Richard FRANKWOSKI, et al., Plaintiffs,

v.

ARMSTRONG TRANSFER & STORAGE CO., INC., et al., Defendants.

2:22-cv-1153-ACA

Signed April 11, 2023

Attorneys and Law Firms

Richard S. Frankowski, The Frankowski Firm LLC, Birmingham, AL, for Plaintiffs.

Al Foster Teel, Madeline E. Hughes, Burr Forman LLP, Birmingham, AL, Kenneth M. Bryant, Burr & Forman, LLP, Nashville, TN, for Defendants Armstrong Transfer & Storage Co., Inc., Mayflower Transit LLC, S&M Moving Systems Inc., United Van Lines LLC.

MEMORANDUM OPINION

ANNEMARIE CARNEY AXON, UNITED STATES DISTRICT JUDGE

*1 Over the course of Plaintiffs Richard and Christeen Frankowski’s move from Nevada to Alabama, they hired six professional moving companies to transport their household goods and the contents of a storage unit. After a delay, their goods arrived with substantial damage. They have sued the six moving companies: (1) Armstrong Transfer & Storage Co., Inc., “aka Armstrong Relocation Company”; (2) Evergreen Van Lines, Corp.; (3) Mayflower Transit, LLC; (4) Polaris Moving Systems, Inc., d/b/a Roadrunner Moving; (5) S&M Moving Systems, Inc.; and (6) United Van Lines, LLC. The Frankowskis assert against each of the six defendants claims for liability under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706(a)(1), or alternatively for state law tort and breach of contract. (Doc. 1 at 6–7). They seek compensatory damages for the property damage as well as punitive and mental anguish damages. (Id. at 7).

The four defendants who have appeared in the case thus far—Armstrong, Mayflower, S&M Moving, and United Van Lines—have filed a joint motion to partially dismiss the complaint. (Doc. 11). Defendants seek dismissal of all the state law tort and contract claims, of the demand for punitive and mental anguish damages, and of Armstrong, S&M Moving, and Mayflower as defendants. (Doc. 12 at 1–2, 13–17). The Frankowskis concede that dismissal of their state law tort and contract claims against all defendants is proper and that they may recover only the damages available under the Carmack Amendment, but they oppose dismissal of Armstrong, S&M Moving, and Mayflower. (Doc. 20 at 2, 5).

The court WILL GRANT IN PART and WILL DENY IN PART the motion to dismiss. Based on the Frankowskis’ concession, the court WILL DISMISS the state law claims and the demand for punitive and mental anguish damages WITH PREJUDICE and without further discussion. See 49 U.S.C. § 14706(a)(1) (“The liability imposed under this paragraph is for the actual loss or injury to the property….”). The court WILL DENY the motion to dismiss Armstrong, S&M Moving, and Mayflower because the Frankowskis specifically allege that each defendant was involved in the shipment of the goods and the defendants have not persuaded the court that United Van Lines’ status as their principal eliminates their potential liability.

I. BACKGROUND

In considering a motion to dismiss for failure to state a claim, the court must accept as true the factual allegations in the complaint and construe them in the light most favorable to the plaintiffs. Butler v. Sheriff of Palm Beach Cnty., 685 F.3d 1261, 1265 (11th Cir. 2012). The court may also consider evidence attached to a defendant’s motion to dismiss if that evidence was incorporated into the complaint by reference, is of undisputed authenticity, and is central to the plaintiffs’ claims. Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002). Defendants submit bills of lading¹ for the two deliveries at issue in this case. (Docs. 12-1, 12-2). The complaint refers to the bills of lading, they are central to the Frankowskis’ claim (see doc. 1 at 4 ¶ 12, 5 ¶ 15), and the Frankowskis do not dispute their authenticity (see doc. 20 at 4). Accordingly, the court’s description of the facts includes the bills of lading. However, where the allegations in the complaint specifically contradict the content of the bills of lading, the court must accept as true the allegations in the complaint. See, e.g., Saunders v. Duke, 766 F.3d 1262, 1270 (11th Cir. 2014) (“Where a civil rights plaintiff attaches a police report to his complaint and alleges that it is false … the contents of the report cannot be considered as true for purposes of ruling on a motion to dismiss.”).

*2 In July 2020, the Frankowskis contracted with Evergreen Van Lines to move the contents of their house from Crystal Bay, Nevada to Birmingham, Alabama. (Doc. 1 at 3 ¶ 8). When Evergreen Van Lines failed to send a suitable truck for a cross-country move, Evergreen arranged for another company, Roadrunner Movers, to take over the move. (Id.). Roadrunner did send a truck and movers, but when the Frankowskis caught an employee stealing electronics and complained, Roadrunner took the Frankowski’s possessions to its facility in Union City, California instead of delivering them to Birmingham. (Id. at 3–4 ¶¶ 8–9).

The Frankowskis “were forced to hire another company, S&M Moving and/or United Van Lines to” pick up and deliver their possessions from the Union City facility to Alabama. (Id. at 4 ¶ 12). United Van Lines created the bill of lading, which identifies Armstrong as its “destination agent.” (Doc. 1 at 4 ¶ 12; doc. 12-1 at 2). United Van Lines also created a “Descriptive Inventory,” which lists S&M Moving as the carrier. (Doc. 1 at 4 ¶ 12). The Frankowskis’ complaint states their belief that United Van Lines hired S&M Moving to pick up and ship the items to Alabama. (Id.). Either S&M Moving or Armstrong (as United Van Lines’ agent) picked up the Frankowskis’ household goods and delivered them to Birmingham. (Id. at 4 ¶ 13; doc. 12-1 at 2). A “substantial amount” of the items were damaged on delivery. (Id. at 4–5 ¶ 13).

With respect to the storage unit pickup, United Van Lines again created the bill of lading, which lists Armstrong as the “destination agent.” (Doc. 12-2 at 2). In addition, United Van Lines’ website lists Mayflower as “a sister company and active competitor of United Van Lines.”² (Doc. 1 at 5 ¶ 15). Either Mayflower or Armstrong (as United Van Lines’ agent) picked up the contents of the storage unit and delivered them to Birmingham. (Id. at 5 ¶ 16; doc. 12-2 at 2). Again, there was “substantial damage to much of” the property. (Doc. 1 at 5 ¶ 16).

II. DISCUSSION

The only claim remaining in this case is for liability under the Carmack Amendment, 49 U.S.C. § 14706(a)(1). The Frankowskis assert that claim against all defendants. (Doc. 1 at 6). Armstrong and S&M Moving contend that the court should dismiss them as defendants because they were acting as United Van Lines’ agents and, under 49 U.S.C. § 13907 and common law, United Van Lines bears the sole liability for the acts of its “disclosed agents.”³ (Doc. 12 at 14–18). Mayflower contends that the court should dismiss it because the bills of lading establish that United Van Lines did both deliveries and Mayflower was not involved in either. (Id. at 17–18).

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

*3 In relevant part, the Carmack Amendment to the Interstate Commerce Act makes carriers liable to shippers for loss or damage to shipments in interstate commerce:

A carrier … shall issue a receipt or bill of lading for property it receives for transportation under this part. That carrier and any other carrier that delivers the property … are liable to the person entitled to recover under the receipt or bill of lading…. Failure to issue a receipt or bill of lading does not affect the liability of a carrier. A delivering carrier is deemed to be the carrier performing the line-haul transportation nearest the destination but does not include a carrier providing only a switching service at the destination.

49 U.S.C. § 14706(a)(1). In plain English, the Carmack Amendment imposes on both the motor carrier that receives goods from the shipper “and any other carrier that delivers the property” liability for “actual loss or injury” to property. Id. By its terms, however, the Carmack Amendment does not permit a shipper to hold liable “connecting carriers”—those who transport goods from the receiving carrier to the delivering carrier. See id. Instead, a shipper whose goods are damaged en route can sue the receiving carrier, the delivering carrier, or both. See id. The carrier ultimately held liable for the damage can then “recover from the carrier over whose line or route the loss or injury occurred the amount required to be paid to the owners of the property.” Id. § 14706(b). Section 14706 also sets out venue rules for “civil action[s] under this section … brought against a delivering carrier” and, separately, those “brought against the carrier alleged to have caused the loss or damage.” Id. § 14706(d)(1)–(2).

A different part of the Interstate Commerce Act, enacted as part of the Household Goods Transportation Act of 1980, see Pub. L. 96-454, 94 Stat. 2011 (1980), provides that “[e]ach motor carrier providing transportation of household goods shall be responsible for all acts or omissions of any of its agents which relate to the performance of household goods transportation services … and which are within the actual or apparent authority of the agent from the carrier or which are ratified by the carrier.” 49 U.S.C. § 13907(a).

According to the allegations in the complaint and the bills of lading, United Van Lines was a motor carrier that issued bills of lading for the two deliveries at issue in this case. (Doc. 1 at 4 ¶ 12, 5 ¶ 15; docs. 12-1, 12-2). Both bills of lading identified Armstrong as the “destination agent.” (Doc. 12-1 at 2; doc. 12-2 at 2). But the Frankowskis allege that either S&M Moving or Armstrong picked up the first delivery; either Mayflower or United Van Lines picked up the second delivery; and either Mayflower or Armstrong delivered both shipments. (Doc. 1 at 4 ¶ 13, 5 ¶¶ 15–16; doc. 12-1 at 2; doc. 12-2 at 2). The court must accept those allegations as true. See Butler, 685 F.3d at 1265; see, e.g., Saunders, 766 F.3d at 1270.

1. Armstrong and S&M Moving

Armstrong and S&M Moving contend that § 13907, in combination with common law principles of agency law, protects them from liability because they were acting as United Van Lines’ agents when they transported the Frankowskis’ household goods. (Doc. 12 at 15–17). The court is not persuaded.

*4 The bills of lading establish that Armstrong was United Van Lines’ agent⁴ and the Frankowskis allege that United Van Lines hired S&M Moving to pick up and ship their items for it. (Doc. 1 at 4 ¶ 12; doc. 12-1 at 2; doc. 12-2 at 2). There is also no dispute that all of the carriers involved in this case were transporting household goods and no party has raised any issue relating to any agent’s actual or apparent authority or ratification—indeed, United Van Lines affirmatively argues that Armstrong and S&M Moving were its agents. (See generally doc. 12 at 14–15). The court must therefore address whether, under the Carmack Amendment and § 13907, a motor carrier’s agent is immune from any and all liability for damage to household goods it transports. The plain language of § 13907 does not provide any such immunity. That statute imposes liability on a principal for all the acts or omissions of its agents (as long as the agent’s acts or omissions related to the performance of household goods transportation services and the agent had actual or apparent authority or the ratification of the carrier). See 49 U.S.C. § 13907(a). But the text of the statute does not totally preclude liability of motor carriers acting as agents.

Moreover, the Carmack Amendment expressly provides that the carrier issuing a bill of lading “and any other carrier that delivers property … are liable to the person entitled to recover under the receipt or bill of lading.” Id. § 14706(a)(1) (emphasis added). This language suggests that a motor carrier’s agent can also be liable if the agent is itself a motor carrier that delivers property. See also Missouri, K. & T. Ry. Co. of Tex. v. Ward, 244 U.S. 383, 387–88 (1917) (explaining that under the Carmack Amendment, connecting carriers “become in effect mere agents, whose duty it is to forward the goods under the terms of the contract made by their principal, the initial carrier” and holding that a shipper can hold the connecting carriers liable); see also Mexican Light & Power Co. v. Texas Mexican Ry. Co., 331 U.S. 731, 733 (1947) (“While each connecting carrier is, of course, liable for damage occurring on its line, only the initial carrier is liable for damage on any of the connections.”).⁵

Armstrong and S&M Moving, however, argue that, aside from the statutory language, common law agency principles mandate that agents cannot be held liable for damages under the Carmack Amendment. (Doc. 12 at 15–17). They cite a plethora of district court opinions, most of which cite to each other and to two Fifth Circuit cases; it also relies on cases from the Second and Seventh Circuits. (Id.); see, e.g., Marks v. Suddath Relocation Sys, Inc., 319 F. Supp. 2d 746, 752 (S.D. Tex. 2004). The court does not find the district court cases persuasive, and it finds the circuit cases distinguishable.

Defendants maintain that Lake City Stevedores, Inc. v. E.-W. Shipping Agencies, Inc., 474 F.2d 1060, 1061 (5th Cir. 1973)⁶ and Atl. & Gulf Stevedores, Inc. v. Revelle Shipping Agency, Inc., 750 F.2d 457, 459 (5th Cir. 1985) support its position that “long-standing federal law states that an agent of a disclosed principal cannot be liable pursuant to the duly issued bill of lading contract.” (Doc. 12 at 16). As an initial matter, these cases have nothing to do with an agent’s liability under a bill of lading. Neither involve disputes between the shipper and the carrier; in both cases, agents executed contracts on behalf of their principals for stevedore services.

*5 The Fifth Circuit decision in Lake City Stevedores—the only case binding on this court—was based entirely on agency principles limiting an agent’s liability for executing a contract on behalf of a principal. See 474 F.2d at 1063–64 (citing Restatement (Second) Of Agency § 320 (1958) (“Unless otherwise agreed, a person making or purporting to make a contract with another as agent for a disclosed principal does not become a party to the contract.”)). In Atl. & Gulf Stevedores, Inc., the Fifth Circuit relied in part on Lake City Stevedores to hold that an agent who executes a contract on behalf of his principal is not liable for claims arising out of nonpayment under the contract even where the agent failed to follow the principal’s instructions. Like Lake City Stevedores, the contract at issue had nothing to do with the obligations of the shipper or the carrier. And, like Lake City Stevedores, the decision was compelled by the Restatement (Second) of Agency § 342(1) (1958) which provides that “[a]n agent who receives money or other thing from his principal to pay or transfer to another person is not thereby liable to the other.” Atl. & Gulf Stevedores, Inc. v. Revelle Shipping Agency, Inc., 750 F.2d 457, 459 (5th Cir. 1985). Although § 342 acknowledges exceptions to this rule, the Fifth Circuit found that those exceptions did not apply. Id.

Neither Lake City Stevedores nor Atlantic & Gulf Stevedores holds that the Interstate Commerce Act immunizes an agent from liability. Both cases rely on specific sections of the Restatement that have no application here. And Atlantic & Gulf Stevedores acknowledged exceptions to the rule on which it rested. See 750 F.2d at 458. Those exceptions include “agent’s liability in tort for failure of performance” and an agent’s “responsib[ility] to [a third party beneficiary] for his nonperformance or misperformance [of a contract].” Restatement (Second) of Agency § 342 cmt. a (1958); see also Restatement (Third) of Agency § 7.02 cmt. b (2006) (“An agent is subject to liability to a third party only when the agent’s conduct breaches a duty that the agent owes the third party. The duty may be derived from tort law, … [or] from a promise made by the agent to the principal for which the third party is an intended third-party beneficiary….”); id. § 7.02 cmt. c (“An actor who … negligently causes [physical impairment of … tangible personal property] is subject to liability for it. An agent has a duty to exercise reasonable care in rendering services to a third person when the agent undertakes to do so to perform a duty owed by the principal to the third party.”) (citation omitted).

Similarly, the Second and Seventh Circuit cases cited fail to persuade the court of the existence of a common law rule that an agent transporting household goods on behalf of a principal is immune from damages. In the Seventh Circuit case, Defendant Kerr Steamship Co. signed a bill of lading as an agent for “P. J. Janzen, Master” of a ship. Valkenburg, K.-G. v. The Henry Denny, 295 F.2d 330, 332 (7th Cir. 1961). The Seventh Circuit held that because the bill of lading contained enough information for “a reasonable person” to discern the identity of Kerr’s principal, Kerr could not be held liable under the bill of lading. Id. at 333. This case, too, is distinguishable because it relates to holding an agent liable for execution of a contract on behalf of a disclosed principal, not performance of the agent’s duties to the principal or plaintiff.

The Second Circuit case Armstrong and S&M Moving cite supports this reading of the cases. In that case, a purchaser of goods that were lost at sea sued, among others, the charterer’s agent, Hansen. Seguros Banvenez, S.A. v. S/S Oliver Dresher, 761 F.2d 855, 858 (2d Cir. 1985). The district court granted summary judgment in favor of the plaintiffs and against Hansen. Id. at 859. The Second Circuit acknowledged the general rule that an agent is not liable for a principal’s breach of a contract to which the agent was not a party but explained that “an agent might be liable if it acted outside the scope of its agency or negligently.” Id. at 860 (citations omitted). Because there were questions of fact about whether Hansen acted negligently, summary judgment against Hansen was improper. Id. Although Armstrong and S&M Moving cite this case as support for the proposition that “the agent of a disclosed principal cannot be held liable pursuant to the duly issued bill of lading contract” (doc. 12 at 16), the case stands for the proposition that an agent can, in appropriate circumstances, be held liable.

*6 In addition, the court notes that there is tension between the circuits about whether a claim under the Carmack Amendment sounds in tort or contract. If a claim under the Carmack Amendment sounds in tort, agency principles governing contracts would not apply. The Eighth Circuit has held that claims under the Carmack Amendment sound in tort. Fulton v. Chi., Rock Island & P. R. Co., 481 F.2d 326, 333 (8th Cir. 1973). Similarly, the Tenth Circuit has stated that “the Carmack Amendment was a codification of the common law rule of liability for negligent damage to goods.” Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1117 (10th Cir. 1989). On the other hand, the Seventh Circuit has expressed doubt about whether such a claim sounds in tort. See N. Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 458 (7th Cir. 1996) (characterizing the Eighth Circuit’s analysis as dicta and stating “[w]e do not fully agree with this dicta,” but declining to explain why because it was “unnecessary for us to detail our divergent view”). In light of the lack of in-depth briefing on this issue, the court declines to weigh in at this point.

In short, Armstrong and S&M Moving’s argument does not persuade the court that they are, effectively, immune from suit because they acted as agents for United Van Lines. Accordingly, the court DENIES the motion to dismiss Armstrong and S&M Moving as defendants.

2. Mayflower

Mayflower contends that it should be dismissed because, given the two bills of lading that identify United Van Lines as the motor carrier, there are no plausible allegations that the Frankowskis entered a contract with Mayflower and they cannot hold Mayflower liable under the Carmack Amendment. (Doc. 12 at 17–18). Mayflower cites no law in support of its contention, and indeed the Carmack Amendment provides that “[f]ailure to issue a receipt or bill of lading does not affect the liability of a carrier,” 49 U.S.C. § 14706(a)(1), indicating that it is possible for a motor carrier to be liable even without a bill of lading.

In addition, Mayflower ignores the Frankowskis’ specific allegation that they “hired United Van Lines and/or Mayflower Transit” and that “Mayflower Transit, LLC and/or Armstrong Relocation and/or United Van Lines delivered all of Plaintiffs’ goods.” (Doc. 1 at 5 ¶¶ 15–16); see Fed. R. Civ. P. 8(d)(2) (“A party may set out 2 or more statements of a claim or defense alternatively or hypothetically, either in a single count or defense or in separate ones. If a party makes alternative statements, the pleading is sufficient if any one of them is sufficient.”); 5 Charles Alan Wright & Arthur R. Miller, Fed. Prac. & Proc. Civ. § 1283 (4th ed. April 2022 Update) (“Under Federal Rule 8(d)(2) a party may include inconsistent allegations in a pleading’s statement of facts.”). Finally, although the bills of lading establish that the Frankowskis hired United Van Lines, the bills do not prove that Mayflower was completely uninvolved in the delivery of the items such that the court can disregard the Frankowskis’ allegations to the contrary. Accordingly, the court WILL DENY the motion to dismiss Mayflower as a defendant.

III. CONCLUSION

The court WILL GRANT IN PART and WILL DENY IN PART the motion to dismiss. The court WILL DISMISS the state law claims and the demand for punitive and mental anguish damages, but WILL DENY the motion to dismiss Armstrong, S&M Moving, and Mayflower as defendants.

The court will enter a separate order consistent with this opinion.

DONE and ORDERED this April 11, 2023.

All Citations

Slip Copy, 2023 WL 2898430

Footnotes

1. Under the pertinent regulations, a “[b]ill of lading means both the receipt and the contract for the transportation of the individual shipper’s household goods.” 49 C.F.R. § 375.103.  
2. Both parties argue about the relevance of a “Mayflower inventory form bearing Mayflower’s tradename.” (Doc. 12 at 17; doc. 20 at 3). The complaint does not mention any such inventory form, so the court cannot and does not consider the form in this opinion.  
3. In its reply brief, United Van Lines offered to stipulate that it is responsible for any damages Armstrong or S&M Moving caused. (Doc. 22 at 4–5). The Frankowskis have not accepted that stipulation, so the court cannot rely on it in deciding this motion to dismiss.  
4. The Frankowskis’ contention that the bill of lading did not disclose “Armstrong Transfer & Storage Company” as United Van Lines’ agent because it identified “Armstrong Relocation Company” is entirely meritless. The Frankowski’s complaint specifically alleges that Armstrong goes by both names. (Doc. 1 at 1 ¶ 2).  
5. Ward and Texas Mexican Railway Company were both decided under a previous version of the Carmack Amendment that did not include any language extending liability to delivering carriers. Compare Pub. L. 59-337, 34 Stat. 584, 595 (1906) with Pub. L. 95-473, 92 Stat. 1337, 1453 (1978).
6. In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down before October 1, 1981.  

© 2023 Thomson Reuters. No claim to original U.S. Government Works.  

End of Document

AGCS MARINE INSURANCE CO., Plaintiff,

v.

KOOL PAK LLC, Defendant.

Case No. 2:22-cv-02775-ODW (MARx)

Signed April 12, 2023

Attorneys and Law Firms

Philip A. Fant, Fant Law Office, Kentfield, CA, for Plaintiff.

James Attridge, Law Office of James Attridge, Littleton, CO, for Defendant.

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [18]

OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

*1 Plaintiff AGCS Marine Insurance Company, as subrogee of its insured Ivar’s Inc., brings this interstate shipping action against Defendant Kool Pak LLC to recover for damage to a shipment of clam chowder. (See Compl. ¶¶ 1–6, ECF No. 1.) Kool Pak moves for summary judgment. (Mot. Summ. J. (“Mot.” or “Motion”), ECF No. 18.) The Motion is fully briefed. (Opp’n, ECF No. 22; Reply, ECF No. 26.) For the reasons discussed below, the Court DENIES the Motion.¹

II. BACKGROUND

Ivar’s Inc. is a Seattle-area restaurant chain and manufacturer of prepared foods for the retail market. (Mot. 2.) On March 26, 2020, Ivar’s tendered a consignment of 1,250 cases of packaged clam chowder to Kool Pak, a common interstate motor carrier, for transportation by road from Ivar’s in Mukilteo, Washington, to consignee Costco in Mira Loma, California. (Compl. ¶¶ 2–4; Mot. 3.) When Ivar’s tendered the chowder to Kool Pak, it was refrigerated at a temperature of 35.7°F and otherwise in good condition. (Compl. ¶ 3.) Kool Pak issued a bill of lading No. 41388, agreeing to transport the chowder in a refrigerated trailer at a temperature between 33°F and 40°F. (Consol. Statement Uncontroverted Facts (“CSUF”) 5, ECF No. 27; Compl. ¶ 4; Decl. James Attridge ISO Mot. (“Attridge Decl.”) Ex. C (“Bill of Lading”), ECF No. 18-2.)

On March 30, 2020, Kool Pak attempted to deliver the chowder to Costco at the destination. (Compl. ¶ 5.) Based on the activation of the time temperature indicator (“TTI”) and Kool Pak’s own temperature logs, the temperature within the refrigerated trailer that transported the chowder had exceeded 40°F for over four hours cumulative during the course of transport. (CSUF 6.) Kool Pak’s own trailer temperature log demonstrated that the chowder was subjected to temperatures exceeding 40°F for over ten hours cumulative. (CSUF 7.)² Costco found the increased temperatures had caused an unsanitary condition under FDA guidelines relating to the prevention of botulism, and accordingly rejected the chowder shipment based on the TTI and Kool Pak’s temperature logs. (Compl. ¶ 5.) Ivar’s provided Costco with replacement chowder from existing stock. (CSUF 4.)

Costco did not attempt to discern the internal temperature of the chowder before it was destroyed. (CSUF 2; see also Compl. ¶ 5; Decl. Philip Fant ISO Opp’n (“Fant Decl.”) Ex. 1 (“AGCS Resp. Interrogs.”) No. 2, ECF No. 25-1.) Ivar’s did not attempt to salvage the chowder in the United States or Mexico. (Attridge Decl. Ex. A (“AGCS Resp. RFAs”) No. 4, ECF No. 18-2.)

*2 AGCS as Ivar’s insurer indemnified Ivar’s for the market value of the lost clam chowder.³ (Compl. ¶ 6.) AGCS filed this action for cargo damage pursuant to the Carmack Amendment, seeking to recover the amount it paid to Ivar’s from Kool Pak. (See generally Compl.) Kool Pak moves for summary judgment on the Carmack Amendment claim, or for partial summary judgment regarding the proper measure of damages. (Mot. 3–7.)

III. LEGAL STANDARD

A court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The burden of establishing the absence of a genuine issue of material fact lies with the moving party, see Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986), and the court must view the facts and draw reasonable inferences in the light most favorable to the nonmoving party, Scott v. Harris, 550 U.S. 372, 378 (2007).

Once the moving party satisfies its burden, the nonmoving party must go beyond the pleadings and cannot simply argue that any disagreement or “metaphysical doubt” about a material issue of fact precludes summary judgment. See Celotex, 477 U.S. at 322–24; Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Though the Court may not weigh conflicting evidence or make credibility determinations, there must be more than a mere scintilla of contradictory evidence to survive summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255 (1986); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000).

“A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the parties’ differing versions of the truth.” S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1306 (9th Cir. 1982). Only genuine disputes—where the evidence is such that a reasonable jury could return a verdict for the nonmoving party—over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. See Anderson, 477 U.S. at 248. The court should grant summary judgment against a party who fails to demonstrate facts sufficient to establish an element essential to his case when that party will ultimately bear the burden of proof at trial. See Celotex, 477 U.S. at 322.

IV. DISCUSSION

Kool Pak moves for summary judgment on the grounds that AGCS cannot meet its prima facie case to establish a Carmack claim and that Ivar’s did not mitigate its damages. (See Mot. 3–7.) Kool Pak also moves in the alternative for partial summary judgment that the measure of damages should be limited. (Id.)

A. Carmack Amendment

The Carmack Amendment, presently codified at 49 U.S.C. § 14706 et seq., is a part of the Interstate Commerce Act and “provides the exclusive cause of action for interstate shipping contract claims.” Pac. Indem. Co. v. Atlas Van Lines, Inc., 642 F.3d 702, 707 (9th Cir. 2011) (quoting White v. Mayflower Transit, L.L.C., 543 F.3d 581, 584 (9th Cir. 2008)). It limits a carrier’s liability under an interstate bill of lading to “the actual loss or injury to the property caused by” the carrier. Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 686 n.2 (9th Cir. 2007) (quoting 49 U.S.C. § 14706(a)). “[T]he statute codifies the common-law rule that a carrier, though not an absolute insurer, is liable for damage to goods transported by it unless it can show that the damage” was the result of an excepted cause.⁴ Mo. Pac. R. Co. v. Elmore & Stahl, 377 U.S. 134, 137 (1964).

*3 To establish a prima facie case of liability under the Carmack Amendment, a shipper must show “delivery in good condition, arrival in damaged condition, and the amount of damages.” Thousand Springs Trout Farms, Inc. v. IML Freight, Inc., 558 F.2d 539, 542 (9th Cir. 1977) (citing Mo. Pac. R. Co., 377 U.S. at 138). The burden then shifts to the carrier to show “both that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability.” Id. (quoting Mo. Pac. R. Co., 377 U.S. at 138).

Courts have recognized a number of ways in which a shipper may establish that goods arrived in damaged condition. These include, for instance, the nature of the damage, Project Hope v. M/V IBN SINA, 250 F.3d 67, 71 (2d Cir. 2001) (frozen diabetes medication); Great Am. Ins. Co. v. USF Holland Inc., 937 F. Supp. 2d 376, 386 (S.D.N.Y. 2013) (frozen vaccines); a diminution in the cargo’s value, Oshkosh Storage Co. v. Kraze Trucking LLC, 65 F. Supp. 3d 634, 637 (E.D. Wis. 2014) (unsealed cheese); and where cargo is rendered unfit for its intended use or perishable goods have spoiled, Contempo Metal Furniture Co. of Cal. v. E. Tex. Motor Freight Lines, Inc., 661 F.2d 761, 763–64 (9th Cir. 1981) (pitted steel tubing); Gordon H. Mooney, Ltd. v. Farrell Lines, Inc., 616 F.2d 619, 620, 623 (2d Cir. 1980) (spoiled fish). Generally, proof by statistical sampling has been deemed adequate evidence of damaged condition, provided the sample is sufficient to fairly indicate the damaged condition of the whole cargo. See Thousand Springs, 558 F.2d at 543; S.C. Johnson & Son v. Louisville & Nashville R.R. Co., 695 F.2d 253, 259 (7th Cir. 1982); Imperial Veal & Lamb Co. v. Caravan Refrigerated Cargo, Inc., 554 F. Supp. 499, 501 (S.D.N.Y. 1982).

Kool Pak contends AGCS cannot establish the second prima facie element, proof of arrival in damaged condition. (Mot. 5–6.) Kool Pak argues the temperature log is insufficient to establish the chowder was actually damaged. (Id. at 6.) Kool Pak urges the Court to reject AGCS’s reasoning, based on FDA guidance, that the elevated temperatures subjected the chowder to unsanitary conditions and rendered the chowder unmerchantable. (Id.; Compl. ¶ 5.) According to Kool Pak, Ivar’s was required to test the temperature of the chowder packages on arrival to prove they were actually damaged. (Mot. 6; Reply 3–4.)

In opposition, AGCS offers the trailer temperature logs and the opinion of its foodborne illness expert to establish that the chowder arrived in damaged condition. (See Opp’n 3–8; Fant Decl. Ex. 2 (“Temp. Logs”), ECF No. 25-2.)⁵ First, the temperature logs indicate the temperature in the trailer exceeded 40°F for more than ten hours cumulative over the forty-four-hour trip. (See Temp. Logs (“Supply Temp. (°F)”); Mot. 5 (“forty-four hour journey”).) Thus, the chowder was exposed to temperatures exceeding what was acceptable for more than 20% of the trip.

*4 AGCS also offers the declaration of its foodborne illness expert, Dr. Heidi Kassenborg, who describes why the FDA deems food adulterated and unfit for consumption under these circumstances. (See Decl. Heidi Kassenborg ISO Opp’n ¶¶ 5–13, ECF No. 23.) Dr. Kassenborg explains that seafood products are particularly susceptible to the toxin responsible for botulism; accordingly, the FDA has issued guidance for safe handling and transport which includes maintaining temperatures below 40°F. (Id. ¶¶ 6–8.) She explains that most bacteria, including the toxin that causes botulism, grow rapidly in temperatures exceeding 40°F, a range she refers to as the “danger zone,” and that four hours cumulative in the danger zone “is the common limit for ready to eat potentially hazardous food.” (Id. ¶ 8.) Dr. Kassenborg opines that, because the “shipment was subjected to temperatures exceeding 40°F cumulatively over [four] hours”—indeed, the logs reveal temperatures over 40°F for over ten hours—“Costco was justified, if not obligated, to reject the shipment.” (Id.) Viewing the temperature logs and Dr. Kassenborg’s expert opinion in the light favorable to AGCS, AGCS raises a triable issue as to whether the chowder arrived in damaged condition.

Kool Pak argues Ivar’s should have tested each chowder package’s internal temperature on arrival, to confirm they were all unmerchantable. (See Reply 4 (describing a methodology of testing chowder pouch temperatures, working from the edges of the trailer inward, to discern if any chowder was actually in the “danger zone”).) Such a temperature test in these circumstances would have been pointless and impractical. Anyone who has unknowingly purchased a stressed gallon of milk at a supermarket understands this—a prior indecisive shopper removed the milk from the refrigerator case, shopped the aisles, and then rejected the milk and returned it to the refrigerated case—the milk may be at an appropriate temperature by the time the next unwitting shopper selects it, but it has already started to spoil from its journey around the store. Here, the undisputed fact is that the chowder was subjected to temperatures in the danger zone for more than ten hours cumulative over a forty-four-hour period of transport. Thereafter, the temperature on arrival “was of no consequence.” See Sunset Motor Lines, Inc. v. Lu-Tex Packing Co., 256 F.2d 495, 499 (5th Cir. 1958) (finding lowered temperature on arrival “of no consequence” where meat cargo had been subjected to elevated temperatures during transport, causing bacterial growth in the meat).⁶

Kool Pak seemingly would have Costco accept the danger zone chowder, sell it to its customers, and then when those customers complained of their foodborne illness, that would be sufficient evidence of the chowder’s damaged condition. (See Mot. 6 & Reply 3 (both citing Thousand Springs, 558 F.2d at 543).) That is what happened in Thousand Springs, where thousands of pounds of trout were subjected to elevated temperatures during transport. 558 F.2d at 543. Upon delivery, employees were concerned about the elevated temperatures but visually inspected the fish and found no indication of damage. Id. So, they accepted the fish, immediately refrigerated it, and distributed it to various retail grocers. Id. As night follows day, the retail stores complained: the fish was spoiled. Id. Only then was the fish again inspected, and by that time, of course, there were visible and aromatic indications of decomposition. Id.

Here, rather than inflict spoiled chowder on its customers, Costco rejected the shipment based on concrete evidence that the chowder had been subjected to ten hours cumulative of unacceptably elevated temperatures. On arrival, the chowder would not likely have shown the visible or aromatic signs of damage like the trout in Thousand Springs eventually did, and even there, those signs appeared only after putting the public at risk of foodborne illness. A lack of visible signs of damage upon arrival is not dispositive. “Food distributors have a duty to ensure that the food they provide to the public is safe,” and the requirement that perishable goods be maintained at certain temperatures provides assurance that the shipment is safe for consumption. See Oshkosh Storage, 65 F. Supp. 3d at 638. “Given the risk to customers and a distributor’s own potential liability, it is not unreasonable for a company to adopt a policy of rejecting shipments of food products” that have been subjected to unsafe conditions, “as long as that policy has been clearly announced.” See id. Here, the bill of lading clearly stated that temperatures above 40°F were not acceptable. (See Bill of Lading (indicating acceptable range 33°F to 40°F).)

*5 The Court finds that the temperature logs and AGCS’s expert’s opinion sufficiently raise a triable issue of fact regarding whether the chowder arrived in damaged condition.⁷ Accordingly, Kool Pak is not entitled to summary judgment on this basis.

B. Mitigation

Kool Pak also argues it is entitled to summary judgment because Ivar’s did not mitigate its damages. (See Mot. 6.) Kool Pak asserts that Carmack requires a shipper to salvage any unadulterated portion of the shipment. (Id.) Essentially, Kool Pak contends Ivar’s should have sold some portion of the chowder to someone else.

“Under the Carmack Amendment, [Kool Pak] has the burden to prove that the plaintiff did not exercise reasonable diligence in mitigating its damages.” Project Hope, 250 F.3d at 78; Allied Tube & Conduit Corp. v. S. Pac. Transp. Co., 211 F.3d 367, 372 (7th Cir. 2000); Eastman Kodak Co. v. Westway Motor Freight, Inc., 949 F.2d 317, 319–20 (10th Cir. 1991). “The aggrieved party need only take reasonable steps under the circumstances of the particular case to mitigate its damages.” Eastman Kodak, 949 F.2d at 320.

The Court is not persuaded that Kool Pak has met its burden here and instead concludes, for all the reasons discussed above, that AGCS raises triable issues regarding what steps would have been reasonable for Ivar’s to take under the circumstances. Viewing the facts and evidence in the light most favorable to AGCS, a reasonable fact-finder could conclude that salvage or resale of any portion of the chowder shipment—which had been subjected to temperatures in the danger zone for bacteria growth for more than ten hours cumulative—would have been not only unreasonable, but also immoral.

Kool Pak is not entitled to summary judgment on this basis.

C. Measure of Damages

Lastly, Kool Pak argues it is entitled to partial summary judgment on the issue of damages. (Mot. 7.) Kool Pak contends that, because Ivar’s provided Costco with a replacement shipment of chowder from existing stock, AGCS’s damages should be limited, as a matter of law, to the cost of manufacture of the replacement chowder, plus transportation costs, if any. (Id.) According to Kool Pak, permitting AGCS to recover the invoice value of the damaged shipment would award it “a windfall in the form of a double profit.” (Id.)

“The general rule for determining the amount of damages is the difference between the market value of the property in the condition in which it should have arrived at its destination and its market value in the condition in which it did arrive.” Contempo Metal, 661 F.2d at 764 (first citing Gulf, Colo. & Santa Fe Ry. v. Tex. Packing Co., 244 U.S. 31, 37 (1917); and then citing F.J. McCarty Co. v. S. Pac. Co., 428 F.2d 690, 692 (9th Cir. 1970)). However, the rule is “not absolute” and will not be “applied in cases where it is demonstrated that another rule will better compute actual damages.” F.J. McCarty, 428 F.2d at 692; see also Ill. Cent. R.R. Co. v. Crail, 281 U.S. 57, 64–65 (1930) (holding that the market value measure “may be discarded and other more accurate means resorted to, if, for special reasons, it is not exact or otherwise not applicable”).

*6 Kool Pak relies on Oak Hall Cap & Gown Co. v. Old Dominion Freight Line, Inc., 899 F.2d 291 (4th Cir. 1990), for its argument that the measure of damages should be limited to the costs of manufacture. (See Mot. 7; Reply 7.) In Oak Hall, a shipment of specialty academic gowns was rendered worthless by smoke damage during transport. 899 F.2d at 292–94. The court found that the general rule—market value less salvage—was not the best measure of actual loss in that case because the evidence demonstrated “that Oak Hall secured substitute goods …, lost no sales, and had no opportunity for a sale with the[ ] damaged goods.” Id. at 296. Accordingly, the court found that Oak Hall’s actual loss was only “the cost of replacing the damaged merchandise.” Id.

Here, in contrast, as AGCS correctly notes, nothing in the record suggests that Ivar’s was ever paid for the original shipment, that the existing chowder stock would not have been otherwise sold, or that the cost of the existing chowder stock was any different than that for the production of the original shipment. (Opp’n 8.) Kool Pak does not “show that [Ivar’s] could not have sold and earned profit on two batches of unharmed product.” See Eastman, 949 F.2d at 319–20. Therefore, Kool Pak fails to establish the absence of a triable issue regarding the proper measure of damages and is not entitled to partial summary judgment on this issue.

V. CONCLUSION

For the reasons discussed above, the Court DENIES Defendant’s Motion for Summary Judgment. (ECF No. 18.)

IT IS SO ORDERED.

All Citations

Slip Copy, 2023 WL 2916552

Footnotes

1. Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15.  
2. Kool Pak’s objection to this statement of fact is OVERRULED. (See CSUF 7.) The fact is relevant and the temperature log does not require an expert’s explanation to be understood. Additionally, Kool Pak did not file its objection in a separate document pursuant to Court rules. (See Scheduling and Case Management Order 8, ECF No. 16.) Thus, to the extent Kool Pak’s objection is directed to some other aspect of CSUF 7 or its supporting evidence, the objection is OVERRULED.  
3. The Complaint alleges the chowder had a “sound market value of $87,076.38” and that AGCS indemnified Ivar’s “for its loss in the amount of $82,076.38.” (Compl. ¶¶ 6–7.) This potential discrepancy is of no consequence to resolution of the Motion.  
4. The excepted causes are not at issue for the purposes of Kool Pak’s Motion.  
5. Both parties submit the temperature logs, titled “Reefer Temperature – Detail,” and do not object to the other party’s exhibit. (See Attridge Decl. Ex. D (“Def.’s Temp. Logs”), ECF No. 18-2.) The temperature logs appear substantively identical, with the exception that Kool Pak’s Exhibit D includes pages from another matter interspersed throughout the log pages. (See id.) Accordingly, for clarity, the Court cites only to AGCS’s Exhibit 2 as the Temperature Logs.  
6. Kool Pak’s selective quotation of Sunset Motor Lines does not serve it well. (Mot. 6.) Kool Pak quotes the general rule, that a shipper is ordinarily bound to accept goods in damaged condition and may not reject them altogether, but the Sunset court continues that this is a “rule[ ] of reason” and it must “give way in the face of reason.” Sunset Motor Lines, 256 F.2d at 498. Regardless, the court in Sunset was addressing the carrier’s arguments regarding the proper salvage value of the goods, not whether the evidence established the fact of damage. See id. at 496–98.  
7. To be clear, the Court is not treating perishable cargo differently than other types of cargo at issue in a Carmack claim; rather, the Court finds the temperature logs and expert’s opinion here sufficient to raise a material dispute over whether AGCS can prove the chowder arrived in damaged condition.  

© 2023 Thomson Reuters. No claim to original U.S. Government Works.  

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