DeBruce Grain, Inc. v. Union Pacific R. Co.
| Decision Date | 08 July 1998 |
| Docket Number | No. 98-1062,98-1062 |
| Citation | 149 F.3d 787 |
| Parties | DEBRUCE GRAIN, INC., a Missouri Corporation, Plaintiff-Appellant, v. UNION PACIFIC RAILROAD COMPANY, a Utah Corporation, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Peter A. Greene, Washington, DC, argued (David H. Baker and Mark Stephen Foster, on the brief), for Plaintiff-Appellant.
Steven D. Soden, Kansas City, MO, argued (John S. Johnson, on the brief), for Defendant-Appellee.
Before HANSEN and MURPHY, Circuit Judges, and DOTY 1, District Judge.
DeBruce Grain, Inc. (DeBruce) filed this action against Union Pacific Railroad Company (UPR) claiming that UPR's distribution of rail cars violated federal rail statutes and its tariff. The district court 2 dismissed the action without prejudice, finding that it fell within the exclusive and primary jurisdiction of the Surface Transportation Board (STB). DeBruce filed this appeal, and we affirm.
DeBruce is a grain merchandiser that purchases grain from farmers and smaller elevators for shipment to domestic and export markets. It operates three elevators in Nebraska whose primary means of transporting grain is by rail. DeBruce purchased transportation from UPR under the terms of UPR's multipart tariff which contained the terms and conditions of transport. Section one of the tariff provided that rail cars could be obtained on seven to fourteen days notice if available. Section two described a "guaranteed freight pool" (GFP) under which shippers subleased cars to the railroad with the understanding that it would provide 1.4 times the number of subleased cars for the shipper's use on a monthly basis. UPR agreed to "make every reasonable effort to ensure that cars are placed as close to the preferred date as possible" but reserved the right to provide them at any time during the shipping period in which the GFP request was made (each month was divided into two shipping periods). Section three of the tariff created a voucher system under which a shipper could purchase vouchers to obtain cars during a particular shipping period. UPR auctioned the vouchers two months prior to a specified shipping period, but they were then frequently resold in secondary markets with the price driven by demand and availability.
When a shortage of grain cars developed in the fall of 1997, UPR filled requests for cars under the voucher system before those requested by GFP participants. Under the tariff a GFP shipper who did not obtain a car within the shipping period it requested could choose to receive either a $250 penalty payment or a car at a later date. Under the voucher program UPR was obligated to pay a penalty of $50 a day per undelivered car, up to a total of $400 for each car, and to provide a car as well. When faced with the impossibility of filling all the requests for cars, UPR gave precedence to those under the voucher system since the financial penalties were greater if those requests were not met. DeBruce says that as a result it did not timely receive its normal supply of cars under the GFP program and was forced to try to buy vouchers at an inflated price and to restrict its new purchases of grain.
In 1995 Congress passed the Interstate Commerce Commission Termination Act under which the STB replaced the Interstate Commerce Commission (ICC) as the regulatory agency for rail transportation. 49 U.S.C. § 702. Application can be made to the STB by disappointed shippers for emergency orders similar to injunctions, 49 U.S.C. § 721(b)(4), and for damages, 49 U.S.C. § 11704. Under 49 U.S.C. § 10501, the STB has broad exclusive jurisdiction over questions of rates, service, tracks, and rail operations with limited exceptions for transportation provided by local governments. Federal court jurisdiction exists over claims for violations of STB orders and for charges that are in excess of the applicable rate. 49 U.S.C. § 11704.
DeBruce filed this action in the district court in late October of 1997, claiming that UPR's decision to give priority to car requests under the voucher program violated its tariff and its obligations to provide service under 49 U.S.C. §§ 11101 and 11121. DeBruce requested a temporary restraining order and an injunction requiring UPR to meet its demands for cars and money damages for its claimed loss of profits. The district court denied the request for injunctive relief and dismissed DeBruce's action without prejudice after determining that it fell within both the exclusive and primary jurisdiction of the STB. The district court believed that 49 U.S.C. § 11704(c), which provides jurisdiction for federal courts to act on certain violations of a carrier's duties, applies only to overcharges and not to the issues raised by DeBruce. It concluded that jurisdiction therefore rested exclusively with the STB under 49 U.S.C. § 10501(b). It also ruled in the alternative that the matter should be left to the STB for resolution under its primary jurisdiction since DeBruce's claims involved issues within the special expertise of the board requiring a uniform national response.
Shortly after the district court dismissed this action, DeBruce filed a claim with the STB. At that time the STB was holding hearings on the rail car shortage in the western United States resulting from congestion on the shipping lines of UPR and the Burlington Northern and Santa Fe Railway Company (BNSF). In the course of denying DeBruce's request for an injunction, the STB stated that it had heard from "hundreds of shippers" and that "[e]ach has had service problems, and each wants relief." Supplemental record, p. 154. 3 It explained that it had attempted to resolve the shortage of cars while making sure to "avoid directly favoring any particular shipper over any other." Id. The STB had previously issued a service order providing a variety of remedies and ordering UPR and BNSF to work with shippers to develop a system of shipment priority, and it denied DeBruce's request for injunctive relief because it would have given shipments by DeBruce priority over all others and was therefore contrary to the public interest and ongoing efforts to...
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