Opinion
No. 79-929
Decided April 9, 1980.
Public Utilities Commission — Motor carriers — Unlawful movements — Order supportable by evidence, when — Penalties imposed.
APPEAL from the Public Utilities Commission.
Appellant, Cleveland Freight Lines, Inc. (hereinafter CFL), operates its hauling business pursuant to an irregular route certificate issued by the Public Utilities Commission. Under this certificate, CFL is granted the authority to transport property to and from all areas within the Cleveland Commercial Zone, as that zone is defined by the commission. CFL is permitted to transport property from and to Cleveland and its commercial zone. See former Rule 3.30, commission's Code of Rules and Regulations, presently Ohio Adm. Code Rule 4901-5-30.
The relevant history of the present dispute dates to a 1974 conference between CFL and representatives of the commission. Following an audit by the commission in 1974, CFL was summoned to an informal conference by the commission to discuss shipments made on what CFL called a "combination of local[s]" basis. The president of CFL, Carl R. Munn, described a combination of locals delivery in his deposition as follows:
"We were getting requests to make calls other than to and from Cleveland throughout the state of Ohio, and it was our feeling at that time that the only way we could do it was to charge what was referred to as a combination of rates. That is, a rate from point A to Cleveland, and then the rate that applies from Cleveland to point, let's say Cleveland's point B to point C. In effect, it nearly doubles the transportation charges of the shipper, which should be enough to discourage it; but we were doing that at the time. I'm not sure we have changed our feeling that that should be a permissible haul, very similar to what we do, for instance, in interstate commerce; but the commission, in the informal hearing, suggested that we not do that anymore, because under their interpretation of the rules at the time, they did not feel that that should be allowed."
Until this conference, appellant was, in essence, accomplishing a movement of property from a point outside Cleveland to another point outside Cleveland, contrary to its certificate, in the commission's view. This was done by routing the shipment through Cleveland and using two bills, one for the movement toward Cleveland and one for the movement away from Cleveland. After the conference, CFL voluntarily ceased this practice.
On April 13, 1977, the commission issued a Citation Order, finding that, based on an audit conducted from October 4, 1976, to February 2, 1977, "CFL had executed and performed contracts for the transportation of property for hire within the state of Ohio, which contracts involved movements not within the scope of the certificates of public convenience and necessity issued to CFL by this commission."
All but a few of the supposed improper shipments were from Parker-Hannifin Corporation in Ravenna, Ohio, to Cleveland and then to various destinations beyond Cleveland. The findings also noted an "apparent abuse" of Special Permission No. 1611, which enabled CFL to charge hourly rates for the Ravenna to Cleveland portion of the deliveries in question, and required CFL to show cause at a public hearing why the permit should not be rescinded.
A formal hearing was conducted on January 5 and 6, 1978, and the commission's attorney examiner filed his report on October 4, 1978. The examiner concluded that CFL had exceeded its authority by engaging in a practice referred to as "cross-hauling" and recommended a five-day suspension of operations and rescission of Special Permission No. 1611 as the appropriate punitive measures. By order dated March 21, 1979, the commission sustained the examiner's findings and adopted the recommended penalties.
An application for rehearing was denied, and the cause is now before this court upon an appeal as of right.
Mr. Lewis S. Witherspoon, for appellant.
Mr. William J. Brown, attorney general, Mr. Marvin I. Resnik and Mr. James R. Bacha, for appellee.
The Public Utilities Commission of Ohio has been granted the power and authority to supervise and regulate motor transportation companies. R.C. 4921.04; E.A. Schlairet Transfer Co. v. Pub. Util. Comm. (1963), 174 Ohio St. 554. Orders of the commission with regard to the regulation of certified motor transportation firms will not be disturbed by this court, unless those orders are shown to be unreasonable or unlawful. See Schlairet, supra. In support of its position on appeal, CFL submits the following three propositions of law:
1. "A motor common carrier operating pursuant to the authority issued to it by the Public Utilities Commission of Ohio is not authorized or permitted to question the validity of instructions given it by a shipper but is required to accept such shipments tendered to it and deliver them to the stated destination point as instructed."
2. "The Public Utilities Commission of Ohio is charged with the regulation of motor transportation companies and under such mandate its responsibilities are the promulgation of clear and definitive rules governing such operations for the guidance of those motor carriers performing pursuant to certificates of public convenience and necessity issued by said commission."
3. "Where the commission has failed to adopt a clear and dispositive rule, decision, or policy governing the participation by irregular route common carriers in pool distribution operations established by a shipper at the carrier's base of authority, the imposition of a five-day suspension and revocation of its exclusive use of equipment tariff provisions constitutes a gross abuse of discretion and is unjust, unreasonable, and unwarranted."
As part of its first proposition of law, CFL contends that there is no evidence in the record indicating that CFL was aware of the fact that it was accomplishing a movement through Cleveland as opposed to shipments to and from Cleveland. According to CFL, it was the shipper, Parker-Hannifin Corporation, that devised the complex system resulting in a through movement, including individual bills of lading combined with a master bill and a sealed packet handed to the carrier's driver to be delivered to the shipper's employees. The typical pattern of movement which the commission found to be illegal was as follows: (A) Shipments from Parker-Hannifin in Ravenna, Ohio (outside the Cleveland Commercial Zone), to Parker-Hannifin's facility on Euclid Avenue in Cleveland under a master bill of lading and a sealed packet — at times, certain property was added to or taken from the trailer at the Euclid Avenue facility; (B) this same property was then transported to CFL's terminal under individual bills of lading, showing the origin of the property to be the Euclid Avenue facility; and (C) finally, the property was shipped from CFL's terminal to various points throughout Ohio.
Whether CFL could reasonably be subjected to a penalty for such movements if it did not know the nature of the through movement and could not be expected to know, need not be reached in this appeal. The record contains evidence which supports the commission's conclusion that "the citee either knew, or should have known, that it was performing unlawful movements." The testimony of William Ellis, Warehouse Manager for Parker-Hannifin, and Carl Munn, CFL's president, supports this conclusion, along with testimony from various other witnesses. Accordingly, appellant's first proposition of law is not well taken.
In its second proposition of law, appellant charges the commission with failing to perform its responsibilities of promulgating clear and definitive rules for motor carriers. As was stated in Duff Truck Line v. Pub. Util. Comm. (1976), 46 Ohio St.2d 186, the commission has no mandatory burden of promulgating such specific rules and regulations, as distinguished from ad hoc litigation. Appellant's second proposition of law is not well taken.
However, as the majority held in Commercial Motor Freight v. Pub. Util. Comm. (1976), 46 Ohio St.2d 195, when there is not a definite commission rule, order, or decision forbidding a particular practice, the imposition of a substantial penalty is unreasonable. This forms the basis for appellant's third proposition of law.
In Commercial Motor Freight, supra, the majority indicated that a carrier should not be subjected to a substantial penalty when the carrier could not knowingly be in violation of a definite rule, order, or decision of the commission or the court since there were no such definite rules, orders, or decisions in existence. The facts in the present case are distinguishable from those in Commercial Motor Freight, in that CFL had the benefit of this court's decisions in Duff, supra, and Commercial Motor Freight, supra, and was informed in 1974 of the illegality of similar movements.
Under these circumstances, the imposition of a five-day suspension and the revocation of Special Permission No. 1611 were neither unreasonable nor unlawful. Although the precise movements of property in the present case are not identical to those in Duff, supra, and Commercial Motor Freight, supra, the principles of law put forth in those cases apply with equal force here, and appellant should not be permitted to perpetuate illegal activity simply by adding window dressing. Although the commission erred in using language from amended Rule 4901-5-30, which was not effective until June 1, 1978, we find the error to have been non-prejudicial, given the findings of the commission and the language of former Rule 4901-5-30, effective January 20, 1963.
The order of the Public Utilities Commission is, therefore, affirmed and the cause remanded for purposes of executing the penalties which were stayed pending the outcome of this appeal.
Order affirmed.
CELEBREZZE, C.J., HERBERT, W. BROWN, P. BROWN, SWEENEY, STRAUSBAUGH and HOLMES, JJ., concur.
STRAUSBAUGH, J., of the Tenth Appellate District, sitting for LOCHER, J.