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CON-WAY SOUTHERN EXPRESS, INC. v. HEWLETT

February 25, 1991

CON-WAY SOUTHERN EXPRESS, INC.
v.
STEPHEN HEWLETT, et al.



The opinion of the court was delivered by: NIXON

 JOHN T. NIXON, UNITED STATES DISTRICT JUDGE

 The plaintiff obtained authorization for the merger from the Interstate Commerce Commission on April 13, 1990, pursuant to Title 49 U.S.C. § 11343. The Tennessee Public Service Commission, however, has issued an order requiring the plaintiff to cease and desist from integrating the operations of HTL and MFL, on the grounds that the state issued certificates of convenience and necessity are nontransferable for a period of five years, and therefore they may not be tacked or joined by the plaintiff at this time.

 As a preliminary matter, the Court will address the argument raised by the defendants at the hearing that the Court must dismiss this action on the basis of the abstention doctrine of Younger v. Harris, 401 U.S. 37, 91 S. Ct. 746, 27 L. Ed. 2d 669 (1971). Younger requires that the Court conduct a three-part analysis to determine if abstention is appropriate. Federal Express Corp. v. Tennessee Public Service Comm'n, 925 F.2d 962, 969 (6th Cir. 1991). The first prong of this analysis asks whether there is a pending state judicial proceeding on the matter before the Court. Id. In this case, unlike the facts in Federal Express Corp., *fn1" there is no pending state judicial proceeding. Accordingly, abstention is not appropriate in this matter.

 The entry of a temporary restraining order is within the discretion of the district court judge. Tyson Foods, Inc. v. McReynolds, 865 F.2d 99, 101 (6th Cir. 1989). In deciding whether such an order is appropriate, the Court must consider whether the moving party will suffer irreparable harm without the order, and whether that party has a reasonable chance of ultimately prevailing on the merits. Id. at 101; Tennessee Public Service Comm'n v. United States, 275 F. Supp. 87, 90 (M.D. Tenn. 1967); see also 11 Wright & Miller, Federal Practice and Procedure, § 2951. The Court may also weigh the potential harm that an injunction would cause to the opposing party, and where the public interest lies. Tyson, 865 F.2d at 101.

 The central question in the application before the Court is whether the Tennessee Public Service Commission is preempted by the Commerce and Supremacy Clauses of the U.S. Constitution and 49 U.S.C. § 11341(a) from enforcing its so-called non-tacking requirement against the plaintiff.

 Under 49 U.S.C. § 11341(a), the Interstate Commerce Commission has exclusive power to approve the merger or acquisition of two or more motor carriers. In pertinent part, this provision states:

 
A carrier or corporation participating in or resulting from a transaction approved by or exempted by the Commission under this subchapter may carry out the transaction, own and operate property, and exercise control or franchises acquired through the transaction without the approval of a State authority. A carrier [or] corporation . . . participating in that approved or exempted transaction is exempt from the antitrust laws and from all other law, including State and municipal law, as necessary to let that person carry out the transaction, hold, maintain, and operate property, and exercise control or franchise acquired through the transaction.

 Id. Thus, a state may not act as an economic "gatekeeper," requiring state approval of mergers or acquisitions of motor carriers operating within its jurisdiction.

 Similarly, in the case at bar, the ICC held that the TSPC's authority to restrict the transfer of HTL's and MFL's certificates of necessity and convenience was preempted by section 11341(a). Con-Way Southern Express, No. MC-F-19568, at 2-3. That is, the TSPC was preempted by the Federal statute from blocking the merger.

 The defendant now seeks to enforce its so-called non-tacking provisions against the plaintiff. This would have the effect of unraveling the merger between the plaintiff and the companies it acquired last year. Under 49 U.S.C. § 11341(a), the TSPC is expressly barred from doing this because it would, in effect, upset the ICC's approval of the merger. Therefore, there is a reasonable probability that the plaintiff will prevail on the merits of its case.

 If the merger of these carriers is proper, and the defendants' cease and desist order is allowed to stand, it appears that the plaintiff stands to suffer irreparable injury. In order to carry out the merger, and in reliance on the ICC's authorization, the plaintiff opened four service centers, hired 123 additional employees, and added 183 pieces of equipment. Under the cease and desist order, the plaintiff would be unable to offer the integrated operations made possible by the ...


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