Q: For the last couple of years, we’ve been shipping to a customer located on a particular highway in the Southwest. These shipments have all gone via the same motor carrier, which we use extensively.
This carrier has a surcharge identified in its tariff as applicable to an area that’s rather specifically described, with one of the boundaries being the highway where our customer is located. It’s been consistently applying the surcharge to our shipments, and we’ve been paying.
We recently were contacted by a post-audit firm and turned quite a lot of our past freight bills over to it for review. The auditor now says the surcharge shouldn’t apply because the tariff says it applies to destinations “within” the area bounded by this highway, and our customer is located on the far side (outside) of the road.
Their view is that if the carrier had wanted to include our customer’s location, it should have described the area as including points “on or within” the highway; because the tariff doesn’t say that, it’s filed a large number of overcharge claims covering shipments over the past year, and wants us to give it older bills for further audit.
Needless to say, the carrier doesn’t agree. We’ve sent a large number of shipments to this customer, and the sum of money in question is already fairly big and will get bigger if we go back further in time. It could even be large enough to warrant filing a lawsuit. Do you think we should consider that?
A: I really don’t. First, forget about those older-than-a-year bills your (fairly unprofessional) auditor wants to examine. In fact, forget about half the ones you’ve already turned over to it. Both it and you are wasting your time with those.
“A shipper must contest the original (motor carrier freight) bill or subsequent bill within 180 days of receipt of the bill in order to have the right to contest such charges”; 49 U.S.C. Section 13710(a)(3)(B). Any bills older than that (and more of them are aging even as I write this) are time-barred as to overcharge claims, lawsuits or anything else.
Your auditor certainly ought to know this limitation, which is why I called him, her or it unprofessional. Indeed, it’s spinning its wheels even looking at past bills older than six months, but seems to be either ignorant of the law or dismayingly anxious to take advantage of carrier representatives that don’t know it.
Now let’s get to the meat of the auditor’s contention, which is also fairly underwhelming in the present-day world of transportation.
There once was a time when carriers were legally required to adhere strictly to the terms of published tariffs. And the former Interstate Commerce Commission had a lengthy set of strict standards by which it construed and applied those tariffs, and an even lengthier roster of precedent cases on which it relied in picking the nits of tariff language.
In that bygone era, your auditor might have had a point. An area “bounded by” a particular highway would at least arguably not include locations on the far side of that highway (although one can also make a pretty good counterargument), and far-side locations such as your customer’s would therefore not be subject to the surcharge.
Back then, the basic rule of tariff interpretation was the same as for sharing a piece of cake between two children: one kid cuts the cake, the other gets first choice of the resulting slices. That is, the carrier writes the tariff, the shipper gets the most favorable (to it) interpretation. That view was fairly rigorously applied.
Something of this same standard prevails even today under general judicial principles, but it’s tempered with common sense. So where the language is less than pellucid, there’s now a willingness to look beyond the strictly construed meaning of the words themselves to anything else that might be considered to express intent.
Once you go there, this carrier’s intent becomes pretty clear. It’s been consistently applying the surcharge to your shipments all along, which is telling. What’s more, you’ve been accepting the charges without complaint, which suggests you haven’t disagreed.
It also makes sense from a real-world standpoint. Such surcharges are usually set because of traffic congestion within the circumscribed area. Well, the carrier has to drive the same roads irrespective of which side the destination sits on, so that’s unaffected.
All things considered, I can’t say your auditor’s on solid ground.
Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.