United States District Court, C.D. Illinois.

AGCS MARINE INSURANCE CO., as subrogee of ASCO POWER TECHNOLOGIES, L.P., Plaintiff,

v.

CHILLICOTHE METAL CO., INC., TRANSPORT LOGISTICS, INC., and TRANSPORT NATIONAL, LLC, Defendants.

Case No. 20-cv-01388-JES-JEH

January 19, 2023

ORDER AND OPINION

James E. Shadid United States District Judge

*1 This matter is now before the Court on Motions for Complete or Partial Summary Judgment filed by Plaintiff AGCS Marine Insurance Co. Inc. and Defendants Transport National LLC and Transport Logistics Inc. Plaintiff has filed a Motion (Doc. 59) for Partial Summary Judgment against Defendants Transport National and Transport Logistics, to which Defendants have Responded (Doc. 62), and Plaintiff has Replied (Doc. 68). Defendants Transport Logistics and Transport National have filed a Motion (Doc. 64) for Complete or Partial Summary Judgment, to which Plaintiff has Responded (Doc. 69), and Defendants have Replied (Doc. 72). Plaintiff and Defendant Chillicothe Metal Company Inc. also moved for summary judgment against one another. Those motions are addressed in a separate Opinion. For the reasons set forth below, Motion (Doc. 59) is DENIED and Motion (Doc. 64) is GRANTED in part and DENIED in part.

This is a case about a shipment of electrical switchgear that was damaged during transit and who is ultimately responsible for the associated loss exceeding $1.8 million. Plaintiff AGCS Marine Insurance Co. Inc. is standing in the shoes of the original manufacturer of the product (the insured) as it paid out the claim for the loss. AGCS now seeks to recover that $1.8 million from either or both the secondary manufacturer¹ that shipped the product after adding large components to it and the companies involved in the transportation of the product to the end user.

BACKGROUND

On November 6, 2020, AGCS, as subrogee of ASCO Power Technologies, L.P. (“ASCO”), filed a four-count Complaint to recover losses sustained on or about November 6, 2018, because of damage in the amount of $1,831,166. Hereinafter, the Court refers to Plaintiff as ASCO for ease of reference because the events giving rise to this dispute stem from contracts between ASCO and Defendant Chillicothe Metal Company, Inc., (“CMCO”) and Defendants Transport National and Transport Logistics (collectively, “the Transport Defendants”). Plaintiff has alleged the following Counts: Breach of Contract Against CMCO (Count I), Breach of Implied Warranty of Merchantability Against CMCO pursuant to New Jersey Uniform Commercial Code, Section 12A:2-314(e) (Count II), Breach of Bailment against CMCO (Count III), and a Claim under the Carmack Amendment against the Transport Defendants (Count IV). Discovery is complete and all Parties have moved for summary judgment. ASCO and the Transport Defendants incorporate arguments and facts presented in their motions for summary judgment and responses to one another’s; therefore, the Court consolidates and addresses both motions herein.

Unless otherwise noted, the following facts are undisputed. The Court has omitted facts discussed regarding the relationship between ASCO and CMCO. Those facts are described in detail in the Court’s Opinion addressing ASCO’s and CMCO’s summary judgment motions against one another.

*2 Transport Logistics is a Wisconsin corporation licensed by the U.S. Department of Transportation under U.S. DOT No. 2226418, as a freight broker. It was a broker for the shipment of cargo involved in this litigation. It was not a trucking company. Transport National is a Wisconsin-based interstate motor carrier licensed by the U.S. Department of Transportation under U.S. DOT No. 165949. It was the motor carrier that was hired to transport the subject switchgear via five truckloads of cargo on flat-bed trucks, from Chillicothe, Illinois to Ft. Meade, MD. ASCO ultimately paid the freight charges for the shipment of the cargo by Transport National.

On May 29, 2018, Transport Logistics issued to ASCO separate quotes for each of the five truckloads. The five Quotes were numbered 270524 (issued for a weight of 2,300 lbs), 270526 (20,000 lbs weight), 270528 (17,200 lbs weight), 270529 (63,500 lbs weight) and 270531(87,000 lbs weight). See Docs. 64-6, 64-7, 64-8, 64-9, 64-10. All quotes, aside from 27024, were issued for a Cargo freight of a “steel storage building.” Each quote contained the following language: “Customer is required to declare the value of Cargo prior to shipping otherwise the liability for said property is limited to $.50 per pound, $100,000.00 maximum value, as applicable under 49 U.S.C. 14706(c)(1)(A) and (B) unless specifically agreed to in writing and appropriate rates or charges applied.” The motor carrier services were to be provided pursuant to terms and conditions in its quotes that included an agreement whereby the parties waived any and all rights and remedies provided by Part B to Subtitle IV of Title 49 of the U.S. Code to the extent such rights and remedies conflicted with the provisions of the terms and conditions in the quotes provided by Transport Logistics.

ASCO’s Adam Seid made the final decision to choose Transport Logistics as the cargo broker. Part of ASCO thinking was that another motor carrier it had communicated with was more expensive. ASCO received the quotes on July 11, 2018, and each of the five quotes contained a limitation of liability term on page 2, paragraph 13. ASCO did not attempt to amend or modify it, and it did not request a revised quote.

On August 6, 2018, ASCO’s Ryan Gobble, Logistics Analyst, sent an email to Scott Eccleston of Transport National and Jacob McKinney of Transport Logistics and Adam Seid and Doug Wilkins of ASCO, that confirmed ASCO’s acceptance and use of the quotes. He also asked when delivery would occur. At the time, ASCO did not ask any questions about the quotes it accepted.

Prior to shipment from CMCO, the bills of lading for this cargo shipment were issued by CMCO. They were created based on communications exchanged between ASCO’s Adam Seid and CMCO’s Mark Reinhold, wherein ASCO explained what was needed in the bill of lading. The Transport Defendants were not involved in their creation. The bills of lading for the cargo only identified CMCO as the shipper. It did not include any valuation for the cargo.

ASCO was the entity that had the information on the value of its cargo whereas the Transport Defendants did not. ASCO never discussed or provided a declared value of the cargo to the Transport Defendants as ASCO had done by email to another motor carrier, Mercer Transportation, a motor carrier with whom ASCO had frequently worked in the past. ASCO had never asked Transport Logistics to adjust its quoted prices for a declared value. According to Transport employee Scott Eccleston, as a matter of general procedure, any customer who wanted to declare a value of a cargo shipment only needed to inform Transport Logistics or Transport National by phone or email. The reason for the declaration of value is that any item for transport valued at over $400,000.00 would require Transport National to purchase additional insurance. Prior to the shipment of the cargo, ASCO did not have any communications with Transport Logistics with regard to a declared value for the cargo.

*3 In early November 2018, the cargo freight shipment was all transported on open truck beds. ASCO had guidelines for shipping electrical switchgear in 2017, but it did not provide those guidelines to Transport Logistics or Transport National. Nor did ASCO issue any specific packaging instructions to either CMCO or Transport National, LLC. Transport National truck driver Matt Woodrum took cellphone photographs of the “saran wrap”² that CMCO applied to the electrical switchgear before he tarped the electrical switchgear at CMCO. He also saw the wrap was around the sides of the electrical switchgear cargo freight.

The written quotes provided by Transport Logistics did not provide for tarping any part of the load. ASCO and the Transport Defendants disagree whether they had any direct conversations regarding requirements for tarping of the electrical switchgear equipment. However, ASCO does, aside from its criticisms, agree that all the items were tarped that were supposed to be tarped for shipment. But no one from ASCO had asked Transport National to bind and secure the tarps that drivers ended up using on the shipment to Fort Meade, Maryland. Transport National drivers used vinyl tarps on the shipment that were water resistant but not waterproof.³ The Parties also disagree whether waterproof tarps were available and whether such a tarp would have prevented all water from entering the cargo.

LEGAL STANDARD

Summary judgment is appropriate where the movant shows, through “materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations … admissions, interrogatory answers, or other materials” that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56. When presented with a motion for summary judgment, the Court must construe the record “in the light most favorable to the nonmovant and avoid[ ] the temptation to decide which party’s version of the facts is more likely true.” Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003). In resolving the motion, “[t]he court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial.” Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994).

In order to withstand a motion for summary judgment, the nonmovant must “set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). If the evidence, however, is “merely colorable, or is not significantly probative” or merely raises “some metaphysical doubt as to the material facts,” summary judgment may be granted. Liberty Lobby, 477 U.S. at 249-50; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Thus, in order to overcome the undisputed facts set forth in a defendant’s motion for summary judgment, a plaintiff cannot rest on the allegations in his complaint but must point to affidavits, depositions, or other evidence of an admissible sort that a genuine dispute of material fact exists between parties. Fed. R. Civ. P. 56(e)(2); Behrens v. Pelletier, 516 U.S. 299, 309 (1996). “[I]f the non-movant does not come forward with evidence that would reasonably permit the finder of fact to find in her favor on a material question, then the court must enter summary judgment.” Waldridge, 24 F.3d at 920. When presented with cross-motions for summary judgment, the Court must consider the motions separately, which necessarily means the nonmovant differs depending on the motion being considered. Schlaf v. Safeguard Prop., LLC, 899 F.3d 459, 465 (7th Cir. 2018) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)). This, however, does not alter the standard for reviewing a motion for summary judgment or the parties’ respective burdens.

DISCUSSION

*4 The Parties agree the shipments containing the electrical switchgear and associated parts were damaged during transit from Chillicothe, Illinois to Fort Meade, Maryland. The Parties recognize it was not a supervening force that caused the damage but rather, in some form, poor packaging by either or both of the Defendants, and/or poor instruction by Plaintiff to the Defendants. They all point the finger at one another for the damage. As the Court sees it, the real issue in this case is the Parties’ agreement in their respective contracts with one another i.e., ASCO with Transport and ASCO with CMCO. Notably, there was no contract between CMCO and Transport. This Opinion addresses the contract between Transport and ASCO.

Unlike its attempt to enforce its terms and conditions on CMCO, here, ASCO claims Transport’s terms and conditions are not enforceable against it; namely, the limitation of liability term. Plaintiff requests the entry of Partial Summary Judgment against Defendants Transport Logistics and Transport National by striking their Fourth Affirmative Defense for enforcement of the $100,000 liability limitation per truckload as provided in the May 29, 2018 quotes from Transport to ASCO. Doc. 59. Plaintiff argues Defendant cannot met the four elements of enforceability as articulated in Hoover v. ABF Freight System, Inc., No. 06-1301, 2008 WL 1805392 (C.D. Ill. April 18, 2008).

The Transport Defendants have moved for summary judgment on Count III against them. First, Defendants argue Transport Logistics is excluded from coverage under the Carmack Amendment because it acted only as a freight broker, as defined in 49 U.S.C. § 13102(2). Second, Defendants argue Plaintiff’s agreement to a limitation of liability, up to $100,000 per shipment, is enforceable. Third, Defendants argue they were not negligent, and they were not contracted to provide any technical packing, nor did they provide a quote for such work. They assert ASCO and CMCO are responsible for their own omissions or negligence in failing to properly package or load the shipments, which resulted in property damage.

1. The CarmackAmendment

Plaintiff’s claim against the Transport Defendants is based on the Carmack Amendment, 49 U.S.C. § 14706. The Transport Defendants assert summary judgment should be granted as to Transport Logistics because it acted only as freight broker and the Carmack Amendment limits its scope to claims against the delivering carrier or carrier alleged to have caused the loss or damage under 49 U.S.C. § 14706(d)(1) and (2). For support, Defendants cite two district court cases, CorTransLogistics, LLC v. Landstar Ligon, Inc., 489 F.Supp.3d 824, 829 (S.D. Ind. 2020) and Sompo Japan Ins. Co. of America v. B&H Freight, Inc., 177 F.Supp.3d 1084, 1087 (N.D. Ill. 2016). Both cases held the Carmack Amendment does not extend to brokers.

Indeed, the Carmack Amendment, states that a civil action may be brought in a district court against a “carrier” alleged to have caused the loss or damage during the course of an interstate shipment. 49 U.S.C. § 14706(d); REI Transp., Inc. v. C.H. Robinson Worldwide, Inc., 519 F.3d 693, 697 (7th Cir. 2008). CorTrans Logistics provides ample discussion explaining the difference between a carrier and a broker. 489 F. Supp. 3d at 830 (“ ‘Broker,’ by contrast, ‘means 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 … as selling, providing, or arranging for, transportation by motor carrier for compensation.’ ”) (quoting 49 U.S.C. § 13102(2)).

Here, ASCO admits in its undisputed material facts section that Transport Logistics was the broker entity and Transport National was the actual motor carrier of the freight cargo that carried the switchgear equipment to Fort Meade. Moreover, ASCO failed to offer any argument against summary judgment as to Transport Logistics or how it qualified as a “carrier,” as opposed to a “broker,” therefore, it has waived its opportunity to do so. See Alioto v. Town of Lisbon, 651 F.3d 715, 721 (7th Cir. 2011). The Court finds Transport Logistics’ request is supported by law and grants the same. Because Plaintiff has alleged no other cause of action against Transport Logistics, it is dismissed as a Defendant in this case. Transport National remains, now referred to as “Transport.”

2. Limitation of Liability

*5 As articulated in their second amended answer and affirmative defenses, Transport has raised the following affirmative defense:

That as the freight broker, Transport Logistics, Inc. offered the motor carrier services of Transport National, LLC on accepted terms that included the requirement that the Customer declare the value of the Cargo prior to shipping, which the Customer did not do, resulting in the liability for said Cargo and property being limited to $.50 or fifty cents per pound, and $100,000.00 or a hundred thousand dollars maximum value, as applicable under 49 U.S.C. § 14706(c)(1)(A) and (B), and said terms thereby contractually limit the extent of any judgment that Plaintiff may recover against Transport National, LLC and Transport Logistics, Inc.

Doc. 42. If the above limitation of liability clause is enforced, then Plaintiff’s recoverable damages are capped at $100,000 per load. Although it is not specified in the briefing, it seems the limit at most would be a recovery $500,000, out of the $1,831,166 sought, since there were five truckloads. The Parties will remain free to argue the maximum limit at trial.

With respect to the limitation clause, the Parties disagree on which factors the Court is to consider in determining whether a carrier has properly limited its liability under the Carmack Amendment. Plaintiff relies on Hoover v. ABF Freight System, Inc., No. 06-1301, 2008 WL 1805392, at *6 (C.D. Ill. April 18, 2008) to articulate four factors:

A carrier must do four things. First, the carrier must maintain a tariff as required by the ICC. In the tariff, the carrier must list each rate available with terms and conditions for each rate. Among the terms that must be stated in the tariff is the ‘released rate’ which is the maximum dollar liability per unit of weight for which the carrier will be liable if the cargo is damaged … Second, the carrier must give the shipper a reasonable opportunity to choose to accept the proposed limit on liability … A “reasonable opportunity” means that the shipper had ‘both reasonable notice of the liability limitation and the opportunity to obtain information necessary to making a deliberate and well-informed choice … Third, the carrier must obtain the shipper’s written agreement to his choice of that limit. The agreement must specify the released rate and state that the released rate applies unless the shipper expressly requests additional coverage … Fourth, the carrier must issue a bill of lading prior to moving the shipment that reflects the agreement.

The test articulated in Hoover came from Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987), the case upon which Transport relies. As was quickly discernable through research, in Nipponkoa Ins. Co. v. Atlas Van Lines, Inc., 687 F.3d 780, 782 (7th Cir. 2012), the Seventh Circuit explicitly stated, “[f]ollowing the enactment of the Trucking Industry Regulatory Reform Act of 1994 and the ICC Termination Act of 1995, the first part of the Hughes test is no longer applicable.” Therefore, the Court applies the operative three-step test: a carrier must “[1] obtain the shipper’s agreement as to a choice of liability; [2] give the shipper a reasonable opportunity to choose between two or more levels of liability; and [3] issue a receipt or bill of lading prior to moving the shipment.” Nipponkoa Ins., 687 F.3d at 782 (quoting Hughes, 829 F.2d at 1415).

*6 Each of the five Quotes dated May 9, 2018, contain two pages. The first provides the commodity quoted, the dimensions, the weight, total charges, and whether it will be tarped, racked, or self loaded (all answered in the negative). “Chillicothe Metals” is listed as “shipper.” The second page includes what appear to be terms and conditions. Paragraph 13 on page 2 states, “Customer is required to declare the value of cargo prior to shipping otherwise [t]he liability for said property is Limited to $.50 per pound, $100,000.00 maximum value, as applicable under 49 U.S.C.14706 (c) (1) (A) and (B) unless specifically agreed to in writing and appropriate rates or charges applied.” See Docs. 64-6, 64-7, 64-8, 64-9, 64-10.

Despite agreeing that it accepted the Quotes as stated, ASCO argues paragraph 13 is not enforceable because: the applicability of a damage limitation is not referenced on the first page of the Quotes; the Quote did not offer any option to declare the cargo’s value or to purchase additional insurance coverage or the rates for it; the language of the limitation is not conspicuous; the Parties did not discuss the damage limitation before this cargo was transported; Transport did not issue a Bill of Lading; and the Bill of Lading and the Quotes did not reflect any signature of ASCO agreeing to the damage limitation. In response, Transport argues it has met all of the requirements to enforce its limitation clause. Specifically, ASCO never asked for rate information, ASCO had a reasonable opportunity to accept the proposed limit because five months passed from Transport supplying the quotes and three months elapsed from ASCO’s acceptance of the quotes to the date of the shipment, and ASCO had direct involvement with CMCO in creating the bill of lading, which was issued prior to shipment. Transport also argues the fact that the Transport Defendants did not issue the bills of lading is immaterial under the law. Doc. 62, at 5 (citing Werner Enterprises v. Westland Maritime, 554 F.3d 1319, 1328 (11th Cir. 2009)).

Many aspects of ASCO’s argument are unpersuasive, such as that the limitation language was not conspicuous, the Parties did not specifically discuss the limitation clause, that Transport was required to provide tariff rates, and the Quotes did not contain ASCO’s signature agreeing to any limitation. First, ASCO is likely a sophisticated shipper that has entered into countless agreement with transportation companies. Courts are reticent to protect sophisticated Parties from themselves, including shippers. We at least know ASCO shipped the switchgear to CMCO from California and had conducted business with CMCO prior to this incident. It even had a shipping guide for electrical switchgear that it neglected to share. ASCO also did not dispute deposition statements from CMCO’s Mark Reinhold that ASCO’s Adam Seid told CMCO what to include in the bills of lading.

Second, ASCO clearly agreed to the two-page Quotes. On August 6, 2018, ASCO, without asking any follow-up questions on the quotes, confirmed its acceptance and use of the Quotes, then asked when delivery would occur. ASCO admitted that it never provided a declared value of the equipment cargo to the Transport Defendants despite having done so to another motor carrier whose quote it did not ultimately accept.⁴ This suggests ASCO knew the importance and requirement for stating such. In sum, ASCO cannot now profess ignorance to the bill of lading it directed and authorized, and to terms it clearly agreed to be bound.

*7 A limitation clause is essentially an exchange; the shipper releases the carrier from liability beyond a stated amount in exchange for a low transportation rate. However, a shipper is only bound if “given a full and fair opportunity to obtain greater protection.” Co-Operative Shippers, Inc. v. Atchison, Topeka & Santa Fe Ry. Co., 840 F.2d 447, 451 (7th Cir. 1988). The Court easily denies partial summary judgment to ASCO as a reasonable juror could find Transport properly limited its liability. The number of months between the quotes, acceptance, and shipment and clear language in the Quotes of the limitation clause strongly suggest ASCO had a reasonable opportunity to choose. However, the Court cannot say no reasonable juror could find in favor of ASCO on this issue. For example, the jury can determine what effect, if any, the lack of description of how to declare a higher value had on ASCO’s reasonable opportunity to choose between two or more levels of liability. The Court also finds the facts surrounding the bill of lading are not fully developed. Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co., 696 F.3d 647, 652 (7th Cir. 2012) (noting a bill of lading can serve many functions, such as evidence of title, or of a transportation contract of carriage between the shipper-consignor and the carrier with terms and conditions binding the shipper and connecting carriers). The bill of lading did not contain terms and conditions or a declared value box, which is a consideration, but ASCO directed its creation, though the extent is unknown. The jury will also be free to consider that ASCO provided another carrier the value of the shipment but not Transport. Nor is the meaning of “two or more levels of liability” fully addressed. ASCO seems to challenge whether Transport provided two levels without further argument and Transport fails to address it.

3. Contract & Causation

ASCO does not move for summary judgment on this Count but argues the record shows Transport knew the electrical switchgear needed tarped before shipment, and Transport inadequately tarped the shipment by not using weatherproof tarps, which caused or contributed to causing the damage. Alternatively, ASCO asserts whether Transport was negligent and caused or contributed to the damages to the electrical switchgear is at a minimum a question of fact for the jury.

The summary judgment briefing raises more questions than it answers for the Court. The Quotes provided by Transport do not discuss, either way, who was responsible for packaging. Nor do the Parties provide prior communication between them. ASCO admits it did not send any emails to Transport or written communication to CMCO but repeatedly contends the following: ASCO’s Ryan Gobble had two conference calls with Transport Defendants on the need for tarping of the shipment (Doc. 69-1); Transport’s Jacob McKinney received an email from Mark Reinhold of CMCO on October 11, 2018 and on the day of shipment reminding him that the switchgear shipment needed to be tarped (Doc. 69-2); and McKinney told Scott Eccleston around October 11, 2018 that the switchgear needed to be tarped and Eccleston told McKinney to update the shipping quotes to reflect tarping (Doc. 69-3). Notably, these contentions by ASCO do not indicate whether it had to be the “waterproof or weatherproof” tarps that ASCO now claims.

It is odd that ASCO knew the electrical equipment was going to be transported via open flatbed trucks (likely a lower cost than an enclosed trailer), yet it did not initially request tarping, at least according to Transport. It is also unclear at what point Transport drivers knew they were transporting electrical equipment. The commodity listed is “steel storage building.” And if they knew it was electrical, then how did they expect the shipment to arrive unscathed by weather? There was a section including plenty of comments, yet no mention of particular packaging for this four-million-dollar equipment or the risk of loss for inadequate packaging. For example, in Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co., a bill of lading contained the following language, “If Carrier receives the goods already packed into containers: …(2) Merchant warrants that the stowage and seals of the containers are safe and proper and suitable for handling and carriage and indemnifies Carrier for any injury, loss, or damage caused by the breach of this warranty.” 782 F.3d 353, 356 (7th Cir. 2015). Notably, the district court and appellate court also assumed if companies were hired by Plano (the buyer) to pack the molds, then Plano would be liable for those companies’ breach of Clause 10(2) just as if Plano itself had packed the container. Id. at 357 n. 3.

*8 The Parties dispute what tarping Transport was required to do and what they agreed to do. ASCO points out Transport’s representative Stuart Kultgen admitted that waterproof tarps exist.⁵ But according to Transport’s Rory Radliff, tarps are not a waterproofing system, as tarps simply keep direct elements of off the product covered by the tarp. Further on that point, Transport’s expert report challenges portions of ASCO’s expert report.

Mr. Knobloch incorrectly assumes that Motor Carriers and truck drivers are packaging experts who have technical expertise in packaging standards and best practices. Truckers and Motor Carriers haul a wide range of cargo types. There is not a regulatory requirement or any industry custom / practice that mandates truckers and Motor Carriers assess or become involved with cargo packaging.

See Doc. 64-22. At trial, the Parties will be free to introduce their experts on this topic and what, if any, applicable trade usage, should it be appropriate.

Regardless of tarping, it is Transport’s position that if the customer or shipper wanted something sent in a waterproof manner, in this instance, they would have had to send the switchgear inside of a trailer that is watertight for the most part if it is not cut open during transit. ASCO disputes whether transporting in a closed trailer was the only way to protect the equipment. ASCO repeats waterproof tarps were on the market, which could have been utilized, but it does not point to any contractual requirement for waterproofing or that Transport had such tarps available. As ASCO shows through its expert, there are various forms of tarping. At the same time, Transport is presumably the “expert” on transportation matters. Part of any carrier’s job is to safely move commodities. If Transport knew it was transporting electrical equipment, then did it have an obligation to inform ASCO that regular tarps would not suffice for water damage protection? The only alternative discussed is that after the first shipment arrived damaged, a second shipment encased in boat wrap, arrived undamaged. CMCO completed similar services for the second shipment, but Transport had no part in moving ASCO’s product. ASCO had guidelines for shipping electrical switchgear but did not share them. At the same time, there is deposition testimony that the guidelines would not have assisted because this was an oversized shipment.

Lastly, the Court must deny summary judgment for Transport because their position assumes that CMCO failed to properly package the shipment. The Court, in a separate Opinion, has granted summary judgment in CMCO’s favor finding it did not breach its agreement with ASCO by failing to properly package the shipment. It will be up to a jury to decide whether ASCO “got what it paid with Transport” or if ASCO paid to have more protections than it received.

CONCLUSION

For the reasons set forth above, Motion (Doc. 59) is DENIED and Motion (Doc. 64) is GRANTED in part and DENIED in part. Summary Judgment is granted to Transport Logistics only. Defendant Transport National remains as a Defendant in this case.

Signed on this 19th day of January, 2023.

All Citations

Footnotes

1 CMCO is a fabricator and vendor of steel enclosures and aluminum enclosures for generators, communication equipment, electrical switchgear, and other products. CMCO SOF 2. It added steel enclosures and steel sub bases to ASCO’s electrical switchgear.

2 In its motion for summary judgment against ASCO, CMCO disputes that it used thin “saran wrap.”

3 ASCO admits this fact but adds the tarps did not wrap around the bottom of the switchgear and elsewhere adds that the tarps which were used were meant to cover lumber rather than electrical equipment. ASCO, however, failed to include this in the additional facts section so as to elicit a response from Transport. Therefore, the Court disregards these facts. See Ciomber v. Coop. Plus, Inc., 527 F.3d 635, 643–44 (7th Cir. 2008).

4 Interestingly, ASCO also submitted an exhibit in its motion for summary judgment against CMCO wherein it provided values and elected increased coverage for A&A Transfer Inc. to transport what appears to be the replacement switchgear to Fort Meade, for more than double the cost of Transport’s services for the first shipment. Doc. 60-10, at 21; see also Doc. 60-10, at 23 (wherein ASCO remarks, “I guess with Transport Logistics being at $52K, you get what you pay for.”). The terms and conditions for A&A’s services also specified that the customer was responsible for shrink wrapping the units. Id. at 21.

5 The Court notes ASCO fails to provide 3 out of 4 pages it cites from Kultgen’s deposition (Doc. 69-5) and the information from the one page provided gives little context.

End of Document

United States District Court, D. Oregon.

Michael POTICNY, Plaintiff,

v.

MOVERS AND PACKERS RELOCATION SPECIALISTS LLC, Defendant.

Case No. 3:22-cv-01243-IM

Signed December 30, 2022

Attorneys and Law Firms

Paul B. Barton, Olsen Barton LLC, Lake Oswego, OR, for Plaintiff.

OPINION AND ORDER

IMMERGUT, District Judge.

*1 Before this Court is Plaintiff Michael Poticny’s Second Motion for Default Judgment. ECF 15. On October 6, 2022, the Clerk entered the default of Defendant Movers and Packers Relocation Specialists LLC, which has not appeared in this action. ECF 14. Plaintiff now seeks a default judgment against Defendant.

For the following reasons, Plaintiff’s Second Motion for Default Judgment is GRANTED in part and DENIED in part.

LEGAL STANDARDS

Following the Clerk’s entry of default under Federal Rule of Civil Procedure 55(a), the general rule is that “the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.” TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (quoting Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)). The court, however, does not accept as admitted legal conclusions or facts that are not well-pleaded. DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007). “[N]ecessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)).

After the entry of a defendant’s default, the Clerk is authorized to enter a default judgment if the plaintiff’s claim “is for a sum certain or a sum that can be made certain by computation … against a defendant who has been defaulted for not appearing.” Fed. R. Civ. P. 55(b)(1). A sum is certain when “no doubt remains as to the amount to which a plaintiff is entitled as a result of the defendant’s default.” Franchise Holding II, LLC v. Huntington Restaurants Grp., Inc., 375 F.3d 922, 929 (9th Cir. 2004) (citing KPS & Assocs., Inc. v. Designs By FMC, Inc., 318 F.3d 1, 19 (1st Cir. 2003)).

If the defendant has appeared or if the plaintiff’s claim is not for a sum certain, the court may enter a default judgment. See Fed. R. Civ. P. 55(b)(2). The court’s decision whether to enter a default judgment is discretionary. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The Ninth Circuit has identified seven factors to guide a district court’s consideration of whether to enter a default judgment (“Eitel factors”):

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). The “starting point,” however, “is the general rule that default judgments are ordinarily disfavored.” Id. at 1472.

BACKGROUND

The following background is taken from allegations in Plaintiff’s Complaint. ECF 1. Plaintiff Poticny is a former resident of Sherwood, Oregon. Id. at ¶ 8. In the spring of 2022, Plaintiff, who had decided to move with his family from Oregon to Pennsylvania, contacted All Coast Moving Group (“All Coast”), a broker that contracts with carriers to transport household goods, for help handling the cross-country move. Id. at ¶¶ 9, 10; ECF 15 at 2. Plaintiff and All Coast executed a Binding Moving Estimate to transport Plaintiff’s household property for $26,536.58. ECF 1 at ¶ 11.

*2 As a broker, All Coast contacted Defendant Movers and Packers, LLC—a New Jersey limited liability company—who agreed to transport the property for the price contained in the Binding Estimate. Id. at ¶ 12. Defendant signed a Job Acceptance Form, in which they agreed to adopt the Binding Estimate as their own. Id.

When Defendant arrived at Plaintiff’s residence, they required Plaintiff to sign a blank Bill of Lading before loading Plaintiff’s property onto the moving truck. Id. at ¶ 14. After loading the property, Defendant’s representative filled in the “actual” cubic feet that the property occupied on the truck and a new total of $44,634 based on that amount of space that the property purportedly occupied on the Bill of Lading. Id. at ¶ 16. Defendant did not conduct a physical inventory of Plaintiff’s property before loading the property onto the moving truck, nor did Defendant rescind the Binding Estimate and provide a new written estimate before demanding a higher price. Id. at ¶ 17. Plaintiff likewise did not rescind the Binding Estimate before the property was loaded onto the moving truck and did not agree to the amount that Defendant filled in on the Bill of Lading. Id. at ¶ 18. Plaintiff subsequently refused to pay the increased amount demanded by Defendant. Id. at ¶ 19. Following Plaintiff’s refusal to pay the increased price, Defendant transported the property to an undisclosed location. Id. at ¶ 20. Plaintiff alleges that Defendant continues to hold Plaintiff’s property “hostage … until [Plaintiff] pays the full $44,634 demanded by” Defendant. Id.

Plaintiff attempted to contact Defendant twice in July and received no response. Id. at ¶¶ 24–26. Plaintiff also filed a complaint with the Federal Motor Carrier Safety Administration on July 27, 2022, to which Defendant has not responded. Id. at ¶ 27. Plaintiff filed his Complaint in this case on August 23, 2022, and served Defendant, through its registered agent, with a copy of the Complaint and summons on September 1, 2022. ECF 15 at 2. The deadline to appear or file an answer was September 22, 2022, and Defendant did not file any responsive pleadings or otherwise appear within the required 21-day period. Id. Plaintiff filed a Motion for Default Judgment, ECF 7, which this Court denied with instruction to first file a request for Entry of Default with the clerk. ECF 9. On September 29, 2022, Plaintiff filed a Motion for Entry of Default, ECF 10, which the clerk entered on October 6, 2022. ECF 14. Plaintiff then filed his Second Motion for Default Judgment on October 19, 2022. ECF 15.

DISCUSSION

As an initial matter, this Court is satisfied that it has personal jurisdiction over Defendant based on the facts in this record. A district court “has an affirmative duty” to determine whether it has subject matter jurisdiction and personal jurisdiction over the defendant before entering a default judgment. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). The court “may dismiss an action sua sponte” where personal jurisdiction does not exist. Id. However, it must first give the plaintiff moving for a default judgment the opportunity to show facts supporting the exercise of personal jurisdiction. Id. at 712–13.

Plaintiff has alleged sufficient facts to support the exercise of specific personal jurisdiction in this case. Specific personal jurisdiction exists where a defendant has “purposefully avail[ed] itself of the privilege of conducting activities within” the state attempting to exert personal jurisdiction. Hanson v. Denckla, 357 U.S. 235, 253 (1958). A plaintiff’s claims must also “arise out of or relate to the defendant’s contacts” with the forum. Bristol-Myers Squibb Co. v. Sup. Ct. of California, San Francisco Ctny., 137 S. Ct. 1773, 1780 (2017). While this does not necessarily require a strict causal link between the defendant’s contacts and the plaintiff’s injury, the two must be sufficiently related such that subjecting the defendant to suit in the forum state would not “offend traditional notions of fair play and substantial justice.” Intl. Shoe Co. v. Washington, 326 U.S. 310, 316–17 (1945). Courts within the Ninth Circuit apply a three-part test to determine whether the exercise of specific jurisdiction over a non-resident defendant is appropriate: “(1) [t]he non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.” Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010).

*3 This Court finds all three prongs met in the present case. Although Defendant is a New Jersey limited liability company, it contracted to do work in Oregon by loading and transporting Plaintiff’s goods from his home in Oregon to his new home on the east coast, thereby “consummate[ing] some transaction with” Plaintiff, a resident of the forum state. ECF 1 at ¶¶ 2, 12; see also Brayton Purcell LLP, 606 F.3d at 1128. Plaintiff’s alleged injury arose directly out of Defendant’s actions in the forum state: Defendant also made Plaintiff sign the challenged Bill of Lading, loaded Plaintiff’s property onto their truck, and refused to release the property in Oregon. ECF 1 at ¶¶ 13–15, 17. Finally, given Defendant’s contacts with Oregon, including a willingness to travel to or send agents to the state to conduct business, the exercise of jurisdiction is not unreasonable.

This Court is also satisfied that it has subject matter jurisdiction. Federal courts may hear suits that raise a federal question. “The 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). Plaintiff’s Complaint contains a well-pleaded federal claim under 49 U.S.C. § 14706 (the “Carmack Amendment”), which provides “a uniform national liability policy for interstate carriers.” Hughes Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609, 613 (9th Cir. 1992). “A plaintiff may bring a Carmack claim in state or federal court … but the district courts have original jurisdiction only if the amount in controversy exceeds $10,000, exclusive of interests and costs….” Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 686 n.2 (9th Cir. 2007). Here, Plaintiff alleges an amount in controversy of approximately $120,000 (representing the value of Plaintiff’s property). This Court therefore has federal question jurisdiction over Plaintiff’s Carmack Amendment claims. This Court also has supplemental jurisdiction over Plaintiff’s state law claims, as they arise out of a common nucleus of operative fact: Defendant’s actions in loading Plaintiff’s property onto their moving truck, failing to observe the Binding Estimate or properly rescind the estimate, and failing to return Plaintiff’s property. 28 U.S.C. § 1367(a); see also Trustees of the Constr. Indus. & Laborers Health & Welfare Tr. v. Desert Valley Landscape & Maint., Inc., 333 F.3d 923, 925 (9th Cir. 2003).

A. Procedural Requirements

Plaintiff has satisfied the requirements of Local Rule 55 and Federal Rule of Civil Procedure 55. Plaintiff requested, ECF 10, and received, ECF 14, the Clerk’s entry of default. Defendants are neither minors nor incompetent. ECF 1. Defendants have not appeared personally or by a representative, so they are not entitled to written notice of the application for default judgment. Fed. R. Civ. P. 55(b); see also Stephen Wurth Photography, Inc. v. Wetpaint.com, Inc., No. SA CV 16-2101-DOC, 2018 WL 5266861, at *2 (C.D. Cal. Oct. 5, 2018) (determining plaintiffs’ “procedural compliance”).

The relief granted in default judgment is limited to what is demanded in the pleadings. Fed. R. Civ. P. 54(c). The remedies requested in the instant motion “are not different from and do not exceed the relief prayed for in the Complaint.” Philip Morris USA Inc. v. Banh, No. CV 03-4043 GAF (PJWx), 2005 WL 5758392, at *6 (C.D. Cal. Jan. 14, 2005); see also ECF 15 at 3.

Finding procedural compliance, this Court now turns to Plaintiff’s Motion for Default Judgment.

B. Default Judgment under FRCP 55

“The dispositions of motions for entries of default and default judgments … are left to the sound discretion of a district court because it is in the best position to assess the individual circumstances of a given case and to evaluate the credibility and good faith of the parties.” Shah v. New York State Dep’t of Civ. Serv., 168 F.3d 610, 615 (2d Cir. 1999) (quoting Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993)) (alterations in original). Plaintiff has moved this Court, and not the Clerk, for default judgment. A court “may” enter default judgment, while the Clerk “must” do so if certain criteria are satisfied. See S. Coast Lumber Co. v. Blue Lake Power, LLC, No. 1:15-cv-01651-CL, 2015 WL 13238463, at *1 (D. Or. Dec. 1, 2015), report and recommendation adopted, No. 1:15 CV 01651-CL, 2016 WL 8735677 (D. Or. Jan. 22, 2016) (rejecting plaintiff’s claim that Rule 55(b)(1)’s mandatory provision applies because “Plaintiff’s request is addressed to the Court, [so] the Court will analyze its motion under subsection (2)’s discretionary standard”). As such, despite Plaintiff’s assertion that it moves for default judgment under FRCP 55(b)(1), ECF 15 at 3, this Court, in its discretion, will analyze Plaintiff’s motion under the Rule 55(b)(2) standard.

1. Eitel Factors

*4 On balance, the Eitel factors weigh in favor of granting Plaintiff’s Motion for Default Judgment based on violations of the Carmack Amendment but weigh against granting Plaintiff’s motion with respect to its state-law claims. Each factor is discussed in turn.

a. Factor 1: Prejudice to Plaintiff

The first Eitel factor “considers whether the plaintiff will suffer prejudice if default judgment is not entered.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). Given Defendant’s failure to cooperate in this lawsuit and Plaintiff’s lack of alternative avenues of recovery, Plaintiff would suffer prejudice if default judgment is not entered. This factor thus weighs in favor of default judgment. See Garcia v. Pacwest Contracting LLC, No. 3:12-cv-01930-SI, 2016 WL 526236, at *3 (D. Or. Feb. 9, 2016) (noting lack of “alternative means by which to resolve their present claims” and finding this factor weighed in favor of default judgment).

b. Factors 2 and 3: Merits of Plaintiff’s Substantive Claims and Sufficiency of the Complaint

The second and third Eitel factors “require that a plaintiff state a claim on which [it] may recover.” PepsiCo, 238 F. Supp. 2d at 1175 (quotation marks and citation omitted); see also Curtis v. Illumination Arts, Inc., 33 F. Supp. 3d 1200, 1211 (W.D. Wash. 2014) (“The second and third Eitel factors … are often analyzed together.” (citation omitted)). For the purposes of default judgment, all well-pleaded allegations in the complaint, except those relating to damages, are assumed to be true. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). However, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992).

Plaintiff brings claims under the Carmack Amendment, the Oregon Unlawful Trade Practices Act, and common law (contract and fraud). This Court considers first Plaintiff’s Carmack Amendment Claim, which imposes strict liability on interstate carriers for “actual loss or injury to property,” 49 U.S.C. § 14706(a), and is “comprehensive enough to embrace responsibility for all losses resulting from any failure to discharge a carrier’s duty as to any part of the agreed transportation….” Georgia, Florida, & Alabama Ry. Co. v. Blish Milling Co., 241 U.S. 190, 196 (1916). To establish a prima facie case against a carrier under the Carmack Amendment, the plaintiff must allege: (1) delivery of the goods to the initial carrier in good condition, (2) damage of the goods before delivery to their final destination, or failure to deliver altogether, and (3) the amount of damages. Beta Spawn, Inc. v. FFE Transportation Services, Inc., 250 F.3d 218, 223 (3d Cir. 2001); accord Roberts v. N. Am. Van Lines, Inc., 394 F. Supp. 2d 1174, 1182 (N.D. Cal. 2004). Plaintiff’s Complaint alleges that Defendant agreed to transport Plaintiff’s goods pursuant an interstate bill of lading, ECF 1 at ¶ 14, and that (1) Plaintiff delivered the goods to Defendant in good condition, see id. at ¶ 16; (2) Defendant failed to deliver the goods to their final destination, id. at ¶ 20; and (3) Plaintiff suffered damages in the amount of $120,000, id. at ¶ 25. Accordingly, Plaintiff is entitled to default judgment on its Carmack claim.

*5 Plaintiff is not entitled to default judgment on its contract claim, because Plaintiff has not stated a claim for which they can recover. See PepsiCo, 238 F. Supp. 2d at 1175. The Carmack Amendment is “the exclusive cause of action for contract claims alleging delay, loss, failure to deliver or damage to property.” Hall, 476 F.3d at 688. “[C]laims based on conduct separate and distinct from the delivery, loss of, or damage to goods survive preemption.” Roberts, 394 F. Supp. 2d at 1181. Courts have held that “bait and switch” claims, wherein a carrier changes the price of the shipment upon receipt of the goods, are preempted by the Carmack Amendment, even if the initial estimate occurred before the carrier took possession of the goods. United Van Lines, Inc. v. Shooster, 860 F. Supp. 826, 827–28 (S. D. Fla. 1992).

Plaintiff’s alleged harm from Defendant failing to honor the binding estimate arises directly out of Defendant’s shipment of Plaintiff’s goods via interstate commerce: Defendant “required [Plaintiff] to sign a blank Bill of Lading before loading the property,” ECF 1 at ¶ 14, loaded the property and “filled in the ‘actual’ cubic feet that the property occupied on the truck and a new total of $44,634 based on that amount of space that the property purportedly occupied,” id. at ¶ 16, and “did not rescind the Binding Estimate and did not provide a new revised written estimate before demanding a higher amount to transport the property.” Id. at ¶ 17. Plaintiff, moreover, is claiming damages from breach of the Binding Estimate based off “the approximate value of the property.” Id. at ¶ 43; compare Roberts, 394 F. Supp. 2d at 1182 (finding the plaintiffs’ breach of contract claim was not preempted by the Carmack Amendment where the plaintiffs alleged neither loss of damage to household goods nor based their amount or form of relief requested on the value assigned to their belongings). Plaintiff’s claim based on breach of the Binding Estimate is therefore “based on loss or damage to goods shipped in interstate commerce” and is preempted by the Carmack Amendment.

Plaintiff’s fraud claims are likewise preempted by the Carmack Amendment. The Carmack Amendment “constitutes a complete defense to common law claims against interstate carriers for negligence, fraud and conversion, even though these claims may not be completely preempted.” White v. Mayflower Transit, L.L.C., 543 F.3d 581, 584 (9th Cir. 2008) (citing Hall, 476 F.3d at 689). Plaintiff’s fraud claims arise out of the same conduct that gives rise to Plaintiff’s Carmack Claim: that Defendant intentionally failed to provide an advance copy of the Bill of Lading, intentionally loaded the property before obtaining a signature, raised the requested payment higher than the Binding Estimate after the property was loaded, and refused to return the property. ECF 1 at ¶¶ 49, 53.

Finally, this Court finds that Plaintiff’s state-law consumer protection claims are preempted by the Carmack Amendment. Like Plaintiff’s contract and fraud claims, Plaintiff’s claims under the Oregon Unlawful Trade Practices Act, O.R.S. 646.605 et. seq, arise out of Defendant’s actions in loading and refusing to unload Plaintiff’s property. ECF 1 at ¶¶ 52–58. Though case law discussing Carmack Amendment preemption typically focuses on the preemption of common law claims, courts have also held that the Carmack Amendment preempts causes of action under state consumer protection laws. Schultz v. Auld, 848 F. Supp. 1497, 1503 (D. Id. 1993) (holding that the Carmack Amendment preempts claim under the Idaho Consumer Protection Act); Gordon v. United Van Lines, 130 F.3d 282, 289 (7th Cir. 1997) (holding that the Carmack Amendment preempts claims under the Illinois Consumer Fraud and Deceptive Business Practices Act); Rini v. United Van Lines, Inc., 104 F.3d 502, 506 (1st Cir. 1997) (holding that the Carmack Amendment preempts claims under brought under Massachusetts’ consumer protection laws). Though the Ninth Circuit has not addressed this preemption issue specifically, this Court is persuaded that this outcome best promotes the Carmack Amendment’s purpose of creating a uniform national scheme of liability for interstate carriers. Adams Express Co. v. Croninger, 226 U.S. 491, 506 (1913) (“[I]t is evident that Congress intended to adopt a uniform rule and relieve [interstate shipping] contracts from the diverse regulation to which they had been theretofore subject.”).

*6 The second and third Eitel factors thus weigh in favor of granting default judgment for Plaintiff’s Carmack Amendment claim. Plaintiff has failed to meet the second and third factors as to its contract, fraud claims, and consumer protection claims.

c. Factor 4: Sum of Money at Stake

The court must “consider the amount of money at stake in relation to the seriousness of Defendant’s conduct.” PepsiCo, 238 F. Supp. 2d at 1176. “[A] large sum of money at stake would disfavor default judgment.” J & J Sports Prods., Inc. v. Cardoze, No. C 09-05683 WHA, 2010 WL 2757106, at *5 (N.D. Cal. July 9, 2010) (citing Eitel, 782 F.2d at 1472); see also Eitel, 782 F.2d at 1472 (noting three million dollars sought in damages as factor weighing against granting default judgment). Plaintiff in this case seeks the immediate return of their property or, if the property is not timely delivered, damages of $120,000, which is the estimated value of the property. This Court does not find this sum to be so large as to “disfavor default judgment.” J & J Sports Prods., 2010 WL 2757106, at *5.

d. Factor 5: Possibility of a Dispute Concerning Material Facts

The fifth Eitel factor considers whether a dispute of material facts is likely. “Where the [p]laintiff’s complaint is well-pleaded and the defendant makes no effort to properly respond, the likelihood of disputed facts is very low.” 3M Co. v. Phx. Auto. Refinishing Co., Ltd., CV 17-00649-RSWL-DTB, 2018 WL 1989536, at *5 (C.D. Cal. Apr. 25, 2018) (quoting Warner Bros. Home Ent., Inc. v. Slaughter, No. CV 13–0892–DOC RNB(x), 2013 WL 5890682, at *3 (C.D. Cal. Oct. 30, 2013)) (alteration in original). Having found Plaintiff’s Complaint to be well-pleaded, and noting that Defendant has failed to timely respond to Plaintiff’s claims, this factor weighs in favor of default judgment.

e. Factor 6: Whether Default was Due to Excusable Neglect

This factor considers whether the defendant’s default was due to excusable neglect. Because Defendant was properly served by service via authorized agent under Oregon law in September 2022, ECF 6; ECF 13 this factor favors default judgment. See Nat’l Photo Grp., LLC v. Pier Corp., No. SACV 13–1165–DOC, 2014 WL 12576641, at *3 (C.D. Cal. Mar. 10, 2014); 3M Co., 2018 WL 1989536, at *5.

f. Factor 7: Strong Policy Preference for Decisions on the Merits

The seventh Eitel factor considers the strong policy preference in favor of decisions on the merits. However, “where a defendant’s failure to appear ‘makes decision on the merits impracticable, if not impossible,’ entry of default judgment is warranted.” Craigslist, Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039, 1061 (N.D. Cal. 2010) (citing PepsiCo, 238 F. Supp. 2d at 1177); see also 3M Co., 2018 WL 1989536, at *5. Such is the case here, as Defendant has failed to appear in the present case, and has further failed to respond to various letter and complaints lodged against them by Plaintiff. See ECF 1 at ¶¶ 24–28.

2. Remedy

Federal Rule of Civil Procedure 54(c) limits relief in default judgment to what is demanded in the pleadings. Fed. R. Civ. P. 54(c). In the instant Motion, Plaintiff seeks equitable relief, in the form of a judgment that either requires Defendant to deliver Plaintiff’s property or disclose its location and allow Plaintiff to retrieve it. ECF 15 at 3–4. In the alternative, Plaintiff requests damages reflecting the value of his property as agreed to on the Binding Estimate. Id. at 4–5. Plaintiff also seeks attorney’s fees. Id. at 6. An award of damages cannot be entered in a default judgment without a hearing “unless the amount claimed is a liquidated sum or capable of mathematical calculation.” Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981) (citation omitted).

*7 Because this Court grants Plaintiff’s Motion for Default Judgment only with respect to Plaintiff’s Carmack Amendment claim, this Court limits Plaintiff’s relief to that which is available under the Carmack Amendment.

a. Relief under the Carmack Amendment

The Carmack Amendment “makes a carrier covered by the [Interstate Commerce Act] liable for damages it causes to property it transports in the amount of the ‘actual loss or injury to the property.’ ” Contempo Metal Furniture Co. of Cal. v. E. Tex. Motor Freight Lines, Inc., 661 F.2d 761, 764 (9th Cir. 1981) (quoting 49 U.S.C. 14706(a)(1)). Plaintiff alleges that Defendant failed to deliver the property, ECF 1 at ¶ 51, and accordingly seeks equitable relief from this Court directing Defendant to return Plaintiff’s property, or, in the alternative, to recover the value of the property. ECF 15 at 7.

The Carmack Amendment limits carrier liability to “actual damages.” See Missouri Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137 (1964) (“The Carmack Amendment … makes carriers liable ‘for the full actual loss, damage, or injury caused by’ them to property they transport.”). This Court thus limits consideration of relief to the actual damages sustained by Plaintiff and declines Plaintiff’s request for equitable relief.

In support of his request for actual damages, Plaintiff submits the Binding Estimate, which includes an estimate of the overall value of Plaintiff’s property. ECF 16-A at 1. The estimate is not itemized and appears to be based on Plaintiff’s own personal valuation of his property. ECF 16 at ¶ 3. “[T]he owner of personal property … is competent to express an opinion regarding its value.” Searcy v. Bend Garage Co., 286 Or. 11, 17 (1979) (citations omitted). In addition to Plaintiff’s own presumed competency in estimating the value of his personal property, this Court notes that the Binding Estimate shows that Plaintiff and Defendant agreed to load and transport 41 items (or 191 individual pieces), including several pieces of large home furniture and electronics such as a washing machine, refrigerator, and television. ECF 16-A at 8. The estimated property value claimed in Plaintiff’s Motion for Default Judgment, further, is the same as the estimate claimed in Plaintiff’s Complaint. See Waller v. Gary & Koby Tranps. Inc., No. 1:08-cv-0725, 2008 WL 4224722, at *5 (reducing default judgment award for a Carmack Amendment claim where damages claimed in the motion for default judgment exceeded damages claimed in the complaint). This Court finds that Plaintiff has adequately identified the specific damages requested and provided sufficient documentation to meet its burden in establishing damages of $119,784 as the “actual loss … to the property.” Contempo, 661 F.2d at 764.

b. Attorney’s Fees and Costs

Plaintiff also requests attorney’s fees. ECF 15 at 6. The Carmack Amendment permits recovery of attorney’s fees by a shipper involving household goods in certain limited circumstances. See 49 U.S.C. § 14708. To receive an award of attorney’s fees pursuant to section 14708, a plaintiff must timely submit a claim for the loss of household goods, prevail in a court action, have no notice from the shipper of an available dispute resolution program, and have no arbitration decision rendered in the dispute. Id. § 14708(d)(1)-(3); see also Ward v. Allied Van Lines, Inc., 231 F.3d 135, 171 (9th Cir. 2000).

*8 Plaintiff has met the requirements for an award of attorney’s fees under section 14708. Plaintiff alleges that the goods were loaded onto Defendant’s moving truck on June 27, 2022. Plaintiff submitted two letters alerting Defendant of their failure to deliver Plaintiff’s property on July 19, 2022, and July 28, 2022, and filed the instant litigation on August 23, 2022. There is no indication that the parties proceeded to arbitration or that an arbitration decision was rendered. As default judgment is appropriate for Plaintiff’s Carmack Amendment claim, Plaintiff has prevailed in this action.

Attorney’s fees under 49 U.S.C. § 14708 must be reasonable. The preferred method for determining reasonable attorney’s fees is calculation of the lodestar figure, the product of the number of hours reasonably spent on the litigation and a reasonable hourly rate. See Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The party seeking an award of attorney’s fees “has the burden of submitting billing records to establish that the number of hours it has requested [is] reasonable.” Gonzalez v. City of Maywood, 729 F.3d 1196, 1202 (9th Cir. 2013). Similarly, the fee applicant has the burden of proving that the requested hourly rate is reasonable. See Camacho v. Bridgeport Fin. Inc., 523 F.3d 973, 980 (9th Cir. 2008).

Plaintiff asks for $25,534.50 in attorney’s fees and $709.41 in costs, ECF 19 at ¶ 7, and submits invoices in support of this request. ECF 17-1. Plaintiff specifically requests attorney’s fees for 30.6 hours of time by lead attorney Paul Barton, charged at an hourly rate of $425; 16.5 hours of time for legal assistant Dorothy Miller, charged at an hourly rate of $200; 31.9 hours of time for associate attorney Nathaniel Woodward, charged at an hourly rate of $285; and 0.60 hours of time for paralegal Jessica Manitsas, charged at $230 an hour. ECF 19 at ¶ 8.

In determining reasonable hourly rates, typically “[a]ffidavits of the plaintiffs’ attorney and other attorneys regarding prevailing fees in the community, and rate determinations in other cases, particularly those setting a rate for the plaintiffs’ attorney, are satisfactory evidence of the prevailing market rate.” United Steelworkers of Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir. 1990). “This District considers the most recent Oregon State Bar Economic Survey (‘OSB Survey’) as its ‘initial benchmark’ in determining whether hourly billing rates are reasonable.” Bark v. Northrop, 300 F.R.D. 486, 493 (D. Or. 2014) (quotation marks and citations omitted); LR 54-3(a) (noting in the “Practice Tip” that the OSB Survey is the initial benchmark). “If the rate requested exceeds the average rate reported in the OSB Survey, the burden is on the prevailing party to justify that higher rate.” Bark, 300 F.R.D. at 493 (citations omitted). Attorneys may argue for higher rates based on inflation, specialty, or other factors. LR 54-3. The most recent OSB Survey is from 2017.

In the declaration supporting award of attorney’s fees, lead attorney Paul Barton notes that he has practiced real estate and business law since 2006, translating to roughly sixteen years of experience. According to the OSB Survey, the median rate for attorneys practicing in the Portland area with 16-20 years of experience is $325—$100 less than the rate proposed in Plaintiff’s fee request. Oregon State Bar, 2017 Economic Survey 39 tbl. 36 (2017), https://www.osbar.org/_docs/resources/Econsurveys/17EconomicSurvey.pdf (last visited November 2, 2022). The declaration submitted in support of the fee request does not contain any justification for the higher rate, except to state that the matter “involves complex issues of Federal and state law, including across jurisdictions.” ECF 19 at ¶ 15. Plaintiff’s Complaint does state claims under federal and state law; however, as discussed above, Plaintiff’s state law claims are clearly preempted by the Carmack Amendment claim, and Plaintiff’s Carmack Amendment claim is not particularly complex. This Court thus reduces the fee for Mr. Barton from $425 to $325 per hour.

*9 The declaration does not include any information about the number of years that Nathaniel Woodward has been practicing. ECF 19 at ¶ 13. The requested rate for Mr. Woodward is $285, which is slightly above the median rate for a Portland-area attorney with seven to nine years of experience. Oregon State Bar, 2017 Economic Survey 39 tbl. 36 (2017), https://www.osbar.org/_docs/resources/Econsurveys/17EconomicSurvey.pdf (last visited November 2, 2022). According to the Oregon State Bar Membership Directory, Mr. Woodward was admitted to the Oregon State Bar in 2020, meaning he has just two years’ experience. The median rate for a Portland-area attorney with two years’ experience is $235. Oregon State Bar, 2017 Economic Survey 38 tbl. 36 (2017), https://www.osbar.org/_docs/resources/Econsurveys/17EconomicSurvey.pdf (last visited November 2, 2022). Accordingly, this Court will award Mr. Woodward fees at a rate of $235 per hour.

The declaration likewise does not specify the years of experience for paralegal Jessica Manitsas in support of Plaintiff’s request for $230 per hour in fees. ECF 19 at ¶ 8. Without any identifying attributes from which to judge the reasonableness of the requested rate, “the court defaults to the median rate of a first-year paralegal.” Reed v. Ezelle Investment Properties, Inc., No. 3:17-cv-1364, 2019 WL 1453480, at *5 (D. Or. Apr. 2, 2019). According to the 2020 National Utilization and Compensation Survey Report, the mean hourly billable rate for a paralegal in the Far West region, which includes the State of Oregon, is $140 per hour. National Association Legal Assistants, National Utilization and Compensation Survey Report 10 fig.28 (2020) (“NALA REPORT”); see also Pac. Coast Fruit Co. v. Ron Squires dba Four Seasons Farmers Mkt., No. 3:16-CV-00463-BR, 2016 WL 4443166, at *3 (D. Or. Aug. 19, 2016) (relying on a prior version of this report to determine the reasonable hourly billable rate for a paralegal). This Court thereby finds that $140 per hour is a reasonable fee for the work done by Jessica Manitsas.

Finally, the declaration does not specify the years of experience for legal assistant Dorothy Miller in support of Plaintiff’s request for $200 per hour in fees. ECF 19 at ¶ 8. At the outset, this Court notes that courts in this district are divided as to whether to award fees for work performed by legal assistants. Compare Aichele v. Blue Elephant Holdings, LLC, 3:16-cv-02204-BR, 2018 WL 2357533, at *5 (D. Or. May 24, 2018) (“The Court has not found any report that reflects hourly billing for legal assistants (as opposed to paralegals)” and declining to award any fees for legal assistant work) with Kulpala v. Delgoda, 3:15-cv-01890-BR, 2016 WL 1618285, at *1 (D. Or. April 21, 2016) (noting that “attorneys’ fee awards permitted by statute frequently compensate for work performed by law clerks and legal assistants”). When courts in this district have awarded fees for work done by legal assistants, they have awarded those fees at rates well below the $200 requested in the present case. See e.g., Wilson v. Decibels of Oregon, Inc., Nos. 1:17-cv-01558, 1:17-cv-01624, 2019 WL 6245423, at *4 (D. Or. Nov. 22, 2019) (awarding $90 per hour for work done by legal assistants); Oregon Laborers-Employers Health & Welfare Trust Fund v. Baseline Indus. Constr. Inc., No. 3:19-cv-1343, 2019 WL 6329336, at *4 (D. Or. Nov. 26, 2019) (awarding $90 per hour for work done by legal assistants); Anderson v. Ross Island Sand & Gravel Co., No. 3:18-cv-00898, 2018 WL 5993581, at *4 (D. Or. Oct. 24, 2018) (awarding $95 per hour for work done by legal assistants); Precision Seed Cleaners v. Country Mut. Ins. Co., 976 F. Supp. 2d. 1228, 1249 (D. Or. 2013) (awarding $50 per hour for work done by legal assistants); Sterling Sav. Bank v. Derek L. Brown & Assocs., Inc., No. 03: 10–cv–00674–BR, 2013 WL 164424, at *4 (D. Or. Jan. 15, 2013) (awarding $50 per hour for paralegals and assistants); Horton v. Comm’r Social Sec. Admin., No 1:12-cv-00612, 2013 WL 3146827, at *3 (D. Or. June 18, 2013) (awarding $80 per hour for work done by legal assistants). This Court finds that $90 per hour is a reasonable fee for the work done by Dorothy Miller.

*10 Having reduced the requested fees and hours to a rate that this Court finds reasonable, this Court hereby awards $19,010.50 in attorney’s fees¹ and $709.41 in costs for a total of $19,350.91.

CONCLUSION

For the reasons stated above, this Court GRANTS in part and DENIES in part Plaintiff’s Motion for Default Judgment. Specifically, this Court GRANTS Plaintiff’s Motion with respect to Plaintiff’s Carmack Amendment claims. However, because Plaintiff’s contract and fraud claims are preempted as a matter of law by the Carmack Amendment, this Court DENIES Plaintiff’s Motion with respect to Plaintiff’s breach of contract, fraud, and consumer protection claims.

This Court ORDERS Defendant to pay $119,784 in damages and $19,719.91 in attorney’s fees and costs.

IT IS SO ORDERED.

All Citations

Footnotes

1 Attorney’s fees are broken down as follows: $325 (30.6) + $235 (31.9) + $140 (.60) + $90 (16.5).

End of Document