Court Opinion

ID: 9472039
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:47:37.160591+00
Date Added: 2024-06-11T17:42:42.708516
License: Public Domain

POSNER, Circuit Judge, dissenting.
If a trucking company is classified as a common carrier under the Interstate Commerce Act, it must charge, for the same service, the same rates to all customers, 49 U.S.C. § 10741(a); it cannot give a discount to some of them. But this irksome restriction does not apply if the trucker can get itself classified as a “contract carrier” with respect to those customers to whom it would like to offer a discount. In order to be classified as a contract carrier, however, it must show either that it means to assign particular trucks to those customers, which is not proposed in the present case, or that its service will be “designed to meet the distinct needs of each” customer. 49 U.S.C. § 10102(14)(B)(ii); see, e.g., Interna*1270tional Detective Service, Inc. v. ICC, 595 F.2d 862, 865-66 (D.C.Cir.1979). The enforcement of this requirement is essential to the integrity of the Act’s common carrier provisions; nonenforcement would allow trucking companies to offer discounts to preferred customers on any basis and for any reason they pleased, simply by applying to the ICC for contract authority and describing their deal with those customers as contract rather than common carriage. Of course the integrity of the Interstate Commerce Act may not be worth preserving. Society might well be better off allowing the prices for truck transportation to be determined by the free market, regulated only by the antitrust laws. But that is a judgment for Congress to make; and although the majority opinion is correct that Congress in recent years has loosened the Interstate Commerce Commission’s grip over the trucking industry, it has not yet discarded the requirement that truckers who want to give discounts to particular customers rather than across the board show that they are serving the distinct needs, of those customers. See H.R.Rep. No. 1069, 96th Cong., 2d Sess. 22 (1980), U.S.Code Cong. & Admin.News 1980, p. 2283. But, if one may judge from the present case, the Commission has decided to complete the deregulation of the carriage of household goods on its own, by no longer requiring moving companies to show any distinct customer needs as a condition of being allowed to operate as motor contract carriers.
The A. Arnold & Son Storage and Transfer Company sought authority to provide contract carrier service to three large corporations that pay their executives’ moving expenses when the executives are transferred from one corporate office to another. These corporations are already customers for Arnold’s common carrier services, with which they generally are well pleased. Unlike many other moving companies, which assign one crew to load the truck and another to unload it at its destination, Arnold uses one crew throughout, and apparently this results in faster and more reliable service. The corporations submitted in support of Arnold’s application for contract carrier authority statements that assert their need for this distinctive service, and the application itself contains a commitment to provide it.
It is important to firms that have offices scattered around the country and that rotate executives among them to be able to move the executives’ household goods with a minimum of the hassle so often encountered in dealing with moving companies; it is sufficiently important that the Commission could justifiably conclude that such firms have a need for the superior quality of service offered by Arnold that is distinct from the needs of others who use moving companies. The problem is that Arnold is already offering the same service, to the same customers, under its common carrier tariffs. The statements that the three corporate customers submitted in support of Arnold’s application for contract carrier authority are, word for word, the same statements that those customers submitted in support of Arnold’s application for common carrier authority, except that in connection with the present application they added, incorrectly, that Arnold proposes to dedicate particular trucks to serving them. (Arnold’s application disavows any such proposal.) The application itself contains the very commitments (for example: “We will make a commitment to providing the same crew to pack, load, haul, unpack, and unload the shipments”) on the basis of which Arnold obtained common carrier authority to serve these customers, see A. Arnold & Son Transfer & Storage Co., Inc. Extension — Household Goods 12 States, No. MC-34631 (Sub-No. 6F), initial decision at p. 2 (ICC Feb. 10, 1981), but describes them as different. However, if there are any real differences apart from the discount that Arnold proposes to offer, the Commission, as we shall see, has not identified them.
Why would Arnold, having obtained authority to provide on a common carrier basis the high-quality moving service that these large corporate customers demand, also desire authority to provide the identi*1271cal service on a contract carrier basis? There is only one possible reason, and that is to allow Arnold to give a discount to some customers but not others. Its application states: “One of the first differences [between Arnold’s proposed contract carrier service and its existing common carrier service] is that we will be much more competitive in our [contract carriage] rates that [than?] we have [been] with these shippers. It is our intent at the present time that our rates for these shippers will be approximately 10% lower than our rates charged as a common carrier.” The paradox to be explained is why “the highest caliber of service” should be cheaper than regular service. It could be — there might be more than offsetting economies from dealing with these customers. But since it is entirely unclear how or whether Arnold’s “highest caliber of service” differs from the regular service that it has been providing these and other customers under its one-crew concept, probably the “highest caliber of service” is not cheaper; probably it is the identical service merely being priced lower as a concession to particular customers. It is pretty obvious who these customers are and are not. Customers who do not have a good alternative to using Arnold will pay the higher common carriage rates; those who do have good alternatives — those who can make a credible threat to patronize another moving company — will pay the lower contract carriage rates. In other words Arnold wants to practice price discrimination. The charging of different prices for the same service to different customers depending on the customers’ alternatives (in economic terminology, on the different elasticities of demand of different customers) is a form of price discrimination. And it is a form of price discrimination that the common carrier provisions of the Interstate Commerce Act are designed to prevent, Western Transportation Co. v. Wilson & Co., 682 F.2d 1227, 1230-31 (7th Cir.1982), and that, therefore, until those provisions are rescinded, the contract carrier provisions of the Act must not be interpreted to allow.
The Commission’s decision approving Arnold’s application for contract carrier authority dismisses unthinkingly the issue I have just identified; in fact, it is the most perfunctory and least persuasive administrative decision that I have read since joining this court. The decision describes the application as one to provide a service featuring “guaranteed pick-up and delivery times and other special services not provided in common carrier tariffs.” The small error in this statement is the remark that Arnold proposes guaranteed pick-up and delivery times; it does not; it says only that it “will guarantee that shippers will receive the highest caliber of service from our company ...,” which is not the same thing (compare 49 U.S.C. § 10734(b)(1)), if indeed it is anything at all. (At another point the application states that Arnold’s dispatcher “will be authorized to provide to the account that type of on-time pick-ups and on-time deliveries that is so important to the transfer of these personnel” (emphasis added).) The big error is the suggestion that the proposed services are not provided in common carrier tariffs; they are— in Arnold’s common carrier tariffs. Elsewhere the Commission’s decision states that the grant of contract carrier authority is based on Arnold’s proposal of “services (such as guaranteed pick-up and delivery times) designed to meet the specialized transportation requirements of the shippers” and of “a specialized transportation service for the supporting shippers at lower rates designed to fit the length of their purses.” The three passages I have quoted constitute the Commission’s entire discussion relevant to the question of distinct needs. They add up to nothing.
Obviously, lower rates alone cannot justify contract carrier status. See, e.g., Liberty Transfer Co., Inc. Extension — Specified Points, 105 M.C.C. 437, 440-41 (1967). True, there is a suggestion in ICC v. J-T Transport Co., 368 U.S. 81, 92-93, 82 S.Ct. 204, 211, 7 L.Ed.2d 147 (1961), that if a shipper cannot afford to pay common carrier rates this by itself might create a “distinct need” for lower contract carrier rates, but there is no indication that Arnold’s *1272large corporate customers are too strapped to pay the common carrier rates for the service they are getting, though naturally they would like to pay less and may take their business elsewhere if Arnold will not charge them less. The factors emphasized in International Detective Service, Inc. v. ICC, 613 F.2d 1067, 1075-76 (D.C.Cir.1979), are also absent. If a lower rate is not enough by itself in these circumstances to establish a distinct need for contract carrier service, then a lower rate combined with a service offering identical to what the applicant is providing to the same class of shippers under its common carrier tariffs cannot be enough either; it is just a discount from the tariffed rate. There is as I have suggested only one reason why Arnold wants to provide the same service to the same group of customers at different rates; it wants to discriminate in price among these customers. The Commission must know this, but evidently it does not care, because it wants to get on with the great work of deregulating the trucking industry. This is nice, but lawless.
I hope I will not be misunderstood as arguing that Arnold may not limit to particular customers its commitment to provide one-crew service. Of course it may. But it does not want to limit its service to particular customers. It is happy to offer the service to all comers under common carrier tariffs; it just wants to be able to offer it at lower prices to select customers, which it may not do until and unless Congress deregulates trucking. Global Van Lines, Inc. v. ICC, 704 F.2d 829, modified, 709 F.2d 11 (5th Cir.1983), is not in point; there is no indication that the applicant in that case was already offering the same services between the same points to the same class of customers under its common carrier tariffs. Fully in point, however, are the remarks of the Sixth Circuit in reviewing another motor carrier decision of the ICC. “It is evident from the facts in the record that there is no substantial evidence to support the conclusions drawn by the ICC ____ It is also troubling that the ICC failed to address points of error which were clearly not frivolous and which the protestants urged with vigor____ With the basis for [the Commission’s] conclusions not clearly articulated, the reviewing court must be left with the suspicion that the decision was made for a reason not stated in the record: solely for the purpose of increasing competition in the area in disregard of other policies articulated by Congress.” Argo-Collier Truck Lines Corp. v. United States, 611 F.2d 149, 155 (6th Cir.1979).