CSX Transportation Co. v. Novolog Bucks CountyCSX Transportation Co. v. Novolog Bucks County
OPINION
This appeal concerns the liability of entities such as warehousemen, pier operators, transloaders, and connecting carriers for demurrage charges, ie., penalties assessed by railroads when shippers or recipients of freight do not timely return railcars to service after loading or unloading. The railroad in this case sought to assess de-murrage charges against a transloader for delays in returning both inbound and outbound railcars to service. With respect to inbound freight, the transloader received loaded railcars on behalf of steel companies or others and forwarded the steel by ship toward mostly foreign destinations; with respect to outbound freight, it ordered empty railcars, which it then loaded with steel for transportation by the railroad to domestic destinations. The trans-loader objected to the assessment, arguing that it could not be subjected to charges under an agreement — namely, the transportation contract — to which it was not a party.
We hold that the consignee-agent provision of the Interstate Commerce Commission Termination Act,
With respect to the transloader’s potential liability for demurrage charges in its role as the shipper (consignor) of freight, we refrain from announcing a holding because the question was not fully addressed or briefed, but we will vacate the District Court’s grant of judgment on this claim as well and remand it for further consideration in light of our holding regarding consignee liability.
Finally, we hold that the District Court did not abuse its discretion when it refused to refer an issue to the Surface Transportation Board (STB), where the party moving for referral did not invoke the doctrine of primary jurisdiction until after the District Court had already decided the issue and the question was not one on which the expertise of the STB was not crucial to the decision.
I. Factual and Procedural Background
The parties in this litigation are businesses engaged in the interstate transportation of freight. CSX Transportation, Inc. (“CSX”) is a rail common carrier; Novolog Bucks County (“Novolog”) is a private port with access to a rail-served industrial facility on the Delaware River.
As relevant here, the Novolog port functioned as a transfer point for the import, export, and domestic transportation of steel. Following instructions from various steel companies, CSX delivered to Novolog railcars loaded with steel, which Novolog unloaded and transferred onto other means of transportation. In addition, when Novolog so requested, CSX placed empty railcars at Novolog’s disposal for loading with imported steel and transportation to domestic destinations. Novolog did not have an ownership interest in any
According to CSX’s Tariff, a person receiving its railcars for unloading, or ordering empty railcars for loading, had two days to do so and return the cars to service; if the cars were kept beyond this time, demurrage charges would be assessed. 1 In particular, CSX’s Tariff Item 8070-G provided that “[ujnless otherwise advised [,] consignor at origin or consignee at destination will be responsible for the payment of demurrage rates.”
During the early part of 2003, fluctuations in the price of steel caused a significant increase in the amount of steel delivered for export to the Novolog facility. As a result, Novolog was unable to perform loading and unloading operations within the two-day time frame established by the Tariff, and CSX began charging Novolog demurrage fees, which totaled $260,304 by August, 2003. Novolog refused to pay, arguing it was not liable for demurrage since it was not a party to the bills of lading or other contracts regarding the shipments at issue and had no responsibility for or control over the volume of rail-cars that entered its facility. 2 CSX then brought this action in the Eastern District of Pennsylvania seeking payment of the demurrage charges, with interest, and attorney fees. It argued that Novolog was liable under the tariff because it was listed in the bills of lading either as the sole consignee for the freight (where the charges arose from unloading delays) or as the shipper (where the charges arose from loading delays). 3
After discovery the parties filed cross-motions for summary judgment. CSX submitted documents appearing to show that in each of the instances for which CSX assessed demurrage charges against Novolog for delays in unloading, Novolog was listed as the sole consignee on the waybills, without any limiting designations such as “care of’ or “account of,” and in each of the instances for which CSX assessed demurrage charges against Novo-log for loading delays, Novolog was listed as the shipper on the waybills.
4
In addi
Novolog contested the admissibility of the documents presented by CSX and argued they were not actual bills of lading. It also submitted the deposition of David Reid, the CEO of Novolog during the relevant period, who testified that Novolog had not given permission to be listed as consignee for the freight in the railcars at issue and had not created or executed any of the bills of lading for the shipments that resulted in demurrage charges.
On May 24, 2006, the District Court denied both parties’ summary judgment motions regarding the demurrage dispute. The court rejected CSX’s theory that No-volog became subject to liability by accepting freight as the named consignee on the bills of lading or by ordering cars as the named shipper; it therefore declined to resolve the evidentiary issues or to make a finding of fact as to whether Novolog was indeed named as the consignee or as the shipper in the bills of lading.
See CSX Transp. v. Novolog Bucks County,
No. 04-CV-4018,
Following the issuance of the opinion denying the cross-motions for summary judgment, CSX filed an admission that “other than Novolog being the named consignee on bills of lading, and Novolog having accepted delivery of the loaded cars by CSX, CSX had no separate contractual relationship with Novolog governing the movement and/or disposition of the detained rail cars.” As a result the District Court entered judgment as a matter of law in favor of Novolog on July 12, 2006.
CSX then filed a motion for reconsideration and an alternative motion for referral to the STB. The District Court denied the motion for reconsideration as untimely and denied the motion for referral “because [its] memorandum and order of May 24, 2006[was] not tantamount to an attack upon the reasonableness of the tariff terms.” CSX filed this timely appeal.
II. Discussion
A. Jurisdiction
We have jurisdiction of this appeal from a final order of the District Court under
Although the subject matter jurisdiction of the District Court is not in question, before we turn to the merits we must address CSX’s contention that the District Court, in rendering its decision, usurped the primary jurisdiction of the STB. CSX urges that in holding that it could not exact demurrage charges from parties such as Novolog, the District Court implicitly declared its tariff unreasonable, a determination reserved statutorily to the STB.
See
The District Court refused to refer the matter to the STB on the grounds that its decision did not amount to a finding that CSX’s rates were unreasonable. On appeal, CSX argues that although the District Court’s opinion may not have expressly held CSX’s demurrage tariff unreasonable, it nonetheless “gutted it and rendered it ineffective.” Novolog responds that CSX’s motion for conditional referral was untimely because it was filed beyond the time limit provided for motions for reconsideration and that in any event it lacks substantive merit. A district court’s decision not to submit an issue for initial determination by an administrative agency is reviewed for abuse of discretion.
Puerto Rico Mar. Shipping Auth. v. Valley Freight Sys.,
Primary jurisdiction “applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body....”
United States v. W. Pac. R.R. Co.,
No coordination would be achieved by requiring a District Court, after it has rendered a judgment, to vacate that judgment upon motion and refer a question it has already decided to an agency. CSX could have filed a petition for declaratory action with the STB once it became clear that Novolog was contesting the charges or could have raised the issue of primary jurisdiction at any time during the preliminary phases of the litigation. Instead it chose to wait until judgment had been entered, and then requested a second bite at the apple. In addition, the STB’s expertise, while helpful, would not have been crucial to the determination of the issues here, which involve the analysis of precedent and statutory interpretation. We therefore hold that the District Court did not abuse its discretion in denying CSX’s motion for conditional referral to the STB. 5
The most important and vigorously argued issue in this case is whether a transloader or connecting carrier such as Novolog can become subject to liability for demurrage charges by being listed as the consignee in a bill of lading and accepting delivery of the freight listed therein, even if it does not have a beneficial interest in the freight and has not authorized the shipper or the carrier to list it as the consignee. The District Court held, as a matter of law, that it cannot. We review its judgment
de novo. A.W. v. Jersey City Public Schools,
The District Court held, first, that whether or not Novolog was in fact listed as the sole consignee in the bills of lading, that unauthorized and unilateral designation was not sufficient to make it a legal consignee for purposes of imposing demur-rage liability.
CSX,
We hold that recipients of freight who are named as consignees on bills of lading are subject to liability for demur-rage charges arising after they accept delivery unless they act as agents of another and comply with the notification procedures established in ICCTA’s consignee-agent liability provision,
We take as our starting point two well-established and oft-repeated principles. The first is that liability for freight charges, including demurrage charges, may be imposed against a consignor, consignee, or owner of the property, or on others by statute, contract, or prevailing custom.
Illinois Cent. R.R. Co. v. South Tec Dev. Warehouse,
Historically the principle governing the liability of parties named as consignees in the bill of lading was a simple one of notice. In general “a consignee as such under a straight bill of lading [was] liable [because] treated as presumptive owner and compelled to pay.”
In re Tidewater Coal Exch.,
These common law principles are reflected in ICCTA’s consignee-agent liability provision, titled “Liability for payment of rates,” which provides in relevant part:
Liability for payment of rates for transportation for a shipment of property by a shipper or consignor to a consignee other than the shipper or consignor, is determined under this subsection when the transportation is provided by a rail carrier under this part. When the shipper or consignor instructs the rail carrier transporting the property to deliver it to a consignee that is an agent only, not having beneficial title to the property, the consignee is liable for rates billed at the time of delivery for which the consignee is otherwise liable, but not for additional rates that may be found to be due after delivery if the consignee gives written notice to the delivering carrier before delivery of the property—
(A) of the agency and absence of beneficial title; and
(B) of the name and address of the beneficial owner of the property if it is reconsigned or diverted to a place other than the place specified in the original bill of lading.
This section appears designed to address precisely the case before us, namely, the situation where a carrier assesses charges after delivery against the named consignee and recipient of the freight, but the consignee/recipient contests its liability for the charges on the grounds that it is a mere middleman. Building on the common law, it adopts the principle that the named consignee becomes a party to the transportation contract upon receipt of the freight and is thereafter liable for all rele
Novolog, however, disputes that this section is applicable to this case. It argues, first, that
First, we need not stray far to discover what the provision means by “rates for transportation,” since the statute itself contains a definition section. As used in ICCTA, “ ‘transportation’ includes”:
(A) a locomotive, car, vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, by rail, regardless of ownership or an agreement concerning use; and
(B) services related to that movement, including receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, and interchange of passengers and property....
Although to our knowledge no court has spoken directly to the applicability of
Having determined that ICCTA’s consignee-agent notification provision applies to the assessment of demurrage charges, we must decide whether it automatically applies to entities that are named as consignees on the bills of lading or whether more is required to turn such entities into “legal consignees” subject to it.
Novolog argues that the shipper’s or carrier’s unilateral decision to designate Novolog as the consignee, without Novo-log’s permission and where Novolog is not the ultimate consignee of the freight, cannot establish its status as a consignee for purposes of demurrage liability under the statute or otherwise. We disagree for three reasons. First, nothing in the statutory language suggests that it intends to restrict the term “consignee” to the ultimate consignee of the freight or use it to mean anything other than the person to whom the bill of lading authorized delivery and who accepts that delivery. Second, to hold that the documented designation of an entity as a consignee and that entity’s acceptance of the freight is insufficient to hold it presumptively liable for demurrage charges would frustrate the plain intent of the statute, which is to establish clear, easily enforceable rules for liability. And third, to the extent that Novolog’s suggests that it would be inequitable to treat the named consignee as presumptively liable, that argument is unpersuasive. 10
As always, the starting point for interpreting a statute is the language of the statute itself.
Hallstrom v. Tillamook County,
The statutory language also fails to support the contention that an entity can be considered a consignee for demur-rage purposes only when it has consented to the designation in the bill of lading. Indeed, the statute envisages specifically the situation where
“the shipper or consignor
instructs the rail carrier transporting the property to deliver it to a consignee that is an agent only,”
To hold, as Novolog asks us to do, that the designation in the relevant bills of lading should not be given effect without some further evidence of consent or involvement would also frustrate the plain intent of
Railway demurrage charges have “from the start been inseparably coupled with the car supply question.” Harleigh H. Hartman,
Law and Theory of Railway Demurrage Charges
9 (1928). Their most important purpose is to encourage the prompt return of freight cars to service so as to guarantee the steady flow of rail freight.
See Pennsylvania R.R. Co. v. Kittaning Iron & Steel Mfg. Co.,
For demurrage charges to fulfill their purpose of ensuring the smooth functioning of the rail freight system by creating disincentives against delays, railways must be able to assess them effectively and without being mired in disputes.
Finally, although Novolog suggests that it would be inequitable to allow a carrier’s or shipper’s unilateral choice of designation to make it party to the transportation contract, no unfairness results from applying the statute’s plain language. Under the statutory scheme, the named consignee can avoid liability in two ways: first, by refusing the freight (which Novolog concedes it could have done); and second, by providing the carrier timely written notice of agency under
For these reasons we decline to follow the Court of Appeals for the Seventh Circuit’s recent conclusion in a similar case that the entity listed as the consignee on the relevant bills of lading was not, without more, the legal consignee under
The District Court held that South Tec was liable for the demurrage charges because it had failed to comply with the notification requirements of
In remanding, the Court of Appeals did not strictly rule out the possibility that South Tec might in fact qualify as a consignee under the statutory provision, but it intimated that, without more, the facts then in the record made it unlikely. It held that “being listed by third parties as a consignee on some bills of lading is not alone enough to [become] a legal consignee liable for demurrage charges, although it, coupled with other factors, might be enough to render South Tec a consignee.”
South Tec,
In our view the
South Tec
court’s approach frustrates the statute’s intent in two ways. First, in contrast to the statute’s clear rule,
South Tec
envisages a “designation-plus” analysis under which the entity named as the consignee on the bill of lading would be presumptively liable for demurrage only if “other factors” were present. Under such a regime, railroads would be forced to second-guess their bills of lading and perform indeterminate weighing tests before deciding who is to be charged. And second,
South Tec
suggests that consignees must satisfy the notification requirements of
In addition to relying on
South Tec,
Novolog seeks to support its position that it cannot be considered a consignee under the statute (or otherwise) by citing to decisions outside the narrow context of the interpretation of
On the question whether such a designation is sufficient to make the transloader a consignee potentially liable for charges, however, the existing precedent is considerably less clear.
Our decision in
Union Pacific R.R. Co. v. Ametek, Inc.,
Middle Atlantic Conference
is of no more comfort to Novolog. The court there held that a certain tariff unilaterally expanding the definition of “consignee” to include any person to whom the bill of lading instructed the carrier to deliver the shipment, but specifically explained that the tariff was invalid because it attempted to impose liability on a party who was not a party to the transportation contract,
“i.e.,
a person
not named in the bills of lading as consignor or consignee.” Middle Atl. Conference,
The “longstanding law” invoked by No-volog for the proposition that a transloader cannot be considered a consignee for de-murrage purposes where it has not executed the bill of lading that names it as the consignee is, in fact, limited to three federal district court cases.
See CSX Transp., Inc. v. Port Erie Plastics, Inc.,
No. 05-139 Erie,
For these reasons we hold that an entity named on a bill of lading as the sole consignee, without any designations clearly indicating any other role, is presumptively liable for demurrage fees on the shipment to which that bill of lading refers, but may avoid liability, if it is an agent, by following the notification provisions of
C. Liability for demurrage charges of a named shipper or consignor
The final issue in this case is whether CSX may assess demurrage charges against Novolog as the consignor for the instances in which Novolog ordered empty railcars, which it then loaded with freight for CSX to transport to a domestic destination. CSX seeks to assess demurrage under Item 8070(G) of its tariff, which provides that “[ujnless otherwise advised, in WRITING, that another party is willing to accept responsibility for demurrage, consignor at origin or consignee at destination will be responsible for the payment of demurrage charges” (emphasis in original).
During the summary judgment proceedings, CSX introduced disputed evidence that Novolog appeared as the consignor on a number of bills of lading for such shipments. The District Court, however, made no findings of fact related to Novo-log’s consignor status and did not discuss this issue separately in its opinion. Nor did the parties fully brief this issue on appeal.
Although consignor liability is not regulated by
III. Conclusion
For the reasons stated above, we will vacate the District Court’s order granting judgment as a matter of law in favor of Novolog and we will remand this case to the District Court for further proceedings consistent with this opinion.
Notes
.Demurrage is “a charge exacted by a carrier from a shipper or consignee on
account of
a failure to load or unload cars within the specified time prescribed by the applicable tariffs. Railroads charge shippers and receivers of freight ‘demurrage’ fees if the shippers or receivers detain freight cars on the rails beyond a designated number of days.”
Union Pacific Railroad Co.
v.
Ametek, Inc.,
Under prior statutory regimes, railroads’ tariffs, including tariffs regarding demurrage charges, had to be filed with the Interstate Commerce Commission (ICC). After the enactment of the Interstaté Commerce Commission Termination Act (ICCTA) in 1996, the Interstate Commerce Commission was replaced with the Surface Transportation Board (STB) and filing of tariffs was no longer required. CSX’s Tariff 8100 is published by CSX on its web site and specifically incorporated into all its transportation agreements.
. A
bill of lading is ‘‘the basic transportation contract between the shipper-consignor and the carrier; its terms and conditions bind the shipper and all connecting carriers.” S.
Pacific Transp. Co. v. Commercial Metals Co.,
. Novolog filed a counterclaim, on which it eventually prevailed at trial. The counterclaim has no relevance to the issues before us.
. A waybill is a “[w]ritten document made out by [the] carrier listing point of origin and destination, consignor and consignee, and describing goods included in shipment....”
Black’s Law Dictionary
1429 (5th ed.1979). According to the Sixth Circuit Court of Appeals, “the bill of lading is a title document, while the waybill describes the freight, its route, and the carriers involved in its shipment. The waybill accompanies the freight throughout the shipment and into the hands
. Our opinion in
MCI Telecomms. v. Teleconcepts,
. As mentioned, the District Court initially held that a genuine issue of material fact remained as to whether a separate contract between Novolog and CSX, known in the litigation as the Refund Contract, constituted a contractual agreement regarding the railcars that could subject Novolog to liability for de-murrage charges. That issue was subsequently resolved by CSX’s admission that it did not. With the last issue of material fact eliminated, the District Court then granted judgment as a matter of law for Novolog.
. The status of owners is somewhat more complex and not relevant here since the parties agree that Novolog did not have a beneficial interest in the cargo. See, e.g., Wheaton Van Lines, Inc. v. Gahagan, 669 A.2d 745, 749 (Me.1996) ("consignee" defined to include "an owner of shipped goods who is identified to the carrier as the intended recipient of the goods, who does in fact accept the goods not as an agent but for itself, and who in every way but designation on a bill of lading acts as a consignee.”)
. There is no substantive difference between the terms “transportation charges" and "rates for transportation” in the statute.
See
Historical and Revision Notes to
. In 1981, the Court of Appeals for the Seventh Circuit interpreted a predecessor of our current
We also note that our opinion in
Baltimore & Ohio Chicago Terminal R.R. Co. v. United States,
. It goes without saying that Novolog's lack of ownership of the freight is immaterial, since the provision is specifically directed at consignees “not having beneficial title to the property.”
. Again, we agree with the
Middle Atlantic Conference
court’s analysis of a substantially identical provision in the part of the statute dealing with motor carriers. The court wrote that Section 223 of the Interstate Commerce Act,
is addressed essentially at the problem of ihe warehouseman, carrier, etc., who, while acting as agent for an undisclosed principal, appears as consignee on the bill of lading. ... [W]ith respect to "transportation charges” (which may include detention charges), the statute provides that a consignee might escape that obligation if certain conditions of notice are satisfied.
Middle Atl. Conference,
Although we do not rely on them for primary guidance, we also note that both the Uniform Commercial Code and the Federal Bills of Lading Act define "consignee” in a manner consistent with our interpretation.
See
U.C.C. § 7-102(3) (“ ‘Consignee’ means a person named in a bill of lading to which or to whose order the bill promises delivery”);
. The alleged bills of lading in this case designate Novolog as the sole consignee, without any indication that it is an agent. If the bills of lading already contain a designation such as "care of,” however, the agency relationship is considered disclosed and the consignee-agent is not subject to liability for demurrage charges. See R. Franklin Unger, Trustee of the Ind. Hi-Rail Corp., debtor— Petition for Declaratory Order — Assessment and Collection of Demurrage of Switching Charges, STB Docket No. 42030, 2000 STB Lexis 333, n. 13 ("demurrage and detention charges ... do not apply to agents acting for the principal parties to the transportation [if] the agency relationship [is] disclosed”; if the "waybills contain ... language that would clearly establish or refer to an agency relationship,” the agency relationship is considered disclosed.)
. It is unclear from the opinion whether the railroad sought to assess demurrage charges on all the shipments or only on those in which South Tec was named as the sole consignee.
. Novolog also urges us to consider
Evans Prods. Co. v. Interstate Commerce Comm’n,