Maislin Industries, US v. Primary Steel

• Citation: 705 F. Supp. 1401
• Decision Date: 22 July 1988
• Docket Number: No. 85-0021-CV-W-JWO.,85-0021-CV-W-JWO.
• Parties: MAISLIN INDUSTRIES, U.S., INC., et al., Plaintiffs, v. PRIMARY STEEL, INC., Defendant.
• Court: U.S. District Court — Western District of Missouri

705 F. Supp. 1401

MAISLIN INDUSTRIES, U.S., INC., et al., Plaintiffs, v. PRIMARY STEEL, INC., Defendant.

No. 85-0021-CV-W-JWO.

United States District Court, W.D. Missouri, W.D.

July 22, 1988.

David G. Sperry, Blue Springs, Mo., for plaintiffs.

Edward E. Schmitt, Roy R. Darke, Jennifer A. Putman, Dietrich, Davis, Dicus, Rowlands, Schmitt & Gorman, Kansas City, Mo., for defendant; Arthur J. Teichberg, New York City, and Henry M. Wick, Jr., Wick, Rich, Fluke & Streiff, Pittsburgh, Pa., of counsel.

MEMORANDUM AND ORDERS

JOHN W. OLIVER, Senior District Judge.

I

A.

Plaintiffs filed the above-styled action on January 8, 1985 to collect $187,923.26 in "undercharges" plus interest and costs, relating to 1,081 shipments of steel transported by defendant. On September 3, 1985 we entered orders granting defendant's motion to refer issues of controversy to the Interstate Commerce Commission (ICC) for determination and staying the above-styled action pending final determination by the ICC. See September 3, 1985 Order at 5. On January 12, 1988 the ICC issued its final determination finding that it would be an "unreasonable practice now to require Primary to pay the undercharges." Primary Steel, Inc. v. Maislin Industries, U.S., Inc., No. MC-C-10961, at 10 (ICC January 12, 1988). In so finding, the ICC expressly departed from its former policy which required the collection of undercharges, the difference between the published tariff and the amount charged at the time of shipment, no matter how unfair or unreasonable that might be in a given case.

On April 8, 1988 defendant Primary Steel "pursuant to the decision of the Interstate Commerce Commission in Primary Steel, Inc. v. Maislin Industries, U.S., Et. Al., ICC docket No. MC-C-10961" filed a motion requesting the Court to enter summary judgment in its favor. Plaintiff Maislin Industries filed a cross-motion for summary judgment on May 11, 1988 contending that the ICC's above-noted decision constitutes an "advisory opinion, is not binding on the Court, is contrary to law and should not be adopted."¹

B.

When the ICC resolves a question within its primary jurisdiction the Commission's final determination should be accorded substantial deference and should not be set aside unless it exceeds the ICC's statutory authority or is unsupported by substantial evidence. See Consolo v. Federal Maritime Commission, 383 U.S. 607, 619-21, 86 S.Ct. 1018, 1026-27, 16 L.Ed.2d 131 (1966) ("By giving the agency discretionary power to fashion remedies, Congress places a premium upon agency expertise, and for the sake of uniformity, it is usually better to minimize the opportunity for reviewing courts to substitute their discretion for that of the agency."); Erickson Transport Corp. v. I.C.C., 728 F.2d 1057, 1062-63 (8th Cir.1984) ("the substantial evidence test is a narrow one and the reviewing court is not to substitute its conclusions for those of the Commission"); Locust Cartage Co. v. Transamerican Freight Lines, Inc., 430 F.2d 334, 341 (1st Cir.1970). If the Commission departs from its former policy in resolving an issue within its primary jurisdiction, as in the instant case, it must adequately explain its change of policy in a manner sufficient to permit judicial review of the ICC's policies. See, e.g., Seaboard System R.R., Inc. v. United States, 794 F.2d 635, 639 (11th Cir.1986); Intercity Transportation Co. v. United States, 737 F.2d 103, 108 (D.C.Cir.1984). For the reasons we now state, we find that the ICC's January 12, 1988 decision should be affirmed and that summary judgment in favor of the defendant should be granted pursuant to Rule 56, Fed.R.Civ.P.

II

The Interstate Commerce Commission's findings of fact in the above-styled case are supported by the substantial evidence in the record as a whole.² Accordingly, the Commission's findings of fact as set forth in its January 12, 1988 order are incorporated herein by this reference as our findings of fact.

A.

Plaintiffs initially contend in their suggestions in support of their motion for summary judgment that "it is clear ... from the ICC decision that it neither addresses nor answers a question within its primary jurisdiction." Plts' Brief at 4. We disagree.

In the ICC's January 12, 1988 decision the Commission accurately stated that this Court "referred to the commission the question of the reasonableness of the rates sought to be collected by Maislin, and whether allowing their collection would be an unreasonable practice." ICC's Order at 1. Plaintiffs do not contest that the ICC has primary jurisdiction over the former question, but rather disputes its primary jurisdiction over the latter.

This Court's September 3, 1985 order definitively ruled on and rejected plaintiffs' primary jurisdiction contention. In our order we expressly found that, inter alia, the question of whether "plaintiffs' practice of assessing and rebilling the defendant higher freight rates and charges than those originally quoted by plaintiffs, agreed upon by the parties, confirmed in writing and billed by the plaintiffs constitutes an unreasonable, unlawful, unfair, and deceptive practice in violation of 49 U.S.C. §§ 10701(a) and 10761" is a question within the primary jurisdiction of the ICC. Order at 2.

In so concluding, we stated that the doctrine of primary jurisdiction has been applied where action otherwise within the jurisdiction of the Court "turns on a determination of the reasonableness of a challenged practice. Nader v. Allegheny Airlines, Inc. supra, 426 U.S. 290 at 304-05 96 S.Ct. 1978 at 1987, 48 L.Ed.2d 643 (1976)." Order at 3. We thus found that the "doctrine requires the court to refer the matter to the ICC where `the claim presented to the court requires an inquiry into the lawfulness of a carrier's practice.' Iowa Beef Processors v. Illinois Central Gulf Railroad Company, supra, 685 F.2d 255 at 621 260 (8th Cir.1982)." Order at 3.

We further noted that the ICC was investigating similar complaints and that "such a policy decision should be dealt with uniformly and with reference to the underlying reasons and policies for the regulations." Id. at 4. Thus we concluded that "it is appropriate that we defer to the special expertise, competence, and administrative discretion possessed by the ICC." Id.

The Eighth Circuit has not addressed the application of the primary jurisdiction doctrine in a case, such as this, involving an allegation of unreasonable collection of undercharges. See In re Total Transportation, Inc., 84 B.R. 590, 596 (D.Minn.1988) (noting the Eighth Circuit has not been presented with the precise question at issue). The Eleventh Circuit, however, has addressed the precise question we ruled on in our September 3, 1985 Order which plaintiffs again raise in their suggestions in support. Seaboard System R.R. Inc. v. United States, 794 F.2d 635, 638 (11th Cir. 1986). The Eleventh Circuit, relying on Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 96 S.Ct. 1978, 48 L.Ed.2d 643 (1976), specifically found that "finding a carrier practice unreasonable is the kind of determination that lies in the primary jurisdiction of the commission." Id. Thus, the Seaboard court concluded that the Commission's action of determining whether the collection of undercharges was an unreasonable practice under the circumstances of that case was both "justified and within its jurisdiction." Id. 637-639.

Subsequent to our September 3, 1985 order, a plethora of lower federal courts have also addressed the precise question presented by plaintiffs' initial contention. The majority of those courts have concurred with our finding in our September 3, 1985 Order.³ See, e.g., RTC Transportation, Inc. v. Country Pride Foods, Ltd., No. CIV S86-1509-MLS/JFM, 1987 W.L. 46938 (E.D.Cal.1987); Motor Carrier Audit and Collection Co. v. Orval Kent Food Co., No. 87 C 5860, 1987 W.L. 18349 (N.D. Ill.1987); Delta Traffic Service Inc. v. Marine Lumber Co., 683 F.Supp. 754 (D.Colo. 1987); In re Tucker Freight Lines Inc., 85 B.R. 426 (W.D.Mich.1988); In re Amarex, Inc., 74 B.R. 378 (Bankr.W.D.Okla.1987); Motor Carrier Audit & Collection Co. v. Family Dollar Stores, 670 F.Supp. 644 (W.D.N.C.1987); Inf, Ltd. v. Spectro Alloys Corp., 651 F.Supp. 1405, 1407-08 (D.Minn.1987). For additional cases see In re Total, 84 B.R. at 594 n. 2.

In light of our September 3, 1985 Order and the subsequent court decisions noted above supporting our ruling, we find and conclude plaintiffs' primary jurisdiction contention is untenable and must be rejected.

B.

Plaintiffs' correlative contentions in their suggestions in support may be summarized as follows: The ICC's "practices" jurisdiction does not empower the ICC to consider equitable defenses or authorize payment of charges below those contained in a published tariff; for such a policy would violate the proscription of 49 U.S.C. § 10761(a) and the long-standing "filed rate" doctrine. Plaintiffs' contentions are essentially the same as those contained in their briefs filed before the ICC. See Deft's Brief, Exh. 9. We find and conclude that the ICC's action in the above-styled case is sufficiently explained, justified, and within the limits of the Commission's statutory authority under 49 U.S.C. §§ 10701(a), 10704(a)(1).

The Interstate Commerce Act, 49 U.S.C. § 10762(a)(1), requires all motor common carriers to publish and file tariffs containing their transportation rate with the ICC. The carrier is obligated to collect the rate published in its tariff (49 U.S.C. § 10761(a)) and failure to do so constitutes a criminal offense under 49 U.S.C. § 11903(a).

In the past, courts have not permitted deviation from the filed rate "upon any pretext." See, e.g., Louisville & Nashville R.R. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed.2d 853 (1915) ("Ignorance of misquotation is not an excuse for either paying or charging less or more than the rate filed."). The Commission historically has also refused to order the...