Iowa Beef Processors, Inc. v. Illinois Central Gulf R. Co.

• Decision Date: 22 October 1982
• Docket Number: Nos. 81-1640,81-2357,s. 81-1640
• Citation: 685 F.2d 255
• Parties: IOWA BEEF PROCESSORS, INC., a Delaware corporation, Appellee, v. ILLINOIS CENTRAL GULF RAILROAD COMPANY, a Delaware corporation, Appellant. IOWA BEEF PROCESSORS, INC., a Delaware corporation, Appellee, v. ILLINOIS CENTRAL GULF RAILROAD COMPANY, a Delaware corporation, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 255

685 F.2d 255

IOWA BEEF PROCESSORS, INC., a Delaware corporation, Appellee, v. ILLINOIS CENTRAL GULF RAILROAD COMPANY, a Delaware

corporation, Appellant.

IOWA BEEF PROCESSORS, INC., a Delaware corporation, Appellee, v. ILLINOIS CENTRAL GULF RAILROAD COMPANY, a Delaware

corporation, Appellant.

Nos. 81-1640, 81-2357.

United States Court of Appeals Eighth Circuit.

Submitted May 18, 1982.

Decided Aug. 23, 1982.

Rehearing and Rehearing En Banc Denied Oct. 22, 1982.

Frank W. Davis, Jr., Marc P. Franson, Gamble, Riepe, Burt, Webster & Davis, Des Moines, Iowa, for appellant Illinois Central Gulf R. Co.

D. Douglas Titus, Bikakis, Titus, Vohs & Storm, Sioux City, Iowa, and Eugene D. Anderson, Washington, D. C., for appellee Iowa Beef Processors, Inc.

Before BRIGHT and McMILLIAN, Circuit Judges, and HARRIS, ^* Senior District Judge.

BRIGHT, Circuit Judge.

Illinois Central Gulf Railroad Co. (ICG) appeals from two orders of the district court, awarding Iowa Beef Processors, Inc. (IBP), $67,300.54 in damages for lost meathooks, plus prejudgment interest, and $15,594.57 in attorneys' fees. Because we agree with ICG's contention that this action falls within the primary jurisdiction of the Interstate Commerce Commission (ICC), we vacate these orders and remand this action for further proceedings in accord with this opinion.

I. Background.

ICG, a common carrier engaged in interstate transportation, provided trailer on flat car (TOFC), or "piggyback," rail service to IBP. From January 1, 1976, through November 11, 1977, ICG transported 6,104 TOFC trailerloads of carcass beef shipped by IBP. Federal law requires elevation or suspension of carcass beef by meathooks or similar appliances, to prevent adulteration of the meat in transit. See 9 C.F.R. § 325.1 (1980). ¹

ICG furnished trailers to IBP with racks for the suspension of carcass meat by meathooks. The trailers did not, however, always contain an adequate number of meathooks for IBP to load a standard shipment of carcass beef. ² Sometimes ICG supplied IBP with trailers that contained no meathooks at all.

On occasion, IBP requested additional hooks from ICG to make up the deficiency on trailers that lacked hooks. ICG responded by furnishing hooks to IBP, which IBP kept in a stockpile. IBP also added its own meathooks to the stockpile, and kept account of their respective contributions. When an ICG trailer did not have enough hooks for a shipment, IBP took hooks from its "hook bank," first subtracting the number drawn from the total for which IBP had credited ICG, and any excess from the number IBP itself had supplied. Similarly, IBP added any excess hooks to the stockpile and credited the donor accordingly. ³ IBP sent regular, monthly "hook statements" to ICG documenting the number and kind (short or long) of meathooks each had supplied to ICG trailers.

At the cessation of ICG's service, IBP's records indicated that IBP had provided a net 66,926 long meathooks that it never recovered, and that IBP retained 7,061 short meathooks provided by ICG. On June 21, 1978, IBP demanded that ICG return the hooks or pay IBP their fair value. When ICG failed to do either, IBP instituted this action. ICG denied liability for the meathooks, alleging that IBP had gratuitously supplied them for its own convenience, and that IBP or its consignees bore the responsibility for any loss or damage to meathooks.

The district court ruled in favor of IBP, on the ground that ICG had a duty to furnish meathooks as "instrumentalities and facilities" of the transportation of carcass meat. The court determined that the rates ICG charged IBP pursuant to the applicable tariff reflected the cost to the carrier of providing meathooks, noting also that ICG had recognized such a duty in the past by providing IBP with meathooks. The court concluded that ICG failed in its duty to provide IBP with a sufficient number of meathooks, and thus ICG had not complied with sections 1(4) and 1(5) of the Interstate Commerce Act, 49 U.S.C. §§ 1(4), 1(5) (1976) (the Act), which require carriers to charge "just and reasonable rates." After determining that the rates ICG charged pursuant to its tariff filed with the ICC reflected the cost of providing meathooks, the court ruled that IBP had a valid claim against ICG for the value of the meathooks IBP supplied that were never returned. Based on the parties' stipulation as to the number and value of meathooks at issue, the court awarded IBP $67,300.54. ⁴

After a separate hearing, the district court ruled that IBP had sustained damage in consequence of a violation of the Interstate Commerce Act, and awarded IBP $15,594.57 in attorneys' fees, pursuant to 49 U.S.C. § 8. ⁵ The court also awarded IBP prejudgment interest at the rate of ten percent per annum based on section 553.3 of the Iowa Code, with interest accruing from the date IBP commenced the action.

ICG appeals from both orders, contending that (1) the district court did not have jurisdiction, because the case does not "arise under" the Interstate Commerce Act; (2) the case falls within the primary jurisdiction of the ICC; (3) the district court erred in concluding that ICG had a duty under the tariff to furnish meathooks for the transport of carcass beef, because the tariffs require only "transportation of and return to origin point" of meathooks; (4) ICG had no duty to return IBP's meathooks, because ICG had no responsibility for the contents of the shipments after delivery of the sealed trailers to IBP's consignees; (4) the district court erred in concluding that IBP had complied with the requirements of 49 U.S.C. § 20(11) (the Carmack Amendment) governing damage suits; and (5) the court erred in awarding attorneys' fees because any damages to IBP were not "sustained in consequence of" a violation of the Interstate Commerce Act.

We agree with ICG that this controversy falls within the primary jurisdiction of the ICC, and therefore we do not consider ICG's challenges to the district court's ruling on the merits.

II. Discussion.

A. Federal Jurisdiction.

The district court determined that "sections 1(3), 1(5), 1(6) and 1(11) (of the Interstate Commerce Act) lie at the center of plaintiff's complaint and the remedy sought(,)" and that section 20(11) "is tied into this matter." Iowa Beef Processors, Inc. v. Illinois Central Gulf Railroad, C78-4057, slip op. at 4 (N.D.Iowa May 22, 1981). On this basis, the district court concluded that it had jurisdiction pursuant to 28 U.S.C. § 1337, ⁶ which gives district courts original jurisdiction for proceedings "arising under any act of Congress regulating commerce."

ICG challenges the district court's determination that this controversy "arises under" the cited sections of the Act on the ground that IBP's complaint refers to the Act only in its description of ICG as a common carrier pursuant to the Act and tariffs filed thereunder. We note, however, that IBP based its claim on an allegation that ICG had failed in "its duty to provide equipment suitable for the transportation of carcass meat." Iowa Beef Processors, Inc. v. Illinois Gulf Central Railroad, C78-4057, amended complaint at 3 (N.D.Iowa Oct. 2, 1978) (emphasis added).

This court need not now determine whether any of the sections of the Act cited by the district court imposed a duty on ICG to supply IBP with meathooks for the shipment of carcass beef. We conclude, nevertheless, that such a duty, if any, derives from the Act, the tariff filed thereunder, and federal regulations governing transportation of animals and animal products. Accordingly, we agree with the district court that this case falls within its original jurisdiction pursuant to 28 U.S.C. § 1337.

B. Primary Jurisdiction.

Although we believe this controversy stems from a claim enforceable by original judicial action in federal district court, we nevertheless conclude that the district court improperly exercised its jurisdiction in this matter. The Supreme Court has held that the ICC has primary jurisdiction over any matter that "raises issues of transportation policy which ought to be considered by the Commission in the interests of a uniform and expert administration of the regulatory scheme laid down by that Act." United States v. Western Pacific Railroad, 352 U.S. 59, 65, 77 S.Ct. 161, 165, 1 L.Ed.2d 126 (1956). Thus, even when an issue is initially cognizable by the district court, the doctrine of primary jurisdiction suspends the judicial progress pending referral of the matter to the appropriate administrative agency for its ruling. Id. at 64, 77 S.Ct. at 165.

Although "(n)o fixed formula exists for applying the doctrine of primary jurisdiction(,)" id., the Court has invoked the doctrine in deferring to the expertise of agencies and to promote uniformity within a particular area of federal regulation.

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. (Far East Conference v. United States, 342 U.S. 570, 574-75, 72 S.Ct. 492, 494, 96 L.Ed. 576 (1952).)

In this case, the district court awarded damages to IBP based on its determination that ICG had a duty to provide meathooks to IBP for the shipment of carcass beef "under its obligations to provide transportation, suitable equipment and facilities of carriage and car service." Iowa Beef Processors, Inc. v. Illinois Central Gulf Railroad, supra, slip op. at 4. As support for this conclusion, the district court cited the federal regulation requiring elevation of carcass beef during shipment. See 9 C.F.R. § 325.1, and n.1 supra, and section 1(3) of the Act, which provides in part The term "transportation" as used...