Ford Motor Co. v. I.C.C.

• Decision Date: 09 August 1983
• Docket Number: 82-1748,Nos. 82-1630,s. 82-1630
• Citation: 714 F.2d 1157
• Parties: FORD MOTOR COMPANY, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Union Pacific Railroad Company, Intervenor. DEPARTMENT OF DEFENSE, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Seaboard Coast Line Railroad Company, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1157

714 F.2d 1157

230 U.S.App.D.C. 92

FORD MOTOR COMPANY, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents,

Union Pacific Railroad Company, Intervenor.

DEPARTMENT OF DEFENSE, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents,

Seaboard Coast Line Railroad Company, Intervenor.

Nos. 82-1630, 82-1748.

United States Court of Appeals, District of Columbia Circuit.

Argued June 1, 1983.

Decided Aug. 9, 1983.

Petitions for Review of Orders of the Interstate Commerce commission.

Robert N. Kharasch, Washington, D.C., for petitioner in 82-1630. David Larrouy, Dearborn, Mich., Olga Boikess and Edward D. Greenberg, Washington, D.C., were on brief for petitioner in 82-1630. Kathleen Craig M. Keats, Washington, D.C., Atty., I.C.C., with whom John Broadley, Gen. Counsel, and Ellen D. Hanson, Associate Gen. Counsel, I.C.C., Washington, D.C., were on brief for respondents in 82-1630 and 82-1748. Henri F. Rush, Atty., I.C.C., John J. Powers, III and Kenneth P. Kolson, Attys., Dept. of Justice, Washington, D.C., also entered appearances for respondents in 82-1630.

                [230 U.S.App.D.C. 93] Mahon, Washington, D.C., also entered an appearance for petitioner in 82-1630.   Howard S. Scher, Atty., Dept. of Justice, Washington, D.C., with whom J. Paul McGrath, Asst. Atty. Gen., Stanley S. Harris, U.S. Atty., and Anthony J. Steinmeyer, Atty., Dept. of Justice, Washington, D.C., were on brief for petitioner in 82-1748
                

R. Eden Martin, with whom Robert B. Batchelder, Omaha, Neb., and Howard J. Trienens, New York City, were on brief for intervenor in 82-1630. Neill W. McArthur, Jr. and Charles M. Rosenberger, Jacksonville, Fla., were on brief for intervenor in 82-1748.

Before MIKVA, GINSBURG and BORK, Circuit Judges.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge:

The Interstate Commerce Commission (ICC or Commission), for most of its near-century existence, was heavily involved in regulating railroad rates to secure their reasonableness. Reform Congress ordered now calls for significant deregulation allowing "to the maximum extent possible, competition and the demand for services to establish reasonable rates." Staggers Rail Act of 1980 (Staggers Act), Pub.L. No. 96-448, sec. 101(a), 94 Stat. 1895, 1897 (codified at 49 U.S.C. § 10101a(1) (Supp. V 1981)). The two cases before us for review, Ford Motor Co. v. Union Pacific Railroad, 365 I.C.C. 630 (1982) (Ford Motor ), and Department of Defense v. Seaboard Coast Line Railroad, I.C.C. Docket No. 37925S (served May 10, 1982, sustained by 3-3 en banc decision served Oct. 12, 1982) (DOD ), arise in the transition period through which the ICC is passing.

We reverse the Commission's decisions in both cases. The ICC's quick dismissals of the complaints in these cases bear the earmarks of a hasty route, not the measured passage from the old regime to the new for which Congress provided. And they rest upon the incorrect premise that failure to join all parties who have an interest in the controversy strips the Commission of its subject matter competence and its authority over the parties before it.

I. STATUTORY FRAMEWORK

Until 1976, the ICC was charged with general superintendence of rates for transportation by rail. A "just and reasonable" standard controlled all rates, rail users could challenge the reasonableness of rates, at any time, and the Commission had authority to determine what constituted a just and reasonable rate in each case. See Interstate Commerce Act, ch. 104, §§ 1, 15, 24 Stat. 379, 384 (1887). Shrinkage of the ICC's rate control stewardship commenced with the Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. No. 94-210, 90 Stat. 31 (4-R Act). That legislation confined the Commission's maximum reasonable rate regulation to cases in which the railroad had "market dominance" over the traffic involved. 49 U.S.C. § 1(5)(b) (1976). Market dominance was defined as "an absence of effective competition from other carriers or modes of transportation, for the traffic or movement to which a rate applies." Id. § 1(5)(c)(i). ¹

In contrast to the decisions challenged in the instant petitions for review, decisions indicative of an agency overeager to relinquish control, in administering the 4-R Act the ICC displayed some reluctance to step Two Staggers Act alterations are central to the cases before us. First, to circumscribe ICC market dominance determinations, Congress set a threshold; it directed the Commission to reject market dominance allegations, and therefore to dismiss complaints without reaching the issue of a rate's reasonableness, when the challenged rate returned revenues below a specified percentage of the variable costs of providing the service (160 percent prior to October 1, 1981, 170 percent currently). 49 U.S.C. § 10709(d)(2). ²

                [230 U.S.App.D.C. 94] back.   The Commission gave the term "market dominance" an expansive interpretation.   See H.R.Rep. No. 1035, 96th Cong., 2d Sess. 38, 115-17 (1980), U.S.Code Cong. & Admin.News 1980, p. 3978.   Congress reacted to the ICC's encompassing reading, and moved further in the direction of deregulation in 1980 when it passed the Staggers Act.   That Act largely removed rail rate regulation from ICC oversight.   See particularly sections 201(a), 202, and 203(a) of the Staggers Act, 49 U.S.C. §§ 10701a, 10709, 10707a
                

Second, Congress provided a cutoff date for challenges even to market dominant rates. Shippers were given until March 30, 1981, 180 days after the October 1, 1980, effective date of the Staggers Act, to file complaints challenging rates. Under section 229 of the Staggers Act, 49 U.S.C. § 10701a note (savings provision), any rate not challenged in a complaint filed within the 180-day period, ³ or challenged unsuccessfully (because "(A) the rail carrier is found not to have market dominance over the transportation to which the rate applies, or (B) the rate is found to be reasonable") is deemed lawful. Such rates thereafter are immune from attack and may be adjusted upward, within statutorily prescribed limits, 49 U.S.C. § 10707a, without Commission surveillance.

II. JOINT RATES AND THE COMMISSION'S JOINDER RULE

Both cases here on review, Ford Motor and DOD, involve "joint rates and through routes," arrangements under which freight is handled by more than one carrier, but charges are assessed jointly under a single rate. In contrast to "combination rate" service, in which each carrier collects its charges separately, in "joint rate" service, the delivering carrier bills and collects for all participating carriers and payments are divided among the participants according to a "divisions" formula.

Both petitioners filed complaints within the 180-day Staggers Act deadline; both complaints alleged, as the Act requires, that the participating carriers had market dominance and that the challenged rates exceeded a reasonable level for the involved traffic. Ford Motor Company (Ford) initially sought only prospective relief--Commission prescription of a reasonable rate for the future. The Department of Defense (DOD) sought only reparations--damages for past overcharges.

DOD named as a defendant only the delivering carrier, Seaboard Coast Line Railroad, although the rates DOD attacked, in most instances, involved movements over three carriers, and eleven carriers, in all, participated in the joint-line services. ⁴ Ford challenged a joint rate involving only two carriers; initially, Ford named both as defendants, but requested and was granted If complaint is made with respect to through transportation by continuous carriage or shipment, all persons subject to the act participating therein, and against which an order is sought, should be made defendants.

                [230 U.S.App.D.C. 95] an order dismissing the complaint against one of them when that carrier and Ford reached a settlement set out in a contract filed with the Commission.   ICC Rule 25(c), the Commission's joinder of defendants rule, 49 C.F.R. § 1100.25(c) (1981), 5 which pre-dates the Staggers and 4-R Acts, provides in relevant part
                

(Emphasis supplied.)

The ICC dismissed the Ford Motor and DOD complaints peremptorily as incurably defective. The Commission maintained that it "lacked jurisdiction" over the complaints absent joinder of all participating carriers. This "jurisdictional impediment" was insurmountable, the ICC reasoned, because Commission precedent established that additional parties could not be joined once the Staggers Act 180-day grace period had passed. See Columbian Chemicals Co. v. Atchison, Topeka, & Santa Fe Railway, ICC Docket No. 38246S (served Sept. 10, 1981) (rejecting amendment adding parties after March 30, 1981, deadline, but not dismissing original complaint).

III. THE COMMISSION'S JURISDICTION OVER THE FORD MOTOR AND DOD COMPLAINTS

In the sections that follow, we describe separately for each case the parties' positions and the ICC's course. We note at the outset, however, a confusion or misperception that pervades the Commission's decisions and its briefs to this court. The term jurisdiction, in the context here relevant, refers to a tribunal's adjudicatory authority over the subject matter and parties before it. See generally RESTATEMENT (SECOND) OF JUDGMENTS ch. 2 introd. note at 27-28, §§ 1, 11 (1980); 13 C. WRIGHT, A. MILLER & E. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3522 (1975). Like the adjudicatory authority of a federal court, the ICC's subject matter jurisdiction or competence--the kinds of controversies it may adjudicate--is prescribed by Congress, and is not determined by the Commission's own notions of authority it should or should not have.

Failure to join a party, even one determined, after the requisite careful, practically-oriented analysis, to be needed for just adjudication, indeed even one so needed as to attract the conclusion-reporting label "indispensable," ⁶ never strips a...