Trans-Allied Audit Co., Inc. v. I.C.C.

• Decision Date: 07 September 1994
• Docket Number: TRANS-ALLIED,No. 93-1211,93-1211
• Citation: 33 F.3d 1024
• Parties: AUDIT COMPANY, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION, United States of America, Respondents. Twin Modal, Inc., Intervenor.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1024

33 F.3d 1024

TRANS-ALLIED AUDIT COMPANY, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION, United States of America Respondents Twin Modal, Inc., Intervenor.

No. 93-1211.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 11, 1993.

Decided Sept. 7, 1994.

Paul Taylor, Bloomington, MN, argued (Alan D. Harris, on the brief), for petitioner.

Laurenc Schecker, Washington, DC, argued (John W. Clark, Robert B. Nicholson, Robert S. Burk and Craig M. Keats, on the brief), for respondent.

Before McMILLIAN, Circuit Judge, LAY, Senior Circuit Judge, and BOWMAN, Circuit Judge.

McMILLIAN, Circuit Judge.

Trans-Allied Audit Co. (Trans-Allied), assignee of the accounts receivable of Rose Freight Lines, Inc. (Rose), seeks review of a final decision of the Interstate Commerce Commission (ICC). The ICC determined that 158 shipments transported by Rose for Twin Modal, Inc. (Twin Modal) after July 31, 1985, were contract carriage and that, with respect to 33 shipments transported by Rose for Twin Modal before that date, Rose had not "participated" in the mileage guide tariff referenced in its distance commodity rates tariffs and therefore had no valid tariffs on file with the ICC. Trans-Allied Audit Co., No. 40322, 1992 WL 356680 (I.C.C. Nov. 27, 1992). For reversal, Trans-Allied argues the ICC erred in finding (1) the transportation relationship between Rose and Twin Modal after July 31, 1985, constituted contract carriage and (2) its filed tariff was not valid. For the reasons discussed below, we deny the petition for review.

REGULATORY BACKGROUND

In order to lawfully provide interstate motor carriage, a person must obtain appropriate operating authority from the ICC. Carriers can provide common carriage or contract carriage or both. 49 U.S.C. Secs. 10921-10923; see Central & Southern Motor Freight Tariff Ass'n v. United States, 244 U.S.App.D.C. 226, 757 F.2d 301 (describing regulatory history of motor common and contract carriage), cert. denied, 474 U.S. 1019, 106 S.Ct. 568, 88 L.Ed.2d 553 (1985). The prohibition against "dual operations," that is, providing both common and contract carriage, was eliminated in 1980. Motor Carrier Act of 1980, Pub.L. No. 96-296, 94 Stat. 793 (repealing 49 U.S.C. Sec. 10930(a)(1)); Deletion of Dual Operations Policy, Ex Parte No. 55 (Sub-No. 42), 45 Fed.Reg. 45,528 (1980). Rose had common carriage authority and later also contract carriage authority. The ICC also licenses brokers under 49 U.S.C. Sec. 10924. Brokers arrange transportation by matching shippers and carriers. 49 U.S.C. Sec. 10102(1) (definition). Twin Modal is a broker.

Because Congress has given the ICC broad regulatory responsibility over a carrier's contract carriage operations, ICC v. J-T Transport Co., 368 U.S. 81, 88, 82 S.Ct. 204, 209, 7 L.Ed.2d 147 (1961), it is for the ICC to Motor common carriers must file public tariffs containing their rates and charges with the ICC. 49 U.S.C. Sec. 10762; see, e.g., Security Services, Inc. v. Kmart Corp., --- U.S. ----, ----, 114 S.Ct. 1702, 1706, 128 L.Ed.2d 433 (1994). The applicable tariff rate (the filed rate) filed by a motor common carrier is the legal rate and the only rate that the carrier may charge, and that a shipper may pay, for common carriage unless and until that rate is set aside by the ICC as unreasonable or unlawful. 49 U.S.C. Sec. 10761(a); Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 120, 128-29, 110 S.Ct. 2759, 2762-63, 2766-67, 111 L.Ed.2d 94 (1990) (Maislin ); see also Reiter v. Cooper, --- U.S. ----, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993). The purpose of the filed rate doctrine is to prevent rate discrimination and to promote rate stabilization. Maislin, 497 U.S. at 119, 110 S.Ct. at 2762.

interpret and apply the statutory standards that define contract carriage. Atlantis Express, Inc. v. Standard Transportation Services, Inc., 955 F.2d 529, 532-34 (8th Cir.1992). A motor common carrier is defined as "a person holding itself out to the general public to provide motor vehicle transportation for compensation." 49 U.S.C. Sec. 10102(14). By contrast, a motor contract carrier is not required to provide motor vehicle transportation service to the general public but instead enters into continuing agreements with shippers and must either dedicate equipment to its shippers' "exclusive use" or provide transportation designed to meet its shippers' "distinct needs." 49 U.S.C. Sec. 10102(15)(B)(ii). At the time of the shipments at issue in the present case, ICC regulations also required that contract carrier agreements be bilateral and in writing, provide for transportation for a particular shipper or shippers, impose specific obligations upon both carrier and shipper or shippers, and cover a series of shipments during a stated period of time in contrast to separate contracts of carriage governing individual shipments. 49 C.F.R. Sec. 1053.1 (1991) (repealed, effective June 20, 1992, in Contracts for Transportation of Property, Ex Parte No. MC-198 (I.C.C. Mar. 5, 1991, Sept. 11, 1991), 8 I.C.C.2d 520 (1992), appeal dismissed sub nom. Central States Motor Freight Bureau, Inc. v. United States, No. 92-1258, 1993 WL 558020 (D.C.Cir. Dec. 28, 1993) (order)). ¹

"The ICC has authority to 'prescribe the form and manner' of tariff filing, [49 U.S.C.] Sec. 10762(b)(1), and the information to be included in tariffs beyond any matter required by statute, [49 U.S.C.] Sec. 10762(a)(1)." Security Services, Inc. v. Kmart Corp., --- U.S. at ----, 114 S.Ct. at 1706. By ICC regulation, there are two basic methods of tariff filing: a carrier can prepare and file its own individual tariffs or it can adopt the rates contained in the tariffs filed by another carrier or agent. However, a carrier can formally bind itself to a tariff filed by another carrier or agent, including incorporating by reference another tariff into its own tariff, only if it "participates" in the other entity's tariff. See 49 C.F.R. Sec. 1312.27(e) (1993). A carrier can participate in a tariff filed by another carrier (or an agent) by issuing a power of attorney or concurrence. Id. Secs. 1312.4(d), 1312.10(a) ("Powers of attorney may be given by a carrier to a carrier or an agent for the purpose of publishing and filing tariffs."), (b)(1) (a concurrence is executed by a carrier who wishes "to participate in joint rates or provisions published in a tariff filed by another carrier or agent"). Although in 1989 the ICC no longer required that the actual powers of attorney be filed with the ICC, 48 Fed.Reg. 31,265, 31,266 (1983); Revision of Tariff Regulations--All Carriers, 1 I.C.C.2d 404, 408 (1984), the ICC continued to require that powers of attorney or concurrences be executed. Absent an effective power of attorney, any reference to a separate tariff is void as a matter of law. 49 C.F.R. Sec. 1312.4(d) ("void-for-nonparticipation" regulation); see, e.g., Atlantis Express, Inc. v. Associated Wholesale Grocers, Inc., 989 F.2d 281, 282-83 (8th Cir.1993).

In comparison to motor common carriers, motor contract carriers set their own rates, which can be higher or lower than common carrier rates (but usually lower) and which are exempt from the tariff filing requirement (and the filed rate doctrine). 49 U.S.C. Secs. 10761(b), 10762(f); Exemption of Motor Contract Carriers from Tariff Filing Requirements, 133 M.C.C. 150 (1983), aff'd sub nom. Central & Southern Motor Freight Tariff Ass'n v. United States, 244 U.S.App.D.C. 226, 757 F.2d 301, cert. denied, 474 U.S. 1019, 106 S.Ct. 568, 88 L.Ed.2d 553 (1985).

BACKGROUND FACTS

In late 1984 Twin Modal, an ICC-licensed property broker, began negotiations with Rose, an ICC-licensed motor carrier, for freight transportation services. At that time Rose had common carrier authority and was in the process of obtaining contract carrier authority as well. Twin Modal and Rose reached an agreement but did not actually execute a written contract for contract carriage until July 31, 1985. However, in December 1984, Twin Modal began tendering shipments to Rose for shipment. On July 24, 1985, Rose finally obtained contract carrier authority from the ICC, and Twin Modal and Rose executed a written agreement for contract carriage on July 31, 1985. It is undisputed that Twin Modal and Rose intended a contract carriage agreement. Under the agreement Twin Modal agreed to "proceed with its best efforts to solicit and obtain freight hauling agreements" for Rose, and Rose agreed to accept all shipments tendered to the extent of its equipment capacity and to transport and deliver such shipments as expeditiously as possible. Rose also agreed to obtain insurance and be liable for all losses or damage to freight. The term of the agreement was 1 year, automatically renewable for 1-year periods, unless terminated by either party upon 30 days notice in writing; the rate for shipments was to be set at the time freight was "delivered" by Twin Modal for shipment to Rose.

Rose handled a total of 191 loads brokered by Twin Modal--33 loads between December 10, 1984, and July 24, 1985, before the parties executed the agreement, for a total of $19,567.40, and 158 loads between August 13, 1985, and April 11, 1988, for a total of $77,593.76. Twin Modal paid all the charges.

Rose filed a Chapter 11 petition in bankruptcy which was later converted to Chapter 7. Trans-Allied later acquired Rose's accounts receivable and brought an adversary action against Twin Modal to recover undercharges arising out of the shipments Rose had handled for Twin Modal. Applying the higher common carrier tariff rates, Trans-Allied alleged that Twin Modal owed $52,356.24 in undercharges ($8,761.00 for the shipments before July 31, 1985, the date of the agreement, and $43,595.24 for the shipments thereafter).

Trans-Allied also filed a petition for a declaratory order before the ICC, claiming that the agreement between Twin Modal and Rose was not a valid contract for contract...