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F.P. CORP. v. KEN WAY TRANSP.

April 8, 1993

F.P. CORP. Plaintiff
v.
KEN WAY TRANSPORTATION, INC. R.M. PALMER COMPANY, and M. POLANER, INC. Defendants



The opinion of the court was delivered by: DANIEL H. HUYETT, 3RD

 I. Background and Positions of the Parties

 Plaintiff operated both as a motor common carrier and a motor contract carrier pursuant to the authority of the Interstate Commerce Commission. Defendant Ken Way is licensed and authorized by the ICC to act as a broker for interstate transportation of property and to receive compensation for its services. Defendants Palmer and Polaner are manufacturers and shippers of products and as shippers utilized the services of Ken Way to arrange for the transportation of goods in interstate commerce and were shipping customers in certain transportation transactions involving motor carriage by FP arranged by Ken Way. On May 24, 1988 FP and Ken Way executed a contract carrier agreement. From May 24, 1988 to June 11, 1990, Ken Way tendered goods to FP for transportation. FP billed, and Ken Way paid, the price agreed upon by the parties at the time of shipping. These prices were below the rates contained in the tariff that the Interstate Commerce Act requires the carrier to "publish and file" with the ICC. 49 U.S.C.A. § 10762. FP commenced this action against Defendants to recover undercharges, which represent the difference between FP's filed tariff rate for common carriage and the negotiated rate for contract carriage actually billed and paid. FP contends that it acted as a motor common carrier when it transported the freight tendered by Ken Way and is therefore entitled to the filed tariff rate under the filed rate doctrine.

 Defendants raise several affirmative defenses to Plaintiff's amended complaint. Defendants assert that Plaintiff transported the goods as a motor contract carrier pursuant to a valid written contract carrier agreement, that Ken Way paid the amounts due pursuant to the contract, and that Plaintiff is not entitled to collect the filed tariff rate. Further, Defendants assert that even if Plaintiff was acting as a motor common carrier, the tariff rates are unreasonable and hence unenforceable. In addition, Defendants assert that Plaintiff does not officially participate in applicable tariffs necessary to support its tariff-based claims and that therefore its tariffs are void and unenforceable. Defendants further contend that Plaintiff incorrectly interprets the tariff rates and incorrectly applies the filed rate doctrine in this undercharge action. Defendants also assert that the defenses just described raise issues within the primary or exclusive jurisdiction of the Interstate Commerce Commission and that the Court should stay this action and let the ICC resolve these issues. Finally, Defendants make a counterclaim for misrepresentation. Defendants claim that Plaintiff misrepresented that it would perform the transportation services as a contract carrier rather than as a common carrier.

 Plaintiff responds to Defendants' motion to stay by contending that the contract between it and Ken Way failed to meet the statutory and regulatory requirements of contract carriage, and thus the parties were bound by the filed tariff rate. Plaintiff asserts that the Court need not refer this issue to the ICC. Plaintiff also contends that Defendants' assertion that the filed rate is unreasonable does not provide a defense in an action at law to collect freight charges. Plaintiff instead claims that Ken Way must pay the filed rate and then seek relief in a separate action under the ICA. Finally, Plaintiff argues in the alternative that Defendant Ken Way have failed to proffer adequate evidence of rate unreasonableness to refer the issue to the ICC.

 II. Filed Rate Doctrine and Contract Carriage

 The Interstate Commerce Act requires a carrier to publish and file tariffs containing the rates for transportation service it may provide in interstate commerce. 49 U.S.C.A. § 10762. The filed rate doctrine, as codified in section 10761(a), provides that a carrier "may not charge or receive a different compensation for that transportation . . . than the rates specified in the tariff." § 10761(a). The Supreme Court has strictly construed the doctrine. See Maislin Industries, U.S. v. Primary Steel, 497 U.S. 116, 126-28, 130, 111 L. Ed. 2d 94 , 110 S. Ct. 2759 (1990). Deviation from the filed rate is not permitted under any circumstances and deviation can result in the imposition of civil or criminal sanctions. See §§ 11902-11904. Moreover, the Court has stated that a shipper's ignorance or a carrier's misquotation of the applicable rate is not permitted to serve as a defense to a common carrier's collection of the filed rate. Maislin, 497 U.S. at 120. Shippers are deemed to have constructive notice of the applicable rate. Id. at 127. In Maislin, the Court overturned the ICC's policy of relieving the shipper of the obligation to pay the filed rate when the shipper and the common carrier had negotiated a lower rate, holding that the policy was inconsistent with the provisions of the ICA. Id. at 119.

 In the past, the filed rate doctrine applied to both contract and common carriers. Convey v. Conagra, Inc., 758 F. Supp. 1160, 1162 (D. Colo. 1992). In 1983, however, the ICC, through its exercise of statutory authority, *fn1" exempted contract carriers from the filed rate doctrine. Exemption of Motor Contract Carriers from Tariff Filing Requirements, 133 M.C.C. 150 (1983), aff'd sub nom. Central & S. Motor Freight Tariff Ass'n v. United States, 244 U.S. App. D.C. 226, 757 F.2d 301 (D.C. Cir.), cert. denied, 474 U.S. 1019, 88 L. Ed. 2d 553 , 106 S. Ct. 568 (1985). The Motor Carrier Act defines "motor contract carrier" as:

 
a person providing motor vehicle transportation of property for compensation under continuing agreements with one or more persons--
 
(i) by assigning motor vehicles for a continuing period of time for the exclusive use of each such person; or
 
(ii) designed to meet the distinct needs of each such person.

 49 U.S.C.A. § 10102(15)(B). A motor carrier must satisfy two requirements to be considered a contract carrier: the agreements must meet the "distinct needs" of the shipper and the agreements must be "continuing." Dan Barclay v. Stewart & Stevenson Serv., 761 F. Supp. 194, 200 (D. Mass. 1991). To fulfill the "distinct needs" requirement, a party must show a need "for a different or a more select or a more specialized service" than a common carrier can provide. ICC v. J-T Transp. Co., 368 U.S. 81, 91 , 7 L. Ed. 2d 147, 82 S. Ct. 204 (1961). Services may be considered more specialized to the extent that they differ "in quality, in priority, in control by the shipper, or in some other significant respect, from the service a common carrier holds out to the public at large." Dan Barclay, 761 F. Supp. at 200 (quoting Dixie Midwest Express, Inc., Extension-General Commodities, 132 M.C.C. 794 (1982)). In respect to the "continuing agreements" requirement, the ICC enacted a regulation defining continuing agreements as follows:

 
"No contract carrier by motor vehicle as defined in 49 U.S.C. § 10012(15) shall transport property for hire . . . except under special and individual contracts or agreements which shall be in writing, shall provide for transportation for a particular shipper or shippers, shall be bilateral and impose specific obligations upon both carrier and shipper or shippers, shall cover a series of shipments ...

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