Williams v. Professional Transp. Inc.

• Decision Date: 01 July 2002
• Docket Number: No. 99-1011.,No. 99-1080.,99-1011.,99-1080.
• Citation: 294 F.3d 607
• Parties: Perry WILLIAMS; Teddi Williams, d/b/a Williams Transport, Plaintiffs-Appellees, v. PROFESSIONAL TRANSPORTATION, INCORPORATED; United Leasing, Incorporated; CSX Transportation, Incorporated, Defendants-Appellants. Perry Williams; Teddi Williams, d/b/a Williams Transport, Plaintiffs-Appellants, v. Professional Transportation, Incorporated; United Leasing, Incorporated; CSX Transportation, Incorporated, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

294 F.3d 607

Perry WILLIAMS; Teddi Williams, d/b/a Williams Transport, Plaintiffs-Appellees, v. PROFESSIONAL TRANSPORTATION, INCORPORATED; United Leasing, Incorporated; CSX Transportation, Incorporated, Defendants-Appellants.

Perry Williams; Teddi Williams, d/b/a Williams Transport, Plaintiffs-Appellants, v. Professional Transportation, Incorporated; United Leasing, Incorporated; CSX Transportation, Incorporated, Defendants-Appellees.

No. 99-1011.

No. 99-1080.

United States Court of Appeals, Fourth Circuit.

Argued December 1, 1999.

Decided July 1, 2002.

COPYRIGHT MATERIAL OMITTED

ARGUED:

John Harlan Mahaney, II, Huddleston, Bolen, Beatty, Porter & Copen, Huntington, West Virginia, for Appellants. Michael Warren Carey, Carey, Hill, Scott, Winter & Johnson, P.L.L.C., Charleston, West Virginia, for Appellees.

ON BRIEF:

Andrew S. Zettle, Huddleston, Bolen, Beatty, Porter & Copen, Huntington, West Virginia, for Appellants. Pamela C. Deem, Carey, Hill, Scott, Winter & Johnson, P.L.L.C., Charleston, West Virginia, for Appellees.

Before WIDENER and LUTTIG, Circuit Judges, and SEYMOUR, United States District Judge for the District of South Carolina, sitting by designation.

Affirmed in part and reversed in part by published opinion. Judge WIDENER wrote the opinion, in which Judge LUTTIG and Judge SEYMOUR concurred.

OPINION

WIDENER, Circuit Judge.

Defendant, CSX Transportation, Inc. ("CSXT"), a subsidiary of CSX Corporation, appeals from the district court's judgment order and accompanying findings of fact and conclusions of law enforcing a previous settlement agreement between CSXT and plaintiff, Williams Transport ("Williams"). CSXT also appeals the district court's award of attorneys' fees to Williams. Williams cross-appeals the district court's denial of an award of punitive damages. We affirm the district court's grant of Williams' motion to enforce the settlement; however, we reverse the district court's award of attorneys' fees to Williams. We also affirm the district court's denial of punitive damages to Williams.

I.

Williams is a common carrier authorized under the laws of West Virginia to provide specialized limousine service to the public. CSXT has utilized Williams for transport of its train crewmen and property in areas of West Virginia since 1987. The settlement agreement at issue in this case stems from an underlying dispute between the parties that began in 1993.

On February 11, 1993, Williams filed a complaint against CSXT, Professional Transportation, Inc. ("Professional"), and United Leasing Inc. ("United Leasing") before the West Virginia Public Service Commission ("Public Service Commission") alleging that Professional and United Leasing displaced Williams pursuant to an illegal contract with CSXT. On March 18, 1994, the Public Service Commission determined that neither Professional nor United Leasing had authority to provide transportation services to CSXT and ordered them to cease and desist from operation of the unlawful transportation services. Following the Public Service Commission's February 2, 1995 decision, Williams filed a complaint in the district court against Professional and United Leasing alleging that the unlawful transportation services provided for CSXT resulted in injury to Williams. While that district court case was pending, CSXT filed a complaint against Williams before the Public Service Commission alleging that Williams had billed CSXT improperly under its tariff. Subsequently, Williams filed a petition with the Public Service Commission to clarify the tariff. The parties disputed the correct interpretation of Williams' tariff and whether a $30 per hour alternative rate could be charged for waiting time.

Before the scheduled jury trial commenced in the district court, the parties met to explore settlement options. On May 23, 1997, Williams and CSXT, participating on behalf of Professional and United Leasing pursuant to an indemnity agreement, reached a settlement agreement at a settlement conference held before the district court.¹ The settlement agreement contained the following terms:

1. CSXT would pay to Williams $140,000;

2. CSXT and Williams would enter into a five-year noncancellable, but transferrable contract, whereby Williams would be the exclusive provider of intrastate service to CSXT in certain areas in accordance with the Public Service Commission's rules, regulations and Williams' tariff; and

3. CSXT agreed to dismiss its overcharge case against Williams in the Public Service Commission.

In order to avoid a conflict with a settlement agreement CSXT had entered in a similar but unrelated action, the settlement agreement between CSXT and Williams was contingent upon Williams' success in a proceeding it had instituted against Mack's Transportation, one of its competitors, to have the Public Service Commission declare Mack's operating certificates dormant. The court noted that if the contingency did not come to fruition, the case would not be settled. The settlement agreement also permitted Williams to continue its tariff clarification petition in the Public Service Commission.²

After the May 23rd settlement conference, the following occurred: CSXT dismissed its overcharge case against Williams; the Public Service Commission declared Mack's Transportation dormant on April 10, 1998, removing the contingency for the settlement agreement to commence; and the parties met several times to negotiate the terms of the five-year contract, never reaching agreement on the terms. As previously agreed, the parties continued to litigate the tariff clarification and interpretation in the Public Service Commission. While the rate dispute continued, the parties agreed that Williams would charge and CSXT would pay for the services according to the billing practices used previously, that CSXT's payment of such charges did not constitute its admission of the charges' correctness, and that CSXT would forgo any right to initiate a complaint case or seek a refund of its payments pending resolution of the rate matter. On December 4, 1997, the parties filed a joint motion to dismiss without prejudice the tariff clarification case in the Public Service Commission. After the dismissal, the parties continued under the previous billing scheme until March of 1998 when CSXT began rejecting most of Williams' invoices and returning them to Williams for recalculation and resubmission. CSXT again claimed the bills were overcharges. Nonetheless, the parties continued their unsuccessful negotiations over terms of the five-year contract. On May 4, 1998, CSXT filed a formal complaint in the Public Service Commission in which it alleged that after the May 23, 1997 settlement, Williams continued to overcharge CSXT for its services.

Although the parties continued to propose and counter-propose terms for their contract, on June 2, 1998, Williams informed CSXT it would seek a hearing before the district court to enforce the settlement agreement. Williams reiterated it was still willing to negotiate, but not under its current tariff. On July 21, 1998, the district court held a hearing on Williams' motion to reopen³ and enforce the settlement agreement. The district court issued its memorandum opinion and order on August 20, 1998, granting the Williams' motion to enforce the settlement agreement and finding that CSXT violated the terms of the agreement by not negotiating in good faith, by refusing to pay Williams' invoices, and by filing a second complaint in the Public Service Commission. The court also granted the Williams' attorneys' fees. Subsequently, CSXT filed a motion described on the docket sheet as one for clarification and/or reconsideration. On October 27, 1998, the court granted the motion to reconsider and set the matter for rehearing, withdrawing its previous memorandum opinion and order.⁴ After the rehearing, the court issued its findings of facts and conclusions of law and judgment order on December 11, 1998, enforcing the settlement agreement; ordering CSXT to pay Williams all past due invoices at the rates specified in Williams' tariff; ordering CSXT and Williams to enter into the five-year exclusive, noncancellable, but transferable contract at Williams' current tariff rate, or at an agreed upon rate to be approved by the Public Service Commission; and ordering CSXT to pay Williams all its reasonable costs and attorneys' fees incurred incident to these proceedings. The court denied Williams' request for punitive damages. Both parties appeal from that order.

II.

As an initial matter, CSXT asserts that the district court's order exceeds the scope of its jurisdiction specified by the Johnson Act of 1934, 28 U.S.C. § 1342. The Johnson Act provides in pertinent part:

[T]he district courts shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or rate-making body of a State political subdivision where:

(1) Jurisdiction is based solely on diversity of citizenship ... and,

(2) The order does not interfere with interstate commerce; and,

(3) The order has been made after reasonable notice and hearing; and,

(4) A plain, speedy and efficient remedy may be had in the courts of such State.

28 U.S.C. § 1342. The Johnson Act's limitation on federal jurisdiction applies only when all four of its conditions are met. See Aluminum Co. of Am. v. Utilities Comm'n of N. C., 713 F.2d 1024, 1028 (4th Cir.1983), cert. denied, 465 U.S. 1052, 104 S.Ct. 1326, 79 L.Ed.2d 722 (1984). The party invoking the Johnson Act has the burden to show the conditions have been met. See US West, Inc. v. Nelson, 146 F.3d 718, 722 (9th Cir.1998) (citing Nucor Corp. v. Nebraska Pub. Power Dist., 891 F.2d 1343, 1346 (8th Cir.1989)). We must first determine if the district court's order is an "order affecting rates chargeable by a public utility." 28 U.S.C. § 1342; Shrader v. Horton, 471...