In re Lee Way Holding Co.
| Decision Date | 15 August 1989 |
| Docket Number | 2-87-0077,Adv. No. 2-87-0071,Bankruptcy No. 2-85-00661,2-87-0081 and 2-87-0087. |
| Citation | 104 BR 877 |
| Parties | In re LEE WAY HOLDING COMPANY, Debtor. Frederick M. LUPER, Trustee, Plaintiff, v. CAPITAL CONVEYOR, Howard Hill, Inc., Monroe, and University of Chicago Hospital, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
Frederick M. Luper, Columbus, Ohio, Chapter 11 Trustee.
Ernest V. Thomas III, Cincinnati, Ohio, Louis J. Wade, Kansas City, Mo., for plaintiff.
James W. Muldoon, David Greim, Worthington, Ohio, William J. Augello, Huntington, N.Y., for defendants.
ORDER ON MOTION OF CERTAIN DEFENDANTS FOR REFERENCE TO INTERSTATE COMMERCE COMMISSION
This cause came on for consideration upon the Motion of Certain Defendants for Transfer and Reference of Issues to the Interstate Commerce Commission and for Stay of Adversary Proceeding, and for other relief. The Motion for Reference is combined with four other Motions seeking various types of relief, including severance, dismissal, and determination that this is a non-core proceeding. However, only the Motion for Reference shall be considered here. The other aspects of the Motion shall be resolved by separate Order. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the General Order of Reference entered in this District.
The moving Defendants (collectively "the Defendants") are from each of the above-captioned adversary proceedings as follows:
Adv. No. 2-87-0071 Coats & Clark Sales Corp
Adv. No. 2-87-0077 Hydrotex, Inc
Adv. No. 2-87-0081 Nudo Products, Inc
Murray Industries, Inc
National Metals Company
National Potteries1
North American Enterprises
Adv. No. 2-87-0087 Western Mining Corp.
Western Publishing Co., Inc.
The Plaintiff, Frederick M. Luper, Trustee for Debtor Lee Way Holding Company ("the Plaintiff" or "the Trustee"), filed these adversary proceedings against numerous defendants, including the moving Defendants, under the Interstate Commerce Act, 49 U.S.C. § 10101, et seq., seeking to collect accounts receivable allegedly due the bankruptcy estate. These receivables consist of undercharges allegedly resulting from differences between amounts actually paid to the Debtor for freight shipments in which each Defendant was a liable party, and the amounts which should have been paid pursuant to the tariffs lawfully on file with the Interstate Commerce Commission ("ICC" or "the Commission"). The Defendants collectively answered the Plaintiff's Complaint and asserted numerous affirmative defenses, including (a) the rates underlying the charges are not the legally applicable rate; (b) tariff publication error, misrepresentation or mistake by the Plaintiffs, which constitute unreasonable practices; (c) the rates are unreasonably high; (d) waiver; (e) fraud; (f) set-off; (g) laches; and (h) accord and satisfaction. The movants seek referral of the issues to the Interstate Commerce Commission under the doctrine of primary jurisdiction.
When the Court is faced with an issue which calls into question an area of special expertise of an agency, the doctrine of primary jurisdiction allows the Court to suspend proceedings pending referral of the issue to the agency for its official position. The doctrine applies whenever enforcement of the claim requires resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body. In Far East Conference v. The United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576 (1952), the Supreme Court explained the use of primary jurisdiction as follows:
In cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over. This is so even though the facts after they have been appraised by specialized competence serve as the premise for legal consequences to be judicially defined. Uniformity and consistency in the regulation of business entrusted to a particular agency are secured, and the limited functions of review by the judiciary are more rationally exercised, by preliminary resort for ascertaining and interpreting the circumstances underlying legal issues to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure.
342 U.S. at 574-75, 72 S.Ct. at 494, 96 L.Ed. at 582.
The Plaintiff argues that under the "filed rate doctrine" a carrier is required to charge and the shipper is required to pay the rate in the carrier's tariff filed with the ICC. No deviation from the filed rate is permitted. The Court need only refer to the tariff to determine the amount of the Defendant's indebtedness; thus no special expertise of the ICC is needed to resolve the dispute and referral is unnecessary.
The filed rate doctrine is based upon 49 U.S.C. § 10761(a) which provides that:
A carrier providing transportation or service subject to the jurisdiction of the Interstate Commerce Commission . . . shall provide that transportation or service only if the rate for the transportation or service is contained in a tariff that is in effect under this subchapter. That carrier may not charge or receive a different compensation for that transportation or service than the rate specified in the tariff whether by returning a part of that rate to a person, giving a person a privilege, allowing the use of a facility that effects the value of that transportation or service, or another device.
The provision has been strictly construed, beginning with Louisville and Nashville R.R. v. Maxwell, 237 U.S. 94, 35 S.Ct. 494, 59 L.Ed. 853 (1915). Maxwell held, in short, that shippers who are charged less than the applicable tariff may be forced to pay the difference between the rate actually charged and the carrier's published rate. Even an intentional misquotation by the carrier will not relieve the shipper/customer from payment of the full obligation. Maxwell, 237 U.S. at 97, 35 S.Ct. at 495. As explained by Justice Hughes:
Under the Interstate Commerce Act, the rate of a carrier duly filed is the only lawful charge. Deviation from it is not permitted upon any pretext. Shippers and travelers are charged with notice of it, and they as well as the carrier must abide by it. . . . Ignorance or misquotation of rates is not an excuse for paying or charging either less or more than the rate filed. This rule is undeniably strict, and it may work hardship in some cases, but it embodies the policy which has been adopted by Congress in regulation of interstate commerce in order to prevent unjust discrimination. (Emphasis added.)
Maxwell, 237 U.S. at 97, 35 S.Ct. at 495, 59 L.Ed. at 853. Maxwell and its progeny have led the ICC and the lower courts to refuse consideration of equitable defenses in suits by carriers to collect undercharges, until recently.
The Defendants argue that the Motor Carrier Act passed by Congress in 1980, which substantially deregulated the trucking industry, warrants reconsideration of the filed rate doctrine. However, Congress did not amend § 10761 and, in an analogous situation, the Supreme Court has refused to give an expansive reading to the Motor Carrier Act. See, Square D Company v. Niagara Frontier Tariff Bureau, 476 U.S. 409, 106 S.Ct.1922, 90 L.Ed.2d 413 (1986). In Square D, the plaintiffs asserted that the Keough doctrine had been impliedly repealed by the Motor Carrier Act and argued that allowing antitrust actions would promote the purposes of the Act. The Supreme Court, however, refused to read into the Act an implied repeal of the Keough doctrine, stating that:
. . . Congress must be presumed to have been fully cognizant of this interpretation of the statutory scheme, which has been a significant part of our settled law for over half a century and that Congress did not see fit to change it when Congress carefully reexamined this area of the law in 1980.
Square D, 106 S.Ct. at 1928 (Footnote omitted). The Fifth Circuit Court of Appeals has so held in a case involving collection of undercharges. Supreme Beef Processors, Inc. v. Yaquinto (Matter of Caravan Refrigerated Cargo, Inc.), 864 F.2d 388 (5th Cir.1989).
The Defendants also point to National Industrial Transportation League — Petition to Institute Rule Making on Negotiated Motor Common...
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