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White v. U.S.

filed: March 19, 1993; As Corrected March 24, 1993.

VEDDER J. WHITE, TRUSTEE FOR LYONS TRANSPORTATION LINES, INC.; CARRIER SERVICE, INC., AGENT FOR JONES TRUCK LINES INC.; TRANS-ALLIED AUDIT COMPANY, INC.; AND INTERSTATE AUDIT CORPORATION, PETITIONERS IN NO. 92-3528, INTERNATIONAL BROTHERHOOD OF TEAMSTERS INTERVENOR-PETITIONER
v.
UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION RESPONDENT, NATIONAL TRANSPORTATION LEAGUE, INTERVENOR-RESPONDENT; LANGDON M. COOPER, TRUSTEE IN BANKRUPTCY FOR BULLDOG TRUCKING, INC. AND ALLSTATE FINANCIAL CORPORATION, PETITIONERS IN NO. 92-3631 V. INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS; LLOYD T. WHITAKER, TRUSTEE FOR OLYMPIA HOLDING CORP. F/K/A P * I * E NATIONWIDE INC., FIEDLCOR BUSINESS CREDIT CORPORATION, PHOENIX ADVISORS & COLLECTIONS, INC. AND IU INTERNATIONAL CORPORATION, PETITIONERS IN NO. 92-3653 V. INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS; LEONARD L. GUMPORT, TRUSTEE OF THE BANKRUPTCY ESTATE OF TRANSCON LINES, PETITIONER IN NO. 92-3666 V. INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, RESPONDENT, NATIONAL INDUSTRIAL TRANSPORTATION LEAGUE, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS, NATIONAL AMERICAN WHOLESALE GROCERS' ASSOCIATION ("NAWGA"), (INTERVENORS PER ORDER DATED 11/2/92 FROM THE USCA FOR THE NINTH CIRCUIT)



Appeal from the Interstate Commerce Commission (ICC No. 0090-1: MC-208).

Before: Mansmann and Nygaard, Circuit Judges, and Dalzell, District Judge.*fn*

Author: Mansmann

Opinion OF THE COURT

MANSMANN, Circuit Judge.

This matter comes to us on consolidated petitions to invalidate rules, promulgated by the Interstate Commerce Commission, that would permit the Commission to review and determine the facial validity of claims brought pursuant to the "filed rate doctrine" of the Interstate Commerce Act. Because we hold that the Commission's proposed activity is the equivalent of the adjudication of claims, which it concedes it is without authority to do, we will set aside the challenged rules.

I.

Vedder J. White,*fn1 other petitioners,*fn2 the intervenor-petitioner,*fn3 and the amicus curiae*fn4 are involved in motor carrier bankruptcies in their capacities of trustees, debtors-in-possession, collection agents, auditing companies, or creditors. They allege that in order to recoup money for these bankruptcy estates, trustees are bringing claims against shippers pursuant to the filed rate doctrine. The filed rate doctrine provides that a carrier receive from a shipper no more or no less than the tariff rate on file with the Commission. The purpose of the doctrine is to prevent rate discrimination and secret deals. Shippers, who have constructive notice of the filed rates, are liable for the full rate, and a carrier may institute an "undercharge action" to obtain the difference between the full filed rate and the lower rate originally paid by a shipper to the carrier. See 49 U.S.C. §§ 10761(a),*fn5 11706(a)*fn6 ; Maislin Industries, U.S. v. Primary Steel, Inc., 497 U.S. 116, 111 L. Ed. 2d 94, 110 S. Ct. 2759 (1990).

Maislin illustrates one type of "undercharge claim." In Maislin, a carrier had given to shippers unpublished discounts from the filed rate. When the carrier declared bankruptcy, the trustee attempted to collect the undiscounted part of the tariff. Upon referral from the bankruptcy court, the Commission applied a "Negotiated Rates " policy to opine that trustees could not rebill the filed rate for shipments originally billed at a lower, negotiated rate. See 497 U.S. at 122-25. The Supreme Court held that the Negotiated Rates policy violated the Interstate Commerce Act in that the policy applied an equitable defense to the filed rate doctrine where the Act did not permit one; the trustee's undercharge claims were therefore valid. Id. at 126-36.

Trustees have asserted other types of undercharge claims. For example, in ICC v. Transcon Lines, 981 F.2d 402 (9th Cir. 1992), the trustee made claims against some shippers pursuant to the carrier's filed credit rules. Against others, he claimed that they had paid an unlawful rate, which, although filed, contravened the purpose of the filed rate doctrine by not identifying the shipper.*fn7

Another example of an undercharge claim involves the assertion that the carrier wrongfully provided services pursuant to "contract carriage." Contract carriage is exempt from the filed rate doctrine. The trustee asserts that because the contract rate was invalid, the exemption was invalid, and therefore the higher filed tariff rate should apply under the filed rate doctrine.

In Ex Parte No. MC-208: Nonoperating Motor Carriers -- Collection of Undercharges, 8 I.C.C.2d 742 (1992) (Undercharge Collections), the Commission expressed concern that the bringing of undercharge claims by trustees was working a hardship on shippers and commerce because of sloppy audits, settlement demands made with inadequate documentation or basis in law, settlements made at nuisance value, and because of other practices the Commission characterized as "unduly coercive and bordering on the fraudulent." 8 I.C.C.2d at 749. In response to these practices, the Commission promulgated the MC-208 Rules ("Rules") challenged here, to be codified at 49 C.F.R. § 1321. The Rules require any carrier that has ceased or is ceasing operations to file representative claims with the Commission, either in advance of or concurrently with a court action. The carrier must stay its pursuit of those claims pending Commission review.

The Rules do not apply to Maislin -type claims, which assert that the shipper originally paid an unfiled rate; rather, the Rules apply to claims "based on the substitution of a different (higher) tariff rate for the tariff rate billed at the time of shipment" and to claims "based on the substitution of a common carrier rate for contract carriage charges originally billed." The Rules allow the Commission to review these undercharge claims and to preclude carriers from pursuing claims that the Commission determines are facially invalid. We refer to this process as the Review Process. According to the Commission, "the sole purpose of the MC-208 Rules is to cull out purported claims that have no colorable basis under the ICA." ICC Br. at 33.*fn8 A decision by the Commission to disapprove a claim would be reviewable in a court of appeals pursuant to 28 U.S.C. §§ 2321(a), 2342(5).

The petitioners have challenged the Rules on several bases, including the theory that the Rules violate the Interstate Commerce Act by giving the Commission original jurisdiction to adjudicate undercharge actions, a power vested in the courts, not the Commission.

We have jurisdiction of a proceeding to set aside or determine the validity of an ICC rule. 28 U.S.C. §§ 2321(a), 2342(5). We must set aside agency action that is arbitrary or capricious, contrary to constitutional right or power, or in excess of statutory jurisdiction or authority. See 5 U.S.C. § 706(2). We defer to an agency's permissible construction of an ambiguous provision of the statute that the agency administers. Chevron, ...


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