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

CELL DEAL INC., Plaintiff,

v.

FEDEX FREIGHT, INC., Defendant.

21-CV-788 (DG)(MMH)

Signed February 28, 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.

REPORT AND RECOMMENDATION

MARCIA M. HENRY, United States Magistrate Judge:

*1 Plaintiff Cell Deal Inc. (“Cell Deal”) sued Defendant FedEx Freight, Inc. (“FedEx”), alleging violations of the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706 et seq. (the “Carmack Amendment”). (See generally Am. Compl., ECF No. 8.)¹ Before the Court is FedEx’s motion for partial summary judgment limiting liability (Def. Mot., ECF No. 20)² and Cell Deal’s motion for summary judgment on liability and damages (Pl. Mot., ECF No. 23)³, both pursuant to Federal Rule of Civil Procedure 56. The Honorable Diane Gujarati referred the motions for report and recommendation. For the reasons stated below, the Court respectfully recommends that both motions should be denied.

I. BACKGROUND

A. Undisputed or Unopposed Facts⁴

This is a commercial dispute arising out of several packages that were allegedly lost and damaged during transit. Cell Deal is a corporation authorized to conduct business in New York, with a corporate address in Brooklyn, New York. (Pl. 56.1 Stmt., ECF No. 23-1 ¶ 1.) FedEx is a corporation authorized to do business in New York with headquarters in Arkansas. (Answer to Am. Compl., ECF No. 10 ¶ 5.) FedEx is also a motor carrier licensed by the Federal Motor Carrier Safety Administration (the “FMCSA”), pursuant to the definition of “motor carrier” under 49 U.S.C. § 14706(a)(1). (Def. 56.1 Resp., ECF No. 24 at 2 ¶ 3; Pl. 56.1 Stmt., ECF No. 23-1 ¶ 3.)⁵

1. The Disputed Shipment

*2 In December 2020, Cell Deal purchased cellphones from AT&T Mobility Invoice (“AT&T”). (Def. 56.1 Stmt., ECF No. 20-1 ¶ 1; Alhob Decl. Ex. B, ECF 23-5 at 2–3.) The cellphones were “used, in a working condition, and were not broken nor damaged.” (Def. 56.1 Stmt., ECF No. 20-1 ¶ 2.) The shipment was to travel from AT&T in Flower Mound, Texas to Cell Deal’s location in Brooklyn, New York. (Id. ¶ 7.) Cell Deal hired Del Express, a broker licensed by the FMCSA, to arrange for FedEx to pick up the cellphones from “AT&T c/o CTDI” and to deliver them to Cell Deal. (Pl. 56.1 Stmt., ECF No. 23-1 ¶ 15; Def. 56.1 Stmt., ECF No. 20-1 ¶¶ 3, 6.)

On or about December 7, 2020, FedEx picked up one pallet from AT&T for shipment to Cell Deal. (Pl. 56.1 Stmt., ECF No. 23-1 ¶¶ 6–7; Def. 56.1 Stmt., ECF No. 20-1 ¶ 4.) The pallet included 27 boxes containing the cellphones and weighed a total of 306 pounds. (Pl. 56.1 Resp., ECF No. 21-2 ¶ 23; Def. 56.1 Stmt., ECF No. 20-1 ¶¶ 17–18.). On December 11, 2020, the date of delivery, “Eddy” signed the delivery receipt indicating that the shipment was received in apparent good order and did not note any exceptions. (Jones Decl. Ex. B., ECF No. 20-4 at 7.)

On December 16, 2020, Del Express filed a claim on Cell Deal’s behalf for the loss of four boxes totaling $12,796.50 in damages. (Id. at 5–6 (Loss and Damage Claim); Def. 56.1 Resp., ECF No. 24 at 3 ¶ 11.)⁶ The parties dispute whether Cell Deal has actually paid FedEx for transporting the shipment. (Def. 56.1 Resp., ECF No. 24 at 4 ¶ 17; Pl. 56.1 Stmt., ECF No. 23-1 ¶ 17.)⁷ However, they appear to agree that FedEx did not offer to compensate Cell Deal for the full amount of its actual damages. (Pl. 56.1 Stmt., ECF No. 23-1 ¶ 14; Def. 56.1 Resp., ECF No. 24 at 4 ¶ 14.)

2. Provisions Governing the Disputed Shipment

The parties do not seriously dispute that Del Express (but not Cell Deal) and FedEx entered into at least two agreements related to the disputed shipment.

Before the disputed shipment, Del Express and FedEx were parties to a Customer Pricing Agreement (the “Del Express Agreement”), effective January 6, 2020. (Def. 56.1 Stmt., ECF No. 20-1 ¶ 8; Jones Decl. Ex. B, ECF No. 20-4 at 2–4.) In the Del Express Agreement, FedEx provided Del Express with favorable shipping rates in exchange for beneficial terms and conditions for FedEx, which applied to all shipments between Del Express and FedEx. (Def. 56.1 Stmt., ECF No. 20-1 ¶ 9.) The Del Express Agreement includes a “Liability Notice,” which states in relevant part:

Except as provided herein, this pricing program is subject to common carriage laws, rules and regulation with the maximum liability coverage not to exceed $25.00 per pound per package or $100,000 per incident, whichever is lower when the shipment is on the US Side of the US-MX border. For other limitations of liability, excess liability coverage and international shipments, refer to FXF 100 rules tariff item 420. Those items described in the National Motor Freight Classification Series (NMFC 100 series) shipped under released value provisions are subject to the maximum released value depending on the class listed at the time of shipment.

(Jones Decl. Ex. B, ECF No. 20-4 at 4 (emphasis added).) The term “FXF 100 rules tariff item 420” refers to Item 420 of FedEx’s Rules Tariff 100 (“FedEx Rules Tariff”), which limits FedEx’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.” (Jones Decl., ECF No. 20-2 ¶ 11; Jones Decl. Ex. B, ECF No. 20-4 at 9 ¶ 6(A).) Item 420 also establishes procedures for a FedEx customer to request higher limits of liability for damage to used goods. (Def. 56.1 Stmt., ECF No. 20-1 ¶ 15.) Neither Cell Deal nor Del Express requested higher limits of liability for the shipment. (Id. ¶ 16.) The “NMFC 100 Series” refers to the National Motor Freight Classification Series 100, a document providing voluntary standards for classification of commodities moving in interstate commerce. (Id. ¶ 12; Jones Decl. Ex. C, ECF No. 20-5 at 2.) FedEx is a participating member interstate carrier and its rates are based on or refer to NMFC 100 Series’ provisions. (See Jones Decl. Ex. C, ECF No. 20-5 at 3 (listing FedEx as a participating carrier).)

*3 The disputed shipment was also governed by Del Express’s standard bill of lading. (Def. 56.1 Stmt., ECF No. 20-1 ¶ 10; Pl. 56.1 Stmt., ECF No. 23-1 ¶ 7.) The bill of lading lists FedEx as the carrier, “CTDI” as “SHIPPER (FROM)”, and Cell Deal as “CONSIGNEE (TO).” (Jones Decl. Ex. B, ECF No. 20-4 at 8.) The bill of lading further states in relevant part:

It is mutually agreed as to each carrier of all or any of said property over all or any portion of said route to destination and as to each party at any time interested in all or any said property, that every service to be performed hereunder shall be subject to all bill of lading terms and conditions in the governing classification NMFC 100 on the date of the shipment. Shipper hereby certifies that he is familiar with all the bill of lading terms and conditions in the governing classification NMFC 100 and the said terms and conditions are hereby agreed to by the shipper and accepted for himself and his assigns.

(Id.) The bill of lading for the disputed shipment does not state the declared value of the shipment and, in fact, expressly states “Shipment Value Not Specified.” (Id.)

B. Procedural History

On January 19, 2021, Cell Deal sued FedEx in the Supreme Court of the State New York, Kings County, alleging negligence in shipping the pallet and seeking damages. (See generally Compl., Cell Deal Inc. v. FedEx Freight, Inc., Index No. 501396/2021 (N.Y. Sup. Ct.), ECF No. 1-2.) FedEx timely removed the action to this court based on federal question jurisdiction—specifically, because Cell Deal’s state law claims are preempted by the Carmack Amendment. (Notice of Removal, ECF No. 1.) Cell Deal subsequently amended the Complaint, replacing allegations of negligence with allegations of Carmack Amendment violations. (Am. Compl., ECF No. 8.) Defendant timely answered the Amended Complaint. (Answer to Am. Compl., ECF No. 10.) Discovery was certified as closed on January 6, 2022. (Jan. 6, 2022 Order.)

FedEx requested a pre-motion conference for an anticipated motion for summary judgment, which Cell Deal opposed. (Def. Ltr., ECF No. 16; Pl. Ltr., ECF No. 17.) The Court denied the request and ordered briefing. (Jan. 7, 2022 Order; Jan. 18, 2022 Order.) Judge Gujarati referred the motions for report and recommendation. (Oct. 28, 2022 Order.)

II. LEGAL STANDARD FOR SUMMARY JUDGMENT

A court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A genuine dispute of material fact exists where the evidence is such that a reasonable jury could decide in the non-movant’s favor.” Kee v. City of New York, 12 F.4th 150, 158 (2d Cir. 2021) (cleaned up). “The burden of showing that no genuine factual dispute exists rests on the party seeking summary judgment, and in assessing the record to determine whether there is a genuine issue as to a material fact, the court is required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought.” Frost v. New York City Police Dep’t, 980 F.3d 231, 242 (2d Cir. 2020) (cleaned up). “If the moving party carries its initial burden, the nonmoving party must come forward with evidence that would be sufficient to support a jury verdict in its favor.” McKinney v. City of Middletown, 49 F.4th 730, 738 (2d Cir. 2022) (cleaned up).

*4 “A party asserting that a fact cannot be or is genuinely disputed must … cit[e] to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.” Fed. R. Civ. P. 56(c); see also McKinney, 49 F.4th at 738 (“[R]ather than merely ‘deny the moving party’s allegations in a general way,’ the party opposing summary judgment ‘must present competent evidence that creates a genuine issue of material fact.’ ”) (citation omitted). Affidavits or declarations used to support or oppose summary judgment “must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” Fed. R. Civ. P. 56(c)(4).

For cross-motions for summary judgment, “the court evaluates each party’s motion on its own merits, and all reasonable inferences are drawn against the party whose motion is under consideration.” Roberts v. Genting New York LLC, 68 F.4th 81, 88 (2d Cir. 2023) (cleaned up). “[I]n reviewing the evidence and considering what inferences may reasonably be drawn, the court ‘may not make credibility determinations or weigh the evidence.’ ” S. Katzman Produce Inc. v. Yadid, 999 F.3d 867, 877 (2d Cir. 2021) (citing Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150 (2000)).

III. DISCUSSION

FedEx seeks partial summary judgment limiting its maximum liability to $153 pursuant to the terms of the Del Express Agreement and/or the bill of lading. (See generally Def. Mem., ECF No. 20-7.) Cell Deal cross-moves for summary judgment as to liability and damages of $109,651 based on the Carmack Amendment. (Pl. Mem., ECF No. 23-11 at 6–9.) As set forth below, Cell Deal is not entitled to summary judgment because there are genuine issues of material fact regarding the amount of damages. Further, partial summary judgment for FedEx is not warranted because there are genuine issues of material fact regarding whether the Del Express Agreement or the bill of lading validly limits FedEx’s liability.

A. Prima Facie Case for Carrier Liability

“The Carmack Amendment ‘addresses the subject of carrier liability for goods lost or damaged during shipment, and most importantly provides shippers with the statutory right to recover for the actual loss or injury to their property caused by any of the carriers involved in the shipment.’ ” Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co., 762 F.3d 165, 170 (2d Cir. 2014) (quoting Cleveland v. Beltman N. Am. Co., 30 F.3d 373, 377 (2d Cir. 1994)). “[T]he Carmack Amendment allows suits by anyone entitled to recover in the receipt or bill of lading, including the buyer who was to receive the goods.” Chubb Seguros Argentina S.A. v. UPS, No. 20-CV-3074, 2022 WL 1321401, at *2 (S.D.N.Y. May 3, 2022) (citing Windows, Inc. v. Jordan Panel Sys. Corp., 177 F.3d 114, 118 (2d Cir. 1999)).

“The Carmack Amendment ‘imposes something akin to strict liability’ on carriers of goods.” Lewis Brass & Copper Co. v. ABF Freight Sys., Inc., No. 13-CV-3251 (JG), 2014 WL 991726, at *3 (E.D.N.Y. Mar. 13, 2014) (quoting Mitsui Sumitomo Ins. Co., Ltd. v. Evergreen Marine Corp., 621 F.3d 215, 216 (2d Cir. 2010) (per curiam)). “The plaintiff must first show a [prima facie] case by demonstrating ‘(1) delivery to the carrier in good condition; (2) arrival in damaged condition; and (3) the amount of damages caused by the loss.’ ” Lewis Brass, 2014 WL 991726, at *3 (quoting Project Hope v. M/V IBN SINA, 250 F.3d 67, 73 n.6 (2d Cir. 2001)). “Once the shipper establishes a [prima facie] case of Carmack liability by showing delivery in good condition, arrival in damaged condition, and the amount of damages, the carrier is liable for the actual loss or injury to the property it transports, unless the carrier can establish that it was free of negligence and that the loss or damage was caused by one of five excusable factors.” Sompo Japan, 762 F.3d at 171 (cleaned up).⁸

*5 In its motion papers and in opposition to FedEx’s motion, Cell Deal argues that the record establishes a prima facie case of liability against FedEx because the cellphones were tendered to FedEx for shipment in good condition, the shipment was delivered to Cell Deal in damaged condition, and Cell Deal suffered damages of $109,651. (See Pl.’s Mem, ECF No. 23-11 at 5–8; Pl.’s Opp., ECF No. 21 at 5–7.) FedEx initially did not respond to Cell Deal’s arguments in its opposition to Cell Deal’s motion, instead insisting that the Court should focus on the limited damages available to Cell Deal. (Def. Opp., ECF No. 24 at 16.) In reply papers related to its motion, FedEx finally asserts that Cell Deal failed to establish a prima facie case of Carmack Amendment liability because: (1) the amount of damages is contested and (2) Cell Deal offers only inadmissible evidence regarding the shipment’s condition before or after delivery. (Def. Reply, ECF No. 22 at 11–15.) For the reasons set forth below, the Court agrees that genuine issues of material fact remain regarding the amount of damages.⁹

“The liability imposed under [the Carmack Amendment] is for the actual loss or injury to the property caused” by a carrier. 49 U.S.C. § 14706(a)(1). “While it is true that damages under the Carmack Amendment should generally be based on the fair market value, [the Second Circuit has] held that it need not be applied if ‘circumstances suggest a more appropriate alternative.’ ” Project Hope, 250 F.3d at 77 (citing Contempo Metal Furniture Co. v. East Tex. Motor Freight Lines Inc., 661 F.2d 761, 764 (9th Cir. 1981) and quoting Thyssen, Inc. v. S/S Eurounity, 21 F.3d 533, 540 (2d Cir. 1994)). “For instance, the Second Circuit has approved the award of repair or replacement costs as an alternative measure of damages in the absence of an open market from which a fair market value could be set …. The Carmack Amendment also permits recovery of lost profits unless they are speculative.” Ensign Yachts, Inc. v. Arrigoni, No. 3:09-CV-209 VLB, 2011 WL 3351969, at *8 (D. Conn. Aug. 3, 2011) (citing Project Hope, 250 F.3d at 77 and Camar Corp. v. Preston Trucking Co., Inc., 221 F.3d 271, 277 (1st Cir. 2000)).

Here, the record reflects that Cell Deal’s position on the value of the cargo has changed over time such that summary judgment is not appropriate. At the time of the delivery, Del Express filed a claim with FedEx on Cell Deal’s behalf, declaring a total loss of $12,796.50 for four missing boxes. (Def. 56.1 Stmt., ECF No. 20-1 ¶¶ 22–23; Pl. 56.1 Resp., ECF No. 21-2 ¶¶ 21–22.) According to Cell Deal, eight of the total 27 boxes on the pallet were damaged or missing, but Cell Deal filed a claim with FedEx for the missing boxes only. (Def. 56.1 Stmt., ECF No. 20-1 ¶ 23; Pl. 56.1 Resp., ECF No. 21-2 ¶¶ 21, 23.) In the state court complaint filed in January 2021, Cell Deal alleged that the total amount of damages was $140,866—specifically, $115,866 for the cost of the cellphones and “at least” $25,000 for lost profits. (Notice of Removal Ex. A., ECF No. 1-2 at 6–7 ¶¶ 9, 13, 18, 20 (Verified Complaint).) After the case was removed to federal court, Cell Deal alleged damages of $109,651 for “damaged” and “missing” freight. (Am. Compl., ECF No. 8 ¶¶ 21, 23–24.) In discovery, Cell Deal claimed damages “pursuant to the damaged pallet and stolen/missing boxes in the sum of $109,000.” (Jones Decl. Ex. A., ECF No. 20-3 at 5–6 (response to Interrog. No. 2 referring to “Exhibit B” for an itemized breakdown).)¹⁰ Cell Deal now returns to its claim for total damages in the amount of $109,651, based on the amounts it paid to AT&T to purchase the cellphones.¹¹ (Def. 56.1 Stmt., ECF No. 20-1 ¶ 24; Alhob Decl. Ex. B, ECF No. 23-5 at 2–3 (AT&T invoice).) Construing these facts in the light most favorable to FedEx, a reasonable jury could find that Cell Deal’s damages were between $12,796.50 and $115,866 based on their assessment of Cell Deal’s proffered evidence, which is an appropriate role for the factfinder. See Great Am. Ins. Co. of New York v. TA Operating Corp., No. 06-CV-13230 (WHP), 2008 WL 5335317, at *8 (S.D.N.Y. Dec. 8, 2008) (holding that jury must determine whether shipper suffered lost profits).

*6 Based on the foregoing, the Court respectfully recommends that Cell Deal’s motion for summary judgment should be denied.

B. Limit on Carrier Liability

Even assuming that Cell Deal had met its prima facie burden, summary judgment is not warranted because genuine issues of material fact remain regarding whether FedEx validly limited its liability.

A motor carrier may limit its 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 surrounding the transportation.” 49 U.S.C. § 14706(c)(1)(A). “[W]here a carrier attempts to limit a shipper’s recovery under the Carmack Amendment by invoking a limitation of liability provision contained in an agreement between the parties, courts apply federal common law to determine the validity of that limitation.” Royal & Sun All. Ins., PLC v. E.C.M. Transp., Inc., No. 14-CIV-3770 (JFK), 2015 WL 5098119, at *3 (S.D.N.Y. Aug. 31, 2015) (citing Great Am. Ins. Co. of New York, 2008 WL 5335317, at *4).

“There are essentially two requirements of an enforceable limitation on liability under the Carmack Amendment: (1) ‘the limitation of liability was the result of a fair, open, just and reasonable agreement between carrier and shipper, entered into by the shipper for the purpose of obtaining the lower of two or more rates of charges proportioned to the amount or risk,’ and (2) ‘the shipper was given the option of higher recovery upon paying a higher rate.’ ” Stephenson Equip. v. ATS Specialized, Inc., No. 5:10-CV-1517 GTS/TWD, 2013 WL 4508444, at *7 (N.D.N.Y. Aug. 23, 2013) (quoting Shippers Nat’l Freight Claim Council, Inc. v. ICC, 712 F.2d 740, 746 (2d Cir. 1983)). “In evaluating whether these prerequisites are met, courts have considered such factors as: (1) whether the carrier has given adequate notice of the limitation of its liability to the shipper; (2) the economic stature and commercial sophistication of the parties; and (3) the availability of ‘spot’ insurance to cover a shipper’s exposure.” Gemnet Express, Inc. v. Fed. Express Corp., No. 06-CV-2648 (DF), 2009 WL 928299, at *5 (S.D.N.Y. Mar. 30, 2009) (citation omitted).

1. Del Express Agreement

FedEx first relies on the terms of the “Liability Notice” in the Del Express Agreement, which incorporates the FedEx Rules Tariff that limits FedEx’s liability for used and reconditioned goods to fifty cents per pound, or a total of $153 for the disputed shipment. (Def. Mem., ECF No. 20-7 at 15; Jones Decl., ECF No. 20-2 ¶¶ 7–10.) FedEx insists that Cell Deal agreed to the terms of the Del Express Agreement, including the FedEx Rules Tariff, by hiring Del Express as the broker for the shipment. (Def. Mem., ECF No. 20-7 at 12–13.) In its opposition, Cell Deal does not directly address these arguments, though Eddie Alhob, the president and owner of Cell Deal, concedes that Del Express and FedEx “handled the pricing” for shipments. (Pl. 56.1 Resp., ECF No. 21-2 ¶ 9.)

When courts uphold a carrier’s limitation of liability, the carrier has put forth credible evidence that: (1) the shipper was involved in negotiations of the agreement containing the limitation of liability and (2) the shipper was familiar with the carrier’s limitations. See, e.g., Design X Mfg., Inc. v. ABF Freight Sys., Inc., 584 F. Supp. 2d 464, 469–70 (D. Conn. 2008) (carrier’s summary judgment evidence included deposition testimony from shipper’s vice-president and affidavits regarding negotiations about the liability limitation); see also Royal & Sun All. Ins., 2015 WL 5098119, at *6 (carrier’s summary judgment evidence included shipper’s deposition testimony about negotiations leading to limitation of liability). In contrast, viewing the record here in the light most favorable to Cell Deal, it is not clear that the Del Express Agreement between Del Express and FedEx did or could provide adequate notice to Cell Deal about FedEx’s limitation of liability. See, e.g., Chubb Seguros, 2022 WL 1321401, at *2 (denying summary judgment because, inter alia, the record did not include specifics about negotiations or whether carrier’s private agreement with a third party was known to the shipper). It is undisputed that Cell Deal is not a party to the Del Express Agreement, which was negotiated between Del Express and FedEx. There is also no evidence in the record that Alhob or any other representative of Cell Deal received copies of the Del Express Agreement. According to Cell Deal, Del Express and FedEx “handled the pricing” for shipments, which suggests that Cell Deal was not familiar with and was not involved in negotiating the provisions of the Del Express Agreement, including the inclusion of the FedEx Rules Tariff. (Pl. 56.1 Resp., ECF No. 21-2 ¶ 9.) The Del Express Agreement does not include the terms of the FedEx Rules Tariff, which FedEx concedes is separately set forth on its public website. (See Jones Decl., ECF No. 20-2 ¶ 14.) Even if the terms were included, FedEx presents no evidence that the information was provided to Cell Deal before the disputed shipment.

*7 On this record, a reasonable jury could find that Cell Deal did not have notice of the FedEx Rules Tariff and its limitation of liability from the Del Express Agreement. Therefore, summary judgment is not proper on this ground.

2. Bill of Lading

FedEx also argues that the bill of lading for the disputed shipment limits its maximum liability for used goods because it incorporates by reference the NMFC 100 Series. (Def. Mem., ECF No. 20-7 at 15–21.) Specifically, “Item 172” of the NMFC 100 Series, titled “Limitation of Carrier Liability Where Value is Not Declared by Shipper,” limits carrier liability when a shipper fails to declare the value of the shipment but the carrier inadvertently accepts the shipment. (Jones Decl. Ex. C, ECF No. 20-5 at 4.) When this happens, Item 172 states that the provisions of “other tariffs” limit the carrier’s liability, and according to FedEx, the “other tariffs” include Item 420 of the FedEx Rules Tariff and the limitations of liability set forth therein. (Def. Mem., ECF No. 20-7 at 16–17.) FedEx further claims that Cell Deal is bound by the bill of lading because Del Express created the bill of lading as Cell Deal’s agent, even if Cell Deal did not understand references to “NMFC” or “tariffs.” (Id. at 15 & n.3.)

Admittedly, whether the limitations on FedEx’s liability were adequately communicated to Cell Deal in the bill of lading is a closer call. “A bill of lading ‘records that a carrier has received goods from the party that wishes to ship them, states the terms of carriage, and serves as evidence of the contract for carriage.’ ” Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 94 (2010) (quoting Norfolk Southern R. Co. v. James N. Kirby, 543 U.S. 14, 18–19 (2004)). If a sophisticated shipper directly prepares the bill of landing, it is usually treated as evidence that the limitation on liability was set forth in a “reasonably communicative form,” and therefore, binding on the shipper. See e.g., Design X Mfg., 584 F. Supp. 2d at 469 (granting summary judgment in favor of the carrier, in part due to evidence that the shipper prepared the bill of lading form.) The facts are distinguishable here because Del Express, not Cell Deal, completed the bill of lading on Cell Deal’s behalf. At the same time, it is reasonable to infer that Cell Deal provided the relevant information to Del Express regarding the shipment’s condition, weight, contents, and any requested special instructions such that Cell Deal should have been aware of any potential limitations on liability.

However, “ ‘[t]he conditions to be considered … [in assessing whether adequate notice of a limitation of liability has been provided to the shipper] include the customer’s familiarity with the contract of carriage, the time and incentive under the circumstances to study the provisions of the contract, and any other notice that the customer received outside of the contract.’ ” Stephenson Equip., 2013 WL 4508444, at *7 (quoting Gemnet Express, 2009 WL 928299, at *7). Here, there is nothing in the record to suggest that the bill of lading reasonably communicated FedEx’s limitation of lability directly to Cell Deal, not to Del Express. Like the Del Express Agreement, the bill of lading does not include the terms of the FedEx Rules Tariff or the website for the tariff’s terms and conditions. Instead, it states (in miniscule font), “Shipper hereby certifies that he is familiar with all the bill of lading terms and conditions in the governing classification NMFC 100 and the said terms and conditions are hereby agreed to by the shipper and accepted for himself and his assigns.” (Jones Decl. Ex. B, ECF No. 20-4 at 8.) The relevant provisions of the NMFC 100 Series are also not located on the bill of lading, and even if they were, they would not include Item 420 of the FedEx Rules Tariff containing FedEx’s limitation of liability. (See Jones Decl. Ex. C, ECF No. 20-5.) The only signature on the bill of lading appears to be that of a FedEx representative, not anyone from Cell Deal. Viewing these facts in favor of Cell Deal, a jury could reasonably infer that FedEx did not adequately provide notice to Cell Deal, via the bill of lading, about the limitations of liability.

*8 In similar cases addressing the enforceability of limited liability when an agent signed the bill of lading on behalf of the shipper, the court evaluated a number of factual circumstances to assess whether the shipper and agent engaged in prior dealings, whether the limited liability language was set forth “in a reasonably prominent writing” on the form, and whether the shipper received a copy of the shipping documents from the agent prior to shipment. See, e.g., Martino, S.A. v. Transgroup Express, 269 F. Supp. 2d 448, 450 (S.D.N.Y. 2003). Here, FedEx relies only on the existence of the bill of lading signed by Del Express to support its assertion that Cell Deal should be bound by the acts of its agent. FedEx has not offered any deposition testimony or other evidence, other than the provision in tiny font on the bill of lading, that the liability limitation was “reasonably communicat[ed]” to Cell Deal in the bill of lading.

For the foregoing reasons, FedEx has not established, as a matter of law, that the purported agreement to limit its liability was “the result of a fair, open, just, and reasonable agreement” with Cell Deal. Gemnet Express, 2009 WL 928299, at *8 (cleaned up). Therefore, the Court respectfully recommends denying FedEx’s motion for partial summary judgment limiting liability.

IV. CONCLUSION

Based on the foregoing, the Court respectfully recommends that the cross-motions for summary judgment at ECF Nos. 20 and 23 should be denied.

A copy of this Report and Recommendation is being served on all parties via ECF. Within 14 days of service, any party may serve and file specific written objections to this Report and Recommendation. 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b). Any requests for an extension of time to file objections shall be directed to Judge Gujarati. If a party fails to object timely to this Report and Recommendation, it waives any right to further judicial review of this decision. See Miller v. Brightstar Asia, Ltd., 43 F.4th 112, 120 (2d Cir. 2022).

SO ORDERED.

All Citations

Footnotes

1. All citations to documents filed on ECF are to the ECF document number (i.e., “ECF No. ___”) and pagination “___ of ___” in the ECF header unless otherwise noted.  
2. FedEx’s motion includes a memorandum of law (Def. Mem., ECF No. 20-7), Rule 56.1 statement of facts (Def. 56.1 Stmt., ECF No. 20-1), the declaration of Teresa Jones (Jones Decl., ECF No. 20-2) and its four exhibits (Jones Decl. Exs. A–D, ECF Nos. 20-3 through 20-6), and FedEx’s reply brief (Def. Reply, ECF No. 22). Cell Deal’s opposition papers include a memorandum of law (Pl. Opp., ECF No. 21), the declaration of Eddie Alhob (Alhob Decl., ECF No. 21-1), and Cell Deal’s responsive Rule 56.1 statement (Pl. 56.1 Resp., ECF No. 21-2).  
3. Cell Deal’s motion includes a memorandum of law (Pl. Mem., ECF No. 23-11), Rule 56.1 Statement of Facts (Pl. 56.1 Stmt., ECF No. 23-1), the declaration of Joshua Bronstein (Bronstein Decl., ECF No. 23-2) and its two exhibits (Bronstein Decl. Exs. F–G, ECF Nos. 23-9 through 23-10), the declaration of Eddie Alhob (Alhob Decl., ECF No. 23-3) and its five exhibits (Alhob Decl. Exs. A–E, ECF Nos. 23-4 through 23-8), the verification to the Amended Complaint (Pl. Verification, ECF No. 23-12), and Cell Deal’s reply brief (Pl. Reply, ECF No. 25). FedEx’s opposition papers include a memorandum of law (Def. Opp., ECF No. 24 at 8–29), the declaration of Matthew Attara (Attara Decl., ECF No. 24 at 6–7), and FedEx’s responsive Rule 56.1 statement (Def. 56.1 Resp., ECF No. 24 at 2–5).  
4. The Court has considered the facts set forth in the parties’ declarations and exhibits attached thereto, and the Rule 56.1 Statements of Facts and opposing 56.1 Statements. The Court must and will construe the facts in the light most favorable to the nonmoving party. See Capobianco v. City of New York, 422 F.3d 47, 50 n.1 (2d Cir. 2005). Unless otherwise noted, the parties consider the facts stated herein as undisputed or the opposing party has not proffered evidence in the record to dispute them.  
5. A “motor carrier” is defined as “a person providing motor vehicle transportation for compensation.” Ikegwuoha v. Art Vill. Gallery, No. 21-CV-6263 (JMF), 2023 WL 1868420, at *4 (S.D.N.Y. Feb. 9, 2023) (quoting 49 U.S.C. § 13102(14)). Cell Deal admits that FedEx is a motor carrier, but also contends that FedEx acted as a freight forwarder for the disputed shipment. (Pl. 56.1 Stmt., ECF No. 23-1 ¶ 3.)  
6. Notwithstanding the claim form that lists “Delexpress” as Claimant’s name, FedEx asserts that Cell Deal submitted this claim. (Def. 56.1 Stmt., ECF No. 20-1 ¶¶ 21–22.)  
7. FedEx refers to a letter it sent to Cell Deal stating that the freight charges remain unpaid (see Def. 56.1 Resp., ECF No. 24 at 3 ¶ 8), but the letter is not attached to either party’s motion papers.
8. Specifically, a defendant “is liable for damage to goods transported by it unless it can show that the damage was caused by (a) the act of God; (b) the public enemy; (c) the act of the shipper himself; (d) public authority; (e) or the inherent vice or nature of the goods.” Lewis Brass, 2014 WL 991726, at *3 (quoting Missouri Pac. R. Co. v. Elmore & Stahl, 377 U.S. 134, 137 (1964)).  
9. For this reason, the Court does not address the remaining elements of the prima facie case.
10. FedEx did not attach the exhibits to Cell Deal’s interrogatory responses to its motion papers, and Cell Deal did not proffer the interrogatory responses at all.  
11. In addition to the fluctuating damages amount, Cell Deal has not established as a matter of law that it is entitled to the AT&T invoice prices as the appropriate damages. “To recover market value, Plaintiff must show that it in fact suffered lost profits and that it could not mitigate damages by substitution of comparable goods from the market. If this showing is not made, the market value measure of damages may be discarded and other more accurate means resorted to.” Id. (quoting Levi Strauss & Co. v. Sea-Land, No. 00-CV-7585 (JSM), 2003 WL 21108311, at *1 (S.D.N.Y. May 15, 2003)). Cell Deal makes no such showing.  

End of Document

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

United States District Court, D. Colorado.

Audrey ZIERKE, Plaintiff,

v.

AMERICAN VAN LINES, INC. And Next Stop Moving and Storage, Defendants.

Civil Action No. 23-cv-00475-DDD-JPO

Signed February 16, 2024

Attorneys and Law Firms

Carissa V. Sears, The Sears Law Office, LLC, Denver, CO, for Plaintiff.

Emileigh S. Hubbard, Vic Houston Henry, Henry Oddo Austin & Fletcher PC, Denver, CO, for Defendants.

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Magistrate Judge James P. O’Hara

*1 This matter is before the Court on Defendants’ Motion to Dismiss Plaintiff’s Original Complaint (the “Motion”) [#9]. The Motion has been referred to this Court. [#16; #23] The Court has carefully considered the Motion and related briefing, the entire case file, and the applicable case law, and has determined that oral argument would not materially assist in the disposition of the Motion. For the following reasons, the Court respectfully RECOMMENDS that the Motion be GRANTED and that Plaintiff’s Complaint be DISMISSED WITHOUT PREJUDICE.

I. BACKGROUND¹

Plaintiff hired Defendant American Van Lines, Inc. (“American”) for her move from California to Colorado. [#6 at ¶ 21] American provided a pick-up window for the shipment of December 22 through December 24, 2022, with a delivery window of December 24, 2022 through January 3, 2023. [Id. at ¶ 22] American assured Plaintiff that they would provide a firm pick up date “a few days in advance.” [Id. at ¶¶ 22-23] When Plaintiff had not heard anything by December 22, she contacted American and was told they would call back the next day. [Id. at ¶ 25] On December 23, American called Plaintiff and informed her that they would not be picking up Plaintiff’s shipment, but would be sending their “sister company”—Defendant Next Stop Moving and Storage (“Next Stop”)—the next day. [Id. at ¶ 26]

*2 When Next Stop arrived, Plaintiff had to sign “new paperwork” that “doubl[ed] the price.”² [Id. at ¶ 27] Next Stop assured Plaintiff numerous times that the price would return to the original quote “once [American] had the property.” [Id.] When Plaintiff later reviewed the “new paperwork” more completely, she learned that many of the listed items were not items that she owned or possessed, but were fake entries. [Id. at ¶ 28]

Plaintiff did not receive her shipment by January 3, 2023—the end of the delivery window provided by American. [Id. at ¶ 29] Plaintiff’s partner contacted American on January 6, and was told that American did not know where Plaintiff’s shipment was. [Id. at ¶ 30] It “eventually became clear” to Plaintiff that American never picked up, received, transported, or otherwise handled Plaintiff’s shipment in any way. [Id. at ¶ 31] Next Stop refuses to deliver the shipment to Plaintiff. [Id. at ¶ 32]

Plaintiff, proceeding pro se,³ initiated this action against American and Next Stop on January 27, 2023 in Colorado state court. [#6] Plaintiff’s Complaint brings six claims asserted against both Defendants: Violation of the Colorado Consumer Protection Act (“CCPA”) [id. at ¶¶ 36-41]; Conspiracy to violate the Colorado Organized Crime Control Act (“COCCA”) [id. at ¶¶ 42-46]; Fraudulent Misrepresentation in Inducement to Contract [id. at ¶¶ 47-53]; Breach of Contract [id. at ¶¶ 54-60]; Unjust Enrichment [id. at ¶¶ 61-65]; and Breach of the Implied Covenant of Good Faith and Fair Dealing [id. at ¶¶ 66-70]. Defendants removed the matter on February 21, 2023 [#1], and filed the Motion to Dismiss on February 27, 2023 [#9]. Plaintiff has responded [#21], and Defendants have replied [#22].

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” In deciding a motion under Rule 12(b)(6), a court must “accept as true all well-pleaded factual allegations … and view these allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir. 2010) (alteration in original) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). Nonetheless, a plaintiff may not rely on mere labels or conclusions, “and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). Plausibility refers “to the scope of the allegations in a complaint: if they are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs ‘have not nudged their claims across the line from conceivable to plausible.’ ” Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (quoting Twombly, 550 U.S. at 570). “The burden is on the plaintiff to frame a ‘complaint with enough factual matter (taken as true) to suggest’ that he or she is entitled to relief.” Id. (quoting Twombly, 550 U.S. at 556). The ultimate duty of the court is to “determine whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007).

III. ANALYSIS

*3 Defendants argue that Plaintiff’s claims, which all arise under state law, are preempted by the Carmack Amendment to the Interstate Commerce Act. [#9 at 7-11] The Carmack Amendment imposes absolute liability on carriers for actual loss or injury to the property transported in the United States. 49 U.S.C. § 14706(a)(1). “The Courts of Appeals have … unanimously held that the Carmack Amendment preempts all state or common law remedies available to a shipper against a carrier for loss or damage to interstate shipments.” Certain Underwriters at Int. at Lloyds of London v. United Parcel Serv. of Am., Inc., 762 F.3d 332, 336 (3d Cir. 2014) (quotation omitted). “Courts of Appeals from the First, Second, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits have consistently held that the Carmack Amendment is the ‘exclusive cause of action for interstate-shipping contract [and tort] claims alleging loss or damage to property.’ ” Id. (quoting Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 688-90 (9th Cir. 2007)); see also Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1113 (10th Cir. 1989) (holding that “state common law remedies are preempted by the Carmack Amendment”).

As an initial matter, Plaintiff briefly argues that “[b]ased on the facts … pleaded in [the] Complaint, it is unclear whether American was acting as a transportation broker or a carrier.” [#21 at 5] Carmack Amendment liability attaches to carriers, but not brokers. See, e.g., Tryg Ins. v. C.H. Robinson Worldwide, Inc., 767 F. App’x 284, 285 (3d Cir. 2019) (“Under the Carmack Amendment …, a carrier is liable for damages incurred during a shipment of goods, whereas a broker … is not liable.”); Essex Ins. Co. v. Barrett Moving & Storage, Inc., 885 F.3d 1292, 1300 (11th Cir. 2018) (noting that the Carmack Amendment “does not apply to brokers”); Swenson v. All. Moving & Storage LLC, No. 21-CV-01968-CMA-STV, 2022 WL 1508506, at *6 (D. Colo. Apr. 26, 2022) (“Courts … have held that Carmack Amendment liability does not attach to brokers”), report and recommendation adopted, No. 21-CV-01968-CMA-STV, 2022 WL 1500778 (D. Colo. May 12, 2022); Delta Stone Prod. v. Xpertfreight, 304 F. Supp. 3d 1119, 1127 (D. Utah 2018) (“Because Carmack Amendment liability applies only to carriers, and since brokers are not carriers, brokers … are not liable for damage to property under the Carmack Amendment.” (collecting cases)). A “carrier” is defined as a “motor carrier, a water carrier, and a freight forwarder.” 49 U.S.C. § 13102(3). A “broker” is defined as “a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C. § 13102(2).

“[T]he key distinction [between a carrier and broker] is whether the disputed party accepted legal responsibility to transport the shipment.” Chillz Vending, LLC v. Greenwood Motor Lines, Inc., 23-cv-00065-PK, 2023 WL 7135152, at *3 (D. Utah Oct. 30, 2023) (quoting Essex Ins. Co., 885 F.3d at 1301); Swenson, 2022 WL 1508506, at *7. “[T]he question will depend on how the party held itself out to the world, the nature of the party’s communications and prior dealings with the shipper, and the parties’ understanding as to who would assume responsibility for the delivery of the shipment in question.” Chillz Vending, 2023 WL 7135152, at *3 (quoting Essex Ins. Co., 885 F.3d at 1302)); see also Ensco, Inc. v. Weicker Transfer & Storage Co., 689 F.2d 921, 925 (10th Cir. 1982) (finding under a previous version of the statute that a “carrier’s status as a common carrier [under the Carmack Amendment] is determined … by reference to what it holds itself out to be.”). “If an entity accepts responsibility for ensuring the delivery of goods, then that entity qualifies as a carrier regardless of whether it conducted the physical transportation.” Tryg Ins., 767 F. App’x at 287; see also id. at 286 (“[T]he definition of ‘carrier’ encompasses entities that perform services other than physical transportation.”).

*4 Here, Plaintiff plainly and singularly alleges that American held itself out as a carrier and accepted responsibility for ensuring the delivery of Plaintiff’s goods. According to the Complaint, American is a “[m]oving company” that assured its customers that it provided “accurate inventory of all items being moved” and “Dependable Long Distance Moving Services.” [#6 at ¶¶ 12, 17] Plaintiff “hired [American] for her move from California to Colorado,” and American “provided a pick up window for [Plaintiff’s] shipment.” [Id. at ¶¶ 21-22] Even when a different company arrived, Plaintiff was told that American would nevertheless receive the property at a later point. [Id. at ¶ 27] When Plaintiff’s shipment did not arrive on time, her partner contacted American. [Id. at ¶ 30] Plaintiff alleges that both Defendants are “holding Plaintiff’s cherished possessions hostage and demanding increased fees,” and that they have both “threatened to immediately commence proceedings to auction all of Plaintiff’s personal possessions.” [Id. at 1] Based on these allegations, Plaintiff brings the same claims against both American and Next Stop, with no differentiation between the two. [Id. at ¶¶ 36-70 (asserting claims against “Defendants,” or, occasionally, “Defendant” without identifying either American or Next Stop)] Indeed, Plaintiff’s theory appears to be that Next Stop is simply American “in the guise of a second alter ego company.” [Id. at ¶ 12] In sum, Plaintiff does not assert any claims against American as a broker, but only as a carrier.

The Court recognizes that the distinction between a “carrier” and a “broker” will often be a “case-specific” and fact intensive analysis that is “not appropriate for resolution on a motion to dismiss.” See Swenson, 2022 WL 1508506, at *7 (citing Essex Ins. Co., 885 F.3d at 1302). To clarify, the Court makes no finding as to American’s actual status as a carrier or as a broker in its dealings with Plaintiff. The Court simply finds that, in order to consider any claims against a defendant as a broker, a complaint must actually allege that the defendant is a broker and assert claims against that defendant as a broker. See Delta Stone Prod., 304 F. Supp. 3d at 1123, 1127 (finding that a plaintiff’s complaint only asserted claims against a defendant as a carrier, holding that the plaintiff’s breach of contract claim against that defendant was therefore preempted by the Carmack Amendment, and granting summary judgment to that defendant on the ground that the defendant was in fact a broker and the Carmack Amendment did not apply to it). Here, Plaintiff’s Complaint makes no allegation that American was a broker and asserts no claims against it as such,⁴ and any factual dispute regarding American’s actual status does not prevent the Carmack Amendment from preempting Plaintiff’s claims against American as a carrier.

Plaintiff also argues that “the Carmack Amendment’s preemption provisions do not apply to routine breach of contract claims,” and therefore her “contract claims” (Claims 4-6) are not preempted. [#21 at 5 (quotation omitted)] This is not the law.⁵ See, e.g., United Parcel Serv. of Am., Inc., 762 F.3d at 336 (“[S]tate law breach of contract and negligence claims against a carrier for loss of or damage to goods are preempted [by the Carmack Amendment].”) Hall, 476 F.3d at 688 (“[T]he Carmack Amendment completely preempts a contract claim alleging loss or damage to property.”); Sec. USA Servs., Inc. v. United Parcel Serv., Inc., 371 F. Supp. 3d 966, 971 (D.N.M. 2019) (“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.’ ” (quoting United Parcel Serv. of Am., Inc., 762 F.3d at 336)); Delta Stone Prod., 304 F. Supp. 3d at 1123 (“[The Carmack Amendment’s] broad preemption covers not only common law negligence claims, but also claims for breach of contract.” (quotation omitted)). Plaintiff’s contract claims—asserted against both Defendants as carriers—are therefore preempted by the Carmack Amendment.

*5 Plaintiff also makes a brief allusion to the idea that her claims alleging “intentional torts preceding shipment” may not be preempted by the Carmack Amendment. [#21 at 6; see also id. at 1] Plaintiff’s argument on this point is undeveloped, besides to simply point to a lack of authority from the Tenth Circuit on this issue, and is arguably waived. [See id. at 1, 6]; see also Crystal S. v. Kijakazi, No. 20-2425-JWL, 2021 WL 3089216, at *3 (D. Kan. July 22, 2021) (“Plaintiff’s failure to develop [an] argument has waived it.” (collecting cases)). In any event, the Court determines that, under binding Tenth Circuit precedent and pursuant to persuasive authority from other courts, Plaintiff’s claims seeking recovery under the Colorado Consumer Protection Act, under the Colorado Organized Crime Control Act, and for fraudulent misrepresentation in the inducement of a contract are preempted by the Carmack Amendment.

In A.T. Clayton & Co. v. Missouri-Kansas-Texas R. Co., the Tenth Circuit considered whether the Carmack Amendment preempted the application of an Oklahoma statute that provided attorney fees in actions brought for negligent or willful damage to property. 901 F.2d 833 (10th Cir. 1990). The Tenth Circuit explained that, in determining whether the statute was preempted, “the focus is on whether the state statute substantively enlarges the carrier’s responsibility for the loss.” Id. at 835. The Oklahoma statute at issue “simply provide[d] an incidental compensatory allowance for the expense of employing an attorney,” and therefore was “incidental to” the overall purpose of the Carmack Amendment. Id. In contrast, if a statute or state law provides “an alternative avenue of recovery” or “an additional remedy” against a carrier for damage or loss to shipped goods, then such claims are preempted. See id. at 834-35. As recently explained by a District Court in this Circuit, “the analytic focus is on the effect the state law claim has on the scope of the carrier’s liability for property that has been lost or damaged during an interstate shipment.” Shemes v. U.S. Moving Serv. LLC, No. 23-cv-02084-HLT-TJJ, 2023 WL 6390524, at *6 (D. Kan. Oct. 2, 2023).

Courts in this Circuit have applied this principle to hold that fraud and consumer protection claims brought against carriers are preempted when they seek to recover for lost or damaged goods. See id.; Pickett v. Graebel Kansas City Movers Inc., No. 17-2021-JAR-JPO, 2017 WL 2264451, at *3 (D. Kan. May 24, 2017) (finding that a claim under the Kansas Consumer Protection Act seeking relief against a carrier on account of missing and damaged goods was preempted by the Carmack Amendment because such a claim would “provide[ ] an alternative avenue of recovery for goods that were lost or damaged in interstate commerce”); Suarez v. United Van Lines, Inc., 791 F. Supp. 815, 817 (D. Colo. 1992) (finding that a plaintiff’s deceptive trade practices and intentional or negligent misrepresentation claims against a carrier were preempted and explaining that “the purposes of the Carmack Amendment and the [Colorado] Deceptive Trade Practices Act are in conflict where deceptive trade remedies provide for more than actual loss” (citing A.T. Clayton, 901 F.2d at 835)). Courts outside of this Circuit have come to the same conclusion. See, e.g., Smith v. United Parcel Serv., 296 F.3d 1244, 1247 (11th Cir. 2002) (finding that the Carmack Amendment preempted the plaintiffs’ fraud claims because the Carmack Amendment “embraces all losses resulting from any failure to discharge a carrier’s duty as to any part of the agreed transportation” (quotation omitted) (collecting cases)); Hayes v. Stevens Van Lines, Inc., No. 14-cv-982-O, 2015 WL 11023794, at *2-3 (N.D. Tex. Jan. 27, 2015) (finding that the Carmack Amendment preempted the plaintiffs’ claims alleging that a carrier’s pre-contract misrepresentations fraudulently induced the plaintiffs to enter into an agreement because the claims “involve damages to goods arising from the interstate transportation of those goods by a common carrier”); Visram v. Darryl Flood Warehouse & Movers, Inc., No. CIV.A. H-05-0469, 2006 WL 305802, at *1-2 (S.D. Tex. Feb. 8, 2006) (finding that the Carmack Amendment preempted the plaintiffs’ fraudulent inducement and intentional misrepresentation claims arising out of the carrier’s pre-contract representations because the claims pertained to the plaintiffs’ agreement to ship goods in interstate commerce (collecting cases)).

*6 Shemes is instructive. There, as here, the plaintiffs alleged that they had a moving agreement with one company, but at the last minute were informed that a second company would be handling the move. Shemes, 2023 WL 6390524, at *1-2. The second company then demanded additional payment before it would load the plaintiffs’ items. Id. at *2. The plaintiffs made the additional payment, as well as a further “last minute” payment demanded before delivery. Id. The plaintiffs then discovered that a substantial amount of their goods had been damaged or lost. Id. The plaintiffs sued, asserting various state law claims—including fraud and consumer protection claims. Id. at *2, 6. The court determined that these claims asserted against the carrier were preempted by the Carmack Amendment. Id. at *6 (collecting cases). This was because the fraud and consumer protection claims were “directed at whether [the carrier] ultimately provided transportation services consistent with its representations, and the relief [the plaintiffs] seek is tied directly to property they allege was either lost or damaged in connection with the move.” Id. The court reached this conclusion despite the plaintiffs’ argument that the agreement between the plaintiffs and the carrier was “secured fraudulently and under duress,” indicating that “neither situation undermines the preemptive effect of the Carmack Amendment on these claims.” Id. at *6; see also id. at *6 n.12 (further explaining that “theories of recovery pertaining to how the agreement to ship was entered into … all relate to the contract of shipment” (quotation omitted)).

The same analysis applies here. As in Shemes, Plaintiff’s claims are all “directed at whether [the Defendants] ultimately provided transportation services consistent with [their] representations.” Id. at *6; [see #6 at ¶¶ 19-20 (describing the Defendants’ “deceptive business practices” as “baiting customers with low quotes to get deposits, forcing customers to use their selected third-party subcontractors, multiplying the costs on arrival with customers under duress, holding possessions hostage for increased fees, and not compensating for broken and missing items”) The relief that Plaintiff seeks is similarly “tied directly to property [she] allege[s] was … lost … in connection with the move.” Shemes, 2023 WL 6390524, at *6; [see #6 at ¶ 32 (describing Plaintiff’s injury as the “depriv[ation] of the use of essentially all of her belongings”)] The Carmack Amendment guarantees that a carrier’s liability for lost or damaged goods is limited to actual loss or injury to the transported property. Suarez, 791 F. Supp. at 816. The fact that some of the allegedly wrongful conduct occurred prior to the shipment of the goods does not “undermine[ ] the preemptive effect of the Carmack Amendment on these claims.” Shemes, 2023 WL 6390524, at *6 & n.12. Accordingly, the Court finds that all of Plaintiff’s claims, as alleged, are preempted by the Carmack Amendment and should be dismissed.

Defendants also argue that Plaintiff’s claims against Next Stop should be dismissed because Next Stop was simply the agent of its disclosed principal, American. [#9 at 3-7] Defendants argue that, under both Colorado and Federal law, American is responsible for Next Stop’s acts and Next Stop cannot have liability. [Id.] This argument relies heavily on exhibits attached to the Motion, which, as explained above, the Court declines to consider. See supra note 1. Moreover, the Court has already found that Plaintiff’s claims—all brought under state law—should be dismissed because they are preempted by the Carmack Amendment. The Complaint does not bring any claims under Federal law. [See generally #6] The Court therefore declines to consider Next Stop’s theoretical liability under an unpled claim.

In sum, the Court finds that the Carmack Amendment preempts all of Plaintiff’s claims as alleged. The Court therefore respectfully RECOMMENDS that the Motion be GRANTED to the extent that it seeks dismissal of Plaintiff’s claims on preemption grounds, and that the claims in Plaintiff’s Complaint [#6] be DISMISSED WITHOUT PREJUDICE.⁶ See Oxendine v. Kaplan, 241 F.3d 1272, 1275 (10th Cir. 2001) (holding that when the plaintiff is proceeding pro se, dismissal with prejudice is only appropriate “where it is obvious that the plaintiff cannot prevail on the facts he has alleged and it would be futile to give him an opportunity to amend” (quotation omitted)); Reynoldson v. Shillinger, 907 F.2d 124, 127 (10th Cir. 1990) (holding prejudice should not attach to dismissal when plaintiff has made allegations “which, upon further investigation and development, could raise substantial issues”).

IV. CONCLUSION

*7 For the foregoing reasons, the Court respectfully RECOMMENDS that:

(1) Defendants’ Motion to Dismiss Plaintiff’s Original Complaint [#9] be GRANTED to the extent that it seeks dismissal of Plaintiff’s claims on preemption grounds;

(2) Plaintiff’s Complaint [#6] be DISMISSED WITHOUT PREJUDICE; and

(3) If this Recommendation is adopted, Plaintiff be given 21 days to file an Amended Complaint that addresses the deficiencies identified by this Recommendation.⁷

All Citations

Footnotes

1. The facts are drawn from the allegations in Plaintiff’s Complaint (the “Complaint”) [#6], which must be taken as true when considering the Motion. See Wilson v. Montano, 715 F.3d 847, 850 n.1 (10th Cir. 2013) (citing Brown v. Montoya, 662 F.3d 1152, 1162 (10th Cir. 2011)). The Court does not consider any additional factual allegations raised by Plaintiff her response brief. See In re Qwest Commc’ns Int’l, Inc., 396 F. Supp. 2d 1178, 1203 (D. Colo. 2004) (disregarding additional factual claims asserted in briefing on a motion to dismiss, explaining that “plaintiffs may not effectively amend their Complaint by alleging new facts in their response to a motion to dismiss”). Defendants also attach exhibits to the Motion for the Court’s consideration. [#9-1; #9-2] The Court declines to consider the contents of Defendants’ exhibits. “As a general rule, the only facts [a court] consider[s] in assessing the sufficiency of a complaint are those alleged in the complaint itself.” Emps.’ Ret. Sys. v. Williams Cos., Inc., 889 F.3d 1153, 1158 (10th Cir. 2018) (citing Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010)). However, a court “may consider ‘documents that the complaint incorporates by reference,’ ‘documents referred to in the complaint if the documents are central to the plaintiff’s claim and the parties do not dispute the documents’ authenticity,’ and ‘matters of which a court may take judicial notice.’ ” Id. (quoting Gee, 627 F.3d at 1186). Here, the Complaint makes two brief references to “new paperwork” provided to Plaintiff, but does not refer to any other document. [#6 at ¶¶ 27-28] The references to the “new paperwork” contain few details. [Id.] These vague references do not incorporate the specific documents attached by Defendants, and the Court is not convinced that the Complaint’s passing references make the “new paperwork” central to any of Plaintiff’s claims—let alone that the documents attached as exhibits are actually the “new paperwork” that the Complaint briefly refers to.  
2. The Complaint references an “original quote,” which the Court assumes contained a lower price provided by American to Plaintiff at some point prior to December 23, 2022. [See #6 at ¶ 27]  
3. The Complaint notes that Plaintiff received “[d]rafting assistance” from Attorney Carissa V. Sears. [#6 at 1 n.1] Attorney Sears has since entered her appearance on Plaintiff’s behalf. [#18]  
4. To be sure, Plaintiff does allege that American did not “pick up, receive[ ], transport[ ], or otherwise handle[ ]” her shipment. [#6 at ¶ 31] But what matters for this inquiry is legal responsibility, not physical transportation. Tryg Ins., 767 F. App’x at 286-87; Chillz Vending, 2023 WL 7135152, at *3. Accordingly, Plaintiff’s allegation that American did not conduct the physical transportation of Plaintiff’s goods does not suffice to state a claim against American as a broker—especially when Plaintiff’s claims are asserted without differentiation against “the Defendants” collectively.  
5. Plaintiff’s only support for the proposition that contract claims fall outside of the scope of Carmack Amendment preemption is a mis-citation to Swenson. [#21 at 1, 5] In Swenson, the Court was explicitly considering preemption by Section 14501(c)(1) of the Federal Aviation Administration Authorization Act of 1994 (the “FAAAA”)—not preemption by the Carmack Amendment as Plaintiff asserts. Swenson, 2022 WL 1508506, at *21 (explaining that “the FAAAA’s preemption provisions do not apply to ‘routine breach-of-contract claims’ ” (emphasis added)).  
6. Defendants request dismissal with prejudice. [See #9 at 1] Plaintiff, who filed her Complaint pro se, is now represented by counsel. [#18] The Court finds it especially appropriate to permit the filing of an amended complaint under such circumstances, particularly when both parties appear to agree that the allegations in Plaintiff’s Complaint may give rise to a viable claim under the Carmack Amendment. [See #9 at 2; #21 at 7] And, as discussed above, this Recommendation does not address the viability of any claims asserted against American as a broker, because no such claims were brought in the Complaint.  
7. Within fourteen days after service of a copy of this Recommendation, any party may serve and file written objections to the magistrate judge’s proposed findings of fact, legal conclusions, and recommendations with the Clerk of the United States District Court for the District of Colorado. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); Griego v. Padilla (In re Griego), 64 F.3d 580, 583 (10th Cir. 1995). A general objection that does not put the district court on notice of the basis for the objection will not preserve the objection for de novo review. “[A] party’s objections to the magistrate judge’s report and recommendation must be both timely and specific to preserve an issue for de novo review by the district court or for appellate review.” United States v. 2121 East 30th Street, 73 F.3d 1057, 1060 (10th Cir. 1996). Failure to make timely objections may bar de novo review by the district judge of the magistrate judge’s proposed findings of fact, legal conclusions, and recommendations and will result in a waiver of the right to appeal from a judgment of the district court based on the proposed findings of fact, legal conclusions, and recommendations of the magistrate judge. See Vega v. Suthers, 195 F.3d 573, 579-80 (10th Cir. 1999) (holding that the district court’s decision to review magistrate judge’s recommendation de novo despite lack of an objection does not preclude application of “firm waiver rule”); Int’l Surplus Lines Ins. Co. v. Wyo. Coal Refining Sys., Inc., 52 F.3d 901, 904 (10th Cir. 1995) (finding that cross-claimant waived right to appeal certain portions of magistrate judge’s order by failing to object to those portions); Ayala v. United States, 980 F.2d 1342, 1352 (10th Cir. 1992) (finding that plaintiffs waived their right to appeal the magistrate judge’s ruling by failing to file objections). But see, Morales-Fernandez v. INS, 418 F.3d 1116, 1122 (10th Cir. 2005) (holding that firm waiver rule does not apply when the interests of justice require review).  

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