Olympian Worldwide Moving & Storage, Inc. v. Showalter, 2013 WL 3875299 (D. Ariz. 2013)
Household goods shipper Showalter booked transit of his stuff from Arizona to Florida with Allied Van Lines through the carrier’s agent, Olympian Worldwide Moving & Storage. An Allied bill of lading was issued that didn’t mention a wedding ring which Showalter later claimed disappeared. Showalter refused to pay freight charges to Olympian; Olympian sued Showalter in the District Of Arizona to collect; and Showalter counterclaimed to recover the ring’s value based on a variety of state and common law causes of action (such as conversion and breach of contract).
Olympian moved to dismiss the counterclaim for failure to state a cause of action, given that Carmack preempts Showalter’s common law legal theories. Showalter responded by showing the bill of lading didn’t list the wedding ring, which therefore wasn’t part of a documented shipment subject to Carmack. And besides, urged Showalter, Olympian was an agent, and not a motor carrier sitting under Carmack’s preemptive umbrella.
While shipping documentation didn’t specify the ring, the shipper’s allegations made clear to the court that Showalter intended and understood it to be cargo. Because provisions of the Interstate Commerce Commission Termination Act that work in coordination with Carmack specify that “[e]ach motor carrier providing transportation of household goods shall be responsible for all acts or omissions of any agents which relate to the performance of household goods transportation services …” (49 USC §13907(a)), the court concluded that, sorry Showalter, agents aren’t liable under Carmack. While seemingly skeptical about how it could be done, the court did allow Showalter an opportunity to amend his complaint to somehow state the ring wasn’t part of the cargo, which could theoretically be a basis for Olympian’s liability. Otherwise, the state and common law claims will be dismissed.
Infinity Air, Inc. v. Echo Global Logistics, Inc., et al., 2013 WL 3199657 (D.Or. 2013)
Shipper Infinity signed an Application for Credit, effectively a contract, with freight broker Echo Global Logistics. The document provided, and incorporated Echo’s website which also provided, that any lawsuits brought against Echo must be filed in Chicago. Echo arranged transit of Infinity’s cargo of airplane parts from New Mexico to Washington with motor carrier Gizmo Trucking. Infinity believed the cargo was damaged in transit, and sued Echo and Gizmo in the U.S. District Court for the District of Oregon. Pointing to its forum selection clauses, Echo moved to dismiss.
Infinity argued that Carmack’s specification of just where an aggrieved shipper may sue for cargo damage (which includes the point of loss) renders Echo’s contract terms unenforceable. The court disagreed, and kicked Infinity’s claims against Echo out of court. Echo, as a broker, cannot be held liable under Carmack – period. Finding that federal law applies to the interpretation of forum selection clauses under these circumstances, and that the forum selection clause wasn’t limited to credit disputes, Echo may enforce Infinity’s agreement to litigate only in Illinois.
Curb Technologies, LLC v. Somerset Logistics, LLC, 2013 WL 3383128 (M.D. Ala. 2013)
Shipper Curb Technologies engaged freight broker Somerset Logistics to arrange transportation of a cargo of roof adapter curbs from Alabama to Florida with a specified agreement that the delivery be made by a certain time. The freight apparently arrived late, and Curb sued Somerset in Alabama state court alleging breach of contract and negligence. Somerset removed the action to the U.S. District Court for the Middle District of Alabama, asserting that the action was a disguised Carmack claim that should be brought against a carrier. Curb moved to remand the action back to state court, asserting that Carmack, by its own terms, doesn’t apply to brokers.
Generally, a defendant’s invocation of a federal defense, like preemption, doesn’t create federal jurisdiction. But where “the preemptive force of a statute is so extraordinary that preemption is ‘complete’ [i.e., like with Carmack], it converts an ordinary state common-law complaint into one stating a federal claim.” Still, that concept only applies if Carmack governs brokers in the first place. It doesn’t. The court kicked the matter back to state court, but refused Curb’s request for costs with the question-raising comment “[t]hough remand is required, the Carmack Amendment’s application to claims against brokers in addition to carriers is an unsettled area …” Really?
Tennessee Wholesale Nursery v. Wilson Trucking Corporation, 2013 WL 3283515 (M.D. Tenn. 2013)
Shipper Tennessee Wholesale Nursery (“TWN”) engaged Wilson Trucking to transport its plants to various out-of-state destinations. TWN believed Wilson didn’t complete the deliveries, forcing the shipper to procure additional transportation services and resulting in lost business due to delayed delivery. TWN sued Wilson in Tennessee state court alleging breach of contract theories.
Wilson removed the action to the Middle District of Tennessee asserting Carmack preemption. TWN moved to remand, claiming that while it hired Wilson to transport the cargo interstate, Wilson never left the Volunteer State with its loads (a charge Wilson denied). And besides, TWN wasn’t claiming its cargo was damaged or destroyed; rather, delivery was just delayed in breach of the contract.
Wrong on both counts, responded the court in denying the motion to remand. It’s not what the carrier did or didn’t do with respect to interstate transportation. The parties’ stated intentions at the time Wilson issued its bill of lading are all that matters. This was a contract for interstate transportation, so Carmack kicks in from the get go. Citing a number of precedents, the court also concluded that cargo damage isn’t essential to Carmack preemption, as “[w]hen damages are sought against a common carrier for failure to properly perform, or for negligent performance of, an interstate contract of carriage, the Carmack Amendment governs.”
Owner-Operator Independent Drivers Association, et al. v. Pacific Financial Association, et al., 2013 WL 3772656 (D. Ariz. 2013)
Okay, just one more preemption case, this one involving freight broker Alliance Transportation’s alleged failure to maintain the minimum $10,000 in financial security required by 49 USC §13906(b). Alliance went the “trust agreement” route whereby it has a trustee, here, Pacific Financial Association, file a BMC-85 with the Federal Motor Carrier Safety Administration that confirms a $10,000 safety fund to pay claims against the broker. A series of drivers, in coordination with OOIDA, claimed Alliance didn’t pay them due-and-owing comp. They believed the trust is supposed to be there to cover unpaid freight charges.
The claims exceeded ten grand collectively. Allegedly, Pacific knew the trust was running dry, and didn’t take steps to require Alliance to replenish it.
OOIDA sued Pacific in an Arizona state court based on state statutory and common law governing trustee liability. However, they didn’t allege causes of action based on statutes requiring compliance with financial responsibility regs (although they could have). This was a state law claim through and through, with the exception of the financial responsibility requirement itself, which federal law dictates.
Pacific removed the action to the District of Arizona, and OOIDA moved to remand. The court granted the motion. The fact that OOIDA’s potential right to relief stems from federal law requirements doesn’t mean federal jurisdiction automatically follows based on a federal question (state courts apply federal law all the time). Indeed, the trust agreement itself indicated it was governed by state law in ways not inconsistent with federal law. Moreover, federal law doesn’t speak to a private right of action for a broker’s breach of its financial responsibility obligations. Back to state court we go.
Maass Flange Corp., USA v. AA-State Hot Shot LLC, et al., 2013 WL 2422874 (M.D.La. 2013)
Shipper Maass Flange entered into a contract – it’s not entirely clear with whom – whereby All-State Hot Shot and National Truck Funding – it’s not clear which – would load two forklifts onto a flatbed which would be transported from Mississippi to Texas by a rig operated by driver Wilson – whose employer isn’t clear. Anyway, the forklifts were damaged en route, and Maass Flange sued all involved in the Middle District of Louisiana.
National moved to dismiss, arguing that it was just the owner of the truck at issue. National had leased the truck to All-State’s driver Davis; had no employment relationship with Wilson; and otherwise had nothing to do with the transport. For purposes of Carmack liability, it claimed it was a “rental agency for independent drivers, a status that’s at most akin to a broker, and therefore cannot be liable under Carmack. Maass Flange having no evidence to the contrary, National was dismissed from the case.
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