Square D Co. v. Niagara Frontier Tariff Bureau, Inc.

• Decision Date: 09 April 1985
• Docket Number: No. 669,D,669
• Citation: 760 F.2d 1347
• Parties: 1985-1 Trade Cases 66,549 SQUARE D COMPANY and Big D Building Supply Corp., Plaintiff-Appellants, v. NIAGARA FRONTIER TARIFF BUREAU, INC.; Bondy Cartage Limited; Dominion-Consolidated Truck Lines, Limited; ICL International Carriers Limited; Inter-City Truck Lines (Canada), Inc.; TNT Canada, Inc., Defendant-Appellees. ocket 84-7831.
• Court: U.S. Court of Appeals — Second Circuit

Page 1347

760 F.2d 1347

1985-1 Trade Cases 66,549

SQUARE D COMPANY and Big D Building Supply Corp., Plaintiff-Appellants, v. NIAGARA FRONTIER TARIFF BUREAU, INC.; Bondy Cartage Limited; Dominion-Consolidated Truck Lines, Limited; ICL International Carriers Limited; Inter-City Truck Lines (Canada), Inc.; TNT Canada, Inc., Defendant-Appellees.

No. 669, Docket 84-7831.

United States Court of Appeals Second Circuit.

Argued Jan. 14, 1985.

Decided April 9, 1985.

Douglas V. Rigler, Washington, D.C. (Linda H. Kamm, Michael Fischer, Foley & Lardner, Washington, D.C.; Joseph E. Zdarsky, Kavinoky & Cook, Buffalo, N.Y.), for plaintiff-appellant, Square D. Co.

H. Laddie Montague, Alan M. Sandals, Berger & Montague, P.C., Philadelphia, Pa.; Arnold Levin, Howard Sedran, Levin and Fishbein, Philadelphia, Pa., for plaintiff-appellant, Big D Bldg. Supply Corp.

Donald L. Flexner, Washington, D.C. (William Randolph Smith, Lisa B. Rovin, Crowell & Moring, Washington, D.C.), for defendant-appellee, Dominion-Consol. Truck Lines, Ltd.

Lester M. Bridgeman, Louis E. Emery, Bridgeman & Urbancyzk, Washington, D.C., for defendant-appellee, Inter-City Truck Lines (Canada) Inc.

Bryce Rea, Jr., Donald E. Cross, Rea, Cross & Auchincloss, Washington, D.C.; Sanford M. Litvack, Clark E. Walter, Donovan, Leisure, Newton & Irvine, New York City, for defendant-appellee, Niagara Frontier Bureau, Inc.

Peter A. Greene, Charles L. Freed, Thompson, Hine & Flory, Washington, D.C., for defendant-appellee, ICL Intern. Carriers Ltd.

John W. Bryant, Eames, Wilcock, Mastej & Bryant, Detroit, Mich., for defendant-appellee, Bondy Cartage Ltd.

Peter D. Standish, Joel B. Harris, Weil, Gotshal & Manges, New York City, for defendant-appellee, TNT Canada, Inc.

Before FEINBERG, Chief Judge, FRIENDLY and KAUFMAN, Circuit Judges.

FRIENDLY, Circuit Judge:

This is an appeal from an order of the District Court for the Western District of New York, Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 596 F.Supp. 153 (1984), which dismissed appellants' complaints under Secs. 4 and 16 of the Clayton Act, 15 U.S.C. Secs. 15, 26, for failure to state a claim on which relief can be granted. The principal issue is whether Keogh v. Chicago & N.W. Ry., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922), has been overruled so far as its language extends to rates filed with but not investigated and approved by the Interstate Commerce Commission ("ICC"), or, failing that, whether the reasoning underlying that language is so much in conflict with later developments that an inferior court should disregard it. While agreeing with appellants that much of the reasoning of Keogh seems outdated, we hold that its language has not been overruled and that if there is to be an overruling, that task is for the Supreme Court. We therefore affirm the district court's principal ruling. However, we also hold that appellants' request for injunctive relief was prematurely dismissed and that appellants should be allowed to replead their damages claims, if they so choose and properly can, to allege injury they have suffered as a consequence of acts of the defendants other than the fixing of rates.

The case before us is a consolidation of two separately filed suits. Both appellants, who were plaintiffs below, are corporations that purchase from the defendants freight transport by motor carrier between the United States and Canada. Appellee Niagara Frontier Tariff Bureau, Inc. ("NFTB") is a rate bureau whose permissible activities are described in an agreement filed with and approved by the ICC. Niagara Frontier Tariff Bureau, Inc.--Agreement, 297 I.C.C. 494 (1955). The other appellees are Canadian motor carriers engaged in the transportation of freight between the United States and Canada. Both complaints were brought on behalf of appellants individually and as representatives of a class comprised of all other persons and businesses who purchased from defendants freight transport between the United States and the Province of Ontario, Canada.

The complaints alleged substantially as follows: ¹ Each of the motor carrier appellees was a party to the collective ratemaking agreement approved by the ICC for the NFTB, which authorized the members of the NFTB to set rates collectively for motor carrier freight traffic between the United States and Canada through authorized committees if the motor carriers adhered to the procedures set forth in the agreement and in ICC regulations. In accordance with the requirements of the Reed-Bulwinkle Act, 49 U.S.C. Sec. 10706(b)(3)(B)(ii) (as amended), the rate bureau agreement preserved the right of each carrier to take independent action. The complaints alleged that at least as early as 1966 and continuing at least into 1981, appellees engaged in a conspiracy "to fix, raise and maintain prices and to inhibit or eliminate competition for the transportation of freight by motor carrier between the United States and the Province of Ontario, Canada without complying with the terms of the NFTB agreement and by otherwise engaging in conduct that either was not or could not be approved by the ICC." More specifically, it was alleged that the appellees established a "Principals Committee" composed of the senior management officials of the NFTB carriers that had authority to operate outside the Province of Ontario. Although this Committee did not have ICC authorization or approval to engage in rate-making, the appellants alleged that, through the Committee, appellees "engaged in the joint setting of rates and related policies and also agreed upon methods by which to inhibit competition for the transportation of freight by motor carrier between the United States and the province of Ontario, Canada;" set and controlled NFTB rate levels without complying with the notice, publication, public hearing or record keeping requirements of ICC regulations; planned "threats, coercion and retaliation" against NFTB member carriers for exercising the right of independent action and carried out such threats; and filed tariffs with the ICC in furtherance of the conspiracy. As a result of the conspiracy, appellants alleged, rates for the transportation of freight by motor carrier between the United States and Ontario were fixed at artificial and non-competitive levels, competition between and among the appellee motor carriers was restrained, competition generally in trade and commerce in the transportation of freight by motor service between the United States and Canada was suppressed, and purchasers of freight transport between the United States and Ontario were deprived of free and open competition. The injury suffered was alleged by Square D to be that shippers "have not been able to purchase transportation at rates determined by free and open competition and have been injured in their business and property in that they have paid more for motor freight transport between the United States and the Province of Ontario, Canada than they would have paid in a freely competitive market." Big D alleged substantially the same injury, although this was phrased in slightly different language. Appellants sought damages and injunctive relief.

Appellees moved, pursuant to F.R.Civ.P. 12(c) and 12(h)(2), for judgment on the pleadings as to appellants' claim for damages on the basis of Keogh v. Chicago & N.W. Ry., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922). Appellants contended that Keogh had been overruled by the Reed-Bulwinkle Act, Pub.L. No. 80-662, 62 Stat. 472 (1948), (current version at 49 U.S.C. Sec. 10706), and also by the Supreme Court's decisions in Carnation Co. v. Pacific Westbound Conf., 383 U.S. 213, 86 S.Ct. 781, 15 L.Ed.2d 709 (1966) and ICC v. American Trucking Ass'n, --- U.S. ----, 104 S.Ct. 2458, 81 L.Ed.2d 282 (1984). Disagreeing with this and going beyond the terms of the motion, Chief Judge Curtin did not limit his holding to the damages claims, and dismissed the complaints in their entirety. This appeal followed.

The Keogh opinion

In Keogh, a shipper of excelsior and flax tow brought an action under the Sherman Act alleging that rail carriers had restrained competition by combining to fix rates. The challenged rates had been duly filed by the carriers with the ICC and had been attacked there by shippers. The ICC suspended the tariffs pending investigation, but approved the new rates after extensive hearings in which Keogh participated; the challenged rates had not been made effective until after they had been so approved. The Supreme Court held that while the Interstate Commerce Act ("ICA") does not immunize regulated carriers from antitrust liability in Government proceedings, a private shipper may not recover treble-damages because he lost the benefit of lower rates which he would have enjoyed but for the conspiracy. 260 U.S. at 161-62, 43 S.Ct. at 49. Rather than limiting its holding to cases where, as in Keogh, rates had been investigated and approved by the ICC, the Court said broadly that shippers could not recover treble-damages for overcharges whenever tariffs have been filed. Id. at 163, 43 S.Ct. at 49.

Justice Brandeis advanced four reasons for this result. The first, and most important, turns on the existence of a remedy in the ICA respecting rates. He began by stating that

[a] rate is not necessarily illegal because it is the result of a conspiracy in restraint of trade in violation of the Anti-Trust Act. What rates are legal is determined by the Act to Regulate Commerce.

Id. at 162, 43 S.Ct. at 49. He pointed out that under Sec. 8 of the latter act, 49 U.S.C. Sec. 8 (current version at 49 U.S.C. Sec. 11705(b)), the exaction of any rate that is illegal under the ICA makes the carrier liable to the person injured thereby for the full amount of damages together with a reasonable attorney's fee, recoverable either by complaint before the ICC or in an action in a federal court; thus if the conspiracy complained of in Keogh had resulted in rates which the...