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Hargrave v. Freight Distribution Service Inc.

filed: April 28, 1995.

JOHN W. HARGRAVE, TRUSTEE IN BANKRUPTCY FOR CIRCLE C TRUCKING, PLAINTIFF-APPELLANT
v.
FREIGHT DISTRIBUTION SERVICE, INC., DEFENDANT-APPELLEE



Appeal from the United States District Court for the Central District of California. D.C. No. CV-92-03566-DWW. David W. Williams, District Judge, Presiding.

Before: James R. Browning and Robert R. Beezer, Circuit Judges, and Ancer L. Haggerty, District Judge.*fn* Opinion by Judge Beezer.

Author: Beezer

BEEZER, Circuit Judge:

We consider two questions. First, we examine whether in a suit brought on behalf of a bankrupt common carrier for recovery of the carrier's filed rate, the district court must refer the issue of the reasonableness of the filed rate to the Interstate Commerce Commission for an initial determination. Although we have addressed this question before, we revisit it in light of the Supreme Court's decision in Reiter v. Cooper, 122 L. Ed. 2d 604, 113 S. Ct. 1213 (1993). Second, we address contract of carriage questions.

The district court granted summary judgment for Freight Distribution Services, Inc. ("FDSI") on the grounds that Circle C Trucking's filed rates were unreasonable. We have jurisdiction pursuant to 28 U.S.C. § 1291. Because we conclude that the district court should not have determined the reasonableness of the filed rate, and because we are unable to decide as a matter of law that the carrier provided contract carriage to the shipper, we reverse summary judgment and remand for further proceedings.

I

Circle C Trucking ("Circle C") operated in interstate commerce pursuant to a grant of authority issued by the Interstate Commerce Commission ("ICC") to provide both common carriage and contract carriage. FDSI, a California transportation brokerage company, entered into a contract with Circle C on August 2, 1988, under which Circle C agreed to transport freight tendered to it by FDSI. FDSI paid Circle C the negotiated contract rate, which was lower than Circle C's filed tariff rate.

Circle C later was declared bankrupt, and the trustee in bankruptcy, John Hargrave, filed an "undercharge" action against FDSI in the district court to recover the difference between the negotiated contract rate and the filed tariff rate, a total of $49,475.15.*fn1 FDSI moved for summary judgment on the grounds that Circle C was acting under its authority as a contract carrier, and alternatively, that Circle C's filed tariff rate was unreasonable.

The district court granted summary judgment, concluding that the Supreme Court's decision in Reiter had undermined the fixed rate doctrine, and that the very fact that the parties intentionally entered into a negotiated contract for a rate lower than the filed tariff indicated that FDSI's "claims of unreasonableness are justified."

We review de novo the district court's grant of summary judgment. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir. 1994). Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c).

II

Hargrave argues that the district court should have referred the issue of the filed rate's reasonableness to the ICC for an initial determination. We agree.

In Milne Truck Lines, Inc. v. Makita U.S.A., Inc., 970 F.2d 564 (9th Cir. 1992), we recognized that the "issue of reasonableness requires 'preliminary resort to the [ICC].'" Id. at 569 (quoting Great N. Ry. v. Merchants Elevator Co., 259 U.S. 285, 291, 66 L. Ed. 943, 42 S. Ct. 477 (1922)). We later stated that "the ICC has exclusive primary jurisdiction to determine the reasonableness of a filed rate." RTC Transp., Inc. v. Conagra Poultry Co., 971 F.2d 368, 372 (9th Cir. 1992); see also Union Pac. R.R. v. Bay Area Shippers Consolidating Ass'n, 594 F.2d 1291, 1294 (9th Cir. 1979).

The Supreme Court, in 1993, decided Reiter v. Cooper, 122 L. Ed. 2d 604, 113 S. Ct. 1213 (1993). In that case, the trustee of a bankrupt carrier sought to collect the difference between a negotiated rate and a filed rate. The shipper attempted to raise a defense to the "undercharge" action based on the unreasonableness of the rate. The Court held that the shipper could raise the claim of unreasonableness in the district court as a counterclaim. Id. at 1217. When the carrier is in bankruptcy, the ...


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