Middlewest Motor Freight Bureau v. United States

• Decision Date: 06 October 1970
• Docket Number: No. 19863. No. 19870.,19863. No. 19870.
• Citation: 433 F.2d 212
• Parties: MIDDLEWEST MOTOR FREIGHT BUREAU et al., Appellees, v. UNITED STATES of America, Appellant. MIDDLEWEST MOTOR FREIGHT BUREAU et al., Appellees, v. NATIONAL SMALL SHIPMENTS TRAFFIC CONFERENCE, INC., et al., Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

433 F.2d 212 (1970)

MIDDLEWEST MOTOR FREIGHT BUREAU et al., Appellees, v. UNITED STATES of America, Appellant.

MIDDLEWEST MOTOR FREIGHT BUREAU et al., Appellees, v. NATIONAL SMALL SHIPMENTS TRAFFIC CONFERENCE, INC., et al., Appellants.

No. 19863. No. 19870.

United States Court of Appeals, Eighth Circuit.

October 6, 1970.

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Donald L. Horowitz, Atty., Dept. of Justice, Washington, D. C., for appellant the United States; William D. Ruckelshaus, Asst. Atty. Gen., and Alan S. Rosenthal and Norman G. Knopf, Washington, D. C., on the briefs.

Arthur A. Arsham, New York City, for appellants, The National Small Shipments Traffic Conference, Inc., and others; John J. C. Martin, New York City, and Richard A. Bowman, Minneapolis, Minn., on the briefs.

Harold C. Evarts, Minneapolis, Minn., for appellees, Middlewest Motor Freight Bureau, and others; George D. Michalson, Kansas City, Mo., and Roland Rice, Washington, D. C., on the briefs.

Before VOGEL, Senior Circuit Judge, and GIBSON and BRIGHT, Circuit Judges.

GIBSON, Circuit Judge.

This is a consolidated appeal by the United States in its capacity as a shipper (No. 19,863) and by other intervening shippers (No. 19870) (hereinafter collectively referred to as shippers) from the judgment of a Three-Judge District Court in the District of Minnesota denying them restitution for excessive rates charged by appellees Middlewest Motor Freight Bureau and its operative interstate trucking carriers (hereinafter collectively referred to as carriers).

Initially the carriers sued under 28 U.S.C. § 2325 and other applicable statutes to enjoin the Interstate Commerce Commission's order canceling their then existing rates. This action called for the convening of a Three-Judge District Court. After obtaining a temporary restraining order from the district judge, the carriers were denied an interlocutory injunction against the ICC order and later requested and secured dismissal of their injunction request on the ground of mootness. In the meantime, the shippers had intervened in the action and had filed counterclaims for alleged excessive freight rates charged during the period of September 13 to 29, 1965, when, but for the intervention of the temporary restraining order, the ICC's order canceling the rates would have been in effect. According to the brief of the National Small Shipments Traffic Conference, Inc., et al., the rate increases were estimated to amount to a minimum of $70,000 per day, making the cost to the public and the concerned shippers for the period involved at least $1,190,000. The shippers contend this amount should be restored to them or to the various shippers who were forced to pay the increased rates by reason of the court's restraint of the ICC order. The carriers contend they are entitled to the rates collected for reasons hereafter discussed.

An understanding of the facts of this controversy requires a brief explication of the regulatory scheme established by Congress by which rates of carriers of goods shipped in interstate commerce are determined. According to the provisions of the Interstate Commerce Act, 49 U.S. C. § 316 et seq., carriers are required to establish "just and reasonable rates" to be charged to shippers of goods. These rates are established by the carriers' filing with the Interstate Commerce Commission tariffs (schedules) of the rates, fares, and charges to be applied by the carriers. The tariffs must be published as required by Commission regulations. The carriers may charge to shippers only the rates specified in the published tariffs. The tariffs, as filed and published by the carriers, are effective, unless the Interstate Commerce Commission finds in an administrative proceeding that they are not shown to be just and reasonable or that they are otherwise violative of the Act; but the Commission itself does not determine rates. If, after the various administrative procedures are followed, the Commission issues a final order rejecting a carrier's tariff, there are three options open to the carrier to determine its operating rates: (1) it may revert to the immediately prior published tariff; (2) it may file a new tariff with the Commission, with higher or lower rates, and thus begin the administrative process anew; or (3) it may seek judicial review of the Commission's order. In conjunction with this last option, an interlocutory or permanent injunction may be sought staying the Commission's order, in which case a three-judge district court must be convened under 28 U.S.C. § 2325.

Because the initiative for determining effective rates rests with the carriers and not with the Interstate Commerce Commission, and because the various administrative and judicial proceedings required to reach a final determination of the lawfulness of the carriers' rates are exceedingly complex, it often happens that in the interim between the filing of a tariff and the final disposition of that tariff, the carriers charge rates which are higher than ones to which they are entitled. In such a situation, the question arises of what remedies, if any are available to shippers who have paid the higher rates. In this case we consider aspects of that pragmatic question.

I. STATEMENT OF THE CASE

The carriers filed tariffs with the Interstate Commerce Commission containing increased rates and charges on less than truckload (LTL) shipments and any quantity shipments in middlewest and central territories which were to take effect July 1, 1963.¹ Upon the filing of a complaint by the shippers, the Commission suspended the new tariffs and ordered an investigation. Then on September 7, 1963, the suspension order was vacated by the ICC and the increased rates were permitted to take effect, but the investigation and hearing on the lawfulness of the tariffs was continued. The Commission issued its final report and order on February 24, 1965, finding that "the proposed increases are not shown to be just and reasonable," and ordering the tariffs canceled. The basis underlying the Commission's report and order was that the carriers had not met their burden of proof under 49 U.S.C. § 316 (g) justifying the increase in rates. LTL Class Rates & Minimum Charges between Midwest and Central Territories, 325 I.C.C. 106 (1965).

The effective date of the original order was April 14, 1965, but the carriers obtained several postponements of the order until an ultimate compliance date of September 13, 1965, was set. Throughout this period, the carriers had ample time to publish new tariffs with a statutory 30-day notice requirement, but failed to do so. On August 30, 1965, the ICC denied any further postponement of the compliance date. At this point, the carriers had the option of complying with the order or seeking judicial review. They chose review.

On September 9, 1965, the carriers filed suit against the Government and the Commission to enjoin enforcement of the order, which was to take effect September 13. The district judge pursuant to 28 U.S.C. § 2284(3) issued a temporary restraining order and required the carriers to post a bond in the amount of $200,000 (later increased to $300,000) for the payment of damages in case the order was wrongfully restrained.

The private shippers who had participated in the Commission proceedings sought and were allowed to intervene as parties defendant to oppose the injunction against the ICC order, and were also allowed to file counterclaims against the carriers for damages arising out of the operation of the temporary restraining order on the ICC's order of cancellation of the rates under review. The basis of the counterclaims was that the shippers were compelled to pay higher rates during the period of the temporary restraining order than they would have if the cancellation order had gone into effect. Later the Government was allowed to intervene in its capacity as a shipper and filed a similar counterclaim.

On September 24, 1965, the Three-Judge Court was convened to hear the carriers' motion for an interlocutory injunction against the ICC order. The motion was denied, but the temporary restraining order was continued in effect until September 29, 1965, to permit the drawing up of findings and a final order. On September 29, the Three-Judge Court issued its findings of fact and conclusions of law denying the interlocutory injunction and dissolving the temporary restraining order. The decision rested primarily on three grounds: (1) the carriers failed to demonstrate a reasonable probability that the Commission's order would be overturned; (2) the carriers had administrative remedies which would enable them to obtain increased rates; and (3) the magnitude of the loss to the public, combined with the "remote possibility" of the carriers' success, justified denial of the interlocutory injunction.

At this point in the litigation, the carriers found themselves in an uncomfortable legal situation. They were required by statute to charge only published tariffs, and they had published none other than those now effectively ordered canceled by the ICC. If they charged these tariffs, they faced the possibility of criminal sanctions under 49 U.S.C. § 322. If they charged new unpublished tariffs, even lower ones, they also incurred the possibility of criminal sanctions under that section. Whether or not this assessment of their legal position is in fact accurate is not material to this decision, but it nevertheless was a motivating factor in the further proceedings which ensued.

The carriers immediately made an ex parte application to the Commission seeking another postponement of the cancellation order. On September 30, the Commission postponed the effective date of the order to October 11, without further change in the order, and also expressly required only one day's² notice and publication of the pre-existing lower rates. On October 5, the carriers filed a new tariff to take effect November...