Aragon v. Wal-Mart Stores East, LP, et al., 2013 WL 5989433 (8th Cir. 2013)
Experienced J.B. Hunt driver Aragon was dispatched to Wal-Mart to fetch a load of reusable plastic containers for transport from Missouri to Illinois. Wal-Mart’s logistics facilitator had preloaded and sealed the trailer. Before leaving the premises, Aragon and a guard opened the seal and looked into the trailer’s right side, which contained shrink-wrapped pallets of the cargo. The driver didn’t inspect the cargo, or even open the left side door, but saw that there were no loading blocks, braces or straps. The guard told Aragon it was “okay,” and sent him on his way. When opening the trailer’s left-side door in Illinois, cargo fell out and injured Aragon.
Aragon filed suit in Missouri state court. Wal-mart and its logistics provider removed the action to the U.S. District Court for the Eastern District of Missouri, and moved for summary judgment. The motion was granted, and Aragon took his claim to the Eighth Circuit. At issue was whether federal case law, most notably the Fourth Circuit’s 1953 decision in U.S. v. Savage Truck Line, Inc., would hold a shipper responsible for a loading accident like this, and/or whether Wal-Mart is liable under 49 CFR 392 safety regs. The appellate and trial courts agreed with each other – no.
Savage and similar cases hold shippers liable for loading accidents when they assume responsibility for loading, and the defects in cargo securement are “latent.” In determining whether a defect is latent, courts consider the carrier’s experience and whether the shipper gave any assurances regarding adequacy of loading. Here, Aragon was very experienced, especially with shrink-wrapped cargo (although not of this particular cargo), and didn’t do much when he had the opportunity to inspect the cargo and its loading. The “okay” of a guard whose task is only to ensure the right cargo leaves with the right truck doesn’t amount to the shipper’s assurance that loading is adequate.
Nor do the safety regs help Aragon. True, they generally impose responsibility for cargo loading and securement on carriers, with exceptions for when (1) trailers are sealed and the shipper instructs that they not be opened; and (2) inspection is impossible based on the shipper’s loading technique. But neither applied here, as Aragon actually opened the trailer, and declined an apparent opportunity to inspect. This one’s on the driver.
Berry v. Transportation Distribution Company, et al., 2013 WL 5966130 (N.D. Okla. 2013)
Great West Insurance Co. insures Oklahoma carrier Transportation Distribution Company and its driver. When Cynthia Berry sued the insureds after an accident, she joined Great West as a defendant under Oklahoma’s direct action statute. The action was removed to the Northern District of Oklahoma, and Great West moved to dismiss, asserting that 49 USC §14505 would preclude plaintiffs from suing trucking insurers because such direct action would amount to an “unreasonable burden” on interstate commerce.
Great West’s theory was that 49 USC §14505, which is designed to prevent states from creating non-uniform circumstances impacting interstate transportation, should preempt the Sooner State’s accommodation to claimants by allowing them to sue insurers. But the federal statute doesn’t say it applies to claims against insurers, and if there’s any logical argument as to how lawsuits against them might be burdensome to interstate commerce, the court didn’t get into it in the opinion. It also rejected Great West’s argument that jurors would be more inclined to award big judgments against defendants they know have insurance, an argument courts have long since rejected. Great West stays in.
Harris v. All State Van Lines Relocation, Inc., 2013 WL 5912571 (W.D. Wash. 2013)
Household good shipper the Harrises booked with motor carrier All State Van Lines transit of their stuff from Michigan to Washington State, and claimed some of it arrived damaged after the carrier had held it hostage. They sued All State in a Washington state court alleging only state law claims, whereupon the carrier moved to dismiss based on Carmack preemption. That prompted the Harrises to amend their complaint to allege Carmack theories of liability, but not before 30 days had passed since service of the original complaint.
That’s when All State removed the action to the U.S. District Court for the Western District of Washington on the basis of federal question jurisdiction as provided by Carmack. The Harrises moved to remand the action back to state court, asserting that All State’s 30-day window to remove to federal court began to run upon service of the complaint, and not when they amended their pleading.
The court agreed with the Harrises, and kicked the matter back to state court as untimely removed. Actions alleging interstate cargo damage are immediately removable even if a complaint doesn’t specifically mention Carmack or other federal claims. Under the “well-pleaded complaint rule,” which limits the bases on which an action may be removed to what is clear from the complaint, All State had adequate notice of the grounds for federal jurisdiction based on the original factual allegations. Put simply, it was clear from the get-go this is an interstate cargo claim. The court also rejected All State’s contention that a determination of whether it was actually a motor carrier had to be resolved before Carmack could be deemed applicable because, hey, that’s clear from the complaint too.
Rohr, Inc. v. UPS-Supply Chain Solutions, Inc., et al., 2013 WL 5676355 (S.D. Cal. 2013)
Shipper Rohr sued logistics company UPS Supply Chain Solutions (“UPS SCS”) and motor carrier Knight Transportation and others in the Southern District of California to recover for cargo damaged during an intermodal haul. On summary judgment, the court found issues of fact as to whether Carmack or the U.S. Carriage of Goods by Sea Act (“COGSA”) governed, and UPS SCS reached a settlement agreement with Rohr whereby it would pay 80 grand to settle out of the action.
This would leave the remaining defendants potentially on the hook for the difference between that sum and what Rohr might ultimately be awarded. To avoid fraudulent or otherwise inequitable settlements that impact the exposure of a settling party’s co-defendants, California, like many other states, has statutes that require the settling defendant to submit to a reasonableness hearing whereby the proposed settlement may be challenged by remaining defendants. They get a chance to argue the settling defendant might be escaping liability for less than its share of responsibility, saddling the remaining defendants with more potential liability than they should bear. When the court ordered a reasonableness hearing, Knight challenged the settlement based on Carmack preemption of state law.
While any number of precedents addresses Carmack and COGSA preemption, Knight didn’t mention any that stand in the way of a settling party escaping a lawsuit by settlement pursuant to the parameters of state law. The court found Ninth Circuit precedents that limit preemption only if state law that would “enlarge or limit the responsibility of the carrier for damages to the shipper,” and state settlement statutes don’t do that. The federal uniformity interest just isn’t threatened by state laws governing settlement. The settlement was approved as reasonable under the claim’s circumstances.
Cincinnati Casualty Company v. TMO Global Logistics, LLC, et al., 2013 WL 5372807 (W.D. Va. 2013)
Cincinnati Casualty Company issued a $10,000 freight broker bond to TMO Global Logistics as required by 49 USC §13906(b) and 49 CFR §387.307(a). When TMO apparently defaulted on freight charge payments to several motor carriers, the carriers made claims, Cincinnati deposited ten grand with the registry of the Western District of Virginia, and then filed an interpleader action against the carriers claiming entitlement to it. Interpleader is a mechanism available to entities who agree they owe a sum of money to someone, perhaps more than one someones, and don’t want to risk paying the wrong claimant. It forces the claimants to duke it out in court as “defendants.”
Two carriers showed up for the fight, and Cincinnati ended up paying some $5,600 in attorneys’ fees participating. It wanted this sum deducted from its $10,000 obligation, a point the law generally supports in interpleader actions. But not here. Broker bonds are federally mandated to protect the public, i.e., truckers, from defaulting brokers to the extent of a minimum amount. If the court allowed over half the mandated sum to be eaten up by a fee award, that goal would be thwarted. Cincinnati has to pay its own interpleader costs.
On a Roll Trucking, Inc. v. Armen Terptrosyn d/b/a ATP Express, 2013 WL 5940680 (N. D. Ill. 2013)
Broker On A Roll Trucking (“OAR”) sought to recover from motor carrier ATP Express damages it had to pay a shipper when ATP allegedly failed to maintain proper cargo temperature settings in a haul from California to New Jersey. OAR sued ATP in the Northern District of Illinois seeking to recover the difference between the cargo’s original and salvage values, and added a claim for attorneys’ fees.
ATP moved to dismiss the attorney fee claim on the ground Carmack doesn’t allow it. OAR didn’t respond to the motion, but the court apparently went through its own analysis. Another court that grappled with the issue considered that while Carmack, under 49 USC §14706, doesn’t contemplate fee awards, §14704(e) does for claims “under this section.” But that statute governs only claims under §14704, which address a motor carrier which did “not obey an order of the Secretary [of Transportation]”, and has nothing to do with cargo claims.
Courts have held that state statutes allowing awards of attorneys’ fees don’t bow to Carmack preemption, but under circumstances not present (or explained) here. The court found no reason for state law allowing fee awards – even had one been asserted – to be applied in the face of federal preemption.
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