Gumport v. AT & T Technologies, Inc. (In re Transcon Lines)

89 F.3d 559
CourtCourt of Appeals for the Ninth Circuit
DecidedJuly 3, 1996
DocketNos. 94-55668, 94-55673, 94-55674, 94-56008, 94-56009, 94-56026 and 94-56027
StatusPublished
Cited by2 cases

This text of 89 F.3d 559 (Gumport v. AT & T Technologies, Inc. (In re Transcon Lines)) 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
Gumport v. AT & T Technologies, Inc. (In re Transcon Lines), 89 F.3d 559 (9th Cir. 1996).

Opinion

O’SCANNLAIN, Circuit Judge:

In this bankruptcy proceeding, we must decide whether, under the Interstate Commerce Act, a motor carrier transported shipments as a contract carrier or as a common carrier.

I

Leonard Gumport, as Chapter 7 Trustee (“Trustee”) for debtor Transcon Lines, a motor carrier, appeals the district court’s and bankruptcy court’s orders upholding the determinations of the' Interstate Commerce Commission (“ICC”),2 which rejected the Trustee’s claims under the Interstate Commerce Act (“ICA”), 49 U.S.C. § 10101 et seq., against six of Transcon’s former customers who were allegedly undercharged on numerous freight shipments. The Trustee sought to collect interstate motor common carrier freight charges. The ICC determined that the shipments were transported in contract, rather than common, carriage. The Appellees, former shipping customers of Transcon, are ACF Industries, Inc., American Standard, Inc., A.O. Smith Corporation, AT & T Technologies, Inc., Eastman Kodak Company [563]*563d/b/a Texas Eastman Company, and International Business Machines Corporation (collectively “Shippers”). The ICC intervened on behalf of the Shippers.

Chapter 7 debtor Transcon was once the twelfth largest motor carrier in the United States. It engaged in transport as a common and contract carrier in interstate commerce pursuant to authority issued to it by the ICC. The Chapter 7 Trustee for Trans-con initiated these proceedings in bankruptcy court against each of the Shippers in order to collect freight undercharges allegedly due on shipments Transcon transported for each Shipper.

Relying on provisions of the ICA, 49 U.S.C. §§ 10741(a), 10761-10762, the Trustee seeks to repudiate Agreements that Trans-eon had with each Shipper for the transportation of shipments at agreed contract prices, and to substitute the higher common carrier rates that Transcon had on file in tariffs at the ICC.

The Agreements were entered into between 1985 and 1990. The Trustee claims that the Agreements are “shams” that fail to comply with the statutory and regulatory requirements for contract carriage. The Trustee seeks to recover undercharges total-ling more than $60 million from all six Shippers combined.

Since the determination of whether shipments constituted contract carriage is a matter within the primary jurisdiction of the ICC,3 the bankruptcy court referred the cases to the ICC, which rejected the Trustee’s claims of undercharges.4 The ICC found that the shipments moved as contract carriage subject to rates contained in the Agreements between Transcon and each of the Shippers; accordingly, the ICC concluded that the Trustee had no basis to collect from the Shippers the higher amounts contained in Transcon’s common carrier tariffs.

On return to the bankruptcy court, the Shippers moved for summary judgment based on the ICC decisions and the Trustee moved to set aside the decisions. Deferring to and giving effect to the ICC decisions, the bankruptcy court and then the district court granted summary judgments for each of the Shippers. The Trustee filed timely notices of appeal to this court.

II

Since we are reviewing the judgment of a district court affirming a bankruptcy court decision giving effect to a decision of the ICC, we are effectively reviewing the decision of an administrative agency. See Bankruptcy Estate of United Shipping Company v. General Mills, Inc., 34 F.3d 1383, 1390 (8th Cir.1994) (involving similar appeal and applying agency standard of review). Accordingly, rather than the de novo standard of review for summary judgment, we apply the standard of review for agency decisions. Id.

Agency decisions may be set aside only if “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Administrative Procedure Act, 5 U.S.C. § 706(2)(A); Idaho Farm Bureau Federation v. Babbitt, 58 F.3d 1392, 1401 (9th Cir.1995). Review under the arbitrary and capricious standard is narrow, and the reviewing court may not substitute its judgment for that of the agency. Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 376, 109 S.Ct. 1851, 1860, 104 L.Ed.2d 377 (1989). However, the agency must articulate a rational connection between the facts found and the conclusions made. United States v. Louisiana-Pacific Corp., 967 F.2d 1372, 1376 (9th Cir.1992). This court may reverse under the arbitrary and capricious [564]*564standard only if the agency has relied on factors that Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Dioxin/Organochlorine Center v. Clarke, 57 F.3d 1517, 1521 (9th Cir.1995).

An agency’s fact findings must be upheld if supported by substantial evidence in the record. See Diamond Walnut Growers v. NLRB, 53 F.3d 1085, 1087 (9th Cir. 1995). Substantial evidence means more than a mere scintilla but less than a preponderance; it means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Andrews v. Shalala, 53 F.3d 1035,1039 (9th Cir.1995).

Ill

As a threshold matter, we address Cross-Appellant Kodak’s affirmative defense that the Trustee lacks standing to bring these undercharge actions.

Kodak bases its standing argument on this court’s analysis in ICC v. Transcon Lines, 990 F.2d 1503 (9th Cir.1992), cert. denied sub nom. Gumport v. ICC, 508 U.S. 981, 113 S.Ct. 2987, 125 L.Ed.2d 683 (1993) (denying Trustee’s petition for certiorari).5 As the bankruptcy court correctly concluded, rather than supporting Kodak’s standing challenge, this court’s decision in Transcon Lines actually confirms that the Trustee has standing to challenge the Agreements.

Although Transcon Lines involves the same Trustee and debtor carrier present here, the case is clearly distinguishable. Unlike here, where the Trustee is suing the Shippers to collect undercharges based on allegedly flawed Agreements for contract carriage, in Transcon Lines,

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Bluebook (online)
89 F.3d 559, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gumport-v-at-t-technologies-inc-in-re-transcon-lines-ca9-1996.