IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS
AMERICAN FREIGHT SYSTEM, INC.,
AMERICAN FREIGHT SYSTEM, INC.,
BIO CLINIC COMPANY,
ADV. NO. 90-7596
ORDER DENYING MOTION TO DISMISS OR FOR SUMMARY JUDGMENT
This proceeding is before the Court on the motion of defendant Bio Clinic Company (Bio) to dismiss or for summary judgment. Bio appears by counsel Louis J. Wade. American Freight System, Inc. (AFS), the plaintiff-debtor, appears by counsel Kurt Stohlgren. The Court has reviewed the relevant pleadings and is now ready to rule.
Congress recently passed the Negotiated Rates Act of 1993 (NRA), which took effect on December 3, 1993. Pub. L. 103-180, 1993 U.S.C.C.A.N. (107 Stat.) 2044 to 2053 (amending 49 U.S.C.A. §§10701, 10702, 10762, 11101, 11706, 11901, and 11909, and adding 49 U.S.C.A. §§10767 and 11712). Part of that act provides that an entity that qualifies as "a small-business concern under the Small Business Act (15 U.S.C. §631 et seq.)" will not be liable for freight charges covered by the NRA. 49 U.S.C.A. §10701(f)(9). Bio has attached to its motion an affidavit claiming that it is such a small-business concern, and contends that alleged fact prevents AFS from recovering any freight undercharges from it. In response, AFS raises two matters that preclude the Court from granting Bio's motion.(1)
First, AFS asserts that it is unable to admit or controvert Bio's claim to be a small-business because this defense was first raised in Bio's present motion, no discovery about the defense has yet been conducted, and the defense is based on information in Bio's sole possession. Since Bio's last pleading before its present motion was filed in 1990, well before the NRA was passed and created the small-business defense, the Court must agree that the defense is newly asserted. Consequently, AFS is entitled to undertake discovery to test Bio's assertion that it qualifies as a small-business concern.
AFS also points out that Bio has not asserted that AFS offered it a transportation rate other than that legally on file with the Interstate Commerce Commission. While the structure of the NRA makes the applicability of §10701(f)(9) less than clear, it appears to provide that the small-business defense to undercharge claims would apply to AFS's claims only if: (1) Bio was offered a transportation rate other than that on file with the ICC, (2) Bio tendered freight in reasonable reliance on the offered rate, (3) AFS did not properly or timely file the offered rate or failed to agree to contract carriage, (4) AFS billed Bio for and collected the offered rate, and (5) AFS now demands payment of a higher rate established by a filed tariff. §10701(f)(1)(B). Bio has not alleged, much less established as fact, that these requirements are satisfied for all the claims AFS is making against it in this proceeding.
For these reasons, the Court concludes that Bio's motion must be denied. AFS will have thirty days from the date of this order to conduct discovery on Bio's status as a small business.
IT IS SO ORDERED.
Dated at Topeka, Kansas, this _____ day of June, 1995.
JAMES A. PUSATERI
CHIEF BANKRUPTCY JUDGE
1.1AFS raised a number of other issues in its brief as well, trying to avoid the application of the NRA. However, in two decisions issued since the brief was filed, Judge Robinson rejected AFS's arguments on those issues. American Freight System, Inc., v. ICC (In re American Freight System, Inc.), 174 B.R. 604 (Bankr. D. Kan. 1994); American Freight System, Inc., v. ICC (In re American Freight System, Inc.), 179 B.R. 952 (Bankr. D. Kan. 1995). The Court will not revisit those issues here.