North Penn Transfer, Inc. v. Victaulic Co. of America

Decision Date05 July 1994
Docket NumberCiv. A. No. 94-0850.
Citation859 F. Supp. 154
PartiesNORTH PENN TRANSFER, INC., Debtor-In-Possession, Plaintiff, v. VICTAULIC COMPANY OF AMERICA, Defendant.
CourtU.S. District Court — Eastern District of Pennsylvania

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Ronald Amato, Bethlehem, PA, for plaintiff.

James W. Patterson, Philadelphia, PA and Paul J. Lamboley, Washington, DC, for defendant.

OPINION AND ORDER

VAN ANTWERPEN, District Judge.

This case presents a recurring question of late, namely whether an interstate motor carrier in bankruptcy can recover undercharges based on tariff rates filed for interstate commerce transportation notwithstanding the lower rates actually collected prior to the carrier's bankruptcy. Plaintiff North Penn Transfer, Inc. ("North Penn Transfer"), a debtor-in-possession, brought this suit against defendant Victaulic Company of America ("Victaulic") to recover $71,752.75 in alleged freight undercharges, plus interest and costs. Defendant filed an answer and counterclaims. This matter is currently before the court on plaintiff's motion to strike defendant's affirmative defenses and two counts of defendant's counterclaims, specifically claims of misrepresentation and abuse of process. Jurisdiction is based upon the Interstate Commerce Act. See 49 U.S.C. §§ 10741(a), 10762.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This action arises out of a relationship between North Penn Transfer and Victaulic in which North Penn Transfer transported property on behalf of Victaulic on numerous occasions between the dates of February 1989 and February 1992. Complaint, Exhibit "A". The carriage was allegedly subject to the provisions of the Interstate Commerce Act ("ICA"), 49 U.S.C. § 10101, et seq. North Penn Transfer filed tariffs with the Interstate Commerce Commission ("ICC") as required by 49 U.S.C. § 10762(a) and therein set forth the applicable rates for different services. The rates germane to the freight services North Penn Transfer provided on behalf of Victaulic were allegedly filed with the ICC. Complaint, ¶ 5.

On February 10, 1992, plaintiff North Penn Transfer filed a petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. Complaint, ¶ 2. Subsequent to its Chapter 11 filing, the plaintiff initiated an audit of its shipments of defendant Victaulic's goods "to determine compliance with the published rates contained in the interstate tariffs on file with the ICC." Complaint, ¶ 7. As a result of this audit, the plaintiff claims to have discovered a discrepancy in its favor between the amount it actually collected from the defendant shipper and the amount allegedly due under the applicable tariff rates filed with the ICC. Complaint, ¶ 8. After failing to receive payment from the defendant for the difference it claimed it was owed, plaintiff initiated this suit on February 8, 1994, alleging that defendant remains indebted to the carrier because defendant has paid only a portion of the full amount due on its shipments.

In its answer, Victaulic asserts, inter alia, that its goods were transported pursuant to a tariff rate or an agreement that was less than the rate plaintiff now seeks to enforce and that it has therefore paid the entire freight bill. The defendant also claims that it was not subject to the filed tariff rates because North Penn Transfer was nota participating carrier regarding some of the tariffs or that the tariffs were not applicable to the deliveries that are the subject of this lawsuit for various different reasons. One of the basic reasons given is that North Penn Transfer shipped not as a common carrier but instead acted as a contract carrier. Amended Answer, p. 3. Therefore, defendant argues, plaintiff's prices were controlled by the terms of the parties' contract rather than the ICC tariff rates. See Defendant's Memorandum in Support of Opposition to Plaintiff's Motion to Strike Defendant's Affirmative Defenses and Counterclaims, pp. 1-2. Another claimed basic reason is that North Penn Transfer's filed tariffs are discriminatory or unreasonable and, therefore, unenforceable. Amended Answer, p. 3. Finally, defendant claims that the tariffs never became effective. Amended Answer, p. 4. Defendant's position is reflected in twelve affirmative defenses and three counterclaims.

Plaintiff, in response, filed the instant motion to strike defendant's affirmative defenses and two of its counterclaims. In this motion, the plaintiff maintains that it was not acting as a contract carrier when it transported property on behalf of Victaulic and, therefore, its prices were required by law to be consistent with the tariff rates on file with the ICC. See Plaintiff's Memorandum of Law in Support of Motion to Strike, pp. 4-9.

II. STANDARD OF REVIEW FOR MOTION TO STRIKE UNDER RULE 12(F)

Rule 12(f) of the Federal Rules of Civil Procedure provides that "the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R.Civ.P. 12(f). "An affirmative defense is insufficient if it is not recognized as a defense to the cause of action." Total Containment, Inc. v. Environ Products, Inc., No. 91-7911, 1992 WL 208981 at *1 (E.D.Pa., August 19, 1992).

"A court possesses considerable discretion in disposing of a motion to strike under Rule 12(f)." River Road Devel. Corp. v. Carlson Corp., No. 89-7037, 1990 WL 69085 at *2 (E.D.Pa., May 23, 1990). Motions to strike, however, are "not favored and usually will be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties, or if the allegations confuse the issues." Id., citing 5 C. Wright & A. Miller, Federal Practice and Procedure at 1382 (1969); see also Cipollone v. Liggett Group, Inc., 789 F.2d 181, 188 (3d Cir.1986); Glenside West Corp. v. Exxon Co., U.S.A., Div. of Exxon Corp., 761 F.Supp. 1100, 1115 (D.N.J.1991).

"Partly because of the practical difficulty of deciding cases without a factual record it is well established that striking a pleading should be sparingly used by courts. It is a drastic remedy to be resorted to only when required for the purposes of justice." United States v. Consolidation Coal Co., No. 89-2124, 1991 WL 333694 at *1 (W.D.Pa., July 5, 1991). "A court should not grant a motion to strike a defense unless the insufficiency of the defense is `clearly apparent'." FDIC v. White, 828 F.Supp. 304, 307 (D.N.J.1993), quoting from Cipollone, 789 F.2d at 188.

A motion to strike will not be granted where the sufficiency of a defense depends on disputed issues of fact. United States v. Marisol, Inc., 725 F.Supp. 833, 836 (M.D.Pa.1989); Linker v. Custom-Bilt Mach., Inc., 594 F.Supp. 894, 898 (E.D.Pa. 1984). Even when the facts are not in dispute, Rule 12(f) is not meant to afford an opportunity to determine disputed and substantial questions of law. Heller Fin. Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1295 (7th Cir.1989); Glenside West Corp., 761 F.Supp. at 1115; Marisol, Inc., 725 F.Supp. at 837. Motions to strike save time and expense, however, by making it unnecessary to litigate claims which will not affect the outcome of the case. See United States v. Kramer, 757 F.Supp. 397, 410 (D.N.J.1991); Consolidation Coal Co., 1991 WL 333694 at *1; Marisol, Inc., 725 F.Supp. at 836.

Motions to strike are to be decided "on the basis of the pleadings alone." Total Containment, 1992 WL 208981 at *1. "An affirmative defense can be stricken `only if the defense asserted could not possibly prevent recovery under any pleaded set or inferable set of facts.'" Linker, 594 F.Supp. at 898, quoting from United States v. Pennsalt Chemicals Corp., 262 F.Supp. 101 (E.D.Pa. 1967).

III. DISCUSSION

North Penn Transfer moves to strike all of the affirmative defenses asserted by Victaulic as well as two counts of its counterclaim. Nevertheless, North Penn Transfer does not argue in detail against each affirmative defense Victaulic has raised, with the exception of the first and eleventh affirmative defenses dealing with the issues of contract carriage and the applicable statute of limitations period respectively. Instead, North Penn Transfer moves to strike the other affirmative defenses on the grounds that they are precluded by the filed rate doctrine.

A. The Filed Rate Doctrine

The filed rate doctrine provides that a carrier receive from a shipper no more or no less than the tariff rate on file with the ICC. See White v. United States, 989 F.2d 643, 646 (3d Cir.1993). The purpose of the doctrine is to prevent rate discrimination and secret deals. Shippers, who have constructive notice of the filed rates, are liable for the full rate, and a carrier may institute an "undercharge action" to obtain the difference between the full filed rate and the lower rate originally paid by a shipper to the carrier. See 49 U.S.C. §§ 10761(a),1 11706(a)2; Maislin Industries, U.S. v. Primary Steel, Inc., 497 U.S. 116, 110 S.Ct. 2759, 111 L.Ed.2d 94 (1990).

The U.S. Supreme Court dealt with one type of "undercharge claim" in Maislin. Id. In that case, a carrier had given to shippers unpublished discounts from the filed rate. When the carrier declared bankruptcy, the trustee attempted to collect the undiscounted part of the tariff. Upon referral from the bankruptcy court, the ICC applied a "negotiated rates" policy to opine that trustees could not rebill the filed rate for shipments originally billed at a lower, negotiated rate. See Maislin, 497 U.S. at 122-25, 110 S.Ct. at 2763-65. The Supreme Court held that the "negotiated rates" policy violated the ICA in that the policy applied an equitable defense to the filed rate doctrine where the Act did not permit one; the trustee's undercharge claims were therefore valid. Id. at 126-36, 110 S.Ct. at 2765-71.

Citing Maislin, North Penn Transfer thus asserts that the court should strike Victaulic's affirmative defenses because certain equitable defenses...

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