Square D Co. v. Niagara Frontier
476 U.S. 409 (1986)

Annotate this Case

U.S. Supreme Court

Square D Co. v. Niagara Frontier, 476 U.S. 409 (1986)

Square D Co. v. Niagara Frontier Tariff Bureau, Inc.

No. 85-21

Argued March 3, 1986

Decided May 27, 1986

476 U.S. 409

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

Syllabus

Petitioner shippers brought class actions in Federal District Court against respondent motor carriers and respondent ratemaking bureau, alleging that, during the years 1966 through 1981, respondents engaged in a conspiracy, in violation of the Sherman Act, to fix rates for transporting freight between the United States and Canada without complying with an agreement filed by the bureau with, and approved by, the Interstate Commerce Commission. Petitioners sought treble damages, measured by the difference between the allegedly higher rates they paid and the rates they would have paid in a freely competitive market, and also sought declaratory and injunctive relief. The District Court dismissed the complaints on the authority of Keogh v. Chicago & Northwestern R. Co.,260 U. S. 156, wherein it was held that a private shipper could not recover treble damages under § 7 of the Sherman Act in connection with ICC-filed tariffs. The Court of Appeals affirmed the dismissal as to the treble damages claims.

Held: Petitioners are not entitled to bring a treble damages antitrust action. Keogh, supra. Pp. 476 U. S. 415-423.

(a) Nothing in the Reed-Bulwinkle Act or in its legislative history indicates that Congress intended to change or supplant the Keogh rule. Similarly, there is no evidence that Congress, in enacting the Motor Carrier Act of 1980, intended to change the Keogh rule. And cases like Carnation Co. v. Pacific Westbound Conference,383 U. S. 213, emphasizing the necessity to strictly construe immunity of collective ratemaking activities from antitrust laws, do not render Keogh invalid. Pp. 476 U. S. 417-422.

(b) The various developments that have occurred since Keogh -- the development of class actions, the emergence of precedents permitting treble damages even when there is an available regulatory remedy, greater sophistication in evaluating damages, and the development of procedures in which judicial proceedings can be stayed pending regulatory proceedings -- are insufficient to overcome the strong presumption of continued validity that adheres in the judicial interpretation of a statute. P. 476 U. S. 423.

760 F.2d 1347, affirmed.

Page 476 U. S. 410

STEVENS, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, WHITE, BLACKMUN, POWELL, REHNQUIST, and O'CONNOR, JJ., joined. MARSHALL, J., filed a dissenting opinion, post, p. 476 U. S. 424.

JUSTICE STEVENS delivered the opinion for the Court.

Petitioners have alleged that rates filed with the Interstate Commerce Commission by respondent motor carriers during the years 1966 through 1981 were fixed pursuant to an agreement forbidden by the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 1 et seq. The question presented is whether the carriers are subject to treble damages liability in a private antitrust action if the allegation is true.

Page 476 U. S. 411

The question requires us to give careful consideration to the way in which Congress has accommodated the sometimes conflicting policies of the antitrust laws and the Interstate Commerce Act, 49 U.S.C. § 10101 et seq. (1982 ed. and Supp. II). Our analysis of the question will include three components: (1) the sufficiency of the complaint allegations in light of the bare language of the relevant statutes; (2) the impact of the Court's decision of an analogous question in 1922 in Keogh v. Chicago & Northwestern R. Co.,260 U. S. 156; and (3) the extent to which the rule of the Keogh case remains part of our law today.

I

Two class action complaints making parallel allegations against the same six defendants were filed in the United States District Court for the District of Columbia and then transferred to Buffalo, New York, where a similar action brought by the United States was pending. The Government case was ultimately settled by the entry of a consent decree; [Footnote 1] after the two private actions had been consolidated, the District Court granted a motion to dismiss the complaints. We therefore take the well-pleaded facts as true. [Footnote 2]

Five of the respondents are Canadian motor carriers engaged in the transportation of freight between the United States and Canada. They are subject to regulation by the Ontario Highway Transport Board, and by the Interstate

Page 476 U. S. 412

Commerce Commission (ICC). They are all members of the Niagara Frontier Tariff Bureau, Inc. (NFTB), which is also a defendant. NFTB is a nonprofit corporation organized to engage in collective ratemaking activities pursuant to an agreement filed with and approved by the ICC. [Footnote 3]

Petitioners are corporations that have utilized respondents' services to ship goods between the United States and Canada for many years. In their complaints, they allege that, at least as early as 1966 and continuing at least into 1981, respondents engaged in a conspiracy

"to fix, raise and maintain prices and to inhibit or eliminate competition for the transportation of freight by motor carrier between the United States and the Province of Ontario, Canada, without complying with the terms of the NFTB agreement and by otherwise engaging in conduct that either was not or could not be approved by the ICC. [Footnote 4]"

The complaints allege five specific actions in furtherance of this conspiracy. First, senior management officials of the NFTB used a "Principals Committee," which was not authorized by the NFTB agreement, to set rates and to inhibit competition. [Footnote 5] Second, respondents set and controlled NFTB rate levels without complying with the notice, publication, public hearing, and recordkeeping requirements of the NFTB agreement and ICC regulations. [Footnote 6] Third, respondents planned threats, retaliation, and coercion against NFTB members to inhibit independent actions. [Footnote 7] Fourth, respondents actually used pressures, threats, and retaliation to interfere

Page 476 U. S. 413

with independent actions. [Footnote 8] Finally, still in furtherance of the conspiracy, respondents filed tariffs with the ICC. [Footnote 9]

Because of respondents' unlawful conduct, the complaints continue, petitioners and the members of the large class of shippers that they represent have paid higher rates for motor carrier freight transport than they would have paid in a freely competitive market. [Footnote 10] They seek treble damages measured by that difference, as well as declaratory and injunctive relief.

The legal theory of the complaints is that respondents' conspiracy is not exempted from a private antitrust, treble damages action even though the rates that respondents charged were filed with the ICC, as required by law. The complaints note that the ICC requires motor carriers to file tariffs containing all their rates, to make the tariffs available for public inspection, and to give advance notice of any changes in the filed rates. [Footnote 11] Although the ICC has the power to determine those rates, the rates are set by the carriers, not the ICC, in the first instance. [Footnote 12] The Reed-Bulwinkle Act, enacted in 1948, expressly authorizes the ICC to grant approval to agreements establishing rate bureaus for the purpose of setting rates collectively. [Footnote 13] The joint Betting of rates pursuant to such agreements is exempted from the antitrust laws, but the statute strictly limits the exemption to actions that conform to the terms of the agreement approved by the

Page 476 U. S. 414

ICC. [Footnote 14] In this case, according to the theory of the complaints, the activities of respondents were not authorized by the NFTB agreement; hence the alleged conspiracy was not exempt from the antitrust laws, and, indeed, blatantly violated those laws.

Under the plain language of the relevant statutes, it would appear that petitioners have alleged a valid antitrust action. The stated activities are clearly within the generally applicable language of the antitrust laws; [Footnote 15] nothing in the language of the Interstate Commerce Act, moreover, necessarily precludes a private antitrust treble damages remedy for actions that are not specifically immunized within the terms of the Reed-Bulwinkle Act. [Footnote 16]

The District Court nevertheless dismissed the complaints on the authority of the Keogh case. 596 F.Supp. 153 (WDNY 1984). The Court of Appeals for the Second Circuit affirmed insofar as the District Court's judgment dismissed the claims for treble damages based on respondents' filed rates, but remanded for a further hearing to determine whether petitioners are entitled to injunctive relief and to give them an opportunity to amend their complaints to state possible claims for damages not arising from the filed tariffs. 760 F.2d 1347 (1985). We granted certiorari to consider whether the rule of the Keogh case was correctly applied in barring a treble damages action based on the filed tariffs, and,

Page 476 U. S. 415

if so, whether that case should be overruled. 474 U.S. 815 (1985).

II

In Keogh, as in this case, a shipper's complaint alleged that rates filed with the ICC by the defendants had been fixed pursuant to an agreement prohibited by the Sherman Act. The rates had been set by an agreement among executives of railroad companies "which would otherwise be competing carriers," 260 U.S. at 260 U. S. 160. They were "higher than the rates would have been if competition had not been thus eliminated." Ibid. The shipper claimed treble damages measured by the difference between the rates set pursuant to agreement and those that had previously been in effect.

In their special plea, defendants averred that every rate complained of had been filed with the ICC and that, after hearings in which Keogh had participated, the rates had been approved by the Commission. That approval established that the fixed rates were "reasonable and nondiscriminatory," id. at 260 U. S. 161, but it did not foreclose the possibility that slightly lower rates would also have been within the zone of reasonableness that the Commission would also have found lawful under the Interstate Commerce Act. Nor did the ICC's approval require rejection of Keogh's contention that the combination among the railroads violated the Sherman Act. [Footnote 17] The Court nevertheless held that, Keogh, a private shipper, could not "recover damages under § 7 because he lost the benefit

Page 476 U. S. 416

of rates still lower, which, but for the conspiracy, he would have enjoyed." Id. at 260 U. S. 162.

The Court reasoned that the ICC's approval had, in effect, established the lawfulness of the defendant's rates, [Footnote 18] and that the legal right of the shippers against the carrier had to be measured by the published tariff. It therefore concluded that the shipper could not have been "injured in his business or property" within the meaning of § 7 of the Sherman Act by paying the carrier the rate that had been approved by the ICC. Justice Brandeis explained:

"Section 7 of the Anti-Trust Act gives a right of action to one who has been 'injured in his business or property.' Injury implies violation of a legal right. The legal rights of shipper as against carrier in respect to a rate are measured by the published tariff. Unless and until suspended or set aside, this rate is made, for all purposes, the legal rate, as between carrier and shipper. The

Page 476 U. S. 417

rights as defined by the tariff cannot be varied or enlarged by either contract or tort of the carrier. Texas & Pacific R. R. Co. v. Mugg,202 U. S. 242; Louisville & Nashville R. R. Co. v. Maxwell,237 U. S. 94; Atchison, Topeka & Santa Fe Ry. Co. v. Robinson,233 U. S. 173; Dayton Iron Co. v. Cincinnati, New Orleans & Texas Pacific Ry. Co.,239 U. S. 446; Erie R. R. Co. v. Stone,244 U. S. 332. And they are not affected by the tort of a third party. Compare Pittsburgh, Cincinnati, Chicago & St. Louis Ry. Co. v. Fink,250 U. S. 577. This stringent rule prevails, because otherwise the paramount purpose of Congress -- prevention of unjust discrimination -- might be defeated."

Id. at 260 U. S. 163.

In this case, unlike Keogh, respondents' rates, established in the tariffs that had been filed with the ICC, were not challenged in a formal ICC hearing before they were allowed to go into effect. They were, however, duly submitted, lawful rates under the Interstate Commerce Act in the same sense that the rates filed in Keogh were lawful. Under the Court's holding in that case, it therefore follows that petitioners may not bring a treble damages antitrust action. [Footnote 19] The question, then, is whether we should continue to respect the rule of Keogh.

III

Petitioners, supported by the Solicitor General of the United States, ask us to overrule Keogh. They submit that

Page 476 U. S. 418

Keogh was implicitly rejected in the Reed-Bulwinkle Act and in the Motor Carrier Act of 1980, Pub.L. 96-296, 94 Stat. 793; that Keogh in effect created an implied immunity from the antitrust laws and that its reasoning is thus inconsistent with later cases, particularly Carnation Co. v. Pacific Westbound Conference,383 U. S. 213 (1966); and that the rationales of the Keogh decision are no longer valid.

Petitioners argue that the Reed-Bulwinkle Act, by delineating an antitrust immunity for specific ratemaking activities, [Footnote 20] repudiated Keogh's holding that shippers may not bring treble damages actions in connection with ICC-filed tariffs. In our view, however, it is not proper to read that statute as supplanting the Keogh rule with a narrow, express exemption from the antitrust laws.

The legislative history of Reed-Bulwinkle explains that it was enacted, at least in part, in response to this Court's decision in Georgia v. Pennsylvania R. Co.,324 U. S. 439 (1945). [Footnote 21] In that case, after restating the holding in Keogh, the Court held that, although Georgia could not maintain a suit under the antitrust laws to obtain damages, it could obtain injunctive relief against the collective ratemaking procedures employed by the railroads. [Footnote 22] The Reed-Bulwinkle Act

Page 476 U. S. 419

thus created an absolute immunity from the antitrust laws for approved collective ratemaking activities.

Nothing in the Act or in its legislative history, however, indicates that Congress intended to change or supplant the Keogh rule that other tariff-related claims, while subject to governmental and injunctive antitrust actions, did not give rise to treble damages antitrust actions. On the contrary, the House Report expressly stated that, except for creating the new exemption, the bill left the antitrust laws applicable to carriers unchanged "so far as they are now applicable." [Footnote 23] Particularly because the legislative history reveals clear congressional awareness of Keogh, [Footnote 24] far from supporting petitioners' position, the fact that Congress specifically addressed this area and left Keogh undisturbed lends powerful support to Keogh's continued viability.

Similarly, petitioners and the Solicitor General argue that private treble damages actions would further the congressional policy of promoting competition in the transportation industry reflected in the Motor Carrier Act of 1980. [Footnote 25] We

Page 476 U. S. 420

may assume that this is the case -- indeed, we may assume that petitioners are correct in arguing that the Keogh decision was unwise as a matter of policy -- but it nevertheless remains true that Congress must be presumed to have been fully cognizant of this interpretation of the statutory scheme, [Footnote 26] which had been a significant part of our settled law for over half a century, and that Congress did not see fit to change it when Congress carefully reexamined this area of the law in 1980. Petitioners have pointed to no specific statutory provision or legislative history indicating a specific congressional intention to overturn the longstanding Keogh construction; [Footnote 27] harmony with the general legislative purpose is inadequate for that formidable task.

Petitioners' reliance on Carnation Co. v. Pacific Westbound Conference,383 U. S. 213 (1966), is also unavailing. In Carnation, a shipper of evaporated milk brought an antitrust treble damages action against an association of shipping companies that had established higher rates for transportation between the west coast of the United States and the Philippine Islands. The defendants contended that the Shipping Act of 1916 had repealed all antitrust regulation of ratemaking activities in the shipping industry. Section 15 of the Shipping Act did create an express exemption for collective

Page 476 U. S. 421

ratemaking pursuant to agreements that had been approved by the Federal Maritime Commission, but the defendants had not obtained any such approval. They nevertheless contended that the structure of the entire Shipping Act, read against its legislative history, demonstrated an intent to free the ratemaking activities of the shipping industry from the antitrust laws. The Court unanimously rejected the argument, explaining:

"We recently said:"

"Repeals of the antitrust laws by implication from a regulatory statute are strongly disfavored, and have only been found in cases of plain repugnancy between the antitrust and regulatory provisions."

"United States v. Philadelphia National Bank,374 U. S. 321, 374 U. S. 350-351. We have long recognized that the antitrust laws represent a fundamental national economic policy, and have therefore concluded that we cannot lightly assume that the enactment of a special regulatory scheme for particular aspects of an industry was intended to render the more general provisions of the antitrust laws wholly inapplicable to that industry. We have, therefore, declined to construe special industry regulations as an implied repeal of the antitrust laws even when the regulatory statute did not contain an accommodation provision such as the exemption provisions of the Shipping and Agricultural Acts. See, e.g., United States v. Philadelphia National Bank, supra."

Id. at 383 U. S. 217-218.

Petitioners correctly point out that cases like Carnation make it clear that collective ratemaking activities are not immunized from antitrust scrutiny simply because they occur in a regulated industry, and that exemptions from the antitrust laws are strictly construed and strongly disfavored. Nevertheless, even if we agreed that Keogh should be viewed as an "antitrust immunity" case, we would not conclude that later cases emphasizing the necessity to strictly construe such immunity rendered Keogh invalid. For Keogh represents

Page 476 U. S. 422

a longstanding statutory construction that Congress has consistently refused to disturb, even when revisiting this specific area of law.

We disagree, however, with petitioners' view that the issue in Keogh and in this case is properly characterized as an "immunity" question. The alleged collective activities of the defendants in both cases were subject to scrutiny under the antitrust laws by the Government and to possible criminal sanctions or equitable relief. Keogh simply held that an award of treble damages is not an available remedy for a private shipper claiming that the rate submitted to, and approved by, the ICC was the product of an antitrust violation. Such a holding is far different from the creation of an antitrust immunity, [Footnote 28] and makes the challenge to Keogh's role in the settled law of this area still more doubtful. [Footnote 29]

Page 476 U. S. 423

Finally, petitioners point to various developments, discussed by the Court of Appeals, that seem to undermine some of the reasoning in Justice Brandeis' Keogh opinion -- the development of class actions, which might alleviate the expressed concern about unfair rebates; [Footnote 30] the emergence of precedents permitting treble damages remedies even when there is a regulatory remedy available; [Footnote 31] the greater sophistication in evaluating damages, which might mitigate the expressed fears about the speculative nature of such damages; [Footnote 32] and the development of procedures in which judicial proceedings can be stayed pending regulatory proceedings. [Footnote 33] Even if it is true that these developments cast Justice Brandeis' reasons in a different light, however, it is also true that the Keogh rule has been an established guidepost at the intersection of the antitrust and interstate commerce statutory regimes for some 6 1/2 decades. The emergence of subsequent procedural and judicial developments does not minimize Keogh's role as an essential element of the settled legal context in which Congress has repeatedly acted in this area.

IV

The Court of Appeals, in Judge Friendly's characteristically thoughtful and incisive opinion, suggested that, in view

Page 476 U. S. 424

of subsequent developments, this Court might be prepared to overrule Keogh. We conclude, however, that the developments in the six decades since Keogh was decided are insufficient to overcome the strong presumption of continued validity that adheres in the judicial interpretation of a statute. [Footnote 34] As Justice Brandeis himself observed, a decade after his Keogh decision, in commenting on the presumption of stability in statutory interpretation:

"Stare decisis is usually the wise policy, because, in most matters, it is more important that the applicable rule of law be settled than that it be settled right. . . . This is commonly true, even where the error is a matter of serious concern, provided correction can be had by legislation. [Footnote 35]"

We are especially reluctant to reject this presumption in an area that has seen careful, intense, and sustained congressional attention. If there is to be an overruling of the Keogh rule, it must come from Congress, rather than from this Court.

The judgment of the Court of Appeals is affirmed.

It is so ordered.

[Footnote 1]

The consent decree enjoins respondents from

"harassing, discouraging, coercing, or threatening in any way any motor carrier to withdraw, forbear from filing, or modify in any way said carrier's planned or actual independent rates,"

and from discussing rates except "within an authorized ratemaking body of a rate bureau with a rate agreement." United States v. Niagara Frontier Tariff Bureau, Inc., 1984-2 Trade Cases

Official Supreme Court case law is only found in the print version of the United States Reports. Justia case law is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.