Caravan Refrigerated Cargo, Inc., Matter of

Decision Date02 February 1989
Docket NumberNo. 88-1209,88-1209
Citation864 F.2d 388
PartiesIn the Matter of CARAVAN REFRIGERATED CARGO, INC., Debtor, SUPREME BEEF PROCESSORS, INC., Appellant, v. Robert YAQUINTO, Jr., Trustee for Caravan Refrigerated Cargo, Inc., Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

J. Michael Weston, Dallas, Tex., John W. Bryant, Eames, Wilcox, Mastej and Bryant, Detroit, Mich., for appellant.

Louis J. Wade, Culp & Wade, Kansas City, Mo., Robert Yaquinto, Jr., Dallas, Tex., for appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before REAVLEY, HIGGINBOTHAM, and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

This is an archetypal "negotiated rate case" involving a motor carrier and a shipper of beef. The well-worn choreography for these cases involves a motor carrier's action against a shipper to collect for undercharges; that is, to collect the difference between the higher rate which the carrier has filed with the Interstate Commerce Commission (the "Commission") and the rate which the parties had negotiated.

In the action before us, the district court refused to refer the case to the Commission and granted summary judgment for the carrier over the shipper's objection that the filed tariff was unreasonable. The shipper sought the district court's reconsideration on the ground that its business with the carrier was at the behest of the government, but the court refused to reconsider. Agreeing with the district court that summary judgment was appropriate and that the motion for reconsideration was properly denied, we affirm.

I. A Great Deal While It Lasted.

Supreme Beef Processors, Inc. ("Supreme Beef"), is a major producer and supplier of beef products to the United States Government. Caravan Refrigerated Cargo, Inc. ("Caravan"), supplied refrigerated transport services to Supreme Beef for several years prior to Caravan's bankruptcy. According to Supreme Beef, it had a long-standing agreement with Caravan that Caravan would "meet or beat" any motor carrier rate quoted by a competing carrier. This agreement enabled Supreme Beef to rely upon low-cost transportation for purposes of preparing its bids. In return, Caravan was guaranteed a large volume of shipping business from Supreme Beef.

During their relationship, Supreme Beef and Caravan continually negotiated the transportation rates to assure competitiveness with other carriers' rates. Caravan billed Supreme Beef for the agreed rates, and Supreme Beef paid those bills. The negotiated rates for the shipments in question here, however, were not the same as those that Caravan had filed with the Commission: The filed rates were higher. From the summary judgment record, it appears that Supreme Beef was unaware of the variance, and had relied upon Caravan's rate quotations. After Caravan's bankruptcy, the trustee filed the instant suit to collect from Supreme Beef the difference between the negotiated rates and the filed rates for those periods during which Caravan did not have the actual, negotiated rates on file; the parties agree that the difference amounts to $70,227.08.

On appeal, Supreme Beef contends that the court erred in failing to refer the case to the Commission, where it could contest the reasonableness of the filed rates, or in the alternative, to deny the summary judgment motion on the basis of Supreme Beef's defense of unreasonableness. Supreme Beef also urges that we find error in the district court's refusal to vacate the summary judgment order after Supreme Beef had presented factual evidence as to the government-carrier exemption.

II. Where's the Beef?

Supreme Beef's first contention is that this case was litigated in the wrong forum. It invokes the primary jurisdiction doctrine and contends that the district court should have referred the dispute to the Commission in the interests of uniformity and expert administration of issues of transportation policy. See United States v. Western Pac. R.R., 352 U.S. 59, 65, 77 S.Ct. 161, 165, 1 L.Ed.2d 126 (1956).

Under the primary jurisdiction doctrine, "a district court trying a case under the Interstate Commerce Act must, if presented with such an issue, stay its proceedings and refer the case to the Commission." City of New Orleans v. Southern Scrap Material Co., 704 F.2d 755, 758 (5th Cir.1983) (citing ICC v. Atlantic Coast Line Ry., 383 U.S. 576, 579, 86 S.Ct. 1000, 1003, 16 L.Ed.2d 109 (1966)). In addition, we have stated that when "the reasonableness of a rate is at issue, 'there must be preliminary resort to the Commission.' " Southern Pac. Transp. Co. v. City of San Antonio, 748 F.2d 266, 272 (5th Cir.1984) (quoting Great N. Ry. v. Merchants Elevator Co., 259 U.S. 285, 291, 42 S.Ct. 477, 479, 66 L.Ed. 943 (1922)). Supreme Beef thus contends that because Caravan's suit was based upon section 10761(a) of the Interstate Commerce Act, and because it properly pled unreasonableness as a defense, the district court was required to refer the case.

Here, however, the facts do not raise technical or complex issues, regarding appropriate rates, that require the expert administration of the Commission and thereby invoke the primary jurisdiction doctrine. Supreme Beef bases its charges of unreasonableness upon the unfairness of having to pay the filed rate because Caravan "failed to get its paperwork done." In reality, this dispute concerns only the applicability of 49 U.S.C. Sec. 10761(a), which provides that a carrier subject to the jurisdiction of the Commission "may not charge or receive a different compensation for ... transportation or service than the rate specified in the tariff." 1 The purpose of this statute is to prevent large suppliers and shippers from negotiating "under-the-table" tariffs, lower than the filed tariffs, and thus undercutting competition from smaller suppliers who must also use the highways of interstate commerce to get their goods to market.

Judicial interpretations of section 10761(a) and its predecessors have given rise to the "filed tariff doctrine," which Justice Brandeis ably explained as follows:

The rate of a carrier duly filed is the only lawful charge. Deviation from it is not permitted upon any pretext. Shippers and travelers are charged with notice of it, and they as well as the carrier must abide by it.... Ignorance or misquotation of rates is not an excuse for paying or charging either less or more than the rate filed. The rule is undeniably strict, and it may work hardship in some cases, but it embodies the policy which has been adopted by Congress in regulation of interstate commerce in order to prevent unjust discrimination.

Louisville & Nashville Ry. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853 (1915).

Supreme Beef contends, however, that the filed tariff doctrine has been weakened and that the district court should have referred the case so that it could contest the reasonableness of Caravan's filed rates in light of Caravan's misquotations. As support for its argument, Supreme Beef cites the Motor Carrier Act of 1980; an advisory opinion from the Commission, National Indus. Transp. League (Ex parte MC-177), 3 I.C.C.2d 99, 86 Fed.Carr.Cas. (CCH) p 37,284 (Aug. 7, 1987); and a recent Eleventh Circuit opinion upholding a Commission ruling that a carrier had engaged in an unreasonable practice by misquoting rates to the shipper. 2

Supreme Beef's claim is that with the Motor Carrier Act, Congress sought to make the industry more competitive by reducing the burden which filing tariffs imposes and that the Commission recognized this change when it declared in its advisory opinion that "equitable defenses to rigid application of filed tariff rates should be available on a case-by-case basis." Moreover, as the Seaboard System case demonstrates, a circuit court of appeals has approved the Commission's willingness to find that misquotation constitutes an unreasonable practice. We respond to each of these authorities in turn.

A. The Motor Carrier Act.

We cannot agree that the 1980 Act abrogates the filed tariff doctrine, as we cannot ignore the plain fact that when Congress examined this area in 1980, it did so in light of section 10761(a) and the long-standing judicial interpretations of that statute. In fact, the changes which Congress did make, a filing exemption for contract carriers, for example, 3 indicate that its intent was to leave the filed tariff doctrine very much intact. Any change in the law must therefore come from Congress, not this court.

In an analogous context, the Supreme Court has refused to overturn doctrine established prior to the Motor Carrier Act which Congress did not expressly abrogate. In Square D Co. v. Niagara Frontier Tariff Bureau, 476 U.S. 409, 106 S.Ct. 1922, 90 L.Ed.2d 413 (1986), the Court upheld its previous ruling inKeogh v. Chicago & Northwestern Ry., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922). Under the "Keogh doctrine," shippers could not bring treble-damage antitrust actions against carriers in connection with filed tariffs, though governmental and injunctive antitrust actions against "concerted rate-making" activities were still available. Answering the argument that the Keogh doctrine should be overturned in light of Congress's intent to promote competition in the transportation industry through the Motor Carrier Act, Justice Stevens wrote,

[W]e may assume that petitioners are correct in arguing that the Keogh decision was unwise as a matter of policy--but it nevertheless remains true that Congress must be presumed to have been fully cognizant of this interpretation of the statutory scheme, which had been a significant part of our settled law for over half a century, and that Congress did not see fit to change it when Congress carefully reexamined this area of law in 1980.

Square D, 476 U.S. at 420, 106 S.Ct. at 1928.

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