CASES (2021)

KP Trucking, LLC v U.S. DOT

2021 WL 868493

This case was not selected for publication in West’s Federal Reporter.
See Fed. Rule of Appellate Procedure 32.1 generally governing citation of judicial decisions issued on or after Jan. 1, 2007. See also U.S.Ct. of App. 10th Cir. Rule 32.1.
United States Court of Appeals, Tenth Circuit.
KP TRUCKING LLC, Petitioner,
v.
UNITED STATES DEPARTMENT OF TRANSPORTATION; Federal Motor Carrier Safety Administration (FMCSA), Respondents.
No. 20-9508
|
FILED March 9, 2021
(FMCS No. 0258)
Attorneys and Law Firms
Lawrence Michael Wheeler, Hammond Archer & Kee, Duncan, OK, for Petitioner
Matthew J. Hardy, Office of Chief Counsel, Atlanta, GA, Paula Lee, United States Department of Transportation, Office of the General Counsel, Washington, DC, Abby Christine Wright, U.S. Department of Justice, Appellate Section, Civil Division, Washington, DC, for Respondents
Before BACHARACH, Circuit Judge, LUCERO, Senior Circuit Judge, and PHILLIPS, Circuit Judge.

ORDER AND JUDGMENT*
Robert E. Bacharach, Circuit Judge
*1 This case involves administrative regulation of the trucking industry. Under these regulations, safety violations by two companies can be combined when one of the companies changes its name or structure to skirt the consequences of prior violations. 49 C.F.R. § 386.73(b).

Invoking this authority, federal regulators suspended a trucking company, Eagle Iron & Metal. When Eagle was suspended, another entity (KP Trucking, LLC) expanded its operations. Regulators viewed KP’s expansion as an effort to continue Eagle’s operations in order to bypass penalties and start anew on a fresh slate. KP disagrees and petitions for judicial review.1 We deny the petition.

1. KP emerges when Eagle is suspended.
Trucking companies can operate only when granted operating authority by the Federal Motor Carrier Safety Administration. See 49 C.F.R. pt. 385. This authority had been granted to Eagle. But the Safety Administration cited Eagle for safety violations, imposed a penalty, and suspended Eagle’s registration. Upon Eagle’s suspension, KP quickly filled the void by taking the steps necessary to obtain reinstatement of its operating authority.

KP soon drew its own citations for safety violations. The Safety Administration directed both KP and Eagle to suspend operations and ordered consolidation of the two companies’ records, finding that KP had continued Eagle’s operations under a new identity in order to avoid Eagle’s civil penalty, suspension, and poor compliance history. KP challenges this finding.

2. The Safety Administration had substantial evidence to find that KP was merely continuing Eagle’s business for an improper purpose.
Under the petition for review, we must consider whether KP was merely continuing Eagle’s operations for an improper purpose. To consider this issue, we regard the Safety Administration’s finding as presumptively valid and will grant KP’s petition only if the finding is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law or unsupported by substantial evidence.” Andalex Res., Inc. v. Mine Safety & Health Admin., 792 F.3d 1252, 1257 (10th Cir. 2015). To overcome this presumption of validity, KP bears the burden of proof. Midwest Crane & Rigging, Inc. v. Fed. Motor Carrier Safety Admin., 603 F.3d 837, 840 (10th Cir. 2010).

The Safety Administration concluded that KP had acted only to continue Eagle’s operations and had expanded for an improper purpose. KP challenges the evidentiary basis for these findings.

A. Substantial evidence existed for the finding of continuity of Eagle’s operations.
To determine whether KP served merely to continue Eagle’s operations, the Safety Administration could consider
• the businesses’ management structures,
• their asset purchases or transfers and the related title history,
• employee records, and
• any other information related to the businesses’ general operations.
*2 49 C.F.R. § 386.73(d). The Safety Administration based its determination in part on the existence of common ownership, finding that one person (Kenney Balthrop) owned KP and had an ownership interest in Eagle. KP does not dispute that Mr. Balthrop is its owner, but does challenge the finding that he had an ownership interest in Eagle. For this finding, the Safety Administration could reasonably rely on two pieces of evidence.

First, Eagle had submitted a form in 2010, stating that Mr. Balthrop was an owner.

Record at 113.

Second, Eagle stated in 2018 that Mr. Balthrop was an owner of Eagle:

Id. at 144.

In finding that KP was used to continue Eagle’s operations, the Safety Administration relied not only on common ownership but also on findings as to the two companies’
• use of the same drivers, vehicles, shippers, telephone numbers, mailing addresses, and email addresses,
• common management, and
• proximity to each another.
KP does not dispute these findings of commonality.

In addition to proximity and commonality in operations, the Safety Administration relied on KP’s acquisition of Eagle’s assets without any payment. KP insists that it did pay for Eagle’s assets, pointing to a contract to buy trucks from Eagle. But in the administrative proceeding, KP never mentioned or presented this contract.

KP seeks to supplement the administrative record with this contract. We deny this request. When we review an agency’s decision, we must focus on the administrative record that already exists, not a newly created record. Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973) (per curiam).

In seeking to expand the administrative record, KP relies on Federal Rule of Appellate Procedure 16(b). This rule allows the parties to stipulate to the addition of a document inadvertently omitted from the agency’s record. But KP does not suggest that the contract was supposed to be in the administrative record and inadvertently omitted; KP instead asks us to consider the document even though it was never part of the administrative record. Even if Rule 16(b) were applicable in this situation, KP has not justified expansion of the record with the contract. See Am. Mining Cong. v. Thomas, 772 F.2d 617, 626–27 (10th Cir. 1985) (identifying exceptions to the rule against the use of extra-record materials).

If we were to consider the contract, we would be evaluating the factual findings based on evidence that the Safety Administration had no opportunity to consider. We thus deny the motion to supplement the record. See N.M. Env’t Improvement Div. v. Thomas, 789 F.2d 825, 835–36 (10th Cir. 1986) (declining to review information that the petitioner had not presented during the administrative process).

*3 Even if we were to consider the contract, the Safety Administration could reasonably have found that KP had not paid for the trucks. According to the contract, KP bought two trucks from Eagle on May 23, 2018. The vehicle identification number of one of these trucks was 1FUPCXYB81LG61890. During a compliance review roughly four months later, however, Eagle provided maintenance records for that same truck, suggesting that it was still in Eagle’s fleet. Given these records, the Safety Administration could reasonably infer that Eagle had never parted with either truck identified in the contract.

B. Substantial evidence existed for the finding of an improper purpose.
The Safety Administration found not only a continuity in operations but also an improper purpose, relying primarily on the timing of Eagle’s suspension and KP’s reinstatement.

In November 2018, the Safety Administration stated that Eagle had an “unsatisfactory” safety record based on numerous violations. Those violations led to civil penalties and an order for Eagle to halt operations. Eagle admitted to some of the violations and entered a settlement agreement, which allowed continuation of operations only if Eagle made installment payments on the civil penalties. After one installment, Eagle stopped paying. As a result, its operations were suspended in May 2019.

Meanwhile, KP twice had its own operating authority suspended for failing to carry liability insurance. The first suspension order came in September 2018, and KP did not make efforts to get reinstated until January 2019—four days before Eagle made its only installment payment. The second insurance-related suspension came in August 2019, after Eagle’s operations had been suspended for non-payment of its penalties. This time, however, KP quickly obtained the required insurance and restoration of its operating authority.

Given Eagle’s inaction when suspended and assessed civil penalties, the Safety Administration could reasonably regard KP’s quick corrective action as a ploy for Eagle to
• continue operations through a newly reinstated KP and
• avoid payment of the previously assessed civil penalties.
KP questions the Safety Administration’s inferences from the timing. KP points out that it too was hit with civil penalties, insisting that if Mr. Balthrop’s goal was to avoid payment, he would have created a third business entity to start again on a fresh slate.

KP did not raise this argument when petitioning for review by the Safety Administration. And KP’s payment of its own penalties does not undermine the Safety Administration’s conclusion that KP was operating as a reincarnation of Eagle. A factfinder might have accepted an innocent explanation for the timing. But a factfinder could also have reasonably inferred that Mr. Balthrop had decided to resume operations through the newly reinstated KP to skirt Eagle’s civil penalties, but declined to form a third entity when KP was assessed its own civil penalties.

* * *

We conclude that the Safety Administration reasonably found that KP was continuing Eagle’s operations for an improper purpose, so we deny the petition for judicial review. We also deny KP’s motion to supplement the record with the contract to buy Eagle’s trucks.

All Citations
— Fed.Appx. —-, 2021 WL 868493

Footnotes

*
The parties have waived oral argument, and it would not materially help us to decide the petition for review. See Fed. R. App. P. 34(a)(2)(C); 10th Cir. R. 34.1(G). So we have decided the petition for judicial review based on the record and the parties’ briefs.
Our order and judgment does not constitute binding precedent except under the doctrines of law of the case, res judicata, and collateral estoppel. But the order and judgment may be cited for its persuasive value if otherwise appropriate. See Fed. R. App. P. 32.1(a); 10th Cir. R. 32.1(A).

1
Regulators also found that another entity, Kenney Balthrop d/b/a KP’s Trucking, was used to avoid the suspension and penalties imposed on Eagle. But this finding is not at issue here.

Radial Engines, Ltd v YRC Freight, Inc.

2021 WL 665536

United States District Court, W.D. Oklahoma.
RADIAL ENGINES, LTD., Plaintiff,
v.
YRC FREIGHT, INC., Defendant.
Case No. CV-19-00841-PRW
|
Filed 02/19/2021

ORDER
PATRICK R. WYRICK UNITED STATES DISTRICT JUDGE
*1 Before the Court is Defendant’s Motion to Dismiss Plaintiff’s Petition (Dkt. 3). For the reasons that follow, the Court grants the motion in part and denies it in part.

Background
Plaintiff, Radial Engines, Ltd., (“Radial”) repairs, remanufactures, and overhauls radial aircraft engines.1 Defendant, YRC Freight, Inc., (“YRC”) is a freight transportation business.2

Radial contracted with YRC to ship an aircraft from Guthrie, Oklahoma, to Pottstown, Pennsylvania, in a sealed cargo trailer.3 According to the Petition, upon arrival to the destination, the seal showed signs of tampering and the aircraft was damaged.4 Radial filed a claim with YRC for the damage to the aircraft, but YRC promptly rejected it.5

Radial then sued YRC in the District Court of Logan County6 seeking a “money judgment” in excess of the jurisdictional minimum plus interest, costs, attorney’s fees, and any other relief deemed just and proper.7 The Petition lays out the facts outlined above in support but enumerates no particular cause or causes of action. It concludes with this, its sole legal assertion: “It was YRC’s duty to ensure that [Radial’s] property was delivered in good condition and YRC breached that duty.”8

YRC subsequently removed to this Court pursuant to 28 U.S.C. § 1332.9

Now, YRC asks this Court to dismiss Radial’s Petition.10 YRC begins by observing that the Petition does not explicitly state a cause of action.11 It then infers breach of contract and negligence claims.12 And these claims, YRC argues, are preempted by the Carmack Amendment, found in 49 U.S.C. § 14706.13 Therefore, it concludes, Radial’s Petition should be dismissed for failure to state a claim upon which relief can be granted.14,15

Discussion
As Radial effectively concedes,16 and well-established authority settles, the Carmack Amendment completely preempts state law on the subject of carrier liability for goods lost or damaged in shipment under a bill of lading,17 including state-law claims for negligence18 and breach of contract.19 So, to the extent Radial can be said to assert such claims,20 its claims fail as a matter of law.

*2 But that does not mean Radial’s Petition fails to state any claim at all. The Carmack Amendment specifically provides a federal cause of action.21 To establish a prima facie claim under that federal cause of action, Radial, as a shipper, need only demonstrate delivery in good condition to a carrier, arrival in damaged condition to the destination, and the amount of damages.22 Radial alleges each of these elements: As Radial succinctly puts it, “the Petition plainly identifies Radial as a shipper, YRC as a carrier, a cargo, and damage to that cargo while it was in YRC’s possession and control”23 in excess of the jurisdictional minimum.24,25 This is more than adequate to state a claim at this early stage.

The fact that Radial’s Petition does not expressly state it is asserting a claim under the Carmack Amendment is of no consequence. “The federal rules effectively abolish the restrictive theory of the pleadings doctrine, making it clear that it is unnecessary to set out a legal theory for the plaintiff’s claim for relief.”26

Conclusion
For the foregoing reasons, the Court dismisses Radial’s claims for negligence and breach of contract but does not dismiss Radial’s claim under the Carmack Amendment or its requested relief. Accordingly, Defendant’s Motion to Dismiss Plaintiff’s Petition (Dkt. 3) is GRANTED IN PART and DENIED IN PART.

IT IS SO ORDERED this 19th day of February 2021.

All Citations
Slip Copy, 2021 WL 665536

Footnotes

1
See Pet. (Dkt. 1, Ex. 1) at 1.

2
See id. at 1-3; Pl.’s Resp. to Def.’s Mot. to Dismiss (Dkt. 6) at 1.

3
See Pet. (Dkt. 1, Ex. 1) at 1.

4
See id. at 2.

5
See id.

6
See id. at 1.

7
Id. at 3.

8
Id.

9
See Notice of Removal (Dkt. 1).

10
See Def.’s Mot. to Dismiss Pl.’s Pet. (Dkt. 3).

11
See Def.’s Br. in Supp. of Mot. to Dismiss (Dkt. 4) at 1.

12
See id. at 1–2.

13
See id.

14
See id. at 2.

15
In the last two sentences of the body of its opening brief, YRC argues for the first and only time in that brief that the Carmack Amendment “preempts all claims that exceed the amount of the loss or injury to the goods, such as business interruption damages or punitive damages,” and that “[c]laims for attorneys’ fees are also not recoverable in a Carmack Amendment case.” Def.’s Br. in Supp. of Mot. to Dismiss (Dkt. 4) at 5. It elaborates no further and cites no legal authority in support. Radial, perhaps understandably overlooking these cursory arguments, does not address them in its response. Because these arguments are not adequately developed, the Court will not address them either, at least not at this juncture. If YRC wishes to pursue these arguments, it may bring them more squarely before the Court in another motion.

16
See Pl.’s Resp. to Def.’s Mot. to Dismiss (Dkt. 6) at 6 (“If Plaintiff had applied labels to its claims, the Carmack Amendment’s preemptive effect would not vitiate the pleading, but instead would ‘convert [ ] plaintiff’s state law claims of breach of contract and negligence into claims arising under federal law.’ ” (citation omitted)).

17
See Adams Express Co. v. Croninger, 226 U.S. 491, 505–06 (1913) (“Almost every detail of the subject [of the liability of a carrier under a bill of lading] is covered so completely [by the Carmack Amendment] 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.” (citations omitted)).

18
See Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1121 (10th Cir. 1989) (holding that “the Carmack Amendment preempts state common law remedies against common carriers for negligent loss or damage to goods shipped under a lawful bill of lading”).

19
See Moffit v. Bekins Van Lines Co., 6 F.3d 305, 306–07 (5th Cir. 1993) (holding, inter alia, that the Carmack Amendment preempts state-law claims for breach of contract and negligence).

20
The Court notes in passing that YRC’s effort to dismiss claims that may-or-may-not be asserted would have been better preceded by a motion for a more definite statement pursuant to Federal Rule of Civil Procedure 12(e).

21
See 49 U.S.C. § 14706(d)(1)–(2).

22
See Missouri Pac. R. Co. v. Elmore & Stahl, 377 U.S. 134, 138 (1964) (“[U]nder federal law, in an action to recover from a carrier for damage to a shipment, the shipper establishes a prima facie case when he shows delivery in good condition, arrival in damaged condition, and the amount of damages.”).

23
See Pl.’s Resp. to Def.’s Mot. to Dismiss (Dkt. 6) at 4.

24
See Pet. (Dkt. 1, Ex. 1) at 2–3 (stating that the aircraft sustained damage in transit and demanding judgment in excess of the amount required for diversity jurisdiction).

25
YRC acknowledges as much in the opening of its brief:
As alleged by Plaintiff in the Petition, this action arises out of the interstate transportation by YRC of certain property (the “Cargo”), from Guthrie, Oklahoma to Pottstown, Pennsylvania. Plaintiff alleges that the Cargo was damaged by YRC. Plaintiff further alleges that because of the alleged damage to the Cargo, Plaintiff has been damaged in an amount “in excess of the amount required for diversity jurisdiction ….” Plaintiff contends that it is entitled to damages from the loss of the damaged Cargo and an award of interest, costs, and attorney’s fees.
Def.’s Br. in Supp. of Mot. to Dismiss (Dkt. 4) at 1 (citations omitted).

26
5 C. Wright & A. Miller, Federal Practice and Procedure § 1219 (3d ed. 2020); see Johnson v. City of Shelby, 574 U.S. 10, 11 (2014) (The Federal Rules of Civil Procedure “do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.” (citations omitted)).