Williams v. Professional Transportation , 388 F.3d 127 ( 2004 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PERRY WILLIAMS; TEDDI WILLIAMS, 
d/b/a Williams Transport,
Plaintiffs-Appellees,
v.
PROFESSIONAL TRANSPORTATION,  No. 03-1387
INCORPORATED; UNITED LEASING,
INCORPORATED; CSX
TRANSPORTATION, INCORPORATED,
Defendants-Appellants.

PERRY WILLIAMS; TEDDI WILLIAMS, 
d/b/a Williams Transport,
Plaintiffs-Appellants,
v.
PROFESSIONAL TRANSPORTATION,  No. 03-1453
INCORPORATED; UNITED LEASING,
INCORPORATED; CSX
TRANSPORTATION, INCORPORATED,
Defendants-Appellees.

Appeals from the United States District Court
for the Southern District of West Virginia, at Bluefield.
David A. Faber, Chief District Judge.
(CA-95-81)
Argued: January 21, 2004
Decided: October 29, 2004
Before WIDENER, LUTTIG, and WILLIAMS, Circuit Judges.
2 WILLIAMS v. PROFESSIONAL TRANSPORTATION, INC.
Affirmed by published opinion. Judge Widener wrote the opinion, in
which Judge Williams concurred. Judge Luttig wrote a concurring
and dissenting opinion.
COUNSEL
ARGUED: Andrew Stephen Zettle, HUDDLESTON, BOLEN,
BEATTY, PORTER & COPEN, Huntington, West Virginia, for
Appellants/Cross-Appellees. Michael Warren Carey, CAREY,
SCOTT & DOUGLAS, PLLC, Charleston, West Virginia, for
Appellees/Cross-Appellants. ON BRIEF: John H. Mahaney, II,
HUDDLESTON, BOLEN, BEATTY, PORTER & COPEN, Hunting-
ton, West Virginia, for Appellants/Cross-Appellees.
OPINION
WIDENER, Circuit Judge:
This case is a contract dispute between CSX Transportation, Inc.
(CSXT) and Perry and Teddi Williams (Williams), who own a private
limousine service used by CSXT to transport its train crews and prop-
erty within West Virginia. In its most recent order, the district court
ordered CSXT to pay Williams $1,891,028.21 and to enter into a five-
year, exclusive, noncancellable, but transferable contract with Wil-
liams, with an effective starting date of July 23, 2002. CSXT appeals
this order, arguing that the district court violated the Johnson Act of
1934 by awarding Williams damages and miscalculated the contract’s
starting date. We affirm.
I.
The dispute between CSXT and Williams began over ten years
ago. It has played out before the West Virginia Public Service Com-
mission (PSC), the state agency charged with setting public utility
rates and resolving rate disputes, and in this lawsuit, which Williams
brought against CSXT and two of the Williams’ competitors, who are
WILLIAMS v. PROFESSIONAL TRANSPORTATION, INC. 3
represented by CSXT under indemnity agreements.* CSXT has
accused Williams of overcharging and improper billing, while Wil-
liams has accused CSXT of trying to put Williams out of business,
either by supporting competitors or refusing to pay for services ren-
dered. On May 23, 1997, however, the parties settled their dispute.
The terms were as follows:
1. CSXT would pay Williams $140,000;
2. CSXT and Williams would enter into a five-year exclu-
sive, noncancellable, but transferrable contract that
would make Williams the exclusive provider of intra-
state crew transportation services in certain West Vir-
ginia areas; and
3. CSXT agreed to dismiss its pending PSC overcharge
case against Williams.
The parties at settlement left open the rate to be paid under the
five-year contract, agreeing to meet and negotiate such a rate. The set-
tlement was contingent upon Williams’ success in another PSC pro-
ceeding, No. 30020-97-FC, that sought to declare dormant the
operating authority of one of Williams’ competitors.
Williams did prevail in No. 30020-97-FC, removing the contin-
gency on April 10, 1998, but negotiations proved unsuccessful to fix
the contract rate which had been left open as agreed. In addition,
while CSXT initially paid Williams for some post-settlement services
in the amounts billed in the invoices, in March 1998 it began rejecting
some invoices and paying others at a lower rate. Williams moved to
enforce the settlement agreement in June, 1998, and the district court
granted the motion on December 11, 1998. The district court found
that CSXT had breached the agreement by prolonging rate negotia-
tions, refusing to pay invoices submitted after the settlement agree-
ment, filing a new overcharge case before the PSC, and supporting
McLine Transportation, another competitor of Williams, before the
PSC. The district court ordered CSXT to:
*CSXT was later made a party to the case.
4 WILLIAMS v. PROFESSIONAL TRANSPORTATION, INC.
1. Pay the $140,000 plus interest owed to Williams under
the May 1997 settlement agreement.
2. Make immediate payment to Williams of all past due
invoices, with interest, "at the rates specified in Wil-
liams’ current tariff in the amounts set forth in those
invoices." These payments were to continue until the
new contract was executed.
3. Enter into the five-year contract as mandated by the
May 1997 settlement, using the rate "contained in Wil-
liams’ current tariff unless, and until, the parties agree
on a new, or different, rate. Any dispute as to the tariff
will be submitted to the [PSC] for resolution."
CSXT appealed, and on September 18, 2000, it also moved for a
stay of the district court’s order. We granted the stay on October 6,
2000. On appeal, CSXT argued that the district court’s order
exceeded its jurisdiction, in violation of the Johnson Act of 1934,
because it resolved a public utility rate dispute.
The Johnson Act provides that:
The district courts shall not enjoin, suspend or restrain the
operation of, or compliance with, any order affecting rates
chargeable by a public utility and made by a State adminis-
trative agency or rate-making body of a State political sub-
division where:
(1) Jurisdiction is based solely on diversity of
citizenship . . .; and,
(2) The order does not interfere with interstate
commerce; and,
(3) The order has been made after reasonable
notice and hearing; and,
(4) A plain, speedy and efficient remedy may be
had in the courts of such State.
WILLIAMS v. PROFESSIONAL TRANSPORTATION, INC. 5
28 U.S.C. § 1342 (2000). CSXT argued that, because the district
court’s December 1998 order required payment of past due invoices
at the invoice rate, the order affected rates chargeable by a public util-
ity and thus ran afoul of the Johnson Act.
We disagreed, holding that the order "did not resolve the rate inter-
pretation dispute between the parties, rather it directed the parties to
submit disputes about the interpretation of the tariff to the Public Ser-
vice Commission." Williams v. Prof’l Transp., Inc., 294 F.3d 607,
612 (4th Cir. 2002). Instead, we endorsed "Williams’ characterization
of the court’s order as one merely enforcing a settlement agreement."
Williams, 294 F.3d at 612.
CSXT also argued that the five-year contract should include a
retroactive start date of April 10, 1998, the date the contingency was
removed and the settlement took effect. We declined to consider this
argument, as CSXT failed to raise it before the district court. Wil-
liams, 294 at 614 (citing Muth v. United States, 1 F.3d 246, 250 (4th
Cir. 1993)).
On remand, CSXT interpreted our opinion to mean it needed to pay
past due invoices at the invoice rate only after that invoice rate had
been submitted to and approved by the PSC. Maintaining its prior
position, CSXT continued to pay for services rendered not in the
amounts billed in Williams’ invoices (the invoice rate), but at a lower
rate it deemed applicable. This lower rate, which we call the N & W
rate, was a tariff rate approved by the PSC in a dispute between Wil-
liams and another railroad, Norfolk & Western Railway Co. CSXT
refused to pay the balance between the N & W rate and the invoice
rate, and Williams moved to have the district court enforce its Decem-
ber 1998 order.
On March 14, 2003, the district court granted Williams’ motion. It
first ordered that CSXT pay Williams $1,891,028.21. This amount
represents the difference, including interest, between the charges
billed in Williams’ invoices and the amount paid by CSXT during the
period from March 6, 1998 (when CSXT began rejecting and dis-
counting the invoices) until October 8, 2002 (when the district court
held a hearing on Williams’ motion to enforce the December 1998
order). The order also makes clear that CSXT must continue "to pay
6 WILLIAMS v. PROFESSIONAL TRANSPORTATION, INC.
Williams’ invoices in the amount billed UNLESS AND UNTIL it
secures a new contract with Williams." (emphasis in original).
Finally, the district court ordered that the five-year contract should
have a retroactive start date of July 23, 2002, the day we issued our
mandate in CSXT’s first appeal.
II.
CSXT now argues that (1) the damages award sets the rate to be
used for charges accrued during the pre-contract period and thus con-
travenes the Johnson Act and (2) the performance start date for the
five-year contract is incorrect. We possess appellate jurisdiction under
28 U.S.C. § 1291. We review de novo the question of whether the dis-
trict court’s order violates the Johnson Act and thus was entered with-
out subject matter jurisdiction. Hill v. Kan. Gas Serv. Co., 323 F.3d
858, 863 (10th Cir. 2003) (internal citations omitted). We review the
district court’s order enforcing the settlement agreement for an abuse
of discretion. Young v. FDIC, 103 F.3d 1180, 1194 (4th Cir. 1997).
A.
CSXT first contends that the district court’s order is contrary to
both the Johnson Act and our prior opinion, and resolved the rate dis-
pute as to the pre-contract period. FAs we noted in CSXT’s prior
appeal, the Johnson Act’s limitation on jurisdiction applies only when
all of its conditions have been met, and the party invoking the John-
son Act has the burden to show these conditions have been met. Wil-
liams, 294 F.3d at 612 (internal citations omitted).
According to CSXT, our prior opinion required any rate dispute to
be submitted to the PSC "before the District Court could take further
action in enforcing the settlement." Appellants’ Br. at 27. By requir-
ing CSXT to pay the $1.8 million before the PSC determines which
rate should apply to pre-contract period services, CSXT argues, the
district court improperly resolved the pre-contract rate.
Our holding today is the same as it was in 2002: there is no John-
son Act violation, because the district court’s order did not "enjoin,
suspend or restrain the operation of, or compliance with, any order
WILLIAMS v. PROFESSIONAL TRANSPORTATION, INC. 7
affecting rates." 28 U.S.C. § 1342. The district court did not select a
rate and insulate it from PSC review. Rather, it enforced a settlement
agreement between the two parties without disturbing the principle
that "any rate disputes and new rates agreed upon by the parties must
be submitted to the Public Service Commission." Williams, 294 F.3d
at 612. Until CSXT and Williams go before the PSC, however, the
rate applicable to services rendered during both the pre-contract and
the five-year contract period is the invoice rate.
Nor did the district court’s order misinterpret our prior opinion.
What we affirmed was what the district court ordered as far back as
1998: immediate payment of past due invoice amounts at the invoice
rates. We did not resolve the propriety of either the pre-contract or the
contract rate, and neither did the district court. There is no order of
the PSC enjoined, suspended, or restrained, neither is there a similar
order of any political subdivision of West Virginia. There being no
such order, nor enjoining, suspending, or restraining any such order,
there is no violation of the Johnson Act, 18 U.S.C. § 1342.
B.
CSXT next argues that the district court abused its discretion in
selecting July 23, 2002 as the effective starting date for the contract’s
performance period. CSXT contends that the contract should be
deemed to have begun on either April 10, 1998, when the contingency
to the May 1997 settlement was removed, or on November 19, 1999,
when CSXT submitted a proposed contract to Williams that it claims
conformed with the district court’s December 1998 order. Williams
cross-appeals, arguing that the contract period has not yet begun
because the parties have not entered into a contract on their own. It
contends that we should reverse and remand with the direction that
"the contract begins to run upon the execution of the contract by the
parties."
District courts have inherent authority, derived from their equity
power, to enforce settlement agreements. Hensley v. Alcon Labs, Inc.,
277 F.3d 535, 540 (4th Cir. 2002) (citing Millner v. Norfolk & W. Ry.
Co., 643 F.2d 1005, 1009 (4th Cir. 1981)). There is no question that
a settlement agreement existed; rather, this discrete aspect of the dis-
pute is over a term of the agreement, when should the five-year per-
8 WILLIAMS v. PROFESSIONAL TRANSPORTATION, INC.
formance period begin? In such a situation, district courts are not to
enforce settlement agreements summarily, but must conduct a plenary
hearing and make findings on the issue. Hensley, 277 F.3d at 541 (cit-
ing Millner, 643 F.2d at 1009, and Alexander v. Indus. of the Blind,
Inc., 901 F.2d 40, 41 (4th Cir. 1990)). The district court adhered to
this principle, holding a hearing on October 8, 2002 and finding in its
subsequent order that the earliest date the contract could have begun
was July 23, 2002.
The district court chose July 23 because the issue of our mandate
on that date dissolved the stay of the district court’s December 1998
order, a stay which CSXT sought, and left the parties "free to enter
into a new contract." It also found that July 23rd was the earliest date
"the parties could have commenced the contract." These findings are
largely factual and are not clearly erroneous under Fed. R. Civ. P. 52.
We agree with the July 23rd date found by the district court and are
of opinion it did not abuse its discretion in fixing that date.
The order of the district court appealed from is accordingly
AFFIRMED.
LUTTIG, Circuit Judge, concurring in part and dissenting in part:
I concur in Parts I and II.A of the court’s opinion, but dissent from
Part II.B, which affirms the district court’s selection of July 23, 2002,
as the start date of the contract. As the majority notes, the district
court refused to hold that the contract term began to run before this
date, because until that time the district court’s December 1998 order
had been stayed by this court, on a motion filed by CSXT. J.A. 321.
However, in its September 18, 2000, motion, CSXT only sought a
stay of enforcement of the money judgment entered by the district
court, not of the district court’s order to enter into a contract with Wil-
liams. J.A. 79. CSXT claims, and the district court did not dispute,
that CSXT offered on November 19, 1999, to perform the contract on
precisely the terms set forth by the district court in its December 1998
enforcement order. See J.A. 321. A fair reading of our order, espe-
cially given the motion made by CSXT, is that we stayed only the
monetary judgment imposed by the district court. J.A. 107. And the
parties apparently so understood our order; since the time that CSXT
WILLIAMS v. PROFESSIONAL TRANSPORTATION, INC. 9
made this offer, it claims that it has exclusively dealt with Williams
as required under the settlement agreement, a claim seemingly
accepted by the district court. See J.A. 321 (offering, in support of its
finding that CSXT had failed to comply with the terms of the Decem-
ber 1998 order, only CSXT’s refusal to pay the full amount of Wil-
liams’ invoices).
Because Williams began to receive the benefit of the agreement
guaranteeing it a five-year exclusive contract on November 19, 1999,
when CSXT agreed to comply with the terms of the enforcement
order, I would hold that the contract began to run on that date. The
date that we dissolved our mandate, July 23, 2002, ought have no
bearing whatsoever on the question of when the parties agreed that
the contract began to run.