United States District Court, E.D. New York.

CELL DEAL INC., Plaintiff,

v.

FEDEX FREIGHT, INC., Defendant.

21-CV-00788 (DG) (MMH)

|

Signed July 12, 2024

Attorneys and Law Firms

Joshua Reid Bronstein, The Law Offices of Joshua R. Bronstein & Associates, PLLC, Port Washington, NY, for Plaintiff.

George W. Wright, George W. Wright & Associates, LLC, Hackensack, NJ, for Defendant.

MEMORANDUM & ORDER

DIANE GUJARATI, United States District Judge:

*1 On March 31, 2022, Defendant FedEx Freight, Inc. filed a motion for partial summary judgment limiting liability. See ECF No. 20; see also ECF No. 22. Plaintiff Cell Deal, Inc. opposed Defendant’s motion. See ECF No. 21. On April 1, 2022, Plaintiff filed a motion for summary judgment on liability and damages. See ECF No. 23; see also ECF No. 25. Defendant opposed Plaintiff’s motion. See ECF No. 24. Both motions were brought pursuant to Rule 56 of the Federal Rules of Civil Procedure.¹

On February 28, 2024, Magistrate Judge Marcia M. Henry issued a Report and Recommendation (“R&R”) setting forth the undisputed/unopposed facts, the procedural history, and the legal standard for summary judgment and recommending that both motions be denied. See generally R&R, ECF No. 26. Judge Henry concluded that Plaintiff is not entitled to summary judgment because there are genuine issues of material fact regarding the amount of damages, noting, inter alia, that the record reflects that Plaintiff’s position on the value of the cargo has changed over time. See R&R at 8-10. Judge Henry also concluded that genuine issues of material fact exist regarding whether Defendant validly limited its liability, noting that a reasonable jury could find that Plaintiff did not have notice of the FedEx Rules Tariff and its limitation of liability from the Del Express Agreement and that a jury could reasonably infer that Defendant did not adequately provide notice about the limitations of liability to Plaintiff via the Bill of Lading. See R&R at 11-17.

On March 13, 2024, Defendant filed objections to the portion of the R&R recommending that Defendant’s motion for partial summary judgment be denied. See Defendant’s Objection in Part to the R&R (“Def.’s Obj. Br.”), ECF No. 27. Defendant objects to the R&R “on the issue of whether there exists a triable material fact whether [Defendant] validly limited its liability” and Defendant asserts that the R&R “does not give due consideration to controlling United States Supreme Court precedent.” See Def.’s Obj. Br. at 2. Defendant argues that “[a]s the United States Supreme Court holds, the proper analysis is whether [Defendant] and Del Express, plaintiff’s designated transportation intermediary with whom [Defendant] contracted, agreed to limit [Defendant’s] liability;” that “[b]ased on Del Express’s status as a licensed freight broker hired by [Plaintiff], [Defendant] need not show that the limitation of liability was directly conveyed or agreed to by [Plaintiff] itself;” that “[t]he record shows, and the Magistrate Judge specifically found, that [Defendant] and Del Express agreed to incorporate the limitation of liability to all shipments tendered by Del Express to [Defendant] under the Del Express Agreement, including the shipment at issue;” that “the record shows that Del Express drafted and agreed to the terms on its own Del Express standard Bill of Lading issued for the shipment;” that “[t]here can be no genuine triable issue of fact that Del Express, acting as plaintiff’s selected shipping agent, had actual notice of the applicable limitation of [Defendant’s] liability and agreed to [the] limitation;” that Defendant “was entitled to rely on the contractual limitation of liability negotiated with Del Express for all shipments brokered by Del Express;” and that Defendant “was not required to confirm that Del Express’s customers, including [Plaintiff], were actually aware of or personally agreed to the limitation.” See Def.’s Obj. Br. at 5. Defendant further argues that the R&R “relies on cases in which the shippers did not use a freight broker or transportation intermediary to contract with a motor carrier.” See Def.’s Obj. Br. at 7. Defendant requests that the Court grant Defendant’s motion for partial summary judgment limiting its liability in this case to $153.00. See Def.’s Obj. Br. at 10.

*2 Plaintiff did not file any objections to the R&R or respond to Defendant’s objections within the time limits for doing so. See generally docket.

By Order dated April 3, 2024, the Court directed Plaintiff to respond to Defendant’s objections and informed Plaintiff that such response must address the caselaw cited by Defendant. See April 3, 2024 Order. By Order dated April 9, 2024, the Court granted an extension request and directed that Plaintiff’s response be filed by April 15, 2024. See April 9, 2024 Order.

On April 15, 2024, Plaintiff filed its Response to Defendant’s Objection in Part to the R&R. See ECF No. 29. Plaintiff asserts that “[t]he analysis by the Defendant fails to contradict the case law and analysis in the Report and Recommendation” and Plaintiff requests that the R&R “be upheld, and that the denial of [Defendant’s] partial motion for summary judgment as to liability remain upheld.” See ECF No. 29 at 6, 8.

* * *

A district court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1); see also Fed. R. Civ. P. 72(b)(3). A district court “shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1); see also Fed. R. Civ. P. 72(b)(3) (providing that a district court “must determine de novo any part of the magistrate judge’s disposition that has been properly objected to”); Arista Recs., LLC v. Doe 3, 604 F.3d 110, 116 (2d Cir. 2010) (“As to a dispositive matter, any part of the magistrate judge’s recommendation that has been properly objected to must be reviewed by the district judge de novo.”); Lorick v. Kilpatrick Townsend & Stockton LLP, No. 18-CV-07178, 2022 WL 1104849, at *2 (E.D.N.Y. Apr. 13, 2022). To accept those portions of an R&R to which no timely objection has been made, however, “a district court need only satisfy itself that there is no clear error on the face of the record.” Lorick, 2022 WL 1104849, at *2 (quoting Ruiz v. Citibank, N.A., No. 10-CV-05950, 2014 WL 4635575, at *2 (S.D.N.Y. Aug. 19, 2014)); see also Jarvis v. N. Am. Globex Fund, L.P., 823 F. Supp. 2d 161, 163 (E.D.N.Y. 2011).

Because no party objected to the portion of the R&R recommending that Plaintiff’s motion for summary judgment be denied, the Court’s review of that portion of the R&R is for clear error. Upon clear error review, the Court adopts the portion of the R&R recommending that Plaintiff’s motion for summary judgment be denied.²

*3 In light of Defendant’s objection to the portion of the R&R recommending denial of Defendant’s motion for partial summary judgment, the Court reviews de novo the R&R with respect to that recommendation. Upon de novo review, the Court concludes that Defendant’s motion for partial summary judgment limiting liability should be granted.

“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.” Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 33 (2004). “The intermediary is certainly not automatically empowered to be the cargo owner’s agent in every sense…. But when it comes to liability limitations for negligence resulting in damage, an intermediary can negotiate reliable and enforceable agreements with the carriers it engages.” Id.; see also Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co., 762 F.3d 165, 185 (2d Cir. 2014) (applying Kirby and determining that “[the intermediary] was the agent of the cargo owner, in the limited sense articulated in Kirby, when it contracted with [the carrier] for the liability limitations, including the Exoneration Clause, contained in the [carrier’s] bill of lading” and “[a]ccordingly, [the cargo owner] is bound by the Exoneration Clause”).

Here, there does not appear to be any genuine dispute of material fact with respect to the limitation of liability. It is undisputed that Plaintiff hired Del Express, a broker licensed by the Federal Motor Carrier Safety Administration, to arrange for Defendant to pick up the cellphones from “AT&T c/o CTDI” and to deliver them to Plaintiff. See R&R at 3. Moreover, the parties do not seriously dispute that Del Express and Defendant entered into at least two agreements that are relevant to the disputed shipment – namely, the Del Express Agreement and Del Express’s standard Bill of Lading. See R&R at 4-5. Further, it is undisputed that the Del Express Agreement includes a “Liability Notice” that references “FXF 100 rules tariff item 420,” which term refers to Item 420 of FedEx’s Rules Tariff 100, which limits Defendant’s maximum liability for “used or reconditioned articles” to “50 cents per pound per package or $10,000 per incident, whichever is lower” when the consignor or consignee does not declare value or fails to describe articles as used or reconditioned on the original Bill of Lading; that the Bill of Lading for the disputed shipment does not declare the value of the shipment and, in fact, expressly states “Shipment Value Not Specified;” that Item 420 establishes procedures for a FedEx customer to request higher limits of liability for damage to used goods; and that neither Plaintiff nor Del Express requested higher limits of liability for the shipment. See R&R at 4-5. Additionally, there is no dispute that the shipment consisted of one pallet weighing a total of 306 pounds. See R&R at 3.

Because Del Express – the intermediary hired by Plaintiff, the cargo owner – contracted with Defendant – a carrier – to transport goods, Plaintiff’s recovery against Defendant is limited by the liability limitation to which Del Express and Defendant agreed. See Kirby, 543 U.S. at 33.³ Del Express and Defendant agreed to limit Defendant’s liability pursuant to the Del Express Agreement. Because the shipment consisted of used goods, the value of the shipment was not declared on the Bill of Lading, and Del Express did not request higher limits of liability, the Del Express Agreement limited Defendant’s liability to 50 cents per pound per package or $10,000 per incident, whichever is lower. Here, the per pound amount – which would be $153.00 – is lower. Plaintiff’s recovery against Defendant therefore is limited to $153.00 pursuant to the liability limitation in the Del Express Agreement.⁴

*4 Accordingly, Defendant’s motion is granted and Defendant’s liability is limited to $153.00.

* * *

Plaintiff’s Motion for Summary Judgment, ECF No. 23, is DENIED; Defendant’s Motion for Partial Summary Judgment, ECF No. 20, is GRANTED; and Defendant’s liability is limited to $153.00.

The parties shall submit their proposed Joint Pretrial Order by August 12, 2024.

Further, the parties are referred to Magistrate Judge Marcia M. Henry for a settlement conference and should contact her chambers in accordance with her Individual Rules by July 19, 2024.

SO ORDERED.

All Citations

Slip Copy, 2024 WL 3401198

Footnotes
1	Familiarity with the detailed procedural history and background of this action is assumed herein.
2	Also upon clear error review, the Court adopts those portions of the R&R setting forth the undisputed/unopposed facts, the procedural history, and the legal standard for summary judgment. See R&R at 2-7. The Court notes that notwithstanding that Plaintiff did not file any objections to the R&R, Plaintiff requests in its response briefing that its motion for summary judgment be granted. See ECF No. 29 at 8. Plaintiff’s request is untimely. However, even if Plaintiff had timely objected to the R&R’s recommendation that Plaintiff’s motion be denied, the Court would adopt that recommendation upon de novo review.
3	Under these circumstances, whether Plaintiff was on notice of the terms of the Del Express Agreement is immaterial. Such a requirement was not established by Kirby and indeed would seem to run counter to the analysis set forth in Kirby. See Kirby, 543 U.S. at 34-35.
4	In light of the above, the Court need not – and does not – address any liability limitation in the Bill of Lading.

End of Document

© 2024 Thomson Reuters. No claim to original U.S. Government Works.

2024 WL 3226580

Only the Westlaw citation is currently available.

United States District Court, N.D. Illinois, Eastern Division.

Larry MENDENHALL, Plaintiff,

v.

FEDEX GROUND PACKAGE SYSTEM, INC., and Does I through X, Defendants.

Case No. 23-cv-11025

|

Signed June 28, 2024

Attorneys and Law Firms

Larry Mendenhall, Oak Park, IL, Pro Se.

Joel David Groenewold, Kopka Pinkus Dolin PC, Chicago, IL, for Defendant FedEx Ground Package System, Inc.

MEMORANDUM OPINION AND ORDER

MARY M. ROWLAND, United States District Judge

*1 Plaintiff Larry Mendenhall sued Defendant FedEx in state court for losses related to an undelivered package. [2-1]. FedEx removed the case to federal court [2] Mendenhall moves to remand, [12], while FedEx separately moves to dismiss. [5]. For the reasons that follow, the motion to remand is denied [12] and the motion to dismiss is granted. [5].

I. Background

The following factual allegations taken from the operative complaint [2-1] are accepted as true for the purposes of the motion to dismiss. See Lax v. Mayorkas, 20 F.4th 1178, 1181 (7th Cir. 2021). On July 26, 2022, Plaintiff Larry Mendenhall bought an Acer Aspire laptop from a seller through eBay online marketplace. [2-1] ¶ 19. eBay contracted with FedEx for the delivery to Mendenhall in Oak Park, Illinois. Id. ¶ 1; Ex. A. After the laptop did not arrive, id. ¶ 1, Mendenhall requested that eBay reimburse him for the missing laptop under their Money-Back Guarantee Policy. Id. ¶ 3. When eBay and/or the seller tried to determine if the laptop had not been delivered, FedEx reported to eBay and/or the seller that FedEx had delivered the goods. Id. ¶ 4. FedEx also alleged that Mendenhall was “knowingly attempting to obtain by deception insurance reimbursement” for the package. Id. ¶ 5.

Mendenhall filed a complaint in Cook County Circuit Court against Defendant FedEx Ground on July 28, 2023. [2-1]. The complaint included a breach of contract claim for FedEx’s alleged failure to deliver the package, as well as a libel claim for FedEx’s statement that it had delivered the package. Id. FedEx then removed the case to federal court, [2], and now moves to dismiss. [5]. Mendenhall, in turn, filed a motion to remand. [12].

II. Analysis

The two pending motions—Mendenhall’s motion to remand [12] and FedEx’s motion to dismiss [12]—both turn on the same question: whether the Carmack Amendment applies to the complaint’s state law claims. The Court will take each motion in turn, first to assess whether we have jurisdiction over the case, then to determine whether the claims are preempted.

a. Motion to Remand

Mendenhall moves to remand on the basis that his complaint does not raise a federal question. As described above, FedEx opposes for the same reason that it moves to dismiss, arguing that the Carmack Amendment applies here.

A defendant may remove a case to federal court if there is a basis for federal subject matter jurisdiction. 28 U.S.C. §§ 1441(a), 1446. Removal to federal court is proper when the original cause of action “arises under the Constitution and laws of the United States.” Louisville & Nashville RR. Co. v. Mottley, 211 U.S. 149 (1908). The party seeking removal bears the burden of establishing federal jurisdiction. Boyd v. Phoenix Funding Corp., 366 F.3d 524, 529 (7th Cir. 2004). The Court must interpret the removal statute narrowly, and any doubts regarding jurisdiction are resolved in favor of remand. Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 758 (7th Cir. 2009).

FedEx removed this case to this Court on the theory that the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, preempts Mendenhall’s claims relating to the delivery of goods. The Carmack Amendment provides a “statutory right to recover for actual losses or injuries” to property caused by carriers involved in shipment. Gordon v. United Van Lines, Inc., 130 F.3d 282, 286 (7th Cir. 1997). In enacting the Amendment, Congress aimed to create a “nationally uniform rule of carrier liability concerning interstate shipments.” REI Transport, Inc. v. C.H. Robinson Worldwide, Inc., 519 F.3d 693, 697 (7th Cir. 2008) (quoting North Am. Van Lines v. Pinkerton Sec. Sys., 89 F.3d 452, 454 (7th Cir. 1996)). The Amendment thus provides the “exclusive cause of action for contract claims alleging delay, loss, failure to deliver or damage to property.” Hall v. North Am. Van Lines, Inc., 476 F.3d 683, 688 (9th Cir. 2007). “[W]hen one ships a package via UPS and there is a dispute, that dispute belongs in federal court because of the Carmack Amendment.” Korer v. Danita Corp., 584 F.Supp.2d 1103, 1105 (N.D. Ill. 2008) (quoting Treiber & Straub, Inc. v. United Parcel Serv., Inc., 474 F.3d 379, 383 (7th Cir. 2007)).

*2 Here, Mendenhall pleads a breach of contract claim that arises from the failure of FedEx to deliver the Acer laptop that he had purchased. [2-1] ¶¶ 17-35. This is the quintessential claim preempted by the Carmack Amendment, as the breach of contract claim arises out of the loss of goods. Because Congress intended the Amendment to provide the exclusive remedy for failure to deliver goods in interstate shipment, “federal law completely occupies the field.” Brunner v. Beltmann Grp. Inc., No. 1:19-CV-03396, 2020 WL 635905, at *3 (N.D. Ill. Feb. 11, 2020) (analyzing Carmack Amendment preemption). FedEx thus has the right to remove the breach of contract claim based on federal question jurisdiction. See, e.g., Korer, 583 F.Supp. at 1105, fn.2 (allowing removal based on Carmack preemption because “the salient question in determining whether an action can be removed based on federal question jurisdiction is … whether Congress intended the federal cause of action to be exclusive.”) (emphasis in original).

Mendenhall makes two arguments against applying the Carmack Amendment. First, he argues that neither party pled that the package traveled in interstate transportation. [13] at 5. Next, Mendenhall argues that he is not covered by the Amendment because he is a recipient, not a carrier or a shipper. Id. The first argument fails because FedEx supplemented its notice of removal with a factual allegation that the package traveled from Texas to Illinois. [15-1]. Mendenhall does not meaningfully contest this fact. Second, the Carmack Amendment covers a carrier’s liability to any person “entitled to recover under the receipt or bill of lading.” 49 U.S.C. § 14706(a)(1). This includes the consignee, or the intended recipient of a shipment. Harrah v. Minnesota Min. & Mfg. Co., 809 F. Supp. 313, 318 (D.N.J. 1992) (extending standing to sue under the Carmack Amendment to plaintiff as “the one to whom the carrier was supposed to make delivery”); V.R. Compounding Corp. v. Occidental Chemical Corp., No. 99 C 8087, 2000 WL 1368045, at *2 (N.D. Ill. Sept. 15, 2000). The Amendment accordingly applies to (and preempts) Mendenhall’s claims pursuant to the contract between eBay and FedEx. See [2-1] ¶ 34.

For these reasons, the Court has federal question jurisdiction over this action.

b. Motion to Dismiss

Applying the Carmack Amendment also means that the Court must dismiss any preempted claims. Mendenhall attempts to save the breach of contract claim by arguing that it meets the elements of a federal cause of action under the Carmack Amendment. See REI Transport, 519 F.3d at 699 (to establish a prima facie case under Carmack, a plaintiff mush show “(1) delivery in good condition; (2) arrival in damaged condition (failure to arrive); and (3) the amount of damages.”). The Court is not permitted to turn a breach of contract claim into a claim filed under the Carmack Amendment. Midamerican Energy Co. v. Start Enterprises, Inc., 437 F.Supp.2d 969, 973 (S.D. Iowa 2006) (quoting U.S. Aviation Underwriters, Inc. v. Yellow Freigh Sys., Inc., 296 F.Supp.2d 1322, 1336-37 (S.D. Ala. 2003)). As previously discussed, Mendenhall’s breach of contract claim “arise[s] out of the loss of or damage to goods,” and is thereby dismissed, with prejudice. Gordon v. United Van Lines Inc., 130 F.3d 282, 289 (7th Cir. 1997).

This leaves Mendenhall’s libel claim. The Carmack Amendment does not cover claims that are “separate to and distinct from” the loss of goods. Gordon, 130 F.3d at 294; accord Pinkerton, 89 F.3d at 458 (“separate and independently actionable harm to the shipper distinct from the damage” are not preempted). Courts have thus allowed distinct claims ranging from allegations of deceptive trade practices to assault to infliction of emotional distress. Scheur v. Rado Express Logistics, Inc., No. 23-CV-00531, 2024 WL 1328818 (N.D. Ill. Mar. 28, 2024) (collecting cases). Here, the libel claim does not arise from the loss of goods itself; its basis is FedEx’s communications with the seller and/or eBay. [2-1] ¶¶ 42-47. While the libel claim escapes preemption, without a federal anchor claim, this Court lacks supplemental jurisdiction to hear it. 28 U.S.C. § 1367(a). This claim is dismissed for now, without prejudice.¹

III. Conclusion

*3 For the reasons stated, Mendenhall’s motion to remand [12] is DENIED. FedEx’s motion to dismiss [5] is GRANTED. The breach of contract claim is dismissed with prejudice, as Mendenhall may not plead the claim in federal court without triggering preemption. The libel claim is dismissed without prejudice. Mendenhall is given leave to file an amended complaint. An amended complaint is due by July 22, 2024. If Plaintiff fails to file an amended complaint, the case will be dismissed for failure to prosecute and failure to follow a court order. This Court cautions Mendenhall that any amendment must be made in accordance with this Court’s order and his Rule 11 obligations.

All Citations

Slip Copy, 2024 WL 3226580

Footnotes
1	At this juncture, the Court declines to rule on FedEx’s several other arguments that Plaintiff failed to state a claim for libel. [6] at 5-9. The Court notes that Plaintiff failed to response to these arguments [10] and therefore waived any response.

End of Document

© 2024 Thomson Reuters. No claim to original U.S. Government Works.