United States District Court, D. Nebraska.

MICHELE E. RUFF, Person Representatives of the Estates of Norman and Geraldine Elsberry, deceased; and REBECCA KALLHOFF, Person Representatives of the Estates of Norman and Geraldine Elsberry, deceased, Plaintiffs,

v.

RELIANT TRANSPORTATION, INC., CARL WHITLOCK, and RANDY DICKSON, Defendants.

8:23CV92

Filed: 05/25/2023

MEMORANDUM AND ORDER

Joseph F. Bataillon Senior United States District Judge

*1 This matter comes before the Court on Plaintiff’s motion to remand for lack of subject-matter jurisdiction in a motor-vehicle injury suit between nondiverse parties. Filing No. 11. The motion is granted.

In June 2021, a tractor-trailer contracted by Defendant Reliant Transportation Inc., a Department of Transportation authorized broker, killed Geraldine and Norman Elsberry. Representatives for the estates, Plaintiffs Michele Ruff and Rebecca Kallhoff, leveled a negligent-hiring claim in the District Court for Lancaster County against Reliant who, asserting complete preemption by federal law governing interstate motor freight, removed to this Court and moved to dismiss. Filing No. 1; Filing No. 6.

That federal law, placed for whatever reason within the Federal Aviation Administration Authorization Act of 1994, reads:

(1) General rule.—Except as provided in paragraphs (2) and (3), a State, political subdivision of a State, or political authority of 2 or more States 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 … broker, or freight forwarder with respect to the transportation of property.

And the exception:

(2) Matters not covered.—Paragraph (1)—(A) shall not restrict the safety regulatory authority of a State with respect to motor vehicles ….

49 U.S.C. § 14501(c). The parties dispute both whether the general preemption clause displaces Plaintiffs’ claim and whether the exception saves it. A tangled web of presumptions governs here.

In general, federal subject matter jurisdiction must appear on the face of a complaint. Caterpillar Inc. v. Williams, 482 U.S. 386 (1987). A removing party bears the burden to establish jurisdiction, and doubts are resolved in favor of remand. Moore v. Kansas City Pub. Sch., 828 F.3d 687, 691 (8th Cir. 2016). Even preemption of state law does not afford jurisdiction unless so complete as to displace the entire field. Minnesota by Ellison v. Am. Petroleum Inst., 63 F.4th 703, 709 (8th Cir. 2023). Ordinarily, and outside questions of removal, interpretation of an express-preemption provision probes Congressional intent free of any presumptions. Watson v. Air Methods Corp., 870 F.3d 812, 817 (8th Cir. 2017) (en banc). Yet within the long tradition of leaving to the States’ their traditional realms of authority, Erie R.R. v. Tompkins, 304 U.S. 64 (1938), questions of preemption “begin with the assumption that the historic police powers of the States are not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” In such circumstances, where Congress’s language offers two plausible meanings, “we must accept the reading that disfavors pre-emption.” R. J. Reynolds Tobacco Co. v. City of Edina, 60 F.4th 1170, 1176 (8th Cir. 2023) (quoting both Altria Grp., Inc. v. Good, 555 U.S. 70 (2008) and Bates v. Dow Agrosciences LLC, 544 U.S. 431 (2005)) (cleaned up). Moreover, “because the lack of a substitute federal cause of action”—Reliant’s thrust here—“would make it doubtful that Congress intended to preempt state-law claims, without a federal cause of action which in effect replaces a state law claim, there is an exceptionally strong presumption against complete preemption.” Minnesota, 63 F.4th at 710.

*2 On this terrain, it remains unclear whether the FAAAA generally preempts Plaintiffs’ claim. It is at least settled that the provision displaces state law having a connection with, or reference to, motor carrier rates, routes, or services and significantly impacts, if only indirectly, Congress’s deregulation of the motor-carriage market. Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 370–71 (2008). But neither the Supreme Court nor the Court of Appeals for the Eighth Circuit have addressed whether such reasoning preempts a negligent-hiring claim against a broker arising from a crash.

The two appellate treatments of the matter, embodying the divergent lines of decision, have agreed that the general provision does preempt such claims. The Courts of Appeals for both the Ninth and Eleventh Circuits have reasoned that a negligent hiring claim imposes liability at a broker’s core point of service, the selection of a motor carrier. Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016, 1024 (9th Cir. 2020); Aspen Am. Ins. Co. v. Landstar Ranger, Inc., 65 F.4th 1261, 1267 (11th Cir. 2023). But neither decision arose in the context of removal, nor do they appear to have meaningfully considered the presumption against Congressional interference with traditional state authority governing at this stage.

More importantly, both panels accepted a more or less face value the assertion that a negligent hiring claim seeks to regulate broker conduct at the core point of service. But presumably, Reliant did not hire the carrier to kill the Elsberrys—it hired the carrier to transport and deliver a shipment. The fatal crash thus a detour well outside the scope of service, Plaintiffs’ negligent hiring claim asks not so much whether Reliant erred in selecting a carrier to deliver a shipment, but whether it so erred as to select a carrier that both failed to deliver and killed two bystanders in the process. Greening v. Sch. Dist. of Millard, 223 Neb. 729 (1986). It is hard to see how wrongful-death liability significantly impacts the market for interstate motor carriage if liability only arises after the market has failed in a particular instance. Rowe, 552 U.S. at 370–71.

Atop that, the Eighth Circuit has found identical text in the Airline Deregulation Act of 1978—“a State … may not enact or enforce a law … related to a price, route, or service of an air carrier”—does not insulate air carriers from a state-law wrongful discharge claim, reasoning that such claim “like a claim alleging race or age discrimination—does not frustrate the ADA’s primary economic objectives.” Notably, for present purposes, the Court also observed that “[l]aws related to ‘safety’ are not synonymous with laws related to ‘service.’ ” Watson v. Air Methods Corp., 870 F.3d 812, 819 (8th Cir. 2017).

Reliant sets much in store by the panel’s next observation:

It is unlikely, for example, that all personal-injury claims against air carriers based on unsafe operations or maintenance are expressly pre-empted by the ADA, given that federal law requires carriers to maintain insurance for bodily injury, death, or property damages resulting from “the operation or maintenance of the aircraft.

noting that while motor carriers too must carry a minimum insurance policy, freight brokers need only maintain a nominal bond to cover unpaid freight charges. Id. But this reads too much into too little. The distinction may well evince no more than Congress’s expectation that brokers will only rarely suffer liability. That aside, the argument might have some force, were not the purchase of insurance to cover foreseeable commercial mishaps merely an exercise in the ordinary course of reasonable prudence.

*3 Given the unconclusive text, and cognizant of the presumption against displacement of traditional state authority, strengthened where Congress has not substituted a claim for relief, this Court fails to find within the general preemption clause of the FAAAA the clear legislative intent necessary to supplant Plaintiffs’ claim. Yet even assuming otherwise, the exception provision would save Plaintiffs’ claim. There, to eliminate doubt, Congress carved out from preemption “the safety regulatory authority of a State with respect to motor vehicles.” 49 U.S.C. § 14501(c). On this point, the appellate treatments diverge.

The Ninth Circuit found similar negligent hiring claims excepted from preemption, reasoning, first, that common law tort constitutes a traditional bedrock state regulatory authority, and second, that the claims promote motor-vehicle safety. United States v. Mier-Garces, 967 F.3d 1003, 1030 (10th Cir. 2020). So too here. Sparks v. M&D Trucking, L.L.C., 301 Neb. 977 (2018).

The Eleventh Circuit agreed that such a claim serves state safety regulatory authority but disagreed that it had the requisite direct, as the panel construed the statute, motor-vehicle connection. 65 F.4th at 1270–71. The panel emphasized the distinction between a “broker” and a “motor carrier,” however, the panel did not answer the question: broker for what? Motor carriage. Reliant and its fellow DOT authorized brokers exist to arrange for the carriage of goods by motor vehicle—to put motor vehicles on the roads. A direct connection to motor vehicles, which seems to ask more than the statute does, appearing on the face of the relationship, the exception applies. 49 C.F.R. § 371.2.

Reliant’s remaining bases for removal similarly fail. Setting aside the total lack of support for, in essence, an abbreviated federal-officer or -agent removal grafted onto 28 U.S.C. § 1337—which grants jurisdiction “arising under any Act of Congress regulating commerce or protecting trade and commerce against restraints and monopolies” (read, the Sherman, Clayton, and Federal Trade Commission Acts, etc.)—Reliant again mistakes Plaintiffs’ safety-based negligence claim for a commercial one. And while this case may certainly raise interesting, even substantial, federal questions regarding a broker’s duty, the exception provision compels the conclusion that Congress wished to leave those questions to the state courts in the first instance. Minnesota, 63 F.4th at 711.

THEREFORE, IT IS ORDERED THAT Plaintiffs’ motion to remand, Filing No. 11, is granted to the extent above. Lacking subject-matter jurisdiction, the case is remanded to the Lancaster County District Court.

Dated this 25th day of May, 2023.

All Citations

© 2023 Thomson Reuters. No claim to original U.S. Government Works.

End of Document

California Rules of Court, rule 8.1115, restricts citation of unpublished opinions in California courts.

Court of Appeal, Second District, Division 3, California.

Francisco LOPEZ, et al., Plaintiffs and Appellants,

v.

METROGISTICS LLC, Defendant and Respondent.

B322681

Filed May 1, 2023

APPEAL from a judgment of the Superior Court of San Bernardino County, John M. Pacheco, Judge. Reversed. (San Bernardino County Super. Ct. No. CIVDS1909599)

Attorneys and Law Firms

Martinian & Associates, Arash H. Zabetian; The Yarnall Law Firm and Delores Yarnall, for Plaintiffs and Appellants.

Horvitz & Levy, Lacey L. Estudillo and Jeremy B. Rosen; Parker Stanbury, John D. Barrett, Jr.; Tseng & Associates and Jennifer T. Tseng, for Defendant and Respondent.

Opinion

HEIDEL, J.^*

*1 Francisco Lopez, Mayra Hernandez, and Francisco Hernandez¹ appeal the grant of a motion for summary judgment in favor of Metrogistics LLC on their complaint alleging negligence and other related claims against David Alcala, Melchor Auto Transport, Inc., Carmax Auto Superstores California, LLC, Carmax Auto Superstores West Coast, Inc., and Metrogistics, among others, stemming from a traffic accident where Alcala’s tractor-trailer struck Lopez, causing him injuries. This appeal solely concerns the scope of liability of Metrogistics, a federally licensed freight broker that made the shipping arrangements leading to the accident, as well as several related matters.

On appeal, plaintiffs contend that: triable issues of fact remain as to whether Metrogistics owed plaintiffs a nondelegable duty because its role in the transaction leading to the incident was that of a motor carrier—rather than a mere broker—under the operative federal statutes and regulations governing interstate freight shipping, as well as whether Metrogistics was otherwise vicariously liable as Alcala’s employer; Metrogistics’s summary judgment motion did not raise and negate every theory of liability asserted in plaintiffs’ complaint; striking plaintiffs’ expert declaration opining that Metrogistics’s business practices were inconsistent with that of a broker was an abuse of discretion; denying mandatory judicial notice of relevant federal law was erroneous; and, the court further erred when it partially granted and partially denied plaintiffs’ motions to compel additional discovery and denied plaintiffs a continuance of the summary judgment hearing to take that additional discovery. Metrogistics counters, in pertinent part, that it did not owe plaintiffs a nondelegable duty because it was acting, at most, as a freight broker during the transaction that led to the incident.

We reverse. The ambiguities in Metrogistics’s contract with the shipper and other evidence make clear that triable issues remain as to whether Metrogistics acted as a motor carrier and accordingly owed plaintiffs a nondelegable duty. In light of this conclusion, we decline to reach the parties’ other contentions.

FACTUAL AND PROCEDURAL BACKGROUND

I. Metrogistics LLC

Metrogistics is a Missouri-based limited liability company. As early as 2016, Metrogistics was licensed as a freight broker with interstate operating authority from the United States Department of Transportation (DOT) and the Federal Motor Carrier Safety Administration (FMCSA). Its work as a freight broker entailed arranging for the transportation of automobiles between shippers or customers and licensed motor carriers.

Metrogistics also purports to ship cars. To that end, it has at various times held itself out as a “nationwide carrier” and has disseminated advertising depicting tractor trailers with Metrogistics’s contact information affixed to the side. It has also registered and litigated trademarks relating to the transportation of vehicles, and its website references Metrogistics “transportation services.”

II. Metrogistics’s service agreement with Autonation, Inc.

*2 In August 2016, Metrogistics contracted with Autonation, Inc. to provide transportation services for Autonation’s western region. In the written contract captioned “Metrogistics Transportation Pilot Western Region,” Metrogistics agreed to “provide service to the AUTONATION western region,” “meet accepted delivery standards set forth by AUTONATION,” provide for “delivery” within designated time frames and under designated rates, and provide insurance for general liability and Autonation’s cargo “[i]n addition to the Cargo coverage held by each contracted carrier.” Metrogistics was to be “paid directly” for these services. The contract does not specify whether Metrogistics is a “carrier” or a “broker.”

III. Metrogistics contracts Autonation shipment to Melchor

In a May 10, 2018 written contract titled “Broker-Carrier Agreement,” Metrogistics (the designated “broker”) agreed to “assign[ ]” certain orders for freight transportation services to a “contract” carrier and “independent contractor,” defendant Melchor, a federally licensed motor carrier with operating authority from the FMCSA. The contract required Melchor to obtain liability and workers’ compensation insurance with a Metrogistics-approved insurer with Metrogistics named as both an “additional insured,” and as “an alternative employer” on those policies. Metrogistics would pay Melchor directly and Melchor agreed never to compete with Metrogistics. The contract also required that Melchor call ahead for pickup and delivery, take down and verify specific information, notify Metrogistics of scheduling changes, and notify Metrogistics within two hours of pickup and delivery.

On July 31, 2018, Metrogistics agreed to deliver Autonation’s vehicles from Autonation’s facility in Phoenix, Arizona to its auction site in Gardena, California. Metrogistics required that Melchor use only a Metrogistics-issued bill of lading (BOL). The BOL contained similar instructions regarding the manner of the pickup, the shipment, delivery, and the paperwork and reporting required thereafter. Melchor then assigned Alcala to the job.

IV. The incident and the instant action

On August 1, 2018, Alcala was driving westbound on the 60 freeway in Riverside, California when he lost control of his truck, swerved off the roadway, and collided with Lopez and his vehicle, causing physical injuries to Lopez and his wife Mayra. At the scene, Alcala identified himself and provided Melchor’s number as his business phone. Melchor contacted Metrogistics several hours later to inform Metrogistics about the accident.

In March 2019, plaintiffs filed the instant action against Alcala, Melchor, Carmax Auto Superstores California, LLC, Carmax Auto Superstores West Coast, Inc., and Does 1 through 100 for negligence and negligent infliction of emotional distress. The complaint was later amended to add an additional claim and name Metrogistics as a party.

V. Metrogistics’s motion for summary judgment

In March 2020, Metrogistics moved for summary judgment as to all plaintiffs and causes of action. Metrogistics argued that, as a matter of law, it was not directly or vicariously liable for Alcala’s negligence and that plaintiffs’ remaining claims were derivative of their negligence claim. Metrogistics alleged that Alcala worked for independent contractor Melchor, and was not an employee of Metrogistics. Because Metrogistics at most acted as a “broker” rather than a carrier, it could not be held vicariously liable for Alcala’s actions. Further, Metrogistics breached no duty that caused plaintiffs’ injuries.

In support of its motion, Metrogistics submitted a declaration from Alan Naes, Metrogistics’s treasury manager, who declared that he is “familiar” with the “relevant contacts and communications,” is “specifically familiar” with the execution and performance of the broker-carrier agreement between Metrogistics and Melchor, and “observe[s] and participate[s] in the day-to-day transportation broker business operations of Metrogistics.” Naes averred that Metrogistics operated as a licensed freight broker under the FMCSA by “arranging for” vehicle pickups from “shippers/customers to be transported by over 500 licensed, permitted carrier[s].” Naes declared that Victor Melchor, acting for Melchor, reviewed a “load board,” saw that Autonation’s vehicles were available for shipment, determined that it could do the job safely, and then contacted Metrogistics and requested that Metrogistics assign it to transport Autonation’s cars from Arizona to California. Naes further averred that all contact and communication between Metrogistics and Melchor was through Victor Melchor—Metrogistics’s “only authorized” contact at Melchor. According to Naes, there was “no contract, agreement, deal, or understanding” between Metrogistics and Alcala; Metrogistics did not supervise Alcala’s work as a licensed commercial driver; and Metrogistics did not pay Alcala for transporting the vehicles.

*3 Metrogistics also included the broker-carrier agreement between Metrogistics and Melchor, Metrogistics’s broker license, and Melchor’s motor carrier permit. Additionally, Metrogistics appended discovery responses showing that Melchor had a valid DOT motor carrier permit, that Alcala was working for Melchor as an independent contractor, that Alcala was driving a tractor trailer leased by Melchor at the time of the accident, and that Alcala contacted Victor Melchor after the accident. Finally, Metrogistics submitted police reports listing Melchor as the motor carrier and employer of Alcala (without mention of Metrogistics), as well as documents showing that Melchor had agreed to transport vehicles for another company around the time of the collision.

VI. Plaintiffs’ summary judgment opposition

In May 2020, plaintiffs filed an opposition to Metrogistics’s summary judgment motion. Plaintiffs argued, among other things, that Metrogistics owed plaintiffs a nondelegable duty because Metrogistics acted as a motor carrier rather than a broker under the Federal Motor Carrier Safety Regulations (FMCSR). In support of their opposition, plaintiffs included a declaration of their motor-safety expert (a former DOT Special Agent), who explained how and why Metrogistics’s representations, advertising, contracts, and conduct, including its non-compliance with federal “broker” regulations, both generally and regarding the subject shipment, were inconsistent with its claim to broker status. Plaintiffs also submitted the August 2016 service agreement between Metrogistics and Autonation; the “ ‘broker-carrier agreement’ ” between Metrogistics and Melchor; Metrogistics’s BOL relating to this matter, identifying Melchor as the “[c]arrier”; Metrogistics’s promotional materials; and excerpts from Metrogistics’s website, including blog posts, job announcements, and client testimonials. Plaintiffs also requested judicial notice of the above-described trademarks and trademark complaint, as well as various trucking regulations in the Code of Federal Regulations (C.F.R.).

VII. Metrogistics’s reply brief in support of summary judgment

In June 2020, Metrogistics filed a reply brief in support of summary judgment asserting that much of plaintiffs’ evidence was “irrelevant” because it involved “different people, different places, and different times.” Metrogistics objected to plaintiffs’ expert declaration as unreliable, speculative, and otherwise improper.

VIII. The trial court’s decision

On July 14, 2020, the court issued a tentative ruling granting Metrogistics’s summary judgment motion. The tentative ruling held that Metrogistics’s contractual relationship with Melchor was only as a broker, and therefore “not the employer/principal of Alcala” and not vicariously liable for Alcala’s negligence. The court elaborated that there was no evidence that Metrogistics accepted the goods being transported and plaintiffs’ evidence did not require the conclusion that Metrogistics was acting as a common carrier. The court intended to grant judicial notice of the 2017 trademark complaint and two Metrogistics trademarks, but deny judicial notice of one of the federal trucking regulations (without ruling on the remaining regulations). The court also intended to sustain Metrogistics’s objection to plaintiffs’ expert’s entire declaration.

After hearing arguments from the parties, the trial court issued an order adhering to its tentative ruling granting summary judgment in its entirety. Plaintiffs timely appealed.²

DISCUSSION

A. Standard of review

The applicable standard of review of a ruling on a motion for summary judgment is well established. “The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).)

*4 The moving party “bears the burden of persuasion that there is no triable issue of material fact and that [it] is entitled to judgment as a matter of law.” (Aguilar, supra, 25 Cal.4th at p. 850; see Code of Civil Procedure, § 437c, subd. (c).) A defendant moving for summary judgment must “ ‘show[ ] that one or more elements of the cause of action … cannot be established’ by the plaintiff.” (Aguilar, at p. 853.) A defendant meets its burden by presenting affirmative evidence that negates an essential element of a plaintiff’s claim. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) Alternatively, a defendant meets its burden by submitting evidence “that the plaintiff does not possess, and cannot reasonably obtain, needed evidence” supporting an essential element of its claim (Aguilar, at p. 854), or that “there is a complete defense to that cause of action.” (Castellon v. U.S. Bancorp (2013) 220 Cal.App.4th 994, 997).

On appeal from a summary judgment ruling, we review the record de novo and independently determine whether triable issues of material fact exist. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767; Guz v. Bechtel National, Inc., supra, 24 Cal.4th at p. 334.) We resolve any evidentiary doubts or ambiguities in favor of the party opposing summary judgment. (Saelzler, at p. 768.)

“In performing an independent review of the granting of summary judgment, we conduct the same procedure employed by the trial court. We examine (1) the pleadings to determine the elements of the claim, (2) the motion to determine if it establishes facts justifying judgment in the moving party’s favor, and (3) the opposition—assuming movant has met its initial burden—to ‘decide whether the opposing party has demonstrated the existence of a triable, material fact issue.’ ” (Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 630.) “We need not defer to the trial court and are not bound by the reasons in its summary judgment ruling; we review the ruling of the trial court, not its rationale.” (Ibid.)

B. Summary judgment was inappropriate because there were triable issues of fact regarding whether Metrogistics owed plaintiffs a nondelegable duty

The nondelegable duty doctrine is an exception to the general rule that one who hires an independent contractor is not liable for the negligence of that independent contractor or its employees. (SeaBright Ins. Co. v. US Airways, Inc. (2011) 52 Cal.4th 590, 600–601.) Nondelegable duties “ ‘arise in situations in which, for reasons of policy, the employer is not permitted to shift the responsibility for the proper conduct of the work to the [independent] contractor.’ ” (Bowman v. Wyatt (2010) 186 Cal.App.4th 286, 316.) A nondelegable duty may arise when a statute or regulation requires specific safeguards or precautions to ensure others’ safety. (Evard v. Southern California Edison (2007) 153 Cal.App.4th 137, 146.) The nondelegable duty doctrine applies to highway common carriers. (Eli v. Murphy (1952) 39 Cal.2d 598, 600.) As another panel of this Division recently stated, this is because when an entity operates as a “carrier,” it “ ‘engage[s] in a “business attended with considerable risk” [citations], and the Legislature has subjected it’ ” to “ ‘regulatory power … to protect the safety of the general public,’ ” and its duties are therefore nondelegable. (Vargas v. FMI, Inc. (2015) 233 Cal.App.4th 638, 650.) Thus, in a situation involving two alleged carriers, the nondelegable duty doctrine ensures that, if a subcontractor carrier’s insurance coverage is inadequate to cover a loss, the primary carrier’s policy can step in to ensure the plaintiff is made whole. (Gamboa v. Conti Trucking, Inc. (1993) 19 Cal.App.4th 663, 668.)

*5 Federal statutes and regulations applicable to interstate motor carrier operations govern the analysis here. (See, e.g., Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425, 434–435 [applying federal motor carrier statute to define scope of alleged carrier’s duty]; Serna v. Pettey Leach Trucking, Inc. (2003) 110 Cal.App.4th 1475, 1487 [similar]; Vargas v. FMI, Inc., supra, 233 Cal.App.4th at p. 664 [similar].) Under the federal Motor Carrier Act of 1980 (MCA), a “ ‘motor carrier’ means a person providing motor vehicle transportation for compensation.” (49 U.S.C. § 13102(14).) The MCA defines a “broker” as “a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” (Id., § 13102(2), italics added.) A person may provide transportation as a motor carrier, or service as a broker, only if registered according to the MCA. (49 U.S.C. § 13901(a); see id., § 13902.)

Relatedly, the FMCSA regulates carriers and brokers engaged in interstate commerce and has promulgated regulations distinguishing brokers from motor carriers. (See 49 C.F.R. §§ 371.2–371.13 (2023); see also id., § 350.105.) The FMCSR further define a “[b]roker” as a “person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier.” (Id., § 371.2(a) (2023).) Motor carriers “are not brokers within the meaning of [part 371.2(a)] when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bound themselves to transport.” (Ibid.) “Brokerage or brokerage service” means “the arranging of transportation or the physical movement of a motor vehicle or of property.” (Id., § 371.2(c).)

The line between “motor carrier” and “broker” is often “a blurry one,” and it is common in practice for shipping companies to perform both roles simultaneously or with respect to only certain subcomponents of a given shipment. (Essex Insurance Co. v. Barrett Moving & Storage, Inc. (11th Cir. 2018) 885 F.3d 1292, 1300 (Essex).)³ The consensus among courts, however, is that the “key distinction is whether the disputed party accepted legal responsibility to transport the shipment.” (Id. at p. 1301; see id. fn. 4 [collecting cases].) Such a rule is grounded in the “common law of bailment,” or the “time-honored” legal principle that “when a party holds itself out as the party responsible for the care and delivery of another’s property, it cannot outsource its contractual responsibility by outsourcing the care and delivery it agreed to provide.” (Id. at p. 1301.)

Whether an entity qualifies as a broker or carrier is “necessarily a case specific analysis” and generally not conducive to summary judgment. (Essex, supra, 885 F.3d at p. 1302.) The answer to the question may, in some cases, be easily answered by the alleged carrier’s contract with the shipper. Even an entity that, in practice, carries some shipments and brokers others may “insulate itself from strict liability with respect to a particular shipment if it makes clear in writing that it is merely acting as a go-between to connect the shipper with a suitable third-party carrier.” (Ibid.) If not, however, “the question will depend on how the party held itself out to the world, the nature of the party’s communications and prior dealings with the shipper, and the parties’ understanding as to who would assume responsibility for the delivery of the shipment in question.” (Ibid. [discussing screenshots of alleged carrier’s website and prior communications and dealings between the parties as relevant to analysis].) In the end, the operative question is “with whom did the shipper entrust the cargo?” (Ibid.)

*6 The record in this case does not provide a simple answer to that question. We thus conclude that, assuming for argument’s sake that Metrogistics met its initial burden of providing sufficient facts justifying judgment in its favor, plaintiffs nonetheless demonstrated that there were triable issues of fact as to whether Metrogistics was acting as a carrier (rather than a broker), and therefore owed plaintiffs a nondelegable duty.

We turn first to the contract between Metrogistics and the shipper (Autonation) and assess whether Metrogistics made “clear in writing that it is merely acting as a go-between to connect the shipper with a suitable third-party carrier.” (Essex, supra, 885 F.3d at p. 1302.) It did not.

The Autonation agreement—executed nearly two years prior to the incident and ambiguously captioned “Metrogistics Transportation Pilot Western Region”—provided that Metrogistics would provide “delivery” services to Autonation’s Western region. The word “broker” does not appear in the agreement. The agreement specified time frames and rates and that Metrogistics would provide general liability insurance “[i]n addition to the Cargo coverage held by each contracted carrier.” While Metrogistics suggests that the agreement’s mention of a “contracted carrier” supports the conclusion that the parties contemplated subcontracting out Autonation’s deliveries to another carrier, this language hardly precludes Metrogistics from contracting out some jobs but not others, or acting as a carrier at the same time as its subcontractor. The parties reasonably appear to have contemplated these alternatives given the presence of language also requiring that Metrogistics obtain insurance and be paid directly for delivery services. In sum, the Autonation agreement does not make “clear” that Metrogistics’s role in the immediate transaction was only that of a broker, rather than a carrier. (Essex, supra, 885 F.3d at p. 1302.) If anything, the agreement suggests that Metrogistics was, in fact, entrusted to deliver Autonation’s cargo with respect to at least some contemplated transactions.

We therefore must consider the remaining evidence to ascertain who assumed legal responsibility for the shipment. That evidence also points both ways.

On the one hand, Metrogistics proffered a declaration from its treasury director (Alan Naes) describing Metrogistics’s conduct with respect to the shipment at issue and claiming Metrogistics only acted as a broker during the transaction.⁴ Metrogistics also submitted evidence that Alcala’s tractor trailer was leased by Melchor, that traffic and collision reports listed Melchor as the motor carrier, that Alcala contacted Melchor first after the accident, and that Melchor had agreed to transport vehicles for another company around the same time. Metrogistics also furnished copies of its broker license,⁵ Melchor’s motor carrier permit, and the written “broker-carrier agreement” between Melchor and Metrogistics, which designated Metrogistics as the broker and Melchor the contract carrier.

*7 On the other hand, plaintiffs furnished the BOL, on Metrogistics’s letterhead, containing instructions to the designated “carrier” Melchor regarding how the pickup, shipment, and delivery were to be carried out, as well as the paperwork and reporting required thereafter. Plaintiffs also submitted, among other things, promotional materials, blogs, client testimonials, and website screenshots marketing Metrogistics’s carrier services, including a 2013 video in which one of Metrogistics’s founding partners advertises Metrogistics’s abilities to handle shipments as a “nationwide carrier” over images of a tractor-trailer appearing to bear Metrogistics’s contact information. Plaintiffs also provided copies of trademarks and pleadings from prior trademark litigation suggesting that Metrogistics was transacting business as a motor carrier; none of those materials state Metrogistics was also acting as a broker.⁶

A closer parsing of the evidence only confirms that summary judgment was unwarranted. For instance, Metrogistics suggests that Melchor’s designation as the “carrier” in the BOL and broker-carrier agreement (as well as Metrogistics’s designation as the “broker” in the latter agreement) establishes that Metrogistics only contracted to provide broker services for this particular transaction. Again, however, the labels the parties assign themselves do not control the inquiry. (See, e.g., Ensco, Inc. v. Weicker Transfer and Storage Co. (10th Cir. 1982) 689 F.2d 921, 925 [because parties often attempt to contract around motor carrier liability, carrier’s status “is determined not by reference to its authority but rather by reference to what it holds itself out to be”]; Essex, supra, 885 F.3d at p. 1301, fn. 4 [similar, collecting cases].) Indeed, other components of the broker-carrier agreement suggest Metrogistics was acting as a carrier at least in some sense, including contractual provisions that Melchor obtain insurance with a Metrogistics-approved insurer (while naming Metrogistics as an “additional insured” and “alternative employer” on the policies), that Metrogistics pay Melchor directly, that Melchor not compete with Metrogistics, and that Melchor call ahead for pickup and delivery, take down and verify specific information, notify Metrogistics if estimated pick up or drop off dates change, and notify Metrogistics within two hours of pickup and delivery. Similarly, the BOL, a document commonly generated by a carrier (BII Finance Co. v. U-States Forwarding Services Corp. (2002) 95 Cal.App.4th 111, 119–120), was generated by Metrogistics and, despite listing Melchor as the carrier, also contained specific instructions regarding Melchor’s performance, as well as penalty provisions.

The parties quarrel over the applicability of several federal district court cases denying summary judgment where triable issues remained regarding a defendant business entity’s “broker” or “carrier” status. (See, e.g., Hewlett–Packard Co. v. Brother’s Trucking Enterprises, Inc. (S.D. Fla. 2005) 373 F.Supp.2d 1349; Just Take Action, Inc. v. GST (Americas) Inc. (D. Minn. May 6, 2005, Civ. A. No. 04–3024 ADM/RLE) 2005 U.S.Dist. Lexis 8432; Louis M. Marson Jr., Inc. v. Alliance Shippers, Inc. (E.D. Pa. 2020) 438 F.Supp.3d 326.) But a review of these cases only highlights that the broker-carrier inquiry almost always hinges on the particular facts of each case, focusing not just on the relevant contractual language but the parties’ conduct and communications, and is ill-suited for a summary proceeding. (Essex, supra, 885 F.3d at p. 1302; see Hewlett Packard Co., at p. 1352 [various ways alleged carrier exhibited control over transaction, including assurance of coverage and specifying manner of transit, precluded summary judgment]; Just Take Action, Inc., at p. 14 [same, where alleged carrier assured coverage, drafted BOL, and directed how and when the shipment would take place]; Louis M. Marson Jr., Inc., at pp. 332–334 [same, based upon alleged carrier’s representations on its website, among other things].)

*8 Therefore, given the fact-intensive nature of the inquiry, the ambiguity of the writings at issue (including, most prominently, the Autonation agreement), as well as the other contradictory evidence we have discussed above, we have no firm conviction that Autonation did not entrust to Metrogistics the cargo whose allegedly negligent transportation led to plaintiffs’ injuries. In other words, there were triable issues of fact as to whether Metrogistics assumed legal responsibility for Autonation’s shipment (Essex, supra, 885 F.3d at pp. 1301–1302), and thereby owed plaintiffs a nondelegable duty as a motor carrier (Eli v. Murphy, supra, 39 Cal.2d at pp. 599–600). We thus conclude that the trial court erred in granting summary judgment. (See, e.g., Aguilar, supra, 25 Cal.4th at p. 856 [successful summary judgment motion must leave no room for conflicting inferences with respect to material facts, and not require weighing evidence or factfinding].) In light of this conclusion, we decline to reach the parties’ alternative contentions.

DISPOSITION

The judgment is reversed and the matter remanded for further proceedings consistent with this opinion. Francisco Lopez, Mayra Hernandez, and Francisco Hernandez are entitled to their costs on appeal.

We concur:

EDMON, P. J.

LAVIN, J.

All Citations

Footnotes

* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.  

1. We collectively refer to the Lopez-Hernandez family as plaintiffs.  
2. In August 2022, by order of the Supreme Court of California, plaintiffs’ appeal was transferred from the Fourth District Court of Appeal, Division Two, to the Second District Court of Appeal.
3. Thus, while the definitions of “broker” and “motor carrier” are “mutually exclusive” under the relevant regulations (Morales v. OK Trans, Inc. (S.D.Tex., Jan. 3, 2023, Civ. A. No. 2:19-CV-00094) 2023 U.S. Dist. Lexis 44748, 7, fn. 5), the relevant cases suggest that multiple entities may qualify as a “broker” or “carrier” during a given transaction, and the parties here have not argued otherwise. (See, e.g., Missouri, Kansas & Texas Railway Co. v. Ward (1917) 244 U.S. 383, 388 [purpose of federal scheme is to hold “initial carrier” liable for damage caused by other carriers “whose duty is to forward the goods under the terms of the contract made by their principal, the initial carrier”].)   
4. Plaintiffs assert for the first time on appeal that Naes’s declaration was not admissible due to a lack of personal knowledge and competence because Naes claimed personal knowledge of Metrogistics’s business relationship with Melchor but then Metrogistics disavowed Naes’s knowledge relative to this specific shipment to avoid Naes’s deposition. In their reply brief, plaintiffs invoke the law of judicial estoppel to underscore the inadmissibility of Naes’s testimony. However, Code of Civil Procedure section 437c, subdivision (d) specifies that objections to declarations based upon personal knowledge and competence “ ‘if not made at the hearing, shall be deemed waived.’ ” (Rodriguez v. E.M.E., Inc. (2016) 246 Cal.App.4th 1027, 1045 & fn. 11.) Moreover, we may also decline to consider arguments asserted in the first instance in a reply brief. (Raceway Ford Cases (2016) 2 Cal.5th 161, 178 [arguments raised for first time in reply brief generally waived].) Plaintiffs suggest, citing Zavala v. Arce (1997) 58 Cal.App.4th 915, 925, that a finding of waiver would be inappropriate because we are obligated to “reassess” the moving papers to determine if the moving party is entitled to judgment as a matter of law. However, no part of Zavala purports to usurp the clear statutory command requiring a finding of waiver here.  
5. To the extent Metrogistics suggests its federal broker license controls whether it owes plaintiffs a nondelegable duty, we disagree. Setting aside that the evidence—including Naes’s declaration—does not preclude the possibility that Metrogistics was also licensed as a carrier, the relevant focus is the nature of the entity’s activities (and whether they satisfy the relevant regulatory definitions under the licensure scheme), not whether the entity conducting those activities is actually complying with the relevant regulations. (See Serna v. Pettey Leach Trucking, Inc., supra, 110 Cal.App.4th at p. 1486 [nondelegable duty rule examines whether “a carrier who undertakes an activity (1) which can be lawfully carried on only under a public franchise or authority and (2) which involves possible danger to the public is liable to a third person for harm caused by the negligence of the carrier’s independent contractor” (italics added)]; Mass v. Braswell Motor Freight Lines, Inc. (9th Cir. 1978) 577 F.2d 665, 667 [common carrier status is determined according to the services offered by an entity, rather than by its corporate character or declared purpose]; see also Klein v. Leatherman (1969) 270 Cal.App.2d 792, 795 [“One truck upon the highway tends to be like any other. It is difficult to discern wherein classification of the operation on the highway as a privilege under franchise, or as a right under a permit, changes the degree of protection required.”].)  
6. Metrogistics concedes it “portrayed itself as being a carrier” in these other contexts, but contends there is no connection between this evidence and the services it actually provided to Autonation during the instant transaction. However, it is well established that such materials—while not alone dispositive—may reliably demonstrate how a “party h[o]ld[s] itself out to the world.” (Essex, supra, 885 F.3d at p. 1302 [screenshots of alleged carrier’s website and prior communications relevant to analysis].) Requiring a direct connection between the advertising and the transaction in question would virtually undo the rule permitting consideration of such advertising, because advertisements are not typically, in our estimation, tailored to a precise customer and transaction.  

© 2023 Thomson Reuters. No claim to original U.S. Government Works.  

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