Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_05-cv-00538/USCOURTS-azd-4_05-cv-00538-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: Civil Miscellaneous Case

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Fulfillment Services, Inc., 

Plaintiff, 

vs.

United Parcel Service, Inc.,

Defendant. 

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CV 05-538 TUC DCB

ORDER

For the reasons explained below, Defendants' Motion to Dismiss and Request for

Judicial Notice are granted.

The Complaint

Plaintiff, Fulfillment Services, Inc. (Fulfillment), filed this case as a class action on

September 7, 2005. The action has not yet been certified as a class action. Fed. R. Civ. P.23(c).

Fulfillment alleges that Defendant, United Parcel Service (UPS), violated 49 U.S.C. §

13703, a provision of the Motor Carrier Act that provides an exemption from antitrust laws for

certain collective activities.

In order to be free from antitrust laws which prohibit carriers from entering into

agreements with one another to bill the same amounts for the same services, carriers must

comply with the provisions for the exemption. The agreement may establish: "through routes

and joint rates; rates for the transportation of household goods; classifications; mileage guides;

rules; divisions; rate adjustments of general application based on industry average carrier costs

. . . ; or procedures for joint consideration, initiation, or establishment of matters described as

allowed in the agreement." 49 U.S.C. § 13703(a)(1). The agreement entered into by the

carriers may be submitted to the Surface Transportation Board for approval and may be

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approved by the board if the agreement is in the public interest. 49 U.S.C. § 13703(a)(2). If

approved by the board, it may be made and carried out under its terms and under the conditions

required by the Board, and the antitrust laws do not apply to the parties and other persons with

respect to making or carrying out the agreement. 49 U.S.C. § 13703(a)(6).

Subsection f provides: that motor carriers "whose routes, rates, classifications, mileage

guides, rules or packaging are determined or governed by publications established under

agreements approved under this section must participate in the determining or governing

publication for such provisions to apply." (emphasis added).

Plaintiff alleges that Defendant charged rates based upon collectively established

classifications without being a participant in the publication of those classifications. In other

words, UPS violated 49 U.S.C. § 13703(f).

Specifically, Fulfillment alleges that the National Motor Freight Classification (NMFC)

100 Series is the publication in which the participating motor carriers establish their

collectively-made freight classifications, which has operated under the antitrust immunity

provision of the statute since 1956. UPS introduced its Hundredweight Service in 1988, and

participated in the NMFC and used the published classification rating system. "Item 2000 of

UPS's General Tariff stated that 'Hundredweight Service may be selected by a shipper for a

shipment of freight classes 50-125.'" (Complaint at 4.) Fulfillment explains, "[a]ll commodities

moving by truck transportation have a 'classification rating' by the NMFC, ranging from class

50 through class 500. These ratings are based on the transportation characteristic of an article,

with density usually the primary transportation factor, class 50 being assigned to the heaviest

density commodities, such as lead ingots, and class 500 to the lightest density commodities,

such as ping pong balls." Id.

UPS terminated its participation in NMFC sometime in 2000, but allegedly continued

to refer its shippers to the NMFC classification for class ratings of their commodities to

determine if they qualified for the Hundredweight Service Rates. July 14, 2004, UPS removed

the reference to NMFC classes 50-125 from Item 2000 in its General Tariff.

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Fulfillment files the case as a class action on behalf of all shippers who moved freight

with UPS pursuant to Item 2000 of UPS's General Tariff from 2000 to 2004. Fulfillment asks

the Court to enter declaratory judgment that the UPS tariff became void when it withdrew from

participation in NMFC in 2000. Fulfillment argues that UPS was unjustly enriched by

collecting freight charges pursuant to the void tariff. Fulfillment seeks restitution or

disgorgement of UPS's unlawful gains of all amounts collected pursuant to the void tariff,

pursuant to 49 U.S.C. § 13103 (damages under the Motor Carrier Act are in addition to

remedies existing under another law or common law). (Complaint at Count I.)

Alternatively, Fulfillment seeks damages pursuant to 49 U.S.C. § 14704(a)(2) for the

difference between the freight charges due under UPS's last legally applicable rate prior to its

withdrawal from participation in the governing publication and the unauthorized freight rates

actually charged by UPS. (Complaint at Count II.)

49 U.S.C. § 14704(a)(2)

This Court's subject matter jurisdiction hinges on provisions in 49 U.S.C. § 14704(a) that

create a private cause of action for violations of the Interstate Commerce Act (ICA), Motor

Carrier provisions. Here, Fulfillment alleges the Defendant violated 49 U.S.C. § 13703(f). The

question is whether or not there is a private cause of action for such a violation .

The seminal case considering private causes of action pursuant to 49 U.S.C. §

14704(a)(2) is Owner-Operator Driver's Ass'n v. New Prime, Inc., 192 F.3d 778 (8th Cir.

1999). Owner-operators brought suit against motor carriers because the lease agreements used

by the motor carriers violated Truth-in-Leasing regulations. The court held that a private right

of action exists under 49 U.S.C. § 14704(a)(1) to bring a civil action for injunctive relief for

violations of sections of the Motor Carrier Act dealing specifically with motor carrier leasing,

and to sue for damages under § 14704(a)(2), which provides that a carrier is liable for damages

sustained by a person as a result of an act or omission of a carrier in violation of the Motor

Carrier Act. 

The 8th Circuit considered the ICC Termination Act of 1995 (ICCTA), which eliminated

the Interstate Commerce Commission (ICC) as the agency responsible for the comprehensive

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regulation and licensing of motor carriers. "Congress intended that the Termination Act

substantially deregulate rail and motor carrier transportation." Id. at 781. Congress expressly

addressed the administrative system provided by the ICC for dispute resolution. It did not

believe that the Department of Transportation (DOT) should allocate scarce resources to

resolving what are essentially private contract disputes and specifically directed that DOT

should not continue the dispute resolution functions established by the ICC. Id. (citing

H.R.Rep. No. 104-311, at 87-88 (1995), reprinted in 1995-2 U.S.C.C.A.N. 793, 799-800). 

The bill provided for private parties to bring actions in court to enforce provisions of the

Motor Carrier Act . . . to "permit these private, commercial disputes to be resolved the way that

all other commercial disputes are resolved--by the parties." Id. "Consistent with this

explanation, the Committee described § 14704 of the House Bill as 'provid[ing] for private

enforcement of the provisions of the Motor Carrier Act in court. This expands the current law

which only permits complaints brought under the Act to be brought before the ICC.'" Id. (citing

H.R.Rep. No. 104-311, at 120-121; 1995-2 U.S.C.C.A.N. at 832-33).

In New Prime, the owner-operators sought to enforce Truth-in Leasing regulations in

court, and the motor carriers argued for the prior regimen of exclusive administrative remedies.

The court held that the Secretary of the Federal Highway Administration (FHWA) did not have

exclusive jurisdiction to resolve private disputes over the Truth-in-Leasing regulations. Id. at

783 (comparing, 49 U.S.C. § 14701(b) (person may file a complaint with the Secretary or

Board about a violation by a carrier of this part) with 49 U.S.C. § 14704(a)(2) (a carrier is liable

for damages sustained by a person as a result of an act or omission of that carrier or broker)).

The court analyzed the same provisions of § 14704(a) at issue in this case and spoke

definitively. The first sentence in § 14704(a)(1) authorizes private suits to enforce FHWA

orders, not agency regulations. Id. at 783. The second sentence in section (a)(1) provides that

a private party "may bring a civil action for injunctive relief for violations of § 14102, motor

carrier leasing, and § 14103, loading agreements. Though this sentence refers only to statutory

violations, it must also include violations of implementing regulations because the statute

contains no mandates or prohibitions, but simply authorizes the Secretary to adopt leasing

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requirements. It would be impossible for a carrier to violate the statute other than by violating

rules or regulations promulgated under the statute. Id. at 784. The court allowed the owneroperators' claims for injunctive relief against the carriers for regulatory violations.

Important to the case before this Court, the eighth circuit appellate court also allowed

the owner-operators' damage claims pursuant to § 14704(a)(2), which provides that "[a] carrier

... is liable for damages sustained by a person as a result of an act or omission of that carrier ...

in violation of this part." The court explained that subsection (a)(2) is a separate part of §

14704(a). Id. at 784. Confessing "to being rather mystified by the inconsistent language used

in the Termination Act's various enforcement provisions . . .," the court, nevertheless, held that

"the most logical reading of the language of § 14704(a)(2) is that it authorizes private parties

to sue for damages for carrier conduct" in violation of the Motor Carrier Act. Id. "And that

interpretation is certainly reinforced by the legislative history of § 14704(a)(2)." Id. (referring

to H.R. Conf. Rep. No. 104-422 at 221-22, reprinted in 1995-2 U.S.C.C.A.N. at 906-07 (stating

that § 14704(a)(2) "provides for private enforcement of the provisions of the Motor Carrier Act

in court.... The ability to seek injunctive relief for motor carrier leasing ... violations is in

addition to and does not in any way preclude the right to bring civil actions for damages for

such violations.") "In construing this inconsistently drafted statute, it is appropriate to use its

legislative history to confirm the most plausible construction of a subsection's plain language."

Id. (citing Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 610 n. 4 (1991)).

The inconsistency noted by the eighth circuit court is between subsection 1, which

specifies a private right of action to sue for injunctive relief, and subsection 2, which only

provides for damages sustained by a person as a result of an action or omission of the carrier.

Nevertheless, the court concluded that 49 U.S.C. § 14704(a) authorizes both private actions for

injunctive relief and damages to remedy at least some violations of the Motor Carrier Act and

its implementing regulations. Id.

In a recent case, Rivas v. Rail Delivery Service, Inc., 423 F.3d 1079, 1083-1085 (9th Cir.

2005), the Ninth Circuit Court of Appeals accepted the reasoning of the eighth circuit in New

Prime, that the private right of action under § 14704(a) allows damage claims under subsection

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For example, in the filed-rate era, undercharge actions could be brought, usually by a trustee of

a bankrupt trucking company, to enforce a filed tariff rate that was higher than a rate agreed to and

charged by the trucking company. The courts refused to enforce the higher filed-tariff rate if the tariff

was void for some technicality like the one asserted by Plaintiff in this action. As an equitable exception

to the the filed rate doctrine, carriers were not allowed to enforce improperly filed (void) tariffs.

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(a)(2) and explained that this alters motor carriers' substantive rights by expanding the class of

plaintiffs eligible to bring claims against them and, therefore, § 14704(a) may not be applied

retroactively to agreements or conduct completed before the effective date of the ICCTA. Id.

Under § 14704(a)(2), Fulfillment has standing to bring a private cause of action against

UPS if it was damaged as a result of the challenged act or omission by UPS. Here, Fulfillment

challenges UPS's failure to participate in the NMFC publication in violation of 49 U.S.C. §

13703(f), which requires such participation in order to be excepted from anti-trust laws that

prohibit motor carriers from collectively establishing freight classifications and rates. The

Court must determine whether 49 U.S.C. § 14704(a)(2) provides a private cause of action to

seek damages related to UPS's alleged noncompliance with 49 U.S.C. § 13703(f): failure to

participate in the governing publication establishing the collective agreement classifications 50-

125.

Motion to Dismiss

UPS characterizes Fulfillment's case as a tariff challenge based on a "void for

nonparticipation" argument. UPS explains that the "void for nonparticipation rule" no longer

applies because Congress eliminated the requirement that motor carriers file their tariffs with

the ICC, and declared any and all filed tariffs null and void. 49 U.S.C. 13210(a)(4); TIRRA,

Pub. L. No. 103-311, 206(c), 212, 108 Stat. 1683, 1684, 1690, (effective August 26, 1994).

The "void for non participation rule" pertained to the "filed rate doctrine" which in the filed

tariff era forced consumers to pay the filed tariff rate, regardless of other agreements or

arrangements between the parties for lesser rates, unless the tariff was void for

nonparticipation.1

 Since deregulation, motor carriers are no longer required to file tariffs with

the government, tariffs are not subject to being declared void for irregularities as they were in

the tariff-era.

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This Court, like both parties, recognizes that "tariffs continue to be the standard industry

practice and the medium by which carriers publish their rates, classifications, rules and

practices." (Reply at 4 (citing Opposition at 11-12)). The fact that carriers label their contract

documents "'tariffs out of habit," Tempel Steel Corp. v. Landstar Inway, Inc. 211 F.3d 1029,

1030 (7th Cir. 2000), does not impart any special status nor make such contracts so labeled

subject to the limited statutory or regulatory tariff requirements. Tariffs must still be filed for

two transportation services not at issue in this case: transportation in noncontiguous domestic

trade and movement of household goods. 49 U.S.C. § 13702. It is undisputed that there was

no filing requirement for the UPS General Tariff at issue here. 

Consequently, within the context of deregulation, the term "void" means that 49 U.S.C.

§ 13703(f) "forbids" motor carriers to apply collectively established freight classifications

unless they participate in the governing publication for such classifications. (Objection at 1.)

It is undisputed that UPS did not participate in the NMFC publication for freight classifications

after 2000. Consequently, Plaintiff argues that UPS's General Tariff is void because Item 2000

improperly referenced the NMFC published freight classifications 50-125 from 2000 to 2004.

Without objection, the Court takes judicial notice of UPS's General Tariffs, effective

February 7, 2000, through July 12, 2004. The tariff documents reflect that in 2000, UPS

erroneously reported in Item 400 that NMFC was a governing publication and Item 2000

included reference to the challenged NMFC classifications 50-125. (Request for Judicial

Notice at Ex. A.) The UPS General Tariff, effective May 31, 2000, was the same. Id. at C.

UPS corrected the error in its General Tariff, effective June 21, 2000, by omitting the NMFC

as a governing publication in Item 400, but the reference to the NMFC classes 50-125 remained

in Item 2000 until UPS issued its General Tariff, effective January 5, 2004. Id. at D, E, G-H,

J-K, M.

Here, the challenged impropriety is an agreement made pursuant 49 U.S.C. § 13703.

49 U.S.C. § 13703

Beginning in 1941, the Department of Justice began questioning the cooperative

activities of the railroads carried on through rate bureaus until confusion, uncertainties and

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inconsistencies became matters of national concern. Atchison, Topeka & Santa Fe Ry. Co. v.

United States, 597 F.2d 593, 594 (7th Cir. 1979). "'Congress was faced with the duty of

harmonizing and reconciling the policy of the antitrust laws as applicable to common carriers

with the national transportation policy which seeks the maintenance of a transportation system

which provides service to the public with reasonable charges and without unjust discrimination

or unfair or destructive competitive practices. A large measure of cooperation and collective

action by and among common carriers is necessary if the national transportation (policy) is to

be effectuated and the public is to receive the kind of transportation service to which it is

entitled and if the rates are to be reasonable and nondiscriminatory.'" Id. (quoting Senate

Report, S.Rep.No. 94-499, 94th Cong., 1st Sess. 14 (1975), U.S.Code Cong. & Admin.News

1976, pp. 14, 28.)

In 1948, Congress added the Reed-Bulwinkle Act to the Interstate Commerce Act to

harmonize and reconcile the antitrust laws as applicable to common carriers, with the national

transportation policy so as to protect the public interest. Id. (quoting S. Rep. No. 44, 80th

Cong., 1st Sess. 3 (1947), see also H.Rep. No. 1100, 80th Cong., 1st Sess. 4 (1947), U.S. Code

Cong. Serv. 1948, p. 1844).

It is necessary to strictly construe immunity of collective rate-making activities from

antitrust laws and to consider the ways in which Congress has accommodated the sometimes

conflicting interests of the antitrust laws and the Interstate Commerce Act. Square D. Company

v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409, 411, 421 (1986) (citing Carnation Co.

v. Pacific Westbound Conference, 383 U.S. 213, 217-218 (1966) (exemptions from antitrust

laws are strictly construed and strongly disfavored)). So while joint setting of rates pursuant

to agreement is exempted from the antitrust laws, the statute strictly limits the exemption to

actions that conform to the terms of the agreement approved by the ICC. Id. at 414. The ICC's

approval, "in effect, establishe[s] the lawfulness of the [] rates. Id. at 416. "'What rates are

legal is determined by the Act to Regulate Commerce," id., which here is 49 U.S.C. § 13703.

Assuming UPS violated 49 U.S.C. § 13703(f) by referencing the NMFC classifications

without participating in the NMFC publication, UPS may not enforce collection of mileage

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Antitrust injury is made up of four elements: (1) unlawful conduct, (2) causing an injury to the

plaintiff, (3) that flows from that which makes the conduct unlawful, and (4) that is of the type the

antitrust laws were intended to prevent. Additionally, the injured party must be a participant in the same

market as the alleged malefactors, such as a consumer of the alleged violator's goods or services or a

competitor of the alleged violator in the restrained market. Id. (citations omitted).

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rates adopted pursuant to the collectively made agreement. 49 U.S.C. § 13703(f)(2)(A)

(participation in governing publication is required for enforcement action). UPS is not exempt

from antitrust law, 49 U.S.C. § 13703(f)(1)(B)(i) (provisions for antitrust exemptions do not

apply), and UPS may be prosecuted by the government, 15 U.S.C. § 9, or sued by an individual

for antitrust violations, 15 U.S.C. 15(a). 

The Clayton Act provides: "any person injured in his business or property by reason of

anything forbidden in the antitrust laws may sue therefore.” 15 U.S.C. § 15(a). This allows

private persons to sue for antitrust violations. Glen Holly Entertainment, Inc. v. Tektronix Inc.,

343 F.3d 1000, 1007 (9th Cir. 2003).

"Antitrust injury is defined not merely as injury caused by an antitrust violation, but

more restrictively as 'injury of the type the antitrust laws were intended to prevent and that

flows from that which makes defendants' acts unlawful.'" Id. at 1007-08 (quoting Brunswick

Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)). In other words, " . . . a plaintiff

must prove that his loss flows from an anticompetitive aspect of the defendant's behavior···· If

the injury flows from aspects of the defendant's conduct that are beneficial or neutral to

competition, there is no antitrust injury, even if the defendant's conduct is illegal per se." Id.

at 1008 (quoting Pool Water Products v. Olin Corp., 258 F.3d 1024, 1034 (9th Cir. 2001)

(citation and internal quotation marks omitted).2

Antitrust laws “were enacted for ‘the protection of competition, not competitors.’ ” Id.

1008 (quoting Cargill, Inc. v. Monfort of Colorado, 479 U.S. 104, 115 *1886) (quoting

Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477, 488 (1977) (quoting Brown Shoe Co. v.

United States, 370 U.S. 294, 320 (1962)). "The end sought [by the Sherman Act's prohibition

against unreasonable restraints of trade] was the prevention of restraints to free competition in

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business and commercial transactions which tended to restrict production, raise prices or

otherwise control the market to the detriment of purchasers or consumers of goods and services,

all of which had come to be regarded as a special form of public injury." Id. at 1009-1010 (Apex

Hosiery Co. v. Leader, 310 U.S. 469, 493 (1940) (emphasis in Glen Holly). "'[T]he central

purpose of the antitrust laws, state and federal, is to preserve competition. It is competition ···

that these statutes recognize as vital to the public interest.'" Id. at 1010 (quoting Knevelbaard

Dairies v. Kraft Foods, Inc., 232 F.3d 979, 988 (9th Cir.2000)). "'Every precedent in the field

makes clear that the interaction of competitive forces ··· is what will benefit consumers.'"

Congress struck a delicate balance when it adopted § 13703, excepting certain agreements

from antitrust liability. The agreement requirements contained in § 13703, including those

allegedly violated by the UPS, are not tariff filing requirements. They serve the purpose of the

statute, which is to provide an exemption from antitrust liability for agreements that comply with

the very specific provisions of the statute for securing such an exemption. Imposing further

liability, as Fulfillment suggests exists under § 14704(a)(2), goes beyond the narrow purpose of

§ 13703, constrains contractual freedom, and is contrary to the policies and principles behind

deregulation. This Court finds that liability under § 13703 does not extend beyond antitrust

violations. 

"Any carrier which is a party to an agreement under paragraph (1) is not, and may not be,

precluded from independently establishing its own rates, classification, and mileages or from

adopting and using a non-collectively made classification or mileage guide." 49 U.S.C. §

13703(a)(4).

The Surface Transportation Board has jurisdiction under § 13703(a)(5)(B) to investigate

any action taken pursuant to an agreement and to take such measures as may be necessary to

protect the public interest including issuing an order directing the parties to cease and desist or

to modify the action. The Board may bring a civil action to enforce the provisions of § 13703.

14702. The Board may review an agreement and change the conditions of approval or terminate

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it when necessary An action approving an agreement, denying, ending or changing an approval

has effect only as related to application of the antitrust laws. 49 U.S.C. § 13703(c). 

In § 14704, Congress limited under the first sentence of (a)(1) to enforcement of Board

Orders that are not for the payment of money, which includes any Order of the Board directed

at enforcement of § 13703(f) provisions like the one challenged here. The second sentence of

(a)(1) to injunctive relief for violations of § 14102 (leasing agreements) and § 14103 (loading

arrangements).

Subsection b limits liability for damages for exceeding tariff rates to the two classes of

tariffs that must still be filed with the government: tariffs required under § 13702 for household

goods and noncontiguous domestic trade. The Court notes that for such tariff violations, "a

carrier is liable for the amounts charged that exceed the applicable rate for transportation or

service contained in a tariff in effect." 49 U.S.C. § 14704(b). This is the same damage

calculation proposed by the Fulfillment: the difference between the freight charges due under

UPS's last legally applicable rate prior to the alleged violation of § 13703(f) as compared to the

unauthorized rate charged by UPS after the alleged violation: UPS stopped participating in the

NMFC publication.

Subsection (c) provisions for filing a complaint with the Board or for bringing a civil

action to recover damages exceeding a tariff rate are limited to subsection b.

The limitations in § 14704 would be pointless if the courts overrode them by interpreting

§ 14704(a)(2) to provide private causes of action for every kind of violation of the Motor Carrier

Act. Like the court in New Prime, this Court looks to the purpose of deregulation, which was

to provide a private forum to resolve what are essentially private contract disputes. New Prime,

192 F.3d at 781. This case does not involve such a dispute. Here, Fulfillment challenges the

legality of UPS's reference to a collective agreement.

The court rejects Fulfillment's argument that UPS's procedural error of failing to

participate in the NMFC governing publication subjects it to a claim for restitution damages for

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UPS's unjust enrichment or compensatory damages for Fulfillment's actual monetary loss. (49

U.S.C. § 13103; 49 U.S.C. § 14704(a)(2)).

As noted by the court in New Prime, 49 U.S.C. § 14704(a)(2) authorizes damages to

remedy at least some violations of the Motor Carrier Act, but this Court finds that it does not

provide a private cause of action for damages for every and any kind of violation of the Motor

Carrier Act. It does not provide a private cause of action for a violation of 49 U.S.C. § 13703(f).

Plaintiff cannot rely on 49 U.S.C. § 13103, which provides that "[e]xcept as provided in

this part, the remedies provided under this part are in addition to remedies existing under another

law or common law." This is a saving clause of preexisting rights under other laws or common

law. Pennsylvania R. Co. v. Sonman Shaft Coal Co., 242 U.S. 120, 123 91916) (purpose is to

preserve all existing rights not inconsistent with those which the ICA creates). It does not

provide a private right of action for Plaintiff to sue for damages resulting from alleged violations

of 49 U.S.C. § 13703(f).

The Court does not reach the merits of the other arguments raised by the Defendant in

its Motion to Dismiss.

Accordingly,

IT IS ORDERED that Defendant's Motion to Dismiss (document 18) is GRANTED.

IT IS FURTHER ORDERED that Defendant's Motion Requesting Judicial Notice in

Support of the Motion to Dismiss (document 19) is GRANTED.

IT IS FURTHER ORDERED that the Clerk of the Court shall enter Judgment

accordingly. 

DATED this 19th day of April, 2006.

Case 4:05-cv-00538-DCB Document 27 Filed 04/21/06 Page 12 of 12