Summary
applying Mechanical Technology to post-ICC Termination Act shipping contract
Summary of this case from Schweitzer Aircraft Corp. v. Landstar Ranger Inc.Opinion
No. 98 C 3122
June 17, 1999
MEMORANDUM OPINION AND ORDER
Defendant Quast Transfer, Inc., a common carrier, was to transport cargo to one of plaintiff Nieman Marcus Group, Inc.'s retail stores located in Chicago, Illinois. While in Cicero, Illinois, the cargo was destroyed by fire. Plaintiff brought suit seeking $306,275.95 in damages. Plaintiff's complaint contains a Carmack Act claim and supplemental state law claims for bailment and negligence. Presently pending is defendant's motion for partial summary judgment limiting the liability on the Carmack Act claim and dismissing the supplemental claims.
On a motion for summary judgment, the entire record is considered with all reasonable inferences drawn in favor of the nonmovant and all factual disputes resolved in favor of the nonmovant. Valance v. Wisel, 110 F.3d 1269, 1274 (7th Cir. 1997); Patel v. Allstate Insurance Co., 105 F.3d 365, 367 (7th Cir. 1997). The burden of establishing a lack of any genuine issue of material fact rests on the movant. Essex v. United Parcel Service, Inc., 111 F.3d 1304, 1308 (7th Cir. 1997). The nonmovant, however, must make a showing sufficient to establish any essential element for which it will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Wintz v. Northrop Corp., 110 F.3d 508, 512 (7th Cir. 1997). The movant need not provide affidavits or deposition testimony showing the nonexistence of such essential elements. Celotex, 477 U.S. at 324. Also, it is not sufficient to show evidence of purportedly disputed facts if those facts are not plausible in light of the entire record. See NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 236 (7th Cir.), cert. denied, 515 U.S. 1104 (1995); Covalt v. Carey Canada, Inc., 950 F.2d 481, 485 (7th Cir. 1991); Collins v. Associated Pathologists, Ltd., 844 F.2d 473, 476-77 (7th Cir.), cert. denied, 488 U.S. 852 (1988). As the Seventh Circuit has summarized:
The moving party bears the initial burden of directing the district court to the determinative issues and the available evidence that pertains to each. "[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); id. at 325 ("the burden on the moving party may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case"). Then, with respect to issues that the non-moving party will bear the burden of proving at trial, the non-moving party must come forward with affidavits, depositions, answers to interrogatories or admissions and designate specific facts which establish that there is a genuine issue for trial. Id. at 324. The non-moving party cannot rest on the pleadings alone, but must designate specific facts in affidavits, depositions, answers to interrogatories or admissions that establish that there is a genuine triable issue. Id. The non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "The mere existence of a scintilla of evidence in support of the [non-moving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
Selan v. Kiley, 969 F.2d 560, 564 (7th Cir. 1992).
Resolving all factual disputes and drawing all reasonable inferences in plaintiff's favor, the facts assumed to be true for purposes of summary judgment are as follows. Plaintiff is a commercial enterprise that frequently uses common carriers to ship goods. In March 1997, plaintiff delivered a trailer of retail goods from New Jersey to defendant in Cicero. The trailer contained goods destined for both a Chicago store and a Minnesota store. The goods for the Chicago store were removed from the trailer to be transported separately. Before being delivered, however, the goods were destroyed.
The pertinent bill of lading was prepared by plaintiff before the shipment left New Jersey. On a pre-printed Nieman Marcus form, the bill of lading provides that defendant received the shipment "subject to the classifications and tariffs in effect on the date of issue of the Bill of Lading." It further provides that every service performed is "subject to all the conditions of the Uniform Domestic Straight Bill of Lading set forth . . . in the applicable motor carrier classification or tariff." Small, boldface print also provides that "Shipper hereby certifies that he is familiar with all the terms and conditions of the said bill of lading, including those on the back thereof, set forth in the classification or tariff which governs the transportation of this shipment and the said terms and conditions are hereby agreed to by the shipper and accepted for himself and his assigns." The bill of lading contained a blank where plaintiff could have inserted the declared value of the goods. Plaintiff did not insert a declared value. The Uniform Straight Bill of Lading provides: "Where the applicable tariff provisions specify a limitation of the carrier's liability absent a release or a value declaration by the shipper and the shipper does not release the carrier's liability or declare a value, the carrier's liability shall be limited to the extent provided by such provisions."
It is undisputed that, to the extent the limitation of the tariff applies, the maximum value of the goods determined by their weight and type is $30,874.26.
For purposes of its own summary judgment motion, defendant takes as true that all the goods plaintiff claims were on the truck were actually on the truck.
Plaintiff does not dispute that under the tariff this loss is calculated by multiplying the weight of the goods by the value per pound assigned to that type of goods.
On defendant's summary judgment motion, it must be assumed that no one at plaintiff was specifically aware of the tariff prior to the fire. Other than the bill of lading, there is no evidence that the parties entered into any express contract regarding this specific shipment. Also, prior to the fire, defendant never expressly informed plaintiff that it was paying a lower shipping rate in return for limited liability or that plaintiff had the option of paying a higher rate without the liability limitation.
Defendant provides evidence that it had mailed copies of sections of the tariff to defendant in January 1997 and in 1996. Responsible officials at defendant deny having any knowledge of the tariff. Defendant objects that the testimony of one of those officials could not be based on personal knowledge. He can, however, testify as to documents that his department has in its possession. In any event, the affidavit of the other official would be sufficient to support a factual dispute.
In April 1997, plaintiff sent a letter to defendant claiming $145,528.32 for the merchandise that was destroyed. Attached documents showed that this was plaintiff's cost for purchasing the goods. At the time, plaintiff already knew the retail value of the goods was approximately $311,000.00. The original complaint in this action, which was filed in May 1998, prayed for $148,136.00 in damages. In July 1998, the complaint was amended to include a prayer for relief of $306,275.95, the claimed retail price of the goods.
Defendant contends that the tariff applies and therefore limits liability to, at most, $30,874.26. Alternatively, defendant contends that it is entitled to the benefit of plaintiff's insurance and therefore defendant's liability should be limited to plaintiff's $100,000 deductible plus the premium for the policy. As another alternative, defendant contends that liability should be limited to the $145,528.32 amount specifically stated in plaintiff's initial claim.
The Carmack Act was amended December 29, 1995 with an effective date of January 1, 1996. It presently provides that the general rule is that a motor carrier is liable "for the actual loss or injury to the property." 49 U.S.C. § 14706 (a). However, an exception to this rule is that the carrier may limit its liability to a value declared by the shipper or to an amount agreed upon between the shipper and carrier. Id. § 14706(c)(1)(A). The parties' agreement may incorporate a limitation of liability contained in a tariff. Formerly, tariffs were filed with the Interstate Commerce Commission ("ICC"). Current law does not contain such a requirement and instead provides that, where a tariff is not filed with the Surface Transportation Board ("STB"), the carrier is to provide "the shipper, on the request of the shipper, a written or electronic copy of the rate, classification, rules, and practices upon which any rate applicable to a shipment . . . is based." Id. § 14706(c)(1)(B). See also id. § 13710(a)(1).
Before 1996, the Carmack Act provided that the ICC could require a carrier that limited its liability to also offer a tariff rate which did not include a liability limitation and the ICC had imposed such a requirement. See 49 U.S.C. § 11730 (b)(2) (1995); Toledo Ticket Co. v. Roadway Express, Inc., 133 F.3d 439, 441-42 (6th Cir. 1998). Presently, and when the fire occurred in 1997, no such statutory provision applies.
Plaintiff argues that the limit of the applicable tariff does not apply because defendant did not adequately inform plaintiff of the limitation contained in the tariff and did not specifically offer a higher rate without the liability limitation. See Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987), cert. denied, 485 U.S. 913 (1988); Toledo Ticket Co. v. Roadway Express, Inc., 133 F.3d 439, 441-42 (6th Cir. 1998). Defendant argues that the 1995 amendment to the Carmack Act essentially eliminated any such requirements, see Jackson v. Brook Ledge, Inc., 991 F. Supp. 640, 645-47 (E.D. Ky. 1997), or, alternatively, that a sophisticated shipper is presumed to have knowledge of the tariffs referenced in a bill of lading that was prepared by the shipper, see Mechanical Technology Inc. v. Ryder Truck Lines, Inc., 776 F.2d 1085, 1089 (2d Cir. 1985).
Under the prior statutory scheme, the Seventh Circuit held that four requirements had to be met in order to limit liability under the Carmack Act. A carrier had to "(1) maintain a tariff within the prescribed guidelines of the Interstate Commerce Commission; (2) obtain the shipper's agreement as to his choice of liability; (3) give the shipper a reasonable opportunity to choose between the two or more levels of liability; and (4) issue a receipt or bill of lading prior to moving the shipment." Hughes, 829 F.2d at 1415.
The ICC no longer exists and there is no longer a requirement to file tariffs with the ICC's successor, the STB. Instead, a motor carrier is required to make the tariff available to shippers upon a shipper's request. 49 U.S.C. § 13710 (a)(1). Therefore, keeping a tariff on file with the ICC can no longer be a requirement for applying a liability limitation. It will suffice to maintain a tariff under the current statutory regime and to make a copy available if requested. Jackson, 991 F. Supp. at 645-46. Here, plaintiff did not request a copy of the tariff prior to the fire so defendant had no obligation to send plaintiff a copy.
Plaintiff agreed to the limitation of liability by signing a bill of lading that incorporated terms of the Uniform Straight Bill of Lading and defendant's tariff. As a sophisticated shipper, plaintiff is charged with knowledge of the applicable tariff. Aero Trucking, Inc. v. Regal Tube Co., 594 F.2d 619, 621-23 (7th Cir. 1979); Mechanical Technology, 776 F.2d at 1088; First Pennsylvania Bank, N.A. v. Eastern Airlines, Inc., 731 F.2d 1113, 1117, 1122-23 (3d Cir. 1984); In re Steve D. Thompson Trucking, Inc., 989 F.2d 1424, 1427 (5th Cir. 1993); State Farm Fire Casualty Co. v. United Van Lines, Inc., 825 F. Supp. 896, 899-901 (N.D. Cal. 1993); W.C. Smith, Inc. v. Yellow Freight Systems, Inc., 596 F. Supp. 515, 517 (E.D. Pa. 1983); Jackson, 991 F. Supp. at 646-47. But compare Dean Foods Co. v. Consolidated Freightways MTR, 29 F. Supp.2d 495, 496 (N.D. Ill. 1998) ("Now, of course, there are no binding filed tariffs and, I think, no presumption that shippers know what they are.") This is especially true when the shipper itself prepared the bill of lading expressly incorporating a tariff and expressly certifying that it was aware of the terms of the tariff. Mechanical Technology, 776 F.2d at 1088. Plaintiff's signing of the bill of lading constitutes entering into a written agreement containing a limitation of liability.
Since the statutory scheme no longer contains a provision regarding offering different rates for different levels of liability limitation, it is unclear whether providing a reasonable opportunity to choose between levels of liability should still be a requirement for enforcing a limitation of liability. But even assuming it is still a requirement, it has been held that "[i]t is enough that the tariff made both coverages available, the bill of lading afforded the shipper a reasonable opportunity to choose between them . . ., and the shipper was a substantial commercial enterprise capable of understanding the agreements it signed." Hollingsworth Vose Co. v. A-P-A Transportation Corp., 158 F.3d 617, 621 (1st Cir. 1998). Here, plaintiff, a sophisticated shipper, chose and prepared the bill of lading form, that form expressly incorporated the applicable tariff and expressly stated that plaintiff was aware of the terms of the tariff and bill, and the form provided plaintiff with the opportunity to insert a declared value, which plaintiff instead chose to leave blank. Under such circumstances, plaintiff had a reasonable and fair opportunity to select a higher limit of liability. Cf. Mechanical Technology, 776 F.2d at 1088-89.
As to the last requirement, there is no dispute that a bill of lading existed for the pertinent shipment.
The undisputed facts show that the requirements for enforcing the liability limitation of the tariff are satisfied. Therefore, plaintiff is limited to claiming an amount based on the weight and type of the goods. Defendant is entitled to partial summary judgment limiting its Count I liability to no more than $30,874.26.
Because this amount is less than the alternative arguments made by defendant, defendant's other arguments regarding limitations of liability need not be considered.
As to the supplemental state law claims, defendant contends that they are preempted by the Carmack Act. See Gordon v. United Van Lines, Inc., 130 F.3d 282, 283 (7th Cir. 1997); Jackson, 991 F. Supp. at 644. Plaintiff does not disagree with this general proposition, but contends the claims should not be dismissed in the event that defendant successfully takes the position that the destruction of the goods occurred outside the purview of the Carmack Act. Defendant, however, concedes that any claim is governed by the Carmack Act. Therefore Counts II and III will be dismissed.
Submission of the final pretrial order is set for July 27, 1999. Additionally, within one week of receiving a copy of today's order, the parties shall contact each other to discuss the possibility of settling the case.
IT IS THEREFORE ORDERED that defendant's motion for summary judgment [32-1] is granted. Counts II and III of the First Amended Complaint are dismissed. On Count I, plaintiff is limited to claiming no more than $30,874.26 in damages based on the limitation of liability contained in the applicable tariff. In open court on July 27, 1999 at 11:00 a.m., the parties shall present an original and one copy of a topbound, final pretrial order in full compliance with Local Rule 5.00.