2018 WL 1400678

United States District Court, S.D. California.
MEADOWGATE TECHNOLOGIES, LLC, Plaintiff,
v.
FIASCO ENTERPRISES, INC., d/b/a ENERGY TRANSPORT LOGISTICS, LLC Defendant.
CASE NO. 17cv230-LAB (KSC)
|
03/20/2018
Opinion
HONORABLE LARRY ALAN BURNS, United States District Judge

ORDER GRANTING MOTION TO DISMISS
*1 This case concerns cargo theft by an unknown party in which the two parties were allegedly unwitting dupes. The specific issue to be decided is which of them must bear the loss. Meadowgate Technologies alleges that it sent some computer parts to an address in California in response to what it believed were three separate purchase orders from its customer, Batelle. The address was actually the address of Defendant Fiasco Enterprises, doing business as Energy Transport Logistics, LLC (“ETL”). ETL in turn received routing instructions for the freight that it believed came from its customer Mitchell Brothers Truck Line. ETL sent the cargo overseas to the U.K., South Africa, and other countries. Later, it turned out, the orders and instructions had not come from Batelle or from Mitchell Brothers but from some unknown third party or parties (the “Unknown Party”), who apparently was behind the fraud. Meadowgate wants ETL to pay, and ETL thinks Meadowgate should bear the loss.

Meadowgate amended its complaint once, to allege diversity jurisdiction. (Docket no. 4, “FAC”). The FAC brings claims for conversion, negligence, and unjust enrichment under California law. Then ETL moved to dismiss. ETL’s motion argues that Meadowgate’s claims are preempted by the federal Carmack Amendment. See 49 U.S.C. § 14706(a). This is the sole issue raised. Meadowgate asks that, if the Court finds its state-law claims preempted, that it be allowed to re-plead, and ETL has agreed to this. The Court heard argument, took the motion under submission, and is now prepared to rule on it.

Discussion
Legal Standards
The motion to dismiss is brought under Fed. R. Civ. P. 12(b)(6). The court must therefore assume the truth of all factual allegations and must construe them in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). Dismissal is warranted where the complaint lacks a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984); see Neitzke v. Williams, 490 U.S. 319, 326 (1989) (“Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law”). Alternatively, a complaint may be dismissed where it presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson, 749 F.2d at 534.

The pleading standard is governed by Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). A complaint must “give the defendant fair notice of what the…claim is and the grounds upon which it rests” and its factual allegations must “raise the right to relief above a speculative level.” Twombly, 550 U.S. at 555. The complaint must contain enough factual allegations that, accepted as true, would state a claim for relief that is “plausible on its face.” Iqbal, 556 U.S. at 678.

The Carmack Amendment, enacted in 1906, “established a national liability policy for interstate carriers.” Hughes Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609613 (9th Cir. 1992). See also Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 (5th Cir. 2003) (“Congress intended for the Carmack Amendment to provide the exclusive cause of action for loss or damages to goods arising from the interstate transportation of those goods by a common carrier.” (emphasis omitted)). The amendment “embraces the subject of the liability of the carrier under a bill of lading which he must issue, and limits his power to exempt himself by rule, regulation, or contract.” Adams Express Co. v. Croninger, 226 U.S. 491, 505 (1913). “It is well settled that the Carmack Amendment is the exclusive cause of action for interstate-shipping contract claims alleging loss or damage to property.” Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 688 (9th Cir. 2007). This includes even a number of types of related claims. See id. at 68–89 (citing cases).

*2 The Carmack Amendment’s preemption has been recognized as broad. See Bullocks Express Transp., Inc. v. XL Specialty Ins. Co., 329 F. Supp. 2d 1246, 1253 (D. Utah 2004). For example, courts have treated even claims for conversion as subject to defensive preemption by the Carmack Amendment. See Hall, 476 F.3d at 689 (“It is well settled that the Carmack Amendment constitutes a complete defense to common law claims alleging all manner of harms.”) Litigants have not been permitted to avoid preemption by characterizing claims as claims for conversion rather than under a bill of lading. See Georgia, Fla. & Alabama Ry. Co. v. Blish Milling, 241 U.S. 190, 197 (1916).

At the same time, the Carmack Amendment does not purport to regulate all transactions merely because a carrier and a shipper are involved. See, e.g., Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 382 (5th Cir. 1998) (explaining that the Carmack Amendment does not preempt claims where the shipper “alleges injuries separate and apart from those resulting directly from the loss of shipped property.”); Gordon v. United Van Lines, Inc., 130 F.3d 282, 289 (7th Cir. 1997) (“[N]ot every claim even remotely associated with the transfer of goods from one place to another is necessarily a claim for damages to the shippers’ goods….”) See also Rini v. United Van Lines, 104 F.3d 502, 506 (1st Cir. 1997) (giving examples of claims between carrier and shipper that would not be preempted).

The most contentious clauses are part of subsection (a)(1):
(1) Motor carriers and freight forwarders….The liability imposed under this paragraph is for the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported in the United States or from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading and, except in the case of a freight forwarder, applies to property reconsigned or diverted under a tariff under section 13702….
49 U.S.C. § 14706(a)(1).

Summary of Argument
Meadowgate has argued that the Carmack Amendment doesn’t apply here, because the ETL wasn’t acting as a carrier in this instance. In reply, ETL alleges that it falls within the definition of a transportation service, as defined in 49 USC § 13102(23). Meadowgate also argues that Carmack doesn’t apply to international shipments from the U.S. to non-adjacent countries. See § 14706(a)(1). It argues ETL was not acting as a carrier when it received freight or when it shipped freight supposedly at Mitchell Brothers’ behest, because it did not transport the parts. Meadowgate cites case law in its brief, as well as the definition in 49 U.S. Code § 13102 (14) (A “motor carrier,” is a “person providing motor vehicle transportation for compensation.”)

In reply, ETL argues that the non-adjacent country argument fails because it applies only to freight transported under a “through a bill of lading”. Even if that is so, subsection (a)(1) provides that “Failure to issue a receipt or bill of lading does not affect the liability of a carrier.”

Analysis
Initially, it is necessary to determine whether the shipping that occurred this case involves a single act that occurred in two sages, or two separate acts. For reasons discussed below, the Court believes treating the two stages of shipment as two separate acts is indicated.

In the first stage or journey, Meadowgate was induced to ship parts to what it believed was its customer in California. The carriers1 in that instance were three other companies, FedEx, UPS, and OnTrac. They are not defendants here and Meadowgate does not seek to hold them liable. The parts were delivered to the address Meadowgate provided. (See FAC, ¶¶ 9–10.)

*3 Once that happened, the carriers had discharged their duties, and Meadowgate received all the freight transportation services it bargained for. When cargo is successfully delivered as agreed, responsibility under a transportation document (a bill of lading, or some other kind of document) terminates. See Tokio Marine & Fire Ins. Co., Ltd. v. Chicago & Northwestern Transp. Co., 129 F.3d 960, 961 (7th Cir. 1997) (citing Schiess-Froriep Corp. v. S.S. Finnsailor, 574 F.2d 123, 127 (2d Cir. 1978) and Am. President Lines, Ltd. v. Fed’l. Maritime Bd., 317 F.2d 887, 888 (D.C. Cir. 1962)). See also Reider v. Thompson, 339 U.S. 113 (1950) (treating two non-overlapping bills of lading as two separate journeys, each covered by its own bill of lading).

After this, the Unknown Party obtained control of the parts using ETL as cat’s-paw. It did this by placing a false order with ETL, arranging for the parts to be shipped overseas, most likely either to the Unknown Party or its confederates, or to its customers who in turn paid the Unknown Party for the parts. Meadowgate was a stranger to this transaction, and has no remedy under a contract or bill of lading. For this journey, a second bill of lading or other transportation document would have been necessary.

In the first transaction, Meadowgate had no agreement or direct business relationship with ETL. As far as Meadowgate was concerned, it was dealing with a customer, not a second carrier. Meadowgate’s claim arises from what ETL — a stranger to the first transaction — did with the parts after they arrived.

If ETL had kept them and returned them on Meadowgate’s demand, there would be no basis for a claim. But instead, ETL made them unavailable by sending them away. Meadowgate’s argument is correct: ETL was not acting as a carrier with respect to this part of the transaction. Negligently disposing of misdelivered goods is a tort that could be committed by many different kinds of businesses. It may be that ETL is a carrier, but it could also have been some other kind of company. See Richter v. N. Am. Van Lines, Inc., 110 F. Supp. 2d 406, 411 (D. Md. 2000) (opining that “torts that any person could commit at any time against another…have only the most incidental link with the contract to ship goods” and are thus not preempted).

Here, ETL might have been an entirely different kind of venture and might have disposed of the parts in any number of ways, by using them, destroying or discarding them, or sending them to someone else. If, for instance, ETL were a computer parts dealer, it might have sent the parts to customers overseas in much the same way, and there would be no real argument that the Carmack Amendment applied. The mere fact that a defendant is a carrier does not mean everything it does is done in that capacity.

At least one court has held that where a third party bringing a tort claim seeks to impose a common-law duty on a carrier, the claim is preempted. See Eagle Transp., LLC v. Scott, 2011 WL 2214812 at *4–*5 (S.D. Miss., June 7, 2011). This stems from Congress’ intent that the Carmack Amendment set a national standard for carriers’ common-law duties: “Congress intended by the Carmack Amendment to provide a uniform national remedy against carriers for breach of the contract of carriage, including a liability for default in any common-law duty as a common carrier.” See Air Prods. & Chemicals, Inc. v. Ill. Central Gulf R.R. Co., 721 F2d 483, 487 (5th Cir. 1983) (emphasis added). See also Adams, 226 U.S. at 505 (discussing how the Carmack Amendment addressed a need for uniform standards for liability). Meadowgate’s is seeking to impose a common law duty on ETL (see FAC, ¶¶ 19–23) could indicate that the claim is preempted.

*4 Meadowgate points out that certain international shipments are not subject to the Carmack Amendment, under 49 U.S.C. § 14706(a). If the shipments are sent to non-adjacent countries (which would include the U.K. and South Africa) under a through bill of lading,2 they are not preempted. See CNA Ins. Co. v. Hyundai Merchant Marine Co., Ltd., 747 F.3d 339, 366 (6th Cir. 2014) (citing Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89 (2010)). ETL does not dispute that the parts were sent to non-adjacent countries, but argues Meadowgate never alleges they were sent under a through bill of lading, so as to forestall preemption. The complaint merely alleges “routing instructions.” ETL argues that because it was a carrier and because the exemption under § 14706(a)(1) does not apply, Meadowgate’s claims are preempted.

The FAC alleges that ETL is a motor carrier. (See FAC, ¶ 3 (alleging that ETL is a for-hire interstate motor carrier).) But Meadowgate now disputes that this means it is a carrier within the meaning of the Carmack Amendment with respect to this transaction, because it never actually transported the parts, and because it had no relationship with the shipper, Meadowgate.

In the second transaction, the shipper was not Meadowgate, but either the Unknown Party or Mitchell Brothers. In relation to that shipper, ETL was a carrier, if it provided the kinds of services a carrier provides. As Meadowgate points out, however, the FAC never says ETL transported the parts, only that it “shipped” them, without saying what that entailed.

(FAC, ¶¶ 15, 21, 22, 23, 27, 29.)
Conclusion and Order
As the Plaintiff in this case, Meadowgate bears the burden of pleading facts to establish its claim. Meadowgate has not shown that he has any claims under state law. Accepting the FAC’s factual pleadings as true, ETL may still have acted as a carrier with respect to the second transaction, and the parts may not have been sent out of the country on a through bill of lading. If either of those is true, the exception covering international shipments would not apply, and the Carmack Amendment would appear to govern Meadowgate’s claim against ETL. Meadowgate will therefore be given to replead its claim or claims. It may either plead facts to show that the exception for international shipments applies here, or it may pursue its claims under the Carmack Amendment, which ETL concedes applies. Because pleading in the alternative is allowed, it could also do both. See Fed. R. Civ. P. 8(d)(2). Furthermore, exercising any of these options would not deprive the Court of jurisdiction.

The complaint is DISMISSED WITHOUT PREJUDICE. No later than April 5, 2018, Meadowgate may file an amended complaint that complies with this order. If Meadowgate needs more time to amend, it should file an ex parte motion showing good cause for the extension.

IT IS SO ORDERED.

DATED: March 19, 2018
HONORABLE LARRY ALAN BURNS
United States District Judge
All Citations
Slip Copy, 2018 WL 1400678

Footnotes

1
The FAC refers to them as carriers. It isn’t clear they were carriers within the meaning of the Cormack Amendment, however. See Treiber & Straub, Inc. v. U.P.S., Inc., 474 F.3d 379, 383 (7th Cir. 2007) (holding Carmack Amendment inapplicable to air carriers such as UPS).

2
A bill of lading that involves transport to or from a foreign country is called a “through” bill if it provides for transport both domestic and international transport.

2018 WL 999963

United States District Court, D. Maryland.
GARTH WHITE, JR., Plaintiff,
v.
DATE TRUCKING, LLC, Defendant.
Civil Action No. ELH-17-1177
|
02/21/2018
Opinion
Ellen Lipton Hollander, United States District Judge

MEMORANDUM
*1 This tort case was filed on December 11, 2016, in the Circuit Court for Baltimore City, by plaintiff Garth White, Jr. ECF 2. It pertains to an incident that occurred on December 19, 2013. Id. Defendant Date Trucking, LLC removed the case to this Court on April 28, 2017, based on diversity jurisdiction. ECF 1. See 28 U.S.C. § 1332. Several motions are pending, and no hearing is needed to resolve them. See Local Rule 105.6.

I.
Defendant has moved (ECF 33, “Motion”) to modify the Court’s current Scheduling Order. See ECF 30. On the same date that defendant filed the Motion, it also filed a motion to shorten plaintiff’s time to respond to the Motion. ECF 34. In particular, both motions were submitted on February 17, 2018, the Saturday of a three-day holiday weekend. The Motion seeks to extend by four months the Scheduling Order’s current deadlines, one of which is February 22, 2018. On that date, defendant’s Rule 26(a)(2) disclosures are due. ECF 30. Defendant seeks to give plaintiff, who opposes the Motion (see ECF 33, ¶ 13), only until February 21, 2018, to respond. ECF 34 at 2.

At the outset, plaintiff’s opposition to an extension is difficult to understand, given that this Court has, at plaintiff’s request, previously modified the original Scheduling Order (ECF 13) by a comparable amount of time, following plaintiff counsel’s entry of appearance in the case in October 2017, several months after suit was filed. See ECF 20; ECF 21. Still, the additional four month extension requested by defendant seems excessive. Defendant asserts, among other things, that “the neuropsychologist select [sic] by the Defendant cannot schedule evaluation and testing until June 2018.” ECF 33, ¶ 9. But, defendant offers no explanation for this delay, or for why this specific neuropsychologist is essential to its case.

Accordingly, by March 2, 2018, counsel are directed either to submit a proposed revised Scheduling Order reflecting an extension of three months for discovery, or show cause why such an extension would be (a) improper, or (b) inadequate. Until then, I shall stay the current Scheduling Order (ECF 30), and I shall deny ECF 34, as moot.

II.
Also pending is plaintiff’s motion for leave to file an amended complaint, filed December 6, 2017. ECF 31 (“Motion to Amend”). The proposed Amended Complaint adds two new defendants: Kevin Grantland, a truck driver, and Kevin Grantland, Inc., Grantland’s corporate alter ego. See ECF 31-4. Defendant opposes the Motion to Amend (ECF 32), with exhibits. Plaintiff did not reply.

In tort cases, Maryland applies the doctrine of lex loci delecti, i.e., the law of the jurisdiction where the alleged wrong occurred. Lewis v. Waletzky, 422 Md. 647, 657, 31 A.3d 123, 129 (2011); Erie Ins. Exch. v. Heffernan, 399 Md. 598, 620, 925 A.2d 636, 648 (2007); Kortobi v. Kass, 182 Md. App. 424, 443, 957 A.2d 1128, 1139 (2008), aff’d, 410 Md. 168, 978 A.2d 247 (2009). As the underlying incident occurred in Maryland (see ECF 2, ¶ 2), it is Maryland’s substantive law that applies here.

*2 Under Maryland law, the statute of limitations for a negligence action is generally three years. See Md. Code (2013 Repl. Vol.), § 5-101 of the Courts and Judicial Proceedings Article (“C.J.”). C.J. § 5-101 provides, in part: “A civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period….”

Plaintiff alleges that he was harmed on December 19, 2013, when a load bar fell on him. ECF 2, ¶ 3. Accordingly, his claim accrued at that time. Given that the three-year statute of limitations has therefore expired, the question is whether the addition of two new defendants would relate back to the initial filing of the Complaint. See Fed. R. Civ. P. 15(c).

Under certain circumstances, a court must treat an amended complaint as if it were filed on the date of the initial complaint. This convention is known as “relation back.” See Fed. R. Civ. P. 15(c). If the amendment relates back, it should be allowed under Fed. R. Civ. P. 15(a). If it does not, the claims against the new defendants are barred, as untimely.

Pursuant to Fed. R. Civ. P. 15(c)(1)(A), an amendment can relate back if “the law that provides the applicable statute of limitations allows relation back.” Because this is a diversity case, and Maryland law applies, plaintiff’s new claims may relate back if Maryland’s statute of limitations so allows. But, under Maryland law, “[a] plaintiff is not permitted to add a new defendant to a case after the limitations period has expired except to correct the name of a defendant.” Hansberger v. Smith, 229 Md. App. 1, 23, 142 A.3d 679, 692, cert. denied, 450 Md. 430, 149 A.3d 552 (2016) (citations omitted); see also Poole v. Coakley & Williams Const., Inc., 423 Md. 91, 130 n.18, 31 A.3d 212, 235 (2011). Here, plaintiff seeks not just to correct a name, but to add two entirely new parties. Therefore, Rule 15(c)(1)(A) does not allow the amendment.

Alternatively, under Rule 15(C)(1)(c), an amendment that “changes the party or the naming of the party” to a suit relates back “to the date of the original pleading,” if:
Rule 15(c)(1)(B) is satisfied and if, within the period provided by Rule 4(m) for serving summons and complaint, the party to be brought in by amendment: (i) received such notice of the action that it will not be prejudiced in defending on the merits; and (ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity.

In other words, for an amended suit to relate back, three requirements must be met. First, Rule 15(c)(1)(B) must be satisfied. See Fed. R. Civ. P. 15(c)(1)(C). Rule 15(c)(1)(B) requires that “the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out…in the original pleading.” Second, the defendant must have received notice of the action within the period provided by Rule 4(m), such that it will not be prejudiced in defending itself on the merits. See Fed. R. Civ. P. 15(c)(1)(C)(i). Rule 4(m) provides for service on a defendant within 90 days after the complaint was filed. Third, it is required that the defendant “knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity.” See Fed. R. Civ. P. 15(c)(1)(C)(ii).

*3 Under this rule, for a claim against a new defendant to relate back, “the new party must have received adequate notice within the limitations period and suffer no prejudice in its defense.” Goodman v. Praxair, Inc., 494 F.3d 458, 473 (4th Cir. 2007) (emphasis added). Plaintiff asserts, in a conclusory manner, that the new defendants “received such notice of the action that [they] will not be prejudiced” and that they “knew or should have known that the action would have been brought against [them], but for a mistake concerning the proper party’s identity.” ECF 31-1 (quoting Krupski v. Costa Crociere S. p. A., 560 U.S. 538, 547 (2010)). But, plaintiff offers no factual or legal support for this assertion. See Krupski, 560 U.S. at 549 (“The only question under Rule 15(c)(1)(C)(ii), then, is whether [the new defendant] knew or should have known that, absent some mistake, the action would have been brought against him.”).

In Krupski, 560 U.S. 538, the plaintiff was injured on a cruise ship. Her ticket was issued by Costa Cruise Lines (“Costa”), the original defendant, but the ticket identified Costa Crociere S.p.A. (“Crociere”) as the carrier, and required notice to the carrier. Suit was timely filed against Costa. After limitations expired, the plaintiff was granted leave to amend to add Crociere as a defendant. But, the district court and the Eleventh Circuit concluded that, under Fed. R. Civ. P. 15(c), the amendment did not relate back to the date of the timely filed complaint under Rule 15(c). The Supreme Court reversed.

The Supreme Court made clear that any focus on the plaintiff’s knowledge as to the proper defendant was “the wrong starting point.” 560 U.S. at 548. It said, id.: “The question under Rule 15(c)(1)(C)(ii) is not whether Krupski knew or should have known the identity of Costa Crociere…but whether Costa Crociere knew or should have known that it would have been named as a defendant but for an error.” The Court added, id.: “Rule 15(c)(1)(C)(ii) asks what the prospective defendant knew or should have known during the Rule 4(m) period, not what the plaintiff knew or should have known at the time of filing her original complaint.[ ]” (Emphasis in original). Moreover, the Court observed that “it would be error to conflate knowledge of a party’s existence with the absence of mistake.” Id.

In addition, the Court reasoned that Rule 15(c)(1)(C)(ii) is not met when “the failure to name the prospective defendant in the original complaint was the result of a fully informed decision as opposed to a mistake concerning the proper defendant’s identity.” Id. at 552. Notably, “the amending party’s diligence” is not a factor. Id. at 553.

In Krupski, the two defendant entities were clearly related. And, the Court observed that the complaint “made clear” that the plaintiff “meant to sue the company that ‘owned, operated, managed…and controlled’ the ship….”, i.e., Crociere, not Costa. Id. at 554 (citation omitted). Thus, the failure to name the proper party was a mistake. Id. at 556. In reaching its decision, the Court pointed to the “interrelationship” between the two defendants and the similarity of their names, which “heighten[ed] the expectation that Costa Crociere should suspect a mistake [was] made when Costa Cruise is named in a complaint that actually describes Costa Crociere’s activities.” Id.

The facts in Krupski are markedly different from the facts in the case sub judice.

Plaintiff’s proposed Amended Complaint contains one relevant, but conclusory, allegation: “Alternatively, KEVIN F. GRANTLAND and KEVIN F. GRANTLAND, INC. has ‘(i) received such notice of the action that it will not be prejudiced in defending on the merits; and (ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity.’).” ECF 31-4, ¶ 14. No factual allegations support this conclusion. Indeed, even if all the facts alleged in the Amended Complaint were taken as true, it is not evident that Grantland or his corporation would have had notice, within the Rule 4(m) period or the limitations period, “that they should have been parties.” Goodman, 494 F.3d at 472.

*4 Plaintiff did not sue any party other than Date Trucking, LLC, and gave no indication that anyone other than defendant and “its agents, servants, and/or employees” were responsible for the occurrence. See ECF 2, ¶ 5. Notably, although defendant raised this issue in its opposition, plaintiff did not reply in support of the Motion to Amend, and has never supplemented his argument. Therefore, there is no basis to conclude that plaintiff’s amendments relate back.

I am mindful that in the current Scheduling Order, I extended, until January 15, 2018, the deadline for plaintiff to add additional parties and amend the pleadings. ECF 30. But, this extension does not demand that I allow futile amendments. Accordingly, I shall deny the Motion to Amend. ECF 31.

Date: February 21, 2018 /s/
Ellen Lipton Hollander
United States District Judge
All Citations
Slip Copy, 2018 WL 999963