Overland Exp., Inc. v. I.C.C.

• Decision Date: 22 September 1993
• Docket Number: No. 92-1037,92-1037
• Citation: 996 F.2d 356
• Parties: Fed. Carr. Cas. P 83,839, 302 U.S.App.D.C. 90, 62 USLW 2010 OVERLAND EXPRESS, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION, Respondent, Jasper Wyman & Son, et al., Household Goods Carriers' Bureau, Inc., The Kroger Co., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 356

996 F.2d 356

Fed. Carr. Cas. P 83,839, 302 U.S.App.D.C. 90,

62 USLW 2010

OVERLAND EXPRESS, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION, Respondent, Jasper Wyman & Son, et al., Household Goods Carriers'

Bureau, Inc., The Kroger Co., Intervenors.

No. 92-1037.

United States Court of Appeals, District of Columbia Circuit.

Argued April 20, 1993.

Decided June 22, 1993.

Rehearing and Suggestion for

Rehearing En Banc Denied

Sept. 22, 1993.

Petition for Review of an Order of the Interstate Commerce Commission.

Joseph L. Steinfeld, Jr., Washington, DC, argued the cause for petitioner. With him on the briefs were Robert B. Walker and John T. Siegler, Washington, DC.

Judith A. Albert, Atty., I.C.C., Washington, DC, argued the cause for respondent. With her on the brief were Robert S. Burk, Gen. Counsel, I.C.C., Ellen D. Hanson, Sr. Associate Gen. Counsel, I.C.C., Robert B. Nicholson and John P. Fonte, Attys., Dept. of Justice, Washington, DC.

William J. Augello, Huntington, NY, argued the cause for intervenor Jasper Wyman & Son, et al.

Thomas M. Auchincloss, Jr. and Leo C. Franey, Washington, DC, were on the brief for intervenor Household Goods Carriers' Bureau, Inc.

Terrance D. Jones and William H. Borghesani, Jr., Washington, DC, entered an appearance for intervenor The Kroger Co.

Before EDWARDS, RUTH BADER GINSBURG, and SILBERMAN, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

Petitioner, a bankrupt carrier, challenges the Interstate Commerce Commission's (ICC's) order declaring that the carrier's rates were never effectively on file with the Commission. We agree with petitioner that the Commission's ruling conflicts with Supreme Court precedent, and therefore, we grant the petition for review.

I.

In the early 1980s, the federal government began to deregulate the transportation industry. As part of that process, the ICC relaxed many of its cumbersome rate filing and approval procedures with which motor carriers had to comply. Even the new, less stringent, requirements were too burdensome for many carriers who, caught up in the spirit of competition, negotiated rates with shippers without regard to the rates on file with the Commission. In many cases, these negotiated rates were far below the carriers' filed rates.

The shippers gladly accepted these low rates. Most of the shippers must have known that under the filed rate doctrine (which is an integral part of the Interstate Commerce Act (ICA), see 49 U.S.C. § 10761(a), and has been consistently followed by the Supreme Court since at least 1915) the carriers had a legal right to collect the full amount of the filed rate no matter how clearly a shipping contract reflected a lower rate. See Louisville & Nashville R. Co. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853 (1915) ("Ignorance or misquotation of rates is not an excuse for paying or charging either less or more than the rate filed."). Presumably the shippers reasoned that carriers would respect the lower negotiated rates because, in a competitive market, a carrier would commit commercial suicide by demanding the filed rate. The shippers apparently did not foresee that the process of opening up a previously heavily regulated market to the forces of competition would push some of the less efficient firms out of the market. And although the shippers were correct to think that active carriers would not insist on the higher filed rates, the same logic did not apply to the trustees of bankrupt carriers whose only incentive was to increase the size of a bankrupt's asset pool.

By the mid-1980s, a number of trustees had billed shippers for the difference between the filed and negotiated rates and, upon the shippers' refusal to pay, had brought undercharge suits. The shippers understandably characterized these suits as grossly inequitable and argued that the Commission should invalidate the filed rates pursuant to its power to regulate unreasonable practices. The Commission, realizing that the undercharge suits resulted from and were contrary to the spirit of its deregulatory efforts, agreed with the shippers. See National Indus. Transp. League, 3 I.C.C.2d 99, 104-08 (1986) ( Negotiated Rates I); Petition to Institute Rulemaking on Negotiated Motor Common Carrier Rates, 5 I.C.C.2d 623, 628-34 (1989) (Negotiated Rates II).

The Supreme Court, however, when it faced the issue in Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 110 S.Ct. 2759, 111 L.Ed.2d 94 (1990), disagreed with the Commission and the shippers. The Court rejected the Commission's determination that the bankrupt carriers' trustees' attempts to recover the difference between the filed and unfiled rates--after they had negotiated, billed, and collected the lower rates--were an unreasonable practice. See id. at 130-31, 110 S.Ct. at 2768. The Court held that the Commission's ruling eviscerated the filed rate doctrine and interfered with the ICA's goal of ensuring nondiscriminatory pricing. The purpose of the filed rate doctrine, the Court reasoned, is to prevent carriers from discriminating among customers, for example, by charging shippers higher rates on less competitive routes. And the filed rate doctrine and the ICA cannot be enforced if carriers (or trustees) are prevented from collecting the filed rate. See id. at 132-33, 110 S.Ct. at 2769.

After their blanket challenge to the trustees' undercharge suits was rejected in Maislin, shippers had to develop more creative defenses that were designed to avoid running afoul of the filed rate doctrine. This case involves one such attempt.

The trustees of the bankrupt Overland Express sued a number of shippers for undercharges in the Southern District of Indiana. A group of these shippers then filed a petition with the ICC for an order declaring Overland's filed rates invalid. The shippers initiated this petition with the ICC rather than waiting for the district court to refer the cases to the Commission. The court eventually did refer some of the cases, but they were never consolidated with the original petition for declaratory relief. ¹

The shippers' major contention before the Commission was that Overland's tariff referred to a separately filed mileage guide in which Overland had failed to participate, and that therefore its filed rates were defective and void as a matter of law. Understanding the shippers' claim requires a brief overview of the Commission's tariff filing regulations. A mileage rate is one of the methods that a carrier can use to charge shippers. It consists of two parts: a rate per mile and a distance between shipping points. A carrier will usually list the rate per mile in its filed tariff and can supply the distances by including a list of mileage figures in the same tariff, by attaching a map to that tariff, or by referring to a separately filed mileage guide compiled by a third party. See 49 C.F.R. § 1312.30(c) (1991). If a carrier chooses the third option, the ICC interprets its regulations as obligating the carrier to participate formally in the mileage guides that it incorporates by reference. See 49 C.F.R. § 1312.27(e); Jasper Wyman & Son, et al.--Petition for Declaratory Order--Certain Rates and Practices of Overland Express, Inc., 8 I.C.C.2d 246, 251-52 (1992). ² Formal participation means only that the carrier must pay a nominal fee to the publisher of the mileage guide and have a valid power of attorney on file with the publisher. See 49 C.F.R. §§ 1312.10(b), 1312.4(d). The power of attorney allows the publisher to act as the carrier's agent when it files the mileage guide with the Commission.

Overland's tariff referred to Mileage Guide Tariff HGB 100, published by the Household Goods Carriers' Bureau. Although Overland provided the Bureau with a power of attorney in 1970, the shippers claimed that it lapsed in 1983 when Overland failed to pay its nominal participation fee, and the publisher omitted Overland from the list of participating carriers. The shippers contended that the failure to maintain a valid power of attorney rendered Overland's filed rates void, and that therefore those tariffs could not serve as the basis for an undercharge suit. Overland's apparent oversight was not unusual. As many as 40% of all carriers failed to satisfy the formal participation requirements for their mileage guides, and shippers have challenged this practice in a number of proceedings. Recognizing the industry-wide importance of the issue, the Commission gave notice in the Federal Register soliciting comments from interested parties. See 56 Fed.Reg. 24,091 (1991). After reviewing the public comments and the pleadings concerning Overland in particular, the Commission decided in favor of the shippers. The Commission held that Overland, because its power of attorney had lapsed, failed to participate formally in the mileage guide. See Jasper Wyman, 8 I.C.C.2d at 254. The Commission noted that under its regulations, " '[a]bsent effective concurrences or powers of attorney, tariffs are void as a matter of law.' " Id. at 250 (quoting 49 C.F.R. § 1312.4(d)). Accordingly, the Commission determined that Overland could not sue for undercharges because there was no effective rate on file that could serve as a basis for a claim. See id. at 263. In a subsequent decision, the Commission dismissed the cases referred from the district court on the ground that the declaratory order in Jasper Wyman resolved all the pending cases. Overland filed a petition for review of the declaratory order.

II.

Although Overland raises a number of claims, its principle contention is that the Commission's interpretation of 49 C.F.R. § 1312.4(d) resulted in an impermissible retroactive rejection of its tariff. ³ In ICC v. American Trucking Associations, 467 U.S. 354, 104 S.Ct. 2458, 81 L.Ed.2d 282 (1984), the Supreme Court severely limited the Commission's ability to reject tariff filings retroactively....