Locust Cartage Co. v. Transamerican Freight Lines, Inc.

• Decision Date: 03 August 1970
• Docket Number: No. 7498.,7498.
• Citation: 430 F.2d 334
• Parties: LOCUST CARTAGE CO., Inc., Plaintiff, Appellant, v. TRANSAMERICAN FREIGHT LINES, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

430 F.2d 334 (1970)

LOCUST CARTAGE CO., Inc., Plaintiff, Appellant, v. TRANSAMERICAN FREIGHT LINES, INC., Defendant, Appellee.

No. 7498.

United States Court of Appeals, First Circuit.

August 3, 1970.

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Arthur E. Nicholson, Boston, Mass., with whom Harold M. Linsky, Boston, Mass., and Mary E. Kelley, Medford, Mass., were on brief, for appellant.

Stephen J. Paris, Boston, Mass., with whom Alan G. Miller, Boston, Mass., was on brief, for appellee.

Before ALDRICH, Chief Judge, COFFIN, Circuit Judge, and FORD, District Judge.

COFFIN, Circuit Judge.

The Motor Carrier Act of 1935 forbids common carriers to engage in transportation without filing a tariff, 49 U.S.C. § 317(d), and obliges such carriers to charge their published rates "for transportation or for any service in connection therewith". 49 U.S.C. § 317(b). Relying on these provisions, appellant Locust Cartage Co., Inc. brought suit in a Massachusetts state court against appellee Transamerican Freight Lines, Inc., seeking to recover the difference between Locust's published rates and the rates it charged Transamerican over a two year period. Transamerican immediately removed to federal district court on the grounds of diversity. After a tortuous procedural history, which consumed four years and included both informal and formal opinions from the Interstate Commerce Commission, the case is here on appeal from a final judgment against Locust.

Both parties are common carriers by motor vehicle operating under certificates of convenience and necessity issued by the I.C.C.¹ Their dispute stems from a contract which Transamerican entered with one Paul C. Ryan in 1961. At that time, Transamerican, a carrier with extensive interstate operations, was experiencing difficulty in the operations of its Boston terminal. Ryan agreed to take over dock handling at the terminal and to perform pick up and delivery service between the terminal and other points in Massachusetts, both within and without the Boston commercial zone as defined in 49 C.F.R. § 1048.9. Under the terms of the contract, Transamerican issued all shipping documents and dealt with the public, while Ryan employed the drivers and controlled the physical details of the service. Since Ryan possessed neither state nor federal operating authority, he purported to lease his equipment to Transamerican, which obtained appropriate licenses for the vehicles in its own name.

Operations continued under this arrangement until February 1962, when Ryan purchased the stock of All Mass. Services, Inc., a common carrier authorized to provide service within Massachusetts. After changing the corporate name to Locust Cartage Co., Inc., Ryan caused the company to obtain new licenses for his vehicles and to file a notice with the I.C.C. adopting the tariffs of All Mass. Services. However, in spite of these indications that Locust intended to operate as a common carrier, Locust continued to perform pick up and delivery service for Transamerican and to charge Transamerican a rate other than the applicable tariff until late 1963, when I.C.C. investigators informed Locust that this practice was illegal. After extensive negotiations among Locust, Transamerican, and representatives of the Commission, Locust rectified its error by filing a concurrence in Transamerican's tariffs, effective as of October 1964.² Shortly thereafter, Locust filed suit to recover the difference between its tariffs and the rate it charged Transamerican from its date of birth in February 1962 to the date of its concurrence in October 1964.

In the district court, argument focused primarily on whether Locust's tariffs applied to the services which it performed for Transamerican. This issue, in turn, depended on whether the services in question were "transportation" within the meaning of 49 U.S.C. § 317(b) or a mere cartage operation. The district court initially directed the parties to seek an advisory opinion from the I.C.C. concerning whether Locust's published rates applied on the basis of several assumptions, the most important of which was that Transamerican did not exercise complete control over Locust's operations.³ When an informal opinion of the I.C.C. staff upheld Locust's claim, Transamerican moved to stay proceedings on the grounds that the issue of the applicable rate fell within the primary jurisdiction of the I.C.C. The district court then ordered Transamerican to initiate proceedings for a declaratory order before the Commission. Both parties submitted arguments and extensive affidavits to the Commission. On the basis of these affidavits, the I.C.C. trial examiner concluded that Locust's operations exhibited the characteristics of a common carrier rather than those of a mere cartage operator, and that Locust was therefore bound to charge its published rate for services outside the commercial zone of Boston.⁴ Division 2 of the Commission affirmed. 335 I.C.C. 46 (1969). However, the district court, relying on substantially the same evidence, concluded that Ryan and Transamerican intended no more than a cartage operation, and that subsequent developments did not alter their basic arrangement. The court therefore entered judgment against Locust.

I.

An initial question we must confront is whether the district court properly substituted its own findings of fact and conclusions of law for those of the I.C.C. This question, in our view, turns on two separate issues: first, whether the issue of Locust's duty to charge its published rates fell within the special competence of the I.C.C.; and second, whether the I.C.C. has exercised its competence by drawing independent findings and conclusions from the record before it.

Turning to the first issue, we note that although Transamerican invoked the primary jurisdiction of the Commission in the court below, neither party has pressed the question on appeal. The doctrine of primary jurisdiction, however, does more than prescribe the timetable of a lawsuit; it also allocates the law-making function between court and agency. United States v. Western Pacific R. R. Co., 352 U.S. 59, 65, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956). The doctrine is, moreover, especially relevant in cases like this, where courts are confronted with issues of fact arising under a complex regulatory scheme outside their normal experience. Far East Conference v. United States, 342 U.S. 570, 574, 72 S.Ct. 492, 96 L.Ed. 576 (1952). We have, therefore, on our own motion considered whether the question of Locust's obligation to charge its published rate fell within the primary jurisdiction of the I.C.C. This, in turn, depends on "whether the question raises issues of transportation policy which ought to be considered by the Commission in the interests of a uniform and expert administration of the regulatory scheme laid down by that Act." United States v. Western Pacific R. R. Co., 352 U.S. at 65, 77 S.Ct. at 166.

Applying this standard, it is apparent that the question of Locust's obligation raises significant issues of transportation policy. Under 49 U.S.C. § 317(b), Locust's obligation to charge its published rates depends on whether Locust is performing "transportation * * * or any service in connection therewith." The term "transportation" plays a key role in the regulatory scheme created by the Motor Carrier Act. The Act defines this term comprehensively to include "all vehicles operated by, for, or in the interest of any motor carrier * * * together with all facilities and property operated or controlled by any such carrier * * * and used in the transportation of passengers or property in interstate commerce * * *." 49 U.S.C. § 303(a) (19). Those who provide transportation for hire must possess either a certificate or a permit issued by the I.C.C. 49 U.S. C. § 303(c). Possession of operating authority requires a carrier to observe a variety of statutory obligations, including the obligation to charge published rates, whenever it performs any form of transportation. See 49 U.S.C. §§ 316, 317, 318. These provisions do not prevent one carrier from placing his equipment under the control of another under a lease or similar arrangement. In such cases, the user rather than the owner provides transportation within the meaning of the Act, Cecil G. Dixon, 21 M.C.C. 617 (1940), and the statute is enforced by treating the user as the operator of the equipment in question. See, e. g., 49 C.F.R. § 1057 (I.C.C. regulations on lease and interchange of equipment). Thus the question of whether a carrier performs transportation has important consequences not only for the carrier itself, but also for the agency charged with enforcing the Act.

There is, however, no single touchstone for resolving this question. One important factor is whether a carrier has held himself out as performing an integrated transportation service. But it is common for traffic solicited and billed by one carrier to move over the lines of another under an interline arrangement, and it is settled that one common carrier can act as an agent for another without losing his status as carrier. United States v. Brooklyn Eastern District Terminal, 249 U.S. 296, 39 S.Ct. 283, 63 L.Ed. 613 (1919). Another significant factor is whether a carrier retains sufficient control over an operation to discharge a carrier's responsibilities to shippers and the general public, but this question requires a weighing of several considerations, including whether the carrier assumes responsibility for the safety of equipment and control of daily operations. See Boston & Maine Transportation Co., 34 M.C.C. 599, 610-613 (1942). These factors illustrate that whether a carrier performs transportation cannot be determined by a simple verbal formula, but requires consideration of a complex of facts in the light of the broad remedial purposes of the Act. Compare United States v. Drum, 368 U.S. 370, 375-376, 82 S.Ct. 408, 7 L.Ed.2d 360 (1962). Of course, cou...