Maislin Industries, US, Inc. v. Primary Steel, Inc.

PETITIONER: Maislin Industries, US, Inc.
RESPONDENT: Primary Steel, Inc.
LOCATION: Maple Heights High School

DOCKET NO.: 89-624
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Eighth Circuit

CITATION: 497 US 116 (1990)
ARGUED: Apr 16, 1990
DECIDED: Jun 21, 1990

ADVOCATES:
Thomas M. Auchincloss, Jr. - on behalf of the Petitioners
Thomas W. Merrill - on behalf of the Respondent

Facts of the case

Question

Media for Maislin Industries, US, Inc. v. Primary Steel, Inc.

Audio Transcription for Oral Argument - April 16, 1990 in Maislin Industries, US, Inc. v. Primary Steel, Inc.

William H. Rehnquist:

We'll hear argument now in Number 89-624, Maislin Industries v. Primary Steel.

Mr. Auchincloss.

Thomas M. Auchincloss, Jr.:

Thank you, Mr. Chief Justice.

Mr. Chief Justice, and may it please the Court:

The issue presented in this case asks whether a shipper who utilizes the services of a motor common carrier has a legal right to the benefit of an unfiled illegal rate, or must the shipper pay the carrier's lawful tariff rate.

Quinn Freight Lines, one of the petitioners in this case, was a motor common carrier that conducted operations in interstate commerce pursuant to authority granted by the ICC and under tariffs on file with the ICC.

The respondents are a shipper, Primary Steel, who utilized the services of Quinn, and the Interstate Commerce Commission.

The facts in this case indicate that Primary and Quinn negotiated rates for the transportation of steel products from a point in Connecticut to destinations in 12 states.

Notwithstanding the fact that Quinn did not file its rates with the Interstate Commerce Commission, transportation was performed over a period of nearly three years, and roughly 1,100 shipments were transported.

Following the bankruptcy of Maislin and Quinn, it was discovered by the rate auditors who were retained by the estate of Maislin that the transportation charges assessed Quinn... assessed Primary by Quinn were in fact not on file in tariffs on file with the ICC.

Now, the rate auditors made demand for payment of undercharges, that is the difference between the filed tariff rates and the unfiled rates that were assessed on the carrier's freight bills.

Primary refused to pay the undercharges, and an action was instituted in the United States District Court in the District of Missouri, Kansas City specifically.

The district court, upon motion of Primary, referred three issues to the Interstate Commerce Commission for consideration.

First, whether Quinn's rates, applicable filed tariff rates that is, were in fact applicable to the shipments transported by Primary, or by Quinn on behalf of Primary; second, whether Quinn's rates were reasonable pursuant to standards established under the Interstate Commerce Act; and third, whether Quinn would be barred from the collection of its undercharges by virtue of two provisions contained in the Interstate Commerce Act: first, Section 10701, which relates to carrier practices, reasonable rates and so on, and secondly, the so-called Tariff Requirement Act, or provision of the act, which is Section 10761 of the Act.

In an advisory decision issued by the Interstate Commerce Commission, the Commission ignored the applicability issue and the rate reasonableness issue, and instead decided that the carrier should be foreclosed from collecting its undercharges, based solely on the language of Section 10701 of the Act, which again is that provision which requires carriers' rates and practices to be reasonable.

Following the advisory decision, the district court issued its decision in which it upheld the ICC advisory opinion, noting also that the negotiated rate proposition was an unreasonable practice and in fact foreclosed the carrier from collecting its undercharges.

The court also held that there was no provision contained in the Interstate Commerce Act which foreclosed the Commission from issuing a policy statement which in effect said that it would henceforth consider equitable defenses to carriers' efforts to collect lawful tariff charges.

On appeal the Eighth Circuit court of appeals affirmed the district court's decision for essentially the same reasons.

Now, the contact which gives rise to this case, an agreement between a common carrier and a shipper to do business at a rate other than the lawful filed tariff rate, is explicitly prohibited by the Interstate Commerce Act.

In upholding the district court's decision, the court of appeals failed to recognize the extremely narrow relief offered to shippers under the Interstate Commerce Act for the recovery of reparations or undercharges on past motor common carrier shipments.

Congress has created a mechanism, a statutory framework, in fact, under which shippers and motor carriers will conduct their business.

The essence of that framework is the common carrier's tariff.

All transactions between shippers and motor carriers must be conducted pursuant to explicit tariff provisions.

The carrier--

What section says that?

Thomas M. Auchincloss, Jr.:

--That's Section 10761 of the Act, Your Honor.

Carriers cannot perform a service.

They cannot perform transportation unless there are explicit provisions in the tariff which underlie that service or that transportation.

All dealings conducted pursuant to the tariff, of course, are subject to scrutiny, either by the ICC or by other shippers or carriers who would have an interest in what the common carrier's holding out may be.

Failure to adhere to the filed tariff can result in civil penalties or criminal penalties.