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UNITED VAN LINES, LLC, Plaintiff, v. SCOTT DEMING, et al.

United States District Court,

N.D. California.

UNITED VAN LINES, LLC, Plaintiff,

v.

SCOTT DEMING, et al., Defendants.

Case No.17-cv-00390-JST

|

07/25/2017

 

JON S. TIGAR, United States District Judge

 

ORDER DENYING MOTION TO DISMISS Re: ECF No. 23

*1 Defendants Scott and Sarah Deming (the “Demings”) move to dismiss Plaintiff United Van Lines, LLC’s (“United”) complaint. ECF No. 23. The Court will deny the motion.

 

 

  1. BACKGROUND

This action arises from United’s transport of the Demings’ household goods during their move from St. Paul, Minnesota to San Francisco, California. Compl., ECF No. 1 ¶ 3.

 

Scott Deming’s employer, Capella Education Company, entered into a contractual relationship with Plus Relocation Services. Id. ¶ 9. In turn, Plus Relocation Services contracted with United for motor carrier services through a “Transportation Services Agreement.” Id. ¶ 8. According to that agreement, “Carrier’s liability on an Item-by-Item basis (excluding Extraordinary Value Items) shall be Full Value Protection…” Id. ¶ 11. The agreement further states that “Carrier’s maximum liability for loss or damage to any and all Items in a shipment shall be the lesser of $5.00 per pound times the actual weight of the shipment or $100,000,” and that “[t]here shall be no charge for Carrier to assume this level of liability.” Id. However, the agreement provides that “Shipper may increase the level of Carrier’s maximum liability set forth above by declaring such additional amount on the Bill of Lading and paying charges for such additional amount equal to $.65 per $100.00 declared above Carrier’s maximum liability level.”

 

 

Id.

United and the Demings also executed a Household Goods Bill of Lading contract for the move. Id. ¶14. That contract similarly provides that, “[i]f any article is lost, destroyed, or damaged while in your mover’s custody, your mover’s liability is limited to the actual weight of the lost, destroyed, or damaged article multiplied by $5.00 per pound per article.” Id. ¶ 15. It goes on to provide that, “[u]nder the Released Level of Liability, your shipment will be transported based on a value of $5.00 per pound multiplied by the actual weight of the shipment.” Id. Finally, the Bill of Lading states the following: “Your signature is REQUIRED here: I acknowledge that for my shipment, I will receive the Released Level of Liability of $5.00 per pound per article.” Id. The Demings shipped 1,066 pounds of household goods at $5.00 per pound and did not declare any household goods as “Item-by-Item” or “Extraordinary Value Items.” Id. ¶ 12.

 

During transportation, the Demings’ household goods suffered water and mold damage. Id. at 17. The Demings have demanded that United pay the full replacement value in the amount of $48,002.64. Id. ¶18. In response, United offered the Demings $5,330, which it contends is its maximum contractual liability under both the Transportation Services Agreement and Bill of Lading. Id. ¶¶ 19?20, 12.

 

United’s complaint asserts a single count seeking declaratory judgment that the Demings are not entitled to recover the full replacement value of the damaged goods. Id. at 5?6.

 

The Demings move to dismiss United’s complaint on the ground that United has not pled the existence of any contract properly limiting its liability under the Carmack Amendment. ECF No. 23 at 6.

 

 

  1. LEGAL STANDARD

*2 A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief” which gives “the defendant fair notice of what the…claim is and the grounds upon which it rests.” Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks omitted). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 663.

 

 

III. DISCUSSION

The Court must determine whether United has plausibly alleged that it is entitled to declaratory judgment that its liability limitations were effective under the Carmack Amendment.

 

The Carmack Amendment “subjects a motor carrier transporting cargo in interstate commerce to absolute liability for ‘actual loss or injury to property.’ ” Hughes Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609, 611–12 (9th Cir. 1992) (citing Missouri Pacific R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137 (1964)); see also, 49 U.S.C. § 14706(a)(1). “[A] carrier’s maximum liability for household goods that are lost, damaged, destroyed, or otherwise not delivered to the final destination is an amount equal to the replacement value of such goods, subject to a maximum amount equal to the declared value of the shipment and to rules issued by the Surface Transportation Board and applicable tariffs.” 49 U.S.C. § 14706(f)(2).

 

However, “[a] carrier…may petition the Board to modify, eliminate, or establish rates for the transportation of household goods under which the liability of the carrier for that property is limited to a value established by written declaration of the shipper or by a written agreement.” Id. § 14706(f)(1). But “[t]he released rates established by the Board…shall not apply to the transportation of household goods by a carrier unless the liability of the carrier for the full value of such household goods…is waived, in writing, by the shipper.” Id. § 14703(f)(3).

 

“Before a carrier’s attempt to limit its liability will be effective, the carrier must (1) maintain a tariff in compliance with the requirements of the Interstate Commerce Commission; (2) give the shipper a reasonable opportunity to choose between two or more levels of liability; (3) obtain the shipper’s agreement as to his choice of carrier liability limit; and (4) issue a bill of lading prior to moving the shipment that reflects any such agreement.” Hughes, 970 F.2d at 611– 12. “The carrier has the burden of proving that it has complied with these requirements.” Id. at 612.

 

The Demings argue that the Bill of Lading and the Transportation Services Agreement do not comply with the second and third requirements because they did not give Mr. Deming a reasonable opportunity to choose between different liability levels or obtain his agreement as to the same. ECF No. 23 at 6?7. They further argue that the Transportation Services Agreement between Plus Relocation and United does not apply because it was not incorporated by reference into the Bill of Lading between Mr. Deming and United and Mr. Deming was not aware of its terms. Id.

 

In response, United fails to explain how either its Bill of Lading or its Transportation Services Agreement satisfied these requirements. Instead, United argues that the motion to dismiss is premature because there are unresolved factual issues relating to whether Mr. Deming had actual notice of the limitation of liability. ECF No. 27 at 9. United further argues that the liability limitation in the Transportation Services Agreement between United and Plus Relocation is binding on Mr. Deming regardless of whether he knew about it. Id. at 9?11. To the extent the Court is inclined to consider the motion to dismiss, United seeks leave to amend. Id. at 11?12.1

 

*3 The Court rejects United’s argument that the motion to dismiss is premature and improper. To support this argument, United relies exclusively on the Northern District of Illinois’ decision in H. Kramer & Co. v. CDN Logistics, Inc., No 13. CV 5790, 2014 WL 3397161 at *4 (N.D. Ill. July 11, 2014). ECF No. 27 at 9. But that case is distinguishable. The Kramer court noted that it “cannot consider the bill of lading and [defendant’s] tariff without converting the motion to dismiss into a motion for summary judgment, as those documents are ‘matters outside the pleadings.’ ” Id. at *4 (quoting Fed. R. Civ. P. 12(d)). However, United attached both the Bill of Lading and the Transportation Services Agreement to its complaint, and therefore this Court may consider those documents without converting the motion to dismiss into a motion for summary judgment. See United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). Moreover, because United seeks declaratory relief that hinges directly on whether those two agreements (which are properly before the Court) contained a permissible limitation of liability, it is unclear what further discovery is needed to resolve this litigation, and United does not point to any.

 

Turning to the merits of the motion to dismiss, the Court first looks to the Bill of Lading between Mr. Deming and United. With respect to liability, the Bill of Lading provides the following:

If any article is lost, destroyed, or damaged while in your mover’s custody, your mover’s liability is limited to the actual weight of the lost, destroyed, or damaged article multiplied by $5.00 per pound per article. This liability level is provided at no charge.

Under the Released Level of Liability, your shipment will be transported based on a value of $5.00 per pound multiplied by the actual weight of the shipment.

Your signature is REQUIRED here: I acknowledge that for my shipment, I will receive the Released Level of Liability of $5.00 per pound per article.

ECF No. 1 at 17. On its face, this liability provision in the Bill of Lading does not give Mr. Deming “a reasonable opportunity to choose between two or more levels of liability” or “obtain [his] agreement as to his choice of carrier liability limit.” Hughes, 970 F.2d at 611–12. Nor does the Bill of Lading include any written waiver of full value protection, which is required by the plain text of the provision governing the transport of household goods. 49 U.S.C. § 14703(f)(3). Therefore, the Bill of Lading does not establish an effective limitation of liability under the Carmack Amendment.

 

Next, the Court turns to the Transportation Services Agreement between United and Plus Relocation. As a preliminary matter, United has plausibly alleged that Mr. Deming was bound by this agreement even though he was not a direct party to it. The Bill of Lading incorporates the Transportation Services Agreement between United and Plus Relocation. Specifically, the “CONTRACT TERMS and CONDITIONS of HOUSEHOLD GOODS BILL of LADING” section provides the following: “Carrier’s currently effective applicable tariffs, all inventories prepared in conjunction with this Bill of Lading, any applicable National Contract Agreements and the Estimate/Order for Service prepared in advance of shipment are hereby incorporated by reference.” ECF No. 1 at 20 (emphasis added). And, even if Mr. Deming was not actually aware of the terms of the Transportation Services Agreement, he is still be bound by it if Plus Relocation was acting as an intermediary. See Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 33 (2004) ( “When an intermediary contracts with a carrier to transport goods, the cargo owner’s recovery against the carrier is limited by the liability limitation to which the intermediary and carrier agreed….[W]hen it comes to liability limitations for negligence resulting in damage, an intermediary can negotiate reliable and enforceable agreements with the carriers it engages.”). United has plausibly alleged that Plus Relocation was acting as an intermediary between United and Mr. Deming, and therefore that Mr. Deming is bound by the liability limitation in the Transportation Services Agreement. See ECF No. 1 ¶¶ 8?9 (alleging that Scott Deming’s employer, Capella Education Company, entered into a contractual relationship with Plus Relocation Services, who in turn contracted with United).

 

*4 United has also plausibly alleged that the Transportation Services Agreement satisfied the requirements for an effective liability limitation under the Carmack Amendment. According to that agreement, “Carrier’s liability on an Item-by-Item basis (excluding Extraordinary Value Items) shall be Full Value Protection…” ECF No. 1 ¶ 11. The agreement further states “Carrier’s maximum liability for loss or damage to any and all Items in a shipment shall be the lesser of $5.00 per pound times the actual weight of the shipment or $100,000,” and that “[t]here shall be no charge for Carrier to assume this level of liability.” Id. Importantly, though, that agreement also states that “Shipper may increase the level of Carrier’s maximum liability set forth above by declaring such additional amount on the Bill of Lading and paying charges for such additional amount equal to $.65 per $100.00 declared above Carrier’s maximum liability level.” Id. This statement, when viewed in conjunction with Mr. Deming’s subsequent failure to declare an additional amount in the blanks on the Bill of Lading, plausibly suggests that United gave Mr. Deming a reasonable opportunity to choose between two or more levels of liability and obtained Mr. Deming’s agreement to a lower level of liability. See Nipponkoa, 687 F.3d at 782?83 (finding that the contracts, “[o]n their face, suggest that [shipper] had a choice between accepting a $0.60 per pound limitation of liability or declaring a different value for the load” because “[shipper] left the line blank where it could have declared a higher value than $0.60 per pound”).

 

Therefore, when construed in the light most favorable to United, the allegations in the complaint and the attached exhibits plausibly suggest that United is entitled to the declaratory relief that it seeks in this action. The Court accordingly denies the motion to dismiss.

 

 

CONCLUSION

The Court denies the motion to dismiss.

 

IT IS SO ORDERED.

 

 

Dated: July 25, 2017

JON S. TIGAR

United States District Judge

All Citations

Slip Copy, 2017 WL 3149301

 

 

Footnotes

1

United dedicates much of its opposition briefing to jurisdictional issues under the Declaratory Judgment Act that are not in dispute and have no relevance to the present motion to dismiss. ECF No. 27 at 5?9.

GEORGE E. WARREN CORPORATION, Plaintiff, v. COLONIAL PIPELINE COMPANY

United States District Court,

  1. New Jersey.

GEORGE E. WARREN CORPORATION, Plaintiff,

v.

COLONIAL PIPELINE COMPANY, Defendant.

Civ. No. 17-1205-KM-JBC

|

Filed 07/17/2017

 

 

OPINION and ORDER

HON. KEVIN MCNULTY, U.S.D.J.

*1 This matter comes before the court on the motion of the defendant, Colonial Pipeline Company, to dismiss Count II of this two-count complaint for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons stated herein, the motion will be granted.

 

 

  1. BACKGROUND

The allegations of the Complaint (“Cplt.”, ECF no. 1) are assumed to be true for purposes of this motion. (See Section II.A, infra.) Because Colonial presents a pure issue of law, the following summary is brief.

 

Defendant Colonial, a common carrier, operates an interstate pipeline which transports gasoline and other petroleum products. As a common carrier, Colonial performs a service for hire; it does not own the petroleum products that it transports. Plaintiff George E. Warren Corporation (“GEW”) regularly uses Colonial’s pipeline to transport its petroleum products from Texas to New Jersey. At its plants in New Jersey, GEW blends the petroleum product.

 

GEW has announced that a Joint Venture of which GEW is a member is building a blending facility in Georgia. That blending facility will inject butane into the shippers’ gasoline as it passes through the pipeline. Colonial will thereby dilute the gasoline and create excess product, which Colonial will sell for its own profit. GEW alleges that it will be harmed by receiving diluted, degraded product, and by losing the benefit of the excess product siphoned off by Colonial.1 In particular, the already-blended product will be in a diluted state, so that GEW cannot blend it further. (Cplt. ¶ 23)

 

The Complaint has two Counts. Count I seeks a declaratory judgment and damages under the Carmack Amendment. Count II seeks a declaratory judgment and damages under the state law tort of conversion. Count II is expressly pled in the alternative, “[i]f the Court determines the conduct described above is outside the Carmack Amendment.” (Cplt. ¶ 36)

 

Colonial moves to dismiss Count II of the Complaint only. (ECF no. 5) GEW has filed a response (ECF no. 8), and Colonial has filed a reply (ECF no. 9). The matter is thus fully briefed and ripe for decision. Because I agree that the state-law tort allegations are subsumed and preempted by the Carmack Amendment, I will grant the motion.

 

 

  1. DISCUSSION
  2. Standard on a Rule 12(b)(6) Motion

Fed. R. Civ. P. 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss, a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Worth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998); see also Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (“reasonable inferences” principle not undermined by later Supreme Court Twombly case, infra).

 

*2 Fed. R. Civ. P. 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief requires more than labels and conclusions, and formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations must be sufficient to raise a plaintiff’s right to relief above a speculative level, such that it is “plausible on its face.” See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A claim has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin to a ‘probability requirement’ … it asks for more than a sheer possibility.” Iqbal, 556 U.S. at 678 (2009).

 

 

  1. Carmack Amendment Preemption of State Conversion Claim

The Carmack Amendment2 “preempts all state or common law remedies available to a shipper against a carrier for loss or damage to interstate shipments.” See Certain Underwriters at Interest at Lloyds of London v. United Parcel Serv. of Am., Inc., 762 F.3d 332, 336 (3d Cir. 2014) (quoting N. Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 456 (7th Cir. 1996)); Atchison, Topeka & Santa Fe Railway Co. v. Harold, 241 U.S. 371, 378 (1916) (“[t]he Carmack Amendment…was an assertion of the power of Congress over the subject of interstate shipments…which, in the nature of things, excluded state action”); Intech, Inc. v. Consolidated Freightways, Inc., 836 F.2d 672, 677 (1st Cir. 1987) (“the Carmack Amendment provides the exclusive remedy” for “an action for damages against the delivering carrier”).

 

That is clear enough. Colonial is a common carrier transporting GEW’s product. GEW’s conversion claim, like its Carmack Amendment claim, is based on damage to its product via Colonial’s dilution of it while in transit from Texas to New Jersey. That is a claim for “loss or damage to interstate shipments.” Certain Underwriters, 762 F.2d at 336.

 

But wait, says GEW; this is not a case of loss or damage, but outright theft by the shipper itself. GEW notes that issue of whether such true conversion claims are preempted by the Carmack Amendment has given rise to “a split in the circuits.”

 

We, however, are in the Third Circuit. The U.S. Court of Appeals for the Third Circuit has held squarely that claims for conversion, like others, are preempted:

The Courts of Appeals have also unanimously held that the Carmack Amendment preempts all state or common law remedies available to a shipper against a carrier for loss or damage to interstate shipments….They have dismissed state and common law claims for breach of contract, negligence, conversion and every other action for loss of or injury to a shipment of goods. Courts of Appeals from the First, Second, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits have consistently held that the Carmack Amendment is the ‘exclusive cause of action for interstate-shipping contract [and tort] claims alleging loss or damage to property…

*3 We have already held in passing that the state law breach of contract and negligence claims against a carrier for loss of or damage to goods are preempted. We affirm that holding today. We also conclude that state law conversion claims are likewise preempted, just as the Supreme Court itself has instructed.

Certain Underwriters, 762 F.2d at 336.

 

GEW cites contrary cases from the First and Ninth Circuits, and states that the split is “not yet resolved by the United States Supreme Court.” (GEW BRf. 7 n.4) Those cases, however, date from 1997 and 1954.3 GEW points to no indications that resolution of the Circuit split is imminent. As things stand, I am obligated to follow current Third Circuit law. Of course, if the Supreme Court were to hold to the contrary during the pendency of this action, I would be obligated to follow that controlling case law. And I will state squarely that GEW has preserved its position on the issue.

 

GEW’s response, in essence, is that it is not being unreasonable—and indeed it is not. GEW pled conversion in the alternative, in the event the Court should find that the Carmack Amendment does not apply. And a party may, of course, set forth alternative versions of a claim in its pleadings. Fed. R. Civ. P. 8(d)(2). Still, a court need not go forward with discovery on an alternative theory that is legally defective; that would impose a pointless burden on the parties, who would have to brief and litigate state law, choice of law issues, and the like. Uniformity and avoidance of such legal fragmentation are the very reason for the Carmack Amendment, see Certain Underwriters, 762 F.3d at 338, and I would not circumvent that policy, even temporarily, without good reason.4

 

 

ORDER

For the reasons set forth above,

 

IT IS this 17th day of July, 2017

 

ORDERED that the defendant’s motion (ECF no.5) to dismiss Count II of the Complaint is GRANTED.

 

All Citations

Slip Copy, 2017 WL 3038251

 

 

Footnotes

1

Colonial has allegedly announced that it will begin the blending operation in early 2017. (Cplt. ¶ 20) The papers do not reveal whether the plan has been implemented on schedule.

2

The Complaint cites 49 U.S.C. § 15906(a). Colonial raises the technical point that the section applicable to an oil pipeline is actually 49 U.S.C. § 20(11), although the standards are identical. Compare Missouri Pac. R. Co. v. Elmore & Stahl, 377 U.S. 134, 138 (1964) (stating elements of a prima facie case under 49 U.S.C. § 20(11)), with Soares v. Bekins Van Lines, Co., 2016 WL 797046 at *2 (D.N.J. March 1, 2016) (stating similar elements for a claim under 49 U.S.C. § 11706). I therefore set the distinction aside.

3

Rini v. United Van Lines, Inc., 104 F.3d 502, 506 (1st Cir. 1997); Glickfeld v. Howard Van Lines, Inc., 213 F.2d 723, 727 (9th Cir. 1954).

4

American Rock Salt Co., LLC v. Norfolk Southern Corp., 180 F. Supp. 2d 420, 426 (W.D.N.Y. 2001), cited by GEW, did allow contract and Carmack Amendment claims to proceed in the alternative. The issue there, however, was one that the court could not resolve on a motion to dismiss: whether the carrier’s parent corporation was a party to a contract which, if applicable, might have vitiated the effect of federal statutory standards. Here, by contrast, the parties present a pure issue of law that is controlled by Third Circuit precedent.

© 2017 Central Analysis Bureau