Soo Line Railroad Company v. United States

COMPANY, LINE RAILROAD SOO Plaintiff, Association Labor Executives’

Railroad En- of Locomotive Brotherhood Intervenor-Plaintiffs, gineers,

v. In- of America

UNITED STATES terstate Commerce Defendants, Railway Com-

Chicago and North Western Chicago Rail- Western pany Great way Company, Intervenor-Defendants.

No. 4-67 Civil 318. Court District States Minnesota, D. Division. Fourth 30, 1968.

Jan.

Fordyce Crouch, Clay, W. Charles H. C. Peterson, Gehrz, Harold Robert G. and Magnuson Glennon, by Lindquist, Ed- & ward and Kenneth F. Kir- M. Glennon win, Minn., Minneapolis, for Soo Line Railroad Co. Goetz,

Vennum, Newhall, & Ackman by Minn., Vennum, Minneapolis, Thomas by Hickey Lyman, Mulholland, & Washington, C., Mahoney, William G. D. Railway for Labor Executives’ Associa- tion and Brotherhood of En- Locomotive gineers. Gen., Turner, Atty. Donald F. Asst. Atty., Foley, Patrick J. U. and John S. Wigger, Atty., Justice, Dept, H. D. for States; the nane, and Robert W. Gin- Counsel, Jr., Rush, Henri F. Gen. Kahn, Atty., and Fritz R. Associate Gen. Counsel, for Interstate Commerce Com- mission. 111., Chicago, Freeman,

Richard M. Wheeler, Wheeler Edward K. & Seaks, Washing- Wheeler ton, Robert G. Stringer, Donnelly C., and & D. Paul, Sharood, by Philip Stringer, St. Chicago Minn., for and North Western Railway Co. Patterson,

Winston, Strawn, Smith & Chicago, Kenny, 111., Edmund J. Goetteman, Harry Stearns & S. Paul, Minn., Stearns, Jr., Chicago St. for R. Great Western Co. HEANEY, Judge Before Circuit LARSON,

DEVITT, Judge Chief Judge. District OPINION Judge: HEANEY, Circuit is an This action Line Company Railway (Soo), Railroad Association, Labor Executives’ and Engineers Brotherhood Locomotive pursuant (1964) to 28 U.S.C. 2325 § enjoin Chicago of (NW) Chicago North Western (GW) Railway Compa- Great Western found, ther would serve an incentive generally, 28 U.S.C. §§ nies. See equipment ap- stimulate investment has been right-of-way, would assure a contin- proved Com- Commerce Interstate operations, en- uance of GW’s and would pursuant Inter- mission § Act, (1920), the NW to resources able Commerce Stat. 481 state Chicago operation of miles amended, 5(2). continued its 730 49 U.S.C. § as Dakota, Railway Company of branch lines in South mainte- and & North Western of ma- Chicago Railway nance which had heretofore been a Com- Great Western jor problem. The conclud- Etc., Commission pany Merger, Finance Docket — merger public in (April ed that was 23388, Report of the Commission 1967); Chicago terest. 20, Western & North Railway Company of Stock disputing plaintiffs, not —Issuance The while Obligation, Assumption Finance of merging a to the railroads and benefits 23389, Report of the Commis- Docket segment public, of the contend that 20, 1967) (hereinafter (April cited sion Soo, employees its and the it serves Commission) (330 Report I.C.C. as injured by merger, that will be subsequently official as withdrawn enjoined. They main it should thus be infra). 26, resi- opinion, The see note that re tain Commission erred principal office of (I) dence fusing: appli to consolidate this being Minnesota, Minneapolis, venue application with to cation the NW’s in this District. merge Chicago, Milwaukee,

lies with the St. Company Paul and Pacific Railroad arid GW, financial serious The faced with application Rock to control with its inability problems to solve an with Island; (II) impose more extensive to internally, unsuccessful conducted them Soo; for of the the benefit Chicago, negotiations merger impose (III) protective to labor condi Railroad Com- Island and Pacific Rock employees.1 for the of Soo’s tions benefit Soo, Island), pany (Rock and the St. (1946), generally, as See 60 Stat. 243 Railway Company. Louis-San Francisco (1966); amended, 80 U.S.C. Stat. merg- 1964, early proposed NW 1009(e), amended, 5 as U.S.C. § § tentatively er, were the terms (Supp. 1967). II July 24, accepted 1964. A on GW CONSOLIDATION. I. November, merger application, filed Contemporaneously hearings. by lengthy 1964, with the NW-GW followed 20, merger, sought merge April with to decision of NW Commission’s The gain the Milwaukee control found that substantial benefits argues merging railways, The it the Rock Island.2 would flow to the saving being approxi- abuse Com principal was an of discretion for the one year. mately $6,000,000 per mission to to consolidate the NW- The Com- refuse savings proceedings with those found would GW mission five-year period It and the Rock Island. over with- Milwaukee achieved urges shippers, erred in also of service to out sacrifice refusing permit primarily elimi- it to introduce evi from the would result duplicate proceeding side-by-side in this the effect facili- dence nation mergers.3 savings, fur- other The ties. protective Rock Island. after the Un- included did so 1. The labor announced, May against Pacific provisions ion dismissal or loss merge moving the Rock ex- with intended other and for benefits change proceeding required penses, employees Island. This continues. for locations, retraining job em- of certain light 3. In the decision the con- of our on displacement ployees, allowances and the set forth solidation issue reason separation not allowances support it, do believe not desiring to transfer. sepa- argument this consider rately. petition with the Com- filed a The NW gain seeking control mission Act, initial motion consolidate Interstate Commerce The Soo’s U.S.C. involving proceeding (1964), one does § “[t]he filed Commission conduct its Milwaukee was shall NW and approval Mil manner as will after stockholder such best con sought by proper dispatch had been duce to the of business waukee-NW management. justice.” motion and to the was denied ends of This Com January 13, 1965, brief, and mission and order dated rec ognize “good cause has not been shown.” the Commission’s refusal because “prejudice any petition consolidate to reconsider was denied sub February right any party pro stantial in an order dated purely ceeding speculative grounds preclude “it the Commission from properly performing responsibilities whether, or when NW-Milwaukee [the application] Cf., will under be filed.” of the Act.” Section Trucking request made after American A stockholder Asso. v. later United merger States, 1499, approval 77, 83, of the NW-Milwaukee 326 at 65 S.Ct. U.S. grounds 1501, rejected (1945); the was on the “that L.Ed. 2065 Federal 89 make does not vote of the stockholders Communications Commission v. Potts merger filing application Broadcasting Co., 134, the of such ville 309 U.S. any (1940). 437, more certain as when it will S.Ct. 84 L.Ed. 656 3, That order was dated June filed.” The issue was most consolidation re requests Subsequent for consoli 1965. cently Supreme by the discussed Court filing by the after the dation made merger in the B “Penn-Central” cases application of the NW-Milwaukee & O R. Co. v. U.S. merge appear spe to have been do not 372, 1100, 18 L.Ed.2d S.Ct. cifically upon.4 ruled (1967) (Preliminary Print), and Penn- motion to the The consolidate Soo’s Merger Central and N & W Inclusion proceedings with this one Rock Island Cases, 486, 602, August 17, dated was in an order denied 723, January L.Ed.2d 1968. The grounds that such consolida- on the merger approve Court refused to delay require tion an infinite “would grounds appeal on on the the first proceedings and in the instant decision had found that Commission affording process due not essential Erie-Lackawanna, the survival of disposition parties in the of record Hudson, and and Delaware proceedings and that infinite those Maine, Boston and was essential postponement herein the decision interest and that those roads unreasonable.” seriously would be so affected considering whether the Commis- competition merged company refusing sion its discretion abused they might survive not be able unless recognize consolidate, the absence adequate protective arrangements statutory requiring were explicit an directive Nevertheless, require of made.5 It consolidation. went on to § apparently proceedings. Nickel Plate The Commission Commis- opinion rejecting apparently request motion Soo’s sion viewed this aas pro- corollary postpone Rock Island to consolidate one to consum- ceedings, motion also referred mation of the Penn-Central until proceeding, (the had three smaller railroads Erie-Lacka- the NW-Milwaukee wanna, adequately Hudson, In the both motions. ruled on the Delaware and independent decision, Maine) light dis- an the Boston and had been of our assured required. is not this issue inclusion the Norfolk & cussion of Western- Pennsylvania merger. See, Nickel Plate Authority Company-Merger-New York of New Railroad 5. The Port York Cen- York, City Company, the Boston tral New Railroad 327 I.C.C. England Maine, New Council 528-29 request, Penn- requested denied the consolidation Commission again largely equating & Western- consolidation Central Norfolk exposure pre- sit and continual to concrete determine means of Commission disadvantages uations, develop serving protected roads on ‘the both through sequence per- policy permanent of lim basis before interim merger, mitting ited both numerous cases are consummation 678, supra, impressive.’ specifically H.R. Doc. No. determine whether significant disadvantage p. ought incorpo- roads to be 81. A the smaller proceedings ‘seldom if individual rated Norfolk and Western Clark, comprehen sufficiently system. produce ever Mr. Justice Penn-Central adequate Court, for the solution speaking noted: sive records for the “ * * importance.’ major questions The Commission has Id., Obviously, all at 82. without proceeded by or under ‘a master facts, plan’ aof satis relevant the chance consolidation the various regions. Following procedure factory disposition Al is diminished. has refused to consolidate though ICC has tools to assemble Region the Northeastern railroad employed complete .records, factual proceedings or control one into highly virtually none of them in these case.” including proceedings, interrelated States, supra, B & O R. Co. v. United power to consolidate the U.S. at 87 S.Ct. at 1107.6 Rather, common issues. cases rigidly segregated, leading concurring have been Mr. in a Brennan, Justice opinion, highly extraordinary critical of the Com to in the ICC to resort 7 resolving mission’s refusal to consolidate: terim conditions instead definitely three fate threat

“Although case-by-case adjudication * * * ”8 ened roads. advantages flexibility offer essential, then and had structure was request merely request post- to adjudica- gone through the motions of pone consummation of the Penn-Central tion.” merger. States, R. 386 B&O Co. v. United U.S. 6. The issue was referred to consolidation 1130, 25, 1100, 430 S.Ct. 18 n. 87 single in a sentence District Court (1967) (Preliminary L.Ed.2d 159 “Decision to all case: whether handle Print). giant proceed- these in one consolidations He also noted: sound in several rests or “ * * * competitive im- Evidence of only judgment subject of the Commission pact pro- in one has been withheld management pro- to its of the various ceeding appear pro- later to promote ceedings as to ultimate so ceedings evidence that in the form of solution fair to carriers and con- permitted company be must affected public interest, sistent with the a task company merge to to protect with another displayed which it has considerable anticompeti- itself, genuity.” Railroad Erie-Lackawanna impact merger will be tive later F.Supp. Company States, v. United strength light limited in increased (D.C.S.D.N.Y.1966). companies compete ability ”*** already merge. language allowed to 7. of Mr. Jus- We also note (foot- possibility 432-433, indicating at 1131 Id. at tice Brennan omitted). note the Interstate Commis- Commerce may give consideration sion informal part, Douglas, dissenting plans made 8. Justice for consolidation: .various has a similar observation: indications that ICC “There are systems. piecemeal, planned along hands- three “The Commission’s all for problem approach merger striking to the is the use off of these The most is, however, commanded of a chart Examiners the Penn-Central anticompeti- Transportation merger’s Act 1940. There evaluate Congress intended for all the no evidence tive which accounts effect Report, entirely planning and roads. Penn-Central remove smaller Appendix policy hardly said function T-2. It need Indeed, respect proceeding un- rail consolidations. ICC ignores position determined, lawfully mandate without such a if it had three-system preamble hearing, to the Act of that a notice 431-32, couraging Id. at 87 S.Ct. at 1130-1131 consolidation of the Nation’s (footnote omitted). railroads into a ‘limited number of systems.’ Under the 1940 remand, On the Commission ordered Act, the initiation of and con- acquire the Norfolk and Western solidation is left pre- the stock of the three railroads on themselves, carriers and the Commis- scribed terms. Norfolk & Western Rail- possesses power compel sion no car- Company York, Chicago, road and New merge. However, congres- riers to Company Merg- and St. Louis Railroad — sional directive for a limited number er, etc., (1967). 330 I.C.C. It systems railroad has not been re-approved merg- also the Penn-Central changed. only change The has been protective er but additional con- achieving goal. in the means of ditions the three smaller railroads * * *» Pennsylvania interim. Railroad Company Merger—New York Central — Ibid. Company, Railroad I.C.C. We believe the Penn-Central cas The District Court for the Dis- Southern distinguishable, es are but it seems that trict of New York sustained the Com- required, the Commission is not as a mat mission’s decision. Erie-Lackawanna law, regional ter of to consolidate all Company Railroad v. United merger proceedings. is, however, F.Supp. (October 19, 1967). .re quired impose protective those condi Supreme affirmed, Court Penn-Central tions which insure the Cases, supra, and & Inclusion N W stat- per survival of affected railroads before ing: mitting merger proceed.9 and the inclu- reorgani- part sion orders are of a vast There is merit to the contention transportation imple- zation of rail the Soo that consolidation menting congressional policy mergers pending of en- Midwest would have Lines, opinion Id. at tentative ternative Vice Chairman cision “In money to from judication.’ mission has consolidations; administered with a view to a be change all nating, nomic conditions in among portation system.’ pro that efficient service and foster sound eco- . co-ordinated # I.C.C. 228 vides that to Commission, such an ‘incongruous . addition Merger disjointed case-by-case approach. planning ^[*] in Great Northern would save for all which the the end of from the to consolidation of the sveral opinions . preserving adequate, economical, —Great ample authority Post, S.Ct. at 1137. Tierney, its to it is not (1967), approach could serve use Act to assert p. strictly provisions carriers; developing, transportation signifies Northern, time, effort, and 1128. The Com- a national trans- Act a ‘tentative’ de- suggests approach (1) straitjacketed proceedings: approach ad, parties to Pac. t would [I] dissenting to insure that a . ‘promote shall hoc ad- railroad change coordi- et an & . that and and al., al B. to . Id. at 292-93. fective lief from the adverse cumulative and means before the are left if and when our final lenged, approach, ly to northern P. R. as preme tive; would enable us to view the merger consummation of in the western a allow proceedings > road our considerations in the western rail- cross our views with each ‘tentative’ decision railroad sharper opposed say ‘We must 79 L.Ed. (4) mergers. us, Co., (2) effects of Court has States v. rail whether the courts would in combination with the first—(cid:127) could be used to insure that ef restructuring —to to after and central would inform all —if and to a competition speculation. 1023].” separate know courts and realignment; more realistic such fragmented, it Under Chicago, emphasized any merger. a is duty what a second or right orders in the West appropriate remained corridors or consolidated becomes ours 511 [55 gain M., As majority’s parties picture (3) repeated are chal St. perspec the Su decision wrong.’ general Lastly, parties would total, P. & after were third re Concerning thorough permitted and that a more consideration these facts Supreme impact their not held that overall on the area Court has serv- ed, must all current a better assessment of the cumulative Commission consolidate mergers, proceedings, we hold effects and third the second related judicial for that not an and a better review. abuse discretion basis it But, require did Commission refuse to do so here. con- and we can now solidation do so II. THE PROTECTIVE CONDI- if to do so abuse of its failure was an its THE FOR SOO. TIONS broad discretion. conceding Soo, while benefits reaching decision, our GW, must to the NW and con- though reluctance, necessity, give Examiner and Trial tended before weight argument merg- of the Commis Commission that the NW-GW late sion that consolidation this date conditions, er, imposition of without the delay.10 would cause a serious We must $1,700,000in from revenue divert (1) also consider: and, the GW needs it. sought years, for a number of but It re- stated that the diversion would merger partner, nor found no other capi- quire reduction of dividends available; (2) one now the benefits expenditures tal and the curtailment merging prompt of a decision rail expenditures equip- on maintenance of ways they are the areas serve clear right-of-way. diversion, This ment and injuries substantial, long from a maintained, make it less com- it (3) delay substantial; would be public. petitive and less able to serve Soo, its and the area it requested that conditions be fourteen adequately protected can serves benefit, for its on the NW-GW imposition protective proper condi conditions would and stated that indemnify tions; (4) the Commission has re losses and enable jurisdiction impose tained whatever effectively compete and continue protective additional are nec public interest. serve the essary given per the event NW is find- Trial Examiner’s A review merge mission to with the Milwaukee or excep- ings and the and recommendations Island;11 (5) control Rock analyz- helpful in taken thereto are tions being given opportunity ing In mak- decision. Commission’s present testimony impact as to the sug- review, intend to we do not mergers it in these the Milwaukee they gest proceedings; (6) and Rock Island findings obliged adopt and conclu- merger, importantly, most the NW-GW Examiner, but we Trial sions of the significance applicants while of findings con- and that his would note public they serve, and not of is such meeting closer to came much clusions importance materially that will it affect substantiality adequacy and the test of restructuring the Midwestern than those Commission. railways taking place which is now nor import that it such will neither serve Examiner, an exhaus- after Trial mergers pend support impede and or other hearing, found: tive eompeti- operate extensive region. over NW out- and tbe applicants and Island Eock final deci- Milwaukee state that a 10. The affect could proceeding is at of those come Milwaukee sion relationship among here carriers years away; and, the Eock least three jurisdiction involved, years away. Island, retain we shall This at five least herein, imposed by ei- challenged seriously the conditions review contention is not upon proper petition upon our ther the Soo. motion, modifica- make such and to own just appropriate, and tions as stated: “Since The Commission pro- reservation believe this is now involved reasonable.” North Western proper ceedings one. to be a both affiliated with to become imposition fifty-six points of certain routes, in com- [T]he tive serve necessary protective thirty- interchange conditions . are facilities at mon with * * * protect Chicago, from material points (with Min- those two at * * * * * sig- being diversion *. neapolis, [T]he Paul and Ashland St. [Chicago switching West- nificant), perform loss C.G.W. Great serv- another; partner and points as a co-solicitor for one ern] ices at common significant relationship element of diver- the most with the GW Soo’s connection; Implicit friendly is the loss of sion. therein a was that of friendly industry compete although a access to served and the GW Chicago or industries which consid- and the Twin C.G.W. for traffic between important Cities, they jointly latter in their alloca- in oth- er the solicit traffic including policies. areas, tion er in which It is clear that no con- areas competitor; principal im- dition which the Commission can is the now NW interchange pose preserve friendly they common could have .re- lationship points Minneapolis, for tied at Paul and Chi- thereto is the eco- St. cago; interchange nomic incentive to make between the GW it * *” Soo, Minneapolis, and the is accom- work. at through intermediaries; plished and Chicago Railway and North Western a that the Soo has direct connection Company Chicago Great Western GW, Chicago, has enabled Railway Company Merger, Report and and reliable fast service Hearing.Ex- Order recommended to and from on movements from the GW aminer, 23388, 23389, p. Finance Docket City Iowa, Wisconsin to Kansas (March 3, (hereinafter 1966) 99 Report cited as Omaha, competition with the NW. Examiner). The Examiner fund that substantial imposition He recommended the traffic would be diverted special four conditions for the benefit of from the Soo to the NW-GW because: (1) direct Soo: access to the Rose- (1) the lose as a Soo would the GW port GW; area over the tracks of partner co-solicitor”; (2) “and rate (2) interchange direct with the NW-GW changes by permit NW-GW Minneapolis yard; (3) at its West preclude participating the Soo from expedited interchange with the NW-GW originating terminating traffic at Chicago, (4) direct, feasible Roseport (3) park; industrial interchange economic with the Rock Is- time-consuming elimination of changes inter- Minneapolis land and Milwaukee at Chicago Minneapolis through the use of the NW-GW tracks would increase the NW-GW’s share of yards. rapid traffic because of more direct and service; (4) single .remaining creation He denied the requested by Soo, stating: line service NW-GW would cause shippers joint to favor it line where serv- “* * * [T]he (e. g., Soo-GW) currently ice used. relatively will leave Soo however, He concluded, that the diversion good competitive position as before would be less than that estimated * * * merger. extent, To the how- many shippers policy Soo because a have ever, protect such conditions do not Soo allocating traffic, of because the Soo fully diversion, from it is the examin- superior a track location in some has er’s conclusion that such losses will be instances and because the financial Soo’s consequences. de minimus and no of relationship with the Canadian Pacific * * *” (Emphasis added). many should enable it to meet of improvements operations service Id. at anticipated merger plan. under the applicants vigorous exception took imposed by

The Examiner then stated: to the conditions the Exam- industry states, Roseport iner,12 arguing: (1) in those and the forest operates 2,000 existing disrupt traffic where more than condition would low-density road, area, per much of it miles in the Twin Cities serving territory branch line in the movement of it cannot mit the Soo to invade low-grade up commodities im- present open the portant bulk serve, for the Soo at economy Roseport of the terri- to all industries direct service freight Island, tory. interchange In terms of annual reve- with Rock a new road, thirty-three per mile Line’s av- exposing indus nue Soo GW’s thus erage ap- along lower of either route to than the thirteen mile tries $20,- compet plicant $16,000 compared the Soo other solicitation — $18,000 ing railways; (2) for Great Western direct inter that the Minneapolis change North at for the Western. its with NW-GW yard net increase its annual ex would “Notwithstanding improving its finan by $186,000 require penses and would corporate helpful cial condition (3) capital expenditure $255,000; large, prosperous affiliation with a Chicago interchange in would railroad, Line, it be remem Soo must by $31,000 expense crease the NW-GW’s just bered, realizing now the bene interchange year; (4) per merger, of its [Footnote: fits Approved own at Rock and Milwaukee Island Commission Du Minneapolis substantially would increase Merger, & A. R. 312 I.C.C. luth S. S. expenses. annual the NW-GW’s (1960).] and, being considera considering Commission, ble to the which it value States in after recommendations, serves, it record, should not be undermined. Examiner’s thereto, important objections found: We believe it and the and services interest its facilities company merged [T]he Consequently, be sustained. probably able to divert a would conditions, imposing of the con short significant amount of traffic from * cessions recommended the examiner Line. [Somewhere Soo (which, respects, in some we consider per year $13,000 estimated between the over-compensatory), but nevertheless applicants $1,700,000 per ** * prevent undue erosion sufficient year by the estimated Soo.] * * * Line traffic under the increased Soo would not be ac- [T]he loss competitive pressures of which companied by proportionate reduc- merged capable.” company * * * would be tion costs. [I]t reduce the trains switch- number Report Commission, 44-46. at es, crew, power, the motive etc. As a rejected by conditions, The Examiner’s net result, the loss of revenue right related disproportionately higher than the * the Roseport to serve industrial traffic at * * Soo amount traffic involved. improved direct inter- and to Considering pro- modest returns changes Minneapolis operation duced [2.95% Soo conditions, Chicago. rejecting these during period and the 1961-1964] stated: low-density widespread expenses of a “* * large * lines, part of its some Contrary to the contention protective of the Soo Line (which openly seeks Line upon merged should be damages liquidated or at least their company. concessions) equivalent operating require ap- (c) Michigan “In does not section the States of and Wis- merger, plicants, price provides as the consin, their rail serv- competi- points. ice to make restitution to their at a number of It is im- * * portant copper and iron mines tors. par- objected the Examiner would 12. The also to the Examiner’s compensate report grounds tially for its loss. conditions on the dealing “In requests rejected with the of Soo It Roseport condition as non-applicant Line and the other car- being overcompensatory (worth $540,000 riers, course, are, concerned with operating $300,000 revenues and pri- relief for such carriers but our year), tending net revenues each and as mary public concern is with the in- discourage development the future transportation terest in the areas parks. industrial thereof, In lieu they among involves, serve. This other required that the NW-GW things, the admonition in section 5 just make available to the Soo on (2) (c) requiring us to consider ‘the terms, rights reasonable traffic or some proposed up- effect of the transaction economically operating arrange- other adequate transportation service to serving purpose ment for public’ ex- upon and ‘the effect public isting Roseport inclusion, shipment interest of customer or fail- whose include, ure to territory.’ other railroads in the of coke had heretofore handled * * * in connection with the GW. “Regarding inclusion, that, we consider rejected Minneapolis It the West con- intervening to the extent the railroads stating: dition trackage rights seek concessions, and certain other some which would re “Regarding request Line’s for di- quire additional under interchange merged rect com- 5(2) terms, section to arrive at final pany Minneapolis, requiring we are are, seeking effect, those railroads * * present * interchange be con- point inclusion. From this tinued via the intermediate services readily of view can more be seen that request Railway, intervening Minnesota Transfer railroads for compensating Northern, Pacific, concessions must be Great Northern measured, applicants’ no less than the Railway Transfer, subject, however, to proposal, by public criteria; interest arrangements par- such other as the enough merely say and that it is not agree might upon, ties involved that, intervening because an railroad subsequent approval .required our if subject will be injury, to some it is * * *” bylaw. entitled to restitution.” Id. at 36-38. Id. at 52. “ * * * Northern, applicants’ The Commission in Great [A] s a result of * * * Burlington Lines, reappraisal [they] Pacific Inc.— have Merger, Railway agreed accept Etc. —Great Northern all conditions Company, (1967), requested by 331 I.C.C. 228 stated: have been the Milwaukee “ * * * ap- In view of the inter- and North Western and considered * * * propriate est criteria of section us. “ * * * goals transportation poli- of the national The effect Milwaukee cy question power there no our and North Western conditions would be improve position strengthen of carriers affect- the Milwaukee —both ” * * * proposed merger. potential competitive ed to revenue posture.” Id. at 280-81. “ ** * report,] prior [In the it was Id. at 281. agreed any merger Giving of the north- effect to the additional * * * necessary protective ern lines it [there conditions clude most but not all of the conditions be] a net Milwaukee diversion to sought by Milwaukee were $11.- North Western of than more * * * Applicants North Western. 6 million opposed had those in the Id. at 279. they belief were not is also of interest to note that * * Pennsylvania-Nexo im- Torh Central Rail- position prove applicants’ merger proceeding/ com- road petitors inappropriate provided would be cash indemnification for ” proceeding. injured railway companies. section I.C.C. omitted). (footnotes Id. at 280 at 531-33.

917 against request- protection of the diver- other conditions the Soo It denied the sion, propriety of Rose- and to the the the ed Soo: interchange Minneapolis port and direct remaining “All of re- the conditions. Line, except 13, quested No. the Soo are that the are denied. We convinced obligat While the Commission is affording protections we are give weight findings ed to to the through specified the above Examiner, required ac Trial it is not reasonable, just will Similarly, cept them. were this Court preventing the means for undue diver- primarily with the concerned whether sion of Soo Line traffic for main- Examiner the Trial Commission had taining competitive adequate bal- judgment, exercised the better we would ance, pub- and are consistent with the findings accept the no choice have but to lic interest. The additional conces- and conclusions of the Commission.14 sought by be, sions the not this is the choice we face. But ease, overly compensa- context of this findings must determine whether tory and unwarranted record.” adequate, the Commission are whether omitted). Ibid, (footnote supported by they are substantial evid summarize, accept- ence,15 they To are in accord whether findings ed Examiner’s that ance with law. Soo, traffic divert from the findings view, relating In our required interest that adequate. to the diversion are protected against diversion, range possible diversion was too broad arrange and that NW-GW should inadequate made and the Commission interchange direct the Soo with findings toas the extent to which diver Milwaukee Rock and the Island. re- impair ability sion would the Soo’s findings accept fused to the Examiner’s public. is a serve There “lack respect extent of to the the diver- findings required sion, necessity essential partial basic or full evidentiary applied to be 15. The standard "The from the case final distillation evidence,” primary that of Ill. Cent. "substantial law is that fact-finder Co., agency, examiner; R. Co. v. & Western R. Norfolk not the 255, 57, agency power ruling 17 L.Ed.2d 385 U.S. 87 S.Ct. ‘the retains (1966) : evidence is 162 “Substantial on facts stance’; ... first ‘enough justify, agency trial if the were has ‘all still jury, powers direct a verdict when a refusal to in mak- which would have sought decision’; from drawn the conclusion the ex- initial ” jury.’ findings Id. it is one fact for aminer is a subordinate whose 66, findings weight Motor Accord: 87 S.Ct. at 260. do not have the Supply States, judge; 238 v. Truck Co. United of a district the relation (D.C.D.Minn.1965); F.Supp. agency Great is not 645 between examiner and Company Railway closely v. United Northern the same or even similar (D.C.D.Minn. States, F.Supp. agency re- 209 230 the relation between viewing court; Compa Railway 1962); the examiner’s Great Northern States, ny F.Supp. findings taken 172 705 to be v. United are nevertheless reviewing (D.C.D.Minn.1959), court reversed as moot 362 into account 939, they 804, given special weight 80 4 L.Ed.2d 768 when de- U.S. S.Ct. Transport witnesses; (1962); Company pend upon Quickie v. demeanor States, F.Supp. (D.C. findings probably 826 169 examiner’s United 36, D.Minn.), per greater weight they be- aff’d curiam 361 than did U.S. have (1959); 140, adoption APA.” 4 L.Ed.2d 111 S.Ct. fore 80 Law, II, Minneapolis Ry. Davis, v. § & Louis Co. United Vol. St. Administrative (D.C.D.Minn. States, F.Supp. (1958); Broad- 165 893 10.04 F.C.C. v. Allentown 173, 855, 1958) (per curiam), 358, casting Corp., aff’d 361 U.S. 75 S.Ct. (1959); (1955); 223 4 L.Ed Universal 80 S.Ct. .2d 99 L.Ed. Camera 1147 Railway Bd., Corp. v. Pacific Co. United L. R. U.S. Canadian v. National (D.C.D.Minn. (1951); F.Supp. L.Ed. 1958). cf., Corporation, F.2d re 1957). (3d Cir. 918 finding

support the Commission’s order.” State Its the traffic diversion 194, States, of Florida from v. United 282 U.S. the Soo would be “somewhere be 215, 119, [$13,000 year] 125, per 51 75 L.Ed. 219 tween the estimate of S.Ct. Lines, (1931). Accord, Burlington applicants $1,700,000 Truck [the esti States, 371 156, Soo,” view, Inc. 83 mate] v. United our amounts U.S. 239, (1962); finding particu 9 207 Colo to no at all.16 L.Ed.2d Such is S.Ct. larly rado-Wyoming P. Federal the case Gas Co. v. when the Commission itself 626, Com., present 850, 9 324 65 L.Ed. concedes that the Soo’s U.S. S.Ct. return on (1945); Atchison, 1235 T. & F. R. Co. investment is modest S. one and would be States, substantially 193, v. United 295 55 affected U.S. S.Ct. a reduction in gross 748, (1935); ap 79 revenue. If L.Ed. 1382 United States the diversion proached higher 70, Louisiana, amount, 54 v. State of 290 U.S. the Soo’s 28, (averaging (1933); year net per 78 income S.Ct. L.Ed. 181 Manu 3.1% States, period 1961-64) facturers R. Co. 246 v. be reduced 457, nearly 29%,17 383, U.S. 38 62 L.Ed. 831 and its return S.Ct. on invest (1918); Lehigh Valley Co., by approximately Meeker ment would v. R. be reduced 31%, 412, 328, 35 59 L.Ed. 644 or from On the 2.95% 1.90%.18 hand, other if the diversion were near the Broth, Broth, Way Employees significance 16. In of Maint. of Also in the F.Supp. (D.C. Way prior v. United Maint. 221 19 case is the fact that E.D.Mich.), opinion opinion, aff’d to the without Commission’s com- peting U.S. 84 S.Ct. L.Ed.2d 270 railroads had withdrawn their ob- (1963), argument jections merger. was advanced to the labor in- While ought probably standing question the Commission specific finding to have made terests had percentage adequacy findings, as to the diversion rejected. diversion. This contention was the Court well have been influenced opinion injured allegedly A review of re the Commission’s the fact findings longer objecting. veals that probably adequate. in that case were railroads were no pro Unlike those ceedings, the diversion estimates of the In the Northern Lines and Penn- specifically negated merger proceedings, railroads were Central the Com- Chesapeake Ry. the Commission. & O. mission stated that it considered a rate Co., ranging Co.—Control—Baltimore & O. R. of return from to 3.73% 2% (1962). Reading (331 261) I.C.C. 281-83 I.C.C. at and from 2.88% opinion whole, (327 499) Commission’s as a to be I.C.C. lower 4.43% than improve service, railway conclusion Commission is that provide jobs employees, discharge a de minimus amount of traffic will be approaching transportation obligations public. diverted —not at all es contrast, compared timates of Central. this return with from proceeding the NW-GW Government Bonds of and with 4.95% negate average did not the estimates of rate of return of Class but rather indicated that the diversion I railroads the United States would be “substantial.” and 1966 of 3.69% 3.9%. following prepared by chart, challenged by

18. Soo and the Com- mission, years $1.7 indicates effect of a million diversion each of the shown: Adjusted for Merger Actual NW-GW Return on Return on Year Net Income Investment Net Income Investment 664,000 ($ 671,000) $ $3,100,000 1.53% .98% $1,765,000 2.45% 1.88% $4,090,000 $2,761,000 2.90% 2.31% $4,355,000 $3,020,000 3.03% 2.44% While net income Soo exceeded $5 million 1965 and $900,000 eight was less than for the first months of 1967. could, future, expect- parent amount, in its net the reduction lower support for its financial ed to return on investment income difficulty. got subsidiary if it into nil. light deci of numerous court In the fully understand obligation dealing of a sions determining

task of the Commission unprofita railway operate to continue to potential difficult diversion is a business,19 view portions of its we ble may complex one, and that events future skepticism possibility that the with some findings prove Commission’s that required Pacific would be the Canadian very But of the mark. were wide unprofitable operations of subsidize complex these are difficult and fact that period of an extensive time. over the Soo makes it all more matters Furthermore, unprofitable operations expertise, use for the Commission to its likely sparsely popu very be in the would it, use it must. but most deems lated areas Commission found that Had Commission important protect. effectively could continue to serve urged, at for the Commission Counsel even if reached the diversion argument, had that the Commission oral higher limits return on in- and its attempted the extent determine might 1.90%, we as low as vestment anticipating expected diversion, that matter, it did have another but could seek to have additional the Soo not do so. NW-GW, imposed in on conditions recognize that are factors cluding there those denied heretofore than other return on net income if the diversion was Commission substan may railway possible make it $13,000 year.20 for a con- tially per in excess provide adequate difficulty tinue to service ar with the Commission’s public, retaining if even of return is com- gument rate that the condition paratively low. interpreted by such factor jurisdiction coun NW’s suggests that is that precluding a sel as reconsideration Railway Company Pacific initially Canadian owns the Comm denied might stock. Furthermore, Soo’s indicates that it well be ission.21 56% States, substantially 19. v. State Colorado 271 United or those were cess] equal L.Ed. U.S. 46 S.Ct. 878 70 to wliat contended before (1926) (the degree hearing original Court balanced the es- it would not be community directly findings by any present topped detriment to the af rail financial loss fected Commerce Commission the Interstate States, way) ; Village see, coming saying of Candor United v. back in ‘You from F.Supp. (D.C.N.D.N.Y.1957) right, $1,300,000 889 that we have we are they (showing by shippers that individual has been for us—(cid:127) traffic that diverted financially disadvantaged us, were rather —and that therefore from to, er discontinuance insufficient ror) ; to show that we exist with can’t seek Corpora Feldspar diversion, States United meet our of a we can’t kind (D.C. public. States, tion v. United N.D.N.Y.1930); F.2d 91 additional We want needs sup parent nothing and of a about There would relief.’ port unprofitable operations pre- original proceeding of a sub sidiary, proceeding Town of Inlet York v. New Cent. that basis? vent them from Co., F.Supp. (D.C.N.D.N.Y. Judge Heaney, R. that is our “MR. RUSH: (held 1934) interpretation. not error for Commission That the intention was par disregard reserving jurisdic- the financial condition of of the Commission wholly subsidiary broadly whose ent owned as it tion as did.” unprofitable permitted to discontinue an * * * In our 21. “MR. WHEELER: run); Jay Connecting Railroad Street saying opinion the Commission was not (D.C. F.Supp. v. Line had a carte blanche E.D.N.Y.1959). any retry time come in at later say [I]f did “JUDGE HEANEY: case. The entire specific Line believed and able to establish ineffec- were that tive, if conditions were a in fact that had oc- make diversion Soo Line return to could substantially showing [ex- were effect conditions were curred those past, and in the future than the argued less traffic were if the diversion compensate Soo, it for other $1,700,000 that this would estimated than system. expected losses stated: He the amount not exceed it would by could thus there “Overall, the examiner’s conclu- it is be no reconsideration. sion that the conditions type of this serve While good relatively in as will leave Soo against purpose protecting useful merger. competitive position before as unexpected, they serve a sub- cannot portion of its lose a small While present findings adequate initial stitute orig- traffic, particularly cars fully submitted the issue has been where terminating inating local at C.G.W. Compare, Penn- to the Commission. moving points presently via Cases, supra, Inclusion Central N.W. of C.G.W. route due to loss Soo/C.G.W. in which efforts, imposed conditions solicitation by Supreme the Read- authorized the Court sig- should the examiner institute Railroad to nificantly competitive increase Soo’s experience re- obtain on actual to based industry heretofore access to by ” prejudice the caused from undue lief merger. * * * feasible. was not Id. at 102. question as to now turn to the We impressed findings Nor the Com- are we with the whether Commission’s argument Roseport respect Roseport the mission’s that conclusions with growth discourage supported the condition would conditions are substantial parks. development proper of industrial and based on standards. evidence nothing support in the to There is record finding Roseport condition In that the the railroad, contemplating that a assertion of the Commission “overcompensatory,” the Commis- development the report: Examiner’s sion relied the any park, gives of an industrial consid- has “Since the examiner concluded possibility some eration the that at to Roseport on its that the threat to Soo future, may merge the it with a time in real, additional condition traffic is railroad, competitive when that merged imposed requiring will be so, required open does it will be to agree negotiate per- company to to park competitors. its to Roseport industry to mit serve argue appears The Commission to directly tracks over the C.G.W. law, improper, it would matter of be admittedly as this would tend to While give Roseport to access to because the Soo overcompensate in terms of traf- permit terminating to do would to share so originating fic at Rose- We against fruits of GW’s investment. present port as loss of traffic agree. similar The condition is moving point, cannot from examiner this any to one Commission lesser con- does believe ” case,” granting the the “Northern Lines dition suffice. Oregon. Portland, entrance to Milwaukee Examiner, Report at footnote Burlington Northern, Great Pacific omitted). Lines, Merger, North- Etc.—Great Inc.— misplaced. to be We believe the reliance Railway Company, supra, ern above, There, It is clear from the as well as Commission insisted on study record, though careful from a condition even Western Union Railway Company Examiner term used the “overcom- Pacific contended permit pensate” in that the Milwaukee the sense Soo would the condition greater Roseport realize from investment. revenue to in the fruits of share its strengthened. ought try any effective and to be case. re- We would narrow open- opened just proceedings, Soo would seek a here we wide as try ing just try as it wanted to Mil- here wanted to the Great Western case only.” as the Great Western waukee well as adversely 5(2) (f) affected. Section CONCLUSION provides: responsibility of approval, under “As a condition of its determine, precisely as as Commission paragraph, any in- this transaction expertise permit, extent will its volving by rail- a carrier or carriers traffic will divert which the NW-GW subject provisions road of this to which from the Soo public the extent require chapter, the Commission shall requires that the Soo interest arrangement equitable a fair and protect against protected After diversion. the railroad the interests of having this, must done employees order affected. will determine approval include the Commission shall give necessary protection. impose providing terms as as definite conditions should be These during years period from of four future practicable and leave as little date of order such effective such negotiation parties feasi as between the transaction will not result ble. carrier or carriers railroad making recognize difficulty being in affected such order a worse natural these determinations and the position respect employ- to their avoiding escape clination them ment, except protection af- many findings leaving specific any employee pursuant forded to negotiation parties to issues between required sentence this shall not be however, done, possible. When following as this is longer period, for a continue judicial impossible. effective review is order, the effective date than of such during period employee which such question as There remains the employ inwas of such carrier permit should whether prior carriers date effective proceed pending ted to further action such order.” Commission. We do not believe rejected Commission The this conten lengthy In hear it should. view of the ground that, tion on a matter ings conducted, that have been heretofore law, apply this section not does why there is no reason employees of added: the Soo.22 It any expedite it not can “Further, there no evidence credible reach a consider to be showing any employees of record opinion. It consistent with decision nonapplicant railroads so, request of it do is the this Court that adversely affected direct result aas parties give and that the merger.” of the doing. cooperation full their in so Report at 66. III. LABOR CONDI- PROTECTIVE East The Commission cites Florida FOR THE EMPLOYEES. TIONS SOO Railway States, 259 Coast Co. v. United contended, (D.C.M.D.Fla.1966), F.Supp. Labor Commis- dis- before the 993 544, 5(2) (f) sion, protection nom., extends missed as moot sub U.S. 386 § employees adversely 1299, (1967), affected to all merger, including 87 18 285 L.Ed.2d Cf., employees support position. of a non- & its Louisville States, applicant. outset, 244 make Co. v. At the we Nashville R. F.Supp. (D.C.W.D.Ky.1965), clear that this decision is limited 337 aff’d 716, employees Soo, per claim to who alone curiam 383 U.S. 86 S.Ct. See, e.g., 22. The Commission stated: Rail- note: Baltimore & Ohio Operation, “The labor associations contend road Co. I.C.C. 5(2) (f) Control, em- Air Line section extends to all R. Seaboard Co. adversely affected, including grounds ployees we find 507.] I.C.C. ” * * * nonapplicant entirely pertinent Line and valid here. those of argument Report Commission, at others. has been re- Similar rejected peatedly prior [Foot- cases (1966); Railway requirements: fulfill he Labor need two 15 L.Ed.2d 615 States, employee railroad and must must be a he Executives’ Association v. United merger.23 F.Supp. (D.C.E.D.Va.1964), be affected vacated 379 85 S.Ct. U.S. Court, Florida East The District L.Ed.2d 338 contrary case, interpreta Coast reached acknowledge 5(2) (f) stating tion of that when that not § Commission does Railway contrary holding con subsection was considered Labor provisions text of other related 5§ Executives’ Association v. United (2),24 required: (D.C.E.D.Va.1963). F.Supp. such a result was In case, “ Court stated: context, pro- Taken 5(2) (f) protection “Section commands many dealing vision is but one of ‘employees the ‘trans- affected’ the Commission’s treatment of action’. The ‘transaction’ here is applicants. Congress spoke of When acquisition of the use Seaboard 5(2), ‘carriers’ in section referred Act does Broad Street station. participants. example, For not, say, as the Commission would limit 5(2) (a) (i) section quired re- the statute security employees a carrier approval more ICC ‘two or guard- involved in the transaction. The ianship merge.’ carriers to consolidate dependent upon role 5(2) (c) speaks section the statute employer of their in the transaction. the ‘interest of the carrier ‘employees All under the affected’ are affected,’ obviously meaning partici- aegis only question is of the Act. The Congress pating carrier. And when they they whether ‘affected’: are Are nonpartieipating wished to refer sufficiently by transac- touched 5(2) (d), ‘another carriers it said * * *” added.) (Emphasis tion? railroad or other railroads.’ Taken context, Id. at 102. think it clear that ‘carrier or carriers’ referred to sec- (f) The initial sentence of § 5(2) (f) tion involved carriers “* * * ambiguity: admits no [T]he immediately in the and most require Commission shall fair and a by affected the Commission’s action. arrangement equitable protect the ” * * * added.) (Emphasis employees interests of the railroad af- employee F.Supp. fected.” To be at 1019. protected, the 23. A recent comment of Mr. Justice pertinent: anxious while about tions Corp. “(c) weight franchises, transaction “(2) Unifications, mergers, paragraph, proval mission, solidate or “(i) tion “(a) quisitions of this ^[*] (1967) v. Flood & could their dealing for two or more carriers In * * * to find paragraph— 1801, 1810, as shall “The passing of meaning (dissenting opinion). not, under the the Commission shall provided merge authorization * * * with another control. following language doubts.’ Concklin, I 5¡5 lawful, upon any think, their except in 18 L.Ed.2d into provisions subdivision considerations, properties of these sec ^[*] Prima Paint raise doubts one to someone statute, proposed corpora- and ac- to con- Black, Com- ^[*] give this ap- (b) or 49 U.S.C. is consistent with the volved, upon petition by such railroad or railroads other action under this the inclusion of another action, railroad thority in the terest of the carrier proposed total ed. other “(d) among proposed transportation (2) upon the fixed railroads in the The approval railroads in the case inclusion, others: proposed transaction; § effect or transaction; require, upon transaction Commission shall have au- charges railroads, finding requesting upon service (1) in paragraph involving or failure to resulting the The effect a territory as a public proposed equitable proposed upon to the such public such inclusion territory railroad prerequisite (4) inclusion, interest.” from the adequate involved interest (3) include, public; affect- terms, of trans- trans- the in- in- analysis. present proceeding, Florida refuse follow We this The decision East Coast in case. observed: based, intervening Court case is District extent railroads seek first, trackage rights questionable on conclusion that con- and certain other and, “participant” are, cessions, “carrier” means those railroads second, inexplicable seeking on assertion effect, inclusion.” Com- The “participant” “applicant.” point More means mission continued: “From this assuming over, readily that “carrier” means view even it can more be seen Soo, by “participant,” request intervening Commission’s railroads for com- measured, analysis pensating proceedings, own these concessions must be by “participant.” applicants’ proposal, no less than * * public Report interest criteria disagree District Court’s last at 37-38. This “carrier,” conclusion used in as (c) awas comment reference § 5(2), “participant.” context of means § (2) requires which contrary itself This is to the Act upon “the effect in- consider 5(13): provides in § inclusion, terest of the or failure to (2)-(12) paragraphs “As used in territory clude, other railroads section, inclusive, this the term ‘car- proposed involved transaction.” ** a carrier railroad rier’ means subject (Emphasis added.) chapter; and a motor to this subject chapter 8 of carrier this 5(2) (f) may Section itself be subject title; and a water carrier to analyzed along the same line of reason chapter title.” 12 of this ing. portion of We note that first the first sentence of section states Thus, qualification the Court seeks following: a condition of its “As “carrier,” 5(2), impose as used § any approval, paragraph, under is not consistent with definitional involving transaction a carrier or carri- very Section clause 5(13) same section. (Emphasis ers railroad “car- demonstrates that the term added.) by rail- carriers “Carrier or 5(2) (a) rier,” (i), is broader than § portion road” is the referent the last term or carriers railroad” “carrier “the em- the same railroad sentence: appears 5(2) (f). former § ployees”; and it is the referent of sub- as includes “motor” and “water” well sequent “the clauses in that section: gravest “railroad carriers.” error railroad”; “such carrier carriers reasoning is illus- in the District Court’s well carrier or carriers.” While could following “In trated their assertion: any argued be carrier who is affect- speaks 5(2) (c), of section the statute in the ed the “involved” is employees the af- of carrier ‘interest very “transaction,” least, is at the Soo fected,’ obviously meaning participating given request- “involved” fact that it added.) (Emphasis qual- That carrier.” protective ed conditions it did ification, meaning,” is noth- or “obvious Again, on Com- case. this is based undisguised statement more than an mission’s own statement “to of the conclusion. intervening extent railroads seek comparison A of the two sentenc- * first * * trackage rights those railroads statutory analysis in Florida es are, seeking effect, inclusion.” is East Coast the Court shows lan- if it be admitted Even equating “participant.” “applicant” guage 5(2) (f) ambiguous, is § assumption explained, This not was public policy is on which that section be incorrect. we believe it to employ- based leads to the conclusion that protected simply, applicants Quite railroads ees of a carrier protected participant alike to from the effects transaction a merger. Recently, being “applicant.” is an This without spoken itself has on the matter of em- the Commission’s own demonstrated prior rejected on peatedly cases provided ployee protective conditions as entirely grounds valid find which we by 5:§ ”* * * (foot- “ pertinent * here. 5, par- of section terms omitted, Footnote our note see (f), 5(2) (c) ticularly section supra.) working recognize implicitly that the Report employ- at 65. of the rail morale important elements ees are past Furthermore, Commission’s preservation maintenance practice itself it considers indicates that transportation and economical efficient third-party authority protect without ” system. Railway employees. Co.- — In Southern Chesapeake-O. Ry. Georgia Ry. Co., Co.-—Control—West Control—Central Maryland Ry. (1962), I.C.C. Co., ern the Commission I.C.C. 567-68 policy distinction This admits no sta ted:26 before this Court that the Commission though they may be affected: then can it be contended between held in our working maintain it as a viable not extend to extend that sion abused its discretion unequivocally quired, to important mission itself sion because protected tective conditions are The Commission’s Counsel is not that it was transportation Soo question conditions and morale the railroads.25 extend required coverage. and, therefore, protect employees states recognizes protection is whether the permitted, to extend language clearly and extended public system? Furthermore, employees whose as vital that it railroad. § disagree. 5(2) applicants or but refusing interest protection. employees Soo Commis- Commis- (f) argues factor not Com even How does pro re- ees adversely clusion that ently dence of record labor expenses, formula to estimate, that, volved We duce labor employees sented here. our dialogue us to do so in situations like impose “Assuming merger.” based turn now to contrary opinion, nonapplicant on the basis expenses in a conditions for the affected as a and that “there was of carriers not The associations refer to that we have the expenses by $780,000 This transaction showing loss of traffic would ^[*] are 60 following would be Soo Line’s diversion conclusion was railroads ”* Commission’s con- it was estimated by applying that no credible percent direct rule-of-thumb, before protection of any employ- finding: interest directly inequitable would be result power to appar- us, in total pre- evi- per for re- year, wages equivalent “The labor associations contend that of 110 employees. (f) employ- section extends to all line of This evidence affected, including adversely per- ees those inconsistent with the Line’s nonapplicant oth- Line and sistent that a diversion of claims $1.7 argument gross re- ers. Similar has been million would result revenue precise point proceedings, proceeding, 25. is- At one in In the cited this only employees preliminary printed of draft was sue involved related issued and applicants. Commission, as the decision of (See p. 54), but subse- I.C.C. was preliminary of 26. draft the Commis- a quently By withdrawn. NOTICE they proceedings, in sion’s decision these Secretary Interstate Commerce Of The on the Southern-Central case: relied Commission, “The November 1967: “ * * * Concerning scope of * * * pamphlet report sub- contains employees affected’ as ‘railroad typographical which oc- stantial errors (f), we in term is used section * * during printing curred hereby adopt and [sic] rationable our point in as stated conclusion on this Southern-Central m expected a net loss of million revenue claimed $1.3 di a million $1.7 expenses amount, in that reduction $400,000 version that of that range $400,000. adversely would about was not would its affect or Soo employees that represented pay further contention Soo Line’s because it insignifi- per the total diversion would be ments Soo to carriers who reducing switching in terms of the number cant formed services in connection trains, switchings opera- of other work. The further and diverted logical testimony inference tions. The is that uneontradieted of this witness any, few, employees if Line would that would its ex the Soo reduce off, penses be laid even if the diversion claims extent of its net revenue million, were substantiated.” that reductions would $1.3 equipment in be maintenance of Report of the at 66. right-of-way expense, and the Soo that sug- cannot, We as the employees bear of loss.27 would 60% any, gests, few, draw the if inference that prob- did reach Examiner this employees of laid off the Soo’s would be lem recommended conditions because he even if the were sub- diversion claims he believed would the Soo Indeed, contrary stantiated. a inference fully off- with other traffic sufficient is one draw from that can set the traffic diverted to the NW-GW. testimony. reading A careful of the event, In such would Soo’s revenue testimony from which the Commission merger; be unaffected and as drew states it that inference shows employees injury of the witness that extent the Soo made clear what $1,300,000 not net ings level as dependent these “A “Q If 300,000 gross dropped. nue? “A lieve, “Q reduce its 000 in annual estimated loss in the “A er he merged witness, “Q in the diversion of “A do. you joyed by “Q $400,000 annually to previous had revenue flow These per I do. Assuming in the first full Yes, I Do recall the or reductions there items reduction in the two (By reductions, have you estimated or unified your you do Mr. diem they because cars we could expenses by of the in Mr. savings might were there could occur [sic] witness further Sherwood, Soo? capacity, charges, a net were applicants testimony freight Hickey) reduce traffic lost. successful could expenses approximately $1,700,- reduce be an offset company would be enjoyed year approximate Slater recall loss expenses? had been diverted. that the thus revenues operations operations expenses you Mr. enjoy of following is at expenses. amount the effect that in 1964? leaving accomplished would result They gross entirely do describe Klingel, such Soo could testimony the same switching effecting now previous you amount to this as our merg- effect about same reve- sav- $1,- be- en- do duction will here.” items wage wages, greater “Q make would side, sulting “A Yes. nual age? “A abolishments that would who would be would would “Q mately “Q Could “A Our labor “The Witness: roll? keep They “Q equipment such reduced way expenses, Does it Yes. Would $700,000-plus? (By number of would per employee expenses you would be represent expense be net loss than reductions further Mr. a described? If percent represent expenses. you approximately be you estimate what payroll ^[*] labor fringe benefits, be follow this estimate of our anticipated, that would attempt laid off. Hickey) made in in line translate savings, greater expense, Using reductions reduction loss expense job displacements would $7,000 revenue expenses ^[*] about in total an expenses That than reasonable aver- gross maintenance that for the flow as a result including be reflected average reduction. in maintenance $780,000 per employee, arbitrary is on the low expense, revenues, ^[*] —labor expense be made to these as outlined $7,000 proportion revenue approxi- so as us annual direct same ^[*] so it pay- cuts into an- re- re- of 926 1958); testimony 139 by States, v. United only the Schaffer 444,

was established (D.S.D.1956), F.Supp. reversed employees 448 would have that the effect 83, grounds, loss, protec- 78 S.Ct. on other 173, no of the Soo’s absorb 60% 2 L.Ed.2d 117 for the tive conditions were employees. Supreme Court has The United States very repeatedly limited told us of our on re- the Commission be that g., duty respect, Ill. R. Co. in this e. Cent. impose it which conditions mand will Co., 385 U.S. Norfolk & Western R. fully v. di- offset the traffic believes will 57, 66, L.Ed.2d 162 NW-GW, 17 87 S.Ct. it believes and which verted to Auto against (1966); Pierce employees United States v. protect the Soo will Freight Lines, Inc., 327 U.S. injury job so, will If no to them loss. (1946), 821 90 L.Ed. protective 66 conditions will result and no Congress specifically confined however, necessary. finds, the has be If it responsibility de judicial directly our termining review will of the Soo is substantial adversely by merger, whether there it must affected the support the in record to impose the protective their evidence conditions for Adminis taken. action administrative benefit. Act, 1009 5 U.S.C.A. § trative Procedure (e) (5). DEYITT, Judge (dissenting). Chief my view, Commerce the Interstate the of the record An examination permissible con- Commission reached by light made contentions approving, as

clusion within the law impression with parties the clear leaves Chicago did, North per- exercised me Chicago Western Great Western ap- within the law discretion missible Railways com- should dismiss the proving conditions with the plaint. it attached. my position The heart of the taken any dispute really as to isn’t There majority opinion associates matter, or, the wis- propriety, for that ap- the Commission made a mistake proving dom, Commission action of the plan which did not merger. authorizing principal requested pro- more of the conditions to urged argument is that the Commission well-being the continued tect competing re- impose did not all of the Soo Line as a result quested or, in the view merger. majority, the conditions at least all of Examiner. But the But must recommended be remembered that of conditions to number and kind test matters of kind is not whether well, judgment wisely question attached is a the Commission acted and authority Ex- determine. but whether it acted within its agent Commis- To it other- the record it. view aminer before making taking testimony and wise would be to vest power court with the sion findings judgment not for that recommendations. His substitute controlling judici- Clearly, Commission. While Commission. on the favoring merger ary power. apparently not V/e have does have many Examin- recommended times disavowed it. North- conditions er, Great Ry. F.Supp. opposing States, it with ern but Co. v. United 209 majority, (D.C.1960); 230, 232 Northern Great recognize nevertheless, Ry. States, F.Supp. 705 does seem to v. United judgment (D.Minn.1959); Quickie Transport of the Commission Co. it is the And (D. States, F.Supp. controls. Examiner which course, v. United “clearly Minn.1959); Minneapolis that, of is the law. The & Louis St. (D. applicable Ry. States, F.Supp. rule” is not erroneous v. United Ry. findings a Hear- Minn.1958); and recommendations Canadian Pacific v. Allentown, (D.Minn. F.Supp. Examiner. F.C.C. v. 927 “Forecasting ability 855, 358, 364, L.Ed. 1147 99 the future 75 S.Ct. U.S. (1955). desire railroads to effect diversion peculiarly expert a matter for the My the Com- find fault with confreres judgment appointed of the ‘tribunal determining exact- with for not mission by experience.’ law and informed Illi- financial loss the Soo the amount ness I.C.C., 206 nois Central R.R. v. U.S. merger, result of the suffer as a will 441, 454, 700, 704, 27 51 L.Ed. S.Ct. speci- absent such hence reason that (1907).” 1128 finding not could the Commission fic compensatory States, properly Erie Lackawanna R. Co. v. United determine preci- (S.D.N.Y.) impose. F.Supp. But exact 1967. regard required— is not sion in this outguess We cannot the Commission impossible. I indeed, probably would be predicting the future effects of the approximation of say exact that an dare merger. District The United States probably to loss of traffic the amount Court for of Florida District Middle diver- the Soo because suffered recently succinctly: said it by the occasioned of traffic sion we, guess. must “The and not As the no than a more protection expert tailor for fit District Court United States * * * prediction Michigan of the future when said District Eastern plainly unreasonable, not must a similar contention: answer agency with con- leave to the vested “ * * * not was Commission gressionally expertise' this assumed engage speculation and required type of decision. precise up guesswork come with a States, Ry. Florida East Coast v. United prediction.” percentage F.Supp. (M.D.Fla.1966) af- Way Em- Brotherhood of Maintenance per curiam, 544, firmed 386 U.S. 87 S.Ct. F.Supp ployees v. United 1299, 18 L.Ed.2d 285 216, 84 per curiam 25 affirmed recently January As 1968 the 11 L.Ed.2d S.Ct. Supreme Court reaffirmed States Indeed, an did make the Commission principle when it said: finding supportive adequate of its action are which rea- “These matters as to it did when imposing the conditions may reasonably differ sonable men said: setting detail, and we no for see basis We are convinced conclusions aside the Commission’s affording the protections Soo we are * * competent *. are no more through specified above the conditions than the Commission just reasonable, will accuracy predic- ascertain those preventing diver- undue for the means [Emphasis supplied.] tions.” traffic, main- sion of Line competitive taining adequate bal- Merger Penn-Central In- N. & W. cases, ance, 486, 524, consistent clusion and are U.S. 602, 621, January 19 L.Ed.2d dated con- The additional interest. 15, 1968. be, sought by cessions overly case, com- of this the context majority disagree also pensatory the railroad.” providing pro- Commission not labor tective conditions for Decision) (p. 25 of Commission’s might who suffer as a result of the judgment This merger. expertise an exercise long plain Supreme of the United States But fact Court of the matter recognized possesses: that whether or has has reopen legal authority impose Commission to pur- employees our own motion for the same of non- on of for the benefit pose.” carriers, applicant do it did not so factual no found this case because approv- April In its Order doing

justification so. The Commis- for merger, Commission also held there was sion provided specifically for retention of rec- credible no evidence jurisdiction as make further orders any showing employees non- ord necessary. might appropriate or be adversely applicant railroad would be inclusion similar reservations mer- direct result of the as a affected jurisdiction Penn-Central ease ger.” important apparently factor con- was an Decision.) (p. 55 of Commission’s Supreme sidered the United States weighing Court the reasonableness finding supported by record This Penn- ICC action in those cases. part apparently based, at was Merger Inclusion Central and N. W. least, on and contentions the evidence cases, supra, pp. 513, 514, at Examiner the Soo before the p. 616, L.Ed.2d 723. 1.7 minimize claimed efforts be traffic loss million-dollar there even But if it assumed that only a no reduction of the labor force but judgment Commission made a mistake of fuel for reduction of such costs as those approving at- per diem, switching, and inter- conditions, tached as has been decided charges change by other railroads. majority, it does follow judgment; we can mistake of correct that my Com- In conclusion of the view the wisely authoritatively for as said it, that, no record mission before “ *** time, another court at another for the of Soo labor conditions benefit power of an administrative imposed reason- need be questions board is not confined decide one. able Pittsburgh deciding correctly.” them appraisal with our connection N.L.R.B., Plate Glass F.2d Co. v. Commission’s the reasonableness (8th 1940). Cir. approving con- action with might propriety, empha- prescribed, ditions it it should be imposed requested have all the Soo’s 14 wisely re- sized that conditions, might imposed or have modify continuing jurisdiction to tained them, might imposed some of or it have experience as recommended; those which the Examiner merger might require. Thus under chose, but it in the exercise of its discre- for the Condition No. 6 Conditions impose particular tion, the six condi- Generally, con- Protection of Carriers tions which I think it did. that was Report Appendix tained in VI permissible rec- conclusion on the whole provides that: arbitrary ord before it —neither or un- having “Any any party person specific within reasonable —made subject may, at matter interest authority Congress assigned to it any application for make time, future therefore, one, which we dis- cannot condi- such modification of the above Minneapolis Ry. turb. v. & St. Louis tions, any them, re- F.Supp. 893, quired interest jurisdiction complaint. We should will be retained dismiss

Case Details

Case Name: Soo Line Railroad Company v. United States

Court Name: District Court, D. Minnesota

Date Published: Jan 30, 1968

Citation: 280 F. Supp. 907

Docket Number: 4-67 Civil 318

Court Abbreviation: D. Minnesota