Union Pacific R. Co. v. Nevada Power Co.

• Decision Date: 11 December 1991
• Docket Number: No. 89-16471,89-16471
• Citation: 950 F.2d 1429
• Parties: UNION PACIFIC RAILROAD COMPANY and its Lessors, Plaintiff-Counter-Defendant-Appellee, v. NEVADA POWER CO., a Nevada corporation, Defendant-Counter-Claimant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1429

950 F.2d 1429

22 Fed.R.Serv.3d 77

UNION PACIFIC RAILROAD COMPANY and its Lessors Plaintiff-Counter-Defendant-Appellee, v. NEVADA POWER CO., a Nevada corporation Defendant-Counter-Claimant-Appellant.

No. 89-16471.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 11, 1991.

Decided Dec. 11, 1991.

Michael J. Ogborn, Heron, Burchete, Ruckert & Rothwell, Denver, Colo., and M. Gene Matteucci, Nevada Power Co., Las Vegas, Nev., for defendant-counter-claimant-appellant.

Robert B. Batcheler, Union Pacific R. Co., Omaha, Neb., and Mark L. Gentile, Miles, Pico & Mitchell, Las Vegas, Nev., for plaintiff-counter-defendant-appellee.

Appeal from the United States District Court for the District of Nevada.

Before GOODWIN, THOMPSON and O'SCANNLAIN, Circuit Judges.

O'SCANNLAIN, Circuit Judge:

Nevada Power Company ("Nevada Power") operates a coal-fired electricity-producing plant near Moapa, Nevada. Since 1978, Union Pacific Railroad Company ("Union Pacific") has transported coal to the plant from Hiawatha, Utah, and other stations along the Utah Railway. ¹ From the very inception of this relationship, the parties have disagreed over the proper transportation rate. This dispute remains unresolved today.

The present matter is but one facet of this lengthy rail tariff dispute. Following a rate determination by the Interstate Commerce Commission ("ICC" or "Commission") in 1979, Union Pacific paid Nevada Power over $1.6 million in reparations for overcharges. Later, the United States Court of Appeals for the Tenth Circuit vacated the ICC's order. Union Pacific then filed this suit in federal district court, seeking a return of its reparation payments.

I

A brief overview of the Interstate Commerce Act is necessary to understand the factual context of this case. ²

A cornerstone of rate-setting jurisprudence is the filed rate doctrine. "The 'filed rate doctrine,' in its most basic form, 'forbids a regulated entity to charge rates for its services other than those properly filed with the appropriate federal regulatory authority.' " Taffet v. Southern Co., 930 F.2d 847, 855 (11th Cir.1991) (quoting Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577, 101 S.Ct. 2925, 2930, 69 L.Ed.2d 856 (1981)). As applied to railroads and other common carriers, the doctrine is codified at 49 U.S.C. § 10761, which provides in pertinent part that a "carrier may not charge or receive a different compensation for that transportation or service than the rate specified in the tariff." The doctrine distinguishes between a "legal" rate and a "lawful" rate. See Southern Pacific Transp. Co. v. San Antonio, 748 F.2d 266, 273 (5th Cir.1984).

The legal rate is the tariff rate published and filed with the I.C.C. The lawful rate is a legal rate which has also been determined by the Commission to be reasonable and acceptable under the requirements of the Interstate Commerce Act.

Id. at 273-74.

There is, however, an important caveat to the filed rate doctrine. When a rail carrier has "market dominance over the transportation to which a particular rate applies," the rates established by the carrier must be reasonable. See 49 U.S.C. 10701a(b)(1); see also Maislin Indus., U.S. v. Primary Steel, Inc., --- U.S. ----, 110 S.Ct. 2759, 2767, 111 L.Ed.2d 94 (1990); Arizona Public Serv. Co. v. United States, 742 F.2d 644, 647 (D.C.Cir.1984) ("ICC must find that the railroad has 'market dominance over the transportation to which the rate applies' as a prerequisite to exercising its power to determine the reasonableness of the rate"). On complaint by an interested party--or on its own initiative--the ICC may begin an investigation to determine the reasonableness of a rate. 49 U.S.C. §§ 10707(a), 11701; see also CSX Transp. v. United States, 867 F.2d 1439, 1440 (D.C.Cir.1989). If the ICC finds a rate to be unreasonable, the ICC is authorized to order the carrier to pay the shipper damages for overcharges, 49 U.S.C. § 11705(b)(2); the Commission may also prescribe a maximum future rate. 49 U.S.C. § 10704(a)(1); see also CSX Transp., 867 F.2d at 1440.

These ICC orders are reviewable by the courts of appeals. See 28 U.S.C. § 2342(5). However, "federal-court authority to reject Commission rate orders for whatever reason extends to the orders alone, and not to the rates themselves." Burlington Northern, Inc. v. United States, 459 U.S. 131, 141, 103 S.Ct. 514, 521, 74 L.Ed.2d 311 (1982). Such limited appellate court review is necessary to preserve the primary jurisdiction vested by Congress in the ICC. See Atchison, T. & S.F. Ry. Co. v. Wichita Bd. of Trade, 412 U.S. 800, 821-23, 93 S.Ct. 2367, 2381-82, 37 L.Ed.2d 350 (1973); Southern Pacific, 748 F.2d at 272.

If a shipper pays on a tariff whose rate is later declared unreasonable, the shipper may recover reparations from the carrier. See 49 U.S.C. § 11705(b)(3); Burlington Northern, 459 U.S. at 141-42, 103 S.Ct. at 520-21. However, a carrier's ability to recover reparations is more restrictive. The Supreme Court explained:

Under § 207(d)(2) of the Staggers Rail Act of 1980, 49 U.S.C. § 10707(d)(2), the carrier can also receive reparations. This right is limited, however, to underpayments resulting from the Commission's suspension of a tariff; it does not apply where ... a court has prevented the carrier from collecting a higher tariff.

Id. at 142 n. 6, 103 S.Ct. at 521 n. 6 (citations omitted).

Each of these various statutory maxims is implicated in Union Pacific's present attempt to recover reparation payments from Nevada Power.

II

Union Pacific began transporting coal from Utah to Nevada Power's Reid Gardner Station in 1978. Prior to October 1978, the set group rate for such coal shipments was $7.07 per ton for a minimum shipment of 4,000 tons. On August 27, 1978, Union Pacific published Tariff 6034, which established a point-to-point rate of $9.21 per ton if annual volume exceeded 350,000 tons and each shipment exceeded 7,600 tons. A fallback rate of $10.41 per ton was set for annual volumes of 150,000 to 350,000 tons, again assuming a minimum of 7,600 tons per shipment. Shortly thereafter, at Nevada Power's request, Union Pacific published a new group rate schedule. Tariff 6020, published on October 27, 1978, set a group rate of $10.90 per ton with no mandatory minimum annual volume.

Nevada Power filed a protest of the Tariff 6034 rates with the ICC, asking the ICC to suspend and investigate the rates. The ICC agreed to investigate and on July 31, 1979, the Commission entered its decision canceling the Union Pacific's rates of $9.21 and $10.41 per ton. See Bituminous Coal, Hiawatha, Utah to Moapa, Nevada, 361 I.C.C. 923 (1979). The ICC did not specify an alternative rate structure. However, the ICC concluded that the maximum reasonable rate for annual volume exceeding 350,000 tons was $7.91 per ton. The Commission ordered Union Pacific to refund to Nevada Power the difference between the Tariff 6034 rate and the $7.91/ton rate.

Upon the ICC's rejection of Tariff 6034, Union Pacific did not publish a new tariff reflecting rates consistent with the ICC's analysis. Rather, Union Pacific contended that the group rates found in Tariff 6020 went into effect, and proceeded to charge Nevada Power accordingly.

Nevada Power again protested to the ICC. The ICC, in an order dated April 15, 1980, found for Nevada Power. Union Pacific and Utah Railway, the ICC declared, "violated our decision in this case. In addition, elimination of the annual volume rates for these movements was a violation of their statutory common carrier obligation to provide adequate service." The ICC reasoned that "unit train/annual volume movements are the only efficient and practical means of transporting large volumes of coal."

The ICC ordered Union Pacific to refund to Nevada Power the difference between the Tariff 6020 rate ($10.90/ton) and the rate it had previously found reasonable ($7.91/ton). ³ Eventually--and not without protest--Union Pacific paid Nevada Power reparations exceeding $1.6 million, approximately one million stemming from overcharges for the period in which Tariff 6034 was in effect, and approximately $600,000 for overcharges stemming from Tariff 6020 overcharges.

Meanwhile, all of the parties before the ICC petitioned the Tenth Circuit for review of the ICC's order. On January 8, 1981, the Tenth Circuit set aside the ICC's decision, finding several irregularities in the ICC's decisionmaking process. See Union Pacific R.R. v. United States, 637 F.2d 764, 767-68 (10th Cir.1981). The court remanded the matter to the ICC to reconsider its rate determination. Id. at 768-69. ⁴

Following the Tenth Circuit's decision setting aside the ICC's order, Union Pacific brought this action in the United States District Court for the District of Nevada to recover its reparation payments. The district court granted summary judgment for Union Pacific. This appeal followed. ⁵

III

Union Pacific filed its original complaint on October 5, 1981, seeking return of its reparation payments made for overcharges under Tariff 6034. Over four years later, Union Pacific moved to amend its complaint, adding a request for recovery of payments made for Tariff 6020 overcharges. Nevada Power objected to the amended complaint, contending that the additional claim was barred by the statute of limitations. The district court granted Union Pacific's motion, holding that the claim related back to the original complaint and was thus not time-barred. Our review of a district court's rejection of a statute of limitations defense under the relation-back doctrine is plenary. See Martell v. Trilogy Ltd., 872 F.2d 322, 325 (9th Cir.1989).

Federal Rule of Civil Procedure 15(c), as it presently reads, provides in pertinent part:

Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates...