Broker - Central Analysis Bureau

Tischauser v. Donnelly Transp., Inc.

United States District Court for the Eastern District of Wisconsin

December 4, 2023, Decided; December 5, 2023, Filed

Case Nos. 20-C-1291; 20-C-1917; 21-C-220; 21-C-965; 23-C-538; 23-C-539; 23-C-556

Reporter

2023 U.S. Dist. LEXIS 215815 *; 2023 WL 8436321

MITCHELL TISCHAUSER, DELOS W. LUEDTKE, PADEN ROTHENBERGER, DUSTIN J. DEMITRIOU, and RONDA DEMITRIOU, Plaintiffs, v. DONNELLY TRANSPORTATION, INC., JOSUE R. HIDALGO-CLARKE, FIREBIRD TRUCKING, INC., MODE TRANSPORTATION, LLC, SYSCO CORPORATION, ACE PROPERTY & CASUALTY INSURANCE COMPANY, and STATE NATIONAL INSURANCE CO., Defendants.

Prior History: Tischauser v. Donnelly Transp. Inc., 2022 U.S. Dist. LEXIS 37366, 2022 WL 623994 (E.D. Wis., Mar. 3, 2022)

Counsel: [*1] For Delos W Luedtke, Plaintiff (1:20-cv-01917-WCG): Jennifer Marie Rice, Timothy M Whiting, LEAD ATTORNEYS, Allison L Hostetler, Whiting Law Group Ltd, Chicago, IL; Steven L Toney, Toney Law Offices SC, Madison, WI.

For Firebird Trucking Inc, Defendant (1:20-cv-01917-WCG): Edward P Gibbons, LEAD ATTORNEY, Kyle T Geiger, Walker Wilcox Matousek LLP, Chicago, IL; Maria DelPizzo Sanders, LEAD ATTORNEY, von Briesen & Roper SC, Milwaukee, WI.

For Donnelly Transportation Inc, Defendant (1:20-cv-01917-WCG): Vincent M Casieri, Schueler Dallavo & Casieri, Chicago, IL.

For Josue Rene Hidalgo Clarke, Defendant (1:20-cv-01917-WCG): Edward P Gibbons, LEAD ATTORNEY, Kyle T Geiger, Walker Wilcox Matousek LLP, Chicago, IL; Maria DelPizzo Sanders, LEAD ATTORNEY, von Briesen & Roper SC, Milwaukee, WI; Vincent M Casieri, Schueler Dallavo & Casieri, Chicago, IL.

For Paden Rothenberger, Plaintiff (1:21-cv-00220-WCG): David J Bischmann, LEAD ATTORNEY, Miles G Lindner, Laura A Lindner, Lindner Law LLC, Milwaukee, WI.

For Donnelly Transportation Inc, Ace Property & Casualty Insurance Company, Defendants (1:21-cv-00220-WCG): Vincent M Casieri, Schueler Dallavo & Casieri, Chicago, IL.

For Josue R Hidalgo-Clarke, Defendant [*2] (1:21-cv-00220-WCG): Maria DelPizzo Sanders, von Briesen & Roper SC, Milwaukee, WI; Vincent M Casieri, Schueler Dallavo & Casieri, Chicago, IL.

For Firebird Trucking Inc, State National Insurance Co Inc, Defendants (1:21-cv-00220-WCG): Maria DelPizzo Sanders, von Briesen & Roper SC, Milwaukee, WI.

For Dustin J Demitriou, Ronda Demitriou, Plaintiffs (1:21-cv-00965-WCG): Thomas A Perlberg, Hupy and Abraham SC, Milwaukee, WI.

For Donnelly Transportation Inc, ACE Property and Casualty Insurance Company, Defendants (1:21-cv-00965-WCG): Vincent M Casieri, Schueler Dallavo & Casieri, Chicago, IL.

For Josue R Hidalgo-Clarke, Defendant (1:21-cv-00965-WCG): Clayton L Riddle, LEAD ATTORNEY, Maria DelPizzo Sanders, von Briesen & Roper SC, Milwaukee, WI; Kyle T Geiger, LEAD ATTORNEY, Walker Wilcox Matousek LLP, Chicago, IL; Vincent M Casieri, Schueler Dallavo & Casieri, Chicago, IL.

For Firebird Trucking Inc, State National Insurance Company, Defendants (1:21-cv-00965-WCG): Clayton L Riddle, LEAD ATTORNEY, Maria DelPizzo Sanders, von Briesen & Roper SC, Milwaukee, WI; Kyle T Geiger, LEAD ATTORNEY, Walker Wilcox Matousek LLP, Chicago, IL.

For Paden Rothenberger, Plaintiff (1:23cv538): David J Bischmann, [*3] Laura A Lindner, Miles G Lindner, LEAD ATTORNEYS, Lindner Law LLC, Milwaukee, WI USA.

For Sysco Corporation, Defendant (1:23cv538): James J Temple, Mulherin Rehfeldt & Varchetto PC, Wheaton, IL USA.

For Mode Transportation Inc, Defendant (1:23cv538): Sara M Butler, LEAD ATTORNEY, Hinshaw & Culbertson LLP, Milwaukee, WI USA.

For Delos W Luedtke, Plaintiff (1:23cv539): Timothy M Whiting, LEAD ATTORNEY, Whiting Law Group Ltd, Chicago, IL USA.

For Sysco Corporation, Defendant (1:23cv539): James J Temple, Mulherin Rehfeldt & Varchetto PC, Wheaton, IL USA.

For Mode Transportation LLC, Defendant (1:23cv539): Sara M Butler, LEAD ATTORNEY, Hinshaw & Culbertson LLP, Milwaukee, WI USA.

For Mitchell Tischauser, Plaintiff (1:23cv556): Rene J L’Esperance, LEAD ATTORNEY, L’Esperance & Feidt LLC, Hortonville, WI USA.

For Sysco Corporation, Defendant (1:23cv556): James J Temple, Mulherin Rehfeldt & Varchetto PC, Wheaton, IL USA; James J Temple, Mulherin Rehfeldt & Varchetto PC.

For Mitchell Tischauser, Plaintiff (1:20-cv-01291-WCG): Rene J L’Esperance, L’Esperance & Feidt LLC, Hortonville, WI.

For Delos W Luedtke, Consolidated Plaintiff (1:20-cv-01291-WCG): Jennifer Marie Rice, Timothy M Whiting, LEAD ATTORNEYS, [*4] Whiting Law Group Ltd, Chicago, IL; Steven L Toney, Toney Law Offices SC, Madison, WI.

For Paden Rothenberger, Consolidated Plaintiff (1:20-cv-01291-WCG): David J Bischmann, LEAD ATTORNEY, Laura A Lindner, Miles G Lindner, Lindner Law LLC, Milwaukee, WI.

For Dustin J Demitriou, Ronda Demitriou, Consolidated Plaintiffs (1:20-cv-01291-WCG): Thomas A Perlberg, LEAD ATTORNEY, Hupy and Abraham SC, Milwaukee, WI.

For Donnelly Transportation Inc, Ace Property & Casualty Insurance Company, Defendants (1:20-cv-01291-WCG): Vincent M Casieri, Schueler Dallavo & Casieri, Chicago, IL.

For Josue R Hidalgo-Clarke, Defendant (1:20-cv-01291-WCG): Edward P Gibbons, Kyle T Geiger, Walker Wilcox Matousek LLP, Chicago, IL; Maria DelPizzo Sanders, von Briesen & Roper SC, Milwaukee, WI; Vincent M Casieri, Schueler Dallavo & Casieri, Chicago, IL.

For Firebird Trucking Inc, Defendant (1:20-cv-01291-WCG): Edward P Gibbons, Kyle T Geiger, Walker Wilcox Matousek LLP, Chicago, IL; Maria DelPizzo Sanders, von Briesen & Roper SC, Milwaukee, WI.

For State National Insurance Co Inc, Defendant (1:20-cv-01291-WCG): Clayton L Riddle, LEAD ATTORNEY, Maria DelPizzo Sanders, von Briesen & Roper SC, Milwaukee, WI; Kyle T Geiger, [*5] LEAD ATTORNEY, Walker Wilcox Matousek LLP, Chicago, IL.

Judges: William C. Griesbach, United States District Judge.

Opinion by: William C. Griesbach

Opinion

DECISION AND ORDER GRANTING MOTIONS TO DISMISS

These consolidated cases arise out of a motor vehicle accident that occurred on January 24, 2020, on U.S. Highway 45 in the Town of Caledonia in Waupaca County, Wisconsin. Plaintiffs Mitchell Tischauser, Delos W. Luedtke, Paden Rothenberger, and Dustin J. Demitriou allege that they were seriously injured when a commercial motor vehicle (CMV) tractor and trailer combination driven by Defendant Josue R. Hidalgo-Clarke crossed the center line and collided with their vehicle. Plaintiff Ronda Demitriou claims loss of consortium due to the injuries sustained by her husband. At the time of the collision, Clarke was en route to pick up a load of products, purchased by Defendant Sysco Corporation, from Manawa, Wisconsin, and transport them to a distribution center in Front Royal, Virginia. According to Plaintiffs’ respective complaints, Clarke was employed as a driver by Defendant Firebird Trucking, Inc., and by Defendant Donnelly Transportation, Inc., and Firebird owned the truck that Clarke was driving. Defendant Sysco [*6] worked with a broker, Defendant Mode Transportation, LLC, to hire Donnelly as the carrier. Donnelly, in turn, hired Firebird, resulting in Clarke being the CMV driver for the purpose of moving Sysco’s goods for profit. The court has jurisdiction under 28 U.S.C. § 1332, as Plaintiffs are all citizens of the State of Wisconsin, while Defendants are citizens of other States, and the amount in controversy exceeds $75,000.

Plaintiffs’ amended complaints added Sysco and Mode as defendants and asserted four claims against them: (1) negligent selection/hiring, training, or supervision; (2) agency/vicarious liability; (3) joint enterprise/venture; and (4) loss of consortium to as to Ms. Demitriou. See Luedtke 2d Am. Compl. ¶¶ 102-216 & 446-59, Dkt. No. 116; Demitriou Am. Compl. ¶¶ 49-162, 390-403 & 434-41, Dkt. No. 117; Rothenberger Am. Compl. ¶¶ 94-206 & 436-49, Dkt. No. 18; Tischauser Am. Compl. ¶¶ 109-222 & 452-59, Dkt. No. 119. Mode and Sysco moved for dismissal of Plaintiffs’ claims against them on the grounds that they are preempted by federal law, the amended complaints fail to state claims against them upon which relief can be granted under Rule 12(b)(6), and that the claims are barred by Wisconsin’s three-year [*7] statute of limitations for personal injury actions, Wis. Stat. § 893.54(1m)(a).

On July 18, 2023, after the motions were fully briefed, the Seventh Circuit issued its decision in Ye v. GlobalTranz Enterprises, Inc., 74 F.4th 453 (7th Cir. 2023), which held that the Federal Aviation Administration Authorization Act (FAAAA), specifically 49 U.S.C. § 14501(c), preempted a claim against a freight broker to recover for negligent hiring of a motor vehicle carrier whose employee was driving a truck involved in an accident that resulted in the death of the plaintiff’s husband. In so ruling, the court held that “the plain text and statutory scheme [of the FAAAA] indicate that 49 U.S.C. § 14501(c)(1) bars Ye’s negligent hiring claim against GlobalTranz [a broker] and that the [FAAAA’s] safety exception in § 14501(c)(2)(A) does not save it from preemption.” Id. at 456, 466.

In light of the Seventh Circuit’s decision in Ye, the court held a hearing on Sysco and Mode’s motions to dismiss on August 1, 2023. At the conclusion of the hearing, the court orally granted both motions, holding that Ye was controlling as to Plaintiffs’ claims against Mode and that, while it was less clear that Ye controlled as to Plaintiffs’ claims against Sysco, the complaints failed to state any claim against Sysco and Mode. This written decision is intended to confirm the court’s ruling [*8] from the bench. The court further concludes that Plaintiffs’ claims against Sysco are also preempted and that the claims of Plaintiffs Dustin and Ronda Demitriou are barred under the applicable statute of limitations.

LEGAL STANDARD

A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a complaint. Kaminski v. Elite Staffing, Inc., 23 F.4th 774, 776 (7th Cir. 2022). Rule 8 requires a pleading to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). To survive a motion for Rule 12(b)(6) dismissal, a complaint must contain factual allegations that “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). While a plaintiff is not required to plead detailed factual allegations, he must plead “more than labels and conclusions.” Id. Therefore, a simple, “formulaic recitation of the elements of a cause of action will not do.” Id. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Twombly, 550 U.S. at 570) (internal citations [*9] and quotations marks omitted); see also Yasak v. Ret. Bd. of the Policemen’s Annuity & Benefit Fund of Chi., 357 F.3d 677, 678 (7th Cir. 2004).

Dismissal under Rule 12(b)(6) may also be granted “when a plaintiff’s complaint nonetheless sets out all of the elements of an affirmative defense.” Independent Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012). This includes the affirmative defense of preemption. Gravitt v. Mentor Worldwide, LLC, 289 F. Supp. 3d 877, 884 (N.D. Ill. 2018) (dismissing plaintiff’s FDA noncompliance claims as preempted under § 360k(a) on defendant’s 12(b)(6) motion); see also Ramljak v. Boston Sci. Corp., No. 20-C-1903, 2021 U.S. Dist. LEXIS 62624, 2021 WL 1209025, at *2 (N.D. Ill. March 31, 2021). Although more properly considered on a motion for judgment on the pleadings under Rule 12(c), the difference is in form only because “[a] motion for judgment on the pleadings under Rule 12(c) . . . is governed by the same standards as a motion to dismiss for failure to state a claim.” Laverty v. Smith & Nephew, Inc., 197 F. Supp. 3d 1026, 1029 (N.D. Ill. 2016) (quoting BBL, Inc. v. City of Angola, 809 F.3d 317, 325 (7th Cir. 2015)).

ANALYSIS

A. Federal Preemption

The FAAAA provides that, subject to limited exceptions, a state “may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier (other than a carrier affiliated with a direct air carrier covered by section 41713(b)(4)) or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). As noted above, Ye held that this provision barred the plaintiff’s negligent hiring claim against the freight broker in that case. At the conclusion [*10] of the hearing on Mode’s and Sysco’s motions, the court held that Plaintiffs’ claims against Mode were clearly preempted in light of the Seventh Circuit’s decision in Ye. The court did not hold at that time that Plaintiffs’ claims against Sysco were likewise preempted under the FAAAA but invited supplemental authority in support of the proposition that “the shipper, someone in the position of Sysco, would be entitled to that protection.” Tr. at 24:25-25:4. In response to the court’s invitation, counsel for Sysco pointed the court to Rowe v. New Hampshire Motor Transport Association, 552 U.S. 364, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008), and briefly explained the case’s applicability. Having given further consideration to Rowe, the court now concludes that Plaintiffs’ claims against Sysco are also preempted under 49 U.S.C. § 14501(c)(1).

The arguments Plaintiffs offered against Mode’s contention that the FAAAA preempts Plaintiffs’ claims against it are unpersuasive. As the court noted at oral argument, Ye essentially held that state tort law governing negligence actions against brokers is preempted by the FAAAA because those laws significantly impact the price and cost, as well as the regulation, of interstate trucking and interstate transportation. In Ye, the court held that the party seeking to establish preemption [*11] “must show both that a state enacted or attempted to enforce a law and that the state law relates to broker rates, routes, or services either by expressly referring to them, or by having a significant economic effect on them.” 74 F.4th at 458 (internal quotations omitted). Ye determined that the broker in that case, GlobalTranz Enterprises, Inc., satisfied both parts of the test. First, common law tort claims have the force and effect of law. Id. at 459 (citing Northwest, Inc. v. Ginsberg, 572 U.S. 273, 281-82, 134 S. Ct. 1422, 188 L. Ed. 2d 538 (2014)). Second, the application of Illinois’ common law of negligence would have a significant economic effect on broker services:

By recognizing common-law negligence claims, courts would impose in the name of state law a new and clear duty of care on brokers, the breach of which would result in a monetary judgment. This is exactly what Ye seeks here against GlobalTranz. To avoid these costly damages payouts, GlobalTranz and other brokers would change how they conduct their services—for instance, by incurring new costs to evaluate motor carriers. Then, by changing their hiring processes, brokers would likely hire different motor carriers than they would have otherwise hired without the state negligence standards. Indeed, that is the centerpiece of Ye’s claim: [*12] that GlobalTranz should not have hired Global Sunrise.

Id.

The court in Ye then analyzed the FAAAA’s safety exception, which provides that laws within a state’s “safety regulatory authority . . . with respect to motor vehicles” are not preempted. Id. at 460 (quoting 49 U.S.C. § 14501(c)(2)(A)). The court determined that the safety exception did not save Ye’s claim. Preliminarily, the court explained that it did not need to reach the issue of whether “a state’s tort law is part of its ‘safety regulatory authority'” because it “conclude[d] that Ye’s claims fail to satisfy the second half of the safety exception’s text”—i.e., “a common law negligence claim enforced against a broker is not a law that is ‘with respect to motor vehicles.'” Id. (quoting 49 U.S.C. § 14501(c)(2)(A)). The basis for that holding was that “the exception requires a direct link between a state’s law and motor vehicle safety,” and the court saw “no such direct link between negligent hiring claims against brokers and motor vehicle safety.” Id.

In particular, the FAAAA’s text did not support the existence of a direct link because the definition of “motor vehicle,” see 49 U.S.C. § 13102(16), does not include brokers, and there is “no mention of brokers in the safety exception itself . . . which suggests [*13] that such claims may be outside the scope of the exception’s plain text.” Id. (citing Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 261-62, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013)). The rest of the text of the safety exception “carefully except[s] state laws for motor vehicle safety, cargo loads, and motor carrier insurance”—but is devoid of “any reference to brokers or broker services.” Id. at 461. And “[w]hile it listed broker services in § 14501(c)(1)‘s express preemption provision, Congress declined to expressly mention brokers again in reference to states’ safety authority. Reading further, we see the same omission of brokers from § 14501(c)(2)‘s other savings provisions for ‘intrastate transportation of household goods’ and ‘tow truck operations.’ Id. § 14501(c)(2)(B), (C).” Id.

Moreover, because “Congress could have chosen to save state safety laws enforced ‘with respect to motor carriers and brokers,’ but it did not,” the court “hesitate[d] to read broker services into parts of the statute where Congress declined to expressly name them, especially when it contemplated them elsewhere within the same statutory scheme.” Id. (citing Rotkiske v. Klemm, 140 S. Ct. 355, 361, 205 L. Ed. 2d 291 (2019) (“A textual judicial supplementation is particularly inappropriate when, as here, Congress has shown that it knows how to adopt the omitted language or provision.”)). Finally, in § 14501(b), titled “Freight [*14] Forwarders and Brokers,” Congress “directly addressed state regulation of brokers by prohibiting states from enacting or enforcing laws ‘relating to intrastate rates, intrastate routes, or intrastate services of any freight forwarder or broker.'” Id. (quoting 49 U.S.C. § 14501(b)(1)). “Following this broad preemption provision, however, Congress did not include a safety exception—another telling omission given that Congress included safety exceptions to the parallel preemption provisions for motor carriers of property (at issue here) and motor carriers of passengers.” Id. In sum, the FAAAA’s “text makes clear that Congress views motor vehicle safety regulations separately and apart from those provisions imposing obligations on brokers. And this separateness counsels a reading of ‘with respect to motor vehicles’ that requires a direct connection between the potentially exempted state law and motor vehicles. Any other construction would expand the safety exception’s scope without a clear, text-based limit.” Id. at 462 (quoting 49 U.S.C. § 14501(c)(2)(A)). Accordingly, Ye agreed with the district court that “the connection . . . between a broker hiring standard and motor vehicles” is “too attenuated to be saved under § 14501(c)(2)(A).” Id.

The instant case involves [*15] various Wisconsin common law tort claims against Mode, a broker. Ye involved just one Illinois common law tort claim against GlobalTranz, also a broker. However, nothing in Ye suggests that either the jurisdictional provenance of a plaintiff’s tort claims or the precise nature of those tort claims should alter the outcome. Ye dealt specifically with only negligent hiring and vicarious liability claims under Illinois’ common law brought against a broker. In addition to their negligent hiring and vicarious liability claims, Plaintiffs brought Wisconsin common law tort claims for joint enterprise/venture. However, all common law claims have the force and effect of law. Id. at 459 (internal citation omitted). And each of Plaintiffs’ claims here “would have a significant economic effect on broker services,” just as the negligent hiring claim in Ye would have. Id. Accordingly, Plaintiffs’ claims against Mode are preempted by the FAAAA. Notwithstanding Plaintiffs’ contention at oral argument, see Tr. at 4:13-20, 5:23-25, & 6:06-08, Ye cannot be read to suggest that the jurisdictional provenance of a tort, or the type of tort at issue, makes a difference to that conclusion. See Ye, 74 F.4th at 458-59 (clarifying that the preemption [*16] inquiry is properly focused on whether the state tort law that the plaintiff is attempting to enforce “would have a significant economic effect on broker services” and otherwise not making a distinction based on the tort’s jurisdictional origins or what specific tort it is). In addition, all the reasons that Ye gave for why the safety exception does not apply to brokers straightforwardly apply here. Accordingly, Plaintiffs’ tort claims against Mode are preempted by the FAAAA.

The court turns next to Sysco’s argument that the FAAAA preempts Plaintiffs’ claims against it when Ye is read in conjunction with Rowe v. New Hampshire Motor Transport Ass’n, 552 U.S. 364, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008). Rowe considered “two provisions of a Maine tobacco law, which regulate[d] the delivery of tobacco to customers within the State,” and whether they were preempted by § 14501(c)(1) of the FAAAA, which provides, in relevant part, that “a State . . . may not enact or enforce a law . . . related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” 552 U.S. at 367-68. The first section of Maine’s tobacco law, § 1555-C, prohibited “anyone other than a Maine-licensed tobacco retailer to accept an order for delivery of tobacco.” Id. at 368 (quoting Me. Rev. Stat. Ann., Tit. 22, § 1555-C(1)). It then added that, “when a licensed retailer accepts [*17] an order and ships tobacco, the retailer must ‘utilize a delivery service’ that provides a special kind of recipient-verification service.” Id. (quoting § 1555-C(3)(c)). Moreover, the delivery service was required to

make certain that (1) the person who bought the tobacco is the person to whom the package is addressed; (2) the person to whom the package is addressed is of legal age to purchase tobacco; (3) the person to whom the package is addressed has himself or herself signed for the package; and (4) the person to whom the package is addressed, if under the age of 27, has produced a valid government-issued photo identification with proof of age.

Id. at 368-69 (citation omitted). Violations were punishable by civil penalties. Id. at 369 (citing §§ 1555-C(3)(E) to C(3)(F) (first offense up to $1,500 and subsequent offenses up to $5,000)).

The second section, § 1555-D, prohibited “any person ‘knowingly’ to ‘transport’ a ‘tobacco product’ to ‘a person’ in Maine unless either the sender or the receiver has a Maine license.” Id. (quoting § 1555-D). It then added that a “‘person is deemed to know that a package contains a tobacco product’ (1) if the package is marked as containing tobacco and displays the name and license number of a Maine-licensed tobacco retailer; [*18] or (2) if the person receives the package from someone whose name appears on a list of un-licensed tobacco retailers that Maine’s attorney general distributes to various package-delivery companies.” Id. (quoting § 1555-D) (emphasis in Rowe). Violations of this section were again punishable by civil penalties. Id. (citing § 1555-D(2) (up to $1,500 per violation against violator and/or violator’s employer)).

The Court held that the FAAAA preempts both provisions. Id. at 371. It explained:

We concede that the regulation here is less “direct” than it might be, for it tells shippers what to choose rather than carriers what to do. Nonetheless, the effect of the regulation is that carriers will have to offer tobacco delivery services that differ significantly from those that, in the absence of the regulation, the market might dictate. And that being so, “treating sales restrictions and purchase restrictions differently for pre-emption purposes would make no sense.” Quoting Engine Mfrs. Assn. v. South Coast Air Quality Management Dist., 541 U.S. 246, 255, 124 S. Ct. 1756, 158 L. Ed. 2d 529 (2004). If federal law pre-empts state efforts to regulate, and consequently to affect, the advertising about carrier rates and services at issue in Morales, it must pre-empt Maine’s efforts to regulate carrier delivery services themselves.

Id. at 372. Rowe‘s logic applies here. [*19] Like Maine’s regulation of tobacco shippers, Wisconsin’s common law of torts amounts to “regulat[ion] of carrier delivery services,” see id., and imposes costs on the operations of Sysco, a shipper, that the FAAAA was intended to preempt. See Ye, 74 F.4th at 459. Accordingly, Plaintiffs’ claims against Sysco, like those against Mode, are preempted and therefore dismissed.

B. Failure to State a Claim

The court also holds that Plaintiffs’ amended complaints fail to state legally cognizable claims against both Mode and Sysco. In so ruling, the court notes that, in this circuit, the Twombly/Iqbal pleading standard controls. Under that standard, a complaint must make factual allegations that, accepted as true, state a claim to relief that is plausible on its face. See Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at 570. Applying that standard to the amended complaints in this case, the court concludes that the complaints do not assert sufficient factual matter that, accepted as true, state a claim for relief that has facial plausibility. In other words, they have not pled “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570) (internal citations and quotations marks omitted).

Beginning [*20] with negligent selection, this claim requires the plaintiff to allege that “(1) there was a wrongful act by the employee; (2) the wrongful act by the employee was a cause of injuries to the plaintiff; (3) the employer was negligent in hiring, training or supervising the employee; and (4) the employer’s negligence was a cause of the employee’s wrongful act.” See Scholz v. United States, No. 16-CV-1052, 2017 U.S. Dist. LEXIS 10951, 2017 WL 375651, at *4 (E.D. Wis. Jan. 25, 2017) (citing Miller v. Wal-Mart Stores, Inc., 219 Wis. 2d 250, 267-68, 580 N.W.2d 233 (1998)). Accordingly, there must be a “nexus” between the negligent selection by the employer and the act of the employee. Id. (citing Miller, 219 Wis. 2d at 262). In assessing that employer-employee “nexus,” the court “asks two questions with respect to causation: first, was the wrongful act of the employee a cause-in-fact of the plaintiff’s injury and, second, was the negligence of the employer a cause-in-fact of the wrongful act of the employee.” Id. In sum, the test of cause-in-fact “is whether the negligence was a ‘substantial factor’ in producing the injury.” Viasystems Techs. Corp., LLC v. Landstar Ranger Inc., No. 10-C-577, 2012 U.S. Dist. LEXIS 171133, 2012 WL 6020015, at *9 (E.D. Wis. Dec. 3, 2012) (citing Morgan v. Penn. Gen. Ins. Co., 87 Wis. 2d 723, 735, 275 N.W.2d 660 (1979)).

Here, Plaintiffs have alleged no facts suggesting that Mode and Sysco were Clarke’s employers or that their actions were a substantial factor in the accident. Clarke was the driver of the CMV, and there are no allegations that either Mode or Sysco ordered Clarke to drive unsafely, [*21] speed, ignore traffic rules, or otherwise break the law. Id. at 18:24-20:06. Indeed, there is no allegation that either Mode or Sysco even knew Clarke would be driving. At the time of the accident, Clarke had not even picked up the Sysco shipment that he was to transport to Virginia. Absent more, Plaintiffs have failed to state a claim for negligent selection, and that claim must be dismissed.

Mode and Sysco also seek dismissal of Plaintiffs’ joint enterprise/venture claim. To constitute a joint enterprise under Wisconsin law, a party must allege “(1) an agreement, express or implied, among the members of the group; (2) a common purpose to be carried out by the group; (3) a community of pecuniary interest in that purpose, among the members; and (4) an equal right to a voice in the direction of the enterprise, which gives an equal right of control.” White v. Fincantieri Bay Shipbuilding, 569 F. Supp. 3d 794, 801 (E.D. Wis. 2021) (citing Spearing v. Bayfield Cnty., 133 Wis. 2d 165, 173, 394 N.W.2d 761 (Wis. Ct. App. 1986)); see also Restatement (Second) of Torts § 491, cmt. c (1965). “If parties engage in a joint enterprise, then each is the agent of the other, within the scope of the enterprise, and each may be held vicariously liable to one who brings a claim arising from the product of the joint venture.” Spearing, 133 Wis. 2d at 173.

Here, there are no allegations showing the existence of a common enterprise among [*22] Defendants that shares profits. Instead, the parties entered contracts in which services were provided in return for set payment. Contractual relations of this kind do not create joint ventures or enterprises, in part, because there is no profit sharing. As the court explained during oral argument, Mode and Sysco “would have gotten paid if they would have completed the job, . . . [b]ut they would not have shared the profits. They would have been paid the rate that was agreed upon under their contract with the parties. A contract isn’t a joint enterprise. A contract requires each party to perform or to pay for performance.

Mode and Sysco also seek dismissal of Plaintiffs’ agency/vicarious liability claim. “In a negligence case, the plaintiff must prove four elements: (1) [a] duty of care on the part of the defendant; (2) a breach of that duty; (3) a causal connection between the conduct and the injury and (4) an actual loss or damage as a result of the injury.” Martindale v. Ripp, 2001 WI 113, ¶ 33, 246 Wis. 2d 67, 629 N.W.2d 698 (citation and quotation marks omitted, brackets in Martindale). “A person is generally only liable for his or her own torts.” Kerl v. Dennis Rasmussen, Inc., 2004 WI 86, ¶ 17, 273 Wis. 2d 106, 682 N.W.2d 328 (citing Lewis v. Physicians Ins. Co. of Wis., 2001 WI 60, ¶ 11, 243 Wis. 2d 648, 627 N.W.2d 484). “Under certain circumstances, however, the law will impose vicarious liability on a person who did [*23] not commit the tortious conduct but nevertheless is deemed responsible by virtue of the close relationship between that person and the tortfeasor.” Id. That is the doctrine of respondeat superior, under which “a master is subject to liability for the tortious acts of his or her servant.” Id. at ¶ 18 (quoting Pamperin v. Trinity Mem’l Hosp., 144 Wis. 2d 188, 198, 423 N.W.2d 848 (1988); Arsand v. City of Franklin, 83 Wis. 2d 40, 45, 264 N.W.2d 579 (1978)).

Generally, a “master” is an employer, and a “servant” is an employee, and such a relationship is a prerequisite to respondeat superior vicarious liability; unless an agent is also a servant, his principal will not be vicariously liable for his tortious conduct except under certain limited circumstances. Id. at ¶¶ 18-20 (citations omitted). “The master/servant relationship is a species of agency; all servants are agents but not every agent is a servant.” Id. at ¶ 20. In general, “a master will only be liable for torts of the servant committed within the scope of the servant’s employment.” Id. at ¶ 23 (citing Scott v. Min-Aqua Bats Water Ski Club, Inc., 79 Wis. 2d 316, 320-21, 255 N.W.2d 536 (1977); Restatement (Second) of Agency § 219(1)). Whether a tortfeasor was acting within the scope of employment at the time the injury was inflicted is a question of fact for the jury to decide. Id.

An independent contractor is an example of a person who is an agent but not a servant. Id. at ¶ 24 (citing Arsand, 83 Wis. 2d at 51-52; Restatement (Second) of Agency § 2(3), cmt. b). An independent contractor is “a person who contracts with another [*24] to do something for him but who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking.” Id. (quoting Restatement (Second) of Agency § 2(3); Wagner v. Cont’l Cas. Co., 143 Wis. 2d 379, 421 N.W.2d 835 (1988); Wis JI Civil 4060). Generally, an owner “is not responsible to a third person for the negligence of an independent contractor.” Wis JI-Civil 1022.6 (Liability of one employing independent contractor) (citing Brandenburg v. Briarwood Forestry Servs., LLC, 2014 WI 37, 354 Wis. 2d 413, 416-17, 847 N.W.2d 395 (2014)).

However, an owner or principal contractor must exercise ordinary care to prevent injury to third persons or damage to property if the work to be done is inherently dangerous. Id. Another exception is when the contract between the owner and the third party requires the owner to take ordinary care to prevent injury to the third party or damage to the property. Id. (citing Medley v. Trenton Inv. Co., 205 Wis. 30, 236 N.W. 713, 715 (1931)). A contract’s use of the label “independent contractor” is “not by itself dispositive; the test looks beyond labels to factual indicia of control or right to control.” Kerl, 273 Wis. 2d 106, ¶ 24 (citing Pamperin, 144 Wis. 2d at 201). “To impose vicarious liability where the requisite degree of control is lacking would not” be in keeping with the logic of the respondeat superior doctrine. Id. at ¶ 27. “If a principal does not control or have the right to control the day-to-day physical conduct of the agent, then [*25] the opportunity and incentive to promote safety and the exercise of due care are not present, and imposing liability without fault becomes difficult to justify on fairness grounds.” Id.

Here, truck driving is not inherently dangerous. As the court explained, that exception “applies to people that deal with explosives. This [exception] applies to . . . different kind of work than simply driving a truck.” See Wis. JI-Civil 1022.6 (“Inherently dangerous work is work from which one can naturally expect harm to arise unless something is done to avoid that harm.”). As for the contractual exception, there’s no allegation here that there are contracts between Sysco and Mode and anyone else that are intended to require Mode and Sysco to take ordinary care to prevent injuries to third parties or damage to property. The general understanding of what shippers do and what brokers do would certainly suggest this isn’t the type of case where you would have that kind of liability, that kind of control.

Mode and Sysco also seek dismissal of Ms. Demitrou’s loss of consortium claim. “Claims for the loss of society, companionship, and consortium are derivative even though they technically ‘belong’ to the close relative making [*26] the claim.” Finnegan ex rel. Skoglind v. Wis. Patients Comp. Fund, 2003 WI 98, ¶ 26, 263 Wis. 2d 574, 666 N.W.2d 797 (collecting cases). As a result, “a derivative claim for loss of consortium or loss of society and companionship does not have its own elements distinct from the negligence claim to which it attaches.” Id. at ¶ 28. Indeed, “juries are instructed that loss of consortium or loss of society and companionship are categories of damages, not separate negligence inquiries.” Id. (citing Wis. JI-Civil 1815 (Injury to spouse: loss of consortium)). Because Plaintiffs’ claims of negligent selection, joint enterprise/venture, and agency/vicarious liability against Mode and Sysco fail as a matter of law, and a loss of consortium claim is derivative of the underlying claims, Ms. Demitriou’s loss of consortium claim against them must be dismissed.

C. Statute of Limitations

Finally, at the August 1, 2023 hearing, the parties discussed the applicability of Mode and Sysco’s statute of limitations defense. In Wisconsin, “[a]n action to recover damages . . . for injuries to the person caused or sustained by or arising from an accident involving a motor vehicle” must be “commenced within 3 years” of the injury or else it is time barred. Wis. Stat. § 893.54(1m)(a). The injury-causing collision at issue in this case occurred on January 24, 2020. Accordingly, [*27] Plaintiffs’ action is barred beginning January 24, 2023.

Wisconsin’s three-year statute of limitations on personal injury actions, Wis. Stat. § 893.54(1m)(a), does not bar all of the plaintiffs’ claims against Mode and Sysco. Plaintiffs Tischauser, Luedtke, and Rothenberger commenced state court actions against those defendants that were timely filed within the statute of limitations and consolidated with the cases presently before the court. It is the commencement of the action, not the service of the complaint, that determines whether an action falls within the statute of limitations. See Wis. Stat. §§ 801.02(1), 893.54. In this case, that rule clearly applies to Tischauser, Luedtke, and Rothenberger, each of whom filed state court actions naming Mode and Sysco as defendants on January 23, 2023. See Case No. 23-cv-556, Dkt. Nos. 1-1, 1-2; Case No. 23-cv-539, Dkt. Nos. 1-1, 1-2; Case No. 23-cv-538, Dkt. Nos. 1-1, 1-2. However, because the Demitrious did not file an action naming Mode and Sysco as defendants before January 24, 2023, the statute of limitations provides an additional reason, at least as to them, to dismiss Mode and Sysco as defendants in this action.

CONCLUSION

For the foregoing reasons, Mode’s and Sysco’s motions to dismiss [*28] Plaintiffs’ tort claims against them because they are preempted by federal law and because they fail to state a claim upon which relief can be granted under Rule 12(b)(6) (Dkt. Nos. 142, 157 & 169) are GRANTED. Mode’s and Sysco’s motions to dismiss the claims asserted by Dustin and Rhonda Demitrou are also granted on the ground that they are barred by the statute of limitations. Accordingly, Mode and Sysco are dismissed as defendants from this action. Because claims remain as to other parties, this order is not final and judgment will not be entered. Mode and Sysco are the only named defendants in Case Nos. 23-cv-538, 23-cv-539, and 23-cv-556; therefore, those cases are terminated.

SO ORDERED Green Bay, Wisconsin this 4th day of December, 2023.

/s/ William C. Griesbach

William C. Griesbach

United States District Judge

End of Document

King Ocean Servs. v. CI Mistic SAS Fruits & Vegetables, LLC,

United States District Court for the Southern District of Florida

November 28, 2023, Decided; November 28, 2023, Entered on Docket

CASE NO. 23-22227-CIV-ALTONAGA/Damian

Reporter

2023 U.S. Dist. LEXIS 211051 *; 2023 WL 8234567

KING OCEAN SERVICES, LTD., Plaintiff/Counter-Defendant, v. CI MISTIC SAS FRUITS AND VEGETABLES, LLC, Defendant/Counter-Plaintiff.

Counsel: [*1] For King Ocean Services Ltd., Plaintiff: Damon Thomas Hartley, De Leon & Kuylenstierna, Town Center One, Miami, FL; Jan Michael Kuylenstierna, De Leo & Kuylenstierna P.A., Town Center One, Miami, FL; Dee Miller Dolvin, Dee M Dolvin, Miami, FL.

For CI Mistic SAS Fruits and Vegetables, LLC, Defendant: Robert John McCaffery, Jr, LEAD ATTORNEY, Law Offices of Robert McCaffery, P.A., Miami, FL.

For CI Mistic SAS Fruits and Vegetables, LLC, Counter Claimant: Robert John McCaffery, Jr, LEAD ATTORNEY, Law Offices of Robert McCaffery, P.A., Miami, FL.

For King Ocean Services Ltd., Counter Defendant: Jan Michael Kuylenstierna, LEAD ATTORNEY, De Leo & Kuylenstierna P.A., Town Center One, Miami, FL; Damon Thomas Hartley, De Leon & Kuylenstierna, Town Center One, Miami, FL; Dee Miller Dolvin, Dee M Dolvin, Miami, FL.

Judges: CECILIA M. ALTONAGA, CHIEF UNITED STATES DISTRICT JUDGE.

Opinion by: CECILIA M. ALTONAGA

Opinion

ORDER

THIS CAUSE came before the Court on Plaintiff/Counter-Defendant, King Ocean Services, Ltd.’s Motion to Dismiss Counterclaim [ECF No. 13]. Defendant/Counter-Plaintiff, CI Mistic SAS Fruits and Vegetables, LLC filed a Response [ECF No. 26]; to which King Ocean filed a Reply [ECF No. 27]. The Court has carefully [*2] considered CI Mistic’s Answer, Affirmative Defenses, and Counterclaim (“Counterclaim”) [ECF No. 8] and its attachments; the parties’ written submissions; and applicable law. For the following reasons, the Motion is granted in part and denied in part.

I. BACKGROUND

King Ocean is a vessel operating common carrier that provides maritime services and cargo transportation between ports in Florida and Central and South America, as well as the Caribbean Basin. (See Countercl. ¶ 4). CI Mistic is in the business of importing and distributing produce. (See id. ¶ 5). On June 15, 2023, King Ocean filed a Complaint [ECF No. 1], asserting one count of breach of contract based on CI Mistic’s failure to “compensate [Plaintiff] for the ocean freight and related charges” arising from various shipments King Ocean completed for CI Mistic from August 2022 through March 2023. (Compl. ¶¶ 16-18 (alteration added)).

CI Mistic asserts counterclaims based on two specific shipments from Colombia to Florida for which it contracted King Ocean to be its common carrier. (See generally Countercl.). The first shipment (“Container 1”) held “1080 Boxes of Plantains” that “were in good condition” when delivered to King Ocean’s [*3] custody for transportation on January 13, 2023. (Id. ¶ 11). The plantains were damaged while in King Ocean’s custody and “not delivered to CI Mistic in the same good condition as when King Ocean received them.” (Id. ¶ 12). When Container 1 was delivered on January 24, 2023, the plantains “were of such a condition they could not be used for their intended purpose.” (Id. ¶ 14). The same allegedly occurred with the second shipment (“Container 2”) of 1080 boxes of plantains, which King Ocean received for transportation around late January 2023 and delivered in early February 2023. (See id. ¶¶ 16-20).

Containers 1 and 2 were shipped under separate contracts of carriage, and King Ocean “issued clean bills of lading” for both shipments. (Id. ¶¶ 24-25). In both bills of lading the parties agreed to extend the provisions of the Carriage of Goods by Sea Act (“COGSA”) to their business transaction as follows:

This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of 1936 of the United States of America, as amended (“COGSA”), which shall apply to the Goods whether carried on or under deck, to carriage of the Goods to, from or between U.S. ports, or between non-U.S. ports, before the Goods are loaded on and after they are discharged from the vessel, and throughout [*4] the entire time the Goods are in custody of Carrier, whether acting as carrier, bailee, terminal operator, inland carrier, stevedore. Carrier shall be entitled to any and all defenses and limitations on liability provided under COGSA and any other compulsorily applicable law for any and all claims arising out of Carrier’s custody or control of the Goods. Carrier shall also be entitled to any and all defenses and limitations provided in Carrier’s contracts with underlying water or land carriers and all such limitations and defenses are incorporated herein by reference.

(Compl., Ex. C, Bill of Lading Terms & Conditions [ECF No. 1-3] 3).¹

The Counterclaim asserts four causes of action: damage to cargo under COGSA (“Count I”), damage to cargo under the Harter Act (“Count II”), breach of warranties and nondelegable cargo worthiness duties (“Count III”), and negligence (“Count IV”). (See Countercl. ¶¶ 22-48). CI Mistic also asserts a set-off affirmative defense, alleging any claim is “offset by monies owed Defendant for damages caused by failing to deliver undamaged cargo.” (Id. 4). King Ocean seeks dismissal of the Counterclaim as a whole, or alternatively, dismissal of Counts II, III, and [*5] IV; and it also contests the validity of the set-off defense. (See generally Mot.)

II. LEGAL STANDARD

“A motion to dismiss a counterclaim under [Federal] Rule [of Civil Procedure] 12(b)(6) is treated the same as a motion to dismiss a complaint.” Fabricant v. Sears Roebuck, 202 F.R.D. 306, 308 (S.D. Fla. 2001) (alterations added; citation omitted). “To survive a motion to dismiss [under Rule 12(b)(6)], a [counterclaim] must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (alterations added; quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). Although this pleading standard “does not require ‘detailed factual allegations,’ . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (alteration added; quoting Twombly, 550 U.S. at 555). Pleadings must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.]” Twombly, 550 U.S. at 555 (alteration added; citation omitted). “A [counterclaim] is plausible on its face when it contains sufficient facts to support a reasonable inference that the defendant is liable for the misconduct alleged.” Gates v. Khokhar, 884 F.3d 1290, 1296 (11th Cir. 2018) (alteration added; citing Iqbal, 556 U.S. at 678).

Courts evaluating motions to dismiss under Rule 12(b)(6) must construe the counterclaim in the light most favorable to the plaintiff/counter-defendant and take its factual allegations [*6] as true. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997) (citing SEC v. ESM Grp., Inc., 835 F.2d 270, 272 (11th Cir. 1988)). In addressing a Rule 12(b)(6) motion, a court considers the allegations of the counterclaim and exhibits attached to or incorporated by reference into the counterclaim. See Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005).

III. DISCUSSION

King Ocean makes four arguments: (1) the Counterclaim is a shotgun pleading that comingles causes of action; (2) COGSA preempts Counts II through IV; (3) CI Mistic is not entitled to set-off damages; and (4) the Counterclaim is permissive. (See generally Mot.). The Court addresses each in turn.

A. Shotgun Pleading

King Ocean argues that the Counterclaim should be dismissed because it is a shotgun pleading that improperly combines claims from both shipments into the same Counts, making it so each Count presents two claims, in violation of Federal Rule of Civil Procedure 10(b). (See id. 9-11). According to CI Mistic, its Counterclaim provides sufficient notice of the claims asserted; alternatively, it seeks leave to amend should the Court disagree. (See Resp. 3).

“Complaints that violate either Rule 8(a)(2) or Rule 10(b), or both, are often disparagingly referred to as ‘shotgun pleadings.'” Weiland v. Palm Beach Cnty. Sheriff’s Off., 792 F.3d 1313, 1320 (11th Cir. 2015). The Eleventh Circuit has identified “four rough types or categories of shotgun pleadings.” Id. at 1321. At issue here is the third category (see Mot. 9-11) — a pleading [*7] “that commits the sin of not separating into a different count each cause of action or claim for relief[,]” Weiland, 792 F.3d at 1323 (alteration added; footnote call number omitted).

The Counterclaim commits no such sin. While the damaged cargo claims are based on two separate shipments, the Court is not convinced the Counterclaim runs afoul of Weiland. See 792 F.3d at 1331 n.3 (collecting examples of the third category of shotgun pleadings that contained “untold causes of action, all bunched together in one count” and were “framed in complete disregard of the principle that separate, discrete causes of action should be plead in separate counts” (quotation marks and citations omitted)). The shipments of Containers 1 and 2 involve identical parties, and CI Mistic alleges breaches under identical legal theories. (See generally Countercl.). Indeed, as King Ocean concedes, the “standard terms and conditions of the bills of lading terms are the same” for both shipments. (Mot. 10).²

Further still, the thorough Motion is itself evidence that the Counterclaim is clear enough to provide King Ocean the bases for raising multiple grounds for dismissal. (See generally id.). “The unifying characteristic of all types [*8] of shotgun pleadings is that they fail to one degree or another, and in one way or another, to give the defendants adequate notice of the claims against them and the grounds upon which each claim rests.” Weiland, 892 F.3d at 1323 (footnote call number omitted). At bottom, “this is not a situation where a failure to more precisely parcel out and identify the facts relevant to each claim materially increased the burden of understanding the factual allegations underlying each [cause of action.]” Id. at 1324 (alteration added).

B. COGSA Preemption of Counts II, III, and IV

Next, King Ocean argues the Harter Act and common-law claims are preempted by COGSA. (See Mot. 11-14). CI Mistic concedes that if its COGSA claim survives dismissal, “COGSA would preempt the remaining [C]ounts.” (Resp. 3-4 (alteration added)).

“COGSA, when it applies, supersedes other laws” and “provide[s] an exclusive remedy” for lost or damaged goods. Polo Ralph Lauren, L.P. v. Tropical Shipping & Constr. Co., Ltd., 215 F.3d 1217, 1220 (11th Cir. 2000) (alteration added) (finding COGSA preempted a plaintiff’s bailment and negligence claims arising from a carrier losing goods while at sea). Although “COGSA governs bills of lading for the carriage of goods ‘from the time when the goods are loaded onto the time when they are discharged from the ship[,]'” parties [*9] may extend COGSA’s application by contract. Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 29, 125 S. Ct. 385, 160 L. Ed. 2d 283 (2004) (alteration added; quoting 46 U.S.C. § 1301(e)) (upholding extension of COGSA’s coverage to “the entire period in which the [goods were] under [the carrier’s] responsibility” (alterations added)).

Here, the parties agreed to extend COGSA coverage to include:

Goods whether carried on or under deck, to carriage of the Goods to, from or between U.S. ports, or between non-U.S. ports, before the Goods are loaded on and after they are discharged from the vessel, and throughout the entire time the Goods are in custody of Carrier, whether acting as carrier, bailee, terminal operator, inland carrier, stevedore.

(Bill of Lading Terms & Conditions 3). The parties agree COGSA applies to CI Mistic’s claims (see Mot. 13; Resp. 3-4), and CI Mistic admittedly alleges Counts II, III, and IV as “alternative[s] to a COGSA claim” (Countercl. ¶¶ 30, 38, 44 (alteration added). Given the parties’ uncontested agreement to be bound by COGSA under the bills of lading; extension of COGSA to apply throughout the entire time the goods were in King Ocean’s custody; and since neither party contests COGSA’s applicability to both shipments, Counts II, III, and IV are dismissed.

C. Set-Off Defense [*10]

King Ocean next argues CI Mistic cannot rely on damaged cargo to offset King Ocean’s freight charges. (See Mot. 14). Beyond making this point, King Ocean fails to ask for any relief. (See id.). The Court construes this portion of the Motion as a motion to strike the set-off defense under Federal Rule of Civil Procedure 12(f) and agrees with King Ocean on this point.³

“It is a well-established and ancient rule that ‘once the goods have been carried to their destination and are ready for delivery, the freight must be paid even though the goods are damaged or deteriorating. This undertaking in the charter is an independent obligation and is not discharged because of failure to deliver the cargo in good condition.'” King Ocean Central Am., S.A. v. Angel Food & Fruit Co., No. 95-0568-Civ, 1995 WL 819141, at *3 (S.D. Fla. Oct. 12, 1995) (quoting Metallgesellschaft A.G. v. M/V Capitan Constante, 790 F.2d 280, 281 (2nd Cir. 1986); other citations omitted) (collecting cases and holding a defendant bringing a damaged cargo claim was not entitled to set off against unpaid freight charges based on damage to its cargo). Consequently, the set-off affirmative defense is stricken.

D. Permissive Counterclaim

Finally, King Ocean argues the Counterclaim is permissive, as it does not involve “any of the bills of lading at issue in the Complaint[,]” and allowing the Counterclaim to proceed would not advance judicial economy and [*11] will “prejudice King Ocean because cargo claims cannot be used to set off freight charges.” (Mot. 16 (capitalization omitted)). CI Mistic argues that, regardless of whether its Counterclaims is compulsory or permissive, the Court has subject-matter jurisdiction, and, if dismissed, it “would bring its COGSA claims in the Southern District of Florida.” (Resp. 4-5). The Court agrees with CI Mistic.

“Even where the addition of counterclaims could prolong the litigation, ultimately, allowing the parties to litigate all of the disputes between them is in the interests of efficiency and justice.” Perez v. Elite Imaging, LLC, No. 16-cv-24555, 2017 U.S. Dist. LEXIS 23226, 2017 WL 666108, at *2 (S.D. Fla. Feb. 17, 2017) (alteration adopted; quotation marks and citations omitted). The Counterclaim’s compulsory or permissive nature is irrelevant here. Even if the undersigned were to dismiss the Counterclaim on this ground, CI Mistic would refile its claim in this District, bringing a needlessly duplicative case involving identical parties, identical transactions occurring during the same time frame, and similar discovery surrounding the shipments of Containers 1 and 2. And the case would likely be transferred to the undersigned and then consolidated with this action.

Nor does the Court find that permitting the Counterclaim [*12] to proceed would complicate the litigation, prejudicing King Ocean. Quite the opposite: keeping the parties’ claims centralized instead of separate will promote judicial efficiency; minimize duplication of the parties’ time and resources and encourage global resolution of all claims between them; and prevent CI Mistic from having to “refile, serve, and relitigate the same issues under a separate case number.” (Resp. 6). These considerations are especially persuasive given the parties’ claims share some overlapping facts.

IV. CONCLUSION

Accordingly, it is

ORDERED AND ADJUDGED that Plaintiff, King Ocean Services, Ltd.’s Motion to Dismiss Counterclaim [ECF No. 13] is GRANTED in part and DENIED in part. Count II, Count III, and Count IV of CI Mistic’s Answer, Affirmative Defenses, and Counterclaim [ECF No. 8] are DISMISSED. CI Mistic’s Second Affirmative Defense is STRICKEN.

DONE AND ORDERED in Miami, Florida, this 28th day of November, 2023.

/s/ Cecilia M. Altonaga

CECILIA M. ALTONAGA

CHIEF UNITED STATES DISTRICT JUDGE

End of Document

¹The Court uses the pagination generated by the electronic CM/ECF database, which appears in the headers of all court filings.

²It is worth noting that King Ocean is the proverbial pot calling the kettle black, considering, as CI Mistic notes (see Mot. 3), King Ocean’s single breach-of-contract claim alleges a failure to pay freight charges due under multiple bills of lading. (See generally Compl.).

³CI Mistic fails to respond to this argument at all (see generally Resp.), and therefore waives any responsive argument it may have had, see In re Egidi, 571 F.3d 1156, 1163 (11th Cir. 2009) (“Arguments not properly presented in a party’s initial brief or raised for the first time in the reply brief are deemed waived.” (citations omitted)).