Hansen v. Norfolk and Western Ry. Co.

• Citation: 689 F.2d 707
• Decision Date: 24 September 1982
• Docket Number: No. 81-3004,81-3004
• Parties: 1982-2 Trade Cases 64,963 Robert HANSEN, d/b/a Hansen Trucking, Plaintiff-Appellant, v. NORFOLK AND WESTERN RAILWAY COMPANY, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 707

689 F.2d 707

1982-2 Trade Cases 64,963

Robert HANSEN, d/b/a Hansen Trucking, Plaintiff-Appellant, v. NORFOLK AND WESTERN RAILWAY COMPANY, et al., Defendants-Appellees.

No. 81-3004.

United States Court of Appeals, Seventh Circuit.

Argued May 12, 1982.

Decided Sept. 24, 1982.

Gregory A. Young, Watson & Rochford, Indianapolis, Ind., for plaintiff-appellant.

John L. Ropiequet, Arnstein, Gluck & Lehr, Chicago, Ill., James V. McGlone, Stewart, Branigin, Ricks & Schilling, LaFayette, Ind., for defendants-appellees.

Before BAUER and ESCHBACH, Circuit Judges, and JAMESON, Senior District Judge. ^*

ESCHBACH, Circuit Judge.

The plaintiff in this action appeals from the district court's dismissal, without prejudice, of his complaint that alleges various violations of the Revised Interstate Commerce Act, 49 U.S.C. §§ 10101-11916, and the antitrust laws. We are asked to decide whether the district court erred: (1) in determining that the Interstate Commerce Commission (ICC) has primary jurisdiction over this case, and (2) in dismissing, rather than staying, the plaintiff's action. Noting jurisdiction under 28 U.S.C. § 1291, we affirm the district court's determination that the ICC has primary jurisdiction, but we reverse the dismissal of the complaint and remand the case with instructions to stay the action pending proceedings by the ICC.

I. THE COMPLAINT

Plaintiff Hansen Trucking, which does business in Illinois and Indiana, is a motor carrier of general freight commodities. The complaint names as defendants: the Norfolk and Western Railway Company (N & W), which transports freight by rail throughout numerous states, including Illinois and Indiana; ten other rail carriers (referred to collectively as the "Railway Companies"); National Piggyback Services (NPS), whose business is not identified; Piggyback Transportation Services (PTS), a motor carrier allegedly formed by N & W and NPS for the sole purpose of providing motor carrier service to N & W and NPS; and thirteen firms (identified collectively as "Shippers"), which allegedly utilize the common carrier services of N & W or PTS.

The plaintiff, in Count I of the complaint, alleges that N & W has violated the tariff requirements of 49 U.S.C. § 10761(a). ¹ In particular, the plaintiff charges N & W with offering improper rebates, preferences, and kickbacks to its customers and accuses NPS, PTS, the Railway Companies, and the Shippers, of conspiring with N & W to circumvent the applicable tariffs.

Count I also contains the allegation that PTS "provided substituted service for Defendant N & W without any tariff provisions or authorities ... which is contrary to and prohibited by the Revised Interstate Commerce Act, 49 U.S.C. § 10761(a)." The term "substituted service" refers to the use of "piggyback" motor freight trailers that can be loaded onto railway flatcars. See generally American Trucking Associations, Inc. v. Atchison, Topeka & Santa Fe Railway Co., 387 U.S. 397, 87 S.Ct. 1608, 18 L.Ed.2d 847 (1967).

The plaintiff, in Count II, alleges that the defendants have violated sections one and two of the Sherman Act, 15 U.S.C. §§ 1 and 2, and section two of the Clayton Act, 15 U.S.C. § 13, by conspiring "to fix and control the common carrier services between various points of origin of shipment, to intermediate points of rail carriers' and to ultimate points of destination." The plaintiff also contends that in furtherance of this conspiracy, "Defendants N & W and NP(S) created Defendant PTS ... for the single and sole purpose of providing motor carrier service for said Defendants in violation of the Revised Interstate Commerce Act, 49 U.S.C. § 10101 et seq., and the Interstate Commerce Commission's tariffs, regulations and rates." The formation and operation of PTS, the plaintiff alleges, "has effectively precluded (plaintiff) from competing fairly and openly with Defendant PTS except on the terms and conditions as controlled by Defendants N & W, NP(S) and PTS, all of which is in violation of the (Sherman and Clayton Acts)."

II. PRIMARY JURISDICTION

A. The plaintiff contends that it has an unqualified right to select the forum that will initially hear its claim that the defendants have violated provisions of the Revised Interstate Commerce Act. This assertion is based on the language of 49 U.S.C. § 11705(c)(1), which provides in pertinent part:

A person may file a complaint with the Commission under section 11701(b) of this title or bring a civil action under subsection (b)(1) or (2) of this section to enforce liability against a common carrier providing transportation subject to the jurisdiction of the Commission ....

The plaintiff's contention ignores the history of § 11705(c)(1) and is inconsistent with the cases that have construed the language of this provision. Section 11705(c)(1) was enacted in 1978, Pub. L. No. 95-473, 92 Stat. 1467, and is essentially a recodification of § 9 of the original Interstate Commerce Act of 1887, 24 Stat. 382, 49 U.S.C. § 9 (1976) (repealed 1978). Current § 11705(c)(1) and former § 9 are identical in all relevant aspects, ² and as early as 1907, the Supreme Court held that the doctrine of primary jurisdiction was applicable to actions brought pursuant to former § 9, Texas & Pacific Railway Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553 (1907). In Interstate Commerce Commission v. Atlantic Coastline Ry. Co., 383 U.S. 576, 86 S.Ct. 1000, 16 L.Ed.2d 109 (1966), the Supreme Court, expounding upon the relationship between former § 9 and the primary jurisdiction doctrine, stated:

By § 9, the complainant is given the alternatives of seeking such damages by complaint to the Commission, ... or of bringing suit in a federal district court. But the primary jurisdiction doctrine requires initial submission to the Commission of questions that raise "issues of transportation policy which ought to be considered by the Commission ...."

Id. at 579, 86 S.Ct. at 1004 (quoting United States v. Western Pacific Railroad Co., 352 U.S. 59, 65, 77 S.Ct. 161, 165-166, 1 L.Ed.2d 126 (1965)). In light of this precedent and the fact that the 1978 revisions to the Interstate Commerce Act were primarily designed "to eliminate awkward and obsolete terms," Transway Corp. v. Hawaiian Express Service, Inc., 679 F.2d 1328, 1330 n. 4 (9th Cir. 1982), we are convinced that the doctrine of primary jurisdiction remains viable in the context of claims brought pursuant to § 11705(c)(1). See generally Cannon v. University of Chicago, 441 U.S. 667, 696-98, 99 S.Ct. 1946, 1957-1958, 60 L.Ed.2d 560 (1979) (it is appropriate to assume that Congress knows the judicial interpretations of statutes).

B. The doctrine of primary jurisdiction is a reflection of the fact that when a court is confronted with a claim as to which it shares concurrent jurisdiction with an administrative agency, there may be sound reasons for the court to stay its hand until the agency has applied its expertise to the salient questions. The doctrine comes into play when a claim is cognizable in a court but adjudication of the claim "requires the resolution of issues which, under a regulatory scheme have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views." United States v. Western Pacific Railroad Co., 352 U.S. 59, 64, 77 S.Ct. 161, 165, 1 L.Ed.2d 126 (1956).

No fixed formula exists for applying the doctrine of primary jurisdiction, but "in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over." Far East Conference v. United States, 342 U.S. 570, 574, 72 S.Ct. 492, 494, 96 L.Ed. 576 (1952). If a specialized agency, in the first instance, answers questions of tariff applications and constructions uniform and consistent regulation may be secured. See id.; Texas & Pacific Railway Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553 (1907).

Applying these principles, we believe that the plaintiff's complaint reveals ample grounds for invoking the doctrine of primary jurisdiction. Central to Count I of the complaint is the allegation that PTS, created by defendants N & W and NPS, provided piggyback motor freight service for N & W without any tariff provisions or authorities. That is, PTS is charged with illegally using motor trailers that can be loaded onto N & W's flatcars. ³ Piggyback service, however, poses difficult transportation policy problems involving the appropriate allocation of services between rail and motor carriers. Because the plaintiff's complaint raises such difficult problems, judicial consideration of this cause must await proceedings by the specialized agency created by Congress to deal with transportation policy-the ICC.

Indeed for many years the ICC has been concerned with the complex policy problems presented by piggyback service. In the 1960's the ICC promulgated a series of rules to govern piggyback service, see 49 C.F.R. §§ 500.2 and 500.3 (Supp. 1967), and the Supreme Court in American Trucking Associations, Inc. v. Atchison, Topeka, and Santa Fe Railway Co., 387 U.S. 397, 87 S.Ct. 1608, 18 L.Ed.2d 847 (1967), sustained the regulations' validity. The Court, recognizing the ICC's broad discretionary authority to regulate piggyback service, stated:

The controlling fact of the matter is that all piggyback service is, by its essential nature, bimodal. It partakes of both the railroad and the trucking functions. The proper allocation of these bimodal functions involves complex considerations. It is not and cannot be precise or mathematical. Railroads are not now confined to the rails. They operate trucks. They are permitted to assemble cargo and, if they so desire, to use their own trucks or subsidiary...