United States District Court, D. Nevada.

VEGAS FAB & FINISH, Plaintiff,

v.

AMG FREIGHT LLC, Defendant.

Case No. 2:23-cv-01336-MMD-NJK

|

Signed January 16, 2024

Attorneys and Law Firms

David S. Lee, Lee, Landrum & Carlson, APC, Las Vegas, NV, for Plaintiff.

Bradley T Austin, Snell & Wilmer LLP, Las Vegas, NV, for Defendant.

ORDER

MIRANDA M. DU, CHIEF UNITED STATES DISTRICT JUDGE

I. SUMMARY

*1 Plaintiff Vegas Fab & Finish (“VFF”) brought this action involving a damaged interstate shipment against Defendant AMG Freight LLC (“AMG”) in Nevada state court. (ECF No. 1-2 (“Complaint”).) AMG removed the case on the basis that the Carmack Amendment, 49 U.S.C. § 14706, provides an exclusive federal remedy against carriers for goods lost or damaged during interstate shipment and thus that the District Court has original jurisdiction under 28 U.S.C. § 1441(a). (ECF No. 1.) Before the Court is Plaintiff’s motion to remand. (ECF No. 10 (“Motion”).)¹ Because the Court finds that AMG has not met its burden to establish that removal is proper, the Court grants the Motion. The Court further denies Defendant’s motions to dismiss (ECF No. 6) and to stay discovery (ECF No. 19) as moot.

II. BACKGROUND

On July 20, 2023, Plaintiff Vegas Fab & Finish filed its Complaint in the Eighth Judicial District Court in Clark County, Nevada, seeking damages against Defendant AMG Freight LLC for breach of contract, breach of the covenant of good faith and fair dealing, and negligence. (ECF No. 1-2.) Both VFF and AMG are corporations organized under Nevada law. (Id. at 2.)

VFF alleges that it entered into a contract with AMG, under which AMG agreed to ship 348 pieces of brass door inlay to Plaintiff’s client in Montreal, Quebec, Canada. (Id. at 4.) After delivery, Plaintiff’s client informed VFF that the pieces of inlay had sustained damage during transit. (Id.) VFF alleges that it reached out to AMG and was told that without VFF’s knowledge, AMG had subcontracted with ABF Freight (“ABF”) to deliver the shipment (Id.) AMG denied any responsibility for the damage. (Id.) VFF alleges that AMG inadequately insured the shipment without VFF’s consent, and that it failed to properly “deliver[ ]”, “maintain”[ ], “protect[ ]” or “entrust[ ]” the shipment. (Id. at 4-7.)

On August 28, 2023, AMG removed on the basis that the Carmack Amendment (“Carmack”) completely preempts the state law claims against it. (ECF No. 1.) VFF moved to remand. (ECF No. 10.)

III. DISCUSSION

Courts strictly construe the removal statute against removal jurisdiction, and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The party seeking removal bears the burden of establishing federal jurisdiction. See Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006). If “a district court determines at any time that less than a preponderance of the evidence supports the right of removal, it must remand the action to the state court.” Hansen v. Group Health Coop., 902 F.3d 1051, 1057 (9th Cir. 2018).

AMG argues that removal is proper because the Carmack Amendment, 49 U.S.C. § 14706, provides an exclusively federal remedy against carriers of interstate shipments, barring VFF’s state law claims. (ECF Nos. 1, 13 at 3-4.) In its response to VFF’s Motion, AMG also argues that even if Carmack does not apply to the facts at issue, the Federal Aviation Administration Authorization Act (“FAAAA”) and the Interstate Commerce Commission Termination Act (“ICCTA”), codified at 49 U.S.C. § 14501(c)(1), also mandate exclusive federal jurisdiction. (ECF No. 13 at 4-5.) The Court considers each of AMG’s purported bases for federal jurisdiction.

A. Carmack Amendment

*2 The Court first considers AMG’s primary basis for removal—that the Carmack Amendment to the Interstate Commerce Act “completely preempts” VFF’s state law claims because the allegations in the Complaint define AMG as a “carrier” within the meaning of the statute. (ECF No. 1.) See 49 U.S.C. § 14706. The Court finds that AMG has not met its burden to establish federal jurisdiction under Carmack.

Federal district courts have “original jurisdiction of all civil actions arising under the … laws … of the United States.” 28 U.S.C. § 1331. A defendant may remove an action to federal court if the plaintiff could have initially filed the complaint in federal court. See 28 U.S.C. § 1441(a). In general, “[t]he presence or absence of federal-question jurisdiction is governed by the ‘well-pleaded complaint rule,’ which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff’s properly pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). The well-pleaded complaint rule ensures that “a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption.” Id. at 393.

Under the corollary “artful pleading” doctrine, however, “a well-pleaded state law claim” may also “present[ ] a federal question when a federal statute has completely preempted that particular area of law.” Hall v. N. Am. Van Lines, Inc, 476 F.3d 683, 687 (9th Cir. 2007) (citing Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1107 (9th Cir.2000)) (emphasis added). See also Hansen, 902 F.3d at 1057 (quoting Rivet v. Regions Bank of La., 522 U.S. 470, 478 (1998)) (“[A] plaintiff may not defeat removal by omitting to plead necessary federal questions.”). A complaint that contains a “completely preempted claim may be removed to district court under § 1441.” Hall, 476 F.3d at 687. See also Lehmann v. Brown, 230 F.3d 916, 919-20 (7th Cir. 2000) (noting that “the phrase ‘complete preemption’ has caused confusion” because it is sometimes conflated with an ordinary preemption defense when it instead functions more accurately as federal occupation of the field).

As both parties in this case acknowledge, VFF presents no well-pleaded federal claim on the face of its Complaint. AMG instead argues that Carmack provides an exclusively federal remedy under the artful pleading doctrine. (ECF No. 13 at 4-5.) Carmack is among the limited number of statutes well-established to “completely preempt[ ] well-pleaded state claims.” Hall, 476 F.3d at 687 (citing Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 8 (2003)). The Amendment is intended to provide “a uniform national liability policy for interstate carriers.” Hall, 476 F.3d at 687 (quoting Hughes Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609, 613 (9th Cir.1992)). It thus provides “the exclusive remedy against carriers for goods lost or damaged during an interstate shipment.” Korer v. Danita Corp., 584 F. Supp. 2d 1103, 1105 (N.D. Ill. 2008). See also Adams Express Co. v. Croninger, 226 U.S. 491, 505-06 (1913) (Carmack covers “the subject of the liability of the carrier under a bill of lading … so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it”).

To determine whether Carmack applies to the claims in this action, the Court must consider whether AMG is properly characterized as a “carrier” or as a “broker.” Carmack governs interstate carriers but does not apply to brokers. See 49 U.S.C. § 14706(a); CGU Int’l Ins., PLC v. Keystone Lines Corp., Case No. C-02-3751 SC, 2004 WL 1047982, at *1-2 (N.D. Cal. May 5, 2004).

*3 AMG argues that “[a]ccepting the Complaint and factual allegations therein as true, AMG Freight is classified as a ‘carrier.’ ” (ECF no. 13 at 4.) AMG further suggests that Plaintiff is attempting to improperly “amend” its complaint to defeat federal question jurisdiction in its Motion. (Id.) VFF argues, by contrast, that AMG should be classified as a broker outside of Carmack’s scope. (ECF No. 10 at 3-4.) It emphasizes that it never defined AMG as a carrier in the Complaint. (ECF Nos. 10, 14 at 4.) VFF also points to a letter AMG sent to VFF counsel’s office in August 2023 and argues that the letter demonstrates that AMG itself has taken the inconsistent position that it operated only as a broker in the transactions in question. (ECF No. 10 at 4.)

In practice, “[t]he difference between a carrier and a broker is often blurry.” CGU, 2004 WL 1047982 at *1-2. The distinction is “not determined by what the company labels itself, but by how it represents itself to the world and its relationship to the shipper.” ASARCO LLC v. England Logistics Inc., 71 F. Supp. 3d 990, 995 (D. Ariz. 2014) (quoting Hewlett-Packard, Co. v. Brother’s Trucking Ent., 373 F.Supp.2d 1349, 1352 (S.D. Fla. 2005)). A motor carrier is “a person providing … transportation for compensation.” 49 U.S.C. § 13102. In general, “[m]otor carriers, or persons who are employees or bona fide agents of carriers, are not brokers within the meaning of this section 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.” 49 C.F.R. § 371.2(a). A broker, by contrast is “a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C § 13102(2). The “crucial distinction is whether the party legally binds itself to [the] transport” of goods—regardless of who actually transports them. See CGU, 2004 WL 1047982 at *2.

The Court finds that AMG has not adequately supported its position that AMG must be classified as a carrier. As a threshold matter, AMG’s view that the Court may consider only the allegations within the four corners of VFF’s Complaint mischaracterizes the Court’s broader power to view evidence outside the pleadings in order to rule on a motion to remand.² The Court further notes that AMG expressly states in its motion to dismiss that it “denies that it was the carrier for Plaintiff’s interstate shipment and contests many of the factual assertions in the Complaint.” (ECF No. 6 at 2.) To resolve the Motion, however, the Court need not consider the admissibility of VFF’s proposed evidence or AMG’s contradictory positions. Even considering only the Complaint, AMG fails to meet its burden. The Complaint does not clearly categorize AMG as a carrier such that any argument that AMG operated as a broker constitutes an improper “amendment.” Numerous sections plausibly indicate VFF’s belief that AMG was acting as a broker. Plaintiff alleges, for example, that “[a]fter reaching out to AMG regarding [the] damaged shipment, VFF was informed that AMG, without Plaintiff’s knowledge, had subcontracted with ABF … to deliver this shipment.” (ECF No. 1-2 at 4.) And that “[a]s a result of AMG’s actions in facilitating the delivery of VFF’s shipment to its client, VFF was forced to incur the cost of the initial delivery [and other fees].” (Id. at 5.)

*4 AMG argues that because Plaintiff alleges AMG accepted responsibility for the shipment and failed to “keep the shipment under their proper control,” Plaintiff has conceded that AMG is a carrier. (ECF No. 13 at 3-4.) But although a carrier is a party that “legally binds itself to transport,” See CGU, 2004 WL 1047982 at *2, the Court is not persuaded that the Complaint’s language alleging that AMG agreed to keep the shipment under its “watch” and failed to “facilitate” and “protect” the shipment put AMG undeniably in the carrier category. (ECF No. 1-2 at 5, 6-8.) These duties are arguably consistent with brokers’ role in “providing, or arranging for, transportation.” See 49 U.S.C § 13102(2). AMG thus oversimplifies the fundamentally “blurry” distinction between carriers and brokers, which generally depends on the factual circumstances surrounding interstate transport. See CGU, 2004 WL 1047982 (noting that courts evaluate this distinction by considering which party accepted responsibility for the goods, which party took possession of goods, and which party is listed as a carrier on the bill of lading and other documents).³ See also Quality King Distributors, 2020 WL 7260799, at *3 (noting that Carmack is not intended to indiscriminately swallow all “claims involving a separate and independently actionable harm to the shipper distinct from … damage [to a shipment]”).

AMG bears the burden of resolving ambiguities that weigh in favor of remand. See Hansen, 902 F.3d at 1057. By pointing only to inconclusive language in the Complaint despite its burden, AMG fails to overcome the strong presumption against removal.

B. FAAAA and ICCTA

AMG next argues that even if it is classified as a broker outside the scope of Carmack, the state law claims against it are nevertheless completely preempted by the FAAAA and the ICCTA. (ECF No. 13 at 4-5.) But the FAAAA does not operate in the same unique way as the Carmack Amendment. Because preemption under the FAAAA is best classified here as ordinary preemption—an affirmative defense—rather than as so-called “complete” preemption which itself creates a federal question, this issue gets to the merits of Plaintiff’s claims. The Court thus finds that it does not have jurisdiction to rule on AMG’s FAAAA preemption defense and leaves the question to the state court on remand.

An ordinary preemption defense which rests on a federal question does not make a case removable. See Caterpillar, 482 U.S. at 392 (1987). See also Elam v. Kansas City S. Ry. Co., 635 F.3d 796, 803 (5th Cir. 2011) (“Defensive preemption does not create federal jurisdiction” but merely asserts the primacy of federal law). The phrase “complete preemption,” as used in the context of the Carmack Amendment, “has caused confusion … by implying that preemption sometimes permits removal” when “[u]nfortunately ‘complete preemption’ is a misnomer, having nothing to do with preemption and everything to do with federal occupation of a field.” See Lehmann, 230 F.3d at 919-20.

The FAAAA preemption provision, amended and recodified by the ICCTA, applies to state law claims related to “price, route, or service of any motor carrier … or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). See also Mastercraft Interiors, Ltd. v. ABF Freight Sys., Inc., 284 F. Supp. 2d 284, 285 (D. Md. 2003). But most district courts treat FAAAA preemption as ordinary defensive preemption—evident in the procedural posture from which cases addressing the statute are largely decided. See, e.g., Dilts v. Penske Logistics, LLC, 769 F.3d 637, 641 (9th Cir. 2014) (“Following removal, Defendants moved for summary judgment, claiming a[n FAAAA] preemption defense”); Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016, 1021 (9th Cir. 2020) (“[Defendant] moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), arguing that the FAAAA preempts Miller’s negligence claim”); Interstate Serv. Provider, Inc. v. Jordan, Case No. 4:21-CV-267, 2021 WL 2355384, at *8 (E.D. Tex. June 9, 2021) (“[T]he cases Defendants use to argue in favor of their complete-preemption theory are inapposite, as they instead concern ordinary preemption [which is evident from their posture because] … upon a finding of complete preemption, and thereby a lack of subject matter jurisdiction, courts would have been precluded from issuing any sort of merits decision.”)⁴

*5 The Court thus interprets AMG’s position on FAAAA and ICCTA preemption as an affirmative defense that does not confer jurisdiction under 28 U.S.C. § 1441(a). AMG must properly assert this defense in state court.

IV. CONCLUSION

The Court notes that the parties made several arguments and cited to several cases not discussed above. The Court has reviewed these arguments and cases and determines that they do not warrant discussion as they do not affect the outcome of the motions before the Court.

It is therefore ordered that Plaintiff’s motion to remand (ECF No. 10) is granted.

It is further ordered that Defendant’s motions to dismiss (ECF No. 6) and to stay discovery (ECF No. 19) are denied as moot.

It is further ordered that this case is remanded and the Clerk of Court is directed to close the case.

All Citations

Slip Copy, 2024 WL 166759

Footnotes

1. AMG opposed the Motion (ECF No. 13), and VFF replied (ECF No. 14).  
2. AMG argues that “Plaintiff cannot amend its Complaint via Motion for Remand and Defendant—and Plaintiff—are limited to allegations as pleaded by Plaintiff at this stage.” (ECF No. 13 at 1 n. 1.) While it is true that in considering removal a court must “focus on the plaintiff’s complaint at the time the petition for removal was filed,” see, e.g., Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987), this requirement does not itself prevent courts from considering evidence outside the pleadings when ruling on a motion to remand—even in the context of federal question jurisdiction. See, e.g., Hansen, 902 F.3d at 1056-57 (suggesting that a removing party must establish federal jurisdiction by a “preponderance of evidence” in a federal preemption case under ERISA); Quality King Distributors, Inc. v. Celtic Int’l, LLC, Case No. 20-CV-2145, 2020 WL 7260799, at *2 (N.D. Ill. Dec. 10, 2020) (quoting Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009)) (finding in a case involving Carmack that where a party is “attack[ing] the complaint’s factual allegations that it was a shipper of goods, ‘[t]he law is clear that when considering a motion that launches a factual attack against jurisdiction, [t]he district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists’ ”).  
3. VFF argues that AMG’s August letter points to AMG’s own confidence that if the Court were to access admissible factual evidence on these and other factors, it would in fact classify AMG as a broker. (ECF No. 10 at 2-4.) While the Court need not rely on the letter in this ruling, the Court again notes that AMG’s response to the Motion includes no acknowledgment of factual considerations beyond the Complaint.  
4. While some courts in other districts have found that the FAAAA completely preempts negligence claims against brokers, see, e.g., Gillum v. High Standard, LLC, Case No. SA-19-CV-1378-XR, 2020 WL 444371, at *3 (W.D. Tex. Jan. 27, 2020), the weight of authority runs counter to this position. See 29 A.L.R. Fed. 2d 563 (“Although there is some authority stating that the FAAAA completely preempts state law in certain cases … courts have generally held that the FAAAA does not completely preempt state law … and therefore have held that the mere assertion of FAAAA preemption as a defense is an insufficient basis to invoke federal question jurisdiction”).  

End of Document

© 2024 Thomson Reuters. No claim to original U.S. Government Works.  

United States District Court, S.D. Florida.

HMD AMERICA, INC., F/U/B/O CERTAIN FAR EAST UNDERWRITERS WITH FUBON INSURANCE CO., LTD., its lead underwriter, Plaintiffs,

v.

Q1, LLC, and Aldon Mega, Inc., Defendants.

Civil Action No. 23-21865-Civ-Scola

|

Signed January 12, 2024

|

Entered January 16, 2024

Attorneys and Law Firms

Michael Charles Black, Michael C. Black, P.A., Miami, FL, for Plaintiffs.

Beata Shapiro, Pro Hac Vice, Wilson Elser Moskowitz Edelman & Dicker LLP, Boston, MA, Mirelis Castilla, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, Miami, FL, for Defendant Q1, LLC.

Kelly L. Kesner, Luks Santaniello Petrillo & Jones, Miami, FL, Spencer Michael Mayer, Lewis Brisbois Bisgaard and Smith, LLP, Coral Gableas, FL, Todd Randall Ehrenreich, Lewis Brisbois Bisgaard & Smith LLP, Coral Gables, FL, for Defendant Aldon Mega, Inc.

Order Granting Motion to Dismiss

Robert N. Scola, Jr., United States District Judge

*1 Plaintiff HMD America, Inc., on behalf of its insurer, Certain Far East Underwriters, seeks to recover from Defendants Q1, LLC and Aldon Mega, Inc. over $3 million in losses it incurred by way of a stolen cargo shipment of 16,000 cellphones belonging to HMD. (Am. Compl., ECF No. 34.) HMD lodges three counts in its complaint: breach of contract and negligence against Q1 (counts one and three, respectively) and breach of contract and/or duties under the Carmack Amendment against Aldon Mega (count two). (Id.) In response, Q1 has filed a motion to dismiss (Def.’s Mot. to Dismiss, ECF No. 39), submitting (1) HMD’s claims against Q1 are preempted under federal law and (2) HMD fails to state a claim for either breach of contract or negligence against Q1. (Pl.’s Resp., ECF No. 46.)¹ HMD has responded to the motion (Pl.’s Resp., ECF No. 46), Q1 has replied (Def.’s Reply, ECF No. 50), and the motion is now ripe for review. Having considered the parties’ briefing, the record, and the relevant legal authorities, the Court, for the following reasons, grants Q1’s motion to dismiss the claims against it (ECF No. 34).

1. Background²

It appears HMD regularly stored a stock of its merchandise at Q1’s distribution warehouse in Orlando, Florida. (Am. Compl. ¶ 4.) In conjunction with that storage, HMD and Q1 also agreed, through a written contract executed in August 2021, that Q1 would perform various logistic-related services for HMD based on certain terms and conditions. (Id. ¶ 15; Agmt., ECF No. 45-3, 2.) In March 2022, HMD asked Q1 to “arrange and transport” a shipment of twenty pallets of HMD’s Nokia cellphones (amounting to 16,000 cellphones) from Q1’s Orlando warehouse to a consignee in Jeffersonville, Indiana. (Am. Compl. ¶¶ 2, 4, 6.) Q1 then, in turn, subcontracted the transportation of the cellphones with its truck broker (and non-party), World Wide Express Corp. (Id. ¶¶ 7, 28.) Thereafter, World Wide contracted with Aldon Mega (now also a third-party plaintiff) to transport the twenty pallets of cellphones. (Id. ¶¶ 8, 28.) Aldon Mega then subcontracted the actual transportation of the shipment to RPM Corp. (now a third-party defendant and counter claimant). (Id. ¶ 29.) Although the shipment was picked up from Q1’s warehouse, on March 11, 2022, apparently by RPM, it was stolen before it reached its destination in Indiana. (Id. ¶¶ 10, 11.) HMD says it was damaged in excess of $3,392,000 based on the loss. (Id. ¶ 12.)

As set forth in the agreement between HMD and Q1, Q1 was obligated “perform all Services with highest degree of care, diligence, skill and judgement.” (Id. ¶ 16; Agmt., Appx. 1, ¶ 7.) The agreement also provides that Q1 was “responsible for the coordination of all HMD shipments from any origin to any destination” and required to “arrange the shipment to the final destination with the best possible carrier.” (Am. Compl. ¶ 17; Agmt., Appx 2, ¶ 5.)

*2 As to count one, the breach-of-contract claim, HMD contends that, based on the theft, Q1 breached the parties’ agreement “by failing to deliver the shipment in accordance with their contract, by failing to adequately arrange for the proper delivery of the shipment, by failing to arrange the shipment with the best possible carrier, and by failing to appoint a well-qualified carrier that had adequate insurance coverage for transporting cell phones.” (Am. Compl. ¶ 18.) HMD also maintains that, “because Q1 was managing the outbound transportation of the shipment, Q1 was responsible for and had the risk of loss of the subject cargo from the moment the goods are received by Q1 into its warehouse until the goods were delivered to the consignee.” (Id. ¶ 16.)

As to count three, the negligence claim, HMD complains that “Q1 failed to use reasonable care in transporting the subject shipment and/or failing to appoint the best possible carrier for the subject shipment,” and, as a result, “the subject shipment was stolen, and there was no insurance coverage for the carrier to pay for the loss.” (Id. ¶ 30.)

2. Legal Standard

A court considering a motion to dismiss, filed under Rule 12(b)(6), must accept all the complaint’s allegations as true, construing them in the light most favorable to the plaintiff. Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008). Although a pleading need only contain a short and plain statement of the claim showing that the pleader is entitled to relief, a plaintiff must nevertheless articulate “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not shown—that the pleader is entitled to relief.” Ashcroft v. Iqubal, 556 U.S. 662, 679 (2009) (quoting Fed. R. Civ. P. 8(a)(2)) (internal punctuation omitted). A court must dismiss a plaintiff’s claims if she fails to nudge her “claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570.

3. Analysis

A. HMD’s negligence claim against Q1 is preempted.

Q1 argues that both HMD’s negligence and breach-of-contract claims against it are preempted under the Federal Aviation Administration Authorization Act. (Def.’s Mot. at 8–9.) In response, HMD submits its claims are not preempted because (1) the FAAAA only applies to intrastate, and not interstate transportation; and (2) the FAAAA does not apply to Q1 because Q1, as the shipper, was not a licensed broker and was not a broker for HMD’s shipment. (Pl.’s Resp. at 4–5.) While the Court is persuaded that preemption applies to HMD’s negligence claim, it finds Q1’s argument as to HMD’s breach-of-contract claim lacking.

As a starting point, Q1 has failed to cite any legal authority, and the Court itself is aware of none, supporting its position that HMD’s breach-of-contract claim is preempted. Indeed, as HMD points out, case law supports the contrary: “Between the narrow reach of the statute and Congress’s intent to only reach state regulation, it is clear that private contractual disputes are not completely preempted by the FAAAA.” Indep. Serv. Provider, LLC v. Aponte, 6:21-CV-558-GAP-GJK, 2021 WL 2828323, at *2 (M.D. Fla. May 24, 2021) (noting that “the Supreme Court has already held that the ADA’s preemption clause—which has broader scope than the FAAAA’s—does not preempt breach of contract claims”) (emphasis in original) (citing Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 228–29 (1995)); Porter Capital Corp. v. Johns Manville, Inc., 2:12-CV-00925-RDP, 2013 WL 3153519, at *5 n. 3 (N.D. Ala. June 14, 2013) (finding common law breach of contract claim not preempted under the FAAAA); Barber Auto Sales, Inc. v. United Parcel Services, Inc., 494 F. Supp. 2d 1290, 1293 (N.D. Ala. 2007) (implicitly acknowledging that “routine breach of contract claims are not preempted by the FAAAA”) (cleaned up); Custom Stud, Inc. v. Meadow Lark Agency, Inc., 566 F. Supp. 3d 950, 954–55 (D. Minn. 2021) (“[T]he FAAAA does not preempt suits alleging breach of a party’s own self-imposed undertakings because these do not constitute a violation of state-imposed obligations.”) (cleaned up). Without further support or analysis then, from Q1, the Court declines to find HMD’s breach-of-contract claim in this case preempted.

*3 Next, in evaluating Q1’s preemption argument with respect to HMD’s negligence claim, the Court begins with the overarching principle that “state law that conflicts with federal law is without effect.” Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992) (cleaned up). This preemption can operate, generally, when either (1) Congress explicitly states an intent to preempt state law; (2) a state law “actually conflicts with federal law”; or (3) a “federal law so thoroughly occupies a legislative field” that one can reasonably infer “that Congress left no room for the States to supplement it.” Id. Regardless of how preemption applies in a given case, any preemption assessment “starts with the assumption that the historic police powers of the States are not to be superseded by Federal Act unless that is the clear and manifest purpose of Congress.” Id. With that backdrop in mind, the Court turns to the FAAAA itself.

The FAAAA’s express preemption provision provides, in relevant part, that a state “may not enact or enforce a law … related to a price, route, or service of any … broker … with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). Under the FAAAA, “transportation” is defined to include “services related to” “the movement of … property.” 49 U.S.C. § 13102(23). And “broker” is defined to mean one who “sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C. § 13102(2). “The phrase ‘related to’ … embraces state laws having a connection with or reference to carrier rates, routes, or services, whether directly or indirectly.” Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260 (2013) (cleaned up). Despite the breadth of the phrase, however, the Supreme Court has nonetheless cautioned that “that § 14501(c)(1) does not preempt state laws affecting carrier prices, routes, and services in only a tenuous, remote, or peripheral manner.” Id. at 261 (cleaned up).

In rejecting Q1’s preemption arguments, HMD argues that the FAAAA simply doesn’t apply to its claims. First, HMD says, the FAAAA, based on its title—“Federal authority over intrastate transportation”—doesn’t apply here because the goods were to be transported interstate, from Florida to Indiana. (Pl.’s Resp. at 4 (emphasis added) (quoting 49 U.S.C. § 14051’s title).) HMD’s position, however, is contrary to the very reason the FAAAA was enacted: Congress’s concern “that state regulation impeded the free flow of trade, traffic, and transportation of interstate commerce.” Dan’s City, 569 U.S. at 263 (cleaned up) (emphasis added). Indeed, as Q1 points out, the FAAAA has been broadly and repeatedly applied to preempt state-law claims related to interstate transportation of property. See, e.g., Aspen Am. Ins. Co. v. Landstar Ranger, Inc., 65 F.4th 1261, 1268 (11th Cir. 2023) (affirming dismissal of state tort claims based on “allegations of negligence and gross negligence against a transportation broker for its selection of a motor carrier to transport property in interstate commerce,” from Colorado to Maryland); Luccio v. UPS, Co., 9:16-CV-81703-RLR, 2017 WL 412126, at *2 (S.D. Fla. Jan. 31, 2017) (Rosenberg, J.) (“[C]ase law and statutory interpretation support the conclusion that the FAAAA was intended to apply to intrastate as well as interstate shipping unless otherwise exempted.”).

Second, HMD argues that the FAAAA doesn’t apply to Q1 because Q1 is a shipper and not a licensed broker or broker for the cellphone shipment in this case. (Pl.’s Resp. at 4–5.) The Court is not persuaded. Instead, the Court agrees with Q1 that FAAAA preemption applies to HMD’s tort claim against Q1 because that claim relates to Q1’s alleged negligence in arranging for the transportation of cargo and Q1’s alleged negligent selection of a motor carrier. In short, the Court finds HMD’s claim against Q1 is an attempt, whether directly or indirectly, to regulate broker and carrier services. See, e.g., Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 372 (2008) (preempting state law that requires a shipper to choose a certain kind of delivery service because although the state regulation “tells shippers what to choose rather than carriers what to do,” the effect of the regulation is to regulate carrier delivery services); Lee v. Werner Enterprises, Inc., 3:22 CV 91, 2022 WL 16695207, at *4 (N.D. Ohio Nov. 3, 2022) (“[N]egligence claims brought against a shipper and broker fall squarely within the preemption of the FAAAA.”); Creagan v. Wal-Mart Transp., LLC, 354 F. Supp. 3d 808, 813 n. 6 (N.D. Ohio 2018) (finding a negligent hiring claim against a defendant shipper preempted because “the negligent hiring claim against [the shipper] stem[med] entirely from [the defendant] broker[’s] services”). Accordingly, the Court finds HMD’s negligence claim against Q1, based on Q1’s alleged failure “to use reasonable care in transporting the subject shipment and/or by failing to appoint the best possible carrier for the subject shipment,” preempted by the FAAAA.

B. HMD fails to state a breach-of-contract claim against Q1.

*4 With the Court’s finding that HMD’s negligence claim is preempted, remaining for resolution is only whether HMD has stated a plausible claim for breach of contract. Q1 does not dispute the existence of an agreement, but maintains that HMD’s allegations of breach are far too conclusory and vague to support a claim for breach of contract. (Def.’s Mot. at 9–11.) In response, HMD stands on its pleading, insisting, without elaboration, that it “sufficiently alleges the existence of a valid contract[,] several of the material provisions of the contract, that Q1 breached the material terms of that contract, and that [it] suffered damages as a result.” (Pl.’s Resp. at 5.) After careful review, the Court agrees with Q1: the complaint fails to sufficiently articulate enough facts to state a plausible claim for breach of contract.

“For a breach of contract claim, Florida law requires the plaintiff to plead and establish: (1) the existence of a contract; (2) a material breach of that contract; and (3) damages resulting from the breach.” Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1272 (11th Cir. 2009). Because the parties do not dispute the first element, the Court’s analysis is trained on whether HMD has sufficiently alleged a material breach that resulted in HMD’s damages.

Within its breach-of-contract count, HMD specifically identifies two provisions of its contract with Q1: paragraph seven (labeled “Liability”) from appendix one; and paragraph five (labeled “Transport Concept”) of appendix two.³ (Am. Compl. ¶¶ 16, 17.) In its complaint, HMD describes paragraph seven as obligating Q1 “to perform all of its services with the highest degree of care, diligence, skill and judgment.” (Am. Compl. ¶ 16.) And it describes paragraph five as rendering Q1 “responsible for the coordination of all HMD shipments from any origin to any destination” and for the arrangement of “the shipment to the final destination with the best possible carrier.” (Id. ¶ 17.) Additionally, without referencing a particular provision of the contract, HMD also alleges, in its complaint, that “because Q1 was managing the outbound transportation of the shipment, Q1 was responsible for and had the risk of loss of the subject cargo from the moment the goods are received by Q1 into its warehouse until the goods were delivered to the consignee.” (Id. ¶ 16.) HMD then presents the entirety of its breach allegations in one short paragraph, alleging that Q1 failed to (1) “deliver the shipment in accordance with [the] contract”; (2) “adequately arrange for the proper delivery of the shipment”; (3) “arrange the shipment with the best possible carrier”; and (4) “appoint a well-qualified carrier that had adequate insurance coverage for transporting cell phones.” (Id. ¶ 18.)

The Court agrees with Q1 that these allegations are inadequate. The specific breach allegations, confined to paragraph eighteen of HMD’s complaint, are purely conclusory and devoid of any concrete facts. HMD’s position seems to be that, simply because the cargo was stolen, Q1 must have somehow failed to uphold its end of the bargain. But, HMD fails to actually connect these dots—the theft and the contract—and ultimately its allegations leave the Court with more questions than answers: Which provision of the contract did Q1 breach when the cell phones were not delivered because they were stolen from the motor carrier? What was inadequate about the way Q1 coordinated the shipment? What facts support HMD’s claim that Q1 failed to arrange the shipment with the “best possible carrier”? Is it HMD’s position that the best possible carrier would be wholly impervious to all thefts? What facts show that the carrier Q1 appointed was not “well-qualified”? Which contract provision required Q1 to appoint a carrier that had adequate insurance coverage for transporting cell phones?

*5 Notably, HMD has not presented any factual allegations supporting its claim that Q1 breached either of the provisions it specifically references. As to the liability provision (paragraph seven of appendix one), HMD proffers no facts showing that Q1 failed to perform its duties “with [the] highest degree of care, diligence, skill and judgment,” as required by the contract. (Agmt., Appx. 1, ¶ 7.) Similarly, the complaint fails to set forth any facts that would support a claim that Q1 breached the transport provision (paragraph five of appendix two) as well. As applicable here, the transport provision renders Q1 “responsible for the coordination of all HMD shipments” and requires Q1 to “arrange the shipment to the final destination with the best possible carrier and routing within agreed lead[ ]time.” (Id. Appx. 2, ¶ 5.) But none of HMD’s allegations supply any facts showing that the theft of the cargo from the carrier resulted from Q1’s failure to comply with these duties under the contract.

Further undermining the viability of HMD’s breach-of-contract claim, as Q1 points out, HMD’s allegations also mischaracterize the parties’ agreement. HMD’s position appears to be that the contract provides for absolute liability against Q1 for cargo that failed to reach its destination in Indiana after leaving Q1’s warehouse in Florida—regardless of whether Q1 was at fault. That is, according to HMD’s reading of the agreement, even without any showing that the in-transit loss was within Q1’s control, Q1, despite not being the actual carrier of the goods, nonetheless bore all the risk of that loss, whatever the cause. HMD fails, however, as Q1 points out, to reference any actual contract language that warrants HMD’s interpretation. Accordingly, the Court finds HMD’s unsupported speculation, that “Q1 was responsible for and had the risk of loss of the subject cargo from the moment the goods are received by Q1 into its warehouse until the goods were delivered to the consignee,” unavailing. (Id. ¶ 16.)

Indeed, other provisions in the contract appear to indicate the contrary: that Q1 was in fact not absolutely liable for any such loss during transport by the carrier. For example, the contract explicitly holds each party “fully liable” to the other for damages arising out of any “gross negligence or willful act or omission.” (Agmt., Appx. 1, ¶ 7.) The agreement further specifies that Q1 is “responsible for” and bears “the risk of the Goods from the moment the Goods are taken in charge of [Q1] until such Goods are released to HMD’s carrier if HMD is managing the outbound transportation”; and, if Q1 “is managing the outbound transportation, the outbound goods will be insured under HMD Global’s insurance freight carrier.” (Id.) These provisions would not make sense if the parties’ agreement was that Q1 was to remain fully liable for any loss of the shipment, regardless of Q1’s fault or ability to prevent the loss. The same logic applies to the agreement’s force majeure clause, absolving Q1 for any liability for “events beyond the control of the Party which occur after entering into agreement for Services and which were not reasonably foreseeable at that time and whose effects are not capable of being overcome without unreasonable expense and/or loss of time.” (Amgt., Appx. 1, ¶ 15.) HMD’s contention that, under the contract, Q1 had the full “risk of loss of the subject cargo” until it was delivered to the consignee (Am. Compl. ¶ 16) is irreconcilable with this force majeure provision. This is especially so where the complaint is devoid of facts from which the Court could conclude or even infer that the theft of the cargo was the result of Q1’s own actions or inactions.

Lastly, HMD’s efforts to insert new allegations, in opposition to Q1’s motion to dismiss are also unavailing. In its response, HMD points to a contract provision that renders Q1 “fully responsible and liable for the actions of its subcontractors.” (Pl.’s Resp. at 5–6 (referencing Agmt., Appx. 1, ¶ 3).) HMD then argues that World Wide’s failure “to appoint the best possible carrier that had sufficient insurance to cover the loss is directly attributable to Q1.” (Pl.’s Resp. at 6.) HMD’s position here suffers from several defects. First, HMD did not set forth this basis for Q1’s liability in its complaint and therefore it is not properly raised. Huls v. Llabona, 437 F. App’x 830, 832 n. 5 (11th Cir. 2011) (noting that a plaintiff may not amend his complaint through argument raised in a response to a motion to dismiss). Second, even if HMD had included these allegations in its complaint, they would be unavailing: HMD supplies no facts showing that World Wide failed to appoint the best possible carrier, that the appointed carrier was required to have insurance sufficient to cover the theft of the cargo, or that World Wide’s actions or inactions otherwise resulted in the theft.

*6 In sum, the Court finds HMD (1) has not supplied factual allegations in its complaint, as opposed to bare conclusions, showing that Q1 breached any of the contractual provisions HMD explicitly identifies; (2) fails to identify any other contractual provisions that Q1 breached; and (3) improperly proffers allegations in response to Q1’s motion to dismiss that were not included in HMD’s complaint. Accordingly, the Court agrees with Q1 that HMD’s breach-of-contract claim should be dismissed. See, e.g., Stepakoff v. IberiaBank Corp., 637 F. Supp. 3d 1309, 1313 (S.D. Fla. 2022) (Bloom, J.) (“In order to allege a material breach in accordance with the pleading standards required under the Federal Rules of Civil Procedure, the plaintiff must allege which provision of the contract has been breached.”); Siedle v. Nat’l Ass’n of Sec. Dealers, Inc., 248 F. Supp. 2d 1140, 1143 (M.D. Fla. 2002) (“Contract construction is a matter of law, and dismissal is appropriate where the cited language in the contract unambiguously demonstrates that the Plaintiff is not entitled to the relief sought.”).

4. Conclusion

For the reasons set forth above, the Court grants Q1’s motion (ECF No. 39) and dismisses HMD’s claims against Q1 with prejudice: HMD’s state-law negligence claim is barred by § 14501(c)(1) and HMD fails to state a claim for breach of contract.

Additionally, the Court dismisses HMD’s claims against Q1 without leave to amend, denying its cursory request to amend, inserted as an afterthought, at the end of its response to Q1’s motion to dismiss. (Pl.’s Resp. at 6.) The request is both procedurally defective and lacking in substantive support. First, the request is untimely and HMD fails to supply good cause, or even any cause, that would warrant an extension of the deadline to amend the pleadings. And second, the request is improperly presented, introduced perfunctorily and thoroughly devoid of any legal support. See Newton v. Duke Energy Florida, LLC, 895 F.3d 1270, 1277 (11th Cir. 2018) (“[W]here a request for leave to file an amended complaint simply is imbedded within an opposition memorandum, the issue has not been raised properly.”); Avena v. Imperial Salon & Spa, Inc., 740 F. App’x 679, 683 (11th Cir. 2018) (“[W]e’ve rejected the idea that a party can await a ruling on a motion to dismiss before filing a motion for leave to amend.”) (noting also that “a motion for leave to amend should either set forth the substance of the proposed amendment or attach a copy of the proposed amendment”) (cleaned up). Finally, HMD has already amended its complaint once, in response to Q1’s first motion dismiss, and yet still failed to set forth a viable claim against Q1.

Done and ordered in Miami, Florida, on January 12, 2024.

All Citations

Slip Copy, 2024 WL 167374

Footnotes

1. Aldon Mega has answered the complaint (ECF No. 36) and so count two is not at issue with respect to this order.
2. The Court accepts the complaint’s factual allegations, as set forth below, as true for the purposes of evaluating the motion to dismiss. Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997).  
3. Although the amended complaint references the agreement as being attached as an exhibit to the complaint, HMD acknowledges having inadvertently neglected to file it. Both parties appear to agree, however, that the Court can consider the contract—central to HMD’s claim and undisputed (later filed by both HMD (Agmt., ECF No. 45-3) and Q1 (Agmt., ECF No. 39, 14–21))—without converting Q1’s motion to dismiss into one for summary judgment.  

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