Maislin Industries Inc v. Primary Steel, Inc

• Citation: 111 L.Ed.2d 94,110 S.Ct. 2759,497 U.S. 116
• Decision Date: 21 June 1990
• Docket Number: No. 89-624,89-624
• Parties: MAISLIN INDUSTRIES, U.S., INC., et al., Petitioners v. PRIMARY STEEL, INC., et al
• Court: United States Supreme Court

497 U.S. 116

110 S.Ct. 2759

111 L.Ed.2d 94

MAISLIN INDUSTRIES, U.S., INC., et al., Petitioners

v PRIMARY STEEL, INC., et al.

No. 89-624.

Argued April 16, 1990.

Decided June 21, 1990.

Syllabus

The Interstate Commerce Act (Act) requires motor common carriers to publish their rates in tariffs filed with the Interstate Commerce Commission (ICC), 49 U.S.C. § 10762, and prohibits both carriers and shippers from deviating from those rates, § 10761. The Act also specifies that a carrier's rates must be nondiscriminatory, § 10741, and that its rates and practices must be reasonable, § 10701, and charges the ICC, upon determining that a rate or practice violates the statute, with prescribing the rate or practice to be followed, § 10704(b)(1). Purportedly pursuant to this authority, the ICC, in its recent Negotiated Rates decisions, has adopted a policy that relieves a shipper of the obligation to pay the filed rate when it has privately negotiated a lower rate with the carrier. From 1981 to 1983, Quinn Freight Lines, a motor common carrier and a subsidiary of petitioner Maislin Industries, U.S., Inc., privately negotiated interstate shipment rates with respondent Primary Steel, Inc., that were lower than Quinn's filed rates. Quinn never filed the negotiated rates with the ICC. In 1983, Maislin filed for bankruptcy, and the bankrupt estate issued balance due bills to Primary for the difference between the filed rates and the negotiated rates. When Primary refused to pay the undercharges, the estate brought suit in the District Court, which referred the matter to the ICC. Rejecting the argument that it lacked the statutory power to release a shipper from liability for such undercharges, the ICC relied on its Negotiated Rates policy to hold that § 10701 authorized it to consider all the circumstances surrounding an undercharge suit to determine whether collection of the filed rate would constitute an unreasonable practice. The ICC concluded that Maislin was not entitled to recover, since Quinn and Primary had negotiated other rates, and since Primary had relied on Quinn to file those rates, had reasonably believed that the amounts quoted and billed were the correct total charges, and had made full payment. The case returned to the District Court, which granted summary judgment for Primary on the basis of the ICC's decision. The Court of Appeals affirmed, agreeing with the District Court that the approach taken by the ICC was consistent with the Act.

Held: The ICC's Negotiated Rates policy is inconsistent with the Act and is therefore invalid. Pp. 126-136.

(a) Since the duty to file rates under § 10762 and the obligation to charge only those rates under § 10761 have always been considered essential to preventing price discrimination violative of § 10741, Arizona Grocery Co. v. Atchison, T. & S. F. R. Co., 284 U.S. 370, 384, 52 S.Ct. 183, 184, 76 L.Ed. 348, this Court has long held that the filed rate alone governs the legal rights of a shipper against a carrier, see, e.g., Keogh v. Chicago & Northwestern R. Co., 260 U.S. 156, 163, 43 S.Ct. 47, 49, 67 L.Ed. 183, and that the statute forbids equitable defenses to collection of the filed tariff, see, e.g., Texas & Pacific R. Co. v. Mugg, 202 U.S. 242, 245, 26 S.Ct. 628, 630, 50 L.Ed. 1011, including the shipper's ignorance or the carrier's misquotation of rates, see, e.g., Louisville & Nashville R. Co. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853. Despite its sometimes harsh effects, this rigid "filed rate doctrine" has been strictly applied and consistently adhered to by the Court. See, e.g., Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 535, 103 S.Ct. 1343, 1344, 75 L.Ed.2d 260. Pp. 126-128.

(b) Although, under the filed rate doctrine, the tariff rate is not enforceable if the ICC finds it to be unreasonable, see, e.g., Maxwell, supra, 237 U.S., at 97, 35 S.Ct., at 495, that exception is not applicable here. The ICC's determination that a carrier engages in an "unreasonable practice" when it attempts to collect the filed rate after the parties have negotiated a lower rate is not entitled to deference, since it conflicts with this Court's interpretation, from which Congress has not diverged, that the secret negotiation and collection of rates lower than the filed rate is discriminatory under § 10741. See, e.g., Armour Packing Co. v. United States, 209 U.S. 56, 81, 28 S.Ct. 428, 435, 52 L.Ed. 681. Stripped of its semantic cover, the Negotiated Rates policy and, more specifically, the ICC's interpretation of "unreasonable practices," thus stand revealed as flatly inconsistent with the Act's scheme as a whole and §§ 10761 and 10762 in particular. Nor can the ICC's policy be justified on the ground that it prevents the carrier from receiving a windfall, i.e., the higher filed rate, from its failure to comply with § 10762's directive to file the negotiated rate, since such "equities" are irrelevant to the application of § 10761, which requires the carrier to collect the filed rate. Compliance with §§ 10761 and 10762 is utterly central to the administration of the Act, and, by sanctioning adherence to unfiled rates, the Negotiated Rates policy effectively renders those sections nugatory and conflicts directly with the Act's core purposes. Pp. 128-133.

(c) The passage of the Motor Carrier Act of 1980 (MCA)—which substantially deregulated the motor carrier industry for the avowed purpose of promoting competitive and efficient transportation services—does not justify the ICC's Negotiated Rates policy. Although the ICC has both the authority and the expertise generally to adopt new policies when faced with new developments in the industry, its power does not extend to a policy that directly conflicts with its governing statute. Nothing in the MCA repeals §§ 10761 and 10762, and generalized congressional exhortations to "increase competition" cannot provide the ICC authority to alter the requirements of those sections as interpreted by this Court. Cf. Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409, 420, 106 S.Ct. 1922, 1928, 90 L.Ed.2d 413. The fact that, even before the MCA's passage, Congress had allowed the ICC to exempt motor contract carriers from the requirement that they adhere to the published tariff, see § 10761(b), demonstrates that Congress is aware of the requirement and has deliberately chosen not to disturb it with respect to motor common carriers. Pp. 133-136.

879 F.2d 400 (CA8 1989), reversed and remanded.

BRENNAN, J., delivered the opinion of the Court, in which WHITE, MARSHALL, BLACKMUN, O'CONNOR, SCALIA, and KENNEDY, JJ., joined. SCALIA, J., filed a concurring opinion, post, p. 136. STEVENS, J., filed a dissenting opinion, in which REHNQUIST, C.J., joined, post, p. 138.

Thomas M. Auchincloss, for petitioners.

Thomas W. Merrill, for respondents.

Justice BRENNAN delivered the opinion of the Court.

Under the Interstate Commerce Act (Act), 49 U.S.C. § 10101 et seq. (1982 ed.), motor common carriers must file their rates with the Interstate Commerce Commission (ICC or Commission), and both carriers and shippers must adhere to these rates. This case requires us to determine the validity of a policy recently adopted by the ICC that relieves a shipper of the obligation of paying the filed rate when the shipper and carrier have privately negotiated a lower rate. We hold that this policy is inconsistent with the Act.

I

A.

The ICC regulates interstate transportation by motor common carriers to ensure that rates are both reasonable and nondiscriminatory. See 49 U.S.C. §§ 10101(a), 10701(a), 10741(b) (1982 ed.). The Act provides that a "common carrier . . . may not subject a person, place, port, or type of traffic to unreasonable discrimination." § 10741. In addition, the Act states that "[a] rate . . ., classification, rule, or practice related to transportation or service . . . must be reasonable." § 10701(a).¹ The ICC has primary responsibility for determining whether a rate or practice is reasonable. See Texas & Pacific R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 440-442, 27 S.Ct. 350, 355-356, 51 L.Ed. 553 (1907). The Commission may investigate the reasonableness of a rate "on its own initiative or on complaint." § 11701(a). When the Commission determines that a rate or practice violates the statute, it "shall prescribe the rate . . . or practice to be followed." § 10704(b)(1). Moreover, motor common carriers are liable "for damages resulting from the imposition of rates for transportation or service the Commission finds to be in violation" of the Act. 49 U.S.C. § 11705(b)(3) (1982 ed., Supp. V).

The Act requires a motor common carrier to "publish and file with the Commission tariffs containing the rates for transportation it may provide." 49 U.S.C. § 10762(a)(1) (1982 ed.). The Act also specifically prohibits a carrier from providing services at any rate other than the filed (also known as the tariff) rate:

"Except as provided in this subtitle, 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 affects the value of that transportation or service, or another device." § 10761(a).

Deviation from the filed rate may result in the imposition of civil or criminal sanctions on the carrier or shipper. See §§ 11902-11904.²

As the Court has frequently stated, the statute does not permit either a shipper's ignorance or the carrier's misquotation of the applicable rate to serve as a defense to the collection of the filed rate. Se...