North Alabama Express, Inc. v. Interstate Commerce Commission

United States Court of Appeals,

Eleventh Circuit.

Nos. 94-6034, 93-6835, 93-6842 and 93-6877.

NORTH ALABAMA EXPRESS, INC., an Alabama corporation. AAA Cooper
Transportation, Inc., an Alabama corporation, Petitioners,

Milan Express, Inc.; James H. Evans and the Alabama Public
Service Commission, Intervenors,

v.

INTERSTATE COMMERCE COMMISSION; United States of America;
Averitt Express, Inc., and Deaton, Inc., Respondents.

In re AVERITT EXPRESS, INC.; Deaton, Inc., Petitioners,

James H. Evans, in his official capacity as Attorney General of
the State of Alabama and on behalf of the district attorneys of the
State of Alabama, Milan Express, Inc., Intervenors.

In re NORTH ALABAMA EXPRESS, INC., Milan Express, Inc.,
Petitioners,

Averitt Express, Inc.; Deaton, Inc., and James H. Evans, in his
official capacity as Attorney General of the State of Alabama and
on behalf of the district attorneys of the State of Alabama;
Alabama Public Service Commission, Intervenors.

AVERITT EXPRESS, INC.; Deaton, Inc., Plaintiffs-Appellants,

v.

Jim SULLIVAN, Charles B. Martin, Jan Cook, Commissioners, in
their official capacities as Commissioners of the Alabama Public
Service Commission; United States of America, Defendants-
Appellees,

Milan Express, Inc., a Tennessee Corporation, Intervenor-
Defendant,

James H. Evans, in his official capacity as Attorney General of
the State of Alabama and on behalf of the district attorneys of the
State of Alabama; North Alabama Express, Inc., and AAA-Cooper
Transportation, Inc., Intervenors.

Aug. 25, 1995.

Petition for Review of an Order of the Interstate Commerce
Commission (ICC No. MC-F-19804).
Appeal from the United States District Court for the Middle
District of Alabama (No. CV93-D-1192-N) Ira DeMent, Judge.
Petition for Writ of Mandamus to the United States District Court
for the Middle District of Alabama.

Before ANDERSON and CARNES, Circuit Judges, and RONEY, Senior
Circuit Judge.

RONEY, Senior Circuit Judge:

In a second petition for review to this Court, North Alabama

Express, AAA-Cooper Transportation Inc., and Milan Express

challenge the Interstate Commerce Commission's order permitting the

transfer of intrastate trucking authority from Deaton, Inc. to

Averitt Express, Inc. We grant the above-named parties' petition,

but because the Interstate Commerce Commission (the "ICC")

misinterpreted our prior opinion, we must again set aside the ICC's

order. North Alabama Express, Inc. v. ICC, 971 F.2d 661, 663-65

(11th Cir.1992), modified on rehearing to delete one sentence of

dictum, 996 F.2d 1072 (11th Cir.1993).

On that petition, we held that the ICC lacked the power to

approve or exempt the transfer of the intrastate routes involved in

this case because the transaction did not constitute a change in

interstate commerce. The ICC apparently interpreted this decision

as requiring only that there be a change in interstate "authority"

to give it the power over the intrastate routes. A transfer of

interstate authority which has not been used, and will not be used

by the transferee, however, does not constitute a change in

commerce. The prior opinion specifically required a change in

interstate commerce, not just a change in interstate authority. A

paper change without any real change in commerce presents precisely

the same nature of the transaction argued by the objectors.

In addition, it is quite apparent from the prior opinion, that
the transfer of intrastate certificates must be related to the

change in interstate commerce. Obviously, as the case stood before

the court on the prior appeal, there could be no relation of the

intrastate routes to a change in interstate commerce if there was

no change in interstate commerce. There are therefore two

questions unanswered. Even though the ICC did find a change in

interstate "authority," it did not find this would result in a

change in interstate "commerce," and in any event, it made no

effort to show what relation the intrastate transfer had to the

interstate transfer.

The disputed transfer occurred in late December 1990 or early

January 1991 when Averitt contracted to purchase a portion of

Alabama Certificate 695 from Deaton. The purchase would allow

Averitt to transport—with a few exceptions—general commodities in

intrastate commerce in the state of Alabama within designated areas

around Birmingham, Mobile, and Selma.

After Averitt and Deaton filed an application for approval

with the Alabama Public Service Commission, several motor carriers

opposed the proposed transfer. The commission set a hearing on the

application for March 7, 1991.

On February 8, 1991, prior to the scheduled hearing before the

state commission, Deaton, Inc. and Averitt Express, Inc. filed a

joint notice of exemption of a transfer transaction under 49 U.S.C.

§ 11343 with the ICC. Deaton and Averitt sought exemption from the

applicable merger, consolidation, and acquisition of control

provisions of the Motor Carrier Act pursuant to 49 U.S.C. §

11343(e). Deaton proposed to transfer its interstate authority to
transport general commodities between points in five southern

states, including Alabama. As part of this transaction, the

parties also sought approval of the same transfer of intrastate

authority proposed to the Alabama Public Service Commission.

Trucking companies North Alabama Express, AAA-Cooper, Milan

Express, and Neely Truck Line opposed the ICC's approval of the

transfer. The ICC determined that section 11341(e) governed and

that section 11341 gave it exclusive jurisdiction over the entire

transaction, including the transfer of intrastate operating rights.

Averitt Express, Inc.—Purchase (Portion) Exemption—Deaton, Inc., 7

I.C.C. 634, 1991 WL 149941 1991 MCC Lexis 95 (1991). North Alabama

and AAA-Cooper as petitioners, as well as Milan Express and the

Alabama Public Service Commission as intervenors, sought review of

that order.

On review, this Court agreed that section 11343 authorized the

ICC to allow transfers of both interstate and intrastate operating

rights. The Court held, however, that the agency could not

authorize the transfer of intrastate rights based on the record

before it. In North Alabama, we said the ICC lacks power to

transfer intrastate rights "absent some connection between the

proposed transaction, the intrastate authority, and interstate

commerce." 971 F.2d at 665. To establish the connection, the

intrastate rights must have "some relationship with the change in

interstate commerce resulting from the proposed transaction." Id.

On the record before the Court, we held that the transfer

would neither enlarge Averitt Express's ability to transport in

interstate commerce, nor would it reduce Deaton's authority to
transport in interstate commerce. Thus, the proposed transfer

effected no substantive change in interstate commerce. Finding no

change in interstate commerce to which the transfer of intrastate

rights could "relate," the court set aside the portion of the ICC

decision declining to revoke the exemption for the transfer of

intrastate rights.

Averitt and Deaton filed petitions to reopen the exemption

proceeding to allow them to meet the test set out in North Alabama.

The ICC denied the request to reopen the proceeding, but treated

the petition and responses as new evidence and entertained

additional comments from the parties. On December 10, 1993, the

ICC entered a new order that again approved the transfer of the

Alabama intrastate certificate. Averitt Express, Inc.—Purchase

(Portion) Exemption—Deaton, Inc., 9 I.C.C. 1232, 1993 WL 514412

1993 ICC Lexis 272.

The ICC stated that upon further review, the supplemented

record indicated that Averitt will gain interstate authority it did

not have before, and Deaton will lose interstate authority it

previously possessed. Under the proposed transfer, Averitt would

be able to transport household goods and commodities in bulk among

five states, which it could not do before. On the other hand,

Deaton would lose its household goods authority and much of its

bulk authority in those states. The ICC decided that such a

"change in each party's "ability to transport certain [items] in

purely interstate commerce[,]' ... satisfies the "change in

authorities test' established by the court in North Alabama. 9

I.C.C. 1232, 1993 WL 514412 at *3 1993 ICC Lexis at 272, *11.
Petitioners seek review of this order.

As a preliminary matter, the objectors argue the ICC acted

outside its authority in reopening the prior proceeding to receive

new evidence and to reconsider the validity of the transfer without

a formal remand from this Court. The ICC has broad statutory

authority to reopen a proceeding at any time "because of material

error, new evidence, or substantially changed circumstances." 49

U.S.C. § 10322(g)(1). In this case, where the Court made clear the

legal error, despite the absence of a formal remand, the agency

acted within its authority in reopening the prior proceeding for

additional evidence.

The objectors argue that this type of transaction does not

qualify for exemption under section 11343(a)(2), and that the ICC's

actions exceed the boundaries of the Commerce Clause and violate

the Tenth Amendment. These arguments were raised and rejected in

the previous appeal. We need not address them further as the prior

opinion constitutes the law of the case. See Burger King Corp. v.

Pilgrim's Price Corp., 15 F.3d 166, 169 (11th Cir.1994).

Issues on Appeal

Petitioners raise two issues we must address on this appeal.

First, North Alabama, AAA-Cooper and Milan Express (collectively,

the "objectors") argue there is not sufficient evidence to support

the ICC's finding that there has been the "change in authorities"

required under North Alabama.

Second, they argue that the transaction is void because there

is no relationship between the interstate and intrastate transfer.

Essentially, the objectors contend here, as they argued
previously, that the transaction is a sham. They assert that

Averitt and Deaton cooked up what is essentially a meaningless

interstate transfer to bootstrap onto it the intrastate transfer

they presumed would not otherwise be approved by the state

commission. The panel agreed with objectors in the prior opinion

that the ICC could not rely upon a "sham" transaction to justify

rewriting intrastate certificates. 971 F.2d at 665.

A. Change in authority

As to the first issue, we hold that the record supports a

decision that the transfer does effect a change in authority to

transport goods in interstate commerce. Averitt would acquire

authority it did not previously have to transport household goods

and bulk commodities in interstate commerce. Deaton would lose the

authority to transport household goods and retain only limited bulk

service.

The interstate authority transferred from Deaton to Averitt is

Interstate Certificate of Convenience and Necessity issued in

Docket NO. MC-11207 (Sub-No. 574)X, which:

authorizes transport of general commodities (except Classes A
and B explosives) between points in AL, GA, LA, MS, and TN,
over irregular routes.

The transferred Alabama intrastate authority from Deaton to Averitt

includes a portion of Alabama Intrastate Certificate No. 695,

authorizing the transport over irregular routes in intrastate

commerce in Alabama of certain commodities.1

1
(1) General Commodities (except commodities in bulk,
Classes A and B explosives and commodities which
because of size or weight require the use of special
handling or equipment):
 According to the joint notice of exemption, Deaton is

primarily a truckload carrier that uses flatbeds, lowboys, and

other special equipment to transport size and weight commodities.

On the other hand, Averitt transports general commodities in vans.

Between all points within a radius of 125 miles of
Birmingham. Between Birmingham and all points within
15 miles thereof, and Mobile and points within 15 miles
thereof.

Restriction: restricted against the transportation of
the above named commodities on flatbed or lowboy
trailers.

(2) General commodities (except high explosives,
commodities injurious to other lading and commodities
which because of size or weight require the use of
special handling or equipment):

Between Mobile and points within ten miles thereof
on the one hand, and Selma and points within ten
miles thereof, on the other hand.

Restriction: Restricted against the
transportation of the above named commodities on
flatbed or lowboy trailers.

Deaton retains the following intrastate authority:

(1) General Commodities (that because of size or weight
require the use of special handling or equipment;
including flatbed and lowboy trailers:

Between all points within a radius of 125 miles of
Birmingham; between Birmingham and all points
within 15 miles thereof, and Mobile and all points
within 15 miles thereof.

Between Mobile and points within 10 miles thereof,
on the one hand, and Selma and points within 10
miles thereof, on the other.

(2) Structural Steel products, steel tubing, steel
pipe, cast iron pipe, cast iron fittings, cast iron
valves, and fire hydrants, (that because of weight
require special handling or equipment) from Jefferson
County and precast concrete panels (that because of
size or weight require special handling or equipment)
from Pelham; to all points in Alabama in truckload
shipments only, utilizing flatbed trailers.
Averitt transports no size and weight commodities. The ICC found

in its second opinion that Averitt has developed from a

predominantly regular route, general commodity carrier with

operations confined to points in Tennessee, to a multi-state

carrier. It holds a number of certificates that authorize

nationwide transportation of general commodities. With minor

exceptions, all of Averitt's authority is restricted against

transportation of household goods and commodities in bulk. Averitt

Express, 9 I.C.C. 1232, 1993 WL 514412 1993 ICC Lexis at 272, *6.

The transferred authority permits the transportation of

household goods and to a lesser degree, commodities in bulk, so

Averitt has authority to transport additional major categories of

traffic. Deaton's retained authority excludes the transportation

of household goods and allows only limited bulk service. Based on

the additional evidence as outlined in the ICC's December 10

opinion, it appears that the authority of the parties to transport

in interstate commerce has been altered.

B. Change in Interstate Commerce

The change in authority, however, does not necessarily result

in a change in commerce sufficient to carry a transfer of

intrastate routes. The prior opinion specifically stated that the

ICC's jurisdiction depends upon a "change in interstate commerce,"

971 F.2d at 665, and that the intrastate rights must have "some

relationship with the change in interstate commerce...." Id.

The objectors argue that because Deaton never transported

household goods and commodities in bulk prior to the transfer of

authority and Averitt does not transport these goods under that
authority, in effect there has been no change in interstate

commerce.

The record provided to this Court in this case, No. 94-6034,

North Alabama Express, Inc. v. Sullivan, is woefully sparse. The

entire record on appeal consists of the parties' joint notice of

exemption with an attachment; the ICC's notice exempting the

transfer subject to public comment; and the two relevant ICC

opinions.

The following statement made by Vice Chairman Simmons in his

dissent that Averitt has not used and has no intention of using the

interstate authority transferred is unchallenged in the

Commission's opinion, in the record, and by Averitt on appeal:

Here, Averitt has never conducted operations under the
authority in question and, despite protestations to the
contrary, apparently has no intention to do so. In my
opinion, in order to show the requisite "change in interstate
commerce,' a purchaser should show that it is acquiring
interstate authority not presently held as well as substantial
evidence of its intention to use that authority to provide a
new and ongoing interstate service.

There is no evidence in the record on appeal to support the ICC's

assertions to the contrary. The transfer of interstate authority

that has not been used by the transferor to a transferee, who has

no intention of using it, creates no change in "interstate

commerce."

C. Relationship Between Intrastate and Interstate Authority and
Change in Interstate Commerce

Finally, objectors assert the transfer is a sham because the

parties failed to show the relationship between the intrastate and

interstate transfers, highlighting the conflicts between the

interstate and intrastate certificates. Contrary to objectors'
assertion, the statute does not require the parties to show the

intrastate authority is "necessary" to the transfer. It is only

after the Commission approves or exempts a transfer of intrastate

and interstate authority that section 11341(a) then exempts that

entire transaction from state law "as necessary" to carry out the

transaction. 49 U.S.C. § 11341(a).2

While the statute requires no showing of necessity to approve

such a transfer, obviously there must exist some relationship

between the interstate and intrastate authority being transferred.

In our prior opinion, we specifically upheld the ICC's authority to

transfer intrastate certificates, even if the transfer violates

state law, if such action is "related to" the change in interstate

commerce. North Alabama, 971 F.2d at 667. Although the level of

relationship does not seem to have been developed, it would appear

that the ICC's authority must rest on a sufficient connection

between the interstate transfer and the attempted intrastate

transfer to make the ICC's action reasonable. Objectors argue no

relationship exists between the transferred intrastate authority

and interstate authority by highlighting the conflicts between the

2
49 U.S.C. § 11341(a) reads

(a) The authority of the Interstate Commerce Commission
under this chapter is exclusive. A carrier or corporation
participating in or resulting from a transaction approved by
or exempted by the Commission under this subchapter may
carry out the transaction, own and operate property, and
exercise control or franchises acquired throughout the
transaction without the approval of a state authority. A
carrier, corporation, or person participating in that
approved or exempted transaction is exempt from the
antitrust laws and from all other laws, including State and
municipal law ... as necessary to let that person carry out
the transaction. (emphasis added).
interstate and intrastate certificates. For example, Averitt would

be permitted to transport interstate commodities in bulk which it

cannot transport intrastate. The ICC failed to decide there was

any relationship in this transaction. Absent a finding of a

reasonable connection between the intrastate and interstate routes,

supported by the evidence, as well as a change in interstate

commerce, the ICC had no power to invade the state's authority over

the intrastate commerce. North Alabama, 971 F.2d at 665.

After the briefing period but prior to oral argument, the ICC

and the United States moved to dismiss the appeal as moot based on

the recent enactment of the Federal Aviation Administration

Authorization Act of 1994. Section 601(c) of the Act preempts the

states from continuing to control certain aspects of the intrastate

transportation of property. We leave to the ICC the determination

as to what, if any, impact the Act has on this case.

The parties conceded at oral argument that a decision such as

the one we have here rendered would moot the related cases pending

before this Court, specifically No. 93-6842, In re North Alabama,

Averitt Express, Inc. v. Sullivan, and No. 93-6835, In re: Averitt

Express, Inc. Those appeals are therefore dismissed as moot.

Conclusion

In our prior opinion, we SET ASIDE the ICC's Order to the

extent that it permitted the transfer of intrastate routes. Since

there is nothing in the record to indicate that there has been any

change in interstate commerce or any relationship between the

intrastate and the interstate transfer that affects interstate

commerce, we GRANT the petition for review and again SET ASIDE the
ICC's Order to the extent that it permits the transfer of the

intrastate routes.

PETITION GRANTED AND ICC ORDER IS SET ASIDE.

No. 93-6842—DISMISSED AS MOOT.

No. 93-6877—DISMISSED AS MOOT.

No. 93-6835—DISMISSED AS MOOT.