2019 WL 1051017

United States District Court, D. New Mexico.
SECURITY USA SERVICES, INC., Plaintiff,
v.
UNITED PARCEL SERVICE, INC., Defendant.
No. 1:18-cv-00264-JCH-KRS
|
Filed 03/05/2019

MEMORANDUM OPINION AND ORDER
Judith C. Herrera United States District Judge
*1 This case presents the question of whether the Carmack Amendment to the Interstate Commerce Act (ICA), 49 U.S.C. § 14706, a federal law regulating the interstate transportation of goods, preempts a state law cause of action for bad-faith. Plaintiff Security USA Services, Inc., sued Defendant United Parcel Service Inc., in New Mexico state court for recovery of damages after Plaintiff’s goods were damaged while being shipped from New Mexico to Texas, asserting state law causes of action for breach-of-contract and bad-faith refusal to pay for damage to Plaintiff’s goods. After removal to this Court under the ICA, Plaintiff amended its complaint to substitute its breach-of-contract claim for a federal cause of action, but maintained its state bad-faith claim. Defendant moved to dismiss the bad-faith claim, arguing that the Carmack Amendment completely preempts state causes of action against carriers for damaged interstate shipments.1 Plaintiff responded that its bad-faith claim is not based on interstate shipments, but on Defendant’s poor dealings in handling Plaintiff’s claims, and thus not within the scope of Carmack Amendment preemption. The Court, after considering the motion and the parties’ arguments, holds that the Carmack Amendment preempts Plaintiff’s state cause of action for bad-faith, and thus grants Defendant’s motion to dismiss Count II. The Court additionally grants Defendant’s motion for request for judicial notice of a document titled “2017 UPS Tariff/Terms and Conditions of Service – United States” (UPS Tariff/Terms) because that document governs the interstate shipment contract between the parties and is central to Plaintiff’s complaint and because Plaintiff did not oppose Defendant’s request for judicial notice.2

I. BACKGROUND
Plaintiff’s First Amended Complaint and the UPS Tariff/Terms, viewed in the light most favorable to Plaintiff, shows the following. On September 18, 2017 Plaintiff and Defendant entered into a shipping contract, commonly referred to as a “bill of laden,” for Defendant to transport two of Plaintiff’s boxes to a security convention in Dallas, Texas. The convention was scheduled to begin in eight-days, or on September 26th. Plaintiff selected the three-day option on the shipping contract so that the packages would arrive in Dallas on September 21. The combined total value of the shipped items was $13,500 and Plaintiff paid $528.14 in shipping fees. Defendant insured the packages.3

*2 On September 21, only one of the two packages arrived in Texas. It was damaged. When Plaintiff contacted Defendant to find out what happened to the other package, Plaintiff was met with responses like “it’s on the way,” and “we will get back to you.” Pl.’s First Am. Compl. at ¶ 6. On September 24, two days before the convention was set to begin, a representative of Plaintiff visited the UPS office in Fort Worth because online tracking indicated that Fort Worth was the missing package’s last destination. According to the Fort Worth office’s records, however, the missing package never left Albuquerque.

Defendant opened an investigation, and Plaintiff went to the UPS office in Albuquerque to find the missing package. The Albuquerque office was uncooperative, and employees said that because UPS had already opened an investigation there was nothing the office could do to help Plaintiff. At this point, the security convention was a mere 24-hours away. Plaintiff therefore spent $11,080 to repurchase the contents of the missing package – which consisted of two laptop computers, one monitor, two cameras, two gateways, four sensors, one rack, two switches, KABA display door locks, catalogs, stands, and display booth items. Plaintiff also rebuilt a missing computer server. Plaintiff decided to pay an employee to drive these items in a van to Dallas, paying for that employee’s travel and lodging costs over two days.

On September 25, 2017, UPS showed up at Plaintiff’s office, tossed the missing box on the lobby floor, and left without apology or an explanation. The box was torn apart and the smaller boxes within it were ripped open, the contents vandalized. According to Plaintiff, UPS employees purposefully did not scan the box, because their plan all along was to steal the contents within. Once employees realized the items had little commercial use, the employees vandalized the contents. To make matters worse, Plaintiff’s van that it dispatched to Dallas was broken into and $3,000 worth of tools were stolen. Plaintiff alleges that because of Defendant’s and its employees’ actions, Plaintiff spent over $10,000 “in replacing equipment, staff time and damages and losses to the vehicle in Dallas.” Pl.’s First Am. Compl. at ¶ 19.

On January 10, 2018, Plaintiff filed an action against Defendant in New Mexico state court, asserting one claim for breach-of-contract and another for bad-faith refusal to pay on Plaintiff’s claim. See Def.’s Notice of Removal, ECF No. 1-1. After removal, Plaintiff amended its complaint to substitute its state law breach-of-contract claim for an analogous federal cause of action under the Carmack Amendment for the damage that Defendant caused to Plaintiff’s goods (Count I). In Plaintiff’s Carmack claim, Plaintiff alleges that Defendant breached the shipping agreement “by failing to transport the two packages … under the bill of laden … in good order and condition…” and to “pay for the damages” such that Defendant is liable for direct and consequential damages. Pl.’s First Am. Compl. at ¶¶ 21-22. In Count II, Plaintiff’s claim for bad-faith, Plaintiff maintains that Defendant refused to pay for Plaintiff’s damages agreed to and completed under the shipping contract, and that Defendant had no legitimate reason to refuse to pay for Plaintiff’s valid insurer claim. See id. at ¶¶ 27-28.

On July 11, 2018, Defendant moved to dismiss Count II only, arguing that the Carmack Amendment completely preempts Plaintiff’s state claim for bad-faith. In its response brief to Defendant’s motion to dismiss, Plaintiff requested leave to amend its complaint, again, to add state law statutory violations of New Mexico’s Unfair Practices Act, N.M. Stat. Ann. § 57-12-1 et seq. and Unfair Insurance’s Practices Act, N.M. Stat. Ann. § 59A-16-1 et seq. on the belief that Defendant misrepresented to Plaintiff the extent of its liability as a purported insurer. See Pl.’s Resp. Br., ECF No. 30, 6.

II. STANDARD OF REVIEW
*3 Defendant moves to dismiss Count II under Fed. R. Civ. P. 12(b)(6). To establish a claim for relief, 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). Determining whether a complaint contains well-pleaded facts sufficient to state a claim is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. Though a complaint need not provide “detailed factual allegations,” it must give just enough factual detail to provide “fair notice of what the … claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not count as well-pleaded facts.” Warnick v. Cooley, 895 F.3d 746, 751 (10th Cir. 2018) (quotations and citations omitted). “If, in the end, a plaintiff’s well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint fails to state a claim.” Id. (quotations and citations omitted). A reviewing court “accept[s] as true all well-pleaded factual allegations in the complaint and view them in the light most favorable to [the non-movant].” Sanchez v. United States Dep’t of Energy, 870 F.3d 1185, 1199 (10th Cir. 2017).

III. DISCUSSION
Congress enacted the Carmack Amendment to establish uniformity and consistency among states in the application and resolution of interstate shipping loss and damage cases. An excellent description of the Carmack Amendment’s purpose, history and operation is set forth in the Court of Appeals for the Third Circuit’s case in Certain Underwriters at Interest at Lloyds of London v. United Parcel Serv. of Am., Inc., 762 F.3d 332, 335-36 (3d Cir. 2014) which the Court presents below:
The Carmack Amendment’s operation is relatively straightforward. The general rule is that an interstate carrier is strictly liable for damages up to ‘the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) [certain intermediary carriers].’ 49 U.S.C. § 14706(a)(1). A shipper and carrier can agree to limit the carrier’s liability ‘to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances’ in order for the shipper to obtain a reduced rate. Id. § 14706(c)(1)(A). Shippers may bring a federal private cause of action directly under the Carmack Amendment against a carrier for damages. Id. § 14706(d).
The Carmack Amendment struck a compromise between shippers and carriers. In exchange for making carriers strictly liable for damage to or loss of goods, carriers obtained a uniform, nationwide scheme of liability, with damages limited to actual loss—or less if the shipper and carrier could agree to a lower declared value of the shipment. See N.Y., New Haven, & Hartford R.R. v. Nothnagle, 346 U.S. 128, 131, 73 S.Ct. 986, 97 L.Ed. 1500 (1953); accord Wesley S. Chused, The Evolution of Motor Carrier Liability Under the Carmack Amendment into the 21st Century, 36 Transp. L.J. 177, 210 (2009). Making carriers strictly liable relieved a shipper of the burden of having to determine which carrier damaged or lost its goods (if the shipper’s goods were carried by multiple carriers along a route). It also eliminated the shipper’s potentially difficult task of proving negligence. See Sec’y of Agric. v. United States, 350 U.S. 162, 173, 76 S.Ct. 244, 100 L.Ed. 173 (1956) (Frankfurter, J., concurring). In return, carriers could more easily predict their potential liability without closely studying the tort law of each state through which a shipment might pass. Carriers’ liability was limited to the actual value of the goods shipped—punitive damages were not available. See, e.g., Penn. R.R. v. Int’l Coal Mining Co., 230 U.S. 184, 200, 33 S.Ct. 893, 57 L.Ed. 1446 (1913) (noting that ‘the act provided for compensation, not punishment’).
*4 For over one hundred years, the Supreme Court has consistently held that the Carmack Amendment has completely occupied the field of interstate shipping. ‘Almost every detail of the subject is covered so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it.’ Adams Express, 226 U.S. at 505–06, 33 S.Ct. 148. The Court has consistently described the Amendment’s preemptive force as exceedingly broad—broad enough to embrace ‘all losses resulting from any failure to discharge a carrier’s duty as to any part of the agreed transportation.’ Ga., Fla. & Ala. Ry. v. Blish Milling Co., 241 U.S. 190, 196, 36 S.Ct. 541, 60 L.Ed. 948 (1916).
Certain Underwriters at Interest at Lloyds of London, 762 F.3d at 335-36.

The Court of Appeals for the Tenth Circuit has likewise described the Carmack Amendment in “broad, preemptive terms.” Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1116 (10th Cir. 1989). The Tenth Circuit and nine other federal appellate courts 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.” Certain Underwriters at Interest at Lloyds of London, 762 F.3d at 336. Thus, federal courts have dismissed “nearly all state-law claims regarding loss of or damage to goods in interstate ground shipping as preempted by the Amendment.” Tran Enterprises, LLC v. DHL Exp. (USA), Inc., 627 F.3d 1004, 1008 (5th Cir. 2010) (citing Moffit v. Bekins Van Lines Co., 6 F.3d 305, 306–07 (5th Cir.1993) (Carmack Amendment preempted plaintiff’s claims for the tort of outrage, intentional infliction of emotional distress, negligent infliction of emotional distress, breach of contract, breach of implied warranty, breach of express warranty, violation of the Texas Deceptive Trade Practices Act, slander, misrepresentation, fraud, negligence, gross negligence, and violation of common carrier duties under state law)).

However, despite the Carmack Amendment’s broad sweep, Supreme Court caselaw “has not clarified the extent to which state law provisions pertaining to the claims process, as opposed to the shipping of goods, are preempted.” Rini v. United Van Lines, Inc., 104 F.3d 502, 504–05 (1st Cir. 1997). Accordingly, “Courts of Appeals have identified a peripheral set of state and common law causes of action that are not preempted.” Certain Underwriters at Interest at Lloyds of London, 762 F.3d at 336. For instance, the Tenth Circuit held that a state’s attorney fee statute was not preempted by the Carmack Amendment because the statute was “incidental to” the Carmack Amendment and did not “substantively enlarge the responsibility of the carrier.” A.T. Clayton & Co., Inc. v. Missouri–Kansas–Texas R.R. Co., 901 F.2d 833, 835 (10th Cir. 1990). The Court of Appeals for the Seventh Circuit has likewise examined “the line between the types of claims that are preempted and those that are not,” Gordon v. United Van Lines, Inc., 130 F.3d 282, 289 (7th Cir. 1997), holding that the Carmack Amendment does not preempt “those state law claims that allege liability on a ground that is separate and distinct from the loss of, or the damage to, the goods that were shipped in interstate commerce.” Id. Thus in Gordon, the estate of an 80-year old decedent could assert a common law claim for intentional infliction of emotional distress (IIED) stemming from the moving carrier’s failure to deliver priceless family heirlooms followed by four-months of deception because the IIED claim was “independent from the loss or damage to goods.” Id.4 The precise question then is whether a common law claim for bad-faith fits within the “peripheral set of state and common law causes of action that are not preempted by the Carmack Amendment.” Certain Underwriters at Interest at Lloyds of London, 762 F.3d at 336.

*5 Arguably, the state bad-faith claim at issue did not arise directly out of damage to goods, but related to Defendant’s poor dealings in the claims process. But ultimately Plaintiff’s state claim is preempted. Again, preempted state laws are those that “substantively enlarge the responsibility of the carrier.” A.T. Clayton & Co., Inc., 901 F.2d at 835. Courts hold that a carrier’s responsibility is substantively enlarged if a state law imposes liability on a carrier “stemming from the claims process, and liability related to the payment of claims.” Rini, 104 F.3d at 506. Thus, in Rini the court held that the plaintiff, though “ill-treated in her attempts to settle,” could not assert state causes of action for negligence, misrepresentation, and unfair and deceptive acts, since those claims were preempted. See 104 F.3d at 506-07. And more analogous to this case, the Court of Appeals for the Second Circuit in Cleveland v. Beltman North American Company, 30 F.3d 373, 379 (2d Cir. 1994) held that a federal common law claim for breach of an implied covenant of good faith and fair dealing in the claims process was preempted since that claim resulted in a jury verdict of $50,000 in punitive damage award on top of a $28,000 recovery for the damaged goods. In so deciding, the court said that the $50,000 punitive damages award had a “dramatic impact” on the defendant’s liability and “seriously enlarge[d] [the plaintiffs’] remedy” such that the award “could well thwart one of the primary purposes of the Carmack Amendment; that is, to provide some uniformity in the disposition of claims brought under a bill of lading.” Id.

Under New Mexico law, punitive damages are recoverable in bad-faith “failure-to-pay cases,” i.e. cases “arising from a breach of the insurer’s duty to timely investigate, evaluate, or pay an insured’s claim in good faith.” Sloan v. State Farm Mut. Auto. Ins. Co., 2004-NMSC-004, ¶ 2, 135 N.M. 106, 108, 85 P.3d 230, 232. Applying Rini and Cleveland, Plaintiff’s claim for bad-faith is preempted because it seeks to impose liability on Defendant arising from its conduct in not paying Plaintiff’s claim. See e.g. Pl.’s Am. Compl. at ¶ 28 (stating that “Defendant had no legitimate or arguable reason for refusing to pay Plaintiff’s valid claim” and that Defendant, without reason, refused to consider the nature of Plaintiff’s losses and rejected the opportunity to consider Plaintiff’s proof of loss). Just as in Cleveland, a punitive damage award could dramatically impact Defendant’s liability, enlarge Plaintiff’s remedy beyond its actual loss, and undermine nationwide uniformity in the resolution of interstate shipping loss and damage cases. The Carmack Amendment extends to and preempts Count II, Plaintiff’s common law cause of action for bad-faith.

The Court next addresses Plaintiff’s request to amend its complaint to add state law statutory violations of New Mexico’s Unfair Practices Act (UPA), N.M. Stat. Ann. § 57-12-1 et seq. and Unfair Insurance’s Practices Act (UIPA), N.M. Stat. Ann. § 59A-16-1 et seq. Federal Rule of Civil Procedure 15(a)(2) provides for liberal amendment of pleadings. Leave should be “freely give[n] … when justice so requires,” but leave need not be granted on “a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, … or futility of amendment.” Duncan v. Manager, Dept. of Safety, City and Cnty. of Denver, 397 F.3d 1300, 1315 (10th Cir. 2005). “The grant of leave to amend the pleadings pursuant to Rule 15(a) is within the discretion of the trial court.” Minter vs. Prime Equipment Co., 451 F.3d. 1196, 1204 (10th Cir. 2006). Plaintiff argues that Defendant, as an insurer, is liable under the UPA and UIPA for misrepresenting its liability limits on the parties’ shipping contract. As Plaintiff puts it, Defendant “leads UPS clients to believe that they are purchasing insurance for their shipped packages, automatically insuring each package up to $100.00, and if more insurance is requested, additional payment by the client is required.” Pl.’s Resp. Br. at 6.

Plaintiff’s request for leave to amend its complaint is denied for two reasons, one procedural and one substantive. As to the procedural aspect, Plaintiff did not include for the Court’s review its proposed amendment in violation of D.N.M.LR-Civ. 15.1, leaving the Court without necessary law, facts, and arguments needed to meaningfully analyze whether Plaintiff’s request should be granted. Substantively, and perhaps more importantly, federal courts find that analogous claims fall within the scope of Carmack Amendment preemption. For instance, in the First Circuit’s case Rini, 104 F.3d 502 at 503, the plaintiff recovered damages at trial under various state causes of action, including under a Massachusetts statute governing unfair and deceptive business acts, against a carrier that lost some of her goods and refused to pay for the loss. The First Circuit reversed the award, holding that the state statutory claims were preempted because they stemmed from the loss of the plaintiff’s goods, even though her statutory claims were predicated on the carrier’s claims handling process. Id. at 506. In the Seventh Circuit’s case Gordon, 130 F.3d at 285, the plaintiff sued under various statue law causes of action, including for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, fraud in the inducement, and fraud in the claims process. The plaintiff alleged that the carrier committed statutory fraud and deception by procuring an insurance contract without obtaining the decedent’s agreement as to her choice of the carrier’s liability or giving her an opportunity to choose between two or more levels of liability. Id. The Seventh Circuit held that the Carmack Amendment preempted this claim, deferring to the Appellate Court of Illinois’ previous determination that the Carmack Amendment preempted a similar claim against a carrier for failing to deliver promised “extra insurance” that the plaintiffs purchased that exceeded the carrier’s specified liability. Id. at 289 (citing Nowakowski v. American Red Ball Transit Co., 288 Ill. App. 3d 348, 223 Ill. Dec. 708, 680 N.E.2d 441 (1997)).

*6 And in Margetson v. United Van Lines, Inc., 785 F. Supp. 917 (D.N.M. 1991) (Campos J.), this Court found the Carmack Amendment preempted the plaintiff’s claims under the New Mexico’s UPA even though the carrier did not transport the plaintiff’s rare and fragile goods from Dallas to Santa Fe in the manner she specifically contracted for. The plaintiff predicated her statutory claims on the carrier’s misrepresentations concerning how it would transport her goods, but the Court noted that because the plaintiff ultimately sought recovery for the damage to her transported goods, the Carmack Amendment preempted such a claim. Id. at 921. The Court also described how an award of punitive damages recoverable under the UPA would be inconsistent with the Carmack Amendment’s limitation of liability to actual damages. Id. at 920-921. Other federal district courts are in accord. See e.g. Berlanga v. Terrier Transp., Inc., 269 F. Supp. 2d 821, 830 (N.D. Tex. 2003).5 Accordingly, granting Plaintiff leave to amend its complaint to add state statutory violations of the UPA and UIPA would be futile because claims under these provisions as Plaintiff currently alleges them would be preempted.

IV. CONCLUSION
Because state law causes of action that seek to impose liability on a carrier for events arising from the claims process and payment of claims are preempted by the Carmack Amendment, Plaintiff’s state claim for bad-faith refusal to pay is dismissed. In light of this holding, the Court does not address or decide Defendant’s alternative arguments that two other sources of federal law – the Federal Aviation Administration Authorization Act of 1994, 49 U.S.C. § 41713(b)(4)(A) and federal common law – independently preempt Count II. Furthermore, Plaintiff’s request for leave to amend its complaint is denied for reasons of futility and non-compliance with the local rule governing amendments.

IT IS THEREFORE ORDERED that Defendant United Parcel Service, Inc.’s Motion to Dismiss Count II in Plaintiff’s First Amended Complaint and Memorandum in support [ECF No. 25] and Motion for Request for Judicial Notice in Support of its Motion to Dismiss [ECF No. 26] are GRANTED.

IT IS SO ORDERED.

All Citations
Slip Copy, 2019 WL 1051017

Footnotes

1
See Defendant’s Partial Motion to Dismiss Count II in Plaintiff’s First Amended Complaint and Memorandum in Support [ECF No. 25] and Defendant’s Request for Judicial Notice in Support of its Motion to Dismiss [ECF No. 26].

2
See Berneike v. CitiMortgage, Inc., 708 F.3d 1141, 1146 (10th Cir. 2013) (in ruling on a Rule 12(b)(6) motion a court can consider documents “incorporated by reference in the complaint; documents referred to in and central to the complaint, when no party disputes its authenticity; and matters of which a court may take judicial notice.”).

3
Defendant acknowledges that a shipping contract existed between the parties, but Defendant strenuously argues that a contract for insurance did not. Plaintiff alleges that Defendant “act[ed] as its own insurer.” Pl.’s First Am. Compl., ECF No. 21 at ¶ 28. Defendant refutes this, saying that Plaintiff merely declared a value of $13,500 for its two packages, but that such a declaration of value does not itself constitute a separate insurance contract. In support, Defendant points to the UPS Tariff/Terms, which state that “[s]hippers desiring cargo insurance … should purchase such insurance from a third party.” UPS Tariff/Terms, Ex. A, 32, ECF No. 27-1. In ruling on a motion to dismiss, the Court must draw all reasonable inferences in Plaintiff’s favor as the non-movant. Admittedly, Plaintiff’s factual allegations concerning the existence of a contract for insurance are unclear from Plaintiff’s complaint. However, for purposes of deciding this motion to dismiss, it is largely irrelevant whether the parties had an insurance contract because as the Court will explain below, Plaintiff’s state cause of action for bad-faith is preempted by federal law and Plaintiff could not bring such a claim even if the parties did have a contract for insurance.

4
But see Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 382-83 (5th Cir. 1998) (lawsuit seeking damages for lost wages and emotional suffering preempted because both resulted directly from the destruction of the plaintiffs’ household goods and thus plaintiffs did not allege injuries separate from the loss of their property).

5
But see N. Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 458 (7th Cir. 1996) (suggesting that carriers could be liable to shippers under a state statute prohibiting deceptive trade practices where, for example, the carrier fails to provide the shipper with information required by state law.). Here, Plaintiff has not alleged that Defendant failed to provide it with legally required information.

2019 WL 1167836

United States District Court, S.D. Ohio, Eastern Division.
Robert BINGER, Plaintiff,
v.
ALPONT TRANSPORTATION, et al., Defendants – Third-Party Plaintiffs,
v.
Select Sires, Inc., Third-Party Defendant.
Case No. 2:17-cv-570
|
Signed 03/13/2019
Attorneys and Law Firms
Andrew R. Young, Young & McCarthy LLP, Cleveland, OH, Don J. Young, III, Young & McCarthy LLP, Delaware, OH, for Plaintiff Mr. Robert M. Binger.
Dale Daniel Cook, John Stephen Teetor, Donald Lee Anspaugh, Robert Curtis Perryman, Isaac Wiles Burkholder & Teetor, LLC, Columbus, OH, for Third-Party Defendant Select Sires, Inc.
Nathan Andrew Lennon, Reminger Co., LPA, Cincinnati, OH, for Defendants – Third-Party Plaintiffs.

OPINION & ORDER
ALGENON L. MARBLEY, United States District Judge
*1 This matter is before the Court on Motion of Third-Party Defendant Select Sires, Inc. (“Select Sires”). Defendant has filed a Motion to Dismiss or in the Alternative for Summary Judgment. (ECF No. 34). Defendant – Third-Party Plaintiff Alpont Transportation (“Alpont”) has filed a Response (ECF No. 41) to which Third-Party Defendant Select Sires has filed a Reply (ECF No. 44). Defendant – Third-Party Plaintiff Alpont has also filed a document styled a Reply to Defendants’ Response (ECF No. 56) which Select Sires has moved to strike (ECF No. 59). Finally, Defendant – Third-Party Plaintiff Alpont has filed a Motion for Leave to File Supplemental Statement of Facts (ECF No. 60) and a Motion for Leave to File an Amended Third-Party Complaint (ECF No. 61).

For the reasons below, Third-Party Defendant Select Sires’s Motion to Dismiss or in the Alternative for Summary Judgment is DENIED without prejudice. Defendant – Third-Party Plaintiff Alpont’s Motion for Leave to File Supplemental Statement of Facts is GRANTED, to supplement ECF No. 41. Alpont’s Motion for Leave to File Amended Complaint is GRANTED. In addition, Alpont’s Reply (ECF No. 56) is STRICKEN.

I. BACKGROUND
In June 2016, Plaintiff Robert Binger was a pedestrian on U.S. Route 42 when Defendant Randall E. Miller, driving a tractor trailer, hit him. (ECF No. 19 at ¶ 8). At the time, Miller was employed by Alpont, and Binger was employed by Select Sires. (ECF No. 19 at ¶ 3). Binger sued Alpont, alleging negligence. In response, Alpont sued Select Sires (ECF No. 20), alleging indemnity/contribution and respondeat superior.

At issue is whether Ohio’s workers’ compensation scheme immunizes Select Sires from Alpont’s request for contribution. Select Sires argues that, as a complying employer, they are immune. Ohio R. C. § 4123.74. Alpont argues that workers’ compensation is a scheme that governs the relationship of employees and their employers and does not speak to the employers’ liability to third-parties. In the alternative, Alpont argues that Sires’ interpretation of the workers’ compensation scheme is unconstitutional as applied to third parties like Alpont.1

II. STANDARD OF REVIEW
Because evaluating Select Sires’s Motion requires consideration of facts that are not present on the face of Alpont’s well-pleaded complaint, this Motion is more properly characterized as a Motion for Summary Judgment than a Motion to Dismiss. Rule 12(b)(6) of the Federal Rules of Civil procedure provides that if “matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.” Because the question of workers’ compensation and employer immunity is not presented on the face of Alpont’s complaint, Select Sires’s Motion is addressed as a Rule 56 Motion for Summary Judgment.

*2 Federal Rule of Civil Procedure 56(a) provides, in relevant part, that summary judgment is appropriate “if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” A fact is deemed material only if it “might affect the outcome of the lawsuit under the governing substantive law.” Wiley v. United States, 20 F.3d 222, 224 (6th Cir. 1994) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) ). The nonmoving party must then present “significant probative evidence” to show that “there is [more than] some metaphysical doubt as to the material facts.” Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 340 (6th Cir. 1993). The mere possibility of a factual dispute is insufficient to defeat a motion for summary judgment. See Mitchell v. Toledo Hospital, 964 F.2d 577, 582 (6th Cir. 1992). Summary judgment is inappropriate, however, “if the dispute about a material fact is ‘genuine,’ that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248.

The necessary inquiry for this Court is “whether ‘the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.’ ” Patton v. Bearden, 8 F.3d 343, 346 (6th Cir. 1993) (quoting Anderson, 477 U.S. at 251-52). The mere existence of a scintilla of evidence in support of the opposing party’s position will be insufficient to survive the motion; there must be evidence on which the jury could reasonably find for the opposing party. See Anderson, 477 U.S. at 251; Copeland v. Machulis, 57 F.3d 476, 479 (6th Cir. 1995). It is proper to enter summary judgment against a party “who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Where the nonmoving party has “failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof,” the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 322 (quoting Anderson, 477 U.S. at 250).

In evaluating a motion for summary judgment, the evidence must be viewed in the light most favorable to the nonmoving party. S.E.C. v. Sierra Brokerage Servs., Inc., 712 F.3d 321, 327 (6th Cir. 2013).

III. ANALYSIS

1. Select Sires’s Motion for Summary Judgment
The question is whether, under Ohio law, a third-party may demand contribution from an employer who is a complying employer under Ohio’s workers’ compensation laws. Generally, such a third-party may not so demand and such an employer would be immune. See e.g., Williams v. Ashland Chemical Co., 52 Ohio App. 2d 81, 89 (1976). However, this immunity is conditioned on the employees’ actions being in the scope of their employment as that phrase is used in the workers’ compensation context. See e.g. Williams, 52 Ohio App. at 86. In this case, there remains a genuine dispute about this material fact. As a result, summary judgment would be inappropriate at this time. Select Sires’ Motion is denied without prejudice and may be re-filed at an appropriate time.
The Ohio Revised Code provides that employers who comply with the workers’ compensation scheme
shall not be liable to respond in damages at common law or by statute for any injury, or occupational disease, or bodily condition, received or contracted by any employee in the course of or arising out of his employment, or for any death resulting from such injury, occupational disease, or bodily condition occurring during the period covered by such premium so paid into the state insurance fund, or during the interval the employer is a self-insuring employer, whether or not such injury, occupational disease, bodily condition, or death is compensable under this chapter.
*3 Ohio R.C. § 4123.74. Ohio courts have generally interpreted this provision to immunize complying employers from liability even to third parties for damage sustained. In Perry, the Court of Appeals allowed the trial court’s order to stand after the trial court granted a judgment notwithstanding the verdict to the defendant who argued that their compliance with the workers’ compensation scheme should overcome an adverse jury verdict. The Perry court explained the principle in broad terms, writing, “[this] section of the Ohio workers’ compensation law provides that an employer who complies with the law is relieved from liability to anyone for damages arising from an injury to an employee sustained in the course of the employee’s employment.” Perry v. S.S. Steel Processing Corp., 40 Ohio. App. 3d 198, 202 (1987). A complying employer is liable to a third-party for claims arising out of injuries to employees only where there has been express agreement between the two parties as to that liability. Williams, 52 Ohio App. 2d at 89 (1976).

But as Perry and Williams indicate, merely being a complying employer is not sufficient for blanket immunity. Rather, the actions in question by the employee must have been in the scope of her employment. Generally, “[u]nder Ohio law, a third-party tortfeasor … has no standing to bring an indemnification claim against an employer for damages suffered by an employee in the course of or arising out of his employment where the employer is acting in compliance with the Ohio workers’ compensation law.” Id. See also Williams, 52 Ohio App. at 86 (noting that the legislature enacted the workers’ compensation scheme to “provide against liability of the employer to anyone for damages arising from any injury … of an employee arising out of his employment.”). Thus any determination of contribution or indemnification, as demanded here, requires a two-step inquiry: first, whether the employer is a complying employer within the meaning of O.R.C. § 4321.74; and second, whether the damage in question “arose out of” the employment.

Alpont’s Complaint alleges Binger was in the scope of his employment that day, and Select Sires argues Alpont has therefore conceded the point. But Alpont’s Complaint brings a claim for respondeat superior which, rather inconveniently, also uses the terminology “scope of employment.” As a result, it is not at all clear that Alpont has conceded that Binger was in the scope of his employment for the workers’ compensation determination. Both determinations – the scope of employment for immunity under O.R.C. § 4321.74 and the scope of employment for respondeat superior – require development of the factual record because although they share a name, they do not share a legal standard.

In the workers’ compensation context, the phrase
has never been accurately defined, although many attempts have been made. It cannot be accurately defined, because it is a question of fact and each case is sui generis. The act of an agent is the act of the principle within the course of the employment when the act can fairly and reasonably be deemed to be an ordinary and natural incident or attribute of the service rendered, or a natural, direct, and logical result of it.
Rogers v. Allis-Chalmers Mfg. Co., 153 Ohio St. 513, 526-27 (1950) (internal quotation omitted). By contrast, respondeat superior requires the element of the master’s control of the manner and means of the servant’s work. It is thus focused on
the relation of superior and subordinate [and] is applicable to that relation wherever it exists, as between principal and agent, or master and servant, is coextensive with it, and ceases when that relation ceases to exist; and the reason of it is to be traced to the power of control and direction, which the superior has a right to exercise, and which, for the safety of others, he is bound to exercise over the acts of his subordinates.
*4 Id. at 527.

Select Sires presents evidence that they are a complying employer within the meaning of O.R.C. § 4231.74. But there remains a genuine dispute of material fact, namely whether Plaintiff Binger’s actions on June 10, 2016 were in the scope of his employment. Select Sires’s immunity cannot be determined conclusively until there is more information in the record properly before the Court about Binger’s responsibilities and training. As a result, although Select Sires may renew their motion at the appropriate time, at this moment it is denied.

2. Select Sires’s Motion to Strike
Alpont filed a document entitled “Reply to Response to Defendants’ Motion to Dismiss or in the Alternative for Summary Judgment.” (ECF No. 56). This document is, in sum and substance, a responsive pleading to Defendants’ Reply (ECF No. 44). Because this reply constitutes an “additional memorand[um] beyond those enumerated,” it is prohibited by Local Rule 7.2(a)(2), except upon leave of court. Select Sires’ Motion to Strike is therefore granted.

3. Alpont’s Motions for Leave to File
Alpont has submitted Motion requesting Leave to File an Amended Complaint. Federal Rule of Civil Procedure 15(a) provides that “leave shall be freely given when justice so requires.” Fed. R. Civ. P. 15(a); Foreman v. Davis, 371 U.S. 178, 182 (1962). While the Sixth Circuit is “very liberal” in permitting amendments, certain factors may warrant the denial of a motion to amend: undue delay, bad faith, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by the amendment, and the futility of the amendment. United States v. The Limited, Inc., 176 F.R.D. 541, 550 (S.D. Ohio 1998).

A substantially similar version of the amended complaint Alpont proposes to file has already been filed, at ECF No. 47 (“Third-Party Plaintiff Interstate Chemical Company’s Third-Party Complaint Against Select Sires”). As a result, the concerns about bad faith and prejudice to the opposing party are de minimis. In addition, the factors weighing in favor of amendment – namely increased clarity and a good faith effort to cure a deficiency – are present here. As a result, Alpont’s Motion for Leave to Amend is granted.

Alpont has also submitted a Motion for Leave to File Supplemental Statement of Facts. Alpont has indicated this Motion relates back to their earlier filings: ECF No. 41 (Response in Opposition to Sires’s Motion for Summary Judgment) and ECF No. 56 (Reply to Response). As above, the latter is stricken from the record. However, Alpont may submit this Statement of Facts to supplement their filing at ECF No. 41. See generally, Fed. R. Civ. P. 56(e). This motion is granted.

IV. CONCLUSION
Although certain contributing employers are immune as against requests for contribution per Ohio’s workers’ compensation scheme, this immunity is contingent on the employee’s actions being in the scope of her employment. On this question, there remains a genuine dispute of material fact. As a result, Third-Party Defendants Select Sires’s Motion for Summary Judgment is DENIED without prejudice and may be refiled at the appropriate time. In the interest of clarity and judicial economy, Plaintiff – Third-Party Defendant Alpont’s Motion to Amend is GRANTED, and Alpont’s Motion to Supplement Doc. 41 is GRANTED. Third-Party Defendants Select Sires’s Motion to Strike is GRANTED.

*5 IT IS SO ORDERED.

All Citations
Slip Copy, 2019 WL 1167836

Footnotes

1
Because Sires’s Motion is denied, it is not necessary at this time to reach the question of the constitutionality of the workers’ compensation scheme, and by this Order, this Court expresses no judgment on the merits of this question. See generally Davet v. City of Cleveland, 456 F.3d 549, 554 (6th Cir. 2006) (reciting the familiar principle that, where possible, federal courts construe challenged state statutes “to avoid constitutional difficulty.”)