United States Court of Appeals, Sixth Circuit.

EMCO CORPORATION; Generali Versicherung AG, a/s/o EMCO Maier GmbH; EMCO Maier GmbH, Plaintiffs-Appellants,

v.

MILLER TRANSFER & RIGGING CO., Defendant-Appellee.

Case No. 22-3376

FILED January 31, 2023

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO

Attorneys and Law Firms

Nathan T. Williams, Kennedy Lillis Schmidt & English, New York, NY, for Plaintiffs-Appellants.

Eric Larson Zalud, I, Deana S. Stein, Benesch, Friedlander, Coplan & Aronoff, Cleveland, OH, for Defendant-Appellee.

Before: SUTTON, Chief Judge; COLE and GRIFFIN, Circuit Judges.

OPINION

COLE, Circuit Judge.

*1 In this shipping dispute, EMCO Corporation (“EMCO”) contends that Miller Transfer & Rigging Company (“Miller”) is liable under the Carmack Amendment, 49 U.S.C. § 14706, for damage caused to EMCO’s industrial machine. Because EMCO failed to establish that the machine was damaged upon delivery, we affirm.

I. BACKGROUND

EMCO wanted to package and ship a Hyperturn 110-SM2Y-1700 industrial machine and corresponding parts (collectively, the “Cargo”) from Cuyahoga Falls, Ohio, to Hallein, Austria. An EMCO employee contracted with Miller for the interstate portion of the shipment’s transport. The employee contracted for “packaging and shipment” of the Cargo within the United States but disclosed to Miller that the Cargo’s ultimate destination was overseas in Austria. The final agreement between EMCO and Miller was for (1) transportation from Cuyahoga Falls, Ohio, to Dover, Ohio; (2) packaging in Dover, including costs for the “[c]rate, VCI,¹ unloading, reloading, and securing the machine in crate”; and (3) transportation from Dover to the Port of Baltimore, Maryland. (Willard Aff., R. 33-6, PageID 297.) Unbeknownst to EMCO, Clarion Warehouse provided the packaging services while Miller transported the Cargo. Clarion and Miller, two separate legal entities, are subsidiaries of the same holding company. Miller subcontracts with Clarion for packaging services on many of Miller’s shipping contracts. EMCO contracted with a different third-party shipping company, Rotra, to transport the Cargo from the Port of Baltimore to Austria.

Notably, three separate bills of lading governed the Cargo’s shipment. “A bill of lading records that a carrier has received goods from the party that wishes to ship them, states the terms of carriage, and serves as evidence of the contract for carriage.” Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 18–19 (2004); see 49 U.S.C. § 14706(a)(1). A through bill of lading, not at issue here, “cover[s] cargo for the entire course of shipment” when cargo is shipped from overseas or to overseas countries. Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 93 (2010); see also CNA Ins. Co. v. Hyundai Merch. Marine Co., Ltd., 747 F.3d 339, 366 (6th Cir. 2014). A straight bill of lading, by contrast, indicates consignment to one entity; carriers transporting cargo under the Interstate Commerce Act (i.e., not internationally) are required to use a straight bill of lading. 49 C.F.R. § 1035.1. The bills of lading covering the Cargo were (1) from Cuyahoga Falls, Ohio to Dover, Ohio, which included shipment and packaging of the Cargo; (2) from Dover, Ohio to Baltimore, Maryland; and (3) from Baltimore, Maryland to Hallein, Austria. Miller issued the first two bills of lading, and Rotra issued the final bill.

On October 16, 2017, Miller transported the Cargo by truck from Cuyahoga Falls to Clarion’s Dover warehouse. Nowhere in the record do the parties suggest that the Cargo was damaged upon its arrival in Dover. Clarion then packaged and crated the Cargo. Miller transported the Cargo by truck on November 14, 2017, from Dover to the consignee, the Ceres Marine Terminal at the Port of Baltimore. The Cargo was delivered to the consignee on November 15, 2017, and there is no indication that the Cargo was damaged at this time. Between November 15 and November 28, the Cargo remained outdoors. On November 28, 2017, the Cargo was brought onto the vessel Drive Green Highway for international transport. The vessel arrived at the Port of Bremerhaven, Germany, on December 15, 2017. On December 20, 2017, Interfracht, an inland carrier, transported the Cargo to EMCO’s facility in Austria.

*2 At some point after the Cargo’s arrival in Austria, EMCO discovered extensive damage to the Cargo. Though the parties dispute when the damage to the Cargo occurred and when EMCO first discovered this damage, the parties agree that the damage occurred after the Cargo arrived at the Port of Baltimore.

EMCO filed the instant lawsuit in the Northern District of Ohio against Miller seeking damages under the Carmack Amendment for Miller’s alleged “fail[ure] to adequately package the Cargo, which resulted in the Cargo being delivered in damaged condition.” (Compl., R. 1, PageID 1, 6.) On April 19, 2021, both Miller and EMCO moved for summary judgment. Each party submitted distinct statements of undisputed material facts in support of their respective motions. Miller later also filed a motion to strike many of EMCO’s exhibits and declarations.

The district court granted summary judgment to Miller and denied summary judgment to EMCO. The court first found that the Carmack Amendment, rather than the Carriage of Goods by Sea Act, 46 U.S.C. § 30701, covered the interstate portion of the Cargo’s shipment—the first two bills of lading issued by Miller. It then dismissed the lawsuit, finding that Miller’s point of delivery was the Port of Baltimore, and EMCO was unable to make the required prima facie showing that the Cargo was damaged upon delivery. The district court did not rule on Miller’s motion to strike because it was no longer relevant based on the district court’s opinion. EMCO timely appealed.

II. ANALYSIS

We review a grant of summary judgment de novo. Zakora v. Chrisman, 44 F.4th 452, 464 (6th Cir. 2022). Summary judgment may only be granted where there is no genuine dispute of material fact and Miller is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a).

The Carmack Amendment is a federal statute that governs liability for damages to goods “transported in the United States or from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading[.]” 49 U.S.C. § 14706(a)(1). The Amendment “makes a motor carrier fully liable for damage to its cargo unless the shipper has agreed to some limitation[.]” Exel, Inc. v. S. Refrigerated Transp., Inc., 807 F.3d 140, 148 (6th Cir. 2015). In making motor carriers strictly liable, the scheme “relieves shippers of the burden of determining which carrier caused the loss as well as the burden of proving negligence.” Id. The statute defines “transportation” broadly, and therefore encompasses damage to any cargo during the physical movement of the cargo as well as “services related to th[e] movement” and packing of the cargo. 49 U.S.C. § 13102(23); see also Ga., Fla. & Ala. Ry. Co. v. Blish Milling Co., 241 U.S. 190, 196 (1916).

The Supreme Court has established a burden-shifting framework to evaluate Carmack Amendment claims. See Mo. Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 138 (1964). To establish a prima facie case for Carmack liability, EMCO must demonstrate (1) delivery to the carrier in good condition, (2) arrival in damaged condition, and (3) the amount of damages owed. Id. Here, both parties agree that EMCO has established the Cargo was in good condition when it was delivered to Miller. But the parties disagree regarding the second prima facie showing. Miller argues, and the district court agreed, that the relevant point of arrival is the Port of Baltimore, where the Cargo arrived undamaged. EMCO argues that the point of arrival is Austria; so long as “the seeds of the Cargo’s damage (i.e., improper packing) were sown while the Cargo was in Miller’s custody,” Miller remains liable for this damage even if it was not discovered until the Cargo’s final delivery, after the Cargo left Miller’s control. (Reply Br. 14.)

*3 Arrival under a straight bill of lading is defined as “delivery of the goods to the consignee,” which typically occurs when nothing “remains to be done by the carrier.” Intech, Inc. v. Consol. Freightways, Inc., 836 F.2d 672, 674 (1st Cir. 1987) (citation omitted); see also Republic Carloading & Distrib. Co. v. Mo. Pac. R.R. Co., 302 F.2d 381, 386 (8th Cir. 1962) (“Common carrier liability ceases upon delivery of the shipment to the consignee.”). “Generally speaking,” nothing remains to be done “when the possession, custody, and control of the goods involved have been surrendered to and accepted by the carrier.” Ill. Cent. R.R. v. Moore, 228 F.2d 873, 877 (6th Cir. 1956). “ ‘[D]elivery’ must mean delivery as required by the contract[.]” Am. Synthetic Rubber Corp. v. Louisville & Nashville R.R. Co., 422 F.2d 462, 466 (6th Cir. 1970) (quoting Blish Milling, 241 U.S. at 195). And the interpretation of the bill of lading, a contract, is governed by federal law. See Chesapeake & Ohio Ry. Co. v. Martin, 283 U.S. 209, 213 (1931) (“[S]ince it was issued in respect of an interstate shipment pursuant to an act of Congress, the bill of lading is an instrumentality of such commerce, and the question whether its provisions have been complied with is a federal question to be determined by the application of federal law.”). As such, “the intention of the parties defines its scope.” Intech, Inc., 836 F.2d at 674 (citing Blish Milling, 241 U.S. at 195).

Miller’s second bill of lading, which covered transport of the Cargo from Dover to Baltimore, is at issue here. A straight bill of lading “simply requires delivery of the goods to the consignee,” listed here as Ceres Marine Terminal in Baltimore. See Intech, 836 F.2d at 674. Thus, delivery occurred when Miller relinquished control over the Cargo to Ceres Marine Terminal. As the district court properly held, “[u]nder Carmack, Miller cannot be held responsible for damage allegedly occurring after the Cargo left the Port of Baltimore, which segment was performed under a separate bill of lading that did not incorporate Miller.” (District Ct. Op., R. 69, PageID 2476.)

EMCO’s “seeds of damage” argument does not change the point of delivery. There is no support for this argument. And indeed, Carmack liability runs solely interstate. If we were to adopt EMCO’s argument, then we would expand Carmack liability internationally despite there being an interstate-only bill of lading governing the dispute.

EMCO’s analysis that delivery is final when there is nothing left to be done, and that Miller did have something left to do—ensure that the packaging survived overseas travel—is similarly unavailing. In Intech, the carrier had a concrete action left to complete before delivery could be effectuated, which was unloading the shipment. 836 F.2d at 675; see also Starboard Holdings Ltd. v. ABF Freight Sys., Inc., 235 F. Supp. 3d 1363, 1373 (S.D. Fla. 2017) (determining that final delivery did not occur until the shipment arrived at plaintiffs’ warehouse, because defendants still had to secure an appointment and deliver the shipment to plaintiffs’ warehouse); Pilgrim Distrib. Corp. v. Terminal Transp. Co., 383 F. Supp. 204, 208 (S.D. Ohio 1974) (finding carrier was not liable under the Carmack Amendment because the damage to the cargo occurred after carrier attempted delivery per the terms of the bill of lading, and therefore fully discharged its duties); Tokio Marine & Fire Ins. Co. v. Chi. & Nw. Transp. Co., 129 F.3d 960, 961 (7th Cir. 1997) (holding that carrier was not liable for package’s theft because the package was delivered to the consignee per the terms of the transportation agreement prior to the theft).

Per the contract terms, delivery occurred at the Port of Baltimore when Miller delivered the Cargo to the consignee, as required by the straight bill of lading. The district court properly held that under the Carmack Amendment, it was EMCO’s burden to show that the Cargo arrived in damaged condition at the Port of Baltimore. Since EMCO cannot do so, Miller is not liable for any damage to the Cargo that occurred after Miller delivered the Cargo in Baltimore.

III. CONCLUSION

*4 For the foregoing reasons, we affirm the district court’s order granting summary judgment to Miller.

All Citations

Footnotes

1. VCI stands for “vapor corrosion inhibitor,” and it protects a package’s contents from corrosion.  

End of Document

United States District Court, D. Maryland.

TRIAX, INC., Plaintiff,

v.

TFORCE FREIGHT, INC., Defendant.

Civil No. 1:22-cv-01693-JRR

Signed February 11, 2023

Attorneys and Law Firms

Davin Van Eyken, Diversified Law Group, Laurel, MD, for Plaintiff.

James Hetzel, Tamara B. Goorevitz, Franklin and Prokopik PC, Baltimore, MD, Thomas Martin, Pro Hac Vice, William D. Bierman, Pro Hac Vice, Price Meese Shulman and D’Arminio PC, Woodcliff Lake, NJ, for Defendant.

MEMORANDUM OPINION

Julie R. Rubin, United States District Judge

*1 This matter comes before the court on Defendant TForce Freight, Inc.’s Motion to Dismiss for Failure to State a Claim. (ECF No. 5; the “Motion.”) The court has reviewed all submissions. No hearing is necessary. Local Rule 105.6 (D. Md. 2021).

BACKGROUND¹

Plaintiff, Triax Inc., is a corporation with its principal place of business in Frederick County, Maryland. (ECF No. 3, ¶ 1.) Defendant, TForce Freight Inc., is a corporation with its principal office in Richmond, Virginia. Id. ¶ 2. This action arises from Defendant’s alleged breach of duty for failure to deliver a shipment per the terms of the Bill of Lading. Id. ¶ 26.

Plaintiff purchased a 375-pound brass separating machine from West Coast Vibratory Feeders in California for $11,000. (ECF No. 3, ¶¶ 6, 10.) The machine was set to be shipped from California on May 5, 2022. Id. ¶ 6. On May 4, 2022, Plaintiff hired Defendant, a carrier, through a third-party freight brokering service to handle the shipment. Id. ¶ 7. The freight brokering service provided Plaintiff with a Bill of Lading that identified Defendant as the carrier that would handle the shipment. Id. ¶ 8.

On May 11, 2022, Plaintiff was notified that the shipment had arrived at Defendant’s facility in Elkridge, Maryland. (ECF No. 3, ¶ 11.) Plaintiff alleges that Defendant thereafter provided conflicting information about the status of the shipment, and that, ultimately, the shipment never arrived at Plaintiff’s warehouse. Id. ¶¶ 12-13. Plaintiff has since received no information from Defendant about the whereabouts of the shipment. Id. ¶ 13. As a result, Plaintiff’s business in connection with the intended use of the machine has been impaired, resulting in financial losses.

On June 10, 2022, Plaintiff filed suit against Defendant in the Circuit Court for Frederick County. On July 8, 2022, Defendant removed the case to this court. The Complaint sets forth one count of negligence. (ECF No. 3, p. 4.) Plaintiff seeks: (i) compensatory damages in the amount of $1,007,254.32; (ii) costs and attorney’s fees; and (iii) any other relief the court deems just and proper. Id. pp. 4-5.

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6)

Defendant argues that Plaintiff’s Complaint fails to state a claim for negligence on the basis of preemption by the Carmack Amendment to the Interstate Commerce Act. (ECF No. 5-1, p. 3.)

A Rule 12(b)(6) motion “tests the legal sufficiency of a complaint. It does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006) (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). Accordingly, a “Rule 12(b)(6) motion should only be granted if, after accepting all well-pleaded allegations in the plaintiff’s complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff’s favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief.” Edwards, 178 F.3d at 244 (citing Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)).

*2 “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). “Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). “A complaint that provides no more than ‘labels and conclusions,’ or ‘formulaic recitation of the elements of a cause of action,’ is insufficient.” Bourgeois v. Live Nation Ent., Inc., 3 F. Supp. 3d 423, 434 (D. Md. 2014) (quoting Twombly, 550 U.S. at 555). “The [c]ourt must be able to deduce ‘more than the mere possibility of misconduct’; the facts of the complaint, accepted as true, must demonstrate that the plaintiff is entitled to relief.” Evans v. 7520 Surratts Rd. Operations, LLC, No. 21-cv-1637, 2021 U.S. Dist. LEXIS 221041, at *4 (D. Md. Nov. 16, 2021) (quoting Ruffin v. Lockheed Martin Corp., 126 F. Supp. 3d 521, 526 (D. Md. 2015)).

ANALYSIS

I. Carmack Amendment

Defendant argues that Plaintiff’s negligence claim is preempted by the Carmack Amendment, and therefore should be dismissed for failure to state a claim. (ECF No. 5-1, pp. 4-5.)

“Federal law preempts state and common law when Congress expressly provides that the federal law supplants state authority in a particular field, or when its intent to do so may be inferred from a pervasive system of regulation which does not leave a sufficient vacancy within which any state can act.” Shao v. Link Cardo (Taiwan) Ltd., 986 F.2d 700, 704 (4th Cir. 1993). “Preemption may also be inferred where state legislation would impede the purposes and objectives of legislation enacted by Congress.” Id.

“The Carmack Amendment was enacted in 1906 as an amendment to the Interstate Commerce Act of 1887.” Id. It applies to common carriers “providing transportation or service subject to the jurisdiction of the Interstate Commerce Commission …” and requires a carrier providing transportation to issue a receipt or bill of lading for property and makes a carrier liable to the person entitled to recover under receipt or bill of lading. 49 U.S.C. § 11707(a)(1); 2 U.S.C. § 14706(a)(1). The Carmack Amendment is a “comprehensive exercise of Congress’s power to regulate interstate commerce.” 5K Logistics, Inc. v. Daily Express, Inc., 659 F.3d 331, 335 (4th Cir. 2011). It “creates ‘a national scheme of carrier liability for goods damaged or lost during interstate shipment under a valid bill of lading.’ ” Id. (quoting Shao, 986 F.2d at 704). Further, the Carmack Amendment “preempts all state or common law claims available to a shipper against a carrier for loss or damage associated with interstate shipments.” Rush Indus. v. MWP Constrs., LLC, 539 Fed. Appx. 91, 94 (4th Cir. 2013). In Adams Express Co. v. Croninger, the Supreme Court described the preemptive scope of the Carmack Amendment:

Almost every detail of the subject [of the liability of the carrier under a bill of lading] is covered 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 …

The duty to issue a bill of lading and the liability thereby assumed are covered in full, and though there is no reference to the effect upon state regulation, it is evident that Congress intended to adopt a uniform rule and relieve such contracts from the diverse regulation to which they had been theretofore subject.

226 U.S. 491, 505-506 (1913).

The Court’s reasoning in Adams Express is consistently relied upon by courts to conclude that the Carmack Amendment preempts common law negligence and contract claims for goods lost or damaged by a carrier during interstate shipment under a valid bill of lading. See Shao, 986 F.2d at 708 (holding that “the Carmack Amendment preempts…. common law claims for breach of contract and negligence for goods lost or damaged by a carrier during interstate shipment”); Brentzel v. Fairfax Transfer & Storage, Inc., No. 21-1025, 2021 U.S. App. LEXIS 38522, at *15 (4th Cir. Dec. 29, 2021) (holding that “[t]he Carmack Amendment ‘preempts all state or common law remedies available to a shipper against a carrier for loss or damage to interstate shipments’ ”) (quoting N. Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 456 (7th Cir. 1996)); Ward v. Allied Van Lines, Inc., 231 F.3d 135, 138 (4th Cir. 2000) (holding that “[t]he Carmack Amendment preempts a shipper’s state and common law claims against a carrier for loss or damage to goods during shipment.”); Pyramid Transp., Inc. v. Overdrive Specialized, Inc., No. WMN-12-1860, 2012 U.S. Dist. LEXIS 118833, at *3-4 (D. Md. Aug. 22, 2012) (holding that “[s]tate and common law claims preempted by Carmack include those of breach of contract and negligence for goods lost or damaged by a carrier during interstate shipment.”); Dominion Res. Servs. v. 5k Logistics, Inc., No. 9-CV-315, 2010 U.S. Dist. LEXIS 68162, at *10 (E.D. Va. July 8, 2010) (holding that “the Carmack Amendment does preempt state law claims against a carrier by a shipper”); Bowman v. Paul Arpin Van Lines, Inc., No. 05-CV-00062, 2005 U.S. Dist. LEXIS 38437, at *10 (W.D. Va. Dec. 30, 2005) (holding that “[t]he Camrack[sic] Amendment, 49 U.S.C. § 14706, preempts … claims for fraudulent misrepresentation and negligence and gross negligence.”).

*3 Count I is a negligence claim against Defendant, a carrier, for the loss of the bass sorting machine. (ECF No. 3, p. 4.) The negligence claim rests on the alleged breach of duty arising from Defendant’s failure to deliver the shipment per the terms of the Bill of Lading. Id. ¶ 26. Plaintiff alleges that Defendant was hired through a third-party freight brokering service and the freight brokering service provided a Bill of Lading that identified Defendant as the freight company handling the shipment. Id. ¶¶ 7, 8. As discussed above, the Carmack Amendment was intended to create a national uniform policy regarding the liability of carriers under a bill of lading for goods lost and it specifically preempts common law claims of negligence. See Shao, supra. Plaintiff’s negligence claim against Defendant for such loss directly conflicts with this policy. Id. Accordingly, Count I is preempted by the Carmack Amendment and the Motion will be granted.

II. Leave to Amend

In its response, Plaintiff requests leave to amend the Complaint. (ECF No. 8, p. 5.) Defendant does not appear to oppose an amendment (despite seeking dismissal of the Complaint with prejudice); in its Reply, Defendant asserts that, if the Complaint is dismissed, it is up to Plaintiff whether to bring a cause of action pursuant to the Carmack Amendment. (ECF No. 11, p. 3.)

Under Federal Rule of Civil Procedure 15(a) “[a] party may amend its complaint once as a matter of course.” Fed. R. Civ. P. 15(a). Once the defendant files a responsive pleading, however, “a party may amend its pleading only with the opposing party’s written consent or the court’s leave.” Id. Rule 15(a) instructs that “[t]he court should freely give leave when justice so requires.” Id.

“[L]eave to amend a pleading should be denied only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would have been futile.” Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006) (quoting Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986)). “Whether an amendment is prejudicial will often be determined by the nature of the amendment and its timing.” Id. at 427. “A common example of a prejudicial amendment is one that ‘raises a new legal theory that would require the gathering and analysis of facts not already considered by the [defendant, and] is offered shortly before or during trial.’ ” Id. (quoting Johnson, 785 F.2d at 509). The further a case progresses “before judgment [is] entered, the more likely it is that the amendment will prejudice the defendant or that a court will find bad faith on the plaintiff’s part.” Id. (citing Adams v. Gould, 739 F.2d 858, 864 (3d. Cir. 1984)). In contrast, an amendment is not prejudicial when “it merely adds an additional theory of recovery to the facts already pled and is offered before any discovery has occurred.” Id. (citing Davis v. Piper Aircraft Co., 615 F.2d 606, 613 (4th Cir. 1980)).

In view of these principles, Plaintiff may file an amended complaint no later than twenty days from entry of this opinion and accompanying order.

CONCLUSION

For the reasons set forth herein, Defendant’s Motion to Dismiss for Failure to State a Claim (ECF No. 5) is granted, however the dismissal will be without prejudice. Plaintiff may file an amended complaint no later than twenty days from entry of this opinion and accompanying order. Should Plaintiff fail to do so, the court will close this case without further notice.

A separate order follows.

All Citations

Footnotes

1. For purposes of adjudicating the Motion, the court accepts as true the well-pled facts set forth in the Verified Complaint at ECF No.3 (the “Complaint”).  

End of Document