United States District Court,

D. New Jersey.

The DONNA KARAN COMPANY LLC, Plaintiff,

v.

AIRGROUP et al., Defendants.

 

Civil Action No. 12–2149 (SRC).

Oct. 22, 2013.

 

OPINION & ORDER

CHESLER, District Judge.

*1 This matter comes before this Court on two motions: 1) the motion for partial summary judgment, pursuant to Federal Rule of Civil Procedure 56, by Defendant Radiant Global Logistics, Inc. d/b/a Airgroup (“Airgroup”); and 2) the motion for summary judgment by Plaintiff the Donna Karan Company LLC (“Karan”), pursuant to Federal Rule of Civil Procedure 56. The Court heard oral argument on October 7, 2013. For the reasons stated below, Plaintiff’s motion will be granted, and Defendant’s motion will be denied.

 

This case arises from a dispute over the liability of Airgroup, a carrier, for a shipment, made by shipper Karan, which was stolen during the shipping process. The parties do not dispute any of the fundamental facts about the shipment and the theft. At issue on these motions are two questions: 1) whether Airgroup’s liability for the theft is limited by the Carmack Amendment, 49 U.S.C. § 14706; and 2) if Airgroup’s liability is not so limited, what the measure of damages should be.

 

The Carmack Amendment regulates the liability of common carriers for loss or damage to shipments:

 

The Carmack Amendment to the Interstate Commerce Act imposes absolute liability upon carriers for the actual loss or injury to property caused by a carrier. Under [the statute], carriers, however, are permitted to limit their liability through a written agreement with the customer or shipper which evidences an absolute, deliberate and well-informed choice by the shipper. Permitting carriers to limit their liability is a carefully defined exception to the Carmack Amendment’s general objective of imposing full liability for the loss of shipped goods; courts, thus, carefully scrutinize agreements purporting to limit such liability.

 

Carmana Designs, Ltd. v. North American Van Lines, Inc., 943 F.2d 316, 319 (3d Cir.1991) (citations omitted).

 

The key Third Circuit case on this “carefully defined exception” to absolute liability is Emerson Elec. Supply Co. v. Estes Express Lines Corp., 451 F.3d 179, 186 (3d Cir.2006):

 

Prior to the enactment of the TIRRA and the ICCTA, a carrier had to satisfy four requirements before it could limit its liability under the Carmack Amendment:

 

(1) maintain a tariff within the prescribed guidelines of the Interstate Commerce Commission; (2) obtain the shipper’s agreement as to [the shipper’s] choice of liability; (3) give the shipper a reasonable opportunity to choose between two or more levels of liability; and (4) issue a receipt or bill of lading prior to moving the shipment.

 

The carrier bears the burden of proof. Id. Since the enactment of the TIRRA and ICCTA in 1994 and 1995, carriers are no longer required to file tariffs with the Surface Transportation Board, but need only provide them to the shipper upon request. Id . at 187 n. 6; 49 U.S.C. § 14706(c)(1)(b).

 

The present motions turn on the third element, the question of whether the carrier gave the shipper a reasonable opportunity to choose between two or more levels of liability. The relevant facts are undisputed. The carrier used an online shipment booking system named “Shiptrax.” (Defs.’ 56.1 Stmt. ¶¶ 73, 74.) The shipper entered shipment information on a series of web pages, and there were empty boxes for the declared value and for the insured value of the shipment. (Defs.’ Resp. 56.1 Stmt ¶ 12; Sakal Aff. Ex. T at RGL0124.) For the shipment at issue, the Karan employee booking the shipment left both boxes blank. (Defs.’ 56.1 Stmt. ¶¶ 84.) Karan accepted the “Rules and Regulations” of the carrier. The question before this Court is whether this provided a reasonable opportunity to choose between two or more levels of liability.

 

*2 Karan contends that it did not. Karan cites the deposition testimony of Karan employee Barbara Freitag, who stated that the shipping rate was based solely on weight and never on value. (Sakal Aff. Ex. R at 97:16–98:10.) Karan asserts as an undisputed fact that, under the terms of a rate agreement entered into on February 9, 2004, the shipping rate was based on the weight of the cargo. (Pl.’s 56.1 Stmt. ¶¶ 3, 4.) In its responsive statement, Airgroup disputed this only to the extent that the rate agreement was based on “weight and service.” (Defs.’ Resp. 56.1 Stmt. ¶ 4 .) Airgroup thus does not contend that the rate changed based on the declared value of the shipment.

 

At oral argument, the Court asked Airgroup’s counsel whether the rate would have been different had Karan entered values in either the declared value or shipping value boxes. Counsel responded that the rate would not have changed—an entry into the boxes would have had no impact on the rate. How, then, can this be considered an opportunity to pay a higher rate by declaring a higher value?

 

Airgroup argues that, by virtue of the fact that the Shiptrax form offered Karan the opportunity to declare a value for the shipment, and that Karan chose to leave it blank, Airgroup provided a reasonable opportunity for Karan to choose between two or more levels of liability, and that, by leaving the box empty, Karan made an enforceable choice to accept the level of liability stated by Airgroup in its “Rules and Regulations.” This Court does not agree. There is no evidence in the record that Airgroup offered Karan an alternative rate for a higher level of liability. Consider, for example, the facts of National Small Shipments Traffic Conference, Inc. v. United States, 887 F.2d 443, 444 (3d Cir.1989), in which the Third Circuit found that the reasonable opportunity requirement had been met: the tariff expressly stated four different rates, based on the amount of the declared value. There is no similar evidence here. To the contrary, the undisputed evidence of record shows that Karan was not offered a choice of rates based on level of liability: there is no evidence that a declaration of value would have caused a different rate to apply.

 

Airgroup points to Rule 22 of its “Rules and Regulations,” which states:

 

Declared Value

 

(A) Declared Value is agreed and understood to be not more than 50 cents per poind [sic] or $50.00, which ever is lesser.

 

(B) Insurance coverage is available upon request for amounts to $25,000.00. Any request for insurance coverage in excess of $25,000 .00 must have approval by the home office of Airgroup Express prior to movement of the freight.

 

(Sakal Aff. Ex. Q.) No reasonable finder of fact could find this to be an offer of two or more levels of liability. It is, rather, a limit to one level of liability, with a separate and supplementary mention of some very limited insurance coverage, but with no rate given. There is no way to read this as an offer of a shipping rate for a higher level of liability for a shipment of value greater than $25,000, since it states that such coverage requires prior approval. An offer to consider something for approval, with unspecified material terms, does not constitute an “opportunity” offered to a shipper. Rather, the facts of this case resemble those in Emerson, in which Third Circuit held:

*3 Estes’s tariff limited its liability to ten cents per pound regardless of whether the shipper declared a higher value or left the declared value box blank in the bill of lading. Because the tariff did not provide an option to declare a higher value with a corresponding level of liability, Estes failed to meet the two or more levels of liability requirement.

 

Emerson, 451 F.3d at 188. Similarly, in the instant case, Rule 22 limited the carrier’s liability to fifty cents per pound.FN1

 

FN1. Airgroup argues that, under the Carmack Amendment, it “is required merely to offer two rates, which it did.” (Defs.’ Opp. Br. 4.) What were the two rates? The record shows only one. Airgroup contends: “Airgroup provided a rate based on weight and a rate based on value.” (Defs.’ Br. 21.) This Court has not been shown the rate based on value that Airgroup contends it provided to Karan.

 

This Court concludes that there is no evidence of record that Airgroup gave Karan a reasonable opportunity to choose between rates for two or more levels of liability. The requirements for limitation of liability under the Carmack Amendment have not been met. Karan has demonstrated that no material factual disputes preclude the entry of judgment as a matter of law. On this issue, the Court will grant Karan’s motion for summary judgment and deny Airgroup’s.

 

Having found that Airgroup’s liability is not limited by the Carmack Amendment, this Court now considers the proper measure of Karan’s damages. “Hijacked goods, unlike those destroyed, ultimately compete with the manufacturer and, therefore, no true replacement is possible.” Polaroid Corp. v. Schuster’s Express, Inc., 484 F.2d 349, 351 (1st Cir.1973). The Third Circuit has held:

 

[O]rdinarily when the carrier is responsible for the loss of the goods in transit, the shipper is entitled to recover the contract price from the carrier. Yet the Supreme Court has recognized that the test of market value is at best but a convenient means of getting at the loss suffered. Thus it may be discarded and other more accurate means resorted to, if, for special reasons, it is not exact or otherwise not applicable. Of course, the carrier has the burden of proof to demonstrate that a court should deviate from the market value rule.

 

Robert Burton Assocs. v. Preston Trucking Co., 149 F.3d 218, 221 (3d Cir.1998) (citations omitted). Airgroup contends that, where the stolen items were to be added to the stock of the shipper, the owner could replenish the supply with replacement goods from the wholesale market or from its own stock. Yet Airgroup’s brief rests on the argument that Karan has failed to show that the stolen items would re-enter the stream of commerce in the United States. As Burton makes clear, it is Airgroup, not Karan, that bears the burden of proof on this issue. Airgroup claims that “it is highly unlikely that these [stolen] products will ever re-enter the domestic market.” (Defs.’ Opp. Br. 11.) The problem here is that Airgroup has offered no evidence to support this contention. There is nothing in the record from which any reasonable finder of fact could conclude that the theft of the goods did not cause Karan to lose sales. Airgroup has failed to meet its burden of proof that this Court should deviate from the market value rule. Karan’s damages shall be measured by the domestic market value of the stolen shipment.

 

*4 Karan’s motion for summary judgment is granted in its entirety, and Airgroup’s is denied.

 

For these reasons,

 

IT IS on this 22nd day of October, 2013

 

ORDERED that Airgroup’s motion for partial summary judgment (Docket Entry No. 59) is DENIED; and it is further

 

ORDERED that Karan’s motion for summary judgment (Docket Entry No. 63) is GRANTED.

United States District Court, N.D. Florida,

Tallahassee Division.

SNYDER’S–LANCE, INC., Plaintiff,

v.

COWEN TRUCK LINE, INC., Defendant.

 

No. 4:12cv598–RH/CAS.

Oct. 23, 2013.

 

ORDER GRANTING SUMMARY JUDGMENT

ROBERT L. HINKLE, District Judge.

*1 This case arises from an indemnity clause in a trucking contract. The plaintiff’s truck ran over and killed the defendant’s employee. The plaintiff settled the resulting wrongful-death action and now seeks indemnification from the defendant. The case is before the court on cross-motions for summary judgment. This order grants summary judgment for the defendant.

 

I

The plaintiff Snyder’s–Lance, Inc. (“Snyder’s”) is a food manufacturer. Through a transportation consultantTransportation Insight, L L CSnyder’s hired the defendant Cowen Truck Line, Inc., to haul goods from a Snyder’s plant in Ohio to a Snyder’s plant in Florida. The governing contract included two provisions of significance. The first said North Carolina law governed the contract. The second required Cowen to indemnify Snyder’s in specified circumstances.

 

A Cowen driver, Charles Taft, delivered a load to the Florida plant, got out of the truck, and went to the adjoining loading dock. A Snyder’s employee driving a Snyder’s truck was backing into that dock. The Snyder’s truck ran over and killed Mr. Taft.

 

Mr. Taft’s personal representative filed a wrongful-death action against Snyder’s, asserting negligence. Snyder’s demanded a defense from Cowen based on the indemnity clause. Cowen denied that the clause applied and refused to provide a defense. After incurring attorney’s fees and costs of $473,064.95, Snyder’s settled the negligence case for $750,000. Snyder’s did not admit liability.

 

Snyder’s filed this action against Cowen seeking recovery of the fees, costs, and settlement amount. Each side has moved for summary judgment.

 

II

The indemnity clause refers to Cowen as “Carrier” and provides:

 

Carrier agrees to indemnify, defend and hold Transportation Insight and [Snyder’s], their agents, employees, and principals harmless from and against any and all direct or indirect claims arising out of or resulting from transportation provided pursuant to this Agreement, including, but not limited to, claims of bodily injury, death, property damage, attorney fees, loss, damage or delay[.] Carrier’s liability under this indemnity and hold harmless provision shall be reduced in proportion to the degree of negligence, if any, of Transportation Insight or [Snyder’s].

 

ECF No. 1–1 at 1 (emphasis added).

 

For two separate reasons, each of which would be sufficient standing alone, the indemnity clause does not apply to the underlying wrongful-death action.

 

First, the indemnity clause applies only to “claims arising out of or resulting from transportation provided pursuant to this Agreement.” At the time of the accident, Mr. Taft was not transporting goods or otherwise performing any duty under the contract. Quite the contrary. M r. Taft had completed the transportation of the goods and was simply on the premises. The Cowen truck and the goods it transported had nothing to do with the accident.

 

The accident did arise from the transportation of goods. B ut the accident arose from the transportation of goods by a Snyder’s driver in a Snyder’s truck the truck that ran over Mr. Taft. It is hard to conceive of any reason why Cowen would agree to indemnify Snyder’s for the allegedly negligent operation of a Snyder’s truck by a Snyder’s driver delivering a load that Cowen had nothing to do with. On any proper reading of the indemnity clause, Cowen did not in fact agree to indemnify Snyder’s in these circumstances.

 

*2 Second, under North Carolina law, just as under Florida law, an indemnity clause does not apply to an indemnitee’s own negligence unless the clause explicitly so provides. Here the indemnity clause applies to claims “arising out of or resulting from transportation provided pursuant to” the contract between Transportation Insight and Cowen, but the clause does not explicitly provide indemnification for claims arising from the indemnitee’s own negligence. The clause therefore does not cover the indemnitee’s own negligence.

 

One case confirming this result is Hill v. Carolina Freight Carriers Corp., 235 N.C. 705, 71 S.E.2d 133 (1952). There the owner and operator of a truck agreed to indemnify the company for whom he was delivering a loadmuch like Cowen agreed to indemnify Snyder’s. There, like here, an accident was allegedly caused by the negligence of the driver of a different truck, and there, like here, the driver of the different truck was employed by the indemnitee. The issue was whether the indemnity clause applied to a claim that the indemnitee’s own driver was negligent. Even though by its terms the clause applied to any claim resulting from a collision involving the indemnitor’s truckand the claim at issue arose wholly from a collision involving the indemnitor’s truck the North Carolina Supreme Court held that the indemnity clause did not apply. The reason, the court said, was that despite its broad language, the clause did not apply to a claim that the indemnitee itself, or a driver it employed, was negligent. The court explained:

 

In evaluating the force and effect of the contract provision, it is essential that we take into consideration the circumstances surrounding the parties and the object in view which induced the making of it. Slocumb v. Raleigh, C. & S.R. Co., 165 N.C. 338, 81 S.E. 335; Terminal R. Ass’n of St. Louis v. Ralston–Purina Co., 352 Mo. 1013, 180 S.W .2d 693; Westinghouse Electric Elevator Co. v. La Salle Monroe Building Corp., 326 Ill.App. 598, 63 N. E .2d 411, affirmed 395 Ill. 429, 70 N. E.2d 604; Anno. 175 A.L.R. 30.

 

The motivating reason why the parties stipulated that the owner should bear al l damages caused by collision would seem to be clear. While ‘exclusive supervision and control’ of the vehicle was vested in the defendant [the i ndemnitee] for the purpose of meeting the requirements of the I.C.C., actual possession or custody thereof was retained by plaintiff [the i ndemnitor]. It was to be operated by one of his choosing and i n the selection of whom defendants had no part. Immediate control and supervision as to speed, manner of operation, hours of work, and the like necessarily remained with plaintiff. The tractor was to be operated on the public highways i n interstate commerce where want of due care on the part of the operator selected by plaintiff or of some third party motorist might well produce damage to the vehicle. But this does not warrant the conclusion the parties intended that plaintiff should assume responsibility for damages to the vehicle resulting from the negligence of defendant or its employees.

 

*3 Contracts which seek to exculpate one of the parties from liability for his own negligence are not favored by the law. Gulf Compress Co. v. Harrington, 90 Ark. 256, 119 S.W. 249, 23 L.R.A., N.S., 1205; Denver Public Warehouse Co. v. Munger, 20 Colo.App. 56, 77 P. 5[.] Hence it is a universal rule that such exculpatory clause is strictly construed against the party asserting it. Luedeke v. Chicago & N.W. Ry. Co., 120 Neb. 124, 231 N.W. 695, 71 A.L.R. 912; Crew v. Bradstreet Co., 134 Pa. 161, 19 A. 500, 7 L.R.A. 661. It will never be so construed as to exempt the indemnitee from liability for his own negligence or the negligence of his employees in the absence of explicit language clearly indicating that such was the intent of the parties. Fisk Tire Co. v. Hood Coach Lines, 54 Ga.A pp. 401, 188 S.E. 57; Griffiths v. Henry Broderick, Inc., 27 Wash.2d 901, 182 P.2d 18, 175 A.L.R. 1; Anno. 175 A.L.R. 30; Westinghouse Electric Elevator Co. v. La Salle Monroe Building Corp., supra; Gross v. General Inv. Co., 194 Minn. 23, 259 N.W. 557; Thompson–Starrett Co. v. Otis Elevator Co., 271 N.Y. 36, 2 N.E.2d 35; Perry v. Payne, 217 Pa. 252, 66 A. 553, 11 L.R.A., N. S., 1173, anno. 11 L.R.A., N. S., 1174; Schwartz v. Merola Bros. Construction Corp., 290 N.Y. 145, 48 N.E.2d 299; 38 A.J. 649, sec. 8; 42 C.J.S., Indemnity, s 13, P. 583.

 

The language used in the contract does not explicitly exempt defendant from liability for damages to the tractor proximately caused by the negligence of one of its employees. Strictly construed it will not permit—indeed it repels—the conclusion the parties so intended.

 

Hill, 235 N.C. at 710, 71 S.E.2d at 137 (emphasis added).

 

The dispute in Hill was governed by Georgia law. But the court cited cases from North Carolina and elsewhere; the court was applying principles it viewed as universal. Other North Carolina cases are to the same effect. See, e.g., Crowell v. E. Air Lines, 240 N.C. 20, 33, 81 S.E.2d 178, 188 (1954); City of Wilmington v. N.C. Natural Gas Corp., 117 N.C.App. 244, 248, 450 S.E.2d 573, 575 (N.C.Ct.App.1994).

 

Florida law follows the same pri nci plethat an indemnity clause does not apply to a claim that the i ndemnitee was itself negligent unless the clause explicitly so provides. See, e.g., Univ. Plaza Shopping Ctr. v. Stewart, 272 So.2d 507, 511 (Fla.1973); H & H Painting & Waterproofing Co. v. Mech. Masters, Inc., 923 So.2d 1227, 1228 (Fla. 4th D CA 2006).

 

This principle makes sense, especially as applied to the indemnity clause at issue here. The clause’s primary purpose was to ensure that if Cowen’s acts caused an i nj uryif, for example, a Cowen driver caused a wreck while transporting goods under the contractand if, as a result, the injured party sued not only Cowen but also Transportation Insight or Snyder’s, perhaps on the theory that Cowen was acting as their agent, then responsibility for defending the lawsuit and paying any loss would fall on Cowen, not on Transportation Insight or Snyder’s. The clause plainly was not intended to allow Snyder’s to escape responsibility for its own driver’s negligence in causing an accident. In short, Cowen undertook responsibility for its own trucking operation, but not for the operation by Snyder’s of its own trucks. Precisely as in Hill.

 

*4 Further confirmation of this analysis comes from the final sentence of the indemnity clause itself: “[Cowen’s] liability under this indemnity and hold harmless provision shall be reduced i n proportion to the degree of negligence, if any, of Transportation Insight or [Snyder’s].” ECF No. 1–1 at 1. This underscores that the purpose of the clause was to relieve Transportation Insight and Snyder’s from responsibility for damages caused by Cowen but not to relieve Transportation Insight and Snyder’s from responsibility for their own negligence.

 

Here the underlying wrongful-death action alleged as the sole basis for recovery that Snyder’s, through an employee wholly unrelated to Cowen, was negligent. Any recovery against Snyder’s in that lawsuit could flow only from the negligence of Snyder’s, not from any other source, because under Florida law which governed the wrongful-death actionany award against Snyder’s would be reduced to eliminate any amount attributable to Mr. Taft’s comparative negligence or the negligence of any other person. The proportion of negligence leading to a recovery in that lawsuit that was attributable to Snyder’s thus could be only one amount: 100%. And so any recovery by Snyder’s under the indemnity clause, even if the clause were otherwise applicable, would be reduced by 100%, to zero.

 

III

A Snyder’s employee driving a Snyder’s truck ran over and killed a pedestrian. The pedestrian worked for Cowen, but otherwise Cowen had nothing to do with it. The clause requiring Cowen to indemnify Snyder’s for claims resulting from Cowen’s transportation services does not apply. And the result is confirmed by the settled principle that an indemnity clause does not apply to claims asserting that the i ndemnitee was itself negligent, unless the clause explicitly so provides, which this clause does not.

 

For these reasons,

 

IT IS ORDERED:

 

1. Cowen’s summary-judgment motion, ECF No. 17, is GRANTED.

 

2. The summary-judgment motion filed by Snyder’s, ECF No. 18, is DENIED.

 

3. It is declared that Cowen has no duty to defend or indemnify Snyder’s on the wrongful-death claim filed by the personal representative of Charles Taft against Snyder’s.

 

4. The clerk must enter a judgment on the merits for Cowen that includes the declaration set out i n paragraph 3.

 

SO ORDERED.