REITER v. COOPER, TRUSTEE FOR CAROLINA MOTOR EXPRESS, INC.

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Argument of Carter G. Phillips

Chief Justice Rehnquist: We'll hear argument now in No. 91-1496, Peter C. Reiter v. Langdon M. Cooper.

Mr. Phillips.

Mr. Phillips: Thank you, Mr. Chief Justice, and may it please the Court:

The Court is required in this case to reconcile two core commands of the Interstate Commerce Act.

The first is that the carrier shall charge and collect only the filed tariff rate, and the second is that the carrier shall not charge or collect a rate that is unreasonable.

In this case petitioners, who previously paid all that the carrier charged in order to ship goods, have been ordered in effect to pay what they claim to be unreasonably high rates.

Petitioners, on behalf of the entire shipping--

Unknown Speaker: Which was the filed rate.

Mr. Phillips: --I'm sorry, Your Honor?

Unknown Speaker: Which was the filed rate.

Mr. Phillips: That was the filed rate, yes, Your Honor, the one that petitioners take the position and argue in defense that it was unreasonably high.

Petitioners on behalf of the entire shipping industry, which faces claims similar to this one in amounts in excess of billions of dollars, urge the Court to reject the categorical approach proposed by the respondents and adopted by the court of appeals in much the same way that the Court rejected an all or nothing solution to this same problem 2 years ago in the Maislin decision.

Instead what the Court should do is to resolve, is to have these issues resolved on a case-by-case basis with the issue of the rate reasonableness decided by the Interstate Commerce Commission subject to judicial review of the Commission's exercise of primary jurisdiction.

Unknown Speaker: Is it your position that even if the carrier filed, charged, sent a bill for the filed rate and the shipper said the rate is unreasonable, should that defense await a ruling by the--

Mr. Phillips: No, no, Justice White, that defense should not await a ruling.

In that situation--

Unknown Speaker: --Why not?

Mr. Phillips: --Section 10743, a separate provision, separate from the filed rate doctrine which is embodied in section 10761(a), specifically provides that the carrier has a right to insist upon payment at the time of the movement of the goods.

And that is the source of the pay first rule which is essentially a rule that the Court has acknowledged in passing on a number of old cases, but that rule has a separate statutory basis.

It's not inherent in the filed rate doctrine, and therefore our position is that if you insist on the payment, and even if the payment is too high in your judgment, you are obliged to follow that because Congress made a specific determination that that's the proper course to follow.

In contrast, Justice White, in this case where the payments were made in full and then additional sums were requested that the--

Unknown Speaker: A negotiated rate was paid?

Mr. Phillips: --A negotiated rate was paid and then a subsequent request was made.

Nothing in the statute specifically deals with that particular situation, and when you're in a no-man's land then it seems to us a different set of rules ought to apply.

Unknown Speaker: But it was a rate, it was a negotiated rate that the carrier had no business charging?

Mr. Phillips: That's true.

The carrier was, acted unlawfully in charging that rate at the time.

He should have filed those rates.

Unknown Speaker: Didn't the shipper also?

Mr. Phillips: No, if you... the provision, section 19761 and 10762 both provide that it is the carrier's duty to comply with the law.

Certainly the shipper has an interest, and after Maislin has an interest that is quite significant in insuring that the tariffs are in fact filed, but the duty itself clearly resides with the carrier under these circumstances.

Unknown Speaker: Well, Mr. Phillips, I guess the shipper would have access to the public information to know whether the rate had been filed or not.

Mr. Phillips: It is true in a theoretical sense that the shipper has access, but I think it is as a practical matter quite unreasonable to expect the shipper to be able consistently to monitor changing tariff rates that can be implemented on 24-hours notice, when if you were to just look at the Carolina tariffs they are six volumes long, they reference additional tariffs that are themselves three and four volumes long.

We're talking about tariff filings that are in the nature of thousands of pages, Justice O'Connor.

Unknown Speaker: May I ask whether your client was time-barred from seeking reparations at the time that the respondents here first tried to collect the alleged undercharges?

Is there a time barr in effect?

Mr. Phillips: As to some portions they would have been, some of the earlier shipments I think would have been barred.

Later shipments would not have been barred.

So we're not in the more, I think more typical situation where the trustee has brought the suit for undercharges at a period in time when the shippers are not permitted to seek reparations.

Unknown Speaker: And does the time barr affect the ability under your position to go back to the ICC for the reasonableness determination?

Mr. Phillips: Absolutely, Justice O'Connor, that is this Court's decision in United States v. Western Pacific where the Court held that where the United States refused to pay and was sued for undercharges and the carriers, the carrier in that case, just as the respondents in this case, said the way to do this is to pay the filed rate and seek reparations.

And the Court said that's, you can't do that because reparations are time-barred.

And in language that I think is strikingly appropriate for this particular case the Court said to hold otherwise would require the Court to condone a situation where the carrier is permitted to obtain unreasonable rates with impunity.

That is precisely the situation that we have here because everyone conceded at the court of appeals level that if these rates turn out to be unreasonable they are essentially lost because the carrier is insolvent and it's going to be impossible to recoup monies.

Under those circumstances what you have is a situation where the shipper's significant right under the statute not to be charged unreasonable rates is essentially vitiated in favor of an unbending absolute rule under the filed rate doctrine, which this Court has never held to be applicable in that particular way.

Unknown Speaker: Could the bankruptcy court collect the full amount of the filed rate and just hold it until such time as you have had a reasonable opportunity to go to the ICC?

Mr. Phillips: The bankruptcy court, I think there's no question the bankruptcy court would have that authority.

The problem with that particular approach is, first of all there's nothing in the court of appeals' opinion that would authorize that because the court of appeals has categorically denied us the opportunity to stay the payment and there is nothing in any of the bankruptcy court or the Fourth Circuit's analysis that even envisions that kind of a procedure.

So it's not really in the case.

But second of all, in, given the magnitude of the undercharges that are at issue here it seems quite extraordinary to think about billions of dollars being placed in the registry when there is no serious reason to wonder whether in fact these charges are reasonable.

In fact the more likely scenario is that these charges are quite unreasonable, having not been reviewed as they have increased over the period of time.

And therefore it seems to us the more appropriate course is if a carrier has reason to believe that a shipper will be unable to pay the filed rate if ultimately determined to be reasonable, then it seems to me the shipper, or, excuse me, the carrier can come forward in either the bankruptcy court or before the ICC and seek to have some protection put in place.

Unknown Speaker: Well, just before you leave that point, it's not at all clear to me that a district court or bankruptcy court can alter the priority of creditors by an equitable subordination of liens that are otherwise equal.

I mean, where, where do you get that authority?

Mr. Phillips: Well, the question is whether you put it into the bankruptcy estate in the first instance.

I agree with you, once it gets into the bankrupt estate it's clear that you can't modify how the creditors receive--

Unknown Speaker: Well, but if bankruptcy courts could do this they could have escrows all the time which would basically alter the provision the Congress has for the priority of creditors and for their equal right to share in proceeds.

Mr. Phillips: --But I think--

Unknown Speaker: And I don't see where this authority comes from.

Mr. Phillips: --Well, it doesn't... I mean, to be honest with you I'm happy to abandon the position that there's authority to do it.

I would have been inclined to assume that as an equitable matter the bankruptcy court could, given that we don't know the legality, the underlying legality, and it's necessary to have the issue resolved by the Interstate Commerce Commission in the exercise of its primary jurisdiction.

Unknown Speaker: Well, you don't argue this in your brief and there's no citation in the brief to support the bankruptcy court's authority to do this, is there?

Mr. Phillips: No.

No, Your Honor, there is none.

Unknown Speaker: Thank you.

Mr. Phillips, as I recall your brief you ask that the, what should happen is the bankruptcy court should refer this matter to the ICC?

Mr. Phillips: Any one of the courts would have been fine, but yes, Your Honor, since it was tried initially before the bankruptcy court we thought the matter should have been referred to the ICC.

Unknown Speaker: What authority does it have to refer it?

I mean, I have heard of, you know, where the doctrine of primary jurisdiction applies I have heard of courts staying proceedings until one of the parties had an opportunity to make use of an available proceeding before the ICC or the FCC or another agency, but I have never heard of a power in the court to direct an agency to make some determination.

Mr. Phillips: It may well be that we are simply employing a short-hand means of accomplishing precisely what you're describing, Justice Scalia.

It's not so much that we care that the matter be specifically referred by any court to the ICC, but that we have an opportunity as shippers to have the rate reasonableness determined initially by the ICC.

Unknown Speaker: Well, is there a proceeding before the ICC that would enable you to do that?

I mean, is there a mechanism--

Mr. Phillips: Oh, yes, I mean the Interstate Commerce--

Unknown Speaker: --whereby if the court stays its hand you can get this issue before the ICC?

Mr. Phillips: --The Interstate Commerce Commission has a policy statement, order 177 and 208, both of which say that they will entertain these kinds of claims and resolve the question of rate reasonableness, and in fact in the Oneida case that was recently decided by the Interstate Commerce Commission that is precisely what they did do.

They undertook to decide the rate reasonableness issue and went forward.

So there are, there is a mechanism, to be sure.

Let me just add one last idea, or at least one set of concepts to the mix in this case.

One significant line of decisions from this Court that it seems to me supports the underlying decision of the ICC to provide this relief is the Interstate Commerce Commission v. American Trucking Associations case, where this Court has upheld extraordinary remedies in situations where they were directly aimed at a particular problem that the statute otherwise does not remedy, and that is precisely what this case is about.

Because the court of appeals, however, has taken a contrary view its judgment should be reversed.

I'd like to reserve the balance of my time, Mr. Chief Justice.

Unknown Speaker: Very well, Mr. Phillips.

Mr. Dreeben.

Argument of Michael R. Dreeben

Mr. Dreeben: Thank you, Mr. Chief Justice, and may it please the Court:

The question in this case is whether a court should refer to the ICC a shipper's defense that the filed rate is unreasonable in an undercharge action brought by an insolvent carrier.

The answer to that question is yes, for three reasons.

First, referral is required to protect the ICC's primary jurisdiction over the reasonableness of rates.

Second, referral is necessary to give the shipper an effective remedy against having to pay unreasonable rates charged under a carrier's tariff.

Unknown Speaker: Well, what if the carrier had an effective remedy to recover reparations?

Would you say that it would be necessary for the court to hold its hand?

Mr. Dreeben: No, Justice White, we don't say that it would be necessary for the court to hold its hand if the shipper did have an effective remedy in reparations.

Unknown Speaker: So you would not apply, you would not apply, you would not apply primary jurisdiction where the carrier, where the shipper paid a negotiated rate that was lower than the filed rate and the carrier then sued for the balance?

Mr. Dreeben: Well, that is this case, of course.

Unknown Speaker: I know it is.

Mr. Dreeben: But the reason why reparations is inadequate in this case is because the carrier is insolvent.

Unknown Speaker: I understand.

I understand.

But absent, if the carrier... if the shipper had a opportunity for reparations you would not apply the primary jurisdiction rule?

Mr. Dreeben: We don't think that this case presents the Court with the requirement of ruling on it.

Unknown Speaker: I know, I know, but what's the United States' position on that?

Mr. Dreeben: The United States' position is that there isn't any need to bring the primary jurisdiction doctrine into play through a referral procedure when reparations are truly available, and that is--

Unknown Speaker: So you do, you do not agree with the shipper here in that regard?

Mr. Dreeben: --Well, I don't think that the shipper here is taking any position that's different from that.

The whole reason why this issue is before the Court today is that there is a rash of collection actions throughout the motor carrier industry in which bankrupt carriers or their trustees are culling through old tariffs and seeking to collect monies that are substantially in excess of what were charged at the time, and they are doing so in a way that gives the shippers no opportunity to challenge the reasonableness of those rates in a way that would be effective.

Unknown Speaker: You're saying, Mr. Dreeben, that then your view of the situation contemplates at least the possibility that the role would be different in bankruptcy than outside of bankruptcy?

Mr. Dreeben: Justice, Chief Justice Rehnquist, we don't think the rule has to be different depending on the fact of bankruptcy or not.

The key question is whether there is an adequate remedy in reparations that would allow the statutory mechanism to work.

That principle is exemplified in this Court's decision in United States v. Western Pacific where the Court held that when the United States' reparation action was time-barred it was permitted to raise the defense of rate unreasonableness in a collection action.

That underlying principle was also expressed in this Court's decision in Crancer v. Lowden where the Court found that there was no abuse of discretion by a district court in going forward with a collection action when the shipper did have an adequate remedy in reparations.

Unknown Speaker: Mr. Dreeben, at the outset of your presentation you referred to referral to the ICC is necessary for three reasons, and you repeated the referral.

What do you mean by referral to the ICC?

Mr. Dreeben: We mean, Justice Scalia, the same thing that Mr. Phillips described, and this Court has used the same sort of short-hand.

As you stated, the court that's hearing the action in which an issue arises that can only be decided by the agency, it will stay its proceedings and it will allow the parties to file a complaint before the administrative agency in order to raise the issue.

Unknown Speaker: But it's up to the parties to take the initiative to go before the agency, and up to the agency to accept that proceeding or not?

Mr. Dreeben: Well, I wouldn't rule out the possibility of a court sua sponte concluding that the issue, that the case raised an issue that it could not decide and that an agency had to decide, and staying its proceedings to give the parties an opportunity to do so.

That really hasn't been a problem in this case or in the pattern of cases in this industry.

Shippers have been seeking to bring the issue before the Interstate Commerce Commission and the Interstate Commerce Commission has issued a policy statement that expresses its willingness to hear on complaint precisely this kind of claim.

Unknown Speaker: But all we're really talking about is a stay of proceedings which the bankruptcy court undoubtedly has the power to achieve, and the issue is simply whether it's appropriate in this situation or not.

Mr. Dreeben: That is exactly what the issue is.

Now, the Court--

Unknown Speaker: In a situation like this in which bankruptcy is the context in which the issue arises, is there any issue of discretion in your view on the part of the bankruptcy court once it determines that there is a genuine issue about the reasonableness of the rates?

Mr. Dreeben: --No.

Unknown Speaker: Would it be an abuse of discretion to fail to stay in other words if there is no question about the genuineness of the issue of reasonableness?

Mr. Dreeben: Yes.

It would be an abuse of discretion in every case, and the reason is that it would defeat the operation of the Interstate Commerce Act.

What we have here are two statutory provisions that are applicable to the same transaction.

On the one hand the carrier is required to charge its tariff rate, and the applicable rate in this case is the tariff rate, not the negotiated rate.

The other relevant statutory provision is the requirement that the tariff rate be a reasonable rate.

If it is not a reasonable rate it is not enforceable.

What the carrier's trustees are trying to do in this case is to have it both ways.

They want to enforce the tariff filing requirement extremely strictly.

They want to do so at the expense of the requirement that the tariff be reasonable, but--

Unknown Speaker: Is there any question about there being a genuine claim of reasonableness here?

Could that be disputed?

Mr. Dreeben: --The issue wasn't resolved at any, in the lower courts at all, and we think that the case should be returned to the lower courts for them to address it.

In general--

Unknown Speaker: I guess you said that in your brief, actually, didn't you?

Mr. Dreeben: --That's correct, Justice Souter.

We do think that when a significant discrepancy exists between the negotiated or charged rate that was paid at the time and the tariff rate, that that may raise an issue, and it also raises an issue of reasonableness when the tariff rate is substantially higher than what the prevailing market rate was.

The ICC has recently clarified that that is the key to a reasonable rate in the current competitive market environment.

So it shouldn't be very difficult for courts to be able to determine when referral is appropriate.

Unknown Speaker: Mr. Dreeben, what if it comes out in the proceedings before the bankruptcy court that the shipper in fact was the only shipper who was getting this special rate and that he and the carrier colluded and the carrier said look, we're charging everybody else, all your competitors, this excessive unreasonable rate, but you we're going to give a fair rate to.

You still think that with all... when the equities are like that you would have to send it, you would have to stay your hand?

Mr. Dreeben: Yes, I think that the issue should still go to the Interstate Commerce Commission.

I don't think that there's any question in that setting the Interstate Commerce Commission would not reward the shipper's violation of the discrimination provision of the act by giving it the benefit of a ruling.

But those issues and the interrelation of the statute in that question raises core questions for the Interstate Commerce Act to balance.

The Interstate Commerce Commission would then be entitled to deference under this Court's Chevron line of cases.

Unknown Speaker: So you say the ICC might just simply refuse to entertain the proceeding for equitable... could it do that?

Mr. Dreeben: Certainly.

Certainly.

I would add, Justice Scalia, that there's been no experience in the markets today of that kind of deliberate discrimination and then a claim of unreasonableness being raised.

We do have a fairly unique market situation today where the tariff rates that were on file for a certain small percentage of carriers were far, far higher than the rates that were being charged in the market, and the result of this was that many of these carriers when they went out of business did have the opportunity to come back later under their tariffs.

The industry as a whole was not ignoring its tariff filing requirements, however.

There were about 1.2 million tariffs filed each year that correctly reflected the rates that were being charged, and it's that body of information that provides a substantial source for saying that these higher tariff rates that were not modified don't conform to the statutory requirement of reasonableness.

And that's what makes it so important to get the issue before the Commission.

Unknown Speaker: How do you frame the threshold test for the reference to the agency?

Is it the likelihood of recovery or the insolvency of the carrier or the fact that the carrier is in bankruptcy?

What's the general rule?

Mr. Dreeben: The general principle we're contending for today is that under the doctrine of primary jurisdiction when the carrier is insolvent the reasonableness defense would be worthless and meaningless unless there is a stay of proceedings and an opportunity for the Commission--

Unknown Speaker: So it turns on the carrier's solvency?

Mr. Dreeben: --In this context, yes.

Again, we think that's an example of the general principle that the Court applied in Western Pacific.

There the carrier had more years to sue for an undercharge than the shipper did to sue for reparations, and the shipper, in that case the United States, if it had had to pay an undercharge would never have been able to challenge reasonableness before the ICC.

In that setting the Court said the reasonableness defense must be referred to the Interstate Commerce Commission.

The same principle we think applies when the carrier's insolvency or other factors preclude the opportunity of a shipper to raise the reasonableness issue before the Interstate Commerce Commission.

Unknown Speaker: Mr. Dreeben, this is an automatic referral?

I mean, no matter how outrageous the claim of unreasonableness is, all the debtor has to say in the bankruptcy proceeding is unreasonable rate and it automatically stays everything and goes over to the ICC?

How long will it take in the ICC?

Do you have any idea?

Mr. Dreeben: I'll answer your second question first.

Unknown Speaker: Okay.

Mr. Dreeben: It has taken approximately 2.5 years for the Interstate Commerce Commission to formulate its basic standard of what it is going to use for reasonableness claims.

It picked a lead case, it developed an opinion, and now that that opinion has been issued the Commission anticipates that it will be able to resolve these claims more quickly.

Of course if the administrative action is unreasonably delayed then there are remedies under the APA to get the Commission to move faster, and I suppose that a district court would have discretion to say we have given the agency a chance, it hasn't answered, that's the end of that.

Now--

Unknown Speaker: And say that the shipper pay up.

Mr. Dreeben: --That's correct, Justice White.

This is what we're talking about as a process of accommodation of policies, not an all one way rule or all the other way rule.

Now as to your--

Unknown Speaker: Mr. Dreeben... go ahead, you didn't answer the first question.

Mr. Dreeben: --As to your first question, Justice Scalia, whether referral should be automatic no matter how transparently flimsy or false the claim of unreasonableness is, the answer to that is no, and I think that this is just a classic example of the doctrine of primary jurisdiction at work.

The court has to be satisfied that there is a genuine issue for the agency to resolve.

This does not require the court to make a preliminary determination of whether a rate is reasonable.

It just requires the court to look at the kind of showing that shippers typically make.

We paid this rate, we were quoted this rate and rates around it by several other people in the market, tariffs reflect this rate, and now the carrier is seeking to charge a rate substantially in excess of what it charged us at the time.

That should be enough for a court to stay its hand and afford the agency the chance to pass on the claim.

So there shouldn't really be any difficulty with respect to courts administering a rule that we propose.

Now, the court of appeals felt compelled to bar the procedure that we advocate in this case because of its reliance on the filed rate doctrine and on this Court's recent decision in Maislin.

The filed rate doctrine does not have anything to do with whether a court can stay a collection action and refer a case to the Commission.

The filed rate doctrine says that defenses such as ignorance of the tariff rate or misquotation of the rate are not an obstacle to application of the tariff rate.

We agree.

The tariff rate is the applicable rate here.

But the filed rate doctrine has nothing to say about whether reasonableness can be asserted as a defense and referred to the Commission, and in fact this Court's decision in Maislin--

Unknown Speaker: You don't suggest, though, that if the carrier has charged the filed rate that the shipper can just raise the defense of unreasonableness unless there's some claim that he can't get reparations?

Mr. Dreeben: --That's absolutely correct, Justice White, and again the shipper cannot use this as a way to avoid payment of the filed rate at the time of shipment because there is an--

Unknown Speaker: Even if he thinks it's unreasonable.

Mr. Dreeben: --Even if he thinks it's unreasonable.

Unknown Speaker: Even if there's a pretty good case for it.

Mr. Dreeben: That's correct.

There is an independent statutory requirement that the shipper must pay at the time of delivery.

But the filed rate doctrine, which reflects some statutory requirements, does not include any requirement that a shipper must pay before having reasonableness litigated when there is absolutely no other opportunity to have the issue of reasonableness litigated.

Unknown Speaker: Well, what happens to the rule that you have to pay when the service is rendered if the shipper claims, well, I know that rule and the carrier is charging me the filed rate, but nevertheless the time for reparations has passed?

Mr. Dreeben: Well, if the time for reparations--

Unknown Speaker: What happens, what happens then?

Mr. Dreeben: --Then it's clear under this Court's decision in United States v. Western Pacific that the case must be referred to the Commission.

Unknown Speaker: Despite this statutory provision that you've got to pay.

Mr. Dreeben: The statutory provision applies at the time the goods are delivered.

Unknown Speaker: Yes, exactly.

Mr. Dreeben: Now, reparations can be asserted for 2 years under the statute of limitations in the Interstate Commerce Act.

An undercharge action can be brought for 3 years.

So you can have the odd situation where if the carrier doesn't insist on collecting the tariff rate at the time of the shipment it can wait 3 years, bring an undercharge action, and then any reparations proceeding before the ICC is time-barred.

Unknown Speaker: But if you have a negotiated rate I suppose the shipper complies with the pay provision by simply paying the negotiated price?

Mr. Dreeben: That's true, Chief Justice Rehnquist, and the shipper does that because that's what the carrier is billing him.

Unknown Speaker: That's what they both think they are talking about.

Mr. Dreeben: That's right.

And in this case there was actually representations made to the shippers that the rate would be filed in the tariff, so they had a reason to expect that that was the filed rate.

Unknown Speaker: Thank you, Mr. Dreeben.

Mr. Dreeben: Thank you.

Unknown Speaker: Or would have been.

Mr. Steinfeld, we'll hear from you.

Argument of Joseph L. Steinfeld, Jr.

Mr. Steinfeld: Thank you, Mr. Chief Justice, and may it please the Court:

Justice White, I believe the issue here is squarely raised by this idea of the petitioner and the Government saying that if the carrier had billed the filed rate at the time of shipment that there would be no reparations, rather there would be no stay in referral proceeding.

That's directly from the petitioners' brief.

That is a ridiculous concept because it ignores the principal provision of the Interstate Commerce Act, that is that filed rates are constructively deemed to know, that shippers are constructively deemed to know at the time of shipment what the rate is.

All rights as between the parties, the shipper and the carrier, are defined by the filed rate.

It is ridiculous to assume that a negotiated rate bargain has legal significance.

This Court affirmed that concept that it would be ridiculous to assume that in the Maislin case.

So here we have the unusual position advanced by both the Government and the petitioner that I can have an illegal rate bargain and that shipper will be free from the duty to pay that filed rate and can raise the defense of reasonableness--

Unknown Speaker: But the duty to pay the... you're not talking about a violation of the obligation to pay when shipped?

You're talking about a duty to pay the filed rate, is that right?

Mr. Steinfeld: --Yes.

The duty to pay when shipped and the duty to pay the filed rate are the same, Chief Justice.

Unknown Speaker: Well, but surely the duty to pay when shipped, if there has been a negotiated rate and both the trucker and the shipper have agreed to the negotiated rate, that can't, that is never going to be enforced beyond the negotiated rate.

Mr. Steinfeld: The statute in its section 1074--

Unknown Speaker: I mean as a practical matter.

Mr. Steinfeld: --Well, as a practical matter the shipper has constructive knowledge and they best check--

Unknown Speaker: As a practical matter when the trucker agrees to ship for a certain amount and the shipper agrees to pay a certain amount, that's what the parties expect and so that's what payment will be made, isn't it?

Mr. Steinfeld: --That may be what payment will be made, but that has no legal significance under the law and the precedent of this Court's opinions.

The pay first before tendering delivery of freight is not to pay what was negotiated.

It is to pay the filed rate.

You cannot--

Unknown Speaker: But that's a total abstraction in the real world.

Mr. Steinfeld: --Your Honor, whether it's an abstraction or not, it's the law.

And it was defined by the Maislin Court.

Any, a mis-billing has no legal significance, and the pay, the prompt pay provision of 10743 is to promptly pay filed rate charges.

It would turn the statute on its head if the prompt pay provision, if Congress said you must promptly pay whatever is billed.

Congress does not say that the billed rate has any significance, Your Honor.

Unknown Speaker: Well, what do you, what do you do to the assertions that the filed rate can't be collected or need not be collected until the ICC gets to pass on it if there's no reasonable way of getting reparations?

Mr. Steinfeld: I say that's without any statutory support.

That--

Unknown Speaker: Well, what about, what do you do about Western Pacific?

Mr. Steinfeld: --Western Pacific is a Tucker Act case.

I think Western Pacific supports our position for the following reason.

Unknown Speaker: Well, it may be a Tucker Act case, but they were just trying to collect a higher rate than had been charged to the United States.

Mr. Steinfeld: Yes, but all parties conceded that the United States had a unique right of set-off.

In other words the United States under the Tucker Act need not pay filed rate charges, need not be worried about paying the filed rate charges, did not have to worry about--

Unknown Speaker: I thought Western Pacific applied the doctrine of primary jurisdiction.

Mr. Steinfeld: --Western Pacific... the doctrine of primary--

Unknown Speaker: Is that right or not?

Mr. Steinfeld: --Your Honor, part of the holding was indeed applying primary jurisdiction.

That dealt with the issue of tariff interpretation.

Unknown Speaker: And among other things to have the ICC decide reasonableness.

Mr. Steinfeld: It was reasonableness as applied to determine which of two applicable filed rate applied, Justice White.

But it was very significant in Western Pacific that this Court said that--

Unknown Speaker: Well, they didn't make the United States pay the filed rate.

Mr. Steinfeld: --Only because, only because it didn't have to under the Tucker Act.

It had the right of set-off.

There is no case in this Court's history that has allowed a shipper to with impunity refuse to pay a filed rate by raising the defense of reasonableness.

This Court's precedent going back to Robinson and Arizona Grocery said that shippers were bound to pay filed rate charges.

They might recover reparation, but they were bound to pay filed rate charges.

And the problem presented by this case is that the act itself has several provisions.

The plain meaning and structure of the act says that you must charge filed rate charges at all times.

The reason is, the policy is to insure that rates be non-discriminatory, there be no undue preference, no discrimination or undue discrimination, and that rates be reasonable.

The reasonableness concept is not equal dignity with the filed rate.

It flows as one of the requirements and the goals of the act.

The goal of anti-discrimination is different from the goal of reasonableness.

They are the same.

How do you enforce that there be no discrimination between carrier and shipper, or rather between shippers for the carrier?

How do you enforce that rates be reasonable?

The only way you can enforce that rates be reasonable is that the public has knowledge of them.

And how is that to be accomplished?

In 1887 Congress developed a statutory scheme that said publicity of rates, once we publish our rates the world will know.

And at that point the question presented was well, what do you do about determining the reasonableness?

In the past the courts could adjudicate the issue of reasonableness because there was no ICC.

Once the ICC was created the courts were to stand back and not decide the issue of reasonableness, but the courts were to enforce the filed rate doctrine.

And so the policy of rate stabilization, reasonableness, and uniformity, you had the filed rate doctrine, you had the publicity of rates.

Then a statutory scheme was developed.

How do you challenge reasonableness in post-shipment litigation?

Well, first let's start out before the shipment occurs.

The rate is posted.

It's not effective.

The ICC can set it aside, rather can stay it, can, through a suspension investigation proceeding for up to 7 months.

During that time the carrier cannot collect that rate.

Once the rate goes into effect, however, the statute says it must be collected.

This Court in Arrow, Burlington Northern, and the other cases that follow, said that would be a ridiculous concept if the agency, while it was investigating the reasonableness of a rate, the statute said 7 months, you haven't made your decision, rate goes into effect.

Now all of a sudden a shipper says well, you're rates are under investigation, I'm not going to pay that whole rate.

I'll pay the part that I think is reasonable.

That would turn the statute on its head.

The statute says after 7 months the rate is to be collected.

Then what happens to the rights of the shipper?

What happens is they have a right of reparation under the statute 11705(b)(3).

They pay the rate, then they can seek to get a refund.

Hence the language in Arizona Grocery, bound to pay, might recover reparations.

Petitioner and the Government would have it read might have to pay if the rate is reasonable.

There's just no support for that in the statute.

Unknown Speaker: Again, what if reparations are not available?

Mr. Steinfeld: Reparations are always available within the statutory scheme.

Let's go back to the doctrine of constructive notice.

Unknown Speaker: Well, maybe reparations, maybe you could say, maybe you could say that the ICC could decide... what would you do, bring a suit for reparations?

Mr. Steinfeld: That's the way... the statutory scheme is you do bring a suit for reparations.

Unknown Speaker: Yes, all right.

You might get a judgment but it can never be collected.

Mr. Steinfeld: Well, first of all, we don't know that it can never be collected because in bankruptcies there are payments.

There could even be full payments.

Amici American Freight has paid 80 cents on the dollar already.

Unknown Speaker: So you think the shipper should pay the filed rate, pay up and then file a claim like any other?

Mr. Steinfeld: Absolutely, because, Your Honor, that's the only way to prevent discrimination.

Think of two shippers.

The shipper, for example, as Justice Scalia pointed out.

You had the shippers that all paid this perhaps high rate, unreasonable rate, but they paid it because they followed the law.

And there's this one shipper that colluded.

And frankly in this case there's good evidence that it happened in this case, in this exact case, that there was collusion between the carrier and the petitioner.

In this case the shipper agrees to a negotiated rate, comes to find out later on a trustee is appointed and says oh, you shall not do that, you must collect the filed rate.

I want to judge the reasonableness 7, 8 years later.

What happens to all of the other shippers that followed the law?

Where are their rights today?

Their rights are extinguished.

Now we're going to reward the shipper that had not only constructive knowledge but I would submit in our case--

Unknown Speaker: But that would be true in any action for reparations out of bankruptcy.

If the shipper has a right to bring an action for reparations, the other shippers who paid the full filed rate would be short changed.

Mr. Steinfeld: --I agree, Your Honor, except that they... no, not totally, because once that reparations action was brought, the date that is filed any other shipper that desired to file it would have that same right at that point in time.

Here we're talking about a situation where they're claiming because the carrier is in bankruptcy, and note there is no bankruptcy exception in the Interstate Commerce Act, all of a sudden rights are changed.

The petitioner argued and the Government said well, if the carrier was solvent we wouldn't have to worry about this.

Your Honor, who knows who is solvent tomorrow.

Let's say there was a reparations proceeding and instead of Carolina Motor Express it was Consolidated Freightways, great company.

And all of a sudden during this 2.5-year period that the Government is saying the ICC is going to consider a reparations claim all--

Unknown Speaker: The Government said the ICC took 2.5 years to determine what policy it, how it would treat these.

It didn't say it would take 2.5 years to decide each individual claim.

Mr. Steinfeld: --Mr. Chief Justice, that, I understand that, but let's--

Unknown Speaker: Well, if you understood it then you just misstated it.

Mr. Steinfeld: --Mr. Chief Justice, the point I'm making is that we don't know that the day after a solvent carrier, that the Government says that the reparations scheme is different when you're involving a solvent carrier, we don't know that that carrier is going to be solvent tomorrow or the next day.

And we don't know that the shipper is going to be solvent to pay the filed rate charges years from now.

The act does not assume solvency.

The act gives people rights, give companies legal rights.

Unknown Speaker: Yes, but none of the solvent carriers brought any of these lawsuits, none of them were brought until they went into bankruptcy, did they?

Mr. Steinfeld: Well, I don't know that that is exactly true.

Certainly the majority--

Unknown Speaker: Well, are there any cases that you know of where solvent carriers are the plaintiff?

Mr. Steinfeld: --In fact I do know of one.

Unknown Speaker: One.

Mr. Steinfeld: Consolidated Freightways did bring a case.

Unknown Speaker: One out of millions.

Mr. Steinfeld: Well, that is endemic of the problem because--

Unknown Speaker: What percentage of the total market do you think was paying the filed rate during the period in question here?

Mr. Steinfeld: --I would say in this case, in Carolina Motor, about 97 percent of all shippers paid the filed rate charges.

Only 3 percent rating error was found by the auditors.

Unknown Speaker: And it still went bankrupt.

Mr. Steinfeld: It still went bankrupt.

Unknown Speaker: That's one carrier, you say.

I'm talking about the market as a whole.

Mr. Steinfeld: In the market as a whole today?

Unknown Speaker: How prevalent was this practice?

Mr. Steinfeld: Regrettably it was prevalent, but not overwhelming.

Unknown Speaker: There are billions of dollars out there.

Mr. Steinfeld: The majority of shippers still pay filed rate charges and carriers--

Unknown Speaker: The majority pay?

Mr. Steinfeld: --I would say since this Court's opinion in Maislin there has been a reform, and certainly people have come back.

When things go out of kilter that doesn't mean the court comes back and corrects them outside of the legislative scheme.

You can't come back and legislate and say well, the problem is out of kilter.

That's up for Congress to do.

And Congress has considered bills and they may yet consider bills in the coming session to deal with the undercharge problem.

But the statutory scheme hasn't been changed.

This is a great note, that since 1887, 1908 is the last major change to the statutory scheme involving reparations.

And we're trying to, the petitioners and the Government want to carve out an exception that goes against case upon case upon case in this Court.

A shipper is bound to pay, Mitchell Coal & Coke, International Coal Mining, Arizona Grocery.

How did we all know that those railroad companies were not, were going to be around the next time when the reparations award was to be made?

The statute gives you rights, legal rights to collect money.

It doesn't insure that there is a bank account there waiting for you at the end of the rainbow.

In this situation if the shippers are forced to pay reparations they may well get back 10 cents on the dollar or 100 cents on the dollar, but they will get what other people would get, like situated companies.

You have the tire manufacturer that sold tires to the trucking company.

He's sitting out there.

He may have a claim.

He deserves to get paid as much as the shipper who is conclusively presumed to know the rate and went into this illegal rate bargain and now wants to say well, I didn't really know the rate.

Unknown Speaker: I suppose the more illegal rate bargains there were for lower rates, the more likely it would be that the carrier would go bankrupt.

Mr. Steinfeld: I would say that's probably true.

And regrettably the marketplace was not properly administered by the ICC.

The ICC, as this Court found, gave lip service to the filed rate doctrine during the 1980's.

The utterly central provision of the act was ignored.

Rate bargains were encouraged.

The negotiated rate policy statement was issued by the Interstate Commerce Commission, and carriers and shippers were told don't worry about the law.

And now we have a national plague of bankruptcies.

Unknown Speaker: Of course under the bankruptcy law in your tire manufacturer hypothetical, if the tire manufacturer had a claim he could set-off any amount that was owed to the company.

Mr. Steinfeld: You're saying if he had a--

Unknown Speaker: So if you're talking about equivalency, the only reason there can't be a set-off here is because it's not a post-petition debt because of the reasonableness doctrine hasn't been adjudicated yet.

Mr. Steinfeld: --That is exactly right, Justice Kennedy.

We have no right of set-off in this situation.

But the tire manufacturer, if he had no other claim... my position was he is a creditor because he is owed money pre-petition, and in this situation the claimant would have a post-petition debt for this reasonableness charge.

But again, constructive knowledge is a doctrine that can't be ignored by this Court.

Unknown Speaker: Only those companies that charged, all the companies that charged low rates have gone bankrupt?

Is that what happened?

That's a strange market phenomenon.

Mr. Steinfeld: Not all, not all companies that have charged low rates.

Unknown Speaker: Just the inefficient ones, I gather, right?

Mr. Steinfeld: Well, I think there's a mix--

Unknown Speaker: And the efficient ones stay in business and continue to charge people low rates.

That's basically what happens, isn't it?

Mr. Steinfeld: --I think that's what the Government is urging certainly.

I think that's a gross simplification of what has happened in this marketplace.

There have been efficient carriers that have been forced to compete with very inefficient carriers, and because of the lack of following the filed rate doctrine and allowing stability of rate making those carriers also had to adjust their rates down.

It would take many hours to determine what indeed was the cause of all these bankruptcies in the motor carrier industry.

But certainly the lack of... the marketplace was not supposed to react that way.

In 1980 there was supposed to be an increase in competition.

The Interstate Commerce Act was specifically written with a policy of insuring against discrimination, and that was retained, preventing of destruction, destructive competition.

None of that occurred, but we still have the same statutes.

Unknown Speaker: Of course these, a lot of these cases, your position is just as strong even if there is no discrimination at all by the carrier.

Mr. Steinfeld: This is true.

Unknown Speaker: Because if they charged just the market rate across the board your anti-discrimination policy still takes over.

Mr. Steinfeld: Well, the filed rate doctrine itself cures many ills, allegedly.

Unknown Speaker: It also creates many ills.

[Laughter]

Mr. Steinfeld: Well, Justice Stevens, there is certainly that feeling.

But that again, I would submit, as this Court said in Square D, it was a great feeling in Square D that the doctrine, the Keogh doctrine should be abandoned, but again it's up to Congress to do it.

In this situation you have a Congress that knows the law, wrote the law in 1980.

If the law is no longer working it can be changed.

But what wasn't changed in 1980, and for a specific purpose, to insure rate stability, there was no change in the law with regard to the posting and the publicity of rates.

And there was no change in the law with regard to the reparations scheme.

The petitioner and the Government now, and what's most interesting, Your Honors, is the Government has changed its position 180 degrees in 6 years.

We submitted, attached to our brief is a brief filed by the Interstate Commerce Commission in San Antonio, it's Southern Pacific/San Antonio, where they urge the Fifth Circuit, and it subsequently was affirmed in the BN case by this Court, to not stay proceedings while the ICC was determining the level of the rates.

Why?

Because they said it interfered with their primary jurisdiction.

This Court in Portland Seed and also in Square D had made the determination that while reasonableness determinations were being made by the agency the rate, the legal rate still controlled, and it provided no defense to a shipper to avoid paying that rate.

Because again following the earlier precedent, a shipper is bound to pay, and this is not equivocal, it's unequivocal, bound to pay the legal rate, might recover reparations.

Unknown Speaker: So you think, you think it's fair to say that our cases hold that a negotiated rate below the filed rate is an illegal rate?

Mr. Steinfeld: Your cases hold that a negotiated rate has no legal significance.

The negotiated--

Unknown Speaker: Well, is it illegal?

Is it a legal rate?

Mr. Steinfeld: --It is, the negotiated rate is an illegal rate.

The filed rate is presumptively legal and presumptively lawful.

The fact that the rate is filed, although not charged... the not charging of the filed rate does not imbue the filed rate with any unlawfulness.

Unknown Speaker: So the shipper should pay at the time the filed rate.

Mr. Steinfeld: The shipper should pay at the time the filed rate.

The shippers are not without ability.

This Court held in Maislin that they had, and it's true, that they're watching services.

They execute a bill of lading, and the language on the bill of lading is very, very specific.

It says received subject to the classifications and tariffs on file with the ICC at the date of shipment.

So it's not just constructive knowledge, it's actual knowledge.

They're signing off on a bill of lading that says that.

It's a contract.

Unknown Speaker: Yes, but as a practical matter the shipper says to the trucker what do I owe you, and the trucker says you owe me the negotiated rate, and he delivers the goods for that.

Mr. Steinfeld: As a practical matter that has no legal significance.

Unknown Speaker: No, but that, that's what in effect happens, isn't it?

Mr. Steinfeld: That's what happened... well, in this case what happened was, and this is in the record, the trucker wrote the shipper a letter saying don't worry about our tariffs, we will handle anything that pays 90 cents a mile.

So as a practical matter in this case the shipper and the carrier decided to charge knowingly off their rates.

But it doesn't matter for my argument because I'm going to concede that the issue of constructive knowledge covers both issues, covers both situations, actual knowledge as well as not having actual knowledge.

If the Court is going to give legal significance to this illegal rate bargain by saying that it provides a reparations defense out of whole cloth, one that is not allowed within the statutory scheme, you have now given legal significance to an unfiled rate, you have sanctioned--

Unknown Speaker: Well, that was not the point I was trying to make with the question, Mr. Steinfeld.

I thought you were talking about the pay when received as if it was perfectly evident to the shipper that he owed more than he was actually being charged.

But if that's the agreement he has bargained for it would be quite natural for him to expect to receive the goods when he paid the price he bargained for.

Mr. Steinfeld: --Well, I think, I understand what Your Honor is saying, and if you're taking a totally innocent shipper that isn't aware of the higher filed rate charges the position is well, he has paid, he should get the goods.

But the law doesn't say payment... it says payment for the transportation services is made.

Now what is payment for the transportation services?

Is that just paying anything?

1 dollar when it should be 1,000 dollars?

No.

Payment, I submit that under the statute payment is payment of rates.

The statute 10743 says payment of rates.

That's the title of the statute.

It doesn't say payment of charges.

It says payment of rates.

And rates are only one thing, what is on file with the ICC.

And that's what the bill of lading says, and that is what the shipper must do.

The equities do not count, because that turns the statutory scheme on its head.

Equities can be looked at from both sides of the fence.

Unknown Speaker: Well, I don't, I don't know.

Certainly the ICC did have a policy for, until Maislin, I suppose, of encouraging negotiated rates.

Mr. Steinfeld: The ICC had that policy and we--

Unknown Speaker: And they were, they were regulating this industry.

Mr. Steinfeld: --Allegedly.

Unknown Speaker: Well, allegedly.

They were.

They just happened to, it turns out they, it turns out that one of their policies didn't square with the statute, at least this Court held.

Mr. Steinfeld: Well, this is another policy, I submit, that doesn't square with the statute because the Commission, as I said, have just changed their view.

Because negotiated rates failed.

That was their answer to the problem that they created.

Now, that being taken away from them, they now have a reasonableness philosophy which they have all of a sudden decided that, contrary to their position for 100 years, now all of a sudden shippers are no longer bound to pay, but they might have to pay, but let us decide whether they are reasonable or not.

But now only in a bankruptcy scenario, not in actual life.

Well, the carriers act ongoing, you're not going to enforce the filed rate doctrine, you're going to get more bankruptcies, and the problem is going to continue and continue.

I don't think you reward an agency's malfeasance by then again finding another exception to allow them off the hook.

Congress is going to deal with this agency.

Unknown Speaker: But we're not talking about, we're not talking about how we should treat the ICC.

We're trying to, we're talking about how to treat the shipper--

Mr. Steinfeld: That is correct, Your Honor.

Unknown Speaker: --who has been, who perhaps mistakenly relied on an ICC policy.

Mr. Steinfeld: I, the way to treat that--

Unknown Speaker: To say nothing of the carrier.

Mr. Steinfeld: --Well, the carrier is out of business.

The carrier's officers can go to jail.

There are criminal penalty provisions which can be enforced, and I submit the ICC I think finally is coming around to doing that.

We have read in the press that there have been some enforcement actions, finally.

That's the way to handle the people who created the malfeasance.

Unknown Speaker: Post-Maislin, I hope.

Mr. Steinfeld: Yes.

Definitely post-Maislin, Your Honor, Justice Scalia.

Unknown Speaker: I don't know why.

The statute has been so clear for 100 years, I don't know why you limit it to post-Maislin.

[Laughter]

Mr. Steinfeld: I can appreciate that comment as well, Justice Stevens.

But this meaningful opportunity doctrine is an equitable principle, and you can search that act from the 10101 to the end of the act and you will not find anything that speaks to deciding cases differently.

Again, the principle of constructive notice has been a part of this jurisprudence since 19... arguably since 1915 when Mr. Maxwell wanted to go to the World's Fair by xx of Denver and now all of a sudden he had to pay more money.

Unknown Speaker: But you must admit the tariffs got a little more complicated after the motor carriers were regulated than before.

Mr. Steinfeld: Again that's, I submit that's the ICC's doing.

I hate to come back to that part.

Tariffs do not have to be complicated.

They can be simplified, and they should be simplified.

Unknown Speaker: Yeah, but they really aren't, as you well know.

I mean, Mr. Phillips gave you one example, several hundred pages sometimes.

Mr. Steinfeld: I do tend to dispute Mr. Phillips in this case.

I don't want to argue too much about the facts of this case, but I was involved in this audit and this is a very simple tariff.

And certainly his client who receives a letter saying that I'll handle anything that pays 90 cents a mile, don't worry about my tariffs, is hard to question that he even bothered to open or crack a book to verify the rate.

But watching services are there and it is not that difficult.

And, by the way, if it is difficult the shippers are not without remedy.

All they have to do is call the ICC up.

They can file a complaint at any time with the agency requesting tariffs to be stricken, modified, or changed.

If they don't like it, let them complain about it.

But what they don't like is having to pay filed rate charges after the fact, which I can understand.

But at the same time the trustees don't like the fact that they're left with clean up costs, with unpaid wage claims.

The thing is a mess, and we're trying to simply enforce the law as it is written.

We're not denying the reasonableness here, by the way.

In Carolina Motor this is exactly true.

If they were truly interested in challenging the reasonableness of the rates they could have done so under the Bankruptcy Code 108(c), extension of the statute of limitations.

They had their full 2 years available to them.

They could get every penny that any other claimant could have gotten had they chose to file a reparations case.

Unknown Speaker: But then that is like Western Pacific where the time for that has expired.

Mr. Steinfeld: Now, now that the plan of liquidation has been affirmed and the stay has been lifted, obviously the time has occurred, has departed.

But, Mr. Chief Justice, Western Pacific was clearly acting on its rights under the Tucker Act.

Why would Congress... query this.

Why would Congress give the U.S. Government the absolute right to raise reasonableness as a defense through a set-off procedure if it didn't have to?

It had to because the United States Government didn't want to be bound, as is often the case, to do what everybody else is doing.

First of all we don't have to worry about the insolvency, thankfully, of the U.S. Government.

So we don't have to worry about the time--

Unknown Speaker: Don't be too sure.

Mr. Steinfeld: --we take.

But there are rules created separately for the United States of America.

And in so doing... and those are the only two cases, by the way.

The Court should note this, that the only two cases that they rely upon are U.S. v. Western Pacific and U.S. v. Pennsylvania Railroad, both Tucker Act cases.

Those are the only cases within the entire jurisprudence of this Court that have provided rate reasonableness as a defense, only because of the set-off provisions under the Tucker Act.

And I would submit if Congress wishes private litigants to have the same rights they sure could give it to them.

If there are any other questions.

If not, thank you very much.

I would ask that the Court affirm the decision below.

Unknown Speaker: Thank you, Mr. Steinfeld.

Mr. Phillips, you have 3 minutes remaining.

Rebuttal of Carter G. Phillips

Mr. Phillips: Thank you, Mr. Chief Justice.

Just a couple of quick points.

First of all I would like to clarify the record in this case.

Mr. Steinfeld suggested that the shippers in this case were informed that the rates would not be filed and therefore acted essentially at their own peril.

What that letter actually says just prior to the reference to what rates were going to be charged is, I'm not sending you the tariff because it is, quote, voluminous, and you need not worry about it though because we're going to go ahead and take care of this in a filed tariff.

So the truth is that the shippers did rely.

It's ultimately not terribly important to the outcome of the case, but it's important to set that record straight.

With respect to the idea that there was either collusion or discrimination in this case, that's nonsense.

This is a shipper who... these are brokers, small brokers.

They don't have any market power.

They use 15 different carriers.

All 15 of those carriers charge precisely the same rate.

And in fact if you look at the carrier's tariffs in this case, they have tariffs that look very similar for other shippers to the rates that they charged here, they just didn't bother to file those tariffs for this particular shipper.

So what happened here is clearly just malfeasance.

He talks about the malfeasance of the Interstate Commerce Commission in how it approached this case.

I find it incredibly mystifying to sit here and say that we have erred because we failed to exercise constructive knowledge when it's obvious that from the beginning the carriers had an obligation to charge and collect the filed rate.

They chose not to do so.

They charged a different rate.

And to suggest that somehow at the outset of this process under section 10743 that we had some duty to come back to them and say, sir, you have undercharged us, you need to expect more out of us, is ridiculous because--

Unknown Speaker: You... that's a little bit of an overstatement.

I thought you conceded long ago that if the, if the carrier had an adequate opportunity to get reparations that the carrier could sue you for the difference between the negotiated rate and the filed rate.

Mr. Phillips: --If it is absolutely clear--

Unknown Speaker: Is that right?

Mr. Phillips: --If it is absolutely clear that there is no risk in pursuing reparations, I agree with that.

Unknown Speaker: Well, then you do, then you did, you had to have had a duty to pay the filed rate.

Mr. Phillips: I did have... I had a duty to pay the filed rate.

Unknown Speaker: Well, you couldn't rely on what the carrier said, then.

If the carrier could collect the filed rate from you, you had a duty.

Mr. Phillips: At the time of shipment all the scheme requires is, and I quote the language, Justice White, only when payment for the transportation of service is provided.

It doesn't say the filed rate.

It says the payment.

And we made that.

Unknown Speaker: Well, I know, but nevertheless the carrier could come back and collect the filed rate from you.

Mr. Phillips: It may come back--

Unknown Speaker: If there is an adequate reparations remedy.

Mr. Phillips: --And of course the one question that Mr. Steinfeld asked is how will we know who is solvent, when.

Well, I don't know how we'll know who's solvent in the future, but the one thing I know absolutely is who is insolvent today, and that's Carolina Motors.

Unknown Speaker: But isn't that the essential injustice?

I mean the essential injustice here is an injustice that you concede is there in the act, that the carrier who was at fault for all of this can nonetheless come and collect the rate, and if he happens to go insolvent the next day you're just straight out of luck.

Isn't that the essential injustice?

And you acknowledge that that is there in the statute.

Mr. Phillips: I acknowledge that it's there in the statute as a timing issue at the outset when the payment, when the shipment is delivered and there is a requirement of payment.

At that, in that circumstance there is an injustice.

But after that circumstance, in the case that we have here, Justice Scalia, where payment is made, you come back later, that injustice no longer applies because the ICC has said to the contrary.

Thank you.

Chief Justice Rehnquist: Thank you, Mr. Phillips.

The case is submitted.