Transway Corp. v. Hawaiian Express Service, Inc.

679 F.2d 1328
CourtCourt of Appeals for the Ninth Circuit
DecidedJune 24, 1982
DocketNos. 80-4379, 80-4489 and 80-4492
StatusPublished
Cited by4 cases

This text of 679 F.2d 1328 (Transway Corp. v. Hawaiian Express Service, Inc.) 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
Transway Corp. v. Hawaiian Express Service, Inc., 679 F.2d 1328 (9th Cir. 1982).

Opinion

NORRIS, Circuit Judge:

The issue raised by this appeal is whether state regulation of transfer, collection and delivery services provided by a Hawaiian motor carrier to an interstate freight forwarder is preempted by the Interstate Commerce Act. We hold that it is and affirm the judgment of the district court.

I

Plaintiff-appellant Transway Corporation (“Transway”) is a Hawaiian motor carrier that holds a certificate of public convenience and necessity from the Public Utilities Commission, State of Hawaii (“PUC”) and files tariffs with the PUC. Defendantappellee Hawaiian Express Service, Inc. (“Hawaiian Express”) is an interstate freight forwarder1 doing business in the Califomia-Hawaii trade.

In 1971, Transway contracted to provide break-bulk and delivery service for Hawai[1330]*1330ian Express within the City and County of Honolulu (which encompasses the entire island of Oahu). The contract provided for payment at rates below those required by the applicable tariff on file with the PUC. Transway provided service at the contract rates for several years, then filed this action against Hawaiian Express for the difference between the contract rates and the minimum tariff rates.2 The PUC intervened as a plaintiff, asserting its jurisdiction to regulate the services provided by Transway to Hawaiian Express.

Acting on cross-motions, the district court granted summary judgment for Hawaiian Express3 on the ground that PUC regulation of the services provided by Transway is preempted by Part IV of the Interstate Commerce Act (“Act”), 49 U.S.C. §§ 1001-1022 (1976).4

II

Motor carriers are regulated by Part II of the Act, 49 U.S.C. §§ 301-327 (1976). Section 204(a)(4a) of the Act, 49 U.S.C. § 304(a)(4a) (1976), authorizes the Interstate Commerce Commission (“Commission”) to exempt from the provisions of “this chapter [referring to Part II],” a class of motor carriers operating solely within a single state, if such exemption will not substantially affect uniform regulation of interstate commerce. Pursuant to that section, and in light of Hawaii’s unique geographic characteristics, the Commission has granted an exemption to “all qualified motor carriers in Hawaii.” Motor Carrier Operation in the State of Hawaii (ex parte 59), 84 M.C.C. 5, 32 (1960). The PUC regulates exempt Hawaiian motor carriers.

Freight forwarders are regulated by Part IV of the Act, 49 U.S.C. §§ 1001-1022 (1976). Transfer, collection and delivery services within terminal areas, provided by motor carriers to freight forwarders, are also regulated by Part IV. 49 U.S.C. § 302(c)(2) (1976). Accordingly, such motor carrier services are expressly removed from coverage by Part II of the Act. Id.

Ill

Transway and PUC argue that the § 204(a)(4a) exemption granted by the Commission to qualified Hawaiian motor carriers in Ex parte 59 precludes Commission regulation of those carriers under any part of the Act.5 We disagree. The contention is inconsistent with the statutory scheme, the language of Ex parte 59, and the policies of the Act.

Section 204(a)(4a) authorizes the Commission only to grant exemptions from the provisions of “this chapter” (emphasis added) — i.e. Part II. See 49 U.S.C. 301 (1976) (“This chapter [8] may be cited as part II of the Interstate Commerce Act.”). It follows that an exemption granted pursuant to that [1331]*1331section is not an exemption from Part IV, which is a separate chapter (chapter 13) of the Act. See 49 U.S.C. § 1001 (1976) (“This chapter [13] may be cited as part IV of the Interstate Commerce Act.”). By the express terms of the Act, terminal area services to freight forwarders are regulated under Part IV, not Part II; thus, the § 204(a)(4a) exemption granted in Ex parte 59 is inapplicable to Transway’s terminal area services.

The language and reasoning of Ex parte 59 support this construction of the statute. First, in citing the relevant portions of § 204(a)(4a), the Commission noted in brackets that the provision for exemption from “compliance with ... this part” refers to Part II of the Act. 84 M.C.C. at 30. More importantly, in granting the § 204(a)(4a) exemption to Hawaiian carriers, the Commission reasoned that the exemption is justified because regulation of local Hawaiian carriers would amount to “unwarranted Federal regulation of a stub ended, essentially local, operation for no useful purpose.” 84 M.C.C. at 31. That rationale is wholly inapplicable to federal regulation of terminal area services provided to interstate freight forwarders. Those services, although provided within a local area, are merely one link in an interstate freight-forwarding system, see 49 U.S.C. § 302(c)(2); as such, they directly affect interstate commerce, and cannot plausibly be characterized as essentially “local” and “stub ended.” We are thus persuaded that the Commission in Ex parte 59 contemplated only an exemption from Part II of the Act.

Finally, we note that in enacting Part IV Congress intended “to authorize the I.C.C. to prescribe terms and conditions allowing local Part II motor carriers to charge freight forwarders less for consolidation and distribution pickup service than the motor carriers charged the shipping public generally ..., and thus enable freight forwarders to secure the profit margin necessary to support their assembly and break-bulk services ... [and] to provide a coordinated nation-wide service.” Hawaiian Express Service v. Pacific Hawaiian Terminals, 492 F.2d 865, 868 (9th Cir. 1974). Exempting Hawaiian motor carriers from Part IV of the Act would directly contravene this congressional policy; we find no evidence that the Commission intended to do so in Ex parte 59.

Transway’s reliance on Hawaiian Express Service v. Pacific Hawaiian Terminals, and IML Sea Transit v. United States, 343 F.Supp. 32, 37-38 (N.D.Cal), aff’d, 409 U.S. 1002, 93 S.Ct. 433, 34 L.Ed.2d 295 (1972) is misplaced. Both cases, in dicta, cite Ex parte 59 broadly for the proposition that the Commission therein exempted Hawaiian motor carriers from “the Act.” In each case, however, the question before the court was whether local Hawaiian carriers were covered by Part II of the Act. 492 F.2d at 867; 343 F.Supp. at 34-35.

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679 F.2d 1328, Counsel Stack Legal Research, https://law.counselstack.com/opinion/transway-corp-v-hawaiian-express-service-inc-ca9-1982.