Appleton Electric Co. v. Advance-United Expressways

• Decision Date: 16 January 1974
• Docket Number: No. 73-1665.,73-1665.
• Citation: 494 F.2d 126
• Parties: APPLETON ELECTRIC COMPANY, Plaintiff-Appellee, v. ADVANCE-UNITED EXPRESSWAYS et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

494 F.2d 126 (1974)

APPLETON ELECTRIC COMPANY, Plaintiff-Appellee, v. ADVANCE-UNITED EXPRESSWAYS et al., Defendants-Appellants.

No. 73-1665.

United States Court of Appeals, Seventh Circuit.

Argued December 5, 1973.

Decided January 16, 1974.

Peter V. Fazio, Sr., Michael W. Ford, James B. O'Shaughnessy, Chicago, Ill., Arthur Hauver, Denver, Colo., for defendants-appellants.

Jay A. Canel, Lawrence E. Morrissey, Chicago, Ill., for plaintiff-appellee.

Before SWYGERT, Chief Judge, SPRECHER, Circuit Judge and POOS, Senior District Judge.^*

SPRECHER, Circuit Judge.

This appeal considers the manageability of a class action with a multi-million member plaintiff class and a thousandplus defendant class. The district court defined a class of plaintiffs (perhaps several million shippers) and a class of defendants (perhaps 1,400 motor carriers) who shipped goods in interstate commerce between May 20, 1968 through August 29, 1969 within a region covered by tariff rates involved in Interstate Commerce Commission Docket No. 34971 (Increased Rates and Charges from, to and between Middlewest Territory).

I

The complexity of the background of this case requires a somewhat complete analysis of its chronological development.

The Middlewest Motor Freight Bureau, Inc., filed and published proposed rate increases on behalf of its motor carrier members to take effect on April 1, 1968. The Interstate Commerce Commission permitted the rates to go into effect as scheduled but, because of protests by various parties, instituted an investigation of the lawfulness of the increased rates without suspending them. By order of April 3, 1968, the Commission ordered specific information and data to be filed, prescribed special procedures and set the matter for hearing on May 20.

On April 12, 1968, two of the protesting parties, the United States Department of Transportation and the General Services Administration, requested that the hearing date be postponed for 90 days. By letter of April 22, 1968, the carriers and their representatives also requested a 90-day postponement because of "the physical impossibility for respondents to compile the required data within the time allowed by the order." In response, the Commission issued an order on April 25 which provided in part:

"It is further ordered, . . . that the hearing be, and, it is hereby postponed to August 19, 1968, conditioned upon respondents\' compliance with the refund provision ordered below. . . .

"And it is further ordered, that respondents be and, they are hereby, ordered to make refunds to the shippers on any shipment moving after May 20, 1968, to the extent that the increases or any portion thereof under investigation herein are not approved by the Commission."

On May 1, 1968, the carriers petitioned the Commission for reconsideration of the April 25 order but withdrew the petition when they learned that in similar situations the Commission had vacated orders granting postponements where the carriers refused to comply with refund conditions. The hearing took place on the postponed date of August 19, 1968. On June 5, 1969, the Commission issued its Report and Order, which found that "the proposed increases have not been shown to be just and reasonable." The Commission ordered the increased rates cancelled, and further ordered:

"That in accordance with the order entered herein on April 25, 1968, the respondents be, and they are hereby, required to refund to shippers the charges on shipments moving after May 20, 1968, to the extent that such charges included the increases herein found not shown to be just and reasonable."¹

The carriers petitioned the Commission to vacate that portion of the June 5, 1969 order requiring refund payments to shippers. The Commission denied the petition on August 29, 1969 and ordered:

". . . That the respondents will hereinafter, in accordance with the said decision of June 5, 1969, make refund to shippers presenting their claims to the carriers supported by paid freight bills or other appropriate evidence."²

Cancellation was made of the disputed increases on statutory notice, effective August 31, 1969, and simultaneously the involved carriers filed new and higher increases to become effective on September 1, 1969.

On October 9, 1969, the carriers filed another petition for reconsideration of the June 5, 1969 decision, which the Commission denied. Two traffic conferences on the same date sought reconsideration of the August 29, 1969 order on the ground that it altered the method of refund payment set forth in the June 5 order. The Commission also denied the conferences' petition on October 27, 1969, "because the order of August 29, 1969, did not change the liability for making refunds, previously determined, but appropriately placed the burden for supporting claims for refunds upon the shippers who paid the charges."³

The carriers sought judicial review of the Commission's order of June 5, 1969, as modified by its order of August 29, 1969, by filing a complaint on January 26, 1970 in the United States District Court for the District of Colorado, seeking a declaration that the orders were invalid and an injunction against enforcement of the refund obligation by a three-judge court in accordance with 28 U.S.C. § 2325.⁴ On June 19, 1970, the district court granted a motion for a temporary restraining order.⁵

On January 14, 1971, the three-judge court sitting at Denver, Colorado, in a memorandum opinion and order, dismissed the complaint of the carriers and thereby upheld the Commission order of June 5 as modified on August 29, 1969. The court held that the refunds required by these orders were neither a reparation authorized by 49 U.S.C. § 304a nor restitution under common law or equity principles, but rather quid pro quo refunds lawfully ordered by the Commission in return for the granting of the extension of time. The carriers were held to be estopped from contesting the orders and found to have waived the right to challenge their validity when they withdrew their objections thereto. Admiral-Merchants Motor Freight, Inc. v. United States, 321 F.Supp. 353 (D. Colo.1971).

The three-judge court entered judgment against the carriers on February 4, 1971, which had the effect of vacating the stay of the orders which had been entered on June 19, 1970. On March 24, 1971, the court entered a new stay of the refund orders "pending the completion of appellate proceedings in the Supreme Court of the United States or in the Court of Appeals for the Tenth Circuit, or both."

The Supreme Court of the United States affirmed the three-judge court judgment on appeal without an opinion at 404 U.S. 802, 92 S.Ct. 51, 30 L.Ed.2d 37 (1971) and denied rehearing at 404 U.S. 987, 92 S.Ct. 443, 30 L.Ed.2d 371 (1971). On December 27, 1971, the Court of Appeals for the Tenth Circuit entered an order granting the carriers' motion to dismiss their separate appeal from the three-judge court judgment.

According to the carriers' brief on appeal in the present case,

"Many shippers sued to collect refunds. There are currently pending 50 `sets\' of cases in 20 state and federal jurisdictions throughout the country arising out of the June 5, 1969, and subsequent Commission orders. Each `set\' consists of from one to 20 separate complaints. Each complaint involves the claims of from one to approximately 200 plaintiffs against from one to several dozen defendants. Most of these cases have been pending for three years or longer; they are in various stages of trial and appeal."

Several of these cases and sets of cases have been filed in the district courts of this circuit, particularly in Chicago, and have been adjudicated by the district courts and, in two instances, by this court.

The district court granted summary judgment for the shipper in three cases consolidated in Aluminum Co. of America v. Admiral Merchants Motor Freight, Inc., 337 F.Supp. 674 (N.D.Ill.1971). The carriers unsuccessfully argued (1) the invalidity of the Commission's refund order; (2) the absence of the shippers as parties to that order; and (3) the absence of a statutory basis of recovery.

The district court granted summary judgment for the shippers in eight cases consolidated in Aluminum Co. of America v. Burlington Truck Lines, Inc., 342 F.Supp. 166 (N.D.Ill. 1972). The carriers unsuccessfully argued (1) their right to defend on the equities as in a restitution suit; (2) failure of the shipper to state a claim for relief for reparations; (3) inapplicability of a res judicata effect of the three-judge Denver court since the carriers were not parties to the Denver proceedings although subject to the refund orders; and (4) their right to defend on the ground that the proposed rates were just and reasonable inasmuch as the Commission's order merely held that they failed to meet their burden of proving that the rates were just and reasonable.

The eleven Aluminum Co. cases were consolidated in this court in Aluminum Co. of America v. Admiral Merchants Motor Freight, Inc., 486 F.2d 717 (7th Cir. 1973), cert. denied, 414 U.S. 1113, 94 S.Ct. 843, 38 L.Ed.2d 739 (1973). We affirmed the summary judgments for the shippers and held that the Commission's refund orders were enforceable as orders to pay money under Section 16(2) of Part I of the Interstate Commerce Act,⁶ which deals with railroads, because of Section 205(g) of Part II, which deals with motor carriers and provides in part (49 U.S.C. § 305(g)):

"Any final order made under this chapter shall be subject to the same right of relief in court by any party in interest as is now provided in respect to orders of the Commission under chapter 1 . . . ."

In holding that the refund orders were enforceable as orders for the payment of money under Section 16(2), we held that these were not proceedings for recovery of reparations under 49 U.S.C. § 304a nor common law restitution suits but were "only justified on the basis of the Commission's procedural powers,...