Rothery Storage & Van Co. v. Atlas Van Lines

• Decision Date: 09 November 1984
• Docket Number: Civ.A. No. 83-0450.
• Citation: 597 F. Supp. 217
• Court: U.S. District Court — District of Columbia
• Parties: ROTHERY STORAGE & VAN CO., et al., Plaintiffs, v. ATLAS VAN LINES, INC., Defendant.

597 F. Supp. 217

ROTHERY STORAGE & VAN CO., et al., Plaintiffs, v. ATLAS VAN LINES, INC., Defendant.

Civ.A. No. 83-0450.

United States District Court, District of Columbia.

October 30, 1984.

As Corrected November 9, 1984.

COPYRIGHT MATERIAL OMITTED

C. Jack Pearce, Robert J. Gallagher, Keith I. Clearwaters, Washington, D.C., for plaintiffs; Timothy J. Shearer, Washington, D.C., of counsel.

James vanR. Springer, R. Bruce Holcomb, Washington, D.C., for defendant.

MEMORANDUM

OBERDORFER, District Judge.

This is a private antitrust action brought pursuant to Section 1 of the Sherman Act, 15 U.S.C. § 1 (1982), against Atlas Van Lines, Inc. ("Atlas"), a nationwide van line company.¹ Plaintiffs are ten present and former agents of Atlas. They challenge an Atlas policy—made effective in August, 1983—under which Atlas announced that it would terminate its agency relationship with any agent that maintained independent operations in the interstate moving business unless the agent transferred its independent authority to do so to a separate and distinct (albeit affiliated) company. The case is presently before the Court both on defendant's motion for summary judgment and on plaintiffs' motion for partial summary judgment as to liability. After careful consideration of undisputed facts developed after extensive discovery and set out pursuant to Fed.R.Civ.P. 56 and Local Rule 1-9(h), as well as the arguments advanced by the parties in their memoranda and at oral argument, the Court concludes that, for the reasons set forth below, plaintiffs' motion for partial summary judgment as to liability must be denied, and defendant's motion for summary judgment must be granted.

I.

This lawsuit involves, in essence, the legality of Atlas's response to the regulatory and commercial changes resulting from the deregulation of the household goods moving industry in 1980. A brief overview of Atlas's methods of operation and of the recent changes in the industry is necessary to an understanding of the nature of the claims at issue.

Defendant Atlas Van Lines holds authority from the Interstate Commerce Commission ("ICC") to transport goods from state to state on a nationwide basis. Statement of Material Undisputed Facts in Support of Plaintiffs' Motion for Partial Summary Judgment As To Liability ¶ II-A (hereinafter "PSF" "Plaintiffs' Statement of Facts"); Defendant's Response to Plaintiffs' Statement of Material Undisputed Facts ¶ II-A (hereinafter "DRPF" "Defendant's Response to Plaintiffs' Facts"); Defendant's Statement of Material Facts As To Which There Is No Genuine Issue ¶ 1 (hereinafter "DSF" "Defendant's Statement of Facts"); Plaintiffs' Statement of Genuine Issues ¶ 1 (hereinafter "PSGI").² As has been typical of the operation of other national van lines, Atlas exercises this authority primarily through a group of "agent" moving companies around the country. These "agent" companies are independent entities that have entered into standardized "Agency Agreements" with Atlas to carry out interstate shipments under Atlas's authority, PSF ¶¶ II-C, V-P, DRSF ¶¶ II-C, V-P, Plaintiffs' Appendix I (hereinafter "Plaintiffs' App."), and that agree—in making Atlas shipments—to abide by the operating procedures, painting and maintenance standards, and uniform rates, inter alia, provided for by the Agency Agreement. See PSF ¶¶ V-O—V-X; DRPF ¶¶ V-O—V-X; DSF ¶¶ 2-13; PSGI ¶ 2-13. In addition, representatives of some of Atlas's agent companies sit on the Atlas board of directors, PSF ¶¶ II-K, V-A; DRPF ¶¶ II-K, V-A—a practice that has been typical in the industry during many years of ICC oversight, see S.Rep. No. 497, 96th Cong., 1st Sess. 8 (1979); H.Rep. No. 1372, 96th Cong., 1st Sess. 10 (1979), and that won express legislative immunity from the federal antitrust laws—as described below— with the enactment of 49 U.S.C. § 10934(d) in 1980.³ Nonetheless, the agent companies in the field remain wholly independent from Atlas itself and interact with Atlas in accordance with standard contractual arrangements. PSF ¶ V-P, DRPF ¶ V-P.

It has also been common in the industry, in addition, for many agent companies to hold their own, separate interstate authority from the ICC. E.g., PSF ¶¶ I-E, I-G; DRPF ¶¶ I-E, I-G; see Practices of Motor Common Carriers of Household Goods (Agency Relationships), 115 M.C.C. 628, 629 (1972) (hereinafter referred to as "Practices"). Agent companies that hold such independent authority in their own right are termed "carrier-agents"; agents that hold no such independent authority are termed "non-carrier" agents. Practices, supra, at 629. While a non-carrier agent accepts shipments solely as an agent for the principal van line that it serves, a carrier-agent has more flexibility. It may, like a non-carrier agent, accept shipments for carriage on the account of its principal carrier. But a carrier-agent may also accept certain shipments for carriage on its own account—rather than that of the principal carrier for which it serves as an agent—when the distance of the shipment does not exceed the geographic range of its independent authority and when other factors render it profitable for the carrier-agent to do so. E.g. PSF ¶¶ V-H—V-J; DRPF ¶¶ V-H—V-J; see Practices, supra, at 629. A carrier-agent, in this fashion, simultaneously functions both as an agent of the principal van line that it serves, and, on certain shipments, as one of the van line's competitors, in that it may shift to its independent account certain shipments that might otherwise have been carried on the van line's account. E.g. PSF ¶¶ V-G, V-I; DSF ¶ 22; PSGI ¶ 22; see Practices, supra, at 629. Some carrier-agents, moreover, enjoy the distinct benefit of using van line personnel, van line uniforms and equipment (with van line insignia), and van line origin and destination services even on shipments carried out on their own, independent authority, e.g., DSF ¶¶ 24-29; PSGI ¶¶ 24-29; see Plaintiffs' App. G, and thus can avoid the costs of building the business infrastructure necessary to exercising their independent carrier authority effectively. See DSF ¶ 27; PSGI ¶ 27. Atlas carrier-agents, for example, enjoyed this latter benefit prior to the events at issue in this lawsuit. DSF ¶¶ 24-29; PSGI ¶¶ 24-29.

Federal law has long given special immunity from the antitrust laws to carrier-agent relationships, but only if 1) the van line and its carrier-agents enter into a "pooling agreement" that spells out the division of business, sharing of facilities, and other terms according to which the van line will allow its "agents" to compete with it, and 2) the pooling agreement meets ICC approval. See 49 U.S.C. §§ 11341-11342 (1982); Practices, supra, at 633. Significantly, a pooling agreement may be terminable unilaterally by either the national van line or its carrier-agents, and the exercise of this option eliminates the automatic antitrust immunity that a carrier-agent relationship otherwise enjoys. See DSF ¶ 24; PSGI ¶ 24. Atlas entered into a pooling agreement in 1957, which set the terms according to which, thereafter, it allowed its agents to acquire and operate their own independent ICC authority. DSF ¶ 24; PSGI ¶ 24. Other van lines, by contrast, have declined to enter into pooling agreements at all, and indeed have traditionally chosen to employ only non-carrier agents. E.g., PSF ¶ III-I; DRSF ¶ III-I. Representatives of carrier-agents—where the van line uses them—may sit on a van line's board of directors just as do representatives of non-carrier agents, both pursuant to prior practice, e.g., PSF ¶ V-A; DRPF ¶ V-A, and under the more recently enacted federal antitrust exemption contained in 49 U.S.C. § 10934(d) (1982).⁴

Finally, it is a central feature of the van line industry that agents within a van line's infrastructure often must agree to provide their services only to that particular van line and to other agent companies within the van line's network. See, e.g., PSF ¶ V-Q; DRPF ¶ V-Q; Plaintiffs' App. G. As in many other industries, "exclusive dealing" is a common method of operation. See Plaintiffs' App. G, at 1-3. For van lines that have exclusive dealing arrangements and that utilize only non-carrier agents, thus, only shipments on the van line's own account are carried within the van line's infrastructure. For van lines that have exclusive dealing arrangements and that use carrier-agents as well as non-carrier agents, however, non-van line shipments originating from the carrier-agents' independent operations may be carried within the van line's infrastructure as well. The establishment of such arrangements for the benefit of a van line's carrier-agents is a matter of voluntary accommodation on the part of the van line—though once established, it may be governed by the van line's ICC-certified pooling agreement. See, e.g., DSF ¶ 24; PSGI ¶ 24; see Practices, supra, at 633. Nonetheless, almost no van line, apparently, allows the agents within its network regularly to handle the traffic of any company that is not also one of the van lines' agents. E.g., DSF ¶ 22; PSGI ¶ 22; see Plaintiffs' App. G.⁵

Prior to the deregulation of the moving industry beginning around 1979, the extent to which agents could and did make use of independent ICC authority—if their van lines allowed them to do so at all—was limited. DSF ¶ 23; PSGI ¶ 23. First, then-existing ICC regulations made it very difficult for non-carrier agents to obtain, or for existing carrier-agents to augment, their own interstate authority. DSF ¶ 35; PSGI ¶ 35. Second, even for agents that did possess such authority, it was usually—due to ICC regulations—of limited geographic scope. DSF ¶ 35; PSGI ¶ 35. Most important, the ICC required that carrier-agents use the same rates for their "independent carrier" shipments as for their "agency" shipments—that is, price competition between van lines and the independent operations of their carrier-agents was expressly barred. DSF ¶ 36; PSGI ¶ 36...