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Siegel Transfer Inc. v. Carrier Express Inc.

argued: March 27, 1995.

SIEGEL TRANSFER, INC.; ROBIN EXPRESS TRANSFER, INC.; JORUSS TRUCKING, INC., APPELLANTS
v.
CARRIER EXPRESS, INC.; BETHRAN, INC.; BETHLEHEM STEEL CORPORATION



Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Civil No. 92-cv-07370).

Before: Mansmann, Cowen and Lewis, Circuit Judges.

Author: Mansmann

Opinion OF THE COURT

MANSMANN, Circuit Judge.

This case arises out of the termination of a motor carrier contract. The plaintiffs, Siegel Transfer, Inc., Robin Express Transfer, Inc., and Joruss Trucking, Inc., alleged that the contract's termination and subsequent refusals to deal on the part of the defendants, Bethlehem Steel Corporation and its subsidiaries, Bethran, Inc. and Carrier Express, Inc., violated section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The plaintiffs also charged the defendants with violations of the Interstate Commerce Act, 49 U.S.C. § 10101 et seq., and the Elkins Act, 49 U.S.C. §§ 11901-11903, 11915-11916, and with several state law causes of action. The plaintiffs now appeal the district court's decision to grant the defendants' motion for summary judgment and motion to dismiss. The issues we address are whether the companies in the Bethlehem Steel corporate family and their agents were legally capable of engaging in an antitrust conspiracy with each other, whether the plaintiffs had a private right of action under the federal transportation statutes, and whether the defendants breached the parties' agreement.

In the wake of the Supreme Court's decision in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 81 L. Ed. 2d 628, 104 S. Ct. 2731 (1984), we hold that the defendants were legally incapable of conspiring with one another or with their agents. We also find that neither the Interstate Commerce Act nor the Elkins Act authorizes the plaintiffs to file a private cause of action in a federal court. Finally, we conclude that the defendants are not liable for breach of contract. Thus, we will affirm the judgment of the district court.

I.

We begin our analysis by reviewing the evidence presented in this case. In considering a motion for summary judgment, a court does not resolve factual disputes or make credibility determinations, and must view facts and inferences in the light most favorable to the party opposing the motion. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992), cert. denied, ___ U.S. ___, 113 S. Ct. 1262 (1993).

Siegel Transfer, Robin Express, and Joruss Trucking were owned by Russell Siegel and his wife, and were based in Sparrows Point, Maryland. Siegel Transfer, a motor contract carrier,*fn1 hauled steel, lumber, telephone poles and heavy equipment for various shippers; Robin Express leased trucks, trailers and drivers to Siegel Transfer and other carriers; and Joruss Trucking also leased trucks to Siegel Transfer.

In 1985, Bethlehem Steel made plans to acquire two motor carriers, Bethran and Carrier Express, through its subsidiary, the Philadelphia Bethlehem and New England Railroad. While Bethlehem Steel did not anticipate that it would satisfy all of its transportation needs by acquiring these carriers, it hoped to capture at least a portion of the revenue it was paying to outside truckers.

Because section 11341 of the Interstate Commerce Act gives the Interstate Commerce Commission exclusive authority to oversee acquisitions of this type, Bethlehem and the Railroad filed a petition, requesting permission to acquire control*fn2 of Bethran and Carrier Express, without having to engage in the Commission's prior approval process. Section 11343(e) authorizes the Commission to exempt an acquisition from regulatory oversight if it finds that regulation is not necessary to carry out the transportation policy of the Act,*fn3 and the acquisition is limited in scope or unlikely to result in an abuse of market power. 49 U.S.C. § 11343(e). Finding that the proposed acquisition met these criteria, the Commission exempted it from the Act's prior approval requirements. Under section 13341, the Commission's exemption not only authorized the parties to proceed with the acquisition, but immunized it from the antitrust laws as well. 49 U.S.C. § 13341. Once the acquisition was finalized, Bethlehem Steel owned 99.92% (8,993 of 9,000 shares) of the Railroad's stock;*fn4 the Railroad owned 100% of Bethran's stock; and Bethran owned 100% of Carrier Express' stock.

Carrier Express, already a licensed common and contract carrier, obtained broker authority from the Commission. Organized to operate without exit barriers, Carrier Express did not hire employees, acquire equipment or engage its own drivers. Instead, it used commissioned, non-exclusive agents in different parts of the country to make arrangements with owner-operators or with other carriers who had access to trucks and drivers to carry the freight it was under contract to transport. The agents made hauling arrangements with whomever Carrier Express authorized to transport its freight.

Carrier Express operations were managed by Oak Management, Inc. Under the parties' contract, Oak Management oversaw all of Carrier Express' day-to-day functions and received a percentage of Carrier Express' revenues as payment for its services. Thomas Rediehs, a Vice President of Carrier Express, was the owner and President of Oak Management, and Kermit Bryan was Oak Management's Executive Vice President.

Oak Management also managed the operations of Rediehs Express, a motor common carrier, motor contract carrier and broker. Rediehs' wife and children owned Rediehs Express, and Bryan was its Operations Manager. Rediehs Express hauled Bethlehem Steel products from Bethlehem Steel's plant located in Burns Harbor, Indiana, and did some business with Carrier Express.

Under its motor contract carrier operating authority, Carrier Express entered into a contract dated January 15, 1986 with Bethlehem Steel, agreeing to transport Bethlehem Steel goods at given rates. In July, 1988, a contract between Bethlehem Steel and Bethran was assigned to Carrier Express,*fn5 which obligated Carrier Express to refund to Bethlehem Steel a sum equal to 5% of the total revenue it received for transporting Bethlehem Steel freight.

In late 1985, Siegel Transfer, Carrier Express and "Bethran doing business as Carrier [Express]" executed a "Contract for Transportation of Property Between A Motor Carrier Broker [Carrier Express] and a Motor Contract Carrier [Siegel Transfer] In Accordance With the Provisions of 49 C.F.R. 1053." The contract took effect on January 4, 1986, and after an initial term of three years, remained in effect from year to year, subject to the right of either party to terminate upon thirty days' written notice. Under the contract, Carrier Express was obligated to offer Siegel Transfer a minimum of 30,000 pounds of authorized commodities per year for transport and to pay Siegel Transfer 90% of the freight rate received by Carrier Express from the shipper. Russell Siegel was named a Carrier Express agent for the Baltimore area and agreed to receive a 6% commission from Carrier Express on the loads he arranged for shipment by companies other than Siegel Transfer.

While the contract was in effect, Siegel Transfer transported Bethlehem Steel goods received from Carrier Express almost exclusively out of Bethlehem Steel's Sparrows Point plant. As to the Bethlehem Steel freight offered by Carrier Express to Siegel Transfer for transport, the 5% refund that Carrier Express owed to Bethlehem Steel was paid from the 10% of the freight rate Carrier Express retained, not from the 90% of the freight rate that Siegel Transfer was paid.

In 1988, while carrying freight received from Carrier Express, a Siegel Transfer vehicle was involved in a serious accident in Alabama. Joined in the lawsuit which followed, Carrier Express paid a substantial sum of money to settle the claims brought against it. That same year, another Siegel Transfer vehicle was involved in another serious accident in Georgia. In December of 1989, Carrier Express was temporarily suspended from transporting goods for Bethlehem Steel because Siegel Transfer had violated Bethlehem Steel's loading and weight limit rules.

James C. Matthews, Vice-President of Carrier Express and Bethran, was aware of and concerned about these incidents. In 1989, Matthews decided to terminate Carrier Express' contract with Siegel Transfer. This decision was based, according to Matthews, on his unwillingness to expose Carrier Express to the continued risks of doing business with Siegel Transfer. Matthews spoke of his intention to terminate the contract with Carl Eckenrode, the President of Bethran, Carrier Express and the Railroad, and a Bethran director; Steven Mollman, Bethran's operations manager and one of its directors; and William Van Heel, a district transportation manager of Bethlehem Steel and a Bethran director. Additionally, Matthews informed Rediehs and Bryan of his decision. Believing that Carrier Express would not be able to find owner-operators or carriers to perform the hauling that Siegel Transfer was handling and would, therefore, suffer a loss of revenue and profit, Rediehs argued against the termination.

Matthews, Rediehs, Bryan and Van Heel convened on January 4, 1990 at Bethlehem Steel's Sparrows Point plant to inform Siegel that Carrier Express' contract with Siegel Transfer was terminated. Prior to their speaking personally with Siegel, Rediehs again voiced his opposition to the termination. Matthews, however, refused to alter his decision. Consequently, when Siegel arrived at the meeting, he was told of the termination, and later that day, received written notice from Matthews.

During the thirty-day notice period which followed, Carrier Express offered Siegel Transfer over 600,000 pounds of freight to transport. At Carrier Express' direction, Oak Management commenced instructing Carrier Express agents that the contract with Siegel Transfer had been terminated and that Siegel Transfer was no longer authorized to carry Carrier Express freight. As an accommodation to Carrier Express, Oak Management assumed responsibility for the Baltimore Carrier Express agency at a 4% commission rate, but only reluctantly, expecting that the agency would be unprofitable. Just as Rediehs had anticipated, Carrier Express was unable to find trucks to replace those that Siegel Transfer had made available; the amount of freight that Carrier Express transported out of Sparrow Point decreased and its revenues declined. Oak Management, in turn, suffered a financial loss. Moreover, Oak Management lost money as Carrier Express' Baltimore agent and relinquished the position in 1991.

Shortly after the contract's termination, Robin Express leased all of its trucks and drivers to Ligon Nationwide, a trucking company of substantial size. Under the arrangement with Ligon Nationwide, which lasted for approximately one year, Robin Express trucks were used to transport freight for several shippers, including Bethlehem Steel. During this time, one of the Bethlehem Steel district transportation superintendents, for whom Siegel Transfer's safety record was unacceptable, advised an agent for Glass Container, a motor carrier, not to use Siegel equipment to haul products from the Bethlehem Steel rod mill located in Sparrows Point.

In February, 1990, Siegel Transfer relinquished its contract carrier operating authority and ceased doing business; Joruss Trucking suspended operations in July, 1990. In November 1990, Robin Express entered into lease agreements with other truckers, who used Robin Express trucks and drivers to carry loads for Bethlehem Steel and a number of other shippers. Unable to secure a sufficient amount of business, however, Robin Express ceased to operate in 1991.

On December 23, 1992, Siegel Transfer, Robin Express and Joruss Trucking commenced this action against Carrier Express, Bethran and Bethlehem Steel. On February 15, 1994, the plaintiffs filed an Amended Complaint, asserting two federal causes of action, one under section 1 of the Sherman Act, 15 U.S.C. § 1 (Count I), and the other under the Interstate Commerce Act, 49 U.S.C. § 10101 et seq., and the Elkins Act, 49 U.S.C. §§ 11901-11903, 11915-11916 (Count XI), as well as several state law claims: violations of the Maryland Antitrust Act (Count II), breach of contract (Counts III and IV), breach of the implied covenant of good faith (Counts VII and VIII), promissory estoppel (Count VI) and civil conspiracy (Count XI).

On March 21, 1994, the defendants filed a motion to dismiss the plaintiffs' Interstate Commerce Act and Elkins Act claims or, in the alternative, to refer them to the Interstate Commerce Commission, and a motion for summary judgment on the plaintiffs' other claims. On July 1, 1994, the district court dismissed the federal transportation law claims, concluding that neither the Interstate Commerce Act nor the Elkins Act gave the plaintiffs a private right of action. Siegel Transfer, Inc. v. Carrier Express, Inc., 856 F. Supp. 990, 1002-05 (E.D. Pa. 1994). The court also granted summary judgment in the defendants' favor on the plaintiffs' remaining claims, with the exception of Count VI for promissory estoppel.*fn6 On the antitrust and civil conspiracy claims, the court concluded that the plaintiffs failed to show that "two or more economic actors" conspired against them, applying the Supreme Court's decision in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 81 L. Ed. 2d 628, 104 S. Ct. 2731 (1984). 856 F. Supp. at 995-1002, 1005, 1009. As to the contract and implied duty of good faith claims, the court rejected the plaintiffs' theory of breach, finding it contrary to the clear and unambiguous language of the parties' agreement. Id. at 1005-06, 1008-09.

On August 22, 1994, judgment was entered for the defendants, and on September 8, 1994, the plaintiffs filed an appeal. We will first address the federal antitrust issues this appeal raises, the federal ...


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