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Gross Common Carrier v. Baxter Healthcare Corproation

April 3, 1995




Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 93 C 5010--William T. Hart, Judge.

Before COFFIN, *fn* CUDAHY and ROVNER, Circuit Judges.

CUDAHY, Circuit Judge.



The present case involves a controversy in the trucking industry. A bankrupt motor carrier, Gross Common Carrier, Inc., sued one of its former shippers, Baxter Healthcare Corporation, to recover monies allegedly owed under past shipping contracts. Whether Gross is entitled to recover for these "undercharges" depends on whether its contract with Baxter contemplated "contract carriage" or "common carriage." The district court found that the parties had anticipated contract carriage when they entered into an agreement to ship goods. Gross argues on appeal that its unilateral use of third party common carriers transformed its contract with Baxter into one for common carriage (entitling it to undercharges). We believe that a carrier lacks the power to unilaterally change the nature of an agreement for contract carriage. We therefore affirm the district court.


Gross Common Carrier, Inc. (Gross) is a carrier authorized by the Interstate Commerce Commission (ICC) to engage in both common and contract carriage. In September of 1988, Gross entered into a transportation agreement with Baxter Healthcare Corporation (Baxter) to transport various hospital and medical-related items. The nature of that relationship is the subject of this dispute.

When Baxter accepted Gross's bid to ship its products, the parties entered into a one-year contract. The contract obligated Gross to perform transportation service for Baxter. Specifically, the contract stated that Gross was to provide transportation services "pursuant to [its] contract carrier permit No. MC 1494 Sub 35." Ex. A para. 2. The contract further prohibited Gross from hiring others on Baxter's behalf. Ex. A para. 8.

Gross in fact provided transportation services under this contract. During the first year of service, Gross moved over 2.4 million pounds of cargo for Baxter. Gross submitted a new rate proposal for the second year of service, which Baxter accepted and incorporated into the parties' agreement. Under the new rate, Gross again moved 2 million pounds of Baxter's cargo. The parties eventually extended the arrangement through September of 1991.

The district court found that performance was generally carried out as contemplated by the contract, with service involving over six million pounds of cargo and thousands of shipments. The district court further found that Gross charged the rates set forth in the parties' contract at all times, and that Baxter paid these rates. The arrangement eventually ended in August of 1991, when Gross discontinued its division specializing in less-than-truckload traffic and filed for bankruptcy.

Gross now alleges that Baxter owes it additional sums under the parties' shipping relationship. Gross's claim rests on arrangements that it occasionally made with third parties to ship Baxter's goods. From time to time, Gross would use joint line carriers to perform portions of the underlying transportation service. Gross now suggests that the fact that it followed this practice of interlining *fn1 with common carriers transforms its arrangement with Baxter from one of contract carriage to one of common carriage. Because common carriers are subject to rates contained in tariffs filed with the ICC, Gross suggests that these rates governed its relationship with Baxter. Consequently, it claims that Baxter owes it the difference between the amounts paid under the contract and the posted tariff rate at the time of service.

The district court rejected Gross's claim, granting summary judgment in favor of Baxter. It found that the contract between Gross and Baxter originally contemplated contract carriage, and that the contract prohibited Gross from hiring others on Baxter's behalf. In light of these factors, the district court believed that Gross lacked the power to unilaterally transform the nature of the contract into one of common carriage (and subsequently hold Baxter liable for undercharges). Because the court determined that Baxter was unaware of Gross's practice of interlining, it rejected Gross's claim. We affirm.


As an initial matter, we need to address a jurisdictional issue before reaching the merits of the parties' claims. *fn2 The Interstate Commerce Commission (ICC) has the statutory authority to resolve disputes concerning whether service was provided in a motor carrier's contract carriage or common carriage capacity. See 49 U.S.C. sec. 11101(d). The ICC has in fact resolved a number of these disputes. See generally In Re Rubbermaid, Inc., No. 40946, 1993 M.C.C. LEXIS 174 (I.C.C. Oct. 13, 1993); Ford Motor Co. v. Security Services, Inc., 9 I.C.C.2d 892, 1993 M.C.C. LEXIS 124 (Aug. 27, 1993). The ICC's authority in this area is not, however, exclusive. When granting the ICC the authority to resolve these disputes, Congress expressly preserved a federal court's jurisdiction in these matters. See Negotiated Rates Act of 1993, Pub. L. No. 103- 180, sec. 9, 107 Stat. 2052. Congress thus ...

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