Carolina Motor Exp., Inc., In re

• Decision Date: 22 November 1991
• Docket Number: 89-3261 and 89-3262,D,No. 56-1299892,Nos. 89-3259,56-1299892,s. 89-3259
• Citation: 949 F.2d 107
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: In re CAROLINA MOTOR EXPRESS, INC., Fed. I.D.ebtor. Langdon M. COOPER, trustee, Mark & Associates of North Carolina, Inc., Plaintiffs-Appellants, v. DELAWARE VALLEY SHIPPERS, Defendant-Appellee. Langdon M. COOPER, Trustee for Carolina Motor Express, Inc., Mark & Associates of North Carolina, Inc., Plaintiffs-Appellants, v. Peter C. REITER, Defendant-Appellee. Langdon M. COOPER, Trustee for Carolina Motor Express, Inc., Mark & Associates of North Carolina, Inc., Plaintiffs-Appellants, v. CALIFORNIA CONSOLIDATED ENTERPRISES, INC., Defendant-Appellee.

Page 107

949 F.2d 107

60 USLW 2338

In re CAROLINA MOTOR EXPRESS, INC., Fed. I.D. No.

56-1299892, Debtor.

Langdon M. COOPER, trustee, Mark & Associates of North

Carolina, Inc., Plaintiffs-Appellants, v. DELAWARE VALLEY SHIPPERS, Defendant-Appellee.

Langdon M. COOPER, Trustee for Carolina Motor Express, Inc., Mark & Associates of North Carolina, Inc., Plaintiffs-Appellants, v. Peter C. REITER, Defendant-Appellee.

Langdon M. COOPER, Trustee for Carolina Motor Express, Inc., Mark & Associates of North Carolina, Inc., Plaintiffs-Appellants, v. CALIFORNIA CONSOLIDATED ENTERPRISES, INC., Defendant-Appellee.

Nos. 89-3259, 89-3261 and 89-3262.

United States Court of Appeals, Fourth Circuit.

Argued Dec. 7, 1989.

Decided Nov. 7, 1991.

As Amended Nov. 22, 1991.

Joseph L. Steinfeld, Jr., Sims, Walker & Steinfeld, P.C., Washington, D.C., argued (Robert B. Walker, John T. Siegler, Washington Robert L. Cope, Grove, Jaskiewiz, Gilliam & Cobert, Washington, D.C., argued (Stuart R. Childs, Washington, D.C., Robert J. Gallagher, Northampton, Mass., on brief), for defendants-appellees.

D.C., Langdon M. Cooper, Mullen, Holland, Cooper, Morrow, Wilder & Sumner, P.A., Gastonia, N.C., on brief), for plaintiffs-appellants.

Before WIDENER and HALL, Circuit Judges, and MICHAEL, District Judge for the Western District of Virginia, sitting by designation.

OPINION

WIDENER, Circuit Judge:

In this consolidated appeal, we address issues arising from the requirement of the Interstate Commerce Act (Act), 49 U.S.C. § 10101 et seq. (1982) that motor common carriers file their rates with the Interstate Commerce Commission (ICC) and that both shippers and carriers adhere to these rates. These cases involve a motor carrier that seeks to collect, based upon its tariff on file with the ICC, undercharges from a shipper with whom it privately negotiated a rate lower than that which the tariff required.

The bankruptcy court entered a final judgment for the plaintiffs in two of the three cases, concluding that because the filed rate doctrine precluded defendants' assertion of equitable defenses to the carrier's undercharge claims, the carrier was entitled to recover regardless of its own actions. Cooper v. California Consolidated Enterprises, 84 B.R. 979 (Bankr.W.D.N.C.1988). On appeal, the district court reversed the final judgments of the bankruptcy court and referred to the ICC the question of whether the carrier's collection of the undercharges would amount to an unreasonable practice. Although the ICC has yet to issue a decision in the two cases, plaintiffs now appeal. ¹

On recommendation of the bankruptcy court, the district court withdrew reference to the bankruptcy court of the third case and, on the defendant's motion, referred the case to the ICC. The ICC later issued a decision in the case stating that the carrier's collection of undercharges constituted an unreasonable practice. Based upon the ICC's finding, the district court granted summary judgment for defendant and dismissed plaintiffs' action. Plaintiffs appeal. ²

We vacate the district court's reversal of the bankruptcy court's judgment in the first two cases, and vacate the district court's entry of summary judgment for defendant in the third case. For the reasons discussed below, we remand these cases to the district court with instructions that the judgment of the bankruptcy court be reinstated in 89-3261 and 89-3262, that the plaintiffs' cross-appeal from the judgment of the bankruptcy court concerning late payment charges and attorneys' fees be ruled upon in 89-3261 and 89-3262, and that judgment be entered in favor of the plaintiffs in 89-3259.

I.

Because the material facts in all three cases are undisputed and are for all practical purposes identical, we need not set forth a detailed chronology of the relationship between the parties. The Fifth Circuit aptly described the present scenario as follows:

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 ... and the rate which the parties had negotiated.

Supreme Beef Processors, Inc. v. Yaquinto, 864 F.2d 388, 388-89 (5th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 3254, 111 L.Ed.2d 763 (1990). As was the case in Supreme Beef, the motor carrier in this case, Carolina Motor Express (CMX), supplied transportation services to the shippers at privately negotiated rates. The shippers believed that CMX would publish the quoted rates in its tariff on file with the ICC. CMX, however, did not publish the quoted rates as a tariff and later billed the shippers at the negotiated rate, which the shippers paid in full. After CMX became bankrupt, an independent auditor employed by the bankruptcy trustee discovered the discrepancy between the collected rates and the applicable tariff rates. The trustee and auditor then filed suit to recover the difference on behalf of CMX as debtor.

II.

Under 49 U.S.C. § 10761(a), a motor carrier subject to the Interstate Commerce Act "may not charge or receive a different compensation for ... transportation or service than the rate specified in the tariff" filed with the ICC. In addition, the Act states that "[a] rate ..., classification, rule, or practice related to transportation or service provided by a carrier ... must be reasonable." 49 U.S.C. § 10701(a). In the classic case of Louisville & Nashville R.R. Co. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853 (1915), the Court explained the significance of section 10761(a)'s predecessor which is the same for the present statute:

Under the interstate commerce act, the rate of the 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, unless it is found by the Commission to be unreasonable. Ignorance or misquotation of rates is not an excuse for paying or charging either less or more than the rate filed.

The Court recently reemphasized the importance of this filed rate doctrine as "essential to preventing price discrimination and stabilizing rates." Maislin Industries, U.S., Inc. v. Primary Steel, --- U.S. ----, ----, 110 S.Ct. 2759, 2766, 111 L.Ed.2d 94 (1990).

The defendants, prior to our order holding this appeal in abeyance pending the Supreme Court's Maislin decision, contended that the carrier's attempt to collect the undercharges was an unreasonable practice under the Act and that the plaintiffs were therefore not entitled to collect the filed rate. Maislin rejected just this contention as do we. As the Supreme Court observed, allowing such an equitable defense would be "flatly inconsistent" with the statute because the defense "rests on an interpretation of the Act that is contrary to the language and structure of the statute as a whole and the requirements that make up the filed rate doctrine in particular." Maislin, --- U.S. at ---- - ----, 110 S.Ct. at 2768. We accordingly vacate the district court's reversal of the bankruptcy court's judgment in 89-3261 and 89-3262, and vacate the district court's entry of summary judgment for defendant in 89-3259.

The defendants next argue that, Maislin notwithstanding, this court should remand these cases back to the district court with instructions to refer them to the ICC for a determination of the reasonableness of the carrier's filed tariff rates. In fact, the defendants argue that certain passages in the Maislin opinion require such an course. Before we consider this argument, however, we must first address the plaintiffs' assertion that the defendants have waived any claim they may have had by failing to raise the issue of rate reasonableness in prior proceedings. After a review of the record in these cases, we find that the defendants have preserved the argument.

Having determined that the defendants may contest the reasonableness of the carrier's filed rates, the question remains of whether the cases should be remanded for re-referral to the ICC. This question is one that the Supreme Court has not decided and on which there is no precedent in this circuit. Maislin, to be sure, did mention in a footnote that the issue of rate reasonableness was not presented in the case and would be "open for exploration" on remand. --- U.S. at ---- n. 10, 110 S.Ct. at 2767 n. 10. But while the Supreme Court has noted without disapproval a stay of proceedings and referral to the ICC after reasonableness was raised as a defense, see Maislin, --- U.S. at ---- - ----, 110 S.Ct. at 2764-66; United States v. Western Pac. R.R. Co., 352 U.S. 59, 71, 77 S.Ct. 161, 168-69, 1 L.Ed.2d 126 (1956), it has also reiterated in Maislin that "[u]nder [the Act] the shipper was bound to pay the legal rate; but if he could show that it was unreasonable he might recover reparation." --- U.S. at ----, 110 S.Ct. at 2767 (quoting Arizona Grocery Co. v. Atchison, Topeka & Sante Fe R.R. Co., 284 U.S. 370, 384-85, 52 S.Ct. 183, 184-85, 76 L.Ed. 348 (1932)); see also Pennsylvania R.R. Co. v. International Coal Mining, 230 U.S. 184, 197, 33 S.Ct. 893, 896, 57 L.Ed. 1446 (1913) ("If ... the rates were unreasonable, the shipper was nevertheless bound to pay and the carrier to retain what had been paid, leaving, however, to the former, the right to apply to the Commission for reparation."). We believe that the Court's decisions are correctly read as taking no position on whether re-referral to the ICC is required in such cases.

We are of opinion that a defense attacking the reasonableness of a carrier's filed rates should not operate to stay enforcement of the filed rate doctrine. Rather, shippers must pay the filed rates and contest those filed rates before the ICC independently if they wish to seek reparations from the carrier. We believe that such an approach is...