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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1993
- **Citation:** 510 U.S. 1032

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0614%3A04. Public record. Not legal advice.