Engelhard Corp. v. Springfield Terminal Ry. Co.

• Decision Date: 02 April 2002
• Docket Number: No. Civ.A. 01-10829-RGS.,Civ.A. 01-10829-RGS.
• Citation: 193 F.Supp.2d 385
• Parties: ENGELHARD CORPORATION v. SPRINGFIELD TERMINAL RAILWAY COMPANY and Consolidated Rail Corporation.
• Court: U.S. District Court — District of Massachusetts

Page 385

193 F.Supp.2d 385

ENGELHARD CORPORATION v. SPRINGFIELD TERMINAL RAILWAY COMPANY and Consolidated Rail Corporation.

No. Civ.A. 01-10829-RGS.

United States District Court, D. Massachusetts.

April 2, 2002.

Catherine M. Campbell, Feinberg, Campbell & Zack, P.C., Boston, MA, Henry M. Wick, Vincent P. Szeligo, Wick, Streiff, Meyer, O'Boyle & Szeligo, P.C., Pittsburgh, PA, for plaintiff.

Jonathan M. Broder, David C. Ziccardi, Philadelphia, PA, Michael B. Flynn, Flynn & Associates, P.C., Boston, MA, for Consolidated Rail Corp., defendant.

Eric L. Hirschhorn, Winston & Strawn, Washington, DC, Robert B. Culliford, Springfield Terminal Railway, N Billrica, MA, for Springfield Terminal Railway Co. Inc., defendant.

MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS

STEARNS, District Judge.

This case involves the alleged non-payment of "car mileage allowances" generated by the movement of privately-owned tank cars over a 155 mile stretch of railway track between Selkirk, New York and Barber, Massachusetts, by two railroads, defendant Consolidated Rail Corporation (Conrail), and defendant Springfield Terminal Railway Corporation (Springfield Terminal). The track is owned by Conrail and shared with Springfield Terminal under an Interchange Agreement.¹

Plaintiff Engelhard Corporation supplies kaolin, a fine white clay commonly used in the manufacture of porcelain. The clay is mined in Georgia and delivered to various destinations in the northeastern United States in specially built tank cars. Contrary to what might be expected, railroads do not typically supply specialized cars. Rather, as one court has explained:

Railroads, pursuant to their common-carrier obligations under the Interstate Commerce Act, must provide railcars suitable for the transportation of a broad range of property, including agricultural products, flammable liquids, as well as crated freight. In part because of these diverse requirements, it has proved impracticable for rail common-carriers to invest the capital necessary for the acquisition of general-use and specialty rolling stock. Carriers, therefore, commonly lease railcars both from firms in the business of supplying railcars and, occasionally, from shippers themselves. Under these leasing arrangements, railroads fulfill their common-carrier obligation to make available suitable railcars by paying car providers their costs of owning the rolling stock through a variety of means, including direct "mileage allowances" and offsets on line-haul freight tariffs.

General American Transp. Corp. v. ICC, 872 F.2d 1048, 1050 (D.C.Cir.1989).

Engelhard supplies its customers not only with kaolin, but also provides the specialty tank cars required for its transport. All of this is a matter subject to intricate regulation. Railroads historically were second only to the nuclear power industry in the pervasiveness of their regulation by the State, an enduring if diminished legacy. At the apex of the regulatory system is the Surface Transportation Board (STB), the successor agency to the venerable Interstate Commerce Commission (ICC). The STB implements the directives of the Interstate Commerce Commission Termination Act of 1995 (ICCTA), 49 U.S.C. §§ 10101-11908,² which as its Title implies, was intended to eliminate government oversight over many, but by no means all, aspects of railway freight service. One such aspect is the "car mileage allowance." The STB remains responsible for setting allowance rates based on the features of a particular rail car. 49 U.S.C. § 11122.³

Before the court are motions to dismiss an Amended Complaint brought by Engelhard seeking to collect unpaid mileage allowances from the defendant railroads. The standards to be applied in reviewing a motion to dismiss are familiar. "We must accept the allegations of the complaint as true, and if, under any theory, the allegations are sufficient to state a cause of action in accordance with the law, we must deny the motion to dismiss." Vartanian v. Monsanto Co., 14 F.3d 697, 700 (1st Cir. 1994). A court must, of course, be satisfied that a complaint contains "factual allegations, either direct or inferential, respecting each material element necessary to sustain a recovery under some actionable legal theory," Glassman v. Computervision Corp., 90 F.3d 617, 628 (1st Cir. 1996), and need not consider unsupported assertions and mere legal conclusions. See Shaw v. Digital Equipment Corp., 82 F.3d 1194, 1216 (1st Cir.1996). Ordinarily, in making its assessment, the court is to confine itself within the four corners of the complaint. There is, however, an exception. Where factual allegations in the complaint are based on documents whose authenticity is not questioned, the court may look to these documents as well. Alternative Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33-34 (1st Cir.2001).⁴

According to the Amended Complaint, Engelhard amassed a fleet of specially built tank cars for use in transporting its clay. Some of these cars were owned by Engelhard outright, while many were leased from other car owners who authorized Engelhard to collect the accrued mileage allowances. Beginning in 1990, Springfield Terminal and Conrail hauled kaolin over the disputed 155 mile segment of track to customers in New England in tank cars supplied by Engelhard. While Conrail consistently credited Engelhard with mileage allowances for tank cars transited to Selkrik, New York, and while Springfield Terminal did the same for tank cars taken beyond Barber, Massachusetts, in a number of instances, neither railroad paid the allowance for cars hauled between the two stations. When questioned by Engelhard, Conrail claimed that Springfield Terminal was responsible for the payments, while predictably, Springfield Terminal put the onus for the payments on Conrail.

Engelhard filed this action on May 15, 2001, seeking $568,155.13 in unpaid mileage allowances. Engelhard maintains that while Springfield Terminal "is not authorized to perform rail carrier service over its length [the disputed 155 mile segment], in some instances [Springfield Terminal] has accepted responsibility for and paid mileage allowances pursuant to a March 31, 1990 Haulage Agreement." Amended Complaint ¶ 13. Despite Springfield Terminal's intermittent payments, the Amended Complaint asserts that Conrail remains primarily responsible for payment of the overdue car mileage allowances.

Said Haulage Agreement has not altered Conrail's rail common carrier status for transportation over the 155 mile segment. Although Conrail reached a private agreement with a subcontractor [Springfield Terminal] to assist it with operations over this segment, it ultimately retains liability for movements handled on its behalf pursuant to the Haulage Agreement.

Amended Complaint ¶ 24.

The "Haulage Agreement" referenced in the Amended Complaint is an Interchange Agreement entered into between Conrail and Springfield Terminal on March 31, 1990, permitting Springfield Terminal to transit cars, either made up in Conrail trains or in trains of its own, over Conrail's Selkirk to Barber line. The Agreement provides, inter alia, for the division of the revenues earned and the expenses incurred in the joint hauling of cars. It is also apparent that a disagreement between Conrail and Springfield Terminal over the interpretation of this aspect of the Agreement is the reason for the erratic payment of mileage allowances to Engelhard. H. Jeffrey Miller, Springfield Terminal's Revenue Manager, responded to Engelhard's inquiries about the erratic payments with the explanation that

I have given you the two possible scenarios for traffic moving eastward from CR to ST. If the route states CRROTTJ ST, then ST divisions of revenue and liability for carhire mileage begins at Selkirk, NY. ST pays mileage between Selkirk and Barber's Station. Conrail is hauling the cars but the cars remain in ST's account for both revenue and carhire as per the haulage agreement.

If the route states CR-BRBER ST, then ST divisions of revenue and liability for carhire mileage begins at Barber's Station, Ma. The carhire from Selkirk to Barber's Station remains in the account of Conrail. This is not a haulage move and the haulage agreement does not apply. Traffic moving westward from ST to CR works the same way.

Amended Complaint, Ex. M.

Conrail, on the other hand, told Engelhard that the Interchange Agreement "placed responsibility for all such moves [between Selkirk and Barber] on Springfield Terminal, regardless of which railroad actually moved the car or received a division of freight rates on the segment." Amended Complaint, ¶ 29.⁵

The court heard argument on defendants' motions to dismiss the original Complaint on October 24, 2001. As the parties refined their positions during the course of the hearing, it became apparent that two issues of law were ripe for adjudication: (1) Are Engelhard's state-law claims preempted by section 10501(b) of the ICCTA?; (2) If so, which of the ICCTA's statutes of limitations applies to Engelhard's claims of non-payment? At the conclusion of the hearing, the court gave Engelhard twenty-one days to file an Amended Complaint sharpening the focus of its state-law claims. Engelhard did so on November 14, 2001.⁶ Thereafter, defendants renewed their motions to dismiss and the parties filed supplemental memoranda directed to the two issues ripe for adjudication.

DISCUSSION

Preemption

"Congress's intent is the touchstone of preemption analysis." Mendes v. Medtronic Inc., 18 F.3d 13, 16 (1st Cir. 1994). "Such intent may be expressed either explicitly, in the language of a statute, or implicitly, through passage of a statutory scheme that extensively occupies the field or where the purpose and objectives of federal law would be frustrated by state law." Talbott v. C.R. Bard, Inc., 63 F.3d 25, 27 (1st Cir.1995). Section 10501(b) of the ICCTA states:

[t]he jurisdiction of the [Surface...