GORDON COMPANIES, INC., Plaintiff, v. FEDERAL EXPRESS CORPORATION, et al., Defendants.

 

14-CV-00868-RJA-JJM

 

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK

 

2016 U.S. Dist. LEXIS 120205

 

 

September 2, 2016, Decided

September 2, 2016, Filed

 

 

COUNSEL:  [*1] For Gordon Companies, Inc., Plaintiff: Dean M. Drew, LEAD ATTORNEY, Buffalo, NY.

 

For Federal Express Corporation, FedEx Ground Package System, Inc., FedEx SmartPost, Inc., Defendants: Aaron Thomas Cassat, LEAD ATTORNEY, Federal Express Corporation, Memphis, TN; John Charles Snyder, LEAD ATTORNEY, FedEx Ground Package System, Inc., Moon Township, PA; Susan C. Roney, LEAD ATTORNEY, Nixon Peabody LLP, Buffalo, NY.

 

JUDGES: JEREMIAH J. MCCARTHY, United States Magistrate Judge.

 

OPINION BY: JEREMIAH J. MCCARTHY

 

OPINION

 

REPORT AND RECOMMENDATION

This case has been referred to me by Hon. Richard J. Arcara for supervision of pretrial proceedings, including the preparation of a Report and Recommendation on dispositive motions [8].1 Before me is defendants’ second motion [42] to dismiss the Second Amended Complaint pursuant to Fed. R. Civ. P. (“Rule”) 12(b)(6) [42]. Oral argument was held on January 21, 2016 [47], followed by supplemental briefing [48-51]. For the following reasons, I recommend that the second motion be denied, without prejudice to further consideration by Judge Arcara.

 

1   Bracketed references are to the CM/ECF docket entries.

 

BACKGROUND

I assume the reader’s familiarity with defendants’ prior motion to dismiss [25], my September 10, 2015 Report and Recommendation [*2]  addressing that motion [34], and Judge Arcara’s November 17, 2015 Decision and Order [39] adopting in part and rejecting in part my Report and Recommendation.

The pending motion seeks “dismissal on two grounds asserted in defendants’ first motion to dismiss: (1) that plaintiff has not and cannot comply with the contractually required notice provisions regarding the overcharges alleged in the Second Amended Complaint; and (2) that the plaintiff’s claim is preempted as to FedEx Ground and FedEx SmartPost by the Carmack Amendment”. Defendants’ Memorandum of Law [42-1], p.1. Each of these arguments will be addressed.

 

ANALYSIS

 

1. Notice

Defendants argue that in its objections to my prior Report and Recommendation, plaintiff “reversed its prior representations to this Court that it made no shipments that were ‘eligible’ for the SmartPost discounts. This about-face brings Plaintiff’s breach of contract claim squarely within the contractual notice provisions that apply to allegations of overcharging”. Defendants’ Memorandum of Law [42-1], p.1. However, plaintiff’s so-called “about face” was contained in its October 29, 2015 Reply Memorandum [38] in support of its objections to my prior Report and Recommendation. [*3]  See Defendants’ Memorandum of Law [42-1], pp. 4-5 (quoting Reply Memorandum [38], p. 7). During oral argument of plaintiff’s objections on November 16, 2015, defendants had the opportunity to alert Judge Arcara to plaintiff’s alleged change of positon. Therefore, I believe this argument is subsumed in his determination that “the allegations in plaintiff’s complaint adequately allege a breach of contract”. Decision and Order [39], p. 2.

Defendants argue that “[p]laintiff fails to allege that it ‘has satisfied and complied with all notices and claims periods,’ as required by the Service Guide”. Defendants’ Memorandum of Law [42-1], p. 8. However, “[t]he contractual notice requirement has been treated as a condition precedent to suit”, Jim Ball Pontiac-Buick-GMC, Inc. v. DHL Express (USA), Inc., 2012 U.S. Dist. LEXIS 13546, 2012 WL 370319, *4 (W.D.N.Y. 2012) (Curtin, J.), and Rule 9(c) allows plaintiff “to allege generally that all conditions precedent have occurred or been performed”. Defendants’ Service Guide cannot impose stricter pleading requirements than those set forth in Rule 9(c), since “[p]arties … cannot modify the Federal Rules of Civil Procedure by agreement”. In re Application of O’keeffe, 2016 U.S. Dist. LEXIS 53572, 2016 WL 2771697, *4 (D.Nev. 2016).

Plaintiff alleges that it “met its obligations under the SmartPost Agreement, inter alia, by making its computer system available to defendants for modification of the FedEx Software [*4]  and by transmitting the delivery information and by giving the Shipments to defendants for delivery”. Second Amended Complaint [23], ¶36. Because the phrase “inter alia” means “[a]mong other things” (Black’s Law Dictionary (9th ed.)), the allegation that it “met its obligations under the SmartPost Agreement” is not limited to the specific examples mentioned, and is broad enough to cover compliance with the contractual notice requirements. Whether plaintiff can prove that allegation (or even survive a motion for summary judgment) is a question for another day.

 

1. The Carmack Amendment

“The Carmack Amendment to the Interstate Commerce Act of 1887 governs the liability of motor carriers for loss or damage to goods transported in interstate commerce. See 49 U.S.C. § 14706(d).” AIG Europe (Netherlands), N.V. v. UPS Supply Chain Sols., Inc., 765 F. Supp. 2d 472, 481 (S.D.N.Y. 2011). In my prior Report and Recommendation ([34], p. 5), I expressly declined to consider the merits of defendants’ preemption argument under the Carmack Amendment. Because that argument does not appear to fall within the scope of Judge Arcara’s Decision and Order (see Decision & Order [39]), I will address it here.

The Carmack Amendment “addresses the subject of carrier liability for goods lost or damaged during shipment, and most importantly provides shippers with the statutory right to recover for the actual loss or injury to their property caused by any of the carriers [*5]  involved in the shipment”. Cleveland v. Beltman North American Co., 30 F.3d 373, 377 (2d Cir. 1994) (emphasis in original). “Because the issue of a shipper’s compensation for actual loss or injury to its property has been comprehensively and directly addressed by the Carmack Amendment, a federal common law cause of action – even assuming such exists – is displaced by the Act.” Id. at 381.

Accordingly, courts in this Circuit have held that the Carmack Amendment does not preempt claims for overcharges. See Frey v. Bekins Van Lines, Inc., 748 F.Supp.2d 176, 181(E.D.N.Y. 2010) (“the Carmack Amendment refers only to actions to recover for lost or damaged goods. There are no such claims raised here, and therefore this action is in no way expressly preempted by the statute”); Learning Links, Inc. v. United Parcel Service of America, 2006 U.S. Dist. LEXIS 13574, 2006 WL 785274 **3-4 (S.D.N.Y.2006) (recognizing “the well-settled axiom that the Carmack Amendment applies only to loss, damage, or injury to shipped goods . . . . Learning Links’ Complaint only refers to shipment overcharges. Nothing in the Complaint alleges that the goods were lost or damaged”). Although defendants cite contrary authority from other circuits (defendants’ Reply Brief [46], p. 9), that authority does not bind this court. Since plaintiff does not seek damages for the loss or damage of goods during shipment, its claim is not preempted by the Carmack Amendment.

 

CONCLUSION

For these reasons, I recommend that defendants’ second motion to dismiss [42] be denied. Unless otherwise [*6]  ordered by Judge Arcara, any objections to this Report and Recommendation must be filed with the clerk of this court by September 19, 2016 (applying the time frames set forth in Rules 6(a)(1)(C), 6(d), and 72(b)(2)). Any requests for extension of this deadline must be made to Judge Arcara. A party who “fails to object timely . . . waives any right to further judicial review of [this] decision”. Wesolek v. Canadair Ltd., 838 F. 2d 55, 58 (2d Cir. 1988); Thomas v. Arn, 474 U.S. 140, 155, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985).

Moreover, the district judge will ordinarily refuse to consider de novo arguments, case law and/or evidentiary material which could have been, but were not, presented to the magistrate judge in the first instance. Paterson-Leitch Co. v. Massachusetts Municipal Wholesale Electric Co., 840 F. 2d 985, 990-91 (1st Cir. 1988).

The parties are reminded that, pursuant to Rule 72(b) and (c) of this Court’s Local Rules of Civil Procedure, written objections shall “specifically identify the portions of the proposed findings and recommendations to which objection is made and the basis for each objection . . . supported by legal authority”, and must include “a written statement either certifying that the objections do not raise new legal/factual arguments, or identifying the new arguments and explaining why they were not raised to the Magistrate Judge”. Failure to comply with these provisions may result in the district judge’s refusal to consider [*7]  the objections.

Dated: September 2, 2016

/s/ Jeremiah J. McCarthy

JEREMIAH J. MCCARTHY

United States Magistrate Judge

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, et al., Plaintiffs, v. ALL AMERICAN FREIGHT, INC., HARTLEY FREIGHT LINES, LLC, and HARTLEY TRANSPORTATION, LLC, Defendants.

 

Case No. 14-CIV-62262-BLOOM/VALLE

 

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA

 

2016 U.S. Dist. LEXIS 120828

 

 

September 6, 2016, Decided

September 6, 2016, Filed

 

 

PRIOR HISTORY: Nat’l Union Fire Ins. Co. v. All Am. Freight, Inc., 2016 U.S. Dist. LEXIS 19014 (S.D. Fla., Feb. 16, 2016)

 

COUNSEL:  [*1] For National Union Fire Insurance Company of Pittsburgh, PA, other Coex Coffee International, Coex Coffee International, Plaintiffs: John Marcus Siracusa, LEAD ATTORNEY, Joseph William Janssen, III, Janssen & Siracusa, P.A., West Palm Beach, FL; Nathan T. Williams, LEAD ATTORNEY, PRO HAC VICE, Kennedy Lillis Schmidt & English, New York, NY.

 

All American Freight, Inc., Defendant, Pro se, Hollywood, Fl.

 

JUDGES: ALICIA O. VALLE, UNITED STATES MAGISTRATE JUDGE.

 

OPINION BY: ALICIA O. VALLE

 

OPINION

 

REPORT AND RECOMMENDATION TO DISTRICT JUDGE

THIS MATTER is before the Court upon Defendant Hartley Freight Lines, LLC’s Motion for Entitlement and Award of Reasonable Attorney’s Fees and Costs (ECF No. 89) (the “Motion”). United States District Judge Beth Bloom referred the Motion to the undersigned for disposition. See (ECF No. 91). The undersigned has reviewed the Motion, Plaintiffs’ Response (ECF No. 116), and Defendants’ Reply (ECF No. 133). Accordingly, being fully advised in the matter, the undersigned recommends that the Motion be DENIED for the reasons set forth below.

 

1. PROCEDURAL BACKGROUND

This case has been discussed extensively in prior Court rulings, which are incorporated by reference. See, e.g., (ECF No. 42) (Order [*2]  on Defendants’ Motion to Dismiss); (ECF No. 82) (Omnibus Order on Motions for Summary Judgment); and (ECF No. 130) (Order on Motion for Sanctions and Motion for Relief from Order on Summary Judgment). Facts relevant to the instant Motion are set forth below.

The case stems from the 2011 theft of 320 bags of green coffee (the “Cargo”) from a warehouse in Miami, Florida. Plaintiff National Union Fire Insurance Company of Pittsburgh, PA (“National Union”), who insured the Cargo against transit-related loss and damage, commenced this action as subrogee for Coex Coffee International (“Coex”). (ECF No. 1).

On March 25, 2015, Plaintiffs filed an Amended Complaint (ECF No. 34), alleging separate claims for breach of carriage contract under the Carmack Amendment, 49 U.S.C. § 14706, against Defendants All American Freight, Inc. (“AAF”), Hartley Transportation, LLC (“Hartley Transportation”), and Hartley Freight Lines, LLC (“Hartley Freight”). Id. Plaintiffs alleged an alternative state law negligence cause of action against Hartley Transportation. Id. at ¶¶ 58-72. Jurisdiction was alleged under 28 U.S.C. § 1331 (federal question) and, alternatively, under 28 U.S.C. § 1332 (diversity of citizenship). Id. at ¶¶ 17, 19.

On May 12, 2015, pursuant to Florida statue [*3]  § 768.79, Hartley Freight served an Offer of Judgment on Plaintiffs in the amount of $500 for “settlement of all claims made by the Plaintiffs against the Defendant Hartley Freight . . . including claims for attorney’s fees, interest, and punitive damages.” (ECF No. 89-1 at 1) (the “Offer of Judgment”). Plaintiffs did not accept the Offer of Judgment. (ECF No. 89 at 2).

On December 16, 2015, Defendants Hartley Freight and Hartley Transportation filed Motions for Summary Judgment. See (ECF Nos. 55, 57). On February 17, 2016, the Court granted Hartley Freight’s Motion for Summary Judgment. See (ECF No. 82). In granting summary judgment, the Court stated that Hartley Freight and Hartley Transportation–although sharing a root name–were distinct legal entities, and Plaintiffs had not provided a legal basis to support their argument that the corporate forms should be disregarded and/or comingled. Id. at 21-22. The Court further concluded that “there is absolutely no evidence that Hartley Freight was a party to the transaction resulting in the theft.” Id. at 23.

The instant Motion followed. In the Motion, Defendant Hartley Freight seeks to recover reasonable attorney’s fees and costs pursuant to Florida statute § 768.79 on the [*4]  grounds that Plaintiffs rejected the Offer of Judgment and the Court ultimately entered summary judgment in its favor. See (ECF No. 89 at 2).

Plaintiffs respond that § 768.79 is inapplicable because the basis for jurisdiction in this case is a federal question under 28 U.S.C. § 1331 based on the Carmack Amendment. (ECF No. 116 at 3).1 In reply, Defendants argue that the Court has diversity or supplemental jurisdiction under 28 U.S.C. §§ 1332 or 1367 over the state law negligence and alter-ego claims such that § 768.79 applies. (ECF No. 133 at 4-5).

 

1   Plaintiffs also argue that the Offer of Judgment was facially deficient. See (ECF No. 116 at 3-5). Because the Motion can be decided on the applicability of § 768.79 to the instant facts, the Court need not address whether the Offer of Judgment was deficient.

 

1. LEGAL STANDARDS

Under the “American Rule,” litigants are generally not entitled to an award of attorneys’ fees for prevailing in litigation unless provided by statute or contract. See, e.g., In re Martinez, 416 F.3d 1286, 1288 (11th Cir. 2005); Buckhannon Bd. & Care Home, Inc. v. W Virginia Dep’t of Health & Human Res., 532 U.S. 598, 602, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001). Relevant to the issue of fees is the interplay between the federal Carmack Amendment (49 U.S.C. § 14706) and Florida’s Offer of Judgment statute (§ 768.79).

The Carmack Amendment generally governs interstate cargo claims, controls and limits the liability of common carriers for in-transit cargo, and preempts common or state law remedies [*5]  that increase a common carrier’s liability beyond the actual loss or injury to the property. See, e.g., A.I.G. Uruguay Compania de Seguros, S.A. v. AAA Cooper Transp., 334 F.3d 997, 1003 (11th Cir. 2003) (citing 49 U.S.C. § 14706(a)(1)) (“The Carmack Amendment to the Interstate Commerce Act makes common carriers liable for actual loss of or damage to shipments in interstate commerce.”); Smith v. United Parcel Serv., 296 F.3d 1244, 1246 (11th Cir. 2002) (“The Carmack Amendment creates a uniform rule for carrier liability when goods are shipped in interstate commerce.”); see also Casamassa v. Walton P. Davis Co. Inc., No. 2:07-CV-317-FTM-34DNF, 2008 U.S. Dist. LEXIS 24941, 2008 WL 879412, at *3 (M.D. Fla. Mar. 28, 2008) (“The Carmack Amendment provides that a shipper may recover the ‘actual loss or injury to the property’ caused by a carrier.”) (quoting 49 U.S.C. § 14706(a)(1)). The Amendment “provides the exclusive cause of action for interstate shipping contract claims.” White v. Mayflower Transit, LLC, 543 F.3d 581, 584 (9th Cir. 2008). As a result, state law claims arising from failures in the transportation and delivery of commercial goods are preempted. Smith, 296 F.3d at 1246 (internal citations omitted); see also Hansen v Wheaton Van Lines, Inc., 486 F. Supp. 2d 1339, 1343-44 (S.D. Fla. 2006) (“The law is well established that the remedies available under the Carmack Amendment preempt all state, common and statutory law regarding the liability of an interstate common carrier for claims arising out of shipments within the purview of said statute.”).

Under Florida statute § 768.79(1), in “a civil action for damages,” a defendant who files an offer of judgment that is not accepted by a plaintiff within 30 days “shall be entitled to recover reasonable costs and [*6]  attorney’s fees incurred by her or him . . . if the judgment is one of no liability.” Courts generally agree that § 768.79 must be strictly construed because it is “in derogation of the common law rule that parties are responsible for their own attorney’s fees.” Campbell v. Goldman, 959 So. 2d 223, 226 (Fla. 2007); Winter Park Imports, Inc. v. JM Family Enters., 66 So. 3d 336, 340 (Fla. Dist. Ct. App. 2011); Palm Beach Polo Holdings, Inc. v. Equestrian Club Estates Prop. Owners Ass’n, Inc., 22 So. 3d 140, 144 (Fla. Dist. Ct. App. 2009).

 

III. DISCUSSION

Although Plaintiffs alleged diversity of citizenship as an alternative basis for jurisdiction in the Amended Complaint, the primary basis for jurisdiction in this case is the Carmack Amendment and federal question jurisdiction. Federal question jurisdiction is governed by 28 U.S.C. § 1331, which provides that “district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treatises of the United States.” (ECF No. 34 at ¶¶ 17, 19). The parties agree that the relevant federal statute, the Carmack Amendment, does not allow for the recovery of attorney’s fees for shipments involving commercial goods. See (ECF Nos. 116 at 2; 133 at 4); Fine Foliage of Florida, Inc. v. Bowman Transp., Inc., 698 F. Supp. 1566, 1576 (M.D. Fla. 1988), aff’d, 901 F.2d 1034 (11th Cir. 1990) (noting that the Carmack Amendment has no provision for the recovery of attorney’s fees in litigation regarding the shipment of commercial goods). The parties, however, dispute whether the claims against Defendant Hartley Freight were brought solely under the Carmack Amendment (which would preclude recovery of attorney’s [*7]  fees), or as an alternative state law negligence claim (which may provide recovery of attorney’s fees under the Offer of Judgment statute).

Specifically, Defendant Hartley Freight argues that where a court has both federal question and supplemental jurisdiction, § 768.79 applies to the state law claims. (ECF No. 133 at 5); see, e.g., Design Pallets v. Gray Robinson, P.A., 583 F. Supp. 2d 1282, 1287 (M.D. Fla. 2008). According to Defendant Hartley Freight, the Amended Complaint included allegations of “negligence and alter-ego liability” that were “incorporated” into the claims against it. (ECF No. 133 at 5-6). Defendant Hartley Freight therefore concludes that the claims against it included state law claims that were not barred by the Carmack Amendment’s prohibition on fees for shipments involving commercial goods. Id. at 6. An analysis of the Amended Complaint, however, does not support Defendant’s argument.

First, the claims against Defendant Hartley Freight set forth in paragraphs 49 to 52 of the Amended Complaint were expressly premised on the Carmack Amendment. (ECF No. 34 at 6-7). Although it is true that paragraph 49 incorporated by reference prior allegations in the Amended Complaint, such form pleading did not create a separate state negligence claim against Defendant Hartley Freight that would allow recovery [*8]  of attorney’s fees under § 768.79. Moreover, even paragraph 16 of the Amended Complaint, which identifies the Defendants Hartley Freight and Harley Transportation as “[acting] in concert and in a similar capacity . . . as an interstate motor carrier of goods” is expressly “subject to the Carmack Amendment.” (ECF No. 34 at ¶ 16) (emphasis added). None of these paragraphs reference state law claims.

Second, paragraphs 58 to 72 of the Amendment Complaint, which allege the alternative state law negligence claim, do not mention Defendant Hartley Freight. (ECF No. 34 at 8-10). Although paragraph 58 once again incorporates prior paragraphs, the only corporate entity named in the alternative negligence claim is Defendant Hartley Transportation. See, e.g., ¶ 59 (“Hartley Transport owed [Plaintiff] a duty . . . .”); ¶ 60 (“Hartley Transport solicited, selected . . . .”); ¶ 62 (“As between [Plaintiff] and Hartley Transport . . . .”); ¶ 63 (“[Plaintiff] relied on Hartley Transport to inquire . . . .”); ¶¶ 64-65, 68 (“Hartley Transport hired AAF . . . .”); ¶ 67 (“the facts specified in Paragraphs 64 and 65 required Hartley Transport to expressly instruct AAF . . . .”); ¶ 69 (“Hartley Transport breached its duties . . . [*9]  .”); ¶¶ 70-71 (“By reason of Hartley Transport’s negligent acts . . . .”); ¶ 72 (“Hartley Transport caused [Plaintiffs] to sustain damages . . . .”). Thus, Defendant Hartley Freight’s argument that it too was the subject of the alternative state negligence claim is contrary to the plain language of the Amended Complaint.

Accordingly, the undersigned finds that the claims against Defendant Hartley Freight were based on the federal Carmack Amendment and it prevailed solely under the federal statute.2 Consequently, § 768.79 is inapplicable to the facts of this case. Vanderwall v. United Airlines, Inc., No. 14-60256-CIV, 2014 U.S. Dist. LEXIS 137709, 2014 WL 4755219, at *1 (S.D. Fla. Sept. 23, 2014) (“[A] federal judge whose

 

2   Indeed, Hartley Freight’s successful motion on summary judgment challenged the Carmack Amendment, without discussion of an alternative state law negligence claim. See (ECF No. 57). Likewise, the Court’s ruling on summary judgment was based on there being “absolutely no evidence that Hartley Freight was a party to the transaction resulting in the theft,” without reference to any state law claim. (ECF No. 82 at 23).

jurisdiction is founded solely on a federal question would not apply § 768.79 to the resolution of federal claims inasmuch as § 768.79 is preempted by federal law.”); Design Pallets, 583 F. Supp. 2d at 1285 (noting that where a federal court [*10]  has subject matter jurisdiction over a federal question only, § 768.79 does not apply); Cf. Morris v. Arizona Beverage Co., No. 03-60907-CIV, 2005 U.S. Dist. LEXIS 45292, 2005 WL 5544961, at *2 (S.D. Fla. Feb. 9, 2005) (concluding that § 768.79 applies where a court has supplemental jurisdiction over state law claims).

 

1. RECOMMENDATION

For the foregoing reasons, the undersigned respectfully recommends that the Motion (ECF No. 89) be DENIED. The undersigned also recommends that judgment be entered in favor of Defendant Hartley Freight consistent with the District Court’s prior ruling on summary judgment. See (ECF Nos. 82 at 25; 89 at 2 n.1).

Within fourteen days after being served with a copy of this Report and Recommendation, any party may serve and file written objections to any of the above findings and recommendations as provided by the Local Rules for this district. 28 U.S.C. § 636(b)(1); S.D. Fla. Mag. R. 4(b). The parties are hereby notified that a failure to timely object waives the right to challenge on appeal the district court’s order based on unobjected-to factual and legal conclusions contained in this Report and Recommendation. 11th Cir. R. 3-1 (2016); see Thomas v. Arn, 474 U.S. 140, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985).

DONE AND ORDERED in Chambers in Fort Lauderdale, Florida, on September 6, 2016.

/s/ Alicia O. Valle

ALICIA O. VALLE

UNITED STATES MAGISTRATE JUDGE