In re Tucker Freight Lines, Inc.
| Decision Date | 14 April 1988 |
| Docket Number | No. K87-176,Bankruptcy No. HK 83-2391,Adv. No. 85-0631.,K87-176 |
| Parties | In re TUCKER FREIGHT LINES, INC., Debtor. John WALTHOUT, Trustee for Tucker Freight Lines, Inc., Appellant, v. UNITED EXPOSITION SERVICE, INC., Appellee. |
| Court | U.S. District Court — Western District of Michigan |
Rice, Rice, Gilbert & Marston by Kevin M. Ball, Grand Rapids, Mich., for appellant.
Muller, Muller, Richmond, Harms, Myers and Sgroi P.C. by William R. Farran, Grand Rapids, Mich., for appellee.
This matter is before the Court on plaintiff-appellant Walthout's appeal from an order by Bankruptcy Judge Howard referring this matter to the Interstate Commerce Commission ("ICC"). Appellant, the trustee of Tucker Freight Lines, Inc. ("Tucker"), a common carrier, instituted this action on September 12, 1985 seeking recovery of freight bill undercharges. Between August 27, 1982 and October 6, 1983, Tucker provided various transportation services for defendant United Exposition Service, Inc. ("United"). Pursuant to 49 U.S.C. § 10762, Tucker had on file with the ICC lawful tariffs containing the lawful rates and charges applicable to the transportation services rendered to United. It is undisputed that Tucker charged, and United paid, less than the amount mandated by the tariff for those services. Tucker, now in bankruptcy, seeks payment of the undercharges, pursuant to 49 U.S.C. § 10761(a). United contends that it negotiated in good faith for the lower rate and that Tucker assured it that the lower rate would be filed with the ICC. However, Tucker never filed those tariffs with the ICC.
On September 12, 1985, the trustee commenced this action seeking $11,240.40 in undercharges from United. This figure represents the difference between the rates billed to and paid by United and the applicable tariff. On March 13, 1987, United sought and obtained an order from the bankruptcy court staying proceedings in the bankruptcy court and referring the matter to the ICC for determination of whether Tucker's collection of the undercharges would constitute an unreasonable practice under 49 U.S.C. § 10704(a). The trustee appeals from this order. Because the facts are undisputed, and because this appeal involves only questions of law, I review Judge Howard's decision de novo. Rubenstein v. Ball Bros. Inc., 749 F.2d 1277 (9th Cir.1984).
As appellant is quick to point out, it has been the well-settled rule for nearly a century that tariff rates are strictly enforced and that equitable defenses are unavailable to shippers in an action by a common carrier to collect undercharges. In Louisville & Nashville R.R. Co. v. Maxwell, 237 U.S. 94, 98, 35 S.Ct. 494, 495-96, 59 L.Ed. 853 (1915), the Supreme Court stated this rule, now referred to as the filed-rate doctrine, and neither the Court nor Congress has since mandated a departure from it. In that case, the Court held:
Neither the intentional or accidental misstatement of the applicable published rate will bind the carrier or the shipper. The lawful rate is that which the carrier must exact and that which the shipper must pay. The shipper\'s knowledge of the lawful rate is conclusively presumed. . . . It was the purpose of the Act to have but one rate, open to all alike, and from which there could be no departure.
Id. at 98, 35 S.Ct. at 496. As the Seventh Circuit noted in Western Transportation Co. v. Wilson & Co. Inc., 682 F.2d 1227, 1231 (7th Cir.1982):
. . . Congress did not create a flexible standard for the courts to apply in accordance with the facts, equities and economic realities of the particular case. It forbade carriers to receive any different compensation from the rate in the applicable tariff. . . . There is no judicial power of equitable reformation of tariffs as of ordinary contracts.
Cases acknowledging and applying this inflexible rule of law are legion, and no useful purpose could be served by citing them here.
In 1986, the ICC made an abrupt change in its policy regarding the strict enforcement of tariff rates. In light of the substantial deregulation of the common carrier industry accomplished by the Motor Carrier Act of 1980, the Commission determined that the rule prohibiting equitable defenses in cases involving negotiated rates was no longer strictly applicable. In National Industrial Transportation League — Petition for Institute Rulemaking on Negotiated Motor Common Carrier Rates, Ex Parte No. MC-177 (October 29, 1986), the ICC issued a policy statement indicating that it would now review undercharge cases to determine whether collection of the undercharge would constitute an unreasonable practice under 49 U.S.C. § 10704(a). Rather than abrogate the rule announced by the Supreme Court in Maxwell, the Commission indicated that it would, upon referral of a matter by a district court, MC-177 at 47,352.
In so holding, the Commission acknowledged that it "lacks initial jurisdiction to entertain challenges to the reasonableness of motor carrier rates charged in the past, or to order the waiver of undercharges." Id. The Commission held, however, that it had the authority, under the doctrine of primary jurisdiction, to "address the question of what rate should have been charged by a carrier . . . if the carrier brings an action for undercharges in district court . . . and the court refers the question of whether the collection of undercharges would be an unreasonable practice to us. . . ." Id.
This policy statement has spawned a plethora of cases in the Circuit and District Courts requesting referral of undercharge cases to the Commission, or challenging an order referring such a matter to that agency. See e.g., Inman Freight Systems Inc. v. Olin Corp., 807 F.2d 117, 119-20 (8th Cir.1986); Seaboard System R.R. Inc. v. United States, 794 F.2d 635 (11th Cir.1986) (); Western Transportation Co. v. Wilson & Co., Inc., 682 F.2d 1227, 1231-32 (7th Cir.1982); In re Breman's Express, 69 B.R. 356 (Bkrtcy.W. D.Pa.1987); INF Ltd. v. Spectro Alloys Corp, 651 F.Supp. 1405 (D.Minn.1987); G.M.W. Inc. v. Flambeau Paper Corp., 623 F.Supp. 473 (W.D.Wisc.1985). Two more recent cases from district courts have denied referral to the ICC for application of its new policy statement, on the ground that the ICC did not have authority to waive the file-rate doctrine announced in Maxwell. Motor Carrier Audit & Collection Co. v. United Food Service, No. 87-C-298 available on WESTLAW, 1987 WL 19008; West Coast Truck Lines, Inc. v. Kaiser Aluminum & Chemical Co., No. C-87-0048 (N.D.Cal July 29, 1987) available on WESTLAW, 1987 WL 46871.
Appellant argues vigorously that referral to the ICC is inappropriate in this matter, because the ICC does not have authority to vary from the filed-rate doctrine. Appellant argues further, that even if the ICC declared its collection action to be an unreasonable practice, the filed-rate doctrine would prevent this Court from denying collection of the undercharges. Thus, appellant concludes, referral is inappropriate and unnecessary in this action.
Appellant cites Square D Company v. Niagara Frontier Tariff Bureau, 476 U.S. 409, 106 S.Ct. 1922, 90 L.Ed.2d 413 (1986), in support of his argument that courts are not free to deviate from the filed-rate doctrine. In that case, the Court affirmed Keogh v. C. & N.W. Ry. Co., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922), which held that treble damages were not available in antitrust actions against carriers even where the carrier conspired to fix rates in violation of the Sherman Act, since the rates had been approved by the ICC. Since rates charged by common carriers are fixed by law, the shipper cannot claim to have sustained damages from having to pay those rates. Square D, 476 U.S. at 415-16, 106 S.Ct. at 1925-26, 90 L.Ed.2d at 420-21. Square D affirmed Keough, while noting that the rule may have outlived its usefulness, on the ground that Congress had not chosen to overrule Keough in the Motor Carrier Act of 1980.
While appellant correctly states the holding in Square D, he misunderstands its application to the case at bar. In Square D, as in Maxwell, the rates strictly enforced by the Court were presumptively reasonable because they had been approved by the ICC. Therefore, collection of those rates was mandated by law. Square D had nothing whatever to say about rates deemed to be unreasonable, or the collection of rates deemed to be an unreasonable practice, by the ICC. MC-177 contradicts neither Square D nor Maxwell, since it proposes not to waive the collection of undercharges on reasonable filed rates, but to hold that filed rates are unreasonable, thus allowing a district court to enjoin the collection of purported undercharges. See, Western Transportation, at 1231.
As appellant argues, 49 U.S.C. 10761(a) mandates the collection of tariff rates filed with the Commission, even where the carrier misquotes or affirmatively misrepresents the applicable rate to the shipper. Consolidated Freightways v. Terry Tuck, Inc., 612 F.2d 465 (9th Cir.1980); Sea-Land Service Inc. v. Sherman, 528 F.Supp. 223 (W.D.Wa.1981). If this were all the statute had to say about tariff rates, then appellant's argument against referral to the ICC would make some sense, because neither the ICC nor the Court could enjoin collection of the published rate. However, 49 U.S.C. § 10704(a) mandates that tariff rates be reasonable. If a tariff rate is unreasonable, it violates the statute. Western Transportation, 682...
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In re Robinson Truck Lines, Inc.
...jurisdiction of the ICC to determine the reasonableness of the carrier's tariffs or practices. As noted in In Re Tucker Freight Lines, Inc., 85 BR 426 (DC WD Mich.1988), the tariffs in Square D were presumptively reasonable because they had been approved by the VI. An obvious tension has de......