Chicago & N.W. Transp. Co. v. Kalo Brick, 450 U.S. 311 (1981)

Chicago & North Western Transportation Co. v. Kalo Brick & Tile Co.

No. 79-1336

Argued December 9, 1980
Decided March 9, 1981
450 U.S. 311

CERTIORARI TO THE COURT OF APPEALS OF IOWA

Syllabus

The Interstate Commerce Act authorizes the Interstate Commerce Commission (ICC) to regulate interstate rail carriers’ abandonment of railroad lines, including branch lines. Under the Act, no such carrier may abandon a line unless it first obtains a certificate from the ICC that the present or future public convenience and necessity permit such an abandonment. After petitioner interstate rail carrier’s branch line in Iowa had been damaged by mud slides, it ultimately decided not to repair, and to stop using, the line, so notified respondent brick manufacturer, which had shipped its products over the line, and applied to the ICC for a certificate permitting it to abandon the line. The ICC granted the application, finding that petitioner had abandoned the line due to conditions beyond its control, that further repairs would not have been sufficient to insure continuous operation, that the abandonment was not "willful," that respondent had no right to insist that the line be maintained solely for its use, and that continued operation would be an unnecessary burden on petitioner and on interstate commerce. Respondent had appeared to oppose the application, but never perfected its filing before the ICC and did not seek judicial review of the ICC’s decision, but, instead, brought a damages action in an Iowa state court while the abandonment application was still pending. It alleged that petitioner had violated an Iowa statute and state common law by refusing to provide cars on the branch line, by negligently failing to maintain the roadbed, and by tortiously interfering with respondent’s contractual relations with its customers. The state trial court dismissed the action on the ground that the Interstate Commerce Act preempted state law as to the matters in contention. The Iowa Court of Appeals reversed, ruling that the state abandonment law was not preempted and that the state and federal schemes complemented one another.

Held: The Interstate Commerce Act precludes a shipper from pressing a state court action for danages against a regulated rail carrier when, as here, the ICC, in approving the carrier’ application for abandonment, reaches the merit of the matter the shipper seeks to raise in state court. Pp. 317-332.

(a) "[T]here can be no divided authority over interstate commerce, and . . . the acts of Congress on that subject are supreme and exclusive." Missouri Pacific R. Co. v. Stroud, 267 U.S. 404, 408. Consequently, state efforts to regulate commerce must fall when they conflict with or interfere with federal authority over the same activity. Pp. 317-319.

(b) The ICC’s authority under the Interstate Commerce Act to regulate railroad line abandonments is exclusive and plenary. This authority is critical to the congresfional scheme, which contemplates comprehensive administrative regulation of interstate commerce. The Act’s structure makes it clear that Congress intended that an aggrieved shipper should seek relief in the first instance from the ICC. Pp. 319-323.

(c) Both the letter and spirit of the Interstate Commerce Act are inconsistent with Iowa law as construed by the Iowa Court of Appeals. That court’s decision amounts to a holding that a State can impose sanctions upon a regulated carrier for doing that which only the ICC has the power to declare unlawful or unreasonable. A system under which each State could, through its courts, impose on railroad carriers its own version of reasonable service requirements could hardly be more at odds with the uniformity contemplated by Congress in enacting the Interstate Commerce Act. Even though the abandonment approval did not come here until after respondent filed its civil suit, it would be contrary to the language of the statute to permit litigation challenging the lawfulness of the carrier’s actions to go forward when the ICC has expressly found them to be reasonable. Accordingly, Iowa’s statutory cause of action for failure to furnish cars cannot be asserted against an interstate rail carrier on the facts of this case. The same reasoning applies to respondent’s asserted common law causes of action, because they, too, are essentially attempts to litigate the issues underlying petitioner’s abandonment of the branch line in issue. The questions respondent seeks to raise in the state court -- whether roadbed maintenance was negligent or reasonable and whether petitioner abandoned its line with some tortious motive -- are precisely the sorts of concerns that Congress intended the ICC to address in weighing abandonment requests. Consequently, on the facts of this case, the Interstate Commerce Act also preempts Iowa’s common law causes of action when the judgments of fact and of reasonableness necessary to the decision havc already been made by the ICC. Pp. 324-331.

295 N.W.2d 467, reversed and remanded.

MARSHALL, J., delivered the opinion for a unanimous Court.