United States District Court, S.D. Illinois.

CERTAIN UNDERWRITERS AT LLOYD’S, Plaintiffs,

v.

CSX TRANSPORTATION, INC., and EVANSVILLE WESTERN RAILWAY, INC. Defendants.

Case No. 20-cv-0795-SPM

02/21/2023

STEPHEN P. McGLYNN, U.S. District Judge

MEMORANDUM AND ORDER

*1 McGLYNN, District Judge:

Pending before the Court is a Renewed Motion for Judgment as a Matter of Law filed by plaintiff Certain Underwriters at Lloyds (“Lloyds”) pursuant to Rule 50 of the Federal Rules of Civil Procedure (Doc. 400). For the reasons set forth below, the Court DENIES the motion.

RELEVANT FACTUAL BACKGROUND

On October 17, 2022, a jury trial commenced between Lloyds and defendant CSX Transportation, Inc. (“CSX”)¹ . On February 11, 2022, the Court ruled on the respective dispositive motions and narrowed the pending issues (Doc. 300). Specifically, this Court held that Lloyds had established a prima facie case under the Carmack Amendment, but there remained the questions as to the amount recoverable under Carmack by Lloyds and whether CSX perfected its asserted limitation of liability (Doc. 300). On October 11, 2022, this Court further advised that it had reviewed the proposed jury instructions that had been submitted by the parties and determined that the Issues Instruction shall read as follows: “Defendant contends that it has limited its liability consistent with the Carmack Amendment. To succeed on this position, defendant must prove the following four elements by a preponderance of the evidence: (1) That the carrier provided the shipper, upon request, a copy of its rate schedule; (2) That the carrier gave the shipper a reasonable opportunity to choose between two or more levels of liability; (3) That the carrier obtained the shippers agreement as to the shippers choice of liability; and, (4) That a bill of lading was issued prior to moving the shipment that reflects the agreement. (Doc. 375). Of note, this version had been submitted and requested by Lloyds.

This action was initially filed on February 14, 2019 in the Western District of North Carolina (Doc. 1), but was subsequently transferred to this Court on August 18, 2020 (Doc. 58). This case asserted several theories of liability and sought recovery for the loss of four locomotives that derailed on September 14, 2018 during Hurricane Florence in or near Lilesville, North Carolina (Doc. 1). The locomotives were newly refurbished by National Railway Equipment Co. (“NRE”) in Mt. Vernon, Illinois and were in the process of being delivered to the Port of Wilmington when the derailment occurred. NRE was insured through Certain Underwriters at Lloyd’s and received payment under their policy of insurance.

*2 On October 21, 2022, at the close of evidence, Lloyds moved for a directed verdict, which was ultimately denied (Doc. 398). The parties then presented closing arguments before the case was submitted to the jury with the agreed upon instructions. Less than ninety (90) minutes later, following the five-day trial, a jury found that CSX proved that it had limited its liability to National Railway Equipment Co. (“NRE”) and awarded $40,000 total ($10,000 per locomotive) to plaintiff Certain Underwriters at Lloyds (“Lloyds”).

LEGAL STANDARD

Rule 50 of the Federal Rules of Civil Procedure “allows a district court to enter judgment against a party who has been fully heard on an issue during a jury trial if ‘a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.’ ” Passananti v. Cook County, 689 F.3d 655, 659 (7th Cir. 2012) (citing Fed.R.Civ.P. 50(a)). “In deciding a Rule 50 motion, the court construes the evidence strictly in favor of the party who prevailed before the jury and examines the evidence only to determine whether the jury’s verdict could reasonably be based on that evidence.” Id. In so doing, the court does not weigh the evidence or make credibility determinations. Tart v. Illinois Power Co., 366 F.3d 461, 478 (7th Cir. 2004) (citing Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150–51 (2000)). Furthermore, while the court reviews the entire record, “it must disregard all evidence favorable to the moving party that the jury [was] not required to believe.” Reeves, 530 U.S. at 151.

“Overturning a jury verdict is not something that [a court] do[es] lightly.” Massey v. Blue Cross–Blue Shield of Ill., 226 F.3d 922, 925 (7th Cir. 2000). A court will do so only if “the moving party can show that no rational jury could have brought in a verdict against it.” Hossack v. Floor Covering Assoc. of Joliet, Inc., 492 F.3d 853, 859 (7th Cir. 2007) (internal citations and quotations omitted).

ANALYSIS

The jury in this case was entrusted with the role of weighing the evidence, making credibility determinations, and drawing reasonable inferences from the facts. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). As such, the jury was responsible for determining whether CSX proved by a preponderance of the evidence, the four (4) elements to establish a limit of liability. Going through each of the elements, this Court does not find any reason to disturb the jury’s determination in favor of CSX and against Lloyds. The evidence allowed a jury to rationally conclude that CSX limited its liability consistent with the Carmack Amendment.

1. Rate Schedule

The first element states, “That the carrier provided the shipper, upon request, a copy of its rate schedule.” Although Lloyds contends that CSX only established they provided NRE with a copy of its rate schedule 5 days after the derailment, Lloyds concedes that NRE had constructive notice of the limitation before the shipment commenced (Doc. 400, p. 2, FN1). As such, Lloyds does not expressly dispute this element.

Notwithstanding the reluctant concession, this Court deems there was reliable and sufficient evidence for the jury to find, by a preponderance of the evidence, that NRE was aware of the rate schedule. Jay Smith, the prior Corporate Logistics Manager for NRE testified that he handled the domestic shipments for NRE from 2005 to 2019, including the shipment at issue² (Doc. 384, pp. 106-107). Smith testified that was familiar with the CSX price list and that he used the public rate that incorporated the limitation of liability language (Doc. 300, p. 115). He further testified that in his position, he contracted with CSX 30 to 40 times per year for 17 years and never requested a different rate (Doc. 384, p. 198). He also testified that he understood if he wanted higher coverage from CSX, he would have to pay a higher shipping rates (Doc. 384, p. 198 – 199).

2. Reasonable Opportunity to Choose

*3 The second element of the issues instruction states, “That the carrier gave the shipper a reasonable opportunity to choose between two or more levels of liability”. Lloyds alleges that CSX failed to establish this issue and points to a New York case to support its contention that CSX was required to offer full coverage under Carmack for the limitation of liability to apply (Doc. 400, p. 3); see Chartis Seguros Mexico S.A. de C.V. v. HLI Rail & Rigging, LLC, 3 F.Supp.3d 178-179 (S.D.N.Y. 2014). CSX counters that there is no such requirement under Carmack (Doc. 402). Indeed, this Court is constrained to note that there is no such language in the statute, that Lloyd’s prepared the jury instruction, and that the Chartis Seguros decision is not binding precedent.

Although Lloyds raises a CSX price list from 1999 to show that it previously contained full Carmack quotes “side-by-side” with a limited liability quote, that argument is not persuasive nor is it a requirement of what must be done. Business practices have evolved over 20 years. The Claims Limitation was admitted into evidence and was shown to the jury. The language stated,

“CSXT understands that you have requested our lowest rate, not a full liability rate offered under the Carmack Amendment. This rate is offered in connection with a limitation of carrier liability for damages to the commodity transported of [$10,000.00]. If full liability under the Carmack Amendment is desired, please contact your CSXT sales representative to receive a specific rate quote with Carmack Amendment protections.”

Based upon the evidence, including the testimony of Jay Smith, who chose the public rate although he was aware he could request a higher rate for more coverage, a rational jury could have found the shipper, NRE, was given a reasonable opportunity to choose between the public rate that limited liability and a rate that would cover the damage to the locomotives.

3. Shipper’s Agreement

The third element of the issues instruction states, “That the carrier obtained the shippers agreement as to the shippers choice of liability.” Lloyds contended that CSX did not provide evidence via a writing that the shipper consented to the liability limitation (Doc. 400, p. 11). In support of this argument, Lloyds points to an STB letter issued in response to a question posed by a judge in the Second Circuit, to wit: Mitsui Sumitomo Ins. Co. v. Evergreen Marine Corp., 621 F.3d 215 (2nd Cir. 2010).

The approved jury instruction does not specify that the agreement must be in writing and this Court is not going to add an additional requirement that was not before the jury when they decided the case. Jay Smith testified that he was aware of the liability limitation and that he accepted it. Hal Burgen, General Counsel for NRE, further indicated in an email to Cyndee Garbrecht, Lloyds representative, that “[e]ach time we ship with CSX, we accept their terms and conditions.” Based upon the evidence submitted at trial, the jury reasonably concluded that CSX proved by a preponderance of the evidence that it obtained NRE’s agreement as to choice of liability.

4. Bill of Lading

The fourth element of the issues instruction states, “That a bill of lading was issued prior to moving the shipment that reflects the agreement.” Lloyds claims that CSX failed to establish this element (Doc. 400, p. 14). Specifically, Lloyds contends that CSX could not point out where the limitation was included on the bill of lading; however, that is not the plain language of step 4. Indeed, there was one jury instruction with 4 separate elements.

Through testimony, CSX established that NRE prepared the bills of lading online, applying the limitation of liability rate. The bill of lading only needed to reflect the agreement, and the jury reasonably inferred via the exhibits and other testimony that it did so.

*4 In closing, it was for the jury to assess the evidence and the credibility of the witnesses who testified about the events at issue. The fact that Lloyds disagrees with the credibility determinations of the jury provides no basis for disturbing the verdict. The totality of the evidence was sufficient to permit the jury to conclude that CSX limited its liability consistent with the Carmack Amendment, and proved by a preponderance of the evidence that: (1) That the carrier provided the shipper, upon request, a copy of its rate schedule; (2) That the carrier gave the shipper a reasonable opportunity to choose between two or more levels of liability; (3) That the carrier obtained the shippers agreement as to the shippers choice of liability; and, (4) That a bill of lading was issued prior to moving the shipment that reflects the agreement. This Court will overturn a verdict only if “no rational jury” could have reached the result it did, and this Court sees no sound basis upon which to disturb the jury’s decision.

CONCLUSION

For the reasons set forth above, the Court denies plaintiff Certain Underwriters at Lloyds Rule 50(b) Motion for Judgment as a Matter of Law. Clerk to enter judgment according to jury verdict. IT IS SO ORDERED.

DATED: February 21, 2023

/s/ Stephen P. McGlynn

STEPHEN P. McGLYNN

U.S. District Judge

All Citations

Footnotes

1. This case also identified Evansville Western Railway, Inc. (“EVWR”) as a party-defendant; however, on February 11, 2022, this Court granted Summary Judgment to EVWR and held that EVWR limited its liability in the amount of $100,000 total, or $25,000 per locomotive (Doc. 300). Additionally, prior to the commencement of the trial, the Court entered an Order that indicated that Lloyd’s claims as to CSX and EVWR were severed and that the trial pertained to CSX (Doc. 378). Accordingly, although the Response in Opposition was purportedly filed by CSX and EVWR, this Court strikes any reference to EVWR.  
2. Jay Smith’s Trial Testimony is contained in Transcript of Jury Trial – Volume III. The transcript has been p. 115)filed with the Court as Document 300, and Mr. Smith’s testimony encompasses pages 106 to 216 of said Document.  

End of Document

United States District Court, S.D. New York.

INTERBORO PACKAGING CORP., Plaintiff,

v.

NEW PENN MOTOR EXPRESS, LLC and YRC, Inc., Defendants.

21-CV-10591 (PMH)

Signed February 14, 2023

Attorneys and Law Firms

Joseph J. Haspel, Joseph J. Haspel PLLC, Middletown, NY, Richard Martin Mahon, Catania, Mahon & Rider, PLLC, Newburgh, NY, Michael Rene Frascarelli, Hopewell Junction, NY, for Plaintiff.

Thomas Christopher Martin, William David Bierman, Nowell Amoroso Klein Bierman, P.A., Hackensack, NJ, for Defendants.

OPINION & ORDER

PHILIP M. HALPERN, United States District Judge:

*1 Interboro Packaging Corp. (“Plaintiff”) presses two claims for relief against New Penn Motor Express, LLC and YRC, Inc. (together, “Defendants”), sounding in breach of contract and fraud in the inducement. (Doc. 31, “SAC”). Plaintiff alleges that Defendants unilaterally terminated a “Freight Charges Agreement” after Plaintiff objected to Defendants’ assessment of fees and costs in excess of the rates the parties had contractually agreed upon.

Defendants, in accordance with the briefing schedule set by the Court, moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss, in part, the Second Amended Complaint. (Doc. 41; Doc. 42). Plaintiff opposed (Doc. 45, “Opp. Br.”), and the motion was fully submitted with the filing of Defendants’ reply brief (Doc. 46).

For the reasons set forth below, Defendants’ motion to dismiss is GRANTED in part and DENIED in part.

BACKGROUND

The facts recited herein are drawn from the Second Amended Complaint and taken as true for purposes of this motion. Plaintiff is a New York corporation that sells plastic bags, including can and trash liners, food bags, plastic tablecloths, storage bags, garment bags, plastic film (plain or printed), stretch film, pallet wrap, as well as disposable gloves and aprons. (SAC ¶¶ 1, 7). Plaintiff ships its products to customers located throughout the United States, including State, City and County municipalities, Colleges, Universities, School Districts, government agencies, and businesses. (Id. ¶ 8). Defendants are a “less-than-truckload” freight carrier and with its subsidiary are corporate entities formed under the laws of the State of Delaware. (Id. ¶¶ 2, 3, 10, 11, 13, 15).

Plaintiff retained Defendants as its principal common carriers under a Freight Charges Agreement. (Id. ¶¶ 26, 32, 38). Plaintiff was awarded contracts competitively bid in reliance on the pallet rates, less-than-truckload rates and the individual rates stipulated to among the parties. (Id. ¶¶ 31, 33-36). Defendants then began to assess fees and costs in excess of the parties’ agreement. (Id. ¶ 41). Plaintiff objected to those fees and advised Defendants that it would only pay the rates to which the parties agreed. (Id. ¶¶ 42, 43). Defendants then unilaterally terminated the Freight Charges Agreement. (Id. ¶¶ 44, 48).

On October 7, 2021, Plaintiff brought suit against Defendants in New York State Supreme Court alleging breach of contract, fraud and misrepresentation, conversion and loss of shipments, and declaratory judgment. On December 10, 2021, Defendants removed the case to this Court. (Doc. 1). Following removal, Plaintiff twice amended its complaint. (Doc. 22; SAC). The Second Amended Complaint asserts two claims for relief against Defendants: breach of contract and fraud in the inducement. Defendants now move to dismiss on statute of limitations grounds the breach of contract claim to the extent any breaches accrued more than 180 days prior to the filing of the Plaintiff’s initial complaint. Defendants move to dismiss the fraud claim in its entirety on the grounds that it is preempted by federal law.

STANDARD OF REVIEW

*2 A Rule 12(b)(6) motion enables a court to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “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.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556). The factual allegations pled “must be enough to raise a right to relief above the speculative level….” Twombly, 550 U.S. at 555.

“When there are well-ple[d] factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. Thus, the Court must “take all well-ple[d] factual allegations as true, and all reasonable inferences are drawn and viewed in a light most favorable to the plaintiff[ ].” Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996). The presumption of truth, however, “ ‘is inapplicable to legal conclusions,’ and ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.’ ” Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Iqbal, 556 U.S. at 678 (alteration in original)). Therefore, a plaintiff must provide “more than labels and conclusions” to show entitlement to relief. Twombly, 550 U.S. at 555.

ANALYSIS

The basis for both branches of Defendants’ motion is the application of the Interstate Commerce Commission Termination Act, 49 U.S.C. § 10101 et seq. (the “ICCTA”), to the claims alleged in the Second Amended Complaint. Defendants argue that a limitations provision in the ICCTA applies to the breach of contract claim to bar claims for overcharges for transportation that occurred more than 180 days prior to the filing of the Plaintiff’s initial complaint. They further argue that the ICCTA preempts Plaintiff’s fraud in the inducement claim for relief. The Court considers each claim in turn.

I. Breach of Contract Claim

The ICCTA provides, in relevant part, that if a shipping customer wishes to contest charges originally or subsequently billed by a motor carrier, it “must contest the original bill or subsequent bill within 180 days of receipt of the bill in order to have the right to contest such charges.” 49 U.S.C. § 13710(a)(3)(B). Plaintiff argues that the ICCTA limitations provision relied upon by Defendants, § 13710(a)(3)(B), does not apply to its breach of contract claim because this action does not seek to recover freight overcharges. Plaintiff contends the breach at issue is Defendants’ termination of the Freight Charges Agreement and refusal to ship Plaintiffs’ goods, which caused delays in Plaintiff’s shipments and forced Plaintiff to ship with other carriers at higher rates. Plaintiff maintains that because it does not seek to recover the difference between Defendants’ published tariff rates and the rates it charged Plaintiff for shipments, the claim is not governed by the ICCTA.

Neither party has provided any persuasive—let alone binding—precedent squarely on point.¹ While it does appear, as explained infra, that the ICCTA applies to this action, it is not clear to the Court that the 180-day limitations provision of § 13710(a)(3)(B) applies to a breach of contract claim that does not seek to recover overcharges. Without the benefit of the Freight Charges Agreement, or any discovery concerning the parties’ agreement, or any condition precedent to suit, etc., the Court will not limit Plaintiff’s breach of contract claim at this juncture. Accordingly, this branch of Defendant’s motion is denied. Once discovery is completed, Defendants may, if appropriate, raise the issue at the summary judgment stage.

II. Fraud in the Inducement Claim

*3 Defendants also argue that Plaintiff’s second claim for relief, fraud in the inducement, must be dismissed as preempted by the ICCTA. The preemption provision applies to “motor carriers of property,” as well as “motor private carrier[s], broker[s], or freight forwarder[s] with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). The section provides, in pertinent part, that a State may not “enact or enforce a law … related to a price, route, or service” of any such carrier. 49 U.S.C. § 14501(c)(1).

Plaintiff specifically alleges that Defendants are “carriers” “as that term is defined in 49 U.S.C. § 13102(3).” (SAC ¶¶ 10, 13). That section defines “carrier” as “a motor carrier, a water carrier, and a freight forwarder.” 49 U.S.C. § 13102(3). Plaintiff has further described Defendants as a “regional, less-than-truckload (“LTL”) freight carrier” which “consolidates freight from multiple shippers into a single truckload” and, as a “leading transporter of industrial, commercial and retail goods,” which “carries out its business, as described above, by shipping its products to its customers via common carriers and LTL trucking companies.” (SAC ¶¶ 11, 14-16). The factual predicate of Plaintiff’s fraud in the inducement claim concerns the rates that Defendants were charging. Indeed, Plaintiff alleges in the first substantive paragraph of this second claim for relief that “the representations of [Defendants], through [Defendants’] Agents, that [Plaintiff] would be charged the fixed tariff amounts without any add-ons, except the $15.00 ‘Liftgate’ fee when requested by [Plaintiff] were knowingly false when made, as the representations that [Defendants] would honor the pricing promises were uttered at a time when there was no intention to honor the pricing promises made.” (SAC ¶ 59). There can be no doubt that Plaintiff has alleged that Defendants are motor carriers and that its fraud claim concerns issues “related to” Defendants’ “price” or “service.”

As none of the exemptions to the ICCTA preemption provision apply to this action, 49 U.S.C. § 14501(2),(3), the Court’s inquiry is whether Plaintiff’s state law fraud claim amounts to enforcement of state law that is “related to a price, route, or service” of Defendants, the motor carriers. See Frey v. Bekins Van Lines, Inc., 802 F. Supp. 2d 438, 441 (E.D.N.Y. 2011) (“[T]he court here must determine whether [p]laintiffs’ state law claims, which allege, inter alia, fraud, negligence, and the violation of state consumer protection laws, amount to enforcement of state law that is ‘related to a price, route, or service’ of the named motor carriers.”). Courts that have been faced with this question have concluded that the broad preemption provision of § 14501(c)(1) applies to state common law claims such as the fraud claim at issue here. See id. (collecting cases).

Plaintiff, in opposition, argues that Congress did not intend for the ICCTA to completely preempt fraud claims. (Opp. Br. at 7-9). Plaintiff does not, however, address the case law that specifically holds “that non-contractual state law statutory and tort claims fall within the ICCTA’s language of preemption, and are therefore barred.” Frey, 802 F. Supp. 2d at 442; see also Huntington Operating Corp. v. Sybonney Exp., Inc., No. H-08-781, 2010 WL 1930087, at *3 (S.D. Tex. May 11, 2010) (dismissing as preempted claims based on state deceptive trade practices act, negligence, and negligent misrepresentation and holding that, “[i]n short, 49 U.S.C. § 14501 broadly preempts state law claims that would regulate interstate transportation of goods.”); Yellow Transp., Inc. v. DM Transp. Mgmt. Servs., Inc., No. 06-CV-01517, 2006 WL 2871745, at *3 (E.D. Pa. July 14, 2006) (dismissing as preempted by § 14501 claims of misrepresentation, unjust enrichment, quantum meruit, and fraud); Mastercraft Interiors, Ltd. v. ABF Freight Sys., Inc., 284 F. Supp. 2d 284, 288 (D. Md. 2003) (dismissing as preempted by § 14501 claims of misrepresentation, negligent misrepresentation, and unjust enrichment).

*4 Plaintiff’s concern that it will not get its day in court should this Court determine its second claim for relief is preempted is misplaced. Plaintiff expressly pled its fraud claim in the alternative (SAC ¶ 59 (“Alternatively, in the event that the Freight Charges Agreement is not upheld….”)), and the breach of contract claim will proceed to discovery as discussed supra. Accordingly, this branch of Defendants’ motion to dismiss the second claim for relief on preemption grounds is granted and the claim is dismissed.²

CONCLUSION

Based upon the foregoing, Defendants’ motion to dismiss pursuant to Rule 12(b)(6) is GRANTED in part and DENIED in part. The request for oral argument is denied as moot.

Plaintiff’s first claim for relief for breach of contract shall proceed to discovery. Plaintiff’s second claim for relief for fraud in the inducement is dismissed in its entirety.

Defendants are directed to file an Answer to the Second Amended Complaint by March 7, 2023. The Court will thereafter docket a Notice of Initial Conference.

All Citations

Footnotes

1. Plaintiff cites Learning Links, Inc. v. United Parcel Serv. of Am., Inc., No. 03-CV-07902, 2006 WL 2466252 (S.D.N.Y. Aug. 24, 2006), for its holding that the 18-month statute of limitations under 49 U.S.C. § 14705 does not apply to breach of contract actions that do not seek to recover freight overcharges. While that case presents the most similar fact pattern to the instant matter of the cases collectively cited by the parties, and is a decision of a court within this Circuit, it is distinguishable because it does not consider the specific statutory 180-day limitations provision relied upon by Defendants.  
2. It is worth noting that Plaintiff’s fraud in the inducement claim, if not preempted, would be subject to dismissal on the ground that fraud as to the original terms of a contract cannot co-exist, as a matter of law, with a breach of contract claim raising the identical issue. The fraud in the inducement claim, in this scenario, fails as a matter of law.  

End of Document