United States District Court,E.D. Arkansas,Eastern Division.

Adriene CORBIN, Plaintiff

v.

March 4, 2008.

OPINION AND ORDER

J. LEON HOLMES, District Judge.

Adriene Corbin commenced this action in the Circuit Court of Phillips County, Arkansas. The defendants removed the action to federal court, contending that the cause of action is governed exclusively by the Carmack Amendment to the Interstate Commerce Commission Act, 49 U.S.C. § 14706. Arkansas Best Corporation subsequently filed a motion to dismiss pursuant to Rule 12(b)(6). Corbin has moved to remand and responded to Arkansas Best’s motion to dismiss.

I.

Only state court actions that originally could have been filed in federal court may be removed to federal court by the defendant. Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987); M. Nahas & Co., Inc. v. First Nat. Bank of Hot Springs, 930 F.2d 608, 611 (8th Cir.1991). If diversity of citizenship does not exist, then federal question jurisdiction typically requires that the federal question be presented “on the face of the plaintiff’s properly pleaded complaint.”Caterpillar, 482 U.S. at 392, 107 S.Ct. at 2429. However, there is an exception to the well-pleaded complaint rule. Woods v. Unigroup, Inc., 945 F.Supp. 1255, 1255 (E.D.Mo.1996).“Under the ‘complete preemption’ doctrine, there are times when a federal statute so completely preempts a particular area of law that ‘any civil complaint raising this select group of claims is necessarily federal.’ “ Id. (quoting M. Nahas & Co., 930 F .2d at 612).

The issue in this case is whether federal law, specifically the Carmack Amendment, preempts Corbin’s claim for negligence under Arkansas law. The Supreme Court has long held that the Carmack Amendment preempts state law negligence claims. Adams Express v. Croninger, 226 U.S. 491, 505-06, 33 S.Ct. 148, 152, 57 L.Ed. 314 (1913) (“Almost every detail of the subject is covered so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it.”). The Eighth Circuit observed that the Carmack Amendment “has preempted suits in specific negligence by holders of hills of lading against their carriers.”Fulton v. Chicago, Rock Island & Pac. R.R. Co., 481 F.2d 326, 331 (8th Cir.1973).“ ‘The cases make it clear that when damages are sought against a common carrier for failure to properly perform, or for negligent performance of, an interstate contract of carriage, the Carmack Amendment governs.’ “ Id. at 332 (quoting Am. Synthetic Rubber Corp. v. Louisville & N.R.R. Co., 422 F.2d 462, 468 (6th Cir.1970)). A prima facie case under the Carmack Amendment exists when a plaintiff shows that: (1) deliver of the shipment to the carrier was in good condition, (2) arrival of the shipment was in damaged condition, and (3) the amount of damages. Mo. Pac. R.R. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142, 1144, 12 L.Ed.2d 194 (1964).

In her complaint, Corbin alleges that she entered into a contract with ABF Freight and Arkansas Best Corporation to move her furniture and household goods from California to Arkansas. She further alleges that the defendants moved her belongings negligently resulting in damage to her property. Because Corbin’s state law claims are based on the negligent acts of ABF Freight and Arkansas Best, they are completely preempted by the Carmack Amendment. See Fulton, 481 F.2d at 331-32;Midamerican Energy Co. v. Start Enters., Inc., 437 F.Supp.2d 969, 971-72 (S.D.Iowa 2006); Woods, 945 F.Supp. at 1256. The claim was properly removed for this Court’s exercise of federal question jurisdiction.

II.

Arkansas Best Corporation has also moved for a dismissal for failure to state a claim pursuant to Rule 12(b)(6). Federal Rule of Civil Procedure 8(a)(2) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief….”FED.R.CIV.P. 8(a)(2). Specific facts are not required; the complaint simply must “ ‘give the defendant fair notice of what the … claim is and the grounds upon which it rests.’ “ Erickson v. Pardus, — U.S. —-, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007) (quoting Bell Atlantic Corp. v. Twombly, — U.S. —-, 127 S.Ct. 1955, 1964-66, 165 L.Ed.2d 929 (2007) (internal quotation marks omitted)). However, the complaint must include enough factual information to “provide the ‘grounds’ on which the claim rests, and to raise a right to relief above a speculative level.” Twombly, 127 S.Ct. at 1964-65 & n. 3;Schaf v. Residential Funding Corp., — F.3d —-, No. 06-3694, 2008 WL 465481, at(8th Cir. Feb. 22, 2008). “A judge must accept as true all of the factual allegations contained in the complaint.” Erickson, 127 S.Ct. at 2200;see also Twombly, 127 S.Ct. at 1964;Swierkiewicz v. Sorema N. A., 534 U.S. 506, 508 n. 1, 122 S.Ct. 992, 995 n. 1, 152 L.Ed.2d 1 (2002); Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827, 1832, 104 L.Ed.2d 338 (1989); Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).

Arkansas Best contends that Corbin’s complaint fails to state a claim because it “provides no facts involving ABC” and does not indicate “any legal relationship or privity between” Corbin and Arkansas Best. Arkansas Best also contends that Arkansas Best is not a “carrier” under the Carmack Amendment and is therefore not liable. From the face of the complaint, it is clear that Corbin has alleged that she contracted with both Arkansas Best and ABF Freight. She likewise alleges negligence on the part of both defendants. Viewing those allegations favorably to Corbin, she has provided a factual basis for her claims against Arkansas Best.

The Carmack Amendment provides:

A carrier providing transportation or service … shall issue a receipt or bill of lading for property it received for transportation under this part. That carrier and any other carrier that delivers the property and is providing transportation or service … are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported in the United States…. Failure to issue a receipt or bill of lading does not affect the liability of a carrier.

49 U.S.C. § 14706(a)(1). A “carrier,” specifically a “motor carrier” in this case, is someone who provides commercial motor vehicle transportation for compensation. 49 U.S.C. § 13102(14). “Transportation” is defined broadly to include “services related to [the] movement [of passengers or property], including arranging for, receipt, delivery, elevation, transfer in transit … handling, packing, unpacking, and interchange of passengers and property.”49 U.S.C. § 13102(23)(B). Thus, liability under the Carmack Amendment “extends beyond the carrier who actually provides the transportation.”Land O’Lakes v. Superior Service Transp. of Wisc., 500 F.Supp.2d 1150, 1155 (E.D.Wis.2007); see, e.g., Mach Mold Inc. v. Clover Assocs., Inc., 383 F.Supp.2d 1015, 1030 (N.D.Ill.2005) (Accordingly, if [the defendant] had been authorized to transport the machine amd accepted and legally bound itself to do so … [the defendant] would be acting as a motor carrier ….”). Therefore, Arkansas Best could be a “carrier” under the Carmack Amendment.

Even if Arkansas Best were not considered a “carrier” under the Carmack Amendment, Corbin’s claim against it should not be dismissed. Under the Carmack Amendment, only carriers and freight forwarders, not brokers, are held liable.Chubb Group of Ins. Cos. v. H.A. Transp. Sys., 243 F.Supp.2d 1064, 1069 (C.D.Cal.2002). However, brokers may be held liable under state tort or contract law in connection with shipments they have brokered. Id.; see also Electroplated Metal Solutions, Inc., v. Am. Servs., Inc., No. 07-C-409, 2008 WL 345617, at(N.D. Ill Feb. 7, 2008). Since Corbin has stated sufficient facts for a claim against Arkansas Best even if Arkansas Best is not a carrier, Arkansas Best should not be dismissed.

CONCLUSION

Because Corbin’s state law negligence claims are preempted by the Carmack Amendment, Arkansas Best and ABF Freight properly removed this action to federal court. Corbin’s motion to remand is therefore denied. Document # 7. Corbin has alleged facts sufficient to state a claim against Arkansas Best. Arkansas Best’s motion to dismiss is denied. Document # 3.

IT IS SO ORDERED.

United States District Court, N.D. California.

The CONTINENTAL INSURANCE COMPANY, a corporation, Plaintiff,

v.

KAWASAKI KISEN KASHA, LTD. d/b/a “K” Line, a foreign corporation, “K” Line America, Inc., a foreign corporation, and Doe One through Doe Ten, Defendants.

Feb. 25, 2008.

ORDER DENYING MOTION TO REMAND

WILLIAM ALSUP, District Judge.

INTRODUCTION

This order holds that all claims by a shipper for damage to cargo under a bill of lading for seaborne carriage between a United States port and a foreign port are exclusively governed by the Carriage of Goods by Sea Act and federal maritime law, thus preempting application of state-law claims. Removal to federal court of such a complaint is therefore authorized even though it may be pled solely in terms of state-law claims. As such, plaintiff’s motion to remand is DENIED.

STATEMENT

In September of 2006 a large shipment of plums traveled by vessel from Oakland, California to Hong Kong (Compl. ¶ 5; Opp. 2). The plums traveled under four separate bills of lading, all issued by or on behalf of defendants Kawasaki Kisen Kaisha, Ltd. and “K” Line America, Inc. By the time of their delivery in Hong Kong, the plums were allegedly spoiled. (Compl.¶ 6).

Plaintiff, a domestic insurance company, issued a cargo insurance policy to its insured, Kingsburg Orchards, to cover the shipment of plums. On October 26, 2007, plaintiff filed a complaint in state court against defendants, asserting four state-law claims: breach of contract, bailment, negligence, and breach of California Civil Code § 2194 (a statute that makes inland common carriers liable for damage to freight). The complaint asserted that defendants “agreed, under contracts of carriage” to carry the cargo of plums from Oakland to Hong Kong (Compl.¶ 5). Defendants, according to the complaint, received the cargo of plums in Oakland “in good order and condition” but delivered the cargo in Hong Kong damaged due to exposure to “improper temperature” (Compl.¶ 5, 6). No federal claim was expressly asserted.

In December of 2007, defendants removed under 28 U.S.C. 1441(b), asserting that the controversy was governed by the Carriage of Goods by Sea Act (“COGSA”). The immediate question is whether to remand for lack of subject-matter jurisdiction.

ANALYSIS

1. LEGAL STANDARD.

Removal under 28 U.S.C. 1441(b) is permitted if the claim is one “arising under” federal law. The removing party bears the burden of establishing that removal is proper. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir.1990). The removal statutes are strictly construed such that any doubts are resolved in favor of remand. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992).

Under the well-pleaded complaint rule, “a cause of action arises under federal law only when the plaintiffs’ well-pleaded complaint raises issues of federal law.”Toumajian v. Frailey, 135 F.3d 648, 653 (9th Cir.1998) (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)). In order to remove an action to federal court, a federal question must appear on the face of the complaint. Ibid. The existence of a federal defense-even the defense of preemption-is normally not enough to justify removal to federal court. Caterpillar Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) (“[I]t is now settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption.”).

The doctrine of complete preemption recognizes, however, that the “preemptive force” of a federal statute can be so strong as to completely preempt state law. “In such instances, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law.”Ansley v. Ameriquest Mortg. Co., 340 F.3d 858, 862 (9th Cir.2003). State claims deemed to have been completely preempted by federal claims are properly removed to federal court. In re Miles, 430 F.3d 1083, 1088 (9th Cir.2005). To date, the Supreme Court has determined that three federal statutes completely preempt state law: Section 301 of the Labor and Management Relations Act (29 U.S.C. 185); Section 502 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132); and Sections 85 and 86 of the National Bank Act (12 U.S.C. 85, 86).See Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6-11, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003). In Beneficial National Bank v. Anderson, the Supreme Court explained that the “proper inquiry focuses on whether Congress intended the federal cause of action to be exclusive.”Id. at 9 n. 5. The Ninth Circuit has explained that complete preemption only arises in “extraordinary” situations and that “[t]he test is whether Congress clearly manifested an intent to convert state law claims into federal-question claims.”Ansley, 340 F.3d at 862 (quoting Wayne v. DHL Worldwide Express, 294 F.3d 1179, 1184 (9th Cir.2002)).

2. THE CARRIAGE OF GOODS BY SEA ACT (COGSA).

By its own terms, COGSA applies to “[e]very bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade …” (46 U.S.C. 30701). COGSA imposes specific duties on the carrier between the “tackles”-i.e., from the time “when the goods are loaded on to the time when they are discharged from the ship.”It also carves out immunities for “uncontrollable losses” (e.g., acts of god, war, strikes, etc.) and provides a default liability limitation of $500 per package. Parties are allowed to negotiate higher liability limitations but an agreement setting a liability limitation below $500 per package is void. Under COGSA, a shipper can establish a prima facie case by producing a valid bill of lading and showing that the cargo was damaged. The burden then shifts to the carrier to prove that the damage resulted from a cause for which it is not liable (i.e., a cause for which an immunity applies). Claims for damages must be brought within one year of delivery of the cargo. Ibid.; see also Admiralty and Maritime Law, Federal Judicial Center, at 58-80 (2004); Michael E. Crowley, The Limited Scope of the Cargo Liability Regime Covering Carriage of Goods by Sea: The Multimodal Problem, 79 Tul. L.Rev. 1461 (2005).

Neither the Supreme Court nor the Ninth Circuit has spoken directly to the question of whether COGSA completely preempts state law. See Wright, Miller and Cooper, Federal Practice & Procedure: Jurisdiction § 3722.1 (3d ed.2007). The courts that have reached the question have come to differing conclusions. See Hemphill v. Transfresh Corporation, et al., No. C 98-0899 VRW, 1998 WL 320840 (N.D.Cal.1998) (concluding that COGSA did not completely preempt state law); Greenidge v. Mundo Shipping Corporation, 41 F.Supp.2d 354, 358 (E.D.N.Y.1999) (holding that COGSA did not completely preempt state law because it did not regulate all onboard activities).Compare Joe Boxer Corp. v. Fritz Transp. Intern. 33 F.Supp.2d 851, 855 (C.D.Cal.1998) (finding COGSA to be completely preemptive but holding that the law did not govern the facts of the case); Polo Ralph Lauren, L.P., v. Tropical Shipping & Constr. Co., 215 F.3d 1217, 1220 (11th Cir.2000) (noting that COGSA is “silent on its preemptive scope” but holding that COGSA provides an exclusive remedy).

This order will follow the Eleventh Circuit’s decision in Polo Ralph Lauren, L.P. and hold that COGSA provides an exclusive remedy and therefore completely preempts state law. First, the text of COGSA implies that Congress intended to supersede other laws, thereby providing an exclusive remedy. Second, COGSA sets forth the kind of comprehensive regulatory scheme that the Supreme Court found to provide an exclusive remedy in Beneficial National Bank v. Anderson. 539 U.S. at 10. Third, the Supreme Court’s recent opinion in Norfolk Southern Railway Co. v. Kirby makes clear that state law must yield to COGSA where it applies. 543 U.S. 14, 28-29, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004). In short, COGSA leaves no state remedy in its wake; it provides an exclusive remedy and is therefore completely preemptive. Here are the details.

Although COGSA is “silent on its preemptive scope,” the text of the statute implies that Congress intended for COGSA to supersede other laws and provide an exclusive remedy. Polo Ralph Lauren, L.P., 215 F.3d at 1220. By its terms, COGSA applies between the “tackles”-in other words, while the cargo is physically on board the ship. The statute explicitly preserves laws that apply before or after this “tackle-to-tackle” period (46 U.S.C. 30701):

Nothing in this chapter shall be construed as superseding any part of sections 190 to 196 of this title, or of any other law which would be applicable in the absence of this chapter, insofar as they relate to the duties, responsibilities, and liabilities of the ship or carrier prior to the time when the goods are loaded on or after the time they are discharged from the ship.

By expressly stating that the law does not supersede laws outside the “tackle-to-tackle” period, Congress evidenced an assumption that COGSA does supersede laws during the “tackle-to-tackle” period. The Eleventh Circuit adopted this interpretation in Polo Ralph Lauren, L.P. where it held that COGSA provides the “exclusive remedy” for goods lost or damaged at sea. 215 F.3d at 1220. Pointing to the passage quoted above, the Eleventh Circuit concluded that COGSA preempted claims of negligence, breach of contract, and bailment. “Because COGSA governs during the time after cargo is loaded and before it is removed from the ship, the implication from this provision is that COGSA, when it applies, supersedes other laws.”Ibid.

COGSA provides the kind of comprehensive regulatory scheme that the Supreme Court found to be completely preemptive in Beneficial National Bank v. Anderson.In that case, the Supreme Court concluded that the National Bank Act provided the exclusive cause of action for usury claims, noting that the provisions of the Act formed a “system of regulations … [all] the parts [of which] are in harmony with each other and cover the entire subject” such that “the state law would have no bearing.”539 U.S. at 10 (internal quotations omitted). Similarly, COGSA’s provisions form a “system of regulations” under which state law has “no bearing.” COGSA imposes affirmative duties on carriers and carves out immunities for “uncontrollable losses.” It protects shippers by voiding agreements that limit liability below $500 a package and it lays out a burden-shifting procedural scheme wherein the carrier bears the burden of proving no fault. Its statute of limitations bars suits filed after a year from delivery. In short, COGSA is a comprehensive system of regulations that “cover [s] the entire subject” and leaves no room for state law.

The Supreme Court’s recent opinion in Norfolk Southern Railway Co. v. Kirby further makes clear that state law must yield to federal maritime law in general and to COGSA where it applies. 543 U.S. at 28-29. In Kirby, a shipper contracted with a freight forwarder to ship cargo from Australia to Alabama. The cargo traveled safely through the ocean leg of its trip but sustained damage from a train wreck in Alabama. The shipper sued the railroad, asserting tort and contract claims. The Supreme Court reached two conclusions that have particular relevance to the present case. First, the Supreme Court concluded that federal maritime law, not state law, governed the case, despite the fact that the damage arose from a train wreck. Id. at 22-28 (“When a contract is a maritime one, and the dispute is not inherently local, federal law controls the contract interpretation”). The Court explained that federal law must govern in order to avoid “confusion and inefficiency” and to protect the “uniformity of general maritime law.” Id. at 28.Second, the Court held that because one of the bills of lading at issue had expressly extended COGSA’s default liability rule to the inland portion of the journey, the railroad was entitled to the limitation’s protection. “In protecting the uniformity of federal maritime law, we also reinforce the liability regime Congress established in COGSA.”Id. at 29.

If federal maritime law governs a train wreck in Alabama then, a fortiori, federal maritime law governs the ocean voyage of plums from Oakland to Hong Kong. More specifically, because plaintiff’s complaint alleges the prima facie elements of a COGSA claim, federal maritime law and COGSA apply here. The complaint asserts that defendants “agreed, under contracts of carriage” to carry the cargo of plums from Oakland to Hong Kong. (Compl.¶ 5). Defendants, according to the complaint, received the cargo of plums in Oakland under four bills of lading and delivered the cargo damaged in Hong Kong. (Compl.¶ 5, 6). Under these facts, COGSA applies; state law has “no bearing.” As in Beneficial National Bank v. Anderson,“[e]ven though the complaint makes no mention of federal law,” plaintiff’s cause of action “only arises under federal law and could, therefore, be removed under § 1441.”Beneficial Nat’l Bank, 539 U.S. at 11.

As noted above, some courts have found that Congress did not intend for COGSA to completely preempt state law. The court in Hemphill v. Transfresh Corp. came to that conclusion. 1998 WL 320840 at 3. This decision came down, however, before the Supreme Court decided Kirby, before the Eleventh Circuit decided Polo Ralph Lauren, and before the Supreme Court offered its recent clarification of the complete preemption doctrine in Beneficial National Bank v. Anderson. See Gil Seinfeld, The Puzzle of Complete Preemption, 155 U. Pa. L.Rev. 537, 552 (2007) (“In the wake of the decision in Beneficial National Bank, the confusion that previously accompanied application of the complete preemption rule has subsided considerably”). Moreover, in Hemphill v. Transfresh Corp., as in other cases, the court pointed to a lack of precedent to support the conclusion that COGSA was not completely preemptive; the court did not engage in a full analysis under the complete preemption doctrine.Hemphill, 1998 WL 320840 at 3;see also JVC Americas Corp. v. CSX Intermodal Inc., 292 F.Supp.2d 586, 594 (D.N.J.2003) (“The courts that have addressed this issue have reached varying results, so there is no “bright line” on this issue … there is no “bright line” or clear Congressional intent in this area to justify preemption”). The absence of precedent, however, should not be equated with the absence of congressional intent. The “proper inquiry focuses on whether Congress intended the federal cause of action to be exclusive.”Beneficial Nat’l Bank, 539 U.S. at 9 n. 5.

In a 1999 decision, a district court in New York concluded that COGSA did not completely preempt state law because “it does not regulate all onboard activities related to cargo.”Greenidge, 41 F.Supp.2d at 354. The court did not specify which onboard activities, in its determination, remained unregulated by COGSA. Although COGSA enumerates specific affirmative duties (for example, COGSA requires carriers to “properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried”), certain of its provisions would apply to activities not specifically enumerated (for example, the statute of limitations).46 U.S.C. 30701. Moreover, assuming for the sake of argument that gaps do exist under COGSA, the Supreme Court made clear in Kirby that federal maritime law, not state law, would fill those gaps.

In a 1995 decision, the Fifth Circuit held that “COGSA does not preclude claims for cargo damages that sound in tort.”Associated Metals & Minerals Corp. v. Alexander’s Unity, 41 F.3d 1007, 1017 (5th Cir.1995). The present case can be distinguished, however, because plaintiff has brought state tort claims. At issue in Associated Metals & Minerals Corp. v. Alexander’s Unity was the proper balance between COGSA and the rest of federal maritime law. At issue here is the proper balance between COGSA and state law.

CONCLUSION

For the foregoing reasons, this order holds that, as to the specific disputes at hand, federal maritime law and COGSA completely preempt any state law remedy. This case was therefore properly removed to federal court. Plaintiff’s motion to remand is D ENIED.A separate case management order will issue.

IT IS SO ORDERED.