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Security Services, Inc. v. K Mart Corp.

filed: June 18, 1993.


Appeal from the United States District Court for the Eastern District of Pennsylvania. D.C. No. 0313-2 : 91-06782.

Before: Cowen, Roth, and Rosenn, Circuit Judges.

Author: Rosenn


ROSENN, Circuit Judge.

This case presents a recurring question of late whether a carrier in bankruptcy can recover undercharges under tariff rates filed for interstate commerce transportation notwithstanding the lower rates actually negotiated and collected prior to its bankruptcy. Plaintiff-Appellant Security Services, Inc., f/k/a Riss International Corporation (Riss), filed suit in the United States District Court for the Eastern District of Pennsylvania to recover undercharges from the Defendant-Appellee K Mart Corporation for interstate transportation services performed by Riss on behalf of K Mart. K Mart defended this action by asserting a number of defenses, only one of which is pertinent here: that the tariff relied upon by Riss to calculate the undercharges was void as a matter of law at the time the services in question were performed.*fn1 If this defense is valid, the tariff cannot serve as a basis from which to calculate such undercharges.

The district court granted K Mart's motion for summary judgment, and Riss appeals. We affirm.


On April 17, 1986, Riss and K Mart entered into a contract under which Riss agreed to transport goods on behalf of K Mart and K Mart agreed to pay for Riss's services at the rates specified in the contract. Between November 3, 1986, and December 29, 1989, Riss performed services for K Mart under the contract and submitted invoices for those services to K Mart in accordance with the terms of the contract.*fn2 K Mart paid these invoices.

In November 1989, Riss filed a chapter 11 bankruptcy petition. At this point, Riss underwent a corporate reorganization and became known as Security Services, Inc. As debtor-in-possession, it conducted a post-petition audit which seemingly revealed that under the filed rate doctrine, it had undercharged K Mart by a significant amount for the services in question.*fn3 Riss calculated the amount of the undercharges by comparing the amounts it had originally invoiced for these services under the contract with amounts that would have been invoiced according to the tariff Riss had on file with the Interstate Commerce Commission (ICC or Commission) at the time the services were performed. Riss thereupon invoiced K Mart for those undercharges plus interest; K Mart, however, refused to pay.

It is undisputed that on August 20, 1984, Riss issued distance rate tariff ICC RISS 501-B with the customary effective date 30 days later. This tariff remained on file with the ICC during the approximately four year period Riss performed the services in question for K Mart under the contract. The tariff in turn referred to and depended upon the Household Goods Carriers' Bureau (HGB) distance guide ICC HGB 100-A, its supplements, and subsequent issues, which specified (1) the distance in miles between various points of origin and destination, and (2) the carriers who were participants in the HGB distance guide.

Riss has produced no direct evidence showing it ever executed a power of attorney or concurrence permitting it to participate in HGB's distance guide. K Mart submitted evidence that HGB canceled Riss's participation in the HGB distance guide on February 19, 1985, by Supplement 17 to the guide, for Riss's nonpayment of participation fees to HGB. K Mart also submitted evidence that HGB considers a power of attorney "dead" if a carrier fails to renew it (by submitting the participation fees) within a reasonable time after cancellation. There is no evidence, apart from HGB's cancellation of Riss's participation, that Riss, as principal, ever revoked any power of attorney that may once have existed, or that HGB, as agent, ever renounced any such power of attorney.



Our review of a district court's grant of summary judgment is plenary. Carlson v. Arnot-Ogden Memorial Hosp., 918 F.2d 411, 413 (3d Cir. 1990). We affirm only if there are no genuine issues of material fact and the relevant law entitles the moving party to judgment. Carter v. Rafferty, 826 F.2d 1299, 1304 (3d Cir. 1987); Fed. R. Civ. P. 56(c).

The Supreme Court provided the classic formulation of the Act's filed rate doctrine when it stated in pertinent part:

Under the Interstate Commerce Act, the rate of the carrier duly filed is the only lawful charge. Deviation from it is not permitted upon any pretext. Shippers . . . are charged with notice of it, and they as well as the carrier must abide by it . . . . Ignorance or misquotation of rates is not an excuse for paying or charging either less or more that the rate filed.

Louisville & Nashville R. Co. v. Maxwell, 237 U.S. 94, 97, 59 L. Ed. 853, 35 S. Ct. 494 (1915). No contract between a carrier and a shipper can reduce the amount payable under filed and published tariffs specifying the rates adopted by the carrier. Louisville & Nashville R. Co. v. Central Iron & Coal Co., 265 U.S. 59, 65, 68 L. Ed. 900, 44 S. Ct. 441 (1924); Keogh v. Chicago & Northwestern R. Co., 260 U.S. 156, 163, 67 L. Ed. 183, 43 S. Ct. 47 (1922). "The duty to file rates with the Commission, see [49 U.S.C.] § 10762, and the obligation to charge only those rates, see [id. at] § 10761, have always been considered essential to preventing price discrimination and stabilizing rates." Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 126, 111 L. Ed. 2d 94, 110 S. Ct. 2759 (1990). The Court has acknowledged that the rule is strict and may at times work a hardship, but this rigid approach has been deemed necessary to promote the congressional policy of preventing unjust discrimination in interstate commerce. Id. at 127-28.

Under ICC regulation, a distance rate tariff consists of two parts: (1) the dollar rate that a carrier charges per mile, and (2) the distance in miles between various points of origin and destination. 49 C.F.R. § 1312.30 (1992); Jasper Wyman & Son, 8 I.C.C.2d 246 (1992), No. 40510, 1992 WL 17399, at * 1 (I.C.C. Jan. 29, 1992), petition for review docketed sub nom. Overland Express, Inc. v. I.C.C., No. 92-1037 (D.C. Cir. Feb. 13, 1992). Because the number of miles between two points will vary depending on the route chosen, specification of that number precludes a carrier from favoring one shipper over another by calculating a lower charge for the favored shipper based on a shorter route. This promotes Congress's policy of preventing price discrimination. When a common carrier elects to file a distance rate tariff, as did Riss, it must provide both components to allow a shipper to calculate transportation costs for a given shipment. If a tariff is incomplete because one or the other of these components is missing, the shipper cannot put the tariff to its intended use.

Tariff ICC RISS 501-B specified only the first required component, i.e., the dollar rate Riss would charge per mile. As permitted by ICC regulation, however, Riss's tariff referred to the HGB distance guide (and its supplements and subsequent issues) to provide the second component. 49 C.F.R. § 1312.30(c)(1)(iii), (c)(4). HGB's distance guide, officially on file with the ICC according to the mandate in 49 C.F.R. section 1312.30(c)(4), is deemed a tariff in its own right. Jasper Wyman, 1992 WL 17399, at * 3; Freightcor Servs., Inc. v. Vitro Packaging, Inc., 969 F.2d 1563, 1566 (5th Cir. 1992), cert. denied, 122 L. Ed. 2d 133, 113 S. Ct. 979 (1993). "Carriers ...

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