Appendix — Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd.

APPENDIX A.

Opinion.

United States Court of Appeals, for the Ninth Circuit.

Thurston, Motor Lines, Inc., Plaintiff-Appellant, v.

Jordan K. Rand, Ltd., Defendant-Appellee. No. 80-5449,

DC No. 80-865-AAH.

Filed July 27, 1982.

Appeal from the United States District Court for the Cen-

tral District of California, A. Andrew Hauk, District Judge,

Presiding, Argued and Submitted November 3, 1981.

Before: Choy and Nelson, Circuit Judges, and Ingram,*

District Judge.

Choy: Circuit Judge.

This is a simple contract-collection action which normally

would have been brought in state court. Thurston Motor

Lines seeks to recover $661.41 in motor freight charges that

Jordan K. Rand, Ltd. allegedly promised to pay. Thurston

Motor sued in federal court solely because the charges

agreed upon in the shipping contract complied with the rate

and tariff provisions of the Interstate Commerce Act, 49

U.S.C. §§ 10701-10786. The district court held that this

tangential relationship to federal law cannot support federal-

question jurisdiction under 28 U.S.C. § 1337.' We agree.

*The Honorable William A. Ingram, United States District Judge for

the Northern District of California, sitting by designation.

‘Most cases on federal-question jurisdiction concern 28 U.S.C.

§ 1331. The statutory test under both § 1331 and § 1337 is whether the

case “arises under’’ federal law. We make essentially the same inquiry

in both instances. Carlson v. Coca-Cola Co., 483 F.2d 279, 280 n.1

(9th Cir. 1973).

andi

I

The precise limits of federal-question jurisdictior. are un-

certain. See, e.g., Town of Greenhorn v. Baker County,

596 F.2d 349, 351 (9th Cir. 1979). We have, however,

recognized two requirements: ‘‘plaintiffs must show that the

federal question was ‘well-pleaded’ and that the claim arose

‘directly’ under federal law.’’ /d., citing League to Save

Lake Tahoe v. B.J.K. Corp., 547 F.2d 1072, 1074 (9th Cir.

1976).

**Under the ‘well-pleaded complaint’ requirement, fed-

eral jurisdiction exists only where the plaintiff would be

required to plead and prove a proposition of federal law to

win a default judgment.’’ League to Save Lake Tahoe v.

B.J.K. Corp., 547 F.2d at 1074 (citations omitted). Neither

party disputes that state law governs what must be alleged

in order to recover for the alleged breach of contract. The

critical allegations made by Thurston Motor, which seem

the type usually made in a state contract-collection action,

are that Rand, Ltd. contracted with Thurston Motor to trans-

port certain goods for a set fee, Thurston Motor transported

the goods, and Rand, Ltd. refused to pay as promised.

Thurston Motor has not identified and we cannot readily

discern any proposition of federal law that a court need

confront in deciding what, if anything, can be recovered.’

Even if in order to win a default judgment Thurston Motor

would have to mention that the parties set the shipping tee

in accordance with the Act, the case would not arise directly

under federal law. We can discern no bright line to deter-

mine when a plaintiff satisfies this second requirement for

federal-question jurisdiction. See Town of Greenhorn vy.

Baker County, 596 F.2d at 352. Instead, we have inquired

*We do not, of course, decide whether a carrier could identify a well-

pleaded proposition of federal law in some future case.

=

generally whether the claim is federal in nature, Keaukaha-

Panaewa Community Ass'n v. Hawaiian Homes Comm'n,

588 F.2d 1216, 1226-27 (9th Cir. 1978), cert. denied, 444

U.S. 826 (1979), or whether federal law is basic or collateral

to the claim, League to Save Lake Tahoe v. B.J.K. Corp.,

547 F.2d at 1074. Thurston Motor’s claim relies on state

contract law and has at most a collateral relationship to the

Interstate Commerce Act.

Although we find the lack of federal-question jurisdiction

obvious, controlling precedent seems to suggest the opposite

result at first glance.

The most troublesome case is Louisville & Nashville Rail-

road v. Rice, 247 U.S. 201 (1918). In Rice, the Supreme

Court found federal-question jurisdiction over a suit to re-

cover $145 allegedly due the carrier for the shipment of

livestock interstate under tariffs regulated by the Interstate

Commerce Act. A fact we believe essential to the finding

of jurisdiction is that the parties had an understanding re-

quiring the carrier to assess al/ charges immediately upon

delivery of the livestock. This arrangement enabled the ship-

per to include the transportation costs in the price at which

it sold the livestock. The dispute in Rice resulted from the

carrier billing the shipper after the delivery and sale for an

additional $145 to cover disinfecting the freight cars.

Though contrary to the parties’ understanding, the additional

charge complied with lawful tariffs.

The discrepancy between the parties’ understanding and

the lawful tariffs is important because unlike the well-

pleaded complaint in the case before us, the one in Rice

could not have alleged that the shipper agreed to pay the

amount sought. The carrier there had to rely exclusively on

entities

the Act to override the parties’ understanding. Rice therefore

was not a simple contract-collection action.

Distinguishing between claims that must rely on the Act,

as in Rice, and those that rely on the parties’ agreement,

as in the case before us, conforms to the overriding purpose

of the Interstate Commerce Act. Congress sought to prohibit

carriers from charging different shippers different fees.

Louisville & Nashville Railroad v. United States, 282 U.S.

740, 749 (1930); Farley Terminal Co. v. Atchison, Topeka

and Santa Fe Railway, 522 F.2d 1095, 1097 (9th Cir.),

cert. denied, 423 U.S. 996 (1975). We would not further

this end by asserting jurisdiction over Thurston Motor’s

action to collect a properly-agreed-upon shipping charge.

The Court in Rice did not focus on the discrepancy be-

tween the understanding and the tariffs in finding jurisdic-

tion. However, our conclusion about the importance of the

discrepancy is supported by the only Supreme Court deci-

sion which both cites Rice as the support for a finding of

jurisdiction and discusses a carrier’s ability to collect lawful

charges. Lowden v. Simonds-Shields-Lonsdale Grain Co.,

306 U.S. 516 (1939), concerned a new tariff properly filed

with the Interstate Commerce Commission that required

shippers to pay for the installation of special grain doors on

box cars used to ship grain. In the past, carriers had borne

the expense. The shipper in Lowden objected to the new

tariff, notified its carrier prior to the shipment that it would

not pay for the installation, and then refused to pay $374

owed under the tariff. The Supreme Court focused on the

discrepancy between the possible understanding of the par-

ties and the new tariff, even framing the issue to be **whether

a carrier’s charges for services, actually utilized by a shipper

and authorized by a tariff requiring prior arrangements or

services, are collectible when the services are rendered on

orders, preceded or accompanied by denials of legal liabil-

adfia

ity.’ Id. at 517. The Supreme Court has never suggested

that Rice supports jurisdiction outside this context. See also

Roco Worldwide, Inc. v. Constellation Navigation, 660

F.2d 992, 994 (4th Cir. 1981) (construing Rice to involve

an agreed-upon undercharge).

We can find no other adequate ground for the jurisdic-

tional holding in Rice. The only possibility suggested in

Rice is that:

The Interstate Commerce Act requires carrier to collect

and consign to pay all lawful charges duly prescribed

by the tariff in respect of every shipment. Their duty

and obligation grow out of and depend upon that act.

247 U.S. at 202. See also Southern Pacific Transportation

Co. v. Commercial Metals Co., 50 U.S.L.W. 4442, 4444

(U.S. Apr. 27, 1982). But the existence of a federal duty

to collect lawful charges does not mean that the carrier can

bring a simple contract-collection action in federal courts.

As long as state courts entertain such lawsuits, the carrier

can satisfy its duty without coming into federal court. We

understand the federal duty to collect to give rise to federal-

question jurisdiction only over lawsuits against carriers

which do not collect proper charges.

Unless the Court based its finding of jurisdiction on the

discrepancy between the parties’ understanding and the law-

ful tariff, we doubt that Rice is still good law. The term

‘‘arising under,’’ though once construed expansively, has

taken on a narrower meaning.’ As the Supreme Court noted

in its landmark decision, Gully v. First National Bank, 299

*Many scholars have analyzed the change. See, e.g., Cohen, The

Broken Compass: The Requirement that a Case Arise ‘‘Directly’’ Under

Federal Law, 115 U. Pa. L. Rev. 890 (1967); Mishkin, The Federal

‘‘Question’’ in the District Courts, 53 Colum. L. Rev. 157 (1953).

, Reappraisal of Federal Question Jurisdiction, 46 Mich. L.

Rev. 17 (1946).

cles

U.S. 109, 113 (1936): **‘Looking backward we can see that

the early cases were less exacting than the recent ones in

respect of some of these conditions [for federal-question

jurisdiction].’"* Rather than conclude that Rice is one of the

outdated *‘less exacting’’ cases, we choose to construe Rice

as holding only that federal-question jurisdiction exists over

claims by a carrier for nonpayment of lawful fees when the

parties had an understanding or agreement inconsistent with

tariffs set in compliance with the Interstate Commerce Act.

A second troublesome precedent, White v. Atchison, To-

peka & Santa Fe Railway, 149 F.2d 919, 920 (9th Cir.

1945), contains the statement: *‘Since interstate commerce

laws are involved, the district court had jurisdiction

....°” But the jurisdictional holding in White is distin-

guishable on the same ground as that in Rice. The carrier

sued to collect from the shipper an amount required by a

lawful tariff but contrary to their agreement. For the reasons

given above, federal jurisdiction turns on the existence of

the discrepancy.

Ill

We find no adequate basis here for jurisdiction under 28

U.S.C. § 1337. Apparently, the Seventh Circuit Court of

Appeals would decide this case differently. Madler v. Artoe,

494 F.2d 323 (7th Cir. 1974). See also Maritime Service

Corp. v. Sweet Brokerage De Puerto Rico, Inc., 537 F 2d

560, 562 (Ist Cir. 1976) (under Shipping Act); George

Transport and Rigging Co. v. International Publications

“Because Gully factually resembles the case before us, a brief review

aaies, te The defendant had allegedly breached

— As, ; ‘There [was] no necessary connection be-

tween the enforcement such a contract according to its terms and the

existence of a controversy arising under federal law.’’ 299 U.S. at 114.

Consequently, the Court found, as we do here, no federal-question

=

Equipment Corp., 425 F. Supp. 1351, 1352 n.2 (E.D. Pa.

1977) (under Interstate Commerce Act). We, however, hold

that there is no federal-question jurisdiction.

AFFIRMED.

a

Order of Dismissal.

United States District Court, Central District of Califor-

nia.

Thurston Motor Lines, Inc., a North Carolina corpora-

tion, Plaintiff, vs. Jordan K. Rand, Ltd., a California cor-

poration, Defendant. Case No. CV 80 00865 AAH (Px).

Filed May 6, 1980.

Pursuant to an Order to Show Cause issued on the Court's

own motion respecting the existence of federal jurisdiction

in this case, an Order to Show Cause Hearing re Jurisdiction

was held in this Court on April 21, 1980, and pursuant

thereto, the Court makes the following order:

ORDER

The Court, having ordered the plaintiff herein to show

cause why this Court should not dismiss this action for want

of subject matter jurisdiction; and the Court having received

and read the response of the plaintiff herein to the Order

to Show Cause, and for good cause appearing:

IT IS ORDERED that this matter should be and hereby

is dismissed for want of subject matter jurisdiction; 49

U.S.C. 10741(a), the statute involved, merely prevents dis-

crimination in trucking charges; this statute does not provide

for bill collection services by a Federal Court.

Dated: May 5, 1980.

UNITED STATES DISTRICT JUDGE

—_

APPENDIX B.

§ 1337.

(a) The district courts shall have original jurisdiction of any

civil action or proceeding arising under any Act of Congress

regulating commerce or protecting trade and commerce

against restraints and monopolies: Provided, however, That

che district courts shall have original jurisdiction of an action

brought under section 20(11) of part I of the Interstate Com-

merce Act (49 U.S.C. 20(11) [49 USCS § 20(11)]), or

section 219 of part Il of such Act (49 U.S.C. 319 [49 USCS

§ 319]), only if the matter in controversy for each receipt

or bill of lading exceeds $10,000, exclusive of interest and

costs.

49 U.S.C. § 317(b) (1977)

(Supplanted in 1978 by Recodification

of Interstate Commerce Act)

(b) No common carrier by motor vehicle shall charge or

demand or collect or receive a greater or less or different

compensation for transportation or any service in connection

therewith between the points enumerated 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

privileges or facilities for transportation in interstate or for-

eign commerce except such as are specified in its tariffs:

Provided, That the provisions of sections 1(7) and 22 of

part I [$§ 1(7) and 22 of this title] shall apply to common

carriers by motor vehicles subject to this part [$§ 301-305,

306-327 of this title}.

— Ss

§ 10741.

(a) A common carrier providing transportation subject to

the jurisdiction of the Interstate Commerce Commission

under subchapter I of chapter 105 of this title [49 USCS

$§ 1050 et seq.] may not charge or receive from a person

a different compensation (by using a special rate, rebate,

drawback, or another means) for a service rendered, or to

be rendered, in transportation the carrier may perform under

this subtitle than it charges or receives from another person

for performing a like and contemporaneous service in the

transportation of a like kind of traffic under substantially

similar circumstances. A common carrier that charges or

receives such a different compensation for that service un-

reasonably discriminates.

§ 10761.

(a) Except as provided in this subtitle, a carrier providing

transportation or service subject to the jurisdiction of the

Interstate Commerce Commission under Chapter 105 of this

title [49 USCS §§1050 et seq.] shall provide that transpor-

tation or service only if the rate for the transportation or

service is contained in a tariff that is in effect under this

subchapter [49 USCS §§ 10761 et seq.]. That carrier may

not charge or receive a different compensation for that trans-

portation or service than the rate specified in the tariff

whether by returning a part of that rate to a person, giving

a person a privilege, allowing the use of a facility that affects

the value of that transportation or service, or another device.

Act Oct. 17, 1978, P.L. 95-473, § 3, 92 Stat. 1466,

provided:

**(a) Sections | and 2 of this Act restate, without substantive

change, laws enacted before May 16, 1978, that were re-

placed by those sections. Those sections may not be con-

— =

strued as making a substantive change in the laws replaced.

Laws enacted after May 15, 1978, that are inconsistent with

this Act are considered as superseding it to the extent of the

enfifine

APPENDIX C.

Complaint for Freight Charges.

United States District Court, Central District of Califor-

nia.

Thurston Motor Lines, Inc., a North Carolina corpora-

tion, Jordan K. Rand, Ltd., a California corporation, De-

fendant. Case No. 80 00865.

Filed March 8, 1980.

Plaintiff alleges as follows:

1. This action arises under an Act of Congress regu-

lating commerce, namely 49 USCA Section 10741(a) [for-

merly Section 217(b) of the Interstate Commerce Act, 49

USCA Section 317(b)]. This court has original jurisdiction

of this cause pursuant to 28 USCA Section 1337.

2. Plaintiff is a corporation incorporated under the laws

of the State of North Carolina, and authorized to do business

in California.

3. The defendant is a corporation incorporated under

the laws of the Stat. of California, and doing business within

this district.

4. The plaintiff is a common carrier by motor vehicle,

authorized as such by the Interstate Commerce Commission,

and is authorized to transport general commodities between

places in the United States.

5. On or about May 8, 1979, the plaintiff performed

transportation services for the defendant according to the

abstract of freight bills set out in Exhibit ‘*A’’ hereto.

6. Plaintiff has not recovered its full lawful charges for

the aforesaid services as set forth in its tariffs on file with

the Interstate Commerce Commission, and indeed has col-

lected nothing at all.

7. The amount of plaintiff's lawful charges which re-

mains uncollected aggregates $666.41.

euliiize

8. The defendant has refused to pay the plaintiff its full

lawful charges.

9. The plaintiff has been damaged in the foregoing

premises in the amount of $666.41.

WHEREFORE, plaintiff prays:

1. For judgment against defendant in the amount of

$666.41;

2. For interest from the date of each rendition of trans-

portation service herein until payment;

3. For costs of suit herein; and

4. For such other and further relief as is just in the

premises.

Dated: March 5, 1980.

GARFIELD, TEPPER & ASHWORTH,

A Professional Corporation

/s/ By Christopher Ashworth

CHRISTOPHER ASHWORTH

Attorneys for Plaintiff

THURSTON MOTOR LINES, INC.

EXHIBIT ‘‘A”

Date Freight Bill Amount

5/08/79 16-479230 $241.40

5/08/79 16-479238 424.01