Norfolk Southern Railway Co. v. Consolidated Freightways Corp.

In this appeal we consider whether, as a matter of federal common law, to recognize the interline trust doctrine and apply it in a federal bankruptcy proceeding. We decline to recognize the doctrine, and affirm the judgment of the district court.

I

Before filing a voluntary petition in bankruptcy in 2002, Consolidated Freight-ways Corporation (“Consolidated Freight-ways”), an interstate motor carrier, as defined under the Interstate Transportation Act, 49 U.S.C.A. § 13902 , operated one of the largest “less than truckload” long haul freight transportation companies in North America. Norfolk Southern Railway Company (“Norfolk”) is a Class I interline freight railroad, the product of hundreds of railroad company mergers over the past century. In providing freight transportation services, Consolidated Freightways commonly engaged in a custom known as “interlining” with other transportation providers, including Norfolk. Interlining is a common practice in the freight transportation industry in which a shipment of freight is moved pursuant to a single bill of lading although more than one company actually transports the goods. Under such an arrangement, either the first or last…