Denver & Rio Grande Western Railroad Company v. United States

PETITIONER: Denver & Rio Grande Western Railroad Company
RESPONDENT: United States
LOCATION: Times Square

DOCKET NO.: 305
DECIDED BY: Warren Court (1965-1967)
LOWER COURT:

CITATION: 387 US 485 (1967)
ARGUED: Mar 16, 1967
DECIDED: Jun 05, 1967

Facts of the case

Question

Media for Denver & Rio Grande Western Railroad Company v. United States

Audio Transcription for Oral Argument - March 16, 1967 in Denver & Rio Grande Western Railroad Company v. United States

Earl Warren:

Number 305 Denver and Rio Grande Western Railroad Company et al., Appellants versus United States et al.

Mr. Dempsey.

William H. Dempsey, Jr.:

Mr. Chief Justice, may it please the Court.

This case comes here on direct appeal from a judgment of a three-judge Federal Court in the District of Colorado.

At root what is involved is the validity of an order of the Interstate Commerce Commission pursuant to which the issuance of certain securities by REA, Railway Express Agency was authorized, those securities were to be sold to the Greyhound Corporation another of the appellees.

The appellants here are five railroads who are stockholders of REA, a number of individual motorbus carriers who are competitors of Greyhound, the Freight Forwarders Institute, the American Trucking Association Incorporated and a number of individual motor carriers.

At the outset I would like to take just a few moments to sketch the case in sort of an outline fashion.

The basic facts are quite simple.

Railway Express is the number one ranking carrier of express freight in the United States and Greyhound is the number two ranking carrier.

Pursuant to the order of the Commission that's here in question Greyhound will acquire a 20% stock interest in REA and that will be accompanied by a 20% representation on REA's Board of Directors.

There is no question from the record that the intent of the parties here fundamentally is to coordinate and consolidate their express trade activities.

Now in these circumstances we suggest and the government agrees I think that the record raised a very serious question under Section 7 of the Clayton Act and under Section 5 of the Interstate Commerce Act, which as this Court of course knows prohibits the acquisition of control by one carrier of another without Commission approval pursuant to the Section 5 proceeding.

So that the basic question here is what should the Commission have done in a proceeding that it was engaged in when these were questions raised on the record.

And the proceeding that it was engaged in was not a proceeding under Section 7 of the Clayton Act nor under Section 5 of the Interstate Commerce Act.

It was a proceeding under Section 28 (2) of the Interstate Commerce Act, the security --

Abe Fortas:

I beg your pardon, did the Commission make any findings as to competitive affect regardless of the statutory parameters?

William H. Dempsey, Jr.:

I think the Commission made no findings with respect to competitive effect although I do think that the Commission made some findings with respect to acquisition of control.

There is a difference of view among the parties on that Mr. Justice Fortas.

Abe Fortas:

I've had some difficulty reading these papers with respect to clarifying now and understanding on that point, but you do think that the Commission did not make any findings as to competitive effect which would --

William H. Dempsey, Jr.:

I think it may --

Abe Fortas:

-– mean that I suppose that the Commission thought that the public interest standard in Section 20 does not require a finding as to competitive effect.

William H. Dempsey, Jr.:

Well, Mr. Justice Fortas I am sure you know that one of our issues here is a Chenery issue, a question of the ambiguity of the Commission's order and I must say that I am really quite at a loss in answering the question as to what the Commission felt here because I just can't tell.

I think that with respect to Section 7, one doesn't know whether the Commission believed that they didn't have to consider Section 7 questions or any question with respect to anticompetitive impact under 28 (2) that was argued to them.

Whether they thought that there was no Section 7 question raised on the record that was argued to them, whether they thought that this was really a justice department responsibility or whether they thought that they could do it later, I just -- really at a loss.

The only place at which they mention Section 7 is in a sentence of the very opening of the order where – in which they say, I think I quote literally that it is not appropriate at this time to consider the Section 7 question.

Abe Fortas:

Do you understand I am making, in this question I am making a distinction between Section 7 Section 5 on the one hand and the factor of competitive effect on the other hand as arguably part of the public interest standard.

William H. Dempsey, Jr.:

Yes I do Mr. Justice Fortas now with respect to the question of the competitive impact the Commission does say on page 200 of the record, it further appearing that intervener's opposition is directed to the possibility of control of applicant by Greyhound and to the anticipated combination and correlation of certain of their facilities and services.

Now there it seemed to me, when I read the order at the first time that they were raising the question of, the broad question that you raise, of anticompetitive impact apart from a section putting it Section 7 terms.

And then in the next paragraph they go into the question of the position that Greyhound will have on the Board of Directors and they indicate their belief that these five Greyhound directors couldn't influence the strong railroad directors and they conclude with what I take to be a finding that there is no control and maybe a finding that there would be no anticompetitive impact or they certainly don't say that.

Potter Stewart:

Where do you take to be in such a finding?