West Coast Truck Lines, Inc. v. Weyerhaeuser Co.

• Citation: 893 F.2d 1016
• Decision Date: 04 January 1990
• Docket Number: 89-35121 and 89-35167,Nos. 89-35115,s. 89-35115
• Parties: WEST COAST TRUCK LINES, INC., Plaintiff, and Delta Traffic Service, Inc., Plaintiff-Appellant, v. WEYERHAEUSER CO.; Marine Lumber Co., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1016

893 F.2d 1016

58 USLW 2410

WEST COAST TRUCK LINES, INC., Plaintiff and Delta Traffic Service, Inc., Plaintiff-Appellant, v. WEYERHAEUSER CO.; Marine Lumber Co., Defendants-Appellees.

Nos. 89-35115, 89-35121 and 89-35167.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 3, 1989.

Decided Jan. 4, 1990.

Miles L. Kavaller, Beverly Hills, Cal., for plaintiffs-appellants Delta Traffic Service, Inc., and West Coast Truck Lines, Inc.

William N. Mehlhaf, Case, Dusterhoff & Mehlhaf, Portland, Or., for defendants-appellees Weyerhaeuser Co. and Marine Lumber Co.

Cecelia E. Higgins, Washington, D.C., for intervenor, Interstate Commerce Commission.

Paul Gary Sterling and Mary Kay Reynolds, Meadows, Smith, Lenker, Sterling & Davis, Long Beach, Cal., Amicus Curiae Counsel, William J. Augello, Augello, Pezold & Hirschmann, Huntington, New York, for The Shippers National Freight Claim Council, Inc.

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

Before WALLACE, PREGERSON and ALARCON, Circuit Judges.

ALARCON, Circuit Judge:

Delta Traffic Service, Inc. (Delta) appeals from the district court's order granting summary judgment in favor of Weyerhaeuser Co. (Weyerhaeuser) and Marine Lumber Co. (Marine). Delta instituted an action to collect interstate motor common carrier freight undercharges. The alleged undercharges represent the difference between West Coast Truck Lines, Inc.'s (West Coast) published rate on file with the Interstate Commerce Commission (ICC) and the rate negotiated, billed and collected from Weyerhaeuser and Marine.

On referral from the district court pursuant to 28 U.S.C. Sec. 1336(b), the ICC determined that West Coast and Delta's attempt to recover the filed rate constituted an unreasonable practice under 49 U.S.C. Sec. 10701(a) and provided a defense to their claim against Weyerhaeuser and Marine for the collection of undercharges. The district court reviewed the ICC's decision under the Administrative Procedure Act, 5 U.S.C. Sec. 706 and accepted and applied the ICC's finding that West Coast's attempt to collect the undercharges was an unreasonable practice barring any recovery in this action.

We must decide whether the district court erred in accepting as a correct interpretation of the law the ICC's declaratory ruling that an attempt to recover motor carrier undercharges may constitute an unreasonable practice, depending on the facts and circumstances, that will preclude application of the filed rate doctrine. We conclude that the ICC and the district court were correct in determining that an unreasonable practice is an exception to the filed rate doctrine and constitutes a defense to an action for common carrier undercharges, and we affirm.

I. JURISDICTION

Federal question jurisdiction exists under 28 U.S.C. Sec. 1337 permitting a district court to exercise its judicial power when an action arises under the Interstate Commerce Act, 49 U.S.C. Secs. 10701, 10741, 10761 and 10762. Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 534, 103 S.Ct. 1343, 75 L.Ed.2d 26 (1983) (per curiam). A complaint for freight undercharges properly "arises under" section 10761. Kansas City Terminal Ry. Co. v. Jordon Mfg. Co., 750 F.2d 551, 552 (7th Cir.1984). The district court referred the question of the reasonableness of West Coast and Delta's billing practices to the ICC under 28 U.S.C. Sec. 1336(b).

The district court had exclusive jurisdiction to review the ICC's determination. 28 U.S.C. Sec. 1336(b). The district court accepted the ICC's determination that the attempt to recover the undercharges was unreasonable and constituted a complete defense to the complaint. The district court then entered an order granting Weyerhaeuser and Marine's motions for summary judgment. Delta filed a timely notice of appeal. We have jurisdiction under 28 U.S.C. Sec. 1291.

II. PERTINENT FACTS

West Coast was a motor common carrier subject to regulation by the ICC. It ceased operations in late 1985. West Coast assigned certain accounts to Delta, a collection agency. Marine and Weyerhaeuser employed West Coast while it was conducting business as a carrier.

Marine and West Coast representatives negotiated oral contracts for 108 interstate shipments between September 1983 and December 1984. The negotiated rates were lower than the tariffs filed by West Coast with the ICC for these shipments. Marine was not aware that the negotiated rates were less than the filed rates. Marine paid the negotiated rate for the shipments.

The record shows that West Coast's course of conduct with Weyerhaeuser was similar. During 1984 and 1985 Weyerhaeuser negotiated oral contracts for 104 shipments with West Coast representatives. These negotiated rates were lower than those filed by West Coast with the ICC. Weyerhaeuser was not aware that the negotiated rates deviated from the filed rates. West Coast accepted the amount tendered by Weyerhaeuser as full payment for the shipments.

After auditing West Coast's freight bills, Delta filed a complaint against Marine on September 3, 1986, to collect undercharges in the amount of $14,948.33. This amount represents the aggregate difference between the published rate contained in the tariff filed by West Coast and the rate actually collected from Marine. On June 30, 1987, West Coast filed a complaint against Weyerhaeuser for aggregate freight undercharges of $11,034.84 for the interstate transportation of green or dry lumber during the period from July 2, 1984, through December 17, 1985, from Oregon to California. On December 18, 1987, the district court stayed the proceedings and referred the question whether an attempt to collect undercharges in a negotiated rate case constitutes an unreasonable practice to the ICC.

On December 27, 1987, Marine and Weyerhaeuser filed a joint petition with the ICC for a declaration that the plaintiffs' attempt to recover the filed rates was an unreasonable practice under the facts presented in support of Delta's complaint.

On April 5, 1988 West Coast filed a new complaint against Weyerhaeuser for freight charges totaling $5,906.98 for additional shipments of lumber and wood products from May through October 18, 1985. On April 25, 1988, by stipulation of the parties, an order was issued staying the district court proceedings pending the decision of the ICC in Marine Lumber Co. and Weyerhaeuser Co.--Joint Petition for Declaratory Order, Docket No. MC-C-30082. On June 27, 1988, the ICC found that it would be an unreasonable practice to permit either Delta or West Coast to collect freight undercharges from Marine and Weyerhaeuser based on the carrier's published tariff rates. The ICC based its decision on the Commission's policy statement adopted in NITL--Petition to Institute Rule on Negotiated Motor Common Carrier Rates, 3 I.C.C.2d 99 (1986), 1986 Fed.Car.Cas. p 37,284 (CCH) (Negotiated Rates I ).

On August 22, 1988, Delta filed a motion for summary judgment. Delta asked the district court to reject the ICC's decision. Delta argued that an unreasonable practice does not constitute a defense to an action filed in a district court to collect undercharges. Delta requested enforcement of its filed rates. On October 4, 1988 the district court entered an order consolidating cases Delta Traffic Service, Inc. v. Marine Lumber Co., No. CV 86-1124-MA, West Coast Truck Lines, Inc. v. Weyerhaeuser Co., CV 87-689-MA, and West Coast Truck Lines, Inc. v. Weyerhaeuser Co., CV 88-369-MA. Thereafter, Weyerhaeuser and Marine filed motions for summary judgment.

On January 24, 1989, the district court entered an order granting the motions for summary judgment filed by Marine and Weyerhaeuser based on the ICC decision. Delta Traffic Serv., Inc. v. Marine Lumber Co., 705 F.Supp. 513 (D.Or.1989). The district court held that the ICC's decision to accept unreasonable practices defenses to filed rate actions was within the agency's primary jurisdiction and not contrary to law. Id. at 517. Because the ICC's application of its unreasonable practices policy to the instant case was supported by substantial evidence, the district court entered the order for summary judgment. Id. at 517-18. Delta filed notices of appeal in each of the three consolidated cases on February 3, 1989. In an order issued on May 1, 1989, we consolidated these appeals.

III. STANDARD OF REVIEW

We review de novo an order granting a motion for summary judgment, without deference to the district court's legal conclusions. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir.1986). The district court's application of the primary jurisdiction doctrine is a question of law reviewable de novo. Farley Transp. Co. v. Santa Fe Trail Transp. Co., 778 F.2d 1365, 1370 (9th Cir.1985). Similarly, the district court's determination that the ICC's findings are supported by substantial evidence is subject to de novo review. See Greenhow v. Secretary of Health & Human Servs., 863 F.2d 633, 635 (9th Cir.1988) (judicial determination whether agency factual finding is supported by substantial evidence is a question of law); McCall v. Andrus, 628 F.2d 1185, 1189-90 (9th Cir.1980) (quoting Dredge Corp. v. Penny, 338 F.2d 456, 462 (9th Cir.1964) ("A judicial determination of whether a finding of fact is supported by substantial evidence presents only an issue of law.... It is therefore subject to disposition by summary judgment." (citations omitted))), cert. denied, 450 U.S. 996, 101 S.Ct. 1700, 68 L.Ed.2d 197 (1981).

IV. DISCUSSION

A. Primary Jurisdiction

Delta contends that the district court erred in its referral of the question of the reasonableness of West Coast and Delta's negotiated rates practices to the ICC because the issue was not within the ICC's primary jurisdiction. Delta asserts that this issue is a pure question of law that is within the exclusive jurisdiction of the federal courts. We disagree.

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