Propak Logistics, et al. v. Landstar Ranger, Inc., 2012 WL 1068118. Fed. Carr. Cas. P 84, 720 (W.D. Ark. 2012)
Shipper Pace Edwards engaged freight broker Propak Logistics to arrange transit of a cargo from Arkansas to Washington state. Propak booked the load with motor carrier Landstar Ranger. The cargo allegedly arrived water damaged. Landstar Ranger denied the claim, and Propak’s cargo insurer paid Pace Edwards, thereby subrogating Propak (and itself) to Pace Edwards’s rights against Landstar Ranger. Propak and the insurer sued the Landstar Ranger in Arkansas state court; the carrier removed the action to the U.S. District Court for the Western District of Arkansas based on Carmack preemption; and Propak moved to remand the suit back to state court.
Propak argued that Carmack governs and applies only to shippers’ claims against carriers, and has expressly been held time and again to be inapplicable to brokers. True, ruled the court, but those numerous decisions are off point. In this instance, Propak’s rights against the carrier derive from those of a shipper. In other words, Propak’s and the insurer’s rights, including its posture in the litigation, are identical to those of the entity that bestowed those rights upon them. Propak essentially is wearing shippers’ shoes with respect to its claims against Landstar Ranger. Motion denied, and the case stays in federal court with Carmack preempting all asserted state and common law causes of action.
Williams v. Advanced Auto Transport, Inc., 2012 WL 1380365 (Minn.App. 2012)
Most disputes over a driver’s status as an employee or independent contractor involve owner-operators whose status is complicated by tractor ownership, lease or occupational activity issues. Here’s an interesting case out of Minnesota that analyzes a driver’s status under general employment law concepts as defined by a North Star State employment law statute.
Driver Williams worked for Advanced Auto Transport, a “drive away” company that transports commercial vehicles from their manufacturers to customers who’ve purchased the vehicles. Advanced Auto terminated Williams when she allegedly disobeyed dispatch instructions and didn’t comply with rest period requirements. Williams sought unemployment benefits, to which she would be entitled only if she were a company employee.
Advanced Auto and the state argued that Williams was an independent contractor not entitled to those benefits. After a complex administrative law history, the matter went into litigation and wound its way up the hill to Minnesota’s Court of Appeals. That court affirmed a lower court’s determination that Williams was an independent contractor not entitled to state unemployment benefits.
The court went through a typical analysis of the degree of control Advanced Auto had and exercised over Williams; its right to discharge her; how it paid her; whether it provided her materials and tools; and whether it controlled the work premises. It was a close call. The company exercised very little control over Williams, which supported an independent contractor determination. However, neither party provided the materials or tools (trucks were owned by the vehicle manufacturers, which also paid for her fuel, repairs, etc.); and neither party controlled the work premises (again, she was mostly at customer locations or on the road). Favoring an employee finding was the fact that Advanced Auto could (and did) terminate Williams without notice or consequence. Pretty much a tie!
Thus, the court looked to “additional factors” as a tiebreaker. “Most importantly,” the court found, “Williams was free to hold herself out to the public or work for other trucking companies …” under her arrangement with the company. Moreover, she could realize a profit or suffer a loss based on her own fortunes with the company, a circumstance at odds with an employment relationship. That sounds very much like an independent contractor, and Williams’s claim for unemployment benefits was turned down.
Leonard’s Express, Inc. v. Arrowstream, Inc. v. C.A. Logistics, Inc., 2012 WL 1014824 (WDNY 2012)
This daisy chain deal involved forwarder Arrowstream booking a cargo of frozen chicken breasts with carrier Leonard’s Express which, in turn, interlined the load to carrier C.A. Logistics. C.A. Logistics ran the load from Texas to New York, where the consignee found the chicken to have thawed because the trailer doors hadn’t been secured. The consignee refused the delivery.
Arrowstream and its shipper refused to pay Leonard’s Express’s freight charges. When Leonard’s Express sued in the Western District of New York, Arrowstream counterclaimed, and brought a third-party Carmack action against C.A. Logistics for $63,429.41 (the cargo’s value net of salvage). C.A Logistics defaulted. On Arrowstream’s motion, the court went through a damages analysis and awarded the cargo’s lost value to Arrowstream against C.A. Logistics. Left unclear is whether Arrowstream can collect from C.A. Logistics. If it does (which is doubtful against a defaulting defendant), then Arrowstream (and ultimately, its shipper) would be whole, and presumably would have to pay the freight charges (assuming they’re accurately calculated) to their carrier of record, Leonard’s Express. If it cannot collect from the delivering carrier, then Leonard’s Express, which bears primary liability for the loss, likely will have to take responsibility for its sub’s neglect.
Eagle Transportation, LLC v. Scott, et al., 2012 WL 1252616 (S.D. Miss. 2012)
Courts have gone in different directions on this issue in post-trial proceedings, but the U.S. District Court for the Southern District of Mississippi recently addressed head on the question of whether pre-judgment interest is recoverable in Carmack claims. Here, broker Eagle Transportation, on behalf of its shipper, pursued a damaged cargo claim against a motor carrier engaged to haul a load from Mississippi to Michigan. Liability was established under Carmack, and Eagle asked for an award of prejudgment interest.
The court found that “[t]he Carmack Amendment does not forbid the award of prejudgment interest,” and that Congress intended for carriers to be responsible for all losses related to a cargo loss. Citing Fifth Circuit precedents, the court ruled that the question of prejudgment interest is one of federal law. But “because there is no generally applicable federal statute governing prejudgment interest … the Court looks to state law for guidance.” Mississippi law provides for an 8%/annum prejudgment rate, which is far higher than the current federal post-judgment rate based on the one-year treasury bill (which is way below 1%).
When they agree to award prejudgment interest in Carmack claims (which is inconsistent), federal courts are known to apply that treasury bill rate. If this case is given precedential value, cargo claim awards could be significantly increased.
United Van Lines, LLC v. Lohr Printing, Inc., 2012 WL 1072248 (D. N.J. 2012)
Lohr Printing wanted to ship a commercial printer from Kentucky to New Jersey. Canon Business Solutions (“CBS”), the entity that had sold the printer to Lohr, advised Lohr that it had successfully used McCollister’s Transportation for its shipping needs, and that McCollister’s had specialized expertise in this type equipment. CBS got a quote from McCollister’s which contained shipping specifics, but no mention of limited liability. Lohr accepted the bid and paid McCollister’s.
Little did Lohr know that McCollister’s was acting as a booking agent for United Van Lines (“UVL”). A UVL truck appeared to fetch the printer, and UVL issued its own bill of lading containing a limitation of liability provision. Lohr contends the printer arrived damaged and was declared a constructive total loss. It filed a $261,000 claim. UVL and McCollister’s brought a declaratory judgment action in the District of New Jersey seeking a determination that their liability was limited to relative peanuts. Lohr counterclaimed against both entities seeking reciprocal relief and an award of the printer’s full value. In response to the counterclaim, McCollister’s wanted out of the action altogether, asserting that it had acted as UVL’s disclosed agent, and therefore couldn’t be held liable.
Ruling that Carmack governed Lohr’s claims against UVL, the court dismissed Lohr’s state and common law causes of action against the carrier on summary judgment. The court noted that McCollister’s might actually qualify as a broker in this transaction, in which case state and common law (but not Carmack) would govern claims against it.
However, the court refused to dismiss Lohr’s counterclaim against McCollister’s, finding that the shipper had stated “a plausible claim for breach of contract” which “does not require total certainty. Instead, [per a U.S. Supreme Court-established standard, the inquiry] is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” More discovery is needed for the court to undertake that inquiry, which very well might find the agent liable for failing to mention the limited liability provision.
Before proceeding, please note: If you are not a current client of Lane Powell PC, please do not include any information in this email that you or someone else considers to be confidential or secret in nature. Prior to the establishment of a lawyer-client relationship, unsolicited emails from non-clients containing confidential or secret information cannot be protected from disclosure.