Facts
- Thurston Motor Lines, Inc. was a common motor carrier authorized to transport commodities in interstate commerce under federal regulation.
- Jordan K. Rand, Ltd. was a shipper that received transportation services from Thurston.
- Thurston alleged Rand failed to pay $661.41 in motor freight charges.
- The complaint asserted Rand’s payment obligation arose from Thurston’s federally filed tariffs on file with the Interstate Commerce Commission (ICC), not merely from a private agreement.
- Thurston pleaded that the action arose under the Interstate Commerce Act, citing the Act’s tariff/rate provisions, and invoked federal jurisdiction under 28 U.S.C. § 1337 (civil actions arising under Acts of Congress regulating commerce).
- The district court dismissed for lack of subject-matter jurisdiction, treating the dispute as outside federal-question jurisdiction.
- The Ninth Circuit affirmed, characterizing the suit as a “simple contract-collection action” that did not arise under federal law.
- The Supreme Court granted review to decide whether § 1337 jurisdiction existed for a carrier’s tariff-based collection suit.
Issues
- Whether a common carrier’s suit to collect unpaid freight charges allegedly owed under federally filed ICC tariffs “arises under” an Act of Congress regulating commerce for purposes of 28 U.S.C. § 1337.
- Whether such a tariff-based collection action is properly treated as a state-law contract claim rather than a federal statutory claim grounded in the Interstate Commerce Act.
Decision
- The Supreme Court reversed the Ninth Circuit and held that federal-question jurisdiction existed under 28 U.S.C. § 1337.
- The Court held the action arose under the Interstate Commerce Act because the carrier’s right to collect charges was necessarily based on federally regulated and filed tariffs.
- The Court rejected the characterization of the suit as a “simple contract-collection action,” explaining that the governing duty to pay the lawful rate is created and controlled by the federal tariff regime.
- The Court relied on prior precedent holding that suits to recover charges due under federally filed rates arise under federal law.
- The case was remanded for further proceedings consistent with the recognition of federal subject-matter jurisdiction, without deciding the merits of the disputed charges.
Legal Principles
- A carrier’s right to recover freight charges due under federally filed tariffs is grounded in the federal statutory tariff system, not solely in private agreement.
- An action by a regulated carrier to collect amounts due under tariffs filed pursuant to the Interstate Commerce Act “arises under” an Act of Congress regulating commerce within the meaning of 28 U.S.C. § 1337.
- Courts should not treat a tariff-based collection suit as merely a state-law contract dispute when the asserted obligation to pay and the permissible rate are fixed by federal law.
- Federal jurisdiction under § 1337 does not depend on the amount in controversy when the claim arises from federally regulated commerce obligations.
Conclusion
The Court held that a common carrier’s suit to recover unpaid freight charges required by federally filed ICC tariffs arises under the Interstate Commerce Act, so federal district courts have subject-matter jurisdiction under 28 U.S.C. § 1337, and dismissal as a mere contract-collection action was error.