McChord v. Louisville & Nashville Railroad

Background

A group of railroad companies asked a federal court to permanently block the Kentucky Railroad Commission from acting under an 1900 state law that the lower court held unconstitutional. The railroads said the commission’s orders would be self-executing, would expose them to many criminal prosecutions and financial ruin, and that they had no adequate legal remedy because courts could not review the commission’s rate findings first.

Reasoning

The main question was whether a court should use equity to stop the commission from carrying out the statute before it acted. The Court said fixing rates is essentially a legislative-type action and that preliminary injunctions against such official action are generally improper. It reviewed Kentucky statutes and concluded the commission has a duty to enforce rates and to initiate prosecutions when warranted, and that the 1900 law did not repeal that duty by implication. Because enforcement is a commission responsibility, the railroads could not rely on the threat of multiple prosecutions to justify blocking the commission in advance. The Court reversed the injunctions and ordered the lower courts to dismiss the bills.

Real world impact

The decision limits railroads’ ability to get a federal court to stop a state commission before rates are set and enforced. Enforcement and criminal charges remain matters for the commission and state procedures first, and whether enforcement after rates are fixed can be blocked was left undecided.