Volume 21 Cases (2018)

ABT ELECTRONICS, INC., Plaintiff, v. AIRGROUP CORPORATION a/k/a RADIANT GLOBAL LOGISTICS, INC.

United States District Court, N.D. Illinois, Eastern Division.

ABT ELECTRONICS, INC., Plaintiff,

AIRGROUP CORPORATION a/k/a RADIANT GLOBAL LOGISTICS, INC., Defendant.

Case No. 17-cv-2801

02/15/2018

Opinion

Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

*1 In its First Amended Complaint, Plaintiff ABT Electronics, Inc. (“Plaintiff”) brings claims against Defendant Airgroup Corporation a/k/a Radiant Global Logistics, Inc. (“Defendant”) for liability under the Carmack Amendment, 49 U.S.C. § 14706 (Count I), fraud (Count II), and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/1 et seq. (Count III). Currently before the Court is Defendant’s motion [15] to dismiss Counts II and III of the First Amended Complaint as preempted by the Carmack Amendment. For the reasons explained below, Defendant’s motion [15] is granted. Counts II and III in the First Amended Complaint are dismissed. This case will be set for further status hearing after the parties file a revised status report on March 15, 2018.

Background1

Plaintiff is an appliance and electronics retailer headquartered in Illinois. [12, ¶ 1.] Defendant is a logistics and freight forwarding company organized in the state of Washington. [Id., ¶ 2.] During the time period relevant to the complaint, Defendant performed freight forwarding services for Plaintiff by arranging for the transportation of Plaintiff’s consumer goods, including televisions and other electronics (“the goods”), to customers throughout the United States. [Id. ¶ 3.] Defendant would take possession of the goods at Plaintiff’s warehouse in Glenview, Illinois and then transport them to their intended destination. [Id., ¶¶ 3, 6.] The parties operated under the terms of a Tariff Rate Agreement that Defendant issued to Plaintiff in April 2015, under which Defendant committed to deliver the goods to customers within six business days of taking possession of the goods from Plaintiff. [Id., ¶¶ 7–8.]

Plaintiff alleges that, from October 31, 2016 to December 8, 2016, during Plaintiff’s busy holiday season, Defendant failed to deliver the goods to Plaintiff’s customers within six business days. According to Plaintiff, delivery times on 2,185 out of 2,750 of these shipments exceeded ten days and sometimes took up to seventy days. [Id., ¶¶ 9–10.] When Plaintiff contacted Defendant about the status of these delayed deliveries, Defendant misrepresented their status and did not provide valid tracking numbers for them to Plaintiff and its customers. [Id., ¶ 12.] Plaintiff claims damages for the loss in value to the goods during this unreasonably long transportation period. [Id., ¶ 11.] Plaintiff further alleges that Defendant’s delay in delivering the goods resulted in customer complaints, negative reviews from customers, and the need for Plaintiff to issue credits, discounts, and gift cards, and re-shipments to customers in order to mitigate its damages from this delay. [Id.]

Plaintiff further alleges that, in September 2016, the parties agreed to an “Enhanced Service” delivery service that Defendant would make available when delivering Plaintiff’s goods (specifically, televisions) to Plaintiff’s customers. This Enhanced Service consisted of using a two-man crew to perform white glove delivery and set up of the televisions at a customer’s home. [Id., ¶ 32.] The parties agreed that the fee for this Enhanced Service delivery would be $150 for televisions less than 150 pounds and $1 per pound for televisions more than 150 pounds. This pricing was confirmed in a Tariff sheet that Defendant issued to Plaintiff in September 2016. [Id., ¶¶ 33–35.] This fee was to be all-inclusive with no further delivery charges. [Id., ¶ 33.] According to Plaintiff, in February 2017, Defendant invoiced Plaintiff $177,451.51 for Enhanced Service delivery on all orders shipped from November 25, 2016 to December 7, 2016. [Id., ¶¶ 41–42.] This charge was not authorized for all of these shipments; this charge also was not all-inclusive as the parties had agreed it would be. [Id., ¶¶ 42–43.] Moreover, after Plaintiff surveyed a sample of its customers from these invoiced deliveries regarding their delivery experience, Plaintiff determined that most of these customers had not actually received the Enhanced Service delivery for which Plaintiff had been invoiced by Defendant. [Id., ¶¶ 45–46.] Plaintiff alleges that Defendant knew that this invoicing was improper and knew or should have known that the Enhanced Service delivery was not being performed in connection with these deliveries. [Id., ¶ 47.]

*2 Plaintiff sued Defendant in Illinois state court in March 2017, and Defendant thereafter removed the action to this Court. [See 1.] On May 25, 2017, Plaintiff filed its First Amended Complaint. [See 12.] In its First Amended Complaint, Plaintiff brings a claim for damages under the Carmack Amendment, 49 U.S.C. § 14706, for Defendant’s unreasonably delay in delivering Plaintiff’s goods to its customers (Count I). Plaintiff also brings claims for fraud and for violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”) for fraudulently invoicing Plaintiff for Enhanced Service delivery that was not authorized and largely not performed (Counts II and III). On June 14, 2017, Defendant filed a motion to dismiss Counts II and III of the First Amended Complaint pursuant to Rule 12(b)(6), which is currently before the Court.

Legal Standard

To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, the complaint first must comply with Rule 8(a) by providing “a short and plain statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), such that the defendant is given “fair notice of what the * * * claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) (alteration in original). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the “speculative level.” E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). “A pleading that offers ‘labels and conclusions’ or a ‘formulaic recitation of the elements of a cause of action will not do.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). Dismissal for failure to state a claim under Rule 12(b)(6) is proper “when the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Twombly, 550 U.S. at 558. In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts as true all of Plaintiff’s well-pleaded factual allegations and draws all reasonable inferences in Plaintiff’s favor. Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007).

III. Analysis

Defendant argues that Counts II and III of the First Amended Complaint must be dismissed because these state law claims alleging delay and damage to the goods are preempted by the Carmack Amendment. Plaintiff responds that Counts II and III focus on allegations of fraudulent billing practices subsequent to Defendant’s allegedly negligent delay and handling of the goods. According to Plaintiff, this constitutes a separate and independent harm and thus is not preempted by the Carmack Amendment.

The Interstate Commerce Act contains several provisions governing a motor carrier’s liability to a shipper for the loss of, or damage to, an interstate shipment of goods. N. Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 453 (7th Cir. 1996). These provisions are commonly referred to collectively as the Carmack Amendment. The Carmack Amendment provides shippers with the statutory right to recover for actual losses or injuries to their property caused by carriers involved in the shipment.2 Gordon v. United Van Lines, Inc., 130 F.3d 282, 285–86 (7th Cir. 1997). The Carmack Amendment limits the carrier’s liability to the “actual loss or injury to the property” damaged en route.3 REI Transp., Inc. v. C.H. Robinson Worldwide, Inc. 519 F.3d 693, 697 (7th Cir. 2008) (citing 49 U.S.C. § 14706(a)(1)). Recoverable damages include “damages for delay, lost profits (unless they are speculative), and all reasonably foreseeable consequential damages.” Am. Nat’l Fire Ins. Co. ex rel. Tabacalera Contreras Cigar Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 931 (7th Cir. 2003) (citations omitted).

*3 Prior to the enactment of the Carmack Amendment, disparate schemes of carrier liability existed among the states, some of which allowed carriers to limit or disclaim liability, whereas others permitted full recovery. REI Transp., 519 F.3d at 697. Thus, a carrier could have been “held liable in one court when under the same state of facts he would be exempt from liability in another.” Adams Express Co. v. Croninger, 226 U.S. 491, 505 (1913). This patchwork of regulation made it “practically impossible for a shipper engaged in a business that extended beyond the confines of his own state * * * to know * * * what would be the carrier’s actual responsibility as to goods delivered to it for transportation from one state to another.” Id. To solve this problem, the Carmack Amendment “create[d] a national uniform rule of carrier liability concerning interstate shipments.” Pinkerton, 89 F.3d at 455; see also Moffit v. Bekins Van Lines Co., 6 F.3d 305, 307 (5th Cir. 1993) (noting that the purpose of the Carmack Amendment “was to create uniformity out of disparity”). Congress ensured this national uniformity by both placing substantive limits on the rights of carriers to contract away liability and by preempting state causes of action against carriers for damaged or lost goods. REI Transp., 519 F.3d at 697 (citing Adams Express, 226 U.S. at 505). The Carmack Amendment’s preemptive scope is broad; the Supreme Court has stated that “[a]lmost every detail of the subject is covered so completely that there can be no rational doubt that Congress intended to take possession of the subject and supersede all state regulation with reference to it.” Adams Express, 226 U.S. at 505–06.

Although this preemptive scope is broad, “it is not all-inclusive.” Schwarz v. Nat’l Van Lines, Inc., 2004 WL 1166632, at *4 (N.D. Ill. May 21, 2004). The Carmack Amendment preempts state law and common law claims “if they in any way enlarge the responsibility of the carrier for losses or if they at all affect the ground of recovery or the measure of recovery.” Glass v. Crimmins Transfer Co., 299 F. Supp. 2d 878, 885 (C.D. Ill. 2004). But the Carmack Amendment does not preempt state law claims that allege 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.

In Gordon, the plaintiff shipper brought various claims (both liability under the Carmack Amendment and state law claims) against the defendant carrier for destroying some of her belongings and for lying to her about the status of those belongings over a three-month period. 130 F.3d at 285. Defendant argued that all of the plaintiff’s state law claims were preempted by the Carmack Amendment. The Seventh Circuit held that the plaintiff’s claim for intentional infliction of emotional distress was not preempted, because this claim alleged liability that was “separate and distinct” from the damage to plaintiff’s belongings. Id. at 289. At the same time, however, the Seventh Circuit held that the plaintiff’s claims for breach of contract, willful and wanton misconduct, fraudulent inducement to contract in violation of the ICFA, common law fraud in the inducement, and common law fraud in the claims process were all preempted. Id. Regarding fraud in the inducement, plaintiff’s claims were “so closely related to the performance of the contract, and the measure of damages for such claims so likely to be the loss or damage to the goods” that they were preempted. Id. Plaintiff’s claim for fraud in the claims process also was held to be “directly related to the loss or damage to the goods that were shipped” and thus within the Carmack Amendment’s preemptive scope. Id. at 290. See also REI Transp., 519 F.3d at 698 (the preemptive sweep of the Carmack Amendment includes state causes of action against carriers where goods are damaged or lost in interstate commerce, but “claims that do not affect a carrier’s liability for lost or damaged goods * * * do not upend the uniformity effected by the Carmack Amendment and are therefore not preempted.”).

Here, Plaintiff brings in Count I a Carmack Amendment claim against Defendant, alleging that Defendant was responsible for transporting Plaintiff’s goods in interstate commerce, and Defendant’s unreasonable delay in delivery of those goods caused damage. [12, ¶¶ 13–27.] Plaintiff also brings claims in Counts II and III for fraud and for violation of the ICFA. [12, ¶¶ 28–54.] Plaintiff bases these claims on Defendant’s issuance of invoices in February 2017 that include Enhanced Service delivery charges that were not authorized or approved, were not all-inclusive as the parties had agreed they would be, and were for services that were not actually provided in connection with many of the deliveries of Plaintiff’s goods to its customers. [Id., ¶¶ 41–48.] According to Plaintiff, this fraud “is independent from any shipping of goods and independent from any loss or damage from shipped goods” and thus not preempted by the Carmack Amendment. [21 at 4–5.]

*4 The Court agrees with Defendant, however, that the claims in Counts II and III ultimately are “so closely related” to the performance of the shipping contract between the parties, Gordon, 130 F.3d at 289, that they are preempted by the Carmack Amendment. See McGinn v. JB Hunt Transp., Inc., 2012 WL 124401, at *3 (E.D. Wis. Jan. 12, 2012) (the relevant inquiry in determining whether a state law claim will be preempted is “whether the state law claim is really a claim for damages to the shipper’s goods in disguise”). Plaintiff alleges in Count I that Defendant failed to transport the goods with “reasonable dispatch,” as it was required to do under the 2015 Tariff Rate Agreement, for the shipments for which it invoiced Plaintiff from October 31, 2016 to December 8, 2016. Plaintiff alleges in Counts II and III that Defendant charged Plaintiff for Enhanced Service delivery on all orders shipped from November 25, 2016 to December 7, 2016—even though these charges were unauthorized and the service was not performed in many cases. These are the same interstate transactions that are at issue in Count I and therefore relate to the same goods that Defendant allegedly damaged through its failure to deliver them with reasonable dispatch.

Moreover, in Counts II and III, Plaintiff incorporates its allegations in paragraphs 1 through 12. [12, ¶¶ 28, 50.] In these paragraphs, Plaintiff alleges that (1) Defendant transported consumer goods in interstate commerce for Plaintiff; (2) Defendant invoiced Plaintiff for these services from October 31, 2016 to December 8, 2016; and (3) Defendant’s unreasonable delay in delivering these goods caused damage. These deliveries and these goods are also at issue in Counts II and III. See Miller v. Reebie Storage & Moving Co., Inc., 1993 WL 414689, at *3 (N.D. Ill. Oct. 15, 1993) (noting that plaintiff, by incorporating the introductory paragraphs of her complaint alleging damage to shipped goods, implicated “the existence of the contract generally, and the nature and quality of services provided by [defendant] in particular,” and thus plaintiff’s claims were preempted by the Carmack Amendment).

On balance, the Court concludes that the harm that Plaintiff alleges in Counts II and III is not separate and distinct from the harm alleged in Count I, but it is instead inextricably linked to Defendant’s performance of its duties as a carrier subject to liability under the Carmack Amendment and its delivery of the goods at issue in Count I. See Brightstar Int’l Corp. v. Minuteman Int’l, 2011 WL 4686432, at *3 (N.D. Ill. Oct. 4, 2011) (noting that non-preempted state causes of actions against common carriers are allowed to proceed only “because the acts of the tortfeasors were not in any way a reasonable part of, or a foreseeable consequence of, interstate shipping”); Schwarz, 2004 WL 1166632, at *8 (holding that constructive fraud claim alleging that the defendant had misled plaintiff regarding the safe and timely delivery of her goods was preempted by the Carmack Amendment); Neely v. Mayflower Transit, LLC, 2003 WL 23648655, at *3 (N.D. Ill. Aug. 4, 2003) (holding that ICFA claim, which concerned conduct that occurred before the shipping contract had been executed, was derived from the shipping contract, and thus was preempted); Miller, 1993 WL 414689, at *3–4 (holding that claims for consumer fraud and deceptive advertising were preempted by the Carmack Amendment because they “rely upon * * * the quality of the services which [defendant] provided”); York v. Day Transfer Co., 525 F. Supp. 2d 289, 300 (D.R.I. 2007) (“Claims * * * based on lingering and consequential effects of conduct performed in the transportation, shipment, and claims process are subject to preemption.”). The state law claims in Counts II and III therefore are preempted by the Carmack Amendment. See Rini v. United Van Lines, Inc., 104 F.3d 502, 506 (1st Cir. 1997) (preempted state law claims “include all liability stemming from damage or loss of goods, liability stemming from the claims process, and liability related to the payment of claims”).

Plaintiff’s main argument in opposition is that Counts II and III allege separate and independent harms that are not preempted because they “exist with or without damage to a shipment.” [21, at 3]. But this argument misses the mark. In Gordon, the Seventh Circuit held that an ICFA claim alleging fraudulent inducement to contract was preempted, even though “a fraudulently induced contract could be executed perfectly.” Gordon, 130 F.3d at 289 (citing Nowakowski v. Am. Red Ball Transit Co., 680 N.E. 2d 441 (Ill. App. Ct. 1997)). Other federal courts have found state-law fraud claims to be preempted in similar situations. See, e.g., White v. Mayflower Transit, L.L.C., 543 F.3d 581, 584–85 (9th Cir. 2008) (the Carmack Amendment barred claims for fraud and improper billing); Moffit v. Bekins Van Lines Co., 6 F.3d 305, 307 (5th Cir. 1993) (holding that the Carmack Amendment preempts state law claims for fraud and violations of the Texas Deceptive Trade Practices Act). As the court in Gordon noted, fraud claims relating to either contract formation or the claims process, such as the Gordon plaintiff’s ICFA claim and common law fraud claims, are preempted because of their close relationship to the performance of the contract of carriage itself, and because the measure of damages for these claims is “so likely to be the loss or damage to the goods.” Gordon, 130 F.3d at 289; see also Nowakowski, 680 N.E. 2d at 444 (preempting ICFA claim alleging that defendants had fraudulently deprived shippers of the benefit of insurance for goods damaged in transit because the claim “in essence seeks compensation for the damage that defendants caused in transporting plaintiffs’ goods interstate”). Plaintiff’s fraud claims in Counts II and III relate to the goods in Defendant’s allegedly damaged deliveries. Plaintiff alleges that Defendant issued fraudulent invoices and made misrepresentations to induce payment from Plaintiff for these same allegedly damaged deliveries. [12, ¶¶ 48, 54.] Therefore, although the allegedly fraudulent invoices may exist separately from the alleged damage to the goods, Plaintiff’s fraud claims are essentially seeking to expand Defendant’s liability for these same allegedly damaged goods. Gordon, 130 F.3d at 289; McGinn, 2012 WL 124401, at *3.4 Allowing Plaintiff to pursue these claims would allow it to expand Defendant’s liability, which is inconsistent with the Carmack Amendment’s goal of promoting uniformity and predictability for interstate carriers. Pietro Culotta Grapes Ltd. v. S. Pac. Transp. Co., 917 F. Supp. 713, 714 (E.D. Cal. 1996).

*5 Additionally, the “separate and distinct” harm exception for the preemption of state law claims that Gordon articulates is narrow and typically involves claims for personal injury or intentional infliction of emotional distress, neither of which Plaintiff alleges. See McGinn, 2012 WL 124401, at *3 (claims for infliction of bodily injury sustained due to negligent loading of goods were not preempted because they alleged a separate, independently actionable harm); Hubbard v. All States Relocation Servs., Inc., 114 F. Sup. 2d 1374, 1377 (S.D. Ga. 2000) (claim for intentional infliction of emotional distress is not preempted if it alleges “an injury separate and apart from the damage to the goods”); Lamm v. Bekins Van Lines Co., 139 F. Supp. 2d 1300, 1312 (M.D. Ala. 2001) (noting that Alabama-law outrage claim would not be preempted because plaintiff’s allegations stemmed from witnessing “the drunken, brawling behavior” of the shippers’ employees, which happened independently of whether there was any actual damage to the goods at issue); see also Opp v. Wheaton Van Lines, Inc., 1999 WL 163041, at *2 (N.D. Ill. Mar. 12, 1999) (denying motion to dismiss common law fraud claim because, at the motion to dismiss stage, the court was unable to determine whether the defendant’s allegedly fraudulent demand for payment was more akin to the intentional infliction of emotional distress claim or the fraud claim in Gordon, and more evidence was necessary in resolving the issue).

To be sure, some cases have allowed disputes about negligent actions, improper billing practices, or alleged overcharging for services to go forward as separate causes of action. But those cases are distinguishable from the instant case (and thus no help to Plaintiff on this point) because they contain no allegations at all about damage to the goods being shipped. See Gale v. Ramar Moving Sys., Inc., 2013 WL 3776983, at *3 (D. Md. July 16, 2013) (claim for negligence that resulted in damage to the plaintiff’s home and non-shipped goods that she owned was not preempted, while any claim related to damage or non-delivery of transported goods was preempted); Frey v. Bekins Van Lines, Inc., 748 F. Supp. 2d 176, 181 (E.D.N.Y. 2010) (state law claims regarding alleged overbilling for household goods shipping services were not preempted where no claims were made that the goods at issue were lost or damaged); Learning Links, Inc. v. United Parcel Serv. of Am., Inc., 2006 WL 785274, at *4 (S.D.N.Y. Mar. 27, 2006) (concluding that plaintiff’s common law breach of contract claim alleging that defendant overcharged for shipments was not preempted by the Carmack Amendment, as the plaintiff “allege[d] no loss, damage, delay or injury to its shipped goods”); In re EVIC Class Action Litig., 2002 WL 1766554, at *10 (S.D.N.Y. July 31, 2002) (antitrust claims against defendant were not preempted where plaintiffs did not allege any loss or damage to goods); see also Ducham v. Reebie Allied Moving & Storage, Inc., 372 F. Supp. 2d 1076, 1079 (N.D. Ill. 2005) (“Ducham’s claim of fraud—not at all in connection with the loss of or damage to his goods, but rather in the extortion of a large added payment under duress—are not” preempted).

Here, in Counts II and III, Plaintiff alleges that the goods at issue were damaged by Defendant while being shipped in interstate commerce and, moreover, that Defendant fraudulently invoiced them for the shipments of these damaged goods. The allegations that goods were damaged bring Plaintiff’s case within the purview of the Carmack Amendment and thus preempt Plaintiff’s remaining state law claims where they increase the potential liability of Defendant for the allegedly damaged goods shipped in interstate commerce. See Gordon, 130 F.3d at 289; see also UPS Supply Chain Solutions, Inc. v. Megatrux Transp., Inc., 750 F.3d 1282, 1294–95 (11th Cir. 2014) (claim for indemnification of attorney’s fees is not preempted because “[e]nforcement of a self-imposed undertaking poses no risk of patchwork regulation or different demands in different jurisdictions”); Mason & Dixon Intermodal, Inc. v. Lapmaster Int’l, LLC, 632 F.3d 1056, 1062 (9th Cir. 2011) (Carmack Amendment did not preempt California good faith settlement law because it could not increase liability for the carrier nor limit the shipper’s recovery). Plaintiff alleges in Counts II and III that Defendant engaged in fraudulent conduct in the delivery and invoicing of goods that Plaintiff also alleges were damaged. “Congress has commanded through the Carmack Amendment that [Defendant] must be sheltered from liability except insofar as it may also engage in conduct that is sufficiently distinct from the contract of carriage that a separate and independent claim arises.” Gordon, 130 F.3d at 290. Because Plaintiff does not allege any conduct sufficiently distinct from the parties’ contract of carriage for these goods in Counts II and III of the First Amended Complaint, these counts must be dismissed.5

Conclusion

*6 For the foregoing reasons, Defendant’s motion [15] is granted. Counts II and III in the First Amended Complaint are dismissed. This case will be set for further status hearing after the parties file a revised status report on March 15, 2018.

Date: February 15, 2018

Robert M. Dow, Jr.

United States District Judge

All Citations

Slip Copy, 2018 WL 905504

Footnotes

For purposes of the motion to dismiss, the Court accepts as true all of Plaintiff’s well-pleaded factual allegations and draws all reasonable inferences in Plaintiff’s favor. Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007).

The Carmack Amendment states, in relevant part:

A carrier providing transportation or service subject to the jurisdiction under subchapter I or III of chapter 135 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 subject to jurisdiction under subchapter I or III of chapter 135 or chapter 105 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, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported in the United States[.]

49 U.S.C. § 14706(a)(1).

The prima facie case under the Carmack Amendment is straightforward: a plaintiff must show “(1) delivery in good condition; (2) arriving in damaged condition; and (3) the amount of damages.” REI Transport, Inc. v. C.H. Robinson Worldwide, Inc. 519 F.3d 693, 699 (7th Cir. 2008) (citation and internal quotation marks omitted). If the plaintiff establishes the prima facie case, the burden shifts to the defendant “to show that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability.” Id. (citation and internal quotation marks omitted).

Although Plaintiff notes that the allegedly fraudulent invoices were issued subsequent to the transportation of the allegedly damaged goods, [21, at 1], this does not change the result. Even though Plaintiff alleges that these invoices were issued in February 2017, Plaintiff also alleges that these invoices were for orders shipped in 2016—the same orders that Plaintiff alleges were damaged. [12, ¶¶ 41–42.] The timing of the invoices is irrelevant, as the alleged fraudulent conduct and the fraud claims “are contingent on and derived from the shipping contract.” Neely, 2003 WL 23648655.

Counts II and III reference two separate agreements under which the parties allegedly operated: the Tariff Rate Agreement setting forth the six-day delivery commitment, [12, ¶ 8], and the tariff sheet issued by Defendant to Plaintiff confirming the agreed pricing for the Enhanced Service delivery, [id., ¶ 35]. It is unclear from the First Amended Complaint whether Plaintiff is claiming that one or the other, or both, of these documents constitutes the “contract of carriage” under which the parties operated. But this does not affect the outcome of this motion. The Carmack Amendment claim, as well as each state law claim, alleges that the same consumer goods were supposed to be delivered by Defendant, but were damaged by delays in delivery. Plaintiff further alleges that Defendant is attempting to charge more for these damaged deliveries than the price that the parties agreed upon for the service. The Court need not address here what terms govern this dispute; whichever terms govern, Plaintiff’s claims in Counts II and III allege that Defendant damaged their goods and then subsequently over-charged them for delivery. Such claims are preempted by the Carmack Amendment.

OWNER–OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., et al., Appellants v. UNITED STATES DEPARTMENT OF TRANSPORTATION, et al.

United States Court of Appeals,

District of Columbia Circuit.

OWNER–OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., et al., Appellants

UNITED STATES DEPARTMENT OF TRANSPORTATION, et al., Appellees

No. 16-5355

Argued November 8, 2017

Decided January 12, 2018

Appeal from the United States District Court for the District of Columbia (No. 1:12-cv-01158)

Attorneys and Law Firms

Joyce E. Mayers, Washington, DC, argued the cause for appellants. With her on the briefs were Paul D. Cullen, Sr., and Paul D. Cullen, Jr., Washington, DC.

Caroline D. Lopez, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Matthew M. Collette, Attorney, Washington, DC, Paul M. Geier, Assistant General Counsel, U.S. Department of Transportation, Joy K. Park, Senior Trial Attorney, and Sue Lawless, Assistant Chief Counsel for Enforcement and Litigation, Federal Motor Carrier Safety Administration.

Before: Tatel, Griffith, and Srinivasan, Circuit Judges.

Opinion

Tatel, Circuit Judge:

*1 In Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016), the Supreme Court held that “Article III standing requires a concrete injury even in the context of a statutory violation,” id. at 1549. In this case, several commercial truck drivers and their industry association claim they were injured by the Department of Transportation’s violation of its statutory obligation to ensure the accuracy of a database containing driver-safety information. As explained in this opinion, we agree with the district court that, under Spokeo, the asserted injury is, by itself, insufficiently concrete to confer Article III standing. We reverse, however, with respect to two drivers whose information was released to prospective employers because dissemination of inaccurate driver-safety data inflicts an injury sufficiently concrete to confer standing to seek damages.

To fulfill its mandate of ensuring “the highest degree of safety in motor carrier transportation,” the Federal Motor Carrier Safety Administration, part of the Department of Transportation, maintains the Motor Carrier Management Information System, a database of commercial truck drivers’ safety records. 49 U.S.C. § 113(b). The database includes “accident reports and other safety violations.” Weaver v. Federal Motor Carrier Safety Administration, 744 F.3d 142, 143 (D.C. Cir. 2014). Maintaining the database requires collaboration between state and federal authorities. States serve as the primary reporters of information: they are obligated by statute to “collect[ ] and report [ ] … accurate, complete, and timely motor carrier safety data.” 49 U.S.C. § 31102(c)(2)(P)(i). For its part, the Department must “ensure, to the maximum extent practical, [that] all the data is complete, timely, and accurate,” id. § 31106(a)(3)(F), and “prescribe technical and operational standards to ensure … uniform, timely, and accurate information collection and reporting by the States,” id. § 31106(a)(4)(A).

Shippers and other firms looking to hire truck drivers can access certain information in the database, namely, “[c]ommercial motor vehicle accident reports,” “[i]nspection reports that contain no driver-related safety violations,” and “[s]erious driver-related safety violation inspection reports.” Id. § 31150(a). The Department makes this information available through its Pre–Employment Screening Program, which provides employers with reports containing crash data from the previous five years and inspection data from the previous three. See U.S. Department of Transportation, Federal Motor Carrier Safety Administration (FMCSA), Privacy Impact Assessment: Pre–Employment Screening Program (PSP) (Apr. 14, 2010). The Department must “ensure that any information that is released … will be in accordance with the Fair Credit Reporting Act [FCRA] … and all other applicable Federal law.” 49 U.S.C. § 31150(b)(1).

To further guarantee the accuracy of the database, the Department must “provide a procedure for [drivers] to correct inaccurate information.” Id. § 31150(b)(4). In order to accomplish this, the Department “established ‘DataQs,’ a web-based dispute resolution procedure that allows ‘[drivers] to challenge [’]” database information. Weaver, 744 F.3d at 143 (quoting Privacy Act of 1974; Department of Transportation, Federal Motor Carrier Safety Administration (FMCSA) 007 Pre–Employment Screening Program, 77 Fed. Reg. 42,548, 42,551 (July 19, 2012)). When a driver files a challenge, the Department forwards it to the relevant state and state officials “decide how to respond.” Id.

*2 Appellants are five commercial truck drivers and their industry association, the Owner–Operator Independent Drivers Association, Inc. Between 2010 and 2013, state law-enforcement authorities cited each driver for violating safety regulations. See Owner–Operator Independent Drivers Association v. Department of Transportation, 211 F.Supp.3d 252, 256 (D.D.C. 2016). The drivers successfully challenged the citations in state court: one driver was found not guilty after trial, and the others had their citations dismissed. Id. at 256–57. All but one of the drivers then asked through DataQs to have the violation reports relating to the citations removed from the Department’s database. Their requests were rejected because, according to the relevant state authorities, the database at the time displayed only initial citations, not adjudicated outcomes. Id. at 257. The safety records of two drivers—Klint Mowrer and Fred Weaver, Jr.—including the challenged violation reports, were shared through the Pre–Employment Screening Program; the other drivers’ records were never disseminated. Id. at 260–61.

The individual drivers and the industry association then sued, challenging the Department’s failure to ensure the accuracy of the database and seeking injunctive and declaratory relief under the Administrative Procedure Act, as well as damages under the FCRA. The Department moved for summary judgment, arguing (among other things) that the drivers lacked Article III standing because they failed to show concrete injury in fact. Id. at 258. The district court agreed and dismissed the case. Id. at 261. The drivers appeal, and now we consider the issue afresh. See Scenic America, Inc. v. Department of Transportation, 836 F.3d 42, 49 (D.C. Cir. 2016) (“We review the District Court’s decision … as to standing de novo ….”).

II.

[1]“ ‘[T]he irreducible constitutional minimum of standing’ requires ‘an injury in fact’ that is both ‘concrete and particularized,’ and ‘actual or imminent, not conjectural or hypothetical.’ ” Hancock v. Urban Outfitters, Inc., 830 F.3d 511, 513 (D.C. Cir. 2016) (alteration in original) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). This case focuses on just one element of that test: whether the alleged injury is “concrete.” Specifically, we must determine whether the drivers’ claimed injury—the Department’s failure to discharge its statutory duty to ensure the accuracy of information in the database—is sufficiently concrete to qualify as injury in fact.

The touchstone for analyzing whether the violation of a statutory obligation constitutes injury in fact is the Supreme Court’s recent decision in Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). There, a consumer initiated a class action against a company that operates an online search engine that gathers and disseminates personal information, claiming that some of the disseminated information was incorrect. Id. at 1544. According to the consumer, this violated the FCRA, which imposes procedural requirements on the creation and use of consumer reports, including obligating reporting agencies to adopt mechanisms for ensuring the information’s accuracy. Id. at 1545–46. The Ninth Circuit had concluded that the consumer satisfied Article III’s injury-in-fact requirement because he had alleged that the search engine violated his rights under the FCRA. Id. at 1546.

[2]The Supreme Court vacated, explaining that the Ninth Circuit, which had focused only on whether the injury was particularized, failed to consider whether the injury was concrete. See id. at 1548 (“We have made it clear time and time again that an injury in fact must be both concrete and particularized.”). Where the alleged injury arises only from a statutory violation—as in both Spokeo and here—the Court explained, “[a] ‘concrete’ injury must be ‘de facto’; that is, it must actually exist.” Id. Although “Congress may ‘elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law,’ ” this “does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Id. at 1549 (alteration in original) (quoting Lujan, 504 U.S. at 578, 112 S.Ct. 2130). “Article III standing requires a concrete injury even in the context of a statutory violation.” Id. A plaintiff “could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” Id.

*3 Our court has had only a few occasions to apply Spokeo. In Hancock v. Urban Outfitters, Inc., 830 F.3d 511 (D.C. Cir. 2016), for example, we found that plaintiffs who alleged that a retailer’s request for their zip codes violated District of Columbia consumer-protection law lacked standing. As we explained, the plaintiffs asserted only “a bare violation of the requirements of D.C. law,” and failed to allege any concrete injury from the disclosure of a zip code, “for example, any invasion of privacy, increased risk of fraud or identity theft, or pecuniary or emotional injury.” Id. at 514. Collecting Spokeo’s scattered definitions of concreteness, we held that a “plaintiff must allege some ‘concrete interest’ that is ‘de facto,’ ‘real,’ and ‘actually exist[s].’ ” Id. (alteration in original) (quoting Spokeo, 136 S.Ct. at 1548, 1549).

Although helpful, Hancock does not control here. In that case, we found that a request for potentially harmless information—a zip code—had inflicted no concrete injury. See id. (“If, as the Supreme Court advised, disclosure of an incorrect zip code is not a concrete Article III injury, then even less so is [plaintiffs’] naked assertion that a zip code was requested and recorded without any concrete consequence.”). By contrast, here we address information that could easily harm a driver were it shared with prospective employers. See Appellants’ Br. 41–42 (explaining that reports of safety violations can meaningfully affect a driver’s professional reputation and employment prospects).

In support of their argument that they are injured by the mere existence of inaccurate information in the database, the drivers focus on two sentences from Spokeo: “[T]he violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact. In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.” Spokeo, 136 S.Ct. at 1549. According to the drivers, these sentences mean that the Department’s failure to comply with its statutory obligation to ensure accuracy, by itself, inflicts injury in fact. We disagree. The emphasized phrase “additional harm” clearly presumes that the putative plaintiff had already suffered a de facto injury resulting from the procedural violation. Reinforcing this understanding of Spokeo, the Supreme Court, in explaining the “no additional harm” proposition, cited only examples of torts like libel and slander per se, where, so long as harmful information is publicized, “the law has long permitted recovery by certain tort victims even if their harms may be difficult to prove or measure,” and cases relating to the denial of access to publically available information. Id. at 1549–50 (citing the informational-standing cases FEC v. Akins, 524 U.S. 11, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998), and Public Citizen v. Department of Justice, 491 U.S. 440, 109 S.Ct. 2558, 105 L.Ed.2d 377 (1989)). Although the Court gave no indication that these two types of cases represent the only instances in which concrete injury results from a bare statutory violation, all of the decisions the drivers discuss fall into these two categories. That is, the violation at issue resulted either from the disclosure of potentially harmful information or from the withholding of public information. See Appellants’ Br. 28–32 (collecting cases).

For example, the drivers invoke the Ninth Circuit’s decision on remand in Spokeo, where the court found that the plaintiff had standing because he had “specifically alleged that [the search engine] falsely reported” facts about his age, marital status, education, employment, and wealth. Robins v. Spokeo, Inc., 867 F.3d 1108, 1117 (9th Cir. 2017). The Ninth Circuit also found that the allegations were not too speculative to establish concrete injury because “both the challenged conduct and the attendant injury ha[d] already occurred,” as the search engine “ha[d] indeed published a materially inaccurate consumer report.” Id. at 1118. Rather than supporting the drivers’ allegation of injury, then, Spokeo on remand confirms that actual publication is required to seek FCRA relief, and that a statutory violation is sufficient to confer standing only if “the specific procedural violations alleged … actually harm, or present a material risk of harm to, [concrete] interests.” Id. at 1113.

*4 The primary case the drivers cite from this Circuit is Friends of Animals v. Jewell, 828 F.3d 989 (D.C. Cir. 2016), see Appellants’ Br. 27–28, a post-Spokeo informational-standing case in which plaintiffs challenged the Interior Secretary’s failure to publish certain information as required by the Endangered Species Act. The drivers read Jewell to support their claim that Congress has broad latitude to define new injuries, but the opinion in that case emphasizes the narrow scope of informational injuries and makes clear that plaintiffs must suffer real harm to support standing. “A plaintiff suffers sufficiently concrete and particularized informational injury,” we explained, “where the plaintiff alleges that: (1) it has been deprived of information that, on its interpretation, a statute requires the government or a third party to disclose to it, and (2) it suffers, by being denied access to that information, the type of harm Congress sought to prevent by requiring disclosure.” Jewell, 828 F.3d at 992. Jewell is thus of no help to the drivers unless, of course, they can show that the Department’s statutory violation injured them.

The other post-Spokeo cases the drivers cite, not one of which comes from this Circuit, similarly involve putative injuries flowing from either disclosure or withholding. Appellants’ Br. 28–32. The courts in each case made clear that plaintiffs must show de facto injury even in the presence of a statutory violation. See, e.g., In re Horizon Healthcare Services Inc. Data Breach Litigation, 846 F.3d 625, 640 (3d Cir. 2017) (“Plaintiffs here do not allege a mere technical or procedural violation of FCRA. They allege instead the unauthorized dissemination of their own private information—the very injury that FCRA is intended to prevent. There is thus a de facto injury that satisfies the concreteness requirement for Article III standing.” (footnotes omitted)); Strubel v. Comenity Bank, 842 F.3d 181, 190 (2d Cir. 2016) (“[A] creditor’s alleged violation of each notice requirement, by itself, gives rise to a ‘risk of real harm’ to the consumer’s concrete interest in the informed use of credit.” (quoting Spokeo, 136 S.Ct. at 1549)).

Unlike the injuries in the cited cases, the drivers’ injury results from neither disclosure nor withholding of information. Rather, the drivers claim they suffer concrete harm from the mere fact that the Department, in violation of its statutory obligations, has allowed inaccurate safety information to remain in the database. As the drivers describe it, they “have a concrete interest in the accuracy of their safety records and the reflection those records project of their safety risk to potential employers.” Appellants’ Br. 33. “As long as [the Department] maintain[s] the inaccurate records of safety regulation violations in the database,” the drivers explain, “[the Department] expose[s] [them] to a material risk of harm contrary to their concrete statutory rights to accuracy.” Id. at 38.

[3]But does the drivers’ injury actually exist? Or, put another way, if inaccurate information falls into a government database, does it make a sound? Considering the drivers’ claimed harm in light of “both history and the judgment of Congress,” as Spokeo instructs, we think not. Spokeo, 136 S.Ct. at 1549.

To begin with, the drivers have identified no historical or common-law analog where the mere existence of inaccurate information, absent dissemination, amounts to concrete injury. They cite libel and slander per se, Appellants’ Br. 35–38, but as explained above, those torts require evidence of publication. See Restatement (First) of Torts § 569 (libel); id. § 570 (slander).

Turning then to the judgment of Congress, we see nothing in the relevant statutory provisions indicating that Congress “creat[ed] legal rights” in the database’s accuracy, “the invasion of which creates standing.” Havens Realty Corp. v. Coleman, 455 U.S. 363, 373, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982) (quoting Warth v. Seldin, 422 U.S. 490, 500, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)); cf. Electronic Privacy Information Center v. Presidential Advisory Commission on Election Integrity, No. 17-5171, –––F.3d ––––, ––––, 2017 WL 6564621, at *4 (D.C. Cir. Dec. 26, 2017) (finding that the plaintiff lacks standing because “it has not suffered the type of harm that [the statute] seeks to prevent”). As the safety statute itself demonstrates, Congress chose to protect truck drivers by requiring the Department to ensure the accuracy of their information, not by giving them a right of action to independently enforce that obligation. Section 31106 obligates the Department to ensure the database’s accuracy and creates no right on the part of the drivers to police their records—it speaks only to the Department itself. See 49 U.S.C. § 31106(a)(3)(F) (“The Secretary shall ….”). Section 31150, which authorizes pre-employment screening, likewise reflects Congress’s concern about disclosure, requiring the Department to “ensure that any information that is released … will be in accordance with the [FCRA] and all other applicable Federal law.” Id. § 31150(b)(1) (emphasis added). The FCRA, too, is designed “to curb the dissemination of false information.” Spokeo, 136 S.Ct. at 1550 (emphasis added). These statutes demonstrate that the harm Congress was concerned about was the dissemination of inaccurate information, not its mere existence in the Department’s database.

*5 The drivers’ inability to identify a clear common-law analog or to cite statutory support for their injury confirms that the mere existence of inaccurate information in the database is insufficient to confer Article III standing. Even though the inaccuracy results from the Department’s violation of its statutory obligations, the drivers have identified no “ ‘concrete interest’ that is ‘de facto,’ ‘real,’ and ‘actually exist[s].’ ” Hancock, 830 F.3d at 514 (alteration in original) (quoting Spokeo, 136 S.Ct. at 1548, 1549).

[4]As the foregoing analysis demonstrates, although the mere existence of inaccurate database information is not sufficient to confer Article III standing, the dissemination of that information to a potential employer is. At oral argument, Department counsel conceded that the two drivers whose safety records were released to prospective employers, Mowrer and Weaver, would have had standing to seek damages had they preserved the issue for appeal. See Oral Arg. 19:23–41. In our view, however, Mowrer and Weaver did raise the issue, stating in their opening brief that “[a]t a minimum, the false report of a criminal history for [Mowrer] and Weaver constitute[s] the demonstration of the kind of concrete injury sufficient to satisfy Article III standing.” Appellants’ Br. 42; see also Compl. ¶ 192 (describing the Department’s “disseminat[ion of] false, inaccurate, imprecise, incomplete and misleading consumer reports to third parties through the [Pre–Employment Screening Program]”). Given this, and because we agree that the two drivers have suffered concrete harm, we shall remand their damages claims to the district court.

[5] [6]In addition to damages, the drivers and their industry association seek prospective relief, including a declaration that the Department violated its statutory obligations and an injunction requiring it to purge the database of inaccurate information. Because “standing is not dispensed in gross,” Town of Chester v. Laroe Estates, Inc., ––– U.S. ––––, 137 S.Ct. 1645, 1650, 198 L.Ed.2d 64 (2017) (quoting Davis v. FEC, 554 U.S. 724, 734, 128 S.Ct. 2759, 171 L.Ed.2d 737 (2008)), the drivers “must demonstrate standing separately for each form of relief sought,” Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 185, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). In order to have standing to seek prospective relief, the drivers must show that dissemination of their database information is “continuing” or “imminen[t].” Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 108, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

[7]The drivers, however, concede that their information is no longer at risk of dissemination through the Department’s Pre–Employment Screening Program, as inspection data remains available for only three years after the relevant inspection and all of their disputed violations occurred more than three years ago. Appellants’ Br. 45. The association, moreover, has offered no evidence that any other member faces a risk of dissemination. Indeed, any risk of future disclosure of inaccurate information has been virtually eliminated by the Department’s adoption of an interpretive rule in June 2014, which allows States “to reflect the results of adjudicated citations” in the database and prohibits certain favorably adjudicated citations from being disseminated through the Pre–Employment Screening Program. See Motor Carrier Management Information System (MCMIS) Changes To Improve Uniformity in the Treatment of Inspection Violation Data, 79 Fed. Reg. 32,491, 32,491, 32,495 (June 5, 2014). Though the rule applies only to inspections occurring “on or after August 23, 2014,” thus excluding the drivers’ citations here, it ensures that similarly situated individuals face little risk of future harm. Id. at 32,495. Besides, given that our review comes more than three years after the rule’s effective date, all inaccurate records are protected from disclosure because they are either subject to the new rule or have aged out of the three-year Pre–Employment Screening Program reporting period.

*6 The drivers insist that, in addition to the Pre–Employment Screening Program, database information is used for other purposes and that the records can be accessed under the Freedom of Information Act, 5 U.S.C. § 552. But the drivers offer no evidence that such use is either imminent or likely, as would be required to support standing at the summary-judgment stage. See Lujan, 504 U.S. at 561, 112 S.Ct. 2130 (“[Standing] must be supported … with the manner and degree of evidence required at the successive stages of the litigation.”).

Finally, this case is not at all like our court’s recent decision in Attias v. CareFirst, Inc., 865 F.3d 620 (D.C. Cir. 2017). There, at the motion to dismiss stage, we found that health-insurance customers had standing to sue their insurer after it suffered a cyberattack in which an intruder breached a customer-information database. Id. at 622. We explained that “identity theft … would constitute a concrete and particularized injury” and that “the complaint plausibly alleges that the plaintiffs now face a substantial risk of identity theft,” because “an unauthorized party ha[d] already accessed personally identifying data … and it is much less speculative—at the very least, it is plausible—to infer that this party ha[d] both the intent and the ability to use that data for ill.” Id. at 627–28. Here, not only are we at the summary-judgment stage, where the drivers must produce evidence of injury, see Lujan, 504 U.S. at 561, 112 S.Ct. 2130, but nothing in the record indicates that anyone has recently accessed or used the information at issue or intends to do so in the future. The prospect of future injury is thus purely “speculative.” Attias, 865 F.3d at 626 (quoting Spokeo, 136 S.Ct. at 1548).

III.

Because the drivers are unharmed by the mere existence of inaccurate information in the Department’s database and because dissemination of that information is not imminent, they—with the exception of Mowrer and Weaver—have suffered no concrete injury in fact sufficient to confer Article III standing. To be sure, it is possible that the mere existence of inaccurate information in a government database could cause concrete harm depending on how that information is to be used. We conclude only that, under the specific circumstances of this case, the drivers have failed to show standing for all of the relief they seek. We thus affirm in part, reverse in part, and remand to the district court for further proceedings consistent with this opinion.

So ordered.