Maislin Industries v. Primary Steel, Inc.

• Decision Date: 17 July 1989
• Docket Number: No. 88-2267,88-2267
• Citation: 879 F.2d 400
• Parties: MAISLIN INDUSTRIES and U.S. Inc., Appellants, v. PRIMARY STEEL, INC., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 400

879 F.2d 400

58 USLW 2079

MAISLIN INDUSTRIES and U.S. Inc., Appellants, v. PRIMARY STEEL, INC., Appellee.

No. 88-2267.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 11, 1989.

Decided July 17, 1989.

Thomas M. Auchincloss, Jr., Washington, D.C., for appellants.

Charles J. Streiff, Pittsburgh, Pa., and Judith Albert, ICC, Washington, D.C., for appellee.

Before JOHN R. GIBSON and WOLLMAN, Circuit Judges, and BRIGHT, Senior Circuit Judge.

JOHN R. GIBSON, Circuit Judge.

This case presents the issue of whether the "filed rate doctrine," which requires a motor carrier to collect the rate published in a filed tariff, obliges Primary Steel, Inc. to pay Maislin Industries and U.S., Inc. an amount greater than that which the parties negotiated. The district court affirmed a ruling of the Interstate Commerce Commission finding it unreasonable under 49 U.S.C. Sec. 10701 for Maislin to recover tariff charges higher than those agreed to by the parties. Maislin Indus. v. Primary Steel, 705 F.Supp. 1401 (W.D.Mo. 1988). On appeal, Maislin challenges the district court's referral of the issue to the ICC, its subsequent affirmance of the ICC decision, and its denial of prejudgment interest. We affirm the judgment of the district court. ¹

Maislin brought this action against Primary Steel to recover freight tariff charges in the amount of $187,923.36. Quinn Freight Liners, Inc., a division of Maislin, made 1,081 shipments of steel for Primary Steel over a three year period. Pursuant to 49 U.S.C. Sec. 10761 (1982), Maislin had filed tariffs with the ICC containing rates and charges applicable to the transportation services provided for Primary Steel. Primary Steel and Maislin, however, had negotiated a shipment rate for an amount below the filed tariff rate, with the understanding that Maislin would file the lower negotiated rate with the ICC. Maislin never filed this negotiated rate with the ICC.

Maislin and its divisions later initiated Chapter 11 bankruptcy proceedings, and the alleged undercharges were discovered by an audit agency appointed by the bankruptcy court. The claimed undercharges of $187,923.36 represent the difference between the negotiated rates paid by Primary Steel and the tariff rate filed by Maislin with the ICC.

The district court relied on the doctrine of "primary jurisdiction," referring to the ICC the questions of whether Maislin's freight rates and charges were unreasonable and whether Maislin's practice of assessing and rebilling Primary Steel for tariff rates higher than those originally negotiated by the parties constituted an unreasonable practice in violation of 49 U.S.C. Sec. 10701(a).

The ICC relied upon its earlier decision in National Indus. Transp. League--Petition to Institute Rulemaking on Negotiated Motor Common Carrier Rates, Ex Parte No. MC-177, 3 I.C.C.2d 99 (1986) (hereafter Negotiated Rates ), and held that it could inquire into whether the imposition of undercharges would be an unreasonable practice under 49 U.S.C. Sec. 10701(a). ² Making extensive factual findings, the ICC determined that Maislin had quoted a rate other than a tariff rate to Primary Steel, that an agreement had been reached between the parties, and that Primary Steel had, in fact, reasonably relied on the rate quotation. The ICC concluded that Maislin would commit an unreasonable practice in requiring Primary Steel to pay undercharges for the difference between the negotiated rates and the tariff rates.

Both parties moved before the district court for summary judgment, Primary Steel relying on the ICC decision, and Maislin contending that the ICC decision was not binding, but only an advisory opinion, and that its decision was contrary to law. The district court found that the ICC decision resolved a question within its primary jurisdiction because the issue presented required an inquiry into the lawfulness of a carrier's practice, and that it was appropriate to defer to the special expertise and administrative discretion of the ICC. See Iowa Beef Processors, Inc. v. Illinois Centr. Gulf R.R. Co., 685 F.2d 255, 259 (8th Cir.1982). The district court concluded that the ICC decision, therefore, should be accorded substantial deference, and not be set aside unless it exceeded the ICC's statutory authority or was unsupported by substantial evidence. See Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 619-21, 86 S.Ct. 1018, 1026-27, 16 L.Ed.2d 131 (1966).

The district court recognized that in the past courts have not permitted deviation from the filed rate required under 49 U.S.C. Sec. 10761. See, e.g., Louisville & Nashville R.R. Co. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853 (1915). Further, the ICC has also refused to allow the waiver of undercharges based on ignorance or carrier misquotations. The district court, however, rejected the applicability of the filed rate doctrine, relying on the 1986 ICC policy change announced in Negotiated Rates. 3 I.C.C.2d 99. Negotiated Rates allows the ICC, upon a court's request, to determine whether collection of undercharges would constitute an unreasonable practice under 49 U.S.C. Sec. 10701. The district court observed that the ICC had not abolished the section 10761 requirement that mandates carriers to charge the tariff rate. Rather, it changed its policy on enforcing the "unreasonable practice" provision of section 10701(a), by allowing the consideration of equitable defenses. The court held that nothing prohibits the ICC from changing its policy and that this change in policy was justified and consistent with its practices under the Interstate Commerce Act. Finally, the district court concluded that the ICC's determination, that a negotiated rate existed and that collection of the alleged undercharge would be an unreasonable and unlawful practice, was supported by substantial evidence. Summary judgment was accordingly granted in favor of Primary Steel.

I.

Maislin first argues that the issue before the district court was not within the ICC's primary jurisdiction. The issue before the ICC here was whether Maislin's practice of assessing and rebilling Primary Steel for the filed tariff rate, which is higher than the rate negotiated and paid by Primary Steel, constituted an unreasonable practice in violation of 49 U.S.C. Sec. 10701(a). Maislin contends that this issue is a question of law and within the competence of the judiciary. In its Order of Referral, the district court, citing Iowa Beef Processors, 685 F.2d at 259, held that the doctrine of primary jurisdiction required it to refer the matter to the ICC, as "the claim presented to the court requires an inquiry into the lawfulness of a carrier's practice." The court concluded that this "policy decision should be dealt with uniformly and with reference to the underlying reasons and policies for the regulations," and that it is therefore "appropriate that we defer to the special expertise, competence, and administrative discretion possessed by the ICC." In its order granting Primary Steel's motion for summary judgment, the district court rejected Maislin's contention that it improperly referred the issue to the ICC.

We are satisfied that the reasonableness of Maislin's billing practices is a matter properly within the ICC's primary jurisdiction. The Supreme Court in United States v. Western Pac. R.R. Co., 352 U.S. 59, 65, 77 S.Ct. 161, 165-66, 1 L.Ed.2d 126 (1956), held that the ICC has primary jurisdiction over any matter that "raises issues of transportation policy which ought to be considered by the Commission in the interests of a uniform and expert administration of the regulatory scheme laid down by that Act." Further, the doctrine of primary jurisdiction should be exercised if the issues in the proceeding "turn on a determination of the reasonableness of a challenged practice," or raise a "question of the validity of a rate or practice." Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 304-06, 96 S.Ct. 1978, 1987-88, 48 L.Ed.2d 643 (1976). In Iowa Beef Processors, 685 F.2d 255, we held that the doctrine of primary jurisdiction dictated that the ICC determine, in the first instance, whether a practice provided for in a carrier's tariff is reasonable. See also General Am. Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 431-32, 60 S.Ct. 325, 330-31, 84 L.Ed. 361 (1940); Western Transp. Co. v. Wilson & Co., 682 F.2d 1227, 1231 (7th Cir.1982).

The Eighth Circuit has not specifically addressed the application of the primary jurisdiction doctrine in a case involving an allegation of unreasonable collection of undercharges. This issue, however, was addressed by the Eleventh Circuit in Seaboard System R.R. Co. v. United States, 794 F.2d 635, 638 (11th Cir.1986), where the court held that "finding a carrier practice unreasonable is the kind of determination that lies in the primary jurisdiction of the Commission." Likewise, a majority of the lower federal courts presented with similar claims for undercharges have referred the issue to the ICC. See, e.g., Delta Traffic Serv. Inc. v. Marine Lumber Co., 683 F.Supp. 754 (D.Or.1987); Motor Carrier Audit & Collection Co. v. Family Dollar Stores, Inc., 670 F.Supp. 644 (W.D.N.C.1987); In re Tucker Freight Lines, Inc., 85 B.R. 426 (W.D.Mich.1988). ³

The decision of whether to allow Maislin to collect undercharges directly involves the reasonableness of Maislin's billing practices. This determination requires the consideration of the facts and circumstances regarding both the existence of the alleged negotiated rate and the reasonableness of allowing Maislin to collect the undercharges. Such matters involve the special expertise of the ICC. We affirm the district court's holding that the ICC had primary jurisdiction to determine the reasonableness of Maislin's billing practices.

II.

The central argument asserted by Maislin is that the filed rate doctrine bars consideration of equitable defenses. Maislin argues that...