INF, Ltd., a freight carrier, sued Spectro Alloys Corp., a metal products manufacturer, to collect the difference between the rate quoted by INF and the higher applicable tariff rate filed with the Interstate Commerce Commission. Spectro now appeals from an adverse summary judgment in which the district court held that, under the “filed rate doctrine,” Spectro’s reliance on the quotation of a tariff by INF did not excuse Spectro from paying the applicable tariff rate. The district court had referred to the ICC the question of whether INF would be engaging in an unreasonable practice in requiring Spectro to pay the difference between the rate INF charged and the filed tariff rate. By a three-two vote, the ICC held that INF’s collection of undercharges would be an unreasonable practice in violation of 49 U.S.C. § 10701. The district court held that under 49 U.S.C. § 10761, Spectro must pay and INF must collect the applicable rate оn file with the ICC, regardless of the ICC’s determination that such a practice is unreasonable.
In 1983, INF solicited business from Spectro to transport Spectro’s goods. Although INF knew that the commodities it was to ship for Spectro were aluminum and aluminum alloy, INF quoted and Spectro agreed to pay a rate based upon the “iron and steel” tariff that INF had filed with the ICC. During 1983 and 1984, INF made 124 shipments for Spectro, for which Spec-tro paid this iron and steel rate. In Dеcember, 1984, INF’s parent corporation filed for reorganization under Chapter 11 of the Bankruptcy Code. Auditors appointed by the bankruptcy court concluded that INF had improperly charged Spectro with the iron and steel rate instead of the “freight, all kinds rate.” According to the auditors, Spectro was undercharged by $22,460.70.
INF brought this action seeking payment of the under charges. Upon Spectro’s motion, the district court referred the case to the ICC to determine whether INF’s demand for payment of the alleged undercharges constituted an “unreasonable practice” under 49 U.S.C. § 10701.
In a three-two vote, the ICC determined that the iron and steel rate applied by the parties in the transaction occurred as a result of negotiations between the parties; INF solicited Spectro’s business and quoted what it believed to be competitive rates, and Spectro accepted and paid the quoted ratе. The ICC also found that Spectro reasonably relied on INF’s rate quotation. Relying on its decision in National Indus. Transp. League —Petition to Institute Rulemaking on Negotiated Motor Common Carrier Rates, Ex Parte No. MC-177, 3 I.C.C.2d. 99 (1986), (hereafter Negotiated Rates), which held that the ICC could consider equitable defenses to determine if the collection of undercharges is a reasonable practice, the ICC concluded that it would be an unreasonable practice to require Spectro to pay the difference between the appropriate tariff rate (the freight, all kinds rate) and the iron and steel rate. Two commissioners dissented, arguing that the Negotiated Rates policy did not apply to this situation as the case involved the application of an incorrect published rate, not a negotiated unpublished rate.
On motion by both parties for summary judgment, the district court held that Spec-tro was not excused from paying the full amount of the applicable freight, all kinds rate. The court reasoned that it was bound by the “filed rate doctrine,” an interpretation of 49 U.S.C. § 10761 which mandates that carriers collect the rate published in their tariffs. Recognizing that the ICC could nevertheless evaluate equitable considerations in determining whether a carrier’s rate or practice was reasonable, the district court held that it did not hаve the power to consider such equitable defenses. Thus, the district court determined that it could not follow the ICC decision because it was required to adhere strictly to the filed rate doctrine.
We first confront the issue of whether the question presented here — whether
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INF’s practice of assessing and rebilling Spectro for the filed tariff rate constituted an unreasonable practice—was properly within the primary jurisdiction of the ICC. INF contends that the issue was not within the ICC’s primary jurisdiction as it is a question of law and within the competency of the judiciary. INF claims that the ICC decision constituted only an advisory opinion not binding on the district court. In its order referring the issue to the ICC, the district court cited
Seaboard Sys. R.R., Inc. v. United States,
In
Maislin Indus. & U. S., Inc. v. Primary Steel, Inc.,
We next decide whether the district court erred in enforcing the filed rate doctrine, disregarding the ICC decision which held that requiring Spectro to pay the difference between the applicable filed rate and the iron and steel rate would be unreasonable under 49 U.S.C. § 10701. While the district court, citing
Negotiated Rates,
recognized that the ICC has the power to consider equitable defenses and to declare a billing practice unreasonable, it held that it must strictly apply the filed rate doctrine and disallow Spectra’s equitable defense, despite the ICC’s decision. The court relied on
Louisville & Nashville R.R. Co. v. Maxwell,
Again, we rely on
Maislin,
where we held that the filed rate doctrine does not bar the ICC from applying equitable defenses to detеrmine whether the collection of undercharges is an unreasonable practice in violation of 49 U.S.C. § 10701.
Although the district court recognized that the Eleventh Circuit had affirmed an ICC decision which held that the collection of undercharges was unreasonable,
see Seaboard,
INF argues that the question in this case, whether the filed rate doctrine bars equitable defenses, is one of law, and therefore contеnds that the district court correctly rejected the ICC’s decision without determining that it was arbitrary, capricious or unsupported by substantial evidence.
See Consolo v. Federal Maritime Comm’n,
The ICC’s factual finding that the rate charged was negotiated and its ultimate determination that the practice of collecting undercharges is unreasonable may not bе set aside unless the ICC’s findings are arbitrary, capricious, or unsupported by substantial evidence. The district court did not reach this issue because INF, in arguing that the issue presented was purely legal, did not assert such an argument, nor does it do so in this appeal. The district court’s opinion may be read as accepting INF’s position that the wire and steel tariff was misquoted and misapplied to aluminum products. In doing so, the court appears to ignore the finding of the ICC that there was a negotiated rate. It failed, however, to use the only proper legal basis for rejecting an ICC finding, namely, that it was arbitrary, capricious or unsupрorted by substantial evidence.
See Erickson Transp.,
The district court stated that even if it were allowed to depart frоm the filed rate doctrine such a departure should not be premised on a “closely divided administrative decision in this fluctuating area of law.” We differ with the district court’s conclusion. Administrative bodies as well as appellate courts may resolve controversies by a one vote margin. 3 In such instances, the majоrity decision controls. As we read the dissenting opinions, both commissioners take issue with the majority’s factual finding that there was a negotiated rate and that Spectro reasonably relied on the rate, and then argue that Negotiated Rates was not intended to be applied so broadly as to cover the misquotation of a tаriff rate. We believe, however, that because the dissenting commissioners in essence base their argument on factual findings of the majority with which they differ, the district court should have considered and applied the majority findings unless it rejected them as arbitrary, capricious, or unsupported by substantial evidence.
In sum, we conclude that the district court erred in holding that because it was bound by the filed rate doctrine, it could not adopt the ICC’s decision. Accordingly, as no issue was raised other than this legal question we have decided adversely to INF, we reverse the district court’s order granting summary judgment in favor of INF and remand the casе to the district court with instructions to grant Spectro’s motion for summary judgment.
Notes
. While this case was pending, the ICC issued an opinion in
Petition to Institute Rulemaking on Negotiated Motor Common Carrier Rates, Ex Parte MC-177,
. The ICC order recited the facts concerning the negotiation as follows:
The evidence here discloses that INF’s president solicited the traffic and quoted what he knew to be a competitive rate for the traffic. Spectro accepted and paid for the transpоrtation services at the quoted rates. Spectro-relied on INF to implement properly the quoted rates. INF’s failure to do so, despite Spec-tro’s lack of vigilance, should, in these circumstances, preclude INF’s later collection of undercharges. There is absolutely no evidence that Spectro agreed to pay any more than the amount INF originally quoted and billed for each shipment. There is no evidence that INF ever demanded additional amounts over the amounts it billed at any time during its business relationship with Spectro. The carrier's president at the time of the negotiations and transportаtion clearly states that the traffic could not have moved competitively under the freight all kinds rates. We find that Spectro reasonably believed that the amounts quoted and billed by INF were the correct total charges for the transportation services it performed, that the amounts were reached as the result of negotiations between Spectro and INF, and that, since full payment was made by Spectro, INF is equitably entitled to collect no more.
3.Summary. The evidence here shows that INF’s president, Mr. Freese, quoted rates to Spectro in order to induce it to tender the aluminum traffic and Spectro agrеed to tender its aluminum shipments at those rates. Spectro, moreover, reasonably relied on Mr. Freese and his quotation in view of the fact that he was the firm’s top management official. It would be inequitable to ignore proven rate negotiations and Spectro’s reasonable reliance on thе assurances of INF’s president simply because inflexible adherence to the "filed rate doctrine” would suggest otherwise. In light of our conclusion that negotiated rates existed, we find that it would be an unreasonable practice now to require Spectro to pay undercharges for the difference bеtween the negotiated rates and the tariff rates.
. News sources report that the United States Supreme Court decided from 31 to 34 cases on a five-four basis in the term just ended, depending on which newspaper article is read. We need not make our own count of the decisions, but it is evident that a substantial percentage of cases are so decided and that this does not detract from their finality.