Recent Cases in Motor Carrier Law - January 2010
by Steven W. Block
Interstate transportation must be in the equation for Carmack to apply.
Black v. Xpress Global Systems, Inc., 2009 WL 3834419 (S.D. Tex. 2009)
Mr. Black engaged Xpress Global to store 20 grand worth of his carpet in its warehouse. It’s not entirely clear – even to the parties - whether the arrangement included transportation services as well. In any event, the carpet made it to an Xpress Global warehouse, and then disappeared. Black sued in Texas state court. The carrier/warehouseman removed the action to the Southern District of Texas, citing federal question jurisdiction under Carmack.
Black moved to remand. Whether or not transportation, which would have to be interstate, was involved here, the allegations of Black’s complaint didn’t even mention a shipping issue. In granting Black’s motion to send the case back to state court, the court went through an analysis of the “well-pleaded complaint rule,” which states that removal is appropriate only if the complaint’s allegations include only federal law causes of action. The U.S. Supreme Court has carved out an exception – one which transportation law frequently takes advantage of – for complaints whose state-law allegations are preempted by statute in favor of federal jurisdiction.
But here, Black’s complaint made no mention of a cause of action arising during shipping operations. Case law and definitional sections of the Interstate Commerce Commission Termination Act make clear that warehousemen are not carriers or otherwise subject to Carmack. Interestingly, Xpress Global asked for leave to research whether or not its deal with Black might have included interstate transportation. The court refused the request, observing that Xpress failed to state in its notice of removal that interstate transportation was involved. You gotta know what services you’re providing!
Ambiguous transportation service provider escapes negligence claim, but still must deal with Carmack.
Eastco International Corporation v. Coyote Logistics, LLC, 2009 WL 5125193 (N.D. Ill. 2009)
Shipper Eastco engaged Coyote Logistics to move a cargo consisting of plastic molding from its Ohio plant to a customer in Illinois. What type entity Coyote was, or even intended to be, is far from clear. Coyote engaged motor carrier Vitran Express to haul the load, and somewhere between the Buckeye and Prairie States the plastic molding vanished. No one had any idea what happened to it. It was worth 19 grand.
Someone had issued a bill of lading naming Coyote as the carrier, and asserting that the shipper accepted “all of the terms and conditions . . . set forth in the classification or tariff which governs the transportation of this shipment.” The only problem with that was no tariff was identified anywhere. Vitran paid Eastco a few hundred bucks based on its bill of lading’s limitation of liability clause.
Eastco sued Coyote in the Northern District of Illinois, alleging causes of action based on both Carmack and common negligence. Coyote moved to dismiss. Coyote urged that Carmack applies only to carriers; that it was just a broker; and that Eastco’s complaint didn’t adequately allege that Coyote was a carrier to begin with. The court concluded that federal pleading standards don’t require a plaintiff to go into much detail about a defendant’s legal status; enough was there for an inference that Coyote was a carrier.
Coyote tried to piggy back on Vitran’s bill of lading, and limit its liability based on Vitran’s tariff. The court ruled that while the bill of lading mentioned the concept of a tariff applying, no specific tariff was actually incorporated, specified or – importantly – shown to the court.
Confusingly, the court dismissed Eastco’s negligence claims, finding that Eastco’s complaint implied only that Coyote was a carrier subject to Carmack’s preemption of common law liability. But Coyote itself was arguing that it was a broker, which would be subject to tort claims! And this finding is inconsistent with the court’s analysis that the complaint needs to be interpreted to find allegations of a shipper-carrier relationship. Couldn’t a broker relationship also be inferred? Anyway, Eastco will continue with its Carmack claim against Coyote, whatever it is.
A box to declare value on a bill of lading, coupled with incorporated tariff provisions, is sufficient to limit a carrier’s liability.
Texas Tape & Label Co. v. Central Freight Lines, Inc., 2009 WL 4852235 (Tex. App.-Waco 2009)
Texas Tape & Label shipped a package with carrier Central Freight that the carrier lost in interstate transit. The shipper left empty a box on the bill of lading for declared freight value. The carrier agreed to pay its $25.00/pound limited liability – per a tariff term – which came to about 15% of a $25,000 claim. Texas Tape sued Central Freight in state court.
Affirming a trial court’s findings, the Texas appellate court shot down the shipper’s arguments one by one. Generally, a bill of lading can and does offer shippers a reasonable opportunity to declare full value, and thereby impose full liability on motor carriers. Central Freight’s practice here was in keeping with industry and legal standards. Texas Tape argued that it couldn’t weigh its awkwardly shaped package before tender, and that Central Freight’s driver told Texas Tape’s owner not to worry about it and that “we’ll take care of ya.” However, parol evidence cannot defeat a contract’s (i.e., a bill of lading’s) clear terms.
The shipper next argued that Central Freight wasn’t relying on the bill of lading as its governing contract with Texas Tape; rather it was basing the parties’ dealings on an alleged pricing agreement that had never been signed, and which contained a similar limitation of liability. The fact Tex Tape never signed the purported agreement meant that its terms shouldn’t apply. If that sounds like a pretty lame argument, you won’t be surprised at the court’s ruling that a carrier’s unsubstantiated belief in an unenforceable agreement does not relieve a shipper of its obligation to declare freight value.
Court applies Carmack to parties’ poorly briefed claims.
Ace Motors, Inc. v. Total Transport, Inc., et al, 2009 WL 4673864 (N. D. Ill 2009)
This opinion demonstrates how the absence of adequate briefing in a transportation claim can force courts to make default determinations based on Carmack and summary judgment evidentiary standards. Participants in transportation should view it has a cautionary tale regarding this rather esoteric field of law.
Automobile exporter Ermek Abdildaev purchased a couple cars for export from Illinois to Kyrgyzstan. He hired Ace Motors, which apparently is a car dealer with export sales operations, to ship his two rods abroad to waiting buyers. Ace hired motor carrier Total Transport to haul Abdildaev’s cars, plus seven others, to New Jersey, presumably to a port for ocean transit. The Total truck collided with a bridge in Illinois, destroying the nine vehicles.
Ace entered into settlement discussions with Abdildaev, and they apparently reached an agreement in principle to settle his claims for 40 grand. Unfortunately, that agreement was never finalized. Instead, Abdildaev kept shipping cars with Ace, and withheld payment of shipping charges of about 23 grand.
Ace sued Total, its employee who secured the freight, its driver, and its principal in the Northern District of Illinois. Abdildaev intervened with his own claims. Everyone cross moved for summary judgment, and apparently irritated the court with “sparse” briefing. Ace successfully demonstrated a Carmack case against Total, and was granted summary judgment against the carrier to that extent. However, it didn’t, as the court put it, demonstrate that any of the gentlemen it sued were Carmack carriers or forwarders (or otherwise the proper subject of a cargo claim), and lost its motion against them individually.
Abdildaev was granted summary judgment against Total, and lost against the individuals, for the same reasons. The court also found Ace to be a “carrier” liable under Carmack to its shipper because it had provided “transportation services.” Nothing in the opinion supports or elucidates how Ace’s agreement to arrange transportation made it a carrier, and Ace didn’t brief any Carmack arguments or defenses well (if at all). Welcome to the trucking business, Ace.
Ace tried to avoid liability based on the doctrine of accord and satisfaction. The court rejected this because the settlement agreement had never been finalized or executed. Ace now stands jointly and severally liable with Total for Abdildaev’s damages.
FAAAA shields UPS from class action suit based on pricing and service.
Haley Hill Designs, LLC v. United Parcel Service, Inc., 2009 WL 4456209 (C.D. Cal. 2009)
Some number of UPS shippers were unhappy with UPS’s alleged practice of charging them for more packages than they actually ship because of purported problems with the carrier’s on-line Worldship program. They brought a class action against UPS in the Central District of California alleging a variety of California state and common law claims in an effort to recover purported overcharges. The brown-clad megacarrier moved to dismiss.
The Federal Aviation Administration Authorization Act of 1994 (“FAAAA”) preempts state law claims “related to a price, route, or service,” and that federal trump card applies to motor carriers. 49 USC § 14501(1). FAAAA essentially bars any state meddling in an intestate carrier’s business practices, either by way of legislation or adjudication of state law claims that would have the same impact. The plaintiffs’ claims addressed UPS’s alleged pricing and service practices, which result in overcharging, and the relief requested extended to new required system that would require UPS to scan each package (rather than rely on the shipper’s on-line input). Those claims were dismissed.
However, certain of the plaintiffs’ claims addressed alleged breaches of contract and the implied covenant of good faith. These are not FAAAA preempted, so long as the claims are confined to an agreement’s terms “with no enlargement of enhancement based on state laws or policies external to the agreement” at issue. Nonetheless, those contract-specific claims were dismissed as well, as the UPS tariff – incorporated into the Worldship contract – mandated that overcharge claims be reported within 180 days (which they weren’t). Of course, tariff terms are enforceable, and UPS’s tariff was actually the basis of plaintiffs complaint.
Large motor carrier working through local agent finds itself potentially liable for the latter’s negligence.
Bishop v. Allied Van Lines, Inc., 2009 WL 5066786 (M.D. Fla. 2009)
Carrier Allied Van Lines works through a national network of authorized agents which handle a variety of logistics services, including warehouse storage, in addition to interstate transit. Ms. Bishop, an antique furniture collector, was moving from Nashville to the Florida keys. Her new place in the islands wasn’t ready yet, so she engaged Allied agent Sanders Moving to store her stuff – including some valuable antiques – in its warehouse. Sanders issued documentation bearing Allied’s logo and a statement proclaiming it was the carrier’s agent.
To protect her furniture from the grueling Tennessee heat, Bishop requested air conditioning in her storage unit. A year or so later, she arranged for Sanders, i.e, Allied, to transport her stuff to Florida. It arrived with water damage probably caused by a leaking AC unit. One piece wasn’t delivered at all.
Bishop called Sanders, which sent her a claims form. She filled it out, listing 11 missing and damaged items. Next to several entries in the “replacement cost” box, she wrote “to be determined.” When Allied and Bishop couldn’t work it out, Bishop sued in Florida state court, and Allied removed to the Middle District of Florida.
Allied moved for summary judgment. First, it argued that Bishop had no proof of what Allied did or didn’t do to cause her loss. That argument failed under Carmack’s burden of proof scheme. Bishop had shown that she delivered her property in good order and condition, and that Allied delivered it damaged and short.
Next, Allied argued principal-agent law concepts, disclaiming responsibility for Sanders’s acts. However, Allied had earlier impleaded (and later dismissed) Sanders in a third-party action in which Allied itself had alleged Sanders was Allied’s agent. The third-party complaint attached an agency contract by which Sanders was required to indemnify Allied for Sanders’s negligence. The court ruled that Allied can’t argue Sanders is and isn’t its agent in the same lawsuit. All other elements of a principal-agent relationship were satisfied, including Sanders’s apparent authority to bind Allied in all services provided to Bishop.
Lastly, Allied argued that Bishop should be limited to the claims in the form she filled out, which didn’t include dollar values. But Allied’s bill of lading, in compliance with Carmack, allowed Bishop nine months to submit her claim. Allied wasn’t deprived of an opportunity to do a full investigation, which is Carmack’s intention in allowing shippers at least nine months to give notice. With ample questions of fact, Allied’s motion for summary judgment was denied.