Bulldog Trucking, Inc., In re

• Decision Date: 10 October 1995
• Docket Number: Nos. 94-2002,94-2005 and 94-2006,94-2003,s. 94-2002
• Citation: 66 F.3d 1390
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: Fed. Carr. Cas. P 83,989, 64 USLW 2288, Bankr. L. Rep. P 76,718 In re BULLDOG TRUCKING, INCORPORATED, formerly known as Bulldog Trucking of Georgia, Incorporated, a Delaware corporation, Debtor. Langdon M. COOPER, Trustee for Bulldog Trucking, Incorporated, Plaintiff-Appellee, v. B & L, INCORPORATED, Defendant-Appellant, United States of America; Interstate Commerce Commission, Amici Curiae. In re BULLDOG TRUCKING, INCORPORATED, formerly known as Bulldog Trucking of Georgia, Incorporated, a Delaware corporation, Debtor. Langdon M. COOPER, Trustee for Bulldog Trucking, Incorporated, Plaintiff-Appellee, v. SHAW'S EXPRESS, INCORPORATED, Defendant-Appellant, United States of America; Interstate Commerce Commission, Amici Curiae. In re BULLDOG TRUCKING, INCORPORATED, formerly known as Bulldog Trucking of Georgia, Incorporated, a Delaware corporation, Debtor. Langdon M. COOPER, Trustee for Bulldog Trucking, Incorporated, Plaintiff-Appellee, v. CANAAN BROKERAGE, INCORPORATED; Agrolinz, Incorporated; Delta and Pine Land Company; J.C. Penney Company, Incorporated; Levelland Compress Company, Incorporated; N.L. Daughtry Fertilizer Company; Terra International, Incorporated; Tifton Aluminum Processing, Incorporated; Waverly Textile Processing, Incorporated, Defendants-Appellants, United States of America; Interstate Commerce Commission, Amici Curiae. In re BULLDOG TRUCKING, INCORPORATED, formerly known as Bulldog Trucking of Georgia, Incorporated, a Delaware corporation, Debtor. Langdon M. COOPER, Trustee for Bulldog Trucking, Incorporated, Plaintiff-Appellee, v. MEREDITH TRANSPORT, INCORPORATED; American Manufacturing Mutual, Defendants-Appellants, United States of America; Interstate Commerce Commission, Amici Curiae.

Page 1390

66 F.3d 1390

Fed. Carr. Cas. P 83,989, 64 USLW 2288,

Bankr. L. Rep. P 76,718

In re BULLDOG TRUCKING, INCORPORATED, formerly known as

Bulldog Trucking of Georgia, Incorporated, a

Delaware corporation, Debtor.

Langdon M. COOPER, Trustee for Bulldog Trucking, Incorporated, Plaintiff-Appellee, v. B & L, INCORPORATED, Defendant-Appellant,

United States of America; Interstate Commerce Commission,

Amici Curiae.

In re BULLDOG TRUCKING, INCORPORATED, formerly known as

Bulldog Trucking of Georgia, Incorporated, a

Delaware corporation, Debtor.

Langdon M. COOPER, Trustee for Bulldog Trucking, Incorporated, Plaintiff-Appellee, v. SHAW'S EXPRESS, INCORPORATED, Defendant-Appellant,

United States of America; Interstate Commerce Commission,

Amici Curiae.

In re BULLDOG TRUCKING, INCORPORATED, formerly known as

Bulldog Trucking of Georgia, Incorporated, a

Delaware corporation, Debtor.

Langdon M. COOPER, Trustee for Bulldog Trucking, Incorporated, Plaintiff-Appellee, v. CANAAN BROKERAGE, INCORPORATED; Agrolinz, Incorporated;

Delta and Pine Land Company; J.C. Penney Company,

Incorporated; Levelland Compress Company, Incorporated;

N.L. Daughtry Fertilizer Company; Terra International,

Incorporated; Tifton Aluminum Processing, Incorporated;

Waverly Textile Processing, Incorporated, Defendants-Appellants,

United States of America; Interstate Commerce Commission,

Amici Curiae.

In re BULLDOG TRUCKING, INCORPORATED, formerly known as

Bulldog Trucking of Georgia, Incorporated, a

Delaware corporation, Debtor.

Langdon M. COOPER, Trustee for Bulldog Trucking, Incorporated, Plaintiff-Appellee, v. MEREDITH TRANSPORT, INCORPORATED; American Manufacturing

Mutual, Defendants-Appellants,

United States of America; Interstate Commerce Commission,

Amici Curiae.

Nos. 94-2002, 94-2003, 94-2005 and 94-2006.

United States Court of Appeals Fourth Circuit.

Argued June 8, 1995.

Decided Oct. 10, 1995.

ARGUED: Paul H. Lamboley, Grove, Jaskiewicz, Gilliam & Cobert, Washington, DC, for Appellants. Charles Derrick Stodghill, Civil Division, United States Department of Justice, Washington, DC, for Amici Curiae. Joseph L. Steinfeld, Jr., Shawn, Mann & Niedermayer, L.L.P., Washington, DC, for Appellee. ON BRIEF: Frank W. Hunger, Assistant Attorney General, Mark T. Calloway, United States Attorney, J. Christopher Kohn, Tracy J. Whitaker, Civil Division, United States Department of Justice, Washington, DC; Henri F. Rush, General Counsel, Ellen D. Hanson, Deputy General Counsel, Theodore K. Kalick, Virginia Strasser, Interstate Commerce Commission, Washington, DC, for Amici Curiae. John T. Siegler, Shawn, Mann & Niedermayer, L.L.P., Washington, DC; Langdon M. Cooper, Alala, Mullen, Holland & Cooper, P.A., Gastonia, North Carolina, for Appellee.

Before WIDENER and MURNAGHAN, Circuit Judges, and FABER, United States District Judge for the Southern District of West Virginia, sitting by designation.

Vacated and remanded by published opinion. Judge WIDENER wrote the opinion, in which Judge MURNAGHAN and Judge FABER joined.

OPINION

WIDENER, Circuit Judge:

This consolidated appeal requires us to decide whether certain provisions of the Negotiated Rates Act of 1993, Pub.L. No. 103-180, 107 Stat. 2044, apply to proceedings in bankruptcy. In each case, the trustee for Bulldog Trucking, Inc., a bankrupt motor carrier, sought undercharges for shipping services provided to a shipper at the instance of a transportation broker.

The district court entered orders in each of four non-core adversary proceedings on June 21, 1994. The court decided that Secs. 2 and 8 of the Negotiated Rates Act of 1993 (Rates Act) ¹ were inapplicable to the bankrupt estate of Bulldog Trucking, granted summary judgment in favor of Bulldog's trustee on his claims for undercharges, certified the judgments under F.R.Civ.P. 54(b) ², and stayed enforcement of the judgments under F.R.Civ.P. 62(h). ³ In these orders, the district court adopted the recommended orders and memorandum opinions issued by the bankruptcy court on February 23 and 24, 1994. Defendants appeal, and we vacate the district court orders in each case and remand for further proceedings.

Bulldog's undercharge claims in each of the four proceedings now appealed are essentially identical, and such claims are not unique to this bankruptcy proceeding. In bankruptcy proceedings across the country, trustees have filed similar undercharge claims, based on the difference between a common carrier's tariff on file with the ICC and a lower, unfiled, negotiated rate. See Reiter v. Cooper, --- U.S. ----, ---- - ----, 113 S.Ct. 1213, 1215-17, 122 L.Ed.2d 604 (1993). Estimates of the total value of undercharge actions arising out of the numerous motor carrier bankruptcies that followed industry deregulation range from $200 million to $32 billion. See H.R.Rep. No. 359, 103rd Cong., 1st Sess. 8, reprinted in 1993 U.S.C.C.A.N. 2534, 2535; see also Reiter, --- U.S. at ---- - ----, 113 S.Ct. at 1215-17. We begin with a brief summary of the events producing this crisis, culminating in the passage of the Rates Act in 1993.

I.

At the time of the shipments in question, the Interstate Commerce Act (ICA), 49 U.S.C. Sec. 10101 et seq., required that all motor common carriers file their shipping rates with the ICC. 49 U.S.C. Sec. 10762(a)(1) (1991 pamphlet). ⁴ Under the ICA common carriers must charge, and shippers must pay, the applicable filed rate. 49 U.S.C. Sec. 10762(a)(1). Congress intended the filed rate requirement to promote transportation rates that are both reasonable and nondiscriminatory. Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 119, 110 S.Ct. 2759, 2762, 111 L.Ed.2d 94 (1990). The Supreme Court has strictly applied the filing requirements of the ICA through the filed rate doctrine, which "embodies the principle that a shipper cannot avoid payment of the tariff rate by invoking common-law claims and defenses such as ignorance, estoppel, or prior agreement to a different rate." Reiter, --- U.S. at ---- - ----, 113 S.Ct. at 1217-19.

In 1980, Congress passed the Motor Carrier Act (MCA), which partially deregulated the trucking industry by encouraging entry of new carriers into the industry, stimulating competitive pricing, and allowing carriers to operate under both common and contract authority. Pub.L. No. 96-296, 94 Stat. 793 (1980); see also Maislin, 497 U.S. at 133, 110 S.Ct. at 2769-70. In response to the MCA, the ICC promulgated regulations allowing common carriers to negotiate individual rates with shippers, a practice previously forbidden. See H.R.Rep. No. 359, reprinted in 1993 U.S.C.C.A.N. 2534, 2535. However, the MCA did not repeal the filed rate requirement, and, until 1994, carriers still had to file these individually negotiated rates with the ICC. 49 U.S.C. Sec. 10762(a)(1) (1991 pamphlet). Carriers often failed to do this. See Jones Truck Lines, Inc. v. Whittier Wood Products Co., 57 F.3d 642, 644 (8th Cir.1995).

The increased competition among carriers following passage of the MCA led to a rise in motor carrier bankruptcies. ICC v. Transcon Lines, --- U.S. ----, ---- - ----, 115 S.Ct. 689, 691-93, 130 L.Ed.2d 562 (1995). Trustees for bankrupt carriers began to pursue shippers that had paid discounted unfiled rates, claiming entitlement to the higher filed rate. Reiter, --- U.S. at ---- - ----, 113 S.Ct. at 1215-17. In response to the growing undercharge problem, the ICC declared in a policy statement it would consider on a case-by-case basis whether a carrier that attempts to collect retroactively a higher filed rate after having negotiated, billed, and collected a lower rate may be committing an "unreasonable practice" under 49 U.S.C. Sec. 10701(a). See NITL-Petition to Institute Rulemaking on Negotiated Motor Common Carrier Rates, 3 I.C.C.2d 99 (1986) (adopting Negotiated Rates policy); see also 5 I.C.C.2d 623 (1989) (clarifying ICC's policy toward negotiated rates).

The Supreme Court rejected the ICC's Negotiated Rates policy in Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 110 S.Ct. 2759, 111 L.Ed.2d 94 (1990). The Court held that the ICC exceeded its authority in applying the unreasonable practice cause of action to undercharge claims, because the MCA had not repealed the filed rate doctrine, and therefore the ICC was not free to ignore the ICA's filed rate requirement. Maislin, 497 U.S. at 130, 135, 110 S.Ct. at 2768, 2770-71.

The Negotiated Rates Act, drafted in part as a response to the Maislin decision, see H.R. No. 103-359, was signed into law on December 3, 1993. Pub.L. No. 103-180, 107 Stat. 2044, 2053. The Rates Act does not completely repeal outright the filed rate requirement, see 49 U.S.C. Sec. 10701(f)(7), but attempts to provide relief to shippers facing undercharge suits. Section 2, containing the remedial provisions of the Rates Act, creates three options for shippers. First, the Rates Act creates settlement options for shippers who negotiated and relied on an unfiled rate lower than the filed rate claimed by the trustee. 49 U.S.C. Sec. 10701(f)(2)-(4). Depending on the transportation provided, shippers can force the carrier to settle for from five to 20 percent of the value of the undercharge claim. 49 U.S.C. Sec. 10701(f)(2)-(4). To take advantage of the settlement options, the shipper must show that the motor carrier is no longer transporting property. 49 U.S.C. Sec. 10701(f)(1)(A).

The second option is a blanket exemption from undercharge liability for shippers that qualify as small-business concerns under the Small Business Act or charitable organizations under the Internal Revenue Code. 49 U.S.C. Sec. 10701(f)(9)(A) & (B). Shipments of recyclable material are also exempt from undercharge claims. 49 U.S.C. Sec. 10701(f)(9)(C). We decide today that this blanket exemption applies whatever the operating status of the motor carrier. See infra at III(A)(1).

The third option restores the unreasonable practice claim as overruled by the Supreme...