Opinion · Court of Appeals for the Fourth Circuit
Transrisk Corp. v. Matsushita Electric Corp. of America
15 F.3d 313
- Type
- Opinion
- Court
- Court of Appeals for the Fourth Circuit
- Jurisdiction
- Federal
- Date
- 1994-01-26
- Topic
- general
How later courts describe this case
- specialized services provided by carrier included accepting all shipments at rate different from filed rate, special insurance in ways not required of common carrier, allowing 30 days to pay freight bills (shippers under common carrier agreements had 14 days to pay)
- more than 600 shipments over 6 months
Citator
UpLaw has not yet analyzed Transrisk Corp. v. Matsushita Electric Corp. of America. The absence of a flag is not a finding that it is good law.
- Cited by
- 3 opinions
TRANSRISK CORP. v. MATSUSHITA ELEC.,15 F.3d 313(4th Cir. 1994)
TRANSRISK CORPORATION, INCORPORATED, A/K/A ALLEGHENY FREIGHT LINES,
INCORPORATED, PLAINTIFF-APPELLANT, v. MATSUSHITA ELECTRIC CORPORATION OF
AMERICA, A/K/A PANASONIC COMPANY, DEFENDANT-APPELLEE.
No. 93-1373.
United States Court of Appeals, Fourth Circuit.
Argued September 27, 1993.
Decided January 26, 1994.
Page 314
Before PHILLIPS and LUTTIG, Circuit Judges, and BUTZNER, Senior Circuit Judge.
[1]OPINION
I
[3] From March through December 1989, Allegheny, an interstate motor carrier based in Virginia, transported approximately 600 shipments for a shipper, Panasonic. Prior to these shipments, the two companies had entered into a written "Transportation Agreement" ("the Agreement"). The Agreement begins with a provision that Allegheny "has authority from the Interstate Commerce Commission to operate as a contract carrier".2It goes on to state that "[c]ustomer [Panasonic] does not guarantee any minimum number of shipments, tonnage, or revenue." The Agreement also identifies the specialized services Allegheny would provide Panasonic, including a promise to specially insure its carriage of Panasonic shipments in ways not required of a common carrier, and permission for Panasonic to pay freight bills within 30 days while shippers under common carrier agreements have only 14. Finally, it includes a detailed schedule of negotiated rates that Panasonic agreed to pay Allegheny for its services.
[4] Following the signing of the Agreement, Allegheny began carrying Panasonic cargo, and Panasonic, in return, made payments according to the agreed upon rate schedule. As noted, over 600 shipments were carried pursuant to the Agreement.
[5] In January 1990, Allegheny filed for bankruptcy. It was taken over by Transrisk which, under an agreement with the carrier, performed audits to determine whether rates based on applicable filed tariffs had been paid to Allegheny by its customers. Transrisk's deal with Allegheny provided that if there were any balances due Allegheny using the filed rate benchmark, Transrisk could bill and collect as assignee of Allegheny.
[6] For purposes of its audit of the Panasonic account, Transrisk assumed that the Agreement, and the shipments handled thereunder, were not sufficient to qualify for motorcontractcarriage. From Transrisk's perspective, Allegheny acted as a motorcommoncarrier, and the higher filed rates should apply. Transrisk then subtracted the lower negotiated rates Panasonic had paid pursuant to the Agreement from the higher filed rates and determined that the shipper had been undercharged for freight services in the amount of $104,730.59. Transrisk later revised this figure downward to its present claim for $43,487.66.
[7] When Panasonic refused to accede to Transrisk's demand for payment, Transrisk on behalf of Allegheny brought this suit in federal district court in Maryland. Panasonic, asserting that all services provided by Allegheny were pursuant to a written agreement sufficient to qualify for motorcontractcarriage, sought summary judgment. Allegheny, contending that the Agreement didnotcomprise a pact for contract carriage, filed a cross-motion for summary judgment.
[8] Finding it "patent that the plaintiff's predecessor, Allegheny, was a contract carrier for Panasonic", the district court granted Panasonic's motion for summary judgment.Transrisk v.Matsushita,No. 92-660, 1993 WL 581057 (D.Md. filed March 17, 1993). This appeal by Allegheny followed.
II
[9] Allegheny contends that the Agreement was insufficient to make it a motorcontractcarrier because (1) it failed to satisfy the "distinct needs" requirement embodied in the Interstate Commerce Act's ("The Act") definition of "motor contract carrier"; and (2) it failed to fulfill the criteria set out by the ICC in 49 C.F.R. § 1053.1 for "continuing agreements".
[10] The Act defines a "motorcontractcarrier" as
a person providing motor vehicle transportation of property for compensation undercontinuingagreementswith one or more persons —
(i) by assigning motor vehicles for a continuing period of time for the exclusive use of each such person; orPage 316
(ii) designed to meet thedistinct needsof each such person.
[11]49 U.S.C. § 10102(15)(B) (1988) (emphasis added).
[12] "Distinct needs", as interpreted by the federal courts, "is a need for a different or a more select or a more specialized service than common carriage provides."Global Van Lines, Inc.v. Interstate Commerce Commission,804 F.2d 1293,1301(D.C. Cir. 1986) (quotingInterstate Commerce Commission v. J-T Transp.Co.,368 U.S. 81,91,82 S.Ct. 204,210,7 L.Ed.2d 147(1961)).
"Continuing agreements" is defined by ICC regulation:
No contract carrier by motor vehicle, as defined by49 U.S.C. § 10102(12) shall transport property for hire in interstate or foreign commerce except under special and individual contracts or agreements which shall be in writing, shall provide for transportation for a particular shipper or shippers, shall be bilateral and impose specific obligations upon both carrier and shipper or shippers, shall cover a series of shipments during a stated period of time in contrast to contracts of carriage governing individual shipments, and copies of which contracts or agreements shall be preserved by the carriers parties thereto so long as such contracts or agreements are in force and for at least one year thereafter.
[13] 49 C.F.R. § 1053.1 (1991).3
A.
[14] Of the two, the "distinct needs" issue is the more easily resolved in Panasonic's favor. The Agreement clearly indicates that Allegheny agreed to provide certain services to Panasonic that a common carrier would be under no obligation to offer. Allegheny does not contest Panasonic's contention that provisions for several specialized services are in the Agreement. Among them: (i) Allegheny would accept all of Panasonic's shipments, and at a rate different from the filed rate, (ii) Allegheny would specially insure its carriage of Panasonic shipments in ways not required of a common carrier, (iii) Panasonic had 30 days to pay freight bills while shippers under common carrier agreements had 14. We therefore conclude, with the district court, that as a matter of law, the "distinct needs" requirement forcontractcarriage was fulfilled.Global Van Lines,804 F.2d at 1301;Dan Barclay, Inc. v. Stewart Stevenson Services,761 F. Supp. 194,200(D.Mass. 1991).
B.
[15] The "continuing agreements" issue is less clearcut, but ultimately must also be decided in favor of Panasonic.
[16] Under the ICC regulation in effect at the time, 49 C.F.R. § 1053.1, whether a shipper-carrier relationship constitutes a continuing agreement depends on whether five criteria are met. In this case, three are clearly met. First, the agreement between the parties is "in writing". Second, it provides for transportation for "a particular shipper", Panasonic. Third, a copy of the agreement has been "preserved" by the parties.
[17] The fourth requirement — that the agreement "shall cover a series of shipments during a stated period of time in contrast to contracts of carriage governing individual shipments" — is essentially a question of whether the shipper-carrier relationship is "continuing". In this case, the volume — over 600 — and duration — over six months — of shipments indicate that the line between single or individual shipments (which can only qualify ascommoncarriage) and an extended and continuous series of shipments (sufficient forcontractcarriage) was crossed. As one federal court recently noted, "`continuing' refers to regularly recurring needs, and repeated transactions, not isolated transactions."Barclay,761 F. Supp. at 202. InPage 317addition, the Agreement contains a stated time period.4
[18] The fifth, and final, requirement — that the agreement "shall be bilateral and impose specific obligations upon both carrier and shipper" — is the most problematic. Under the Agreement, Panasonic "does not guarantee any minimum number of shipments". The absence of a provision requiring the shipper to tender a specific or minimum number of shipments raises an obvious problem that has bothered some courts asked to find an agreement for contract carriage.See Matter of Steve D. Thompson Trucking,Inc.,989 F.2d 1424(5th Cir. 1993);Barclay,761 F. Supp. at 203.Cf. In re United Shipping Co.,134 B.R. 359(Bankr. D.Minn. 1991) (finding agreement between shipper and carrier bilateral because shipper obligated to tender at least one shipment per year).
[19] However, none of those cases involved a number of shipments comparable to the 600 plus Panasonic tendered to Allegheny. For example, the carrier inThompson Truckingtransported 35 shipments; the carrier inBarclayhandled only two. Furthermore,Thompson Trucking,upon which Allegheny relies for the proposition that the absence of a minimum tender clause dooms a contract carriage defense, actually rests primarily on the fact that the shipper used a carrier that had not obtained a permit for contract carriage prior to the purported contract carriage shipments.5Here, by contrast, Allegheny had obtained a permit for contract carriage and prominently included this fact in the Agreement with Panasonic.
[20] Moreover, under the recent ICC decision inGeneral Mills, Inc.— Petition for Declaratory Order — Certain Rates and Practices ofUnited Shipping Company, Inc.,8 I.C.C.2d 313 (1992),aff'd(Bankr.D.Minn. 1992) (appeal currently pending before Eighth Circuit), only "substantial compliance" with the requirements of 49 C.F.R. § 1053.1 is necessary to find motorcontractcarriage. Rather than requiring complete compliance,GeneralMillsheld that the key issue in determining whether there was a motorcommonor motorcontractagreement is the intent of the parties: "The contract may be incomplete or deficient in other respects, but these shortcomings will not change the status of the carriage from that intended by the parties at the time of transportation." 8 I.C.C.2d at 321.See also, W.W. Grainger,Inc. v. United Shipping Company, Inc. — Petition for DeclaratoryOrder — Certain Rates and Practices of United Shipping Company,Inc.,1992 Fed.Car.Cas. (CCH) ¶ 37,988 (ICC, May 27, 1992) (finding parties' intent and subsequent conduct enough to overcome deficiencies in agreement for contract carriage).
[21] InGeneral Mills,the Commission found "substantial compliance" even though the shipper-carrier agreement appeared not to require the shipper to tender any minimum number of shipments. "While it [the agreement] does not specifically reference a number of shipments to be tendered, considered in its entirety it can easily be contrasted to multiple contracts governing individual shipments." 8 I.C.C.2d at 323.
[22] In the instant case we think it apparent as a matter of law that the intent of the parties, at the time of transportation, was that Allegheny was to operate as a motorcontractcarrier for Panasonic. First, as inGeneral Mills,the Agreement states up front that it is an agreement to do business under Allegheny's contract carrier authority. Second, it contains several provisions pertaining to Panasonic's specialized needs. And third, it includes an extensive, detailed schedule of negotiated rates.
[23] Allegheny contends that we owe no deference to the ICC's interpretation of itsPage 318regulation as reflected inGeneral Millsbecause the "ICC's now meager standard of proof of contract carriage" shows that it "exercise[s] no true expertise." Appellant's Brief at 23. We disagree. We believe to the contrary that the agency's interpretation in this matter is entitled to deference underChevron United States Inc. v. Natural Resources Defense Council,Inc.,467 U.S. 837,104 S.Ct. 2778,81 L.Ed.2d 694(1984).See Reiter v. Cooper,507 U.S. ___, ___,113 S.Ct. 1213,1221,122 L.Ed.2d 604(1993) (ICC interpretation of Interstate Commerce Act "at least a reasonable interpretation of the statute, and hence a binding one," citingChevron). The matter at issue lies clearly within the range of agency expertise.
III
[24] We therefore conclude that the district court properly determined that, as a matter of law on the summary judgment record, Allegheny acted as a contract motor carrier under its agreement with Panasonic, hence is not entitled to the claimed undercharges.6
[25]AFFIRMED.
[28] The majority never actually holds that the contract is bilateral, nor could it, given the explicit contractual provision that Panasonic has no obligation whatsoever to transport any shipments with Allegheny. J.A. at 49 ("Nothing herein shall require, or be construed to require, Customer to transport any shipments with Carrier, or otherwise use any services of Carrier. Customer does not guarantee any minimum number of shipments, tonnage, or revenue."). And it is unclear on what basis the majority believes the bilateral contract requirement is satisfied. But it appears to rest its conclusion on one of two grounds, either that Allegheny made 600 shipments on Panasonic's behalf, a number that, the majority reasons, itself confirms that a bilateral contract existed,anteat 317-318 (emphasizing the number of shipments made here compared with the number in other cases), or that, under the ICC's decision inGeneral Mills,Inc.,8 I.C.C.2d 313,aff'd,No. 4-89-345 (Bankr.D.Minn. Aug. 27, 1992),appeal submitted,No. 93-1232 (8th Cir. Oct. 11, 1993), "substantial compliance" with the other requirements for contract carriage renders compliance with the bilateral contract requirement unnecessary,anteat 317. Neither ground (nor, for that matter, the two in combination), in my view, is sufficient to meet the explicit requirement that carriage contracts be bilateral.
[29] Assuming that the majority rests its conclusion on the fact that 600 shipments were undertaken by Allegheny at Panasonic's request, I am at a loss to understand how the performance of a particular number of shipments even relates to the existence or not of a bilateral contract. Both parties to a contract either have or have not undertaken obligations by the terms of the instrument. If one party has no obligation under the contract, none is created by the fact that he engages the other party daily, or even continuously, in the performance of the other party's contractual obligations.
[30] If the majority rests its conclusion instead on the belief thatGeneral Millsrenders compliance with the bilateral contract provision unnecessary if there is "substantial compliance" with the other contract carriage requirements, then I believe the majority has misreadGeneral Mills.There, the ICC found "substantial compliance" with section 1053.1 preciselybecausethe agreement in question was "clearly a bilateral agreement in writing." 8 I.C.C.2d at 323. As the Commission emphasized, "[the agreement] imposed obligations on both parties. General Mills agreed to tender shipments to United and pay for the services provided under the contract."Id.It is true, as the majority notes, that the agreement inGeneral Millsdid "`not specifically reference a number of shipments to be tendered,'"anteat 317Page 319(quotingGeneral Mills, supra,at 323), and that this fact did not in the Commission's view negate the existence of a bilateral contract. However, this is because the agreement did impose on General Mills an obligation to tender some number of shipments. If theGeneral Millsagreement, like the agreement in this case, had not imposed an affirmative obligation on both parties, the ICC would not, because it could not have consistently with either section 1053.1 or basic principles of contract law, have found an intent to form a contract in the first place.
[31] Because Panasonic indisputably had no obligation whatsoever under its contract with Allegheny, the contract was not bilateral, and therefore it cannot be considered a contract for carriage under the terms of 49 C.F.R. § 1053.1.
- The motor carrier industry refers to the difference between the rates filed with the Interstate Commerce Commission ("ICC") (and charged forcommoncarriage) and lower negotiated rates (charged forcontractcarriage) as the "undercharge." This case is typical of many undercharge cases which arise when a motor carrier attempts to collect the difference between the negotiated rate actually paid by the shipper and the higher rate on file with the ICC.See generally,Howard R. Rubin, Note,Reiter v.Cooper and Unreasonable Rates: Are Reports of the Filed RateDoctrine's Death Greatly Exaggerated?,42 Duke L.J. 905 (1993). ↩
- Allegheny also operated as a motorcommoncarrier. ↩
- Effective June 20, 1992, the I.C.C. repealed 49 C.F.R. § 1053.1 in an effort to reduce the overly technical requirements needed to attain motor contract carriage status.SeeContracts for Transportation of Property,57 Fed.Reg. 21616-01 (I.C.C. 1992). Both parties agree that the regulation was in effect during the course of their agreement, and is controlling for purposes of this case. ↩
- "This Agreement shall be in force for a period of one year from the date hereof and shall be automatically renewed from year to year . . . [but] this Agreement may be terminated by either party at any time by giving thirty (30) days prior written notice to the other party." InIn re United Shipping Co.,134 B.R. 359,365(Bankr. D.Minn. 1991), the court found a similar provision in a shipper-carrier agreement sufficient to satisfy the "stated time period" requirement. ↩
- "[B]ecause [the shipper] did not ship its goods pursuant to a valid contract carriage permit, it was subject to the applicable filed tariff."989 F.2d at 1434. ↩
- This disposition makes it unnecessary to consider other issues debated by the parties premised on a determination that Allegheny acted as a common carrier for Panasonic. ↩