Opposition Brief — Bessemer & Lake Erie Railroad Co. v. Wheeling-Pittsburgh Steel Corp.

No. 93-643

IN THE

Siuprenw Comet of the United States

OCTOBER TERM, 1993

BESSEMER & LAKE ERIE RAILROAD COMPANY.

Petitioner,

v.

REPUBLIC STEEL CORPORATION, ef al..

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

BRIEF IN OPPOSITION OF RESPONDENTS

C.D. AMBROSIA TRUCKING COMPANY,

ERIE-WESTERN PENNSYLVANIA PORT AUTHORITY

AND CODAN CORPORATION, AND TAURO

BROTHERS TRUCKING COMPANY

LAWRENCE R. VELVEL DRUCE J. ENNIS, JR.

MICHAEL L.. COYNE DONALD B. VERRILLTI, JR.

27 Hickory Lane CARL S, NAI

Wind! 1, NIL 03087 KIT A. P!

Counsel foi C.D. Ambrosia TH it \ A

Truel: gy Conipan 1, Ee C= JENS VC

Western Pennsuluamaa GOL T th Sti

Port Authoj ti a) (] Washin mn, UD

Codan Ce rporation (202) 689-6000

JERRY S. COHEN Counsel of Record

\

ANN C, YAHNER

COHEN, MILSTEIN, I[AUSFELD

& TOLL

1401 New York Avenue, N.W.

Suite 600

WW «lt

hin: . iC. 20065

Counsel for Tauro Brothers

Trucking Company

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

BEST AVAILABLE COPY

QUESTIONS PRESENTED

1. Whether the holding of Keogh v. Chicago & N.W.

Ry. Co., 260 U.S. 156 (1922), should be expanded to bar

antitrust damages for any party—customer or competitor

—when: (a) plaintiffs did not challenge the lawfulness

of any rate filed with the Interstate Commerce Commis-

sion and did not seek any rebate of alleged filed-rate

overcharges; (b) damages were not measured by refer-

ence to hypothetical regulated railroad rates; (c) the jury

was specifically instructed that liability could not be prem-

ised on rate-related claims: and (d) the court of appeals

“conclude[d] from the evidence produced that .. . plain-

tiffs proved at trial an antitrust conspiracy that was not

grounded in rate-related claims.”

2. Whether, assuming Keogh is expanded to bar such

antitrust damage claims by shippers, it should further

be expanded to bar damages for competitors, where: (a)

this Court’s decisions and those of the lower courts have

consistently declined to apply Keogh to competitor claims;

(b) the competitor claims do not create the risk of dis-

criminatory rebates that was the concern in Keogh, and

(c) the competitors’ claims are not measured by reference

to hypothetical rates that would require Interstate Com-

merce Commission approval.

3. Whether Illinois Brick Co. v. Illinois, 431 U.S. 720

(1977), should be extended to bar the antitrust damage

claims of the steel company plaintiffs, notwithstanding

that the court of appeals in this and a related case held

those steel companies to be directly-injured victims of a

conspiracy to exclude competition.

(i)

il

RULE 29 STATEMENT

Pursuant to Rule 29.1, there are no parent or sub-

sidiary corporations to be listed.

TABLE OF CONTENTS

Page

pO Nee gy | ea iv

i ce cuetebebesueiisoimminan 1

a csccueaeuispunaiminies 2

B. District Court Proceedings ....................... ANIA So g

DR ee 9

Me MEINE BID occ cecececcecceccoceceeeensvenceeceseroses 9

3. Post-trial Proceedings ..................................... *

C. The Third Circuit’s Decision ................................. 11

REASONS FOR DENYING THE WRIT ................. 12

I. THE COURT OF APPEALS CORRECTLY

APPLIED SETTLED LAW RESPECTING

iss scan ossccerssiveceveedbapseussvere: 12

A. The Limits of the Keogh Doctrine Are Well-

Established and Were Properly Respected

by the Court of Appeals... teats ae 12

B. There Is No Need For Plenary Review of the

Court of Appeals’ Holding That Keogh Does

Not Bar Damages In Suits Brought By Com-

a a A OREM 20

Il. B&LE’S ILLINOIS BRICK ARGUMENT IS

INAPPLICABLE TO THE COMPETITOR

PLAINTIFFS, AND INCORRECT WITH RE-

SPECT TO THE STEEL COMPANIES ............. 24

SO IT vcevevssversvcersesssevuveccnes <a A Ea Re scaak 27

(iil)

iv

TABLE OF AUTHORITIES

Cases Page

Associated General Contractors v. California

State Council of Carpenters, 459 U.S. 519

TIED isoncsnivintin-cqpadasnaoieredteeneemaiiedata tanta eee ie 26, 27

Barnes v. Arden Mayfair, Inc., 759 F.2d 676 (9th

eee AMIR EN tine! eS estat as 15

C.I.R. v. McCoy, 484 U.S. 3 (1987) ..-....022002. eee eee 18

Capital Freight Serv. v. Trailer Marine Trans-

port, 704 F. Supp. 1190 (S.D.N.Y. 1989) 0.000... 15, 24

City of Groton v. Connecticut Light and Power

Co., 662 F.2d 921 (2d Cir. 1981) ...... elec errrer 15, 22, 23

City of Kirkwood v. Union Electric Company, 671

F.2d 1173 (8th Cir. 1982), cert. denied, 459

Sis i aaa 15, 22, 23

City of Mishawaka, Indiana v. Indiana & Michi-

gan Electric Company, 560 F.2d 1314 (7th Cir.

1977), cert. denied, 436 U.S. 922 (1978) _........... 15

Clipper Exxpress v. Rocky Mountain Motor Tariff

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

denied, 460 US. 1287 (1968)...............---...-...---.... 15, 23

Concord v. Boston Edison Co., 915 F.2d 17 (1st

Cir. 1990), cert. denied, 499 U.S. 931 (1991).... 23

Dart Drug Corp. v. Corning Glass Works, 480 F.

Supp. 1091 (D. Md. 1979) —............ Suecmaamaninatdeions 26

Delaware & Hudson Ry. Co. v. Conrail, 654 F.

ee Ci Seas BED cicnevectistniseeniacicenss 15, 24

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

oo) Be mis Be ie Se... neers 22

Federal Maritime Comm’n v. Seatrain Lines, Inc.,

ee es ee MN ince cavaccccepaceecieohansssnchisceans 14

Fontana Aviation, Inc. v. Cessna Aircraft Co., 617

i- £¢ We, ge A. Pen 26

Frontier Enterprises, Inc. v. Amador Stage Lines,

~ 624 F. Supp. 137 (E.D. Cal. 1985) —................... 24

Georgia v. Pennsylvania R.R. Co., 324 U.S. 439

IIIIOE cits cachictoeceanatseen oasucsadpenibeaiadiaaenamnana 13, 20, 21, 23

H.J. Inc. v. Northwestern Bell Telephone Co., 954

F.2d 485 (8th Cir.), cert. denied, 112 S. Ct. 2306

2, EAST TS Ee CORRS eu ae Renata nn Mee ee RENN 14

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) .... 24, 25,

26, 27

EY A

Vv

TABLE OF AUTHORITIES—Continued

Page

In re Wheat Rail Freight Ry. Antitrust Litig., 759

F.2d 1305 (7th Cir. 1985), cert. denied sub nom.,

Little Crow Milling Co. Inc. v. Baltimore and

Ohio R.R., 476 U.S. 1158 (1986) ......000000. oo. 14

Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156

RUN eer ee passim

Lifschultz Fast Freight, Inc. v. Consol. Freight-

ways Corp. of Delaware, 805 F. Supp. 1277

(D.S.C. 1992), aff'd mem., 998 F.2d 1009 (4th

ME RARE RE Rare ashes ele SOI eae 17, 18, 24

Litton Systems, Inc. v. AT&T, 700 F.2d 785 (1983),

cert. denied, 464 U.S. 1073 (1984) .....0 15

Marneel v. United States Parcel Serv. of America,

Inc., 260 F. Supp. 391 (N.D. Calif. 1966) ........ 24

Nat'l Gerimedical Hospital & Gerontology v. Blue

Cross of Kansas City, 452 U.S. 378 (1981)... 14

Petrol Stops Northwest v. Continental Oil Co.,

1978-2 Trade Cases { 62,304 (D. Col. 1978) .__.... 26

Pinney Dock and Transport Co. v. Penn Central

Corp., 838 F.2d 1445 (6th Cir.), cert. denied,

ee Shy ee ID sete ocean passim

Square D Co. v. Niagara Frontier Tariff Bureau,

Inc., 476 U.S. 409 (1986) _............ EOE 13, 14, 20

Square D Co. v. Niagara Frontier Tariff Bureau,

Inc., 760 F.2d 1347 (2d Cir. 1985) _........00... 21

Trans-Kentucky Transport v. L & N R. Co., 581

FP. Supp. 769 (E.D. Ky. 1968) ...............-....-------.-- 15

United States v. Bessemer and Lake Erie R. Co.,

GRE Fee OOO CI. Cir, TIGR) nnncccceccnccvccecnresececsess 2, 6,8

United States v. Philadelphia Nat’l Bank, 374 U.S.

UD ESO vaste cao iee cee ea eae ere 14

Miscellaneous

ABA Antitrust Section, ANTITRUST LAW DEVELOP-

BIT Cee BOD ven ovesbeeendeces ecco 25, 26

IN THE

Suprenw Cut of the United States

OCTOBER TERM, 1993

No. 93-643

BESSEMER & LAKE ERIE RAILROAD COMPANY,

‘ Petitioner,

REPUBLIC STEEL CORPORATION, ef al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

BRIEF IN OPPOSITION OF RESPONDENTS

C.D. AMBROSIA TRUCKING COMPANY,

ERIE-WESTERN PENNSYLVANIA PORT AUTHORITY

AND CODAN CORPORATION, AND TAURO

BROTHERS TRUCKING COMPANY

Respondents C.D. Ambrosia Trucking Company (Am-

brosia), Erie-Western Pennsylvania Port Authority and

Codan Corporation (Erie), and Tauro Brothers Truck-

ing Company (Tauro) respectfully oppose the petition

for certiorari.

STATEMENT

There is nothing “extraordinary” about this antitrust

Case-—except, perhaps, the audacity and scope of the

illegal conduct at issue. In a 1989 jury verdict, Petitioner

Bessemer & Lake Erie Railroad (B&LE) was held re-

sponsible for its leading role in a destructive 25-year

2

conspiracy that unlawfully monopolized the transporta-

tion of iron ore to this nation’s steel mills.’ In a prior

criminal case, B&LE pled nolo contendere to antitrust

charges based on its role in the conspiracy. See United

States v. Bessemer and Lake Erie Ry. Co., 717 F.2d 593

(D.C. Cir. 1983).

The Third Circuit’s judgment in this case does not

warrant plenary review. B&LE does not dispute the trial

court’s finding that “[l]iterally thousands of documents,

from the railroads’ own files, establish beyond dispute the

existence of an illegal conspiracy.”* Nor does B&LE

challenge the Third Circuit's holding, agreeing with the

D.C. Circuit in the criminal case, that the Interstate

Commerce Act afforded the conspirators no antitrust

immunity. B&LE neither denies its role in the conspiracy

nor questions the fairness of the proceedings that awarded

compensation for its effect. B&LE instead asks this Court

to immunize its misconduct from treble damages through

a sweeping extension of the Keogh doctrine. Even with

respect to this issue, however, B&LE does not challenge

the instructions given the jury. Instead, B&LE seeks to

manufacture a need for plenary review by presenting an

incomplete and seriously distorted picture of what was

decided below.

A. The Facts

Traditionally, iron ore in mud-like form was trans-

ported from mines in Michigan, Minnesota and eastern

Canada across the Great Lakes on ships known as “bulk-

1 Although B&LE describes itself as a “small, 200-mile railroad,”

it was one of the largest carriers of iron ore in the nation during

the period in question, and was established for the principal pur-

pose of transporting ore from Lake Erie to the steel mills of Ohio

and Pennsylvania.

* Appendix to Petition for Certiorari (Pet. App.), 97a (opinion

denying motion for judgment notwithstanding the verdict).

—————————

ers.” On arrival at docks on the south shore of Lake

Erie, the ore was unloaded by huge and extremely ex-

pensive equipment, including large cranes known as

huletts. From the docks, B&LE and other railroads trans-

ported the ore to steel mills in Ohio and Pennsylvania.’

So long as ore remained in mud form, this transportation

system was largely insulated from competition because the

railroads controlled the huletts needed to unload the

“bulker” ships, and the rail lines from the docks to the

mills.

In the early 1950s, the advent of “pelletized” ore por-

tended three important changes in ore transportation.

First, because pelletized ore could be unloaded with a

conveyor belt carried on the ship (rather than huletts on

the docks), a larger and more efficient type of vessel—

the “self-unloader”—could replace traditional bulkers. Sec-

ond, because huletts and other heavy equipment were no

longer necessary to unload ore, “private docks” not

owned by the railroads could compete for iron ore busi-

ness without facing the entry barrier of prohibitive cap-

ital investments. Third, because railroads could not bar

private docks from dealing with motor carriers, trucks

could compete with railroads for transportation of ore to

the mills. Pelletized ore therefore made possible a new

transportation system—self-unloaders, private docks, and

trucks—that could move ore at a cost far lower than

the monopoly rates charged by the railroads.

The railroads’ own documents demonstrate their collec-

tive determination to squelch this threat to their monop-

% Other railroads, including the New York Central (NYC), the

Chesapeake & Ohio Railway Co. (C&O), the Baltimore & Ohio

Railroad Company (B&O), the Norfolk & Western Railway Com-

pany (N&W), Penn Central Corp., and the Consolidated Rail Cor-

poration (Conrail), also transported ore and were defendants in

this case. Defendants other than B&LE settled before trial, or were

dismissed from the case.

4

oly profits. As early as 1956, the railroad conspirators

recognized the risk of a “switch in the movement of raw

ore from 100% in bulk freighters . . . to substantial

self-unloader movements.” Court of Appeals Appendix

(CA App.) 6460. Concerned that “other shippers may

enter the picture and self-unloaders may . . . go to other

[nonrailroad] docks,” the railroads convened secret meet-

ings at which they concluded that “something must be

done to overcome the threat such inexpensive facilities,

which could spring up anywhere, are to our established

ore facilities and charges.” CA App. 6462. Indeed, rail-

road documents confirm their fear that “the economies

involved [would entice] additional public docks in the

iron ore trade to compete with the railroads, [which was]

the cause of the greatest alarm” to the conspirators. CA

App. 6576."

The railroad conspirators’ response to this threat was

extensive and closely coordinated. To forestall the pro-

liferation of private docks, the railroads agreed to place

restrictive covenants in leases or sales of railroad-owned

dock properties to “limit[] the commodities to be han-

dled” by those who leased such properties. CA App.

6479. Such restrictions were a principal means by which

the conspiracy achieved its objectives. Thus, for example,

one railroad leased dock property to a nonrailroad but

provided it could not be used as a “site for handling and

storage of . . . iron ore and coal received in lake vessels.”

CA App. 6589; see also CA App. 6480.

For years, the railroad conspirators blocked efforts by

Respondent Erie to buy or lease an abandoned railroad-

owned dock for a self-unloading iron ore facility. One

railroad conspirator described the land sought by Erie as

of “great strategic value to any party hoping to put to-

gether a pellet handling facility.” CA App. 7138. Per-

* See also, CA App. 6460, 6890, 7460, 2459-60, 2464-65, 2470,

2442-44, 6528, 6575, 6596.

5

ceiving “grave dangers . . . inherent in giving any non-

railroad operator access to facilities suitable for the han-

dling of iron ore pellets,” CA App. 7482, the conspirators

agreed to “resist” any sale or lease “in the absence of

protective measures to prevent the use of any Erie water-

front property for coal and ore purposes.” CA App.

7155. Thus, the railroads refused to sell Erie the dock

unless the deed was “restricted so no competitive coal

or ore facilities might be erected.” CA App. 6889. As

one conspirator boasted to the others, “[w]e have strongly

resisted for years all proposals to sell or lease the Erie

Ore dock.” CA App. 7952.

The railroad conspirators also suppressed competition

by agreeing to boycott private docks. Once the possibility

of unloading pelletized ore on private docks became a

real threat, several railroads, in furtherance of the con-

spiracy, cancelled competitively priced rail service from

those properties to the steel mills.° Other railroads con-

sistently refused to provide competitive rail service from

private docks to the mills.° Railroad documents make

clear that these actions were taken for the express purpose

of suppressing the development of self-unloader technol-

ogy and competition from private docks.’

5 The B&O railroad eliminated such service from three private

docks because it “would not have any control over the charge that

may be assessed against self-unloaders that may discharge iron

ore at these particular spots.” CA App. 6464, 6469.

®CA App. 6527, 6535, 6876, 6895, 7994, 8256.

7™CA App. 8413 (competitive rai] service from private docks

“would unquestionably result in private docks being preferred’’).

Iron ore was never transported under general railroad “class rates”

(which were “catch-all rates” applicable to any commodity not

otherwise specifically provided for), because those rates were two

to three times higher than the “iron ore line haul” rates. B&LE

concedes that without iron ore line-haul rates the private “docks

were not economically viable.” Pet. at 14 n.9.

6

Ambrosia, Tauro and other trucking companies were

also targets of the conspiracy. One railroad memorandum

warned that “[w]le do not want to provide an area at

which a self-unloader dock for iron ore pellets may be

constructed which, in turn, might be used to truck iron

ore.” CA App. 7151, 7278. Conspirators cautioned that

an unrestricted lease of railroad-owned property to a

would-be competitor “would, in effect, create a [non-

railroad] dock, and the ore could. . . be trucked.” CA

App. 7475. A leading conspirator warned “[t]here is one

thing about rates from a private facility which has al-

ways bothered me, and that is the possibility of trucking.”

The railroads feared that providing competitively priced

service from a non-railroad dock would enable such docks

to handle pelletized ore, which in turn “might influence

a movement by truck.” CA App. 6626. The president

of one conspirator railroad warned the president of an-

other that there were “many other facets of [a particular]

proposal which are disturbing, including the possibility of

trucking ore from a private facility.” CA App. 7461.

The conspirators also agreed to refuse to accept any

self-unloaders at their docks,® or to charge the same dock

handling rates for self-unloaders as for bulkers, thus im-

posing charges for unloading services neither required nor

performed by the docks for those vessels. See United

States v. B&LE Ry. Co., 717 F.2d at 601 (noting that

this conduct was illegal and not immunized by the Inter-

state Commerce Act). They undertook this course for

the specific purpose of suppressing incentives to develop

self-unloaders by eliminating cost savings self-unloaders

would otherwise have accomplished.

The railroads agreed to forego independent action, and

used coercion to ensure fealty to the conspiracy’s objec-

8 B&LE refused to handle self-unloaders at Conneaut, Ohio.

Penn Central refused to handle self-unloaders at Ashtabula. CA

App. 7453. N&W refused to handle self-unloaders at its Huron

Dock. CA App. 6495, 7391, 6894, 7311, 7317.

7

tives. For example, the conspirators convened a meeting

in 1971 in response to a proposal by C&O to lease private

dock space to a potential competitor. A B&LE memoran-

dum reports a “negative reaction” of the conspirators that

was “immediate and vocal.” One railroad indicated that

it had “resisted similar pressures to establish comparable

arrangements at the ore docks at Erie.” The conspirators

threatened “rate wars” on commodities important to

C&O’s revenues if C&O implemented its proposal. CA

App. 7456. A follow-up letter from the president of one

railroad noted that C&O’s proposal was “of great concern

to... all of the major Eastern lines,” and reiterated that

the “competitive reaction of other rail carriers would be

immediate, maybe even over-compensatory.” CA App.

7460-7462. C&O’s proposal was withdrawn.

B&LE was integral to this conspiracy from its incep-

tion, and participated in every significant conspiratorial

meeting. CA App. 6457, 6483, 6631, 6897." B&LE also

went to great lengths, along with the other conspirators,

9 During the period of the conspiracy, B&LE was a wholly owned

subsidiary of U.S. Steel. Because U.S. Steel was the last steel

company to pelletize its ore, it had significant incentives to delay

the development of self-unloader technology in order to deprive its

competitors of a transportation cost advantage. CA App. 7496,

4317, 4324-27. B&LE chaired a special committee that blocked a

B&O proposal to handle self-unloaders. At B&LE’s instigation, the

conspiracy brought N&W back in line when it began to handle a

few self-unloaders. CA App. 6883, 6887, 6894. B&LE called a meet-

ing to discuss ways to combat the competitive threat of trucks.

CA App. 135. B&LE then chaired a “Special Committee” that

monitored and laid plans to combat truck competition. The Com-

mittee met in B&LE’s offices, CA App. 7943, where B&LE’s report

on trucking was discussed. CA App. 7990, 7955. Acting as watch-

dog for the conspiracy, B&LE notified the other conspirators when

it discovered that the Pittsburgh & Lake Erie Railroad had estab-

lished competitive rail service from the private Pinney Dock. CA

App. 8394. The notice enabled conspirators (including B&LE) to

discuss retaliatory actions against the Pittsburgh & Lake Erie,

and the actions were then taken by the appropriate conspirators,

CA App. 8410.

8

to conceal the conspiracy “so as to avoid directing atten-

tion” to their actions “and possibly also lay ourselves open

to litigation.” CA App. 6496. Railroad officials repeat-

edly met in secret, deliberately ignoring the procedural

requirements of the rate bureaus (which permitted them

to set rates collectively only in public meetings), and re-

peatedly took steps to ensure that “[t]here was no com-

mittee record” of these meetings and that minutes were

“not disclosed to anyone in any manner.” CA App.

7313.”

Despite the railroads’ efforts, the conspiracy eventually

came to light as a result of a civil suit filed in 1980.

Criminal indictments, resulting in B&LE’s nolo contendere

plea, followed in short order.

B. District Court Proceedings

Between 1982 and 1984, five steel companies, three

private docks (including Erie), and three trucking com-

¥ panies (including Ambrosia and Tauro) filed separate

antitrust actions against B&LE and other railroads seek-

ing treble damages for injury inflicted by the conspiracy.

The cases were consolidated in the Eastern District of

Pennsylvania.

10The conspirators’ conduct violated the Interstate Commerce

Act not only because the conspirators shaped their strategies in

clandestine meetings that were not subject to public scrutiny, but

also because the conspirators agreed to forego their right to deal

independently with private docks and trucks, with obedience to

that agreement enforced through coercion by the conspirators. See

generally United States v. Baltimore & Ohio R.R., 538 F. Supp.

200, 207-09 (D.D.C. 1982), aff'd sub. nom. United States v. BELE

Ry. Co., 717 F.2d 593 (D.C. Cir. 1983). Thus, as the jury specifi-

cally found, B&LE’s conduct in the conspiracy was not “reason-

able” under “the regulatory policies under which defendant op-

erated.” Indeed, the jury found that B&LE lacked even a “good

faith belief” that its conduct “was required by ICC regulations.”

CA App. 1902,

ic aeaeeeceataees cence aainammemamiiinaaainiiaaiel

1. Pretrial Proceedings

The district court dismissed several damage claims be-

fore trial. In particular, applying Keogh v. Chicago &

N.W. Ry. Co., 260 U.S. 156 (1922), the court dismissed

“fajll rate-related claims asserted by the steel company

plaintiffs,” i.e., all claims in which plaintiffs sought a re-

bate of overcharges actually paid to the railroads for

tariffed services. See Pet. App. 21a, 29a.

2. Trial Proceedings

Trial commenced in May 1989. The liability phase

lasted six weeks. The jury heard the testimony of dozens

of witnesses, and reviewed thousands of documents (most

from the railroads’ files). At the close of the evidence,

the trial court gave careful and lengthy instructions in-

forming the jury that B&LE and the other conspirators

would be entirely immune under the antitrust laws “for

agreements and understandings related to tariffs and re-

lating to agreements affecting tariffs as long as they were

in compliance with the Rate Bureau procedures and con-

sistent with that.” CA App. 5002.

The district court charged the jury that, in addition to

immunity under the Interstate Commerce Act, B&LE

could claim the benefit of the Keogh damages bar to the

extent plaintiffs sought a rebate for alleged overcharges:

[O]nce a rate is being charged pursuant to a duly

filed tariff which has not been disapproved by the

Interstate Commerce Commission, then it is conclu-

sively presumed so far as the law is concerned that

that charge is a reasonable one. And what that means

is that nobody can claim damages under the antitrust

laws or any other law—no shipper who pays rail-

road rates, who pays freight charges to a rail-

road—can complain to have been damaged either by

the antitrust laws or by other laws merely by the alle-

gation that those charges were higher than they

should have been. As long as those charges were

pursuant to a duly filed tariff, they are presumed to

10

be reasonable; and the place to challenge their rea-

sonableness is with the Interstate Commerce Commis-

sion and not in a court of law in an antitrust case.

CA App. 4982. The court specifically repeated the

charge that “nobody can make a claim for damages

measured by or based upon the fact that they paid a rate

authorized by an ICC-approved tariff by claiming that

that rate was too high.” CA App. 5029-30.

The liability jury returned verdicts in favor of all

plaintiffs except one dock company (Reaney). The jury

specifically found, in a series of interrogatory responses,

that B&LE participated in the conspiracy to suppress

competition in the transportation of iron ore by delaying

the development of self-unloader technology, precluding

competition from private docks, and impeding truck com-

petition, and that this conduct was a material cause of

injury to all plaintiffs (except Reaney). The jury ex-

pressly found that B&LE’s conduct was not undertaken in

conformity with the rate bureau procedures of the ICA,

and was not premised on a good faith belief that its con-

duct was within this ICA immunity.

A separate damages jury was then empaneled. Using

typical methods of damage calculation, plaintiffs estimated

the costs, prices and profits that would have existed but

for the illegal conspiracy. Erie, Ambrosia, Tauro and the

other competitor plaintiffs estimated the profits they would

have earned on the iron ore business from which they

were foreclosed. The steel companies estimated the trans-

portation cost savings they would have achieved had they

been able to use competitors of the railroads. Plaintiffs’

damage estimates were carefully integrated to preclude

duplicative awards. For example, no dock or truck com-

pany claimed iost profits on business claimed by another

dock or truck company. The damages jury awarded some,

but far from all, of the damages sought by plaintiffs—and

expressly denied certain categories of damages.

icine

1]

3. Post-trial Proceedings

B&LE challenged the liability and damages findings in

a motion for judgment notwithstanding the verdict. The

district court rejected the motion, concluding that “[l]it-

erally thousands of documents, from the railroads’ own

files, establish beyond dispute the existence of an illegal

conspiracy . . . to prevent self-unloading vessels, private

docks, and trucking firms from gaining a foothold in the

transportation of ex-lake iron ore.” Pet. App. 29a.

With respect to Keogh, the court acknowledged that

“(rjailroad rates and charges which are subject to the

jurisdiction of the Interstate Commerce Commission are

conclusively presumed to be reasonable, hence the defend-

ant cannot be held liable for damages under the antitrust

laws because a plaintiff has been required to pay such

rates or charges.” Pet. App. 95a. But, the court held,

these issues were fully explained to the respective

juries, and there is no present contention that either

charge was erroneous. The liability jury found that

the defendant had, indeed, violated the antitrust

laws by conduct which was not immune from anti-

trust scrutiny, and the damages jury found that plain-

tiffs’ damages were attributable to non-immune con-

duct. ... These findings are amply supported by the

evidence.

Pet. App. 96a (emphasis added).

C. The Third Circuit’s Decision

The Third Circuit affirmed the district court in all re-

spects relevant to B&LE’s petition. The appeals court

recognized that the district court had dismissed all claims

seeking rebates of overcharges for tariffed services, and

affirmed the district court’s conclusion that “plaintiffs

proved at trial an antitrust conspiracy that was not

grounded in rate-related claims” of the kind barred by

Keogh. Pet. App. 34a (emphasis added). The court thus

applied the recognized distinction between “overcharge”

12

claims, which Keogh bars, and claims that regulated en-

tities sought to preclude market entry by new competi-

tors through a broad range of anticompetitive conduct.

Indeed, the court specifically held that “it is fully consist-

ent with Keogh . . . to accept these [railroad] rates as

lawful and nonetheless to conclude that through non-rate

activities, particularly the restriction on the sale or lease

of dock space and the refusal to deal with potential com-

petitors, the railroads effectively retarded entry of lower

cost competitors to the market.” Pet. App. 32a.

REASONS FOR DENYING THE WRIT

I. THE COURT OF APPEALS CORRECTLY APPLIED ©

SETTLED LAW RESPECTING KEOGH.

The Keogh issues raised by B&LE do not warrant

plenary review. B&LE opposed certiorari on similar ques-

tions five years ago in Pinney Dock and Transport Co. v.

Penn Central Corp., 838 F.2d 1445 (6th Cir.), cert.

denied, 488 U.S. 880 (1988), but now urges this Court

to grant review to adopt a sweeping ruling expanding

Keogh beyond its current well-established limits. As will

be demonstrated, plenary review is even less warranted

now than it was in Pinney.

‘A. The Limits of the Keogh Doctrine Are Well-Estab-

lished and Were Properly Respected by the Court

of Appeals.

B&LE’s principal plea for review rests on an unprece-

dented and untenable characterization of the Keogh doc-

trine, including its application to shippers in market pre-

clusion cases. The Third Circuit’s application of Keogh

was entirely correct, and presents no genuine conflict with

a decision of this Court or any court of appeals.

1. Keogh provides antitrust violators with a narrowly

circumscribed protection from treble damages. In every

case in which this Court has recognized a Keogh bar to

13

treble damages, a shipper complained that filed rates it

actually paid a carrier were inflated as a result of price-

fixing, and invoked the antitrust laws to seek what

amounted to a rebate of the allegedly excessive part of

the rate. In Keogh itself, the Court made clear that the

bar applied only to an individual shipper’s claims for

damages that, “like a rebate,” would refund to the shipper

the difference between the rate paid the carrier and the

lower rate the shipper allegedly would have paid the car-

rier absent the price-fixing. 260 U.S. at 162. In Georgia

v. Pennsylvania R.R. Co., 324 U.S. 439 (1945), the State

of Georgia sought damages as parens patriae on behalf

of its citizens for alleged rate overcharges resulting from

price fixing. And in Square D Co. v. Niagara Frontier

Tariff Bureau, Inc., plaintiffs alleged that the filed rates

they paid for motor carrier transport were inflated as a

result of price-fixing, and sought damages “measured by

th[e] difference” between the inflated rate and the rate

that allegedly would have been filed with the ICC absent

the price-fixing. 476 U.S. 409, 413 (1986).™

Keogh has been limited to cases where shippers ef-

fectively seek “rebates” of filed-rate “overcharges” because

Keogh’s policy rationales apply only in that narrow cir-

cumstance. The principal justification for the damages

bar is protection of “the paramount purpose of Congress

[in enacting the ICA]—prevention of unjust discrimina-

tion.” 260 U.S. at 163. That purpose “might be de-

feated” if one shipper recovered a de facto “rebate” of

filed rates by succeeding in litigation while other ship-

pers continued to pay the filed rate. Id. See also Square

D, 476 U.S. at 423 n.30 (“the Keogh concern” was with

antitrust damages “operating as a discriminatory rebate”);

11 As this Court noted in Square D, the Second Circuit, after

barring damages for tariff “overcharges,” remanded to the district

court to permit plaintiffs to “amend their complaints to state pos-

sible claims for damages not arising from the filed tariffs” paid

by the plaintiffs to the carriers. 476 U.S. at 417 n. 19; id. at 414.

The Second Circuit’s ruling was affirmed by this Court.

14

id. at 423 (“the expressed concern [was] about unfair

rebates”). Keogh also sought to protect the ICC’s regu-

latory prerogatives by precluding courts from speculating

as to what alternative shipper rates the ICC would have

approved for tariffed service in lieu of the excessive rates

caused by the antitrust violation. 260 U.S. at 163-164.

Limiting Keogh to shipper rebate claims is entirely

consistent with, if not required by, the established prin--

ciple that exemptions from antitrust liability are “strongly

disfavored and have only been found in cases of plain

repugnancy between the antitrust and regulatory provi-

sions.” '” Confining Keogh to these recognized boundaries

is also consistent with the clear import of Square D that

“Keogh . . . was unwise as a matter of policy” and per-

sists solely for reasons of stare decisis. 476 U.S. at 420,

423-424. As Square D makes clear, there is simply no

warrant for extending Keogh beyond its traditional nar-

row scope.

2. The limits of Keogh are equally settled in the courts

of appeals. Courts apply Keogh where shippers use the

antitrust laws to seek what amounts to a rebate for al-

leged overcharges paid as a result of price-fixing.” But

courts refuse to apply Keogh where—as here—plaintiffs

do not seek a rebate of the difference between what they

actually paid the carrier and what they would have paid

the carrier in the absence of price-fixing, but instead seek

to recover non-overcharge damages (lost profits or busi-

12 United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 350-

851 (1963); see also Nat. Gerimedical Hospital & Gerontology

Center v. Blue Cross of Kansas City, 452 U.S. 378, 388-389 (1981) ;

Federal Maritime Commission v. Seatrain Lines, Inc., 411 U.S.

726, 733 (1973).

13 F.g., In re Wheat Rail Freight Ry. Antitrust Litig., 759 F.2d

1305 (7th Cir. 1985), cert. denied sub. nom., Little Crow Milling

Co. Inc. v. Baltimore & Ohio R.R., 476 U.S. 1158 (1986); H.J. Ine.

v. Northwestern Bell Telephone Co, 954 F2d 485 (8th Cir.), cert.

denied, 112 S.Ct. 2306 (1992).

| |

15

ness losses) inflicted by anticompetitive behavior designed

to destroy competitors and suppress competition in a regu-

lated industry. See Barnes v. Arden Mayfair, Inc., 759

F.2d 676, 679 (9th Cir. 1985); Clipper Exxpress v.

Rocky Mountain Motor Tariff Bureau, 690 F.2d 1240

(9th Cir. 1982), cert. denied, 459 U.S. 1227 (1983):

Litton Systems, Inc. v. AT&T, 700 F.2d 785 (2d Cir.

1983), cert. denied, 464 U.S. 1073 (1984); City of Kirk-

wood v. Union Electric Company, 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): City of Mishawaka, Indiana y.

Indiana & Michigan Electric Company, 560 F.2d 1314

(7th Cir. 1977), cert. denied, 436 U.S. 922 (1978). In

each of these cases, the court rejected the claim that

Keogh should bar all antitrust damages—not just “over-

charge” damages—whenever market preclusion in a regu-

lated industry is at issue."

3. The Keogh rulings of the courts below expressly

followed this well-established body of law. The district

'* The distinction is also well established in the district courts.

See Capital Freight Serv. v. Trailer Marine Transport, 704 F.

Supp. 1190, 1192, 1197 (S.D.N.Y. 1989) (carriers’ “various anti-

competitive actions” give rise to treble “damages not for the in-

creased rates it was forced to pay, but for lost sales and profits

and the going concern value of its destroyed business”); Dela-

ware & Hudson Ry. Co. v. Conrail, 654 F.Supp. 1195, 1205

(N.D.N.Y. 1987) (“D&H seeks to establish that Conrail engaged

in a broad pattern of conduct specifically designed to eliminate

D&H as a competitor. The plaintiff’s damages will be measured

not by the difference between existing rates and some hypothetical

rates, but by business losses it has allegedly sustained”); Trans-

Kentucky Transport v. L@N R. Co., 581 F.Supp. 759, 767 (E.D.

Ky. 1983) (“Plaintiffs do not ask the Court simply to find specific

rates to be unreasonably high and to lower them retroactively to

reasonable levels. Instead, plaintiffs seek to establish that defend-

ants engaged in a broad pattern of conduct, including but not

limited to the manipulation of rates, specifically designed to destroy

the TTI project as a competitor. Damages would be measured ...

by the business losses plaintiffs have sustained”).

16

court applied Keogh to dismiss all claims seeking rebates

for alleged overcharges by the railroads for tariffed serv-

ices provided to the shipper plaintiffs. The court was

careful to instruct the jury that “no shipper who pays rail-

road rates, who pays freight charges to a railroad[,] can

complain to have been damaged either by the antitrust

laws or by other laws merely by the allegation that those

charges were higher than they should have been,” so long

as the rates had been filed with the ICC. But the court

properly permitted the jury to consider all “non-rate

claims” by shippers and competitors, i.e., all claims that

did not seek rebates for alleged overcharges for railroad

services actually provided to plaintiffs. CA App. 4982. ‘

The Third Circuit also observed the well-established

distinction between overcharge rebate claims and market

preclusion claims. As the court held, “it is fully consist-

ent with Keogh . . . to accept these [railroad] rates as

lawful and nonetheless to conclude that through non-rate

activities, particularly the restriction on the sale or lease

of dock space and the refusal to deal with potential com-

petitors, the railroads effectively retarded entry of lower

cost competitors to the market.” Pet. App. 32a. B&LE

does not dispute that Keogh has no application to railroad

conduct precluding the emergence of private docks—and

as the Third Circuit concluded, that conduct “eliminated

much of the economic incentive to use self-unloaders.”

Pet. App. 19a.

As the Third Circuit recognized, the policies underlying

Keogh have no application here. None of the plaintiffs

sought damages for the difference between what shippers

paid the railroads and what they would have paid the

railroads absent the conspiracy. And none of the dam-

ages awarded even remotely pose a threat of rate dis-

crimination among shippers. Damages to the dock and

truck company plaintiffs could not amount to a de facto

rebate because those plaintiffs did not pay any railroad for

any carrier services. The primary injury suffered by the

a |

17

steel company plaintiffs was the transport savings they

lost because they could not use self-unloaders to transport

ore across Lake Erie. The ICC has no power to compen-

sate the steel companies for those damages. Nor does the

other component of the steel companies’ recovery—lost

savings for dock handling charges—implicate Keogh poli-

cies. The steel companies based their damages case en-

tirely on estimates of handling charges they would have

paid to nonrailroad docks absent the conspiracy to sup-

press the development of such docks. Because those rates

were entirely unregulated, no judgment as to what lower

rates the ICC would have approved for the service is

required.

4. There is no basis for B&LE’s claim that the Third

Circuit’s application of these settled principles “creates a

division among the courts over whether the doctrine ap-

plies to conspiracies involving mixed rate and non-rate

activities to exclude competitors from a market.” Pet.

at 10 (emphasis added). Suggesting that the present

case “created” a conflict, B&LE inexplicably ignores the

large number of prior -cases that, like the Third Circuit

here, confine Keogh to overcharge rebate claims by ship-

pers. Instead, B&LE points to the Sixth Circuit’s 1988

opinion in Pinney Dock and Transport Co. v. Penn Cen-

tral Corp., 838 F.2d 1445, and the Fourth Circuit's

unpublished affirmance of Lifschultz Fast Freight, Inc.

v. Consol. Freightways Corp. of Delaware, 805 F.Supp.

1277 (D.S.C. 1992), aff'd mem., 998 F.2d 1009 (4th

Cir.) (Table), pet. for cert. filed, No. 93-456 (Oct. 4,

1993), as its sole evidence that “the holding below flatly

. . . conflicts with holdings of at least two other circuits.”

Pet. at 14. The alleged conflict is illusory.

Lifschultz Fast Freight presents no conflict. The Fourth

Circuit plainly did not consider its unpublished ruling to

be in conflict with the law of any other Circuit because

Fourth Circuit rules require publication if a decision

“creates a conflict with a decision in another circuit.”

Fourth Circuit Internal Operating Procedure 36.4(v). In-

18

deed, the court’s order plainly states that “[u]npublished

opinions are not binding precedent in this circuit.” *”

Moreover, the district court in Lifschultz raised Keogh

as an alternative ground for decision after granting sum-

mary judgment on all claims because the plaintiff failed

to produce evidence to prove them. Lifschultz Fast

Freight, Inc. v. Consol. Freightways Corp. of Dela-

ware, 805 F. Supp. 1277, 1289-94 (D.S.C. 1992). The

unpublished Fourth Circuit order generally approved the

district court’s reasoning as “sound,” but did not adopt

or endorse the court’s Keogh ruling. For these reasons,

the unnecessary discussion of Keogh in the district court’s

Lifschultz opinion plainly creates no need for plenary re-

view. In any event, Lifschultz involved a direct attack

on the legality of filed rates. It thus does not raise issues

remotely like those raised in the present case. 805 F.

Supp. at 1282, 1294.

Nor does the Sixth Circuit’s 1988 decision in Pinney

present a genuine conflict. In that case, as in this one,

the court held that Keogh did not bar damages for ex-

clusionary conduct such as refusal to lease dock sites to

plaintiffs and harassment of competitors. 838 F.2d at

1457. The Sixth Circuit then stated that “it would...

appear that” other claims like those at issue here would

be barred by Keogh, but “[rJather than requiring out-

right dismissal of these claims,” the court gave plaintiffs

“an opportunity on remand to amend their complaint in

order to clarify these allegations to state a claim for dam-

ages consistent with Keogh.” 838 F.2d at 1458. Thus,

the Sixth Circuit did not finally resolve the issue on

which B&LE claims there is a conflict.

15 See Dkt. No. 92-2523 (4th Cir. July 6, 1993), slip op. at 2.

As this Court has noted, unpublished dispositions have “an as-

sumed lack of precedential effect.” C.J.R. v. McCoy, 484 U.S. 3, 7

(1987). In the Fourth Circuit, the court will cite unpublished

opinions only in “unusual circumstances” and “disfavor[s]” liti-

gants’ citation of them. Fourth Circuit Internal Operating Pro-

cedure 36.6,

19

Moreover, because Pinney was decided on interlocutory

review, the Sixth Circuit did not have the benefit the

Third Circuit had here of a full factual record after an

extensive trial and detailed jury interrogatory responses

finding specific misconduct that plainly falls outside the

scope of Keogh. Accordingly, the factual underpinnings

of the decision were different in Pinney respecting the

critical issue on which B&LE posits a conflict. For these

reasons, Pinney’s status is far from clear.

Plenary review is also unwarranted because the pur-

ported “conflict” identified in B&LE’s petition already

existed when this Court denied certiorari in Pinney.” In

the five years since certiorari was denied in Pinney,

no court of appeals has agreed with Pinney’s suggestion

that Keogh might extend beyond overcharge rebate claims.

At most, Pinney represents a divergence in the applica-

tion of Keogh to a single, extremely complex factual set-

ting that is unlikely ever to recur. For this reason, Pinney

is unlikely to be of continuing significance. There is thus

even less reason for plenary review now than there was

when certiorari was denied in Pinney.

Furthermore, as B&LE informed the Court in opposing

certiorari in Pinney, because rail rate bureaus no longer

exist, issues of the sort raised in the petition will not

recur with any frequency.’ The regulatory landscape and

the role of the ICC have been dramatically altered by

congressional action removing rate regulation and rein-

stating competition in the transportation marketplace. It

is thus particularly inappropriate for B&LE to argue that

Keogh should now be expanded to insulate broad anti-

competitive conspiracies, in an era of substantial con-

traction of rate regulation as a policy tool in the rail and

trucking industries.

16 Aside from the ruling below, every other case rejecting the

suggestion that Keogh applies beyond “overcharge” cases had

already been decided prior to Pinney.

Brief in Opposition in No. 88-72, at 3, 6, 12.

20

In short, there is simply no need for plenary review

of whether Keogh should be expanded beyond its tradi-

tional and well-recognized limits.

B. There Is No Need For Plenary Review of the Court

of Appeals’ Holding That Keogh Does Not Bar

Damages In Suits Brought By Competitors.

Nor should this Court grant review to consider B&LE’s

alternative claim that Keogh bars treble damages in suits

brought by competitors, rather than customers, of a regu-

lated carrier. That issue is not presented because Keogh

does not apply at all to the-exclusionary conduct injuring

shippers and competitors on which the jury’s damage

awards were based. See Point I.A. supra. Review is un-

warranted in any event because the Third Circuit’s re-

fusal to extend Keogh to competitor claims was plainly

correct and in accord with settled law.

1. In Keogh itself, the Court held that “[t]he legal

rights of shipper as against carrier in respect to a rate

are measured by the published tariff.” 260 U.S. at 163

(emphasis added). The Court made clear that “[u]nless

and until suspended or set aside, this rate is made for

all purposes, the legal rate, as between carrier and ship-

per.” Id. (emphasis added). Similarly, in Square D, the

Court emphasized that “Keogh simply held that an award

of treble damages is not an available remedy for a private

shipper claiming that the rate submitted to, and approved

by, the ICC was the product of an antitrust violation.”

476 U.S. at 422 (emphasis added).

Notwithstanding the Court’s obvious care in both Keogh

and Square D to limit the Keogh damage bar to cases

in which shippers claim overcharges, B&LE argues that

the 1945 decision in Georgia v. Pennsylvania R.R. Co.,

324 U.S. 439 (1945), extended the Keogh doctrine to

competitor suits. That argument is plainly wrong.

The state of Georgia sought damages from the carrier

only as a shipper and as parens patriae representative of

other shippers. Georgia sought damages for itself only in

21

its “proprietary capacity” as “a shipper of goods and com-

modities.” ** Georgia sued the railroad on behalf of its

citizens, not to recover lost income or profits, but to re-

cover amounts paid to the railroad that were higher than

the amounts the railroad would have been paid absent the

conspiracy. The Court barred these damage claims solely

because “[t]he legal rights of a shipper against a carrier

in respect to a rate are to be measured by the published

tariff.” 324 U.S. at 453 (emphasis added).

The Georgia Court said nothing to indicate that Keogh

would bar competitors’ damage claims. Thus, Georgia

cannot plausibly be read as extending Keogh to com-

petitor suits. As the Third Circuit correctly noted in this

case, “it is obvious that in rendering its decision the

court’s focus was on Georgia’s claims as a customer.”

Pet. App. 37a & n.6.

This Court’s rulings make clear that the policy justifica-

tions for Keogh simply do not apply in the competitor

context." Competitors such as the dock and truck plain-

tiffs seek damages resulting from lost profits and other

business losses, not a rebate of customer overcharges re-

sulting from the difference between rates charged and

hypothetical rates that would have been charged by the

carrier in the absence of an alleged antitrust activity.

The dock and truck company plaintiffs in this case, for

example, did not pay any rates, filed or otherwise, to

the railroads. No rate payment is “exacted” from these

181944 Term, Brief on Behalf of State of Georgia’s Motion for

Leave To File Amended Bill of Complaint at 7, 10, 27-28.

19 As Judge Friendly noted in his opinion for the Second Circuit

in Square D, in “suits by competitors rather than users of the

service ... many of the considerations relied upon in Keogh would

not apply.” Square D Co. v. Niagara Frontier Tariff Bureau, Inc.,

760 F.2d 1352, 1856 (2d Cir. 1985). In addition, the difference be-

tween competitor claims and shipper claims was squarely brought to

the attention of this Court in Square D, see Amicus Brief of C.D.

Ambrosia Trucking Co. et al., in No. 85-21. Thus, the Court was

clearly aware of that difference when it repeatedly described Keogh

as a doctrine applicable to “private shippers.”

22

competitors. See Keogh, 260 U.S. at 163. Because the

competitors have paid nothing to the defendant, they

obviously are not seeking rebates of overcharges. Like

any competitor, the dock and truck company plaintiffs

sought lost profits and business losses—well-established

measurements of damages that do not raise the issues

implicated in the customer context. Awarding such dam-

ages does not require any change in the rates set by the

regulatory body. The competitor simpiy recovers for

losses resulting from the antitrust violation.

2. The Third Circuit’s ruling is also in accord with

the well-recognized rule in the courts of appeals that

Keogh does not apply to competitor suits. The rule was

firmly established in the Third Circuit and elsewhere long

before the present case. See Essential Communications

Systems, Inc. v. AT&T, 610 F.2d 1114, 1116 (3d Cir.

1979). In Essential, the Third Circuit refused to extend

Keogh to competitor claims, concluding that “the filed

tariff rule has little or nothing to do with [a carrier’s]

duties under the antitrust laws toward its competitors

. . . competitors are not the intended beneficiaries of that

rule of public utility regulation.” 610 F.2d at 1121.

Essential recognized that “[t]here is no policy conflict,

actual or potential, therefore, between the section 4 Clay-

ton Act remedy and the anti-discrimination purposes of

the filed tariff rule” because “[t]he Bell System will not

be asked to disgorge to any customers any revenues de-

rived under the filed tariff . . . [and] can continue to

collect those revenues until a new tariff is filed.” Jd.

at 1122.

In City of Kirkwood v. Union Electric Co., the Eighth

Circuit agreed with Essential, holding that “[a] rule for-

mulated to ensure uniformity of rates as between cus-

tomers should not give an unfair advantage to a utility

in its dealings with competitors.” 671 F.2d at 1179.

The Second and Ninth Circuits have likewise concluded

that Keogh does not bar competitor damage claims. See

City of Groton v. Connecticut Light & Power Co., 662

23

F.2d at 929; Clipper Exxpress v. Rocky Mountain Tariff

Bureau, Inc., 690 F.2d at 1267.”

3. Certiorari is not warranted to resolve the purported

“conflict” between this well-established line of authority

and the Sixth Circuit’s application of Keogh to competi-

tor claims in Pinney. For reasons discussed above, it is

far from clear that Pinney presents a genuine conflict.

See pages 18-19 supra. Even if Pinney presents a technical

conflict on the competitor issue, guidance from this Court

is not needed. When this Court considered the petition for

certiorari in Pinney, the “conflict” between that decision

and a well-established body of contrary authority already

existed and this Court saw no need to grant review.”!

Nothing that has happened in the five years since cer-

tiorari was denied in Pinney should alter that judgment.

No court of appeals has followed Pinney in extending

Keogh to competitor claims—which is hardly surprising

given rate deregulation. Indeed, this aspect of Pinney

does not appear to have been applied in any other case

even within the Sixth Circuit. B&LE’s claim that the

Fourth Circuit adopted this position in Lifschultz is in-

correct, as demonstrated supra at pages 17-18.” Every dis-

20 B&LE’s claim that there is a “conflict among the circuits

concerning the application of Keogh to competitors’ claims arising

out of rates for electricity” is meritless. See Pet. at 19 n.13. The

one case B&LE cites as creating the conflict, Concord v. Boston

Edison Co., 915 F.2d 17 (1st Cir. 1990), cert. denied, 499 U.S. 931

(1991), did not even mention Keogh. Concord concluded, largely

as a matter of economic theory, that the conduct at issue there

did not violate the antitrust laws. Thus, Keogh, which bars

damages for conduct concededly in violation of the antitrust laws,

simply was not at issue. This Court’s denial of certiorari in 1991

in Concord casts considerable doubt on B&LE’s claim of a conflict:

City of Groton and Kirkwood—the cases allegedly in conflict with

Concord—were decided well before 1991.

21 The Second, Third, Eighth and Ninth Circuit decisions refus-

ing to extend Keogh to competitor suits all predated Pinney, and

all — Georgia v. Pennsylvania R.R. Co.

*° The competitor issue was not even mentioned by the Fourth

Circuit, which merely noted that the district court held as an

24

trict court to consider the question, except the district

court in Lifschultz, has rejected Pinney’s reasoning.~’ That

one district court in the last five years has cited Pinney

approvingly in an alternative holding certainly does not

justify plenary review, for the reasons discussed supra.

Pinney’s unwarranted extension of Keogh to competitor

Suits is plainly an aberration that has garnered no sub-

stantial following.”

II. B&LE’S ILLINOIS BRICK ARGUMENT IS INAP-

PLICABLE TO THE COMPETITOR PLAINTIFFS,

AND INCORRECT WITH RESPECT TO THE STEEL

COMPANIES.

B&LE alternatively suggests that the Court should

grant certiorari to determine whether Illinois Brick * bars

certain of the plaintiff steel companies’ claims. As B&LE

concedes sub silentio, its argument has no application

to the competitor dock and truck plaintiffs, or to National

Steel which owned its own fleet of self-unloaders. Even

with respect to the other steel companies, the argument

is meritless and provides no basis for granting certiorari.

“alternative ground” that the plaintiff’s claims were barred because

“the claims were collateral attacks on the rates and tariffs set be-

fore the Interstate Commerce Commission.” 1993 WL 241742, at 2.

*3 See, e.g., Capital Freight Serv., Inc. v. Trailer Marine Transport,

704 F. Supp. 1190, 1197 (S.D.N.Y. 1989); Frontier Enter., Inc. v.

Amador Stage Lines, 624 F. Supp. 137, 143 (E.D. Cal. 1985);

Delaware & Hudson Ry. Co. v. Conrail, 654 F. Supp. 1195, 1205

(N.D.N.Y. 1987) ; Marneel v. United States Parcel Service of Amer-

ica, Inc., 260 F. Supp. 391, 406 (N.D.Cal. 1966).

“4 As the United States noted in supporting en banc reconsidera-

tion before the Sixth Circuit in Pinney, Pinney’s position respect-

ing competitor suits is “puzzling and wrong” and “threatens proper

antitrust enforcement.” Memorandum of the United States as

Amicus Curiae in Support of Suggestion for Rehearing En Banc,

Pinney Dock and Transport Co. v. Penn Central Corp. (6th Cir.,

filed March 23, 1988).

°5 Illinois Brick Co. v. Illinois, 431 U.S. 720, 737, 744 (1977).

aan

25

1. In /ilinois Brick, this Court held that where a man-

ufacturer illegally overcharged a direct purchaser, an in-

direct purchaser down the distribution chain could not

recover under the antitrust laws on a claim that the

“overcharge” had been “passed on” to it. B&LE did not

argue in the trial court that //linois Brick applied to the

competitor plaintiffs. Similarly, in the Third Circuit,

B&LE only argued that “{u]nder Jilinois Brick and _ its

progeny, the steel company plaintiffs are barred from

recovering antitrust damages,” but never challenged the

dock and truck company verdicts, or the National Steel

verdict, on this basis. (App. Br. at 38 (emphasis added) ).

Accord id. at 42-54 (same). In this Court, B&LE again

argues only that //linois Brick bars “the steel companies’

award in this case.” Pet. at 22; see also id at 23, 28.

B&LE thus may not obtain plenary review of the ques-

tion whether I/linois Brick forecloses the damage awards

to the dock and truck company plaintiffs, and to Na-

tional. To the extent B&LE seeks review with respect

to the competitor plaintiffs, its petition must be denied.

It is clear, in any event, that JI/linois Brick has noth-

ing to do with the claims of the competitor plaintiffs.

They claim that the railroad conspirators took numerous

acts (e.g., refusal to lease docks to private operators that

would allow trucking of iron ore; restrictions prohibiting

such facilities from handling iron ore; etc.) that were

specifically aimed at eliminating them as low-cost com-

petitors. See generally ABA Antitrust Section, ANTITRUST

LAW DEVELOPMENTS 654-55 (3d Ed. 1992) (“Illinois

Brick does not preclude recovery by a plaintiff who is a

competitor of the defendants rather than a purchaser and

who does not seek to recover damages based on a passed-

on overcharge”).

2. B&LE’s arguments for plenary review are also com-

pletely unpersuasive with respect to the shipper plaintiffs,

the only plaintiffs against whom Illinois Brick was as-

Serted below. B&LE argues that the court of appeals

26

subsumed Iilinois Brick’s bright-line rule as a constituent

part of the standing test established in Associated General

Contractors v. California State Council of Carpenters,

459 U.S. 519 (1983) (“AGC”), and then posits a split

among the lower courts on this and related issues. This

conflict, however, is entirely contrived. :

Illinois Brick applies when a plaintiff's recovery re-

quires proof of overcharges passed down through a

chain of distribution. See ANTITRUST LAW DEVELOP-

MENTS, supra, at 654 (and cases cited therein).

The application of Illinois Brick outside this passed-on

overcharge context has not been an issue of significance

in the lower courts—to the contrary, only sporadic lower

court cases over the years have had occasion to even

consider the matter.”

The factual record in this case simply does not raise

an Illinois Brick issue with respect to the steel companies.

The railroads’ aim of preventing steel companies from

taking advantage of alternative technology and competi-

tors was achieved by a broad array of devices, including

refusal to sell or lease property to nonrailroad dock oper-

ators, imposition of lease restrictions to prevent docks

from handling iron ore from self-unloaders, refusing to

provide competitive rail service from private docks, re-

fusing to handle self-unloaders at railroad docks, and coer-

cion against railroads which were considering a departure

from the conspiracy. In seeking damages directly caused

by this conduct, the steel companies demonstrated that

they were direct purchasers of the railroad dock and trans-

port services, and potential direct purchasers of the sup-

pressed self-unloader and private dock transportation sys-

tem. The evidence simply does not permit the conclusion

that the steel companies were indirect purchasers.

26 See, e.g., Fontana Aviation, Inc. v. Cessna Aircraft Co., 617

F.2d 478 (7th Cir. 1980) ; Dart Drug Corp. v. Corning Glass Works,

480 F. Supp. 1091, 1101 (D. Md. 1979); Petrol Stons Northwest v.

Continental Oil Co., 1978-2 Trade Cases { 62,304 (D. Col. 1978).

_ —

27

B&LE thus has no plausible basis for arguing that the

Third Circuit’s ruling departs from this Court's prior

holdings or demonstrates a circuit conflict. The Third

Circuit did not hold that even where Illinois Brick ap-

plies, its bright-line rule may be ignored so long as the

AGC standing test is satisfied. Instead, recognizing that

the Illinois Brick rule did not apply on these facts, the

Court appropriately undertook the standing analysis re-

quired by AGC. In doing so, the court of appeals also

took into account the general concerns that underlie the

Illinois Brick rule—precisely as this Court did in AGC

itself. 459 U.S. at 543-44.

CONCLUSION

The petition should be denied.

Respectfully submitted,

LAWRENCE R. VELVEL BRUCE J. ENNIS, JR.*

MICHAEL L. COYNE DONALD B. VERRILLI, JR.

27 Hickory Lane CARL S. NADLER

Windham, NH 03087 KIT A. PIERSON

Counsel for C.D. Ambrosia THERESA A. CHMARA ;

Trucking Company, Erie- JENNER & BLOCK

Western Pennsylvania 601 Thirteenth Street, N.W.

Port Authority and Washington, D.C. 20005

Codan Corporation (202) 639-6000

JERRY S. COHEN * Counsel of Record

ANN C. YAHNER

COHEN, MILSTEIN, HAUSFELD

& TOLL

1401 New York Avenue, N.W.

Suite 600

Washington, D.C. 20005

Counsel for Tauro Brothers

Trucking Company

November 23, 1993