Total Quality Logistics, LLC v. Macktoon, Inc., 2014 WL 656622 (S.D. Ohio 2014)
Broker Total Quality Logistics (TQL) booked transit with motor carrier Arrow Transportation of shipper Verascold’s cargo of Pepperidge Farm frozen bread products from Pennsylvania to consignee Americold’s cold storage warehouse in Utah. The bill of lading, prepared by Verascold, specified reefer transit temperature of -10º Fahrenheit. The cargo’s temperature was read at between 42-44º, prompting Pepperidge Farm, which owned it, to direct destruction of the bread products to avoid any possibility their reaching the public. Americold complied.
TQL paid the shipper the cargo’s commercial contract value, and sued Arrow in the Southern District of Ohio to recoup its payment. Arrow’s driver argued that the reefer temp was fine until he arrived at Americold, and that it dropped during several hours before the consignee unloaded his truck. The court concluded that the evidence didn’t bear this out. First, the driver’s logs – required by federal regulation – didn’t properly demonstrate the driver’s arrival and departure times. Second, while he could conveniently remember specific times to the minute regarding certain points, other times escaped him. Third, the TQL/Arrow contract specified that the motor carrier’s responsibility ended only when the consignee signs the bill of lading, which didn’t happen until after the cargo was offloaded.
Pointing to precedents allowing shippers to refuse salvage of their products for reasons related to product integrity in the marketplace, the court found that the cargo’s sales value was the proper measure of damage, even if 25-35% of that value could have been recovered through a sale (even that wasn’t entirely clear). Finding all elements of a Carmack claim satisfied, the court awarded TQL the cargo’s full retail value.
Mitsui Sumitomo Ins. Group v. Navistar, Inc., et al., 2014 WL 1245290 (N.D. Ill. 2014)
SMI Crankshaft sold crankshafts to truck manufacturer Navistar, which packaged them and booked transport of them with carrier Landstar Ligon from SMI’s facility for delivery to a warehouse owned by ODW Logistics. When some of crankshafts were found damaged, Navistar returned them to SMI, which incurred costs to make replacements. SMI collected on an insurance policy from insurer Mitsui Sumitomo, which sued Navistar, Landstar Ligon and ODW in subrogation in the Northern District of Illinois. The insurer alleged causes of action based on Carmack and negligence.
The court granted defendants’ ensuing FRCP 12(b)(6) motion to dismiss the negligence claim based on Carmack preemption. Mitsui Sumitomo had alleged Navistar is a “carrier” for purposes of its Carmack allegations. While it argued this allegation didn’t apply to the negligence claim, the insurer hadn’t alleged the truck manufacturer was anything else – in the alternative or otherwise. The complaint did allege Navistar negligently packaged the crankshafts, but the court, pointing to statutory definitions in 49 USC §13102(23)(A) and (B), found that such wrongdoing “falls squarely within the definition of transportation under the Carmack Amendment” as “services related to that movement, including … packing …” Thus, Carmack alone will govern any liability the truck manufacturer might have. Thus, Navistar was subject to Carmack for just packing the freight. Hmm.
Gregory Poole Equipment Co. v. ATS Logistics Services, Inc., et al., 2014 WL 1053517 (EDNC 2014)
This case involved a carrier’s rather novel approach toward dodging liability for not one, but two accidents that damaged a cargo consisting of a generator set and related parts. Shipper Gregory Poole Equipment engaged broker ATS Logistics Services to arrange transit of the cargo from Maryland to North Carolina, and ATS booked the load with carrier East Coast Specialized Hauling. East Coast Drivers crashed into two separate bridges, damaging the cargo to the tune of 356 grand in repair costs. The shipper sued ATS and East Coast in the Eastern District of North Carolina.
East Coast crossclaimed against ATS, alleging the broker violated the Tar Heel State’s Unfair and Deceptive Trade Practices Act by failing to declare the cargo’s actual value, thereby obtaining artificially low freight charge quotes from the carrier through which ATX gained an unfair competitive advantage, and shifting an inequitable liability risk onto the carrier. ATS moved to dismiss the crossclaim based on the Federal Aviation Administration Authorization Act of 1994’s prohibition of any state enacting laws “… related to the price, route, or service of any motor carrier …, broker or freight forwarder with respect to the transportation of property” (49 USC §14501(c)(1)). The court agreed, and tossed the crossclaim on the ground the state law, if enforced, would regulate an aspect of competition amongst players in the trucking industry. The court didn’t get into how easy it should have been for the carrier to protect itself from any improper valuation in the first place.
Panther II Transportation, Inc. v. Village of Seville Board of Income Tax Review, et al., 2014 WL 1063538 (Ohio 2014)
Ohio has a statute exempting motor carriers from imposition of local income taxes on their net profits. Seville, Ohio tried to sock Panther with such a tax, which initiated a long, multi-agency administrative war that led to court battles ultimately culminating in an appeal before Ohio’s Supreme Court. Affirming the state court of appeals, the Buckeye State’s high court shot down Seville’s tax as contrary to the preemptive state statute.
The court’s opinion proclaims its decision to be not so much one of interpretation as one enforcing a statute’s very clear terms, which comprehensively prohibit local municipalities from taxing motor carriers. The appealing taxing authorities pointed out that the preemptive statute was enacted at a time when Ohio had no local taxes. That’s true, ruled the court, but nothing in the law requires a preemptive statute to be predicated on existing circumstances, or to identify what it was preempting. Moreover, the statute’s wording is expansive, and actually includes an exception for “general property tax,” suggesting its intended application to any other varieties of taxation.
In addition to its approach toward analyzing a proposed tax on trucking companies, this decision is interesting and notable for the enormous effort and attention put to the issues by state taxing authorities, the parties, and amici. At first the Supreme Court declined jurisdiction; perhaps the attention was a consideration in its granting reconsideration and giving the matter a full and final shake.
Weaver, et al. v. Federal Motor Carrier Safety Administration, et al., 2014 WL 775466 (C.A.D.C. 2014)
Here’s a decision from the U.S. Court of Appeals for the District of Columbia Circuit that addresses jurisdictional issues arising from judicial review of FMCSA’s actions, and explaining threshold criteria that can pull the agency directly into the federal court of appeals.
Driver Fred Weaver got cited in Montana for skipping a weigh station. The charge was dismissed without prejudice under unclear circumstances, but FMCSA kept the citation within its Motor Carrier Management Information System (MCMIS), which potential employers can access to screen drivers. Mr. Weaver, supported by the Owner-Operator Independent Drivers Association, didn’t think it was fair for a dismissed charge to cloud his record, and tried to get FMCSA to remove it. That failed, FMCSA deferring to Montana’s state authorities in response to the driver’s request on the federal agency’s DataQ system that accommodates such challenges. Weaver and OOIDA sued FMCSA seeking to have the entry removed, filing concurrently in both the District of the District of Columbia and court of appeals to avoid being time barred if either court were deemed improper. The government moved to dismiss the district court action, asserting that the Hobbs Act, at 28 USC §2342(3)(A), vests jurisdiction exclusively in the court of appeals.
That issue was submitted to the court of appeals. The Hobbs Act provides for review in the court of appeals of all “rules, regulations and final orders” of the Secretary of Transportation under specified statutes, including 49 USC §31106(a)(3)(F), which requires him/her to “ensure, to the maximum extent practical, [that] all the data [including within the MCMIS database] is complete, timely and accurate.” The plaintiffs’ challenge was to this provision, but the question was whether the agency action was a rule, regulation or order. FMCSA believed it was, equating its “final agency action” with a “final order.”
The court disagreed and sent the issue to district court. Just because an order is final, and might therefore be ripe for judicial review (as cases hold) doesn’t mean it’s an order as contemplated by the Hobbs Act. The statute actually has seven subsections, one of which addresses “all final agency actions,” whereas the one at issue here covers “rules, regulations, or final orders.” The fact Congress chose different language demonstrates it wanted a narrower focus for immediate appellate review under these circumstances. The court found there is none here, and in fact, FMCSA hasn’t compiled a record “with an eye toward judicial review.” On those grounds, the district court gets the first crack at this.
National Motor Freight Traffic Association, et al. v. General Services Administration, et al., 2014 WL 958599 (D.D.C. 2014)
A series of motor carriers that had hauled freight for the federal government apparently got sick of the General Services Administration (GSA) reviewing their invoices two and three years after payment, and then docking payment of later freight charges as offset for what the government perceived to be overcharges on the earlier hauls. Those carriers, along with the National Motor Freight Traffic Association, filed suit against GSA in the District Court of the District of Columbia, asserting that even Uncle Sam has but six months to challenge a freight charge (as provided by 49 USC §13710). GSA felt it was entitled to go back three years in disputing a payment as allowed by 31 USC §3726.
But first, GSA sought dismissal of the case from the District of the District of Columbia on the ground it lacked subject matter jurisdiction, the Court of Federal Claims being exclusively empowered to hear contract claims against the federal government by the Tucker Act, 28 USC §1491. At issue was whether this was primarily a contract claim, or a statutory interpretation claim regarding the government’s right to review earlier payments. The court found that, in the end analysis, this was about money due and owing under a contract, which was the source of rights the plaintiffs sought to enforce.
That conclusion brought the issues within the Tucker Act’s purview, but the analysis didn’t end there. Plaintiffs actually sought recovery of freight charges due and owing under a large number of bills of lading, for each of which the plaintiffs claimed less than $10,000. The Little Tucker Act, 28 USC §1346, provides that the district courts have concurrent jurisdiction with the Court of Federal Claims for contract claims under ten grand, and the court saw no reason to aggregate the plaintiffs’ collective claims to get over that amount. The matter stays with the District of the District of Columbia.
The only bad news for plaintiffs was that two of them didn’t have standing to sue, as they hadn’t alleged GSA had actually shorted any freight charges to them – at least not yet. They were focused on future GSA action, which wasn’t a proper basis for a claim. Those two plaintiffs were dismissed out.
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