Opinion ID: 21694
Heading Depth: 4
Heading Rank: 1

Heading: Same or Related Origins and Destinations.

Text: Section 20 of Contract 6018 provides: During the term of this Contract, Carriers shall provide Chevron with net rail contract rates that are equal or lower than net rates of competitors of Chevron with respect to the movement of same commodities [] from same or related origins to same or related destinations as included in addendums to this contract. In the event Chevron has reason to believe that a competitor has a lower net rate or minimum weight, then Chevron will notify carriers in writing and 22 request carriers to certify in writing that Chevron has the equivalent lower contract net rate. (emphasis added). As the district court stated below: “This term (same or related origins to same or related destinations) is significant in that it determines which of the thousands of shipments of plastic resins on the Railroads’ lines each year were to be compared to shipments by Chevron for the purpose of determining if Chevron received equivalent or lower net rates as provided in Section 20.” Thus, Chevron’s damages were contingent on the court’s interpretation of this provision. The more liberal the interpretation, the higher the recovery. Conversely, the more conservative or restrictive the interpretation, the lower the recovery for Chevron. The district court construed “related origins” and “related destinations” to mean points that are rail stations described in tariffs and that are related in the groups described in the National Rate Basis Tariff (the “NRBT”). For example, “origin A” and all points that take the same rates as “origin A” are “related origins.” Thus, “origin B” and all points that take the same rates as “origin B” are “related origins” that constitute another set of “related origins” different from “origin A.” In reaching this conclusion, the district court relied on expert testimony proffered by the Railroads. The district court also reviewed industry treatises and published Interstate Commerce Commission rulings interpreting similar terms. Chevron apparently argues that the same or related origins and destination language should be interpreted based on geography. Specifically, Chevron appears to argue that shipments of plastic resins in the “Gulf coast” region should be the geographic base to compare the rates that the Railroads charged Chevron’s competitors. Furthermore, Chevron asserts that if the parties intended 23 for the NRBT to govern the standards to determine same or related origins and destination, the parties would have expressly referred to the NRBT in the agreement. When interpreting an agreement, courts strive to give effect to the parties’ intent. Borders v. KRLB, Inc., 727 S.W.2d 357, 359 (Tex. App. – Amarillo 1987, writ ref’d n.r.e.). The parties intent is gleaned from the entire agreement, and thus Texas law requires us to “peruse the complete document to understand, harmonize, and effectuate all its provisions.” Questa Energy Corp. v. Vantage Point Energy, Inc., 887 S.W.2d 217, 221 (Tex. App.-- Amarillo 1994, writ denied). Our de novo review supports the district court’s conclusion. First, the term “same or related origins to same or related destination” does not on its face use geography as the mediating principle to determine which groups of origins or destinations are to be used to identify Section 20 violations. Furthermore, Chevron does not identify any provision or language in the agreement that states origins or destinations in the Gulf coast region shall exclusively be used to identify Section 20 violations. However, Section 24 of the Contract 6018 provides that: Shipments made under the provision of this Agreement are subject to AAR (American Association of Railroads) rules and other accepted practices within the industry as the same may be amended from time to time. Services and other matters not specifically addressed in this Agreement shall continue to be governed by and paid for under the rules, regulations, tariffs, and statutes as described above which would apply if the transportation service were provided under tariffs. (emphasis and parenthetical added). Thus, Section 24 expressly defers to industry standards and customs, and rules and regulations. The district court heard testimony from Chevron witnesses Rusty Radloff (“Radloff”) and Clifford Sayre (“Sayre”). Radloff was the principal contract negotiator for the Railroads. Sayre, who was called as an expert witness by the Railroads, was a former 24 transportation consultant and former vice president of DuPont’s materials, logistics and services, with responsibility for its transportation division. At the time of trial, Sayre had approximately 40 years in the plastics industry. Essentially, both Sayre and Radloff testified that the same or related origin and destination language had a specialized meaning in the industry. Sayre testified that the language as understood in the industry refers to rail stations described in tariffs and that are related in groups described in the NRBT. Radloff testified that “same or related origins” refers to groupings of various stations in published tariffs that take the same rate basis. Furthermore, as stated above, ICC rulings support the district court’s interpretation. See Hoerner Waldorf Corp. v. Union Pacific RR Co., 358 ICC 1, 10 (1977)(“the practice of grouping points of origin or destination and applying the same rate to all points with the group is a longstanding characteristic of the rate structure of the country.”); Docket 28300, Class Rate Investigation, 262 I.C.C. 447 (1945)(“Points other than key points in areas of the respective territories accorded key rates are embraced in congruous key points so as to compose logical and natural groupings”). The district court’s conclusion is also consistent with treatises co vering the subject matter. See Transportation and Logistic Dictionary, (1989)(“A number of points , the rates from which are made the same as or with relation to rates from other points in the same group”); Harry Bruce, Distribution and Transpiration Handbook, (1971)(“A group of points, the rates to which are made the same as or with relation to rates to other points in the group”). Although Chevron argues that the district court erred by relying on Radloff’s and Sayre’s testimony and the treatises, we have recognized that a trial court’s reliance on individuals experienced in a particular field for the purposes of obtaining explanation of the technical meaning of terms used in the industry is “prudent.” See Phillips Oil Co. v. O.C., Corp., 812 F.2d 265, 281 (5th Cir. 1987). 25 “In construing a specific contractual term, we must give consideration to the meaning attributed to that term in the industry.” Personal Preference Video, Inc. v. HBO, 986 F.2d 110, 114 (5th Cir. 1993). Additionally, we reject Chevron’s challenge to Sayre’s testimony under Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589-90, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), because Sayre’s credentials adduced at trial establish that he was qualified to render expert testimony. We will not upset a district court decision to rely on expert testimony absent a showing of abuse of discretion. See Moore v. Ashland Chemical Inc., 151 F.3d 269, 274 (5th Cir.1998) (en banc) (citing General Electric Co. v. Joiner, 522 U.S. 136, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997)). Chevron does not show that the district court abused its discretion. Therefore, based on our review of the agreement and the pertinent portions of the record, we agree with the district court’s interpretation of “same or related origins to same or related destinations.”6