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SIEGEL TRANSFER, INC. v. CARRIER EXPRESS

July 1, 1994

SIEGEL TRANSFER, INC., ROBIN EXPRESS TRANSFER, INC. and JORUSS TRUCKING, Inc., Plaintiffs,
v.
CARRIER EXPRESS, INC., BETHTRAN, INC., and BETHLEHEM STEEL CORPORATION, Defendants.



The opinion of the court was delivered by: FRANKLIN S. VAN ANTWERPEN

 VAN ANTWERPEN, J.

 This civil action arose out of a written contract for transportation services between Plaintiff Siegel Transfer, Inc. ("Siegel Transfer") and defendants Carrier Express, Inc. ("Carrier Express") and Bethtran, Inc. ("Bethtran"). The dispute centers around the January 4, 1990 termination of the contract and alleged refusals on the part of defendants to conduct further business between the parties. Plaintiffs assert two federal law claims: first, a violation of section 1 of the Sherman Act, 15 U.S.C. § 1 (Count I) and, second, so-called "transportation law" claims brought under the Interstate Commerce Act, 49 U.S.C. § 10761 et seq. and Section 41 of the Elkins Act 49 U.S.C. §§ 11902, 11903 and 11915 (Count XI). Plaintiffs also bring numerous state law claims. *fn1" We have jurisdiction over the federal claims pursuant to 28 U.S.C. §§ 1331 & 1337, and 15 U.S.C. § 15. In addition, we have diversity jurisdiction in this matter pursuant to 28 U.S.C. § 1332. *fn2"

 Discovery in this matter ended on March 17, 1994. Before us now are two motions, Defendants' Motion to Dismiss Plaintiffs' Transportation Law Claims, or, In the Alternative, to Refer to the Interstate Commerce Commission Plaintiffs' Transportation Law Claims ("Motion to Dismiss"), filed March 21, 1994, and Defendants' Motion for Summary Judgment, also filed March 21, 1994. Based upon these motions and accompanying memoranda, plaintiffs' responsive memoranda, and defendants' reply memoranda, we now resolve both of these motions.

 I. Facts

 A. Regulation of Motor Carriers

 We begin our discussion of the relevant undisputed facts with a brief overview of the regulatory regime governing the transportation of goods by motor carriers. Congress first set forth the transportation policy it intends to govern interstate carriers in the Interstate Commerce Act, 24 Stat. 379 (1887) currently codified at 49 U.S.C. § 10101 et seq. As goals of this policy, federal regulation of transportation should promote fairness and efficiency. Freightcor Services, Inc. v. Vitro Packaging, Inc., 969 F.2d 1563, 1570 (5th Cir. 1992), cert. denied 122 L. Ed. 2d 133, 113 S. Ct. 979 (1993); 49 U.S.C. § 10101.

 The transport of goods by motor carriers is subject to regulation by the Interstate Commerce Commission (ICC), and motor carriers are generally required to obtain operating authority permits from the ICC in order to transport goods in interstate commerce. 49 U.S.C. §§ 10521, 10921-23. There are two types of operating authority for motor carriers who transport goods: (1) motor common carrier and (2) motor contract carrier.

 A motor common carrier is defined in the Interstate Commerce Act as a "person holding itself out to the general public to provide motor vehicle transportation for compensation over regular or irregular routes, or both." 49 U.S.C. § 10102(14). Common carriers are required to file their rates for transporting goods with the ICC and charge their rates to all shippers. 49 U.S.C. § 10761.

 A motor contract carrier of property is defined as "a person providing motor vehicle transportation of property for compensation under continuing agreements with one or more" shippers by either dedicating equipment or by meeting the shipper's distinct needs. 49 U.S.C. § 10102(15)(B). Since 1983, contract carriers have been exempt from the rate filing and uniform rate requirements mentioned above. Exemption of Motor Contract Carriers from Tariff Filing Requirements, Ex Parte No. MC-165, 133 M.C.C. 150 (1983), aff'd, Central and Southern Motor Freight Tariff Association, Inc. v. United States, 244 U.S. App. D.C. 226, 757 F.2d 301, 305-306, 322-330 (D.C.Cir.), cert. denied, 474 U.S. 1019, 88 L. Ed. 2d 553, 106 S. Ct. 568 (1985).

 B. The Parties

 The three plaintiff companies are:

 (1) Siegel Transfer, formed in 1980, which had ICC operating authority as a contract carrier from 1986 until early 1990, but never owned any trucks or had any employees; *fn3"

 (3) Joruss Trucking, formed in 1987, which owned trucks which it leased to Siegel Transfer. *fn5"

 The three plaintiff companies are all owned by Russell Siegel and his wife. *fn6"

 The defendants include a parent and its subsidiaries. Defendant Bethlehem Steel owns the Philadelphia, Bethlehem and New England Railroad (PB&NE). PB&NE owns defendant Bethtran, and Bethtran owns defendant Carrier Express. *fn7"

 C. The Contract Between Siegel Transfer and Carrier Express

 In late 1985, Russell Siegel, the owner of Siegel Transfer, contacted Bethtran and proposed the following: leasing his own transport equipment and getting a percentage of the Carrier Express freight rate. The agreement that the two parties eventually reached provided that Siegel Transfer would get 90 percent of the freight rate Carrier Express received from its shipper. *fn8"

 The written contract between Siegel Transfer, Carrier Express and Bethtran was effective January 4, 1986. *fn9" During the four years that the contract was in effect, Siegel Transfer had contract carrier operating authority from the ICC which enabled it to transport goods for shippers with whom it had a transportation contract. *fn10" Siegel Transfer transported goods for Carrier Express originating, for the most part, from Bethlehem Steel's Sparrows Point, Maryland plant, and it also transported goods on its own account originating from other shippers. *fn11" For loads transported for Carrier Express under contract, Siegel Transfer provided its own insurance, and it was paid 90 percent of the freight rate received by Carrier Express from the shipper. *fn12"

 D. The Contracts Between Bethlehem Steel and Carrier Express

 Carrier Express had a transportation contract with Bethlehem Steel pursuant to which it agreed to transport Bethlehem products under Carrier Express's contract carrier ICC operating authority. The rates for the transportation services were determined by Carrier Express and Bethlehem in accordance with the terms of the contract. Carrier Express performed the contract by transporting some of the freight itself and arranging with Siegel Transfer to handle other shipments. *fn13"

 During the period January 1, 1987 to May 1, 1993, Bethlehem Steel also had a written contract with Carrier Express whereby Bethlehem Steel received a refund of five percent of the total revenues from Bethlehem Steel freight transported by Carrier Express. *fn14" With respect to the Bethlehem Steel freight transported by Siegel Transfer, the five percent refund was paid to Bethlehem Steel out of the 90% portion of the freight rate retained by Carrier Express. *fn15"

 E. The Termination of the Carrier Express - Siegel Transfer Contract

 Carrier Express terminated the contract with Siegel Transfer by giving written notice to Siegel Transfer on January 4, 1990. Carrier Express claims that it terminated the contract because James C. Matthews, Carrier Express's Vice-President, determined that Siegel Transfer had been transporting Bethlehem Steel freight in a manner violative of Bethlehem and Carrier Express policies concerning legal weight limits and other safety concerns. (Defendants' Motion for Summary Judgment, at 15-16).

 II. Standard of Review

 Our analysis of defendants' motion for summary judgment is governed by Rule 56(c) of the Federal Rules of Civil Procedure, which provides for summary judgment where the:

 
pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.

 "The party moving for summary judgment must demonstrate that, under the undisputed facts, the non-movant has failed to introduce evidence supporting a necessary element of his case." In Re Phillips Petroleum Secur. Litigation, 881 F.2d 1236, 1243 (3d Cir. 1989). To defeat summary judgment, the non-moving party must respond with facts of record that contradict the facts identified by the movant and may not rest on mere denials. Celotex Corp v. Catrett, 477 U.S. 317, 321 n.3, 106 S. Ct. 2548, 2552 n.3, 91 L. Ed. 2d 265 (1986) (quoting Fed. R. Civ. P. 56(e)); see also First Nat. Bank v. Lincoln Nat. Life Ins. Co., 824 F.2d 277, 282 (3d Cir. 1987). The non-moving party must demonstrate the existence of evidence that would support a jury finding in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S. Ct. 2505, 2510-11, 91 L. Ed. 2d 202 (1986).

 Defendant also moves to dismiss plaintiffs' transportation law claims under Fed.R.Civ.Proc. 12(b)(6). The standard for reviewing a Rule 12(b)(6) motion is also well- settled. In reviewing a complaint, we must accept all allegations and reasonable inferences that can be drawn therefrom as true and view them in a light most favorable to the non-moving party. Sturm v. Clark, 835 F.2d 1009, 1011 (3d Cir. 1987) (citations omitted). A complaint may properly be dismissed "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 2232, 81 L. Ed. 2d 59 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 101, 2 L. Ed. 2d 80 (1957)). Thus, our decision rests on the legal sufficiency of the plaintiffs' case.

 III. Analysis

 A. Antitrust Claims

 In Count I of their Amended Complaint, plaintiffs assert an antitrust claim based on section 1 of the Sherman Act. Plaintiffs claim that defendants and their alleged co-conspirators acted in concert to restrain competition in the transportation of steel products by boycotting Siegel. (Amended Complaint, P34). In particular, they complain of the following actions taken by defendants: the decision to and eventual termination of Siegel's contract; the post-termination refusal to do business with Siegel; defendants notifying their customers that Siegel was no longer doing business with them; and violating the Interstate Commerce Act in an attempt to restrain trade. (Amended Complaint, P35).

 In order for the aforementioned activities to constitute a section 1 Sherman Act violation, the plaintiffs must establish the following four elements: (1) that the defendants contracted, combined or conspired among each other; (2) that the combination or conspiracy produced adverse, anti-competitive effects within the relevant product and geographic markets; (3) that the objects of and the conduct pursuant to that contract or conspiracy were illegal; and (4) that the plaintiffs were injured as a proximate result of that conspiracy. Tunis Bros. Co. v. Ford Motor Co., 763 F.2d 1482, 1489 (3d Cir. 1985). *fn16" In their motion for summary judgment, defendants focus upon plaintiffs' inability to, among other things, demonstrate the first element - concerted action. We believe this argument is dispositive of defendants' motion.

 Section 1 of the Sherman Act targets unreasonable restraints of trade effected by a "contract, combination . . . or conspiracy" between separate entities. As the Supreme Court held in the seminal case of Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 768, 104 S. Ct. 2731, 2740, 81 L. Ed. 2d 628 (1984), section 1 "does not reach conduct that is 'wholly unilateral.'" Id. Properly discriminating between unilateral and concerted conduct, the Copperweld Court explained, is necessary to effectuate the dual anti-trust goals of prohibiting coordinated and anti-competitive efforts of separate economic actors while permitting intra-firm cooperation aimed at healthy market competition. The Court reasoned:

 
It is perfectly plain that an internal "agreement" to implement a single, unitary firm's policies does not raise the antitrust dangers that § 1 was designed to police. The officers of a single firm are not separate economic actors pursuing separate economic interests, so agreements among them do not suddenly bring together economic power that was previously pursuing divergent goals. Coordination within a firm is as likely to result from an effort to compete as from an effort to stifle competition. In the marketplace, such coordination may be necessary if a business enterprise is to ...

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