili- ties and services ‘‘on such terms and conditions as the parties may agree.’’ See 45 U.S.C. §562(a). Subsequent amendments to 45 U.S.C. § 501, et seq., have merely sup- plemented the basic legislation. See Amtrak Improvement Act of 1974 (Public Law 93-496, October 28, 1974, 88 Stat. 1527). The Amtrak Improvement Act of 1974, supra, amended the name of the Railroad Passenger Service Act of 1970 to become the Rail Passenger Service Act. See Sec- 67 tion 12 of the 1974 amendment. The Act is referred to by the parties and will herein be referred to simply as the ‘*Amtrak Act.”’ 3. The Regional Rail Reorganization Act of 1973, 45 U.S.C. § 701, et seq. (Public Law 93-236, January 2, 1974, 87 Stat. 986), referred to by the parties and by our court as the ‘‘Rail Act,’’ provided for the establishment of the United States Railway Association and the Consolidated Rail Corporation (ConRail), both with enumerated powers and duties. The United States Railway Association was created as a Government corporation, incorporated under the District of Columbia Nonprofit Corporation Act, and was empowered to prepare and implement a Final System Plan. ConRail was created as a for-profit corporation, in- corporated under the laws of a state, with its principal office in Philadelphia, Pennsylvania. Pursuant to Section 742, ConRail was to acquire, operate, rehabilitate and main- tain efficient rail service over the rail lines designated in the Final System Plan. Amtrak brought the instant declaratory judgment action on May 5, 1976, pursuant to 28 U.S.C. §§ 2201 and 2202, alleging both diversity of citizenship and federal question jurisdicton. The relief sought was an order to show cause upon Penn Central why a quarterly work schedule for the restoration of 360 miles of Penn Central tracks had not been submitted to Amtrak on May 3, 1976, as required by the order of confirmation and the arbitration award re- ferred to earlier. This declaratory action was brought in the United States District Court for the Southern District of Indiana, Indianapolis Division. Amtrak initiated arbitration proceedings on August 18, 1972, in the Reorganization Court, pursuant to a broad arbitration clause entered into by the parties in The Na- tional Railroad Passenger Corporation Agreement of April 16, 1971. This agreement is referred to by the parties as the ‘‘Basic Agreemert,’’ and was mandated by Section 061(a) of the Amtrak Act, 45 U.S.C. § 501, et seq., whereby Amtrak was directed to contract with the railroad ‘to relieve the railroad of its entire responsibility for the provision of intercity rail passenger service’’ under ‘‘such terms and conditions as necessary to permit the Corpora- 68 tion [Amtrak] to undertake passenger service on a timely basis.’’ Under the terms of the Basic Agreement, Amtrak under- took to assume the intercity rail passenger responsibilities of the Trustees of Penn Central and all other contracting railroads, and Penn Central undertook to render certain services to Amtrak and to maintain its rail lines used by Amtrak at an agreed upon ‘‘level of utility.”’ Under Article Six of the Basic Agreement any ‘‘claim or controversy’? between Amtrak and Penn Central was to be resolved by binding arbitration in accordance with the provisions of The National Railroad Passenger Corpo- ration Arbitration Agreement separately contracted to by the parties on April 16, 1971. Referred to by the parties as the ‘‘Arbitration Agreement,’’ Section 4.2 provides: ««* * * [A]ny arbitration award hereunder made by a majority of the members of any Arbitration Panel shall be binding upon the parties thereto. Any arbitration award hereunder shall declare the rights of the parties thereto and may make awards of money, or enjoin or otherwise operate in such a way as to require specific performance by a party of any act or obligation.’’ (Emphasis added.) Section 4.3 of the Arbitration Agreement further provides: ‘‘ Judgment may be entered upon any arbitration award hereunder * * * in any United States District Court.’’ A dispute arose between Amtrak and Penn Central con- cerning the ‘‘level of utility’’ of about 360 miles of certain rail lines of Penn Central connecting Kankakee, Illinois, with Louisville, Kentucky, and Cincinnati, Ohio, via Indi- anapolis, Indiana, under the Basic Agreement of 1971. Amtrak’s claim that Penn Central had defaulted in its obligation to maintain the track was duly submitted to the National Arbitration Panel.? 2 The National Arbitration Panel is a special arbitration panel created in Article One of the Arbitration Agreement of April 16, 1971. The panel is composed of three arbitrators representing both railroad and Amtrak interests, and convenes in Washington, D. C. The jurisdiction of the panel is limited to “claims or controversies” that may arise under the Basic Agreement. 69 After the parties submitted extensive written memoranda and oral testimony was heard, the arbitration was in- terrupted by an ‘‘Emergency Order’’ of the Federal Rail- road Administration on August 1, 1974. This emergency order terminated Aiatrak’s service on the above-mentioned Penn Central line because the track had been found to 7 “in an — gp eel creating ‘‘an emergency situ- ation involving a hazard of death inj affected by the use thereof.’’ ied rate cae Without objection from Penn Central and in accordance with its rules, the Panel began additional hearings, ac- cepted a revised request for an award from Amtrak, and received additional evidence on September 11, September 24, September 29 and December 16, 1975, and J anuary 20 1976. Thereafter, on February 3, 1976, the National Ar. bitration Panel issued a written award in NAP Case No. 11, In Re: Level of Utility, with the following declarations and awards: _First, the Panel declared that Amtrak had a contract right to have the Penn Central rail lines connecting Kanka- ae mr sg and with Louisville via Indianapolis ept ‘‘at no less than the level of utility’’ which exi Mek On. y existed on Second, the Trustees of Penn Central had defaulted in keeping this bargain. Third, the Trustees were ordered to ‘‘cause’’ the restora- tion of these lines to their proper condition by January 1 1978, in accordance with a ‘‘Panel Program,’’ which pro- vided, inter alia, for a detailed work schedule to be sub- mitted to Amtrak within ninety days of this award. The estimates of the cost of these repairs ranged from 22 million dollars, based upon independent evaluation, to 11 million dollars, estimated by Penn Central using its own employees. Costs were estimated in terms of October 1975. The Panel’s award further provided that Penn Cen- tral would bear the entire financial burden of the repairs. A dissenting opinion was handed down by Panel Mem- ber Johnson, recommending the denial of Amtrak’s claim for specific performance. He noted that in 1971 the rail lines were already in a state of deterioration and that the 70 present award would upgrade the lines beyond the May 1, 1971, level at the total expense of Penn Central. Although conceding that Penn Central had in fact defaulted by per- mitting the lines to deteriorate generally since 1971, Ar- bitrator Johnson stated that, upon the record, the issue of what constituted maintenance on the one had and rehabili- tation on the other, had not been answered. Johnson, there- fore, concluded that the inequity of ordering Penn Central to pay the entire cost of the ‘‘Panel Program’’ was an arbitrary interpretation of Section 4.2, supra, and suggested that the expense of the program be shared equally. On February 4, 1976, pursuant to 9 U.S.C. §9, United States Arbitration Act, and Section 4.3 of the Arbitration Agreement, supra, Amtrak petitioned the United States District Court for the Southern District of Indiana, Indi- anapolis Division, tor confirmation of the arbitration award. However, on February 17, 1976, Penn Central petitioned the Reorganization court in ihe Eastern District of Penn- sylvania for an order requiring Amtrak to show cause ‘‘why it should not be required * * * to comply with the provisions of Order No. 238 and, pending the filing of said petition, why it should not be enjoined from proceeding further in the [Confirmation Proceeding].’’ In authorizing the Trustees of Penn Central to enter into the Basie Agreement with Amt.ak, the Reorganization Court in Order No. 238, in pertinent parts, stated: ‘$1. The Trustees are authorized to execute a con- tract with Amtrak in substantially the form sub- mitted to the Court at the hearing, PROVIDED, however, * * * (b) that whenever any matter 1s resolved by arbitration pursuant to the Main Agree- ment or the Arbitration Agreement, the decision shall be submitted to this court for review and ap- proval before becoming finally binding upon the Trustees or the Debtor, during the pendency of these reorganization proceedings. a. 2. oe ‘‘4. The Court reserves jurisdiction over said contract for the purpose of directing such actions and granting such iurther relief as may be necessary to protect the interests of the Debtor’s Estete.’’ 71 The Reorganization Court, however, never ruled on Penn Central’s February 17, 1976, petition to show cause because the Trustees of Penn Central subsequently con- sented to the entry of a judgment in the Indiana Court The consent of the Trustees, and by implication that of the Reorganization Court, was induced by the assurances of counsel for Amtrak that it was only attempting to liquidate its claim in the Indiana court, and that Amtrak was well aware of and, in fact, accepted the primary jurisdiction of the Reorganization Court. Language from Amtrak’s memorandum, as it appears in the record in the Reorganization Court, reads: ‘‘any judgment entered by the Indianapolis District Court upon Amtrak’s Petition to Confirm will not serve to make the award of the National Arbjtra- tion Panel finally binding upon the Trustees. To become finally binding, execution on the judgment would be necessary. Yet execution in any court other than this Reorganization Court would so manifestly interfere with the Court’s exclusive jurisdiction to control the administration of the estate that it would be impossible to support in law or fact. Therefore in order for Amtrak to make the award finally bind- ing upon the Trustees, the entire matter will eventu- ally have to be submitted in the bankruptey proceed- ings * * * The mere fact that the arbitration claim has been reduced to a judgment will not prevent this Court from making an inquiry since the merger of a claim into a judgment does not change its nature as far as provability is concerned.’’ Thereafter, the Trustees consented to the entry of jude- ment in the Confirmation Proceedings in Indiana based upon the above assertions in the Reorganization Court that the Indiana Court would review the arbitration pro- ceedings ‘‘to see that the award was a proper award and that the arbitrators acted honestly and did not exceed their powers.’’ Thereafter, the Indiana Court entered of Confirmation on March 24, 1976. an Order On April 9, 1976, Amtrak petitioned the Reorganiza- tion Court for enforcement of the now confirmed Arbitra- 72 tion Award. Penn Central, thereafter, filed an answer to the petition for enforcement, asserting that the award could not be enforced against Penn Central because the rail tracks in question had been conveyed to ConRail pur- suant to the Rail Act, and, therefore, Penn Central’s ob- ligation to restore the tracks was terminated. Amtrak secured an indefinite postponement of its petition in the Reorganization Court, returned to the Indiana Court and filed its instant declaratory judgment action in Indiana. During the arbitration proceedings between the litigants, Congress supplemented Section 77 of the Bankruptcy Act with the Rail Act, as herein earlier set out.* The Rail Act, like the Amtrak Act, was designed to revitalize the nation’s rail system, and the rail lines in issue here were designated for transfer to ConRail. Penn Central contends that such a transfer to ConRail relieved it of the responsibility to restore the 360 miles of track, and that, in any event, the issue was One in the exclusive jurisdiction of the Reorgani- zation Court pursuant to its Order 238, supra. At the center of this controversy is the Indiana Court’s conclusion of law that: **5. The judgment upon the arbitration award of the National Arbitration Panel entered by this Court on March 24, 1976, is res judicata concerning and is a conclusive bar against any further legal claims which may be made by the Trustees that: (a) the award of the National Arbitration Panel and judgment of this Court entered thereon is invalid and nonenforceable because of the pro- visions of the Regional Rail Reorganization Act of 1973; or (b) the rehabilitation of the rail lines which are the subject of this controversy at the sole 3 As the Supreme Court recognized in the Regional Rail Reorganization Act Cases, 419 U.S. 102, 153 (1974) : “Congress, in enacting these provisions, clearly intended to legislate pursuant to the bankruptcy power. The Rail Act, like §77 of the Bankruptcy Act, which the Rail Act supplements, merely ‘advances 73 cost of the Trustee is unreasonable or inequitable in view of the April 1, 1976, transfer of these lines to ConRail; or (c) the judgment should not be carried out because of any facts, circumstances or legal de- fenses which could have been or ought to have been asserted during the confirmation proceedings as a ground for vacating the award under the pro- visions of Section 10 of the Federal Arbitration Act or for modifying or correcting this award un- der Section 11 of the Federal Arbitration Act, 9 U.S.C. §§ 10 and 11.”’ It is quite clear to us that the Indiana Court intended to and did set up its judgment upon the arbitration award as a final and conclusive judgment, holding that it was res judicata concerning the arbitration award and a complete bar to further consideration of the claims set out in sub- paragraphs (a), (b) and (c) above. At this point it appears relevant to report a late hap- pening. On September 30, 1976, Judge Fullam of the Re- organization Court entered Order No. 2569 which denied Amtrak’s petition for an order authorizing, instructing and directing the Trustees of Penn Central to carry out the judgment of the Indiana District Court to restore or cause to be restored certain rail lines in Indiana. Judge Fullam further enjoined Amtrak, pursuant to Order 238, supra, as follows: ‘The Petitioner, National Rail Passenger Corpo- ration (‘Amtrak’), is enjoined from instituting or furthering any legal proceeding for the assertion or enforcement against the Trustees or the estate of the Debtor of any alleged obligation or liability for track maintenance or improvement, in any jurisdic- tion or before any tribunal except this Court, (or, if appropriate, in the Special Court), or as otherwise ordered by this Court. Nothing in this order shall be deemed to apply to the appeal now pending in the Circuit Court of Appeals of the Seventh Circuit, nor another step in the direction of liberalizing the law on the subject of bankruptcies,’ .. . .” (Citations omitted.) 74 to any appeal from this or any other Order of this Court.’’ (Emphasis added).* On October 1, 1976, Judge Fullam handed down a Memo- randum and Order with respect to his Order No. 2569. This appears in Appendix F of Amtrak’s brief filed here in the instant appeal. Judge Fullam, inter alia, gave an an- alysis of the procedural history of this proceeding with respect to the Indiana Court. He fully considered the effect of the Rail Act as it related to ConRail. He paid his respects to Amtrak’s intentions, absent the injunctive restrictions hereinabove set out, to return to the Indiana Court, or perhaps other courts in an attempt to obtain a further expansion of the confirmed arbitrator’s award, or perhaps in some other fashion to obtain ‘‘reparations.’’ Judge Fullam, stating that he was unable to fully understand the legal theory or basis for Amtrak’s attempts, held that the injunction should remain in effect. Il We first consider whether the Indiana Court had juris- diction by declaratory judgment or any other judicial means to circumscribe the jurisdiction of the Pennsylvania Re- organization Court, as to the enforcement of an arbitration award which was subsequently confirmed by the Indiana Court. At the outset it seems quite clear to us that in a railroad reorganization, the power to resolve all disputes involving the estate and to determine the enforceability and status of all claims is vested exclusively in the Reorganization Court. See the injunctive powers in Section 77(j) of the Bankruptey Act, 11 U.S.C. § 205(j). Baker v. Gold Seal Liquors, 417 U.S. 467, 477 (1974), Mr. Justice Stewart con- curring. Baker was a Penn Central reorganization case in which the Seventh Circuit was reversed. In the New Haven Inclusion Cases, 399 U.S. 392 (1970), a similar question was presented concerning a railroad reorganization under Section 77. Two groups of creditors sought relief in differ- 4 Amtrak has in fact appealed from Judge Fullam’s Order No. 2569, as we were advised by counsel during oral argument. This appeal is now pending before the Court of Appeals for the Third Cireuit. 79 ent tribunals. The two courts reached different decisions as to the proper compensation. The Supreme Court on review of the proceedings, first addressed itself to the con- flict of jurisdiction and found that it rested exclusively in the Reorganization Court. New Haven Cases at 426, 428- 429. We find that the plenary and exclusive jurisdiction of the Reorganization Court to determine issues that directly affect and concern the reorganization, including the en- forcement of the Arbitration Award, is exemplified by Jn Re New York, New Haven and Hartford Railroad Co., 2 Cir., 457 F.2d 683 (1972), cert. denied, Smith v. Baker, 409 U.S. 890, reh. denied, 409 U.S. 1019 (1972). The court there was presented with the ‘‘conflict of jurisdiction between two federal courts each claiming jurisdiction to affect in- terests in certain property over which, under a literal reading of § 77(a), one federal court has ‘exclusive juris- diction.’ ’’ 457 F.2d at 687. The court held that the New Haven Railroad Reorganiza- tion Court was without jurisdiction to establish a lien against the Penn Central properties in favor of the New Haven. The court further held that the exclusive jurisdic- tion to determine how claims or rights should be enforced in the Penn Central reorganization rested solely in the Penn Central Reorganization Court. The court was careful to stress the Congressional purpose behind the enactment of Section 77 in general and the necessity to award the over- lapping jurisdiction of numerous courts. To hold otherwise ‘‘would tend greatly to formulate conflicts between co- ordinate courts * * *.’’ 457 F.2d at 688-689. (Citations omitted. ) This is not to say that the Reorganization Court may not delegate to other forums the resolution of factual disputes while retaining jurisdiction in itself over the enforcement of factual determinations made elsewhere. In its Order No. 771, the Reorganization Court recognized that the merits of a contractual dispute are clearly severable from the reorganization proceeding itself, so long as that court retains to itself the jurisdiction to decide at a later stage, if necessary, all issues concerning the implementation of any relief which may be granted in the state court action. 76 In the New Haven Inclusion Cases, 399 U.S. at 433-434, the Supreme Court gave its imprimatur to such a practice. This practice is further evidenced by the Reorganization Court’s authorization to the Trustees to enter into the Basic Agreement with Amtrak, which contained a pro- vision for the arbitration of disputes arising from the inter- pretation of the Agreement, and retaining to itself jurisdic- tion over the enforcement of any arbitration awards (Order No. 238). In support of their motion for summary judgment in the Indiana Court, Amtrak relied upon The Hartbridge, 2 Cir., 57 F.2d 672, 673 (1932), cert. denied, Munson S. S. Line v. North of England 8S. S. Co., Ltd., 288 U.S. 601 (1933), to support their position that because the Trustees have had their ‘‘day in court,’’ they could not then seek review in the Reorganization Court of matters previously litigated. The Hartbridge, however, only goes so far as to say that where a party to an arbitration award has not opposed a proceeding to confirm it, that party cannot later move to vacate the award. Here the Trustees did not seek to have the award vacated. The Trustees say they were satisfied that the arbitrators acted properly in confining their in- quiry to the determination of the Trustees’ obligations under the agreement, leaving to the Reorganization Court the enforcement of the award. The analogy drawn between the decision of the court in Hartbridge and the instant case is misplaced. Of direct interest here is Kalb v. Furstein, 308 U.S. 433 (1940). Kalb arose under the provisions of Section 75 of the Bankruptcy Act, 11 U.S.C. § 203 (the Frazier-Lemke Act). Kalb, a farmer, filed a petition for the composition and extension of time to pay his debts. Two mortgagees began foreclosure proceedings against Kalb’s Wisconsin farm while the petition was pending. Kalb’s land was sold by the sheriff under a judgment of foreclosure. Kalb took no steps to stay the’foreclosure or the action to enforce it. On appeal from the judgment of the Supreme Court of Wisconsin in favor of the mortgagees, the jurisdiction of the Wisconsin Supreme Court to proceed as it did was presented to the Supreme Court of the United States. 7d. at 436. 77 Speaking for the Court in Kalb, Mr. Justice Black wrote, inter alia, ‘‘The Constitution grants Congress exclusive power to regulate bankruptcy and under this power Con- gress can limit the jurisdiction which courts, state or fed- eral, can exercise over the person and property of a debtor who duly invokes the bankruptcy law. * * * We think the language and broad policy of the Frazier-Lemke Act con- clusively demonstrate that Congress intended to, and did deprive the Wisconsin County Court of the power and jurisdiction to continue or maintain in any manner the foreclosure proceedings * * * without the consent after hearing of the bankruptcy court in which the farmer's petition was then pending.’’ Jd. at 439-440. It seems quite clear to us that the Indiana Court was without jurisdiction by declaratory judgment, or other judicial means, to circumscribe the jurisdiction of the Penn- sylvania Reorganization Court as to the enforcement of an arbitration award which was subsequently confirmed by the Indiana Court, and we now so hold. Ill Penn Central questions whether the Indiana Court had before it a ‘‘controversy’’ which would give it jurisdiction under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, to determine the effect of its earlier order. In short, Penn Central contends that the declaratory judgment here is an advisory opinion and a nullity under the Declaratory Judgment Act. In view of our disposition of this appeal we shall assume that there was a ‘‘controversy”’ before the Indiana Court which enabled it to proceed. Whether the actions it took were proper is quite another question. IV . We next proceed to the-question of whether the Indiana Court was correct in holding that its earlier confirmation order was res judicata in the proceedings which earlier had been commenced in the Reorganization Court to enforce the confirmed order. As hereinabove indicated in Part I of this opinion, the Indiana Court expressly held that its judgment of March 78 24, 1976, upon the arbitration award was a final and con- clusive judgment and was res judicata concerning and was a conclusive bar against any further legal claims which may be made by the Trustees and explicitly set out the nature of the claims so barred. Aimtrak’s complaint sought a declaratory judgment from the Indiana Court as to whether issues raised in the Trustees’ answer to Amtrak’s petition in the enforcement proceedings were barred by res judicata. We are unable to find any precedent, and none has been cited to us, for referring back to the court of first adjudica- tion (the Indiana Court) the question of whether its judg- ment is res judicata in another court, here, the Reorganiza- tion Court. The law is to the contrary. That is, in this case the Reorganization Court has the responsibility to decide whether the issues before it are barred by the prior ad- judication in the Indiana Court. Cf. Donovan v. City of Dallas, 377 U.S. 408, 412 (1964), citing Kline v. Burke Con- struction Co., 260 U.S. 226 (1922). The Trustees left no doubt as to their position and the record clearly shows that the Confirmation Proceeding had the limited purpose to review the arbitration proceedings ‘*to see that the award was a proper award and that the arbitrators acted honestly and did not exceed their powers.’’ To that limited extent only the Indiana Court acted within its powers. See 9 U.S.C. §§ 9, 10 and 11. We find nothing in the Act of Congress that expresses any intent that the Reorganization Court was to be divested of its plenary powers in preference to the declaratory judg- ment power of the Indiana Court. In passing, we note here that the Arbitration Panel held that it was without jurisdiction to decide the ConRail issue. The issue was not raised before the Indiana Court. Yet, Amtrak urged and the Indiana Court held that the Trustees could not raise the issue of the transfer of the subject rail lines to ConRail. We are therefore compelled to the conclusion that the Indiana Court erred in finding that the enumerated bars against the Trustees were res judicata of the matters set out in its Conclusion of Law No. 5, supra, and we so hold. 79 IN SUMMARY In view of the foregoing, we hold that the Declaratory Judgment of the Indiana Court was an improper exercise of its limited jurisdiction and was wrong on the merits. Accordingly, the judgment of the Indiana Court is reversed. This case is remanded to the Indiana Court with directions to vacate its declaratory judgment. The issues hereinabove discussed are within the exclusive jurisdiction of the Pennsylvania Reorganization Court and it may now proceed therewith. REVERSED. REMANDED WITH Directions. A true Copy: Teste: Clerk of the United States Court of Appeals for the Seventh Circuit Appendix B UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION Nationa Rattroap PassENGER CORPORATION, | Plaintiff, V. CIVIL Rosert W. BLANCHETTE, ACTION Ricwarp C. Bonn, ; NO. Joun H. McArruur, IP76-274-C Trustees of the Property of PENN CENTRAL TRANSPORTATION COMPANY, Defendants. JUDGMENT ENTRY This action came before the Court for the Entry of Judgment in favor of the plaintiff, National Railroad Passenger Corporation, and against the defendants, Robert W. Blanchette, Richard C. Bond, and John H. McArthur, Trustees of the Property of Penn Central Transportation Company. It is ORDERED, ADJUDGED AND DECREED that the plaintiff’s Motion for Summary Judgmerit is granted and that judgment is hereby entered in favor of the plain- tiff, National Railroad Passenger Corporation, and against the defendants, Robert W. Blanchette, Richard C. Bond, and John H. McArthur, Trustees of the Property of Penn Central Transportation Company, on the plaintiff’s com- plaint in accordance with the Memorandum Order, Findings of Fact and Conclusions of Law entered simultaneously herewith. Date: June 25, 1976. WituiaMm E. Sreckier Chief Judge, United States District Court for the Southern District of Indiana 81 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION NaTionaL RarLRoap PASSENGER CORPORATION, | Plaintiff, ” CIVIL Rosert W. BLANCHETTE, ACTION Ricuarp C, Bonn, , NO. Joun H. McArruur, IP76-274-C Trustees of the Property of Penn CENTRAL TRANSPORTATION CoMPANY, Defendants. |} MEMORANDUM ORDER, FINDINGS OF FACT, AND CONCLUSIONS OF LAW This cause came before the Court for ruling upon pend- ing motions. A Motion for Summary Judgment and a Motion for Expedited Consideration were filed on May 28, 1976, by the plaintiff, National Railroad Passenger Cor- poration (‘‘Amtrak’’). In support of its Motion for Sum- mary Judgment, Amtrak submitted the affidavit with ex- hibits of Charles T. Richardson, one of Amtrak’s attorneys in this action, and a brief of points and authorities in support of the Motion for Summary Judgment. The de- fendants (‘‘Trustees’’) filed a memorandum in opposition. In support of its Motion for Expedited Consideration, Am- trak submitted the affidavit of H. L. Bishop, an employee of the firm of Sverdrup & Parcel and Associates, Inc. On June 14, 1976, the Trustees filed their Motion to Dismiss Complaint, with a memorandum and a supplemental memo- randum in support. Amtrak filed a memorandum in opposi- tion. On June 14, 1976, the Trustees also filed a Motion for Prior Hearing of Defendants’ Motion to Dismiss, In Advance of Plaintiff’s Motion for Summary Judgment. On June 17, 1976, the Trustees filed a Cross-Motion for Summary Judgment. On June 18, 1976, the Court heard oral argument on all pending motions. Having considered Amtrak’s motions and the opposition of the Trustees, having considered the Trustees’ motions and the opposition of Amtrak, and having considered the 82 83 pleadings, entries, evidence and arguments in this action, as well as in the consolidated arbitration confirmation actions in this Court entitled ‘‘National Railroad Passen- ger Corporation, Petitioner, vs. Robert W. Blanchette, Richard C. Bond, and John H. McArthur, Trustees of the Property of Penn Central Transportation Company, Re- spondents,’’ Cause No. IP76-76-C (‘‘Penn Central case’’), and ‘‘National Railroad Passenger Corporation, Plaintiff, vs. The Chesapeake and Ohio Railway Company, Defend- ant; and State of Indiana, Otis R. Bowen, Governor, Theo- dore L. Sendak, Attorney General, Public Service Commis- sion of Indiana, Intervenors,’’ Cause No. IP74-420-C (**C & O case’’), the Court makes the following rulings: The Motion to Dismiss Complaint of the Trustees is OVER- RULED. The “ross-Motion for Summary Judgment of the Trustees is OVERRULED. The Motion for Summary Judgment of Amtrak is GRANTED. Amtrak’s Motion for Expedited Consideration and the Trustees’ Motion for Prior Hearing are moot and the Court need not rule there- on. The rulings herein announced and the Findings of F#t and Conclusions of Law below settle the controversies be- tween the parties in this lawsuit, principally the dispute concerning the ambiguity in and the meaning of the Court’s judgment entered in the Penn Central case on March 24, 1976. The Court makes the following findings of Fact and Con- clusions of Law pursuant to Rule 56 of the Federal Rules of Civil Procedure: FINDINGS OF FACT 1. Amtrak is a corporation organized and existing under the laws of the District of Columbia pursuant to 45 U.S.C. §§ 501, et seq. The Trustees are Trustees in Bankruptey of the Property of the Penn Central Transportation Com- pany (‘‘Penn Central’’) pursuant to 11 U.S.C. § 205, and the orders of the United States District Court for the East- ern District of Pennsylvania (‘‘Bankruptey Court’’). Penn Central is a corporation organized and existing under the laws of Pennsylvania. 2. Amtrak’s Petition to Confirm Arbitration Award in the Penn Central case was filed in this Court on February 84 4, 1976, under the provisions of the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq., and was served upon a repre- sentative of the Respondents therein on February 6, 1976. That Petition to Confirm asked the Court to confirm an award of the National Arbitration Panel in favor of Amtrak and against the Trustees entered on February 3, 1976. A copy of the award was attached to the Petition to Confirm. The Court enlarged the Trustees’ time to respond to Amtrak’s Petition to Confirm to March 10, 1976. A request by the Trustees for an additional enlargement of time was never acted upon by this Court, but the Trustees responded on March 24, 1976. See paragraph 5 below. 3. On Febrvary 17, 1976, the Bankruptey Court en- tered Order No. 2215 at the request of the Trustees. The Order directed Amtrak to show cause why it had not peti- tioned the Bankruptcy Court to confirm the arbitration award issued by the National Arbitration Panel in the Bankruptcy Court or petitioned the Bankruptcy Court for leave to file the Penn Central case in this Court. A copy of Order No. 2215 was attached to Mr. Richardson’s affidavit as Exhibit B. 4. In response to Order No. 2215, Amtrak, the Trustees and other interested parties appeared by counsel before the Bankruptcy Court on March 18, 1976. A copy of the transcript of that hearing was attached to Mr. Richardson’s affidavit as Exhibit C. 5. On March 24, 1976, the Trustees filed in this Court a Response to Amtrak’s Petition to Confirm. On that same day, counsel for all the parties in both the Penn Central ease and the C & O case appeared before this Court in chambers. There was a general discussion by counsel with the Court concerning the status of the Penn Central case and the C & O case and the various issues and defenses in the cases. Counsel for the Trustees reported to the Court that the Trustees had no objection to the confirmation of the arbitration award in favor of Amtrak by the National Arbitration Panel, provided that any order of confirmation was in the form attached to the Trustee’s Response filed earlier. At the close of the meeting with this Court, the Court signed the Order of Confirmation Concerning NAP Case No. 11; In Re: Level of Rail Utility Final Decision 85 and Award as to Penn Central, and the Order of Confirma- tion Concerning NAP Case No. 29; In Re: Chicago—Cin- cinnati Service Decision and Award. 6. On April 9, 1976, Amtrak filed in the Bankruptey Court its Petition for Order Authorizing, Instructing and Directing the Trustees to Carry Out the Judgment of the U. S. District Court, Southern District of Indiana to Re- store or Cause to Be Restored Certain Rail Lines in In- diana. A copy of the Petition was attached to Mr. Richard- son’s affidavit as Exhibit G. Thereafter, the Trustees filed their Answer to Amtrak’s Petition, a copy of which was attached to Mr. Richardson’s affidavit as Exhibit H. 7. The contract between Penn Central and Amtrak con- sists of a Basic Agreement and an Arbitration Agreement. The Bankruptcy Court authorized the Trustees to execute the contract by Order No. 238, dated April 27, 1971. Pur- suant to the contract, the Trustees ceased their rail pas- senger service, which was taken over by Amtrak on May 1, 1971, and Amtrak began using the Penn Central rail lines connecting Kankakee with Cincinnati and with Louisville on that day. For safety reasons, Amtrak trains were forced to cease operating over the Penn Central rail lines on August 1, 1974, and thereafter, Amtrak trains have had to use alternate routes belonging to other railroads, includ- ing the route of The Chesapeake and Ohio Railway Com- pany. 8. On April 1, 1976, the major portion of the Penn Central rail lines connecting Kankakee with Cincinnati and Louisville were transferred to the Consolidated Rail Cor- poration (‘‘ConRail’’) in accordance with a July 26, 1975, plan of the federal government. The transfer and plan were made pursuant to the Regional Rail Reorganization Act of 1973, 45 U.S.C. §§ 701, et seg. Because of like transfers of most of its other railroad properties to ConRail, the Trustees are no longer operating over any of the rail line routes used by Amtrak passenger trains. ConRail has, therefore, since April 1, 1976, been providing the rail serv- ices required by Amtrak to operate over routes which had theretofore been routes of the Penn Central. 9. The complaint in this action was properly filed by Amtrak on May 5, 1976, under the provisions of the Federai 86 Declaratory Judgment Act, 28 U.S.C. $§ 2201 and 2202. The amount in controversy exceeds the sum or value of $10,000, exclusive of interest and costs. Subject matter jurisdiction is based upon diversity of citizenship under 28 U.S.C. § 1332 and on the presentation of a federal question under 28 U.S.C. § 1331 as to the effect of a judgment rendered in accordance with the provisions of the Federal Arbitra- tion Act, 9 U.S.C. §§ 1-14. The Court has personal juris- diction over the parties. 10. Venue is properly laid herein by virtue of 28 U.S.C. §§ 1391(a) and (b) since the cause of action upon which this complaint is based is the judgment of this Court en- tered on March 24, 1976, against the Trustees arising out of the application by this Court of the provisions of Sec- tions 9 and 13 of the Federal Arbitration Act, 9 U.S.C. $$ 9 and 13. 11. Substantially all of the facts relating to the con- troversy which is the subject of this action arise in the Southern District of Indiana. CONCLUSIONS OF LAW 1. The Court includes in its Conclusions of Law any statement of fact listed above which is a conclusion of law. 2. There is no genuine issue as to any material fact and Amtrak is entitled to judgment in its favor as a matter of law. 3. The Court had original jurisdiction to confirm or vacate the arbitration award of the National Arbitration Panel in the Penn Central case, in accordance with the provisions of Sections 9 and 10 of the Federal Arbitration Act and to enter judgment thereon in accordance with Sec- tion 13 of that Act. 4. The judgment so entered by this Court on March 24, 1976, has the same force and effect, in all respects, as a judgment in a civil action and the arbitration award so confirmed on the merits by judgment may therefore be enforced against the Trustees as if it had been rendered in such an action. 5. The judgment upon the arbitration award of the Na- tional Arbitration Panel entered by this Court on March 87 24, 1976, is res judicata concerning and is a conclusive bar against any further legal claims which may be made by the Trustees that: ; (a) the award of the National Arbitration Panel and judgment of this Court entered thereon is in- valid or nonenforceable because of the provisions of the Regional Rail Reorganization Act of 1973; or (b) the rehabilitation of the rail lines which are the subject of this controversy at the sole cost of the Trustees is unreasonable or inequitable in view of the April 1, 1976, transfer of these lines to Con- Rail; or (c) the judgment should not be carried out be- cause of any facts, circumstances or legal defenses which could have been or ought to have been as- serted during the confirmation proceedings as a ground for vacating the award under the provisions of Section 10 of the Federal Arbitration Act or for modifying or correcting this award under Section 11 of the Federal Arbitration Act, 9 U.S.C. §$ 10 and 11. 6. The law is with Amtrak and against the Trustees and judgment should be entered by separate entry in favor of Amtrak and against the Trustees on Amtrak’s com- plaint in accordance with this Memorandum Order, Find- ings of Fact and Conclusions of Law. Date: June 25, 1976. WituraMm E. Strecker Chief Judge, United Stutes District Court for the Southern District of Indiana : Appendix C UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION Nationa RarLroap Passencer Corporation, Petitioner, vs. | ~6 NO. State or INDIANA, IP74-420-C Oris R. Bower, Governor, Tuevore L. Senpak, Atrorney GENERAL, Pusiic Service Commission or INDIANA, Intervenors. ORDER OF CONFIRMATION CONCERNING NAP CASE NO. 11; IN RE: LEVEL OF RAIL UTILITY FINAL DECISION AND AWARD AS TO PENN CENTRAL This matter is before the Court on the Petition to Con- firm Arbitration Award of the National Railroad Passenger Corporation (‘‘Amtrak’’), concerning an arbitration award in favor of Amtrak and against the Trustees of the Prop- erty of the Penn Central Transportation Company (‘*Trustees’’), made by the National Arbitration Panel (**Panel’’), in NAP Case No. 11; In Re: Level of Rail Utility. By separate Order, this Court is also ruling today upon Amtrak’s Petition to Confirm Arbitration Award con- cerning an arbitration award in favor of Amtrak and 8&9 90 against The Chesapeake and Ohio Railway Company (‘‘C & O’’), made by the Panel in NAP case No. 29; In Re: Chi- eago-Cincinnati Service. The two related confirmation ac- tions by Amtrak, one against the Trustees and one against the C & O, were ordered consolidated by the Court on February 20, 1976. Amtrak’s Petition to Confirm the award against the Trustees was filed in this Court on February 4, 1976, under the provisions of the Federal Arbitration Act, 9 U.S.C. §§$1 et seq. The Panel’s award was issued under the date of February 3, 1976, and a copy of that award was attached to Amtrak’s Petition to Confirm as Exhibit I. A copy of the award is also attached to this Order of Confirmation. The Trustees do not oppose the confirmation by this Court of the award. Having considered the Panel’s award, Amtrak’s Petition to Confirm, and the Trustee’s response to Amtrak’s Petition to Confirm, and being fully advised, it is ORDERED, ADJUDGED AND DECREED (1) that Amtrak’s Petition to Confirm Arbitration Award, filed herein on February 4, 1976, be granted; and (2) that the Final Decision and Award As to Penn Cen- tral of the National Arbitration Panel in NAP Case No. 11; In Re: Level of Rail Utility, dated February 3, 1976, be confirmed in accordance with 9 U.S.C. §9 and judg- ment entered in accordance with 9 U.S.C, § 13. Date: March 24, 1976. EEE EE EES REE REESE EEE EEE ER ESE SRE SEER EEE ERR ERR RE REESE WiuiaM E. Sreckier Chief Judge, United States District Court for the Southern District of Indiana 2 | NATIONAL ARBITRATION PANEL 271 Avenue of the Americas Forty Second Floor New York, N.Y. 10020 Leo D. Welch, Chairman February 3, 1976 NAP CASE NO. 11; IN RE: LEVEL OF RAIL UTILITY FINAL DECISION AND AWARD AS TO PENN CENTRAL This case was instituted before the Panel by a Notice of Arbitration, dated January 11, 1973, filed on behalf of National Railroad Passenger Corporation (Amtrak or NRPC) in accordance with Section 3 of the Arbitration Rules, for the purpose of settling a contract dispute be- tween Amtrak and Illinois Central Gulf Railroad (ICG) and a contract dispute between Amtrak and the Trustees of the Penn Central Transportation Company, Debtor (Penn Central). The contract involved in each dispute was a so-called ‘*Basic Agreement’’, dated April 16, 1971, which Amtrak had entered into with each of the railroads that were to provide services to be performed by Amtrak, beginning May 1, 1971, under the Railroad Passenger Service Act of 1970 (the Amtrak Act). These railroads included ICG and Penn Central]. The two disputes were consolidated into one proceeding before the Panel (NAP Case No. 11) because it would be necessary for the Panel to decide almost identical questions to resolve the disputes. In the consolidated proceeding Amtrak requested the Panel to find that ICG and Penn Central had not maintained certain of their lines used by Amtrak trains in accordance with the obligation undertaken by them in Section 4.2 of the Basic Agreement, which states: ‘‘The Rail Lines of Railroad used in NRPC’s Inter-City Rail Passenger Service pursuant to either Article Three or Article Four hereof shall be main- tained by Railroad at not less than the level of utility existing on the date of the beginning of such use.’’ Amtrak also requested the Panel to grant specific per- formance awards that would require ICG and Penn Central, at their sole cost, to restore their respective rail lines in- 02 volved in this proceeding to the level of utility required by Section 4.2. The rail lines of ICG in controversy were those used be- tween Chicago and New Orleans by Amtrak’s northbound and southbound trains, both known as ‘‘The Panama Lim- ited.’’ The rail lines of Penn Central in controversy involve two routes over which Amtrak trains began operations on May 1, 1971, and over which Amtrak trains were operating when this arbitration proceeding was instituted. One route con- nected Chicago and Washington via Indianapolis and Cin- cinnati and was used by Amtrak’s eastbound train, ‘‘The George Washington’’, and by Amtrak's westbound train, ‘‘The James Whitcomb Riley’’. A section of these trains operates to Newport News, Va. From May 1, 1971, until October 16, 1973, these trains operated on the ICG rail lines from Chicago to Kankakee, Illinois, which lines were also used by The Panama Limited, and on Penn Central lines between Kankakee and Cincinnati via Lafayette and Indianapolis. The other routes connected Chicago and St. Petersburg via Indianapolis and Louisville, and was used by Amtrak’s northbound and southbound trains, both known as ‘*The Floridian’’. A section of these trains operates to Miami. From May 1, 1971 until January 24, 1972, these trains oper- ated over the ICG lines from Chicago to Kankakee, which lines were also used by The Panama Limited, and then over Penn Central lines from Kankakee to Louisville via Lafayette and Indianapolis. As hereinafter pointed out, Amtrak trains do not now operate over any of the Penn Central lines that were used by the above trains on May 1, 1971 and at the time of the institution of this arbitration proceeding, since such lines have deteriorated to a point where they cannot be used for passenger service. Following extensive hearings conducted on the factual matters and other issues in dispute between Amtrak and ICG, the Panel on November 20, 1973, handed down a Deci- sion and Award interpreting and setting forth the meaning of the obligation that ICG had assumed under Section 4.2, found that the evidence indicated a failure by ICG to main- tain the rail lines in controversy at the level of utility re- 93 quired by Section 4.2, and directed that steps be taken by the parties looking toward a detailed plan for bringing the utility of the ICG lines in controversy up to the standards required by the Basie Agreement and envisioned by the Amtrack Act, as such standards were interpreted by the Panel. The Panel handed down a Final Award as to ICG on December 31, 1974, granting specific performance and incorporating such a plan. The initial hearings in Case No, 11 involved Penn Central as well as ICG. Following these initial hearings, the Panel, on November 29, 1973, requested Penn Central and Amtrak to furnish it detailed, up-to-date information with respect to the facts involving the Penn Central portion of the case. This information was submitted to the Panel in September of 1974. Shortly prior thereto, on August 30, 1974, at the request of Amtrak and with the concurrence of Penn Cen- tral, the Panel had placed the Penn Central portion of the case on ‘‘inactive’’ status. After allowing the case to lie dormant for a year, Amtrak requested, in a letter dated August 15, 1975, that the case he reopened. Beginning on September 11, 1975, additional hearings were conducted by the Panel on the Penn Central portion of the case, which hearings were concluded on January 20, 1976. This Final Decision and Award is directed to the obiigation of Penn Central under Section 4.2 of the Basic Agreement, and to a delineation of the work which the Panel has found to be necessary to effect specific perform- ance of such obligation. In line with the interpretation of Section 4.2 in the Panel's Decision and Award of November 20, 1973 as to ICG, the majority of the Panel finds, as to Penn Central, that: 1. the Rail Passenger Service Act of 1970 and its subsequent amendments demonstrate a strong Congressional intent that the rail passenger serv- ice to be provided by NRPC (Amtrak) should be fast, convenient and efficient. The parties to the NRPC Agreement of April 16, 1971 (the Basic Agreement) recognized this Congressional intent and incorporated it into their contract by Sec. tions 3.3 and 4.4 thereof, and 2. pursuant to the goalx outlined in Section 3.3 of the Basic Agreement, Penn Central agreed in of Section 4.2 to maintain its rail lines used in Am- trak’s intercity passenger service ‘‘at not Jess than the level of utility existing on the date of the beginning of such use,’’ and 3. the level of utility to Amtrak of the rail lines of Penn Central involved in this case on May 1, 1971, the date of first use, is reflected and em- bodied in the schedules agreed upon by Penn Central for Amtrak trains that were to use sych lines, and accordingly Penn Central assumed the obligation by Section 4.2 of the Basic Agreement to maintain, at its sole cost, its rail lines involved in this proceeding in such a way as to alloy the accomplishment of the agreed-upon schedules with a reasonable degree of regularity and with a reasonable degree of passenger comfort. The majority of the Panel finds further that the evidence in this case clearly shows a failure by Penn Centra] to maintain its rail lines involved in this proceeding at the level of utility agreed upon, within the meaning of such term as described above and in the Panel’s Decision and Award of November 20, 1973. In fact, the evidence shows that the Penn Central rail lines involved in this case have deteriorated to such an extent that, for safety reasons, they cannot now be used for passenger service. Because of the deteriorated condition of the Penn Central lines, Amtrak has been required to use alternate lines over other rail- roads, which lines formerly carried only freight traffic, in order to reach the endpoints it is required to serve, Use of these alternate lines makes it impossible for Amtrak to serve a number of important cities in Indiana, where vir- tually all of the rail lines in this case are situated, including the capital city of Indianapolis. Amtrak has obtained ac- cess to these alternate routes over other railroads by claim- ing the right to do so under the terms of the Basic Agree- ment. C&O, one of the railroads owning the alternate Jines, has contested this right in a companion case to Case No, 11, namely Case No. 29. In a Decision and Award of November 7, 1974, the Panel held in Case No. 29 that Amtrak was entitled to the services requested by Amtrak under the terms of the Basic Agreement. Following this Decision and 95 Award, Amtrak bought confirmation of the award in the United States District Court for the Southern District of Indiana, [Indianapolis Division. This Court had previously, on petition of Amtrak, enjoined C&O from refusing to per- form the requested services, pending arbitration by this Panel. The confirmation proceedings are still pending before such Court. In a letter from its President, Mr. Reistrup, Amtrak has informed the Chairman of the Panel that Amtrak intends to return its trains to the Penn Central lines in controversy as soon as they are placed in a condi- tion to accept such service. Similar assurances have been given by Amtrak to the Court in the Case No. 29 confirma- tion proceedings. The majority of the Panel also finds that Amtrak is en- titled to have Penn Central specifically perform whatever acts or obligations as may be necessary to restore the rail lines in controversy, namely those connecting Kankakee with Cincinnati via Indianapolis, and connecting Kankakee with Louisville via Indianapolis, to the level of utility re- quired by Section 4.2 of the Basic Agreement as such Sec- tion has been interpreted herein and in the above mentioned Decision and Award of November 20, 1973. The Panel, therefore, directs Penn Central, without cost to Amtrak, to do or cause to be done the work delineated below and found by the Panel to be necessary to restore such rail lines to their May 1, 1971 level of utility, as such level of utility has been defined by the Panel. THE PANEL PROGRAM Pursuant to authorization by the Panel, on October 24, 1975 Amtrak submitted an engineering study, prepared on its behalf by the engineering firm of Sverdrup & Pareel, for restoration of the Penn Central lines in controversy to the level of utility described herein. Thereafter, on Decem- ber 5, 1975, Penn Central submitted comments on this engi- neering study. On December 16, 1975, the Panel conducted hearings concerning the differences between the parties as to the extent of the work that would be required, and both parties presented extensive oral testimony and exhibits in support of their respective positions. At the close of these hearings, and at the direction of the Panel, both parties 96 agreed to meet in an attempt to resolve their differences. Such meetings took place and as a result agreement was reached as to the standards to be used in determining the level of utility of the lines that would comply with the inter- pretation of Section 4.2. in the Decision and Award of November 20, 1973. Agreement was also reached as to many of the differences relating to the amount and type of work that would have to be done to bring the lines up to the agreed upon standards. The only important matter not resolved was with respect to the amount and type of work that would be needed in connection with the relaying of approximately forty-five miles of rail. After an exhaustive study and analysis of all facts and arguments presented by the parties, the Panel adopts as the program to be followed in carrying out the award in this case the ‘‘Panel Program’’ attached hereto, which Panel Program is made a part of this Final Decision and Award. The Panel Program is based on two portions of a revision by Sverdrup & Parcel of its engineering study, made in January, 1976, following the meetings of the parties re- ferred to above. The portion of the Panel Program under the heading ‘‘Standards’’ incorporates the standards agreed upon by the parties, and are essentially the same standards, except as to rail, prepared by the consultants for Amtrak and ICG and included in the plan adopted by the Panel in its Final Decision and Award of December 31, 1974 as to ICG for the restoration of its lines involved in this case. The portion of the Panel Program under the heading ‘‘Necessary Rehabilitation’? incorporates the agreement of the parties as to the amount and type of work needed, to the extent that there was agreement, and other- wise reflects the determination of disputed matters by the Panel. Sverdrup & Parcel submitted to the Panel detailed cost estimates of the work that would have to be performed under the Panel Program, computed for the most part on the basis of unit costs for labor, equipment and commodity developed by the Bechtel Corporation for use by USRA in determining the approximate cost of rehabilitating Penn Central lines to be acquired by the Consolidated Rail Cor- poration (ConRail) pursuant to the Regional Rail Reorgan- 97 ization Act of 1973. Such cost estimates were made on the assumption that the work would be done by a third party hired to do the work. Sverdrup & Parcel estimates that the cost, less salvage, would be approximately $22,690,000., based on October 1975 costs, and without allowing for profit. Penn Central estimates that the cost, less salvage, would be approximately $11,500,000. Its figures were also based on October 1975 costs, but assumed that the required work would be performed by Penn Central employees. In view of the uncertainty as to who will actually perform the work, any determination by the Panel as to the cost of rehabilitating the lines t> the required level of utility would be based on unwarranted speculation. The Panel therefore orders only that specific performance be performed. No finding is made as to cost. The Panel orders that Penn Central specifically perform its obligation under Section 4.2. to maintain its rail lines involved in this case and that it do so in accordance with the following: 1. Penn Central shall institute, or cause to be instituted, a program for the relaying of rail, for tie replacement, for ballasting, for surfacing and for alignment which would complete all of the work shown in the attached Panel Pro- gram, at no cost to Amtrak, by January 1, 1978, Notwith- standing any provisions of this Final Decision and Award or the Panel Program, if it is found in performing the required work that the rail, ties, ballast, surface or the alignment on any part of the rail lines in question between any two adjacent mile posts is in strict accordance with the Standards set forth in the Panel Program, no work need be accomplished on such part or parts. 2. In the sections of track described by mile post in the Panel Program to be restored, Penn Central shall replace, or cause to be replaced, at no cost to Amtrak, sufficient defective ties so that not less than 16 non-defective ties remain in each 39-foot track length and so that there will be no violations of Federal Railroad Administration mini- mum requirements with respect to cross-ties. 3. Penn Central shall institute, or cause to be instituted, at no cost to Amtrak, a program for the repair or replace- 98 ment, by January 1, 1978, of all turnouts, highway cross- ings and railroad crossings indicated in the Panel Program as being defective. 4. Penn Central shall institute, or cause to be instituted, at no cost to Amtrak, a vegetation control program which will ensure that by the end of the 1977 work season the vegetation on all the track along the rail lines in contro- versy has been adequately controlled within ten feet of the track centerline. 5. All the work as specified above to be done, and all other work specified to be done in the Panel Program, shall be in strict accordance with the applicable Standards speci- fied in the Panel Program and shall be completed by Janu- ary 1, 1978. Within ninety days of the date of this Final Decision and Award, the Penn Central shall submit to Amtrak a detailed work schedule, by quarters, that would meet the completion date of January 1, 1978, and work shall start promptly thereafter. Once the work has been started in compliance with this Final Decision and Award, quar- terly reports shall be made to Amtrak showing work ac- complished. Reports to Amtrak shall include sufficient infor- mation concerning the status of planning for work not yet in progress so that Amtrak will be in a position to know at all times whether or not the level of utility of the rail lines in controversy will be restored by January 1, 1978, as required by this Final Decision and Award. 6. In the event Penn Central, while using its best efforts to comply with this Final Decision and Award, determines that unforeseen and unusual circumstances will require a major revision in the restoration completion date as set forth above, the Penn Central shall inform Amtrak imme- diately of such determination and its reasons why a revision seems necessary. However, in no event except force majeure (as defined in the Basic Agreement) shall less than 100% of the work specified in the Panel Program be accomplished by January 1, 1978 unless Amtrak first agrees to an exten- sion thereof. Article Six of the Basic Agreement limits the authority of the Panel to ‘‘the interpretation, application, or imple- mentation of this Agreement,’’ and Section 4.5 of the Arbi- tration Agreement requires that the Panel ‘‘be governed 99 by the provisions and language of the applicable Basic Agreement or Agreements.’’ Accordingly, the Panel does not consider that it is the proper body to decide whether, or to what extent, the Regional Rail Reorganization Act of 1973 or the Final System Plan thereunder may affect the carrying out of this award. Leo D. Wetcu Chairman SEE EERE REE REE EEE EERE EEE ERE eeeeeeeeeeee JAMES A. FARMER DISSENTING OPINION The majority of the Panel, hereinafter referred to as the majority, has reaffirmed its construction of Section 4.2 adopted in NAP 11 (ICG), namely, that the undertaking to maintain lines ‘‘at not less than the level of utility exist- ing on the date of beginning’’ of use by Amtrak means that they ‘‘must be maintained in such a way so as to allow the accomplishment of the agreed upon schedules with a reason- able degree of regularity and passenger comfort.’’ Since the schedules in effect on May 1, 1971, have not been accom- plished since September 1971, the majority finds that Penn Central has been and is in default of its Section 4.2 obli- gation. I dissented in NAP 11 (ICG) and, rather than repeat the detail of that dissent, it is incorporated herein by refer- ence. In essence, it took the position that Section 4.2 was intended to prevent a railroad from downgrading its track by reducing maintenance below the May 1, 1971, level after that date and excluded any obligation to upgrade its lines by increasing maintenance above the May 1, 1971, level. Indeed Section 4.3 imposed on Amtrak sole responsibility for added expense of any upgrading of lines, requested by it, above the May 1, 1971, level of utility. In mv opinion, the rather unusual situation presented in this case illustrates the basic invalidity of the majority’s construction of Section 4.2. Implementation of its standard of schedule accomplishment by adoption of the Amtrak re- habilitation program would produce a most arbitrary and inequitable result. The evidence of both parties establishes 100 that lines under consideration were in poor condition on May 1, 1971, reflecting years of deferred maintenance. De- railment of an Amtrak train in September 1971 indicated they had not been in such condition as to safely permit operation at speeds necessary to meet the May 1, 1971, schedules and, consequently, slow orders were issued limit- ing speeds to thirty miles an hour on most of the lines and ten miles an hour on the balance. The schedules have not been met since September 1971. Thus, under the majority’s construction of Section 4.2, Penn Central would have been obligated in September 1971 to upgrade the lines above their May 1, 1971, level at its expense in order to meet the schedules even though Section 4.3 imposes the burden of such an improvement on Amtrak. In any event, the rehabili- tation program adopted by the majority, while enabling the schedules to be accomplished, would place the lines in far better condition than they were on May 1, 1971, and the full financial burden of this would be imposed on the bankrupt Penn Central estate. Having expressed my disagreement with the rationale of the majority’s finding of default, I must concur in the ultimate conclusion that there has been a breach of the Section 4.2 obligation of Penn Central. The record does show that the physical condition of the lines, at Jeast in substantial part, has generally deteriorated since May 1, 1971, and they are in even worse condition now than they were then. The Panel cannot make a determination on the record before it as to what extent the expense of the rehabilitation program represents upgrading, on the one hand, and resto- ration, on the other. However, a substantial upgrading of the lines above their May 1, 1971, condition is clearly con- templated by the program. In these circumstances, if a specific performance award could lawfully be entered, which for reasons that follow I do not believe is possible, it should provide that the expense of the program be shared equally by Amtrak and Penn Central. Such an approach would serve to reconcile application of Sections 4.2 and 4.3 and would constitute an equitable allocation of the burden, assuming that Penn Central could do the work itself and retained ownership of the lines. 101 Nevertheless, the majority has entered a specific perform- ance award requiring Penn Central ‘‘to institute or cause to be instituted’’ a major rehabilitation program at its sole expense. According to Amtrak’s estimate, which is predi- cated on employment of a third party contractor to do the work, this program involves a net expenditure of over $22 million, based on October 1975 level of wages and prices of materials, and without any profit allowance to such third party contractor. While Penn Central estimates that the work could be performed for $11.5 million by it, using Penn Central personnel, the record leaves no doubt that perform- -ance by Penn Central will be impossible because of impend- ing and foreseeable developments beyond its control. The potential impact of its decision on the bankrupt estate is not confined, it should be noted, to this proceeding because Amtrak has advised the Panel that it will seek a further award or awards requiring rehabilitation of all other Penn Central lines used by Amtrak outside of the Northeast Corridor. The financial scope of the over-all ob- jective is apparent. For example, the rail lines from New York to Chicago and New York to St. Louis, over which the Broadway Limited and the National Limited, respec- tively, operate have a combined route mileage of 1995 miles compared with the 338 route miles in question in this case. If rehabilitation costs for the latter are any guide, it is evident that rehabilitation costs for all lines could exceed $100 million. In view of the foregoing, it is somewhat surprising that the majority opinion sees fit to avoid any discussion or consideration of an intervening development since the Agreement of April 16, 1971, was executed which raises seriove questions as to the Panel’s legal authority to issue the spe. -‘erformance award sought by Amtrak, namely, the Res —“ Rail Reorganization Act of 1973 ( Reorganiza- tion Aci. Altho © forcefully presented by counsel for Penn Central, the majority disposes of the issues involved on the unsupported ground that determination of these questions is beyond its province.* * The majority appears to have adopted the contention of Amtrak counsel: “On the other hand, if the Penn Central is lawfully entitled to relief from their contract obligations freely undertaken on April 16, 1971, then ~ 102 Since these questions go to the existence of the obligation for which enforcement is sought and the possibility or im- possibility of compliance with the specific performance award in accordance with the provisions of the contract, I do not believe that the Panel discharges its responsibilities by simply, in effect, referring them to judicial determina- tion. Section 4.2 of the National Railroad Passenger Cor- poration Arbitration Agreement provides that any arbitra- tion award ‘‘shall declare the rights of the parties’’ and may ‘‘require specific performance by a party of any act or obligation,” Although the issues raised by these questions are left to court determination de novo, the effect of the Reorganiza- tion Act on Penn Central's Agreement with Amtrak, which was called to the Panel's attention, should be described in this dissent. On April 1, 1976, Penn Central will cease to be a railroad carrier, except as to possible minor exceptions not material here, as a result of the Final System Plan (F.S.P.) adopted by the United States Railroad Administration created by the Reorganization Act. Most of its rail lines will have been conveyed on that date to Consolidated Railroad Cor- poration (Conrail), also created by the Act, or to profitable rail lines, pursuant to mandatory orders of the Special Court established by the Act,” and discontinuance of serv- ice on the balance of its rail lines concurrent with such conveyances is authorized by the Act.** Significantly, all it ean surely find adequate relief in the courts from any a vard this Panel might grant. Thus, if the Panel has no power to issue the specifie per- formance herein requested, an adequate remedy is available to the Penn Central to protect itself from injury. The Award ean be appropriately attacked under the provisions of the Federal Arbitration Act for vacating an improper award. (Amtrak letter Dee. 23, 1975, to Panel Chairman) * The Supreme Court held in Regional Rail Reorganization Cases, 419 U.S. 102, 141: “. . . The Special Court is mandated to order the con- veyance of rail properties included in the Final System Plan and is granted no diseretion not to order the transfer. . . . The Rail Act em- powers no court, including this court, to prevent a ** Reorganization Cases held “. . . railroads in reorganization subject to the Act are free to abandon service and dispose as they wish of any rail properties not designated for transfer under the Final System Plan 103 of the lines involved in this case will be conveyed to Conrail. The conveyances designated in the F.S.P. are not limited to rail lines. All Penn Central roadway machinery, like work equipment, and all maintenance of way materials and supplies are designated for conveyance by April 1, 1976 (F.S.P. Vol. II, pp. 250 and 251). Broad conveyance desig- nations as to such items as ‘‘ Administrative Assets: Offices, Warehouses, Supplies, Records,’’ ete., are also included. On top of all this, Penn Central personnel—operating, mainte- nance of way, engineering and others—will become em- ployees of Conrail or other acquiring railroads on April 1, 1976, or be eligible for severance benefits. In short, Penn Central will be virtually out of the railroad business lock, stock and barrel on April 1, 1976. All of these facts were called to the Panel’s attention. Yet they make it perfectly clear that Penn Central cannot pos- sibly comply with that part of the majority’s award that requires Penn Central to prepare within ninety days (ap- proximately May 1, 1976) a detailed plan for completing the work by January 1, 1978, and thereafter to ‘‘institute’’ req- uisite improvements for completion within the specified pe- riod. In the language of the vernacular, there is ‘‘no way”’ this can be done, The majority, implicitly recognizing this unavoidable fact, prescribes in the alternative that Penn Central shall ‘‘eause to be instituted’? the requisite program. This as- sumes, of course, that Section 4.2 imposes on Penn Central an obligation to improve lines owned by another railroad and to utilize a third party contractor for this purpose. Pefore discussing the erroneous character of this assump- tion, it should be noted parenthetically that the only third party contractor which could possibly perform the work is Conrail. This was conceded by Amtrak. Under existing Penn Central labor union contracts all maintenance work must be done by its employees and Section 506 of the Reor- ganization Act provides that the same limitation shall apply when these employees are transferred to Conrail. ; .. 2” (419 U.S. 102, 116). On Dee. 9, 1975, Penn Central posted notice of discontinuance of service of 5000 miles of rail lines not designated for transfer. 104 The underlying reasoning for holding that Penn Central should be required to try to contract with Conrail for im- provement of Conrail lines at Penn Central’s expense for Amtrak's benefit is not explained in the majority opinion, but it necessarily assumes that the Reorganization Act will not terminate Penn Central's obligation under the Agree- ment on and after April 1, 1976. This is patently wrong in my view. Penn Central’s service and maintenance obligations inci- dental thereto are confined by the express terms of the Agreement to its ‘‘ Rail Lines’’-and obviously contemplate performance by Penn Central employees, in view of long- standing labor union agreements, thus excluding use of third party contractors.* The Reorganization Act provides that conveyances to Conrail shall include ‘‘all right, title and interest (of Penn Central) in the rail properties.’’ (Re- organization Act, Section 303(b)). Thus, Penn Central’s service and maintenance obligations as to the lines under consideration will of necessity terminate upon their convey- ance to Conrail. They will no longer be its ‘‘Rail Lines ;’’ they will be Conrail’s. Indeed, the Reorganization Act is designed to free Penn Central of its railroad carrier obli- gations on April 1, 1976. As a matter of fact, the Reorganization Act specifically recognizes that ‘‘the value of obtaining freedom from cur- rent contractual liabilities’’ is one of the benefits contem- plated for bankrupt roads. Section 303(¢)(1)(A)(i) pro- vides that the Special Court in passing on the fairness of compensation for mandated conveyances by a railroad in reorganization to the Corporation to consider not merely the value of the securities received by the railroad for the exchange, but also ‘‘the other benefits accruing to it as a result of the exchange.’’ (F.S.P. Vol. I, p. 128) The Final System Plan states: * Article 111, See. 3.1 obligates Penn Central “to provide NRPC (Am- trak), over Rail Lines of Railroad, with the services requested by NRPC;” Article IV, See. 4.2 confines its maintenance obligations to “The Rail Lines of Railroad used in NRPC service ;” and Article IV, See. 4.1 —* provides that “The Rail Lines of Railroad shall include all its rights of way and real properties appurtenant thereto which constitute its track- age, whether owned or leased or otherwise held by it.” 105 **Other benefits are provided to the estates by the Act either in the form of an increase in realizable values on retained assets or through the elimination of obligations or liabilities associated with the assets conveyed.”’ (F.S.P. Vol. I, p. 129) It is difficult to conceive of an obligation or liability more closely associated with properties conveyed than the main- tenance obligation with respect to the rail lines in question assumed by Penn Centrel under Section 4.2 of the April 16, 1971, Agreement. The majority’s award requires performance of work which cannot be instituted prior to April 1, 1976, when the obligation it seeks to enforce will have been terminated as a result of governmental action and intervention. The Panel, in my judgment, has the responsibility of determin- ing whether a specific performance order is or will be related to an existent obligation, but, as previously indi- cated, the majority opinion does not consider this question, which goes to the essence of its authority to ‘act. Furthermore, the majority opinion does not consider whether the performance it has ordered is in accordance with the terms and intent of the Agreement. Penn Central did not obligate itself to improve lines acquired from it and owned by another, Conrail in this case, or to do so under a contract with a third party. Penn Central's obligation was limited to maintaining its own lines with its own equipment, materials and personnel. Amtrak's request for specific per- formance conflicts with the legal principle: ‘**If it is impossible to perform a contract accord- ing to its terms, a party cannot insist on another type of performance to obtain the same result that wout?® have obtained if the contract had been per- formed instead of being discharged.’’ (17 A C.J.S. p. 605) It also conflicts with the following statement in Corbin on Contracts (1962 Ed.) : ‘* . if one contracts to render a specified per- formance that requires the existence of a definite physical condition or means of performance, he will usually be discharged from duty by the destruction or non-existence of these necessary means or con- ditions.’’ (Vol. 6, pp. 394-395) This is a clear cut case in which supervening impossibility of performance has been created by governmental action under the Reorganization Act. The physical condition and the means of performance contemplated by the Agreement will be non-existent on and after April 1, 1976, as a result of this governmental inter- vention. Penn Central will no longer have the rail lines to improve or equipment, materials and supplies, and per- sonnel essential to its carrying out a rehabilitation pro- gram. The doctrine of supervening impossibility of per- formance finds full application to this situation.* Aside from the foregoing considerations which go to the Panel’s authority to issue the majority’s award and its lawfulness, there are several other aspects of the case that merit comment. In the first place, the Final System Plan contemplates that Penn Central will be required to convey properties to Conrail in exchange for securities which reflect the value of such properties based on their net liquidation value. The United States Railroad Administration made a comprehen- sive assessment of the physical conditions of Penn Central rail lines to be conveyed to Conrail, utilizing Bechtel Cor- poration and others for this purpose, and made a determina- tion of their value for exchange purposes on the basis of salvage value of the properties in their 1974 condition. The total valuation of all Penn Central properties to be trans- ferred to Conrail was only 495 million dollars. Securities to be issued to Penn Central are to be based under the Plan on this valuation after giving consideration to other benefits accruing to Penn Central as a result of the Act, such as *17A C.J.S. 22; Corbin on Contracts (2d Ed.) Vol. 5A, p. 253, Vol. 6, pp. 324-325, 394-395. Corbin states the concept of supervening impossi- bility of performance rests on an implied condition in the contract that obligations can be met. Reliance on an implied condition is not necessary in this ease because Section 8.1 of the Amtrak Agreement expressly makes compliance subject to force majeure which is defined to inelude “cireumstances beyond the control of the parties claiming such force majeure for non-performance.” 107 freedom from contractual obligations ‘‘associated with the assets conveyed."’ (F.S.P. Vol. I, p. 129) It seems mani- festly inequitable to impose on the bankrupt Penn Central estate under these circumstances the burden of giving Conrail millions of dollars for improvement of Conrail lines. Yet, as indicated before herein, this would be the necessary effect of the majority's award, assuming Con- rail’s willingness to enter into a contract with Penn Central for compliance with the award. In the second place, the record reveals that Amtrak has already persuaded the United States Railroad Administra- tion that Conrail should assume the expense of rehabilitat- ing the lines in question in this case, as well as other Penn Central lines used in Amtrak service which are to be ac- quired by Conrail, and that the standard of rehabilitation shall be to permit accomplishment of the May 1, 1971, sched- ules (F.S.P., Vol. I, pp. 30, 43-44). As a result of studies con- ducted by Bechtel Corporation, referred to before herein, Conrail will have information as to the physical conditions of the lines and what will be required for their rehabilita- tion to meet the May 1, 1971, schedule accomplishment standard. Furthermore, S. 2718 contains an authorization for over two billion dollars to Conrail for rehabilitation of rail properties to be acquired by it and other purposes. It seems incongruous in these circumstances for Amtrak to attempt to impose the burden on the bankrupt Penn Central estate of rehabilitating all lines acquired from Penn Cen- tral outside the Northeast Corridor which are to be used in Amtrak service. Congress has already given its sanction to the Final System Plan, including assumption by Conrail of responsibility for rehabilitation of Amtrak service lines, and is authorizing appropriations to discharge this respon- sibility. For reasons stated herein, I dissent from ihe majority's conclusion that the Panel should not concern itself with questions as to the legal effect of the Reorganization Act on Penn Central's obligations under the Amtrak Agree- ment as well as its ability to comply with the performance award sought by Amtrak. In my opinion, such a conclusion places the Panel in a position of dereliction in the dis- charge of its arbitration duties. Accordingly, I would deny 108 issuance of a specific performance award on the grounds set forth in this dissent. STANFIELD JOHNsoN February 3, 1976 Appendix D IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA In the Matter of In Proceedings for Penn Centra TRANSPORTATION the Reorganization CoMPANy, of a Railroad Debtor BKY. No. 70-347 Re: Petition of the National Rail Passenger Corporation ORDER NO. 2569 AND NOW, this 30th day of September, 1976, upon con- sideration of the ‘‘ Petition of National Rail Passenger Cor- poration for Order Authorizing, Instructing and Directing the Trustees to Carry out the Judgment of the U.S. District Court, Southern District of Indiana to Restore or Cause to be Restored Certain Rail Lines in Indiana’’ (Document No. 10440), and after hearing thereon, it is ORDERED: 1. The petition is DENIED. 2. The Petitioner, National Rail Passenger Corporation (‘‘Amtrak’’), is enjoined from instituting or furthering any legal proceeding for the assertion or enforcement against the Trustees or the estate of the Debtor of any alleged obli- gation or liability for track maintenance or improvement, in any jurisdiction or before any tribunal except this Court (or, if appropriate, in the Special Court), or as otherwise ordered by this Court. Nothing in this Order shall be deemed to apply to the appeal now pending in the Circuit Court of Appeals of the Seventh Circuit, nor to any appeal from this or any other Order of this Court. Joun P. Fuuuam, J. 109 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA In the Matter of In Proceedings for Penn CENTRAL TRANSPORTATION the Reorganization CoMPANY, of a Railroad Debtor BKY. No. 70-347 Re: Petition of National Rail Passenger Corporation to Enforce Arbitration Award MEMORANDUM AND ORDER NO. 2569 Fuiiam, J. October 1, 1976 National Rail Passenger Corporation (‘‘Amtrak’’) has petitioned this Court for an order directing the Trustees of the Debtor’s estate to carry out the terms of an arbi- trators’ award (National Arbitration Panel Case No. 11— In re: Level of Utility) which was confirmed by a judgment entered in the United States District Court for the Southern District of Indiana on March 24, 1976 (Civil Actions Nos. IP 76-76-C and 74-42-C). The award determined that the Trustees had failed to maintain certain passenger trackage, principaily located in Indiana, in such condition as to pro- vide for the same level of passenger service which was in effect as of May 1, 1971, as required by 4.2 of the ‘‘basic agreement’? between Amtrak and the Trustees, which be- came effective as of May 1, 1971, in accordance with Order No. 238 in these proceedings. In essence, Amtrak seeks to have the Trustees perform the required engineering work for a program of upgrading the trackage in question, and either to perform or arrange with others to perform the necessary work, all at the expense of the Debtor’s estate. (In the course of the arbitration proceeding, estimates of the costs involved ranged from $11.5 million to $22 million.) Although Amtrak has petitioned this Court to enforce the arbitrators’ award, as confirmed by the Indiana court, it is apparently the contention of Amtrak’s counsel that the only issues which this Court has the jurisdiction to decide relate to choices as to which of the Debtor’s assets should be devoted to the contemplated track improvement. Amtrak seems to be contending that all other issues either 110 111 have already been decided elsewhere, or cannot be decided because they should have been decided elsewhere. In order to attempt to understand these contentions, it is necessary to review briefly the checkered procedural history of this case. The basic agreement between Amtrak and the Trustees requires the Trusices to maintain facilities at the same service levels prevailing as of May 1, 1971. It also provides for compensation to the Trustees by Amtrak in amounts related, initially, to costs incurred solely for passenger service. The contract also provides for arbitration of dis- putes. However, in authorizing the Trustees to enter into the agreement, this Court’s Order No. 238 imposed the condition that final determinations of arbitrators would be subject to review and approval by this Court before be- coming finally binding upon the Trustees and the Debtor’s estate. In compliance with that condition, several such awards have been submitted to this Court for approval or rejection. The arbitration proceeding pertaining to the level of maintenance of the Indiana trackage was instituted by Am- trak, in 1972, but the hearings were postponed for a lengthy period at Amtrak’s request.’ After hearing, the arbitrators (by a 2 to 1 vote) reached their decision on February 3, 1976. Amtrak later petitioned the United States District Court for the Southern District of Indiana to confirm the award. The Trustees then petitioned this Court to enjoin Amtrak from proceeding with the Indiana litigation, in- voking the condition set forth in Order No. 238 and the general powers of the Bankruptcy Court. At the hearing in this Court, counsel for Amtrak acknowledged that the award could not be enforced against the Trustees or the debtor’s estate except as this Court might direct; made clear that it would be his contention that Amtrak was not bound by the condition set forth in Order No. 238; but contended that this was academic, since the Indiana Court was being asked to do nothing more than confirm the award of the arbi- 1 At a recent conference in chambers in this matter, Amtrak’s counsel stated that it was his understanding that the delay was oceasioned in part by uncertainty as to the desirability of pressing the issue, and in part by the need for time to gather evidence. 112 trators. It was conceded that, quite apart from the question of Order No. 238 and the condition it imposed, Amtrak would have to return to this Court in order to obtain en- forcement of the arbitrators’ decision.” On that basis, I dismissed the Trustees’ Petition and per- mitted the Indiana confirmation proceeding to go forward. Thereafter, the Trustees appeared in the Indiana court and stipulated that they had no objection to the entry of a judgment confirming the arbitrators’ award, so long as the judgment was strictly limited to the actual award of the arbitrators. The Trustees submitted a proposed form of the judgment which they would be satisfied to have entered, and that was the order which was entered. Amtrak then filed the present petition. The Trustees filed an answer, reiterating the position which they had taken, and which had been fully discussed, at the earlier hearings in this Court, namely, that as of April 1, 1976, substantially all of the Debtor’s rail properties had been conveyed to ConRail, ConRail had taken over all rail operations, and substantially all of the Debtor’s personnel were now em- ployed by Amtrak. In essence, the Trustees pointed out that implementation of the Rail Act relieved them of all further operating responsibilities, including any vestigial responsi- bilities emanating from the basic agreement with Amtrak, and that compliance with the arbitrators’ award is now a legal and practical impossibility. Amtrak thereupon sought, and obtained, a postponement of the hearing on its petition (asserting that the scheduled date would be personally inconvenient to its counsel) and returned to the Indiana court to file a ‘‘ Petition for Declara- tory Judgment’’ seeking, inter alia, a determination by the Indiana court that its earlier judgment confirming the ar- bitrators’ award was res judicata as to, and barred all further assertion of, issues relating to the possible impact of the Rail Act upon enforcement of the arbitrators’ award. Concurrently, Amtrak sought a stay of all proceedings in 2 In retrospect, this statement of Amtrak’s position may represent only one of several alternative positions. Counsel’s argument was prolix and not notably lucid. But it is the only contention which this Court found aec- ceptable as a basis for non-interference in the confirmation litigation. 113 this Court on its own petition for enforcement, and when this proved unsuccessful, sought further stays from the Court of Appeals and even from the United States Supreme Court. Application to the Supreme Court was filed on the eve of the scheduled hearing; a temporary stay was granted pending receipt of the Trustees’ response to the applica- tion. The stay was dissolved a few days later, and the hear- ing in this Court was rescheduled. In the Indiana declaratory judgment proceeding, Am- trak’s counsel drafted and submitted to that Court a state- ment of findings and conclusions, and a form of order, all of which were signed by the court on June 25, 1976. In essence, as I understand it, this Order declares that the Trustees are barred, by the earlier judgment confirming the arbitrators’ award, from asserting in this Court or elsewhere any issues relating to the impact of the Rail Act upon enforcement of the award, and all issues relating to alleged impossibility of performance. An appeal has been taken from this Order, which is now pending in the Seventh Circuit. ~ IL The first issue to be addressed is whether, as Amtrak contends, this Court lacks jurisdiction to consider whether the interposition of the Rail Act relieves the Trustees of further responsibility with respect to the upgrading of trackage now owned by ConRail. Amtrak’s argument in- volves two somewhat related assertions: (1) that the reser- vation in Order No. 238 does not confer jurisdiction to review the arbitrator’s award, because that reservation was invalid, and in any event is not binding upon Amtrak in any way; and (2) the doctrine of res judicata precludes consideration of the stated issue by this Court, in view of the judgment or judgments entered in Indiana. A. Validity and Effect of Order No. 238. The provision in the basic agreement relating to arbitra- tion of disputes such as that involved in Case No. 11 is purely contractual; it was not mandated by the Rail Passen- ger Service Act of 1970. The Trustees’ Petition to this Court seeking authorization to enter into the basic agree- 114 ment with Amtrak was not unopposed, and many legitimate and substantial objections to the proposed contract were asserted by various parties. The statute provided for reso- lution by the Interstate Commerce Commission of certain disputes relating to the basis of compensation to the Trus- tees for operating the passenger service. Obviously, parties dissatisfied with the ICC decisions in this area would be able to obtain judicial review of those determinations. It was felt that many of the other issues which, under the con- tract, would be submitted to arbitration before the National Arbitration Panel, might prove to have equally substantial impact upon the Debtor’s estate, yet, under the contract as originally proposed, would escape meaningful judicial re- view in any forum. As discussed in the Opinion filed in connection with the entry of Order No, 258, serious ques- tions were raised as to the possibly unconstitutional impact of the basic agreement. At the very least, therefore, it seemed desirable to insure that the arbitration provisions were not so utterly open-ended as to give rise to an argu- ment that unconstitutional impact could not be prevented. Moreover, there was at least a serious question as to the legal propriety in a railroad reorganization context of au- thorizing a contract with binding arbitration provisions of the type contemplated. Section 26 of the Bankruptcy Act did provide for arbitration; however, § 26(c) provided: ‘‘e, The written finding of the arbitrators or of a majority of them as to the issues presented may be filed in court and shall have like force and effect as the verdict of a jury.”’ Thus, even if § 26 of the Bankruptey Act were held appli- cable to railroad reorganization proceedings, it would seem that the proposed arbitration clause in the basic agree- ment would be partially in conflict with § 26(c), unless the bankruptcy court reserved the right to insure that arbi- trators’ awards were not given any greater effect than that contemplated by § 26(c). Moreover, § 26 of the Bankruptcy Act was the only pro- vision of the bankruptcy laws which authorized arbitration of disputes, and it was, and is, far from clear that § 26 is ayplicable in railroad reorganization cases. Section 77(1) ve 115 makes the non-railroad reorganization provisions of the Bankruptcy Act, including § 26, applicable to proceedings under § 77 only to the extent that they are ‘‘consistent with the provisions’’ of § 77 itself. And § 77(c)(2) vests in the reorganization court sweeping authority over, and respon- sibility for, the affairs of the debtor. An argument can be made that submitting disputes to arbitration in accord- ance with § 26 of the Bankruptcy Act would not be ‘‘con- sistent with’’ the allocation of authority contemplated by § 77(c)(2), and that therefore § 26 does not apply in rail- road reorganization proceedings. Be that as it may, at the very least it seems clear that a reorganization court can best carry out its responsibilities under §77(c)(2) by re- taining some degree of control over the implementation of the end product of arbitration, especially where the mag- nitude and legal ramifications of an arbitration award can- not be perceived in advance. For all of these reasons, I am satisfied that the condition included in Order No. 238 is entirely valid. But even if it were otherwise, the fact remains that the Trustees were authorized to enter into the Amtrak agreement only upon that condition. Amtrak, like any other party contracting with court-appointed trustees, ean validly contract with them only to the extent authorized by the appointing court. I thus am unable to accept the suggestion that, somehow, Amtrak is free to ignore the provisions ef Order No, 238. In my view, Amtrak would be bound by the provisions of Order No. 238 even if it had been unaware of the condi- tion imposed by the Court, until after the contract was executed. But no one can seriously suggest that Amtrak was not fully conversant with the terms of Order No. 238. The initial hearing on the Trustees’ Petition for approval of the Amtrak contract commenced on April 20, 1971. In the course of that hearing, it was agreed that the cross- examination of certain witnesses would be deferred until a final hearing to be held three days later, on April 23, 1971. While Amtrak did not formally enter an appearance or participate as a party in these hearings, counsel for Am- trak, R. Chapman Rose, Esq., attended at least the April 20 hearing, and participated therein to the extent of mak- ing a brief argument in support of the Trustees’ Petition 116 (Tr. pp. 1692-97). In the course of these hearings, par- ticularly at the April 23 hearing, the arbitration provisions of the proposed contract came under heavy attack; indeed, many parties insisted that the type of condition ultimately inserted in Order No, 238 would provide insufficient pro- tection. At the conclusion of the April 23 hearing, the Court sought information as to whether Amtrak had any objection to the proposed reservation relating to arbitra- tion, and counsel for the Trustees advised that Amtrak had expressed no objection. The record does not disclose whether any representative of Amtrak was actually in attendance at the hearing on April 23. However, either that same day, or within two or three days thereafter, at the request of Amtrak’s counsel, a conference in chambers was held, attended by Mr. Rose and other representatives of Amtrak, together with counsel for the Trustees, At that conference, Amtrak sought, unsuccessfully, to have the condition about arbitration removed from Order No, 238; and it was made clear that Amtrak would seriously con- sider the possibility of challenging that feature of the Order by means of an appeal therefrom. However, Order No, 238 was not appealed, by anyone, B. Review Irrespective of Order No. 238. Wholly apart from the provisions of Order No, 238, I find unacceptable the notion that a reorganization court is without jurisdiction to consider the propriety and feasi- bility of a proposal that the Trustees of the Debtor must forthwith embark upon a program of trackage rehabilita- tion involving potential expenditures (as to one small seg- ment of the Debtor's property) of $11.5 million to $22 million. Irrespective of the provisions of Order No, 238, and even if the Rail Act had never been enacted, and the Trustees were still operating the railroad, the effect to be given in these reorganization proceedings to the conclusions of the arbitrators would have been a matter for determina- tion by this Court. Section 77(c)(2) of the Bankruptey Act provides that even the orders of governmental regu- latory agencies requiring that certain work be done in order to protect the safety of the traveling public, are binding upon the Debtor's estate only if approved by the Court (or, under certain limited circumstances, the ICC); 117 surely mere contractual obligations are entitled to no great- er weight. C. The Indiana Judgment. The arbitrators in Case No, 11 determined that the track- ge in question was not being maintained so as to provide f level of utility commensurate with that existing as of 1, 1971, and that under Paragraph 4.2 of the basic agreement, it was the responsibility of the Trustees to arrange for the upgrading, at no cost to Amtrak. In the course of the hearings before the arbitration panel, Am- trak expressly disclaimed any intention to seek damages for the alleged inadequate maintenance (an understandable concession, since (a) the possibility that Amtrak could prove that it had suffered damages was remote, and (b) under the operating agreement, if the Trustees had spent more on maintenance, the compensation due them from Amtrak would have been increased, at least to some extent). Amtrak sought only prospective relief, and the arbitrators’ award was prospective only. Moreover, the arbitrators’ report expressly refused to resolve any issues concerning the effect of the Rail Act and the forthcoming conveyance to ConRail, stating ‘Accordingly, the Panel does not consider that it is the proper body to decide whether, or to what extent, the Regional Rail Reorganization Act of 1973 or the Final System Plan thereunder may affect the carrying out of this award.’™ The judgment of the United States District Court for the Southern District of Indiana which was entered on March 24, 1976, confirming the award, was strictly limited to the provisions of the award itself. The judgment added nothing to the award, except finality. Essentially the only issues which could have been resolved in the confirmation proceeding were such matters as the integrity of the arbi- trators, the absence of fraud or collusion, and the jurisdic- tion of the arbitrators, under the terms of the contract, to render the award. 3 The dissenting member was of the view that the award should not be entered at all, because the Rail Act made comphance impossible. 118 The judgment confirming the award is a final judgment, and is entitled to be given res judicata effect in these pro- ceedings. No one has ever contended otherwise. In short, it is now finally settled that the Trustees had not fully complied with their obligation to maintain the trackage involved, and that Amtrak was entitled to have the situa- tion speedily remedied. But the impact of the Rail Act upon effectuation of the award was clearly left open for later determination elsewhere. It is only this judgment, entered on March 24, 1976, which has become final. If for no othgr reason than lack of finality, therefore, nothing which thereafter occurred in the Indiana court could give rise to the bar of res judicata or estoppel. See, ¢.g., Kreiger v. General Electric Co., 497 F.2d 468, 472 (2d Cir. 1974), cert. denied, 419 U.S. 861 (1974). In the interests of completeness, however, it is ap- prop e to diseuss briefly the ‘declaratory judgment” procee. .ngs later held in that court. A court which renders a judgment is ordinarily power- less to decide vhat effect is to be accorded that judgment in litigation be ore other courts. The Trustees have argued, and apparently are contending on appeal, that the ‘‘de- claratory judgment”? rendered by the Indiana court on June 5, 1976, was merely an advisory opinion, and therefore beyond the jurisdiction of that court, in the absence of an actual case or controversy. Since these issues are to be decided by the appropriate appellate court, I express no view as to the jurisdiction of the Indiana court in this regard, The views of the District Court in Indiana as to the effect which should be given to its earlier judgment, while not binding upon this Court, are nevertheless entitled to careful consideration. But having carefully considered the views of the Indiana court, and notwithstanding my great respect for that tri- bunal, I find myself unable to agree with its conclusions. In the first place, I cannot understand how an arbi- trators’ award which expressly left certain issues open for later determination by other tribunals can, by a confirma- tion judgment expressly limited to the terms of the award, be deemed to have resolved those very issues. In the secon 119 place, I do not believe that issues of such i potential importance to the future of rail eames nets throughout a large segment of the nation should be deemed to have been resolved by a process of procedural sleight-of- hand, rather than on their merits. And finally, as will be discussed below, compliance with the arbitrators’ award as confirmed, is a legal and practical impossibility and would plainly conflict with Congressional mandates. *,* . } . . } . ] Il The basic agreement between Amtrak and the Trustees required the Trustees to maintain the trackage at its May 1, 1971 level of utility for a period of 25 vears. But on April 1, 1976, as mandated by the Rail Act and the Final System Plan promulgated thereunder, the Trustees’ own- ership of the railroad and responsibilities for operating it became vested in ConRail. The suggestion that the Trustees nevertheless remain liable to maintain the property for all, or any part of, the remaining 20 years of the term of the agreement deserves serious consideration only if one assumes that Amtrak, unlike all of the thousands of other parties having legal relationships with the Penn Central has been granted sone kind of immunity from the impact of Congressional action. Needless to state, no such im munity has been conferred. ; ; Congress plainly intended to eliminate the involv of bankrupt estates and reorganization courts in eo. ership and operation of the rail system in the northeastern part of the United States. By providing, in the Final Sys- tem Plan approved by Congress, for the conveyance of ownership and operating responsibilities to ConRail as of April 1, 1976, Congress achieved that goal. The Final System Plan itself expressly deals with the question of ongoing maintenance and improvement of trackage to the level required by Amtrak (see Final System Plan Vol. 1 pp. 30, 43-44). To require the Trustees to plan for, finance, and carry out maintenance and improvements after the April 1 cutoff date would be clearly inconsistent with these 120 provisions, as well as with the provisions of §211(h) of the Rail Act (governing the transitional financial arrange- ments between ConRail and the Trustees) and the valuation process now under way in the Special Court.* The contract between the Trustees and Amtrak makes it abundantly clear that the question of maintenance and improvement is inseparable from continued ownership. The Trustees were required to maintain their own railroad, not someone else’s. They were required to use their own employees (because of the terms of existing collective bar- gaining agreements), not someone else's. The contract pur- ports to be binding upon the successors and assigns of the Trustees, without regard to whether such successor or as- signee did or did not assume the obligations of the con- tract. Whether this means that Amtrak is entitled to enforce these obligations as against ConRail is not for this Court to decide. Depending upon how that question is ultimately resolved, it may be that Amtrak might be able to establish that implementation of the Rail Act has deprived it of valuable rights, for which it is entitled to a remedy; or ConRail might be able to establish that its assumption of these liabilities comes within the ‘‘other benefits’’ aspect of the valuation proceedings in the Special Court. I ex- press no view as to any of these matters. For the reasons thus far discussed, the relief sought by Amtrak in the present case cannot and will not be granted.° * For example, the Special Court is required to give consideration to “ero- sion” of the Debtor's estate stemming from pre-conveyance operations. If Amtrak’s present contention were sound, such erosion would continue to pile up for the next 20 years. Moreover, the valuation of the prop- erties themselves would be thrown into confusion. 5 The entire question of upgrading trackage for passenger service (which requires, for comfortable, high-speed operation, better track conditions than is necessary for freight service) has received and is receiving the attention of Congress, the Department of Transportation, and the ap- propriate regulatory agencies. The ICC has recently completed a rule- making proceeding, Ex Parte No. 277 (Sub. No. 2), Adequacy of Intercity Rail Passenger Service-Track, the report of which contains a thor- ough canvass of the field. 348 1CC Rpts. 518-80. Contrary to the impli- cations of some of Amtrak's arguments in this case, the views expressed herein are entirely consistent with the views expressed by the Commis- / 12 IV The procedures sought to be followed by Amtrak in nection with this entire matter have been such that, in aid of this Court 's jurisdiction and to prevent undue interfer- ence with the reorganization process, an Order was earlier entered enjoining Amtrak from initiating or pursuing liti- gation on this subject in other jurisdictions, pending hear- ing and determination of the present petition. At a recent conference in chambers, it was apparent that, in the absence of that restriction, Amtrak intended to return to the In- diana court, or perhaps other courts, in an attempt to ob- tain a further expansion of the confirmed arbitrators’ award, or perhaps in some other fashion to obtain **repara- tions. ’’ I do not profess to understand fully the Jezal theory or alleged basis for any such attempts, but I am persuaded that the injunction should remain in effect. If this Court's view of the matter is incorrect, it can be corrected on ap- peal ; if correct, the injunction is proper. sion, which, at page 539, n. 4 states: “As [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2196%3A1. Public record. Not legal advice.