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Milne Truck Lines Inc. v. Makita U.S.A. Inc.

filed: July 7, 1992.

MILNE TRUCK LINES, INC. AND CONSOLIDATED/MARK, A JOINT VENTURE BETWEEN CONSOLIDATED INTERNATIONAL STORES CORP. AND MARK SERVICES, INC., PLAINTIFFS-APPELLEES,
v.
MAKITA U.S.A., INC., DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Central District of California. D.C. No. CV-88-04440-TJH. Terry J. Hatter, District Judge, Presiding.

Before: James R. Browning, Robert Boochever, and Stephen Reinhardt, Circuit Judges. Opinion by Judge Reinhardt.

Author: Reinhardt

REINHARDT, Circuit Judge:

The primary question presented by this case is whether in a suit brought by a motor common carrier under the Interstate Commerce Act for recovery of its filed rate the defendant shipper may plead unreasonableness of the filed rate as a defense. We conclude that the filed rate doctrine, as set forth in Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 110 S. Ct. 2759, 111 L. Ed. 2d 94 (1990), does not bar such a defense, but that because the reasonableness of a motor common carrier filed rate falls within the primary jurisdiction of the Interstate Commerce Commission (ICC), the district court must refer the reasonableness issue to the ICC for initial determination. We further conclude that the filed rate doctrine does bar the assertion of common law counterclaims for negligent or fraudulent conduct relating to the negotiation and filing of tariff rates. Accordingly, we reverse the district court's grant of partial summary judgment to the carrier, Milne Truck Lines, but affirm its dismissal of defendant-appellant Makita, U.S.A.'s counterclaims for negligence and fraud.

I

Appellee Milne Truck Lines, Inc. (Milne), was a motor common carrier operating in interstate commerce pursuant to a grant of authority issued by the Interstate Commerce Commission (ICC). Appellant Makita U.S.A., Inc. (Makita), a manufacturer of electric power tools, used the transportation services of Milne to ship its products. On all shipments after June 24, 1985, Milne billed Makita at a 35% discount from its generally applicable filed rate. The freight bills incurred by Makita from July 11, 1985, through March 23, 1987, for shipments originating from Fremont, California, and Cerritos, California, are the subject of this dispute.

Until mid-1985, Makita's headquarters were located in its facility in San Jose, California. In late 1984, Milne filed a tariff with the ICC that reflected a 25% discount for Makita shipments originating from San Jose, effective December 18, 1984. On June 13, 1985, Makita moved its headquarters from San Jose to Fremont, and at that time ceased operating out of San Jose. At no time after June 13 did Milne transport Makita shipments originating from San Jose. Effective June 24, 1985, Milne amended its filed tariff to increase the discount for Makita shipments originating in San Jose to 35%. Not until August 18, 1987, did Milne amend its filed tariff to provide expressly for a 35% discount for Makita shipments originating in Fremont.

Milne ceased operations on September 10, 1987. Appellee Consolidated/Mark (C/M), a freight audit company, was appointed to audit Milne's freight bills in order to determine whether the bills had been paid and whether they had been properly rated according to the tariffs filed by Milne with the ICC. When C/M discovered that from July 11, 1985, through March 23, 1987, Makita had paid the discounted rate on shipments originating from Fremont and Cerritos, C/M demanded payment of the filed, nondiscounted rate. Until C/M supplied Makita with a copy of the tariff filed by Milne, Makita was not aware that the tariff specified a discount rate only for shipments originating in San Jose. Makita refused to make the additional payments.

C/M filed suit against Makita under the Interstate Commerce Act (the Act), 49 U.S.C. §§ 10761, 10762, for payment of the filed rate. Makita raised twenty-one affirmative defenses. Makita claimed, inter alia, that the tariff was ambiguous, that the nondiscounted filed rate was unreasonable, that the question of the reasonableness of the filed rate fell within the primary jurisdiction of the ICC, and that Milne's tariff and billing practices constituted unreasonable practices under 49 U.S.C. sections 10701 and 10704. In addition, Makita filed three counterclaims against Milne. The first two counterclaims sought damages based on Milne's allegedly negligent or fraudulent conduct in representing to Makita that the rates it offered had been or would be filed and in failing to file tariffs that corresponded to the agreement negotiated with Makita. The third counterclaim alleged the imposition of unreasonable rates in violation of 49 U.S.C. section 10701(a).

C/M and Milne filed motions to dismiss Makita's counterclaims and for partial summary judgment, and Makita filed a motion for referral of the issues of the reasonableness of Milne's tariff rates and practices to the ICC. On March 28, 1989, the district court stayed its action on the various motions pending our decision in West Coast Truck Lines, Inc. v. Weyerhaeuser Co., 893 F.2d 1016 (9th Cir.), withdrawn, 912 F.2d 1130 (9th Cir. 1990), on the question whether under the Act an unreasonable practice defense could be asserted to prevent application of the filed rate doctrine in an action to collect for motor common carrier undercharges. During the stay, Makita filed a petition with the ICC for review of Milne's tariff rates and practices. The ICC set a briefing schedule, which was filed with the district court.

Our opinion in West Coast Truck Lines, filed January 4, 1990, concluded that the ICC's recognition of an unreasonable practice defense to the filed rate doctrine was consistent with congressional intent. Makita filed a motion in the district court for judicial notice of the decision in West Coast Truck Lines, and of the fact that the Supreme Court had granted certiorari in order to resolve the identical issue. On June 21, 1990, the Supreme Court issued its decision in Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 110 S. Ct. 2759, 111 L. Ed. 2d 94 (1990), which effectively reversed West Coast Truck Lines.

Shortly after the Court's decision in Maislin, C/M and Milne requested that the district court lift the stay and rule on the pending motions. The district court refused to refer the reasonable rate issue (as well as the reasonable practice question), granted plaintiffs' motions for dismissal of Makita's counterclaims and for partial summary judgment, and entered judgment for Milne in the amount of $47,653.10. The court also awarded Milne prejudgment interest. Makita filed this timely appeal.*fn1

II

Makita argues that the tariff language specifying "San Jose" as the point of origin for Makita shipments entitled to the discounted rate is ambiguous because Milne amended the tariff to increase the discount after Makita had ceased operating out of San Jose. Thus, a literal reading of "San Jose" would render the amended tariff meaningless. Accordingly, Makita argues, we are required to construe "San Jose" to include shipments from Fremont and Cerritos. We find that the tariff reference to "San Jose" is ambiguous with respect to shipments originating in Fremont, but not with respect to shipments originating in Cerritos. Because we are unable ...


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