IN RE GORDONS TRANSPORT, INC.
| Decision Date | 05 February 1985 |
| Docket Number | Bankruptcy No. 83-2048,Adv. No. 84-0247. |
| Parties | In re GORDONS TRANSPORTS, INC., Debtor in Chapter 7, (Originally filed under Chapter 11), A.J. CALHOUN, Trustee for Gordons Transports, Inc., Plaintiff, v. COPELAND CORPORATION, Defendant. |
| Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Tennessee |
David G. Sperry and Louis J. Wade, Kansas City, Mo., for plaintiff.
Philip E. Langer, and Jon M. Sebaly, Dayton, Ohio, for defendant.
In the instant proceeding the Defendant, Copeland Corporation ("Copeland"), moves the Court for an Order dismissing the complaint for turnover of property pursuant to 11 U.S.C. § 542(b) and a money judgment filed by the Plaintiff, A.J. Calhoun, Trustee for Gordons Transports, Inc. ("Gordons"), the above-named Chapter 7 Debtor. Copeland asserts that this Court does not have primary jurisdiction over Gordons' complaint and that Gordons' claim is an improper action for turnover of property under section 542(b) of the Bankruptcy Act.
Gordons seeks to recover debts allegedly owed by Copeland to Gordons for transportation services provided by Gordons from April of 1980 through March of 1983. Gordons avers that the freight bills that were submitted to and paid by Copeland were erroneously based upon a lawful, however, inapplicable tariff, thus entitling Gordons to recover the difference between what the tariff should have been and the sum that was actually paid by Copeland.1
In its motion to dismiss, Copeland contends that this Court, or any court, is without jurisdiction over the controversy because Gordons' claim involves the application of tariff rates. Copeland argues that the Interstate Commerce Commission ("ICC") has primary jurisdiction in this case because it has special expertise to determine the proper tariff rate applicable to the transactions between the parties before the Court. Copeland cites in its brief a number of cases that it claims stand for the proposition that the ICC has primary jurisdiction to determine any question that deals with the application of a tariff rate.
Copeland's perception of the doctrine of primary jurisdiction is somewhat distorted, and understandably so. This judge-made doctrine originated in the case of Texas & Pacific R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553 (1907). In Abilene Cotton an oil company sued a railroad, seeking to recover charges paid in excess of what was a just and reasonable tariff rate.2 The Interstate Commerce Act provided: "Nothing in this act contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this act are in addition to such remedies." Despite language in the statute specifically allowing court suits for damages for unreasonable tariff rates, the Supreme Court held that since the shipper's claim was based upon the unreasonableness of the established tariff rate, the shipper must seek its remedy through the ICC. The Court's reasoning was that if courts and juries were allowed to determine reasonableness of rates, uniformity would be impossible.
The scope of the Abilene Cotton opinion was inordinately broad. Subsequent ICC cases served to limit the primary jurisdiction doctrine and clarify for the courts when the doctrine should be invoked. The leading case in this area is Great Northern R. Co. v. Merchants Elevator Co., 259 U.S. 285, 42 S.Ct. 477, 66 L.Ed. 943 (1922). In a most scholarly opinion, Mr. Justice Brandeis both clarifies the function of the doctrine of primary jurisdiction and explains how the courts should apply the doctrine.
The purpose of the primary jurisdiction doctrine is to guide a court in determining whether to refrain from exercising its jurisdiction until after an administrative agency has made a ruling concerning some question involved in the case before the Court. If a court determines that an agency has primary jurisdiction, it will either dismiss the case or simply postpone any action on the case until the agency makes a ruling. The Supreme Court stated: "The very purpose of providing either an exclusive or an initial and preliminary administrative determination is to secure the administrative judgment either, in the one case, in substitution for judicial decision or, in the other, as foundation for or perchance to make unnecessary later judicial proceedings. Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U.S. 752, 767, 67 S.Ct. 1493, 1500, 91 L.Ed. 1796 (1947).
It is clear that a court should apply the doctrine of primary jurisdiction in the following circumstances: where a party is asserting that a tariff rate, rule, or practice is unreasonable or unjustly discriminatory; where the question involves technical matters over which the ICC has discretion and the determination should be made by the ICC in order to secure uniformity; where complex and technical cost allocation and accounting problems are involved and the determination would involve voluminous and conflicting evidence and the ICC is better suited to make the determination because of its acquaintance with the many intricate facts of transportation. In determining whether or not to resort to administrative judgment, a court must appraise the character of the controverted question and the nature of the inquiry necessary for its solution. Merchants Elevator, 259 U.S., at 291, 42 S.Ct. at 479.
In the case at bar, the primary issue before this Court is whether the commodities that were shipped by Copeland were stampings or castings. Gordons contends that the commodities were improperly classified as castings, resulting in the application of the wrong tariff rate. Thus, the Court is called upon to...
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