Nepera Chemical, Inc. v. Sea-Land Service, Inc., SEA-LAND

Citation253 U.S.App. D.C. 394,794 F.2d 688
Decision Date17 June 1986
Docket NumberNo. 81-2388,SEA-LAND,81-2388
Parties, 253 U.S.App.D.C. 394 NEPERA CHEMICAL, INC., Appellant v.SERVICE, INC., et al.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Appeal from the United States District Court for the District of Columbia (Civil Action No. 79-03022).

Martin Sterenbuch, with whom Hugh H. Lewis, Washington, D.C., was on brief, for appellant.

Edward M. Shea, with whom Francis W. Fraser, Washington, D.C., was on brief, for appellee Sea-Land Service, Inc.

C. Jonathan Benner, General Counsel, Federal Maritime Com'n, Clare R. Donelan, Atty., Federal Maritime Com'n, Stanley S. Harris, U.S. Atty. at the time the brief was filed, Lawrence Ledebur, Atty., Dept. of Justice, and John Oliver Birch, Asst. U.S. Atty., Washington, D.C., were on the brief for appellees Federal Maritime Com'n, et al. Gordon M. Shaw, Atty., Federal Maritime Com'n, Kenneth M. Raisler, Asst. U.S. Atty. at the time the brief was filed, Royce C. Lamberth and R. Craig Lawrence, Asst. U.S. Attys., Washington, D.C., also entered appearances for appellees Federal Maritime Com'n, et al.

Before ROBINSON, Chief Judge, WALD, Circuit Judge, and LUMBARD, * Senior Circuit Judge.

Opinion of the Court filed by Chief Judge ROBINSON.


This appeal challenges a summary judgment dismissing an action by Nepera Chemical, Inc., which asserts negligence on the part of Sea-Land Service, Inc. Nepera urges reversal on several grounds, some of which we deem meritorious. So, while we affirm in part, we also reverse in part and remand for further proceedings.


The controversy had its inception in an agreement of sorts between Nepera, a manufacturer and distributor of chemicals, and Sea-Land, an ocean-going common carrier operating in foreign commerce, and as such subject to the Shipping Act of 1916. 1 Prior to 1978, Sea-Land's published tariff specified a rate of $6.85 per hundred-weight for overseas transportation of picolines, a liquid chemical manufactured by Nepera and used in the production of nicotinic acid. 2 In anticipation of a new tariff soon to be become effective, 3 Sea-Land informed Nepera that it would maintain in that tariff a rate equivalent to $6.85 per hundredweight for carriage of picolines. 4 Despite this affirmative assurance, however, Sea-Land's new tariff, when later published, did not include any reference to that chemical. 5 As a result, when, in 1978, Nepera shipped three containers of picolines from the United States to Spain, Sea-Land was legally required to calculate its freight charges on the tariff rate reserved for liquid commodities "not otherwise specified." 6 That rate was $631.25 per weight-ton--more than four times the old rate for picolines. 7

Sea-Land subsequently informed Nepera, however, that it would correct the overcharge 8 by resorting to Section 18(b)(3) of the Act. 9 That section allows a carrier to apply to the Federal Maritime Commission for approval of a refund to a shipper of a portion of charges collected, or a waiver of collection of charges billed, "where it appears that there is an error in a tariff of a clerical or administrative nature" and certain other statutory conditions are met, including the filing of the application for refund or waiver within 180 days from the date of shipment. 10 Sea-Land promptly published a new tariff item designating a weight-ton rate for picolines which approximated, but was not identical to, the earlier $6.85 per-hundredweight rate. 11 Later, exactly 180 days after Nepera's shipment Sea-Land applied to the Commission under Section 18(b)(3) for permission to refund and waive the amount by which Sea-Land's actual freight bills exceeded charges based on the corrected tariff rate for picolines. 12

The Commission denied Sea-Land's application simply because the corrected rate for picolines was not the perfect counterpart of the old $6.85 per-hundredweight rate. 13 In accordance with an established agency policy requiring absolute equivalence of the two figures, the Commission ordered Sea-Land to recoup from Nepera the full amount of freight charges computed at the unspecified-liquids rate, a total of $25,596.51 over the picolines rate in the pre-1978 tariff; 14 and, since none of the statutory 180-day filing period remained, the Commission's disposition became administratively final. Thereafter, Sea-Land refused to request review of the Commission's decision by this court, thus prompting Nepera to do so. 15 We reversed the Commission's denial of Sea-Land's application, holding that relief under Section 18(b)(3) was appropriate despite the minor rate variation attributable to the methodology of conversion. 16

In the meantime, Nepera had instituted the present litigation in the District Court. Charging negligence by Sea-Land, Nepera sought compensatory damages, measured by the amount of freight overcharges and the expenses incurred in prosecuting the proceeding in which the Commission's adverse decision was overturned, and punitive damages as well. 17 The District Court granted summary judgment to Sea-Land, noting that Nepera had prevailed in this court and thereby had established Sea-Land's duty and authority to cancel the overcharges, and on that basis it dismissed Nepera's claim to relief therefrom as moot. 18 Holding further that Nepera's sole remedy lay in the proceeding authorized by Section 18(b)(3), 19 the court rejected Nepera's demands for punitive damages, 20 for attorneys' fees and other expenses it incurred in the forerunning litigation, 21 and for attorneys' fees in the case at bar. 22 We turn now to consider Nepera's contentions that the last four rulings were in error.


The initial question presented by this appeal is whether the rate-correction procedure furnished by Section 18(b)(3) of the Shipping Act 23 is exclusive, and thus forbids a common-law action against a carrier for negligence in applying for leave to refund and waive shipping charges, where the carrier voluntarily represented that it would seek a specified rate correction. Persuasive authority leads us to conclude that it is not.

The Supreme Court has on two occasions been confronted by strikingly similar issues of exclusivity of federal statutory provisions. In Hewitt-Robins, Inc. v. Eastern Freight-Ways, Inc., 24 a shipper challenged a motor carrier's practice of directing intrastate shipments over interstate routes in an effort to obtain the higher interstate rate, and sought to recover the resulting difference in the carrier's charges. In holding that the common-law action for refund of freight overcharges had survived passage of the Motor Carrier Act, 25 the Court discussed five considerations significant to the case at bar. First, the shipper did not question the reasonableness of the tariff rates, but rather the carrier's response to its common-law duty to transport over the least expensive available route. 26 Second, the Motor Carrier Act provided no procedure by which routing practices, as opposed to rates, could be contested prior to shipment. 27 Third, allowance of an action for damages suffered as a consequence of misrouting would not jeopardize the stability of either tariffs or routes, and thus would not hamper the efficient administration of the Act. 28 Fourth, continued recognition of such an action would have a "healthy deterrent effect" upon motor carriers. 29 And "[f]inally, and not to be overlooked," said the Court, "the absence of any judicial remedy places the shipper entirely at the mercy of the carrier, contrary to the overriding purpose of the Act. The allowance of such actions would, on the contrary, give neither an unfair advantage." 30

The factors that led the Court to sustain the common-law action in Hewitt-Robins are equally apposite and decisive here. Nepera directs its attack, not at the reasonableness of any rate, but at Sea-Land's alleged subpar performance of its assumed duty to apply for a correction utilizing a rate equivalent to the $6.85 per hundredweight rate that Sea-Land had previously represented it would maintain. 31 The Shipping Act supplies no procedure by which a shipper can challenge a carrier's activities in this connection prior to shipment. Nepera's negligence action poses no threat to the sanctity of tariffs or the efficient administration of the Shipping Act; on the contrary, by deterring carriers from carelessness in discharging voluntarily assumed duties, 32 lawsuits of that nature would assist in achieving important purposes of Section 18(b)(3)--"prevent[ion of] injustice in situations where it would be inequitable to charge the filed rate," 33 and avoidance of discriminatory treatment of shippers. 34 Lastly, "and not to be overlooked," 35 Section 18(b)(3) authorizes the carrier alone to apply to the Commission for authority to refund or waive transportation charges, 36 and thus places the shipper "entirely at the mercy of the carrier." 37 We believe the overall remedial objectives of the Shipping Act easily tolerate recognition of common-law tort liability for a carrier's negligent acts or omissions in filing a Section 18(b)(3) application where the carrier has taken on responsibility for seeking a refund or waiver based on a specified rate.

Moreover, in Nader v. Allegheny Airlines, Inc., 38 the Supreme Court again found nonexclusivity when it held that the Federal Aviation Act, despite its addressal of "deceptive practices," did not foreclose common-law fraudulent-misrepresentation actions against carriers subject to its provisions. 39 The Court declared that, as a general rule, "a common-law right, even absent a saving clause, 40 is not to be abrogated 'unless it be found that the preexisting right is so repugnant to the statute that the survival of such right would in effect deprive the subsequent statute of its efficacy; in other words, render its...

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