# Petition — Terry Tuck, Inc. v. Consolidated Freightways Corp. of Delaware

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1980
- **Citation:** 447 U.S. 907

## Text

Gupreme Court, U. i, !

FILED
APR %5 1980

MICHAEL RODAK, JR., CLERR

IN THE

Supreme Court of the United States

October Term, 1979

TERRY TUCK, INC.
Petitioner,
VS.

CONSOLIDATED FREIGHTWAYS CORPORATION OF DELA-
WARE,

Respondent.

Petition of Terry Tuck, Inc. for a Writ of Certiorari to
the Court of Appeals for the Ninth Circuit.

SLAFF, Mosk & RUDMAN,
GEORGE SLAFF,
Marc R. STEIN,

9200 Sunset Boulevard,
Suite 825,

Los Angeles, Calif. 90069,
(213) 275-5351,

Attorneys for Petitioner,
Terry Tuck, Inc.

Parker & Son, Inc., Law Printers, Los Angeles. Phone 724-6622

SUBJECT INDEX

Page
PENN OOS ho oo er SS ee ]
ET SIRES AAS SS es ede 2
ici RIES SE RS i a aan 2
een ok ou 5 wc a in.p's nono Wi 2
NN in ks 5 a au cies 0s. he bneue.s 3
Tc li it ne s 5
The Judgment of the Court Below Was Contrary to the

RN OE oa inks nw cinsip'e soe 5

The Historical Background of the ‘‘Conclusive Pre- _
I oe esis cs ase daige-o-a 8

This Court Has Held That the Policy of the Act Is Not
Contravened by Permitting the Shipper to Offset His
Damage From a Carrier’s Wrong Against the Car-
rier’s Claim for Its Charge ................... 12

MIN cha aa RUSS ik cScpcsccbacess 17

Appendix A. Memorandum and Order Re: Finding of
Fact, Conclusion of Law, Granting Partial Summary
Judgment, Dismissing Counter-Claim, Dismissing
Claim for Punitive Damages, and Dismissing Ac-
oe le CEE ee eS ey aE ee aay ee App. p. 1

ii

TABLE OF AUTHORITIES CITED

Cases Page
Aero Trucking Inc. v. Royal Tube Company, 594 F.2d
OUP LPR. SPINS eae Shs a a ee 4
Armour Packing Company v. United States, 209 U.S. 55
RRUUMINe SRL Oks os ois pak ee aces 9
Atchisos T. & S.F. R. Co. v. Robinson, 233 U.S. 173
POW ide ea Ges Mu kav ch ek 5, 6
Burkhart v. Fort Worth & D.C. Ry. Co., 149 F.2d 909
We BO oy oes co he ee 4
Chicago & N.W. Rwy. v. Lindell, 281 U.S. 14
RUE Crecee reel tt toe pe fy tae
Forster Bros. Co. v. Duluth S.S.&A.R. Co., 14 Inters.
er. Mee, Soe tise) oe ee 11

Francis v. Southern Pacific Co. , 333 U.S. 445 (1948) 15, 16

George N. Pierce Co. v. Wells Fargo & Co., 236 U.S.
ci ey SORT a RS SRO CUE Te SRT AT ek 12, 13

Great Northern R. Co. v. O’Connor, 232 U.S. 508
CEU N Se aN ei ticg ee i oe eee 5, 6

RUF fe ks eins vic eet, 5 cae +s 6, 7,11
Louisville & N.R. Co. v. Maxwell, 237 U.S. 94(1915) 11

New York Central and Hudson River Railroad Company
v. United States, 212 U.S. 481 (1909) ........... 9

New York, New Haven and Hartford R.R. Co. v. In-
terstate Commerce Commission, 200 U.S. 361 (1906) 9

Pettibone v. Richardson, 126 F.2d 969 (7th Cir. 1942) 4
Poor v. Chicago B. & Q. R. Co., 12 Inters. Com. Rep.

PMPMIIES 6 5d 05 0h Gan oboe eee ie: 11
Southern Pacific Company v. Miller Abattoir Company,

SON B20 Sor (510 Cir. 1972). 14, 15

eee

Page
Standard Oil Co. of Indiana v. United States, 164 F. 376

CFR RG RD ie aks CERRINA ck et ee cs oes 9
Texas & Pacific Rwy. Co. v. Mugg & Dryden, 202 U.S.
OS 860s oo FA RORR AN ae FAG whee bse ban 10
Trammel v. United States, 48 U.S.L.W. (Feb. 27, 1980)
pp. 4201, 4203 ......... Cia we Suc e we as 15, 16
United States v. New York Central and Hudson River
mammoes, 212 U.5. SUP (IGM 6 ovo voc en 7)
Miscellaneous
First Annual Report of the Interstate Commerce Com-
guano (IG87) OO. So? oo cos os keene: 9

Report, Senate Select Committee on Interstate Com-
merce, 49th Cong., Ist Sess. (1886) pp. 191,198,199 9

Rules
Rules of United States Supreme Court, Rule 19 ..... 7
Statutes
United States Code, Title 28, Sec. 1254(2) ......... 2
United States Code, Title 49, Sec. 317(b)........ a3
United States Code Annotated, Title 49, Sec. 41..... 13
United States Code Annotated, Title 49, Sec. 41(2) .. 10
Textbooks
Drinker, Henry S., ‘‘The Interstate Commerce Act,’’
(George T. Bisel Co., 1909) p. 55 .............. 9
Hadley, A.T., ‘‘Railroad Transportation,’’ (G. P. Put-
nam’s Sons, 1885, 1889 Ed.) p. 21 ............. )

Hillman, J.J., ‘‘Competition and Railroad Price Dis-
crimination,’’ (The Transportation Center of North-
western University, 1967) p. 148 ............... 16

The Nature of the Judicial Process, in Selected Writing of
Benjamin Nathan Cardozo (Hall Ed. 1947) p. 174 . 16

IN THE

Supreme Court of the United States

October Term, 1979
petennaerr

TERRY TUCK, INC.
Petitioner,
vs.
CONSOLIDATED FREIGHTWAYS CORPORATION OF DELA-
WARE,

Respondent.

Petition of Terry Tuck, Inc. for a Writ of Certiorari to
the Court of Appeals for the Ninth Circuit.

Terry Tuck, Inc. (‘‘Terry Tuck’’) petitions for a writ of
certiorari to review the judgment of the Court of Appeals
for the Ninth Circuit, entered in this case on January 29,
1980.

Opinion Below.

The opinions of the District Court for the Central District
of California and of the Court of Appeals for the Ninth
Circuit are set out in Appendix A and Appendix B, re-
spectively. The opinion of the Court of Appeals is reported
in 612 F.2d 465.

sisi

The judgment of the District Court was entered on No-
vember 7, 1975.

The judgment of the Court of Appeals was entered on
January 29, 1980.

Jurisdiction.

The jurisdiction of the Court is invoked pursuant to Title
28 U.S.C. §1254(1).

Question Presented.

The question presented for review may be stated as fol-
lows:

When a shipper has paid a common carrier the rate
prescribed in the carrier’s tariffs, is the shipper pre-
cluded from suing the carrier for fraudulent rate mis-
representation, made by the carrier in order to keep the
shipper from utilizing a competing carrier at a great
saving in cost to the shipper?

Statute Involved.

The only statute 1 :volved is Title 49 U.S.C. §317 (b)
which provides:

‘“No common carrier by motor vehicle shall charge or
demand or collect or receive a greaier or less or dif-
ferent compensation for transportation or for any serv-
ice in connection therewith between the points enum-
erated in such tariff than the rates, fares, and charges
specified in the tariffs in effect at the time; and no such
carrier shall refund or remit in any manner or by any
device, directly or indirectly, or through any agent or
broker or otherwise, any portion of the rates, fares, or

charges so specified, or extend to any person any priv- .

ileges or facilities for transporation in interstate or for-
eign commerce except such as are specified in its tar-
iffs: Provided, That the provisions of sections 1(7) and

pa ae

22 of this title shall apply to common carriers by motor

vehicles subject to this chapter.”’
Petitioner does not challenge the validity of the statute.
Petitioner does challenge the engrafting upon the statute by
the Circuit Court’ in a fraud case of a conclusive presump-
tion that the shipper knew the carrier’s tariffs and accord-
ingly, the carrier was free to perpetrate a wilful fraud upon
the shipper with regard to the rate.

Statement of the Case.

The facts of the case are simple and straightforward.

Respondent (hereafter ‘‘Consolidated’’) sued Petitioner
(hereafter ‘“Terry Tuck’’) for the balance due ($12,531.36)
on a number of shipments from the East Coast to Terry
Tuck’s plant in Los Angeles.

Summary judgment for that amount was granted against
Terry Tuck; was not appealed from; and indeed, was paid
in full. However, Terry Tuck had counterclaimed for dam-
ages in the amount of $10,000 (and for punitive damages)
based on Consolidated’s fraud. Terry Tuck alleged that upon
examination of early billings from Consolidated, it found
that a competing carrier (Western Carloading) by reason of
being a freight forwarder could carry its goods at a much
lower rate and indeed offered to do so. (R. 186.) On being
so advised, a Consolidated agent came to Terry Tuck’s
office and, in order to keep Terry Tuck from switching its
business to Western Carloading, advised Terry Tuck it was
being incorrectly billed and that it need only pay Consoli-
dated a lower rate than the billed rate. (R. 177-178.) On
the basis of these representations, Terry Tuck did not switch

‘We do not hesitate to point out to the Court at the outset that there
is no conflict among the Circuits in this regard. Indeed, as appears in
the per curiam opinion of the Ninth Circuit, that Circuit relied exclu-
sively upon decisions of the Seventh and Eighth Circuits.

Rae

its business to Western Carloading, (R. 178), but continued
to ship via Consolidated and to pay Consolidated the lower
rate. By not giving its business to Western and subsequently
being required to pay Consolidated the difference ($12,-
531.36) between what it had paid Consolidated and the one
of Consolidated’s thousands of filed rates which was, de-
spite its employee’s representation to the contrary, actually
applicable, Terry Tuck was damaged in the amount of
$10,000. (R. 8.)

However, on Consolidated’s motion the District Court
dismissed Terry Tuck’s counterclaim in reliance upon Pet-
tibone v. Richardson, 126 F.2d 969 (7th Cir. 1942), and
the Circuit Court in reliance on Pettibone, supra, Burkhart
v. Fort Worth & D.C. Ry. Co., 149 F.2d 909 (8th Cir.
1945) and Aero Trucking Inc. v. Royal Tube Company, 594
F.2d 619 (7th Cir. 1979), affirmed per curiam.

aii

ARGUMENT.

The Judgment of the Court Below Was Contrary to the
Decisions of This Court.

The dismissal of Terry Tuck’s counterclaim for fraud
rests entirely upon the ‘‘conclusive presumption’’ that a
shipper knows every one of the carrier’s thousands of filed
rates as well as he/she/it knows that the sun rises in the East
and therefore cannot be led astray by the fraud of the carrier.
In reaching this conclusion the Court below, like the two”
circuits on whose decisions it relied, ignored completely the
clear statements of this Court that the ‘‘conclusive pre-
sumption’’ first declared by this Court in Kansas City South-
ern Rwy. Co. v. Carl, 227 U.S. 639 (1913) did not apply
in the case of the carrier’s fraud. Great Northern R. Co.
v. O'Connor, 232 U.S. 508 (1914); Atchison T. & S.F.R.
Co. v. Robinson, 233 U.S. 173 (1914); George N. Pierce
Co. v. Wells Fargo & Co., 236 U.S. 278 (1915).

Those three cases were decided almost immediately fol-
lowing the Carl case. In Carl, a shipper, ‘‘in order to obtain
the lower of two freight rates’’’ had shipped goods at an
agreed value less than their actual value, and upon their
loss, sued for the full value. For the first time in any civil
case under the Interstate Commerce Act, the words ‘‘con-
clusively presumed’’ appeared in a decision of this Court,
but only after this Court had been careful to note that ‘“There
was no evidence tending to show any misrepresentation
made by the [railroad] company, or any deceit, or fraud
...’”* There this Court said:

‘“When there are two published rates, based upon dif-
ference in value, the legal rate automatically attaches

*227 U.S. 639, 640.
‘Id.

sn

itself to the declared or agreed value . . . The shipper’s
knowledge of the lawful rate is conclusively presumed,
and the carrier may not be required to surrender the
goods . . . until the full legal rate has been paid.’”*

But within a very short time after Carl, this Court took
pains to point out, in three separate cases, that this pre-
sumption was not to be applied in the case of fraud by the
carrier. The first of those cases was Great Northern Railway
Company v. O’Connor, 232 U.S. 508 (1914), decided less
than a year after Carl. Like Carl that was a case in which
the shipper had shipped goods at a rate which provided for
a lower valuation than the goods’ actual value and, when
the goods were lost, sought to recover their actual value.
In denying recovery of an amount over the lower valuation,
this Court said:

“If. . . there are alternative rates based on value, and
the shipper names a value to secure the lower rate, the
carrier, in the absence of something to show rebating
or false billing is entitled to collect the rate which
applies to goods of that class .. .’” [Emphasis sup-
plied. }

Six weeks later, in Atchison, T.& S.F.R. Co. v. Robin-
son, 233 U.S. 173, 180 (1914), this Court reiterated that
‘“so long as they [the filed tariff rates] are operative, they
are conclusive as to the rights of the parties, in the absence
of facts or circumstances showing an attempt at rebating
or false billing. Great Northern R. Co. y. O’Connor, su-
pra.”’ [Emphasis supplied. ]

Finally, a year later this Court made it abundantly clear
that those two cases vitiated the application of the ‘‘con-

“227 U.S. 639, 652-653.
*232 U.S. 508, 515.

a.

clusive presumption’’ where the carrier’s fraud was in-
volved. In George N. Pierce Company v. Wells Fargo &
Company, 236 U.S. 278, 286 (1915) this Court took the
occasion to point out that, while there was no element of
fraud in the case before it, nevertheless,

““In the O’Connor Case, 232 U.S. 503 and the Robin-
son Case, 233 U.S. 173, above, the doctrine of the
conclusiveness of the filed rates was said to have no
application to fraudulent acts or false billings.’ |Em-
phasis supplied. ]

These deliberate statements by this Court underscore its
determination from the outset not to permit the “‘conclusive
presumption’’ rule of Carl to be misapplied to cases in-
volving a carrier’s *‘fraudulent acts’’ in connection with its
rates. Nevertheless, the Court below, following the lead of
the Seventh and Eighth circuits, completely disregarded
what this Court pointed out in those three cases and applied
what this Court had said in Carl, where no fraud by the
carrier was involved, to a case of wilful fraud perpetrated
by a carrier upon a shipper strictly for the carrier’s monetary
benefit.

This case has certainly been decided by the Court of
Appeals for the Ninth Circuit ‘‘in a way to conflict with
applicable decisions of this court’? and that Court ‘‘has
decided an important question of federal law which has not
been but should be, settled by this court.’’ [Emphasis
added.] Rule 19, Rules of Supreme Court.

It may be reasonably (if not ‘‘conclusively’’) presumed
that unless this Court reverses the Court below, other circuits
will join the parade which holds that carriers may continue
with impunity to defraud shippers by deliberate misrepre-
sentations of rates and will thus agree with the statement
by Consolidated’s corporate counsel in his letter to Terry
Tuck that ‘‘the truth’’ of whether or not Consolidated’s

eek aN

agent perpetrated a fraud upon Terry Tuck is not ‘‘the rel-
evant question.’’ (R. 180-181.)

lf fraud—on the part of common carriers—is to be per-
manently enshrined in the pantheon of greed, certiorari
should be denied.

If, on the other hand, this Court looks to the rationale of
the rule in cases not involving the carrier's fraud and to its
own statements that such presumption was not to be invoked
to protect a carrier’s fraud, and refuses to be taken in by
the horribles usually paraded by the self-interested carrier
about *‘rebates under the guise of’’ such suits, then certiorari
should be granted.

While the particularly invidious application of this lower
court-made rule immunizing fraud by a carrier—and it is
only to this that we address ourselves—has never been spe-
cifically before this Court, this Court has, as we have
pointed out, clearly indicated its disapproval of the rule’s
applicability in the case of ‘‘fraudulent acts’ involving rates
by the carrier. We submit that this Court should take this
opportunity to strike down a rule enunciated by three circuits
which condones fraudulent conduct by a carrier and which
cannot be justified today on any ground of business neces-
sity, let alone business morality, and which flies in the face
of what this Court has said.

The Historical Background of the ‘‘Conclusive
Presumption’’ Rule.

Obviously, we do not close our eyes to the line of cases
which, after the passage of the Interstate Commerce Act in
1887, grafted on to the law the presumption, in cases nor
involving the carrier’s fraud, that shippers knew the carrier’s
tariffs. Nor should anyone’s eyes be closed to the fact that
the reason for the action of the courts was to prevent col-

i.

lusion and consequent undercutting of the Act, nor to en-
courage fraud by a carrier against a shipper.

It is not necessary to tell this Court that the basic purpose
of the Act was to lessen the stranglehold which railroads
and favored shippers—many of whom were thus able to
grow into monopolies—had upon large segments of the
American economy.° To this end, the courts fashioned the
presumption of knowledge by the shippers of a carrier’s
rates in order to counteract the likelihood of secret refunds
under the guise of claims of the carrier’s misquotation of
rates. For even after the passage of the Act, attempts at
secret and collusive rebating did not come to a halt’ and the
courts kept sharp eyes out for any practice by which a
favored shipper might be able to achieve an advantage over
his business competitor by securing, through collusion with
the carrier, a rate lower than the filed rate the competitor
was required to pay* and thus defeating one of the primary
purposes of the Act. ;

The only place in the Interstate Commerce Act where a
““conclusive presumption’’ was created by Congress was

“Report of the Senate Select Committee on Interstate Commerce,
49th Congress, Ist Session, 1886, Pgs. 191, 198 & 199; First Annual
Report of the Interstate Commerce Commission, 1887, Pgs. 5-7; ‘‘Rail-
road Transportation’, Hadley, A.T., Pg. 21 (G.P. Putnam’s Sons,
1885, 1889 Ed.); *“The Interstate Commerce Act’’, Drinker, Henry S.,
Pg. 55 (George T. Bisel Co., 1909).

"New York, New Haven and Hartford R.R. Co. v. Interstate Com-
merce Commission, 200 U.S. 361 (1906); Armour Packing Company
v. United ‘States, 209 U.S. 55 (1908): Standard Oil Co. of Indiana vy.
United States, 164 F. 376 (7th Cir. 1908); New York Central and
Hudson River Railroad Company v. United States, 212 U.S. 481 (1909):
United States v. New York Central and Hudson River Railroad 212
U.S. 509 (1909).

“This factor is not present in the case at Bar, since the lower rate
offered by the carrier other than Consolidated was open to all, including
any competitor of Terry Tuck’s.

a, a

in the Elkins Act 49 U.S.C.A. 41(2), which provided that
‘in any prosecution begun under section 41, 42 or 43”’ of
the Act, the rate filed by the carrier shall ‘‘as against such
carrier, its officers or agents’’ [emphasis supplied] ‘‘be
conclusively deemed to be the proper rate.”’

Prosecutions under those sections could be brought
against shippers, as well as against carriers. At the time of
the adoption of the Elkins Act in 1903, no decision of this
Court had established any rule of a presumption of knowl-
edge by the shipper of the carrier’s rates, let alone a con-
clusive presumption. Had Congress intended to impose such
a presumption upon the shipper, it could have done so at
the time it imposed that presumption on the carrier, but it
clearly was not minded to do so.

In 1906, this Court for the first time adopted the position
that ‘““whatever may be the rate agreed upon, the carrier’s
lien on the goods is, by force of the act of Congress [the
Interstate Commerce Act], for the amount fixed by the pub-
lished schedule of rates and charges, and this lien can be
discharged . . . only by the payment of such amount.’ This,
the Court held, was so ‘whether or not’’ the shipper ‘‘knew
that the rate he obtained was less than the scheduled rate.’’'°

It may be noted that the Court there did not speak of any
‘“presumption’’ and certainly not of any ‘‘conclusive pre-
sumption.’’ It simply asserted the rule that the published
rate was paramount. Of course, it cannot be doubted that
this court felt at that time, with other courts and with the
Interstate Commerce Commission, that ‘‘[t]o permit ship-
pers to impute negligence to carriers in quoting rates and
on that ground to enjoy the rate quoted instead of paying

ae & Pacific Rwy. Co. v. Mugg & Dryden, 202 U.S. 242, 245
( ).
Se

ae

the lawfully published rate would open a broad and ample

way for the payment of rebates and for other unlawful prac-

tices and might, in its practical results, work a repeal of the

essential feature of this legislation’’'' and that ‘‘collusion

between the carrier and a shipper, which it desired to favor
. . would be rendered too easy of accomplishment.’’'”

It was the joint action of carrier and favored shipper to
negate the Act’s prohibition of rebating which was the po-
tential evil perceived by both the Interstate Commerce Com-
mission and the courts. For despite the passage of the In-
terstate Commerce Act and the Elkins Act (1903) and the
Hepburn Act (1906), powerful shippers and railroads were
still attempting to evade the prohibition of rebates to favored
shippers.'’ It was, however, as we have noted, not until
1913 that the magic words ‘‘conclusively presumed’’ ap-
peared in a decision of this Court in a civil case involving
a misquotation of a rate.'*

Two years later when this Court, in Louisville & N.R.
Co. v. Maxwell, 237 U.S. 94 (1915), a case which, unlike
the case at Bar involved no fraud, no wilful misrepresen-
tation, quoted from Carl with approval, it pointed out that
the rule ‘embodies the policy which has been adopted by
Congress in the regulation of interstate commerce in order
to prevent unjust discrimination.’’ Id. at 97. (Emphasis
supplied. )

"Poor v. Chicago B.& Q. R. Co., 12 Inters. Com. Rep. 418, 423-
424 (1907).

"Forster Bros. Co. v. Duluth S.S.& A.R. Co., 14 Inters. Com. Rep.
232, 236 (1908).

"Note 7, supra.

"Kansas City Rwy. Co. v. Carl, supra, pg. 5, 227 U.S. 639, 653.

— 7

This Court Has Held That the Policy of the Act Is Not
Contravened by Permitting the Shipper to Offset
His Damage From a Carrier’s Wrong Against the
Carrier’s Claim for Its Charge.

This Court has not found that to permit a shipper to
recover for a carrier’s wrong would result in unjust dis-
crimination or, in any way, interfere with or vitiate the
purposes of the Interstate Commerce Act. Indeed, this Court
has found the very opposite to be true and has had no
hesitation about permitting the shipper to seek relief by way
of set-off or counterclaim when wronged by the carrier.

The alleged problem of the possibility of collusion be-
tween shipper and carrier for rebates, etc., did not impress
this Court in Chicago & N.W. Rwy. v. Lindell, 281 U.S.
14 (1930). There this Court recognized that while the shipper
was liable for the full amount of the carrier’s tariff rate, the
shipper was nevertheless entitled to set-off, or to recover,
by way of counterclaim, the damages suffered as a result
of the carrier’s negligence.

The only difference between Lindell and the case at Bar
is the imposition by the Court below of a ‘conclusive pre-
sumption”’ in a situation where this court has made clear
that that doctrine did not apply, namely, in the case of
“fraudulent acts’’.'° There is, of course, no basis in reason,
in logic and indeed, in law, as this Court has recognized,
for fastening upon an innocent party who has been subjected
to a carrier’s fraud in regard to its rates such a court-made
‘‘conclusive presumption’’ when this Court has refused to
permit any such presumption to interfere with, let alone
preclude, recovery for a carrier’s simple negligence.

“George N. Pierce v. Wells Fargo, supra. 236 U.S. 278. 286 (1915).

at, ae

The only possible argument that could be made for the
imposition upon a defrauded party of such a rule which, on
its face and in its application, is unjust to the party de-
frauded, is that to permit recovery by the injured party might
open the door to evasion of the Act and to the evils the Act
was designed to eliminate. But this Court in Lindell saw
that that presented no problem and almost summarily dis-
missed that argument.'® The question which had been cer-
tified to the Court was whether a ‘‘shipper acting in good
faith and without collusion’’ was debarred by 49 U.S.C.A.
$41 from pleading ‘‘by way of set-off, a counterclaim for
a loss suffered by him as a result of the carriers failure to
perform its obligations touching the transportation and de-
livery of the identical shipment.’’ [Emphasis supplied. ] (281
U.S. 14.)

The Court pointed out that ‘‘The purpose of the Act to
prevent discrimination has been emphasized by this Court
and is well-known.’’'’ The Court then met head-on the issue
of possible collusion between carrier and shipper and con-
sequent discrimination and said, ‘‘It is well understood that
payment by carriers to shippers under the guise of settling
claims for loss and damages may in effect constitute dis-
crimination that the act was intended to prevent,’’ and ob-
viously, on the basis that that would not be the result of
permitting such offset or counterclaim by the shipper, the
Court proceeded to answer the certified question ‘‘No.’’"*

“It is of interest—and perhaps. also, of significance—that the opinion
of the unanimous court was written by Mr. Justice Butler, who, fore
taking his seat on the Court. had been one of the country’s leading
railroad lawyers. (Proceedings in Memory of Honorable Pierce Butler
308 U.S. v (1939).)

ah...

Why permitting a counterclaim for damages due to fraud
in a Carrier’s rate quotation would have any different effect
from permitting a counterclaim for damages due to a car-
rier’s negligence, cannot be explained in any manner, except
by digging in one’s heels and proclaiming loudly ‘‘conclu-
Sive presumption, conclusive presumption’’—something
which this Court had noted was not applicable in case of
the carrier’s fraud. In Lindell this Court specifically rec-
ognized the possibility of collusion and fraud between ship-
per and carrier, ‘‘under the guise of”’ settling actions brought
by one or the other, but clearly took the position that by
1930 that possibility was much too remote or too negligible
to deny to a shipper aggrieved by a carrier the right to
recover his damages. Certainly nothing has intervened since
that time to increase that remote possibility.

The Third Circuit Court of Appeals recognized this clear
aspect of this Court’s decision when, in Southern Pacific
Company v. Miller Abattoir Company, 454 F.2d 357, 360
(3rd. Cir. 1972) (a case in which damages for breach of a
shipping contract was pleaded as a set-off against the freight
charges) it said:

‘“The Railroad argues that, even if its failure were a
breach of the shipping contract, to allow recovery of
damages for the breach would offend 49 U.S.C.A.
§6(7). That is, an unscrupulous railroad could pur-
posely neglect to give the immediate notice called for
by the contract and thus give a disguised rebate to the
customer so favored . . . This argument was rejected
by the Supreme Court, however, in Chicago & N.W.
Rwy. v. Lindell, 281 U.S. 14 (1930).’?”? [Emphasis
supplied. ]

"454 F.2d 357, 360.

»

\

| om

The Court then quoted from this Court’s opinion, and -
stated:

‘*The language quoted leaves little doubt that the Court
understood the danger of disguised rebates, but rejected
it as a reason for denying recovery to the injured shipper
. . . It would not be the fact of paying damages, but
the overpayment of damages, that would constitute
unlawful ‘rebate’. The fact that a railroad might seek
to evade laws forbidding rebates through such a sub-
terfuge is not sufficient to warrant denial of damages
to those customers of railroads who suffer through
some breach of duty by the railroad.’’”°

These words, just as the words of this Court in Lindell
are equally applicable—indeed, more so—to the situation
where a carrier actually practices fraud upon a shipper.
There simply is no basis for permitting a court-made ‘‘con-
clusive presumption’’—and in a far different context when
uttered by this Court—to give blessing and reward to a
carrier’s fraud.

Not many weeks ago, this Court pointed with approval
to Mr. Justice Black’s admonition in his dissenting opinion
in Francis v. Southern Pacific Co., 333 U.S. 445, 471
(1948), ‘‘When precedent and precedent alone is all the
argument that can be made to support a court fashioned
rule, it is time for the rule’s creator to destroy it.’’?!

It was precedent and precedent alone rather than logic or
public interest or necessity which impelled the holding of
the Court below (and of the Seventh and Eighth Circuits)
and which, unless this Court speaks, will be the basis for

454 F.2d 357, 360-361.
*'Trammel v. United States, 48 U.S. L.W., 4201, 4203. (February
27, 1980).

ee” ea

similar holdings when like cases, involving a carrier’s fraud,
arise.

To be sure, this Court was not the creator of the rule that
the ‘‘conclusive presumption’’ of knowledge of the rate
applied against a shipper in case of a carrier’s fraud in
connection with the rate. That fact, however, should not
stay this Court’s hand in destroying the rule before it is
further misapplied as it has heen by the Court below, as
well as by the Seventh and Eighth Circuits.

Perhaps in addition to what this Court said in Trammel
and what Mr. Justice Black had said in Francis, it may be
illuminating to note what Professor Hillman” said in quoting
the words of another member of this Court:

‘*In seeking to lift the heavy hand of precedent from
another field of law, Justice Cardozo, in preachment
amply justified by his steadfast practice, once urged
that ‘a spirit of realism should bring about a harmony
between present rules and present needs.’”? His ad-
monition is no less compelling when applied to a field
of economic regulation having its origins in the political
context and economic policies of another era.”’

***Competition and Railroad Price Discrimination’’, Hillman, J.J.,
pg. 148 (The Transportation Center of Northwestern University, 1967).

“The Nature of the Judicial Process, in Selected Writing of Benjamin
Nathan Cardozo, 174 (Hall ed. 1947).

ee |, 08

Conclusion.

We urge that certiorari be granted so that this Court may
consider whether the ‘‘conclusive presumption’’ doctrine
fashioned to avert fraud should be used to insulate a carrier
from liability for wilful fraud perpetrated by a carrier on a

shipper.
Respectfully submitted,
SLAFF, Mosk & RUDMAN,

GEORGE SLAFF,
Marc R. STEIN,

Attorneys for Petitioner
Terry Tuck, Inc.

April 18, 1980.

APPENDIX A.

Memorandum and Order Re: Findings of Fact, Conclu-
sions of Law, Granting Partial Summary Judgment,
Dismissing Counterclaim, Dismissing Claim for Pu-
nitive Damages, and Dismissing Action.

United States District Court, Central District of Califor-
nia. Consolidated Freightways Corporation of Delaware, a
corporation, Plaintiff, v. Terry Tuck, Inc., a corporation,
Defendant.

Terry Truck, Inc., a corporation, Cross-Complainant, v.
Consolidated Freightways Corporation of Delaware, a cor-
poration, Cross-Defendant. Civil No. 75-1911-HP.

Filed: Nov. 6, 1975.

On October 20, 1975, the above-entitled matter came on
for hearing upon plaintiff's motions for partial summary
judgment and dismissal of defendant’s counterclaim. The
court having read the affidavits, moving papers and points
and authorities submitted by the parties, and being fully
advised in the premises now makes the following findings
of fact, conclusions of law, and rulings:

I. PARTIAL SUMMARY JUDGMENT
Findings of Fact

1. Plaintiff Consolidated Freightways Corporation of
Delaware [hereafter ‘‘Consolidated’’] is a common carrier
by motor vehicle authorized by the Interstate Commerce
Commission to operate in interstate commerce.

2. It is stipulated by the parties that Consolidated is a
corporation authorized to do business in California.

3. Terry Tuck, Inc. is a corporation organized under
the laws of the State of California and is authorized to do
business in this state.

sks Mace

4. As pertinent to this action, Consolidated is authorized
to carry general commodities between Lawrence, Massa-
chusetts and Los Angeles, California.

5. Between September 24, 1974 and November 27,
1974, Malden Mills, Inc. of Lawrence, Massachusetts,
tendered to Consolidated twenty-four (24) shipments of a
commodity denominated by the said Malden Mills, Inc. as
**pile fabric NOI,’’ destined for and delivered to the de-
fendant at Los Angeles, California.

6. The aforesaid pile fabric NOI was shipped suspended
in boxes on rolls or creels.

7. At the times of the various shipments, pile fabric
NOI shipped suspended in boxes was classified in the Na-
tional Motor Freight Classification Tariff 100-A, Item
49540 sub | as ‘*Class 200 AQ”’ freight.

8. The aforesaid National Motor Freight Classification
Tariff 100-A is published on behalf of Consolidated and
filed with the Interstate Commerce Commission.

9. At the times of the various shipments, Class 200 AQ
freight moving between Lawrence, Massachusetts and Los
Angeles, California carried a rate of $41.70 per hundred
weight, pursuant to Rocky Mountain Motor Tariff Bureau
521, Section 8, eleventh and twelfth revised pages 308;
Rocky Mountain Motor Tariff Bureau Tariff 21-C, first
revised page 306; Rocky Mountain Motor Tariff Bureau
Tariff 521, fourth revised title page; Rocky Mountain Motor
Tariff Bureau Tariff 120, fifteenth revised page 167; Rocky
Mountain Motor Tariff Bureau Tariff 20-G, second revised
page 296; and Increase Supplements 40 and 41 to Rocky
Mountain Motor Tariff Bureau Tariff 521, all of which
tariffs are published on behalf of Consolidated and are on
file with the Interstate Commerce Commission.

=

10. The aggregate amount payable under the applicable
tariffs for the transportation services rendered by Consoli-
dated is $20,816.44.

11. Certain payments have been made by the defendant
for the transportation services rendered by Consolidated
aggregating $8,873.67.

12. The balance due for the transportation services ren-
dered by Consolidated is $11,942.77, which sum has not
been paid by the defendant. .

Conclusions of Law

1. This action arises under an Act of Congress regu-
lating commerce, namely, 49 U.S.C.A. § 317(b). This court
has original jurisdiction of this cause pursuant to 28
U.S.C.A. § 1337.

2. The only lawful rate which may be charged and re-
ceived. by a common carrier operating in interstate com-
merce is the rate published in the carrier’s tariffs on file
with the Interstate Commerce Commission. New York Cent.
& H.R.R. Co. v. York & Whitney, 256 U.S. 406 (1921).

3. The shipper or consignee of property shipped in in-
terstate commerce is liable as a matter of law for the dif-
ference between the freight charges erroneously claimed by
the carrier and the larger amount due’ under the applicable
tariffs. New York Cent. & H. R.R. Co., supra.

4. The carrier must, under compulsion of law, recover
undercharges regardless of contrary agreement or misquo-
tation by the carrier. Louisville & N. R. Co. v. Maxwell.
237 U.S. 94, 59 L. Ed. 853 (1915); Locust Cartage Co.
v. Transamerican Freight, 430 F. 2d 334, 343 (1st Cir.
1970).

5. The only lawful rate which the plaintiff is permitted
to charge for the transportation of pile fabric NOI suspended
in boxes, between Lawrence, Massachusetts and Los An-

a oe

geles, California, is $41.70 per hundred weight. New York
Cent. & H.R. R. Co., supra.

6. The defendant, having paid a lesser rate than $41.70
per hundred weight for the transportation pf pile fabric NOI
suspended in boxes, is liable as a matter of law for the
difference between the lesser amount, and the full tariff
charge. New York Cent. & H.R. R. Co., supra.

7. The defendant is liable for freight charges in the
amount of $11,942.77.

8. There being no genuine issue as to any material fact,
and the defendant being liable as a matter of law for the
carrier’s lawful charges, the motion for partial summary
judgment is granted.

Il. MOTION TO DISMISS DEFENDANT'S
COUNTERCLAIM
It further appearing to the court that:

1. The shipper is without remedy against the carrier for
alleged damage due to reliance upon incorrect freight
charges, Pettibone, etc., Trustees of Indianapolis and Louis-
ville Ry. Co. v. Richardson, 126 F. 2d 969 (7th Cir. 1942);

2. Defendant’s counterclaim is based on alleged dam-
ages suffered from defendant’s reliance upon Consolidated’s
incorrect freight charge quotation;

3. Defendant’s counterclaim fails to state a cause of
action; therefore, Consolidated’s motion to dismiss is
granted. F. R. Civ. P. 12(b) (6).

Ill. CONSOLIDATED’S CLAIM FOR
PUNITIVE DAMAGES
Moreover, the court finds that:

1. Consolidated has asked for punitive damages due to
alleged conscious misrepresentation by defendant of the
nature of the freight shipped by means of Consolidated’s
transportation service;

ates

2. Plaintiff Consolidated basically presents a contract
action for which punitive damages do not ordinarily lie,
Cal. Civ. Code § 3294 (West 1970);

3. The damages suffered by plaintiff are a result of
improperly low freight payments made by defendant and
are hereby remedied by the grant of partial summary judg-
ment;

4. Plaintiff's claim for punitive damages is dismissed
upon the court’s own motion because such damages are not
appropriate for the claim presented in this action.

Accordingly,

IT IS ORDERED that:

1. Consolidated’s motion for partial summary judgment
is granted;

2. Consolidated’s motion to dismiss the counterclaim
is granted;

3. Consolidated’s claim for punitive damages is dis-
missed; 7

4. The cause having been determined by motions for
partial summary judgment and dismissal for failure to state
a cause of action, this action is now dismissed;

5. Each side to bear its own costs;

6. The Clerk of the Court shall serve copies of this
Order, by United States mail, upon the parties appearing
in this cause.

Dated: November 6, 1975.

/s/ Harry Pregerson
Harry Pregerson

ssid

APPENDIX B.
Opinion.

United States Court of Appeals, for the Ninth Circuit.
Consolidated Freightways Corporation of Delaware, a cor-
poration, Plaintiff-Appellee, v. Terry Tuck, Inc., a cor-
poration, Defendant-Appellant.

Terry Tuck, Inc., a corporation, Cross-Complainant-Ap-
pellant, v. Consolidated Freightways Corporation of Del-
aware, a corporation, Cross-Defendant. C. A. No. 77-2119.

Filed: Jan. 28, 1980.

Appeal from the United States District Court for the
Southern District of California.

Before: Kennedy and Farris, Circuit Judges, and Thomp-
son,* District Judge.

PER CURIAM:

Under the Motor Carriers Act § 217(b), 49. U.S.C.
§ 317(b) (1976), Consolidated Freightways sued Terry Tuck
for an amount still owing under the applicable ICC-approved
tariff. Terry Tuck counterclaimed for fraud, alleging that
the carrier knowingly misquoted the shipping rates. The
district court granted Consolidated’s summary judgment
motion for the amount still due, and it dismissed the coun-
terclaim pursuant to Fed. R. Civ. P. 12(b) (6). The facts
are admittedly indistinguishable from those occurring in
Aero Trucking, Inc. v. Regal Tube Co., 594 F.2d 619 (7th
Cir. 1979), Pettibone v. Richardson, 126 F.2d 969 (7th Cir.
1942), and F. Burkhart Mfg. Co. v. Fort Worth & D.C.
Ry. Co., 149 F.2d 909 (8th Cir. 1945). We agree with the
Seventh and Eight Circuits that no claim for relief can be
predicated on a carrier’s alleged fraudulent misquotation of

tariffs. Accordingly, the district court’s judgment and order
are AFFIRMED.

*The Honorable Gordon Thompson, Jr. , United States District Judge,
Southern District of California. sitting by designation.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_2033%3A1. Public record. Not legal advice.