Tokio Marine Am. Ins. Co. v. Jan Packaging
United States District Court for the District of New Jersey
December 18, 2020, Decided; December 18, 2020, Filed
Civil No. 2:17-cv-07491 (KSH) (JAD)

Reporter
2020 U.S. Dist. LEXIS 240798 *

TOKIO MARINE AMERICA INSURANCE COMPANY, a/s/o ITOCHU LOGISTICS (USA) CORP., Plaintiffs, v. JAN PACKAGING, McCOLLISTER’S TRANSPORTATION SYSTEMS, INC., BALA TRANSPORT CORP., KING TRANSPORT LLC, NOLAN TRANSPORTATION GROUP, and COURIER SYSTEMS, Defendants, AND JAN PACKAGING, Defendant / Third-Party Plaintiff, v. NOLAN TRANSPORTATION GROUP, McCOLLISTER’S TRANSPORTATION SYSTEMS, INC. and MASTHEAD INTERNATIONAL, INC., Third-Party Defendants.

Notice: NOT FOR PUBLICATION

Prior History: Tokio Marine Am. Ins. Co. v. Jan Packaging, 2017 U.S. Dist. LEXIS 199366, 2017 WL 6021858 (D.N.J., Dec. 4, 2017)

Katharine S. Hayden, U.S.D.J.
Defendant / third-party plaintiff Jan Packaging has brought this third-party action against third-party defendants McCollister’s Transportation Systems, Inc. (“MTS”), Nolan Transportation Group, and Masthead International, Inc. based on allegations of liability under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706 (Count One), along with state law claims for defense, indemnity, and contribution (Count Two), breach of contract and/or quasi-contract (Count Three), and negligence (Count Four). All counts were filed against Nolan Transportation; Counts Two and Four were filed against Masthead; and Counts One, Two, and Four were filed against MTS. Currently before the Court is MTS’s motion to dismiss Counts One, Two, and Four for lack of standing under the Carmack Amendment and failure to state a claim under Fed. R. Civ. P. 12(b)(6).

I. BACKGROUND
Intel Corporation, a company headquartered in California, sold certain computer chip manufacturing equipment to Hangzhou [*3] Silan Integrated Circuit Company, a company headquartered in China. (D.E. 7, FAC ¶ 12.) Silan hired Kingpoint Technology to oversee shipment of the equipment from the United States to China. (Id. ¶ 13.) Kingpoint, in turn, hired Itochu Logistics (USA) Corporation to arrange for the shipment. (Id. ¶ 14.) Plaintiff Tokio Marine America Insurance Company issued an insurance policy to Itochu that covered Itochu’s liability for any damage to the equipment caused by others who assumed responsibility for delivering it in good condition. (Id. ¶ 16.)
Itochu hired MTS, Bala Transport Corporation, King Transport Corporation, Nolan Transportation, and Jan Packaging to transport the equipment from Massachusetts to New Jersey by motor carriage. (Id. ¶ 17.) Itochu also hired Jan Packaging and Courier Systems to repackage the goods in New Jersey for ocean shipment to China. (Id.) In Massachusetts, MTS, Bala Transport, King Transport, Nolan Transportation, and Jan Packaging received all the equipment in good condition, but two units were damaged upon arrival in New Jersey. (Id. ¶¶ 18-20.) Kingpoint sued Itochu for the damage and, under the terms of the insurance policy, Tokio Marine paid out $ 504,840 [*4] to Kingpoint to settle the claim. (Id. ¶¶ 23, 30.)
On September 27, 2017, Tokio Marine brought this action against MTS, Bala Transport, King Transport, Nolan Transportation, Jan Packaging, and Courier Systems to recover the settlement payments, as well as costs of suit and other relief. Days later, due to a filing error, Tokio Marine filed its first amended complaint, which MTS and Jan Packaging moved to dismiss. (D.E. 11, 12). On November 7, 2017, Tokio Marine voluntarily dismissed MTS with prejudice (D.E. 16, 17), and on December 4, 2017, the Court denied Jan Packaging’s motion (D.E. 22, 23).
On January 9, 2018, Jan Packaging filed a third-party complaint (D.E. 26) against Nolan Transportation and then on August 1, 2019, Jan Packaging filed a motion for leave to amend to add MTS and Masthead as third-party defendants (D.E. 53). On September 18, 2019, Jan Packaging filed a second amended third-party complaint alleging that at all relevant times: MTS and Nolan Transportation acted as motor carriers for the transportation of the computer chip manufacturing equipment in interstate commerce; Tokio Marine and/or Jan Packaging had a “Contract of Carriage” with MTS and Nolan Transportation [*5] to transport the equipment from Massachusetts to New Jersey; Nolan Transportation breached its contract by failing to secure qualified motor carriers to transport the equipment; MTS and Nolan Transportation negligently hired unqualified carriers and breached their duty of care to load and secure the equipment in a manner to prevent damage during transportation; and the equipment was damaged while in MTS and Nolan Transportation’s care, custody, and control. (D.E. 58 ¶¶ 2-6, 19-24.)
On October 8, 2019, Nolan Transportation filed an answer and crossclaims against Bala Transport and Masthead for contribution and/or indemnification. (D.E. 63.) On October 16, 2019, MTS filed the instant motion to dismiss Jan Packaging’s claims against it for lack of standing under the Carmack Amendment and failure to state a claim under Fed. R. Civ. P. 12(b)(6). The motion is fully briefed (D.E. 64, 68, 69) and the Court decides it without oral argument. See L. Civ. R. 78.1.

II. LEGAL STANDARD
Federal Rule of Civil Procedure 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. See Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss, a court must [*6] take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See New Jersey Carpenters & the Trustees Thereof v. Tishman Const. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014); see also Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).
Federal Rule of Civil Procedure 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, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007); see also Phillips, 515 F.3d at 232 (Rule 8 “requires a ‘showing’ rather than a blanket assertion of an entitlement to relief” (citation omitted)). 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.” Twombly, 550 U.S. at 570; see also West Run Student Hous. Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013).
The facial plausibility standard is met “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, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (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.” Id. at 678.
In deciding a Rule 12(b)(6) motion, a court may consider the complaint, any exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents [*7] if the complaint’s claims are based upon those documents. Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010).

III. ANALYSIS
MTS first argues that Jan Packaging lacks standing to pursue a claim under the Carmack Amendment because the second amended third-party complaint failed to allege facts that Jan Packaging is classifiable as an entity with a beneficial interest in the shipment of the damaged equipment. Second, MTS argues that Jan Packaging’s state law claims asserted in Counts Two and Four are expressly preempted by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”), 49 U.S.C. § 14501. In opposing, Jan Packaging does not address the preemption argument.
Turning first to standing, the Carmack Amendment regulates the relationship between shipping carriers and the owners of goods being shipped and imposes strict liability on those carriers for goods lost or damaged in interstate commerce. See Sanofi-Aventis U.S., LLC v. Great Am. Lines, Inc., 718 F. App’x 110, 112 (3d Cir. 2017) (citing 49 U.S.C. § 14706). The Carmack Amendment requires a motor carrier to issue a receipt or bill of lading for the property it transports. 49 U.S.C. § 14706(a)(1). The carrier is then “liable to the person entitled to recover under the receipt or bill of lading” for any loss or injury to the property caused by any carrier during shipment. Id. Interpreting the Carmack Amendment, [*8] decisions in this district limit standing to “shippers or consignors, holders of the bill of lading issued by the carrier or persons beneficially interested in the shipment although not in possession of the actual bill of lading, buyers or consignees, or assignees thereof.” Harrah v. Minn. Mining & Mfg. Co., 809 F. Supp. 313, 318 (D.N.J. 1992) (Bissell, J.).
According to MTS, to the extent the equipment in question was damaged, Jan Packaging did not suffer any loss and has no right to recover for damages to Tokio Marine’s goods pursuant to the Carmack Amendment under the facts presented. MTS argues that neither Tokio Marine’s first amended complaint nor Jan Packaging’s second amended third-party complaint identify any specific transaction or bill of lading or indicate the extent or nature of damage, the date(s) of loss, the time of delivery, or any other distinguishing information that would assist in determining the nature of Jan Packaging’s claims. Hovering over these arguments is a litigation event that MTS believes prompted this third-party action: Tokio Marine dismissed it with prejudice as a defendant in the underlying lawsuit, and Jan Packaging is trying to bring MTS back in with its Carmack Amendment and state law claims.
In opposing, Jan Packaging [*9] directs the Court’s attention to two separate “contracts of carriage,” purportedly issued by MTS that identify Jan Packaging as both a “consignor” — a person or entity from whom goods are received for shipment, — and a “consignee” — a person or entity to whom the goods are to be delivered. (D.E. 68-1, Ex. A.) Insofar as these documents are prerequisites to standing, and indeed specify it as a consignor and consignee, Jan Packaging argues that under Harrah and decisions in accord, standing is established.
In its reply brief, MTS argues that Jan Packaging fails to indicate whether those contracts of carriage are associated with any of the losses alleged by Tokio Marine in this action. In addition, MTS relies on three cases to support the argument that when determining the right of a party to recover under a bill of lading, courts are concerned with the actual roles played by the entities in interest, not with mere listings. First, in One Beacon Insurance Co. v. Haas Industries, Inc., 634 F.3d 1092 (9th Cir. 2011), the Ninth Circuit recognized that although members of certain classes will be entitled to sue under the Carmack Amendment, there is a “crucial phrase” in the statute that provides a “direct approach to standing[:] . . . ‘the person entitled to recover [*10] under the receipt or bill of lading.'” Id. at 1098 (quoting 49 U.S.C. § 14706(a)(1)). There, the court looked to a definition on the bill of lading that governed the shipment of goods at issue, “rather than an abstract classification system,” to determine that the owner of lost goods qualified as a “shipper” who had standing to sue under the Carmack Amendment even though the owner did not negotiate any shipping arrangements or appear on the bill of lading. Id.
Next, MTS relies on Banos v. Eckerd Corp., 997 F. Supp. 756 (E.D. La. 1998). In that case, the Eastern District of Louisiana looked to Black’s Law Dictionary for its definition of “consignor,” and held that because the owner of goods qualified as an entity “from whom the goods have been received for shipment,” she had standing to sue for the damages to and/or loss of her property despite not appearing on the bill of lading. Id. at 762. The third case MTS relies on is from this district court. In Harrah v. Minnesota Mining and Manufacturing Co., the court also looked to Black’s Law Dictionary for its definition of “consignee.” Despite the fact that the owner of goods did not negotiate the shipping arrangements or execute a bill of lading for the return of his property, the court held that he had standing to sue under the Carmack [*11] Amendment because he was “the one to whom the carrier was supposed to make delivery.” 809 F. Supp. at 318.
MTS also argues that any identifications of Jan Packaging on any bill of lading is irrelevant because Jan Packaging was not, and never claimed to be, an owner, shipper, consignor, or consignee of the damaged equipment at issue in this case. As MTS points out, Jan Packaging has identified itself as a motor carrier since the onset of this case. In its earlier motion to dismiss Tokio Marine’s complaint, for example, Jan Packaging states: “As a motor carrier, Jan Packaging was hired by [Tokio Marine’s] insured, Itochu, as a motor carrier to transport goods from Massachusetts to New Jersey,” and, “Jan Packaging was hired to make multiple interstate trips between Massachusetts and New Jersey . . . .” (D.E. 11-1 at 2 (emphasis added).) MTS further points out that Jan Packaging’s second amended third-party complaint fails to reflect any fact that would identify it as a consignor, consignee, or as having any beneficial interest in any of the shipments at issue.
The Court agrees. In the second amended third-party complaint, Jan Packaging alleges that: “At all relevant times, Plaintiff and/or Defendant/Third-Party [*12] Plaintiff, Jan Packaging, had a Contract of Carriage with McCollister’s Transportation Systems, Inc. to transport certain goods of the Plaintiff’s in interstate commerce from Massachusetts to New Jersey.” (SATPC ¶ 5.) However, Jan Packaging did not include any governing documents as exhibits for consideration. Only in opposing the motion to dismiss did Jan Packaging use the contracts of carriage listing it as consignor and consignee to describe its role. Without more, all Jan Packaging offers (now, as opposed to in the complaint) are contracts of carriage that may or may not have governed the shipments of goods at issue in this case. There are no factual allegations that Jan Packaging performed as a consignor or consignee or otherwise participated in the shipping arrangements as an entity with any beneficial interest in the equipment. Therefore, the foregoing would indicate that Jan Packaging — as a motor carrier hired to load and transport goods from Massachusetts to New Jersey and repackage those goods for subsequent shipment to China — lacks standing after the goods suffered damage to bring an action under the Carmack Amendment as a party “entitled to recover under the receipt or [*13] bill of lading . . . for the actual loss or injury to the property.” 49 U.S.C. § 14706(a)(1) (emphasis added). Accordingly, the motion to dismiss Count One is granted.
Turning to preemption, MTS argues that the FAAAA expressly preempts Jan Packaging’s state law claims for defense, indemnity, contribution, and negligence. Express preemption exists “when Congress includes in a statute explicit language stating an intent to preempt conflicting state law.” Deweese v. Nat’l R.R. Passenger Corp. (Amtrak), 590 F.3d 239, 245 (3d Cir. 2009).
Pursuant to the FAAAA, “a State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.” 49 § 14501(c)(1) (emphasis added). “The FAAAA’s preemption clause prohibits enforcement of state laws ‘related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.'” Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013) (quoting 49 U.S.C. § 14501(c)(1)). State laws are not preempted, however, where their relationship with carrier rates, routes, or services are “tenuous, remote, or peripheral.” Id. at 261.
MTS cites to Huntington Operating Corp. v. Sybonney Express, Inc., 2010 U.S. Dist. LEXIS 55591, 2010 WL 1930087 (S.D. Tex. May 11, 2010), for its contention that Jan Packaging’s state law claims are expressly preempted [*14] by the FAAAA. In Huntington, the plaintiff, an importer/exporter, brought claims for violations of the Texas Deceptive Trade Practices Act, negligence, negligent misrepresentation, and breach of contract against a shipping broker after a shipment of goods was stolen during transport from Florida to Texas. In that case, the defendant argued that the FAAAA preempts all claims founded in state statute or common law, except for breach of contract. The plaintiff opposed and pointed out that the FAAAA “shall not restrict . . . the authority of a State to regulate motor carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization[.]” 2010 U.S. Dist. LEXIS 55591, [WL] at *3 (quoting 49 U.S.C. § 14501(c)(2)(A)). The district court noted that the provisions of the FAAAA closely parallel those found in the Airline Deregulation Act and that courts have interpreted the preemptive scope of the FAAAA in accordance with case law addressing the ADA. Accordingly, in holding that the FAAAA “broadly preempts state law claims that would regulate interstate transportation of goods,” the court dismissed all but the plaintiff’s breach of contract claim. Id.
MTS also argues that claims sounding in [*15] equity, including indemnity and contribution, are likewise preempted under the FAAAA, and directs the Court’s attention to Nature’s One, Inc. v. Spring Hill Jersey Cheese, Inc., 2017 U.S. Dist. LEXIS 160888, 2017 WL 4349065 (S.D. Ohio Sept. 29, 2017). There, the plaintiff, a manufacturer, brought claims against a motor carrier for indemnity and contribution based on the carrier’s alleged negligence in failing to prevent contamination to a shipment of milk. The court concluded that because the plaintiff’s claims alleged negligence in the carrier’s performance of its services, they were preempted under the “expansive” scope of the FAAAA as relating “to a price route, or service of any motor carrier.” 2017 U.S. Dist. LEXIS 160888, [WL] at *6-8 (quoting 49 § 14501(c)(1)).
Jan Packaging fails to address this argument. Courts in this District have held this omission to be fatal to the nonmovant. See Griglak v. CTX Mortg. Co., LLC, 2010 U.S. Dist. LEXIS 34941, 2010 WL 1424023, at *3 (D.N.J. Apr. 8, 2010) (Cooper, J.) (“The failure to respond to a substantive argument to dismiss a count, when a party otherwise files opposition, results in a waiver of that count.”); Duran v. Equifirst Corp., 2010 U.S. Dist. LEXIS 22903, 2010 WL 936199, at *3 (D.N.J. Mar. 12, 2010) (Martini, J.) (“The absence of argument constitutes waiver in regard to the issue left unaddressed, and that waives the individual counts themselves.”).
Even were Jan Packaging’s silence not construed as a waiver, Counts Two and Four relate to motor carrier services that gave rise to this action and are therefore [*16] preempted by the FAAAA. The negligence claim is based upon alleged actions taken by MTS, Nolan Transportation, and Masthead to transport the equipment from Massachusetts to New Jersey by motor carriage. For example, Jan Packaging alleges that MTS negligently hired unfit and unqualified motor carriers to transport the goods and breached its duty of care to load and secure all shipments in a manner to prevent damage. Further, Jan Packaging claims that it was MTS’s negligence as a motor carrier that directly and proximately caused the damages it suffered.
The claims for defense, indemnity, and contribution likewise relate to the motor carrier services provided. Jan Packaging alleges that, in the event it is held liable to Tokio Marine for any loss or damage to the equipment, such liability was caused or brought about by the acts or omissions of MTS. Similarly, Jan Packaging claims to be entitled to contribution in the amount corresponding to the proportion of MTS’s fault as a motor carrier.
Because Jan Packaging’s state law claims all hinge on MTS’s alleged negligence in performing its services as a motor carrier, Counts Two and Four are preempted under the FAAAA as “relat[ing] to a price, [*17] route, or service of any motor carrier . . . with respect to the transportation of property.” 49 § 14501(c)(1). Accordingly, the motion to dismiss Counts Two and Four is granted.

IV. CONCLUSION
For the reasons stated above, the Court grants MTS’s motion to dismiss. (D.E. 64.) Jan Packaging lacks standing to pursue relief under the Carmack Amendment as alleged in Count One, and federal preemption law under the FAAAA bars its state law claims asserted in Counts Two and Four. An appropriate order will be entered.
Date: December 18, 2020
/s/ Katharine S. Hayden
Katharine S. Hayden, U.S.D.J.

ORDER
Upon consideration of defendant McCollister’s Transportation Systems, Inc.’s motion to dismiss the second amended third-party complaint (D.E. 64); and for the reasons expressed in the Court’s opinion filed herewith,
IT IS, on this 18th day of December, 2020,
ORDERED that defendant’s motion is GRANTED, and the second amended third-party complaint (D.E. 58) is dismissed with prejudice as to McCollister’s Transportation Services, Inc.
/s/ Katharine S. Hayden
Katharine S. Hayden, U.S.D.J.

2020 WL 7488914

United States District Court, E.D. California.
AMERISURE INSURANCE COMPANY, Plaintiff,
v.
R&L CARRIERS, INC, A CORPORATION, et al., Defendants.
Case No.: 1:20-cv-01134-DAD-JLT
|
12/21/2020

Jennifer L. Thurston, UNITED STATES MAGISTRATE JUDGE

FINDINGS AND RECOMMENDATION TO DENY MOTION FOR DEFAULT JUDGMENT (Docs. 8, 15)
*1 Plaintiff seeks default judgment against defendant Star Logix, Inc. (Docs. 8, 15)1 , and the defendant has not opposed this motion. For the following reasons, the Court recommends the motion for default judgment against defendant Star Logix, Inc. be DENIED.

I. Procedural History
On August 14, 2020, plaintiff filed its complaint against Defendants R&L Carriers, Inc., Star Logix, Inc. and Midas Solutions, Inc.2 (Doc. 1.) On September 7, 2020, defendant Star Logix, Inc. was served. (See Doc. 5.) Star Logix, Inc. failed to file a responsive pleading as required by Federal Rule of Civil Procedure 12(a)(1)(A)(i). On October 14, 2020, Defendant R&L Carriers, Inc.3 filed its

answer. (Doc. 7.)
On October 28, 2020, plaintiff filed the motion now pending before the Court seeking default judgment against defendant Star Logix, Inc. (Doc. 8.) Pursuant to this Court’s order, the plaintiff sought the clerk’s entry of default on December 2, 2020. (Docs. 12, 13.) Upon motion by the plaintiff, the Court entered the Clerk’s Certificate of Entry of Default against defendant Star Logix, Inc. on December 4, 2020. (Docs. 13, 14.) On December 18, 2020, plaintiff filed what appears to be a duplicative motion for default judgment against defendant Star Logix, Inc. (Doc. 15.)

II. Plaintiff’s Allegations4
Kar Nut Products Company, LLC retained R&L Carriers, Inc. as freight forwarder to hire trucking companies on Kar Nut’s behalf to transport 41,000 pounds of the pistachios purchased from the supplier, Paramount Farms, in Lost Hills, California to Michigan. (Doc. 1 at 3.) On or about December 5, 2018, R&L Carriers, Inc. later retained Star Logix, Inc. to transport the load of pistachios from Lost Hills, California to Michigan with a scheduled delivery date of December 10, 2018. (Id.) On or about December 6, 2018, a work order was made by R&L Carriers, Inc. to Midas Solutions, Inc. to transport the load of pistachios. (Id.) On or about December 6 or 7, 2018, the load was picked up by a Midas Solutions, Inc. driver from Paramount Farms in Lost Hills, California. (Id.) The load was later offloaded from a trailer driven by the Midas Solutions, Inc. driver and delivered to a warehouse in Vernon, California. (Id.) The load of pistachios never made it to its destination in Michigan. (Id.)

According to the plaintiff, at all times relevant herein, plaintiff had in place a policy of insurance issued to Kar Nut providing transportation coverage. (Id.) Plaintiff alleges that as a result of the incident, Kar Nut sustained damages and filed a claim with the policy. (Id.) Plaintiff reports that it paid to or on behalf of Kar Nut $189,600.00, as a result of the damages it sustained. (Id.) Plaintiff has made a claim for damages with Defendants for $189,600.00. (Id.)

III. Discussion

A. Legal Standards
*2 Federal Rule of Civil Procedure 55 allows that the Clerk of Court may enter default as to a party against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend against the action. See Fed. R. Civ. P. 55(a). As a general rule, once default is entered, the factual allegations of the complaint are taken as true, except for those allegations relating to damages. TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (citations omitted); see also Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (stating that although a default established liability, it did not establish the extent of the damages). Although well-pleaded allegations in the complaint are admitted by defendant’s failure to respond, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992).

A party may request entry of default judgment against a defaulted party pursuant to Federal Rule of Civil Procedure 55(b). However, “[a] defendant’s default does not automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment lies within the district court’s sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The Ninth Circuit has provided seven factors for consideration by the district court in exercising its discretion to enter default judgment: (1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff’s substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy of favoring decision on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).

Additionally, pursuant to Rule 54(b), “when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.” Fed. R. Civ. P. 54(b). Granting default judgment as to only some claims or some defendants is generally disfavored “in the interest of sound judicial administration.” Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 8 (1980); see also Morrison-Knudsen Co. v. Archer, 655 F.2d 962, 965 (9th Cir. 1981) (”Judgments under Rule 54(b) must be reserved for the unusual case in which the costs and risk of multiplying the number of proceedings and of overcrowding the appellate docket are outbalanced by pressing needs of the litigants for an early and separate judgment as to some claims or parties.”). There is “a long-settled and prudential policy against the scattershot disposition of litigation,” and “entry of judgment under [Rule 54(b)] should not be indulged as a matter of routine or as a magnanimous accommodation to lawyers or litigants.” Spiegel v. Trustees of Tufts College, 843 F.2d 38, 42 (9th Cir.1988).

The Supreme Court has warned that “absurdity might follow” in instances where a court “can lawfully make a final decree against one defendant…while the cause was proceeding undetermined against the others.” Frow v. De La Vega, 82 U.S. 552, 554 (1872). The Ninth Circuit has summarized the Frow standard as follows: “[W]here a complaint alleges that defendants are jointly liable and one of them defaults, judgment should not be entered against the defaulting defendant until the matter has been adjudicated with regard to all defendants.” In re First T.D. & Investment, 253 F.3d 520, 532 (9th Cir.2001) (citing Frow, 82 U.S. at 554). “Supreme Court and Ninth Circuit precedent prohibit default judgment where a default judgment against one defendant could be inconsistent with a judgment on the merits in favor of other defendants.” York v. Am. Sav. Network, Inc., 2015 WL 6437809, at *2-3 (E.D. Cal. Oct. 21, 2015).

B. Analysis
*3 Plaintiff seeks entry of default judgment as to Star Logix, Inc., but the motion does not explain why there is no just reason for delay of entry of final judgment as to fewer than all claims and parties. See Fed. R. Civ. P. 54(b). The complaint asserts the first and third claims against each defendant, and the second claim against R&L Carriers, Inc. (Doc. 1.) The complaint also “prays for judgment against Defendants, and each of them, on each and every cause of action.” (Id. at 6.) It therefore appears plaintiff is seeking relief against defendants jointly and severally and, under Frow, default judgment should not be entered against one defendant until the matter has been adjudicated as to all defendants. At the very least, the claims, facts, and legal issues asserted in the complaint relative to each of the defendants are very similar. See In re First T.D. & Inv. Inc., 253 F.3d at 532 (reasoning that the Frow principle applies to circumstances in which counterclaim parties have closely related defenses or are otherwise “similarly situated.”). Additionally, defendant R&L Carrier, Inc. has filed an answer and has asserted that the shipper party caused the loss. (Doc. 7 at 5.) Consequently, there appears to be a significant risk of incongruous or inconsistent judgments if the Court were to grant default judgment against Star Logix, Inc. at this juncture. See Employee Painters’ Trust v. Cascade Coatings, No. C12-0101 JLR, 2014 WL 526776, at *3 (W.D. Wash. Feb. 10, 2014) (”it would be an abuse of discretion for this court to grant Plaintiffs’ motion for default judgment because Plaintiffs allege the same claims against Mr. Schlatter and the non-defaulted jointly and severally liable co-defendants, Mr. McLaughlin and Cascade Partnership. Supreme Court and Ninth Circuit precedent prohibit default judgment where a default judgment against one defendant could be inconsistent with a judgment on the merits in favor of other defendants”); Helton v. Factor 5, Inc., Case No: C 10-4927 SBA, 2013 WL 5111861, at *6 (N.D. Cal. Sept. 12, 2013) (”In the present case, there is a serious risk of inconsistent judgments. Plaintiffs have alleged that Defendants all are jointly and severally liable for the 11 claims alleged in the First Amended Class Action Complaint.”).

IV. Findings and Recommendations
Based on the foregoing, the Court RECOMMENDS that plaintiff’s motion for default judgment (Docs. 8, 15) be denied without prejudice.

These Findings and Recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 304 of the Local Rules of Practice for the United States District Court, Eastern District of California. Within twenty-one days of the date of service of these Findings and Recommendations, any party may file written objections with the Court. Such a document should be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991); Wilkerson v. Wheeler, 772 F.3d 834, 834 (9th Cir. 2014).

IT IS SO ORDERED.

Dated: December 19, 2020 /s/ Jennifer L. Thurston

UNITED STATES MAGISTRATE JUDGE
All Citations
Slip Copy, 2020 WL 7488914

Footnotes

1
The Court notes that Plaintiff filed what appears to be a duplicative motion for default judgment (Doc. 15) after the clerk’s entry of default.

2
Plaintiff reported in their joint scheduling report that Midas Solutions, Inc. has not appeared in this matter yet, and the plaintiff is still attempting service for them. (Doc. 10 at 3, 5.) The Court has ordered the plaintiff to show cause why Midas should not be dismissed due to the violation of Rule 4(m). (Doc. 16)

3
Defendant notes that R&L Truckload Services, LLC was erroneously sued as R&L Carriers, Inc. (Doc. 7 at 1.)

4
Plaintiff’s allegations are as set forth in the complaint. (Doc. 1 at 3.)