Southern Pacific Transportation Company, Cross-Appellees v. San Antonio, Texas, Acting by and Through Its City Public Service Board, Cross-Appellant

748 F.2d 266, 1984 U.S. App. LEXIS 16337
CourtCourt of Appeals for the Fifth Circuit
DecidedNovember 29, 1984
Docket84-1059
StatusPublished
Cited by64 cases

This text of 748 F.2d 266 (Southern Pacific Transportation Company, Cross-Appellees v. San Antonio, Texas, Acting by and Through Its City Public Service Board, Cross-Appellant) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Pacific Transportation Company, Cross-Appellees v. San Antonio, Texas, Acting by and Through Its City Public Service Board, Cross-Appellant, 748 F.2d 266, 1984 U.S. App. LEXIS 16337 (5th Cir. 1984).

Opinion

GOLDBERG, Circuit Judge:

The opinion delivered on October 9, 1984 is withdrawn and is replaced by the following.

This action represents the latest stage in the long and exceedingly complex litigation between two railroads — Burlington Northern, Inc. (“Burlington Northern”) and Southern Pacific Transportation Company (“Southern Pacific”) — and the city of San Antonio, Texas. The railroads contracted *268 with San Antonio to transport coal to be used in the city’s coal-fired power plant. Contract negotiations began in 1974, and the railroads originally quoted a rate of $7.90 per ton. By 1975, the railroads had raised the rate to $11.90 per ton in the face of high inflation. In May 1975, San Antonio filed a complaint with the Interstate Commerce Commission (“I.C.C.”) challenging the rate as unreasonable and seeking reparations. The I.C.C. issued a decision establishing a rate of $10.93 per ton. See San Antonio v. Burlington Northern, 355 I.C.C. 405 (1976) (“San Antonio F). The Commission emphasized that the rate was temporary and that the parties could petition for a modification of the order. Id. at 417-18; see also Burlington Northern v. United States, 459 U.S. 131, 103 S.Ct. 514, 517, 74 L.Ed.2d 311 (1982). The San Antonio I decision was affirmed on appeal to the Eighth Circuit. 1

In 1978, the Commission issued a new order (“San Antonio II") in which it found that the maximum rate should be increased to $16.12 per ton. 2 In 1979, a third order (“San Antonio III") was issued, resulting in a new maximum rate of $17.23. 3 The railroads then filed tariffs with the Commission at the $17.23 rate. Those tariffs were still on file during the period in dispute in this case — June 24, 1980, to May 6, 1981. 4

A. The D.C. Circuit Action: San Antonio v. United States

In the meantime, though, the dispute over the rates had continued to boil. San Antonio and the railroads filed cross-petitions in the D.C. Circuit for review of the San Antonio II and San Antonio III prescriptions. In June 1980, the Court of Appeals decided that aspects of both orders were “arbitrary and capricious.” San Antonio v. United States, 631 F.2d 831, 851 (D.C.Cir.1980). The court vacated the Commission’s orders and remanded the case to the Commission. The question arose, however, as to which rate would apply during the period until the I.C.C. determined a new maximum rate. Put differently, what immediate effect did the D.C. Circuit’s judgment have on the rate that San Antonio was required to pay? This issue was important because the railroads continued to ship coal for San Antonio. Indeed, between June 24, 1980, and May 6, 1981, they shipped nearly three million tons of coal for the city.

San Antonio refused to pay the published tariff rate during this period and unilaterally reduced its payments to the level set by San Antonio I. 5 It theorized that the vacation of San Antonio II and San Antonio III by the D.C. Circuit had operated to “revive” the San Antonio I rate. San Antonio’s failure to pay the tariff rate during the period resulted in a savings to it — and a loss to the railroads — of $19,832,-596.93. 6

Ultimately, on April 7, 1981, the I.C.C. issued a decision (“San Antonio IV”) formally vacating San Antonio I and requiring the city to resume paying the San Antonio III tariff rate pendente lite 7 The *269 order became effective thirty days later, and the city began paying the rate on May 7, 1981. A question remained, however, concerning the rate applicable during the interim period between the D.C. Circuit’s judgment and the San Antonio IV order— i.e., the period from June 24, 1980, to May 6, 1981. Even though San Antonio was required to pay the San Antonio III rate after May 6, the parties disagreed about whether the San Antonio I rate had revived and become applicable to shipments prior to May 6. The I.C.C. had failed to decide this issue in San Antonio IV. Noting that the “rate revival” theory was already being litigated before the D.C. Circuit, the Commission chose to defer to the judgment of the courts. 8

Shortly thereafter, the D.C. Circuit issued a clarification of its 1980 holding. It held that the San Antonio I rate had revived by virtue of the vacation of San Antonio II and San Antonio III. Thus, the city was required to pay only at the San Antonio I rate for the period from June 24, 1980, to May 6, 1981. Tariffs set in excess of that rate were unlawful. San Antonio v. United States, 655 F.2d 1341 (D.C.Cir.1981).

The Supreme Court granted certiorari and, in a unanimous opinion, reversed. The Court held that the D.C. Circuit’s action in striking the orders in San Antonio II and III nevertheless operated to leave the tariff in effect until the I.C.C.’s redeter-mination of a reasonable rate. If the Commission later determined that the tariff rate was too high, San Antonio could collect reparations. Burlington Northern v. United States, 103 S.Ct. at 522.

B. The Fifth Circuit Action: Southern Pacific Transportation v. San Antonio

After the Supreme Court’s decision, the railroads moved to reactivate a collection action that had been lying dormant in the United States District Court for the Western District of Texas. The railroads had originally filed the action in 1981 to recover over $19.8 million, plus interest, representing the freight charges withheld by San Antonio between July .1980 and May 1981. The suit was held in abeyance, however, pending the outcome of the litigation in the D.C. Circuit and the Supreme Court.

Even after the Supreme Court had issued its opinion in Burlington Northern v. United States, San Antonio continued to oppose the reopening of the Texas suit. The city argued that some issues remained unresolved before the D.C. Circuit. On May 20, 1983, however, that circuit issued an order in which it found -that “there are no issues which require briefing and argument before this Court.” San Antonio v. United States, No. 78-2051, Order (May 20, 1983). Subsequently, the Texas District Court reactivated the collection action. Southern Pacific Transportation v. San Antonio, No. SA-81-CA-71, Memorandum Order (June 9, 1983).

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748 F.2d 266, 1984 U.S. App. LEXIS 16337, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-pacific-transportation-company-cross-appellees-v-san-antonio-ca5-1984.