Kansas City Southern has asked the Surface Transportation Board to reject Canadian Pacific’s petition for expedited declaratory relief, which KCS claims would assist CP in preparing a “hostile” control application.
“On May 27, 2021 … CP filed a petition for expedited declaratory relief … asking the [STB] to order that, despite CP now being in the position of a hostile acquirer, (1) KCS has a continuing obligation to provide CP with the information CP needs to prepare, file and defend its forthcoming Application for Board authorization to control KCS; and (2) CP has a continuing right to access the information KCS has already provided to CP under the Protective Order,” Baker & Miller PLLC Attorneys William A. Mullins and Crystal M. Zorbaugh wrote in a June 16 filing to the STB:
“CP no longer has a legal or contractual right to the information sought,” and “[n]o precedent supports CP’s audacious request,” they noted. Additionally, CP’s Declaratory Order Petition “does not cite a single case where the Board or its predecessor held that a railroad seeking control of a target railroad is entitled to force the target railroad to divulge ‘confidential, proprietary, or commercially sensitive material that can cause serious competitive injury’ solely because it desires to file a control application over the objections of the target railroad.”
The STB should “deny” CP’s petition because there is no precedent and because granting it “would create bad public policy,” the attorneys wrote. “There is neither an active uncertainty nor controversy that would require a declaratory order to be granted at this time.”
However, if the STB decides there is one, the attorneys said, the agency should “declare that KCS has no obligation to produce or provide CP with any further information given that the CP-KCS merger agreement has terminated and KCS has withdrawn as a co-applicant in FD 36500 [CP-KCS proceeding]. Moreover, CP entered into a voluntary contract … with KCS that obligates CP to return all information and materials KCS previously provided.”
CP is not without recourse if the STB finds for KCS. The KCS attorneys wrote there is a “long-standing, formalized and approved process by which CP can have its application to acquire KCS reviewed and compared and contrasted to CN’s: It can file an inconsistent application in the FD 36514 [CN-KSC] proceeding … To the extent CP needs information to prepare and file an inconsistent application in FD 36514 or a separate application in FD 36500, then it can prepare and file its application based upon readily available information (including the confidential Carload Waybill Sample, which the Board has provided to CP in FD 36500). To the extent CP cannot obtain the necessary information required to put into an inconsistent or parallel application from sources available to it, it can seek a waiver from the otherwise applicable requirements to include such information in an application … But there is no legal or policy basis for the Board to compel KCS to assist CP in its hostile application.”
The next move is STB’s.