Opposition Brief — Farley Terminal Co. v. Atchison, Topeka & Santa Fe Railway Co.

SUBJECT INDEX

Page

Rn I tn ee ee Os oe 1

eet 2

SU sai ni udabnemaseumassine a

Reasons for Not Granting the Writ .............0.......... 6

I

The Decision Below Does Not Conflict With the

Decision Rendered by This Court in Arizona

Grocery Co. v. Atchison, Topeka and Santa

Fe Ry. Co., 284 U.S. 370 (1932) .................. 6

II

The Holding Below Does Not Conflict With the

Decision of Another Court of Appeals ............ 7

Ill

Santa Fe Did Not Unilaterally Circumvent a

Systemwide Contract Rate ..........000000000020000.... 8

IV

Santa Fe Had No Duty to Publish Its Own Tariff :

Containing Rates Consistent With Existing :

NINE = Stites ni sidgSeenswconcaintukacbonigecnncsicptearsimenill 9

BUI ocr <acrcsusay causes pease tees sercaess ce uomendedcar: 11

f

:

4

INDEX TO APPENDICES

Page

Appendix A. Judgment of the U.S. Court of Ap-

peals for the Ninth Circuit, in Farley Terminal

Company, Inc. v. Atchison, Topeka & Santa Fe

Railway Co., No. 74-1872, entered July 9, 1975

Appendix B. Opinion of the U.S. Court of Ap-

peals for the Ninth Circuit, in Farley Terminal

Company, Inc. v. The Atchison, Topeka and

Santa Fe Railway Company, No. 74-1872, en-

Ny RED zcdtheeneesnccbin sis aicaeteenecdapivinie

Appendix C. Judgment of the United States Dis-

trict Court for the Central District of California,

entered Fevruary 19, 1974 ........--...-.-.c<ceccsecoseesee

Appendix D. Findings of Fact and Conclusions of

Law of the United States District Court for the

Central District of California, entered February

Sa a arate alice ei tn

Appendix E. Substituted Service

TABLE OF AUTHORITIES CITED

Cases Page

American Trucking Association v. AT&SF R. Co.,

ee RT NE a od todihp ossknigatiscidenchvescosescs 3

Arizona Grocery Co. v. Atchison, Topeka and

Santa Fe Ry. Co., 284 U.S. 370 (1932) ...... a 7

Armour Packing Co. v. United States, 209 U.S. 56

ance eet herds Sind sioespcenssédonsesstacnic 10

AT&SF R. Co. v. United States, 244 F.Supp. 955

uk pe BEE, SR ar SE RE Ne eee 3

Farley Terminal Co., Inc. v. The Atchison, Topeka

and Santa Fe Railway Company, No. 74-1872

ipa ict ca shad shibeacucesinibodecdasacsbékaee 5

Louisville & Nashville Railroad Company v. Mottley, ‘

I Ee OD sds cache Linss cmvosadeahsnidastinss 10 :

Lowden v. Simonds-Shields-Lawnsdale Grain Co., /

Se RI NY RI oon cps sesansneocenestannnen 10 4

Middlewest Motor Freight Bureau v. United States, 4

433 F.2d 212 (Eighth Circuit 1970), cert. denied .

I I I FI kre e chats kc chasnosensanndanconsens : A 4

New Haven Railroad Company v. I.C.C., 200 U.S. '

Meese ren esa t netshandatahichokambssvesnen asliui 10 :

Texas and Pacific Railroad Company v. Mugg, 202

NN MIs destnas ch cistnincashccakdiccsaece thsscapsaseaseces 10

rN eg My vo BE toe Se | ; Se re. ee

Miscellaneous

Transcontinental Freight Bureau Tariff, Supple- q

ment 41 to Freight Tariff 2-F, Item 4900-E,

i ft IR EEE SERS DECTS SUE MEEISS oI ce ER UaR OES ye E

¥

Statute t

United States Code, Title 49, Sec. 41... 9, 10 i

LORIE LINE CELL EGET ELLIE IRE ES LE NEERING REDE ELITES ELLEN S NEGO VBE SIRE ELE 0 _|

IN THE

Supreme Court of the United States

October Term, 1975

A ee

FARLEY TERMINAL Co., INC.,

Petitioner,

vs.

THE ATCHISON, TOPEKA AND SANTA FE RAILWAY

COMPANY,

Respondent.

Petition for a Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit.

Response in Opposition to Petition for

Writ of Certiorari.

Opinions Below.

The judgment of the United States Court of Appeals,

entered July 9, 1975, not reported, appears in Appen-

dix A hereto. The opinion of the United States Court

of Appeals, entered July 9, 1975, not yet reported,

appears in Appendix B hereto. The Judgment of the

United States District Court for the Central District

of California, granting The Atchison, Topeka and Santa

Fe Motion for Summary Judgment, entered February

19, 1974, not reported, appears in Appendix C hereto.

The United States District Court Findings of Fact and

Conclusions of Law, not reported, appear in Appendix

eT See

ONE HAMID SO

id eta Bein

few Seid

A EEA ILA OLGA GN 0 LEED Lika NG WEED

D hereto. Those relevant pages of the Interstate Com-

merce Commission Decision in Ex Parte 230, Substi-

tuted Service—Charges and Practices of For-Hire Car-

riers and Freight Forwarders (Piggyback Service), 322

I.C.C. 301 (1964), dealing with trailer-rental contracts,

specifically pages 303, 319, and 370-372, appear in

Appendix E hereto.

Questions Presented.

Was it the intent of the Interstate Commerce Commis-

sion (hereinafter referred to as the JCC) that approved

rate tariffs for leasing TOFC equipment in interstate

commerce, filed pursuant to its Ex Parte 230, 322

1.C.C. page 301, supersede and render null and void

TOFC Leasing Rates contained in existing carrier-

shipper agreements?

What is the legal effect of The Atchison, Topeka

and Santa Fe Railway Company being a party to Trans-

continental Freight Bureau Tariff Supplement 41 to

Freight Tariff 2-F, Item 4900-E, Section I filed pursuant

to Ex Parte 230?

Statement of Case.

This case involves the rates to be charged for the

leasing of trailers for use in piggyback or trailer-on-

flatcar (TOFC) service as of November 17, 1967, the

date that Transcontinental Freight Bureau Tariff, Sup-

plement 41 to Freight Tariff 2-F, Item 4900-E, Section

I, was filed by Santa Fe and the other railroads. Prior

to that date, Santa Fe billed and charged Farley Termi-

nal Co., Inc. (Farley) the rates contained in a lease

agreement previously entered into by the parties.

In 1962, the Interstate Commerce Commission insti-

tuted a general investigation into trailer-on-flatcar

on

(TOFC) or piggyback service. The investigation was

to cover “every aspect of TOFC operations. .. .”

322 LOS, 305.

On October 9, 1962, a pre-hearing conference formu- :

lated a series of proposed rules.

“The proposed rules were predicated upon the basic

premise that all persons desiring to use TOFC

service should be able to do so, with the charges

for the same services being equal to all users,

whether they be motor or water carriers, freight

forwarders, or private shippers.” 322 I.C.C. at 319.

Other important aspects of the proposed rules includ-

ed a requirement that a rail carrier providing all rail

TOFC service make a specific provision in its tariffs

for all incidental and accessorial services offered by

it in connection therewith.

BRAM SPD MRR INTERIM

The Examiners recommended that railroads perform-

ing all rail TOFC services be required to publish in

their tariffs all the rates, charges and rules connected :

with such service, including charges for the leasing

of equipment, detention of trailers, accessorial services,

and pickup and delivery service, if any such services

are offered. The ICC stated in Ex Parte 230 at page

370 that “unless the same opportunity to lease equip-

ment is made available to all similarly situated shippers

at the same price, the leasing of a trailer to a favored

shipper can become a concession violative of the ELK-

INS ACT.” Ex Parte 230 was challenged by Santa

Fe and others on grounds not relevant to this case

and was reversed in AT&SF R. Co. v. United States,

244 F.Supp. 955 (1965) and was affirmed in American

Trucking Association v. AT&SF R. Co., 387 U.S. 847

(1967).

aera

Ain eis ME SOR tM CEM

ae

The Interstate Commerce Commission served an or-

der dated July 13, 1967, on Santa Fe and other railroads

requiring compliance with Rule 500.7 of Ex Parte 230,

p. 415. Under the order, tariffs were oe to be

filed by August 18, 1967.

On August 2, 1967, the railroads filed a petition

with the ICC to postpone the effective date of the

order for a period of ninety (90) days beyond August

18, 1967, or until November 16, 1967.

The extension was granted and the result of the

combined efforts of the various railroads involved was

a formulation of the Interstate Commerce Commission

approved Transcontinental Freight Bureau Tariff and

filing thereof. The tariff was issued on October 12,

1967, and became effective on November 17, 1967.

Santa Fe was a party to said multi-party tariff. The

rates contained in said tariffs were consistent for all

railroads furnishing the same services.

It was not until August 3, 1973, that Farley filed

its complaint for breach of contract in the United States

District Court for the Central District of California.

In said complaint, Farley alleged only that Santa Fe

commenced charging it at a higher rate in the tariff

than the rate contained in the pre-existing leasing agree-

ment. The complaint did not allege that the tariff rates

were unreasonable. Also, it was not until August 3,

1973, that Farley first contested the tariff rates. Farley

failed to file a protest with the Interstate Commerce

Commission contesting said rates.

In its answer to Farley’s complaint, Santa Fe contend-

ed that as a matter of law the rates contained in the

tariff vitiated or negated the rates contained in the

pre-existing leasing agreement.

SCA PIA Regen es FOE

ST BA me Cd : we SL ei RIES Fe VE

ee

oo

The United States District Court granted Santa Fe’s

motion for summary judgment, dismissed Farley’s com-

plaint, and denied its motion for summary judgment,

and entered judgment for Santa Fe. The findings of

fact and conclusions of law of United States District

Court for the Central District of California, entered

February 19, 1974, are found in Appendix D. Farley

appealed to the United States Court of Appeals for

the Ninth Circuit which affirmed the decision rendered

by the United States District Court in Farley Terminal

Co., Inc. v. The Atchison, Topeka and Santa Fe Rail-

way Company, No. 74-1872, July 9, 1975.

The substance of the Court of Appeals decision

was that the filing of the ICC approved tariff by Santa

Fe along with other railroads voided those rates covering

the same subject matter in pre-existing contracts be-

tween the parties.

SI otek CRS Sos a on

2 PLE We

nae COE OAS OSES BNL ATPL FOE A oh ATI BL SBE

ils

REASONS FOR NOT GRANTING THE WRIT.

I

The Decision Below Does Not Conflict With the De-

cision Rendered by This Court in Arizona Grocery

Co. v. Atchison, Topeka and Santa Fe Ry. Co.,

284 U.S. 370 (1932).

In the Arizona Grocery case, this Court held that

where the ICC, upon complaint, holds a hearing on

the reasonableness of a rate, and determines a reason-

able rate, it cannot thereafter, at a subsequent hearing,

declare the previously declared reasonable rate to be

unreasonable and give the unreasonableness of the rate

retroactive application.

Although it is true that the Court in the Arizona

Grocery case distinguished between Commission made

and carrier made rates, it concluded that the Interstate

Commerce Commission and not the Courts, has the

power to determine the reasonableness of such rates.

It is only after a shipper protests carrier made rates

within a statutory period of time that the ICC holds

a hearing to determine the reasonableness of such rates.

If the ICC determines the rates to be reasonable, it

may prescribe or order specific rates the carriers may

charge.

In this case, Farley never filed a protest with the

ICC as to the reasonableness of the rates charged

it under the tariff.

It never contested the reasonableness of the tariff

rates in its complaint on file with the United States

District Court.

And further, it never brought the reasonableness of

the tariff rates into issue at the United States District

Court hearings below. Below it claimed only that the

rn i i ella

om Pon

tariff rates were in excess of the lease agreement rates.

It is now raising the issue for the first time.

Still further, the issue of whether a tariff was a

unilateral tariff was never discussed in the Arizona

Grocery case.

II

The Holding Below Does Not Conflict With the

Decision of Another Court of Appeals.

Farley cites the United States Court of Appeals,

Eighth Circuit, case of Middlewest Motor Freight Bu-

reau v. United States, 433 F.2d 212 (Eighth Circuit

1970), cert. denied 402 U.S. 999 (1971), for the erro-

neous proposition that Santa Fe is not entitled to keep

the difference between the pre-existing contract rates

with Farley and the tariff rates.

First, the Middlewest Motor Freight Bureau case

on the facts is distinguishable, and the case further

does not make such a statement.

In the Middlewest Motor case carriers filed a tariff

containing a higher rate than a previously published

rate. Various shippers contested that higher rate by

filing a protest before the Interstate Commerce Com-

mission, the body that Congress gave jurisdiction to

determine rates. Although that case did have language

indicating that the burden is on the carrier to show

that its rates are just and reasonable, and to justify

any change in rates, the shippers first had to avail

themselves of their administrative remedy, i.e.: of filing

a protest before the Interstate Commerce Commission.

In the Middlewest case, therefore, the various shippers

did file protests with the Interstate Commerce Com-

mission over the new tariff rates. In the case here,

Farley filed no such protest, and never challenged the

2S ETS

~ eee

a

rates before the Interstate Commerce Commission, the

body ordained by Congress to have exclusive powers

for determining rates involving interstate commerce

transactions.

Also, it should be noted that in the Middlewest

case, supra, the I.C.C. after a hearing, found the tariff

rates were not just and reasonable and ordered them

cancelled.

In this matter, Farley never contested the rea-

sonableness of the rates, and there never was a hearing

held before the Interstate Commerce Commission in

regard to same.

Further, the Court in the Middlewest case, supra,

at page 222, in discussing whether tariff rates are

unreasonably high or discriminating, states “such a

judgment lies solely within the province of the Interstate

Commerce Commission.” The Court, in substance, held

in the aforecited case that the tariff in question was

unlawful because carriers maintained the tariff in vio-

lation of an order of the Interstate Commerce Com-

mission.

Il

Santa Fe Did Not Unilaterally Circumvent a

Systemwide Contract Rate.

Santa Fe, along with numerous other rail carriers,

became a party to Transcontinental Freight Bureau

Tariff, Supplement 41 to Freight Tariff 2-F, Item 4900,

Section I, covering rates involving leasing of TOFC

equipment in interstate commerce. A mutually accept-

able rate was determined by all carriers involved. The

rate was approved by the ICC and the tariff became

effective upon its filing on November 17, 1967. Farley,

as well as other shippers and shippers’ agents, had

actual notice of the new rate found in the tariff, but

nil

did not choose to protest it or challenge it before

the ICC, the body having jurisdiction of said rate.

The new rate was not a unilateral rate, but rather

a multi-party rate. Case law cited by Santa Fe and

relied upon partially by the United States Court of

Appeals clearly shows that upon the effective date of

the tariff, the rates of the pre-existing lease agreement

were vitiated and void.

IV

Santa Fe Had No Duty to Publish Its Own Tariff Con-

taining Rates Consistent With Existing Contracts.

It is unchallenged that Santa Fe was not the only

party to the Transcontinental Freight Bureau rate, but

many other railway companies were likewise parties.

If Santa Fe had filed a tariff rate at the existing

rate of the lease agreement, it would have been left

with a rate different than those of other railroads with

the same service. This would clearly constitute a vio-

lation of The Elkins Act, 49 U.S.C., Section 41,

and likewise would have circumvented the public policy

intended by Congress to preclude discrimination of rates

in interstate commerce.

The Interstate Commerce Commission intended that

tariffs required by it to be filed, pursuant to its Ex

Parte 230, page 301, would apply to existing contracts.

It was not necessary for the ICC to effectuate this

intent by including express language in the order that

existing contracts are abrogated upon effectiveness of

the tariff. A vast and convincing body of Federal law

relevant to regulation of interstate commerce, clearly

states such a specific intent.

Pursuant to the requirement levied by Ex Parte 230,

page 301, the railroads drafted a rate tariff covering

Boerner re cern ames

:

pea ven

the leasing of TOFC equipment. That tariff, after ap-

proval by the ICC, was filed and had the force and

effect of statute. To continue charging Farley the lease

rates would have resulted in rate discrimination and

violation of The Elkins Act, 49 U.S.C., Section 41.

The specific tariff filed was in no way a unilateral

tariff formulated by Santa Fe. The filing of the tariff

could in no way be construed to be a breach of contract

by Santa Fe. Farley was presumed to know that the

rates of the lease agreement would be negated upon

its replacement by an ICC approved tariff. When Farley

entered into the lease contract with Santa Fe, it had

knowledge that the contract could be changed at any

time by newly created rates, orders or statements of

the ICC in fulfilling its obligation to regulate interstate

commerce.

The following cases support the position of Santa

Fe;

Louisville & Nashville Railroad Company v.

Mottley, 219 U.S. 467, 477-486 (1911);

Armour Packing Co. v. United States, 209 U.S.

56, 81-83 (1908);

New Haven Railroad Company v. I.C.C., 200

US. 361;

Texas and Pacific Railroad Company v. Mugg,

202 U.S. 242, 245 (1906);

New Haven Railroad Company, supra, 200 U.S.

at 393;

Lowden v. Simonds-Shields-Lawnsdale Grain

Co., 306 U.S. 516, 520 (1939).

Farley has failed to show inconsistent United States

Court of Appeals decisions on point. He has failed

to show any significant questions of Federal law that

this court should decide. The possibility of antitrust

law violations was never in issue in the courts below.

Conclusion.

For the above reasons, the Petition for Writ of Certi-

orari to the United States Court of Appeals for the

Ninth Circuit should be denied.

Respectfully submitted,

MATTHEW H. WITTEMAN,

Davip E. PARRY,

By MATTHEW H. WITTEMAN,

Attorneys for The Atchison, Topeka and

Santa Fe Railway Company.

BAL TT NS ANREP OREO

ADAP

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APPENDIX A.

Judgment of the U.S. Court of Appeals for the Ninth

Circuit, in Farley Terminal Company, Inc. v.

Atchison, Topeka & Santa Fe Railway Co., No.

74-1872, entered July 9, 1975.

United States Court of Appeals, for the Ninth Circuit.

Farley Terminal Company, Inc., Plaintiff-Appellant,

vs. Atchison, Topeka & Santa Fe Railway Company,

Defendant-A ppellee. No. 74-1872, DC #73-1818.

Harold Willinger as Assembly Con., Plaintiff-Appel-

lant, vs. Atchison, Topeka & Santa Fe Railway Com-

pany, Defendant-Appellee. No. 74-2410, DC #73-

1806.

APPEAL from the United States District Court for

the Central District of California.

THIS CAUSE came on to be heard on the Tran-

script of the Record from the United States District

Court for the Central District of California and was

duly submitted.

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court, that the judgment

of the said District Court in this Cause be, and hereby

is AFFIRMED.

74-1872

With costs in this court in favor of the Ap-

pellee and against the Appellant in the

Nc Noe ett de oes cms veusicka sch $326.84

Cost of printing Appellee’s brief ............. $326.84

Filed and entered July 9, 1975.

LE et IRD INI eT Relhind S W - 7S

a, Cae

APPENDIX B.

Opinion of the U.S. Court of Appeals for the Ninth

Circuit, in Farley Terminal Company, Inc. v.

The Atchison, Topeka and Santa Fe Railway

Company, No. 74-1872, entered July 9, 1975.

United States Court of Appeals, for the Ninth Circuit.

Farley Terminal Company, Inc., Plaintiff-Appellant,

vs. The Atchison, Topeka and Santa Fe Railway Com-

pany, Defendant-A ppellee. No. 74-1872.

Harold Willinger, doing business as Assembly Con-

solidators, Plaintiff-Appellant, vs. The Atchison, Topeka

and Santa Fe Railway Company, Defendant-Appellee.

No. 74-2410.

OPINION

[July 9, 1975]

Appeal from the United States District Court for

the Central District of California.

Before: KOELSCH and GOODWIN, Circuit Judges,

and WOLLENBERG,* District Judge.

PER CURIAM:

In these separate but related actions for damages

for breach of contract, Farley Terminal Co., Inc., and

Harold Willinger, lessees of TOFC (trailer-on-flatcar )

or “piggy-back” service equipment under separate but

substantially identical lease agreements with the Atchi-

*The Honorable Albert C. Wollenberg, United States Dis-

trict Judge for the Northern District of California, sitting by

designation.

a ae

son, Topeka and Santa Fe Railway Company (the Santa

Fe), appeal from the district court’s granting of sum-

mary judgments in favor of the lessor railway. The

question presented is whether the Santa Fe’s filing of

a rate tariff as required by the Interstate Commerce

Commission (ICC )—which tariff, when approved, im-

posed on lessees higher rates for the leasing of TOFC

equipment than were provided in the pre-existing lease

agreements—constitutes an actionable breach of those

agreements. We conclude it does not and therefore af-

firm.

Briefly, the facts are these: In its decision in Ex

parte 230, Substituted Service—Charges and Practices

of For-Hire Carriers and Freight Forwarders (Piggyback

Service), 322 I.C.C. 301 (1964), the ICC promulgated

regulations requiring that each railroad providing TOFC

service in interstate commerce publish, post, and file

tariffs containing all rates and charges for the leasing

of its TOFC equipment. See 322 I.C.C. at 415; 49

C.F.R. § 500.7 (1964), redesignated 49 C.F.R.

§ 1090.7 (1967).' Early in 1967, Farley and Willinger

executed separate lease agreements with the Santa Fe

whereby each agreed to lease trailers and flatcars from

the railway on an availability basis, at rates specified

in the agreements. During the following months, each

was charged at those rates. However, in July, 1967, the

ICC served an order on the Santa Fe and other railroads

which provided TOFC service, requiring them to comply

with the regulations promulgated in Ex parte 230 by

1A challenge to Ex parte 230, on grounds not relevant to

this appeal, was sustained in A., T. & S. F. R. Co. v. United

States, 244 F. Supp. 955 (N.D. Ill. 1965) (three-judge court),

and then reversed sub nom. American Trucking Associations,

Inc. v. A., T. & S. F. R. Co., 387 U.S. 397 (1967).

pony ae

filing appropriate tariffs before August 18, 1967. After

obtaining a ninety-day extension, the railroads, includ-

ing the Santa Fe, filed Trans-Continental Freight Bureau

Freight Tariff 2-F, Supplement 41, Section 1, Item

4900-E. This tariff, which established higher rates for

the leasing of TOFC equipment than were provided

in the pre-existing leases, became effective November

17, 1967, after the ICC approved it. Lessees were

thereafter charged at the new, higher rates. They

brought these actions to recover the difference between

the charges they paid under the tariff and those they

would have paid under their respective agreements.

The district court granted summary judgments in favor

of the Santa Fe, and these appeals followed.

We commence with the fundamental principle that

summary judgment is proper only where there is no

genuine issue as to any material fact or where, viewing

the evidence and the inferences which may be drawn

therefrom in the light most favorable to the adverse

party, the movant is entitled to prevail as a matter

of law. Rule 56, F. R. Civ. P. Here the district court

properly granted summary jucgments in favor of the

railroad.

Appellants concede, as they must, that once the

new tariff rates for TOFC service became effective,

the Santa Fe was bound by law to charge those rates.

Section 6(7) of the Interstate Commerce Act, 49

U.S.C. § 6(7), prohibits carriers in interstate com-

merce from receiving “different compensation . . . than

the rates, fares, and charges which are specified in

the tariff filed and in effect at the time.” Moreover,

the Elkins Act, 490 U.S.C. $$ 41 ef seq. provides

criminal penalties for departures from the published

rates, see 49 U.S.C. § 41(2), and for a carrier’s

OOS DENE ERIE EAL EOP OE

—

returning to a shipper rebates or offsets against them,

see 49 U.S.C. §41(3).

Appellants nevertheless urge their entitlement to dam-

ages based on the variance between the tariff rates

they were charged and those specified in their pre-

existing agreements with the railway. We are not per-

suaded, It is well recognized that the principal congres-

sional purpose in enacting the Interstate Commerce Act

was to obtain a uniformity of rates and an end to

discriminatory practices. As the Court early noted in

New Haven Railroad Company v. I.C.C., 200 US.

361, 391 (1906):

“It cannot be challenged that the great purpose

of the act to regulate commerce, whilst seeking

to prevent unjust and unreasonable rates, was to

secure equality of rates as to all and to destroy

favoritism, these last being accomplished by requir-

ing the publication of tariffs and by prohibiting

secret departures from such tariffs, and forbid-

ding rebates, preferences and all other forms of

undue discrimination. To this extent and for these

purposes the statute was remedial and is, there-

fore, entitled to receive that interpretation which

reasonably accomplishes the great public purpose

which it was enacted to subserve.”

Where, as here, a conflict exists between published

tariff rates and rates enumerated in pre-existing agree-

ments, we think it well established that the tariff rates

must prevail. Were we to permit enforcement of the

inconsistent contractual rates, we would significantly

undercut the clear policy of the Act to secure equal

rates for all. as well as condone one discriminatory

situation such as the Act was intended to remedy. See,

e.g., Louisville and Nashville Railroad Company v. Mot-

ARG ISLA SVS SLAP LONG EGO LER IOE DE BELGIAN VED BE DML OI OOL RDS Tis 2 EE SSI es

i

tley, 219 U.S. 467, 477-486 (1911); Armour Packing

Company vy. United States, 209 U.S. 56, 81-83 (1908);

Texas and Pacific Railway Company v. Mugg, 202

U.S. 242, 245 (1906); New Haven Railroad Company,

supra, 200 U.S. at 390-392.* Cf. American Trucking

*For example, the Court observed in Armour Packing Com-

pany, supra, 209 U.S. at 81-82, as follows:

“It [the law regulating interstate commerce] has pro-

vided for the establishing of one rate, to be filed as

provided. subject to change as provided, and that rate

to be while in force the only legal rate. Any other con-

struction of the statute opens the door to the possibility

of the very abuses of unequal rates which it was the design

of the statute to prohibit and punish.

. This feature of the law, it is insisted, puts the

shipper ‘in many kinds of trade at the mercy of the car-

rier, who may arbitrarily change a rate, upon the faith

of which contracts have been entered into. But the right

to make such regulations is inherent in the power of

Congress to legislate respecting commerce, and such con-

sideration of inconvenience or hardship address themselves

to the law-making branch of the Government... .

“The statute being within the constitutional power of

Congress, and being in force when the contract was made,

is read into the contract and becomes a part of it.

4 “If the shipper sees fit to make a contract covering a

definite period for a rate in force at the time he must

be taken to have done so subject to the possible change

of the published rate in the manner fixed by statute,

to which he must conform or suffer the penalty fixed

by law.”

The Court further said in Mottley, supra, 219 U.S. at 482-

483:

“The agreement between the railroad company and the

[plaintiffs] must necessarily be regarded as having been

made subject to the possibility that, at some future time,

Congress might so exert its whole constitutional power

in regulating interstate commerce as to render that agree-

ment unenforceable or impair its value. That the exercise

of such power may be hampered or restricted to any

extent by contracts previously made between individuals

or corporations, is inconceivable. The framers of the

Constitution never intended any such state of things to

exist.

“

. After the commerce act came into effect no

contract that was inconsistent with the regulations estab-

lished by the act of Congress could be enforced in any

court. The rule upon this subject is thoroughly established.”

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2

Association, Inc. v. A., T. & S. F. R. Co., 387 US.

397, 406 (1967).

In this connection, a tariff, rate, or charge, duly

established in accordance with the Act, is the legal

rate; it has the force of statute and is binding on

carrier and shipper alike. See Lowden v. Simonds-

Shields-Lonsdale Grain Co., 306 U.S. 516, 520 (1939);

Pennsylvania Railroad Company v. International Coal

Mining Company, 230 U.S. 184, 196-197 (1913); Rob-

inson v. Baltimore and Ohio Railroad Company,

222 U.S. 506, 508-510 (1912).* And a contract

valid when made is nevertheless rendered void by subse-

quently established tariff rates which are inconsistent,

at least to the extent of the inconsistency. See Mottley,

supra, 219 U.S. at 480-486.‘ Moreover, a shippers

%Appellants rely heavily on Macco Construction Company

v. Farr, 137 F.2d 52 (9th Cir. 1943), and Ets-Hokin & Galvan,

Inc. v. Maas Transport, Inc., 380 F.2d 258 (8th Cir. 1967),

cert. denied, 389 U.S. 977 (1967). We think both decisions

are inapposite. In Macco, we held that a contract which in-

cidentally violated a California licensing statute was not there-

by rendered unenforceable because the California legislature

did not intend that such violations void otherwise legal con-

tracts. 137 F.2d at 55. And in Ets-Hokin, which relied in

part on Macco, the Eighth Circuit held that a contract which

violated the Motor Carrier provisions of the Interstate Com-

merce Act was not unenforceable because Congress, in pass-

ing those provisions, did not intend “that contracts resulting

in violations of that portion of the Act be illegal and void.”

380 F.2d at 260-261. Here, however, as noted in the cited

cases, Congress did intend to render void rates inconsistent

with those established in conformity with the Act.

‘Appellants cite Chicago, Milwaukee, St. Paul & Pacific

Railroad Company v. Alouette Peat Products, 253 F.2d 449

(9th Cir. 1957), for the proposition that, even though ship-

pers are required to pay carriers the rate on file with the

ICC, a showing that such a rate was not lawfully established

would entitle them to recover the difference between what

they had thus paid and the lawfully established rate. Here.

however, appellants have presented no showing that the pub-

lished rate was unreasonable or otherwise established in violation

(This footnote is continued on next page)

E.

;

:

Oe at tek Cees

_

knowledge of duly published tariff provisions is pre-

sumed. American Railway Express Company v. Daniel,

269 U.S. 40, 42 (1925); Kansas City Southern Railway

Company v. Carl, 227 U.S. 639, 653 (1913); Chicago

& Alton Railroad Company vy. Kirby, 225 U.S. 155,

166 (1912); Mugg, supra, 202 U.S. at 245.°

Appellants’ remaining contention—that the Santa Fe

was required under the circumstances to establish a

tariff rate identical to that enumerated in its pre-existing

agreement with appellants—is without merit. It is well

settled that a carrier is entitled to initiate rates, and

to adopt such policy of rate-making as it deems wise,

subject to the revisory powers conferred upon the ICC.

See Diamond Tank Transport v. United States, 23

F. Supp. 497, 501 (W.D. Wash., N.D. 1938) (three-

judge court), affirmed, 305 U.S. 567 (1938); United

States v. Illinois Central Railroad Company, 263 U.S.

515, 522 (1924). And in light of the congressional

intention, already noted, that pre-existing agreements

be abrogated by subsequently promulgated regulations,

at least to the extent of the inconsistency, we think

it clear that a carrier’s decision fixing a proposed tariff

rate to be charged uniformly to all should not be

foreclosed by its pre-existing obligation to charge a

different rate to a few.

AFFIRMED.

of the Act. The mere fact that the published rate is incon-

sistent with a rate enumerated in pre-existing contracts does

not render it violative of the Act.

5Southern Pacific Company yv. Miller Abattoir Company,

454 F.2d 357 (3d Cir. 1972), relied on by appellants, is

not to the contrary. That decision merely held that a provi-

sion in a shipping contract, requiring that the railroad immedi-

ately notify the consignee if a cargo of livestock were stopped

in transit by quarantine, was not satisfied by the railroad’s

publication of a tariff explicitly stating that screw worms existed

in Arizona and that livestock leaving that state would be stopped

for inspection. See 454 F.2d at 361-362.

—

APPENDIX C.

Judgment of the United States District Court for the

Central District of California, entered February

19, 1974,

In the United States District Court, for the Central

District of California.

Farley Terminal Co., Inc., Plaintiff, vs. The Atchi-

son, Topeka and Santa Fe Railway Company, Defend-

ant. Civil Action No. 73-1818-EC.

JUDGMENT

This action came on for hearing before the Court,

Avery E. Crary, District Judge, presiding, and the

issues having been duly heard and a decision having

been duly ordered,

IT IS ORDERED AND ADJUDGED, that the plain-

tiff take nothing and that the action be dismissed on

the merits.

DATED at Los Angeles, California, this 19th day

of February, 1974.

/s/ E. Avery Crary

United States District Judge

CEE Ee in oa a |

Sy - x

—

APPENDIX D.

Findings of Fact and Conclusions of Law of the United

States District Court for the Central District of

California, entered February 19, 1974.

In the United States District Court, for the Central

District of California.

Farley Terminal Co., Inc., Plaintiff, vs. The Atchi-

son, Topeka and Santa Fe Railway Company, Defend-

ant. Civil Action No. 73-1818-EC.

PROPOSED FINDINGS OF FACT AND

CONCLUSIONS OF LAW

The Court, having duly heard defendant’s Motion

for Summary Judgment on February 11, 1974, does

hereby make the following findings of facts and conclu-

sions of law:

That on February 20, 1967, plaintiff and defendant

executed a Lease Agreement, wherein defendant would

lease to plaintiff, on an availability basis, TOFC equip-

ment (flat cars and trailers) at rates specified in the

terms of the aforementioned Lease Agreement;

That prior to November 17, 1967, defendant charged

plaintiff for lease and use of such equipment pursuant

to the aforementioned Lease Agreement;

That subsequent to November 17, 1967, Trans-Con-

tinental Freight Bureau Tariff Supplement 41 to Freight

Tariff 2F, Item 4900, Section I, was approved by

the Interstate Commerce Commission and filed and

became effective;

That the aforementioned tariff had the force and

effect of law and was the proper tariff for defendant

to charge plaintiff for plaintiff's use of defendant’s

TOFC equipment in Interstate Commerce;

a

That the rates provided in said tariff, as a matter

of law, rendered null and void the rates contained

in the Lease Agreement, dated February 20, 1967;

{although Ex Parte 230 did not express an intent

to negative existing rate contracts |

That, therefore, as a matter of law, the proper rates

for defendant to charge plaintiff for its use of defend-

ant’s TOFC equipment for eastbound movements in

Interstate Commerce, were the rates contained in the

aforedescribed tariff.

It is ordered, therefore, that defendant’s Motion for

Summary Judgment be and the same hereby is granted

and that said Judgment be entered herein in the de-

fendant’s favor, dismissing this action with costs to

be taxed by the Clerk in favor of the defendant and

against the plaintiff.

DATED: Feb. 19, 1974

/s/ E. Avery Crary

United States District Judge

Pe Sy ae ARRAN a

a

APPENDIX E.

SUBSTITUTED SER VICE—PIGGYBACK

John E. Faulk, R. M. Hartsock, and Clement T.

Mayo for Department o: Defense.

William R. Pierce for General Services Administra-

tion.

John BH. Fallon, Harvey Gobetz, and Asa J. Merrill

for Bureau of Inquiry and Compliance, Interstate Com-

merce Commission.

Report of the Commission on Oral Argument

By the Commission:

This proceeding, instituted on June 29, 1962, on

our own motion under the authority of parts I, II,

III, and IV of the Interstate Commerce Act and section

4 of the Administrative Procedure Act, constitutes this

Commission’s first general investigation of what is prob-

ably the most significant recent development in trans-

portation—trailer-on-flatcar or piggyback service. The

notice of proposed rulemaking made it known that

we intended this investigation to be broad in scope,

encompassing every aspect of TOFC operations, and

that we intended to explore new approaches to piggy-

back service. Among the matters specifically mentioned

in the notice as a subject for consideration was:

The extent to which motor carriers, water car-

riers, express companies and freight forwarders

should be permitted to use Plans III and

IV [open-tariff] rail rates and service in their

operations.

It was also made clear that we intended to reexamine

existing precedents and practices, and that consideration

ation

would be given to the adoption of rules and regulations

which might be found necessary to regulate coordinated

and substituted service transportation in the public in-

terest.

The order instituting this proceeding named as re-

spondents all railroads, motor carriers, and water car-

riers of property, freight forwarders, and express com-

panies operating in interstate commerce, and authorized

and directed our Bureau of Inquiry and Compliance

to participate. It also assigned the matter for a pre-

hearing conference, which was held October 9, 1962,

and at which proposed rules, reproduced as appendix

II hereto, were distributed. Oral hearings have not

been held, but representations, verified statements, and

reply statements have been received from numerous

interested parties. The proceeding was assigned to two

hearing examiners who recommended adoption of the

regulations contained in appendix III hereto. Exceptions

to the ........

A similar, perplexing problem for shippers and car-

riers has been interpretation of the “mixture” tariff

rule applicable to plan III transportation of “all-com-

modity” traffic. Ordinarily this type of rule will provide

that not more than 60 percent of the weight of a

total, two-trailer shipment may consist of any one com-

modity or article. One frequent variation of this tariff

rule provides the alternative test; not more than 60

percent of the total shipment or not more than 60

percent of 70,000 pounds. The carriers do not seem

to be applying any consistent approach in determining

whether commodities being shipped are the “same”

commodity or article. In general, neither commodity

classifications nor other published listings are used to

determine whether the articles included in a single

=

shipment are sufficiently dissimilar to constitute differ-

ent commodities for the purposes of mixture rules.

This state of affairs leaves a railroad free to haul

‘straight truckloads of high-rated commodities at hidden

bargain rates should it choose to do so for a favored

shipper.

Bearing in mind the historical development of piggy-

back transportation and its present-day problems—as

well as its appealing advantages—we shall now proceed

to an examination of the issues raised directly by the

instant investigation.

The Proposed Rules

At the prehearing conference held in this proceeding

on October 9, 1962, a series of proposed rules, repro-

duced as appendix II hereto, was distributed. As noted

at that time, they were designed to serve as a framework

upon which rules ultimately to be adopted, if any,

could be developed. The proposed rules represented

something of a new approach to TOFC terminology

as they attempted to separate TOFC service, without

regard to the five numbered plans now in common

use, into two more basic classes: “joint intermodal”

TOFC service which would include any piggyback serv-

ice performed jointly by a rail carrier and a motor

or water common carrier; and “all-rail” TOFC service

which would include any piggyback service in which

traffic moves exclusively at rail rates and on rail billing.

The proposed rules were predicated upon the basic

premise that all persons desiring to use TOFC service

should be able to do so, with the charges for the

same services being equal to all users, whether they

be motor or water carriers, freight forwarders, or private

shippers. The proposed rules B-4, B-5, C-1, and C-

—

It is apparent that this state of affairs places a

premium on a shipper’s having a sophisticated traffic

department, capable of assessing the various available

services, charges, and allowances, and of determining

what combination offers the best transportation bargain

in moving a particular shipment. We think that carriers

should be encouraged to use as simple a method of

tariff publication as possible, and should be discouraged

from permitting the kind of situation illustrated. It

is also clear that the general practice by which railroads

and their affiliates trip lease trailers to shippers for

immediate use in TOFC service contains potential seeds

of discrimination. Unless the same opportunity to lease

equipment is made available to all similarly situated

shippers at the same price, the leasing of a trailer

to a favored shipper can become a concession violative

of the Elkins Act.

While we recognize that there are opportunities for

discrimination in present rate publication and equipment

leasing practices, we cannot agree with the A.T.A.

that the only available cures are a straitjacket for

TOFC tariffs and major surgery to excise trailer leasing.

The contentions that rail carriers are required by statute

to publish rates only for a “complete” service and

that they are obligated to furnish trailers wherever

TOFC service is provided were disposed of in Eastern

Central M. Carriers Assn. v. Baltimore & O. R. Co.,

314 1.C.C. 5, 45-47, aff'd. sub nom. Cooper-Jarrett,

Inc., v. United States, .... F. Supp. .... (W.D. Mo. 1964)

(civil action No. 13469, February 6, 1964). The basic

flaw in the A.T.A’s legal argument, which was also

pointed out in that decision, appears to be the false

assumption that a highway trailer necessarily is an

“instrumentality of transportation” which carriers must

-

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PLD IMRE LACIE NGS AL AY OE SST IN“ ctelert

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po eae

furnish. This can, of course, be the case when a railroad

holds out a service which by its nature requires perform-

ance of some motor carriage. But it need not hold

out to perform more than rail service, and in that

case the trailer, tendered for transportation by a shipper,

is nothing more than a container—an “article of com-

merce.”

We must point out here that we are not holding

that the service which a carrier holds out to perform

can only be ascertained from the actual words of its

tariff. When a rail carrier offers a ramp-to-ramp TOFC

service, ostensibly confined to the line-haul rail trans-

portation of loaded highway trailers tendered at its

terminal by shippers, but then proceeds to lease trailers,

and to provide drayage, loading, and other “accessorial”

services, we think that it is in fact holding out a

complete door-to-door service. In such a case, all the

services it provides become transportation services rath-

er than mere accessorial services, and they are required

to be the subject of its tariff publications. This, we

think, disposes of the New York Central’s argument

that we have no authority to require the publication

of accessorial services. To agree with the Central’s

position would be to allow any carrier, by self-imposed

limitations contained in its tariffs, to designate what

it considers to be transportation services and what

it considers nontransportation services. This distinction

is, we believe, a matter of fact and not one that can

be imposed by fiat. The nature of piggyback—the fact

that its advantage lies in its being a combination of

rail and motor transportation—makes rail carriers tend

to offer to their customers services which were tradi-

tionally provided only by motor carriers and which

can physically be performed only with motor vehicies.

SESSION NNR OIE HERON TERT CONOR Egy

=—=™=

Such services, we believe, will normally be transporta-

tion services when offered in connection with TOFC

transportation.

The existence of opportunities to engage in discrim-

inatory practices, standing alone, will not, in our opin-

ion, justify our requiring a strict format for TOFC

rate publications or striking down the prevalent prac-

tice of trailer leasing by railroads. The record before

us is almost completely devoid of evidence that these

opportunities for discrimination have been misused. In

spite of the variety and complexity of all-rail TOFC

tariffs, they seem to be serving their purpose effec-

tively, and we would not be justified in imposing a

new scheme of publication in the absence of specific

shipper complaints. The same appears to be true of

trailer leasing. Where complaints of discrimination have

been made, as in the case of certain midwestern

meat-packers, the railroads involved have taken steps

to correct the situation. We agree with the examiners

that tariff rules providing for the publication of charges

for leasing trailers and for other special TOFC services

will eliminate many of the present opportunities for

abuse. Should this approach prove ineffective, addi-

tional steps can be taken at some future time. At

present, we conclude that they are not needed, and

that regulations substantially similar to those recom-

mended will suffice. The only significant change we

think necessary in the recommended tariff rules is

to provide for publication by rail carriers of the leas-

ing charges of affiliates. To omit the practices of rail-

affiliated leasing companies from the effect of the leas-

ing rule would obviously be to create a legal loophole

and to allow the doing by indirection of what could

not be done directly. The following rules will be adopt-

ed:

ERE LIE EE LY CAI STERN, BONIS SPL Ga OIE PIE » OE LES

PN RS

1 Arye

2 RR Ca Mr

an

7 Tariff publication regulations.

(a) Each railroad performing or holding out to per-

form TOFC service shall publish, post, and file tariffs

(itself or through an agent) which shall contain in

clear and explicit terms all of the rates and charges

for and the rules governing the leasing of equipment

to any person using its TOFC service (whether by

the railroad itself or by any person affiliated with

or controlled by the railroad or any agents of the

railroad), and other special services or practices, includ-

ing charges for pickup or delivery service when such

charges are in addition to line-haul transportation

charges. Such tariffs shall also contain, in clear and

explicit terms, all amounts to be paid to any shipper

for tie lease of any empty truck, trailer, or semitrailer

(or the container portion of any truck, trailer, or semi-

trailer having a demountable chassis) when such empty

equipment is being transported incidentally to its prior

or subsequent use in TOFC service.

(b) No allowance shall be payable by a rail carrier

to any shipper, freight forwarder, or consignee which

renders any service or furnishes any instrumentality

in connection with TOFC service unless (1) such serv-

ice is one that the rail carrier is obligated to perform

or provide under the applicable rate and (2) the amount

of the allowance is published in tariffs on file with

the Interstate Commerce Commission.

(c) The area within which pickup and delivery serv-

ice will be performed by a rail carrier offering to

provide TOFC service shall be described specifically

and the description published in clear and explicit terms

in the tariff. It is not permissible to refer to decisions

of the Commission for the description nor to state

pens Naan gh ORR Gah Eh Saat ce re

= a

that the area within which pickup and delivery service

will be performed is that defined by the Commission

in a formal proceeding.

(d) All rail tariffs containing rates for TOFC trans-

portation of property shall specify the extent to which

such rates do or do not include the loading and un-

loading of property from or to the highway vehicle

by the carrier. When charges in addition to the line-

haul TOFC transportation charges or in addition to

pickup or delivery charges, if any, are made for the

loading or unloading of property, they shall be pub-

lished in appropriate tariffs and filed with the Inter-

state Commerce Commission.

(e) Highway vehicles or rail cars provided by ship-

pers or freight forwarders in connection with all-rail

TOFC service, while on railroad premises, shall be

subject to the storage or demurrage rules, regulations,

and charges published in tariffs on file with the Inter-

state Commerce Commission.

Billing and Notification Rules

Section D of the proposed rules and the examiners’

recommended rules 19 through 23 deal with the billing

of TOFC shipments and

» Loe fe ee —— . X .

a 4 SOLS ROR Ray EN PTR NERC IRE OTE ATR AAT DREN LS