Seaboard System R.R., Inc. v. U.S.
| Decision Date | 24 July 1986 |
| Docket Number | No. 85-3425,85-3425 |
| Citation | 794 F.2d 635 |
| Parties | SEABOARD SYSTEM RAILROAD, INC., Petitioner, and the Buckeye Cellulose Corporation, Intervenor-Petitioner, v. UNITED STATES of America and Interstate Commerce Commission, Respondents. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Fred R. Birkholz, Jacksonville, Fla., for petitioner.
Michael P. Coury, Memphis, Tenn., for intervenor Buckeye Cellulose Corp.
Evelyn G. Kitay, I.C.C., John J. Powers, III, Marion L. Jetton, U.S. Dept. of Justice, Antitrust Div., Washington, D.C., for respondents.
Petition for Review of Order from the Interstate Commerce Commission.
Before RONEY and FAY, Circuit Judges, and SIMPSON, Senior Circuit Judge.
The railroad in this petition for review of an ICC order seeks to collect undercharges based on a higher single-car rate to a shipper who was promised and received lower multicar rates for shipments between December 1977 and May 1980. The ICC held that the tariff provisions at that time were not ambiguous and that, in any event, the collection of undercharges under the circumstances of this case would be unreasonable. As to the latter decision, the Commission made an abrupt change from 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. We affirm.
The controlling facts are not complex. Buckeye Cellulose Corporation operates a soybean processing plant at Memphis, Tennessee, from which it ships soybean meal to Mobile, Alabama. Between December 1977 and May 1980, Buckeye shipped 373 shipments of soybean meal to Mobile via L & N Railroad, on which Buckeye or its consignee paid a multicar rate.
Prior to late 1977, Buckeye's shipments to Mobile moved primarily via other carriers, and Buckeye received multicar rates from those carriers. That year, because of difficulty obtaining sufficient cars from these carriers, Buckeye approached L & N for additional service. After an L & N sales manager assured Buckeye of sufficient car supply, Buckeye began making shipments via L & N. Whenever multicar shipments were made by the consignee, the multicar rate was paid to L & N. In late 1978, when Buckeye rather than the consignee assumed responsibility for paying freight charges, Buckeye sought and received assurance from an L & N rate clerk that the multicar rate applied and received subsequent verification from the L & N sales manager. Thereafter, Buckeye's multicar shipments to Mobile were either prepaid or billed by L & N under the multicar rate. Not until November 1979 did L & N advise Buckeye that it did not have a multicar rate from Memphis to Mobile, but only a single-car rate. Until February 1980, however, Buckeye's multicar shipments were billed by L & N and paid by Buckeye at the multicar rate. L & N then began rebilling the shipments at the single-car rate.
Seaboard System Railroad, the successor in interest to L & N, now asserts that L & N published no multicar rate between Memphis and Mobile. Seaboard seeks to collect undercharges of $104,502.46, representing the difference between the multicar rate that was paid and a higher single-car rate that it asserts was the applicable tariff rate. The controversy reflects a somewhat unclear published tariff.
The pertinent tariff entry, published in item 2525-D of supplement 75 to tariff I.C.C. SFA 3705-P, appeared essentially as follows:
TO
AL Mobile
)( R8 .68
TN Memphis)(
The bracket to the right of the word "Memphis," known as a "crow's foot," is a typographical device used throughout the tariff, although the tariff does not explain its meaning. The explanation of route reference "R8" names routes of L & N, the Illinois Central Gulf Railroad Company (ICG), the St. Louis-San Francisco Railway Company (SLSF), and the Southern Railway System (SR). Route reference "R29" refers only to the routes of ICG, SLSF, and SR, and not to those of L & N. The rate in column 1 is a single-car rate, while the lower rate in column 3 is a multicar rate.
Upon receiving the notice in 1979, Buckeye sought an informal opinion from the ICC and was advised by the Chief of the Commission's Section of Rates and Informal Cases that all the rates encompassed by the Memphis bracket, including the multicar rate, applied to all routes encompassed by the bracket, including L & N's route.
The Commission in this proceeding accepted as "plausible" Buckeye's argument that the "crow's foot" or bracket to the right of the word "Memphis," which spanned both the "R8" and "R29" lines, overcame the placement of those lines and made both rates opposite the bracket applicable to all routes referenced opposite the bracket. Buckeye, Continental, and L & N adhered to this reading for over two years, and the Commission's own tariff expert employed it in 1980. Nonetheless, the Commission found the provision unambiguous and that the single-car rate was the applicable rate.
The reasoning was this. To adopt Buckeye's reading would not give effect to all provisions of the tariff. The three routes referenced in "R29" were all referenced, along with others, in "R8." If "R8" pertained to the multicar rate in column 3 as well as the single-car rate in column 1, then route reference "R29" would have been superfluous. In order to give effect to "R29," the tariff must be interpreted as not providing a multicar rate for the L & N route. The bracket, the Commission found, has no significance other than as a device to avoid repetition of the name of the origin point on the second line. The Commission concluded that because this is the only reading that gives meaning to all the terms of the tariff, the tariff must be considered unambiguous.
We need not decide that point in order to affirm the Commission in this case. The Commission found that it could inquire into whether it would be an unreasonable practice for L & N to collect undercharges under the circumstances presented. Although this decision marks a change from past practice, we hold it is not contrary to the statute and within the Commission's authority.
The Commission identified its authority to prevent unreasonable practices by rail carriers as originating from two statutes: 49 U.S.C.A. Sec. 10701(a), which provides that a "practice related to transportation or service provided by a carrier subject to the jurisdiction of the Interstate Commerce Commission under chapter 105 of this title must be reasonable," and 49 U.S.C.A. Sec. 10704(a)(1), which authorizes the ICC to order a carrier to stop a violation.
The Commission found that the publication of a tariff whose meaning is not plain to the ordinary user, combined with a misquotation of the applicable rate under that tariff and a shipper's reliance on the misquotation to its detriment, constitute circumstances under which the Commission may find that the collection of undercharges would be an unreasonable practice. The Commission emphasized that there must be difficulty in interpreting the tariff such that the shipper reasonably relied on the carrier's interpretation and did so to its detriment. Here the tariff, even if not technically ambiguous, lent itself to misinterpretation by the ordinary user, and the shipper relied on L & N's continued misquotations and misbillings, to the shipper's substantial detriment. If the tariff was ambiguous and subject to two interpretations, the case is even stronger to support the Commission's decision.
As the Commission recognized, the courts have long refused to recognize carrier rate misquotations as a defense against legal actions by carriers seeking to collect undercharges. The seminal case was decided almost three quarters of a century ago and would seem to travelers today to have reached a curious result. In Louisville & Nashville Railroad v. Maxwell, 237 U.S. 94, 35 S.Ct. 494, 59 L.Ed. 853 (1915), the Supreme Court held that a railroad passenger had to pay $58.30 on an undercharge for tickets despite the fact that he had relied upon the carrier's price misquotation. ...
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