Opinion
CIVIL NO.: 10-1247 (DRD).
March 9, 2011
REPORT AND RECOMMENDATION
I. PROCEDURAL HISTORY
On January 15, 2010, plaintiff Salinas Asphalt, Inc. ("Salinas") filed a complaint in the Puerto Rico Court of First Instance, San Juan Part, against defendants Astec, Inc. ("Astec"), Expeditors International of Washington, Inc. ("Expeditors International of Washington"), Expeditors International (Puerto Rico), Inc. ("Expeditors"), and an unnamed insurance company asserting state law claims for breach of contract and negligence based on allegations that defendants mistakenly sent a shipment of asphalt that plaintiff had ordered to Costa Rica instead of Puerto Rico, causing costly delays. (Docket No. 1-9.) Expeditors timely removed the case under federal question jurisdiction. (Docket No. 1.)
The state court case was later transferred to Court of First Instance in Guayama. (Docket No. 6, p. 1 n. 1.)
Pending before the court is plaintiff's motion to remand and for attorney's fees and costs. (Docket No. 3.) Expeditors filed an opposition, and plaintiff has replied. (Docket Nos. 6; 8.) The motion was subsequently referred to the undersigned for report and recommendation. (Docket No. 14.)
While generally all defendants must consent to remove a case in order for removal to be effected, it is unclear from the parties' submissions whether the other defendants were served in the state case. See Esposito v. Home Depot U.S.A., 590 F.3d 72, 75 (1st Cir. 2009) (citing 28 U.S.C. § 1441); (see Docket No. 1-11.) In any event, as plaintiff did not move to remand on this basis, to the extent any such defect exists, it is considered waived. Id. (citations omitted).
II. LEGAL STANDARD
A defendant may remove a case filed in state court only when the action could have been originally filed in federal court. 28 U.S.C. § 1441; Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). In the absence of complete diversity, there must be federal question jurisdiction pursuant to 28 U.S.C. § 1331 for the federal court to hear the case. Id. Jurisdiction is determined by examining the well-pleaded complaint from state court, not the possible defenses that could be raised in the answer. Rosselló-González v. Calderón-Serra, 398 F.3d 1, 11 (1st Cir. 2004) (citation omitted).
When a party questions the propriety of a removal petition, the removing party bears the burden of showing that removal is proper. BIW Deceived v. Local Union S6, Indus. Union of Marine Shipbldg. Workers of Amer., IAMAW Dist. Lodge 4, 132 F.3d 824, 831 (1st Cir. 1997). Removal statutes are strictly construed against removal. See Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941). When plaintiff and defendant clash about jurisdiction, however, "all doubts should be resolved in favor of remand." Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (citation omitted). "If at any time before final judgement it appears that the district court lacks subject matter jurisdiction [over a case removed from state court], the case shall be remanded." 28 U.S.C. § 1447(c); see American Policyholders Ins. Co. v. Nyacol Prods., 989 F.2d 1256, 1264 (1st Cir. 1993) (vacating dismissal and ordering the district court to "return the improvidently removed action to the court from whence it emanated").
III. LEGAL ANALYSIS
Complete Preemption
49 Stat. 3000137See 49 U.S.C. § 4171328 U.S.C. § 1447 Caterpillar, Inc. v. Williams 482 U.S. 386393Fayard v. Northeast Vehicle Servs., LLC 533 F.3d 4246see Ben. Nat'l Bank v. Anderson 539 U.S. 18Fayard533 F.3d at 46Metro. Life Ins. Co. v. Taylor 481 U.S. 5863
While Expeditors did not explicitly refer to the doctrine in its removal petition or its opposition to plaintiff's motion to remand (Docket Nos. 1; 6), the undersigned construes Expeditors' claim that the Convention applies despite it not being mentioned in plaintiff's complaint as an argument that plaintiff's state claims are completely preempted by the treaty.
See Convention for the Unification of Certain Rules for International Carriage by Air, May 28, 1999, ICAO Doc. 9740, S. Treaty Doc. No. 106-45, 1999 WL 33292734 (2000) (hereinafter the "Montreal Convention").
The Montreal Convention
Entered into force on September 5, 2003 following its ratification by the United States Senate, the Montreal Convention replaced the Warsaw Convention and its supplementary amendments as the treaty governing rights and liabilities in international air carriage. See Sompo Japan Ins., Inc. v. Nippon Cargo Airlines Co., Ltd., 522 F.3d 776, 780-81 (7th Cir. 2008) (citing Ehrlich v. Am. Airlines, Inc., 360 F.3d 366 (2d Cir. 2004)). By its express language, the Montreal Convention governs "all international carriage of persons, baggage or cargo performed by aircraft for reward." Montreal Convention, art. 1(1). The Convention defines "international carriage" as:
Although the Montreal Convention is "an entirely new treaty that unifies and replaces the system of liability that derives from the Warsaw Convention," courts have looked to caselaw concerning the Warsaw Convention in making determinations regarding "substantively similar" provisions of the Montreal Convention. Ehrlich v. Am. Airlines, Inc., 360 F.3d 366, 371 n. 4 (2d Cir. 2004); Fedelich v. Am. Airlines, 724 F. Supp. 2d 274, 284 n. 3 (D.P.R. 2010); Best v. BWIA W. Indies Airways Ltd., 581 F. Supp. 2d 359, 362 (E.D.N.Y. 2008); Espinoza Ugaz v. Am. Airlines, Inc., 576 F.Supp.2d 1354, 1360 (S.D. Fla. 2008).
any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two States Parties, or within the territory of a single State Party if there is an agreed stopping place within the territory of another State, even if that State is not a State Party. Carriage between two points within the territory of a single State Party without an agreed stopping place within the territory of another State is not international carriage for the purposes of this Convention.Id. at art. 1(2). Relevant to the present case, Article 19 of the Montreal Convention provides that "[t]he carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo[,]" under limitations set forth in Article 22. Id. at art. 19, 22. The Convention also contains an exclusivity provision, which states that:
By comparison, the Warsaw Convention applied to "all international transportation of persons, baggage, or goods performed by aircraft for hire," where "international transportation" was defined as:
any transportation in which, according to the contract made by the parties, the place of departure and the place of destination, whether or not there be a break in the transportation or a transshipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another power, even though that power is not a party to this convention. Transportation without such an agreed stopping place between territories subject to the sovereignty, suzerainty, mandate, or authority of the same High Contracting Party shall not be deemed to be international for the purposes of this convention.
Warsaw Convention, art. 1(2).
[i]n the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention[.]Id. at art. 29.
Neither the Supreme Court nor the First Circuit has yet addressed whether this provision of the Montreal Convention, or Article 24 of the Warsaw Convention, completely preempts state law causes of action. Other courts that have considered the issue have disagreed as to whether either Convention completely preempts state law. Compare Schaefer-Condulmari v. US Airways Group, Inc., 2009 U.S. Dist. LEXIS 114723, at *25 (E.D. Pa. Dec. 8, 2009) (finding that the Montreal Convention completely preempts state law claims); Schoeffler-Miller v. Northwest Airlines, Inc., 2008 U.S. Dist. LEXIS 93851, at *9 (C.D. Ill. Nov. 17, 2008) (same); Husmann v. Trans World Airlines, Inc., 169 F.3d 1151, 1153 n. 5 (8th Cir. 1999) (finding "state law cause of action [to be] completely preempted by the Warsaw Convention");Singh v. N. Am. Airlines, 426 F. Supp. 2d 38, 48 (E.D.N.Y. 2006) (same); with Narkiewicz-Laine v. Scandinavian Airlines Sys., 587 F. Supp. 2d 888, 890 (N.D. Ill. 2008) ("[b]ecause the conditions and limits of the Montreal Convention are defenses to the state-law claims raised by plaintiff, they do not provide a basis for federal-question subject matter jurisdiction"); Sompo Japan Ins., Inc. v. Nippon Cargo Airlines Co., 522 F.3d 776, 781 (7th Cir. Ill. 2008) ("the [Warsaw] Convention's preemption is not complete"); Distribuidora Dimsa v. Linea Aerea Del Cobre S.A., 976 F.2d 90, 93 (2d Cir. 1992) (denominating the liability limitations of the Warsaw Convention an affirmative defense);Rogers v. Am. Airlines, Inc., 192 F. Supp. 2d 661, 664 (N.D. Tex. 2001) ("although the Warsaw Convention's exclusivity provisions may well preempt [p]laintiffs' state law claims, the delicate balance between state and federal courts cautions against finding that the field of international air travel is so completely preempted that any claim relating to the area is 'necessarily federal in character.'") (citation omitted).
While the First Circuit has stated that "the [Warsaw] Convention is preemptive," the court did not indicate whether this was a reference to complete preemption, and the finding was not made in the context of removal. Acevedo-Reinoso v. Iberia Lineas Aereas De Espana S.A., 449 F.3d 7, 11 (1st Cir. 2006) (citing El Al Israel Airlines, 525 U.S. at 168).
However, this issue need not be decided in the present case, as the evidence illustrates that the shipment in question was intended to be domestic and hence outside the scope of the Montreal Convention. See Montreal Convention, art. 1(2) ("[c]arriage between two points within the territory of a single State Party without an agreed stopping place within the territory of another State is not international carriage for the purposes of this Convention.") Expeditors contends that the parties agreed that Expeditors would ship materials on behalf of co-defendant Astec from Atlanta, Georgia to San Juan, Puerto Rico, with an agreed upon stopping point in San José, Costa Rica. (Docket No. 6, p. 3.) In support of its claim, Expeditors has submitted two air waybills listing Astec as the shipper, Expeditors as the issuing carrier's agent, and plaintiff Salinas as the consignee. (Docket Nos. 1-5; 1-6; 6, pp. 3-4.) The first, executed on August 22, 2009, shows that "trenching equipment" was to be shipped from Atlanta, Georgia to San José, and the second — executed September 1, 2009 — indicates that the equipment was to be sent from San José to San Juan, Puerto Rico. Id. Expeditors maintains that the air waybills are the contracts of carriage between the parties, and are "binding upon all who sue a carrier for matters relating to the shipment upon which it is issued." Levy v. United Parcel Sys., 2008 U.S. Dist. LEXIS 11543, at *4-*5 (D.N.J. Feb. 14, 2008); (Docket No. 6, p. 4.) As such, Expeditors claims that the air waybills demonstrate the parties' intention that the shipment would include an "agreed stopping place within the territory of another State," and that the shipment should thus be considered international carriage. Montreal Convention, art. 1(2); (Docket No. 6, pp. 3-4.)
Yet, Expeditors' reliance on the air waybills is flawed. Defendant has submitted no evidence indicating that plaintiff ever received the air waybills prior to shipment or otherwise assented to the use of San José as a stopping point; instead, defendant states only that an invoice listing the shipment's destination as San José was "issued and presented to the shipper [co-defendant Astec,]" not to plaintiff. (Docket No. 6, p. 5.) Furthermore, plaintiff has submitted evidence demonstrating that Expeditors admitted that the shipment to San José, Costa Rico was not an "agreed upon stopping place," but rather a mistake. (Docket No. 8, p. 2.) On September 8, 2009, a supervisor at Expeditors International of Washington's Atlanta office e-mailed an Astec customer service representative stating that the shipment in question had been "misrouted to San José, Costa Rica instead of San Juan, Puerto Rico," and requesting a letter from Astec indicating that the shipment did not originally require customs clearance because it was intended to be "domestic," and that Astec — not plaintiff — would "take responsibility for duties, taxes and other dest[ination] fees" because the "[shipment] was originally domestic." (Docket No. 8-2.) A letter containing those terms was executed by Astec that same day. (Docket No. 8-3.) In light of this admission, Expeditors' attempt to rely on the information contained in the air waybills is unpersuasive. It is thus RECOMMENDED that the Montreal Convention — and its predecessor the Warsaw Convention — be found not to provide federal question jurisdiction over plaintiff's claims in the present case.
In addition, Expeditors' claim that the shipment constitutes international transportation due to language in the air waybill stating that the "shipper agrees that the shipment may be carried via intermediate stopping places which the carrier deems appropriate" is unavailing, since said provision does not evince any agreement between the parties regarding a specific intermediate stopping point "within the territory of another State." See Montreal Convention, art. 1(2). As to Expeditors' claim that plaintiff ratified the terms of the contract by accepting delivery of the goods (Docket No. 6, p. 5), such an argument goes to the merits of plaintiff's underlying claims and is outside the scope of the present motion.
Airline Deregulation Act
Expeditors also claims that the ADA — a statute designed to promote uniformity within aviation regulation — preempts plaintiff's state claims, thus providing federal question jurisdiction. (Docket No. 6, p. 6.) However, while the statute contains a preemption provision prohibiting states from "enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation[,]" courts that have considered the issue have found the ADA not to have a complete preemptive effect. 49 U.S.C. § 41713(b)(1); see Wayne v. DHL Worldwide Express, 294 F.3d 1179, 1184 (9th Cir. 2002) ("the ADA does not provide a basis for federal jurisdiction under the complete preemption doctrine."); Sam L. Majors Jewelers v. ABX, Inc, 117 F.3d 922, 925-26 (5th Cir. 1997) (citation omitted); Musson Theatrical, Inc. v. Federal Express Corp., 89 F.3d 1244, 1253 (6th Cir. 1996); Seagate Logistics, Inc. v. Angel Kiss, Inc., 699 F. Supp. 2d 499, 504 (E.D.N.Y. 2010). To wit, Expeditors cites no cases addressing complete preemption in the context of the ADA. See Caterpillar, 482 U.S. at 398 ("[t]he fact that a defendant might ultimately prove that a plaintiff's claims are preempted . . . does not establish that they are removable to federal court.") Therefore, it is RECOMMENDED that the ADA be found not to provide federal question jurisdiction over plaintiff's claims.
As Expeditors has not established a basis for federal question jurisdiction, it is hereby RECOMMENDED that this case be remanded to state court.
Attorney's Fees
Plaintiff also claims to be entitled to attorney's fees and costs pursuant to 28 U.S.C. § 1447(c), which states that the granting of a motion to remand "may require payment of just costs and any actual expenses, including attorney's fees, incurred as a result of the removal." 28 U.S.C. § 1447(c). However, courts have held that a plaintiff "is not automatically entitled to attorney's fees simply because removal was ultimately determined to be improper." Martin v. Franklin Capital Corp., 393 F.3d 1143, 1147 (10th Cir. 2004) aff'd, 546 U.S. 132 (2005). Instead, the Supreme Court has held that "[a]bsent unusual circumstances, courts may award attorney's fees under 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal." Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). In this case, as plaintiff has not articulated why Expeditors' removal petition lacked such a basis, it is hereby RECOMMENDED that plaintiff's motion for attorney's fees and costs be DENIED. (Docket No. 3, p. 9.)
IV. CONCLUSION
In view of the foregoing, it is RECOMMENDED that plaintiff's motion (Docket No. 3) be GRANTED IN PART and DENIED IN PART. The same should be GRANTED as to plaintiff's motion to remand the case to state court, and DENIED as to plaintiff's request for attorney's fees and costs.
IT IS SO RECOMMENDED.
Pursuant to the court's referral order (Docket No. 14), the parties have five (5) business days to file any objections to this report and recommendation. Failure to file same within the specified time waives the right to appeal this report and recommendation. Fed.R.Civ.P. 72(b)(2); Fed.R.Civ.P. 6(c)(1)(B), and Local Rule 72(d); see also 28 U.S.C. § 636(b)(1);Henley Drilling Co. v. McGee, 36 F.3d 143, 150-151 (1st Cir. 1994); United States v. Valencia, 792 F.2d 4 (1st Cir. 1986).