G.M.W., Inc. v. Certified Parts Corp. , 135 Wis. 2d 503 ( 1986 )

SUNDBY, J.

(concurring.) I do not agree with the majority opinion that equitable defenses are not available to shippers faced with undercharge collection actions brought by common carriers. That conclusion is not supported by Square D Co. v. Niagara Frontier Tariff Bur., 476 U.S. —, 90 L.Ed. 2d 413 (1986) or Chicago & N.W. Tr. Co. v. Thoreson Food Prod., 71 Wis. 2d 143, 147-48, 238 N.W.2d 69, 72 (1976).

On October 14,1986 the ICC adopted the following policy statement effective November 29,1986:

The Commission has adopted a policy statement holding that, in the post-Motor Carrier Act of 1980 environment, the filed rate doctrine does not necessarily bar equitable defenses. Where an undercharge claim is filed by a carrier in court based on a tariff rate and the shipper claims that a lower, negotiated but unpublished rate was understood, if the court refers the case to the Commission for determination of the availability of equitable relief, the Commission will decide whether, under all the relevant circumstances, collection of the undercharges would be an unreasonable practice. A proposal to adopt a rule declaring a negotiated (but unpublished) motor carrier rate to be the maximum reasonable rate “if the shipper acted with a good faith belief that the negotiated rate was the legally applicable rate” is denied.

National Industrial Transportation League — Petition to Institute Rulemaking on Negotiated Motor Common Carriers Rates, ICC Ex Parte No. MC-177 (October 14, 1986).

In its decision, the Commission stated:

In short, we offer to undertake an advisory analysis of whether a negotiated but unpublished rate existed, the circumstances surrounding assessment of the tariff rate, and any other pertinent facts. We would, at a court’s request, determine, based on all relevant circumstances, whether collection of undercharges based on the rate contained in the filed tariff would constitute an unreasonable practice and, if a negotiated rate is found to exist, whether this amount is all a carrier should be permitted to collect. The referring court would retain final authority to set the remedy, if any, and review our determination. [Footnote omitted.]

Id. at 8.

The Commission also stated in its decision:

The question that we are addressing here is whether a shipper must pay the rate established in a tariff where a motor common carrier has negotiated a lower rate and has indicated that the negotiated rate would be the one charged (and therefore presumably filed as a tariff). We believe, in the highly competitive motor carrier industry and economy in general, equitable defenses to rigid' application of filed tariff rates should be available on a case-by-case basis and that our unreasonable practice jurisdiction authorizes such an approach. [Footnote omitted.]

Id. at 6-7.

The Commission pointed out that neither Square D, supra, nor Regular Common Carrier Conference v. United States, 793 F.2d 376 (D.C. Cir. 1986), holds that the Commission is precluded from passing on the reasonableness of carrier practices pursuant to its express statutory authority in 49 U.S.C. sec. 10701(a). ICC Ex Parte No. MC-177 at 8. The Commission further pointed out that insofar as Square D reaffirmed that carriers must file their rates does not mean that the Commission lacks authority to find in a particular case, that allowing a carrier to collect the tariff rate would be unreasonable. Id. Thus, the Commission stated it was not abolishing the requirement of 49 U.S.C. sec. 10761 which precludes a carrier from charging or receiving a different compensation for providing transportation than the rate specified in the tariff. Id.

The effect of our decision today is that even if the ICC determines that collection of undercharges constitutes an unreasonable practice, and that the negotiated amount is all that the carrier should be permitted to collect, the courts are powerless to give any effect to such a determination.¹ The federal courts do not see themselves as powerless in such a situation. As the seventh circuit stated in Western Transp. Co. v. Wilson and Co., Inc., 682 F.2d 1227, 1231 (7th Cir, 1982): “A tariff provision has to be reasonable. See 49 U.S.C. sec. 10704(a). If it is not, it violates the statute_” It is well settled that a contract made in violation of a valid statute is void, although the statute does not expressly so declare. Urwan v. Northwestern Nat. Life Ins. Co., 125 Wis. 349, 359, 103 N.W. 1102, 1105 (1905).

I do not believe the state courts are powerless to entertain an equitable defense by a shipper based upon a determination by the ICC that collection of undercharges in a particular case constitutes an unreasonable practice.² If the federal courts have the power to entertain equitable defenses in such cases, so do the state courts. “Controversies concerning rights and liabilities connected with interstate shipments are federal questions and state courts faced with such controversies must apply federal law.” Thoreson Food Prod., 71 Wis. 2d at 147, 238 N.W.2d at 72.

The majority opinion deals extensively with Seaboard System R.R., Inc. v. United States, 794 F.2d 635 (11th Cir. 1986), as it must, since that decision supports the power of the ICC to find a carrier practice respecting collection of undercharges unreasonable. I agree with the majority opinion’s conclusion that the reasonableness of a practice is exclusively within the jurisdiction of the ICC. G.M.W., Inc. v. Flambeau Paper Corp., 623 F. Supp. 473, 476 (W.D. Wis. 1985).³ Thus, neither the federal courts nor the state courts can determine the reasonableness of a practice of a common carrier. It does not follow, however, that the courts cannot refuse to enforce a practice found by the ICC to be unreasonable. I agree with the majority opinion that Certified Parts Corporation, in this action, may not raise an equitable defense to the collection of the undercharge for which G.M.W. sues but only because the ICC has not found that the collection of the undercharge is an unreasonable practice.

1 The majority opinion states that courts are not free “in concert with the ICC” to “circumvent an act of Congress” by refusing to enforce an unreasonable tariff. In its footnote, however, the opinion states: “We therefore do not consider whether the ICC’s authority extends to giving advisory opinions to state courts, and whether, had the ICC made an advisory analysis in this case, the result would be different.” The majority opinion is contradictory.

2 Contrary to the majority opinion’s assertion, I do not suggest that “any tariff’ can be an unreasonable practice. I suspect that shippers who invoke the jurisdiction of the ICC will be disappointed to discover that obtaining a finding that collection of a filed tariff is an unreasonable practice involves more than simply showing an agreement to charge a lower rate. However, when such a finding is made, I believe the courts may entertain an equitable defense based on that finding.

3 In G.M. W., Inc. the court referred to the ICC for determination the shipper’s complaint that G.M.W., Inc. was engaged in an unreasonable collection practice. Its order stated: “IT IS ORDERED that this case is transferred to the Interstate Commerce Commission for its determination as to whether the practice of G.M.W., Inc. is unreasonable to the extent that undercharges will not be allowed recovery. ” (Emphasis added.) Id., 623 F. Supp. at 478.