United States District Court,

W.D. New York.

QWIK-COOK, INC., Plaintiff,

v.

BIRDDOG SOLUTIONS, INC., Defendant.

No. 09-CV-6278.

 

Oct. 9, 2009.

 

DECISION and ORDER

 

MICHAEL A. TELESCA, District Judge.

 

INTRODUCTION

 

Plaintiff Qwik-Cook, Inc., (“Plaintiff” and/or “Qwik-Cook”) brings this action pursuant to diversity jurisdiction alleging that the defendant Birddog Solutions, Inc., (“Defendant” and/or “Birddog”) breached a contract entered into by the parties. Specifically, in its first cause of action plaintiff seeks damages for defendant’s alleged breach of an agreement due to its failure to timely process plaintiff’s freight bills. Plaintiff in its second cause of action further alleges rescission of the contract based on Birddog’s alleged failure to audit Qwik-Cook’s freight bills. Moreover, in its third cause of action Qwik-Cook seeks cancellation of the contract based on Birddog’s alleged nonperformance.

 

Birddog has filed a motion to dismiss the first cause of action pursuant to Federal Rule of Civil Procedure 12(b)(6) on grounds that Qwik-Cook has failed to state a cause of action upon which relief can be granted against Birddog. Defendant contends that Qwik-Cook’s first cause of action based on the contract with Birddog contained a valid and enforceable clause limiting and precluding liability as it pertains to the allegations set forth in the first cause of action. Qwik-Cook opposes the motion to dismiss. For the reasons set forth below, I grant defendant’s motion to dismiss the First Cause of Action.

 

BACKGROUND

 

Qwik-Cook operates a mail order catalogue business. See Complaint (“Comp.”), ¶ 2. According to the Complaint, its livelihood depends on the timely shipment of parcel packages, both inbound and outbound by common carriers. See id. In May 2008, Qwik-Cook and Birddog entered into a Logistics Optimization Services Agreement (“LOSA Contract”) under which Qwik-Cook agreed to utilize and Birddog agreed to provide logistical and audit services for a three-year period to reduce plaintiff’s freight and shipping expenses. See id., ¶ 4. The Complaint further alleges that Birddog agreed to provide audit and payment services for Qwik-Cook, including the auditing of freight invoices “for extension, addition, rate and parcel service failure errors, and processing the correct payment amounts in a timely manner, and in accordance with the payment terms” of Qwik-Cook’s freight carriers. See id., ¶ 5.

 

In addition, plaintiff claims that defendant did not (1) properly audit the freight invoices from plaintiff’s carriers, (2) correct any errors in the invoices from plaintiff’s carriers, (3) timely process the payment of plaintiff’s freight invoices, and (4) failed to supply documentation to plaintiff on parcel services. See id., ¶ 8. The Complaint asserts that as a result of the failure to process plaintiff’s freight invoices on a timely basis, plaintiff’s freight carriers notified plaintiff that it was in breach of their contract and as a consequence stopped providing freight service to plaintiff. See id., ¶ 9. Accordingly, plaintiff alleges that the lack of freight services “crippled plaintiff’s mail order catalogue business.” See id., ¶ 10.

 

The two-page LOSA Contract contains the following clause:

 

6. Limit of Liability. Notwithstanding anything else in this agreement or otherwise, BirdDog will not be liable with respect to any subject matter of this agreement under any contract, negligence, strict liability or other legal or equitable theory (I) for any amount or (II) for any punitive, special, incidental or consequential damages or lost data or (III) for cost of procurement of substitute goods, technology or services or (IV) for loss or corruption of data or interruption of use. This section does not limit liability for bodily injury of a person. BirdDog makes no warranty with respect to any technology, goods, services, rights or other subject matter of this agreement and hereby disclaims warranties of merchantability, fitness, for a particular purpose an noninfringement with respect to any and all of the foregoing.

 

See LOSA Contract, attached as Ex. A to defendant’s Br. Qwik-Cook claims that Birddog breached the LOSA Contract when it allegedly failed to timely process Qwik-Cook’s freight bills causing damages to the plaintiff. See id., ¶ 15. As a result of the alleged breach, plaintiff seeks $171,225 in “operational costs for the additional shipping and handling services needed to service Plaintiff’s customers” and $500,000 for “damage to its [plaintiff’s] professional reputation and loss of goodwill.” See id., ¶¶ 11 and 16.

 

In support of its motion to dismiss the First Cause of Action, Birddog argues that the LOSA Contract contains a limit of liability clause in paragraph 6 that precludes recovery of any consequential, special, incidental, punitive, or indirect damages. See Def. Br. at 2. Specifically, Birddog contends that the claim for $171,225 for alleged “cost overruns” is barred by ¶ 6 since this is a claim for special, incidental, or consequential damages, and for cost of procurement of substitute goods or services. See id. Similarly, defendant states that the claim for $500,000 for “damage to [plaintiff’s] professional reputation and loss of goodwill” is also prohibited by ¶ 6 of the LOSA Contract. See id. Accordingly, defendant argues that plaintiff’s allegations in the First Cause of Action are precluded by ¶ 6, limit of liability clause, of the LOSA Contract.

 

Qwik-Cook’s response to these arguments are (1) that the language of the limit of liability clause is ambiguous and determining its meaning is a question of fact for the fact-finder, (2) that Birddog’s interpretation of the limit of liability clause is improper because it would lead to an absurd result and would contravene the manifest intention of the parties and the purpose of the LOSA Contract itself, and (3) that even if Birddog’s interpretation of the limit of liability clause was proper, the clause is unenforceable because it would render the contract lacking in mutuality of obligation. See Pl. Opp. Br. at 2-3.

 

DISCUSSION

 

I. Standard of Review on a Motion To Dismiss

 

In deciding a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a court must “accept … all factual allegations in the complaint and draw … all reasonable inferences in the plaintiff’s favor.” See Ruotolo v. City of New York, 514 F.3d 184, 188 (2d Cir.2008) (internal quotation marks omitted). In order to withstand dismissal, the complaint must plead “enough facts to state a claim to relief that is plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007) (disavowing the oft-quoted statement from Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief”). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” See id. at 1965 (internal quotation marks omitted). Thus, “at a bare minimum, the operative standard requires the ‘plaintiff [to] provide the grounds upon which his claim rests through factual allegations sufficient to raise a right to relief above the speculative level.’ ” See Goldstein v. Pataki, 516 F.3d 50, 56-57 (2d Cir.2008) (quoting Twombly, 127 S.Ct. at 1974).

 

The Court may consider documents that are referenced in the Complaint, documents that the plaintiff relied on in bringing suit and that are either in the plaintiff’s possession or that the plaintiff knew of when bringing suit. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002); see also Taylor v. Vermont Dep’t of Educ., 313 F.3d 768, 776 (2d Cir.2002); Kramer v. Time Warner, Inc., 937 F.2d 767, 773 (2d Cir.1991). Here, the Complaint expressly references the LOSA Contract, which is attached to Birddog’s memorandum in support of its motion to dismiss. In fact, the First Cause of Action for breach of contract expressly relies on the LOSA Contract. The Court finds that the Complaint does incorporate this document since it relates to the very issue referred to and characterized in various paragraphs of the Complaint. See Complaint, ¶¶ 4-9, 15. Thus, the LOSA Contract is a document Qwik-Cook “either possessed or knew about and … relied [on] in bringing the suit.” See Rothman v. Gregor, 220 F.3d 81, 89 (2d Cir.2000) (citations omitted).

 

II. The LOSA Contract Is Not Ambiguous As It Relates To The First Cause Of Action

 

Plaintiff argues that the limit of liability clause is ambiguous and unclear leaving it susceptible to at least two reasonable but conflicting interpretations. See Pl. Br. at 3; see also Jensen v. Bd. of Regents, 268 Neb. 512, 518, 684 N.W.2d 537 (2004). As such, plaintiff claims that under Nebraska law, the meaning and relevance of ¶ 6 of the LOSA Contract presents a question of fact that needs to be determined by a fact-finder and is not appropriate for a motion to dismiss. See id., at 4, 684 N.W.2d 537; see also Kropp v. Grand Island Public Sch. Dist. No.2, 246 Neb. 138, 142, 517 N.W.2d 113 (1994) (meaning of ambiguous terms in contract is a question of fact to be determined by a fact-finder). Defendant contends that with respect to interpretation of the LOSA Contract, plaintiff’s claim is misplaced since the contract is clear on its face and does not require construction. See Def. Reply Br. at 1-2; see also Bass v. Dalton, 213 Neb. 360, 363, 329 N.W.2d 115 (1983) (“courts are not free to interpret contracts which are couched in clear and unambiguous language”).

 

The parties agree that Nebraska law applies.

 

The Court agrees with defendant’s argument and finds that the language in ¶ 6 of the LOSA Contract pertaining to limits of liability is unambiguous as it relates to the allegations in the First Cause of Action in the Complaint. See Bedrosky v. Hiner, 230 Neb. 200, 204, 430 N.W.2d 535 (1988) (Court held that “[a] determination as to whether ambiguity exists in a contract is to be made on an objective basis, not by the subjective contentions of the parties; thus the fact that the parties urge opposing interpretations does not necessarily indicate that the contract is ambiguous.”) ¶ 6 of the LOSA Contract states that defendant will not be liable “(II) for any punitive, special, incidental or consequential damages[.]” See LOSA Contract, ¶ 6. The largest item of damages sought by QwikCook is the “damage to its professional reputation and loss of goodwill” alleged to be $500,000. See Comp.,¶ 6. However, such damages as alleged in ¶ 16 of plaintiff’s Complaint are clearly excluded by ¶ 6 of the LOSA Contract, which specifically excludes liability for special, incidental or consequential damages. See J .J. Schaefer Livestock Hauling v. Gretna St. Bank, 229 Neb. 580, 428 N.W.2d 185 (1988) (There is a strong presumption that a written instrument correctly expresses the intention of the parties). Thus, plaintiff’s allegations alleging injury to its business reputation and loss of goodwill is dismissed.

 

The second item of damages that Qwik-Cook seeks to recover is “$171,225 in operational costs for the additional shipping and handling services needed to service Plaintiff’s customers.” See Comp., ¶ 11. This alleged loss can clearly be categorized as an item of consequential damages. See, e.g., Shotkoski v. Standard Chemical Mfg. Co., 195 Neb. 22, 237 N.W.2d 92, 97 (Neb.1975) (consequential damages included loss in milk production caused by dairy farmer’s use of cattle feed supplement). The damages alleged in ¶ 11 of the Complaint are also precluded as “cost of procurement of substitute … services” under ¶ 6 of the LOSA Contract. See Rumbaugh v. Rumbaugh, 229 Neb. 652, 428 N.W.2d 500 (1988) (parties are bound by the terms of the contract even though their intent may be different from that expressed in the agreement).  Because the terms of ¶ 6 of the LOSA Contract are clear, there are no factual ambiguities that require interpretation. See Tighe v. Combined Ins. Co. of America, 261 Neb. 993, 628 N.W.2d 670 (2001) (Whether or not contract language is ambiguous is a question of law). Accordingly, the language of the limit of liability clause is not ambiguous as it relates to the damages alleged in the First Cause of Action. Plaintiff’s allegation relating to operational costs is dismissed.

 

It is true that, ordinarily, a breach of contract will mean that damages, if proved, may be recovered against the breaching party. Here, however, in ¶ 6, Qwik-Cook and Birddog agreed to a limitation of damages. Parties bargaining at arm’s length surely may limit the recovery of actual damages resulting from a breach that is caused by specified circumstances. See Reichert v. Hammond, 264 Neb. 16, 645 N.W.2d 519, 527 (Neb.2002) ( “When … parties are experienced in business … and the parties had fair opportunity to consider the agreement, courts rarely find that liability limitations are unconscionable.”) The fact that Birddog may have breached the contract cannot void the limit of liability clause.

 

III. Mutuality of Obligation

 

Plaintiff argues that the limit of liability clause is unenforceable since it would result in the contract lacking mutuality of obligation. See Pl. Br. at 7. In addition, plaintiff claims that as interpreted by defendant, plaintiff would be obligated to perform its duties but Birddog could not be held accountable for the breach of its duties. See id. Defendant contends that it is not suggesting that the limit of liability clause exculpates it from all liability. See Def. Reply Br. at 3. For instance, the limit of liability clause does not preclude recovery for compensatory or direct damages for economic loss sustained as a result of a breach of the contract. See id.

 

Mutuality of obligation is an essential element of every enforceable agreement under Nebraska law. See Hecker v. Ravenna Bank, 237 Neb. 810, 468 N.W.2d 88, 93 (Neb.1991) (citing Garsick v. Dehner, 145 Neb. 73, 15 N.W.2d 235, 238 (Neb.1944). The Supreme Court of Nebraska has held that “mutuality of contract consists in the obligation of each party to do, or to permit something to be done, in consideration for the act or promise of the other … Mutuality is absent when one party only of the contracting parties is bound to perform and the right of the parties exist at the option of one only.” See id. Here, Qwik-Cook’s assertion that ¶ 6 of the LOSA Contract limits all liability if Birddog breached the contract is misplaced. The limit of liability clause does not exonerate defendant from potential liability for all damages. As previously mentioned, ¶ 6 does not bar recovery for compensatory or direct damages for economic loss sustained as a result of a breach of the agreement. It limits damages for “punitive, special, incidental or consequential damages” as well as “cost of procurement of substitute … services[.]” See LOSA Contract, ¶ 6.

 

CONCLUSION

 

For the reasons set forth above, defendant’s motion to dismiss the First Cause of Action of the Complaint for breach of contract is GRANTED since it fails to state a claim upon which relief can be granted. The First Cause of Action of the Complaint is dismissed.

 

ALL OF THE ABOVE IS SO ORDERED.

 

W.D.N.Y.,2009.

Qwik-Cook, Inc. v. Birddog Solutions, Inc.

Slip Copy, 2009 WL 3296132 (W.D.N.Y.)

 

END OF DOCUMENT

United States District Court,

D. New Jersey.

PORT DRIVERS FEDERATION 18, INC., et al, Plaintiffs,

v.

ALL SAINTS EXPRESS, INC., et al, Defendants.

Civ. No. 09-0868 (WHW).

 

Sept. 28, 2009.

 

OPINION

 

WALLS, Senior District Judge.

 

All Saints Express, Inc. and St. George Warehouse, Inc. (“Defendants”) move under Rule 12(b)(6), Fed.R.Civ.P. 12(b) (6), to dismiss the Complaint filed by Port Drivers Federation 18, Inc., Florencio Hernandez, Julian Hernandez, Jose Landa, Nelson Rodriguez, and Juan Marte (“Plaintiffs”). Pursuant to Rule 78, Fed.R.Civ.P. 78, the Court decides Defendants’ motion without oral argument. Defendants’ motion is denied.

 

FACTUAL AND PROCEDURAL BACKGROUND

 

Plaintiffs are independent owners and operators of trucks who lease their trucking equipment and driving services to motor carriers that are authorized by the U.S. Department of Transportation (“DOT”). All Saints Express, Inc. (“All Saints”) is a Delaware corporation with a place of business in New Jersey, and is a DOT authorized motor carrier. Between 2004 and 2008, Plaintiffs entered into “Independent Contract(or) Agreement[s]”with All Saints, under which they agreed to lease their equipment and services to All Saints for the purpose of transporting property.

 

Plaintiffs state that Port Drivers Federation 18, Inc. is acting “in a representative capacity on behalf of its members who operate under lease to the Defendant,” its members being the other named Plaintiffs. Although Defendants do not raise the issue, the Court notes that, under Int’l Union, United Auto., Aerospace and Agric. Implement Workers of Am. v. Brock, 477 U.S. 274, 106 S.Ct. 2523, 91 L.Ed.2d 228 (1986), an association such as Port Drivers Federation 18, Inc. has standing to sue on behalf of its members and is a proper plaintiff because “(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.” Id. at 282.

 

Plaintiffs allege that, as DOT authorized motor carriers, All Saints and its alter-ego, St. George Warehouse (“St.George”), are subject to the federal Truth in Leasing Regulations (“the Regulations”), 49 C.F.R. §§ 376.1, et. seq. Plaintiffs allege that the agreements entered into between Plaintiffs and Defendants are “leases” under the agreements, with Plaintiffs being the “lessors” of equipment and services and Defendants being the “lessees.” Plaintiffs allege that the leases violate the Regulations because they fail to include required information, such as the amount of the lessors’ compensation, the duration of the lease, and information regarding “charge-backs,” i.e., the items that will be initially paid for by lessees but ultimately deducted from lessors’ compensation.

 

Under 49 U.S.C. § 14704, any person may “bring a civil action for injunctive relief for violations of sections 14102 and 14103,” the sections under which the Regulations are promulgated. 49 U.S.C. § 14704(a)(1). Pursuant to this statutory provision, Plaintiffs seek (i) a declaratory judgment finding that the agreements in question are leases that violate the Regulations, (ii) an injunction prohibiting All Saints from performing transportation requiring DOT authorization until it enters into lease agreements meeting the requirements of the Regulations, (iii) an injunction compelling All Saints to disclose documents as required by the Regulations, (iv) an injunction preventing All Saints from engaging in retaliation or harassment against Plaintiffs, and (v) an award of attorneys’ fees and expenses.

 

Defendants move to dismiss Plaintiffs’ Complaint under Rule 12(b) (6), Fed.R.Civ.P. 12(b)(6), arguing that, despite its status as a DOT authorized motor carrier, All Saints is not subject to the Regulations because it is exempt under the primary business and/or corporate families exemptions to the Regulations, and that Plaintiffs have therefore failed to state a claim upon which relief can be granted.

 

LEGAL STANDARD

 

On a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), the court is required to “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 306 (3d Cir.2007). However, “a pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ 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, —U.S. —-, —-, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “Once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.” Twombly at 546. Thus, “a district court weighing a motion to dismiss asks ‘not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.’ ” Twombly at 563 n. 8 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).

 

In considering the plaintiff’s claims, the Court may consider the allegations of the complaint, as well as documents attached to or specifically referenced in the complaint. See Sentinel Trust Co. v. Universal Bonding Ins. Co., 316 F.3d 213, 216 (3d Cir.2003); Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1357 at 299 (2d ed.1990). “A ‘document integral to or explicitly relied on in the complaint’ may be considered ‘without converting the motion [to dismiss] into one for summary judgment.’ ” Mele v. Fed. Reserve Bank of N.Y., 359 F.3d 251, 255 n. 5 (3d Cir.2004) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997)).

 

DISCUSSION

 

Applicability of Regulatory Framework

 

Under Title 49 of the U.S.Code, the federal government is charged with overseeing modes of interstate transportation, including transportation by motor carrier, and the Secretary of Transportation is charged with carrying out this oversight. 49 U.S.C. §§ 13101, 13301. Motor carriers are required to receive operating authority from the Secretary before engaging in interstate motor transportation for hire, and the Secretary is empowered to regulate agreements entered into by motor carriers. 49 U.S.C. §§ 13901-2, 14102. See also Swift at 1110. Pursuant to these statutory grants of authority, the Secretary promulgated the Truth in Leasing Regulations (“the Regulations”), 49 C.F.R. §§ 376.1, et. seq, which govern the agreements between motor carriers and the independent owner-operators of trucks who the carriers hire to transport goods. “A primary goal of this regulatory scheme is to prevent large carriers from taking advantage of individual owner-operators due to their weak bargaining position.” Swift at 1110. Accordingly, the Regulations require an authorized carrier leasing trucking equipment and driving services from an owner-operator to enter into a written lease with the owner-operator, and require the leases to contain certain provisions. 49 C.F.R. §§ 376.11, 376.12. If a carrier fails to meet these requirements, owner-operators may seek damages and equitable relief under 49 U.S.C. § 14704. Swift at 1110.

 

Plaintiffs allege that All Saints is a DOT authorized and registered motor carrier and therefore subject to the relevant statutes and the Regulations. (Compl.¶ 1, 16.) Defendants concede that All Saints is an authorized and registered motor carrier (Def.Br.1), but argue that All Saints is exempt from this regulatory framework because it comes within the primary business exemption and/or the corporate families exemption found in the statutes. Leaving aside the fact that All Saints has registered itself under a statutory and regulatory regime from which it now claims exemption,  the Court rejects both these arguments at this time.

 

The Court notes that its analysis and evaluation of Defendants’ motion have been burdened by Defendants’ failure to provide thorough, well-researched, and cogent briefing in support of their motion.

 

Registration of authorized motor carriers is required by 49 U.S .C. §§ 13901-13902; 49 C.F.R. § 365.101. Although Defendants dismiss the significance of this registration, stating that “[Plaintiffs] look at All Saints’ DOT filing as a motor property contract carrier as if such a designation precludes exemption under the statute” (Def. Reply 4), such registration is indicative of a motor carrier’s own perception that it is subject to the statutory and regulatory framework, rather than exempt from it. If a person or entity did not consider itself to be an authorized motor carrier subject to regulation, it presumably would not register with the DOT. Syracuse Plastics, Inc. v. Guy M. Turner, Inc., 959 F.Supp. 147, 149 (N.D.N.Y.1997) (“In the instant case, defendant registered with the [Interstate Commerce Commission, the predecessor to the DOT] as an interstate motor carrier … Clearly the defendant considers itself to fall within the coverage of the [ Motor Carrier] Act.”).

 

First, Defendants maintain that All Saints and/or St. George is exempt under the “primary business” exemption of Title 49 because warehousing, not transportation, is its primary business. (Def. Br. 2-3; Def. Reply 2, 4-5.). The primary business exemption provides:

 

(a) In general.-Neither the Secretary nor the Board has jurisdiction under this part over the transportation of property by motor vehicle when-

 

(1) the property is transported by a person engaged in a business other than transportation; and

 

(2) the transportation is within the scope of, and furthers a primary business (other than transportation) of the person.

 

49 U.S.C. § 13505. The allegations in Plaintiffs’ Complaint (Compl ¶¶ 1, 8-17) and the agreement attached to Plaintiffs’ Complaint (Compl.Ex.A) suggest that Plaintiffs can prove facts to support a conclusion that All Saints’ and St. George’s primary business is transportation, and that they are therefore subject to the statutes and the Regulations.

 

Second, Defendants maintain that All Saints is exempt under the “corporate families” exemption of 49 U.S.C. § 13505(b) because it is a wholly owned subsidiary of St. George and it provides transportation services only for the benefit of its corporate parent, St. George. (Def. Br. 1, 3-4; Def. Reply 3, 5.) The corporate families exemption reads: “Neither the Secretary nor the Board has jurisdiction under this part over transportation of property by motor vehicle for compensation provided by a person who is a member of a corporate family for other members of such corporate family.” 49 U.S.C. § 13505(b)(1). The allegations in Plaintiffs’ Complaint (Compl ¶¶ 1, 8-17) and the agreement attached to Plaintiffs’ Complaint (Compl.Ex.A) suggest that Plaintiffs can also prove facts to support a conclusion that All Saints provides transportation services to parties other than St. George, and that it is therefore subject to the statutes and the Regulations.

 

Violation of Regulations

 

Plaintiffs allege that the “Independent Contract(or) Agreement[s]” entered into between Defendants and Plaintiffs Florencio Hernandez, Julian Hernandez, Jose Landa, Nelson Rodriguez, and Juan Marte are identical in all material respects to the agreement between Florencio Hernandez and All Saints, which is attached to the Complaint as Exhibit A. (Compl.¶¶ 8-12.) Plaintiffs allege that these agreements are leases that violate the Regulations because (i) they do not inform lessors of the amount of their compensation, in violation of the compensation provision of 49 C.F.R. § 376.12(d); (ii) they do not permit the lessors to examine the lessee’s documents relating to compensation, in violation of the compensation documentation provision of 49 C.F.R. § 376.12(g); (iii) they do not contain terms specifying the duration of the lease, in violation of 49 C.F.R. § 376.12(b); (iv) they do not specify that the lessee is required to provide the lessors with copies of insurance policies for the leased equipment, in violation of the insurance documentation provision of 49 C.F.R. § 376.12(j)(2); and (v) they do not clearly specify all items to be initially paid for by the lessee but ultimately deducted from the lessor’s compensation, in violation of the charge-back provision of 49 C.F.R. § 376.12(h).

 

The Court considers this agreement, which is integral to the Complaint and explicitly relied on in the Complaint. However, the Court does not consider the declarations attached to Defendants’ Memoranda of Law in support of its Motion to Dismiss or the additional facts alleged in Plaintiffs’ Memorandum of Law in opposition to the Motion. These materials are inappropriate for consideration in the context of a Motion to Dismiss, which requires the Court to accept as true all factual allegations in the Complaint. Moreover, consideration of such matters outside the pleadings would, under Rule 12(d), convert a Rule 12(b)(6) Motion to Dismiss into a Rule 56 Motion for Summary Judgment, a conversion which the Court is disinclined to make because it has not directed the parties to brief in preparation for summary judgment.

 

Plaintiffs’ claims regarding the terms of the agreements are supported by the representative agreement attached to the Complaint, and each of Plaintiffs’ allegations of regulatory violations, if proved, would be sufficient to entitle Plaintiffs to relief under 49 U.S.C. § 14704.

 

CONCLUSION

 

Accepting as true the allegations in Plaintiffs’ Complaint, and construing the Complaint in the light most favorable to Plaintiff, the Court finds that Plaintiffs can demonstrate facts to support the conclusion that Defendants are subject to, and are in violation of, the Truth in Leasing Regulations, and that Plaintiffs are entitled to relief from these violations. Plaintiffs have stated a claim upon which relief can be granted.

 

It is on this 28th day of September, 2009:

 

ORDERED that Defendants’ Motion to Dismiss Plaintiffs’ Complaint for Failure to State a Claim Upon Which Relief Can Be Granted is DENIED.

 

D.N.J.,2009.

Port Drivers Federation 18, Inc. v. All Saints Exp., Inc.

Slip Copy, 2009 WL 3234589 (D.N.J.)

 

END OF DOCUMENT