Amicus Curiae Brief — Pinney Dock & Transport Co. v. Norfolk & Western Railway Co.

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4

8 No. 88-72

w IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

PINNEY Dock & TRANSPORT Co.,

. Petitioner,

NORFOLK & WESTERN RAILWAY Co., et al.

LITTON INDUSTRIES, INC., et al.,

. Petitioners,

NORFOLK & WESTERN RAILWAY Co., et al.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Sixth Circuit

MOTION FOR LEAVE TO FILE AND BRIEF OF

C.D. AMBROSIA TRUCKING CO.,

DAVID W. REANEY AND REANEY DOCK COMPANY,

AND ERIE-WESTERN PENNSYLVANIA

PORT AUTHORITY/CODAN CORPORATION

AS AMICUS CURIAE IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI

August 10, 1988

LAWRENCE R. VELVEL

(Counsel of Record)

58 Stillwater Drive

Nashua, New Hampshire 03062

(508) 470-3070

BRUCE J. ENNIS

KIT ADELMAN-PIERSON

DAVID HANDZO

JENNER & BLOCK

21 Dupont Circle, N.W.

Washington, D.C. 20036

(202) 223-4400

Counsel for Amici

WILSON - Erzs PRINTING Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

IN THE

Suprene Court of the United States

OCTOBER TERM, 1988

No. 88-72

PINNEY Dock & TRANSPORT Co.,

. Petitioner,

NORFOLK & WESTERN RAILWAY CO., et al.

LITTON INDUSTRIES, INC., et al.,

- Petitioners,

NORFOLK & WESTERN RAILWAY CoO., e¢ al.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Sixth Circuit

MOTION OF C.D. AMBROSIA TRUCKING COMPANY,

DAVID W. REANEY AND REANEY DOCK COMPANY,

AND ERIE-WESTERN PENNSYLVANIA

PORT AUTHORITY/CODAN CORPORATION

FOR LEAVE TO FILE BRIEF AMICUS CURIAE

Amici, David W. Reaney and Reaney Dock Company,

C.D. Ambrosia Trucking Co., Inc., and Erie-Western

Pennsylvania Port Authority/Codan Corporation, hereby

2

move for leave to file the accompanying brief amicus

curiae in support of the petition for a writ of certiorari.*

Amici are two docks and a trucking company that were

gravely injured by the same conspiracy challenged by the

petitioners. Amici filed antitrust suits against the con-

spirators; two of amici’s three suits were brought in dis-

trict courts in the Sixth Circuit. Although amici’s cases

have been consolidated with several others for pretrial

proceedings in a federal district court in the Third Cir-

cuit, there is a possibility that the Sixth Circuit’s decision

could control the two suits initially filed in the Sixth Cir-

cuit. Also, the Sixth Circuit’s decision could conceivably

receive precedential effect regardless of where suit was

filed. Amici thus have a vital interest in the outcome of

this case.

Additionally, amici’s participation in this case will aid

the Court because amici will present matters that are es-

sential to resolution of the petition for a writ of cer-

tiorari. A number of those matters have not been put

before the Court by the petitioners or have been treated

cursorily by them. The matters presented by amici show

that the Sixth Circuit’s decision conflicts with decisions

of this Court and federal courts of appeal, thwarts the

explicit intent of Congress, and presents legal and eco-

nomic questions of national importance.

Because amici have a vital interest in the outcome of

this case and will present matters of great importance to

certiorari, including matters not presented or not pre-

sented fully by the petitioners, it would be appropriate

for amici to be permitted to file the accompanying brief

in support of the petition for a writ of certiorari.

*The Pinney and Litton plaintiff-petitioners have consented to

the filing of amici’s brief in support of certiorari. Their letter of

consent has been forwarded to the Clerk. The defendant-respondents

have refused to consent to the filing of amici’s brief, thereby making

this motion necessary.

—

3

CONCLUSION

For the foregoing reasons, amici respectfully request

that this Court grant the motion to file the accompanying

brief in support of the petition for a writ of certiorari.

Respectfully submitted,

LAWRENCE R. VELVEL

(Counsel of Record)

58 Stillwater Drive

Nashua, New Hampshire 03062

(508) 470-3070

BRUCE J. ENNIS

Kit ADELMAN-PIERSON

DAVID HANDZO

JENNER & BLOCK

21 Dupont Circle, N.W.

Washington, D.C. 20036

(202) 223-4400

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...... ee eae ii

Be EE FE PI ecienicsnics cisstacseasnconessacbeeanicdaaeincadcionn J

I iii h ed it na isecivnsteabincidennddanwiatins 2

STATRemrts Ge tee CABS ......................................

A. The Railroads’ Conspiracy ...............................--.--

B. Proceedings In the Instant Case And the Crim-

RRR Sir RE DL Ay Leas a ea kre EH 6

REASONS FOR GRANTING THE WRIT..................... 7

I. By Immunizing The Conspirators’ Denial of

Commodity Line Haul Rates to Private Docks,

The Sixth Circuit Has Acted In Conflict With

the D.C. Circuit and Has Contravened Clear

COIS SNE ce 7

II. The Sixth Circuit’s Ruling On Keogh Con-

cededly Conflicts With Decisions of Other Cir-

cuits and Is Inconsistent With This Court’s De-

CE FA ae iis bencisietanieniell en: 10

III. The Sixth Circuit’s Decision on Standing Is

Unprecedented And Contrary To Decisions of

ee SNe ele nae ecaaeia daa aae 12

IV. The Sixth Circuit’s Decision Nullifies Congress’

Intent That the Ratemaking Process Be Open

Ge eee: TED dette es 14

V. The Sixth Circuit’s Opinion Is Inconsistent With

Decisions of This Court and Courts of Appeal

Regarding The Use of Bottleneck Monopoly

eens te Uae rs AR Sand ARAN RW RO TRACT EN OE amas 15

TET UTIIT chiscanieccstphntnsinstenciehansieiensanicaiends cccnohiande 17

ii

TABLE OF AUTHORITIES

CASES Page

Blue Shield of Virginia, Inc. v. McCready, 457

Bs A BID ~ cieeicict biinnctisntincedihantusaacdbiniahamenmnetalindais 13

City of Groton v. Connecticut Light & Power Co.,

¢ « Fas fs Re: | er 16

City of Kirkwood v. Union Electric Co., 671 F.2d

1173 (8th Cir. 1982), cert. denied 459 U.S. 1170

| RRR PL a epee Oe nD 16

Clipper Express v. Rocky Mountain Motor Tariff

Bureau, Inc., 690 F.2d 1240 (9th Cir. 1982),

cert. denied 459 U.S. 1227 (1983) .........0000000.022.... 16

Continental Ore Co. v. Union Carbide & Carbon

Corp.,. 870 U.S. 6O0 (19GB) —nccccccccccccccccesesecces seceseBy 8, 18

Essential Communications Systems, Inc. v. AT&T,

7 om Bar ay | ee 16

Frontier Enterprises, Inc. v. Amador Stage

Lines, Civil No. S-83-940 (E.D. Cal. October 2,

| RR SEE EAN SSR SSN reac eee ee 16

Georgia v. Pennsylvania Railroad Co., 32 4 U.S.

REE a a ae ee DC a OE Ce 11

ICC v. American Trucking Associates, Inc., 467

EEUU ss ckhiided dnestcaacntnacdumiedlccaesaathsdousedadioatiane 11

Litton Systems, Inc. v. AT&T, 487 F. Supp. 942

(S.D.N.Y. 1980), aff'd 700 F.2d 785 (2d Cir.),

cert. denied 464 U.S. 1073 (1983) —...22.... 16

Marnell v. United Parcel Service of America, 260

F. Supp. 391 (N.D. Cal. 1966) .22...........cccccoccsceees 16

Otter Tail Power Co. v. United States, 410 U.S.

SUE SII" AiCclinciccndgslinnabanibibieshaihcessudtedsiapedacaanstanbantce 16

Square D Co. v. Niagara Frontier Tariff Bureau,

Ine., 476 U.S. 409 (1986) ...............-....-.-coecese 8, 10, 11

Trans-Kentucky Transportation Railroad v. Louis-

vile and Nashville Railroad Co., 1983-2 Trade

Cases § 65, 476 (E.D. Ky. 1983) 16

United States v. AT&T, 461 F. Supp. 1314 (D. D.C.

ROP deincndcinsinedatensiataind, 16

United States v. Bessemer & Lake Erie Railroad

Co., 717 F.2d 593 (D.C. Cir. 1983) 7

eee

ili

STATUTES AND LEGISLATIVE HISTORY Page

49 U.S.C. § 10706 Se RF Seren Saealadgiialactaciad 3, 8,9

Senate Report No. 44, 80th Cong., Ist Sess.

(1948) ERAN MOPED SCE on OO RO RCE 10, 14

House Report No. 1100, 80th Cong., Ist Sess.

(1948) ld ttee 14

94 Cong. Rec. 4032-34, 8414 (1948) 8, 9,15

93 Cong. Rec. 3969, 6614 (1947) somnennie 10, 14

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

No. 88-72

PINNEY Dock & TRANSPORT Co.,

. Petitioner,

NORFOLK & WESTERN RAILWAY Co., et al.

LITTON INDUSTRIES, INC., et al.,

7 Petitioners,

NoRFOLK & WESTERN RAILWAY Co., et al.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Sixth Circuit

BRIEF OF C.D. AMBROSIA TRUCKING COMPANY, INC.,

DAVID W. REANEY AND REANEY DOCK COMPANY,

AND ERIE-WESTERN PENNSYLVANIA

PORT AUTHORITY /CODAN CORPORATION

AS AMICUS CURIAE IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI

INTEREST OF THE AMICI

Amici are two docks and a trucking company that were

gravely injured by the same conspiracy challenged by the

petitioners in this case. Amici filed three antitrust suits

against the conspirators, and two of those suits were

ll

2 ¢

brought in district courts in the Sixth Circuit. Although

amici’s cases are presently pending in a federal district

court in the Third Cireuit, having been consolidated

with several others for pretrial proceedings, there is a

possibility that the Sixth Circuit’s decision in this case

could control amici’s two suits initally filed in the Sixth

Circuit. Also, the Sixth Circuit’s decision could conceiv-

ably receive precedential effect in amici’s cases regardless

of where they were filed. Amici thus have a vital inter-

est in this case.

INTRODUCTION

This case deals with the handling and transportation

of iron ore that moved from Lake Erie to steel mills

located in Ohio, Pennsylvania and West Virginia. Con-

trol over iron ore movements lay in the hands of a group

of railroad companies, some of which are respondents in

this case. In order to retain their control over iron ore

handling and transportation, these railroads engaged in

one of the most destructive conspiracies ever uncovered

in the history of the antitrust laws. To protect their out-

moded methods for handling and transporting iron ore

from Lake Erie, for over twenty years this group of

powerful railroads conspired to prevent the introduction

of better and cheaper methods of handling and carrying

ore. The conspirators thereby caused the cost of han-

dling and transporting ore to be inflated by hundreds of

millions of dollars and destroyed the economic health of

persons and companies that sought to introduce modern

technology. The conspiracy was carried out through hun-

dreds of secret meetings, phone calls, letters and memo-

randa. So blatant was the conspirators’ disregard of

antitrust laws that their actions were memorialized in

thousands of pages of documents ultimately discovered

in the defendants’ files.

When the conspiracy was finally uncovered, four of

the railroads pleaded nolo contendere to a criminal in-

dictment. During the criminal proceedings, a federal dis-

3

trict judge and the Court of Appeals for the District of

Columbia Circuit held the conspirators’ actions were sub-

ject to the antitrust laws. Moreover, a document inad-

vertently produced during discovery revealed that Con-

rail’s antitrust counsel told that company’s Board of

Directors that “The type of conduct [at issue]—that is a

conspiracy to monopolize and to prevent independent mar-

ket entry—has never been exempt from the antitrust

laws by reason of ICC regulation.” However, contrary

to the rulings of the District of Columbia judges and the

conclusions of Conrail’s counsel, the Sixth Circuit has

now held the conspiracy immune from any significant

civil liability to the parties it gravely injured or de-

stroyed.

In its opinion, the Sixth Circuit issued an immunity

ruling directly contrary to the D.C. Circuit’s prior hold-

ing, conceded that its ruling on the Keogh issue conflicts

with other courts of appeal, misapplied this Court’s deci-

sion in Square D Co. v. Niagara Frontier Tariff Bureau,

Inc., 476 U.S. 409 (1986), ignored this Court’s ruling in

Continental Ore Co. v. Union Carbide & Carbon Corp.,

370 U.S. 690 (1962), and thwarted the explicit intent

of Congress in the Reed-Bulwinkle Act, 49 U.S.C.

§ 10706.

In these circumstances this case warrants review.

There are direct conflicts between the Sixth Circuit and

other courts of appeal. The Sixth Circuit’s opinion is

inconsistent with rulings of this Court. The legal and

economic questions are of national importance—to the

antitrust laws, to competitive conditions and a sound

economy, and to carrying out the will of Congress.

STATBAIENT OF THE CASE

A. The Railroads’ Conspiracy

Mud-like iron ore was long transported to Lake Erie

railroad docks in vessels called bulkers. These boats were

unloaded by huge cranes, called huletts. Each hulett

4

had a claw that dipped into bulkers to grab loads of ore,

which were deposited on the dock or in rail cars. The

ore then moved inland to steel mills via railroad “line

hauls” that were exceptionally lucrative for the railroads.

In the 1950’s, ore began to be shipped in pelletized

rather than mud-like form. Pellet ore can be carried in

technologically advanced boats which unload themselves

by an internal conveyor belt and a boom that deposits

the ore on the dock. Because they unload themselves,

these “self unloaders” rendered unnecessary the expensive

hulett cranes used by railroad docks to unload bulkers.

Moreover, self unloaders could be received at non-railroad

docks that did not have hulett cranes. Because the non-

railroad docks (called private’docks) did not need to

invest in huletts, they could charge much less than rail-

road docks.

The railroads viewed self unloaders and private docks

as a serious threat. Self unloaders and private docks en-

dangered the railroads’ monopoly over the business of

providing dock services for ore, and thereby threatend

the revenues the railroads received from this business

and the value of the railroads’ investments in hulett

cranes. They also endangered the railroads’ monopoly

over inland transportation of ore and the huge revenues

derived from that transportation. For if self unloaders

brought ore to private docks, then trucks, which were

refused access by the railroads to railroad-owned docks,

would be able to compete with railroads for the inland

transportation of ore by carrying it from private docks.

The railroads therefore agreed to forestall the use of

self unloaders and to preclude private docks and trucks

from entering the iron ore trade. Beginning in 1956,

and continuing for approximately twenty-four years, the

railroads conspired to achieve their exclusionary pur-

poses. The steps taken to implement the conspiracy in-

cluded :

or

(1) Railroads refused to file “commodity” line haul

rates for movements of ore from private docks. Ore un-

loaded at private docks thus could be moved inland by

rail only at “class” dates, which were two to four times

higher than the commodity line haul rates applicable to

ore movements from railroad docks. In fact, no ore was

ever moved at the expensive “class” rates because, as the

railroads knew, it was economically infeasible to do so.

Being denied commodity rates and commodity rate serv-

ice, private docks were effectively precluded from com-

peting with railroad docks.

(2) Despite economic savings realized because self

unloaders unloaded themselves instead of having to be

unloaded by hulett cranes, the railroads refused to lower

their dock handling rates for self unloaders.

(3) Railroad docks refused to handle self unloaders.

(4) Railroads refused to sell or lease land to com-

panies or governmental entities that intended to estab-

lish private docks.

(5) Railroads prohibited trucks from picking up ore

at railroad docks, or levied economically prohibitive

charges against such pick-ups.

(6) Railroads harassed truck movements of ore.

(7) When any railroad indicated it might abandon

the conspiracy and act independently by handling self

unloaders, by granting a commodity line haul rate to a

private dock, or by leasing or selling land for a private

dock, other railroads pressured it to adhere to the con-

spiratorial agreements and threatened retaliation if it

acted independently. The other railroads thereby forced

continued adherence to the conspiracy.

The railroads’ conspiratorial purposes and agreements

were kept secret by use of “informal’’ unpublicized meet-

6

ings, unpublished proposals, private phone calls, and pri-

vate memoranda and letters that sometimes carried spe-

cific admonitions of secrecy. By these secret means the

railroads agreed upon the conspiracy’s goals of forestall-

ing self unloaders and barring private docks and trucks.

By the same secret means the railroads decided to take

such implementing steps as agreeing not to grant a com-

modity line haul rate to private docks, agreeing not to

sell or lease land for use as a private dock, agreeing not

to grant lower dock handling rates to self unloaders,

agreeing to harass truck movements of ore, and applying

pressure and threatening economic retaliation against any

railroad that indicated it might abandon the conspiracy.

B. Proceedings In the Instant Case And the Criminal Case

Because of a falling out between two of the conspira-

tors, the conspiracy was uncovered in 1980. The instant

civil cases were then brought, thousands of pages of in-

criminating documents were obtained from the defend-

ants’ own files, and the trial judge wrote lengthy opin-

ions detailing the facts and finding the defendants sub-

ject to the antitrust laws. In addition, a criminal indict-

ment was filed by the federal government. The senior

trial judge in that case ruled the defendants’ actions were

not immune from the antitrust laws, and the Court of

Appeals for the D.C. Circuit affirmed. Four defendants,

three of which are respondents in this case, pleaded nolo

contendere rather than face trial."

1The four were Conrail, the Baltimore & Ohio Railroad, the

Chesapeake & Ohio Railroad, and the Bessemer & Lake Erie Rail-

road. One defendant, the Norfolk & Western, went to trial and

obtained a directed verdict of acquittal because the trial judge felt

the government failed to show it had joined the conspiracy. The

trial judge in the Pinney case thereafter reached an opposite assess-

ment of the evidence against the Norfolk & Western, and the ques-

tion is sub judice in consolidated actions being heard in Philadelphia.

7

REASONS FOR GRANTING THE WRIT

I. By Immunizing The Conspirators’ Denial of Commod-

ity Line Haul Rates to Private Docks, The Sixth Circuit

Has Acted In Conflict With the D.C. Circuit and Has

Contravened Clear Congressional Intent

The most important method used to exclude private

docks from handling ore was the defendants’ refusal to

grant them commodity line haul rates. The Sixth Cir-

cuit, however, has held the exclusionary denial of rates

immune from the antitrust laws, and has thereby re-

lieved defendants from most of their civil damages lia-

bility to private docks.

The Sixth Circuit’s immunity ruling directly conflicts

with the decision of the District of Columbia Circuit in

the criminal case. United States v. Bessemer & Lake

Erie Railroad Co., 717 F.2d 593 (D.C. Cir. 1983). There

the indictment listed nine categories of acts in further-

ance of the conspiracy. 717 F.2d at 597. Three of the

nine categories involved denial of commodity line haul

rates to private docks,* and the indictment was upheld in

its entirety by the D.C. Circuit. Thus the D.C. Circuit

has held the conspiratorial denial of line haul rates sub-

ject to antitrust liability, while the Sixth Circuit has held

the denial immune from antitrust liability.’

2 The three categories of such denial were that the defendants

refused to grant commodity line haul rates for movements of ore

from private docks, removed private docks from tariffs providing

commodity line haul rates on ore, and amended commodity line haul

tariffs to provide that they applied only from railroad docks.

3 The Sixth Circuit unsuccessfully tried to distinguish the D.C.

Circuit opinion, saying “We do not find our holdings necessarily at

odds with those in U.S. v. Bessemer involving entirely different

considerations of the role of the United States in the criminal

enforcement of the Sherman Act.” Petitioners’ Appendix at 28a-

29a, n.15. However, any such “different considerations of the role

of the United States in criminal enforcement” have nothing to do

with whether the conspiratorial denial of a line haul rate is immune

8

The Sixth Circuit’s decision also conflicts with this

Court’s decision in Continental Ore Co. v. Union Carbide

& Carbon Corp., 370 U.S. 690 (1962). There the Court

ruled that, even if an act is lawful when committed in

isolation, it is not lawful when committed as part of a

broader scheme: ‘[A]cts which are in themselves legal

lose that character when they become constituent elements

of an unlawful scheme.” 370 U.S. at 707. Here the

denial of commodity line haul rates to private docks was

one of several means used to implement a broader overall

conspiracy to bar private docks, trucks and self unloaders.

Even assuming the denial of rates would be lawful stand-

ing alone, it was unlawful as part of defendants’ overall

scheme.*

The Sixth Circuit’s ruling also contravenes the will

of Congress in two ways the Circuit did not even dis-

cuss. First, when enacting the Reed-Bulwinkle Act, 49

U.S.C. § 10706, Congress explicitly made clear that agree-

ments limiting service were not to be immune from the

antitrust laws. Representative Bulwinkle said:

the Act would not make possible carrier agreements

to limit and reduce service to the public. S. 110 as

originally introduced and as passed by the Senate

authorized the approval of agreements as to matters

of service. Objection was made to such agreements

.... 94 Cong. Rec. 4033 (1948) (extension of re-

marks). (Emphasis added. )

To obtain passage of the Act, said Bulwinkle, its sup-

porters

proposed that the bill be amended so as to restrict

its application to rate conferences and nothing else.

from antitrust laws. If the denial of rates is immune, it is immune

regardless of whether a case is criminal or civil, and if it is not

immune, it lacks immunity regardless of whether a case is criminal

or civil.

4 The Sixth Circuit did not mention Continental Ore.

9

This having been done by amendment in the House,

subsequently accepted by the Senate, the bill no

longer applies to agreements as to service matters,

... - 94 Cong. Rec. 4033 (1948) (extension of re-

marks). (Emphasis added. )

j The lack of immunity for agreements to limit service

is fatal to the conspiracy, for there could be no commod-

ity line haul service without commodity line haul rates.

By agreeing to deny commodity line haul rates to private

docks, the defendants were agreeing to deny them com-

modity line haul service. Such denial of service is not

immune under Reed-Bulwinkle.

Furthermore, because the defendants knew that no ore

ever moved via the much higher priced class rate service,

by denying commodity rates and service to private docks

the defendants were de facto denying them any service.

Again, such denial is not immune.

Second, the Sixth Circuit thwarted Congress’ intent

that there be no agreements limiting a railroad’s right

of independent action and Congress’ intent that no rail-

road coerce another into agreeing not to exercise its right

of independent action. The Congressional intent was ex-

plicitly stated in the Reed-Bulwinkle Act itself* and in

its legislative history.®

° The Commission “may not approve an agreement. . . establish-

ing a procedure for determination of a matter through joint consid-

eration unless that (Commission finds that each party to the agree-

ment has the absolute right under it to take independent action

either before or after a determination is made under that proce-

dure.” 49 U.S.C. § 10706(d) (2).

* The Senate Report says the House bill was changed “to make it

unmistakably clear that no agreement between carriers establishing

a procedure for the determination of any matter through joint

consideration shall be approved unless assurance is provided that

each carrier party to the agreement shall have the free and unre-

ital ieee

10

Here the railroads’ secret agreements contained no pro-

visions according any right of independent action.

Rather, the railroads agreed that no carrier would act

independently, and they brought economic pressure to

bear on any railroad that considered granting a commod-

ity line haul rate to a private dock. None of this was

even mentioned by the Sixth Circuit.

li. The Sixth Circuit’s Ruling On Keogh Concededly Con-

flicts With Decisions of Other Circuits and Is Incon-

sistent With This Court’s Decision in Square D

The Sixth Circuit ruled that the Keogh doctrine bars

suits not just by shippers, but by competitors. The Cir-

cuit conceded that this ruling is contrary to other cir-

cuits. Petitioners’ Appendix at 17a.

The Sixth Circuit also seriously misapplied this Court’s

recent decision in Square D Co. v. Niagara Frontier

Tariff Bureau, Inc., 476 U.S. 409 (1986), which the ap-

peals court relied upon. In Square D, the present amici

strained right to take independent action.” Senate Report No. 44,

p. 15, 80th Cong., 2d Sess. (1948).

Representative Bulwinkle made clear that the right of independent

action must be preserved against coercion. He said:

The charge made against the railroads in the Georgia case is

that they combined and conspired to fix rates by coercion... .

A combination or conspiracy of that kind would not be pro-

tected or immunized by S.110.

S.110 does not authorize the Interstate Commerce Commission

to approve rate conferences that are used in a conspiracy to

fix rates by coercion... .

There is nothing in the bill which would prevent issuance of an

injunction against coercion . .. whether accomplished by a rate

bureau or by any other means. 94 Cong. Rec. 4033-4034 (1948)

(extension of remarks); see 94 Cong. Rec. 4032 (1948) (exten-

sion of remarks).

Senator Reed similarly emphasized that:

This bill does not give any immunity to any coercive combina-

tion. Paragraph 6 leaves such a combination subject to the

antitrust laws, just as it is today. 93 Cong. Rec. 6614 (1947).

11

submitted a brief pointing out that Keogh had never ap-

plied to suits by competitors even though “bottleneck

monopolists” had often tried to use it to bar actions by

competitors who had been foreclosed from introducing

cheaper and better products and services. The amici

urged that, if the Court reaffirmed Koegh, it should not

apply Keogh to competitors. And, in a brief authored

by counsel for the Chessie system in this case, the Square

D defendants candidly acknowledged that “courts have

viewed competitor cases as distinctly different” from

shipper cases.

With this information before it, the Square D Court

said not less than twelve times that Keogh bars suits by

shippers,” but never even hinted that Keogh bars suits

by competitors.

Furthermore, the Court reaffirmed the application of

Keogh to shippers not because the doctrine was wise, but

because it was a long standing part of the “settled legal

context” in which Congress had legislated. Congress, said

the Court, had long known of but had not changed Keogh.

476 U.S. at 423.

Application of Keogh to competitors has not been part

of any settled legal context known to but not changed by

Congress. Rather, until the Sixth Circuit’s opinion, all

the law was that Keogh did not apply to competitors.”

7 In addition, the Court quoted language from Georgia v. Penn-

sylvania Railroad Co., 324 U.S. 439 (1945), stating that Keogh

applies to suits by shippers.

*In support of its Keogh ruling the Sixth Circuit urged that the

ICC is the sole source of rights for competitors. That argument is

remarkably mistaken. As Congress made clear when enacting the

Reed-Bulwinkle Act, competitors have rights under the Sherman

Act when railroads act outside the immunity granted by Reed-

Bulwinkle. In addition this Court and others have ruled that com-

petitors have rights and remedies’ under the Sherman Act even

though they may also have ICC rights and remedies. See Square D,

supra, 476 U.S. at 419-20; ICC v. American Trucking Associates,

Ine., 467 U.S. 354, 360 (1984).

— ] } ' . a: sll " .

That was the settled legal contex which Congress ng

PW of but did not en ings ¥ regard > an? »* . ‘

Keogh to competitors.®

Il. The Sixth Circuit’s Decision on Standing Is Unprece-

dented And Contrary To Decisions of This Court

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13

court has held that injured competitors (who were the

announced targets of a conspiracy and often were named

in conspiracy meetings and documents) lack antitrust

standing to base a suit on all the components of the con-

spiracy. The Sixth Circuit’s ruling also flies in the face

of this Court’s holding in Continental Ore that a plaintiff

cannot be forced to attack only parts of a conspiracy:

'P)laintiffs should be given the full benefit of their

proof without tightly compartmentalizing the vari-

ous factual components and wiping the slate clean

after scrutiny of each. ‘[T]he character and effect

of a conspiracy are not to be judged by dismember-

ing it and viewing its separate parts, but only by

looking at it as a whole.’ Continental Ore Co. v.

Union Carbide & Carbon Corp., 370 U.S. 690, 699

(1962). (Emphasis added. )

The Sixth Circuit’s decision also conflicts with this

Court’s ruling in Blue Shield of Virginia, Inc. v.

McCready, 457 U.S. 465 (1982). There a conspiracy to

bar psychologists from insurance reimbursement caused

injury to a consumer of psychological services. The con-

sumer was held to have standing because her injury “was

inextricably intertwined with the injury the conspirators

sought to inflict on psychologists and the psychotherapy

market.” 457 U.S. at 484.

Here actions against self unloaders caused injury to

private docks and trucking companies; actions against

private docks caused injury to trucking companies; and

the injury to each group “was inextricably intertwined

with the injury the conspirators sought to inflict” on

other groups. Yet the Sixth Circuit has said that no

group has standing to assail intertwined actions that

were taken against another group but that also harmed

the first group. This holding conflicts with McCready.

14

IV. The Sixth Circuit’s Decision Nullifies Congress’ In-

tent That the Ratemaking Process Be Open to Public

Participation

The defendants’ conspiracy was hatched and main-

tained in secret. Public notice was not given of proposed

agreements or of meetings to discuss them. Decisions

were reached at secret “informal meetings.”” Admonitions

of confidentiality were issued. The defendants’ agree-

ments were never published. Shippers and competitors

received no opportunity to comment. The secrecy and

lack of notice attending the conspiracy were charged by

the government in the criminal case and were set forth

in an opinion by the trial judge in this case.

The secrecy and lack of notice were inconsistent with

prerequisites for immunity established by Congress. The

legislative history of the Reed-Bulwinkle Act makes ex-

plicit that a ratemaking process open to participation by

the public was a Congressionally ordained condition of

immunity.”

Representative Bulwinkle said:

I read the other day the astonishing statement that ‘the bill

permitted carriers to get together in secret some dark night.’

Needless to say this is absolutely incorrect. The bill provides

for complete publicity at every conference to protect the rights

of the public. 93 Cong. Rec. 3969 (1947) (extension of re-

mvwrks (Emphasis added. )

The Senate and House Reports also show Congress’ view that

rate bureaus must give all interested parties “a full opportunity

to be heard” in regard to rate adjustments. Senate Report

No. 44, p. 11 (1948); House Report No. 1100, pp. 9-10 (1948).

The Reports add thst ‘one of the principal functions” of the

rate bureaus “is to serve as media through which the railroads

confer with their skippers and consult their wishes and neess

before reaching their é«terminations with respect to rates. ai

Ibid. ;

Finally, Representative Bulwinkle pointed out that the conference

method of ratemaking permitted by the bill “furnish[es] a method

by which any shipper, small as well as large, can keep track of

proposed changes through regularly published dockets listing all

15

The Sixth Circuit, however, immunized the conspira-

tors from significant liability to injured parties despite

the conspiracy’s total inconsistency with Congress’ re-

quirement of a ratemaking process open to public partici-

pation. The Circuit thereby thwarted Congress’ intent

that an open process be a precondition of immunity."

V. The Sixth Circuit’s Opinion Is Inconsistent With Deci-

sions of This Court and Courts of Appeal Regarding

The Use of Bottleneck Monopoly Power

The railroads had bottleneck monopoly power at two

different levels. They had a monopoly over the business

of providing dock services for ore, and monopolies over

the business of transporting ore inland to steel mills. This

dual bottleneck monopoly was used to prevent market

entry at three levels: to forestall self unloaders from

carrying ore; to preclude private docks from handling

ore; and to preclude trucks from carrying ore inland.

The railroads thus used their bottleneck monopolies to

stifle technological progress and cheaper prices at three

levels and to prevent competition with themselves at the

dock and inland transport levels.

The use of bottleneck monopoly power at one or more

levels of an industry to bar competition, technological

progress and cheaper prices at other levels has become a

proposals.” 94 Cong. Rec. 4033 (1948) fextension of remarks). He

also said the conference method of ratemaking provides “a place

where any shipper . . . may present his views on proposed changes

to all interested carriers.” Jd. at 4033. He and Senator O’Mahoney

stressed that small shippers would be at a particular disadvantage

in the absence of these procedures. Jd. at 4033; see 94 Cong. Rec.

8414-15 (1948).

11 The Circuit’s proffered justification for thwarting Congress

was its statement that Pinney and Litton had waived claims that

defendants had not adhered to open procedures. Petitioners’ Ap-

pendix at 28a. Even if the Circuit’s statement regarding waiver is

factually accurate, this cannot excuse a federal court from ignoring

the explicit intent of Congress.

16

frequent occurrence in crucial regulated industries such

as the telephone, electric power and railroad industries.”

When such use of bottleneck power has been challenged

in antitrust cases, this Court and courts of appeal have

regularly made plain that there is neither regulatory

immunity nor Keogh protection for the use of bottleneck

power at one level to bar competition at another level.

See, e.g., Otter Tail, supra; Clipper Express, supra; City

of Kirkland, supra; City of Groton, supra; Essential

Communications, supra.

In the present case, however, the Sixth Circuit has

granted both regulatory immunity and Keogh protection

to bottleneck monopoly actions by which conspirators used

a stranglehold over one level of an industry to obtain an

equal stranglehold over a second Jevel, with corresponding

stifling of competition, lessening of technological innova-

tion, and higher prices. In so acting the Sixth Circuit

has come squarely into conflict, on questions of national

economic importance, with the above cited decisions of

this Court and courts of appeal.

12 See Otter Tail Power Co. v. United States, 410 U.S. 366 (1973) ;

Litton Systems, Inc. v. AT&T, 487 F. Supp. 942 (S.D.N.Y. 1980),

aff'd 700 F.2d 785 (2d Cir.), cert. denied 464 U.S. 1073 (1983) ;

Clipper Express v. Rocky Mountain Motor Tariff Bureau, Inc., 690

F.2d 1240 (9th Cir. 1982), cert. denied, 459 U.S. 1227 (1983) ; City

of Kirkwood v. Union Electric Co., 671 F.2d 1173 (8th Cir. 1982),

cert. denied 459 U.S. 1170 (1983); City of Groton v. Connecticut

Light & Power Co., 662 F.2d 921 (2d Cir. 1981); Essential Com-

munications Systems, Inc. v. AT&T, 610 F.2d 1114 (3d Cir. 1979) ;

Frontier Enterprises, Inc. v. Amador Stage Lines, Civil No. S-83-

940 MLS (E.D. Cal., October 2, 1985); Trans-Kentucky Transpor-

tation Railroad v. Louisville and Nashville Railroad Co., 1983-2

Trade Cases § 65, 476 (E.D. Ky. 1983) ; United States v. AT&T, 461

F. Supp. 1314 (D.D.C. 1978); Marnell v. United Parcel Service of

America, 260 F. Supp. 391 (N.D. Cal. 1966).

be oe

17

CONCLUSION

For the above reasons, this Court should grant cer-

tiorari.”

Respectfully submitted,

LAWRENCE R. VELVEL

(Counsel of Record)

58 Stillwater Drive

Nashua, New Hampshire 03062

(508) 470-3070

BRUCE J. ENNIS

KIT ADELMAN-PIERSON

DAVID HANDZO

JENNER & BLOCK

21 Dupont Circle, N.W.

Washington, D.C. 20036

(202) 223-4400

Counsel for Amici

August 10, 1988

13 Review is warranted even if the Sixth Circuit was correct in

ruling that, because petitioners in this case allegedly knew of the

conspiracy, the doctrine of fraudulent concealment is inapplicable

to them and the federal statute of limitations bars them from

recovering under the federal antitrust laws. The Ohio antitrust

statute provides that there shall be no statute of limitations under

the state antitrust laws, and there would therefore be no bar to

recovery of double damages under the state laws by petitioners if

the Sixth Circuit was wrong in ruling that the defendants’ actions

are immune under paramount federal regulatory law. In any event,

the evidence shows that the amici had no knowledge of the con-

spiracy, which was fraudulently concealed from them. Amici’s

actions, therefore, are not barred by the statute of limitations.