Before ROBINSON, Chief Judge, WALD, Circuit Judge, and LUMBARD,* Senior Circuit Judge. Opinion of the Court filed by Chief Judge ROBINSON.
UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE ROBINSON I. BACKGROUND
The controversy had its inception in an agreement of sorts between Nepera, a manufacturer and distributor of chemicals, and Sea-Land, an ocean-going common carrier operating in foreign commerce, and as such subject to the Shipping Act of 1916. *fn1 Prior to 1978, Sea-Land's published tariff specified a rate of $6.85 per hundred-weight for overseas transportation of picolines, a liquid chemical manufactured by Nepera and used in the production of nicotine acid. *fn2 In anticipation of a new tariff soon to be become effective, *fn3 Sea-Land informed Nepera that it would maintain in that tariff a rate equivalent to $6.85 per hundredweight for carriage of picolines. *fn4 Despite this affirmative assurance, however, Sea-Land's new tariff, when later published, did not include any reference to that chemical. *fn5 As a result, when, in 1978, Nepera shipped three containers of picolines from the United States to Spain, Sea-Land was legally required to calculate its freight charges on the tariff rate reserved for liquid commodities "not otherwise specified." *fn6 That rate was $631.25 per weight-ton -- more than four times the old rate for picolines. *fn7
Sea-Land subsequently informed Nepera, however, that it would correct the overcharge *fn8 by resorting to Section 18(b)(3) of the Act. *fn9 That section allows a carrier to apply to the Federal Maritime Commission for approval of a refund to a shipper of a portion of charges collected, or a waiver of collection of charges billed, "where it appears that there is an error in a tariff of a clerical or administrative nature" and certain other statutory conditions are met, including the filing of the application for refund or waiver within 180 days from the date of shipment. *fn10 Sea-Land promptly published a new tariff item designating a weight-ton rate for picolines which approximated, but was not identical to, the earlier $6.85 per-hundredweight rate. *fn11 Later, exactly 180 days after Nepera's shipment, Sea-Land applied to the Commission under Section 18(b)(3) for permission to refund and waive the amount by which Sea-Land's actual freight bills exceeded charges based on the corrected tariff rate for picolines. *fn12
The Commission denied Sea-Land's application simply because the corrected rate for picolines was not the perfect counterpart of the old $6.85 per-hundredweight rate. *fn13 In accordance with an established agency policy requiring absolute equivalence of the two figures, the Commission ordered Sea-Land to recoup from Nepera the full amount of freight charges computed at the unspecified-liquids rate, at total of $25,596.51 over the picolines rate in the pre-1978 tariff; *fn14 and, since none of the statutory 180-day filing period remained, the Commission's disposition became administratively final. Thereafter, Sea-Land refused to request review of the Commission's decision by this court, using prompting Nepera to do so. *fn15 We reversed the Commission's denial of Sea-Land's application, holding that relief under Section 18(b)(3) was appropriate despite the minor rate variation attributable to the methodology of conversion. *fn16
In the meantime, Nepera had instituted the present litigation in the District Court. Charging negligence by Sea-Land, Nepera sought compensatory damages, measured by the amount of freight overcharges and the expenses incurred in prosecuting the proceeding in which the Commission's adverse decision was overturned, and punitive damages as well. *fn17 The District Court granted summary judgment to Sea-Land, noting that Nepera had prevailed in this court and thereby had established Sea-Land's duty and authority to cancel the overcharges, and on that basis it dismissed Nepera's claim to relief therefrom as moot. *fn18 Holding further that Nepera's sole remedy lay in the proceeding authorized by Section 18 (b)(3),19 the court rejected Nepera's demands for punitive damages,20 for attorney's fees and other expenses it incurred in the forerunning litigation,21 and for attorney's fees in the case at bar,22 We turn now to consider Nepera's contentions that the last four rulings were in error. II. EXCLUSIVITY OF SECTION 18 (b) (3)
The initial question presented by this appeal is whether the rate-correction procedure furnished by Section 18(b)(3) of the Shipping Act23 exclusive, and thus forbids a common-law action against a carrier for negligence in applying for leave to refund and waive shipping charges, where the carrier voluntarily represented that it would seek a specified rate correction. Persuasive authority leads us to conclude that it is not.
The Supreme Court has on two occasions been confronted by strikingly similar issues of exclusively of federal statutory provisions. In Hewitt-Robins, Inc. v. Eastern Freight-Ways, Inc.,24 a shipper challenged a motor carrier's practice of directing intrastate shipments over interstate routes in an effort to obtain the higher interstate rate, and sought to recover the resulting difference in the carrier's charges. In holding that the common-law action for refund of freight overcharges that survived passage of the Motor Carrier Act,25 the Court discussed five considerations significant to the case at bar. First, the shipper did not question the reasonableness of the tariff rates, but rather the carrier's response to its common-law duty to transport over the least expensive available route.26 Second, the Motro Carrier Act provided no procedure by which routing practices, as opposed to rates, could be contested prior to shipment.27 Third, allowance of an action for damages suffered as a consequence of misrouting would not jeopardize the stability of either tariffs or routes, and thus would not hamper the efficient administration of the Act.28 Fourth, continued recognition of such an action would have a "healthy deterrent effect" upon motor carriers.29 And "finally, and not to be overlooked," said the Court, "the absence of any judicial remedy places the shipper entirely at the mercy of the carrier, contrary to the overriding purpose of the Act. The allowance of such actions would, on the contrary, give neither an unfair advantage."30
The factors that led the Court to sustain the common-law action in Hewitt-Robins are equally apposite and decisive here. Nepera directs its attack, not at the reasonableness of any rate, but at Sea-Land's alleged subpart performance of its assumed duty to apply for a correction utilizing a rate equivalent to the $6.85 per hundred-weight rate that Sea-Land had previously represented it would maintain.31 The Shipping Act supplies no procedure by which a shipper can challenge a carrier's activities in this connection prior to shipment. Nepera's negligence action poses no threat to the sanctity of tariffs or the efficient administration of the Shipping Act; on the contrary, by deterring carriers from carelessness in discharging voluntarily assumed duties,32 lawsuits of that nature would assist in achieving important purposes of Section 18(b)(3) -- "prevent[ion of] injustice in situations where it would be inequitable to charge the filed rate,"33 and avoidance of discriminatory treatment of shippers.34 Lastly, "and not to be overlooked,"35 Section 18(b)(3) authorizes the carrier alone to apply to the Commission for authority to refund or waive transportation charges,36 and thus places the shipper "entirely at the mercy of the carrier."37 We believe the overall remedial objectives of the Shipping Act easily tolerate recognition of common-law tort liability for a carrier's negligent acts or omissions in filing a Section 18(b)(3) application where the carrier has taken on responsibility for seeking a refund or waiver based on a specified rate.
Moreover, in Nader v. Allegheny Airlines, Inc.,38 the Supreme Court again found nonexclusivity when it held that the Federal Aviation Act, despite its addressal of "deceptive practices," did not foreclose common-law fraudulent-misrepresentation actions against carriers subject to its provisions.39 The Court declared that, as a general rule, "a common-law right, even absent a saving clause,
Important to our holding today is an accurate understanding of what Nepera assails in this case. The District Court apparently believed that Nepera's target was the higher tariff rate for its shipments of picolines.42 As we read the record, however, Nepera's aim is wholly different. Nowhere does Nepera assert that either the rate Sea-Land assured or the rate it charged in unreasonable -- a grievance that could be remedied only under the terms of the Shipping Act. Nepera's sole claim is that Sea-Land's negligence in handling the application for refund and waiver led to automatic statutory imposition of a rate that was much higher than it should have been. That contention calls into question the course of conduct by which the higher rate became binding, not the validity of any rate designated for any commodity. No injury suffered as a result of the negligence averred can be redressed by resort to the statutory procedure for protesting rates as unjust now that the time limit for filing such a protest has expired.43 We hold that Section 18(b)(3) does not bar Nepera's negligence suit. III. PRIOR-LITIGATION EXPENSES
The District Court held that Nepera could not recover excessive overcharges in its lawsuit against Sea-Land because the latter was required to correct them in a Section 18(b)(3) proceeding.44 Since Nepera does not seek review of that ruling,45 we need not consider whether the Shipping Act precludes relief of that sort in a common-law action. Nepera continues, however, to press the remainder of its demand for compensatory damages -- for attorneys' fees and other expenses incurred in obtaining reversal of the Commission's order denying the application for refund and waiver.46 The District Court treated this effort as a run-of-the-mill request for reimbursement of those items and deemed them nonrecoverable as a matter of law.47 We conclude that the court erred in doing so.
Consideration of Nepera's damages claim requires initially an identification of the body of law controlling. Although the parties have argued the issue pro and con as one of general federal law,48 that treatment is the product of faulty analysis. Nepera invoked the jurisdiction of the District Court solely on the ground of diverse citizenship,49 and no other basis of federal-court jurisdiction is apparent. That means that Nepera's claim is to be measured by local rather than federal law. As the Supreme Court has said, in an ordinary diversity case where the state law does not run counter to a valid federal statute or rule of court, and ...