S. S. Kresge Company v. A & B Transfer, Inc. ( 1974 )

JOHN W. PECK, Circuit Judge.

This is an appeal from an order granting summary judgment in favor of the plaintiff-shipper, S. S. Kresge, in an action against A & B Transfer, Inc., and a number of other motor carriers engaged in interstate commerce. In the District Court, Kresge sought enforcement of an Interstate Commerce Commission refund order, upheld by a three-judge district court in Admiral-Merchants Motor Freight, Inc. et al. v. United States and the Interstate Commerce Commission, 321 F.Supp. 353 (D.Colo.1971), aff’d mem., 404 U.S. 802, 92 S.Ct. 51, 30 L.Ed.2d 37 (1971), reh. denied, 404 U.S. 987, 92 S.Ct. 443, 30 L.Ed.2d 371 (1971). It alleged that the decision in Admiral-Merchants, supra, was res judicata on all issues except the amount of damages. Because of the complexity of this case, we set out the facts in some detail.

The defendants-appellants, all motor carriers in interstate commerce, are members of the Middlewest Motor Freight Bureau¹ and participate in its published tariffs. In early 1968 the Bureau published new rates to be effective in thirty days.² Initially, the Commission raised no objection to the increased rates and allowed them to take effect on April 1, 1968. But after receiving complaints from shippers, the Commission scheduled a hearing on the lawfulness of the rates for May 20, 1968. The Department of Transportation and the General Services Administration, both of which had opposed the rate increases, requested that the Commission postpone the hearing for ninety days so that each agency could adequately prepare for the proceedings. The carriers later joined in that request.

The Commission by its order of April 25, 1968, granted the request but conditioned the extension on the agreement of the carriers to comply with a refund provision:

“It is further ordered, That the time for filing the requested information and supporting data be, and, it is hereby extended to August 5, 1968; that the hearing be, and, it is hereby postponed to August 19, 1968, conditioned upon respondents compliance with the refund provision ordered below * *

“And it is further ordered, That respondents be and, they are hereby, ordered to make refunds to the shippers on any shipment moving after May 20, 1968, to the extent that the increases or any portion thereof under investigation herein are not approved by the Commission.”

On May 1, 1968, the carriers petitioned the Commission to reconsider the refund portion of the order of April 25, and raised several objections to its legality. However, the carriers later withdrew their objections, apparently because they needed the ninety-day extension to compile the necessary data for the hearing. Admiral-Merchants Motor Freight, Inc. v. United States, supra, at 356. As a result, the order of April 25 stood without protest. The Commission held the hearing on August 19, 1968, and issued its findings on June 5, 1969. It found that the carriers had not shown the increased rates to be “just and reasonable,” ordered them cancelled and:

“further ordered, That, in accordance with the order entered herein on April 25, 1968, the respondents be, and they are hereby, required to refund to shippers the charges on shipments moving after May 20, 1968, to the extent that such charges included the increases herein found not shown to be just and reasonable.”

The Bureau then petitioned the Commission either to vacate or reconsider its refund order or to reopen the proceedings for a further hearing. At the same time that the carriers notified the Commission that they would cancel the disputed rates as of August 31, 1969, they also gave the Commission notice of new increased rates to take effect on September 1, 1969. On August 29, 1969, the Commission declined to suspend or investigate the new increases and also denied the carriers’ petition to reconsider the refund order. Furthermore, the Commission ordered;

“that the respondents will hereinafter, in accordance with the said decision of June 5, 1969, make refund to shippers presenting their claims to the carriers supported by paid freight bills or other appropriate evidence.” I.C.C. Docket No. 34,971, Order of August 29, 1969.

Finally, on October 27, 1969, the Commission denied the carriers’ second petition for reconsideration of the refund order.

The carriers then sought an injunction against enforcement of the refund order. (See Interstate Commerce Act, §§ 17(9) & 205(h), 49 U.S.C. §§ 17(9) & 305(h) ). A three-judge district court was empaneled to hear the case pursuant to 28 U.S.C. §§ 2325 and 2284. (Admiral-Merchants, supra.)

The three-judge district court found that although the refund order was valid, it was nevertheless not based on the Commission’s statutory authority, but rather constituted a procedural device— a condition which the Commission could lawfully append to its grant of a postponement of the hearing. Since the carriers had impliedly agreed to this procedure — by withdrawing their objections —they were estopped from later contesting the validity of the order:

“It is abundantly clear, therefore, that Congress has not authorized the Commission to order refunds as a generally accepted procedure. It is also clear, however, that the Commission did not undertake to exercise any such power nor is this a reparations proceeding such as that which was condemned in the T.I.M.E. ease. Indeed, we do not view the present action of the Commission as an effort to exercise any general authority. The order in question was instead issued incident to a request for a continuance and indeed was not unlike the exercise of the suspension power which the Commission has and had under 49 U. S.C. § 316(g). No doubt the Commission could have ordered the rates suspended at least for a period of time (seven months).

“An even stronger argument for refusal to annul the Commission’s order is the doctrine of equitable estoppel. We have in mind the principle which imposes an obligation on a person to live up to his representations or conduct in circumstances where inequitable consequences would result to persons having the right to rely, and who in good faith did rely on the representations made. Applied to the ease at bar the Commission certainly relied on the carriers’ withdrawal of their jurisdictional objection to the refund condition. The Commission’s reliance was evidenced by its failure to vacate the order. It did not have to anticipate that the carriers would renege. The carriers’ withdrawal of their timely objection was a positive act which evidenced willingness to go along with the condition imposed.

“We are unable in good conscience, in view of the circumstances presented, to annul the order of the Commission. The Commission was acting in good faith in granting the extension, and the carriers were at the time agreeable to acceptance of the benefits of such an extension order. Their present posture appears to us to be grossly inequitable and not deserving of court intervention. While we do not commend the procedure as one which should be or could be practiced, we do hold that the peculiar facts of this case, arising as they did, are such as to not justify the granting of the relief requested, namely annulment of the Commission’s order and approval of the carriers’ conduct.” [Footnotes omitted.] 321 F.Supp. at 359-360.

The present action for refunds was brought by Kresge against those members of the Middlewest Motor Freight Bureau with whom it did business between May 20, 1968, and June 5, 1969. Kresge moved for summary judgment, contending that since the Supreme Court had affirmed the opinion of the three-judge district court, nothing remained for the District Court here but to order enforcement and determine the amount of damages. The District Court found no “significant or material factual disputes” between the parties, granted the motion for summary judgment, citing Admiral-Merchants as res judicata on the question of whether the cause of action asserted by the plaintiff properly entitled it to the relief sought. As a result the defendants were ordered to examine the plaintiff’s freight invoices and make a refund in accordance with the ICC order of June 5, 1969. The present appeal by the defendant carriers is from that order.

To resolve the instant appeal we turn to a recent Seventh Circuit case which resolved similar appeals before it regarding enforcement proceedings founded on the same Colorado three-judge district court’s judgment and affirmed those cases in favor of the plaintiff-shipper by holding that the shipper did have a statutory cause of action under §§ 16(2) and 205(g) of the Interstate Commerce Act, 49 U.S.C. §§ 16(2) and 305(g). Aluminum Company of America v. Admiral Merchants Motor Freight, Inc., 486 F.2d 717 (7th Cir. 1973). We are persuaded by that Court’s opinion and adopt its reasoning as dispositive of the issues presented by the appeal before us.

Accordingly, the judgment of the District Court is affirmed.

1 . The Middlewest Freight Bureau is a rate publishing agent for interstate motor carriers having regular routes and which operate in the middle western states. The Bureau also compiles statistical data which are presented to the ICC in support of tariff changes.

2 . Section 217 of the Interstate Commerce Act, 49 U.S.C. § 317(c), requires interstate motor carriers to notify the Commission 30 days prior to any change in rates. The ICC may then allow the rates to take effect without objection, allow the rates to take effect but order a hearing on their lawfulness, or suspend the rates for up to seven months and in the interim hold a hearing on the lawfulness of the rates. 49 U.S.C. § 316(g).