Montes de Oca v. El Paso-Los Angeles Limousine Express, 2015 WL 1250139 (C.D. Cal. 2015)
Ms. Montes de Oca sued freight broker El Paso Los Angeles Limousine Express to recover for personal injuries (how and why, we don’t know) in a California state court. The broker removed to the U.S. District Court for the Central District of California, claiming that ICCTA, per 49 USC §14501(c)(1), provides federal question jurisdiction and preempts the plaintiff’s tort claims. In other words, El Paso-Los Angeles Limousine Express asserted that freight brokers can’t be liable for personal injury claims based on state tort law theories.
Sound frivolous? Well, that’s close to what a recent line of cases addressing cargo liability claims against brokers has held, a point the broker made in response to Ms. De Oca’s motion to remand her case back to state court. Interpreting ICCTA’s 49 USC §14501(c)(1) as preempting tort claims against brokers, cargo claimants have been forced to proceed based on contract theories.
While not finding the broker’s position frivolous, the court cited precedents for the notion that federal courts are loath to find federal preemption when a plaintiff “invokes traditional elements of tort law.” Personal injury matters are within that tradition. Also, ICCTA tracks the Airline Deregulation Act (ADA) in its preemption terms, and the Ninth Circuit has cautioned that “broad interpretation” of the statute outside its context would “effectively result in the preemption of virtually everything a transporter does.” ICCTA, like the ADA, is intended to insulate the trucking industry from state regulation, specifically rates routes and services, but not immunize it from liability for personal injury. Cargo litigation could impact those goals; personal injury claims cannot. This matter goes back to state court where it belongs, subject to law that properly governs it.
Blackwell v. Across U.S.A., Inc., 2015 WL 1879754 (N.D. Tex. 2015)
Shipping documentation apparently needs to provide very clear specification as to its intended court to be effective, at least in the Longhorn State. Just ask household goods carrier Across U.S.A., which issued a bill of lading to shipper Blackwell to haul his stuff from Texas to North Carolina. Blackwell filed suit against Across U.S.A. in a county court within Dallas, alleging the carrier engaged in some sort of “bait and switch” fraud that violated the Texas Deceptive Trade Practices Act. Across U.S.A. removed the action to the U.S. District Court for the Northern District of Texas, asserting Carmack governs and connotes federal jurisdiction.
Blackwell moved to remand, pointing to the bill of lading’s forum selection clause, that provided that “suit shall and must be brought in circuit or county court in and for Dallas County”; that “the parties agree to submit themselves to the jurisdiction of the Texas Courts”; and that the “Shipper consents to jurisdiction in Dallas County, Texas …” The court agreed and remanded. First, there are no circuit courts in Dallas County, such that a county court is all that fits the first provision. Second, a Fifth Circuit decision holds that “[f]ederal district courts may be in Texas, but they are not of Texas,” as they have their origin in Article III of the U.S. Constitution and federal statutes. Thus, the federal court isn’t encompassed by the clause “jurisdiction of the Texas Courts.” Third, forum selection clauses generally are enforceable as written unless they’re the result of fraud or overreaching; enforcement would deprive a party of a day in court; unfairness of law would deprive a party of a remedy; or enforcement would be against public policy. None of those were the case here
Across U.S.A. must abide by its own provision, and it gets to pay Blackwell’s attorneys for the remand motion, the court ruling that these rules well enough established that the case wasn’t the subject of a reasonable removal.
Walters Metal Corporation v. Universal Am-Can, Ltd., et al., 2015 WL 1880186 (S.D. Ill. 2015)
Six service providers were involved in the transport from Illinois to Texas of an oversize load of pipe spools belonging to shipper Walters Metal Corporation. While en route, the cargo was damaged in a bridge collision. We don’t know which of the several truckers involved was running the truck at the time, but it doesn’t much matter for purposes of the case.
One of the involved providers was Mason and Dixon Lines (MADL), which had issued a bill of lading to Walters. MADL filed a declaratory judgment action against Walters in the U.S. District Court for the Southern District of Illinois (the nature of the requested judgment isn’t clear). Walters counterclaimed, in that action, alleging that MADL was a motor carrier, and was liable under Carmack and common law negligence principles. Walters subsequently settled out with MADL.
Why MADL was named in a second action involving several other defendant truckers we also don’t know. In any event, the others moved to dismiss Walters’ claims, asserting it had been established by Walters’ own counterclaim in the earlier action that, hey, MADL was a motor carrier. Thus, the other providers urged, we can’t be. In other words, because only carriers may be liable under Carmack, whatever the other defendants were, they’re ostensibly immune from liability.
The problem with that argument is that it assumes only one entity may be a carrier of record subject to Carmack at a time. That’s not the case, ruled the court. Per Carmack, anyone issuing a bill of lading is a potentially liable record, and Walters had alleged that four of the defendants had done so for this haul (huh?). The motion to dismiss was denied.
Gibson v. United Parcel Service, Inc., 2015 WL 1850278 (Cal. App. 1 Dist. 2015)
Robert Gibson, under disputed circumstances, was said to be the shipper of a UPS parcel containing some 658 grand in cash. Police dogs barked their conclusion that the package smelled like dope. UPS had discovered the parcel’s dubious contents through an audit in Sacramento before shipping it to destination in North Carolina. UPS turned it over to the California State Bureau of Narcotic Enforcement, which handed it off to the U.S. Attorney’s Office.
Gibson sued UPS in a California state court, alleging a number of state and common law causes of action. In response, UPS filed a demurrer (in law-speak, a defendant’s way basically of saying “so what” to a complaint, asserting that, at least as currently crafted, it must be dismissed because the allegations couldn’t possibly lead to liability or an award of damages). The court agreed, and dismissed the complaint with leave to amend. Gibson took another stab at it with an amended complaint that alleged there was a mix-up of some sort within the Gibson household, leading to a family member shipping the wrong cargo. Uh-huh.
UPS demurred again, and this time the court agreed by dismissing the complaint without leave to amend. The California Court of Appeals agreed as well. If Carmack governs this matter, Gibson’s common law claims are preempted, and because the government had seized the cargo, he no longer held any possessory interest in the cargo for which he could assert a claim against UPS in the first place. And even if he did, Carmack’s public authority defense would so clearly shield UPS from liability that the claim clearly would surely fail. There was some suggestion this shipment was intended to be by air freight, but even if that were the case, the preemptory effect of the Airline Deregulation Act, 49 USC §41713, would have similar effect.
Park Insurance Company v. Lugo, et al., 2015 WL 1535791 (SDNY 2015)
Get out your pencil – you’ll need it to diagram this one out. A rig, operated by driver Solano and owned by Sav-On Waste Services, was involved in a multivehicle collision in Pennsylvania that injured the Lugos and Youngs. Eco America Trucking Corp. was in the process of buying the rig from Sav-On at the time of the accident, and its registration had already been transferred to Eco. Eco also paid for the truck’s fuel, maintenance and repairs.
The relationship between Sav-On and Eco was ambiguous. Sav-On hired owner operators and operated as a freight broker, and isn’t registered with FMCSA as a motor carrier. Eco is an FMCSA-licensed motor carrier, and employed Solano. But Sav-On gave Solano credit cards to pay for fuel and repairs, and it collected payment of freight charges from shippers. Record keeping by all concerned was shoddy, as were memories about who actually paid the driver his wages.
Park Insurance Company insured Sav-On in a policy that covered the rig involved in the accident. Park’s policy had a coverage ceiling of $500,000, but included an MCS-90 Endorsement certifying coverage up to $750,000 that would be applicable to motor carrier liability resulting from bodily injury or property damage (FMCSA regs require motor carrier coverage to that extent).
When the Lugos and Youngs made claims for their extensive damages, Park brought an interpleader action in the U.S. District Court for the Southern District of New York, seeking to deposit with the court, and have its liability limited to, about 455 grand ($500,000 less expended costs). Interpleader is a legal mechanism whereby a party that concedes it’s liable for a certain amount, but doesn’t know to whom, can deposit the amount of its conceded liability with a court, naming those potentially entitled to the proceeds as defendants. If the court agrees the amount deposited is all the “plaintiff” depositor should owe, then the “defendant” claimants are left to fight out who gets how much of the deposit, and the depositor is done with it with no further exposure.
At issue here was whether or not Sav-On was a motor carrier. If it was, then the MCS-90 Endorsement kicks in, and Park can’t get off the hook for less than $750,000. Park thought Eco should be the motor carrier, arguing Sav-On was just the lessor of a truck to Eco. The court didn’t see it that way, and granted interpleader subject to a $750,000 deposit. Sav-On’s activities in controlling the truck’s activities and collecting freight charges, along with the ambiguities as to which entity paid Solano, suggested motor carrier activities. And if Sav-On didn’t think it was motor carrier, why did it procure the MCS-90 Endorsement?
Northrich Company v. Group Transportation Services, Inc. and FedEx Freight, Inc., 2015 WL 1291447 (N.D. Ohio 2015)
Here’s a shipper that just didn’t get things right, in a claim that shouldn’t have been brought. Northrich was a representative of manufacturers of HVAC products. It engaged broker Group Transportation Services (GTS) to arrange interstate transit of a load of three heat exchangers, which it claimed carrier FedEx delivered damaged. The shipper sued GTS and FedEx in the U.S. District Court for the Northern District of Ohio, and after discovery closed, was met with a barrage of the defendants’ motions for summary judgment.
GTS made the brokers-aren’t-liable-for-cargo-they-didn’t-touch argument, and Northrich responded with a claim that GTS was FedEx’s agent, and therefore was within Carmack’s purview of potentially liable entities. That sounds like a reasonable position if you have evidence to back it up. Northrich didn’t. Coming into court with empty hands and claiming you think somewhere there’s a contract between the two defendants just doesn’t cut it. GTS was dismissed out.
In its motion, FedEx first argued lack of standing based on the absence in any bill of lading of Northrich as a shipper of record. In fact, the shipper itself said it never saw a bill of lading, “which, in itself, militates against Plaintiff’s right to recover under the Carmack Amendment.” The bill of lading attached to the shipper’s briefing didn’t identify Northrich anywhere. The court put it best: “After consideration of the relevant authority, the Court is unable to find any decision which explains how a party that is not the shipper; that is not listed on, or a party to, the bill of lading; that did not possess the bill of lading; that did not negotiate with the carrier; and that was not the receiving party of the shipment, has standing to sue for damage to the cargo under the Carmack Amendment.”
But even if Northrich had standing, it never got off home base for a Carmack claim. There was no evidence of good order and condition at time of tender. The shipper pointed to bill of lading language confirming the cargo was “properly classified, described, packaged, marked and labeled,” but that’s a far cry from an indication of its condition. In any event, a bill of lading “is not necessarily prima facie evidence of that condition.” Northrich goes home empty handed.
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