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separately by this Commission's Bureau of Enforcement, Auto Driveaway Company, and the United States Department of Defense, and jointly by F. J. Boutell Driveaway Co., Inc., and Nu-Car Carriers, Inc., and by National Automobile Transporters Association (NATA), Automobile Transport, Inc., Baker Driveaway Company, Inc., Dealers Transit, Inc., Kenosha Auto Transport Corporation, M & G Convoy, Inc., Gate City Transport Co., and Square Deal Cartage Co.

In No. MC-C-7287, by order dated March 18, 1971, the Commission instituted an investigation pursuant to sections 204(c) and 212(a) of the Interstate Commerce Act, into and concerning the motor carrier operations and practices of AAACon Auto Transport, Inc., with a view to determining whether AAACon has been and is performing operations not authorized by its Certificate No. MC125808 (Sub-No. 1), in violation of section 206(a) of the said act, and the terms, conditions, and limitations of said certificate; and whether AAACon has been and is engaging in unjust and unreasonable practices in connection with matters relating to the transportation of automobiles, in driveaway service, in violation of section 216(b) and sections 219 and 20(11) of the act, and to issuing such orders and taking such other and further action as to the facts and circumstances may appear to warrant. The Commission's Bureau of Enforcement was directed to participate.

In No. MC-C-7287 (Sub-No. 1), on June 21, 1971, AAACon filed a petition for a declaratory order, seeking clarification of a restriction in its Certificate No. MC-125808 (Sub-No. 1), which restricted the authority contained therein against the transportation of traffic moving to automobile dealers. By order of division 1, entered July 8, 1971, the petition was designated for oral hearing on a consolidated record with No. MC-C-7287.

In No. FF-359, by application filed December 11, 1968, as amended, Auto Trip USA, Inc., of New York, N.Y., seeks a permit under section 410 of the act to operate as a freight forwarder, in interstate commerce, through the use of facilities of common carriers by railroad, express, water, or motor vehicle, in the transportation of used passenger automobiles, with or without baggage, personal effects, and used sporting equipment, between points in the United States. By report and order of division 1 at 336 I.C.C. 570, dated August 25, 1970, applicant in No. FF-359 was granted authority to operate as a freight forwarder, (1) of used passenger automobiles, and (2) of baggage and personal effects moving with used passenger automobiles, in driveaway service, between points in the United States (except Alaska and Hawaii), restricted (a) to the transportation of traffic moving in freight forwarding service, and (b) against the transportation of traffic (i) moving on Government bills of lading, or (ii) moving to automobile dealers. By order dated May 4, 1971, the Commission, Appellate Division 1, reopened the proceeding in No. FF-359 for further hearing solely on the question of applicant's fitness and directed that it be handled on a consolidated record with the proceeding in No. MC-C-7287. It further directed the Commission's Bureau of Enforcement to participate in No. FF-359.

Hearing was held on a consolidated record in the three instant proceedings. Appearing as protestants and/or interveners in the various proceedings were the following parties: National Automobile Transporters Association; Automobile Transport, Inc.; Baker Driveaway Company, Inc.; Dealers Transit, Inc.; Kenosha Auto Transport Corporation; M & G Convoy, Inc.; Gate City Transport Co.; Square Deal Cartage Co.; F. J. Boutell Driveaway Co., Inc.; Nu-Car Carriers, Inc.; Auto Driveaway Company; the United States Department of Defense; and this Commission's Bureau of Enforcement (Bureau).

The Administrative Law Judge recommended that a cease and desist order, as set forth in the appendix to this report, be entered. He found, inter alia, that respondent AAACon has consistently, knowingly, and deliberately pursued a course of arbitrarily denying. juer damage claims filed against it; that it has impeded the settlement of any and all claims by engaging in devious and blatant obstructionist tactics in order to avoid settling claims; that it has employed a “bill of lading agreement” in dealing with its shippers which differed in significant respects from the uniform bill of lading incorporated in its filed tariffs, all to the detriment of its shippers; and that it has held out to the general public a type of service which it did not actually perform. In addition, he found that the evidence further demonstrates that respondent has been, and is performing operations not authorized by its certificate in No. MC-125808 (SubNo. 1), including the transportation of repossessed, stolen, or abandoned used passenger automobiles moving in driveaway service to points in New York, California, and Florida, and in violation of a condition in its certificate restricting the authority granted therein against the transportation of traffic moving to automobile dealers. The Administrative Law Judge recommended, in addition, that AAAC on be found unfit; that the petition in No. MC-C-7287 (SubNo. 1) be denied; and that the application in No. FF-359 also be

denied, on further hearing, for the reason that Auto Trip, a wholly owned subsidiary of AAACon, has not been shown to be fit to operate as a freight forwarder in interstate or foreign commerce.

AAACon and Auto Trip, on exceptions, contend that AAACon did not receive proper notice of the matter under investigation as required by the Administrative Procedure Act, specifically with respect to the Bureau of Enforcement's allegation that it failed to arbitrate cases or properly handle claims and that lacking such notice, AAACon was unable to prepare an adequate defense. They contend that the evidence selected and presented by the Bureau demonstrates its bias against AAACon, since it selected only that material from AAACon's files which it believed supported its preconceived notion that AAACon's business and claims handling practices were unreasonable or illegal. They contend that the evidence selected by the Bureau and cited by the Administrative Law Judge in support of his findings is for the most part hearsay, or at best incomplete, and does not support his contention that AAACon has, by its past conduct, demonstrated that it is unfit to operate in interstate or foreign commerce. They submit that the Administrative Law Judge, in reaching his decision, in some instances made findings of fact that were patently false and failed to consider evidence presented by AAAC on which supports its contention that in denying a number of the cited claims, it was exercising a legal right, which it was required to do in order not to show perference to any one shipper; and that, in other instances, it resisted claims which sought amounts far in excess of the actual damage to the vehicle transported or which were based on arbitrary estimates or on misrepresentations by the shipper. AAACon denies that it has attempted in any way to avoid liability for just and properly filed claims, or that its procedures in handling and investigating claims

in any way unlawful unreasonable.

AAACon and Auto Trip argue specifically that the arbitration clause employed in the former's bill of lading, which the Administrative Law Judge considers unreasonable, complies with the Commission's suggestions for such provisions in Ex Parte No. 263, Loss and Damage Claims, 340 I.C.C. 515 (1972), and was filed and approved as part of its tariff by the Commission; and that similar provisions are common and accepted in use by all major driveaway carriers and have been sustained in the Federal courts. They submit that AAACon's bill of lading, incorporating the arbitration clause, is consistent with the terms of the Uniform Bill of Lading, since the terms set forth therein are not intended to be exclusive, and in no





way violates Commission policy or practices. They aver that the Administrative Law Judge erred in concluding that AAACon's arbitration clause requires arbitration in New York City and that such a provision was clearly unreasonable. They submit that New York City is, in fact, merely the situs for the action; that the arbitration clause does not restrict the venue of shipper's suit or deprive a party of any remedies or oust the local court of jurisdiction; that, in any event, bills of lading requiring arbitration at a designated place other than the forum of litigation have long been enforced by the Federal courts; and that by insisting on arbitration, AAACon was merely complying with the Commission's requirement that it treat all claimants alike by asserting its rights and by not waiving any defenses. In addition, they assert that such claims handling procedures as service by mail, and payment within 7 days, which the Administrative Law Judge considers unconscionable, are both reasonable and just; and that in seeking the benefit of any insurance policies in effect on the transported vehicle, AAACon was merely exercising a right without in any way denying primary liability. They submit that it is shipper's responsibility to establish clearly that the reported damage to the vehicle was actually caused by the carrier and in the absence of such evidence. AAACon is entitled to assume, if shipper signs a clear bill of lading. that the car was delivered in satisfactory condition. They maintain that AAACon's screening procedures for its casual drivers are of the type employed by the industry, and the screening requirements recommended by the Administrative Law Judge would, if implemented, impose on it more rigorous standards than those required of similar carriers, placing a severe burden on AAACon's operations. They deny that there is anything about the business practices summarized above that is either unreasonable unjustified. They contend that AAACon has in every way sought to conduct its operations in a reasonable manner, and when abuses have occurred, it has fired the offending agent.

AAACon and Auto Trip also except to the Administrative Law Judge's finding that AAACon has engaged in the illegal transportation of used automobiles to automobile dealers in violation of the restriction contained in its certificate. They contend that the majority of the allegedly illegal movements" were deliveries to automobile dealers as repossessors of automobiles or to credit agencies acting in the same capacity; and that in those instances where a clear violation of the restriction occurred, AAAC on fired the offending agent. They submit that AAACon has made every


effort to advise its agents to avoid even the appearance of violating the restriction, and has sought in every way to comply with the terms of its certificate.

They also except to the Administrative Law Judge's denial of the freight forwarder application on the basis of Auto Trip's lack of fitness. They submit that assuming AAACon is found unfit, the latter's past conduct cannot be charged to Auto Trip; and that, even if it could be, the pertinent statute does not require that a freight forwarder applicant establish its fitness. They also point out that the petition in No. MC-C-7287 (Sub-No. 1) seeks an interpretation of a restriction, in effect posing a question to the Commission, and the Administrative Law Judge's recommendation that the relief sought therein be denied is not an appropriate response.

The Bureau replies urging that the evidence of record clearly demonstrates that in numerous instances AAACon has repeatedly denied claims without a proper investigation on the basis that claimant signed a so-called “clear receipt" for the automobile on delivery, retained the driver's fee for more than 7 days, which, by the terms of AAACon's bill of lading, amounted to a full satisfaction for whatever damage occurred during the transportation, or on the basis of an asserted mechanical defect in the vehicle. The Bureau contends that the Administrative Law Judge properly found that the arbitration agreement as set forth in AAACon's bill of lading, and its practices and policies pursuant to this provision, are in violation of section 216(b) and sections 219 and 20(11) of the act. It submits that by the terms of this agreement, shipper is not permitted the choice of electing to arbitrate; that there is no provision in the bill of lading for the appointment of an arbitrator, and the bill of lading requires that the arbitrator in handling the claim be bound by the same provisions of the bill of lading agreement without variance or modification. As a result, the Bureau contends that the arbitration clause is a sham, since there is no real basis for arbitration. The record properly demonstrates, it avers, that AAACon's past claims handling procedures, including the use of fictitious names by AAACon's employees assigned to handling claims, have been designed to frustrate the filing of legitimate claims by shippers; and that AAACon's reluctance to settle claims is attributable to the fact that by the terms of its insurance policy, it is required to absorb the initial $1,000 in damages. The Bureau concludes by stating that the record properly supports the Administrative Law Judge's conclusion that AAACon failed to properly and thoroughly investigate claims and adequately screen and instruct its casual drivers and agents, and

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