Opinions of the United 1996 Decisions States Court of Appeals for the Third Circuit

1-8-1996

Hargrave v. United Wire Hanger Corp. Precedential or Non-Precedential:

Docket 95-5131

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Recommended Citation "Hargrave v. United Wire Hanger Corp." (1996). 1996 Decisions. Paper 242. http://digitalcommons.law.villanova.edu/thirdcircuit_1996/242

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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

NO. 95-5131

JOHN W. HARGRAVE, TRUSTEE IN BANKRUPTCY FOR SABER TRANSPORT, INC., Appellant

v.

UNITED WIRE HANGER CORP.

On Appeal From the United States District Court For the District of New Jersey D.C. Civ. No. 92-cv-02497

Argued: December 11, 1995

Before: BECKER, ROTH and LEWIS, Circuit Judges

(Filed: January 8, 1996)

ROBERT B. WALKER, ESQUIRE (ARGUED) JOHN T. SIEGLER, ESQUIRE Shawn, Mann & Neidermayer, L.L.P. 1850 M Street, N.W. Suite 280 Washington, DC 20036

Counsel for Appellant

GERARD F. SMITH, ESQUIRE (ARGUED) Law Offices of Gerard F. Smith

One Broadway Suite 201

1 Denville, NJ 07834

GEORGE CARL PEZOLD, ESQUIRE RAYMOND A. SELVAGGIO, ESQUIRE Augello, Pezold & Hirschmann, P.C. 120 Main Street Huntington, NY 11743

Counsel for Appellee

OPINION OF THE COURT

PER CURIAM:

The Interstate Commerce Act (ICA),

et seq., mandates that motor common carriers file their

rates with the Interstate Commerce Commission (ICC), and

prohibits carriers from providing services at any rate other than

the filed rate. Many carriers, however, in response to increased

competition fostered by the Motor Carrier Act of 1980, negotiated

and charged rates lower than those filed with the ICC. When some

of these carriers later filed for bankruptcy, their trustees

attempted to recover the "undercharge" amounts -- the difference

between the filed rate and the negotiated rate. To thwart these

claims, the ICC took the position that a carrier attempting to

collect a filed rate after having negotiated a lesser rate

engaged in an "unreasonable practice" in violation of the ICA.

However, in Maislin Indus. v. Primary Steel, Inc.,

(1990), the Supreme Court held the ICC's policy invalid

under the ICA, because the ICA establishes a duty to charge filed

2 rates. The Court reaffirmed the "filed rate doctrine," under

which a carrier can sue for the difference between the filed rate

and the rate charged.

In response to Maislin and the burgeoning amount

of undercharge litigation, Congress passed the Negotiated Rates

Act of 1993 (NRA),

Stat. 2044-2053 (1993).

This statute purports to resolve the undercharge crisis, but

because of, inter alia, jurisdictional conflicts between

congressional committees, the statute is less than pellucid.

Although the NRA is aimed at claims brought by bankrupt carriers,

NRA section 9 expressly states that "[n]othing in [the NRA] . . .

shall be construed as limiting or otherwise affecting application

of title 11, United States Code, relating to bankruptcy . . . ."

. The issue in this case is whether the NRA and

the Bankruptcy Code conflict, and if so, how to resolve the

conflict.

Saber Transport, Inc., a motor carrier, went into

bankruptcy in 1991. Plaintiff John W. Hargrave, Trustee for

Saber, seeks to recover freight undercharges from United Wire

Hanger Corp. in the amount of $57,517.05 for freight shipments

that occurred during 1989-1990. United argues, and the district

court held, that the NRA's small business exemption,

(f)(9), relieves United from liability. In response,

Hargrave submits that the anti-forfeiture provisions of the

bankruptcy code,

(l) & 541(c)(1), prohibit

application of the small business exemption in this case.

Resolution of the controversy turns on two issues: whether the

3 NRA's small business exemption requires a showing that the suing

carrier is no longer transporting property; and, if so, whether

such requirement means that the exemption is "conditioned on the

. . . financial condition of the debtor" (and thus comes within

the bankruptcy code's anti-forfeiture provisions,

(l) & 541(c)(1)).

Many courts have addressed these questions, and

virtually all of them (including every Court of Appeals to

address the issue) have found in favor of the defendant shipper.

Because so many opinions have already been written on this

abstruse subject, we elect not to consume more trees from the

forest. Rather we strongly endorse (and adopt) the reasoning of

In re Lifschultz Fast Freight Corp.,

(7th Cir. 1995),

the latest in the growing line of cases. For the reasons set

forth therein, the judgment of the district court in favor of

United Wire will be affirmed.

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