Security Services, Inc. v. K Mart Corp.

• Court: U.S. Supreme Court
• Writing for the Court: SOUTER, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and BLACKMUN, STEVENS, O'CONNOR, SCALIA, and KENNEDY, JJ., joined. STEVENS, J., filed a concurring opinion. THOMAS, J., and GINSBURG
• Decision Date: 16 May 1994
• Docket Number: 93284
• Citation: Security Services, Inc. v. K Mart Corp. (1994)
• Parties: SECURITY SERVICES, INC., Petitioner v. K MART CORPORATION

114 S.Ct. 1702

128 L.Ed.2d 433

SECURITY SERVICES, INC., Petitioner

v K MART CORPORATION.

No. 93-284.

Argued Feb. 28, 1994.

Decided May 16, 1994.

Syllabus ^*

The mileage rate tariff that petitioner motor carrier filed with the Interstate Commerce Commission (ICC) did not list distances for calculating charges for shipments, but instead relied upon a Household Goods Carriers' Bureau (HGCB) Mileage Guide for its distance component. The Mileage Guide states that it may not be used to determine rates unless the carrier is shown as a "participant" in the Guide. Participants are listed in a separate HGCB tariff filed with the ICC. When petitioner failed to pay its fees, HGCB canceled petitioner's participation by supplementing the latter tariff. Sometime later, petitioner contracted to transport respondent shipper's goods at rates below its filed tariff rates. Petitioner subsequently filed for Chapter 11 bankruptcy and, as debtor-in-possession, asserted that respondent was liable under the Interstate Commerce Act's filed rate doctrine for undercharges based on the difference between the contract and tariff rates. Respondent refused to pay. Petitioner sued. The District Court granted summary judgment for respondent, and the Court of Appeals affirmed, concluding that the filed tariff could not support an undercharge claim because it was void under ICC regulations requiring participation in mileage guides referred to in a carrier's tariff; that the regulations' retroactive voiding of the tariff was permissible under ICC v. American Trucking Assns., Inc., 467 U.S. 354, 104 S.Ct. 2458, 81 L.Ed.2d 282; and that nonparticipation in the Guide was not a mere technical defect excused by petitioner's substantial compliance with the filed rate rule.

Held: A motor carrier in bankruptcy may not rely on tariff rates it has filed with the ICC, but which are void for nonparticipation under ICC regulations, as a basis for recovering undercharges. Pp. ____.

(a) A bankruptcy trustee for a defunct carrier or the carrier itself as a debtor-in-possession is entitled to rely on the filed rate doctrine, which mandates that carriers charge and be paid the rates filed in a tariff, to collect for undercharges based on effective, filed rates. Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 110 S.Ct. 2759, 111 L.Ed.2d 94. The ICC's void-for-nonparticipation regulation, however, invalidates a mileage-based tariff once cancellation of the carrier's participation in an agent's distance guide is published, as it was here. Such a tariff is incomplete and ceases to satisfy the fundamental purpose of tariffs: to disclose the freight charge due to the carrier. Petitioner may not recover for undercharges based on filed, but void, rates lacking an essential element. Pp. ____.

(b) The rule of American Trucking, supra, 467 U.S. at 361-364, 104 S.Ct. at 2462-64, is not apposite here, for the void-for-nonparticipation regulation does not apply retroactively. Under the regulation, petitioner's tariff reference to the HGCB Mileage Guide became void as a matter of law and its tariff filings incomplete on their face when HGCB canceled its participation in the Guide by filing a supplemental tariff. The transactions with respondent occurred after that date. Pp. ____.

(c) Also inapplicable is the "technical defect" rule. See, e.g., Berwind-White Coal Mining Co. v. Chicago & Erie R. Co., 235 U.S. 371, 375, 35 S.Ct. 131, 132, 59 L.Ed. 275. A tariff like petitioner's that refers to another tariff for essential information, which tariff in turn states that the carrier may not refer to it, does not provide the "adequate notice" of rates to be charged that the Court's "technical defect" cases require. Pp. ____.

996 F.2d 1516 (CA3 1993), affirmed.

SOUTER, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and BLACKMUN, STEVENS, O'CONNOR, SCALIA, and KENNEDY, JJ., joined. STEVENS, J., filed a concurring opinion. THOMAS, J., and GINSBURG, J., filed dissenting opinions.

Paul O. Taylor, Minneapolis, MN, for petitioner.

William J. Augello, Huntington, NY, for respondent.

John F. Manning, Washington, DC, for amicus curiae U.S., by special leave of the court.

Justice SOUTER delivered the opinion of the Court.

This case presents the question whether a motor carrier in bankruptcy may recover for undercharges based on tariff rates that are void as a matter of law under the Interstate Commerce Commission's regulations. We hold that the carrier may not rely on the filed but void tariff.

I

On August 20, 1984, petitioner Security Services, Inc. (then known as Riss International Corp.) filed with the Interstate Commerce Commission (ICC) a mileage (or distance) rate tariff having an effective date 30 days later. The tariff was received, accepted, and filed, and was never rejected by the ICC. Although the tariff specified rates to be charged per mile of carriage, it was not complete in itself, for it included no list of distances or map on which a shipper could rely in calculating charges for a given shipment. For the distance component of this mileage-based tariff, petitioner relied upon a Household Goods Carriers' Bureau (HGCB) Mileage Guide, its supplements, and subsequent issues. HGCB is itself not a carrier, but a publisher of distance guides for use in tariff filings. The Mileage Guide is a 565-page volume of large format, which specifies the distances in miles between various points of origin and destination, and contains maps and supplemental rules. The Mileage Guide refers shippers to a separate HGCB tariff and its supplements, filed with the ICC, for a list of the carriers who are "participants" in the Mileage Guide. A participant is a carrier who pays HGCB a nominal fee and issues it a valid power of attorney. The first page of HGCB's Mileage Guide states that it "MAY NOT BE EMPLOYED BY A CARRIER AS A GOVERNING PUBLICATION FOR THE PURPOSE OF DETERMINING INTERSTATE TRANSPORTATION RATES BASED ON MILEAGE OR DISTANCE, UNLESS CARRIER IS SHOWN AS A PARTICIPANT IN THE ABOVE NAMED TARIFF." HGCB, Mileage Guide No. 12, p. 1 (Dec. 1982). HGCB filed a tariff supplement to its Mileage Guide, effective February 19, 1985, listing participants and canceling Riss's participation in the Mileage Guide for failure to pay the nominal participation fee to HGCB. HGCB treats a power of attorney issued to it as void if not renewed by remitting the participation fee within a reasonable time after cancellation. Riss did not renew.

On April 17, 1986, Riss contracted with respondent Kmart Corporation to transport Kmart's goods at rates specified in the contract, and from November 3, 1986, to December 29, 1989, Riss transported goods for Kmart under the contract. Riss billed, and Kmart paid, at the contract rate. In November 1989, Riss filed a Chapter 11 bankruptcy petition and while undergoing reorganization became Security Services. As debtor-in-possession, Security Services billed Kmart for undercharges (and interest) it was allegedly owed, based on the difference between the contract rate Kmart paid and the tariff rates that Riss assertedly had on file with the ICC. Security Services argued that under the Interstate Commerce Act's filed rate doctrine, Kmart was liable for the tariff rates filed with the ICC, regardless of any contract rate negotiated. Kmart refused to pay, and this suit ensued.

The District Court for the Eastern District of Pennsylvania granted summary judgment for Kmart on the ground that Security Services had no valid tariff on file with the ICC (without which it could not collect for undercharges), because HGCB had canceled its participation in the Mileage Guide. The Court of Appeals for the Third Circuit affirmed. 996 F.2d 1516 (1993). The court reasoned that under ICC regulations Riss's tariff was void for nonparticipation in the HGCB Mileage Guide, that Riss had not filed any mileages of its own to replace its canceled participation, and that the consequently incomplete and void tariff could not support a claim for undercharges. Id., at 1524. The court took the position that, although the ICC regulations operated retroactively to void a filed tariff, that retroactive application was permissible under this Court's test in ICC v. American Trucking Assns., Inc., 467 U.S. 354, 104 S.Ct. 2458, 81 L.Ed.2d 282 (1984). 996 F.2d, at 1524-1526. Finally, the court rejected Security Services' argument that its failure to participate formally in the HGCB Mileage Guide was a mere technical defect excused by its substantial compliance with the rule requiring it to file its rates with the Commission. Id., at 1526.

We granted certiorari, 510 U.S. ----, 114 S.Ct. 341, 126 L.Ed.2d 306 (1993), to resolve a Circuit conflict over the validity of the ICC void-for-nonparticipation regulation,¹ and now affirm.

II

A motor carrier subject to the Interstate Commerce Act must publish its rates in tariffs filed with the ICC. 49 U.S.C. §§ 10761(a), 10762(a)(1). The carrier "may not charge or receive a different compensation for that transportation . . . than the rate specified in the tariff. . . ." § 10761(a). We have held these provisions "to create strict filed rate requirements and to forbid equitable defenses to collection of the filed tariff." Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 127, 110 S.Ct. 2759, 2766, 111 L.Ed.2d 94 (1990); accord, Reiter v. Cooper, 507 U.S. ----, ----, 113 S.Ct. 1213, 1219, 122 L.Ed.2d 604 (1993) (slip op., at 7); 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"). The purpose of the filed rate doctrine is "to ensure that rates are both reasonable and nondiscriminatory," Maislin, supra, 497 U.S. at 119, 110 S.Ct., at 2762 (citing 49 U.S.C. §§ 10101(a), 10701(a), 10741(b) (1982 ed.)), and failure to charge or pay the filed rate may...