United States District Court, S.D. Ohio, Western Division.

James McCarthy, Plaintiff,

v.

Krupp Moving and Storage II, LLC, Defendant.

Case No. 1:24-cv-79

|

07/15/2024

Susan J. Dlott, United States District Judge

Order Granting in Part and Denying in Part Motion to Dismiss

*1 This matter is before the Court on Defendant Krupp Moving and Storage II, LLC’s Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 4.) Plaintiff James McCarthy hired Krupp to move his belongings from a residence in Montgomery, Ohio to a residence in Boston, Massachusetts in November 2022. McCarthy then filed this suit against Krupp asserting claims under the Carmack Amendment to the Interstate Commerce Act of 1877, 49 U.S.C § 14706, et seq., and Ohio law for Krupp’s alleged wrongful conduct during its performance of the moving contract. Krupp now moves to dismiss the second through tenth claims for relief alleged in the Complaint—the Ohio law claims—on the basis of Carmack Amendment preemption. For the reasons that follow, the Court will GRANT IN PART and DENY IN PART the Motion to Dismiss.

I. BACKGROUND

A. Factual Allegations

The well-pleaded allegations of the Complaint are assumed to be true for purposes of a Rule 12(b)(6) dismissal motion. McCarthy signed an Estimate on November 4, 2022 and then a Contract on November 15, 2022 with Krupp for Krupp to provide two trucks and five movers to pack and move the McCarthy family’s belongings from Montgomery, Ohio to Boston, Massachusetts. (Doc. 1 at PageID 2–3.) The Contract included listed charges for payment amounting to $19,044.48. (Id. at PageID 3.) Krupp promised McCarthy it would provide two 26-foot trucks for the move. (Id.)

Krupp’s movers did not follow McCarthy’s organizational system when it packed up his Ohio residence. (Id. at PageID 4–5.) Krupp provided one 26-foot truck, but the second truck was only 16-feet long. (Id. at PageID 5.) Krupp’s trucks did not have enough storage space to move all McCarthy’s belongings. (Id. at PageID 5–7.) The movers placed McCarthy’s belongings in the truck without wrapping or protecting them, resulting in multiple items becoming damaged or stained. (Id. at PageID 8–9.) Krupp charged McCarthy $21,406.53 for its services, more than $2,000 in excess of the Contract price. (Id. at PageID 10.)

B. Procedural History

McCarthy initiated this suit against Krupp on February 20, 2024. He asserted ten claims for relief:

• First: Violation of the Carmack Amendment, 49 U.S.C. § 14706, et seq.;

• Second: Breach of Contract;

• Third: Unjust Enrichment—In the Alternative;

• Fourth: Conversion;

• Fifth: Fraud;

• Sixth: Negligent Misrepresentation–In the Alternative;

• Seventh: Violation of the Ohio Consumer Sales Practices Act (“OCSPA”), Ohio Revised Code § 1345.01, et seq.;

• Eighth: Violation of the Ohio Deceptive Trade Practices Act (“ODTPA”), Ohio Revised Code § 4165.01, et seq.;

• Ninth: Negligence; and

• Tenth: Intentional Infliction of Emotional Distress. (Id. at PageID 10–17.)

Krupp now moves to dismiss the second through tenth claims for relief on the basis that all of the state law claims are preempted by the Carmack Amendment. (Doc 4.) McCarthy filed a Memorandum in Opposition, to which Krupp filed a Reply. (Docs. 5, 8.)

II. STANDARDS GOVERNING MOTIONS TO DISMISS

*2 Federal Rule of Civil Procedure 12(b)(6) allows a party to move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). To withstand a motion to dismiss, a complaint must comply with Federal Rule of Civil Procedure 8(a), which requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 677–678 (2009) (quoting Rule 8(a)(2)). It must include sufficient facts to state a claim that is plausible on its face and not speculative. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 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.” Iqbal, 556 U.S. at 678. A district court examining the sufficiency of a complaint must accept well-pleaded facts as true, but not legal conclusions or legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678–679; DiGeronimo Aggregates, LLC v. Zemla, 763 F.3d 506, 509 (6th Cir. 2014).

III. ANALYSIS

Krupp moves to dismiss the Ohio law claims on the basis of Carmack Amendment preemption. The Sixth Circuit has explained the purpose of the Carmack Amendment and its preemption effect:

The Carmack Amendment, enacted in 1906 as an amendment to the Interstate Commerce Act, 24 Stat. 379, created a national scheme of carrier liability for loss or damages to goods transported in interstate commerce. See Adams Express Co. v. Croninger, 226 U.S. 491, 503-06, 33 S. Ct. 148, 57 L. Ed. 314 (1913). The Amendment restricts carriers’ ability to limit their liability for cargo damage. It makes a motor carrier fully liable for damage to its cargo unless the shipper has agreed to some limitation in writing. 49 U.S.C. § 11706(a), (c), § 14101(b). Making carriers strictly liable relieves shippers of the burden of determining which carrier caused the loss as well as the burden of proving negligence. Certain Underwriters at Interest at Lloyds of London v. UPS, 762 F.3d 332, 335 (3d Cir. 2014). Carriers in turn acquire reasonable certainty in predicting potential liability because shippers’ state and common law claims against a carrier for loss to or damage were preempted. Id.

Section 14706(a)(1) makes the carrier liable to the person entitled to recover

under the receipt or bill of lading. 49 U.S.C. § 14706(a)(1). Exel, Inc. v. S. Refrigerated Transp., Inc., 807 F.3d 140, 148 (6th Cir. 2015).

“It is well settled that the Carmack Amendment completely preempts a shipper’s state common law and statutory causes of action.” Renouf v. Aegis Relocation Co. Corp., 641 F. Supp. 3d 439, 446 (N.D. Ohio 2022). The Carmack Amendment “embraces the subject of the liability of the carrier under a bill of lading…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.” Adams Express Co. v. Croninger, 226 U.S. 491, 505–506 (1913). Therefore, the Carmack Amendment governs “when damages are sought against a common carrier for failure to properly perform, or for negligent performance of, an interstate contract of carriage.” Am. Synthetic Rubber Corp. v. Louisville & N. R. Co., 422 F.2d 462, 466 (6th Cir. 1970). “All state law claims for loss or damage to property arising out of the interstate transportation of household goods are preempted.” Yonak v. United Van Lines, LLC, No. 1:23CV0092, 2023 U.S. Dist. LEXIS 100257, at *15 (N.D. Ohio June 8, 2023). The Carmack Amendment generally preempts “state law causes of actions against an interstate motor carrier for fraud, tort, intentional and negligent infliction of emotional stress, breach of contract, breach of implied warranty, breach of express warranty and state deceptive practices acts, etc.” Automated Window Mach., Inc. v. McKay Ins. Agency, Inc., 320 F. Supp. 2d 619, 620 (N.D. Ohio 2004).

*3 Despite this broad preemptive effect, McCarthy argues that his Ohio claims fall within a “very limited exception” to Carmack Amendment preemption for “state law claims that are unrelated to loss or damage to goods from interstate transport.” Yonak, 2023 U.S. Dist. LEXIS 100257, at *15. “[C]laims survive this preemption only when they are ‘separate and independently actionable harms that are distinct from the loss of, or the damage to, the goods.’ ” Next F/X, Inc. v. DHL Aviation Ams., Inc., 429 F. Supp. 3d 350, 361 (E.D. Ky. 2019) (internal quotation and citation omitted). On the other hand, claims are preempted if they “involve a failure to discharge a carrier’s duty with respect to any part of the transportation to the agreed destination.” Renouf, 641 F. Supp. 3d at 447 (internal quotation and citation omitted).

The Court will apply this precedent to determine whether each of McCarthy’s state law claims are preempted.

A. Breach of Contract (Second Claim for Relief) and Unjust Enrichment (Third Claim for Relief)

McCarthy alleges in the breach of contract and unjust enrichment claims that (1) that Krupp charged him more than the agreed-upon cost for the move and (2) that Krupp failed to provide two 26-foot trucks and therefore was unable to move certain goods. (Doc. 1 at PageID 11–12.) McCarthy cites a Northern District of Texas case for the proposition that claims for overcharges are not preempted because they are “separate and apart from the loss or damage to [ ] shipped property.” Hilgers v. VIP Moving & Storage Inc., No. 3:19-CV-1472-S, 2020 WL 7059589, at *5 (N.D. Tex. Dec. 2, 2020). Similarly, he relies primarily on a case from the District of Vermont to argue that claims arising from a carrier’s failure to accept certain goods for transportation are exempt from Carmack Amendment preemption. See Counter v. United Van Lines, Inc., 935 F. Supp. 505, 506 (D. Vt. 1996) (noting that the carrier did not issue a bill of lading and did not ship any goods).

However, McCarthy fails to address case law from district courts in the Sixth Circuit holding to the contrary. In Renouf, a Northern District of Ohio court held that a fraudulent inducement claim against a carrier for failing to honor its quote and delivery date was preempted. 641 F. Supp. 3d at 447. The court favorably cited cases from other jurisdictions holding that a claim for charging an improper rate and a claim based on a fraudulent estimate were both preempted. Id. (citing Duerrmeyer v. Alamo Moving & Storage One, Corp., 49 F. Supp. 2d 934, 936 (W.D. Tex. 1999) (improper rate) and United Van Lines, Inc. v. Shooster, 860 F. Supp. 826, 828–29 (S.D. Fla. 1992) (fraudulent estimate)). The Court finds Renouf more persuasive than Hilgers on the issue of whether a plaintiff can assert a state law claim for overcharges. Any claim for overcharges, whether sounding in contract or tort, is preempted because “it seeks damages flowing from the shipping agreement with [Krupp].” Id.

Likewise, the courts in the Eastern District of Kentucky and the Northern District of Ohio agree that claims for failing to deliver goods are preempted. The Next F/X court held that a plaintiff’s negligence claim that the carrier failed “to provide the necessary resources to effect carriage of the entirety of Next FX’s shipment” was preempted. 429 F. Supp. 3d at 362. Similarly, in Yonak, the plaintiffs alleged in part that the carrier provided a smaller truck than needed, causing them to have to leave goods behind. Yonak, 2023 U.S. Dist. LEXIS 100257, at *3–4. The district court held that claims alleging fraud and violations of the OCSPA based on these allegations arose from the interstate shipment of household goods and were preempted. Id. at *16. The allegations in Next F/X and Yonak are more analogous to this case than are those in the Counter decision cited by McCarthy. The defendant carrier in Counter did not perform the transportation contract and did not take even possession of the plaintiff’s goods because the parties had a falling out over the cost before the shipment date. 935 F. Supp. at 506, 508. Though the Carmack Amendment did not apply to the plaintiff’s claims in Counter, it does apply to preempt the breach of contract and unjust enrichment claims here for failing to deliver goods. The Court will dismiss the breach of contract and unjust enrichment claims.

B. Conversion (Fourth Claim for Relief)

*4 McCarthy alleges in the conversion claim that Krupp wrongfully denied him immediate possession of certain items of personal property because it failed to provide a sufficiently large moving truck, forcing him to leave the items behind. (Doc. 1 at PageID 13–14.) Krupp moves to dismiss the claim as preempted. The Court has already held that claims based on a carrier’s failure to provide a sufficiently large truck to transport all of a plaintiff’s goods are preempted by the Carmack Amendment. See Next F/C, 429 F. Supp. 3d at 362; Yonak, 2023 U.S. Dist. LEXIS 100257, at *3–4, 16.

McCarthy does not dispute that his conversion claim as pleaded should be preempted. Instead, he points to a case holding that “claims for ‘true conversion,’ where the carrier appropriates the property for its own use or gain, are not preempted.” Cent. Transp. Int’l, Inc. v. Alcoa, Inc., No. 06-CV-11913-DT, 2006 WL 2844097, at *4 (E.D. Mich. Sept. 29, 2006). McCarthy asks for leave to file an amended complaint if evidence of a “true conversion claim” is discovered. He has not alleged facts to support a true conversion claim in the Complaint, nor has he submitted a proposed amended complaint with a true conversion claim for the Court’s consideration. The Court will not grant leave to amend at this time based on speculation.¹ The Court will dismiss the conversion claim pleaded in the Complaint because it is preempted.

C. Fraud (Fifth Claim for Relief), Negligent Misrepresentation (Sixth Claim for Relief), OCSPA (Seventh Claim for Relief), and ODTPA (Eighth Claim for Relief)

McCarthy alleges in the fraud, negligent misrepresentation, OCSPA, and ODTPA claims that Krupp is liable for falsely stating that it could move all of his personal property from Montgomery, Ohio to Boston, Massachusetts. (Doc. 1 at PageID 14–16.) In his brief, McCarthy cites to Krupp’s allegedly broken promise to provide two 26-foot-long trucks for the move. Once again, the Court holds that that claims based on a carrier’s failure to provide a sufficiently large truck to transport all of a plaintiff’s goods are preempted by the Carmack Amendment. See Next F/C, 429 F. Supp. 3d at 362; Yonak, 2023 U.S. Dist. LEXIS 100257, at *3–4, 16.

McCarthy’s reliance on a decision to the contrary by the Supreme Court of Texas in 1980, Brown v. Am. Transfer and Storage Co., 601 S.W.2d 931 (1980), is not persuasive. The court in Brown held that a Texas Deceptive Trade Practices Act claim for misrepresentations made before the contract was signed was not preempted. Id. at 933, 938. However, the Brown decision has been heavily criticized and not followed by federal courts. See, e.g., Hayes v. Stevens Van Lines, Inc., No. 4:14-CV-982-O, 2015 WL 11023794, at *2 (N.D. Tex. Jan. 27, 2015) (“Because Plaintiffs’ DTPA state claims involve damages to goods arising from the interstate transportation of those goods by a common carrier, the Court finds that the claims should be dismissed as they are preempted by the Carmack Amendment.”); Franyutti v. Hidden Valley Moving & Storage, Inc., 325 F. Supp. 2d 775, 778 (W.D. Tex. 2004) (“Because [the Brown] holding occurred prior to many of the Supreme Court and Fifth Circuit opinions relied upon, it’s holding has limited value.”); Schultz v. Auld, 848 F. Supp. 1497, 1503 (D. Idaho 1993) (calling Brown “clearly inconsistent with decisions of the United States Supreme Court and the federal circuits to have directly addressed the issue”). This Court, likewise, will not follow Brown. The fraud, negligent misrepresentation, OCSPA, and ODTPA claims will be dismissed.

D. Negligence (Ninth Claim for Relief)

*5 In the negligence claim, McCarthy alleges that Krupp owed him a duty to exercise reasonable care in providing moving services and that Krupp breached that duty by, “among other things, backing a moving truck into a centuries old tree at [his] new house in Boston, Massachusetts.” (Doc. 1 at PageID 16–17.) Krupp’s argument to dismiss this claim is different. He asserts that McCarthy lacks standing to assert this claim or fails to plead a claim for negligence because it is not clear from the allegations whether he owns the tree in question and what damage the tree suffered. The Court will not dismiss the claim on this basis. McCarthy alleged that the tree is “at [his] new house.” (Id. at PageID 17.) He also alleges that the unspecified harm to the tree “infuriate[ed] both [him] and his new neighbors” and that he “suffered damages.” (Id. at PageID 8, 17.) These allegations are sufficient to state a plausible claim for relief for purposes of Rule 12(b)(6).

Krupp also moves to dismiss the negligence claim on the grounds of Carmack Amendment preemption. Krupp argues that preemption embraces all losses resulting from any “failure to discharge a carrier’s duty as to any part of the agreed transportation,” and the damage the tree allegedly resulted from a breach of that duty. Renouf, 641 F. Supp. 3d at 447. McCarthy, on the other hand, argues that a negligence claim for damage to an item separate from the goods shipped in interstate commerce are not preempted. Claims are not preempted “when they are separate and independently actionable harms that are distinct from the loss of, or the damage to, the goods.” Next F/X, Inc., 429 F. Supp. 3d at 361 (internal quotation and citation omitted); see also Val’s Auto Sales & Repair, LLC v. Garcia, 367 F. Supp. 3d 613, 620 (E.D. Ky. 2019) (“[T]he Carmack Amendment does not preempt state law claims that involve separate and independently actionable harms to a shipper that are distinct from the loss of, or damage to, goods that were shipped in interstate commerce.”). Neither party cites a case on point where the defendant carrier’s negligence during the transportation of household goods causes physical damage to an item of property separate from the transported goods.

The Court has found case law on point from other jurisdictions. In Gale v. Ramar Moving Syss., Inc., No. No. CCB–13–487, 2013 WL 3776983, at *2–3 (D. Md. July 16, 2013), the district court refused to dismiss negligence claims brought for damage to the plaintiff’s home and non-shipped goods. Likewise, another district court found no intent by Congress in the Carmack Amendment “to regulate damage to residences incurred during interstate shipment of goods.” Rehm v. Baltimore Storage Co., 300 F. Supp. 2d 408, 415–416 (W.D. Va. 2004). On the other hand, a district court in New Jersey did dismiss a claim for damage to the plaintiff’s residence because it resulted from the defendant carrier’s failure to properly discharge its duties under the shipping contract. Raineri v. N. Am. Van Lines, Inc., 906 F. Supp. 2d 334, 340 (D.N.J. 2012). In the absence of guidance from the Sixth Circuit, the Court is persuaded that the damage to the tree is sufficiently separate from the regulation of the interstate shipment of goods that it falls outside the zone of preemption. The Court will not dismiss the negligence claim.

E. Intentional Infliction of Emotional Distress (Tenth Claim for Relief)

Finally, McCarthy alleges that Krupp is liable for intentional infliction of emotional distress because Krupp’s failure to provide sufficiently large moving trucks forced him to have to throw away “priceless family heirlooms” that did not fit into the trucks. (Doc. 1 at PageID 17.) Krupp once again argues that the claim is preempted, but McCarthy asserts that it is not. McCarthy points out that the Eastern District of Kentucky in Next F/X cited favorably to a Seventh Circuit decision allowing an intentional infliction of emotional distress claim based on the destruction of valuable personal possession to go forward. 429 F. Supp. 3d at 361 (citing Gordon v. United Van Lines, 130 F.3d 282, 285, 289–290 (7th Cir. 1997)). The Seventh Circuit opinion in Gordon, however, does not help McCarthy here. The Seventh Circuit stated that a claim for intentional infliction of emotional distress is not preempted where it “allege[s] liability on a ground that is separate and distinct from the loss of, or the damage to, the goods that were shipped in interstate commerce.” Gordon, 130 F.3d at 289. McCarthy’s claim for intentional infliction of emotional distress explicitly is premised on the loss of his personal possessions and would be preempted under the Gordon standard. (Doc. 1 at PageID 17.) The Court will dismiss McCarthy’s claim for intentional infliction of emotional distress as preempted. See Automated Window Mach., 320 F. Supp. 2d at 620 (stating that “state law causes of actions against an interstate motor carrier for…intentional and negligent infliction of emotional [dis]tress…are pre-empted”).

IV. CONCLUSION

*6 For the foregoing reasons, Krupp’s Motion to Dismiss is GRANTED IN PART and DENIED IN PART. It is granted insofar as the second through eighth claims for relief and the tenth claim for relief are DISMISSED WITH PREJUDICE based on Carmack Amendment preemption. It is denied insofar as the ninth claim for relief is not preempted or dismissed. This case will continue forward on first claim for relief for violation of the Carmack Amendment and the ninth claim for relief for negligence.

IT IS SO ORDERED.

BY THE COURT:

S/Susan J. Dlott

Susan J. Dlott

United States District Judge

All Citations

Slip Copy, 2024 WL 3413255

Footnotes
1	McCarthy can file a motion to amend pursuant to Federal Rule of Civil Procedure 15(a)(2) if appropriate circumstances arise.

End of Document

© 2024 Thomson Reuters. No claim to original U.S. Government Works.

United States District Court, E.D. New York.

CELL DEAL INC., Plaintiff,

v.

FEDEX FREIGHT, INC., Defendant.

21-CV-00788 (DG) (MMH)

|

Signed July 12, 2024

Attorneys and Law Firms

Joshua Reid Bronstein, The Law Offices of Joshua R. Bronstein & Associates, PLLC, Port Washington, NY, for Plaintiff.

George W. Wright, George W. Wright & Associates, LLC, Hackensack, NJ, for Defendant.

MEMORANDUM & ORDER

DIANE GUJARATI, United States District Judge:

*1 On March 31, 2022, Defendant FedEx Freight, Inc. filed a motion for partial summary judgment limiting liability. See ECF No. 20; see also ECF No. 22. Plaintiff Cell Deal, Inc. opposed Defendant’s motion. See ECF No. 21. On April 1, 2022, Plaintiff filed a motion for summary judgment on liability and damages. See ECF No. 23; see also ECF No. 25. Defendant opposed Plaintiff’s motion. See ECF No. 24. Both motions were brought pursuant to Rule 56 of the Federal Rules of Civil Procedure.¹

On February 28, 2024, Magistrate Judge Marcia M. Henry issued a Report and Recommendation (“R&R”) setting forth the undisputed/unopposed facts, the procedural history, and the legal standard for summary judgment and recommending that both motions be denied. See generally R&R, ECF No. 26. Judge Henry concluded that Plaintiff is not entitled to summary judgment because there are genuine issues of material fact regarding the amount of damages, noting, inter alia, that the record reflects that Plaintiff’s position on the value of the cargo has changed over time. See R&R at 8-10. Judge Henry also concluded that genuine issues of material fact exist regarding whether Defendant validly limited its liability, noting that a reasonable jury could find that Plaintiff did not have notice of the FedEx Rules Tariff and its limitation of liability from the Del Express Agreement and that a jury could reasonably infer that Defendant did not adequately provide notice about the limitations of liability to Plaintiff via the Bill of Lading. See R&R at 11-17.

On March 13, 2024, Defendant filed objections to the portion of the R&R recommending that Defendant’s motion for partial summary judgment be denied. See Defendant’s Objection in Part to the R&R (“Def.’s Obj. Br.”), ECF No. 27. Defendant objects to the R&R “on the issue of whether there exists a triable material fact whether [Defendant] validly limited its liability” and Defendant asserts that the R&R “does not give due consideration to controlling United States Supreme Court precedent.” See Def.’s Obj. Br. at 2. Defendant argues that “[a]s the United States Supreme Court holds, the proper analysis is whether [Defendant] and Del Express, plaintiff’s designated transportation intermediary with whom [Defendant] contracted, agreed to limit [Defendant’s] liability;” that “[b]ased on Del Express’s status as a licensed freight broker hired by [Plaintiff], [Defendant] need not show that the limitation of liability was directly conveyed or agreed to by [Plaintiff] itself;” that “[t]he record shows, and the Magistrate Judge specifically found, that [Defendant] and Del Express agreed to incorporate the limitation of liability to all shipments tendered by Del Express to [Defendant] under the Del Express Agreement, including the shipment at issue;” that “the record shows that Del Express drafted and agreed to the terms on its own Del Express standard Bill of Lading issued for the shipment;” that “[t]here can be no genuine triable issue of fact that Del Express, acting as plaintiff’s selected shipping agent, had actual notice of the applicable limitation of [Defendant’s] liability and agreed to [the] limitation;” that Defendant “was entitled to rely on the contractual limitation of liability negotiated with Del Express for all shipments brokered by Del Express;” and that Defendant “was not required to confirm that Del Express’s customers, including [Plaintiff], were actually aware of or personally agreed to the limitation.” See Def.’s Obj. Br. at 5. Defendant further argues that the R&R “relies on cases in which the shippers did not use a freight broker or transportation intermediary to contract with a motor carrier.” See Def.’s Obj. Br. at 7. Defendant requests that the Court grant Defendant’s motion for partial summary judgment limiting its liability in this case to $153.00. See Def.’s Obj. Br. at 10.

*2 Plaintiff did not file any objections to the R&R or respond to Defendant’s objections within the time limits for doing so. See generally docket.

By Order dated April 3, 2024, the Court directed Plaintiff to respond to Defendant’s objections and informed Plaintiff that such response must address the caselaw cited by Defendant. See April 3, 2024 Order. By Order dated April 9, 2024, the Court granted an extension request and directed that Plaintiff’s response be filed by April 15, 2024. See April 9, 2024 Order.

On April 15, 2024, Plaintiff filed its Response to Defendant’s Objection in Part to the R&R. See ECF No. 29. Plaintiff asserts that “[t]he analysis by the Defendant fails to contradict the case law and analysis in the Report and Recommendation” and Plaintiff requests that the R&R “be upheld, and that the denial of [Defendant’s] partial motion for summary judgment as to liability remain upheld.” See ECF No. 29 at 6, 8.

* * *

A district court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1); see also Fed. R. Civ. P. 72(b)(3). A district court “shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1); see also Fed. R. Civ. P. 72(b)(3) (providing that a district court “must determine de novo any part of the magistrate judge’s disposition that has been properly objected to”); Arista Recs., LLC v. Doe 3, 604 F.3d 110, 116 (2d Cir. 2010) (“As to a dispositive matter, any part of the magistrate judge’s recommendation that has been properly objected to must be reviewed by the district judge de novo.”); Lorick v. Kilpatrick Townsend & Stockton LLP, No. 18-CV-07178, 2022 WL 1104849, at *2 (E.D.N.Y. Apr. 13, 2022). To accept those portions of an R&R to which no timely objection has been made, however, “a district court need only satisfy itself that there is no clear error on the face of the record.” Lorick, 2022 WL 1104849, at *2 (quoting Ruiz v. Citibank, N.A., No. 10-CV-05950, 2014 WL 4635575, at *2 (S.D.N.Y. Aug. 19, 2014)); see also Jarvis v. N. Am. Globex Fund, L.P., 823 F. Supp. 2d 161, 163 (E.D.N.Y. 2011).

Because no party objected to the portion of the R&R recommending that Plaintiff’s motion for summary judgment be denied, the Court’s review of that portion of the R&R is for clear error. Upon clear error review, the Court adopts the portion of the R&R recommending that Plaintiff’s motion for summary judgment be denied.²

*3 In light of Defendant’s objection to the portion of the R&R recommending denial of Defendant’s motion for partial summary judgment, the Court reviews de novo the R&R with respect to that recommendation. Upon de novo review, the Court concludes that Defendant’s motion for partial summary judgment limiting liability should be granted.

“When an intermediary contracts with a carrier to transport goods, the cargo owner’s recovery against the carrier is limited by the liability limitation to which the intermediary and carrier agreed.” Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 33 (2004). “The intermediary is certainly not automatically empowered to be the cargo owner’s agent in every sense…. But when it comes to liability limitations for negligence resulting in damage, an intermediary can negotiate reliable and enforceable agreements with the carriers it engages.” Id.; see also Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co., 762 F.3d 165, 185 (2d Cir. 2014) (applying Kirby and determining that “[the intermediary] was the agent of the cargo owner, in the limited sense articulated in Kirby, when it contracted with [the carrier] for the liability limitations, including the Exoneration Clause, contained in the [carrier’s] bill of lading” and “[a]ccordingly, [the cargo owner] is bound by the Exoneration Clause”).

Here, there does not appear to be any genuine dispute of material fact with respect to the limitation of liability. It is undisputed that Plaintiff hired Del Express, a broker licensed by the Federal Motor Carrier Safety Administration, to arrange for Defendant to pick up the cellphones from “AT&T c/o CTDI” and to deliver them to Plaintiff. See R&R at 3. Moreover, the parties do not seriously dispute that Del Express and Defendant entered into at least two agreements that are relevant to the disputed shipment – namely, the Del Express Agreement and Del Express’s standard Bill of Lading. See R&R at 4-5. Further, it is undisputed that the Del Express Agreement includes a “Liability Notice” that references “FXF 100 rules tariff item 420,” which term refers to Item 420 of FedEx’s Rules Tariff 100, which limits Defendant’s maximum liability for “used or reconditioned articles” to “50 cents per pound per package or $10,000 per incident, whichever is lower” when the consignor or consignee does not declare value or fails to describe articles as used or reconditioned on the original Bill of Lading; that the Bill of Lading for the disputed shipment does not declare the value of the shipment and, in fact, expressly states “Shipment Value Not Specified;” that Item 420 establishes procedures for a FedEx customer to request higher limits of liability for damage to used goods; and that neither Plaintiff nor Del Express requested higher limits of liability for the shipment. See R&R at 4-5. Additionally, there is no dispute that the shipment consisted of one pallet weighing a total of 306 pounds. See R&R at 3.

Because Del Express – the intermediary hired by Plaintiff, the cargo owner – contracted with Defendant – a carrier – to transport goods, Plaintiff’s recovery against Defendant is limited by the liability limitation to which Del Express and Defendant agreed. See Kirby, 543 U.S. at 33.³ Del Express and Defendant agreed to limit Defendant’s liability pursuant to the Del Express Agreement. Because the shipment consisted of used goods, the value of the shipment was not declared on the Bill of Lading, and Del Express did not request higher limits of liability, the Del Express Agreement limited Defendant’s liability to 50 cents per pound per package or $10,000 per incident, whichever is lower. Here, the per pound amount – which would be $153.00 – is lower. Plaintiff’s recovery against Defendant therefore is limited to $153.00 pursuant to the liability limitation in the Del Express Agreement.⁴

*4 Accordingly, Defendant’s motion is granted and Defendant’s liability is limited to $153.00.

* * *

Plaintiff’s Motion for Summary Judgment, ECF No. 23, is DENIED; Defendant’s Motion for Partial Summary Judgment, ECF No. 20, is GRANTED; and Defendant’s liability is limited to $153.00.

The parties shall submit their proposed Joint Pretrial Order by August 12, 2024.

Further, the parties are referred to Magistrate Judge Marcia M. Henry for a settlement conference and should contact her chambers in accordance with her Individual Rules by July 19, 2024.

SO ORDERED.

All Citations

Slip Copy, 2024 WL 3401198

Footnotes
1	Familiarity with the detailed procedural history and background of this action is assumed herein.
2	Also upon clear error review, the Court adopts those portions of the R&R setting forth the undisputed/unopposed facts, the procedural history, and the legal standard for summary judgment. See R&R at 2-7. The Court notes that notwithstanding that Plaintiff did not file any objections to the R&R, Plaintiff requests in its response briefing that its motion for summary judgment be granted. See ECF No. 29 at 8. Plaintiff’s request is untimely. However, even if Plaintiff had timely objected to the R&R’s recommendation that Plaintiff’s motion be denied, the Court would adopt that recommendation upon de novo review.
3	Under these circumstances, whether Plaintiff was on notice of the terms of the Del Express Agreement is immaterial. Such a requirement was not established by Kirby and indeed would seem to run counter to the analysis set forth in Kirby. See Kirby, 543 U.S. at 34-35.
4	In light of the above, the Court need not – and does not – address any liability limitation in the Bill of Lading.

End of Document

© 2024 Thomson Reuters. No claim to original U.S. Government Works.