March 2023

Certain Underwriters at Lloyds v. CSX Transportation, Inc.

United States District Court, S.D. Illinois.

CERTAIN UNDERWRITERS AT LLOYD’S, Plaintiffs,

CSX TRANSPORTATION, INC., and EVANSVILLE WESTERN RAILWAY, INC. Defendants.

Case No. 20-cv-0795-SPM

02/21/2023

STEPHEN P. McGLYNN, U.S. District Judge

MEMORANDUM AND ORDER

*1 McGLYNN, District Judge:

Pending before the Court is a Renewed Motion for Judgment as a Matter of Law filed by plaintiff Certain Underwriters at Lloyds (“Lloyds”) pursuant to Rule 50 of the Federal Rules of Civil Procedure (Doc. 400). For the reasons set forth below, the Court DENIES the motion.

RELEVANT FACTUAL BACKGROUND

On October 17, 2022, a jury trial commenced between Lloyds and defendant CSX Transportation, Inc. (“CSX”)¹ . On February 11, 2022, the Court ruled on the respective dispositive motions and narrowed the pending issues (Doc. 300). Specifically, this Court held that Lloyds had established a prima facie case under the Carmack Amendment, but there remained the questions as to the amount recoverable under Carmack by Lloyds and whether CSX perfected its asserted limitation of liability (Doc. 300). On October 11, 2022, this Court further advised that it had reviewed the proposed jury instructions that had been submitted by the parties and determined that the Issues Instruction shall read as follows: “Defendant contends that it has limited its liability consistent with the Carmack Amendment. To succeed on this position, defendant must prove the following four elements by a preponderance of the evidence: (1) That the carrier provided the shipper, upon request, a copy of its rate schedule; (2) That the carrier gave the shipper a reasonable opportunity to choose between two or more levels of liability; (3) That the carrier obtained the shippers agreement as to the shippers choice of liability; and, (4) That a bill of lading was issued prior to moving the shipment that reflects the agreement. (Doc. 375). Of note, this version had been submitted and requested by Lloyds.

This action was initially filed on February 14, 2019 in the Western District of North Carolina (Doc. 1), but was subsequently transferred to this Court on August 18, 2020 (Doc. 58). This case asserted several theories of liability and sought recovery for the loss of four locomotives that derailed on September 14, 2018 during Hurricane Florence in or near Lilesville, North Carolina (Doc. 1). The locomotives were newly refurbished by National Railway Equipment Co. (“NRE”) in Mt. Vernon, Illinois and were in the process of being delivered to the Port of Wilmington when the derailment occurred. NRE was insured through Certain Underwriters at Lloyd’s and received payment under their policy of insurance.

*2 On October 21, 2022, at the close of evidence, Lloyds moved for a directed verdict, which was ultimately denied (Doc. 398). The parties then presented closing arguments before the case was submitted to the jury with the agreed upon instructions. Less than ninety (90) minutes later, following the five-day trial, a jury found that CSX proved that it had limited its liability to National Railway Equipment Co. (“NRE”) and awarded $40,000 total ($10,000 per locomotive) to plaintiff Certain Underwriters at Lloyds (“Lloyds”).

LEGAL STANDARD

Rule 50 of the Federal Rules of Civil Procedure “allows a district court to enter judgment against a party who has been fully heard on an issue during a jury trial if ‘a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.’ ” Passananti v. Cook County, 689 F.3d 655, 659 (7th Cir. 2012) (citing Fed.R.Civ.P. 50(a)). “In deciding a Rule 50 motion, the court construes the evidence strictly in favor of the party who prevailed before the jury and examines the evidence only to determine whether the jury’s verdict could reasonably be based on that evidence.” Id. In so doing, the court does not weigh the evidence or make credibility determinations. Tart v. Illinois Power Co., 366 F.3d 461, 478 (7th Cir. 2004) (citing Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150–51 (2000)). Furthermore, while the court reviews the entire record, “it must disregard all evidence favorable to the moving party that the jury [was] not required to believe.” Reeves, 530 U.S. at 151.

“Overturning a jury verdict is not something that [a court] do[es] lightly.” Massey v. Blue Cross–Blue Shield of Ill., 226 F.3d 922, 925 (7th Cir. 2000). A court will do so only if “the moving party can show that no rational jury could have brought in a verdict against it.” Hossack v. Floor Covering Assoc. of Joliet, Inc., 492 F.3d 853, 859 (7th Cir. 2007) (internal citations and quotations omitted).

ANALYSIS

The jury in this case was entrusted with the role of weighing the evidence, making credibility determinations, and drawing reasonable inferences from the facts. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). As such, the jury was responsible for determining whether CSX proved by a preponderance of the evidence, the four (4) elements to establish a limit of liability. Going through each of the elements, this Court does not find any reason to disturb the jury’s determination in favor of CSX and against Lloyds. The evidence allowed a jury to rationally conclude that CSX limited its liability consistent with the Carmack Amendment.

1. Rate Schedule

The first element states, “That the carrier provided the shipper, upon request, a copy of its rate schedule.” Although Lloyds contends that CSX only established they provided NRE with a copy of its rate schedule 5 days after the derailment, Lloyds concedes that NRE had constructive notice of the limitation before the shipment commenced (Doc. 400, p. 2, FN1). As such, Lloyds does not expressly dispute this element.

Notwithstanding the reluctant concession, this Court deems there was reliable and sufficient evidence for the jury to find, by a preponderance of the evidence, that NRE was aware of the rate schedule. Jay Smith, the prior Corporate Logistics Manager for NRE testified that he handled the domestic shipments for NRE from 2005 to 2019, including the shipment at issue² (Doc. 384, pp. 106-107). Smith testified that was familiar with the CSX price list and that he used the public rate that incorporated the limitation of liability language (Doc. 300, p. 115). He further testified that in his position, he contracted with CSX 30 to 40 times per year for 17 years and never requested a different rate (Doc. 384, p. 198). He also testified that he understood if he wanted higher coverage from CSX, he would have to pay a higher shipping rates (Doc. 384, p. 198 – 199).

2. Reasonable Opportunity to Choose

*3 The second element of the issues instruction states, “That the carrier gave the shipper a reasonable opportunity to choose between two or more levels of liability”. Lloyds alleges that CSX failed to establish this issue and points to a New York case to support its contention that CSX was required to offer full coverage under Carmack for the limitation of liability to apply (Doc. 400, p. 3); see Chartis Seguros Mexico S.A. de C.V. v. HLI Rail & Rigging, LLC, 3 F.Supp.3d 178-179 (S.D.N.Y. 2014). CSX counters that there is no such requirement under Carmack (Doc. 402). Indeed, this Court is constrained to note that there is no such language in the statute, that Lloyd’s prepared the jury instruction, and that the Chartis Seguros decision is not binding precedent.

Although Lloyds raises a CSX price list from 1999 to show that it previously contained full Carmack quotes “side-by-side” with a limited liability quote, that argument is not persuasive nor is it a requirement of what must be done. Business practices have evolved over 20 years. The Claims Limitation was admitted into evidence and was shown to the jury. The language stated,

“CSXT understands that you have requested our lowest rate, not a full liability rate offered under the Carmack Amendment. This rate is offered in connection with a limitation of carrier liability for damages to the commodity transported of [$10,000.00]. If full liability under the Carmack Amendment is desired, please contact your CSXT sales representative to receive a specific rate quote with Carmack Amendment protections.”

Based upon the evidence, including the testimony of Jay Smith, who chose the public rate although he was aware he could request a higher rate for more coverage, a rational jury could have found the shipper, NRE, was given a reasonable opportunity to choose between the public rate that limited liability and a rate that would cover the damage to the locomotives.

3. Shipper’s Agreement

The third element of the issues instruction states, “That the carrier obtained the shippers agreement as to the shippers choice of liability.” Lloyds contended that CSX did not provide evidence via a writing that the shipper consented to the liability limitation (Doc. 400, p. 11). In support of this argument, Lloyds points to an STB letter issued in response to a question posed by a judge in the Second Circuit, to wit: Mitsui Sumitomo Ins. Co. v. Evergreen Marine Corp., 621 F.3d 215 (2nd Cir. 2010).

The approved jury instruction does not specify that the agreement must be in writing and this Court is not going to add an additional requirement that was not before the jury when they decided the case. Jay Smith testified that he was aware of the liability limitation and that he accepted it. Hal Burgen, General Counsel for NRE, further indicated in an email to Cyndee Garbrecht, Lloyds representative, that “[e]ach time we ship with CSX, we accept their terms and conditions.” Based upon the evidence submitted at trial, the jury reasonably concluded that CSX proved by a preponderance of the evidence that it obtained NRE’s agreement as to choice of liability.

4. Bill of Lading

The fourth element of the issues instruction states, “That a bill of lading was issued prior to moving the shipment that reflects the agreement.” Lloyds claims that CSX failed to establish this element (Doc. 400, p. 14). Specifically, Lloyds contends that CSX could not point out where the limitation was included on the bill of lading; however, that is not the plain language of step 4. Indeed, there was one jury instruction with 4 separate elements.

Through testimony, CSX established that NRE prepared the bills of lading online, applying the limitation of liability rate. The bill of lading only needed to reflect the agreement, and the jury reasonably inferred via the exhibits and other testimony that it did so.

*4 In closing, it was for the jury to assess the evidence and the credibility of the witnesses who testified about the events at issue. The fact that Lloyds disagrees with the credibility determinations of the jury provides no basis for disturbing the verdict. The totality of the evidence was sufficient to permit the jury to conclude that CSX limited its liability consistent with the Carmack Amendment, and proved by a preponderance of the evidence that: (1) That the carrier provided the shipper, upon request, a copy of its rate schedule; (2) That the carrier gave the shipper a reasonable opportunity to choose between two or more levels of liability; (3) That the carrier obtained the shippers agreement as to the shippers choice of liability; and, (4) That a bill of lading was issued prior to moving the shipment that reflects the agreement. This Court will overturn a verdict only if “no rational jury” could have reached the result it did, and this Court sees no sound basis upon which to disturb the jury’s decision.

CONCLUSION

For the reasons set forth above, the Court denies plaintiff Certain Underwriters at Lloyds Rule 50(b) Motion for Judgment as a Matter of Law. Clerk to enter judgment according to jury verdict. IT IS SO ORDERED.

DATED: February 21, 2023

/s/ Stephen P. McGlynn

STEPHEN P. McGLYNN

U.S. District Judge

All Citations

Footnotes

This case also identified Evansville Western Railway, Inc. (“EVWR”) as a party-defendant; however, on February 11, 2022, this Court granted Summary Judgment to EVWR and held that EVWR limited its liability in the amount of $100,000 total, or $25,000 per locomotive (Doc. 300). Additionally, prior to the commencement of the trial, the Court entered an Order that indicated that Lloyd’s claims as to CSX and EVWR were severed and that the trial pertained to CSX (Doc. 378). Accordingly, although the Response in Opposition was purportedly filed by CSX and EVWR, this Court strikes any reference to EVWR.
Jay Smith’s Trial Testimony is contained in Transcript of Jury Trial – Volume III. The transcript has been p. 115)filed with the Court as Document 300, and Mr. Smith’s testimony encompasses pages 106 to 216 of said Document.

End of Document

Perez v. Roman

United States District Court, S.D. Texas, Brownsville Division.

Leonor PEREZ & Felipe Varela, Jr. Plaintiffs,

Dora Alicia Gallegos ROMAN d/b/a Transportes Bega & Jose Samuel Gonzales, Defendants.

Civil Action No. 1:21-cv-187

Signed February 2, 2023

Attorneys and Law Firms

Jason Harold Casell, Richard A. Hinojosa, Justin David Burrow, Hinojosa Law PLLC, Houston, TX, for Plaintiffs.

Chaz Daniel Klaes, Donato Minx Brown Pool, Houston, TX, Raul M. Calderon, Daniela Ivette Saybe Guillen, Donato, Brown, Pool, & Moehlmann, Houston, TX, for Defendants.

REPORT AND RECOMMENDATION OF THE MAGISTRATE JUDGE

Ronald G. Morgan, United States Magistrate Judge

*1 Plaintiffs Leonor Perez and Felipe Varela, Jr., have sued Defendants Dora Alicia Gallegos Roman, doing business as Transportes Bega, and Jose Samuel Gonzales for a vehicular accident which occurred on October 2, 2019. On December 13, 2022, Gallegos Roman and Gonzales filed a partial motion for summary judgment. Dkt. No. 24. Perez and Varela did not file a response.¹

After reviewing the record and the relevant caselaw, it is recommended that the partial motion for summary judgment be granted. There is no genuine dispute of material fact as to whether Gallegos Roman was negligent in hiring or supervising Gonzales.

I. Background

A. Factual Background

In 2015, Transportes Bega hired Gonzales as a driver. Dkt. No. 24-3, p. 10. In 2013, Gonzales graduated from a trucking school “known as the Canales Transportes school” in Mexico. Id., p. 7. He has a Mexican commercial driver’s license. Id. Prior to working for Transportes Bega, he worked for three other Mexican trucking companies. Id., pp. 8-10. Gonzales had never been involved in a motor vehicle crash prior to the incident at the heart of this case. Id., p. 8.

Gonzales testified at his deposition that Transportes Bega provided him training videos, which were courses about how to safely drive in America. Dkt. No. 24-3, pp. 12-13. He also testified that Transportes Bega outfitted his truck with GPS trackers to check whether he drove safely, such as obeying speed limits. Id., p. 14.

On October 2, 2019, Perez and Varela were traveling in San Benito, Texas, and were stopped at a traffic light. Dkt. No. 24-9, p. 5. Gonzales’s tractor-trailer struck their vehicle from behind. Id., p. 6. Varela testified that he had no way of knowing how fast the truck was traveling when it struck his vehicle. Id. Photographs of the Plaintiffs’ vehicle show minor damage to the rear bumper. Dkt. No. 24-1.

B. Procedural Background

On October 4, 2021, Perez and Varela filed suit against Gallegos Roman and Gonzales in the 107th District Court in Cameron County, Texas. Dkt. No. 1-1, p. 4. As to Gonzales, the Plaintiffs asserted that he operated his vehicle negligently, causing the accident. Id., pp. 7-8. As to Gallegos Roman, the Plaintiffs asserted claims of respondeat superior and negligent entrustment. Id., pp. 9-10.

On November 3, 2021, the Defendants were served. Dkt. No. 1-1, p. 2. On November 29, 2021, the Defendants timely removed the case to this Court on the basis of diversity jurisdiction. Dkt. No. 1.

*2 On May 13, 2022, the parties stipulated that Gonzales was acting within the scope of his employment when the accident occurred. Dkt. No. 13.

On December 13, 2022, Gallegos Roman filed a partial motion for summary judgment, seeking summary judgment as to the claim of negligent entrustment. Dkt. No. 24. The Defendants did not seek summary judgment as to the negligence claim against Gonzales or the respondeat superior claim against Gallegos Roman.

On January 6, 2023, the Plaintiffs sought an extension of time to respond to the partial motion for summary judgment. Dkt. No. 30. On January 9, 2023, the Court granted the motion for an extension of time, giving the Plaintiffs until January 31, 2023, to file their response. Dkt. No. 31.

The Plaintiffs did not file a response to the motion for summary judgment.

II. Applicable Law

A. Summary Judgment

Summary judgment is appropriate when the moving party has established that the pleadings, depositions, answers to interrogatories, admissions, and affidavits – if any – demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).

A “genuine issue of material fact exists where evidence is such that a reasonable jury could return a verdict for the non-movant.” Piazza’s Seafood World, L.L.C. v. Odom, 448 F.3d 744, 752 (5th Cir. 2006). The movant “can show there’s no material dispute if he demonstrates that the [non-movant] could not prevail even if each factual question were resolved in their favor.” Freedom From Religion Found., Inc. v. Mack, 49 F.4th 941, 950 (5th Cir. 2022).

If the non-movant would bear the burden of proof at trial, the moving party may satisfy its summary judgment burden “by merely pointing out that the evidence in the record contains insufficient proof concerning an essential element of the nonmoving party’s claim.” Ortega Garcia v. U.S., 986 F.3d 513, 533 (5th Cir. 2021). The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. Id.

“All facts must be viewed in the light most favorable to the nonmovant and all justifiable inferences must be drawn in his favor.” Crane v. City of Arlington, Texas, 50 F.4th 453, 461 (5th Cir. 2022). Thus, factual controversies are resolved in favor of the non-movant, “but only where there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts.” Lexon Ins. Co., Inc. v. Fed. Deposit Ins. Corp., 7 F.4th 315, 321 (5th Cir. 2021). In the “absence of any proof,” the Court cannot and will not assume that the non-moving party could or would prove the necessary facts. McCarty v. Hillstone Rest. Grp., Inc., 864 F.3d 354, 358 (5th Cir. 2017). Finally, “a court should not make credibility determinations or weigh the evidence in ruling on a motion for summary judgment.” Chacon v. Copeland, 577 Fed. App’x. 355, 360 (5th Cir. 2014) (unpubl.) (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)) (internal quotations omitted).

III. Analysis

The motion for partial summary judgment should be granted. As a matter of law, the Plaintiffs cannot maintain claims of respondeat superior and negligent entrustment against Gallegos Roman. Furthermore, there is no genuine issue of material fact as to negligent entrustment.

A. Mutually Exclusive

*3 The Plaintiffs have made claims of respondeat superior and negligent entrustment against Gallegos Roman. These claims are mutually exclusive.

“Texas courts have repeatedly held that, where only simple negligence is alleged, negligent entrustment and respondeat superior are mutually exclusive modes of recovery.” Ferrell Gas, Inc. v. Reese, 2022 WL 17843996, at *4 (Tex. App. Dec. 21, 2022) (unpubl.) (citing Rosell v. Cent. W. Motor Stages, Inc., 89 S.W.3d 643, 654 (Tex. App.—Dallas 2002, pet. denied) & Patterson v. E. Tex. Motor Freight Lines, 349 S.W.2d 634, 636 (Tex. Civ. App.—Beaumont 1961, writ ref’d n.r.e.). This is because under either theory, the employer is liable for the employee’s negligence, so the claims are repetitive of each other. Id. The parties have already stipulated that Gonzales was acting within the scope and course of his employment when the accident occurred, which is sufficient to establish respondeat superior. See Univ. of Texas M.D. v. Baker, 401 S.W.3d 246, 261 (Tex. App. 2012) (respondeat superior requires a showing “that the employee be acting in the course and scope of employment when the negligence occurs”).

The only instance where the claims are not mutually exclusive is when there is a simple negligence claim against the driver, but a gross negligence claim against the employee for entrusting a vehicle to “an incompetent or reckless” driver. Ferrell Gas, Inc., 2022 WL 17843996, at *4. The complaint does not raise any claims of gross negligence against Gallegos Roman. Dkt. No. 1-1, pp. 9-10. As such, the availability of the respondeat superior claim makes the negligent entrustment claim untenable. Summary judgment is appropriate on this basis.

B. Negligent Entrustment

Even if the negligent entrustment claim was not barred as a matter of law, there is no genuine dispute of material fact as to this claim.

“Proof of negligent entrustment requires: (1) entrustment of a vehicle by the owner; (2) to an unlicensed, incompetent, or reckless driver; (3) that the owner knew or should have known to be unlicensed, incompetent, or reckless; (4) the driver’s negligence on the occasion in question; (5) proximately caused the accident.” Rosell, 89 S.W.3d at 655.

There is no evidence in the record that Gonzales was “unlicensed, incompetent, or reckless.” Gonzales has a Mexican commercial drivers license, which is valid within the United States.² He had no prior motor vehicle accidents prior to the one at issue in this case. Because there is no evidence of his unfitness to be a driver, there is no evidence in the record that Gallegos Roman knew or should have known that he was unfit to drive for her. As such, there is no genuine dispute of material fact as to the negligent entrustment claim.

IV. Recommendation

It is recommended that the partial motion for summary judgment filed by Gallegos Roman and Gonzales be granted. Dkt. No. 24. Summary judgment should be entered as to any claims of negligent entrustment.

*4 The parties have fourteen (14) days from the date of being served with a copy of this Report and Recommendation in which to file written objections, if any, with the United States District Judge. 28 U.S.C. § 636(b)(1). A party filing objections must specifically identify the factual or legal findings to which objections are being made. The District Judge is not required to consider frivolous, conclusive, or general objections. Battle v. United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).

If any party fails to timely object to any factual or legal findings in this Report and Recommendation, the District Judge is not required to conduct a de novo review of the record before adopting these findings. If the District Judge chooses to adopt such findings without conducting a de novo review of the record, the parties may not attack those findings on appeal, except on the grounds of plain error. Alexander v. Verizon Wireless Servs., L.L.C., 875 F.3d 243, 248 (5th Cir. 2017).

DONE at Brownsville, Texas on February 2, 2023.

All Citations

Footnotes

Typically, if a party fails to respond to a motion, it is considered unopposed. Local Rule 7.4. The Court, however, may not simply grant a dispositive motion as unopposed; it must consider the merits of the motion. Webb v. Morella, 457 F. App’x 448, 452 (5th Cir. 2012) (citing John v. State of La. (Bd. of Trustees for State Colleges & Universities), 757 F.2d 698, 709 (5th Cir. 1985)). The Court, however, is not required “to survey the entire record in search of evidence to support a non-movant’s opposition.” Jones v. Sheehan, Young & Culp, P.C., 82 F.3d 1334, 1338 (5th Cir. 1996).
The United States and Mexico have a reciprocal agreement to recognize the commercial drivers license issued by the other country. https://www.fmcsa.dot.gov/sites/fmcsa.dot.gov/files/docs/international-programs/79541/2017cdlmousignedenglish_0.pdf.

End of Document