Fulfillment Services v. UPS

CourtCourt of Appeals for the Ninth Circuit
DecidedJune 9, 2008
Docket06-15970
StatusPublished

This text of Fulfillment Services v. UPS (Fulfillment Services v. UPS) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fulfillment Services v. UPS, (9th Cir. 2008).

Opinion

FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

FULFILLMENT SERVICES INC.,  Plaintiff-Appellant, v. No. 06-15970 UNITED PARCEL SERVICE, INC. (UPS-Parent); UNITED PARCEL  D.C. No. CV-05-00538-DCB SERVICE, INC. (UPS-NY); and UNITED PARCEL SERVICE, INC. (UPS-OH), Defendants-Appellees. 

FULFILLMENT SERVICES INC.,  Plaintiff-Appellee, v. No. 07-15006 UNITED PARCEL SERVICE, INC. (UPS-Parent); UNITED PARCEL  D.C. No. CV-05-00538-DCB SERVICE, INC. (UPS-NY); and OPINION UNITED PARCEL SERVICE, INC. (UPS-OH), Defendants-Appellants.  Appeal from the United States District Court for the District of Arizona David C. Bury, District Judge, Presiding Argued and Submitted February 13, 2008—San Francisco, California Filed June 9, 2008 Before: Barry G. Silverman, M. Margaret McKeown, and Richard C. Tallman, Circuit Judges. 6489 6490 FULFILLMENT SERVICES INC. v. UPS Opinion by Judge McKeown 6492 FULFILLMENT SERVICES INC. v. UPS

COUNSEL

Paul D. Cullen, Sr., The Cullen Law Firm, Washington, Dis- trict of Columbia, for the plaintiff-appellant-cross-appellee.

Gregory B. Koltun, Morrison & Foerster LLP, Los Angeles, California, for the defendants-appellees-cross-appellants. FULFILLMENT SERVICES INC. v. UPS 6493 OPINION

McKEOWN, Circuit Judge:

The Interstate Commerce Act (“ICA”) was adopted to bring uniformity to shipping regulations previously governed by inconsistent state laws. George W. Wright, Slouching Toward a Morass: The Case For Preserving Complete Carmack Pre- emption, 1 DePaul Bus. & Com. L.J. 177 (2003). Historically, the Interstate Commerce Commission had responsibility for enforcing the ICA. Continuing the deregulation initiatives begun in the 1970s and early 1980s, in 1995 Congress passed the Interstate Commerce Termination Act (“Termination Act”), which abolished the Interstate Commerce Commission and transferred primary responsibility for enforcement of the ICA to the Surface Transportation Board (the “Board”). The Motor Carrier Act (“MCA”) is among the ICA provisions whose enforcement was transferred under the Termination Act.

This case concerns the availability of a private civil remedy for violations of the MCA, specifically establishment of ship- ping rates in the trucking industry. In particular, we consider whether, under § 14704(a)(2), a private party can sue for vio- lations of § 13703. See 49 U.S.C. § 14704(a)(2); 49 U.S.C. § 13703. We hold that § 14704(a)(2) provides for a private cause of action, but that a plaintiff must allege actual damages arising from the violation in order to state a claim success- fully.

BACKGROUND

United Parcel Service (“UPS”) describes itself as “the world’s largest package delivery company.” As a motor car- rier transporting goods interstate, UPS is subject to the juris- diction of the Secretary of Transportation and the Board and is governed by certain substantive provisions of the MCA. See 49 U.S.C. § 13501. Fulfillment Services, Inc., a freight ship- 6494 FULFILLMENT SERVICES INC. v. UPS ping company, alleges that UPS violated one of these provi- sions, namely 49 U.S.C. § 13703.

Section 13703 provides that a motor carrier “may enter into an agreement with one or more [other] carriers to establish . . . joint rates,” and that such agreements “may be made and car- ried out . . . and the antitrust laws . . . do not apply to parties or other persons with respect to making or carrying out the agreement.” 49 U.S.C. § 13703(a)(1), (6). Subsection (f) requires that “[a] motor carrier . . . whose . . . rates [or] classi- fications . . . are determined or governed by publications established under agreements approved under this section must participate in the determining or governing publication for such provisions to apply.” 49 U.S.C. § 13703(f) (emphasis added). In other words, § 13703 provides an exception from antitrust liability to carriers for collective rate and classifica- tion setting, provided they meet certain conditions. The sub- ject of this appeal is UPS’s “Hundredweight Service,” which Fulfillment alleges runs afoul of § 13703(f).

According to UPS, its Hundredweight Service entitles ship- pers to lower rates if they send multiple packages to the same location on the same day. At the time UPS introduced its Hundredweight Service in 1988, it participated in the National Motor Freight Classification (“NMFC”), a collectively com- piled rate classification publication covered by § 13703. Through item 2000 of its General Tariff, UPS incorporated the NMCF’s 100 Series (“NMCF Classification”) as part of its pricing mechanism, and referenced the NMCF Classifica- tion in the published rates for its Hundredweight Service. In October 2000, UPS ceased participating in the NMCF, and stopped listing NMCF as a “governing publication.” Notwith- standing these changes, UPS’s Hundredweight Service tariffs continued to refer to the NMCF Classification until mid-2004.

Under the NMFC Classification, commodities carried by truck have a “classification rating” ranging from class 50 to class 500, based primarily on their density. Articles with the FULFILLMENT SERVICES INC. v. UPS 6495 heaviest density, such as books and ingots, fall in Class 50, whereas the lightest items, such as ping pong balls, are assigned Class 500. Fulfillment claims that UPS’s tariff, even after it withdrew from NMFC publication, continued to refer to classes 50-125 and that UPS restricted its Hundredweight Service to commodities in those classes.1

Fulfillment filed this putative class action on behalf of itself and others who shipped parcels using UPS’s Hundredweight Service between October 28, 2000, and July 14, 2004, claim- ing that UPS’s continued reference to the NMCF Classifica- tion violated § 13703(f). The suit asked for a declaratory judgment that Item 2000 of UPS’s tariff became void and unenforceable when UPS withdrew from participation in NMCF. Fulfillment also sought relief under 49 U.S.C. § 14704(a)(2), alleging that this provision allows private par- ties to sue for violations of the MCA, including violations of § 13703.

The district court granted UPS’s motion to dismiss because “liability under § 13703 does not extend beyond antitrust vio- lations.” The district court denied UPS’s motion for attorney’s fees under 49 U.S.C. § 14707(e), holding both that it lacked jurisdiction to award fees, because it had dismissed the under- lying suit for lack of standing, and that § 14707(e) requires only that attorney’s fees be awarded to prevailing plaintiffs, not defendants such as UPS. Fulfillment now appeals the dis- missal of its suit, and UPS cross appeals the denial of attor- 1 The result, according to Fulfillment, was to limit service under low rates to the heaviest items and avoid transporting bulky but light commod- ities like ping pong balls. Although UPS disputes that its Hundredweight Service tariff was limited to these classes or was determined with refer- ence to the NMFC, we do not address this factual challenge at this stage of the proceedings.

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