Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 84 C 2359--Marvin E. Aspen, Judge.
Coffey and Ripple, Circuit Judges, and Campbell, Senior District Judge.*fn*
CAMPBELL, Senior District Judge.
In 1980, Congress enacted the Staggers Rail Act, 49 U.S.C. § 10101 et seq. and in doing so "unambiguously expressed its interest in allowing free competition, to the maximum extent possible, to govern the financial health of the railroad industry." ICC v. Texas 479 U.S. 450, 93 L. Ed. 2d 809, 107 S. Ct. 787, 793 (1987). As part of the Staggers Act, Congress enacted 49 U.S.C. § 10730(c) which states in pertinent part, "A rail carrier . . . may establish rates for transportation of property under which the liability of the carrier for such property is limited to a value established by . . . a written agreement between the shipper and carrier. . . ."
To further promote deregulation of the railroad industry, Congress also enacted 49 U.S.C. § 10505(f) which authorized the Interstate Commerce Commission (ICC) to exempt rail transportation from regulation. Pursuant to this authority, the ICC did exempt rail transportation from regulation. See 46 Fed. Reg. 14,348 (1981); see also ICC v. Texas, 107 S. Ct. at 789. However, Congress still mandates that rail carriers who desire to limit their liability to shippers do so pursuant to 49 U.S.C. § 10505(e) which states:
No exemption order issued pursuant to this section shall operate to relieve any rail carrier from an obligation to provide contractual terms for liability and claims which are consistent with the provisions of section 11707 of this title. Nothing in this subsection or section 11707 of this title shall prevent rail carriers from offering alternative terms nor give the Commission the authority to require any specific level of rates or services based upon the provisions of section 11707 of this title. (emphasis added).
Section 11707, to which section 10505(e) refers provides that a common carrier is liable for the actual loss or injury to property it transports.*fn1 49 U.S.C. § 11707(a)(1). However, § 11707(c)(4) states that a carrier "may limit its liability for loss or injury of property transported under section 10730 of this title." Thus, a rail carrier may limit its liability to a shipper if the carrier can satisfy the requirements of section 10730(c) and section 10505(e).
Our jurisdiction is pursuant to 28 U.S.C. 1291. For the reasons set forth below, we conclude that the rail carrier before us has satisfied the requirements of section 10730(c) and section 105O5(e). Accordingly, the district court's decision is reversed in part, affirmed in part and remanded.
In the present case, The Atchison, Topeka and Santa Fe Railway Company (Santa Fe) defendant/appellant/cross-appellee, a rail carrier, sought to limit its liability to Co-Operative Shippers, Inc. (Co-Op) plaintiff/appellee/cross-appellant. Co-Op is an association of shippers which consolidates the freight of its members and tenders the combined loads to carriers, thereby obtaining for its members the benefit of the carriers reduced transportation rates for volume shipping. Co-Op is managed by Coordinated Traffic Services which received $25 million in revenue in 1983.
Santa Fe was contacted in September 1982 by Ronald Salbego, the General Manager for Co-Op's management company. Salbego asked Santa Fe's representative, John Beck, about the possibility of Co-Op entering into a volume contract with Santa Fe. Salbego dep. at 37. Beck forwarded a copy of Santa Fe's volume transportation contract titled "Contract T-116" to Salbego.
On November 3, 1982 Co-Op's Assistant Operations Manager Joseph Garrity telephoned Santa Fe's Mr. Beck and requested a change in the terms of the contract. The negotiations concerned Co-Op's quota of trailers per year imposed by Santa Fe in Contract T-116. Salbego dep. at 42. Santa Fe agreed to Co-op's proposed modification. Co-Op never sought to negotiate the liability terms of the transportation contract. Garrity dep. at 15.
Mr. Beck forwarded the changed contract to Mr. Salbego on November 17, 1982 and Salbego executed the contract on November 22, 1982. Contract T-116 states that ATSF Circular TOFC-1 and ATSF Circular No. 7000 are incorporated by reference as terms and conditions governing all trailer-on-flatcar (TOFC) shipments delivered by Co-Op to Santa Fe. Co-Op had received copies of TOFC-1 and Circular 7000 prior to Co-Op's execution of Contract T-116. Salbego dep. at 40.
The pertinent provisions in TOFC-1 and Circular 7000 are as follows:
37 SUIT TO In the event that suit must be
COLLECT filed to collect any charge arising
under this contract, the amount
sued upon shall include interest
from the date of shipment at the
maximum rate of interest allowed
by law in the jurisdiction in which
suit is filed. Court costs and reasonable
attorney's fees shall be added to such
principal and interest. (emphasis added).
52 ATSF ATSF shall not be liable for any
LIABILITY loss or damage to lading or to
FOR LOSS vehicles caused by an act of God,
AND DAMAGE the public enemy, act or default
of the shipper or receiver, inherent
nature of the commodity, authority
of law, riots or strikes;
or which occurs while the vehicle
is outside the possession of
All persons involved with a
shipment shall, to the fullest
possible extent, mitigate loss and
damage on an equitable basis.
ATSF liability for loss or damage
to the loading (sic) in any single
vehicle shall be subject to ...