Bits & Pieces

Inter “K” N.V. v. UPS Supply Chain Solutions, Inc.

 Court of Appeals of Arizona,

Division 2, Department A.

INTER “K” N.V., Plaintiff/Appellee,


UPS SUPPLY CHAIN SOLUTIONS, INC., a Delaware corporation, Defendant/Appellant.


No. 2 CA–CV 2011–0026.

Nov. 18, 2011.


Appeal from the Superior Court of Santa Cruz County; Cause No. CV05241; Honorable Stephen M. Desens, Judge. AFFIRMED.

Fennemore Craig, P.C. By GeorgeO. Krauja and Scott D. McDonald, Tucson, Attorneys for Plaintiff/Appellee.


Gaona Law Firm By DavidF. Gaona, Phoenix, and Countryman & McDaniel By Geoffrey Gill, Los Angeles, California, Attorneys for Defendant/Appellant.



ECKERSTROM, Presiding Judge.

*1 ¶ 1 Appellant UPS Supply Chain Solutions, Inc. (UPS), appeals from the trial court’s grant of summary judgment in favor of appellee Inter “K” N.V. (Inter K), a foreign corporation. UPS argues the court erred in granting summary judgment on the issues of liability and damages for breach of a bailment contract. For the following reasons, we affirm the judgment.


Factual and Procedural Background

¶ 2 We view the facts and the inferences to be drawn from them in the light most favorable to the party opposing summary judgment. Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, ¶ 13, 38 P.3d 12, 20 (2002). Inter K purchased 450 cases of cigarettes in the Philippines in 2003 and arranged for them to be shipped to the United States. Upon the arrival of the cigarettes in Los Angeles, United States Customs and Border Protection officials seized the cigarettes and stored them in a warehouse pending the government’s forfeiture action. After Inter K reached a settlement with Customs, the cigarettes were released to Inter K on the condition the cigarettes would be sold for export only.


¶ 3 Inter K entered into a contract with Alfredo Puchi FN1 whereby Puchi would purchase the cigarettes to be sold for export only. As part of the sale, Inter K agreed to have the cigarettes transported to UPS’s warehouse in a Free Trade Zone (FTZ) in Nogales, Arizona. Puchi was to pay $166,920 total for the 450 cases of cigarettes.


FN1. Alfredo Puchi is the owner of G. Puchi Wholesale Foods Corp. We refer to them collectively throughout this decision as “Puchi.”


¶ 4 Inter K’s customhouse broker prepared a customs form, CF 7512, to allow the goods to be moved from the Customs warehouse in Los Angeles. The form states the goods are consigned to “Inter ‘K’ c/o FTZ # 60.” Upon the arrival of the cigarettes in Nogales, UPS prepared a “Warehouse Verification In & Out Freight” form identifying Inter K as the customer.


¶ 5 Before the cigarettes arrived at the FTZ, Puchi began contacting UPS’s customer service representative, Esperanza Alcantar, about admitting the cigarettes into the FTZ. After they arrived, he had numerous conversations with Alcantar, and he instructed his customhouse broker, David Partida, to arrange with UPS to have the cigarettes transferred to Puchi’s warehouse. Partida sent UPS a Customs Form 7501 and letter requesting release of the cigarettes as documentation to withdraw the cigarettes from the FTZ, and UPS released them to Partida. This transfer was accomplished without Inter K’s authorization or approval. Puchi began selling the cigarettes from his duty-free store in Nogales but did not pay Inter K the contract price for the cigarettes. Rather, Puchi paid Inter K only $10,000.


¶ 6 In July 2005, Inter K filed a complaint against Puchi and UPS. In its sole claim against UPS, Inter K asserted UPS had “agreed to act as bailee for Inter K’s goods when it accepted custody of the cigarettes and made a zone entry” and that it had breached the bailment contract by releasing the cigarettes to Puchi without Inter K’s authorization.FN2 After years of litigation involving Inter K, Puchi, and other persons not parties to this appeal, Inter K moved for partial summary judgment against UPS on the issue of liability. After the trial court granted that motion, Inter K then moved for “final summary judgment” against UPS on the issue of damages in March 2010. The trial court again granted summary judgment in favor of Inter K and entered a final judgment pursuant to Rule 54(b), Ariz. R. Civ. P., in which Inter K also was awarded attorney fees in the amount of $66,934.FN3 This appeal followed.


FN2. A bailment is created when “personal property is delivered to one party by another in trust for a specific purpose, with the express or implied agreement that the property will be returned or accounted for when the purpose is accomplished.” Nava v. Truly Nolen Exterminating of Houston, Inc., 140 Ariz. 497, 500, 683 P.2d 296, 299 (App.1984). Under former A.R.S. § 47–7102(A)(1), the Uniform Commercial Code provision applicable to this case, a “[b]ailee” is a “person who by a warehouse receipt, bill of lading or other document of title acknowledges possession of goods and contracts to deliver them.” 1984 Ariz. Sess. Laws, ch. 77, § 3.


FN3. Inter K also was awarded judgment in its favor against Puchi in a separate decision not part of this appeal, and UPS was ordered to pay “taxable costs of $5,366.15, which … shall be a joint and several liability with [Puchi].”



*2 ¶ 7 UPS contends the trial court erred in granting summary judgment in Inter K’s favor on both liability and damages. We review de novo the trial court’s grant of summary judgment. Eller Media Co. v. City of Tucson, 198 Ariz. 127, ¶ 4, 7 P.3d 136, 139 (App.2000). A party is entitled to summary judgment only when there is no genuine issue of disputed material fact and the moving party is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(c); Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990).


¶ 8 In granting judgment in favor of Inter K, the trial court relied in part on former A.R.S. § 47–7204(A), which provided, “A warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful person would exercise under like circumstances….” FN4 1984 Ariz. Sess. Laws, ch. 77, § 3. UPS asserts that the trial court erred in granting summary judgment in Inter K’s favor because whether UPS exercised reasonable care in releasing the goods to Puchi was a question of fact for the jury.


FN4. The Uniform Commercial Code, which is now codified as A.R.S. §§ 47–1101 through 47–10101, underwent substantial amendments in 2003, which were adopted by Arizona in 2006. See 2006 Ariz. Sess. Laws, ch. 53, §§ 5–50; 2C U.L.A. 16 (Supp.2008). Because the versions in effect before the amendments are applicable to this case, we cite the former versions of the statutes.


¶ 9 But Inter K has alleged and argues on appeal that UPS breached the bailment contract by its misdelivery to Puchi.FN5 Such misdelivery cases are not governed by the negligence standard of former § 47–7204. See Turner v. Scobey Moving & Storage Co., 515 S.W.2d 253, 254–55 (Tex.1974) (finding identical provision to former § 47–7204 under Texas law inapplicable to controversy over misdelivery because “loss of or injury to the goods” covers “loss by fire or theft or like causes,” not unauthorized delivery of goods); FN6 U.C.C. § 7–403 cmt. 1 (superseded 2003), 2C U.L.A. 385 (2005) (stating that “misdelivery” has been purposefully omitted from list of lawful excuses for failure to deliver under document of title); cf. Lerner v. Brettschneider, 123 Ariz. 152, 154–55, 598 P.2d 515, 517–18 (App.1979) (acknowledging “[m]isdelivery constitutes wrongful exercise of control” to support conversion claim, not negligence claim). Rather, pursuant to former A.R.S. § 47–7403, a bailee must deliver goods in its possession “to a person entitled under the document” of title unless the bailee establishes a lawful excuse for its failure to deliver.FN7 1984 Ariz. Sess. Laws, ch. 77, § 3. This statute is based on the general principle that warehousemen who misdeliver goods are absolutely liable for the value of those goods. See generally Utica Nat’l Bank & Trust Co. v. Happy Wheat Growers, Inc., 558 F.2d 279, 282 (5th Cir.1977) (warehouseman’s absolute liability for misdelivered goods not excused by lack of causation or exercise of due care); Quinto v. Millwood Forest Prods., Inc., 938 P.2d 189, 192 (Idaho Ct.App.1997) (“[A] delivery of bailed property by a bailee to one not authorized by the bailor to receive it is a conversion or a breach of the bailment contract for which the law imposes liability on the bailee irrespective of negligence.”).


FN5. Misdelivery is “[d]elivery not according to contractual specifications; esp. delivery to the wrong person.” Black’s Law Dictionary 1089 (9th ed.2009).


FN6. To the extent UPS has alleged it lost the cigarettes due to Puchi’s theft, and thus, negligence principles apply, this is a new argument on appeal. Therefore, we do not address it.


FN7. The parties consistently have asserted this misdelivery claim is governed by the U.C.C., and, thus, we need not decide whether a common law breach of bailment claim exists independently of the U.C.C.


*3 ¶ 10 The trial court found that form CF 7512, which had been prepared by Inter K’s customhouse broker, “is the relevant document of title,” and, thus, because that form listed Inter K as the consignee, UPS was “in breach of the bailment contract as a matter of law” when it delivered the goods to Puchi without Inter K’s authorization. While acknowledging that form CF 7512 lists the consignee as Inter K, UPS contends a material issue of fact remains because other documents prepared by Inter K, such as an invoice and a “pickup order,” failed to “unequivocally name Inter K as owner of the goods” but, rather, created a reasonable inference that Puchi had “a controlling interest in the cigarettes, if not outright ownership.” A “[d]ocument of title” can be a


bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers.


1999 Ariz. Sess. Laws, ch. 203, § 13 (former A.R.S. § 47–1201(15)). Further, “[t]o be a document of title a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee’s possession which are either identified or are fungible portions of an identified mass.” Id.


¶ 11 Here, the trial court correctly found form CF 7512 is a “document of title.” Although the document does not fit within one of the specific types listed in the statute such as a bill of lading or warehouse receipt, the CF 7512 qualifies as “any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers.” 1999 Ariz. Sess. Laws, ch. 203, § 13 (former § 47–1201(15)). FN8 The CF 7512 is a standardized Customs document used to “facilitate the entry of goods into the United States and the goods’ subsequent transportation.” NYC Apparel FZE v. U.S. Customs & Border Prot., 484 F.Supp.2d 77, 89 (D.D.C.2007). Puchi’s broker, Partida, testified that the form is “an in-transit document” that “allows merchandise to go from one warehouse to another” while under the supervision of Customs. The form arrived at UPS’s warehouse with the cigarettes, and it describes the consignee as “Inter ‘K’ [care of]” UPS’s warehouse at UPS’s physical address.


FN8. Inter K relies on the current version of A.R.S. § 47–1201(B)(16)(b), which was amended in 2006 to include “transport document [s]” among those specifically enumerated as documents of title. See 2006 Ariz. Sess. Laws, ch. 53, § 5. However, we apply the version of the statute in effect at the time of the breach. Cf. Tarrant Cnty. Hosp. Dist. v. GE Automation Servs., Inc., 156 S.W.3d 885, 891 (Tex.App.2005) (noting rule without discussion).


¶ 12 Partida testified by deposition that entities often consign goods to themselves in the manner Inter K used here, and Inter K’s attorney stated in his affidavit that he intentionally consigned the goods to Inter K to clarify Inter K’s ownership of them until Puchi had paid. By showing Inter K as the consignee, the form was clear as to the entity entitled to the goods. See 1984 Ariz. Sess. Laws, ch. 77, § 3 (former A.R.S. § 47–7102(A)(2), defining consignee as “person named in a bill to whom or to whose order the bill promises delivery” and former § 47–7403(D), defining “person entitled under the document” of title in relevant part as “person to whom delivery is to be made by the terms of or pursuant to written instructions”). Therefore, the trial court correctly concluded Inter K was entitled to judgment as a matter of law because the CF 7512 was a document of title, and we uphold the determination that UPS is liable to Inter K under former § 47–7403 for failing to deliver the goods pursuant to the terms of that document.


*4 ¶ 13 UPS argues that even if it is liable, the trial court erred in granting summary judgment on the issue of damages because it “properly has limited its liability to $50.00.” Specifically, UPS emphasizes that Inter K’s customhouse broker required Inter K to sign a Customs Power of Attorney, which provides that “[t]hird parties to whom the goods are entrusted may limit liability for loss or damage,” and that UPS expressly had adopted the industry standard of limiting liability for loss or damage to $50 as evidenced by their standard Terms and Conditions of Service, which document is readily available for review on their website. But limitations on liability in a bailment contract must be specifically agreed to by the parties. See Lerner, 123 Ariz. at 155, 598 P.2d at 518; cf. Grain Dealers Nat’l Fire Ins. Co. v. Union Co., 111 N.E.2d 256, 261 (Ohio 1953) (warehouse receipt limiting liability must be presented to bailor at commencement of bailment to have binding effect). And UPS concedes that neither Inter K’s customhouse broker nor anyone else from Inter K ever signed the document setting forth UPS’s terms and conditions of service.


¶ 14 Nonetheless, UPS contends, relying on Norfolk Southern Railway v. Kirby, 543 U.S. 14 (2004), that “an intermediary may effectively bind the owner of goods to a third party’s limitation.” Kirby is distinguishable on several grounds. There, the owner of goods expressly had agreed to a limitation-of-liability provision with the general contractor and a provision extending the limitation of liability to claims “made against any servant, agent or other person (including any independent contractor) whose services have been used in order to perform the contract.” Id. at 30. Here, Inter K did not expressly agree to any limitation of liability; rather, the term in the contract between Inter K and its customhouse broker was simply that “[t]hird parties to whom the goods are entrusted may limit liability for loss or damage.” This clause is insufficient to bind Inter K to UPS’s specific limitation of liability under the principles set forth in Kirby.


¶ 15 In the alternative, UPS contends Puchi, who did sign the document, was acting as an agent for Inter K in doing so. UPS relies on the law of apparent authority, which involves “conduct of a principal that allows a third party reasonably to conclude that an agent is authorized to make certain representations or act in a particular way.” Miller v. Mason–McDuffie Co. of S. Cal., 153 Ariz. 585, 589, 739 P.2d 806, 810 (1987). But an agency relationship is a fiduciary relationship in which the agent acts on the principal’s behalf. Restatement (Third) of Agency § 1.01 (2006); accord Queiroz v. Harvey, 220 Ariz. 273, ¶ 8, 205 P.3d 1120, 1122 (2009). Thus, Puchi, the opposing party to Inter K in an arms-length transaction, hardly could be considered an agent of Inter K. And Inter K did nothing that would have allowed UPS reasonably to conclude that Puchi was authorized to act on Inter K’s behalf. The trial court did not err in concluding the $50 limitation clause does not apply to this action.


*5 ¶ 16 UPS next argues that even if its liability is not limited, the appropriate measure of damages is a jury question. Yet UPS mischaracterizes this action as an action based on UPS’s “ ‘negligence in caring for the property,’ “ for which “ ‘the bailor is entitled to be compensated for all losses that are the natural consequence and proximate result of the bailee’s tortious act.’ “ 8A Am.Jur.2d Bailments § 250 (2011). Inter K, too, erroneously relies on authority allowing for the recovery of the market value under the U.C.C. equivalent to former A.R.S. § 47–7204, a statute inapplicable to this misdelivery case.FN9 See 1984 Ariz. Sess. Laws, ch. 77, § 3; see also 7 Hawkland U.C.C. Series § 7–204:6 (2011) (“If the goods are completely destroyed or lost, the market value of the goods may be an appropriate measure of damages.”).


FN9. The trial court also based its decision about damages on a finding that UPS was liable under former § 47–7204. See 1984 Ariz. Sess. Laws, ch. 77, § 3.


¶ 17 Neither party has provided the standard for measuring damages in a misdelivery case where the goods were neither destroyed nor lost. In general, however, the measure of damages in a bailment action for conversion is the fair market value of the property at the time of the conversion. See 8A Am.Jur.2d Bailments § 254. UPS argues that the evidence of the fair market value of the cigarettes is in dispute, relying solely on Puchi’s deposition testimony about the quality of the cigarettes. But the best evidence of fair market value is the value that a willing buyer and willing seller would pay pursuant to an arms-length transaction. See Boyce v. Soundview Tech. Grp., Inc., 464 F.3d 376, 387 (2d Cir.2006); Honeywell Info. Sys., Inc. v. Maricopa Cnty., 118 Ariz. 171, 174, 575 P.2d 801, 804 (App.1977). Here, at the time UPS released the cigarettes to Puchi, Puchi and Inter K had reached an agreement that Puchi would purchase the cigarettes for $166,920. Both Puchi and Inter K were experienced in the cigarette trade and presumably had taken into account the variables Puchi describes, such as the age and quality of the cigarettes, when reaching an agreement on the price. Thus, that price is the best evidence of fair market value, and there is no genuine issue of material fact about whether another amount would be more accurate.


¶ 18 UPS also argues the trial court erred when it found Inter K had no duty to mitigate its damages by repossessing the cigarettes from Puchi.FN10 Inter K and the court relied on Weiss v. Saffell, 82 Ariz. 316, 319–20, 313 P.2d 390, 393 (1957), a conditional sales contract case, in so concluding. Although Weiss does not address squarely whether a plaintiff in a misdelivery by conversion case has a duty to mitigate damages by repossessing the goods, the court’s conclusion that Inter K had no duty here is correct nonetheless. See Wash. State Bank v. Medalia Healthcare L.L.C., 984 P.2d 1041, 1045 (Wash.Ct.App.1999) (plaintiff in conversion action has no obligation to take back converted property); W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 15, at 106 (5th ed.1984) (once property converted, “defendant cannot undo his wrong by forcing the goods back upon their owner … in mitigation of damages”).


FN10. UPS also points out it raised a comparative negligence defense and argues in the event it is found liable, “the factual issue[ ] of … comparative negligence should be decided.” But UPS asserts this argument only in the context of a negligence claim and does not argue comparative fault applies to a U.C.C. conversion by misdelivery claim. Thus, we need not address this issue further. See Kaman Aerospace Corp. v. Ariz. Bd. of Regents, 217 Ariz. 148, n. 6, 171 P.3d 599, 604 n. 6 (App.2007).


*6 ¶ 19 Finally, because we have upheld summary judgment in favor of Inter K, it remains the successful party in a contract action entitled to fees and costs under A.R.S. § 12–341.01(A). However, UPS contends that, even if Inter K is the successful party, § 12–341 .01(A) does not apply to an action between a bailor and a bailee. See Ariz. Tile, L.L.C. v. Berger, 223 Ariz. 491, ¶ 35, 224 P.3d 988, 995–96 (App.2010) (whether attorney fee statute applies is question of law reviewed de novo). Our supreme court has held, in the analogous case of Wenk v. Horizon Moving & Storage Co., 131 Ariz. 131, 132, 639 P.2d 321, 322 (1982), that a breach of a bailment contract claim could support an award of attorney fees and costs as “arising out of a contract” pursuant to § 12–341.01(A). Accord Sparks v. Republic Nat’l Life Ins. Co., 132 Ariz. 529, 543, 647 P.2d 1127, 1141 (1982). UPS has pointed to no distinction between the contract here and the contract in Wenk, and we cannot find a material distinction. Thus, were we to conclude that this breach of a bailment claim does not arise out of contract, we would do so in contravention of Wenk, and we are not at liberty to modify or overrule decisions of our supreme court. See City of Phx. v. Leroy’s Liquors, 177 Ariz. 375, 378, 868 P.2d 958, 961 (App.1993).FN11


FN11. UPS maintains that another supreme court case, Barmat v. John & Jane Doe Partners A–D, 155 Ariz. 519, 522, 747 P.2d 1218, 1221 (1987), decided after Wenk, suggests a bailor/bailee relationship is a special relationship whose duties do not arise out of contract. In Barmat, the sole issue on review was whether parties in a legal malpractice action were eligible for fees under § 12–341.01( A). 155 Ariz. at 520, 747 P.2d at 1219. However, despite the reference to bailors and bailees in that context, the court in Barmat cited Wenk with approval as involving a contract implied in fact, under which fees can be awarded properly pursuant to § 12–341.01( A). Barmat, 155 Ariz. at 521, 523, 747 P.2d at 1220, 1222. At least in the context here, which is indistinguishable from that in Wenk, we thus conclude that Wenk still controls.


¶ 20 We also award Inter K its costs and attorney fees on appeal pursuant to § 12–341.01(A) upon its compliance with Rule 21(c), Ariz. R. Civ.App. P.



¶ 21 For the foregoing reasons, we affirm the trial court’s judgment against UPS.



Owens v. Anthony

United States District Court,

M.D. Tennessee,

Cookeville Division.

Danny Wayne OWENS, et al.


William A. ANTHONY, et al.


No. 2–11–0033.

Dec. 6, 2011.


B. Keith Williams, James R. Stocks, Lannom & Williams, Lebanon, TN, for Danny Wayne Owens, et al.


R. Dale Bay, Mary Beth Haltom, Lewis, King, Krieg & Waldrop, P.C., James A. Beakes, III, Kenneth M. Bryant, Miller & Martin, P.L.L.C., Nashville, TN, for William A. Anthony, et al.



TODD J. CAMPBELL, District Judge.

*1 Pending before the Court is Defendant C.H. Robinson Worldwide, Inc.’s Motion to Dismiss (Docket No. 37). For the reasons stated herein, Defendant’s Motion is DENIED.



This case arises from a motor vehicle wreck in which a tractor-trailer driven by Defendant Anthony crashed into a vehicle driven by Zachary Owens, causing severe personal injuries to Mr. Owens. Plaintiffs, Co–Conservators of Zachary Owens, contend that the negligence of all four Defendants was the proximate cause of the serious and painful personal injuries to their son. Docket No. 33 (Amended Complaint).


Defendant C.H. Robinson Worldwide, Inc. (“Robinson”) has moved to dismiss Plaintiffs’ claims against it, arguing that Plaintiffs’ common law negligence claims are preempted by operation of the Federal Aviation Administration Authorization Act (“FAAAA”) and Plaintiffs’ statutory negligence claims must be dismissed because there is no private right of action for the violations Plaintiffs assert. Docket Nos. 37–38.


Plaintiffs allege that Robinson was engaged in a joint venture FN1 with Defendants Fleet Global and G.P. Express for the purpose of commercially transporting freight in interstate commerce at the time the tractor trailer, driven by Defendant Anthony and owned by Defendant Fleet Global and/or G.P. Express, crashed into Zachary Owens’ vehicle. Docket No. 33. Plaintiffs also allege that Robinson was, at all relevant times, an agent, employer and/or statutory employer of the other Defendants and is, therefore, vicariously liable for the negligence of the other Defendants. Id. Plaintiffs contend that Robinson, through vicarious liability, joint venture imputed liability and/or agency liability, is responsible for Zachary Owens’ injuries. Id.


FN1. Plaintiffs assert that Robinson, as a broker of interstate motor carriers, arranged the place, date and times of pickup and delivery, received the pickup and delivery addresses, communicated specific limitations and directions regarding the loading and unloading of the cargo, and provided the directions for the transport of the load to the other Defendants. Docket No. 33.


In addition, Plaintiffs allege that Robinson is guilty of its own negligence in failing reasonably to investigate the driver and transportation companies involved; failing reasonably to monitor the driver and transportation companies involved; failing reasonably to hire, train and retain the driver and transportation companies involved; failing reasonably to ensure that the transportation companies involved had the necessary experience, training and knowledge; allowing or encouraging the carriers and driver to operate the vehicle in a tired and impaired state; and failing reasonably to require or maintain safe tractor trailers. Docket No. 33—Seventh Cause of Action. Finally, Plaintiffs contend that Robinson is guilty of statutory negligence or negligence per se through its alleged violations of specific Motor Carrier Regulations. Docket No. 33—Eighth Cause of Action.



For purposes of a motion to dismiss, the Court must take all of the factual allegations in the Amended Complaint as true. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). 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. Id. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Id. at 1950. A legal conclusion couched as a factual allegation need not be accepted as true on a motion to dismiss, nor are recitations of the elements of a cause of action sufficient. Fritz v. Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir.2010).



*2 The question of whether a certain state action is preempted by federal law is one of congressional intent. Federal Express Corp. v. United States Postal Service, 55 F.Supp.2d 813, 816 (W.D.Tenn.1999); FN2 Dilts v. Penske Logistics LLC, ––– F.Supp.2d ––––, 2011 WL 4975520 at *5 (S.D.Cal. Oct.19, 2011).FN3 Where federal law is said to bar state action in fields of traditional state regulation, it is assumed that the historic police powers of the states are not to be superseded by the federal act unless that was the clear and manifest purpose of Congress. Federal Express, 55 F.Supp.2d at 816; City of Columbus v. Ours Garage and Wrecker Service, Inc., 536 U.S. 424, 122 S.Ct. 2226, 2232, 153 L.Ed.2d 430 (2002).


FN2. Federal Express involved a Tennessee Consumer Protection Act claim concerning false and deceptive advertising. It was not a personal injury case.


FN3. In Dilts, the court found that the imposition of substantive standards upon the motor carrier’s routes and services implicated preemption by the FAAAA. Dilts at * 9. Dilts was not a personal injury case.


The FAAAA, which sought to preempt state trucking regulation,FN4 provides that a state may not enact or enforce a law or regulation related to a price, route or service of any motor carrier with respect to the transportation of property. 49 U.S.C. § 14501(c)(1); Rowe v. New Hampshire Motor Transport Ass’n, 552 U.S. 364, 128 S.Ct. 989, 993, 169 L.Ed.2d 933 (2008).


FN4. The Act replaced the then-existing patchwork of intrastate trucking laws with a uniform federal standard. The statutory language was borrowed from the Airline Deregulation Act (“ADA”) and has been interpreted consistently by the Supreme Court in both settings. Rowe, 128 S.Ct. at 994. Congress intended for the preemption provisions of the FAAAA to be applied in an identical manner as the preemption provision of the ADA.   Deerskin Trading Post, Inc. v. United Parcel Service of America, Inc., 972 F.Supp. 665, 668 (N.D.Ga.1997).


In line with this statute, the Supreme Court has held that state enforcement actions having “a connection with or reference to” carrier rates, routes or services are preempted. Rowe, 128 S.Ct. at 995. Such preemption may occur even if a state law’s effect on rates, routes or services is only indirect. Id. Nonetheless, federal law may not preempt state laws that affect rates in only a tenuous, remote or peripheral manner. Id. (citing Morales v. Trans World Airlines, Inc., 504 U.S. 374, 390, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992)).FN5 Courts have found that Congress’ “related to” language has a broad scope. Federal Express, 55 F.Supp.2d at 816. Section 14501(c)(1) requires the Court to determine whether the provision, directly or indirectly, binds the carrier to a particular price, route or service and thereby interferes with competitive market forces within the industry. Dilts at * 7.


FN5. In Rowe, the Court found that the Maine laws at issue, which regulated the delivery of tobacco to customers within the state, were preempted by federal law. Rowe was not a personal injury case. In Morales, the Court found that a claim of deceptive airline-fare advertising under a state consumer fraud statute was preempted by federal law. Morales was not a personal injury case.


Although Congress generally preempted state regulation of motor carriers, it simultaneously carved out an exception to the rule with regard to the states’ safety regulatory authority by expressly stating that the provisions of § 14501(c)(1) “shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” 49 U.S.C. § 14501(c)(2). To determine whether this exception applies, courts must decide whether the provision at issue is intended to be, and is, genuinely responsive to motor vehicle safety. Dilts at * 12 (citing American Trucking Ass’n v. City of Los Angeles, 559 F.3d 1046,1054 (9th Cir.2009)).


Here, the Court must determine whether Plaintiffs’ common law negligence claims are “related to” (that is, have a connection with) a price, route or service of Robinson with respect to the transportation of property. Even if Plaintiffs’ claims have such a connection, the Court must determine whether such claims are “saved” under the safety regulatory authority exception. In other words, the Court must decide whether personal injury negligence claims are preempted by the FAAAA under these circumstances.


*3 Robinson contends that Plaintiffs’ claims against it rest on the manner in which it conducts its business as a broker and are related to its “services.” Robinson argues that even though personal injury claims against motor carriers may not be preempted, it is a broker, not a motor carrier.


Plaintiffs claim that this is a personal injury lawsuit and their negligence claims are related to highway safety, not Defendant’s services. Plaintiffs argue that the cases upon which Defendant relies are not persuasive because they are not personal injury cases. Plaintiffs maintain that this is a case about the negligence of the persons and corporations involved in and responsible for the unsafe operation of the truck that struck and severely injured Zachary Owens. Plaintiffs also aver that safety issues are historically within the states’ police powers and are presumed not to be preempted. In addition, Plaintiffs point out that the FAAAA specifically reserves regulation of safety issues for the states pursuant to 49 U.S.C. § 14501(c)(2).


The Court agrees with the numerous courts which have found that personal injury negligence claims are not preempted by the FAAAA. For example, in Jimenez–Ruiz v. Spirit Airlines, Inc., ––– F.Supp.2d ––––, 2011 WL 2460873 (D.Puerto Rico June 16, 2011), the court held that personal injury claims based on a state’s general negligence law are not preempted by the ADA.FN6 In summarizing various Circuit Court decisions, the Jimenez–Ruiz court noted that where a plaintiff invokes traditional elements of tort law, the courts almost uniformly have resolved against federal preemption. Id. at * 4 (collecting cases).


FN6. As noted above, Congress intended for the preemption provisions of the FAAAA to be applied in an identical manner as the preemption provision of the ADA. Deerskin Trading Post, 972 F.Supp. at 668.


Moreover, in Seals v. Delta Air Lines, Inc., 924 F.Supp. 854 (E.D.Tenn.1996), the court stated that it could reach but one conclusion, that the Supreme Court does not interpret the ADA preemption clause (which has been held to involve identical analysis to the FAAAA preemption clause) to extend to personal injury suits against the carriers. Id. at 859 (citing American Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995)). And in Margolis v. United Airlines, Inc., 811 F.Supp. 318 (E.D.Mich.1993), the court also held that personal injury negligence claims were not preempted by the ADA: “Congress has expressed no intent to preempt traditional state law claims for negligence in the ADA amendments to the Federal Aviation Act.”   Id. at 323.


Similarly, in Cartegena v. Continental Airlines, Inc., 10 F.Supp.2d 677 (S.D.Tex.1997), the court found that the FAAAA did not preempt the plaintiff’s state law claims against the airline for personal injuries sustained during a flight, holding that the passenger’s claims related to operation of the airline’s aircraft, not to the routes or services of the defendant. Id. at 680; see also Hodges v. Delta Airlines, Inc., 44 F.3d 334, 336 (5th Cir.1995) (federal preemption of state laws by the FAAAA does not displace state tort actions for personal physical injuries or property damages caused by the operation and maintenance of aircraft); In re Air Disaster, 819 F.Supp. 1352 (E.D.Mich.1993) (negligence claims not preempted); O’Hern v. Delta Airlines, Inc., 838 F.Supp. 1264, 1267–68 (N.D.Ill.1993) (negligence claim not preempted).


*4 Plaintiffs allege that Defendant Robinson was negligent in investigating, choosing, training, monitoring and retaining this driver and these two transportation companies. These claims involve highway safety issues. In addition, Plaintiffs have alleged that Defendant Robinson was a joint venturer with, agent and employer of the other Defendants which are motor carriers. Accepting the allegations of the Amended Complaint as true, the Court finds that the negligence issues presented here involve highway safety which has been expressly exempted from the preemption statute.


For these reasons, Defendant’s Motion to Dismiss the Seventh Cause of Action is denied.



Plaintiffs have alleged that Defendant Robinson is guilty of negligence per se in that it acted or failed to act in violation of certain Motor Carrier Regulations. Defendant has moved to dismiss these claims, arguing that there is no private right of action for the violations Plaintiffs assert.


The Court reads Plaintiffs’ Amended Complaint as setting forth a claim for negligence based upon the violation of certain regulations, not as setting forth a claim for violation of those regulations. The doctrine of negligence per se permits a plaintiff to satisfy the breach element of a negligence action by substituting the violation of a statutorily imposed duty for the reasonable person standard. Brown v. City of Memphis, 440 F.Supp.2d 868, 875 (W.D.Tenn.2006).


To the extent Plaintiffs ask the Court to recognize a private right of action for violation of the Motor Carrier Regulations, the Court declines to do so. To the extent Plaintiffs’ Eighth Cause of Action states a claim for negligence based upon the violation of those regulations, Defendant’s Motion to Dismiss is denied.



For these reasons, Defendant C.H. Robinson Worldwide, Inc.’s Motion to Dismiss (Docket No. 37) is denied.









Slip Copy, 2011 WL 6056409 (M.D.Tenn.)

(Cite as: 2011 WL 6056409 (M.D.Tenn.))


© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


© 2024 Central Analysis Bureau