Brizendine v. Cotter & Co.

• Decision Date: 21 September 1993
• Docket Number: No. 92-2925,92-2925
• Citation: 4 F.3d 457
• Parties: Robert E. BRIZENDINE, Trustee on Behalf of the Bankruptcy Estate of Brown Transport Truckload, Inc., Brown Transport Corp., and Thurston Motor Lines, Inc., Plaintiff-Appellant, v. COTTER & COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 457

4 F.3d 457

62 USLW 2108

Robert E. BRIZENDINE, Trustee on Behalf of the Bankruptcy Estate of Brown Transport Truckload, Inc., Brown Transport Corp., and Thurston Motor Lines, Inc., Plaintiff-Appellant, v. COTTER & COMPANY, Defendant-Appellee.

No. 92-2925.

United States Court of Appeals Seventh Circuit.

Argued Jan. 29, 1993.

Decided Aug. 5, 1993.

Rehearing and Suggestion for Rehearing

En Banc Denied Sept. 21, 1993.

David G. Sperry, Allan D. Harris, Independence, MO, Jeffrey S. Firestone, Firestone, Liebman & Eddy, Chicago, IL, Paul O. Taylor (argued), Harris & Taylor, Bloomington, MN, Lawrence M. Liebman, Eddy & Liebman, Chicago, IL, for plaintiff-appellant.

Hugo M. Chaviano, David J. Fischer, Chaviano, Fischer, Kendle & Wahlers, Chicago, IL, William J. Augello (argued), Augello, Pezold & Hirschmann, Northport, NY, for defendant-appellee.

Before FLAUM, MANION, and ROVNER, Circuit Judges.

FLAUM, Circuit Judge.

This case poses an important question under the Interstate Commerce Act (ICA): may a motor carrier collect undercharges from a shipper pursuant to a tariff that refers to a mileage guide in which the carrier did not formally "participate"? The district court granted summary judgment to the shipper on the basis of a decision by the Fifth Circuit on this issue. See Freightcor Servs., Inc. v. Vitro Packaging, Inc., 965 F.2d 1339 (5th Cir.1992), withdrawn and op. replaced on reh'g, 969 F.2d 1563 (5th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 979, 122 L.Ed.2d 133 (1993). We are the first circuit to address the question since a key decision of the Interstate Commerce Commission (ICC or the Commission) was reversed by the District of Columbia Circuit. See Overland Express, Inc. v. ICC, 996 F.2d 356 (D.C.Cir.1993), rev'g Jasper Wyman & Son, 8 I.C.C.2d 246, 251-52 (1992). We find the reasoning of that court persuasive, and we now agree with its conclusion that a carrier may collect undercharges pursuant to such a tariff.

Brown Transport Truckload, Inc. (Brown), was a motor common carrier operating in interstate commerce. The carrier is now bankrupt. Brown's shipping rates and other regulations were maintained in published tariffs on file with the ICC. Cotter & Company (Cotter) was one of Brown's customers. A post-shipment audit of Brown's bills by the trustee in bankruptcy revealed that Brown had undercharged Cotter by some $112,000, when the rates actually billed were compared to the rates on file with the ICC. The trustee issued balance due bills to Cotter for the undercharges; Cotter refused to pay. In litigation before the district court, Cotter's principal defense was that Brown's filed tariffs were void and could not be used to calculate rates because they violated one of the ICC's regulations governing tariff publication.

According to the ICC's regulations, a mileage rate consists of two elements: the rate per mile, and the distance between the origin and destination of shipping. See 49 C.F.R. Sec. 1312.30 (1992). Carriers have three alternative methods of establishing distances: they may (1) publish the distances between all locations covered by the distance rates as part of the tariff; (2) refer to a map attached to the tariff; or (3) refer to a separately filed mileage guide. See id. Sec. 1312.30(c)(1). If a carrier chooses the third method, the regulations provide that it must "participate" in any tariffs to which its own tariff refers. See id. Sec. 1312.27(e). To participate, a carrier must issue a valid concurrence or power of attorney to the publisher of the mileage guide and pay a nominal fee. ¹ See id. Secs. 1312.10, 1312.4(d). The power of attorney allows the publisher to act as the carrier's agent when it files the mileage guide; in turn, the publisher must file with the ICC a supplement that lists all carriers that have participated in its guide. See id. Sec. 1312.25. Absent an effective power of attorney, the regulations provide that the tariff is void as a matter of law. See id. Sec. 1312.4(d).

Tariff ICC BTTY 239 prescribed Brown's rates for transportation of Cotter's goods. Item 789 of that tariff set forth a rate of $1.75 per mile per truckload. Brown chose not to publish its own mileage tables. Instead, item 100 of the tariff listed as a governing publication ICC HGB 100, a mileage guide published by the Household Goods Carriers' Bureau (HGCB). Brown, however, never filed a power of attorney with HGCB, and HGCB never listed Brown as a participating carrier. As a result, the validity of Brown's tariff is in doubt. If the ICC regulations nullify Brown's tariff, then Brown has no right to collect undercharges from Cotter. If, on the other hand, the regulations cannot void a tariff that has already taken effect, then Brown may proceed with its action in the district court.

I.

We begin by setting out some general principles applicable to the case. The ICA requires a motor carrier to publish its rates in a tariff filed with the ICC. See 49 U.S.C. Sec. 10762 (1988). Carriers may charge only rates embodied in tariffs duly filed. See id. Sec. 10761(a). Under what has become known as the "filed rate doctrine," the rate published in the filed tariff governs the legal relationship between the carrier and the shipper. As the Supreme Court has reiterated many times, a shipper cannot avoid payment of the tariff rate even if the parties agreed to a different price or if the shipper pleads ignorance of the rate on file. See, e.g., Maislin Indus., U.S. v. Primary Steel, Inc., 497 U.S. 116, 110 S.Ct. 2759, 111 L.Ed.2d 94 (1990); Louisville & Nashville R.R. Co. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853 (1915); Texas & Pacific Ry. Co. v. Mugg, 202 U.S. 242, 245, 26 S.Ct. 628, 630, 50 L.Ed. 1011 (1906). The purpose of the doctrine is to promote uniformity and to prevent price discrimination by prohibiting secret agreements between carriers and shippers. No matter what price the parties privately negotiate, the filed rate controls. The Court has explained the logic of the doctrine as follows:

This rigid approach was deemed necessary to prevent carriers from intentionally "misquoting" rates to shippers as a means of offering them rebates or discounts. As the Commission itself found, "past experience shows that billing clerks and other agents of carriers might easily become experts in the making of errors and mistakes in the quotation of rates to favored shippers, while other shippers, less fortunate in their relations with carriers and whose traffic is less important, would be compelled to pay the higher published rates."

Maislin, 497 U.S. at 127-28, 110 S.Ct. at 2766-67 (quoting Poor v. Chicago, B. & Q.R. Co., 12 I.C.C. 418, 421 (1907)).

The filed rate doctrine is, however, constrained by one significant exception: the filed rate is not enforceable if the ICC finds that it is unreasonable or discriminatory. See 49 U.S.C. Secs. 10761(a), 10701, 10741; Maislin, 497 U.S. at 128, 110 S.Ct. at 2767. "The legal rights of shipper as against carrier in respect to a rate are measured by the published tariff. Unless and until suspended or set aside, this rate is made, for all purposes, the legal rate, as between carrier and shipper." Keogh v. Chicago & Northwestern Ry. Co., 260 U.S. 156, 163, 43 S.Ct. 47, 49, 67 L.Ed. 183 (1922) (emphasis added). As a result, the ICC's statutory powers to regulate motor carrier rates fall mainly into two categories. First, the ICC may reject a submitted tariff before it goes into effect if it contains any formal or substantive defect. See 49 U.S.C. Sec. 10762(e); ICC v. American Trucking Ass'ns, Inc., 467 U.S. 354, 359 n. 3, 104 S.Ct. 2458, 2461 n. 3, 81 L.Ed.2d 282 (1984). For a period of seven months thereafter, the ICC may also suspend an effective tariff in order to investigate suspected unlawfulness. See id. Sec. 10708(b). Second, the ICC may review the lawfulness of a filed rate that has gone into effect on its own motion or by complaint at any time. If the rate is found to be unreasonable, then the ICC has the power to prescribe a new rate. See 49 U.S.C. Sec. 10704(b)(1). Unreasonable or discriminatory rates may precipitate an action by a shipper for "reparations" from the carrier. See 49 U.S.C. Sec. 11705(b)(3); American Trucking, 467 U.S. at 361 n. 5, 104 S.Ct. at 2462 n. 5 (citations omitted). The shipper may also assert the unlawfulness of the rate as a counterclaim or defense to an action for undercharges by a carrier. See Reiter v. Cooper, --- U.S. ----, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993). In either scenario, however, the damages due to the shipper will be limited to the harm caused by the violation itself--in other words, the amount by which the rate charged exceeds a reasonable rate. ²

Which additional remedial powers the ICC possesses was the subject of ICC v. American Trucking Ass'ns, Inc., 467 U.S. 354, 104 S.Ct. 2458, 81 L.Ed.2d 282 (1984). In that case, the ICC had decided that it needed the power to reject certain tariffs that were already in effect to deter violations of "rate bureau agreements"--agreements over rates reached by groups of carriers that are immune from antitrust scrutiny. Tariff rejection, the Supreme Court explained, is a remedy of potentially devastating effect on a carrier. Whereas declaring a rate unreasonable yields damages in the amount by which the unlawful tariff was unreasonable, invalidating an effective tariff leaves a carrier without that tariff's rates on file. The carrier may, therefore, be liable in a suit brought by a shipper for the entire amount by which the rejected rate exceeds any previously effective rate. See id. at 358, 361 & n. 5, 104 S.Ct. at 2461, 2462 & n. 5. ³ The Court held that 49 U.S.C. Sec. 10762(e), the ICA provision that grants the ICC its ordinary power of tariff rejection, did not authorize retroactive rejection. Section 10762(e) authorizes refusal of a submitted tariff at the threshold, the Court explained, but not revocation of a tariff that had already...