No 35918 THE UNITED STATES OF AMERICA v. MERCURY Decided October 28, 1976 Rates charged on 18 shipments of prefabricated aluminum houses or buildings from Lawrence, Mass., to Lake Mary, Fla., and three shipments of passenger motor vehicles from Dosaga, Ga., to Middlesex, N.J., and Garden City, N.Y., found unjust and unreasonable. Reasonable charges determined and proceeding discontinued. Russell Chapin, William L. Eaton, Carla A. Hills, Irving Joffe, and Sara Najjar for complainant. Martin W. Bercouici, James H. Hickcox, and Myron Smith for interveners in support of initial decision. Robert E. Born and J. Michael May for defendant and intervener. REPORT AND ORDER OF THE COMMISSION DIVISION 2, COMMISSIONERS HARDIN, O'NEAL, AND CHRISTIAN HARDIN, Commissioner: The modified procedure was followed. Exceptions to the initial decision of the Administrative Law Judge were filed jointly by the defendant, Mercury Motor Express, Inc., and its supporting intervener, Southern Motor Carriers Rate Conference, Inc. (Conference or intervener);' a reply was filed by the complainant. Additionally, replies to the exceptions were jointly filed by the Drug and Toilet Preparation Traffic Conference and The National Small Shipments Traffic Conference, Inc. (DTP), and also filed by The Society of the Plastics Industry, Inc. (SPI), all in support of the initial decision. SPI requests a rulemaking proceeding for the promulgation of certain tariff rules. Our ultimate findings are the same as those recommended in the initial decision. Exceptions and requested findings not specifically discussed in this report nor 'By order of November 15, 1973, the Conference was permitted to intervene in support of the defendant and submitted evidence as a party herein. reflected in our conclusions or findings have been considered and found not justified. By complaint filed October 16, 1973, the Department of Justice, Civil Division, representing the United States, alleges that the charges collected by the defendant on 18 shipments of prefabricated houses or buildings from Lawrence, Mass., to Lake Mary, Fla., and three shipments of passenger motor vehicles from Dosaga, Ga., to Middlesex, N.J., and Garden City, L.I., N.Y., were and are unjust and unreasonable in violation of sections 216(b) and (d) of the Interstate Commerce Act to the extent such charges are in excess of the charges determined on a classification basis. Initially, the complainant filed an action against the defendant in the United States Court for the Middle District of Florida, Tampa Division, on August 8, 1973, alleging the unreasonableness of the transportation charges on the same grounds cited in the complaint herein and seeking reparations in the amount of $10,687.14. The litigation in the district court has been stayed pending an administrative determination of the issues by the Commission. During the period April 6, 1971 to July 6, 1971, inclusive, the complainant tendered 18 shipments of aluminum houses or buildings to defendant. Each individual shipment weighed 3,800 pounds and contained five buildings weighing 760 pounds each. A shipment of five buildings fills the loading space of a 40-foot flat-bed trailer. On these 18 shipments, complainant paid and bore charges of $23,196 based on the applicable class 100 truckload rate of $6.44, minimum 20,000 pounds, although none of the shipments exceeded 3,800 pounds. The rate charged was based on a tariff rule which provides that a shipment subject to any-quantity rates, loaded to vehicle capacity, is subject to a minimum charge at the class 100 rate, minimum 20,000 pounds. The rule is an exception to the classification basis of class 250, any quantity. The complainant asserts that the charges collected on the 18 shipments were unjust and unreasonable to the extent that they exceeded charges of $12,500.10 ($735.30 per shipment) based on the classification basis of class 250 rate of $19.95, any quantity, for 17 of the shipments, and to the extent that the charges on the 18th shipment exceeded $794.20, again based on the class 250 rate but at $20.90, any quantity, or, in other words, to the extent that the charges exceeded a total of $13,294.30. The three shipments of automobiles moved in 40-foot trailer vans. On these three shipments the complainant paid and bore charges of 'Rates and costs are stated in amounts per 100 pounds unless otherwise indicated. $1,614 based upon the applicable class 150 rates of $9.22, 2,000 pounds or more but less than 5,000 pounds, based upon the applicable class 150 rates, minimum 6,000 pounds, to Garden City, and $8.46, minimum 6,000 pounds, to Middlesex from Dosaga, even though none of the automobiles weighed in excess of 3,000 pounds. The rates charged were based upon a tariff rule which provided a minimum charge of class 150, minimum 6,000 pounds, on less-thantruckload (LTL) shipments of automobiles. This minimum-charge provision is an exception to the classification basis of class 150, LTL. The complainant contends that the charges collected on the three automobiles were unjust and unreasonable to the extent that these charges exceeded charges from Dosaga for two shipments to Garden City at $285.56 and $285.37 each shipment based upon the classification basis class 150 rates of $9.68, 2,000 pounds or more but less than 5,000 pounds, and a charge of $257.63 based on the class rate of $8.89, 2,000 pounds or more but less than 5,000 pounds on the shipment to Middlesex. In support of its position, the complainant relies on the principle applied in numerous similar Commission decisions that exceptions rates which are higher than classification rates are, in the absence of special or unusual circumstances, prima facie unreasonable. See, for example, Glama Dress Co. v. Mid-South Transports, 335 I.C.C. 586, 595 (1969); Aircraft, Automobile Glass-Middle Atlantic Territory, 311 I.C.C. 650, 651 (1960); Exceptions Ratings on Magnesium Metals, 305 I.C.C. 318, 319-320 (1958); Great American Industries, Inc., v. Brooks Transp. Co., Inc., 302 I.C.C. 259, 262 (1957); United States v. Western Gillette, Inc., 341 I.C.C. 889 (1972); docket No. 35332 United States v. Ryder Truck Lines, Inc., et al. (not printed), decision and order decided April 4, 1972, by Review Board Number 4; and docket No. 35662, United States v. Carolina Carriers Corp. (not printed), decided September 11, 1973, by Review Board No. 4. The complainant also relies on Great American Industries, Inc., supra, for the proposition that class rates at classification ratings are generally considered to be maximum reasonable rates and on Ford Motor Co. v. Standard Transp. Co., Inc., 62 M.C.C. 311, 314 (1953), which holds that there is a presumption of reasonableness attached to classification ratings. The unrebutted evidence introduced by the complainant conclusively shows that the charges assessed and collected on the involved shipments were based on applicable exception ratings which exceeded charges computed on the basis of classification ratings which otherwise would have applied thereon. Accordingly, the complainant contends that the charges assessed and collected by the defendant are prima facie unjust and unreasonable and that the Commission should find that complainant has suffered damages in the amount of $10,687.14. In further support of its position, the complainant developed fully allocated costs based on East-South regional averages which tend to indicate that the revenues generated on the involved shipments at the classification bases would have exceeded the fully allocated costs for the involved transportation services. On the other hand, the defendant and intervener take the position that the presumption of unreasonableness relied upon by the complainant has application only when certain conditions are present, which conditions are allegedly absent here. In their view, where it is shown that rates based on classification ratings fail to cover the fully allocated costs for the service thereunder, the presumption that the class rate is the maximum reasonable rate is rebutted, and thus the presumption of unreasonableness, being predicated on the antecedent presumption, is also rebutted. Various decisions cited in support thereof include: New Orleans Shippers' Asso. v. I. C. R. R. Co., 34 I.C.C. 32, 34 (1915); Sulfuric Acid from New Orleans, La., 42 I.C.C. 200, 202 (1916); and Volume Class Rates, Transcontinental Territory, 325 I.C.C. 735, 738 (1965). Cost evidence developed by the defendant and intervener was presented for the purpose of showing that the charges computed on the involved shipments at the classification basis would be too low to cover the fully allocated costs for the transportation services rendered. Their cost data were calculated on a one-way basis because of a traffic imbalance which generally necessitates the deadheading of flat-bed trailers from Florida to Georgia and South Carolina. To establish that automobiles require unusual procedures which increase handling costs, the defendant described certain transportation characteristics and special requirements for handling passenger automobiles generally, including lower than average density, length, and weight of each automobile in the shipment, and the necessity for separate handling of the automobiles and the parts therefor. Investigation and Suspension Docket No. M-24488, Classification Rating on Passenger Automobiles, Nationwide, decided March 5, 1973 (unprinted), is cited for the proposition that the Commission has already found that the class 150 LTL rating on passenger automobiles is not now and never was reasonable. The Administrative Law Judge found that charges obtained from the exceptions basis under which the shipments moved were unjust |