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Union Pacific R. Co. v. Ametek

January 15, 1997

UNION PACIFIC RAILROAD CO.; MISSOURI PACIFIC RAILROAD CO.; NORFOLK AND WESTERN RAILWAY CO.; SOUTHERN RAILWAY CO.; BURLINGTON NORTHERN RAILROAD CO.; CONSOLIDATED RAIL CORPORATION; CSX TRANSPORTATION CO.

v.

AMETEK, INC.; UNITED STATES OF AMERICA; SURFACE TRANSPORTATION BOARD UNION PACIFIC RAILROAD CO.; MISSOURI PACIFIC RAILROAD CO.; NORFOLK & WESTERN RAILWAY CO.; SOUTHERN RAILWAY CO.; BURLINGTON NORTHERN RAILROAD CO.; CONSOLIDATED RAIL CORPORATION, APPELLANTS.



An Appeal from the United States District Court for the Middle District of Pennsylvania D.C. No. 90-cv-1396 Argued September 18, 1996

Before: NYGAARD, ROTH, AND ROSENN, Circuit Judges

ROSENN, Circuit Judge.

Filed January 15, 1997

OPINION OF THE COURT

The appeal in these consolidated cases raises questions of first impression in this circuit relating to the symbiotic power of a United States district court and the Interstate Commerce Commission (ICC) *fn1 to render judgment for demurrage fees *fn2 against an entity which is not a party to any transportation contract with a railroad. The plaintiffs, six national freight carriers (the Interline Railroads) sued Ametek, Inc. in the United States District Court for the Middle District of Pennsylvania to recover $297,270 allegedly due under a demurrage tariff issued by the Panther Valley Railroad Company (Panther Valley), now defunct. Panther Valley had assigned its demurrage claim against Ametek to the Interline Railroads. Ametek receives plastic materials by rail at Nesquehoning, Pennsylvania which it processes and then ships by rail to the material suppliers' customers.

The district court, on motion of Ametek, referred one issue to the ICC: the reasonableness of a demurrage charge. The ICC, however, determined preliminarily that the tariff had no application to Ametek because it was neither the consignor nor consignee of the shipped goods, and had not assumed contractual liability. The district court adopted the ruling of the ICC and concluded that Ametek had not entered into any separate agreement obligating it to pay the demurrage fees. It therefore entered summary judgment for Ametek and the ICC and denied the Interline Railroads' motion for summary judgment. We affirm.

I.

The demurrage charges assigned by Panther Valley allegedly accrued under its tariff during 1987 through 1989 inclusive. *fn3 Ametek's customers ship the raw materials by rail to Ametek's plant by private rail car. Panther Valley and its predecessor had provided rail service over a period of about eight years without demurrage charges. The practice of Ametek's customers was to alert Ametek as to whether the loaded cars should be delivered to Ametek promptly or be held on Panther Valley's tracks for later delivery.

In 1986, Ametek had a need to store privately owned empty and inbounded loaded rail cars for extended periods of time. The president of Panther Valley initiated discussions with Ametek's rail consultant concerning a side track agreement between Ametek and Panther Valley for such cars. Eventually on April 22, 1996, Panther Valley's president submitted a proposed side track agreement to Ametek's vice-president in which Ametek would lease track to accommodate a seasonal overflow of rail cars experienced by Ametek. In August 1986, the president of Panther Valley sent a letter to Ametek setting forth the terms of a second proposed side track lease agreement. Ametek would pay Panther Valley 65 cents per car per day stored on Panther Valley track. For reasons unknown to all involved, the agreement "fell through the cracks" and was never signed. All parties concede that if the agreement were in force, Ametek would not be liable for demurrage fees.

In 1987, Panther Valley unilaterally imposed a demurrage tariff of $20 per car per day for the first two days that a company held rail cars beyond a free period of 48 hours. The tariff increased to $30 for each of the next two days, and $40 for each subsequent day. The parties disagree as to whether Ametek was informed of this tariff.

In the face of severe financial problems, Panther Valley, in January 1990, billed Ametek for $297,270 in demurrage fees for the period March 15, 1987 through October 2, 1989. Ametek refused to pay the invoice, and suggested that the fair way to handle the storage problem would be to calculate the amount Ametek would owe under the aborted lease agreement, which amounted to $29,664.60. Panther Valley rejected this proposal because it would not be in its "best financial interest." In June 1990, Panther Valley ceased operations and assigned the claim to its creditors, six freight carriers (the Interline Railroads).

On July 23, 1990, the Interline Railroads brought this action for demurrage allegedly accrued between March 15, 1987 and October 2, 1989 (Ametek I). In response to a motion by Ametek, the district court stayed its proceedings and referred one issue to the ICC: the reasonableness of Panther Valley's demurrage charges. The court specifically retained jurisdiction over all other issues. Subsequently, Ametek filed a separate complaint with the ICC claiming that the demurrage rates and practices were unreasonable. The ICC consolidated the proceedings. *fn4

The ICC stated that before it could determine if the charges were reasonable, a threshold issue required that it determine if the tariff could be applied to Ametek at all. Finding that Ametek was merely the agent of its customers and neither the consignor nor consignee, the ICC concluded that Panther Valley could not impose demurrage fees on Ametek. The ICC relied on Middle Atlantic Conference v. ICC, 353 F. Supp. 1109, 1116-1121 (D.D.C. 1972) (demurrage tariff does not apply to agent of party to transportation contract). The ICC found that Ametek did not receive, process, or distribute its own materials, and that Ametek generally was not the consignor or consignee designated on the bills of lading.

The Railroads challenged the ICC decision in the United States District Court pursuant to 28 U.S.C. Section(s) 1336(b) by filing another and separate complaint against the ICC (Ametek II). The court consolidated Ametek II with Ametek I. The ICC, Ametek, and the Railroads moved for summary judgment. The court found that the ICC properly addressed the threshold question whether the tariff applied to Ametek. The court determined that the ICC properly concluded that a demurrage tariff did not apply to a company that is not a party to a contract of transportation. The court then granted summary judgment for ICC and Ametek. The Railroads timely appealed to this court.

II.

Before we discuss the substantive issues raised by the appellants, the Interline Railroads, we turn to the threshold question of the jurisdiction of this court to hear this appeal. Ametek contends that the district court lacked jurisdiction over Ametek II because the action did not arise out of the question referred by the district court as to the reasonableness of the demurrage charges. *fn5 Thus, it maintains that the district court lacked subject matter jurisdiction pursuant to 28 U.S.C. Section(s) 1336(b), and this court therefore cannot exercise appellate jurisdiction. *fn6

This court exercises plenary review over matters of jurisdiction. Anthuis v. Colt Indus. Operating Corp., 971 F.2d 999, 1002 (3d Cir. 1992). Title 28 of the United States Code provides:

When a district court . . . refers a question or issue to the Interstate Commerce Commission for determination, the court which referred the question or issue shall have exclusive jurisdiction of a civil action to enforce, enjoin, set aside, annul, or suspend, in whole or in part, any order of the Interstate Commerce Commission ...


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