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10/26/84 National Classification v. United States of America

October 26, 1984






Petition for Review of an Order of the Interstate Commerce Commission.


Wald, Bork, and Starr, Circuit Judges. Opinion for the Court filed by Circuit Judge Bork.


Petitioners National Classification Committee and National Motor Freight Traffic Association, Inc. appeal from an order of the Interstate Commerce Commission interpreting an agreement made pursuant to former section 5a of the Interstate Commerce Act, recodified as amended at 49 U.S.C. ยง 10706 (1982). That section, enacted by Congress in 1948, ch. 491, 62 Stat. 472, provided that any carrier party to an agreement among carriers about "rates, fares, classifications, divisions, allowances, or charges . . . or rules and regulations" relating to those subjects could apply to the Commission for approval of the agreement. Commission approval gave the parties antitrust immunity for the making of the agreement. *fn1

The agreement in question here was made between motor carrier members of NMFTA and approved by the ICC. It provides for collective action with respect to freight classification matters. The Commission held that the agreement did not authorize various charges and rules promulgated by petitioners and ordered them stricken from the agreement. We affirm the Commission's order but hold that it does not operate retroactively to expose the parties to the agreement to antitrust liability for rules made in the past. I.

Pursuant to the statute, in 1954 petitioner NMFTA presented the ICC with a proposed agreement which would govern classification matters among NMFTA members. The purpose of a freight classification is to assign each article or group of articles with comparable transportation characteristics to a class. These assignments are made according to well-known classification principles which are based upon distinctions relative to transportability, such as shipping weight, perishability, ease or difficulty of loading, and stowability. See Class Rate Investigation, 262 I.C.C. 447, 508 (1945). Once a classification rating is assigned, the price of class rated transportation can be established by examining a separate, class rate tariff which provides the rate for transporting an article of a given class between origins and destinations. Class rate tariffs are published by regional rate bureaus or individual carriers.

NMFTA's 1954 proposed agreement was rejected by the ICC as "not . . . in furtherance of the national transportation policy . . . ." National Motor Freight Traffic -- Agreement, 292 I.C.C. 45, 52 (1954). The Commission viewed the proposal as too broad because it attempted to set not only the particulars of classification practices, but also announced a system for joint consideration of traffic problems of general concern to the industry. Id. at 49.

NMFTA returned to the Commission with a redrafted agreement in 1956, and this time the Commission granted approval. National Classification Committee -- Agreement, 299 I.C.C. 519 (1956). While not as ambitious as the earlier proposal, the 1956 agreement was still sweeping:

The agreement establishes a code of procedure which enables applicants to utilize an effective means for joint consideration, initiation, and establishment of classification matters. It furnishes a means to avoid destructive competition, promote sound economic conditions, protect shipping interests, and allow carriers an independence of action, free and unrestrained. The collective procedure in conformity with the terms of the agreement is not prohibited by any provisions of section 5a and it will aid motor carriers to maintain reasonable and nondiscriminatory classifications of property in furtherance of the national transportation policy.

Id. at 522.

The agreement was, of course, subject to amendment to take account of new developments and concerns. In schedules filed to become effective on May 5, 1978, NMFTA proposed to publish in the Classification Tariff on behalf of its member carriers an extra charge of $2.00 per shipment on what are called "order-notify" shipments when such shipments weighed 10,000 pounds or less. An order-notify shipment is one in which a carrier, upon its issuance of a negotiable, order-notify bill of lading, becomes obliged to retain possession of the goods shipped until the original bill is surrendered to it prior to delivery. According to petitioners, the order-notify bill is "another form of the more familiar c.o.d. shipment, with the difference being that the carrier collects the price of the goods before delivery in the case of c.o.d. shipments, whereas the consignor collects the price of the goods before the carrier can deliver in the case of order-notify shipments. In either case, the carrier is liable for loss of the goods if delivery is accomplished without prior collection of the price of the goods." Brief for NCC and NMFTA at 11-12 (citation omitted).

Some parties objected to NMFTA's proposal, and by order of May 2, 1978, the ICC suspended the operation of the proposed schedules and instituted an investigation into their lawfulness. The Commission requested that parties to the investigation address such issues as (1) whether the proposed charge was just and reasonable; (2) whether the charge was within the jurisdictional scope of the 1956 agreement, and (3) whether the NMFTA agreement procedures give participating carriers adequate time to publish provisions elsewhere to continue order-notify service without assessing the new $2.00 charge. The Commission stated that the 1956 agreement "is limited to the joint consideration of classification ratings, rules and regulations." Joint Appendix at 2a (hereinafter "J.A."). As a result of the investigation, the ICC "ordered the proposed schedules cancelled. It found that NMFTA had not shown the proposed charge to be cost-justified, i.e., just and reasonable in amount. In addition, the Commission concluded that it would be contrary to the purpose for which the Commission had originally approved the NMFC [National Motor Freight Classification] Agreement to interpret it to permit the collective establishment of an order-notify charge." Brief for ICC at 11; see J.A. at 248a, 320a. *fn2 The Commission noted that, "the purpose of classification is to assign articles to classes which reflect characteristics of ...

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