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Duane Kaiser, Plaintiff, v. Fed Ex Cargo Claims Dept.

Duane Kaiser, Plaintiff, v. Fed Ex Cargo Claims Dept., Defendant.

 

Court File No. 17-cv-1716 (JRT/LIB)

 

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA

 

2017 U.S. Dist. LEXIS 166692

 

 

September 21, 2017, Decided

September 21, 2017, Filed

 

 

COUNSEL:  [*1] For Duane Kaiser, Plaintiff: S Steven Prince, LEAD ATTORNEY, Grell & Feist L.L.C, Minneapolis, MN.

 

For Fed Ex Cargo Claims Dept, Defendant: Brian A Wood, LEAD ATTORNEY, Lind Jensen Sullivan & Peterson, PA, Mpls, MN; Lauren Allison D’Cruz, LEAD ATTORNEY, Lind Jensen Sullivan & Peterson, PA, Mpls, MN.

 

JUDGES: Leo I. Brisbois, United States Magistrate Judge.

 

OPINION BY: Leo I. Brisbois

 

OPINION

 

REPORT AND RECOMMENDATION

This matter came before the undersigned United States Magistrate Judge pursuant to two orders of referral, [Docket Nos. 10 and 19], made in accordance with the provisions of 28 U.S.C. § 636(b)(1)(B), and upon Defendant’s Motion to Dismiss, [Docket No. 6], and Plaintiff’s Motion to Remand to State Court, [Docket No. 12]. This Court held a Motion Hearing on August 17, 2017, and Defendant’s Motion to Dismiss, [Docket No. 6], and Plaintiff’s Motion to Remand to State Court, [Docket No. 12], were taken under advisement thereafter. (See, Minute Entry, [Docket No. 24]).

For the reasons set forth below, the Court recommends that Defendant’s Motion to Dismiss, [Docket No. 6], be DENIED as moot, and Plaintiff’s Motion to Remand to State Court, [Docket No. 12], be GRANTED.

 

  1. STATEMENT OF ALLEGED FACTS1 AND PROCEDURAL HISTORY

 

1   For the purposes of the present Motion to Dismiss under Rule 12(b)(6), the Court accepts the facts alleged in the operative First Amended Complaint, [Docket No. 17], as true and construes them in the light most favorable to Plaintiffs. See, Riley, 153 F.3d at 629 (citing Double D Spotting Serv., 136 F.3d at 556).

Plaintiff [*2]  Duane Kaiser purchased two outboard motors from a seller in Florida, who shipped the motors to him in Minnesota by Defendant Fed Ex. (Wood Aff., Exh. A, [Docket No. 8-1], 1; Prince Dec., Exh. E, [Docket No. 15], 21). Plaintiff alleges that the motors were damaged during shipping; as a result, on December 30, 2016, he filed a pro se claim in Minnesota State Conciliation Court. (See, Id. at Exh. A, [Docket No. 15], 6; Id. at Exh. B, [Docket No. 15], 8). Plaintiff sought $10,000 plus filing fees and costs of $75.2 (Id.). The Statement of Claim Plaintiff filed to initiate his case in Conciliation Court was a fill-in-the-blank form, on which Plaintiff stated:

 

The Defendant(s) owe(s) me $10,000, plus filing fees and costs of $75.00, for a total of $10,075.00 because on or about (state month and year) the following event occurred (briefly describe the event): I purchased 2 2013 350 hp mercury verado motor they were damaged in shipping. FedEx refuses to acknowledge any responsibility[.]

 

 

([Docket No. 1-1], 1).

 

2   Minn. Stat. § 491A.01, Subd. 3a, states: “[T]he conciliation court has jurisdiction to hear, conciliate, try, and determine civil claims if the amount of money or property that is the subject matter of the claim does not exceed: (1) $15,000; or (2) $4,000 if the claim involves a consumer credit transaction.”

A conciliation hearing was held on April 12, 2017, and on April 25, 2017, Judge John G. Melbye issued an Order entering Judgment in Plaintiffs favor in the amount of $10,000 plus fees of [*3]  $75. (Id. at Exh. A, [Docket No. 15], 6; Id. at Exh. E, [Docket No, 15], 20). In the written Order, Judge Melbye noted that the repair estimate for the engines was $10,534.98 plus labor and the declared value of the engines at was $40,000, but found Defendant liable only “for the amount stated in the complaint”–$10,000. (Id. at 21).

On May 17, 2017, Defendant removed the case to Minnesota State District Court for a de novo trial by jury, pursuant to Minn. Stat. Ann. § 491A.02, Subd. 6. (Id. at Exh. F, [Docket No. 15], 24).

On May 23, 2017, Defendant removed the case from the Minnesota State District Court to this Court.3 (Notice of Removal, [Docket No. 1]). As grounds for removal, Defendant asserts that Plaintiff’s state-law claim is completely preempted by the Carmack Amendment to the Interstate Commerce Commission Termination Act, 49 U.S.C. § 14706, et seq., and therefore, this Court has jurisdiction and the action is subject to removal to federal court. (Id. at 2).

 

3   In its Civil Cover Sheet, Defendant identified diversity jurisdiction as the basis for removal. ([Docket No. 2]). When Plaintiff pointed out that diversity jurisdiction does not exist in the present case, (see, Mem. in Supp. of Remand, [Docket No. 14], 5-6), Defendant acknowledged that its indication of diversity jurisdiction was a scrivener’s error and it had intended the basis of removal to be federal question jurisdiction. (Mem. in Opp. to Remand, [Docket No. 22], 3).

Two days later, on May 25, 2017, Defendant filed the present Motion to Dismiss, [Docket No. 6]. It argues that this action must be dismissed because Plaintiff attempts to recover damages under state law which are only available under federal law, due to the complete preemption by the Carmack Amendment. (Mem. in Supp., [Docket No. 7], 1-2).

On June 23, 2017, Plaintiff–through counsel [*4]  he obtained after the removal to this Court–filed the Motion to Remand to State Court, [Docket No. 12], which is now before this Court. Plaintiff argues that applicable federal law precludes removal of this matter, as he is not seeking more than $10,000. (Mem. in Supp., [Docket No. 14], 5-6). Plaintiff also argues that the removal was untimely. (Id. at 6-7). Finally, Plaintiffs counsel requests an award of costs and attorney’s fees. (Id. at 8-9).

 

  1. PLAINTIFF’S MOTION TO REMAND TO STATE COURT, [Docket No. 12]

Although it was filed second, this Court addresses the Motion to Remand, [Docket No. 12], before addressing the Motion to Dismiss, [Docket No. 6], because if the Motion to Remand is granted, it will render the Motion to Dismiss moot. See, Alliance Energy Servs., LLC v. Kinder Morgan Cochin LLC, 80 F. Supp. 3d 963, 964, 973 (D. Minn. 2015) (where a federal court lacks jurisdiction, necessitating remand, it may not make any substantive rulings).

 

  1. Standards of Review

 

 

A party opposing removal may bring a motion requesting that the federal court remand the case back to state court. 28 U.S.C. § 1447(c). The district court shall remand the case back to state court if it determines that the court lacks subject matter jurisdiction. Id., Martin v. Franklin Capital Corp., 546 U.S. 132, 134, 126 S. Ct. 704, 163 L. Ed. 2d 547 (2005). On a motion to remand, the party seeking removal and opposing remand bears the burden [*5]  of demonstrating federal jurisdiction by a preponderance of the evidence. In re Prempro Prods. Liab. Litig., 591 F.3d 613, 620 (8th Cir. 2010); In re Bus. Men’s Assur. Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993). The federal court should resolve any doubt as to the propriety of removal in favor of remand. Prempro, 591 F.3d at 620; Bus. Men’s Assur., 992 F.2d at 183. “In addition to the notice of removal and its exhibits, to determine whether there is jurisdiction, the court may consider documents submitted after the notice of removal as well as those attached to subsequent motions.” Guggenberger v. Starkey Labs., Inc., No. 16-cv-2021, 2016 U.S. Dist. LEXIS 180403, 2016 WL 7479542, at *5 (D. Minn. Dec. 29, 2016).

 

 

In re Wachovia Bank Commer. Mortg. Trust Commer. Mortg. Pass-Through Certificates, Series 2007-C30, 241 F. Supp. 3d 905, 2017 WL 991044, *4 (D. Minn. 2017).

“A defendant may remove ‘only state-court actions that originally could have been filed in federal court.”‘ Smith v. Local Union No. 110, Intern. Brotherhood of Electric Workers, 681 F. Supp. 2d 995, 997 (D. Minn. 2010) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 96 L. Ed. 2d 318 (1987)). “It is to be presumed that a cause lies outside [a federal court’s] limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” (Citations omitted). Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994).

 

  1. Analysis

The Carmack Amendment “was first enacted in 1906 as an amendment to the Interstate Commerce Act . . . . [It] has been altered and recodified over the last century” and now “governs the terms of bills of lading issued by domestic [motor] carriers.” [*6]  See, Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 96-97, 130 S. Ct. 2433, 177 L. Ed. 2d 424 (2010). “The Carmack Amendment ‘essentially provides that a carrier is liable for the actual loss or injury it causes to a shipper’s property.'” (Citation omitted.) Union Pacific Railroad Company v. Beemac Trucking, LLC, 929 F. Supp. 2d 904, 913 (D. Neb. 2013); see, also, 49 U.S.C. § 14706(a) (addressing liability for motor carriers under the Carmack Amendment).

Although Plaintiff’s claim was brought on state-law grounds in Conciliation Court, Defendant argues that actions such as the present one for damage arising during the interstate transportation of freight cannot be brought on state law grounds because the Carmack Amendment completely preempts this field of the law. (Mem. in Supp. of Dismissal, [Docket No. 7], 2). This interpretation has been adopted by several Courts, including the United States District Court, District of Minnesota.4

 

4   The Eighth Circuit has not yet spoken directly to whether the Carmack Amendment completely preempts all state law causes of action resulting from damage to freight during interstate shipping. See, Zumba Fitness, LLC v. ABF Logistics, Inc., No. 1:15-cv-02151, 2016 U.S. Dist. LEXIS 116298, 2016 WL 4544355, * (W.D. Ark. August 30, 2016) (noting split on the question of whether the Carmack Amendment completely preempts state law remedies in the area and stating “there is apparently no Eighth Circuit precedent on the matter”). However, other courts have so found. See, e.g., Rush Industries, Inc. v. MWP Contractors, LLC, 539 Fed. Appx. 91, 95 (Fourth Circuit 2013) (holding “that the Carmack Amendment preempts Rush Industries’ state and common law claims . . .”); Smallwood v. Allied Van Lines, Inc., 660 F.3d 1115, 1120 (9th Cir. 2011) (“It is well settled that the Carmack Amendment is the exclusive cause of action for interstate-shipping contract claims alleging loss or damage to property’ and thus completely preempts such claims.”); Tran Enterprises, LLC v. DHL Exp. (USA), Inc., 627 F.3d 1004, 1008 (5th Cir. 2010) (noting its prior holding that “‘Congress intended for the Carmack Amendment to provide the exclusive cause of action for loss or damages to goods arising from the interstate transportation of those goods by a common carrier.”); Federated Mut. Ins. Co. v. Con-Way Freight, Inc., No. 15-cv-450 (ADM/BRT), 2015 U.S. Dist. LEXIS 61028, 2015 WL 2194863, * (D. Minn. May 11, 2015) (“Courts have routinely found that the Carmack Amendment preempts state law if the cause of action involves loss or damage to goods caused by the interstate shipment of those goods by a common carrier. ‘It is well settled that the Carmack Amendment is the exclusive cause of action for interstate-shipping contract claims alleging loss or damage to property.’ (Citations omitted.)). In addition, language from the United States Supreme Court supports this interpretation. See, New York, N. H. & H. R. Co. v. Nothnagle, 346 U.S. 128, 131, 73 S. Ct. 986, 97 L. Ed. 1500 (1953) (“With the enactment in 1906 of the Carmack Amendment, Congress superseded diverse state laws with a nationally uniform policy governing interstate carriers’ liability for property loss.”).

Generally speaking, federal and state courts have concurrent jurisdiction over Carmack Amendment claims. See, 49 U.S.C. § 14706(d)(1) (“A civil action under this section may be brought against a delivering carrier in a district court of the United States or in a State court.”); 49 U.S.C. § 14706(d)(3) (“A civil action under this section may be brought in a United States district court or in a State court.”). However, pursuant to 28 U.S.C. § 1337:

 

(a) The district courts [*7]  shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce or protecting trade and commerce against restraints and monopolies: Provided, however, That the district courts shall have original jurisdiction of an action brought under [the Carmack Amendment], only if the matter in controversy for each receipt or bill of lading exceeds $10,000, exclusive of interest and costs.

 

 

(Emphasis added.) Therefore, even assuming that the Carmack Amendment does operate to completely preempt state-law-based claims based upon damage to freight during interstate transportation, it does so only for claims over $10,000.

In support of his Motion to Remand, [Docket No. 12], Plaintiff argues that the “amount in controversy” in the present case “does not exceed ‘10,000, exclusive of interest and costs.'” (Mem. in Supp., [Docket No. 14], 6).

Defendant disagrees, arguing that “the amount in controversy now exceeds $10,000.00.” (Mem. in Opp., [Docket No. 22], 4). Defendant argues that Judge Melbye’s statement in his Conciliation Court Order that “Plaintiff submitted photos and a repair estimate for $10,534,98” was an indication that Plaintiff presented evidence in Conciliation Court “establishing [*8]  damages exceeding $10,000.00.” (Id.). Defendant further asserts that Judge Melbye only awarded Plaintiff $10,000 because Judge Melbye was limited in awarding damages to the amount claimed in Plaintiff’s Statement of Claim to the Conciliation Court but that limitation is negated by the removal of the Conciliation Court case action to State district court for a de novo trial, because proceedings in State district court are governed by the Minnesota Rules of Civil Procedure, which provide in relevant part that a plaintiff may recover an award in excess of that pled in the complaint. (Id. at 4-6). Minn. R. Civ. P. 54.03 states:

 

A judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment. Except as to a party against whom a judgment is entered by default, every other judgment shall grant the relief to which the party in whose favor it is rendered is entitled.

 

 

(Emphasis added.) Thus, Defendant argues that because Plaintiff could potentially recover over $10,000 on his claims if brought in Minnesota State district court, 28 U.S.C. § 1337(a) does not prohibit the removal of the present case to this Court. (Mem. in Opp., [Docket No. 22], 5-6).5

 

5   Defendant also argues that the “amount in controversy” is defined by 28 U.S.C. § 1446(c)(2)(A), which allows the notice of removal to determine the amount in controversy under certain circumstances. (Mem. in Opp., [Docket No. 22], 6). However, that statutory subsection, by its very language, applies only to cases removed on the basis of diversity of citizenship. See, 28 U.S.C. § 1446(c). The present case was removed as a federal question case, not under diversity of citizenship, so 28 U.S.C. § 1446(c)(2)(A) does not apply.

Although neither party has cited nor [*9]  has the Court’s independent legal research revealed legal authority directly addressing whether the “amount in controversy” for purposes of determining a Carmack Amendment claim’s removability is calculated by a potential claim or an actual claim, guidance can be found in general principles from other instances in which Congress has instituted a jurisdictional monetary threshold. For example, the United States Supreme Court has long held: “If [a plaintiff] does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294, 58 S. Ct. 586, 82 L. Ed. 845 (1938). More recently, the United States Supreme Court quoted this language and again noted: “[F]ederal courts permit individual plaintiffs, who are the masters of their complaints, to avoid removal to federal court, and to obtain a remand to state court, by stipulating to amounts at issue that fall below the federal jurisdictional requirement.” Std. Fire Ins. Co. v. Knowles, 568 U.S. 558, 595, 133 S. Ct. 1345, 185 L. Ed. 2d 439 (2013).

Moreover, Plaintiff stated on the record at the August 17, 2017, Motions Hearing that he will not seek more than $10,000 in damages under the Carmack Amendment.6 (Aug. 17, 2017, Motions Hearing, Digital Record, 2:02-03). Thereafter, [*10]  Defendant conceded on the record that, based upon this representation, it can no longer pursue the Carmack Amendment claim in this Court, as the amount in controversy does not meet the threshold monetary requirement for removal that the claim exceed $10,000.7 (Id. at 205-12). See, Donelow v. Kmart Corp., No. 2:11-00549, 2011 U.S. Dist. LEXIS 149370, 2011 WL 6936359, * (S.D. W. Va. Dec. 29, 2011) (remanding case to state district court after parties stipulated that the plaintiff would not accept any recovery in excess of $75,000, which was the jurisdictional amount-in-controversy threshold for the diversity jurisdiction claim which the defendant had removed to Federal Court). Although the parties have not entered into a formal stipulation binding Plaintiff to a $10,000 recovery, the parties’ representations to this Court on the record at the August 17, 2017, Motion Hearing are sufficient to obtain a remand to Minnesota state district court.

 

6   And the Court notes that at no point in the judicial proceedings represented in the record now before this Court has Plaintiff sought to recover an amount in excess of $10,000.

7   In addition, Defendant will suffer no prejudice if the case is remanded, because the Minnesota Supreme Court has stated that a plaintiff’s recovery is limited to the amount stated in the complaint if the defendant would be prejudiced by an increase in that amount. The Minnesota Supreme Court specifically held that “where a party chooses to sue for an amount that will or may deprive another party of a right he may have, the plaintiff is bound by such choice unless he takes action to amend his complaint within such time as will enable the defendant to assert the right which he has.” Stephenson v. F.W. Woolworth Co., 277 Minn. 190, 197, 152 N.W.2d 138 (Minn. 1967).The present situation fits squarely into this exception. Plaintiff’s choice to sue for less than $10,000 operates to deprive Defendant of the option of removing the case to federal court. Moreover, at the August 17, 2017, Motion Hearing, Plaintiff explicitly represented on the record that he will not seek more than $10,000 in damages under the Carmack Amendment. (August 17, 2017, Motion Hearing, Digital Record, 2:02-03). Therefore, there is no potential prejudice to Defendant by granting the Motion to Remand, as Plaintiff will not be able to increase his claim under the Carmack Amendment upon return to Minnesota State District Court.

Also supporting this Court’s recommendation that the case be remanded is the persuasive authority found in Quintessence of Home Appliances, Inc. v. R+L Carriers, Inc., No. 3:08-cv-618-J-32MCR, 2008 U.S. Dist. LEXIS 127750, 2008 WL 11336255, *4 (M.D. Fla. November 23, 2008). In that case, the United States District Court for the Middle District of Florida remanded a Carmack Claim to Florida state [*11]  district court where “the Plaintiff clearly pleaded damages below the jurisdictional amount” by stating that “each individual claim for damages does not exceed $10,000.” Id. Although the United States District Court for the Middle District of Florida recognized that the area of law regarding the valuation of Carmack Amendment claims–the issue in that case–was unsettled, it reiterated that the burden is on the nonmoving party to demonstrate that removal was proper, and it concluded: “At minimum, there is an ambiguity that must be decided in favor of remand.”

Similarly, in the case presently before the Court, at a minimum, there is an ambiguity over whether the amount in controversy for a Carmack Claim is determined based upon damages pled by Plaintiff or based upon the potential damages alleged by Defendant. This ambiguity is resolved in the present case by the parties’ representations on the record at the August 17, 2017, Motion Hearing, but even assuming solely for the sake of argument that Plaintiff had not agreed to restrict his recovery to $10,000, remand would nevertheless be warranted, as all doubt regarding the propriety of removal must be resolved in favor of remand. See, Kokkonen, 511 U.S. at 377 (setting forth presumption [*12]  “that a cause lies outside [a federal court’s] limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction”); Prempro, 591 F.3d at 620 (stating that the Court should resolve any doubt as to the propriety of removal in favor of remand).

In summary, it is far from settled that a defendant may meet the monetary threshold of an excess of $10,000 required for removal of a Carmack Amendment claim from state court to federal court by including “potential” damages in addition to those damages actually pled by the plaintiff. As such, any doubt regarding this Court’s removal jurisdiction must be resolved in favor of remand. In addition, Plaintiff has now stated on the record that he will not seek to recover damages in excess of $10,000. Defendant has failed to meet its burden to “demonstrat [e] federal jurisdiction by a preponderance of the evidence.” See, Id.

Accordingly, the Court recommends that Plaintiff’s Motion to Remand to State Court, [Docket No. 12], be GRANTED.8

 

8   Plaintiff also seeks costs and attorney fees incurred in bringing the Motion to Remand and in responding to Defendant’s Motion to Dismiss. (Mem. in Supp., [Docket No. 14], 8-9), “An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred at as result of the removal.” 28 U.S.C. § 1447(c). However, “[a]ttorney’s fees should be awarded only when the removing party had no objectively reasonable basis for removal.” Medtronic, Inc. v. Endologix, Inc., 530 F. Supp. 2d 1054, 1059 (D. Minn. 2008). In the present case, although the Court has determined that remand is appropriate, the relevant case law is not settled, as explained above, and there is no indication in the record now before the Court that Defendant removed the action to this Court in bad faith. Therefore, the removal was not objectively unreasonable, and the Court recommends that this portion of Plaintiff’s Motion to Remand be denied.

As such, Defendant’s Motion to Dismiss, [Docket No. 6], is rendered moot. See, Alliance Energy Servs., LLC, 80 F. Supp. 3d at 964.

 

  1. CONCLUSION
  2. Based on the foregoing, and all the files, records, and proceedings herein, IT IS HEREBY RECOMMENDED that:

 

  1. Defendant’s [*13] Motion to Dismiss, [Docket No. 6], be DENIED as moot; and
  2. Plaintiff’s Motion to Remand to State Court, [Docket No. 12], be GRANTED.

CARRIER SERVICES GROUP, INC., Plaintiff, v. SCHNEIDER LOGISTICS, INC., SCHNEIDER TRANSPORTATION AK TTRANSIT CORPORATION, W.W. ROWLAND TRUCKING CO. INC., CARGO SPEED CORP.

CARRIER SERVICES GROUP, INC., Plaintiff, v. SCHNEIDER LOGISTICS, INC., SCHNEIDER TRANSPORTATION AK TTRANSIT CORPORATION, W.W. ROWLAND TRUCKING CO. INC., CARGO SPEED CORP., Defendants.

 

CASE NO. 4:15-CV-02626-JRA

 

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO, EASTERN DIVISION

 

2017 U.S. Dist. LEXIS 157682

 

 

September 26, 2017, Decided

September 26, 2017, Filed

 

 

COUNSEL:  [*1] For Carrier Services Group, Inc., Plaintiff: Randil J. Rudloff, LEAD ATTORNEY, Warren, OH.

 

For W. W. Rowland Trucking Co., Inc., Defendant: Scott Wing, LEAD ATTORNEY, Monica P. Fazekas, Leahy, Eisenberg & Fraenkel, Chicago, IL; Thomas W. Wright, LEAD ATTORNEY, Matthew P. Baringer, Davis & Young – Willoughby Hills, Willoughby Hills, OH.

 

JUDGES: John R. Adams, UNITED STATES DISTRICT JUDGE, NORTHERN DISTRICT OF OHIO.

 

OPINION BY: John R. Adams

 

OPINION

 

MEMORANDUM OF OPINION AND ORDER

Defendant W.W. Rowland Trucking Co. Inc. (“Rowland”) seeks summary judgement pursuant to Fed. R. Civ. Pro. 56, asserting that Plaintiff Carrier Services Group, Inc. (“Carrier”) has failed to establish a prima facie case for liability under 49 U.S.C. § 14706 (the “Carmack Amendment”). Doc. 50-1. Carrier has opposed the motion. Doc. 51. For the reasons stated herein, the Court GRANTS IN PART AND DENIES IN PART Rowland’s Motion for Summary Judgment.

 

  1. FACTS

Carrier is an Ohio corporation engaged in the business of buying and selling new and used telecommunications computer equipment. Doc. 11, p. 3. Carrier purchased thirty-eight pieces of used telecommunications equipment from Austin Tele-Services (“ATS”), a non-party, located in Austin, Texas. The equipment consisted of metal towers, which contained [*2]  telecommunication related computer components. Carrier paid $25,000.00 for the equipment. Carrier hired Schneider Logistics and Schneider Transportation to arrange for transportation of the order. Schneider Logistics brokered a portion of the load to Rowland. Doc. 50-1 at 2. A Rowland driver arrived at ATS to pick up a portion of the equipment on August 4, 2015. Twenty-five of the thirty-eight pieces of equipment were loaded onto the Rowland truck. The remaining thirteen pieces of equipment were loaded on a separate truck and are not at issue in this case.

The twenty-five towers loaded on August 4, 2015, were accompanied by a clean bill of lading. Rowland has a “no touch” policy for their drivers concerning the handling of loads; Rowland drivers are not responsible for loading the shipments onto the truck, nor are the drivers allowed on the loading docks.

The Rowland truck arrived at the Carrier warehouse in Warren, Ohio, on August 6, 2015. Doc. 50-1 at 3. When the Rowland truck’s trailer door was opened, Carrier’s Chief Executive Officer, Richard Lee Hartman, testified that some of the equipment towers had fallen over. That day, on the bill of lading, Carrier’s General Manager, Terrence [*3]  Williams, stated that five of the twenty-five pieces received had fallen over and were damaged. Mr. Hartman later testified that he made the decision that the entire load was “scrap” as soon as the truck was opened. Doc. 50-2 at 64. Although he believed the shipment to be scrap, Hartman spent approximately thirty minutes looking at the equipment the following day. Doc. 50-1 at 6. The equipment was not tested, nor were the individual components examined. All twenty-five pieces of equipment were scanned into Carrier’s computer system as scrap. All twenty-five pieces are currently in storage at Carrier’s warehouse in Leavittsburg, Ohio. Carrier has not produced any material in support of its valuation of the equipment, lost sales, or customers lost due to the alleged damage to the shipment apart from the testimony of Mr. Hartman.

 

  1. STANDARD OF REVIEW

Summary judgment is appropriate when the “pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.” Estate of Smithers v. City of Flint, 602 F.3d 758, 761 (6th Cir. 2010). A fact must be essential to the outcome of a lawsuit to be [*4]  “material.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Summary judgment will be entered when a party fails to make a “showing sufficient to establish . . . an element essential to that party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). “Mere conclusory and unsupported allegations, rooted in speculation, do not meet [the] burden.” Bell v. Ohio State Univ., 351 F.3d 240, 253 (6th Cir. 2003).

Summary judgment creates a burden-shifting framework. See Anderson, 477 U.S. at 250. The moving party has the initial burden of showing there is no genuine issue of material fact. Plant v. Morton Int’l, Inc., 212 F.3d 929, 934 (6th Cir. 2000). When evaluating a motion for summary judgment, the Court construes the evidence and draws all reasonable inferences in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). The non-moving party may not simply rely on its pleadings; rather it must “produce evidence that results in a conflict of material fact to be resolved by a jury.” Cox v. Kentucky Dep’t of Transp., 53 F.3d 146, 150 (6th Cir. 1996).

 

III. LAW AND ANALYSIS

The Carmack Amendment to the Interstate Commerce Act, codified at 49 U.S.C. § 14706, addresses the liability of common carriers for goods lost or damaged during a shipment under the jurisdiction of the Interstate Commerce Commission. CNA Ins. Co. v. Hyundai Merchant Marine Co., Ltd., 747 F.3d 339, 353 (6th Cir. 2014). The parties agree that the Amendment applies to the shipment at issue here. To establish a prima facie case for liability under the Carmack Amendment, the plaintiff must satisfy three elements:

 

(1) that the initial (“receiving”) carrier received the cargo in good condition;

(2) that the [*5]  cargo was lost or damaged; and

(3) the amount of actual loss or damages.

 

 

Id. Upon an adequate showing of the three elements, the burden shifts to the defendant to demonstrate that it was not negligent and that the damage was instead due to one of five excepted causes:

(a) an act of God;

(b) an act of terrorism or war;

(c) an act of the shipper itself;

(d) an act of public authority; or

(e) the inherent vice or nature of the goods.

 

 

Missouri Pac. R.R. v. Elmore & Stahl, 377 U.S. 134, 137-138, 84 S. Ct. 1142, 12 L. Ed. 2d 194 (1964). If a defendant-carrier can demonstrate any of the five exceptions, it wins. CNA Ins. Co., 747 F.3d at 353. The Sixth Circuit emphasizes how slight the evidentiary burdens are under the Amendment. If the defendant carrier cannot demonstrate an applicable exception, “then the shipper prevails based on its establishing the–very low threshold–prima facie case.” Id.

 

  1. Initial Receipt

To satisfy the first element of a Carmack Amendment claim, Carrier must demonstrate that the equipment was in good condition when it was received by Rowland at ATS for delivery. In general, a shipper’s burden to prove that the goods were received by a carrier in good condition may be satisfied by a proffer of a clean bill of lading for the shipment. Sec. Ins. Co. v. Old Dominion Freight Line, Inc., 391 F.3d 77, 83 (2nd Cir. 2004). A bill of lading is the “basic transportation contract between the shipper-consignor [*6]  and the carrier.” S. Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. 336, 342, 102 S. Ct. 1815, 72 L. Ed. 2d 114 (1982). A “statement in the bill of lading as to ‘apparent good order’ is prima facie evidence only that, as to parts which were open to inspection and visible, the goods were in good order at the point of origin.” Hoover Motor Express Co. v. United States, 262 F.2d 832, 834 (6th Cir. 1959) (internal citation omitted); see also Accura Sys., Inc. v. Watkins Motor Lines, Inc., 98 F.3d 874, 878 (5th Cir. 1996). A “shipper’s burden of proving that the goods were delivered to the carrier in good condition may be satisfied by the proffer of a clean bill of lading for the shipment, provided that the cargo was packaged in a way that permitted its inspection by the carrier.” Sec. Ins. Co., 391 F.3d at 83.

Rowland’s 30(b)(6) deponent testified that there was no notation on the bill of lading indicating that there was a problem with the load. Doc. 51-3, p. 35-36. There is no dispute between the parties that the shipment at issue was accompanied by a clean bill of lading. Doc. 50-3, p.1. In addition to the clean bill of lading, Carrier offers the affidavit of Chris Goldstein, the warehouse supervisor of ATS, who averred that the equipment was in good working order and undamaged condition when it was loaded on the Rowland truck. Doc. 51-1. Carrier further notes that Rowland’s drivers are required by company policy to notify their dispatchers of any damage to a cargo [*7]  on receipt of the cargo. Doc. 51-3, p. 27. Rowland has produced no evidence that such a report was made with regard to this shipment. Doc. 51-3, p. 27. Rowland also has a “no-touch policy” which states drivers are not allowed on the loading dock prior to loading and may not participate in the loading process. Doc. 51-1, p. 8. Rowland contends that its own “no-touch policy” and the fact that the subject equipment towers contained numerous computer components that were not visible unless their doors were opened prevent Carrier from imputing condition from the bill of lading.

Rowland offers no legal basis for its theory that a unilateral no-touch policy can extinguish liability under the Carmack Amendment. In support of the argument that the multitude of computer components were not visible to the naked eye, Rowland offers cases in which items were shrink wrapped or sealed in containers. Ohio Star Transp., LLC, v. Roadway Exp., Inc., 2010 U.S. Dist. LEXIS 95764, 2010 WL 3666982 (Sept. 14, 2010) (shrink wrapped computers); A.I.G. v. Uruguay Compania de Seguros, S.A. v. AAA Cooper Transp., 334 F.3d 997, 999 (11th Cir. 2003) (Motorola cellphones, in boxes, shrink wrapped on pallets); Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 83 (2nd Cir. 2004) (packed in containers with numbered seals). Rowland offers nothing to demonstrate that the equipment towers in this instance were shrink wrapped or in sealed containers. The cases cited by Rowland do not stand for the proposition [*8]  that a carrier must be able to view all computer components to constitute an opportunity to inspect; instead, Ohio Star and A.I.G. turn on the issue of whether the shipper could determine the nature of the shipment with the naked eye. The photographs of the contents of the shipment show the absence of shrink wrap and the fact that the doors of the equipment towers were accessible and unsecured. Nothing in this record suggests that the towers were damaged prior to shipment or that Rowland’s driver was unable to determine the nature of the shipment by observation. In the absence of a legal basis to conclude otherwise, the Court finds the shipment was subject to a clean bill of lading and undamaged on receipt.

 

  1. Loss or Damage

Although the Carmack Amendment does not explicitly define “damage,” courts have generally found “actual loss or injury,” including a decrease in product value, are sufficient under the “very low threshold” established by the Amendment. Oshkosh Storage Co. v. Kraze Trucking LLC, 65 F. Supp.3d 634, 637 (E.D. Wis. 2014); CNA Ins. Co., 747 F.3d 339 at 353. Under this element, Carrier offers the testimony of Mr. Hartman, who states that when the Rowland truck’s trailer was opened, some of the towers had fallen over and some were still standing. Doc. 50-2, p. 13. Mr. Hartman testified that the towers [*9]  were loaded with “pallet banding,” which is how they typically receive and ship them. Doc. 50-2, p. 13. Mr. Hartman testified that some of the pallets themselves were broken and sticking into the air. Doc. 50-2, p. 13. Mr. Hartman states that he deemed the entire load to be scrap as soon as the truck was opened and that he confirmed his belief by examining the equipment for approximately thirty minutes the following day. Doc. 50-2, 16-17. However, the bill of lading identified only five of the twenty-five pieces as having fallen over and being consequently damaged. Doc. 50-3, p. 1.

None of the twenty-five pieces of equipment were tested. Doc. 50-2, p. 17. Mr. Hartman testified that none of the equipment was tested because the cost of doing so would far exceed the value of the lot. Doc. 50-2, p. 18. According to Mr. Hartman the cost of testing varies depending on the piece of equipment but could cost $2,000.00. Doc. 50-2, p. 18. Mr. Hartman also valued the pieces claimed as damaged between $50.00 and $15,000.00. Doc. 50-2, p. 18. Clearly, for at least a portion of the pieces, the cost of testing would not exceed the value of the piece. Testing even a portion of the pieces would have [*10]  served as proof of damages, “so long as the sample is sufficient to indicate fairly the quality, condition, and nature of damage to the whole cargo.” Allied Tube & Conduit Corp. v. Southern Pac. Transp. Co., 211 F.3d 367, 372 (7th Cir. 2000). In the absence of testing or any independent verification of Mr. Hartman’s representation that the entire load was “scrap,” this Court is left with the photographs taken of the load when the container was opened and the bill of lading that indicates five of the twenty-five towers were damaged. By Carrier’s own representation, twenty of the twenty-five towers had not fallen and were packed as Carrier expected. Under these circumstances, conclusory statements about the condition of the pieces are insufficient, without further evidence, to establish that the entire shipment was damaged upon delivery.

Therefore, Carrier meets its burden under the second element of the Carmack Amendment with regard to the five towers that fell and fails to meet its burden under the second element of the Carmack Amendment with regard to the remaining towers that did not fall.

 

  1. Value of loss or damage

Under the Carmack Amendment, the amount of damages is limited to “actual loss.” 49 U.S.C. § 14706(a)(1). Actual loss is “ordinarily measured by the reduction in market value at destination or by replacement or repair costs occasioned by the harm.” [*11]  Camar Corp. v. Preston Trucking Co., 221 F.3d 271, 277 (1st Cir. 2000). Recovery of lost profits is permitted, unless they are speculative. Id. Evidence of past sales for similar equipment has been deemed too speculative to allow for damages in excess of the purchase price. Id. “A damages award must have a rational basis in the evidence.” Id. at 279. The Carmack Amendment further allows for consequential damages to the extent that they are foreseeable. Am. Synthetic Rubber Corp. v. Louisville & N.R. Co., 422 F.2d 462, 466 (6th Cir. 1970).

Carrier seeks damages in excess of $160,000.00. Carrier paid $25,000.00 for the total thirty-eight piece order, but only twenty-five pieces of equipment were on the shipment at issue here. Carrier has not produced any evidence of an agreement to sell any of the twenty-five pieces, which were purchased as inventory for Carrier’s system of “predictive analysis.” Doc. 50-2, p. 19, 25. Carrier failed to provide evidence of subsequent demand for the “scrapped” equipment by customers; nothing offered by Carrier indicates a lost sale or customer as a result of the alleged damage. Mr. Hartman’s testimony that Carrier has a history of similar and higher sales compared to what Carrier would have been seeking for the pieces of “scrapped” equipment is, admittedly, speculative: “So I’m buying on futures. If there’s[sic] negatives in the market and here’s [*12]  some product . . . I could match these two up. It might not hit for two, three, four, even six months, but I know there’s going to be a shortcoming somewhere on some of these commodities . . . .” Doc. 50-2, p. 25. Damages in excess of the purchase price are not appropriate under these circumstances.

As stated, Carrier purchased thirty-eight pieces. Carrier makes a prima facie case for damage to five of the thirty-eight towers. Rowland has not responded with any of the exceptions that excuse liability under the Amendment. Therefore, Carrier has established a prima facie case under the Amendment as to five of the towers.

 

  1. CONCLUSION

For the reasons stated herein, the Court GRANTS IN PART, with respect to liability, as to twenty of the twenty-five towers in the shipment, and DENIES IN PART, with respect to damages, Rowland’s Motion for Summary Judgment.

IT IS SO ORDERED.

/s/ John R. Adams

Judge John R. Adams

U.S. DISTRICT JUDGE

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

Date: September 26, 2017

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