Opinion ID: 423647
Heading Depth: 1
Heading Rank: 4

Heading: dod

Text: 19 Three days short of the Staggers Act rate challenge deadline, on March 27, 1981, the Department of Defense (DOD) filed a complaint for reparations (damages) against Seaboard Coast Line Railroad (Seaboard). 8 The complaint alleged that Seaboard, as delivering carrier, participated with other carriers in the movement of DOD ammunition and explosive shipments to the Military Ocean Terminal, Sunny Point, N.C., that [Seaboard] and other participating railroads had market dominance within the meaning of [49 U.S.C. § 10709], 9 and that the rates complained against exceeded a reasonable level by more than $4 million. Joint Appendix (J.A.) 6-9. 10 20 Seaboard moved to dismiss asserting principally that it lacked market dominance over the traffic involved. J.A. 43-53. In a short section of its motion, J.A. 46-47, Seaboard urged that the complaint should also be dismissed for violation of the ICC's joinder of defendants rule, 49 C.F.R. § 1100.25(c) (1981) (set out supra pp. 1159-1160), since none of the other carriers participating in the several joint-line rates DOD challenged had been made defendants. 11 The bulk of Seaboard's presentation, however, dealt with procedures Seaboard recommended to the Commission for hearing and deciding the threshold market dominance question. 21 Seaboard claimed in its motion that there was no need for discovery by [DOD] prior to the filing of its market dominance evidence; Seaboard stated in explanation that, under the relevant provision of the Staggers Act, 49 U.S.C. § 10709(d)(3), detailed costing of the movements in question was not required and DOD could use Rail Form A costs which were readily available to any complainant. J.A. 50 n. [230 U.S.App.D.C. 97] 5. 12 In conclusion, Seaboard repeated that its motion to dismiss and recommended procedural schedule were designed to direct the Commission's inquiry to the threshold market dominance determination as a preliminary matter. J.A. 52. 13 22 As it turned out, the Commission never embarked on the inquiry contemplated in Seaboard's recommended procedural schedule. In a terse order, the Administrative Law Judge (ALJ), on November 4, 1981, granted the motion to dismiss, J.A. 64; he stated as the sole reason for his action DOD's failure to name all necessary parties. Apart from quotation of the Commission's joinder of defendants rule, the ALJ cited only one authority in support of his disposition: Mayo Shell Corp. v. Chicago, Rock Island & Pacific Railroad, 293 I.C.C. 243 (1954). 23 DOD appealed, urging immediate reversal because Mayo Shell, far from supporting dismissal of the complaint, was prime authority for its retention. J.A. 68. In that decision, the ICC distinguished between a future rate prescription case and a reparations claim. The Commission, in Mayo Shell, stated the general rule that all carriers should be joined when a future rate prescription is sought, but added that failure to name all participating carriers is not a bar to consideration of a reparation claim, ... [it suffices that] one of the carriers participating in the through haul is a defendant. 293 I.C.C. at 246. 24 Upon receipt of a copy of DOD's appeal, the ALJ, on his own motion, vacated his November 4, 1981, order and immediately issued another one. The ALJ's second order, dated November 17, 1981, deleted the reference to Mayo Shell and acknowledged that Rule 25(c) appears to limit 'participating' carriers merely to those 'against which an order is sought.'  This appearance, the ALJ then declared, is not ... controlling. He stated, without elaboration, that [f]ailure to name as defendants all railroad carriers participating in a through movement under a through rate virtually would render market dominance a meaningless concept. J.A. 71. 14 In this corrected order, the ALJ also noted the ICC's decision in Columbian Chemicals Co., supra; the ALJ failed to observe, however, that the ICC, in Columbian Chemicals Co., left the original complaint standing despite the Commission's refusal to permit joinder, after the Staggers Act deadline date, of additional joint-rate participants. 25 DOD appealed the ALJ's second order, asserting that proof of collective market dominance could be adduced, as even Seaboard's motion indicated it could, without naming the originating and intermediate carriers on the routings in question. DOD further argued that, whatever shifts in position the ICC had arrived at after the Staggers Act rate challenge deadline, it would make[ ] no sense to dismiss complaints for failing to adhere to rules which were not issued until after the Complaint was filed. J.A. 78. 26 Division 1 of the Commission, in an order served May 10, 1982, denied DOD's appeals. J.A. 90. In explanation of its disposition, Division 1 supplied only an unadorned citation to the Commission's decision in Ford Motor, served April 19, 1982, which retroactively overruled Mayo Shell to the extent that Mayo Shell sanctioned reparations complaints against fewer than all joint-rate carriers. DOD then sought full Commission [230 U.S.App.D.C. 98] review; DOD pointed out once more that its complaint complied with published Commission rules and precedent extant on the date of filing, and it requested an opportunity to adduce costing evidence adequate to show collective market dominance. 27 The full Commission divided 3-3; that vote left Division 1's decision as the Commission's final judgment. J.A. 104. Commissioner Sterrett, joined by two other Commissioners, set out his reasons for concurring in the result. J.A. 105-11. His statement does not qualify as a Commission opinion; in the record on this petition for review, however, it is the only attempt at full articulation of reasons for the dismissal of DOD's complaint. 15 28 According to Commissioner Sterrett, nothing new occurred in the disposition of DOD's challenge. When the 4-R Act introduced the market dominance concept, Commissioner Sterrett sought to explain, the joinder requirement in reparations proceedings changed. True, the Commission never said so explicitly prior to its April 1982 Ford Motor decision; it did not amend its joinder rule, nor did the statute speak directly to the point. Nonetheless, DOD's reliance on Mayo Shell was unreasonable, Commissioner Sterrett thought, because [t]hat case was decided before the market dominance provisions were enacted, and is automatically overruled by statute. J.A. 108. 29 Commissioner Sterrett believed that ever since 1976 the Commission has held the opinion that a carrier-specific [market dominance] finding [is] necessary for each joint-line party to a rate, J.A. 108, and that [i]t is simply impossible, when all participants to a joint movement are not made defendants, to make the requisite jurisdictional finding that each involved carrier has market dominance for its portion of the movement. J.A. 107. The statute, Commissioner Sterrett said, although silent on [the joinder] point, made the necessity of a finding of market dominance against each carrier clear. J.A. 106 n. 3. 30 Commissioner Sterrett acknowledged that the Commission had not rigidly adhered to the all participating carriers must be named defendants position in NITCOM, supra, and in Columbian Chemicals Co., supra. NITCOM, Commissioner Sterrett said, was limited to joint rates involving Canadian carriers, J.A. 109; Columbian Chemicals Co. did not squarely present the issue, he ventured, because [n]o defendant asked for dismissal of the entire proceeding, and [i]t may be that ... complainant had joined sufficient carriers [8 out of 12] to permit a market dominance finding for a particular routing(s). J.A. 110 & n. 6. 16 31 Chairman Taylor, in dissent, said [t]he question here is one of fairness. J.A. 112. It would be inequitable, he believed, to foreclose[ ] DOD's right ever to obtain a hearing to seek reparations of the allegedly unlawful charges based on the combined effect of the ICC's 1982 decision in Ford Motor retroactively overruling Mayo Shell, and the Commission's refusal (announced in Columbian Chemicals Co., served Sept. 10, 1981) to allow joinder of additional parties after the March 30, 1981, complaint cutoff date. J.A. 112. Chairman Taylor thought the Commission's joinder rule might be interpreted to require joinder of all participating carriers in all complaint cases. J.A. 113. Prior to Ford Motor, however, the Commission had never published an interpretation to that effect. Moreover, Chairman Taylor found recent statutory and decisional changes less clear than did Commissioner Sterrett: [T]hey do not explicitly and ineluctably require the joinder of all parties in a reparations complaint; the [230 U.S.App.D.C. 99] Staggers Act savings provision only requires that the complainant allege market dominance to file its complaint; the Commission had pointed out in NITCOM that a market dominance determination is simply more difficult, but not impossible, to make in the absence of all participating carriers. J.A. 113-14 (emphasis in original). 32 Chairman Taylor acknowledged that to obtain the most accurate cost and revenue data possible ..., all carriers participating in a joint rate should be joined in the complaint. J.A. 114 n. 1. He agreed with the Commission's reasoning to that effect in Ford Motor. But he would apply Ford Motor in reparations proceedings only prospectively, so that affected persons would have notice and an opportunity to comply. It was fundamentally unfair, he concluded, to dismiss DOD's complaint despite its compliance with the governing regulations and the relevant case law existing at the time of filing. J.A. 114-15. The Commission, he believed, had precluded DOD not because of any legislative direction, and not because DOD failed to observe published ICC positions; rather the result was reached in the interest of administrative convenience, because it is more difficult, but not impossible, for the ICC to grapple with market dominance when only one joint rate participant is a named defendant. J.A. 114-15.
33 The ICC asks us (1) to decide whether the market dominance provisions of the 4-R Act require joinder of all participating railroads in a complaint for damages, and (2) to bypass the procedural entanglements and adornments on which DOD focuses. Brief for the ICC in DOD at 14, 16. Addressing the first request, we conclude that the Commission confuses administrative action authorized by the 4-R and Staggers Acts with action the legislation commands. As to the matter on which DOD focuses, we agree with Chairman Taylor: the critical question in this case is not the tenor of permissible long-term regulation, it is the fairness of the ICC's approach to complaints filed under the pressure of the Staggers Act rate challenge deadline. 34 The 4-R Act supplies a definition of market dominance 17 and provides one relevant command: [N]o rate shall be found to be unjust or unreasonable ... unless the Commission has first found that the proponent carrier has market dominance over such service. 49 U.S.C. § 1(5)(b) (1976). 18 The 4-R Act, in this context, does not mention joint rates or party joinder, nor does the Staggers Act. Indeed, the Commission concedes as much. See Brief for the ICC in DOD at 13. The ICC acknowledges too that [t]he legislative history of the 4-R Act does not disclose whether Congress thought about the specific question of who must be joined in a complaint concerning a joint rate. Id. at 18 n. 13. The same is true, so far as we can tell, of the Staggers Act legislative history. 35 Like Chairman Taylor, we find nothing in the 1976 and 1980 legislation that ineluctably require[s] the joinder of all parties in a reparations complaint. J.A. 113-14. Nor do we believe that such a requirement must be implied in order to equip the ICC to determine market dominance. As the Commission's own precedent suggests, it may well be more onerous, but it is not impossible, for the ICC to resolve a market dominance issue in a joint-rate case in the absence of all participating carriers. See J.A. 114; NITCOM, supra; cf. Columbian Chemicals Co., supra. 19 36 While we do not read into the spaces Congress left a command that the ICC require joinder of all participating railroads in a complaint for damages, 20 we do not [230 U.S.App.D.C. 100] doubt the Commission's authority to shape a sensible party joinder rule to facilitate market dominance determinations. In fact, there is no dispute on this point. DOD does not question the ICC's authority to overrule Mayo Shell [which stated it sufficed in reparations cases challenging joint rates to name only one carrier] ... and to establish a new [joinder of defendants] rule for future cases. Brief for the Petitioner in DOD at 13 (emphasis in original). 21 37 As our account of the proceedings before the Commission indicates, DOD did not have the benefit, prior to the complaint-filing deadline, of any announcement from the Commission that, on pain of dismissal and permanent preclusion, a joint-rate reparations complaint must join all carriers. 22 Lacking fair notice, DOD reasonably could not be expected to conform its complaint to the requirement the Commission ultimately stated. The peremptory dismissal of DOD's rate challenge, we believe, fully warrants the description, arbitrary and capricious administrative action. See e.g., Hatch v. Federal Energy Regulatory Commission, 654 F.2d 825, 835 (D.C.Cir.1981) (agency must accord parties notice and meaningful opportunity to meet new standard); Greyhound Corp. v. ICC, 551 F.2d 414, 416 (D.C.Cir.1977) (This court emphatically requires that administrative agencies adhere to their own precedents or explain any deviations from them.). See generally K. DAVIS, ADMINISTRATIVE LAW TREATISE § 17.07 (Supp.1982). 23 38 We note here a concern heightened at oral argument in this case. The ICC emphasized that its insistence on joinder of all participating carriers is intended to insure that the Commission, before ruling on market dominance, will have before it the most accurate cost and revenue data possible. See J.A. 109 n. 5, 110, 114 n. 1; Brief for Intervenor in DOD at 18-19. But we are not confident that the ICC, even today, has securely resolved what a collective market dominance finding entails and, specifically, whether, as Commissioner Sterrett stated, the requisite jurisdictional finding [is] that each involved carrier has market dominance for its portion of the movement. J.A. 107. 39 Asked at argument whether Commissioner Sterrett's statement accurately reflects [230 U.S.App.D.C. 101] the ICC's view, counsel for the ICC responded ambiguously. Initially, he said: 40 [Y]ou really can't do it that way, you can't make that kind of a finding, and the statute requires that the movement itself be market dominant, not any individual segment of the movement. After further colloquy, counsel ventured: 41 [Commissioner Sterrett] did not really say [that it is necessary to find that each involved carrier had market dominance for its particular portion of the movement]. He said that you have to make a finding that the movement itself is market dominant and he said you also have to make a finding that each carrier is market dominant. 42 Counsel for DOD expressed uncertainty, which the court shares: 43 At one point the ICC says in its brief [at p. 18], collective market dominance. ... That's what must be shown. Commissioner Sterrett's [statement], at [J.A.] 107, talks about segmenting out each carrier, showing for each carrier that portion of the route which they [sic] carried and showing market dominance with respect to each part. 44 .... [F]rom the ICC we don't know what is right. 45 It may be that the Commission has a clear position, and that the problem is one of communicating it intelligibly. In any event, for the benefit of the public it serves, the ICC should attempt to restate, cogently, the ingredients of the collective determination it will make, how it will combine those ingredients, and the approach it will take hereafter to joinder of parties. 24 46 In the case at hand, because it is too late under ICC precedent to join additional defendants, we hold, in agreement with Chairman Taylor, only this: the dismissal of DOD's complaint was an abuse of discretion; the complaint should be reinstated; guided by its proceedings in NITCOM, the Commission should afford DOD an opportunity to prove its allegation that [Seaboard] and other participating railroads had market dominance within the meaning of [49 U.S.C. § 10709]. J.A. 8.