# Amicus Curiae Brief — Reiter v. Cooper

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0251%3A10

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1993
- **Citation:** 507 U.S. 258

## Text

No. 91-1496 cr Sete
i 4 1997?
In The | orrict OF THE CLERK }

Supreme Court of the Unitéd-States

October Term, 1992
o

IN RE: CAROLINA MOTOR EXPRESS, INC.,
Debtor.

®

PETER C. REITER and
CALIFORNIA CONSOLIDATED ENTERPRISES, INC.,

Petitioners,

LANGDON M. COOPER, TRUSTEE
FOR CAROLINA MOTOR EXPRESS INC.,
MARK & ASSOCIATES OF NORTH CAROLINA, INC.,

Respondents.

¢

On Writ Of Certiorari
To The United States Court Of Appeals
For The Fourth Circuit
+

BRIEF OF LEONARD L. GUMPORT, TRUSTEE
OF THE BANKRUPTCY ESTATE OF
TRANSCON LINES, AS AMICUS CURIAE
IN SUPPORT OF THE RESPONDENTS
@

Leonarp L. Gumport, Esq.*
355 South Grand Avenue,

nis 39th Floor

Los Angeles, California 90071
(213) 617-7070
*Trustee of the Bankruptcy
Estate of Transcon Lines

COKER CALL COURT i) 322881

QUESTION PRESENTED

Amicus curiae will address the following question:

In a civil action by an insolvent common carrier to
enforce and collect its unambiguous filed tariff rate (the
“filed rate”) from a private shipper, must the trial court
delay enforcement of that rate merely because the shipper
alleges that the rate is unreasonable, even though:

1. the shipper may protect its right to recover repa-
rations for payment of an unreasonable filed rate by
depositing it with the court under Rule 67 of the Federai
Rules of Civil Procedure as amended in 1983;

2. enforcement of the filed rate is “utterly central”
to the Interstate Commerce Act (Maislin, 111 L.Ed.2d at
112);

3. a filed rate is binding unless and until suspended
by the ICC; _

4. the. plain meaning of the Interstate Commerce Act
conflicts with a shipper’s purported implied right to
withhold payment, and the legislative history of the repa-
rations provisions does not show a clear intent to over-
rule Crancer v. Lowden, 315 U.S. 631 (1942); ~

5. Congress in 31 U.S.C. § 3726 only granted the
United States, not private shippers, a right to withhold
payment; and

6. permitting the shipper to withhold payment of
the filed rate will prejudice both solvent and insolvent
carriers?

TABLE OF CONTENTS

Page
QUESTION PRESENTED ..........:seseeecwce: eee
INTEREST OF AMICUS CURIAE ...............4-. 1
SUMMARY OF ARGUMENT.................00000: 4

ARGUMENT:

I.

E. The Plain Meaning

FED.R.CIV.P 67 PROVIDES A REMEDY FOR
PETITIONERS’ FALSE DILEMMA, SO THAT
THERE IS NO REASON TO OVERRULE
CRANCER v. LOWDEN OR TO UNDERMINE
THE “UTTERLY CENTRAL” PURPOSE AND
PLAIN MEANING OF THE INTERSTATE COM-
MERCE AGT ....ccccovcesscnssseunneneeneee

A. Petitioners’ False Dilemma................

B. Fed.R.Civ.P. 67 Makes Crancer v. Lowden
Equally Applicable To Filed Rate Claims Of
inseivent Cassteg®. ...+cccscessaseenee

C.. The Primary Jurisdiction Doctrine Does Not
Permit Referral To The ICC Of A Filed Rate
Claim When The Meaning Of The Tost Is
Not In Dispute.............6600 cece eeeeee

D. The Filed Rate Doctrine Is “Utterly Central”
To The Interstate Commerce Act And
Would Be Undermined By qt | heme Os
mits A Shipper To With
The Filed Rate Pending A Hearing On Rate
Reasonableness..... - . «~~. 6-66 ees w we nnne

tent With An

IL.

“es”

TABLE OF CONTENTS - Continued

Page

1. The Plain Meaning Of The Act Conflicts
With An ange a To Withhold

Pi Ciiceeeasescesscececccces:

2. The Plain Meanin Also Conflicts With

3. The Plain Meaning Also Conflicts With
The Proposed ——— aes Of

Recoupment. .. =e e228 *@ SSB eR € SF SFeeSTSESEHeSSEZS

> Referral Based On Unsubstantiated
Of Filed Rate Unreasonableness Will
Undermine The Filed Rate Doctrine And
ED wncccccscceccccccceccecs

G. Stas Mined Gy Petttenen Weate be
Highly Prejudicial To Both Solvent And
I

ACT SO AS TO REFER FILED RATE CLAIMS
TO AN AGENCY THAT HAS PUBLICLY
ANNOUNCED THAT IT: (A) WANTS TO
ABOLISH THE FILED RATE DOCTRINE AND
(B) WILL NOT SAFEGUARD THE

BIN, CHAIRMAN, INTERSTATE
COMMERCE COMMISSION, TO THE
RARITAN TRAFFIC CLUB, INC. ON
TUESDAY, MARCH 10, 1992, AT
PINES MANOR RESTAURANT, EDi-

14

15

18

21

iv

TABLE OF AUTHORITIES

Page
Cases
Crancer v Lowden, 315 U.S. 631 (1942) ........ 6, 8, 12
Great Northern Railway Co. v. Merchants Ele
| 2 § | ae

Griffin v. Oceanic Contractors, Inc., 458 US. 546

Gulf States Utilities Co. v Alabama Power Co.,
824 F.2d 1465 (Sth Cir 1987) modified 831 F2d

ICC v. Transcon Lines, _ F2d __ (9th Cir., t Sams

In re Oneida Motor Freight v. peannneeniineninns
BF RE Te eee 15

v. & Northwestern R. sheen 260 US.
EN SARA eae SET eS 4

Maislin Industries, US., Inc. v. Primary Steel, Inc.,
497 US. __, 111 LEd2d 94, 110 S.Ct. 2759

GED oh ccsccccccescessesesenccnaseseccocessss passim
Milne Truck Lines, Inc. v. Makita US.A, Inc, __

FED ce, GU Gin PUY Uy CEP ccccccscccccccepees
Montana-Dakota Utilities Co. v. Northwestern

Public Service Co., 341 U.S. 246 (1950).............8

ates, 793 F.2d 376 (D.C. Cir 1986)................9

v

TABLE OF AUTHORITIES - Continued

Page
United States v. aoe ae See oe
United § Sistes «. Western Pacific Railroad Co., 352
STATUTES
11 USC. § SO20K2).......... pdetdesendsnevdsineda 19
Oe SED sitnunscescccedsocedcnbkenuenseaien 13
Wy oo c5icsscatecseceennee
Oe Ge Ea cesescescccccocescccocesescesth Un OE
ee EE ncsccccscesscccsstcsscedeer tl
Fe eB EI cccccccccescscoscccsocucee
49 USC. § 10101(aK1KD)....................... 17, R
BD Ta © Be occ cccccccccccccccccess 17, 22
49 USC. § 10701fe) ...... pesesucseonesoosesedcusias 17
Rabo ckccedcesevéecécesecs mdéintenn an
Gr ie OF Pe cnccnccseccccececces Decceecess 9, 15
Se ee EL oc cncsccecsstucccesssdvessseo me
rteccreccecesessessoess 4, 5, 6, 14, 20, 23
ot otnnescenceessssedsetdexcunsaiensel 22

vi No. 91-1496
°

In The

Supreme Court of the United States
October Term, 1992

TABLE OF AUTHORITIES - Continued
Page

Lecest ative Marexiais

S.Rep.No. 46, 49%h Cong, Ist Sess. (1886)... . 10, 21, 22

+ _
| IN RE: CAROLINA MOTOR EXPRESS, INC,
4 + Collier on + Bankruptcy —— at 553-38 (15th | .
DE. DINED... . 22-00 -ceveveverceesscccereresorerrs: 3 PETER C. REITER and
Informal Procedure For Determining Motor Car- CALIFORNIA CONSOLIDATED ENTERPRISES, INC,
rier And Freight Forwarder Reparation, Ex Petitioners,
Parte No. 249 Gub-No. 1), 335 LCC. 403 (1969)... 12 e
Petitions for Issuance of Rate Reasonableness and
Unreasonable Practices eaand Statement, 8 LANGDON M. COOPER, TRUSTEE
LCC26 68 (1991) .........------ coserececsrecs By WD FOR CAROLINA MOTOR EXPRESS INC,
Settens fer Payment of Rates and Charges - MARK & ASSOCIATES OF NORTH CAROLINA, INC,
- for Nonpayment (49 CFR Respondents
Part sot 1S20). F "C. Ex Parte No. MC-1 bvtnaed e : -

i ED ccecccesccccscceasetucbawessbevessooscoce WO On Writ Of Certiorari

To The United States Court Of Appeals
For The Fourth Circuit
°
BRIEF OF LEONARD L. GUMPORT, TRUSTEE
TRANSCON LINES, AS AMICUS CURIAE
IN SUPPORT OF THE RESPONDENTS
o-

Amicus curiae is Leonard L. Cumport, the chapter 7
bankruptcy trustee of the estate of Transcon Lines. Trans-
con Lines was a major motor common carrier with annual
revenues in excess of $200 million.

2

Transcon Lines collapsed during the period of illegal
rate destabilization promoted by the ICC under its Nego-
tiated Rates policy. In May 1990, health, welfare and pen-
sion plans of Transcon Lines filed an involuntary
bankruptcy petition against it. In June 1990, less than 30
days before this Court invalidated the ICC’s Negotiated
Rates policy in Maislin industries, US., Inc. v. Primary
Steel, inc, 497 US. __ (1990), the Bankruptcy Court for
the Central District of California appointed Mr. Gumport
as trustee of Transcon Lines.

During the Negotiated Rates regime, Transcon Lines
operated at a deficit while granting secret discounts to
attract and hold the trade of shippers. Among other
things, Transcon Lines funded the deficits caused by its
rate discounts by: (1) wage concessions from its
employees, (2) defaults on payments to their health, wel-
fare and pension plans, and (3) neglect of its legal duty to
conduct environmental clean up of the underground fuel
storage tanks at its truck terminals throughout the coun-
try.

Once a source of jobs for more than 3,000 employees
throughout the United States, Transcon Lines now has
only two employees. It has no business operations. It has
thousands of creditors, including former employees, their
benefit funds, equipment lessors, and landlords. Its pri-
mary activities consist of efforts to recover illegal dis-
counts and to remediate 2nd sell its polluted truck
senantndl

ough Transcon Lines went bankrupt while grant-

maa Zemsunts to Gene, the recipients of these
illegal discounts now contend that any payment by them

3

should be delayed while they litigate the reasonableness
of Transcon Lines’ filed tariff rates. The shippers’ evi-
dence that Transcon Lines’ filed rates are unreasonable
include Transcon Lines’ illegal, unfiled rates (which
count rates of other carriers (who may have offered non-
compensatory rates to solicit or hold business while the
ICC abdicated its duty to enforce the tariff system).

Beginning in 1990, the ICC sought to halt the filed
rate collection effort of the Transcon Lines trustee. See
ICC v. Transcon Lines, __ F2d __ (9th Cir, June 17,
1992)(petitions for rehearing pending). On March 10,
1992, the Chairman of the ICC publicly condemned the
filed rate doctrine as a “dinosaur.” See Appendix A. The
ICC has indicated that it may revive its illegal Negotiated
Rates policy through the subterfuge of making unfiled
rates evidence that filed tariff rates are unreasonable and
therefore unenforceable. See Petitions for Issuance of Rate
Reasonableness and Unreasonable Practices Policy Statement,
8 LC-C.2d 61, 74 (1991).

Perceiving that the ICC will adhere to its view that
unfiled rates should be enforced, shippers now seek
wholesale referral of filed rate litigation to the ICC for
rate reasonableness hearings. In the meantime, the former
employees of Transcon Lines remain unpaid, the polluted
truck terminals remain unremediated, the ICC publicly
scorns as a “dinosaur” the statutory tariff system man-
dated by Congress, and money that shippers should

disgorge or pay into court under Fed.R.Civ.P. 67 is con-
sumed instead in legal fees.!

«

SUMMARY OF ARGUMENT

Petitioners should pay the filed rate, and the ICC
should enforce the tariff system as urged by Respondents.
Petitioners and their amici create a false dilemma by

failing to mention the provisional remedy provided by”.*

Fed.R.Civ.P. 67. As amended in 1983, Rule 67 permits
Petitioners to preserve their right to reparations by pay-
ing the filed tariff rate into the registry of the trial court.

To allow Petitioners to delay payment of the filed
rate during protracted ICC hearings on rate reasonable-
ness would undermine the “utterly central” policy of
enforcement of the filed rate. Withholding payment of the
filed rate prejudices both solvent and insolvent carriers.
The plain meaning of the Interstate Commerce Act is
inconsistent with an implied right to withhold payment
of the filed rate. An unsubstantiated claim of rate unrea-
sonableness never justifies agency referral. Illegal,
unfiled rates are not competent evidence of the unrea-
sonableness of filed rates.

This case does not involve the admittedly “unique”
right of set-off that Congress did give to the United States
in 31 U.S.C. § 3726. See brief of amicus ICC at 13 n.7.

e

' Pursuant to Rule 37.3 of the Rules of this Court, the par-
ties have consented to the filing of this brief. The parties’ letters
of consent will be filed with the Clerk of this Court.

ARGUMENT

I. FED.R.CIV.P 67 PROVIDES A REMEDY FOR PETI-
TIONERS’ FALSE DILEMMA, SO THAT THERE IS
NO REASON TO OVERRULE CRANCER v. LOW-
DEN OR TO UNDERMINE THE “UTTERLY CEN-
TRAL” PURPOSE AND PLAIN MEANING OF THE
INTERSTATE COMMERCE ACT

A. Petitioners’ False Dilemma

Petitioners have no valid excuse to withhold pay-
ment of the filed rate. They can and must pay it — either
to the carrier or the court registry

In their statement of issue and throughout their
briefs, Petitioners and their amici emphasize that this
case involves an insolvent carrier. Petitioners argue that
their ‘right to recover reparations is meaningless unless
Petitioners have an implied statutory right to withhold
payment of the filed rate pending final ICC adjudication
of rate reasonableness claims.

Respondents refute those arguments. Further, as
described below, Petitioners’ purported dilemma does
not in fact exist. Private shippers sued by an insolvent
carrier can preserve the right to recover reparations by
paying the filed rate into the registry of the court. This
remedy is consistent with the statutory language and the
policy of strict enforcement of the filed rate doctrine. The
remedy proposed by Petitioners - judicial creation of a
right to withhold payment until the ICC conducts pro-
tracted rate review proceedings — is not.

B. Fed.R.Civ.P. 67 Makes Crancer v. Lowden

Equally Applicable To Filed Rate Claims Of
Insolvent Carriers

More than five decades ago, this Court held that a
trial court has discretion to enforce a carrier’s filed rate
claim against a shipper without waiting for the ICC to
decide the shipper’s rate reasonableness claims against
the carrier. Crancer v. Lowden, 315 U.S. 631 (1942). In
holding that the trial court correctly proceeded to enforce
the carrier’s’ fifed rate claim, the Court noted that it was
“important to aid the efforts of a carrier in collecting
published cRarges in full.” Id. at 635.

Petitioners and their amici do not ask this Court to
overrule Crancer. Instead, they attempt to distinguish it
on the ground that it involved a solvent carrier who
could make the shipper whole if the ICC awarded a
reparations claim. In fact, the Court in Crancer did not
state that the carrier was solvent, and stated only that a
reparations claim was a “complete remedy. ...” Id., 315
U.S. at 635.

After Crancer was decided, Fed.R.Civ.P. 67 was
amended to provide a provisional remedy to a defendant
that owes money to a plaintiff but claims an interest in
that money. Under Rule 67, when an insolvent carrier
sues to recover a filed rate from a shipper, the shipper can
fully preserve its ability to recover reparations by paying

the filed rate into the registry of the court. Rule 67 pro-
vides:

In any action in which any part of the relief
sought is a judgment for a sum of money or the
disposition of a sum of money or the disposition

2

of any other thing capable of delivery, a party,
upon notice to every other party, and by leave of
court, may deposit with the court all or any part
of such sum or thing, whether or not that party
claims all or any part of the sum or thing.

The 1983 amendment to Rule 67 broadened it to
permit a party who claims an interest in the deposited
funds to make the deposit. See Gulf States Utilities Co. v.
Alabama Power Co., 824 F.2d 1465, 1474-75 (5th Cir. 1987),
modified 831 F.2d 557 (1987)(in dispute between public
utilities, the district court properly utilized Rule 67 to
permit one utility to deposit disputed payments into
court registry).

Petitioners should have utilized Rule 67 if they
wanted to preserve their right to recover reparations.
Petitioners do not even mention Rule 67, because Peti-
tioners do not want reparations. They want to withhold
payment. If the Court condones this, failed carriers will
suffer the kind of protracted bankruptcy proceedings that
are a national disgrace. Other marginally solvent carriers
will fail when their filed rate claims are met with spu-
rious rate reasonableness defenses. Petitioners must obey
the law and pay the filed rate.’

C. The Primary Jurisdiction Doctrine Does Not
Permit Referral To The ICC Of A Filed Rate
Claim When The Meaning Of The Tariff Is Not
In Dispute

When an issue is not within the primary jurisdiction
of an agency, then a trial court has no power to refer that

2 The defects in the proposed remedies of set-off and
recoupment are discussed in Sections I.E.2 and I.E.3 of this brief.

issue to the agency. See Montana-Dakota Utilities Co. v.
Northwestern Public Service Co., 341 U.S. 246, 254 (1950). In
Montana-Dakota, the Court stated:

If the court is presented with a case it can

decide[,] but some issue is within the competence

of an administrative body, in an independent

proceeding, to decide, comity and avoidance of

conflict as well as other considerations make it
proper to refer that issue. But we know of no
case where the court has ordered reference of an
issue which the administrative body would not
itself have jurisdiction to determine in a pro-

ceeding for that purpose. 341 U.S. at 254

(emphasis added).

This principle compels the conclusion that enforce-
ment of an unambiguous filed rate should not be referred
to the ICC under the primary jurisdiction doctrine.
Unless a tariff is ambiguous, a court should not refer the
issue of tariff interpretation to the ICC. See United States v.
Western Pacific Railroad Co., 352 U.S. 59, 69 (1956), citing
Great Northern Railway Co. v. Merchants Elevator Co., 259
U.S. 285 (1922) and Crancer v. Lowden, 315 U.S. 631 (1942).
Further, after determining the applicable filed rate, the
trial court has discretion to proceed to enforce the car-
rier’s filed rate claim, regardless of the pendency of
administrative reparations proceedings. Crancer, 315 U.S.
at 635.

D. The Filed Rate Doctrine Is “Utterly Central” To
The Interstate Commerce Act And Would Be
Undermined By A Rule That Permits A Shipper
To Withhold Payment Of The Filed Rate Pend-
ing A Hearing On Rate Reasonableness

The filed rate doctrine is “utterly central” to the
administration of the Interstate Commerce Act. Maislin

Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. ___, 111
L.Ed.2d at 112, quoting Regular Common Carrier Conference
v. United States, 793 F.2d 376, 379 (D.C. Cir. 1986)(Scalia,
J.). This policy precludes imposing a judicial gloss on the
Act that would undermine this statutory purpose, espe-
cially when a more plausible interpretation would further
this purpose. See Maislin, 111 L.Ed.2d at 110-11 (ICC
could not utilize its agency expertise to justify adopting a
rule that would undermine the statutory filed rate doc-
trine).

Petitioners and their amici overlook Maislin’s ruling
that compliance with the statutory filed rate doctrine in
49 U.S.C. §§ 10761 and 10762 is “utterly central” to the
administration of the Act. Maislin, 111 L.Ed.2d at 112.
Instead, they incorrectly assert that rate reasonableness -
not the filed rate doctrine - is the “bedrock,” the “core,”
the “cornerstone,” and the “central requirement” of the
Act. See brief of amicus National Industrial Transporta-
tion League et al., (“NITL”) at 3, 9, 10 and 11. NITL cites
no authority for these assertions, which contradict Maislin.

Petitioners and their amici similarly overlook incon-
venient language from Maislin when they quote out of
context Maislin’s assertion that “the filed rate is not enfor-
ceable if the ICC finds the rate to be unreasonable.”
Maislin, 111 L.Ed.2d at 109; see brief of amicus NITL at 13.
In the very same paragraph of text, the Court in Maislin
explained: “Unless and until suspended or set aside, [the
filed rate] is made, for all purpose, the legal rate... . ”
Maislin, 111 L.Ed.2d at 109, quoting Keogh v. Chicago &
Northwestern R. Co., 260 U.S. 156, 163 (1922)(emphasis in
original). This overlooked language contradicts the posi-
tion of Petitioners and their amici that a shipper has a

10

right to withhold payment of the filed rate before the ICC
suspends or sets aside the rate. On the contrary, this
language compels the conclusion that a shipper must pay
the filed rate, and is excused from that legal duty only in
the event that the ICC actually does suspend or set aside
the filed rate.

Petitioners and their amici want the filed rate doc-
trine transformed into a “filed opening bid” doctrine.
Under the “filed opening bid” doctrine, the filed tariff
rate would merely signify what the carrier proposed to
receive as payment; the shipper would remain free at all
times to object to the filed opening bid as unreasonable.
Under this system, neither the shipping public nor the
ICC would know from the carrier’s filed tariffs what rates
were actually in effect. Discrimination would be facili-
tated and unfiled, secret rates would proliferate.?

3 In recommending enactment of the filed rate doctrine in
the landmark Interstate Commerce Act, the Senate Select Com-
mittee on Interstate Commerce emphasized that rigid adherence
to the published rate was necessary:

The posting or publication of railroad rates would be
of no advantage to the public unless the law contem-
plates and requires that the schedules established and
posted are strictly adhered to. If variations from the
published rates are to be permitted, it would be use-
less to have them posted. So far as that is concerned,
information as to the ostensible rates is now suffi-
ciently accessible to the public, and posting them
would only impose a needless annoyance and useless
expense upon the corporations.

S.Rep.No. 46, 49th Cong., 1st Sess. 200 (1886)(emphasis in the
original).

11

E. The Plain Meaning Of The Act Is Inconsistent
With An Implied Statutory Right To Withhold
Payment Of The Filed Rate Pending ICC Deter-
mination Of The “Reasonable” Rate

1. The Plain Meaning Of The Act Conflicts
With An Implied Right To Withhold Pay-
ment

“The plain meaning of legislation should be conclu-
sive, except in the ‘rare cases [in which] the literal appli-
cation of a statute will produce a result demonstrably at
odds with the intentions of its drafters.’” United States v.
Ron Pair.Enterprises, 489 U.S. 235, 242 (1989), quoting
Griffin v. Oceanic Contractors, Inc., 458 U.S. 546, 571 (1982).

The Interstate Commerce Act does not contain any
provision that expressly states that rate unreasonableness
is a defense to enforcement of the filed rate, or that a
private shipper has a right to withhold payment of the
filed rate pending agency referral. Consistent with the
“utterly central” policy of requiring payment of the filed
rate (Maislin, 111 L.Ed.2d at 112), the statutory language
provides only that the shipper may recover “for damages
resulting from the imposition of rates for transportation
or service the Commission finds to be in violation of this
subtitle.” 49 U.S.C. § 11705(b)(3). If Congress meant this
provision to create a new statutory defense to the duty to
pay the filed rate, Congress certainly forgot to say so.

Instead, it appears that Congress sensibly balanced
the “utterly central” policy of strict enforcement of the
filed rate against the shipper’s interest in paying only
reasonable rates. Instead of creating a defense to the

12

“utterly central” filed rate doctrine, Congress did what it
said and said what it meant: it gave the shipper a limited
right to assert a claim for damages if the filed rate proved
to be excessive. But that claim did not constitute a defense
to the carrier’s statutory filed rate claim. Congress cre-
ated only a limited, express exception to this rule for the
United States as a shipper. See 31 U.S.C. § 3726.

The Court should not override the plain meaning of
the Act when: (1) that plain meaning furthers the “utterly
central” policy of the Act of strict enforcement of the filed
rate (Maislin, 111 L.Ed. at 112), and (2) that plain meaning
is not “demonstrably at odds” with the legislative history
of the Act (United States v. Ron Pair Enterprises, supra, 489
U.S. at 242). Petitioners and their amici fail to identify
any legislative history that “demonstrably” shows the
unequivocal intent of Congress to create a new statutory
defense to filed rate claims.

Elsewhere, the ICC has admitted that Congress in
fact declined to give the ICC the broad reparations
powers for which it lobbied. See Informal Procedure For
Determining Motor Carrier And Freight Forwarder Repara-
tion, Ex Parte No. 249 (Sub-No. 1), 335 LC.C. 403, 408
(1969)(“Shippers were thus not given the option, as rec-
ommended by the Commission, of proceeding initially
before either the Commission or the Court in seek-
ing . . . redress”). If rate reasonableness was “utterly
central” to the Act, Congress presumably would have
given shippers the express right to withhold payment
while they went to the ICC for protection. Further, if
Congress had intended to overrule Crancer v. Lowden, 315
U.S. 631 (1942), then the legislative history and statutory

13

language presumably would contain express statements
to that effect.

2. The Plain Meaning Also Conflicts With A
Right Of Set-Off

The plain meaning of the statute also conflicts with an
interpretation that would permit the shipper to exercise a
right of set-off. A shipper cannot have a right of set-off if its
right to assert the unreasonableness of a filed rate arises only
after making payment. If Congress meant to create an unrea-
sonableness defense or a right of set-off, it should have s@id
so. Congress did not say so, except for the United States in
31 U.S.C. § 3726. This Court should not rewrite the Act so as
to undermine its “utterly central” policy of strict enforce-
ment of the filed rate. See Maislin, 111 L.Ed.2d at 112. Rewrit-
ing the statute in this fashion would be the equivalent of
demoting the importance of the filed rate.* The carrier must
collect and the shipper must pay the filed rate.

The ICC has elsewhere admitted that permitting a right
of set-off undermines the Act. See Regulations for Payment of
Rates and Charges — Penalty Charges — for Nonpayment (49 CFR
Part 1320), ICC Ex Parte No. MC-1 (February 17, 1988).
There, the ICC explained why it would not promulgate a rule
to permit shippers to exercise a right of set-off:

4 The bankruptcy filing of a carrier does not create a right
of set-off. Bankruptcy law preserves a right of set-off that arises
prior to bankruptcy, but does not create a right of set-off that did
not exist independently of the bankruptcy. See 11 U.S.C.
§ 553(a); 4 Collier on Bankruptcy 9553.06, at 553-38 (15th ed. 1992)
(“Prepetition set-offs are governed by applicable non-
bankruptcy law”).

14

Other matters. Several shipper groups propose
that, if we promulgate final rules, we incorpo-
rate a mechanism into the tariff-rule methods
that would allow shippers to toll the time at
which they become liable for collection charges.
They aver that if they have a legitimate dispute
over an assessed transportation rate they should
be allowed to file with the carrier (within a short
time period after completion of the transporta-
tion) a letter disputing the rate. The shippers
suggest that, as long as a shipper legitimately
disputes the rate and is not lodging a pro forma
protest, then such a letter of protest should
exculpate it from collection charges. We decline
to adopt such a provision. We believe it is imprac-
tical. The distinction between a legitimate, hon-
est protest and an illegitimate pro forma protest
is not an easy distinction and would likely gen-
erate a flood of unnecessary litigation. It is also
too easily susceptible to unequal application and
thus could promote unlawful discrimination.
Finally, as noted supra, shippers are obligated to pay
first. Set-offs of freight charges are not lawful. Id. at
6 (emphasis added and footnote omitted).

The ICC made these observations without even consider-
ing the possible use of Fed.R.Civ.P. 67. Rule 67 makes the
quoted reasoning of the ICC even more strongly militate
against judicial creation of a right of set-off.

3. The Plain Meaning Conflicts With The Pro-
posed Equitable Right Of Recoupment

Petitioners’ amici suggest that their right to repara-
tions justifies judicial creation of an implied right of

15

“recoupment.” See brief of amicus NITL at 28. This argu-
ment does no more than give another label to the incor-
rect conclusion that the Act permits a shipper to withhold
payment of the filed rate.

The proposed implied right of “recoupment” must be
rejected for an additional reason. Petitioners’ amici admit
that: “Recoupment is an equitable doctrine. . . .” See brief
of amicus NITL at 28 n.3 (emphasis added). But Maislin
precludes judicial creation of equitable defenses to
enforcement of the filed rate. The Court stated in Maislin:

Given the close interplay between the duties
imposed by [49 U.S.C.] §§ 10761-10762 and the
Statutory prohibition on discrimination, see
§ 10741, this Court has read the statute to create
strict filed rate requirements and to forbid equita-
ble defenses to collection of the filed tariff. 111
L.Ed.2d at 108 (emphasis added).

F. Agency Referral Based On Unsubstantiated
Claims Of Filed Rate Unreasonableness Will
Undermine The Filed Rate Doctrine And Con-
done Illegality

“[I}n order to merit reference of a matter to the ICC, a
shipper must provide more than a bald, conclusory alle-
gation of rate unreasonableness.” In re Oneida Motor
Freight v. Ormond Shops, 126 B.R. 431, 442 (D.N.J.
1991)(collecting authorities). “[T]he district court need
not refer the issue of reasonableness to the ICC if there is
no reasonable likelihood that the ICC will reach a deter-
mination favorable to the shipper.” Milne Truck Lines, Inc.
v. Makita U.S.A., Inc., __F2d __ (9th Cir., July 7, 1992).
Similarly, when a tariff is unambiguous, this Court has

16

refused to refer it to the ICC for interpretation. Great
Northern Railway Co. v. Merchants Elevator Co., 259 US.
285 (1922).

In light of these principles, a shipper should have no
right to ageacy referral of a reparations claim absent
evidence from which the ICC could reasonably decide in
the shipper’s favor. This Court should halt now the latest
effort to nullify the filed rate doctrine and to revive the
ICC’s illegal Negotiated Rates policy. This new defense
tactic, condoned by the ICC, relies on this syllogism:

- Illegal unfiled rates are legitimate evidence of
“reasonable” rates.

- When a carrier’s filed rate is higher than an
unfiled rate, then the carrier's filed rate is
unreasonably high.

- Therefore, the shipper is entitled to pay only
the unfiled rate, Maislin is overruled, and Nego-
tiated Rates is reinstated.

This syllogism has the same defect as the ICC’s ille-
gal Negotiated Rates policy that this Court rejected in
Maislin. In Maislin, the ICC attempted to enforce unfiled
rates by declaring that it was an “unreasonable practice”
for a carrier to attempt to collect its filed rate after agree-
ing to an unfiled rate. The ICC called this policy its
“Negotiated Rates” policy. In rejecting this policy, Maislin
held that the filed rate doctrine prohibits the ICC from
adopting a policy “sanctioning ‘adherence to unfiled rates”
because such a policy “undermines the basic structure” of
the Interstate Commerce Act. Maislin, 111 L.Ed.2d at 112
(emphasis added).

17

Unfiled rates therefore cannot legally serve as evidence
to support agency referral of a reparations claim. Under the
filed rate doctrine as defined in Maislin, an illegal, unfiled
rate cannot be used to show that a filed rate is “unreason-
able.” Otherwise, a carrier would risk liability for reparations
based on evidence of unfiled rates. This would sanction
adherence to unfiled rates, and Maislin expressly forbids any
policy “sanctioning adherence to unfiled rates. ...” Maislin,
111 L.Ed.2d at 112.5

Despite Maislin’s mandate, the ICC recently noted that it
historically has considered “a carrier’s proffer of a particular
rate” to be evidence of rate unreasonableness. Petitions for
Issuance of Rate Reasonableness and Unreasonable Practices Policy
Statement, 8 1.C.C.2d 61, 74 (1991); see also amicus brief of ICC
at 6 n.5. The obvious implication of this post-Maislin com-
ment is that the ICC may use unfiled rates to support
findings of rate unreasonableness.

5 The standard for referral should be that the shipper must
submit competent evidence from which the ICC reasonably
could find that the filed rate of the carrier is unreasonable,
taking into account the “reasonable profit” standard of 49 U.S.C.
§ 10701(e) and the national transportation policies stated in 49
U.S.C. § 10101. “Competent evidence” would not include ille-
gal, unfiled rates.

The national transportation policies stated in 49 U.S.C
§ 10101 include: (a) “to promote safe, adequate, economical, and.
efficient transportation” (§ 10101(a)(1)(B)), (b) “to encourage
sound economic conditions in transportation, including sound
economic conditions among carriers” (§ 10101(a)(1)(C)), (c) “to
encourage the establishment and maintenance of reasonable
rates for transportation, without unreasonable discrimination
or unfair or destructive competitive practices”
(§ 10101(a)(1)(D)), and (d) “to encourage fair wages and work-
ing conditions in the transportation industry” (§ 10101(a)(1)(F)).

18

G. The Rule Urged By Petitioners Would Be
Highly Prejudicial To Both Solvent And Insol-
vent Carriers

Petitioners’ amici contend that no prejudice will
result to a bankrupt carrier if its filed rate claim is post-
poned pending the outcome of the referral of the ship-
per’s rate unreasonableness claim. See brief of amicus
ICC at 22; brief of amicus NITL at 24. On the contrary, the
rule urged by the ICC will prejudice both insolvent and
solvent carriers and will needlessly undermine the filed
rate doctrine.

A rule that permits a shipper to delay payment of the
filed rate based on a claim of rate unreasonableness will
inevitably invite shippers to assert such claims, regard-
less of their merit. Prejudice will result to all carriers:

A. All carriers will frequently be forced to deviate
from all filed rates, regardless of whether they are reason-
able rates. In order to obtain prompt payment and to
avoid the cost of litigation, carriers will frequently accept
less than the filed rate in “settlement” of spurious rate
reasonableness defenses. Unless such “settlements” are
publicized and filed with the ICC (an unlikely scenario),
they will in substance constitute secret, unfited, ratemak-
ing agreements.

B. Carriers that do not settle spurious reasonable-
ness claims will frequently suffer increased delays in
payment while the carriers endure interminable adminis-
trative proceedings on spuciovs rate reasonableness
defenses. A marginally solvent carrier will go bankrupt
from delays in payment based on spurious rate rea-
sonableness claims. A bankrupt carrier will be unable to

19

make prompt distributions to creditors on their claims
during the pendency of protracted litigation.6 Unsecured
creditors of a bankruptcy estate are acutely prejudiced by
delays in distribution, because unsecured claims do not
accrue interest during bankruptcy. See 11 U.S.C.
§ 502(b)(2).

The attempted distinction between solvent and insol-
vent carriers also fails because it is based on a false
premise: that an insolvent carrier is not operating. Urging
adoption of this false premise, amicus NITL cites an ICC
study and states:

Insolvent carriers ~ precisely because they are no
longer operating - do not require a constant and
predictable cash flow to preserve their solvency.

See brief of amicus NITL at 24. To credit this assertion,
this Court would have to forget the existence of chapter
11 of the Bankruptcy Code, 11 U.S.C. §§ 1101-1174. Many
insolvent carriers do operate under chapter 11, and they

© A favorite tactic of the ICC and shippers’ lobbying groups
is to emphasize that a portion of the recoveries of filed rate
claims may go to pay the court-approved contingent fee of
counsel employed by the carrier’s bankruptcy estate. But a
bankruptcy estate cannot afford to pay counsel on an hourly
basis when the estate is deprived of cash by shippers who
wrongfully withhold payment of the filed rate. Further, if the
law gives the shipper an incentive to assert a spurious defense
to a filed rate claim, then the law also causes an increase: (a) in
the employment of defense counsel by shippers to assert such
defenses, and (b) the size of the contingent fee demanded by
counsel for the estate. These legal costs By both sides of filed rate
litigation necessarily diminish the recoveries by the carrier, its
employees, and other creditors. Strict enforcement of the filed
rate doctrine would stop this.

20

do provide services to the public and jobs and income to
their employees. But these same insolvent carriers will
fail and liquidate if this Court permits their customers to
delay performing their legal duty to pay the filed rate.

Thus, the results of the unfounded rule urged by
Petitioners will be highly prejudicial. Further, these preju-
dicial results are unnecessary. Instead of adopting Peti-
tioners’ unfounded rule, the Court should require the
shipper to perform its legal duty to pay the filed rate -
either to the carrier, or to the court’s registry under
Fed.R.Civ.P. 67. This rule will deter a shipper from assert-
ing a spurious defense, because the assertion of the
defense will not delay payment of the filed rate. This rule
also will deter spurious litigation that occurs only if
shippers have an incentive to assert rate reasonableness
as a defense. This rule will further the “utterly central”
filed rate doctrine (Maislin, 111 L.Ed.2d at 112), because
shippers, carriers and the public will know that shippers
are presumptively paying the filed rate. By reason of
Fed.R.Civ.P. 67, this rule will not in any way impinge ona
shipper’s reparations claim. Finally, this rule will prevent
unjustified carrier bankruptcies that will result if this
Court gives shippers an incentive to stall payment of the
filed rate.

21

Il. THE COURT SHOULD NOT REWRITE THE ACT
SO AS TO REFER FILED RATE CLAIMS TO AN
AGENCY THAT HAS PUBLICLY ANNOUNCED
THAT IT: (A) WANTS TO ABOLISH THE FILED
RATE DOCTRINE AND (B) WILL NOT SAFE-
GUARD THE ALLOWANCE OF REASONABLE
RATES TO COMMON CARRIERS

Amicus NITL purports to describe at pages 2-6 of its
brief the “Regulatory Environment” ‘and the “Nature of
the Problem” in this case. But, as described below, the
Court may take judicial notice that the “regulatory envi-
ronment” in reality consists of official opposition by the
ICC to enforcement of the filed rate doctrine by carriers.
Not surprisingly, this “environment” results in the “prob-
lems” of illegal, unfiled rates and of shippers’ trying to

get filed rate claims improperly referred to ICC so that it
can prevent their enforcement.

Congress enacted the filed rate doctrine in 1887 to
promote uniform, published transportation rates that
would create a more level playing field for competition
among businesses using the channels of transportation
and that would prevent discrimination against members
of the shipping public. See S.Rep.No. 46, 49th Cong., Ist
Sess. 188, 198 (1886).7 In addition, the Interstate Com-
merce Act as amended now expressly states that one of

7 In recommending enactment of the Act, the Senate Select
Committee on Interstate Commerce reported:

[T]he committee believes that every effort possi-
ble should be put forth by Congress to secure equality
betweer man and man in respect to the matter of
tlansportation, and that one means to that end would
be the prohibition of personal preferences under

22

the nation’s transportation policies is to prevent “destruc-
tive competitive practices” by carriers. 49 U.S.C.
§ 10101(a)(1)(D). This policy furthers another express
statutory policy: “fair wages” for employees of carriers.
49 U.S.C. § 10101(a)(1)(F).

Through its Chairman, the ICC has publicly attacked
these statutory goals. On March 10, 1992, the Chairman of
the ICC assailed these goals in a written speech (“JCC
Chairman's Speech”) entitled “The Revolution in Motor
Carrier Transportation” which was presented to the Rar-
itan Traffic Club, Inc.®:

A. Abolish the filed rate doctrine: Instead of sup-
porting the filed rate doctrine, the ICC Chairman
described the tariff freight undercharge issue as a “fur-
ball” that “the ICC has in its throat” because bankruptcy
trustees are attempting “to collect monies on filed tariff
rates despite the existence of lower negotiated rates that
were agreed to by a carrier and a shipper... . ” ICC
Chairman's Speech at 3. The Chairman described this
Court’s decision in Maislin as a source of “headaches”
(id.) and condemned the filed rate doctrine as “a dinosaur
that should be sent to its reward.” Id. at 4 (emphasis in
original); see Appendix A.

suitable penalties, which should be supplemented by
proper provisions for securing publicity of rates.

S.Rep.No. 46, 49th Cong., Ist Sess. 190 (1886).

8 The Court may take judicial notice of this written and
widely publicized speech under Rule 201 of the Federal Rules of
Evidence. We do not request the Court to take judicial notice of
the truth of the speech, only that the*words were spoken by the
Chairman of the ICC.

23

B. Permit below-cost pricing: Instead of supporting
reasonable rates for carriers, the ICC Chairman sup-
ported below-cost rates. The Chairman stated: “Then
there are charges of destructive below-cost pricing in the
LTL [less-than-truckload] sector. In my view, to the extent
that it exists, below-cost pricing in the present competi-
tive environment is essentially a derogatory name for
very aggressive —- and often very efficient - marketing

and yield management.” ICC Chairman's Speech at 2; see
Appendix A.

Not surprisingly, both Carolina Motor Express and
amicus Transcon Lines went bankrupt in a “regulatory
environment” polluted by this attitude and the illegal
Negotiated Rates policy. Many more carriers will fail if this
Court permits improper referral of filed rate and unsub-
stantiated rate reasonableness claims to an agency which:
(1) condemns the filed rate doctrine, and (2) endorses
below-cost pricing. The federal judicial system will then
have to administer those future carrier bankruptcies
while former employees and other creditors endure need-
less delay and economic hardship.

¢

CONCLUSION

A private shipper should not be permitted to with-
hold payment of an unambiguous filed rate pending the
outcome of ICC hearings on rate reasonableness. The
shipper must forthwith pay the filed rate, either to the
carrier, or into the registry of the court under Fed.R.Civ.P.
67. The shipper has no right to" agency referral of a
reparations claim unless the shipper submits evidence to

24

the court from which the agency could reasonably rule in
favor of the shipper. Such evidence does not include
evidence of unfiled or otherwise illegal rates.

Respectfully submitted,

Leonarp L. Gumport, Esq.”
355 South Grand Avenue,

39th Floor
Los Angeles, California 90071
(213) 617-7070
*Leonard L. Gumport, Trustee of the
Bankruptcy Estate of Transcon Lines

September 1, 1992

App. 1

APPENDIX A: EXCERPTS OF WRITTEN REMARKS
BY HONORABLE EDWARD J. PHIL-
BIN, CHAIRMAN, INTERSTATE
COMMERCE COMMISSION, TO THE
RARITAN TRAFFIC CLUB, INC. ON
TUESDAY, MARCH 10, 1992, AT
PINES MANOR RESTAURANT, ED!-
SON, NEW JERSEY

“THE REVOLUTION IN MOTOR
CARRIER TRANSPORTATION”

President Bush has repeatedly said that government
regulations must be necessary, economically sensible,
understandable, responsive to public concern and cost
beneficial. I couldn’t agree more, and I’ve done my best
since becoming Chairman to have repealed or amended
useless and outdated regulations that hamper the busi-
ness operations of the trucking industry and drain the
vitality of our nation’s economy. While the Commission
has made great progress in this effort, there’s a lot left to
do.

If, as suggested recently by Federal Reserve Board
Chairman Alan Greenspan (and others), the economy is
showing signs of rebound, the industry could well see a
financial Renaissance through higher freight rates and
improved business.

Despite all the evidence to the contrary, allegations of
the failure of deregulation continue: a favorite complaint
is that there is now, or soon will be, undue if not dan-
gerous carrier concentration in the LTL sector. (The big
guys are swallowing the little guys.) | believe that any

App. 2

apparent concentration in the LTL sector is the result of
the unleashing of pent-up market pressures and not the
result of a failure of the marketplace. In fact, ICC studies
indicate that undue concentration has not occurred.

* * all

Then there are charges of destructive below-cost pric-
ing in the LTL sector. In my view, to the extent that it
exists, below-cost pricing in the present competitive envi-
ronment is essentially a derogatory name for very aggres-
sive - and often very efficient - marketing and yield
management.

The major “furball”’ the ICC has in its throat is the
“undercharge issue” caused by attempts of trustees of
bankrupt motor carriers to collect monies based on filed
tariff rates despite the existence of lower negotiated rates
that were agreed to by a carrier and a shipper, billed by
the carrier and paid by the shipper, but never filed in a
tariff at the ICC by the carrier. The Commission currently
has pending more than 200 such cases.

The Commission has addressed this issue to the best
of its ability under current law. Last September, we dis-
cussed applicable rate reasonableness standards and
some techniques available to shippers to show that the
higher tariff rates sought may not be lawfully collected.
The ICC has also issued decisions in individual cases that

% All emphases and quotatiof marks are in the text of the
Chairman's written speech.

App. 3

provide relief to specific shippers and also offer guidance
to others facing similar claims.

The use of contracts seemed a safe remedy for some
of the headaches brought about by the Maislin decision.
But that course of action has its own perils and ambi-
guities, which we hope to eliminate soon by clarifying the
differing requirements of the law and the ICC regula-
tions. The 37,000 carriers who have contract authority
deserve to drive on a highway free of legislative and
regulatory potholes.

The real solution to the undercharge problem lies in
remedial legislation. The Commission has supported two
bills introduced by Senator Exon and co-sponsors, neither
of which has been enacted. For the future, we can only
hope for the best.

The undercharge issue, among other things, casts
serious doubt on the continued utility of mandatory filing
of motor carrier rate tariffs, given the swift pace at which
trucking business is done in today’s partially deregulated
and fiercely competitive transportation marketplace.

In short, I've seen no evidence that the current statu-
tory filing requirement serves any beneficial interest. Its
only function appears to be the perpetuation of an out-
dated system through sheer aversion to change. The pre-
sent “filed rate doctrine” is a dinosaur that should be sent
to its reward.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0251%3A10. Public record. Not legal advice.