New Orleans & Lower Coast Railroad v. International Proteins Corp.

514 F. Supp. 46, 1981 U.S. Dist. LEXIS 18430
CourtDistrict Court, E.D. Louisiana
DecidedFebruary 17, 1981
DocketCiv. A. Nos. 75-1849, 77-813
StatusPublished
Cited by4 cases

This text of 514 F. Supp. 46 (New Orleans & Lower Coast Railroad v. International Proteins Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New Orleans & Lower Coast Railroad v. International Proteins Corp., 514 F. Supp. 46, 1981 U.S. Dist. LEXIS 18430 (E.D. La. 1981).

Opinion

MEMORANDUM OPINION AND ORDER

EDWARD J. BOYLE, Sr., District Judge:

This consolidated action arose out of an order of the Interstate Commerce Commission (Commission), by Division 2, in a proceeding entitled International Proteins Corporation, et a. v. The Baltimore and Ohio Railroad Company, et al, Docket No. 36047, 355 I.C.C. 137 (August 20, 1976). The New Orleans & Lower Coast Railroad Company, in No. 75-1849, seeks enforcement of the Commission’s order. International Proteins Corporation (IPC) and its subsidiaries, Atlantic Shippers of Baltimore and Petrou Fisheries, in No. 77-813, ask us to set aside the order. The New Orleans & Lower Coast Railroad and other concerned railroads have intervened in this second case. The controversy concerns the charges assessed by the railroad for the shipment of fifty-two carloads of watersoaked fishmeal owned by IPC. The Commission found that the railroads were entitled to $111,728 in [48]*48total charges for this shipment. By virtue of 28 U.S.C. § 1336(a), this court has jurisdiction to enforce, enjoin or suspend, in whole or in part, this order of the Commission. The parties have cross-moved for summary judgment in No. 77-813. The case was submitted for adjudication on the administrative record and supporting legal memoranda. For the following reasons, we grant the motions in part and deny same in part and remand the case to the Commission for further proceedings consistent with this opinion.

I. THE FACTUAL BACKGROUND

The facts are not in dispute. In August, 1972, a six-alarm fire broke out in the warehouse of plaintiff Atlantic Shippers of Baltimore, Inc., at Canton, Maryland. Firefighters poured tons of water into the building, and the fishmeal within the building became soaked. Plaintiff IPC purchased the damaged fishmeal, in an effort to salvage it, for a price of $421,561.44. IPC decided to transport the wet fishmeal via the intervening railroads to the plant of plaintiff Petrou Fisheries, Inc. in Empire, Louisiana for processing.

Wet fishmeal is highly combustible and the rail shipment presented special problems. Pursuant to Department of Transportation hazardous materials regulations, the wet fishmeal had to be shipped in open-top cars instead of closed boxcars. Moreover, a special permit had to be obtained to make this shipment. Once in transit, the railroads began to receive complaints of the meal’s highly noxious odor from individuals in communities through which the train transporting the wet fishmeal passed.

The first four of the fifty-two cars transporting the fishmeal arrived and were unloaded in Empire where Petrou employees processed the shipment. However, plaintiffs were prevented from unloading the remaining forty-eight cars by an order of the Plaquemines Parish Board of Health. The Board of Health, noting that it had received numerous complaints that odors from the shipment had caused vomiting and nausea, and that employees of the nearby Gulf Oil Company had threatened to walk off their jobs due to the odor, ordered the entire shipment removed from the parish within five days. The plaintiffs complied with this order, and had the fishmeal transported to Port Arthur, Texas, for destruction.

The railroads originally billed plaintiffs on the basis of the column commodity rate1 that applies for transportation of fishmeal in closed-topped cars. This rate amounted to $19.57 per net ton plus a 2.5% surcharge, a total of approximately $20.06 per net ton. The railroads, claiming that the column commodity rate only applied to shipments in closed-topped cars, rebilled plaintiffs on the basis of a class rate.2 The class rate was $2.49 per hundred pounds plus a 2.5% surcharge, a total of approximately $51.05 per net ton. The railroads applied this higher rate to the full origin track scale weight of the moisture laden shipment, and determined a total line haul charge of $145,-378 (based on 5,684,782 pounds hauled).

Additionally, the railroads assessed demurrage charges of $10,260. Demurrage is a charge rail carriers impose upon shippers and receivers for the detention of freight cars beyond an allotted free time period for loading and unloading. A total of 694 car days elapsed before plaintiffs returned the cars to the railroads. The demurrage charges and the line haul charges resulted in a total bill to plaintiffs of $155,638.

[49]*49The plaintiffs paid the railroads $41,836. Instead of paying the balance of the $155,-638, the plaintiffs filed a complaint with the Commission. They alleged that the rate charged by the railroads for transporting the damaged fishmeal was unjust and unreasonable, in violation of section one of the Interstate Commerce Act, 49 U.S.C. § 10701(a). Plaintiffs asked the Commission to prescribe a lower rate for the line haul charges and to waive the penalty portion of the demurrage charges.

The Commission received evidence in the case according to its “modified procedure,” 49 C.F.R. §§ 1100.43-52, under which the agency decides a case on written submissions instead of holding an oral hearing. Administrative Law Judge Allard, in the Commission’s initial decision, agreed with the plaintiffs that the $51.05 per ton class rate was unjust and unreasonable as applied to the total weight of the shipment. Applying the rationale of Millhurst Milling & Drying Co., Inc. v. Boston & Maine Railroad Co., 299 I.C.C. 674 (1957), the ALJ granted plaintiffs a reduced rate on the excess water portion of the shipment. However, he applied the full $51.05 per ton class rate to the normal or dry weight of the fishmeal, resulting in total line haul charges of $101,468. Waiver of any portion of the demurrage charges was denied.

In subsequent administrative proceedings, the Commission affirmed the ALJ’s decision. Thus, according to the Commission’s order, plaintiffs owe $111,728 in total charges. Dissatisfied with this order, plaintiffs now ask us to review the Commission’s decision.

II. THE APPLICABLE LAW

By virtue of section 1(4) of the Interstate Commerce Act (Act), 49 U.S.C.A. § 10701(a) (1979), all rates charged by common carriers must be reasonable. A carrier may charge only those rates that are specified in its published tariffs. Id. § 10761(a). The tariff rate is known as the legal rate; that is, the rate which must be charged to all shippers alike. However, the legal tariff rate is not always a lawful rate, because rates must be reasonable to be lawful. The exaction of unreasonable rates was forbidden at common law. The Act created the legal rate, but retained the common law duty to charge no more than a reasonable rate. The Act altered the common law only by vesting in the Commission, rather than the courts, the power to determine the reasonableness of a published rate. Arizona Grocery Co. v. Atchison, T. & S. F. Ry. Co., 284 U.S. 370, 384, 52 S.Ct. 183, 184, 76 L.Ed. 348 (1932). Sections 8 and 9 of the Act, 49 U.S.C.A. § 11705(b)(2) and (c)(1), authorize any person to make a complaint to the Commission to seek relief from an unreasonable rate.

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514 F. Supp. 46, 1981 U.S. Dist. LEXIS 18430, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-orleans-lower-coast-railroad-v-international-proteins-corp-laed-1981.