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Norfolk Southern Railway Co. v. Judge Warehousing, LLC

United States District Court, S.D. Georgia, Savannah Division

September 9, 2019




         Before the Court is Defendant Judge Warehousing, LLC's Motion to Stay Case and Refer Questions to the Surface Transportation Board. (Doc. 48.) For the following reasons, Defendant's motion is GRANTED.


         This action was filed by Plaintiff Norfolk Southern Railway Company ("Norfolk Southern") to recover demurrage charges allegedly owed by Defendant Judge Warehousing, LLC ("Judge"). (Doc. 1 at 2.) Pursuant to 49 U.S.C. § 10746, Norfolk Southern established rules related to the assessment and computation of rail car demurrage charges. (Id.) A demurrage fee is a "charge that both compensates rail carriers for the expenses incurred when rail cars are detained beyond a specified period of time (i.e., free time) for loading or unloading, and serves as a penalty for undue car detention to encourage the efficient use of rail cars in the rail network." 49 C.F.R. § 1333.1; see also Norfolk S. Ry. Co. v. Groves, 586 F.3d 127 3, 1276 (11th Cir. 200 9) (describing demurrage as charges for delay in releasing transportation equipment and explaining the purposes as" 'secur[ing] compensation for the use of the car and of the track which it occupies'" and "'promot[ing] car efficiency by providing a deterrent against undue detention.'" (quoting Turner, Dennis & Lowry Lumber Co. v. Chicago, Milwaukee & St. Paul Ry. Co., 271 U.S. 259, 262, 46 S.Ct. 530, 531, 70 L.Ed. 934 (1926))). Plaintiff Norfolk Southern is a rail carrier that provides service to Defendant Judge. (Doc. 1 at 1; 3.) Norfolk Southern alleges that it released rail cars into the possession of Defendant Judge, that Defendant Judge accepted the delivery of the rail cars, and that Defendant Judge failed to return possession of the rail cars to Norfolk Southern within the allotted "free time" prescribed by the demurrage tariffs. (Id. at 3.) As a result, Norfolk Southern contends that Defendant Judge has accrued outstanding demurrage charges between October 2013 and March 2016 totaling $951, 025.00. (Id.)

         On November 22, 2017, Defendant Judge filed its Motion to Stay Case and Refer Questions to the Surface Transportation Board requesting that this Court stay the action and refer certain questions to the Surface Transportation Board ("STB") pursuant to the doctrine of primary jurisdiction and 49 U.S.C. § 10501. (Doc. 4 8 at 1.) Defendant Judge argues that Plaintiff Norfolk Southern has created an unreasonable system for assessing and computing demurrage charges and that, because adjudication of Norfolk Southern's claim "requires the consideration of whether certain rules and practices . . . are unreasonable in violation of 49 U.S.C. § 10702 and 10746," the STB should handle these questions due to its special expertise and competence. (Id.)

         Specifically, Defendant Judge contends that Plaintiff Norfolk Southern assesses demurrage on Judge unless Judge can assert an affirmative defense recognized by Norfolk Southern and that Norfolk Southern utilizes an undisclosed, unpublished memorandum in lieu of any provisions in its tariff to determine when, and in what circumstances, to grant demurrage relief. (Doc. 48 at 6-7.) Judge contends that this practice is unreasonable because Judge has no way of knowing what demurrage defenses are acceptable to Norfolk Southern and the decision of whether to grant relief is left to the discretion of Norfolk Southern. (Id. at 7.) Judge also contends that Norfolk Southern creates a backlog of rail cars due to its service errors, namely when Norfolk Southern delivers only 27 rail cars, and leaves the remaining rail cars on constructive placement, instead of actually placing those cars with Judge when it knows that Judge can accommodate 30 rail cars. (Id. at 9.)

         Judge also argues that Norfolk Southern is unreasonable in some of its practices which allows demurrage to accrue to Judge that is not due to Judge. Judge argues that Norfolk Southern's refusal to switch Judge's facility on weekends, despite charging demurrage, is unreasonable as well as the fact that Norfolk Southern collects demurrage caused by "bunching." (Id. at 10.) "Bunching" occurs when rail cars destined for one facility are held together in "bunches" and then released at the same time which can overwhelm the receiving facility. (Id.) Related to the bunching complaint, Defendant Judge contends that Norfolk Southern once operated a program wherein it "calculated an estimated delivery window for each rail car and would offer certain credits ("ETA credits") for each day that the car was delivered either before or after that window." (Id. at 11.) Judge claims that it received ETA credits amounting to tens of thousands of dollars to alleviate the demurrage charges incurred due to bunching but that Plaintiff Norfolk Southern decided in June 2015 that it would no longer provide ETA credits unless Judge entered into a separate contract. (Id. at 12.) Judge maintains that it was never notified of the decision to stop providing ETA credits or the requirement to sign a contract until May 2017 and that, in effect, Norfolk Southern simply stopped providing ETA credits with little or no explanation as to why. (Id.) Judge argues that Norfolk Southern's decision to unilaterally suspend the provision of ETA credits in absence of a signed contract, resulting in approximately $187, 900 in demurrage charges, was unreasonable and that Norfolk Southern should provide Judge with the ETA credits it would have been entitled to receive. (Id. at 12-13.) Relatedly, Judge contends that Norfolk Southern arbitrarily caps the total amount of credits it will provide, even when Judge is entitled to credits due to service errors. (Id. at 13.) Judge additionally contends that Norfolk Southern causes demurrage to accrue to Judge by delivering freight after the agreed upon "service window" thereby making it impossible for Judge to unload it by the "cutoff" time imposed by Norfolk Southern. (Id. at 13.) Finally, Judge argues that Norfolk Southern's practice of not delivering rail cars on a first-in/first-out basis is unreasonable because it causes demurrage to accrue. (Id. at 15.)

         Accordingly, Defendant Judge contends that the following issues should be referred by this Court to the STB under the doctrine of primary jurisdiction:

1. In order to recover from Judge, must [Norfolk Southern] prove that the demurrage that allegedly accrued occurred because the rail car could not "be actually placed because of any condition attributable" to Judge? Or may [Norfolk Southern] grant relief only on grounds contained in an unpublished internal operating memorandum where its Tariff recognizes no grounds for demurrage relief?
2. Is demurrage attributable to Judge, and therefore recoverable, where it accrues on days where [Norfolk Southern] will not spot rail cars at Judge's facility?
3. Is demurrage attributable to Judge, and therefore collectible, where it accrues as a result of bunching?
4. Can [Norfolk Southern] unilaterally, and without notice, cease providing ETA credits which mitigate demurrage caused by bunching after providing this relief for years?
5. Can [Norfolk Southern] arbitrarily limit the credits it provides to offset bunching by capping the relief provided and deducting from it any service credits provided?
6. Is demurrage attributable to Judge where it accrues because [Norfolk Southern] failed to deliver the rail car within the agreed upon service window, rending Judge unable to unload it before ...

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