Burlington Northern, Inc. v. Weyerhaeuser Co.

• Decision Date: 25 October 1983
• Docket Number: No. 82-3598,82-3598
• Citation: 719 F.2d 304
• Parties: BURLINGTON NORTHERN, INC., a Delaware corporation, Plaintiff-Appellant, v. WEYERHAEUSER COMPANY, a Washington corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 304

719 F.2d 304

BURLINGTON NORTHERN, INC., a Delaware corporation, Plaintiff-Appellant, v. WEYERHAEUSER COMPANY, a Washington corporation, Defendant-Appellee.

No. 82-3598.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 10, 1983.

Decided Oct. 25, 1983.

George C. Inman, Jr., Seattle, Wash., for plaintiff-appellant.

William A. Helsell, Helsell, Fetterman & Martin, et al., Seattle, Wash., for defendant-appellee.

Appeal from the United States District Court, Western District of Washington.

Before KILKENNY and FLETCHER, Circuit Judges, and JAMESON, District Judge. ^*

KILKENNY, Circuit Judge:

Burlington Northern appeals from an order of the district court dismissing its action against Weyerhaeuser. It claims that Weyerhaeuser should have paid interstate tariff rates on certain rail shipments of logs transported between April 26, 1976, and December 31, 1978. These shipments took place entirely within Washington. Burlington Northern contends that it was actually the first leg of continuing transportation to the Orient in foreign commerce. The district court held that the shipments were intrastate and, therefore, Weyerhaeuser had paid the proper intrastate tariff rates. We affirm.

FACTS

Burlington Northern transported approximately 39,000 million board feet (MBF) of Weyerhaeuser logs, 3,749 rail carloads, during the subject period. These shipments originated at Weyerhaeuser's inland sort yards throughout Washington and were destined for its Tacoma, Washington sort yard (TSY). Burlington Northern initially billed Weyerhaeuser at intrastate tariff rates. Later, upon learning that the Interstate Commerce Commission (ICC) was investigating the shipments, Burlington Northern rebilled Weyerhaeuser at the interstate tariff rates. Weyerhaeuser refused to pay the additional amount. ¹

TSY is primarily utilized for sorting, scaling and loading logs onto ships destined for the Orient. The record indicates that the facility is also used as a marshaling center where logs are delivered for further transshipment to other Weyerhaeuser mills. During the subject period logs were transported by six different methods. ² Burlington Northern's shipments accounted for only a small percentage of the total volume of logs delivered to TSY. ³ In fact, during this period Weyerhaeuser exported 913,624 MBF of logs from its TSY facility. In addition, it transshipped 48,391 MBF from TSY to other Weyerhaeuser mills in Washington. The evidence indicates that more logs were transshipped within Washington each year than delivered to TSY by Burlington Northern.

During transportation from the inland sort yards to TSY the logs remained under Weyerhaeuser's complete control. Title did not pass to export purchasers until after the logs had arrived at TSY and were later delivered to their ships. ⁴ Prior to that time Weyerhaeuser maintained absolute control and power to divert logs to any uses in the best interest of the company.

Upon arriving at TSY logs were turned over to Puget Sound Bureau scalers. The scalers, who were not Weyerhaeuser employees, sorted the logs according to Bureau standards to determine which were suitable for export. Some export quality logs were subsequently de-barked. This process began in December, 1977. Weyerhaeuser discovered that de-barking increased the volume of logs that could be loaded onto ships. The bark was converted into a new product, beauty bark, and sold locally. Approximately one-third of all logs delivered to TSY during the subject period were de-barked.

Export quality logs were eventually loaded onto arriving ships, which called on TSY during this period at an average of eight per month. Approximately 90 percent of these ships were loaded pursuant to long-term contracts. Burlington Northern contends that these contracts were firm commitments that obligated Weyerhaeuser to deliver logs to TSY at regular intervals to accommodate scheduled ship arrivals. Consequently, when the logs left the inland sort yards destined for TSY they had already embarked on the first leg of continuing transportation to the Orient. Weyerhaeuser maintains that the contracts did not obligate it to deliver any of the logs transported by Burlington Northern to TSY for exportation. Furthermore, that their final destination was uncertain until sometime after the logs arrived at TSY.

On February 10, 1982, Weyerhaeuser moved for summary judgment. The district court denied the motion, ruling that there existed a factual question regarding Weyerhaeuser's intentions when it shipped logs from the inland sort yards to TSY. The court suggested that it read the depositions and other pretrial materials and render a decision on the merits. Both parties agreed. After further consideration, the district court held that the shipments were intrastate in nature. It based its decision primarily on the fact that Weyerhaeuser retained absolute control of the logs until after they had arrived at TSY. It held that

[b]ecause of this element of unqualified ownership and unrestrained power to direct and divert the logs to whatever use [Weyerhaeuser] might elect after their arrival at TSY, and notwithstanding any generalized intention that the logs might be shipped abroad after their arrival in Tacoma, the court finds that the shipments

from the sort yards in the woods were intrastate shipments.

ISSUE

The sole issue on appeal is whether the district court correctly determined that the log shipments were not in interstate commerce within the meaning of the Interstate Commerce Act, 49 U.S.C. Sec. 1001 et seq.

STANDARD OF REVIEW

This case involves a combination of disputed factual findings and conclusions of law. We are free to review the district court's conclusions of law. See Hoptowit v. Ray, 682 F.2d 1237, 1245 (CA9 1982). However, findings of fact can be overturned only when clearly erroneous. FRCivP 52(a); See Hoptowit, at 1245. A finding of fact is deemed clearly erroneous when although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been committed. Gay v. Waiters' and Dairy Lunchmen's Union, 694 F.2d 531, 539 (CA9 1982).

Burlington Northern's contention that a "more careful scrutiny" should be applied in this case is meritless. It is well established that the clearly erroneous standard of review applies to findings of fact even when the district court relies solely on a written record. See Nicholson v. Board of Education, 682 F.2d 858, 864 n. 6 (CA9 1982); United States v. Mountain States Construction Company, 588 F.2d 259, 264 n. 5 (CA9 1978); Lundgren v. Freeman, 307 F.2d 104, 115 (CA9 1962).

DISCUSSION

I. Disputed Factual Findings.

At the outset we must consider Burlington Northern's contention that the district court based its ultimate decision, in part, upon erroneous factual findings. In particular, Burlington Northern claims that (1) Weyerhaeuser specifically intended at the inland sort yards to export all logs transported to TSY; and (2) Weyerhaeuser's long-term contracts obligated it to transport the subject rail shipments to TSY for exportation on arriving ships.

The record contains substantial evidence to support the district court's determination that Weyerhaeuser did not have the requisite fixed and specific intent at the inland sort yards to export all logs transported to TSY. The evidence consists mainly of deposition testimony given by Weyerhaeuser employees involved at the management level with the transportation and processing of logs for Weyerhaeuser. The employees stated that most, but not all, of the logs transported to TSY were generally intended for probable export sale. However, they also indicated that some logs were sent to TSY with the intent that they would likely be transshipped to other Weyerhaeuser mills.

The statements given by Weyerhaeuser's Export Log Marketing Manager fairly summarize those of other employees deposed. He stated that

[t]he Tacoma Sort Yard ... is a distribution or marshaling yard for Weyerhaeuser logs. It receives its logs from wood yards, and logging sites ... Most, but not all, of the logs shipped to Tacoma are intended for probable export sale. Some logs are sent to Tacoma with the intent that they will likely be transshipped to another Weyerhaeuser facility for manufacture into various forest products....

No log that is sent to Tacoma is irrevocably committed to a specific end use at the time it is shipped from the woods. Weyerhaeuser owns and controls all the logs at Tacoma and has the freedom to dispose of them in any manner that is in the best interest of the company. Our export customers have no interest in, or right to, any log until Weyerhaeuser delivers it to the vessel.

We find nothing in the record to show that Weyerhaeuser had a fixed and specific intent to export any particular logs that were transported by Burlington Northern to TSY during the subject period. It is clear that Weyerhaeuser generally expected to export most of the logs delivered to TSY After a careful review of the long-term contract before us, we are convinced that it did not obligate Weyerhaeuser to deliver any particular logs to TSY for exportation. ⁵ The terms of the contracts required Weyerhaeuser to supply arriving ships with a prearranged volume of logs for export at a negotiated price. ⁶ Scheduled ship arrivals and advance notice requirements kept the company apprised of the volume of logs needed at TSY during any given period of time. However, Weyerhaeuser retained absolute control over the logs until after they arrived at TSY, including the power to divert the logs to any other use. The export purchasers had no interest in the logs until they were delivered to their ships.

but the final destination--intrastate, interstate or foreign--was uncertain until after the logs arrived at TSY. Moreover, we reject Burlington Northern's claim that Weyerhaeuser's long-term contracts require a contrary result.

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