Wednesday, December 25, 2013

Wisconsin Electric Power Co. v. Union Pacific Railroad Co. case brief

Wisconsin Electric Power Co. v. Union Pacific Railroad Co. case brief summary
557 F.3d 504 (2009)

Appellant electric utility brought an action against appellee railroad alleging that the railroad breached a contract whereby the railroad transported coal to the utility by raising the rate charged to the utility. The utility appealed the order of the United States District Court for the Eastern District of Wisconsin which granted summary judgment to the railroad.

The contract provided that, after the railroad delivered coal to the utility, if the railroad was prevented by force majeure from reloading its empty cars with iron ore for a specified steel mill, the railroad could charge a higher rate applicable to shipments with no backhauling. The steel mill shut down and eventually closed for good, at which point the railroad began charging the higher rate. The utility contended that the railroad waived its right to the higher rate by not exercising the right when the steel mill first shut down, and that the railroad did not make a good faith effort to obtain backhauling of other commodities.


  • The court held that the railroad was contractually entitled to charge the higher rate. 
  • The railroad's failure to immediately invoke its right to the higher rate did not waive the right, there was no detrimental reliance by the utility on the lack of prompt notice, and the utility enjoyed the benefit of the lower rate to which it was not contractually entitled. 
  • Further, the railroad's duty of good faith did not include a duty to explore the possibility of re-configuring its operations and obtaining railcars optimized to carry other shippers' commodities.

The order granting summary judgment to the railroad was affirmed.

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