United States District Court,

S.D. Alabama, Southern Division.

MARK DEES, et al., Plaintiffs,

v.

COLEMAN AMERICAN MOVING SERVICES, INC., et al., Defendants.

CIVIL ACTION 17-0292-WS-N

|

Filed 10/26/2017

 

 

ORDER

WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE

*1 This matter is before the Court on the plaintiffs’ motion to remand. (Doc. 14). The parties have submitted briefs and evidentiary materials in support of their respective positions, (Docs. 14, 16, 18), and the motion is ripe for resolution. After careful consideration, the Court concludes that the motion is due to be granted.

 

 

BACKGROUND

The plaintiffs filed in state court a five-count complaint, with each count asserting a claim under state law. The complaint alleges that the defendants, while under contract to move the plaintiffs’ property, damaged that property but have refused to pay for the damage as per the parties’ contract. No other wrongdoing of any kind is alleged. Claims are asserted for bad faith, breach of contract, fraud, negligence and wantonness. (Doc. 1 at 7-12). The complaint seeks an award of compensatory and punitive damages but does not demand any particular amount.

 

The defendants removed on the basis of federal question jurisdiction. Although the complaint asserts only state-law claims, the defendants argue that those claims are completely preempted by the Carmack Amendment, thereby furnishing federal question jurisdiction.1

 

 

DISCUSSION

This Court has already held that, in light of the Supreme Court’s analysis expressed in Beneficial National Bank v. Anderson, 539 U.S. 1 (2003), “complete preemption applies in a Carmack Amendment context.” U.S. Aviation Underwriters, Inc. v. Yellow Freight System, Inc., 296 F. Supp. 2d 1322, 1338 Ala. 2003); accord Stabler v. Pack & Load Services, Inc., 2011 WL 245491 at *1 (S.D. Ala. 2011). The Court is not alone. The only two courts of appeal known to have addressed the issue have reached the same conclusion,2 as have a number of sister courts within the Eleventh Circuit.3 The plaintiffs offer the Court no reason to reconsider its position.

 

*2 Instead, the plaintiffs assert that the amount in controversy does not exceed $10,000. In support of this argument, they point to their amended complaint (filed in federal court), which adds a sixth count invoking the Carmack Amendment, for the violation of which they demand $6,130. (Doc. 8 at 6-7).

 

The defendants first suggest that the amount in controversy is irrelevant, (Doc. 16 at 2), but this is incorrect. The only cases that may properly be removed are those “of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). The Carmack Amendment is housed in 49 U.S.C. § 14706, and “the district courts shall have original jurisdiction of an action brought under section 11706 or 14706 of title 49, only if the matter in controversy for each receipt or bill of lading exceeds $10,000, exclusive of interest and costs.” 28 U.S.C. § 1337(a). As the party invoking the Court’s subject matter jurisdiction, the burden lies with the defendants to demonstrate that this jurisdictional threshold is satisfied.

 

“[W]here jurisdiction is based on a claim for indeterminate damages, … the party seeking to invoke federal jurisdiction bears the burden of proving by a preponderance of the evidence that the claim on which it is basing jurisdiction meets the jurisdictional minimum.” Federated Mutual Insurance Co. v. McKinnon Motors, LLC, 329 F.3d 805, 807 (11th Cir. 2003). Because the complaint does not identify a specific sum demanded under an (unpleaded) Carmack Amendment cause of action, the defendants’ burden is to show by a preponderance of the evidence that the amount in controversy under the Carmack Amendment more likely than not exceeds $10,000.

 

To meet their burden, the defendants note the following: (1) the complaint seeks an award of both compensatory and punitive damages; (2) the complaint alleges the plaintiffs insured the moved property for $75,000; and (3) prior to removal, the plaintiffs made a settlement offer of $22,500. (Doc. 16 at 5).4 These circumstances do not carry the defendants’ burden.

 

As noted, the complaint asserts state-law causes of action, some of which permit an award of punitive damages and/or emotional distress damages. The plaintiffs seek such damages, along with “loss and use [sic] of their property, economic loss [and] consequential damages” and “full replacement value of the damaged property.” (Doc. 1 at 8, 11). The defendants assume the Court can consider all these elements of damage in determining the amount in controversy, but they are mistaken.

 

“When determining the jurisdictional amount in controversy in diversity cases, punitive damages must be considered, [citations omitted], unless it is apparent to a legal certainty that such cannot be recovered.” Holley Equipment Co. v. Credit Alliance Corp., 821 F.2d 1531, 1535 (11th Cir. 1987). Alabama law may allow punitive damages and emotional distress damages, but that is not here relevant. The defendants’ theory of the Court’s jurisdiction is that all state claims have been completely preempted by the Carmack Amendment, which means that the plaintiffs’ “state law claims morph into a federal Carmack Amendment claim.” Yellow Freight, 296 F. Supp. 2d at 1339. The relevant question is thus whether punitive damages and emotional distress damages are recoverable under the Carmack Amendment; if they are not, they cannot be considered in determining the amount in controversy.

 

*3 The Eleventh Circuit has not addressed this issue. Other courts of appeal are split, with a majority of the courts (and all the more recent decisions) ruling that neither punitive damages nor emotional distress damages are recoverable under the Carmack Amendment. Compare Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 382-83 (5th Cir. 1998) (punitive damages and emotional distress damages are not recoverable under the Carmack Amendment); Gordon v. United Van Lines, Inc., 130 F.3d 282, 285-87 (7th Cir. 1997) (same); and Cleveland v. Beltman North American Co., 30 F.3d 373, 379-81 (2 nd Cir. 1994) (same as to punitive damages) with Reed v. Aaacon Auto Transport, Inc., 637 F.2d 1302, 1307 (10th Cir. 1981) (Carmack Amendment does not preclude awards of punitive damages), overruled in part on other grounds, Underwriters at Lloyds of London v. North American Van Lines, 890 F.2d 1112 (10th Cir. 1989) (en banc) and Hubbard v. Allied Van Lines, Inc., 540 F.2d 1224, 1228 (4th Cir. 1976) (same).

 

Had the defendants acknowledged this issue and made any reasoned argument that the Court should follow the older, minority view, the Court would be required to weigh the relative merits of the two lines of cases. Because the defendants have not done so, the Court need not do so, either, but may simply conclude that the defendants have failed to meet their burden of showing that punitive damages or emotional distress damages may be awarded in an action under the Carmack Amendment.

 

The limits of the plaintiffs’ policy say little if anything about the value of their claim. As this Court has noted, “a high policy limit does not establish a large amount in controversy for the simple reason that the … claim may be for far les than the policy limit.” Employers’ Mutual Casualty Co. v. Parker Towing Co., 2007 WL 4577705 at *2 (S.D. Ala. 2007).

 

“While [a] settlement offer, by itself, may not be determinative, it counts for something.” Burns v. Windsor Insurance Co., 31 F.3d 1092, 1097 (11th Cir. 1994). What it counts for, however, depends on the circumstances. As this Court has noted, “[s]ettlement offers commonly reflect puffing and posturing, and such a settlement offer is entitled to little weight in measuring the preponderance of the evidence. On the other hand, settlement offers that provide specific information … to support [the plaintiff’s] claim for damages suggest the plaintiff is offering a reasonable assessment of the value of [his] claim and are entitled to more weight.” Jackson v. Select Portfolio Servicing, Inc., 651 F. Supp. 2d 1279, 1281 (S.D. Ala. 2009) (internal quotes omitted).

 

The settlement proposal advanced here falls in the former category; it offers to settle for $22,500 without providing a single word of explanation how this figure was derived. (Doc. 16-2 at 1). It is therefore entitled to “little weight” in the jurisdictional analysis. This is especially so since the offer presumably takes into account punitive damages and emotional distress damages, which the defendants have failed to show can be awarded under the Carmack Amendment.

 

The best evidence of the amount in controversy under the Carmack Amendment is the amount demanded by the plaintiffs in Count Six of the amended complaint. The defendants correctly note that the amount in controversy must be determined as of the time of removal and that jurisdiction then attaching cannot be lost simply because the plaintiff lowers the amount demanded after the case is removed.5 But the corollary to this rule is that post-removal evidence can shed light on the amount in controversy at the time of removal.6 The amended complaint does so, because it represents the first time the plaintiffs have identified the damages they seek based solely on the single claim on which removal is based.7

 

*4 Because the defendants have not sustained their burden of establishing by a preponderance of the evidence that the amount in controversy under the Carmack Amendment exceeds $10,000, this action must be remanded to state court. The defendants ask the Court, before remanding the action, to dismiss the state claims on the grounds they are preempted by the Carmack Amendment. (Doc. 16 at 6). Because the Court lacks subject matter jurisdiction over this action, it has no authority to enter any such ruling.8 Similarly, the defendants ask the Court, before remanding the action, to enter an order limiting the plaintiffs’ claim to $6,130. They identify no legal principle permitting entry of such an order, and the Court declines to investigate on their behalf.

 

 

CONCLUSION

For the reasons set forth above, the plaintiffs’ motion to remand is granted. This action is remanded to the Circuit Court of Clarke County.

 

DONE and ORDERED this 26th day of October, 2017.

 

All Citations

Slip Copy, 2017 WL 4838845

 

 

Footnotes

1

The Carmack Amendment applies only to shipments of property by carriers in interstate commerce. E.g., Werner Enterprises, Inc. v. Westwind Maritime International, Inc., 554 F.3d 1319, 1326 (11th Cir. 2009). The complaint does not allege that either defendant is a carrier covered by the Carmack Amendment or that the move was between states, but the defendants so assert, (Doc. 1 at 2-3), and the plaintiffs do not contest the assertion.

2

Hall v. North American Van Lines, Inc., 476 F.3d 683, 688 (9 th Cir. 2007); Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 (5th Cir. 2003).

3

E.g., Morris v. Mayflower Transit, LLC, 18 F. Supp. 3d 1342, 1344-45 (M.D. Ala. 2014); Andrews v. Atlas Van Lines, Inc., 504 F. Supp. 2d 1329, 1332 (N.D. Ga. 2007); Bear MGC Cutlery Co. v. Estes Express Lines, Inc., 132 F. Supp. 2d 937, 947 (N.D. Ala. 2001); Baker v. Allied Van Lines, Inc., 2007 WL 461029 at *1 (M.D. Fla. 2007). But see Armstrong v. North Alabama Moving and Storage, Inc., 533 F. Supp. 2d 1157, 1159 (N.D. Ala. 2008) (questioning complete preemption in light of the Carmack Amendment’s amount-in-controversy requirement); Intermed Ultrasound Services, Inc. v. Fedex Freight, 2006 WL 3258548 at *2 (N.D. Fla. 2006) (rejecting complete preemption based on pre-Anderson analysis).

4

The defendants initially asserted that the complaint affirmatively alleged $75,000 in property damage. (Doc. 1 at 2). They have since corrected that error.

5

“A court’s analysis of the amount-in-controversy requirement focuses on how much is in controversy at the time of removal, not later.” Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 751 (11th Cir. 2010). “[E]vents occurring after removal which may reduce the damages recoverable below the amount in controversy requirement do not oust the district court’s jurisdiction.” Poore v. American-Amicable Life Insurance Co., 218 F.3d 1287, 1290-91 (11th Cir. 2000).

6

“[W]hat is prohibited are post-removal changes in the amount in controversy, not post-removal clarifications of the amount that was in controversy at the moment of removal.” Jackson, 651 F. Supp. 2d at 1282. The Court in Jackson thus properly considered a post-removal affidavit from plaintiff’s counsel explaining the reasoning behind a pre-removal settlement demand. Id.

7

Nor is the $6,130 demanded inherently suspect, since the only property identified as damaged is a console piano, a storage cabinet and a bird bath. (Doc. 1 at 8). While the complaint also seeks damages for loss of use, economic loss and consequential damages (which the Court assumes without deciding may be awarded under the Carmack Amendment), the defendants have offered no reason to believe there is much value in such damages as applied to three pieces of household furnishings.

8

“[O]nce a federal court determines that it is without subject matter jurisdiction, the court is powerless to continue.” Underwriters at Lloyd’s v. Osting Schwinn, 613 F.3d 1079, 1092 (2010) (internal quotes omitted).

E.D. New York.

JAS FORWARDING (USA), INC., Plaintiff,

v.

OWENS TRUCKMEN, INC., OWENS LOGISTICS GROUP, LLC, Defendant.

17-cv-03589 (ADS)(AYS)

|

Filed 11/01/2017

Attorneys and Law Firms

APPEARANCES:, Spector Rubin, P.A., Attorneys for the Plaintiff, Continental Plaza, 3250 Mary Street, Suite 405, Miami, FL 33131, By: Andrew R. Spector, Esq., of Counsel

George W. Wright & Associates, LLC, Attorneys for the Defendants, 88 Pine Street, New York, NY 10005, By: George W. Wright, of Counsel

 

 

MEMORANDUM OF DECISION AND ORDER

ARTHUR D. SPATT United States District Judge

*1 SPATT, District Judge:

 

The Plaintiff JAS Forwarding (USA), Inc. (the “Plaintiff”) brought this action against the Defendants Owens Truckmen, Inc. (“OTI”) and Owens Logistics Group, LLC (“OLG”) (collectively, the “Defendants”) alleging fraudulent misrepresentation, breach of contract, and, in the alternative, breach of statutory duties under the ICC Termination Act of 1995, the Carmack Amendment, 49 U.S.C.§ 14706 et seq. The Plaintiff only seeks damages in the amount of $15,000.

 

Presently before the Court are two motions: a motion by OLG to vacate the Clerk’s entry of default pursuant to Federal Rule of Civil Procedure (“FED. R. CIV. P.” or “Rule”) 55(c), and a motion by OTI to dismiss the fraudulent misrepresentation count pursuant to Rule 12(b)(6). For the following reasons, OLG’s motion to vacate the entry of default is granted, and OTI’s motion to dismiss is denied.

 

 

1. BACKGROUND
2. The Relevant Procedural Background

On May 15, 2017, the Plaintiff filed its complaint in the Supreme Court of the State of New York, Nassau County. The complaint alleged two causes of action—for fraudulent misrepresentation, and breach of contract. In the alternative, the complaint alleged a cause of action for breach of statutory duties under the ICC Termination Act of 1995, the Carmack Amendment, 49 U.S.C. § 14706 et seq.

 

On June 14, 2017, OTI removed the action on the ground that the Court has jurisdiction over a federal question; namely, whether the Defendants violated the Carmack Amendment.

 

On June 19, 2017, OTI filed a motion pursuant to Rule 12(b)(6) to dismiss the Plaintiff’s claim for fraudulent misrepresentation against it.

 

On June 28, 2017, the Plaintiff requested a certificate of default against OLG. The Clerk of the Court noted the default of OLG on the same day.

 

On September 21, 2017, OLG moved to vacate the Clerk’s entry of default.

 

 

1. The Relevant Facts

The following facts are drawn from the Plaintiff’s complaint, and for the purposes of OTI’s motion to dismiss pursuant to Rule 12(b)(6), are accepted as true.

 

The Plaintiff is a Georgia corporation. It is not clear from the face of the complaint in what type of business the Plaintiff engages. OTI and OLG are New York corporations. Both of the Defendants appear to engage in trucking services, and the complaint alleges that the Defendants are carriers as defined by the Carmack Amendment, or they held themselves out to be carriers.

 

Although the complaint does not state when, the Plaintiff retained OTI to unpack, store, and ship cargo containing mascara (the “cargo”). The complaint does not state if this was a one-time agreement, or if it was an ongoing relationship.

 

At some point, which is not clear from the face of the complaint, the cargo arrived in the Port of New Jersey. The complaint alleges that OTI received the cargo, and brought it to its warehouse for delivery to Howell, Michigan. Again, the complaint does not state any dates for these events.

 

The pickup order, which was sent from the Plaintiff to OTI, stated that the cargo consisted of 21 pallets. When the cargo was delivered to Michigan, “it was discovered” that three pallets were missing. The three pallets amounted to 23,328 sets of mascara. The complaint does not state when the cargo arrived, or who “discovered” that the three pallets were missing.

 

*2 The complaint alleges that OTI did not make any exceptions to the quantity of cargo that it had received, nor did it notify the Plaintiff that it had received fewer pallets than the number indicated on the pickup order.

 

The Plaintiff’s customer, who presumably ordered the missing mascara, made a claim against the Plaintiff for $21,788.35. Through a series of emails, OTI allegedly stated that they would, through insurance, reimburse the Plaintiff for the missing pallets. The Plaintiff claims that it relied on these representations from OTI when it paid the customer who made the claim against it. On February 15, 2017, which is the only date detailed in the complaint, OTI allegedly told the Plaintiff that “[w]e will have our insurance take care of it.”

 

However, OTI apparently later stated that it never agreed to reimburse the Plaintiff.

 

The Plaintiff was informed, on some date, that OTI did not perform the services at issue for the Plaintiff, but that OLG had done so instead, and that OLG did not have insurance for the Plaintiff’s claim. The Plaintiff alleges that OTI has stated that OLG is a “motor broker only, and not a carrier, and, therefore, has no responsibility for any cargo loss.” (Compl. ¶ 27). The Plaintiff states that it always communicated with OTI, and that all documents provided to the Plaintiff were submitted by “Owens Truckmen,” including a certificate of liability insurance which listed Owens Truckmen as the insured.

 

The Plaintiff further states that OTI and OLG operate out of the same offices, and have the same officers.

 

 

1. DISCUSSION
2. As to OLG’s Motion to Vacate the Clerk’s Entry of Default
3. The Legal Standard

Rule 55 states that “[t]he court may set aside an entry of default for good cause ….” FED. R. CIV. P. 55(c).

 

In deciding whether to vacate a certificate of default, a court must consider “(1) whether the default was willful, (2) whether the defendant demonstrates the existence of a meritorious defense, and (3) whether, and to what extent, vacating the default will cause the nondefaulting party prejudice.” United States v. Chesir, 526 F. App’x 60, 61 (2d Cir. 2013) (quoting SEC v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998)); see also State St. Bank & Trust Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 168 (2d Cir. 2004) (stating that these criteria “should be construed generously” in favor of party seeking relief from judgment (internal citations and quotation marks omitted)).

 

 

2. Application to the Facts

Construing the above criteria generously in favor of OLG, see State St. Bank & Trust, 374 F.3d at 168, the Court finds that the entry of default should be vacated.

 

 

1. As to OLG’s Willfulness

The Second Circuit has stated that willfulness is “more than merely negligent or careless” conduct, McNulty, 137 F.3d at 738, but will be found “where the conduct of counsel or the litigant was egregious and was not satisfactorily explained,” id. For example, “[a] default is deemed willful where a defendant simply ignores the complaint without action.” Circuito Cerrado, Inc. v. LV Foods, Inc., 296 F.R.D. 122, 126 (E.D.N.Y. 2013) (internal citations and quotation marks omitted). “Thus, ‘where a party is notified that he is in default and he apparently makes no effort to appear pro se or to explain his situation to the court, such neglect is inexcusable.’ ” Arista Records, Inc. v. Musemeci, No. 03CV4465(DGT)(RML), 2007 WL 3124545, at *4 (E.D.N.Y. Sept. 18, 2007) (quoting Yan v. Bocar, No. 04 Civ. 4194, 2005 WL 3005338, at *13 (S.D.N.Y. Sept. 8, 2005)), report and recommendation adopted, No. CIV.A. CV-03-4465(DG, 2007 WL 3145861 (E.D.N.Y. Oct. 25, 2007); cf. Kauhsen v. Aventura Motors, Inc., No. 09-cv-4114, 2010 U.S. Dist. LEXIS 55554, at *13, 2010 WL 2301289 (E.D.N.Y. June 7, 2010) (noting that “[w]illfulness includes conduct that is ‘not satisfactorily explained’ ” (internal citations and quotation marks omitted); Domond v. Great Am. Rec., Inc., 116 F. Supp. 2d 368, 374 (E.D.N.Y. 2000) (Spatt, J.) (noting that “willfulness may be inferred where a party’s conduct was egregious and not adequately explained”); Frost Belt Int’l Recording Enters., Inc. v. Cold Chillin’ Records, 758 F. Supp. 131, 136 (S.D.N.Y. 1990) (“[U]tter failure to explain the default effectively precludes a finding of excusable neglect.”).

 

*3 Here, OLG states that after it received the summons and complaint in this action on May 25, 2017, it forwarded them to its insurance broker, who forwarded them to OLG’s insurance company, Lloyd’s of London. OLG states that it “expected Lloyd’s to take over its defense in this case.” (Mem. in Supp. of Mot. to Vacate at 1). OLG also states that it has been engaged in settlement talks with the Plaintiff throughout the lawsuit.

 

Taking these facts into account, the Court finds that OLG has sufficiently explained its conduct, and that its default was not willful.

 

 

1. As to Whether OLG Presents a Meritorious Defense

“To satisfy the criterion of a ‘meritorious defense,’ the defense need not be ultimately persuasive at this stage. ‘A defense is meritorious if it is good at law so as to give the factfinder some determination to make.’ ” Am. All. Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996) (quoting Anilina Fabrique de Colorants v. Aakash Chemicals and Dyestuffs, Inc., 856 F.2d 873, 879 (7th Cir. 1988)).

 

OLG states that it was informed by its contractor, Prestige Logistics, who is not a party to this action, that there were pallets missing when it unloaded the container on May 18, 2016. Furthermore, OLG claims that it “does not provide actual transportation services as a carrier.” Finally, OLG states that it has a defense to the breach of contract claim in that it never stated that OLG would pay the Plaintiff’s claim; instead OLG represented that it would forward the Plaintiff’s claim to OLG’s insurer.

 

The Court finds that this is sufficient at this stage. Therefore, OLG has presented a meritorious defense which gives this Court some determination to make. Am. All. Ins. 92 F.3d at 61.

 

 

1. As to Whether the Plaintiff Would Be Prejudiced by the Vacatur of Default

The only prejudice to which the Plaintiff can identity is the litigation of this motion and the “preparation for the entry of default judgment.” First, the Plaintiff did not have to oppose this motion. Second, the Court is constrained to find how the preparation of a two page affidavit in support of a request for an entry of default would constitute prejudice.

 

Furthermore, it appears that discovery has only just begun, and OLG moved to vacate the entry of default less than three months after its entry, and approximately four months after the Plaintiff initiated the lawsuit. The Court is hard pressed to find that the Plaintiff would be prejudiced by a vacatur here. See, e.g., Chesir, 526 F. App’x at 63 (holding that the plaintiff was prejudiced where the defendant “indisputably waited to appear in these proceedings until 42 months after service of the complaint, 26 months after the clerk entered his default, and 8 months after entry of the default judgment.”).

 

Other than filing their motion for a default judgment, the Plaintiffs have “proceeded to litigate this case as if the default had never occurred.” Trs. of Empire State Carpenters Annuity, Apprenticeship. Labor-Mgmt. Cooperation, Pension, & Welfare Funds v. Penco United, LLC, 13-cv-4745 (SJF)(AKT), 2015 U.S. Dist. LEXIS 15424, at *17 (E.D.N.Y. Jan. 6, 2015), report and recommendation adopted, 2015 U.S. Dist. LEXIS 14606 (E.D.N.Y. Feb. 5, 2015).

 

Also, the expense of resources alone is insufficient prejudice. The Plaintiff initiated this suit, and so clearly intended expending resources to litigate it.

 

Therefore, the Plaintiff would not be prejudiced by a vacatur of the default.

 

*4 Accordingly, OLG’s motion to vacate the clerk’s entry of default is granted.

 

 

1. As to OTI’s Motion to Dismiss the Fraudulent Misrepresentation Count Pursuant to Rule 12(b)(6)
2. The Legal Standard

In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the Plaintiff. See Walker v. Schult, 717 F.3d 119, 124 (2d Cir. 2013); Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006); Bold Elec., Inc. v. City of N.Y., 53 F.3d 465, 469 (2d Cir. 1995); Reed v. Garden City Union Free School Dist., 987 F. Supp. 2d 260, 263 (E.D.N.Y. 2013).

 

Under the now well-established Twombly standard, a complaint should be dismissed only if it does not contain enough allegations of fact to state a claim for relief that is “plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974, 167 L. Ed. 2d 929 (2007). The Second Circuit has explained that, after Twombly, the Court’s inquiry under Rule 12(b)(6) is guided by two principles:

First, although a court must accept as true all of the allegations contained in a complaint, that tenet is inapplicable to legal conclusions, and [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss and [d]etermining whether a complaint states a plausible claim for relief will … be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.

Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 664, 129 S. Ct. 1937, 1940, 173 L. Ed. 2d 868 (2009)).

 

Thus, “[w]hen there are well-pleaded factual allegations, a court should assume their veracity and … determine whether they plausibly give rise to an entitlement of relief.” Iqbal, 556 U.S. at 679.

 

 

2. As to Whether the Carmack Amendment preempts the Plaintiff’s Fraudulent Misrepresentation Claim Against OTI

OTI contends that the Carmack Amendment preempts the Plaintiff’s fraudulent misrepresentation claim against OTI. In opposition, the Plaintiff contends that it is necessary to plead the two claims in the alternative because OTI has represented that it is a broker, and brokers are not covered by the Carmack Amendment. The Court finds that whether OTI is a broker is a fact intensive issue, and that the Plaintiff has properly plead the two claims in the alternative.

 

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). “In enacting it, Congress intended to provide interstate carriers with reasonable certainty and uniformity in assessing their risks and predicting their potential liability.” Project Hope v. M/V IBN SINA, 250 F.3d 67, 73 n.6 (2d Cir. 2001) (citing Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 381 (5th Cir. 1998); Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700, 704 (4th Cir. 1993)).

 

*5 The Carmack Amendment states, in pertinent part:

A carrier providing transportation or service … 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 and is providing transportation or service … are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property caused by (A) the receiving carrier, [or] (B) the delivering carrier …. Failure to issue a receipt or bill of lading does not affect the liability of a carrier.

49 U.S.C. § 14706(a)(1).

 

Congress also intended, however, to “relieve shippers of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods.” Reider v. Thompson, 339 U.S. 113, 119, 70 S. Ct. 499, 502, 94 L. Ed. 698 (1950). Accordingly, the Carmack Amendment gives a shipper the “right to proceed against the initial carrier in a case where damage or loss occurred while the shipment was in the hands of a subsequent carrier.” Aaacon Auto Transp., Inc. v. State Farm Mut. Auto. Ins. Co., 537 F.2d 648, 653 (2d Cir. 1976). “Carmack effectively codified the strict liability rule that governed the liability of common carriers at common law.” Sompo Japan Ins. Co. of Am. v. Union Pac. R.R. Co., 456 F.3d 54, 59 (2d Cir. 2006) (internal citations omitted).

 

In sum, “[t]he Carmack Amendment establishes a single uniform regime for recovery by shippers directly from [the] interstate common carrier in whose care their [items] are damaged, and … preempt[s][the] shipper’s state and common law claims against a carrier for loss or damage to goods during shipment.” Project Hope, 250 F.3d at 73 n. 6 (internal citations and quotation marks omitted).

 

However, the Carmack Amendment does not impose liability on brokers. See Olympus Dairy USA Corp. v. Pavil Assocs., Inc., No. 12 CV 1897 RML, 2013 WL 6493482, at *2 (E.D.N.Y. Dec. 6, 2013) (“The Carmack amendment imposes liability on carriers and freight forwarders but not on brokers, as those terms are defined by the statute, and thus it is critical to determine whether a defendant was acting as a carrier or freight forwarder, or as a broker, in relation to the particular shipment that was damaged.” (quoting Nipponkoa Ins. Co., Ltd. v. C.H. Robinson Worldwide, Inc., No. 09 CV 2365, 2011 WL 671747, at *3 (S.D.N.Y. Feb. 18, 2011) (internal alterations omitted)); Active Media Servs., Inc. v. CAC Am. Cargo Corp., No. 08-CV-6301 ER, 2012 WL 4462031, at *3 (S.D.N.Y. Sept. 26, 2012) (“[C]ourts have repeatedly held that the Carmack Amendment does not apply to brokers.” (citing, inter alia, Comm. Union Ins. Co. v. Forward Air, Inc., 50 F.Supp..2d 255, 257 (S.D.N.Y.1999))).

 

Under the statute, a “broker” is “a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C. § 13102(2).

 

*6 Because the Carmack Amendment does not apply to brokers, courts have held that Carmack’s preemption of state law claims does not extend to brokers. See Active Media Servs., 2012 WL 4462031, at *4 n.5; Comm. Union Ins., 50 F. Supp. 2d at 261 (“[T]he Court finds that plaintiff[’]s [federal and state] common law claims may be asserted against defendant despite the fact that the Carmack Amendment does not provide for broker liability for goods lost or damaged during transport by a carrier.”); Nipponkoa Ins., 2011 WL 671747, at *8 n.9 (“Because this Court cannot determine as a matter of law that the Carmack Amendment is applicable here, the Court can likewise not rule as a matter of law that Plaintiff’s breach of contract and breach of bailment claims are preempted by the Carmack Amendment.”).

 

Here, OTI represented to the Plaintiff that it and OLG acted as brokers for the Plaintiff’s shipment. (See Pl.’s Ex. A (email from the Director of Safety for Owens Truckmen stating that “Owens Truckmen did not handle this shipment, but Owens Logistics brokered it to another carrier. … [A]s a Broker we are not obligated to offer Cargo Insurance nor are we obligated to accept any of the liability.”); Pl.’s Ex. B (email from Director of Safety for Owens Truckmen stating that “[a]s a non-vehicle owning broker we are not required to carry Cargo Insurance.”); Pl.’s Ex. C (email from the insurer for Owens Truckmen stating that “[OTI] did not touch the load,” implying that OTI operated as a broker)).

 

However, “[t]he difference between a carrier and a broker is often blurry [,] and it is apparent from the case law that the carrier/broker inquiry is inherently fact-intensive and not well suited to summary judgment.” Chartis Seguros Mexico, S.A. de C.V. v. HLI Rail & Rigging, LLC, No. 11 CIV. 3238 ALC GWG, 2014 WL 988569, at *4 (S.D.N.Y. Mar. 13, 2014) (quoting Nipponkoa Ins., 2011 WL 671747, at *5 (internal alterations omitted)). Indeed, to determine whether a company served as a broker or a carrier, courts will consider what services were offered, and will “closely examine whether a company’s statements to a shipper indicated that its actions were not limited to arranging transport, but also exert[ed] some measure of control over drivers.” Nipponkoa Ins., 2011 WL 671747, at *5 (internal citations, quotation marks, and alterations omitted).

 

To that end, the Plaintiff has plead the common law causes of action and the Carmack Amendment cause of action in the alternative. This is because the Defendants allegedly held themselves out as carriers to the Plaintiff.

 

Rule 8 of the Federal Rules of Civil Procedure states, in pertinent part, that:

A party may set forth two or more statements of a claim or defense alternatively or hypothetically, either in one count or defense or in separate counts or defenses. When two or more statements are made in the alternative and one of them if made independently would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements. A party may also state as many separate claims or defenses as the party has regardless of consistency and whether based on legal, equitable, or maritime grounds.

FED. R. CIV. P. 8(e)(2); see also Aiena v. Olsen, 69 F.Supp.2d 521, 531 (S.D.N.Y.1999) (permitting alternative pleading for ERISA claim made in the alternative to state law claims because plaintiff not bound by alternative allegations at the motion to dismiss stage).

 

Given the uncertainties concerning whether the Defendants were brokers or common carriers, the Plaintiff would have placed itself in a precarious position if it had only plead either the common law claims or the Carmack Amendment claim. That is, if the Plaintiff had only alleged common law violations, the Defendants could have claimed that they were carriers and that the common law claims were preempted by the Carmack Amendment, thus requiring their dismissal. If, however, the Plaintiff had only brought the Carmack Amendment claim, the Defendants could claim that they were brokers, and that they could therefore not be held liable under the Carmack Amendment. See, e.g., Aiena, 69 F. Supp. 2d at 531 (allowing for alternative pleading, and stating that “given the uncertainties concerning (a) whether the J & H arrangements were an ERISA plan and (b) the scope of ERISA preemption, it would be foolish to put all of one’s eggs in either the ERISA or the state law basket”).

 

*7 Therefore, the Court cannot say as a matter of law at this juncture that the Carmack Amendment preempts the Plaintiff’s fraudulent misrepresentation claim against OTI. The Plaintiff has sufficiently plead its state law claims and Carmack Amendment claim in the alternative. Accordingly, OTI’s motion to dismiss the Plaintiff’s fraudulent misrepresentation claim pursuant to Rule 12(b)(6) is denied.

 

 

III. CONCLUSION

For the reasons stated above, OLG’s motion to vacate the entry of default pursuant to Rule 55(c) is granted, and OTI’s motion to dismiss the Plaintiff’s fraudulent misrepresentation claim is denied. The Clerk of the Court is respectfully directed to vacate the entry of default against OLG. This case is respectfully referred to Magistrate Judge Anne Y. Shields for the completion of discovery.

 

SO ORDERED