In re Roberts Carrier Corp.

• Decision Date: 13 August 1993
• Docket Number: Adv. No. 392-0475A.,Bankruptcy No. 390-10391
• Citation: 157 BR 109
• Parties: In re ROBERTS CARRIER CORP., Debtor. Paul E. JENNINGS, Trustee, Plaintiff, v. TAMAQUA CABLE PRODUCTS CORP., Defendant.
• Court: U.S. Bankruptcy Court — Middle District of Tennessee

157 B.R. 109 (1993)

In re ROBERTS CARRIER CORP., Debtor Paul E. JENNINGS, Trustee, Plaintiff, v. TAMAQUA CABLE PRODUCTS CORP., Defendant.

Bankruptcy No. 390-10391, Adv. No. 392-0475A.

United States Bankruptcy Court, M.D. Tennessee.

August 13, 1993.

Paul E. Jennings, Paul E. Jennings Law Offices, P.C., Nashville, TN, Trustee and for Trustee.

Phillip North, North & Gideon, Nashville, TN, for Tamaqua Cable Products Corp.

MEMORANDUM

KEITH M. LUNDIN, Bankruptcy Judge.

The question presented is whether the "contract carrier" and "rate reasonableness" issues in these carrier undercharge adversary proceedings should be referred to the Interstate Commerce Commission under the doctrine of primary jurisdiction. Referral of the contract carrier and rate reasonableness issues is denied. The following are findings of fact and conclusions of law. Fed.R.Bankr.P. 7052.

I.

The debtor in this Chapter 7 case was a commercial carrier. This adversary proceeding consolidates several lawsuits by the Chapter 7 trustee against shippers that hired the debtor before bankruptcy. The trustee alleges that the debtor was a common carrier and that the defendant shippers were undercharged at rates less than the debtor's common carrier rates filed at the Interstate Commerce Commission ("ICC"). The trustee seeks to recover the undercharges for the benefit of all creditors.

The shippers raise one defense and one counterclaim:

1. The shippers argue that the debtor was a "contract carrier," rather than a "common carrier," at the time it performed services. If this defense is proven, the shippers were not bound by the common carrier rates filed with the ICC and the trustee would be precluded from recovering (nonexistent) undercharges. Interstate Commerce Commission, Ex Parte No. MC-165, Exemption of Motor Contract Carriers from Tariff Filing Requirements, 133 M.C.C. 150, 1983 WL 42429, 1983 MCC LEXIS 21 (May 17, 1983), aff\'d sub nom., Cent. & S. Motor Freight Tariff Ass\'n. v. United States, 757 F.2d 301 (D.C.Cir.1985), cert. denied, 474 U.S. 1019, 106 S.Ct. 568, 88 L.Ed.2d 553 (1985); Vining v. Rock Wool Mfg. Co. (In re Steve D. Thompson Trucking, Inc.), 989 F.2d 1424, 1428 n. 3, 1434 n. 22 (5th Cir.1993).

2. Alternatively, the shippers counterclaim¹ that, even if the debtor was a common carrier, the debtor\'s filed rates were unreasonable. If the debtor\'s filed common carrier rates were unreasonable, then they are unenforceable against the defendant shippers. Louisville & N.R.R. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853 (1915); Maislin Ind. v. Primary Steel, Inc., 497 U.S. 116, 128, 110 S.Ct. 2759, 2767, 111 L.Ed.2d 94 (1990).

The Chapter 7 trustee and one of the shipper defendants, Tamaqua Cable Products Corporation ("Tamaqua"), have filed cross-motions for summary judgment raising a preliminary forum selection question. Tamaqua asserts that the "contract carrier" issue and the "rate reasonableness" issue should be referred to the ICC under the doctrine of primary jurisdiction. The trustee opposes referral to the ICC.

II.

"The doctrine of primary jurisdiction . . . is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties." United States v. Western Pac. R.R., 352 U.S. 59, 63-64, 77 S.Ct. 161, 165, 1 L.Ed.2d 126 (1956). It

applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views.

No fixed formula exists for applying the doctrine of primary jurisdiction. In every case the question is whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application in the particular litigation.

Id. at 64, 77 S.Ct. at 165 (citation omitted). Factors to be considered in applying the doctrine are "whether the issues of fact raised in the case are not within the conventional experience of judges; or whether the issues of fact require the exercise of administrative discretion, or require uniformity and consistency in the regulation of the business entrusted to a particular agency." Marshall v. El Paso Natural Gas Co., 874 F.2d 1373, 1377 (10th Cir.1989) (citing Far East Conference v. United States, 342 U.S. 570, 574-75, 72 S.Ct. 492, 96 L.Ed. 576 (1952)). A court should "refer a matter to the ICC when it believes the agency's . . . determination will assist in resolving the entire dispute." Covey v. ConAgra, Inc., 763 F.Supp. 479, 482 (D.Colo.1991). A "court is not required to defer factual issues to an agency under the doctrine of primary jurisdiction if those factual issues are of the sort that the court routinely considers." Marshall, 874 F.2d at 1377.

The question whether this debtor was a "contract carrier" or a "common carrier" is a run-of-the-mill legal question not obviously within the special competence of the ICC. Whether a particular relationship between a shipper and a carrier is "contractual" or "common" is fact-laden. The development and presentation of relevant facts is the sort of thing that courts do in every contract dispute. The statutory definition, found at 49 U.S.C. § 10102(15) (1988), has been interpreted and applied by many courts. See Security Servs., Inc. v. Johnson Matthey, Inc., No. 91-6699, 1992 WL 176497 (E.D.Pa. July 15, 1992); Brizendine v. Beatrice/Hunt-Wesson, Inc. (In re Brown Transp. Truckload, Inc.), 142 B.R. 536 (Bankr.N.D.Ga.1992); Brizendine v. Reliable Corp., 152 B.R. 224 (N.D.Ill.1993); Barclay, Inc. v. Stewart & Stevenson Serv., Inc., 761 F.Supp. 194 (D.Mass.1991); Global Transp. Servs., Inc. v. United Shipping Co. (In re United Shipping Co.), 134 B.R. 359 (Bankr. D.Minn.1991). Determining whether the relationships between this debtor and these shippers was contract carriage or common carriage does not implicate uniformity or consistency considerations — the "contract carrier" issue turns on the facts of each specific case and consequently is not of much precedential value. Tamaqua has cited no issue of fact that requires the exercise of administrative discretion, as opposed to the ordinary application of law to contested facts — the stuff that courts do every day.

The majority of courts that have addressed the question whether to refer a "contract carrier" issue to the ICC have concluded not to refer. See Security Serv., Inc. v. Johnson Matthey, Inc., No. 91-6699, 1992 WL 176497 (E.D.Pa. July 15, 1992); Brizendine v. Reliable Corp., 152 B.R. 224 (N.D.Ill.1993); Brizendine v. Beatrice/Hunt-Wesson, Inc. (In re Brown Transp. Truckload, Inc.), 142 B.R. 536 (Bankr.N.D.Ga.1992); Global Transp. Servs., Inc. v. United Shipping Co. (In re United Shipping Co.), 134 B.R. 359 (Bankr.D.Minn.1991); Dan Barclay, Inc. v. Stewart & Stevenson Serv., Inc., 761 F.Supp. 194 (D.Mass.1991). As one court explained:

The general jurisdiction of the I.C.C. does not bar the court from determining whether the parties operated pursuant to contract or common carriage. . . . Determination of this type of issue requires the court to interpret and apply the statute which defines contract carriage and well established principles of contract law. Such a task is within the purview of the court and does not require the technical expertise of which the agency is the repository.

Security Serv., Inc. v. Johnson Matthey, Inc., No. 91-6699, 1992 WL 176497, at *2 (E.D.Pa. July 15, 1992) (citations omitted).

Reported cases that have referred the contract carrier issue to the ICC were decided during a period when the ICC had created confusion over its own standards for distinguishing contract from common carriage. Prior to repeal on May 5, 1992,² the Motor Contract Carrier Regulations of the ICC required that contract carriage arrangements be in writing and meet other specified technical requirements. See Contracts for Transp. of Property, 49 C.F.R. Part 1053 (1980) (repealed 1992). For some time prior to May of 1992, the ICC had been retreating from this requirement of a written contract. Upon repeal, the ICC replaced the written contract requirement and the technical standards of 49 C.F.R. Part 1053 with a "totality of the circumstances" standard. Interstate Commerce Commission, Ex Parte No. MC-198, Contracts for Transp. of Property, 1992 WL 113532, 1992 MCC LEXIS 59, at *17-18, 8 I.C.C.2d 520, 529 (May 5, 1992). Finding "considerable confusion as to what standards now apply in determining contract carriages," one judge of the United States District Court for the Eastern District of Pennsylvania referred two "contract carriage" cases to the ICC after the repeal of 49 C.F.R. Part 1053. See Brizendine v. Baldwin Hardware Corp., No. 91-6800, 1992 WL 209980, at *3, 4 (E.D.Pa. Aug. 24, 1992); F.P. Corp. v. Ken Way Transp., Inc., 821 F.Supp. 1032, 1036 (E.D.Pa.1993). Another judge of the same court found no confusion and held that resolution of the contract carriage question is "a task . . . within the purview of the court and does not require the technical expertise of which the agency is the repository." Security Serv., Inc. v. Johnson Matthey, Inc., No. 91-6699, 1992 WL 176497, at *2 (E.D.Pa. July 15, 1992). Another case, Atlantis Express, Inc. v. Standard Transp. Servs., Inc., 955 F.2d 529 (8th Cir.1992), was decided approximately four months before the repeal of 49 C.F.R. Part 1053, during the period in which the ICC was retreating from the requirement of a written contract. The ICC had already instituted a proceeding to consider the repeal of Part 1053, stating that "`the Commission does not "invalidate" contracts for contract carriage, and it is not our policy to find a lack of contract carriage based on simple, technical oversights or omissions.'" Atlantis, ...