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FEDERAL EXPRESS CORP. v. TENNESSEE PSC

April 23, 1990

FEDERAL EXPRESS CORPORATION
v.
TENNESSEE PUBLIC SERVICE COMMISSION, et al.



The opinion of the court was delivered by: WISEMAN

 THOMAS A. WISEMAN, JR., CHIEF UNITED STATES DISTRICT JUDGE.

 This matter is before the Court on remand from the Sixth Circuit Court of Appeals. The Sixth Circuit reversed this court's holding that it did not have subject matter jurisdiction to determine the merits of Federal Express' claim. See Federal Express Corp. v. Tennessee Public Service Comm'n, 693 F. Supp. 598 (M.D.Tenn. 1988), aff'd 878 F.2d 381 (6th Cir. 1989)(table), rev'd on petition for rehearing, No. 88-5974, Slip op. (6th Cir. 10/6/89). In remanding, the Sixth Circuit instructed this court to consider the question of abstention in view of CSXT, Inc. v. Pitz, 883 F.2d 468 (6th Cir. 1989).

 CSXT held that traditional abstention analysis applies even where preemption is the primary constitutional question. 883 F.2d at 473. See also New Orleans Public Service, Inc. v. Council of New Orleans, 491 U.S. 350, 109 S. Ct. 2506, 105 L. Ed. 2d 298, reversing 798 F.2d 858 (5th Cir. 1986) (rejecting argument that presence of preemption question bars District Court from abstaining under Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971)). Traditional analysis of whether Younger abstention is appropriate follows a three-step framework.

 
[Abstention] is appropriate only where a court can answer all three of the following questions in the affirmative:
 
First, do [the relevant state proceedings] . . . constitute an ongoing state judicial proceeding; second, do the proceedings implicate important state interests; and third, is there an adequate opportunity in the state proceedings to raise constitutional challenges.
 
Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432, 73 L. Ed. 2d 116, 102 S. Ct. 2515 (1982).

 CSXT, 883 F.2d at 474 (parallel citations omitted; brackets supplied in CSXT).

 Federal Express' dispute with defendant, Tennessee Public Service Commission (TPSC), has had a lengthy sojourn in the state administrative process, resulting in TPSC issuing a Show Cause Order on June 9, 1987. *fn1" The Show Cause Order rejected Federal Express' challenges to the applicability and constitutionality of a state requirement that all intrastate motor carriers apply for a certificate of convenience and necessity, and affirmed an ALJ's decision that Federal Express was an intrastate motor carrier under Tennessee law and was required to obtain a certificate. The TPSC gave Federal Express thirty days to comply with its order, but later extended the deadline to August 25, 1987. Federal Express subsequently filed a petition for review and an application for immediate stay with the Tennessee Court of Appeals, seeking to delay its application for a certificate pending state review of the order. The Court of Appeals denied the stay on August 6, 1987.

 Federal Express filed its federal complaint on August 7, alleging as it did in the state administrative proceedings, that the state regulations were expressly preempted by the Airline Deregulation Act of 1978 and impliedly preempted by the Commerce Clause. On August 10, 1987, this court entered a TRO, forestalling application for the certificate. On August 12, Federal Express moved for entry of a preliminary injunction without further hearing or for delineation of the issues to be presented at the hearing. On August 18, defendant moved to consolidate the preliminary injunction hearing with a hearing on the merits. Two days later, this court consolidated the injunction hearing with the hearing on the merits, extended the TRO to September 10, 1987, the date set for the consolidated hearing, and invited the parties to brief the issue of whether abstention was appropriate. On September 9, the day before the consolidated hearing, Federal Express dismissed its state appeal.

 Applying the traditional, three-step framework with sensitivity to the federalism concerns underlying Younger abstention, the Court finds that it must abstain from determining the merits of this dispute. Consequently, the Court dismisses plaintiff's claim and lifts the injunction against TPSC.

 I. THE STATE PROCEEDINGS CONSTITUTE AN "ONGOING JUDICIAL PROCEEDING".

 Where the state proceeding "investigates, declares and enforces liabilities as they stand on present and past facts and under laws supposed already to exist," it is judicial. NOPSI, 491 U.S. 350, 109 S. Ct. 2506, 105 L. Ed. 2d at 318 (quoting Prentis v. Atlantic Coast Line Co., 211 U.S. 210, 226, 53 L. Ed. 150, 29 S. Ct. 67 (1908)). Accord CSXT, 883 F.2d at 474. Both Federal Express and TPSC, agree, as they must, that the proceedings out of which this suit grew are "judicial," as defined in ...


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