CSX Trans Co v. Novolog Bucks Cty

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
9-5-2007
CSX Trans Co v. Novolog Bucks Cty
Precedential or Non-Precedential: Precedential
Docket No. 06-3431
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 06-3431
CSX TRANSPORTATION COMPANY,
Appellant
v.
NOVOLOG BUCKS COUNTY
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D. C. No. 04-cv-04018)
District Judge: Hon. Thomas N. O’Neill, Jr.
Argued on July 12, 2007
Before: SLOVITER, ALDISERT and ROTH, Circuit Judges
(filed: September 5, 2007)
Paul D. Keenan, Esquire (Argued)
Charles L. Howard, Esquire
Keenan, Cohen & Howard, P.C.
One Commerce Square
2005 Market Street, Suite 3520
Philadelphia, PA 19103
Counsel for Appellant, CSX Transportation, Inc.
Frederick A. Tecce, Esquire (Argued)
McShea Tecce, P. C.
The Bell Atlantic Tower, 28 th Floor
1717 Arch Street
Philadelphia, PA 19103
Counsel for Appellee, Novolog Bucks County
John K. Fiorilla, Esquire (Argued)
Capehart Scatchard, P. A.
8000 Midlantic Drive, Suite 300
Mount Laurel, NJ 08054
Counsel for Amici Curiae, Norfolk Southern
Railway Company and BNSF Railway Company
2
OPINION
ROTH, Circuit Judge:
This appeal concerns the liability of entities such as
warehousemen, pier operators, transloaders, and connecting
carriers for demurrage charges, i.e., penalties assessed by
railroads when shippers or recipients of freight do not timely
return railcars to service after loading or unloading. The railroad
in this case sought to assess demurrage charges against a
transloader for delays in returning both inbound and outbound
railcars to service. With respect to inbound freight, the
transloader received loaded railcars on behalf of steel companies
or others and forwarded the steel by ship toward mostly foreign
destinations; with respect to outbound freight, it ordered empty
railcars, which it then loaded with steel for transportation by the
railroad to domestic destinations. The transloader objected to the
assessment, arguing that it could not be subjected to charges
under an agreement – namely, the transportation contract – to
which it was not a party.
We hold that the consignee-agent provision of the
Interstate Commerce Commission Termination Act, 49 U.S.C. §
10743(a)(1), governs this dispute as to the charges assessed
against Novolog as the consignee of freight. Under this
provision a transloader or other such entity, if named on the bill
of lading as the sole consignee, is presumptively liable for
demurrage charges arising from unloading delays, unless it
accepts the freight as the agent of another and notifies the carrier
of its status in writing prior to delivery. Because the factual
3
record was not sufficiently developed, however, we cannot
determine what the bills of lading showed here; thus we vacate
the District Court’s order granting judgment to the railroad as a
matter of law and remand for further proceedings.
With respect to the transloader’s potential liability for
demurrage charges in its role as the shipper (consignor) of
freight, we refrain from announcing a holding because the
question was not fully addressed or briefed, but we will vacate
the District Court’s grant of judgment on this claim as well and
remand it for further consideration in light of our holding
regarding consignee liability.
Finally, we hold that the District Court did not abuse its
discretion when it refused to refer an issue to the Surface
Transportation Board (STB), where the party moving for referral
did not invoke the doctrine of primary jurisdiction until after the
District Court had already decided the issue and the question was
not one on which the expertise of the STB was not crucial to the
decision.
I. Factual and Procedural Background
The parties in this litigation are businesses engaged in the
interstate transportation of freight. CSX Transportation, Inc.
(“CSX”) is a rail common carrier; Novolog Bucks County
(“Novolog”) is a private port with access to a rail-served
industrial facility on the Delaware River.
As relevant here, the Novolog port functioned as a transfer
point for the import, export, and domestic transportation of steel.
Following instructions from various steel companies, CSX
delivered to Novolog railcars loaded with steel, which Novolog
unloaded and transferred onto other means of transportation. In
addition, when Novolog so requested, CSX placed empty railcars
4
at Novolog’s disposal for loading with imported steel and
transportation to domestic destinations. Novolog did not have an
ownership interest in any of the shipments at issue here, but
rather received and forwarded cargo on behalf of others and on
their instructions.
According to CSX’s Tariff, a person receiving its railcars
for unloading, or ordering empty railcars for loading, had two
days to do so and return the cars to service; if the cars were kept
beyond this time, demurrage charges would be assessed.1 In
particular, CSX’s Tariff Item 8070-G provided that “[u]nless
otherwise advised [,] consignor at origin or consignee at
destination will be responsible for the payment of demurrage
rates.”
During the early part of 2003, fluctuations in the price of
1
Demurrage is “a charge exacted by a carrier from a shipper
or consignee on account of a failure to load or unload cars
within the specified time prescribed by the applicable tariffs.
Railroads charge shippers and receivers of freight ‘demurrage’
fees if the shippers or receivers detain freight cars on the rails
beyond a designated number of days.” Union Pacific Railroad
Co. v. Ametek, Inc., 104 F.3d 558, 559 n.2 (3d Cir. 1997)
(internal quotations and citation marks omitted).
Under prior statutory regimes, railroads’ tariffs, including
tariffs regarding demurrage charges, had to be filed with the
Interstate Commerce Commission (ICC). After the enactment
of the Interstate Commerce Commission Termination Act
(ICCTA) in 1996, the Interstate Commerce Commission was
replaced with the Surface Transportation Board (STB) and filing
of tariffs was no longer required. CSX’s Tariff 8100 is
published by CSX on its web site and specifically incorporated
into all its transportation agreements.
5
steel caused a significant increase in the amount of steel
delivered for export to the Novolog facility. As a result, Novolog
was unable to perform loading and unloading operations within
the two-day time frame established by the Tariff, and CSX began
charging Novolog demurrage fees, which totaled $260,304 by
August, 2003. Novolog refused to pay, arguing it was not liable
for demurrage since it was not a party to the bills of lading or
other contracts regarding the shipments at issue and had no
responsibility for or control over the volume of railcars that
entered its facility.2 CSX then brought this action in the Eastern
District of Pennsylvania seeking payment of the demurrage
charges, with interest, and attorney fees. It argued that Novolog
was liable under the tariff because it was listed in the bills of
lading either as the sole consignee for the freight (where the
charges arose from unloading delays) or as the shipper (where the
charges arose from loading delays).3
After discovery the parties filed cross-motions for
summary judgment. CSX submitted documents appearing to
show that in each of the instances for which CSX assessed
demurrage charges against Novolog for delays in unloading,
Novolog was listed as the sole consignee on the waybills, without
any limiting designations such as “care of” or “account of,” and
in each of the instances for which CSX assessed demurrage
charges against Novolog for loading delays, Novolog was listed
2
A bill of lading is “the basic transportation contract
between the shipper-consignor and the carrier; its terms and
conditions bind the shipper and all connecting carriers.” S.
Pacific Transp. Co. v. Commercial Metals Co., 456 U.S. 336,
342 (1982) (internal citation omitted).
3
Novolog filed a counterclaim, on which it eventually
prevailed at trial. The counterclaim has no relevance to the
issues before us.
6
as the shipper on the waybills.4 In addition, CSX presented to the
District Court many pages of computer spreadsheets purporting
to reflect the fact that Novolog was named as either the
consignee or the shipper on the corresponding bills of lading.
Novolog contested the admissibility of the documents
presented by CSX and argued they were not actual bills of lading.
It also submitted the deposition of David Reid, the CEO of
Novolog during the relevant period, who testified that Novolog
had not given permission to be listed as consignee for the freight
in the railcars at issue and had not created or executed any of the
bills of lading for the shipments that resulted in demurrage
charges.
On May 24, 2006, the District Court denied both parties’
summary judgment motions regarding the demurrage dispute.
The court rejected CSX’s theory that Novolog became subject to
liability by accepting freight as the named consignee on the bills
of lading or by ordering cars as the named shipper; it therefore
declined to resolve the evidentiary issues or to make a finding of
fact as to whether Novolog was indeed named as the consignee
4
A waybill is a “[w]ritten document made out by [the] carrier
listing point of origin and destination, consignor and consignee,
and describing goods included in shipment . . ..” Black’s Law
Dictionary 1429 (5th ed. 1979). According to the Sixth Circuit
Court of Appeals, “the bill of lading is a title document, while
the waybill describes the freight, its route, and the carriers
involved in its shipment. The waybill accompanies the freight
throughout the shipment and into the hands of the destination
carrier.” Missouri Pacific R. Co. v. Escanaba and Lake
Superior R. Co., 897 F.2d 210, 211 (6th Cir. 1990). The record
does not clarify what significance, if any, the parties ascribe to
the different role played by the waybills and the bills of lading
that accompanied the shipments at issue.
7
or as the shipper in the bills of lading. See CSX Transp. v.
Novolog Bucks County, No. 04-CV-4018, 2006 WL 1451280, at
*3 n.3-5, *4 n.6 (E.D. Pa. May 24, 2006). It held, however, that
summary judgment was inappropriate because there remained an
issue of material fact as to whether Novolog had entered a
separate contractual agreement with CSX that might make it
liable to the charges.
Following the issuance of the opinion denying the cross-
motions for summary judgment, CSX filed an admission that
“other than Novolog being the named consignee on bills of
lading, and Novolog having accepted delivery of the loaded cars
by CSX, CSX had no separate contractual relationship with
Novolog governing the movement and / or disposition of the
detained rail cars.” As a result the District Court entered
judgment as a matter of law in favor of Novolog on July 12,
2006.
CSX then filed a motion for reconsideration and an
alternative motion for referral to the STB. The District Court
denied the motion for reconsideration as untimely and denied the
motion for referral “because [its] memorandum and order of May
24, 2006 [was] not tantamount to an attack upon the
reasonableness of the tariff terms.” CSX filed this timely appeal.
II. Discussion
A. Jurisdiction
We have jurisdiction of this appeal from a final order of
the District Court under 28 U.S.C. § 1291. The District Court
had diversity jurisdiction under 28 U.S.C. § 1332 and federal
question jurisdiction under 28 U.S.C. § 1337 over a cause of
action arising under the Interstate Commerce Act, 49 U.S.C. §
10101 et seq.
8
Although the subject matter jurisdiction of the District
Court is not in question, before we turn to the merits we must
address CSX’s contention that the District Court, in rendering its
decision, usurped the primary jurisdiction of the STB. CSX
urges that in holding that it could not exact demurrage charges
from parties such as Novolog, the District Court implicitly
declared its tariff unreasonable, a determination reserved
statutorily to the STB. See 49 U.S.C. § 10702 (mandating that
rail carriers shall establish reasonable rates, rules, and practices);
49 U.S.C. § 10704.
The District Court refused to refer the matter to the STB
on the grounds that its decision did not amount to a finding that
CSX’s rates were unreasonable. On appeal, CSX argues that
although the District Court’s opinion may not have expressly
held CSX’s demurrage tariff unreasonable, it nonetheless “gutted
it and rendered it ineffective.” Novolog responds that CSX’s
motion for conditional referral was untimely because it was filed
beyond the time limit provided for motions for reconsideration
and that in any event it lacks substantive merit. A district court’s
decision not to submit an issue for initial determination by an
administrative agency is reviewed for abuse of discretion.
Puerto Rico Mar. Shipping Auth. v. Valley Freight Sys., 856 F.2d
546, 549 (3d Cir.1988).
Primary jurisdiction “applies where a claim is originally
cognizable in the courts, and comes into play whenever
enforcement of the claim requires the resolution of issues which,
under a regulatory scheme, have been placed within the special
competence of an administrative body . . ..” United States v. W.
Pac. R.R. Co., 352 U.S. 59, 64 (1965). In such cases, courts may
refer specific questions to the administrative body charged with
their resolution. See 28 U.S.C. § 1336 (district courts may refer
an action to the Surface Transportation Board for determination.)
9
Unlike objections to subject matter jurisdiction, which can be
raised at any point, primary jurisdiction arguments can be
waived. Baltimore & Ohio Chicago Terminal R.R. v. Wisconsin
Cent. Ltd., 154 F.3d 404, 411 (7th Cir. 1998); see also Northwest
Airlines v. County of Kent, 510 U.S. 355, 366 n.10 (1994)
(declining to invoke the primary jurisdiction doctrine where the
parties had not raised the issue). Primary jurisdiction “is
concerned with promoting proper relationships between the
courts and administrative agencies charged with particular
regulatory duties.” W. Pac. R.R. Co., 352 U.S. at 63. It does not
strictly limit the power of the courts, but rather is intended to
“serve as a means of coordinating administrative and judicial
machinery and to promote uniformity and take advantage of the
agencies’ special expertise.” Pejepscot Indus. Park, Inc. v.
Maine Cent. R.R. Co., 215 F.3d 195, 205 (1st Cir. 2000).
No coordination would be achieved by requiring a District
Court, after it has rendered a judgment, to vacate that judgment
upon motion and refer a question it has already decided to an
agency. CSX could have filed a petition for declaratory action
with the STB once it became clear that Novolog was contesting
the charges or could have raised the issue of primary jurisdiction
at any time during the preliminary phases of the litigation.
Instead it chose to wait until judgment had been entered, and then
requested a second bite at the apple. In addition, the STB’s
expertise, while helpful, would not have been crucial to the
determination of the issues here, which involve the analysis of
precedent and statutory interpretation. We therefore hold that
the District Court did not abuse its discretion in denying CSX’s
motion for conditional referral to the STB.5
5
Our opinion in MCI Telecomm. v. Teleconcepts, 71 F.3d
1086 (3d Cir. 1995), is not to the contrary. There we held that
the doctrine of primary jurisdiction mandated referral of a
question requiring the interpretation and application of a local
10
B. Liability for demurrage charges of a named
consignee that accepts freight
The most important and vigorously argued issue in this
case is whether a transloader or connecting carrier such as
Novolog can become subject to liability for demurrage charges
by being listed as the consignee in a bill of lading and accepting
delivery of the freight listed therein, even if it does not have a
beneficial interest in the freight and has not authorized the
shipper or the carrier to list it as the consignee. The District
Court held, as a matter of law, that it cannot. We review its
judgment de novo. A.W. v. Jersey City Public Schools, 486 F.3d
791, 794 (3d Cir. 2007).
The District Court held, first, that whether or not Novolog
was in fact listed as the sole consignee in the bills of lading, that
unauthorized and unilateral designation was not sufficient to
make it a legal consignee for purposes of imposing demurrage
liability. CSX, 2006 WL 1451280, at *8, *11. 6 Second, the
telephone company’s tariff to the Pennsylvania Public Utilities
Commission (PUC). We based that decision on the nature of the
question to be decided, which the Pennsylvania Supreme Court
had held to be one peculiarly within the special expertise of the
PUC. The same deference is unnecessary here.
6
As mentioned, the District Court initially held that a
genuine issue of material fact remained as to whether a separate
contract between Novolog and CSX, known in the litigation as
the Refund Contract, constituted a contractual agreement
regarding the railcars that could subject Novolog to liability for
demurrage charges. That issue was subsequently resolved by
CSX’s admission that it did not. With the last issue of material
fact eliminated, the District Court then granted judgment as a
11
District Court dismissed CSX’s argument that Novolog was
liable as the agent of an undisclosed consignee principal, since
“this rule of law only applies where an agent actually is entering
into a contract on behalf of the principal.” Id. at *9. Third, the
District Court held that CSX was not liable for demurrage under
the statutory terms of ICCTA’s consignee-agent liability
provision, 49 U.S.C. § 10743(a)(1) (providing for liability of
consignee-agents who do not notify carrier of agency
relationship), since that section “relates only to the payment of
rates for shipment of freight not demurrage and . . . demurrage
charges are distinct from transportation rates.” Id. at *10.
Finally, the District Court rejected CSX’s argument that
Novolog’s knowledge of the industry practices, its acceptance of
notices that railcars had been delivered, and its requests for
railcars confirmed that it was the legal consignee or consignor of
the shipments.
We hold that recipients of freight who are named as
consignees on bills of lading are subject to liability for demurrage
charges arising after they accept delivery unless they act as
agents of another and comply with the notification procedures
established in ICCTA’s consignee-agent liability provision, 49
U.S.C. § 10743(a)(1).
We take as our starting point two well-established and oft-
repeated principles. The first is that liability for freight charges,
including demurrage charges, may be imposed against a
consignor, consignee, or owner of the property, or on others by
statute, contract, or prevailing custom. Illinois Cent. R.R. Co. v.
South Tec Dev. Warehouse, 337 F.3d 813, 820 (7th Cir. 2003)
(internal quotation marks and citation omitted); Middle Atl.
Conference v. United States, 353 F. Supp. 1109, 1118 (D.D.C.
1972) (three-judge panel). The second is that the consignee
matter of law for Novolog.
12
becomes a party to the transportation contract, and is therefore
bound by it, upon accepting the freight; thus it is subject to
liability for transportation charges even in the absence of a
separate contractual agreement or relevant statutory provision.
See Louisville & Nashville Ry. Co. v. Central Iron & Coal Co.,
265 U.S. 59, 70 (1924) (“if a shipment is accepted, the consignee
becomes liable, as a matter of law, for the full amount of the
freight charges, whether they are demanded at the time of
delivery, or not until later”); Erie R. Co. v. Waite, 114 N.Y.S.
1115 (1909) (demurrage may be imposed upon consignees
independently of statute or express contract); Gage v. Morse, 12
Allen 410, 90 Am. Dec. 155 (Mass. 1866) (“[i]f the consignee
will take the goods, he adopts the contract”).7
Historically the principle governing the liability of parties
named as consignees in the bill of lading was a simple one of
notice. In general “a consignee as such under a straight bill of
lading [was] liable [because] treated as presumptive owner and
compelled to pay.” In re Tidewater Coal Exch., 292 F. 225, 234
(D.C.N.Y. 1923) (Hand, J.). However, if the consignee was
“known [by the carrier] not to be the owner” but a mere “factor”
or agent, the consignee was not liable for demurrage. Id. The
carrier might have notice of the relationship because the bill of
lading included language such as “care of” or “account of,” or
might simply know of the agency through long dealing even if
7
The status of owners is somewhat more complex and not
relevant here since the parties agree that Novolog did not have
a beneficial interest in the cargo. See, e.g., Wheaton Van Lines,
Inc. v. Gahagan, 669 A.2d 745, 749 (Me. 1996) (“consignee”
defined to include “an owner of shipped goods who is identified
to the carrier as the intended recipient of the goods, who does in
fact accept the goods not as an agent but for itself, and who in
every way but designation on a bill of lading acts as a
consignee.”)
13
the bill of lading failed to disclose it. Id. at 233-34. In either
case, the principal rather than the agent would be liable. Id.
These common law principles are reflected in ICCTA’s
consignee-agent liability provision, titled “Liability for payment
of rates,” which provides in relevant part:
Liability for payment of rates for transportation for
a shipment of property by a shipper or consignor to
a consignee other than the shipper or consignor, is
determined under this subsection when the
transportation is provided by a rail carrier under
this part. When the shipper or consignor instructs
the rail carrier transporting the property to deliver
it to a consignee that is an agent only, not having
beneficial title to the property, the consignee is
liable for rates billed at the time of delivery for
which the consignee is otherwise liable, but not for
additional rates that may be found to be due after
delivery if the consignee gives written notice to the
delivering carrier before delivery of the property–
(A) of the agency and absence of beneficial
title; and
(B) of the name and address of the
beneficial owner of the property if
it is reconsigned or diverted to a
place other than the place specified
in the original bill of lading.
49 U.S.C. § 10743(a)(1) (emphasis added).
This section appears designed to address precisely the
case before us, namely, the situation where a carrier assesses
14
charges after delivery against the named consignee and recipient
of the freight, but the consignee/recipient contests its liability for
the charges on the grounds that it is a mere middleman.
Building on the common law, it adopts the principle that the
named consignee becomes a party to the transportation contract
upon receipt of the freight and is thereafter liable for all relevant
charges, whether immediately due or arising after delivery,
unless the consignee is an agent and the carrier has notice of
this. It adds precision to the common law tradition, however, by
clearly laying out what a named consignee/recipient must do to
avoid liability on the grounds that it is an agent. The
requirements are not burdensome: the consignee is obligated
merely to notify the carrier, in writing, of the agency
relationship.
Novolog, however, disputes that this section is applicable
to this case. It argues, first, that Section 10743 applies to “rates
for transportation,” which do not include demurrage charges.
Second, it contends that it is not a consignee merely by dint of
being so designated, without its consent, on the bills of lading,
and therefore the section cannot apply to it. We disagree.
First, we need not stray far to discover what the provision
means by “rates for transportation,” since the statute itself
contains a definition section. As used in ICCTA,
“‘transportation’ includes”:
(A) a locomotive, car, vehicle, vessel, warehouse,
wharf, pier, dock, yard, property, facility,
instrumentality, or equipment of any kind related
to the movement of passengers or property, or
both, by rail, regardless of ownership or an
agreement concerning use; and
(B) services related to that movement, including receipt,
15
delivery, elevation, transfer in transit, refrigeration, icing,
ventilation, storage, handling, and interchange of
passengers and property . . ..
49 U.S.C.§ 10102(9) (emphasis added). There can be little
question that railcars – as cars, vehicles, instrumentalities, or
equipment related to the movement of property by rail – are
encompassed by this definition.
Although to our knowledge no court has spoken directly
to the applicability of Section 10743(a)(1) to demurrage rates,
both the former ICC and a three-judge panel of the District
Court for the District of Columbia, faced with a substantially
identical provision applicable to motor carriers, have also found
it applicable to detention (i.e., demurrage) charges. In Payment
for Detention Charges, Eastern Central States, 335 I.C.C. 537
(I.C.C. 1969), the agency relied in part on Section 223 of the
ICC Act, 49 U.S.C. § 323 (1964), to decide whether a trucking
association’s tariff was unlawful. The ICC held without
hesitation that the phrase “transportation charges in respect to
the transportation of . . . property” in that provision “of course
[] would encompass charges for demurrage or detention of
vehicles. . . . While detention charges have a purpose different
from that of freight charges, . . . demurrage charges are part of
the total transportation charges.” Payment for Detention
Charges, 335 I.C.C. at 539-40 (emphasis added).8 Upon review,
a three-judge panel of the District Court for the District of
Columbia agreed with the ICC, writing that the term
8
There is no substantive difference between the terms
“transportation charges” and “rates for transportation” in the
statute. See Historical and Revision Notes to 49 U.S.C. § 10744
(1982) (“[t]he word ‘rates’ is substituted for ‘charges’ for
consistency in view of the definition of ‘rate’ in section 10102
of the revised title”).
16
“transportation charges” in Section 223 of the ICC Act “may
include detention charges.” Middle Atl. Conference v. United
States, 353 F. Supp. 1109, 1121 n.34 (D.D.C. 1972).9 We thus
hold that demurrage rates are “rates for transportation” under
Section 10743.
Having determined that ICCTA’s consignee-agent
notification provision applies to the assessment of demurrage
9
In 1981, the Court of Appeals for the Seventh Circuit
interpreted a predecessor of our current Section 10743 as not
applying to detention charges. In Blanchette v. Hub City
Terminals, 683 F.2d 1008 (7th Cir. 1981), it wrote that “[t]he
purpose of [49 U.S.C. § 3.2 (1976)] was to relieve from liability
agent-consignees who paid in full carriers’ initial bills, which
the carrier later discovered were lower than the rate required by
the tariff.” Id. at 1011. Although this is clearly one of the
purposes of the provision, it by no means excludes its
applicability to other kinds of charges that can arise after
delivery. Thus we decline to so limit its reach.
We also note that our opinion in Baltimore & Ohio
Chicago Terminal R.R. Co. v. United States, 583 F.2d 678, 690-
91 (3d Cir. 1978), does not govern. There we held that the
provisions of the then-current statute prohibiting rebates did not
invalidate a proposed regulatory scheme by which the carrier
was obligated to remit a certain portion of the billed demurrage
charges to the actual owner of the rail car: these provisions (the
then-current 49 U.S.C. § 15(15) and 41(1)) did not regulate
demurrage charges, since the latter were “car service
regulation[s]” as opposed to transportation rates and charges as
those terms were used in the provisions at issue. Our decision
was based on an analysis of the intent of the particular
provisions at issue and does not affect our interpretation of a
different provision here.
17
charges, we must decide whether it automatically applies to
entities that are named as consignees on the bills of lading or
whether more is required to turn such entities into “legal
consignees” subject to it.
Novolog argues that the shipper’s or carrier’s unilateral
decision to designate Novolog as the consignee, without
Novolog’s permission and where Novolog is not the ultimate
consignee of the freight, cannot establish its status as a
consignee for purposes of demurrage liability under the statute
or otherwise. We disagree for three reasons. First, nothing in
the statutory language suggests that it intends to restrict the term
“consignee” to the ultimate consignee of the freight or use it to
mean anything other than the person to whom the bill of lading
authorized delivery and who accepts that delivery. Second, to
hold that the documented designation of an entity as a consignee
and that entity’s acceptance of the freight is insufficient to hold
it presumptively liable for demurrage charges would frustrate
the plain intent of the statute, which is to establish clear, easily
enforceable rules for liability. And third, to the extent that
Novolog’s suggests that it would be inequitable to treat the
named consignee as presumptively liable, that argument is
unpersuasive.10
As always, the starting point for interpreting a statute is
the language of the statute itself. Hallstrom v. Tillamook
County, 493 U.S. 20, 25 (1989). Unlike with the phrase “rates
for transportation,” ICCTA does not define the term
“consignee” or its cognates. It is a fundamental canon of
statutory construction, however, that “unless otherwise defined,
10
It goes without saying that Novolog’s lack of ownership of
the freight is immaterial, since the provision is specifically
directed at consignees “not having beneficial title to the
property.” 49 U.S.C. § 10743(a)(1).
18
words will be interpreted as taking their ordinary, contemporary,
common meaning.” Perrin v. United States, 444 U.S. 37, 42
(1979). In common usage, the term means nothing more than
the person to whom cargo is delivered following instructions.
See Webster’s Third New International Dictionary (1971)
(defining “consignee” as “one to whom something is consigned
or shipped”); Black’s Law Dictionary (6th ed. 1990) (defining
“consignee” as “[o]ne to whom a consignment is made[; p]erson
named in bill of lading to whom or to whose order the bill
promises delivery; [i]n a commercial use, . . . one to whom a
consigment may be made, a person to whom goods are shipped
for sale, or one to whom a carrier may lawfully make delivery in
accordance with his contract of carriage, or one to whom goods
are consigned, shipped, or otherwise transmitted”). There is
simply no reason to read the word “consignee” in section 10743
as having the more restricted meaning of ultimate consignee.11
11
Again, we agree with the Middle Atlantic Conference
court’s analysis of a substantially identical provision in the part
of the statute dealing with motor carriers. The court wrote that
Section 223 of the Interstate Commerce Act, 49 U.S.C. § 323
(1964),
is addressed essentially at the problem of the
warehouseman, carrier, etc., who, while acting as
agent for an undisclosed principal, appears as
consignee on the bill of lading. . . . [W]ith respect
to “transportation charges” (which may include
detention charges), the statute provides that a
consignee might escape that obligation if certain
conditions of notice are satisfied.
Middle Atl. Conference, 353 F. Supp. at 1121 n.34 (emphasis
added).
19
The statutory language also fails to support the
contention that an entity can be considered a consignee for
demurrage purposes only when it has consented to the
designation in the bill of lading. Indeed, the statute envisages
specifically the situation where “the shipper or consignor
instructs the rail carrier transporting the property to deliver it to
a consignee that is an agent only,” 49 U.S.C. § 10743(a)(1)
(emphasis added), i.e., where the person designated by the
shipper or consignor as the consignee is not in fact the person
who would normally be responsible for the charges, but is only
an agent (more properly designated, for instance, as a “care of”
party).12
Although we do not rely on them for primary guidance,
we also note that both the Uniform Commercial Code and the
Federal Bills of Lading Act define “consignee” in a manner
consistent with our interpretation. See U.C.C. § 7-102(3)
(“‘Consignee’ means a person named in a bill of lading to which
or to whose order the bill promises delivery”); 49 U.S.C. §
80101(1) (1994) ( “consignee” is “the person named in a bill of
lading as the person to whom the goods are to be delivered”).
12
The alleged bills of lading in this case designate Novolog
as the sole consignee, without any indication that it is an agent.
If the bills of lading already contain a designation such as “care
of,” however, the agency relationship is considered disclosed
and the consignee-agent is not subject to liability for demurrage
charges. See R. Franklin Unger, Trustee of the Ind. Hi-Rail
Corp., debtor – Petition for Declaratory Order – Assessment
and Collection of Demurrage of Switching Charges, STB
Docket No. 42030, 2000 STB Lexis 333, n.13 (“demurrage and
detention charges . . . do not apply to agents acting for the
principal parties to the transportation [if] the agency relationship
[is] disclosed”; if the “waybills contain . . . language that
would clearly establish or refer to an agency relationship,” the
20
To hold, as Novolog asks us to do, that the designation in
the relevant bills of lading should not be given effect without
some further evidence of consent or involvement would also
frustrate the plain intent of Section 10743, which is to facilitate
the effective assessment of charges by establishing clear rules
for liability.
Railway demurrage charges have “from the start been
inseparably coupled with the car supply question.” Harleigh H.
Hartman, Law and Theory of Railway Demurrage Charges 9
(1928). Their most important purpose is to encourage the
prompt return of freight cars to service so as to guarantee the
steady flow of rail freight. See Pennsylvania R.R. Co. v.
Kittaning Iron & Steel Mfg. Co., 253 U.S. 319, 323 (1920)
(purpose of demurrage charges is “to promote [railcar]
efficiency by penalizing undue detention of cars.”) Congress’s
concern with ensuring that railcars be available for
transportation and not sidelined or improperly used as storage
facilities is reflected in 49 U.S.C. § 10746, which provides that
rail carriers “shall compute demurrage charges, and establish
rules related to those charges, in a way that fulfills the national
needs related to – (1) freight car use and distribution; and (2)
maintenance of an adequate supply of freight cars to be
available for transportation of property.” Compensation of the
railroads for the use of their equipment is a secondary purpose
of demurrage charges. Turner, Dennis & Lowry Lumber Co. v.
Chicago, Milwaukee & St. Paul Ry.Co., 271 U.S. 259, 262
(1926); 4 Saul Sorkin, Goods in Transit § 25.02[1] & n.2
(updated 2007) (collecting cases).
For demurrage charges to fulfill their purpose of ensuring
the smooth functioning of the rail freight system by creating
disincentives against delays, railways must be able to assess
agency relationship is considered disclosed.)
21
them effectively and without being mired in disputes. Section
10743 is designed to ensure just that. The simple rule that the
named consignee becomes liable for demurrage charges upon
acceptance of the freight unless it timely notifies the carrier of
an agency relationship allows railroads to rely on the bills of
lading and avoid wasteful attempts to recover from the wrong
parties. For their part, recipients of freight who should not be
saddled with liability for transportation charges arising after
delivery can escape it with little effort by simply providing
written notice of their status to the carrier.
Finally, although Novolog suggests that it would be
inequitable to allow a carrier’s or shipper’s unilateral choice of
designation to make it party to the transportation contract, no
unfairness results from applying the statute’s plain language.
Under the statutory scheme, the named consignee can avoid
liability in two ways: first, by refusing the freight (which
Novolog concedes it could have done); and second, by providing
the carrier timely written notice of agency under Section
10743(a)(1), if appropriate. The rail carrier, in contrast, has no
option but to deliver the freight to the consignee named by the
shipper, whether that be the ultimate consignee or owner or a
middleman such as a transloader or warehouseman. As amici
railroads argue, such middlemen generally have no incentive to
enter into separate contracts with carriers that would make them
responsible for demurrage charges; if they cannot easily be held
accountable for their own delays, they may simply decide to use
the rail cars as free storage. Holding such entities presumptively
responsible for delays occurring while the railcars are under
their control under the clear rule of Section 10743 ensures that
the railroads will be able to assess demurrage, while also making
it possible for all parties (carriers, middlemen such as Novolog,
shippers, and ultimate consignees) to allocate the risk of liability
by private contract, if they so choose.
22
For these reasons we decline to follow the Court of
Appeals for the Seventh Circuit’s recent conclusion in a similar
case that the entity listed as the consignee on the relevant bills
of lading was not, without more, the legal consignee under
Section 10743. See South Tec, 337 F.3d at 821. See also
Union Pacific Railroad Co. v. Carry Transit, No.3:04-CV-1095-
B (N.D. Tex. Oct. 27, 2005) (following South Tec). In South
Tec, a printing company (Donnelley) had an agreement with a
carrier (the Illinois Central Railroad) to transport paper from
Donnelley’s paper suppliers to the South Tec warehouse. There
the paper was sorted and stored and the railcars released. When
Donnelley needed the paper, it was loaded on other railcars or
trucks and brought to the Donnelley facility. According to
Donnelley’s agreement with Illinois Central, the bills of lading
should state simply that the car was “to stop at South Tec
Warehouse . . .. Freight Charges Cover Shipments to Ultimate
Destination.” Id. at 814-15. Although at least ninety percent of
the bills of lading named Donnelley as the consignee, however,
there was a wide variation among the bills of lading, and a small
percentage named South Tec as the consignee. Id. at 815, 821.
The District Court held that South Tec was liable for the
demurrage charges because it had failed to comply with the
notification requirements of 49 U.S.C. § 10743(a)(1). The
Court of Appeals disagreed, noting that the District Court had
apparently assumed that South Tec was indeed the consignee of
the freight for purposes of the statute, and remanded for a
determination of “who was the legal consignee (or consignees)
of the paper shipments in question.” Id. at 822.
In remanding, the Court of Appeals did not strictly rule
out the possibility that South Tec might in fact qualify as a
consignee under the statutory provision, but it intimated that,
without more, the facts then in the record made it unlikely. It
held that “being listed by third parties as a consignee on some
23
bills of lading is not alone enough to [become] a legal consignee
liable for demurrage charges, although it, coupled with other
factors, might be enough to render South Tec a consignee.”
South Tec, 337 F.3d at 821. Although the court did not explain
what additional factors might be considered, it suggested that
one of the factors militating against finding South Tec to be a
consignee under the statute was that the railroad had notice of
South Tec’s agent status because of the large number of bills of
lading designating it as a “care of” party. Id.13
In our view the South Tec court’s approach frustrates the
statute’s intent in two ways. First, in contrast to the statute’s
clear rule, South Tec envisages a “designation-plus” analysis
under which the entity named as the consignee on the bill of
lading would be presumptively liable for demurrage only if
“other factors” were present. Under such a regime, railroads
would be forced to second-guess their bills of lading and
perform indeterminate weighing tests before deciding who is to
be charged. And second, South Tec suggests that consignees
must satisfy the notification requirements of Section 10743 only
when the carrier does not already have notice – through other
bills of lading or otherwise – that the named consignee is acting
as the agent of another. Practically, this would require
consignees and railroads alike to ask with respect to each
shipment whether, in the universe of shipments involving the
same actors, a sufficient number of bills of lading have clarified
the agency relationships so as to exempt the consignee from the
statutory requirements. A far more effective system is to treat
each bill of lading as a separate instance, so that in each case the
entity named as consignee is presumptively responsible for
demurrage.
13
It is unclear from the opinion whether the railroad sought
to assess demurrage charges on all the shipments or only on
those in which South Tec was named as the sole consignee.
24
In addition to relying on South Tec, Novolog seeks to
support its position that it cannot be considered a consignee
under the statute (or otherwise) by citing to decisions outside the
narrow context of the interpretation of Section 10743(a)(1),
which it claims represent “longstanding law barring imposition
of demurrage liability upon an entity unilaterally designated as
a consignee.” This characterization is incorrect. What the cases
unanimously require for consignee liability is that the
transloader or other transportation intermediary that does not
have a beneficial interest in the freight at least be named as the
consignee in the bill of lading. See Middle Atl. Conference, 353
F. Supp. 1109, 1119 n.31 (finding general agreement in the case
law that where middlemen such as warehousemen or pier
operators (1) acted as known agents or (2) were not named as
consignors or consignees, they were not parties to the
transportation contract and were not liable for demurrage
charges); CSX Trans., Inc. v. City of Pensacola, 936 F. Supp.
880, 885 (N.D. Fla. 1995) (relying on the fact that the Port of
Pensacola was not listed as a consignee on any of the bills of
lading to find it was not liable for demurrage under the
railroad’s tariff).
On the question whether such a designation is sufficient
to make the transloader a consignee potentially liable for
charges, however, the existing precedent is considerably less
clear.
Our decision in Union Pacific R.R. Co. v. Ametek, Inc.,
104 F.3d 558 (3d Cir. 1997) (Ametek), for instance, has nothing
to say about whether a transloader that is named as the
consignee might be liable for demurrage charges. That case
reached this Court on appeal from the District Court’s review of
the ICC’s decision in Ametek, Inc. –Petition for Declaratory
Order; Ametek, Inc. v. Panther Valley R.R. Corp., ICC Docket
No. 40663, 1993 ICC Lexis 13 (Jan. 15, 1993) (ICC Ametek),
25
where the ICC had held unlawful the attempt by creditors of a
certain rail freight carrier to collect demurrage charges from the
owner and operator of a plastic processing facility. Ametek
“receive[d] raw plastic materials for processing [and after]
processing the materials . . . ship[ped] the processed product to
the material suppliers’ customers.” ICC Ametek at *4. In the
vast majority of the cases, Ametek was not named as the
consignee or the consignor on the bills of lading. The ICC,
however, also noted that, with respect to a few of the shipments,
“Ametek was a party to the transportation contract by being
named as the consignee . . ..” Id. at *17 (emphasis added).
Where Ametek was listed as the consignee on the bill of lading,
it was potentially liable for the charges. By the time the case
reached us, however, the issue of whether it might be liable in
the very small number of instances in which Ametek was named
as a consignee was no longer being litigated; our review was
focused on whether Ametek was liable – either through its
receipt of the freight or by some separate contractual
arrangement – where it was not named as the consignee in the
bill of lading. See id. at 560 (Ametek “generally was not the
consignor or consignee designated on the bills of lading”), 563
(it was “undisputed that Ametek was not a party to the
transportation contracts”). We did not even mention, much less
take a position on, the ICC’s apparent assumption that Ametek
was a party to the transportation contract in the few cases in
which it was named as a consignee. Thus Ametek is of no help
to Novolog – and indeed, the ICC’s position in that litigation
supports our view.
Middle Atlantic Conference is of no more comfort to
Novolog. The court there held that a certain tariff unilaterally
expanding the definition of “consignee” to include any person
to whom the bill of lading instructed the carrier to deliver the
shipment, but specifically explained that the tariff was invalid
because it attempted to impose liability on a party who was not
26
a party to the transportation contract, “ i.e., a person not named
in the bills of lading as consignor or consignee.” Middle Atl.
Conference, 353 F. Supp. at 1112 (emphasis added). Thus
Middle Atlantic Conference does not stand for the proposition
that a tariff may not make such entities as warehousemen liable
for demurrage charges, but that it may not do so without support
from the bill of lading and simply because of the “mere fact of
handling the goods shipped.” Id. at 1118.
The “longstanding law” invoked by Novolog for the
proposition that a transloader cannot be considered a consignee
for demurrage purposes where it has not executed the bill of
lading that names it as the consignee is, in fact, limited to three
federal district court cases. See CSX Transp., Inc. v. Port Erie
Plastics, Inc., No. 05-139 Erie, 2006 WL 2847414 (W.D. Pa.
Sep. 29, 2006) (following the District Court’s decision in this
case); Union Pacific Railroad Co. v. Carry Transit, No.3:04-
CV-1095-B (N.D. Tex. Oct. 27, 2005) (holding that where a
transloader did not have any beneficial interest in the freight and
did not authorize the shippers to list it as a consignee it could not
be held liable for demurrage charges); and Southern Pacific
Transp. Co. v. Matson Navigation Co., 383 F. Supp. 154, 157
(D. Cal. 1974) (holding that a transloader who is “merely named
in the railroad bill of lading” without being actively involved in
the transportation contract and without any “culpability for the
delay” cannot be liable for demurrage, but noting specifically
that the transloader had been named as the “care of” party in the
vast majority of the bills of lading under examination). We do
not find these cases persuasive.14
14
Novolog also urges us to consider Evans Prods. Co. v.
Interstate Commerce Comm’n, 729 F.2d 1107, 1113 (7th Cir.
1984). Evans involved an attempt to assess demurrage charges
against repair facilities; the court there concluded, among other
things, that “[a]lthough they receive cars and ship the repaired
27
For these reasons we hold that an entity named on a bill
of lading as the sole consignee, without any designations clearly
indicating any other role, is presumptively liable for demurrage
fees on the shipment to which that bill of lading refers, but may
avoid liability, if it is an agent, by following the notification
provisions of 49 U.S.C. § 10743(a)(1). On remand, the District
Court should determine whether Novolog appeared as the
consignee on the relevant bills of lading. Because it is
undisputed that Novolog did not comply with the statutory
notification provision, it will be unnecessary to determine
whether it acted as an agent in the instances where it was named
as the consignee.
C. Liability for demurrage charges of a named
shipper or consignor
The final issue in this case is whether CSX may assess
demurrage charges against Novolog as the consignor for the
instances in which Novolog ordered empty railcars, which it
then loaded with freight for CSX to transport to a domestic
cars out again, repair facilities are not consignors or consignees
of the cars because delivery of the cars as freight is not
completed and the carrier’s lien is not extinguished when the
repair facility receives the car. Repair facilities do not
determine the further disposition of the cars, but rather act at the
behest of the car owners/lessors.” Id. at 1113. It is unclear
under what travel documents the empty rail cars traveled on
their way to the repair facilities; the court appears to have based
its decision on the common-sense notion that a rail car is not
going to a repair facility to stay there, but rather will be released
to its owner or lessee after some time. We do not find the
analogy between a transloader and a repair facility – which
presumably does not engage in loading or unloading operations
and cannot be the consignee of freight – particularly instructive.
28
destination. CSX seeks to assess demurrage under Item
8070(G) of its tariff, which provides that “[u]nless otherwise
advised, in WRITING, that another party is willing to accept
responsibility for demurrage, consignor at origin or consignee at
destination will be responsible for the payment of demurrage
charges” (emphasis in original). CSX’s tariff defines
“consignor” as “[t]he party in whose name a car[s] is ordered;
or the party who furnishes forwarding direction.”
During the summary judgment proceedings, CSX
introduced disputed evidence that Novolog appeared as the
consignor on a number of bills of lading for such shipments. The
District Court, however, made no findings of fact related to
Novolog’s consignor status and did not discuss this issue
separately in its opinion. Nor did the parties fully brief this
issue on appeal.
Although consignor liability is not regulated by 49 U.S.C.
§ 10743 or an analogous statutory provision, we see no reason
why the principles applicable to consignee liability under the
statute should not be made equally applicable to consignor
liability. If the analogous rule governed, the entity named as
consignor or shipper on the bill of lading would be liable unless
it had ordered the empty railcars as an agent of another and had
so notified the carrier in writing at the time of the request or
unless, if another entity had designated it as consignor, it
notified the carrier prior to shipment. Nonetheless, we find the
record insufficient and the briefing too cursory to announce a
rule. We will instead vacate the District Court’s grant of
summary judgment with respect to the claims based on
consignor liability and instruct it to reexamine this issue in light
of our discussion of consignee liability. On remand, the District
Court should determine whether Novolog appeared as the
shipper/consignor on the relevant bills of lading. The District
Court may also find it necessary to determine whether Novolog
29
was an agent in the instances in which it appeared as shipper or
consignor in the bills of lading and, if so, whether it
appropriately notified CSX of the relationship.
IV. Conclusion
For the reasons stated above, we will vacate the District
Court’s order granting judgment as a matter of law in favor of
Novolog and we will remand this case to the District Court for
further proceedings consistent with this opinion.
30