Frontier Supply Chain Solutions, Inc. v. Streamline Transport Solutions, LLC, 2014 WL 3705349 (N.D. Ill. 2014)
Canadian transportation service provider Frontier Supply Chain Solutions engaged Illinois-based motor carrier Streamline Transport Systems to haul cargo owned by Frontier’s customers from Frontier’s Itasca, Illinois facility to its place in Winnipeg. Frontier printed up three bills of lading naming both itself and Streamline as “shippers,” but no one as a carrier. It also issued a load confirmation sheet designating Frontier as the shipper and Streamline as the carrier. The bills of lading state a $2.00/pound limitation of liability for cargo loss; the load confirmation states the carrier will be fully liable.
Streamline fetched the cargo, and then promptly lost it to theft. When Frontier sued Streamline in the U.S. District Court for the Northern District of Illinois seeking recovery of the freight’s $99,569.80 value, Streamline pointed to the limitation of liability clauses in Frontier’s own bills of lading, and moved for summary judgment. The motion was denied.
Streamline wasn’t a named carrier in the bills of lading it pointed to, and while the load confirmation sheet did say it was a carrier, that same document also said it would be fully liable. Frontier alleged it was the “originating carrier” (its role isn’t fully described in the opinion), and the bills of lading appeared to be contracts between it and the customers, as opposed to with Streamline. All told, it was from clear that Streamline had adequate documented with Frontier to limit its liability.
H. Kramer & Co., et al. v. CDN Logistics, Inc., 2014 WL 3397161 (N.D. Ill. 2014)
The Prairie State’s federal northern district isn’t seeing things in favor of carrier limitation of liability these days. Here again, a shipper, H. Kramer & Co., printed up a bill of lading, this time stating that the carrier’s “tariff … governs the transportation of the shipment.” Carrier CDN Logistics happened to have a tariff that contained a clause disclaiming liability for theft. When the cargo of brass and copper ingots was stolen from CDN’s storage facility, Kramer sued CDN, and CDN disclaimed liability based on its tariff. CDN brought a FRCP 12(b)(6) motion to dismiss the action, claiming the complaint didn’t state a viable claim for relief.
The court considered various cases that have gone both ways on this issue, some finding incorporation of a tariff – particularly when the shipper itself drafts the bill of lading – adequate notice of limitation of liability terms; and some saying simply referring to another document doesn’t do the trick for the required actual notice. AFter kicking around precedents through several pages of opinion, the court ultimately couldn’t decide which way to go, and punted by denying the motion in its current form. A 12(b)(6) motion must be decided based on the pleadings alone. “Actual notice” to the shipper of a carrier’s limited liability as Carmack requires, is a “fact intensive” issue. Disputed facts, such as whether the bill of lading was “issued” before the transportation’s commencement, and whether Kramer signed the bill of lading, are issues better decided on an FRCP 56 motion for summary judgment, which should come later. This case is a great example of how differing standards applied by various courts across the land have led to confusion within the judiciary, and have damaged the uniformity Carmack was intended to create.
Sodikart USA v. Geodis Wilson USA, Inc., 2014 WL 4373609 (S.D. Fla. 2014)
Shipper Sodikart imported racing karts from France, and engaged transportation service provider Geodis Wilson USA for the purpose of facilitating ocean transportation to Houston and then connecting rail and truck carriage to Scottsdale, Arizona. The freight arrived water damaged, and Sodikart sued Geodis Wilson in the U.S. District Court for the Southern District of Florida, claiming it had held itself out as a freight forwarder that was a “one stop shop” for “ocean, shipping, trucking, insurance clearance,” and provides “the services of assembly, consolidation, breaking, bulk and distribution.” Sodikart alleged Geodis Wilson was liable under Carmack for the cargo’s value.
The parties produced only a through ocean bill of lading for the court’s consideration, the authenticity and issuance of which Sodikart disputed. While the court recognized that failure to issue a bill of lading doesn’t affect a motor carrier’s liability, it concluded based on the U.S. Supreme Court’s decision in K-Line v. Regal-Beloit that the absence of a surface bill of lading ipso facto means Carmack doesn’t apply in the face of an ocean bill governing inbound international cargo. Dismissing Sodikarts’ claim on summary judgment, the court ruled that even if the shipper successfully refuted the through ocean bill of lading’s authenticity, the claim still must be dismissed because, again, there was no separate surface bill. The opinion doesn’t mention why Sodikart didn’t pursue a claim under COGSA, and didn’t reach the question of whether Geodis Wilson actually had stepped into the shoes of a freight forwarder by its representations.
This decision takes Regal-Beloit too far, placing the emphasis in defeating Carmack not on the existence of a through ocean agreement, but on the absence of a domestic bill of lading. Instead of focusing on what parties agreed to, or on what they had the option to avoid, it mandates an affirmative agreement that Carmack apply by way of separate documentation. This wasn’t the Supreme Court’s intent or ruling in its recent decisions.
Courtney v. Ivanov, et al., 2014 WL 4097351 (W.D. Pa. 2014)
Driver Ivanov, hauling for carrier Freightlion Logistics, pulled his rig off the side of Interstate 80 without signaling, allegedly causing driver Courtney, driving another tractor-trailer, to crash into the back of him. Courtney was injured, and sued Ivanov and Freightlion in the U.S. District Court for the Western District of Pennsylvania. Among other things, he alleged that Freightlion had violated 49 USC §14101(a), which mandates that carriers provide “safe and adequate” services, and thus was liable to Courtney under 49 USC §14704(a)(2), which provides: “Damages for violations.— A carrier or broker providing transportation or service subject to jurisdiction under chapter 135 is liable for damages sustained by a person as a result of an act or omission of that carrier or broker in violation of this part.” He also claimed Freightlion was liable for punitive damages as provided by Pennsylvania law.
Freightlion moved on summary judgment to dismiss the §14704(a)(2) and punitive damages theories, the former as not creating a private cause of action for negligence claims, and the latter, well, the opinion doesn’t really say why the carrier thought it should be excluded before denying that aspect of the motion.
But siding with the majority of courts that have considered this issue, the court agreed §14704(a)(2) doesn’t create private statutory rights in favor of a personal injury plaintiff. This law was intended and designed to hold the feet of a neglectful carrier to the fire for commercial (i.e., cargo) damages only. The court observed that other statutes in the same section specifically referenced personal injury liability, and the absence of such mention in §14704(a)(2) necessarily means Congress intended to exclude it (as a matter of basic statutory construction). But also, the legislative history of this law supports the notion that Congress intended to transfer to federal regulation only certain regulatory and commercial oversight, leaving personal injury and similar torts to the states (which are better suited to deal with them).
Certain Underwriters at Interest at Lloyds of London, et al. v. United Parcel Service of America, Inc., 2014 WL 3906951 (3rd Cir. 2014)
Shipper First State Depositary shipped coins and special metals with UPS that allegedly disappeared, resulting in an insured loss of $150,000, Underwriters sued UPS in subrogation in the U.S. District Court for the Eastern District of Pennsylvania, alleging various state and common law theories of liability, including conversion, but not Carmack. Apparently, the shipper believed UPS personnel stole the cargo.
UPS moved to dismiss, alleging Carmack preemption. The trial court agreed, and the mess went up the hill to the Third Circuit where shipper’s interests argued the “true conversion” exception to Carmack. That doctrine provides that if a carrier or its employees steals cargo, then the carrier may not avail itself of Carmack’s limitation of liability provisions. That just wouldn’t be fair.
But as the Third Circuit pointed out, that’s not to say that a conversion claim throws Carmack out the window altogether. Preemption still applies. A judicially carved-out exception couldn’t have the force of nixing preemption even if judges wanted it to. Going through a nice little history of Carmack and its preemptive effects, the court explained that the court couldn’t upset Congress’ design of a nationally uniform liability policy based on a single, mostly equitable exception to limitation of liability. As underwriters didn’t plead Carmack at all, or even ask for leave to amend their complaint to include it, the entire claim was thrown out.
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