Amicus Curiae Brief — Maislin Industries, US, Inc. v. Primary Steel, Inc.

No. 89-624 ~ FILE D

anaine wR 2 BM

In THE

Supreme Court of the United

———=

October Term, 1989

Maisuin INpustRips, U.S., INc., ef al.,

Petitioners,

v.

Primary STEEL, INc.,

Respondent.

On Petition for a Writ of Certiorari to

United States Court of Appeals

for the Eighth Circuit

AMICUS CURIAE BRIEF OF

OVERLAND EXPRESS, INC. IN SUPPORT OF

PETITIONER MAISLIN INDUSTRIES, U.S.,

INC., ET AL.

JAMES A. KNAUER

Counsel of Record

JUDY L. WOODS

Kroger, Gardis & Regas

700 Guaranty Building

Indianapolis, IN 46204

(317) 634-6828

Counsel for Official

Creditors’ Committee for

Overland Express, Inc.

JAMES M. CARR

JAY JAFFE

MARTHA R. LEHMAN

Baker & Daniels

300 North Meridian Street

Indianapolis, IN 46204

Counsel for Overland

Ewpress, Ine.

March 1, 1990

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QUESTION PRESENTED

In an action to collect freight undercharges by a bankrupt

trucking company, is the shipper bound to pay the published

rate even where the ICC deems the undercharge action to be

an unreasonable practice but has not found the published tariff

to be an unreasonable rate?

TABLE OF CONTENTS

Guostion Fuasssted .....ccccccescssceseueesaaneee

Teen Gs Camiamts ... oc cccccccececessensnle

Tete of Aatirantiies .....cccceocsee oun

INTEREST OF OVERLAND EXPRESS, INC.

AND ITS OFFICIAL CREDITORS’ COMMIT-

TEE AS AMICUS CURIAE ..................

SUMMARY OF THE ARGUMENT............

ABIQUGEEBISE « 000 cccccceseeeseeunennee

IV.

A.

B.

THE FILED RATE DOCTINE IS THE LAW

1. Publication of Tariffs is Central to the

Purpose of the Interstate Commerce Act

This Court has Consistently Upheld the

Validity of the Filed Rate Dectrine.....

Only Congress May Change the Filed

Rute DestsGRe . .occccccceeseeneeee

THE ICC MAY NOT USE A FINDING OF

UNREASONABLE PRACTICE TO ABRO-

GATE THE FILED RATE DOCTRINE ....

|. The ICC has Limited Adjudicatory

re

2. The ICC's Opinion in Negotiated Rates

Violates Rules of Statutory Construction

te

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“~<

’. THE ICC’S OPINION IN NEGOTIATED

RATES CONFLICTS WITH THE BANK-

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6

14

16

18

TABLE OF AUTHORITIES

Cases Page

American Trucking Associations v. Atchison, Topeka, &

Santa Fe R.R., 387 U.S. 367 (1967) .............. 10

Armour Packing Co. v. United States, 209 U.S. 56 (1980) 6

Breman’s Express Co. v. Mitchell Milling Co. (In re

Breman’s Express Co.), 92 Bankr. 636 (Bankr.

ee eee ccc sccctaccecess 3

Carriers Traffic Service, Inc. v. Anderson Clayton & Co.,

S81 F.20 475 (7th Cir. 1989) .................0.5. 13

Guidry v. Sheet Metal Workers National Pension Fund,

EES EIS ID 14, 15

Kelly v. Robinson, 479 U.S. 36 (1987) ................ 9

Keogh v. Chicago and Northwestern R.R., 260 U.S.

Neen ec dec ccwecccecsccccce 8,9

Louisville & Nashville R.R. v. Central Iron & Coal Co.,

Tee ee wk ees wceseecees 7

Louisville & Nashville R.R. v. Marwell, 237 U.S. 94

ee Cutan bdeedeekssecccess 6,8

Maislin Industries, U.S., Inc., et al. v. Primary Steel,

Inc., 879 F.2d 400 (Sth Cir. 1989) .............. passim

Pongetti v. Baldor Elec. Co., (In re Robinson Truck

Lines, Inc.), 89 Bankr. 584 (Bankr. N.D. Miss. 1988) 14

Primary Steel, Inc. v. Maislin Industries, U.S., Inc., et

al., No. MC-C-10961 (ICC), January 12, 1988...... 13

Rebel Motor Freight v. Southern Beverage Co., 673 F.

I ED occ cescccccccecceses 16

Regular Common Carrier Conference v. United States,

7ee F.20 376 (D.C. Cir. 1986).................... 15

Southern Pac. Transp. Co. v. Commercial Metals Co.,

og eB or ee 7, 8, 15

Southwestern Elec. Power Co. v. Burlington Northern,

Inc., 475 F. Supp. 510 (E.D. Tex. 1979)....... 12, 15, 16

Square D Co. v. Niagra Frontier Tariff Bureau, Inc., 476

Cas ED ox ch encccdascécecduacaensenceesees 8,9

Still v. Salem Carpet Mills, Inc. (In re Southwest Equip-

ment Rental, Inc.), 103 Bankr. 908 (Bankr. E.D.

WN, THD ok cncccdcccccddaduqensannadavasdsss 14

Supreme Beef Processors, Inc. v. Yaquinto

(In re Caravan Refrigerated Cargo), 864 F.2d 388

CG I nd sk ca cehoralenteetvarewens 11, 16

Texas & Pac.Ry. v. Abilene Cotton Oil Co., 204 U.S. 426

PED - cncdckansduneaswessddounsabaremeedn 6

T1.M.E.. Inc. v. United States, 359 U.S. 464 (1959) ... 14

United States v. Western Pac. R.R., 352 U.S. 59

i Ne ie eee ae 12

Western Transp. Co. v. Wilson & Co., 682 F.2d 1227

GY WE 6s ob ockceccdcisneenséestcacanenens 5

Statutes

fF tet OF fF eeperrerrrrrr errr? Tre rrr rT 2

Oe Fay SD 650 a60en6oeudusddncadaddeseuevasauns 17

Se es SUE hb tec wdsccwccesnechvcawsdecqdiacsers 17

Se 6 46600 6bs0cccksecenaceecenanuanenes 17

Be ee EE 6.650566. 00ercnncn ds cosddendadensouss 17

Sp ES 6.5 dccctencekénendouceedtesdsuane 17

4 Fe rrr rTTT Teer eT ye eT 6, 11, 13

iv

Sr Aid io Vaxcoseaevbeninndssspeaoeees 13

Py SN oa Ke Dannsccacuccsesteases 11, 13, 15-16

Pe SEN 9 0.04460 05400 canenereekddunel 16, 18

PN dacnieecsccedssceubiaccosscunbel 8, 16

PUN GA hes ecbeecewdcdsteeenceeetenuas 8, 16

CP I A 5d Sta daveb dodscueascessasatn 5, 8, 16

Pa IN bh. Fs hancddennasasdccssaceweels 16, 18

Pub. L. No. 89-170, 79 Stat. 651 (1965) ............... 14

Pub. L. No. 96-296, 94 Stat. 793 (1980) ...............

SPs SEs 9 66k nbn dvdndeiecddenneccnessaees

Legislative and Administrative Authorities

H. R. 3243, 101st Cong., Ist Sess. (1989) ............. 9

Petition to Institute Rulemaking on Negotiated Motor

Common Carrier Rates, Ex Parte No. MC-177 3

DADA PEs on tkkcdsutoneccacs 10, 12-14, 16-18

Petition to Institute Rulemaking on Negotiated Motor

Common Carrier Rates, Ex Parte No. MC-177 5

BA Re GP GUE c 6 cccdccusesevevecs 10, 12-14, 16-18

S. Rep. No. 46, 49th Congress, Ist Session, i79 (1886). 6

Other Authorities

Callari, Shippers Seek New Law on Balance Due Bills,

Traffic Management, April 1988, at 17............ 8

MacDonald, JCC Action Adds New Spin to Ongoing

Freight Undercharge Contest, Traffic Management,

ey ee OP ic Hv 6b arene beedbeceuciewniauiaee 3

Semich, Are Death-Valley Days Over for Trucking?

Purchasing, April 23, 1987, at 41.................

Take Care Now to Avoid Undercharge Woes, Pur-

chasing, October 12, 1989, at 29 .............556.

vi

No. 89-624 :

In THE

Supreme Court of the United States

October Term, 1989

MAISLIN INDustRIES, U.S., INc., ef al.,

Petitioners,

v.

PRIMARY STEEL, INC.,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Eighth Circuit

AMICUS CURIAE BRIEF OF

OVERLAND EXPRESS, INC. IN SUPPORT OF

PETITIONER MAISLIN INDUSTRIES, U.S.,

INC., ET AL.

2

I. INTEREST OF OVERLAND EXPRESS,

INC. AND ITS OFFICIAL CREDITORS’

COMMITTEE AS AMICUS CURIAE

Overland Express, Inc. (“Overland”) and its Official Cred-

itors’ Committee (the “Committee”) submit this brief in sup-

port of petitioner Maislin Industries, U.S., Inc., et al.

(“Maislin”) and respectfully request that the Court reverse the

decision of the United States Court of Appeals for the Eighth

Circuit. Maislin Industries, U.S., Inc., et al. v. Primary Steel,

Inc., 879 E.2d 400 (8th Cir. 1989). A motor common carrier,

Overland filed a petition for relief under Chapter 11 of the

United States Bankruptcy Code (“Bankruptcy Code”), 11

U.S.C. $101 et seg., (1982 & Supp. V 1987). on May 5, 1988.

Overland’s bankruptcy case is pending before United States

Bankruptcy Judge Frank J. Otte in the United States Bank-

ruptey Court for the Southern District of Indiana under case

number IP&8-3004-RAJ. On August 12, 1988, Overland ceased

operations and thereafter began to liquidate its assets. Over-

land’s creditors have filed over one thousand proofs of claim

asserting claims totalling almost $75,000,000.00.

To fulfill their statutory duties to maximize the estate for

distribution to creditors, Overland and the Committee

obtained bankruptcy court approval to employ auditors to

review Overland’ billings for errors and undercharges. The

auditors have discovered more than $20,000,000.00 of errors

and undercharges in Overland’ bills to shippers.

Pursuant to the Motor Carrier Act of 1980 (the “1980 Act”),

Congress deregulated the motor carrier industry. Pub. L. No.

96-296, 94 Stat. 793 (1980) (codified in 49 U.S.C.). The 1980 Act

did not change the requirement that carriers file tariffs with

the Interstate Commerce Commission (“ICC”), but the ICC no

longer approves carrier tariffs before they become effective.

The deregulation of the trucking industry brought about dras-

tic changes. Carriers engaged in competitive pricing and the

results were dramatic. In 1987, one commentator estimated

that since 1980 approximately 6,500 trucking firms have ceased

3

to exist.! Many of the 6,500 trucking firms that ceased opera-

tions filed bankruptcy. Trustees of these bankrupt carriers

have sought to collect undercharges in an effo.. to distribute

assets to creditors.* Cf Breman’s Express Co. v. Mitchell

Milling Co. (In re Breman’s Express Co.), 92 Bankr. 636, 644

(Bankr. W.D. Pa. 1988).

In Overland’s case, freight undercharges represent a signifi-

cant asset which can be distributed to Overland’s unsecured

creditors. The filed rate doctrine is an essential part of the

Interstate Commerce Act (the “Act”) and has been consis-

tently upheld by this Court. The filed rate doctrine mandates

that Overland collect its undercharges. Recent pronounce-

ments by the ICC have cast a cloud over the filed rate doctrine

and created equitable defenses for shippers. Overland’s

attempts to collect undercharges have been impaired by the

ICC and by the split of authority among bankruptcy and other

federal courts across the country as to whether the filed rate

doctrine remains the law. Overland’s interest in this case is

similar to that of the Petitioner, Maislin, although the magni-

tude of the undercharges ii Overland’s case is much greater

and not all of Overland’s undercharges stem from unpublished

or negotiated rates.*

'Semich, Are death-valley days over for trucking’, Purchasing, April 23,

1987, at 41.

*A recent article estimated that disputed undercharge claims may total

$100 million. MacDonald, JCC Action Adds New Spin to Ongoing Under-

charge Contest, Traffic Management, July 198%, at 15.

‘This Amicus Curiae Brief is filed with the consent of all parties to this

action.

4

Il. SUMMARY OF THE ARGUMENT

The filed rate doctrine is an essential part of the Act. It has

been a pivotal part of the congressional scheme to regulate

commerce since 1887. More than eighty years of Supreme

Court interpretation of the filed rate doctrine have left a clear

understanding of the law. Only published tariffs may be billed

and collected. Both carriers and shippers must abide by this

rule. No equitable defenses to payment of the published tariff

rate exist.

Any deviation from this rule, whether by the ICC or the

courts, is contrary to law. The power of the ICC to regulate

carriers, including the power to prohibit unreasonable prac-

tices, does not abrogate obligations of carriers and shippers

under the filed rate doctrine. Although the ICC may alter its

administrative practices and policies, it must do so within the

parameters of existing law. In changing its interpretations, the

ICC, like the courts, is bound by rules of statutory construc-

tion. Without specific congressional enactment, the ICC may

neither create equitable defenses to the filed rate doctrine nor

waive the payment of published tariffs by declaring an action to

collect underchafges to be an unreasonable practice. The deci-

sion of the Eighth Circuit in Mais/i» in affirming the findings of

the ICC was contrary to law and should be reversed by this

Court.

In cases involving negotiated rates, shippers can easily pro-

tect themselves from undercharges by requiring proof that

negotiated rates have been published. When shippers fail to

obtain published tariffs for shipments, they incur full liability

for payment of undercharges. In the case of a bankrupt carrier,

the real parties in interest in an action to collect undercharges

are the creditors of the bankrupt carrier and the shipper. In

these cases, equity lies with the creditors, not the negligent

shipper.

5

Ill. ARGUMENT

A. THE FILED RATE DOCTRINE IS THE LAW.

1. Publication of Tariffs is Central to the

Purpose of the Interstate Commerce Act.

Congressional oversight of interstate commerce is an essen-

tial function of our federal government. One of the most impor-

tant purposes of the Act is the prevention of discriminatory

pricing. The filed rate doctrine, 49 U.S.C. $10761, has been the

primary means of enforcing the goals of Congress to achieve

uniformity in the regulation of interstate commerce. In order

to promote equal access to transportation for all shippers,

Congress required carriers to publish their rates for respective

services and prohibited discounts or rebates of any kind. The

only method for a common carrier to change the rate for

carrying goods was and still is to file a new tariff.

Section 10761 of the Act requires a carrier to collect the

charges mandated by filed tariffs. 49 U.S.C. §10761 (1982).

Section 11903 makes a carrier's failure to bill or a shipper's

failure to pay in accordance with published tariffs a criminal

offense. 49 U.S.C. $11903(a) (1982). This congressional mandate

that goods be shipped only in accordance with published tariffs

has been consistently supported by decisions of this Court,

other courts, and until recently, the ICC.

It is important to note, as did the Court of Appeals for the

Seventh Circuit that

Congress did not create a flexible standard for the

courts to apply in accordance with the facts, equities

and economic realities of the particular case .. .

There is no judicial power of equitable reformation of

tariffs as of ordinary contracts.

Western Transp. Co. v. Wilson & Co., 682 F.2d 1227, 1231 (7th

Cir. 1982), reh'g denied.

Congressional intent to prohibit secret unpublished tariffs

was unequivocal in the original enactment of the Act. S. Rep.

6

No. 46, 49th Cong., Ist Sess., 179-200 (1886). The Act has been

amended numerous times, including the most recent 1980

amendments, but retains this original prohibition. 24 Stat. 380,

(1887); 49 U.S.C. $10761(a) (1980). This legislative history

underscores congressional intent to retain the filed rate doc-

trine; yet the ICC has now deemed itself empowered to over-

ride the intent of Congress.

2. This Court has Consistently Upheld the Validity of

the Filed Rate Doctrine.

Beginning with Teras & Pacific Ry. v. Abilene Cotton Oil

Co., this Court held that Congress had clearly expressed its

intention to require carriers to file tariffs and to charge ship-

pers in accordance with the filed tariffs. 204 U.S. 426 (1907).

This Court found in Armour Packing Co. v. United States “(the

Act} has provided for the establishing of one rate, to be filed as

provided, subject to change as provided, that that rate to be,

while in force, the only legal rate.” 209 U.S. 56, 81 (1908).

The Court reiterated this principle in Louisville & Nashville

RR. v. Maxwell, 237 U.S. 94 (1915). In Maxwell, this Court

required a passenger to pay the published tariff in spite of the

railroad’s mistake in quoting a fare. This Court analogized to

the transportation of goods and stated that shippers are pre-

sumed to know whether a rate is lawful. /d. at 98. The carrier's

mistake in quoting the fare did not provide a defense to pay-

ment of the published rate. /d. In fact, this Court rebuked the

Tennessee Supreme Court for attempting to create an equita-

ble defense where the Act did not provide for one. Jd. Ma.rwell/

clearly upholds the carrier's right and duty to charge in accor-

dance with the filed tariff.

In Marwell, this Court noted that the filed rate governs

unless the ICC finds that the rate is unreasonable. There is a

difference between finding that a carrier's published rate or

practice is unreasonable under 49 U.S.C. §10701 and finding

that a reasonable published tariff may not be collected. The Act

permits the former but not the latter. In determining that the

7

collection of an undercharge is an unreasonable practice, the

ICC cannot negate the shipper’s obligation to pay the filed rate.

Equitable defenses to an action for payment of the filed rate

were rejected in Louisville & Nashville RR. v. Central lron &

Coal Co., where this Court held the price of shipping goods is

fixed by law and no contract can legally reduce that amount.

265 U.S. 59, 65 (1924). “| N Jor could any act or omission of the

carrier. . . estop or preclude it from enforcing payment of the

full amount by a person liable therefor.” /d. In Maisi/in, the

Eighth Circuit Court of Appeals erred by allowing the finding

of the ICC that the carrier engaged in an unreasonable practice

to preclude the carrier from collecting the published rate.

Almost sixty years after the Cenfral Iron decision, this

Court reaffirmed the principle that bars the assertion of equi-

table defenses when a carrier demands payment in accordance

with the published rate. Southern Pac. Transp. Co. v. Com-

mercial Metals Co., 456 U.S. 336 (1982). The carrier failed to

collect all freight charges from the consignee and later sent the

consignor a bill for the balance due. The consignor defended by

claiming that the carrier had violated ICC regulations by fail-

ing to collect the freight charges prior to releasing the goods.

The carrier conceded this omission, but claimed that its omis-

sion did not provide a defense to payment. This Court looked to

the history and purpose of the credit regulations and found that

the credit regulations were intended to protect carriers, not to

harm them. 456 U.S. at 345. This Court noted that permitting

selective defenses to payment would defeat the purposes of the

Act — to prevent discriminatory rates and provide equal treat-

ment for shippers. 456 U.S. at 346. The consignor could have

protected itself from liability for freight charges by executing

the nonrecourse section of the bill of lading. If courts permitted

shippers to avoid payment based on credit violations then the

nonrecourse clause would be meaningless. 456 U.S. at 351.

Significantly, this case was decided after the 1980 Act.

The facts of Southern Pacific closely parallel those currently

before the Court. Just as the consignor in Southern Pacific

could have protected itself by executing the nonrecourse provi-

8

sions of the bill of lading, Primary Steel could have protected

itself in this case by requiring Maislin to file a tariff at the

agreed rate. Both shippers and carriers are obligated to verify

that charges comport with a filed tariff. Maxwell, 237 U.S. at

98; 49 U.S.C. §§11901-11903 (1982 and Supp. V 1987). By comply-

ing with this requirement, shippers and carriers can simply

and inexpensively protect themselves. In fact, attorneys for

both shippers and carriers have advised shippers that, while

the filed rate doctrine exists, shippers will find the costs of

compliance minimal in comparison to the costs of defending

undercharge claims. +

Recently, this Court considered the filed rate doctrine in

Square D Co. v. Niagra Frontier Tariff Bureau, Inc., 476 U.S.

409 (1986). In Square D, shippers alleged that the rates which

had been filed with the ICC constituted a violation of anti-trust

laws. The carriers based their defense on the exemption from

anit-trust laws under the Act and contended that the filed rates

constituted lawful rates and therefore could not violate anti-

trust laws. The Court cited Keogh v. Chicago and North-

western R.R., 260 U.S. 156 (1922), and noted that in Keogh the

Court found that the ICC ’s approval of the carriers’ rates had

established the lawfulness of the rates. This Court explained

that even though the ICC no longer approves rates when they

are filed, the filed rates constitute lawful rates in the same

manner that the rates in Keogh were lawful. 476 U.S. at 417.

In determining whether the Keogh rule was still a proper

interpretation of the law in light of the Reed-Bulwinkle Act and

the 1980 Act, this Court concluded that Congress had ample

opportunity to reflect on the Keogh decision. /d. at 419. Con-

gress’ refusal to rewrite the law to overturn the Keogh decision

supported the continued viability of the principle that pub-

lished reasonable rates are lawful rates. /d. The shippers also

argued that exempting carriers rates from anti-trust laws was

contrary to congressional intent to deregulate the motor car-

‘Callari, Shippers Seek New Law On Balance Due Bills, Traffic Manage-

ment, April 1988, at 17; Take Care Now to Avoid U ndercharge Woes, Purchas-

ing, October 12, 1989, at 29.

rier industry by the 1980 Act. This Court considered that

position but concluded,

been a significant part of our settled law for over half

acentury, and that Congress did not see fit to change

it when Congress carefully re-examined this area of

the law in 1980.

476 U.S. at 420 (footnote omitted). Since this Court presumed

that Congress agreed with the Keogh decision, the use of lawful

rates could not support an action for violation of the anti-trust

laws.

The Square D decision is a strong precedent for reversing the

Eighth Circuit in this case. This principle of statutory con-

struction is widely supported. See, e.g., Kelly v. Robinson, 479

U.S. 36 (1987). The rule of law that presumes congressional

knowledge and approval of prior court interpretations when

statutory amendments are made applies in this case. Congress

had considered and is currently considering an amendment to

the Act which would alter both the filed rate doctrine and the

authority of the ICC.° While congressional consideration of a

proposed amendment should not dictate how this Court inter-

prets existing law, it should provide guidance as to the congres-

bial iam ahantetien tome

The filed rate doctrine has been the law for more than eighty

years. It has withstood judicial construction and congressional

amendments, yet remains intact. Although some courts have

considered it a harsh rule, the filed rate doctrine is the law until

changed by Congress. In order to affirm the Maislin decision,

this Court would have to reverse a long line of consistent

statutory construction. Such a result is untenable.

5H.R. 3243, 10st Cong., Ist Sess. (1989), is now pending before the Surface

Transportation Subcommittee of the House Committee on Public Works and

Transportation of the United States House of Representatives.

10

3. Only Congress May Change the Filed Rate Doctrine.

In October, 1986, the ICC issued its advisory opinion in

Petition to Institute Rulemaking on Negotiated Motor Com-

mon Carrier, Rates, Ex Parte No. MC-177 (“Negotiated Rates

I”) which determined that the ICC has primary jurisdiction to

determine whether a carrier's collection of undercharges is an

unreasonable practice under 49 U.S.C. §10701. 3 L.C.C.2d 99

(1986). This opinion was amended by the ICC in June, 1989,

Petition to Institute Rulemaking on Negotiated Motor Com-

mon Carrier Rates, Ex Parte No. MC-177 (“Negotiated Rates

II"). 5 L-C.C.2d 623 (1989). The ICC's position in Negotiated

Rates | and 11 ignores the rules of statutory construction and

by the ICC's own admission represents a drastic reversal of

prior policy.

These edicts by the ICC were not prompted by any new

direction from Congress, but by the ICC's perception of chang-

ing price structures and competitiveness in the trucking indus-

try. 3 L.C.C.2d at 104. According to the decision of this Court in

American Trucking Associations v. Atchison, Topeka, &

Santa Fe R.R., 387 U.S. 367 (1967), an administrative agency

can change its practices in light of new developments. While

the ICC may have the power to regulate and to change its

administrative policies within the framework of existing law, it

may not avoid its duty to uphold the Act, including the filed rate

doctrine. It may not prefer one section of the Act to the

exclusion of another. The dramatic change espoused in Negot/-

ated Rates | and I] without corresponding change in the under-

lying statutues constitutes a usurpation by the ICC of

congressional authority.

The Mais/in court upheld the decision of the ICC, based on

its policy as announced in Negotiated Rates 1, finding collection

of undercharges by Maislin was an unreasonable practice

under 49 U.S.C. §10701 and that Primary Steel need not pay

the published rate for shipments made. 879 F.2d at 400, 406.

In Caravan Refrigerated Cargo, Inc., the United States

Court of Appeals for the Fifth Circuit held that even if the ICC

ll

finds that a carrier engaged in an unreasonable practice, nei-

ther the ICC nor a court has authority to prevent collection of

valid published tariffs. Supreme Beef Processors, Inc. v.

Yaquinto (In re Caravan Refrigerated Cargo, Inc.), 864 F.2d

388, 394 (5th Cir. 1989) reh’g and reh’g en banc denied, petition

for cert. pending, No. 88-1958. This is the better reasoned view.

While there can be no doubt the ICC is fully empowered to

determine the reasonableness of carrier rates and practices

under 49 U.S.C. §10701, this power does not extend to allow the

ICC to permit a shipper to pay less than the published rate.

Even where a negotiated rate is clearly established as in Mais-

lin, the shipper may not escape its obligation under the filed

rate doctrine. To hold otherwise creates a defense for the

shipper without legal basis. It subverts the policy of providing

equal access to transportation. It gives the shipper a cause of

action for Lhe carrier's unreasonable practice, when the Act

does not contemplate one. Congress opted in the 1980 Act to

retain the filed rate doctrine. Rather than create a private

cause of action for carrier violations and unreasonable prac-

tices, Congress chose to give the ICC broad regulatory and

enforcement powers.

The practical result of the decision by the Eighth Circuit in

Maislin would be to allow carriers and shippers to make the

filed rate doctrine a nullity by simply negotiating an

unpublished rate. If the competitive pricing structure of the

trucking industry warrant this, then Congress, not the ICC,

must enact new laws. Until Congress changes 49 U.S.C.

$10761, carriers, shippers, the ICC, and the courts must abide

by the law. If an equitable defense to collection of a published

tariff is to be permitted, this defense must have a statutory

basis.

12

B. THE ICC MAY NOT USE A FINDING OF

UNREASONABLE PRACTICE TO ABROGATE THE

FILED RATE DOCTRINE.

1. The ICC has Limited Adjudicatory Powers.

Recently, the ICC has taken an active role in adjudicating

matters pertaining to freight undercharge disputes.® These

cases have traditionally come before the ICC by referral from

district and bankruptcy courts under the doctrine of primary

jurisdiction. More recently, such actions have been commenced

by petition of a shipper based on the policy announced by the

ICC in Negotiated Rates II which authorizes adjudication by

the ICC without court referral. 5 I.C.C.2d 623 (1989). Just as

this Court held that mere reference to “tariff construction” is

not “determinative on the jurisdictional issue,” so too, should it

hold that mere reference to “reasonableness” of billing prac-

tices and tariffs is not outcome determinative in this or similar

cases. United States v. Western Pac. R.R. 352 U.S. 59, 68-69

(1956).

The ICC has limited jurisdiction and no plenary power to

fashion remedies. Southwestern Elec. Power Co. v. Burlington

Northern, Inc., 475 F. Supp. 510, 520 (E.D. Tex. 1979). Even

the ICC admits in both Negotiated Rates I and I] that it has no

power to grant a remedy, only to determine “reasonableness”

issues:

The Commission has no authority to award

damages. Only the courts can grant a remedy.

3 1.C.C.2d 99, 101 (1986).

We now see that our ‘advisory opinion’ language may

have been a source of confusion and requires clarifica-

tion. It was used only to illustrate that this agency's

unreasonable practice finding in certain instances

‘The number of cases now pending or recently decided is too great to

permit citation. See Petition for Writ of Certiorari to the United States Court

of Appeals for the Eighth Circuit, No. 89-64, October 16, 1989, App. D-H. In

none of these cases has the ICC ruled in favor of a carrier.

13

may not be self-enforcing (since the courts, not the

Commission, have the more narrower [sic] authority

to order or deny payment of undercharges in a par-

ticular case), and would be issued only in response to

a court referral of the unreasonable practice issue.

5 I.C.C.2d 623 (1989).

Yet, the ICC has created an equitable defense to the filed

rate doctrine under its interpretation of 49 U.S.C. §10701 and

has created a remedy for the shipper by declaring that the

carrier's unreasonable practice prevents collection of the filed

rate. This was the result in Maislin.

In light of our conclusion that negotiated rates

existed, we find that it would be an unreasonable

practice now to require Primary Steel to pay under-

charges for the difference between the negotiated

rates and the tariff rates.

Primary Steel, Inc. v. Maislin Industries, U.S., Inc., et al.,

No. MC-C-10961 (ICC), January 12, 1988; Appendix C to Peti-

tion for Certiorari at 44a.

Both the ICC and the Maislin court claim this result does

not abolish the filed rate doctrine. The clear effect is to use one

section of the Act (49 U.S.C. §10701) to nullify another (49

U.S.C. §10761). The tension and potential for conflicting inter-

pretations has been noted by other courts. See, e.g., Carriers

Traffic Serv., Inc. v. Anderson Clayton & Co., 881 F.2d 475, 482

(7th Cir. 1989).

[A] finding of negotiated rates should not automati-

cally signal the follow-up conclusion of unreasonable

carrier practices. Such reasoning would permit ship-

pers and carriers to avoid the filed rate doctrine

simply by agreeing on a rate. The filed tariffs could

largely be ignored. This line of thought takes 49

U.S.C. §§10701(a) and 10704 beyond their intended

purpose and undercuts the vitality of 49 U.S.C.

§10761(a), which is clearly contrary to the law.

14

Pongetti v. Baldor Elec. Co. (In re Robinson Truck Lines,

Inc.), 89 Bankr. 584, 592 (Bankr. N.D.Miss. 1988).

This Court previously faced an attempt to create a cause of

action for shippers where the Act provided none. 7./.M.E.,

Inc. v. United States, 359 U.S. 464 (1959). The Court's analysis

of legislative history and congressional intent where part, but

not all, of the relevant portions of the Act were amended is

directly applicable to this case in light of the 1980 Act. It may be

that the result here will lead to future legislative action just as

the Act was amended after 7.].M.E. See Pub. L. No. 89-170, 79

Stat. 651, 651-652 (1965). If there is to be a change; so be it.

However, Congress, not the ICC or the courts, must make such

a change.

2. The ICC’s Opinion in Negotiated Rates Violates Rules

of Statutory Construction.

If the goal is as the ICC suggests to “harmonize” two provi-

sions of the Act, the usual and customary rules of statutory

construction should apply. Where two parts of the same statute

appear to conflict, the more specific portion controls over the

more general. As one court noted, the broad rule giving the

ICC the power to regulate unreasonable practices cannot con-

trol the specific rule requiring adherence to the filed rate

doctrine.

Congress has given the ICC broad authority to regu-

late carrier practices, but Congress itself has

enacted a key regulation — the rule that the filed rate

controls.

Still v. Salem Carpet Mills, Inc. (In re Southwest Equipment

Rental, Inc.), 103 Bankr. 908, 910 (Bankr. E.D. Tenn. 1989).

The importance of this rule of statutory construction was

reaffirmed in Guidry v. Sheet Metal Workers National Pension

Fund, 110 S.Ct. 680 (1990). This Court refused to permit a

general section of the Labor-Management Reporting and Dis-

closure Act of 1959 to override a specific prohibition against

alienation of pension benefits contained in the Employee

15

Retirement Income Security Act of 1974. An exception to the

prohibition where Congress had created none could not be

upheld by this Court. 110 S.Ct. at 687. Guidry demonstrates

that a policy choice made by Congress may not seem fair, but in

light of clear congressional choice the courts must defer.

The ICC's use of the unreasonable practice section of the Act

has given shippers a defense to the payment of filed rates when

both Congress and this Court have said no defenses exist. In

Southern Pacific, this Court refused to permit the carrier's

violation of ICC credit regulations to create a defense to the

payment of freight charges. This Court was concerned that

permitting selective equitable defenses would abrogate the

entire rule. 456 U.S. at 352. See also Guidry, 110 S.Ct. at 687.

The ICC’s unreasonable practice findings provide shippers

with a method of avoiding compliance with filed tariffs. This is

in violation of the clear intent of section 10761 which provides no

defenses to payment of the published tariff.

The general rulemaking authority delegated by Congress to

an administrative agency can never be the basis for allowing

that agency to make a rule which prohibits a practice which is

mandated by the same statute. Southwestern Equipment, 103

Bankr. at 910; see also Regular Common Carrier Conference v.

United States, 793 F.2d 376 (D.C. Cir. 1986).

Another important consideration is that the 1980 Act modi-

fied the authority of the ICC to grant relief from the filed rate

doctrine to contract carriers. 49 U.S.C. §10761(b) (1982).

Under this provision, the ICC may grant relief from the stric-

tures of 49 U.S.C. §10761(a) only to contract carriers.

Having given the ICC statutory authority to grant

relief from the filed rate statute for contract carriers

only, Congress must be presumed to have decided

that the other changes made in the law by the 1980

Act did not justify giving the ICC the authority to

alter the operation of the filed rate statute between

common carriers and their customers.

16

Southwestern Equipment, supra at 910, citing, In re Caravan

Refrigerated Cargo, 864 F.2d 388 (5th Cir. 1989); Rebel Motor

Freight v. Southern Beverage Co., 673 F.Supp. 785 (M.D.La.

1987). This distinction between common and contract carriers

indicated Congress did not intend to overrule the filed rate

doctrine.

A final point about congressional intent and statutory inter-

pretation by the ICC under Negotiated Rates I] was made in

Southwestern Equipment. 103 Bankr. at 911. Under 49 U.S.C.

$10762(d) the ICC now has authority to shorten the notice

period for making a tariff effective after its date of publication

from thirty days to one day.

The reason for shortening the notice period appears

obvious. The period was shortened so that carriers

and shippers can negotiate rates for immediate ship-

ping and still abide by the filed rate statute.

Id. at 911. See also 49 C.F.R. §1312.4(e) (1988).

In the absence of clear congressional intent, courts and

administrative agencies should be loathe to make sweeping

changes in statutory interpretation. Even though the ICC may

have considerable latitude to alter its policies and regulations,

courts must abide by the law and enforce the filed rate doctrine

under 49 U.S.C. §10761.

C. THE ICC’S OPINION IN NEGOTIATED

RATES CONFLICTS WITH THE BANKRUPTCY CODE.

The basic dispute underlying the collection of a freight

undercharge is the allocation of the burden for failing to comply

with the law. Both the shipper and the carrier are obligated to

see that tariffs are filed and abided by.

Civil and criminal penalties apply to any person who

“knowingly offers, grants, gives, solicits, accepts, or receives”

transportation services at rates less than the published tariffs.

49 U.S.C. §§11901, 11902, 11903 (1982 & Supp. V 1987). The fact

that the filed rate doctrine is still an important part of the Act is

17

apparent in the fines and penalties that may be imposed for

violations of it. Since both shippers and carriers are subject to

these obligations, if tariffs are not filed or published rates are

not charged and paid, who should bear the responsibility?

Most operating carriers do not attempt to collect under-

charges, even for clerical errors, for fear of alienating shippers

and losing business.? In most cases, it is a bankruptcy trustee®

who discovers that published tariff rates have not been billed or

paid. It is the creditors, usually unsecured creditors, who bear

the economic burden of the illegal bargain between shipper and

carrier.

Even if the ICC determines that a carrier has engaged in an

unreasonable billing practice, the ICC lacks authority to grant

a waiver of undercharges as a remedy for the shipper. In the

case of a bankrupt carrier, the trustee must collect any under-

charges which are due from shippers. A bankruptcy trustee is

a fiduciary with respect to creditors and has a duty to maximize

the bankruptcy estate. Under the Bankruptcy Code, the

trustee is obligated “to collect and reduce to money the prop-

erty of the estate.” 11 U.S.C. §704 (Supp V 1987) ; 11 U.S.C.

§§1106, 1107 (1982 & Supp V 1987). This is the primary obliga-

tion of the trustee. Under 11 U.S.C. §541 (1982 & Supp V 1987),

a cause of action is property of the estate. As a result, the real

parties in interest in most cases, including Maislin, are the

creditors of the bankrupt carrier and the shipper. The ICC's

policies in Negotiated Rates I and I] fail to account for this. The

ICC has allocated the burden for abiding by the filed rate

doctrine entirely to the carrier. Shippers are the parties who

have the most direct economic interest to protect and who can

most easily prevent an undercharge claim. Shippers should not

be excused from paying the published rate.

Because shippers can so easily protect themselves from

undercharge claims, it is particularly inequitable to allow them

7Shippers do, however, collect overcharges from operating carriers.

‘Under the Bankruptcy Code, a debtor-in-possession has the same duties

and responsibilities as a trustee. 11 U.S.C. §§1107, 1108.

1s

to reap the benefit of paying less than the filed rate, while

ordinary trade creditors of the bankrupt carrier go unpaid. A

shipper who allows repeated shipments, sometimes over a

period of years, to be made without obtaining and verifying

that the rate has been duly published does not have equity on

its side. Rates may now be published on one day's notice. 49

U.S.C. $10762(d) (1982); 49 CFR §1312.4(e) (1988).

Many of the undercharge cases heard or pending in district

and bankruptcy courts involve large, sophisticated shippers

with considerable economic clout to negotiate favorable rates.

Primary Steel was such a shipper. This case, like so many

others, is not a case of one side obtaining an unfair advantage,

but a case of an illicit bargain between a shipper and a carrier

who both knew or should have known they were operating

under an unpublished tariff. Neither party may equitably use

the other's conduct or “unreasonable” practice to excuse its

own failure. A shipper who does not obtain a published tariff

after negotiating a rate is liable for the published rate. If equity

determines the outcome in these cases, it lies with the cred-

itors of bankrupt carriers, not with a shipper who could have

easily prevented the undercharges but instead participated in

the negotiation of unpublished rates and knew or should have

known it was paying less than the filed rate.

IV. CONCLUSION

The difficulty with both the [CC advisory opinions in Negofi-

ated Rates I and I] and the Maislin decision is that they go too

far. A negotiated rate is not always an unreasonable practice,

nor is an action to collect undercharges. Even where a carrier

engages in a practice deemed to be unreasonable, the shipper

remains obligated to pay the published rate. Allowing the

shipper to receive a windfall at the expense of the creditors of a

bankrupt carrier places the burden for noncompliance on the

wrong parties.

The question of whether the filed rate doctrine should exist

in an era of deregulation is a question for Congress. The Court

19

cannot make policy or shape legislation; it is the judicial branch

of a tripartite government. The ICC cannot change the law or

reallocate the burden of noncompliance with the law. It is a

creature of the executive branch designed to implement the

policy choices of Congress. Only Congress has the constitu-

tional power to alter the filed rate doctrine, whether by elim-

inating it or creating an equitable defense to it. Congress has

not yet done this. Until Congress amends the Interstate Com-

merce Act, the choice for the judicial and executive branches is

clear; the filed rate doctrine remains the law without excep-

tion.

For all of the foregoing reasons, Overland Express, Inc. and

its Official Creditors’ Committee as amicus curiae to Maislin

pray that this Court reverse the decision of the United States

Court of Appeals for the Eighth Circuit in Maislin Industries,

U.S., Inc., et al. v. Primary Steel, Inc.

Respectfully submitted,

JAMES A. KNAUER

Counsel of Record

JUDY L. WOODS

Kroger, Gardis & Regas

700 Guaranty Building

Indianapolis, IN 46204

(317) 634-6328

Counsel for Official

Creditors’ Committee for

Overland Express, Inc.

JAMES M. CARR

JAY JAFFE

MARTHA R. LEHMAN

Baker & Daniels

300 North Meridian Street

Indianapolis, IN 46204

Counsel for Overland Express, Inc.

March 1, 1990