On October 28, 1988, the court determined that the I.C.C. had primary jurisdiction to decide the validity of the tariff upon which plaintiffs' claim is based. The I.C.C. subsequently issued an order declaring that the disputed tariff constitutes an unreasonable practice under the Interstate Commerce Act. Now the parties, plaintiffs Delta Traffic Service ("Delta") and Campbell 66 Express, Inc. ("Campbell 66") and defendant The Mennen Company ("Mennen"), have filed cross-motions for summary judgment. The I.C.C. has intervened in support of defendant's motion. Plaintiffs request summary judgment on the grounds that the I.C.C. decision is arbitrary and capricious and that the filed rate doctrine applies; whereas defendant moves for summary judgment relying upon the I.C.C.'s determination that the rate in question was invalid.
This dispute concerns the effective rate for motor carrier services which Campbell 66 performed for Mennen in 1985 and early 1986. In 1980 Campbell 66 established a 35% discount on its motor carrier services. In 1985, the carrier filed a new rate which provided that in the event that a shipper submitted late payments, its discount would be forfeited. Although Campbell 66 accepted late payments at the discounted rate, the carrier and its auditor in bankruptcy, Delta Traffic Service, now seek payment for "undercharges" on services performed during the period. During the period at issue Campbell did not notify defendant of this loss-of-discount provision. Mennen paid the amount that Campbell billed at the time of shipments, and Campbell accepted payment without in any way indicating that these payments were deficient.
On October 28, 1989 the court granted Mennen's motion to stay this action and to allow the Interstate Commerce Commission to exercise its primary jurisdiction to determine the reasonableness of the disputed tariff. The court referred three issues to the Commission: first, whether the Campbell 66 loss-of-discount provision violates or is inconsistent with the Commission's rules or constitutes an unreasonable practice; second, whether Mennen was entitled to and received notice of the disputed loss-of-discount provision; and finally, whether the loss of discount on these shipments would result in unreasonable charges, rates or practices.
In a unanimous decision of August 28, 1989, the I.C.C. found for Mennen on two of these grounds:
that the loss-of-discount provision violated the credit rules in effect at the time [of the shipments] and that to apply it would constitute an unreasonable trade practice. [And that] had Campbell 66's loss-of-discount provision been permissible under the Commission's credit regulations at the time, Campbell 66 would have been in violation of 49 C.F.R. 1320.3.
The Mennen Co. v. Campbell 66 Express, Inc. and Delta Traffic Service, Inc., No. MC-C-30135, at 6 (August 28, 1989) [hereinafter " I.C.C. Decision "]. The Commission reasoned that "it necessarily follows that the loss of discounts on the involved shipments would result in an unreasonable practice." Id. at 7. Therefore, because of these two findings, the I.C.C. declined to reach the issue of whether the resulting rates and charges are substantively unreasonable. Id.
The Commission found the following facts, which are essentially unchallenged by the parties:
In April of 1984 Campbell published a 35 percent discount covering the Mennen shipments which are the subject of this dispute. (Tariff ICC CAML 635, I.C.C. Record, at 90, 92). The published discount was not conditioned on prompt payment of bills. Mennen participated in this program. On July 22, 1985, Campbell published an amended tariff which added to the discount provision the condition: "Discounts will apply only on shipments when payment of freight charges is made within the credit period as defined by the Interstate Commerce Commission." (Tariff I.C.C. CAML 635-A, I.C.C. Record, at 97). The credit period is defined by the Commission as 15 days. I. C.C. Decision, at 2. This tariff was in effect until Campbell 66 filed for bankruptcy on April 14, 1986.
Mennen continued to participate in the 35% discount program until Campbell 66 filed for bankruptcy. Plaintiffs allege that Mennen made late payments of its credit bills during the period from July 1985 until April 1986. However, Campbell 66 accepted defendant's payments without complaint during the period. Furthermore, the Commission found that during this period, "[Mennen] received neither any notices of late payments nor any claims or invoices based on the . . . loss-of-discount note [tariff 635-A]." I.C.C. Decision, at 2.
When Campbell 66 filed for bankruptcy in April of 1986, it hired Delta to conduct an audit of Campbell's freight bills. That audit concluded that Mennen had underpaid freight charges by $ 24,769. In December of 1986, Mennen began receiving undercharge claims alleging that it had forfeited discounts with Campbell by failing to comply with the Commission's 15-day credit period. Plaintiffs made undercharge claims against Mennen for 501 shipments in the amount of $ 24,769. Mennen refused payment, and this suit followed.
Congress has granted the Commission exclusive authority to establish rules governing the extension of credit by carrier to shippers. 49 U.S.C. § 10743. The I.C.C.'s organic statute, the Interstate Commerce Act, contains a very broad grant of authority, and places few limits on the power of the Commission to determine the reasonableness of covered rates and practices.
Under the APA, a court may set aside a final agency determination only if it is "arbitrary, capricious, or not in accordance with the law." 5 U.S.C. sec. 706(2)(A).
Under this narrow scope of review, the court may not substitute its judgment for that of the Commission where the Commission's decisions are supported by adequate findings. Illinois Central Ry. v. Norfolk & W. Ry., 385 U.S. 57, 69, 17 L. Ed. 2d 162, 87 S. Ct. 255 (1966). However, the Commission must examine data relevant to its decision and articulate "a rational connection between the facts found and the choice made." Motor Vehicle Manufacturers Assn. v. State Farm Mutual Automobile Ins. Co., 463 U.S. 29, 43, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983). Plaintiffs have failed to demonstrate an inadequate basis for the I.C.C.'s decision.
Requirement of Notice
The Commission found that Campbell 66 did not notify Mennen that it had published an amended tariff eliminating the 35% discount when payment was not made within the 15 day credit period. The record supports that finding. (See Statement of Randy Miller, I.C.C. Record, at 10). Indeed, plaintiffs do not dispute this. Instead they argue, as they did before the Commission, that publication of the tariff combined with notice that Mennen's bills would be delinquent if not paid within fifteen calendar days satisfied the I.C.C. rules. (Defendant's Br., at 7).
The I.C.C. determined that Campbell's means of notice violated 49 C.F.R. 1320.3(c). That subsection provides:
Bills or accompanying written notices shall state credit time limits and service charge and discount terms. When credit is extended, freight bills or a separate written notice accompanying a freight bill or a group of freight bills presented at one time shall state the time limit by which payment must be made and any applicable service charge and discount terms.