Delaware & Hudson Railway Co. v. Offset Paperback Manufacturers, Inc.

126 F.3d 426, 1997 WL 612463
CourtCourt of Appeals for the Second Circuit
DecidedOctober 7, 1997
DocketNo. 1754, Docket 96-9388
StatusPublished
Cited by1 cases

This text of 126 F.3d 426 (Delaware & Hudson Railway Co. v. Offset Paperback Manufacturers, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Delaware & Hudson Railway Co. v. Offset Paperback Manufacturers, Inc., 126 F.3d 426, 1997 WL 612463 (2d Cir. 1997).

Opinion

OAKES, Senior Circuit Judge:

Plaintiff-appellant Delaware and Hudson Railway Company, Inc. (“D & H”), a railway shipping company, seeks to collect demur-rage fees for the late return of its railroad boxcars. The United States District Court for the Northern District of New York (Thomas J. McAvoy, Chief Judge) dismissed D & H’s complaint for lack of jurisdiction over the subject matter of the complaint. We conclude that, despite dramatic changes in the regulation of rail shipping, federal law in effect in 1995 allowed the enforcement of demurrage charges in federal court. We therefore reverse and remand.

D & H delivered shipments of paper to Defendants-Appellees, five book publishers and manufacturers (collectively “consignees”), between March 1993 and December 1995. D & H claims that the consignees failed to return its boxcars within the prescribed time period after delivery, and filed this lawsuit on March 25, 1996, to collect demurrage fees, or late charges, from the consignees.

D & H sought relief in federal court on the basis of federal question jurisdiction under 28 U.S.C. § 1331. The district court also considered 28 U.S.C. § 1337, and D & H asserts this latter basis for jurisdiction in its briefs on appeal. Section 1337 grants district courts “original jurisdiction of any civil action or proceeding under an Act of Congress regulating commerce.... ” The Interstate Commerce Act (“ICA”) regulates commerce within the meaning of § 1337. See Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 533-34, 103 S.Ct. 1343, 1343-44, 75 L.Ed.2d 260 (1983) (per curiam).

The consignees, claiming that a 1983 decision of the Interstate Commerce Commission (“ICC”) exempted boxcar demurrage rates from regulation, sought dismissal of the claims for lack of subject matter jurisdiction. In a decision read from the bench, the district court agreed with the consignees. An order granting consignees’ motion to dismiss was entered on September 19, 1996, and a judgment of dismissal was entered on September 26, 1996. This court has appellate jurisdiction under 28 U.S.C. § 1291.

DISCUSSION

This appeal presents the single, narrow question whether, under law in effect as of December 1995, federal jurisdiction exists over an action to collect demurrage fees for the late return of railroad boxcars. For the reasons discussed below, we conclude that it does.

Demurrage fees historically have been established in published tariffs, subject to enforcement under the ICA and the “filed rate doctrine.” See 49 U.S.C. §§ 10762 (creating the duty to file rates with the ICC) and 10761 (requiring that only the filed rates be charged) (1994) (repealed 1996). Under the filed rate doctrine, carriers may bring actions to enforce these filed rates in federal court because the tariffs have the force and effect of a federal statute. See Thurston Motor Lines, 460 U.S. at 534-35, 103 S.Ct. at 1343 [428]*428(discussing Louisville & Nashville R. Co. v. Rice, 247 U.S. 201, 38 S.Ct. 429, 62 L.Ed. 1071 (1918)). The filed rate doctrine has been applied to demurrage rates. See Turner, Dennis & Lowry Lumber Co. v. Chicago, Milwaukee & St. Paul Ry. Co., 271 U.S. 259, 261, 46 S.Ct. 530, 531, 70 L.Ed. 934 (1926). At the time of the shipments at issue, D & H had filed a tariff containing its demurrage charges with the ICC.

This appeal arises against a background of dramatic changes in the federal government’s regulation of railway transport. The Staggers Rail Act of 1980, Pub.L. No. 96-448, 94 Stat. 1895, exempted large parts of the railroad industry from regulation, and also authorized the ICC to undertake further deregulation. See 49 U.S.C. § 10505 (1994) (current version at 49 U.S.C.A. § 10502 (1997)). In 1983, the ICC exercised this power by exempting the transportation of boxcar commodities from maximum rate standards and tariff filing requirements. See Exemption from Regulation — Boxcar Traffic, 367 I.C.C. 425 (1983) (“Boxcar Traffic ”). The D.C. Circuit later vacated Boxcar Traffic in part but upheld the portions of the decision that concern this appeal. Brae Corp. v. United States, 740 F.2d 1023 (D.C.Cir.1984).

The ICC was terminated on January 1, 1996, and replaced by the Surface Transportation Board. See ICC Termination Act of 1995, Pub.L. No. 104-88, 109 Stat. 803. The claims in this case, however, involve demur-rage charges that accrued before January 1996. No party to this appeal has claimed that the ICC Termination Act retrospectively changed the parties’ rights under prior law, and, absent a statement by Congress to the contrary, we see no reason that it should have. Accordingly, the law cited and discussed below is that in effect in 1995. We do not address any changes brought by the ICC Termination Act, as such questions are not relevant to this appeal.

The district court held that it lacked subject matter jurisdiction because the Boxcar Traffic decision and its implementing regulations had exempted demurrage rates from the ICC’s jurisdiction and the mandatory filing requirement of the ICA. In the absence of federal regulation, the court held that demurrage fees no longer held the force and effect of a federal statute and therefore could not serve as the basis for federal jurisdiction. The court discussed two reasons for its conclusion. First, the court explained that “[t]he fact that plaintiff may have been required by [former 49 U.S.C. § 10750] to compute the demurrage charges and establish rules in accordance therewith simply does not establish [that] the filing of the tariff is required, nor that such tariff prescribe the duties and obligations of the parties to the shipment.” Second, the court noted that a 1983 ICC regulation expressly mentioned several areas over which the ICC retained jurisdiction and demurrage was not one of them. See 49 C.F.R. § 1039.14(b) (1996). Both grounds for the district court’s decision were incorrect.

First, the Boxcar Traffic decision did not disturb existing demurrage regulations. In Boxcar Traffic the ICC exempted transportation rates from regulation. The courts and the ICC have consistently recognized a distinction between transport, or freight rates, and demurrage rates. See, e.g., ICC v. Oregon Pac. Indus., Inc.,

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126 F.3d 426, 1997 WL 612463, Counsel Stack Legal Research, https://law.counselstack.com/opinion/delaware-hudson-railway-co-v-offset-paperback-manufacturers-inc-ca2-1997.