General Mills, Inc. v. United States, No. 4-72 Civ. 164.

• Court: United States District Courts. 8th Circuit. United States District Court of Minnesota
• Writing for the Court: HEANEY, Circuit , DEVITT, , and LORD
• Citation: 364 F. Supp. 1278
• Parties: GENERAL MILLS, INC., et al., Plaintiffs, New Orleans Traffic and Transportation Bureau et al., Intervening Plaintiffs, v. UNITED STATES of America, and Interstate Commerce Commission, Defendants, The Atchison, Topeka and Santa Fe Railway Company, et al., Intervening Defendants.
• Decision Date: 12 June 1973
• Docket Number: No. 4-72 Civ. 164.

364 F. Supp. 1278

GENERAL MILLS, INC., et al., Plaintiffs,
New Orleans Traffic and Transportation Bureau et al., Intervening Plaintiffs,
v.
UNITED STATES of America, and Interstate Commerce Commission, Defendants,
The Atchison, Topeka and Santa Fe Railway Company, et al., Intervening Defendants.

No. 4-72 Civ. 164.

United States District Court, D. Minnesota, Fourth Division.

June 12, 1973.

364 F. Supp. 1279

Elmer H. Atchley, and James Scoggin, Minneapolis, Minn., for plaintiffs.

John F. Donelan, John M. Cleary, and Frederic L. Wood, Washington, D.C., Louis A. Schwartz and Laurence F. Daspit, New Orleans, La., and Harold E. Spencer, Chicago, Ill., for plaintiffs-intervenors.

John H. D. Wigger, Dept. of Justice, Washington, D.C., Robert G. Renner, Minneapolis, Minn., Fritz R. Kahn and Raymond M. Zimmet, Interstate Commerce Commission, Washington, D.C., for defendants.

Curtis H. Berg, St. Paul, Minn., William Moloney and Hollis Duensing, Washington, D.C., J. R. Davis, Richmond, Va., James L. Howe, III, Washington, D. C., Harvey Huston, Rodger K. Johnson, Chicago, Ill., Richard Kienle, Roanoke, Va., Richard Murphy, Philadelphia, Pa., and John Paylor, Baltimore, Md., for defendants-intervenors.

Before HEANEY, Circuit Judge, DEVITT, Chief District Judge, and LORD, District Judge.

MILES W. LORD, District Judge.

In this action, plaintiffs seek to set aside in part an Order of the Interstate Commerce Commission approving increases in demurrage charges as proposed by the nation's railroads for the undue detention of freight cars being loaded or unloaded by shippers or consignees (hereafter shippers). In the proceedings entitled Demurrage Rules and Charges, Nationwide, 340 I.C.C. 83, decided October 5, 1971, the Commission found the proposed increased demurrage charges to be just and reasonable and otherwise lawful. It is the plaintiffs' claim that the conclusions of the Commission were not reasonable and not based on substantial evidence and hence should be set aside by this Court.

This action was brought pursuant to 28 U.S.C. §§ 1336, 1398, 2321, 2322, 2323, 2324; 49 U.S.C. § 17; and 5 U.S. C. § 551 et seq. A three judge court was convened pursuant to 28 U.S.C. §§ 2284 and 2325.

By schedules filed with the Interstate Commerce Commission (hereafter Commission),

364 F. Supp. 1280

the nation's railroads proposed changes in car demurrage rules and charges governing the detention of railroad cars by or for shippers. The schedules were to go into effect on September 1, 1970 and increased the charges as is illustrated in the following chart

---------------------------------------------------------
                Car-days after 48 hours Prior Increased
                 free time Charges Charges
                ---------------------------------------------------------
                 1 ............................ $ 5 .......... $10
                 2 ............................ 5 .......... 10
                 3 ............................ 5 .......... 10
                 4 ............................ 5 .......... 10
                 5 ............................ 10 .......... 20
                 6 ............................ 10 .......... 20
                 7 ............................ 10 .......... 30
                 8 ............................ 10 .......... 30
                 9 or over .................... 15 .......... 30
                ---------------------------------------------------------
                

Numerous shippers, including the plaintiffs herein, protested the proposed increases. In response to the protests, the Commission, by Order of Divison 2, suspended the proposal until March 31, 1971 and instituted an investigation into the reasonableness and lawfulness of the suspended schedules. Evidence in written form was submitted by the railroads in support of the proposed changes and by the protesting shippers in opposition thereto. Oral hearings were held before a Hearing Examiner of the Commission for the purpose of cross-examination on December 14-18, 1970.

In a report and order dated March 25, 1971, Division 2 found that the proposed increased charges and rules had not been shown to be just and reasonable, and ordered their cancellation on or before April 30, 1971. At the same time, the Commission announced that it had determined that the proceeding involved an issue of general transportation importance and that parties of record dissatisfied with the decision would be permitted to file a petition for reconsideration by the entire Commission. Such a petition was filed by the railroads on April 28, 1971, and certain of the protesting shippers filed replies. The entire eleven-man Commission issued its report and order on October 5, 1971, which is the order under attack in this proceeding.

Specifically, the Commission found that there has been a substantial increase in the percentage of cars detained by shippers; that the increasing delays in releasing cars are primarily the fault of the shippers; that the demurrage charges established in 1964 had lost their penalty element in the economy by 1971; and that the higher demurrage charges were just and reasonable and would result in a more prompt release of cars by shippers which would be of benefit to the entire shipping public and carriers. The Commission did find that with respect to Saturdays, Sundays, and holidays, the proposed changes were not shown to be just and reasonable and should not be implemented.

A petition for reconsideration was filed and denied by order of the Commission on January 14, 1972. The increased demurrage charges here in issue became effective at the expiration of the suspension period on April 1, 1971 and have remained in effect since that date.

In arriving at their decision, the Commission considered the rising costs of operating railroads as well as specific studies that indicated that the percentage of freight cars held beyond the 48 hour free time has been increasing at a rapid rate. Furthermore, the Commission looked to two specific time periods in the past decade in which the Commission temporarily raised the demurrage rates. The studies reveal that each time demurrage charges were raised, there was a noticeable effect on the detention of freight cars.

The Commission relied heavily on a study of demurrage made by the Association of American Railroads covering the years 1961 to 1970. This study consisted of weekly reports from 13 selected districts indicating the total number of freight cars on hand for unloading and those on hand beyond the 48 hour free time. This study revealed a steady increase over the past decade in the percentage of cars that were detained beyond

364 F. Supp. 1281

the 48 hour free time.¹ The Commission then looked to its experience during those periods of time when demurrage charges were increased

Under Service Order 979 which was in effect from April, 1966 until July of 1967, demurrage charges were increased to the same level as the present changes. Whereas in the ten year period, the percentage of cars held beyond the 48 hour free period had increased from 16.48% to 22.58%, the per cent of increase in detention was only .08 in 1966 and there was no increase in 1967. It was the Commission's conclusion that the increased demurrage charges retarded the increase in freight car detention. Under Service Order 1023 demurrage rates were raised for a four month period in 1969.² Various studies by the railroads indicated that detention of freight cars during this four month period was considerably less than for the same period in the preceding and the following years.³

Plaintiffs in this matter do not challenge all of the changes in the demurrage rates. Although they do not concede that any of the changes are warranted, they maintain that as a matter of policy they choose only to contest the rate change for the first four days after the 48 hour free time.

It is the plaintiffs' position that there is not substantial evidence in the record to support the findings and conclusions of the Commission. In particular, plaintiffs allege that although there may be evidence that the amount of detention of railroad cars has increased over the last decade there is no evidence to show that the increase is the fault of the shippers. Plaintiffs affirmatively produced a number of witnesses who testified to the effect that car detention is the result of poor and inconsistent railroad service and not the fault of the shippers. Secondly, it is asserted that there is no evidence in the record dealing specifically with the problem of detention of empty freight cars which are held for the purposes of loading, although the increased demurrage rate will be applicable to this type of detention. Finally, it is argued by the intervenor port authorities that the situation at the Gulf ports presents a unique problem in that the shippers have no control over the detention of the cars. It is the intervening plaintiffs' position that since there was no specific evidence concerning the situation at the ports and that the Commission failed to make a specific finding relative to this problem that as to the ports, the increased demurrage should be set aside in that it was not based on substantial evidence.

364 F. Supp. 1282

The main thrust of the shippers' argument centered around the claim that the undue detention was the result of erratic railroad service and not the fault of the shippers. It was the shippers' claim that instead of delivering the cars at a continuous steady rate as ordered, they were often delivered in bunches which made...