Opinion
Civil Action No. H-03-0024.
December 5, 2004
MEMORANDUM AND OPINION ON MOTION FOR RECONSIDERATION BY SAMTECH CORPORATION
Plaintiff Samtech Corporation has moved for reconsideration of this court's May 28, 2004 Memorandum and Opinion granting summary judgment in favor of defendant Federal Express Corporation ("FedEx") on the basis of limitations. Samtech had sued FedEx almost two years after delivering an allegedly damaged package. The contract between Samtech and FedEx, contained in FedEx's Service Guide and incorporated by its airbill, barred Samtech's contract claim, because it required any suit for breach of contract to be filed within one year from the date of delivery. Samtech argued that such a contractually-imposed limitations period was unenforceable in Texas. Under Texas law, agreements that impose limitations periods of less than two years are unenforceable. FedEx argued that the Airline Deregulation Act preempted the application of the Texas statute. This court agreed. Samtech seeks reconsideration of the preemption ruling.
Based on careful review of the motion and response, the record, and the applicable law, this court denies Samtech's motion for reconsideration, for the reasons set out below.
I. Background
Samtech sued FedEx in Texas state court on November 26, 2002, alleging violations of the Carmack Amendment, 46 U.S.C. § 14706, breach of contract and bailment, and negligence. (Docket Entry No. 1, Ex. 1). The claims stemmed from FedEx's delivery of a damaged Samtech package containing a computer server. FedEx removed on the basis of federal question jurisdiction. (Docket Entry No. 1).
On March 14, 2004, following cross-motions for summary judgment, this court denied Samtech's motion and denied in part and granted in part FedEx's motion. This court dismissed Samtech's bailment and negligence claims as preempted by the ADA. (Docket Entry No. 22). Samtech moved for reconsideration of the denial of its summary judgment motion. (Docket Entry No. 23). This court denied the motion. The only claim remaining was for breach of contract.
This court's decisions of March 14 and May 28, 2004 set out the factual details in greater detail. (Docket Entry Nos. 22, 28).
FedEx had argued that Samtech did not timely file its claim within one year after the date of delivery, as required by the contract of carriage. Samtech filed suit almost two years after the date of delivery. In the March 2004 ruling, this court held that the Texas statute making contractually-agreed limitations periods of less than two years unenforceable applied. TEX. CIV. PRAC. REM. CODE § 16.070(a). (Docket Entry No. 25). FedEx moved for reconsideration of this ruling. In May 2004, this court granted the motion for reconsideration and held under the ADA, the one-year contractually-agreed limitations period was enforceable. Samtech has now moved for reconsideration of that decision. (Docket Entry No. 30).
II. Analysis
Samtech asks this court to reconsider its decision that a contractually-required one-year limitations period applies to its breach of contract claim. Although Texas law makes unenforceable contractually-agreed limitations periods shorter than two years, this court determined that the ADA preempts the application of the Texas statute and that under federal common law, FedEx's one-year contractual limitations period is reasonable.
In its motion for reconsideration, Samtech largely reiterates arguments that this court previously considered in its May 2004 ruling. Citing Jones v. R.R. Donnelley Sons, Co., 124 S. Ct. 1836 (2004), Samtech argues that because federal common law borrows state statutes of limitations, the Texas statute that makes an agreement fixing limitations at less than two years, section 16.070(a), applies to invalidate the one-year limitation provision set in the FexEx contract. Section 16.070 is not a state statute of limitation that can be "borrowed" because it does not establish a maximum period within which parties must file suit or have their claims barred. Section 16.06070(a) instead establishes a minimum period of two years within which parties must file a breach of contract suit, regardless of whether the contracting parties have agreed to a shorter period. Moreover, while federal courts generally borrow state statutes of limitation if federal law does not supply a limitations period, such borrowing is not necessary when the parties have contracted for a limitations period.
Samtech's Airbill and its incorporated Service Guide stipulated a one-year limitations period for filing claims. In its motion for reconsideration, Samtech does not dispute the validity of its contract of carriage with FedEx. The recent Supreme Court decision Samtech cites, Jones, does not involve a contractually-selected limitations period. Rather, the issue in Jones was the limitations period that applied to a civil rights tort claim under 42 U.S.C. § 1981. The Court resolved this question by reference to another federal statute that established a uniform limitations period for many federally-created causes of action. 124 S. Ct. at 1845.
Samtech also contends that section 16.070(a) is procedural tolling statute that does not enlarge the substantive rights of the parties, so as to trigger preemption. Samtech does not address the discussion in the May 2004 Memorandum and Opinion that applying the Texas statute to void the parties' contractual limitations period would not be borrowing a Texas statute of limitations or using Texas contract law to enforce the parties' own contractual obligations. Rather, the application of the Texas law would be to enlarge the parties' contractual obligations. Such an approach would deviate from the "middle course" that the Supreme Court has steered between "what the ADA preempts, and what it leaves to private ordering, backed by judicial enforcement." American Airlines, Inc. v. Wolens, 513 U.S. 219, 234 (1995). Samtech would be using the state statute to void the parties' contractual limitations provision. This use of state law would not be to enforce the contract Samtech made with FedEx, but instead would impose an external requirement on FedEx in the contractual arrangements to provide air transportation services to its customer, Samtech. Samtech's motion to reconsider does not address this aspect of the Memorandum and Opinion.
Finally, Samtech argues that FedEx bears the burden of proof to demonstrate that refusing to enforce FedEx's contractual limitations period would have a significant economic effect on the carrier's services. (Docket Entry No. 30). Samtech argues that this court's initial opinion finding that the ADA did not preempt section 16.070(a) "noted that Fed Ex had not supplied any competent summary judgment evidence to support its claim that contractual limitations periods have a significant economic effect on an air carrier's services." Samtech asserts that "[w]hile Fed Ex still has submitted absolutely no competent summary judgment evidence, the Court's Opinion now purports to find such an impact, as well as other findings concerning `market incentives' for contractual limitations periods and so forth." (Docket Entry No. 30, p. 4).
In its original opinion, this court stated that section 16.070(a) "does not create any substantive obligation on the air carrier, but merely extends the amount of time for a consumer to file a claim against that air carrier for a service the carrier has already agreed to provide. . . . Although section 16.070(a) could affect financing, there is no competent summary judgment evidence that any such impact would be significant." This court then relied on several cases from this and other circuits discussing the role of economic effects in the preemption analysis. See, e.g., Lyn-Lea Travel Corp. v. American Airlines, 283 F.3d 282, 287 (5th Cir. 2002) (stating "ADA preemption is concerned solely with economic deregulation, not with displacing state tort law") (internal quotations omitted); Smith v. America W. Airlines, 44 F.3d 344, 347 (5th Cir. 1995) (focusing on "economic or contractual dimension" of services in finding that tort claims of passengers on hijacked plane would "not regulate the economic or contractual aspects" of airlines' practices).
This court made no factual findings in either of its prior opinions in this case, but rather applied judicial decisions interpreting whether the ADA preempted certain state law claims. "Interpretation of the statutory language is the key to construing its preemptive force." Hodges, 44 F.3d at 3334-335 (citing Morales, 504 U.S. at 383). The Supreme Court in Morales found that "it is clear as an economic matter" that the challenged state restrictions "have the forbidden significant effect upon [airline] fares." 504 U.S. at 388. The Fifth Circuit has held that the ADA preempts claims without requiring evidentiary hearings to establish the severity of "the forbidden significant effect" on prices. See, e.g., Witty v. Delta Air Lines, Inc., 366 F.3d 380, 383 (5th Cir. 2004) (holding, on interlocutory appeal following denial of defendant's motion to dismiss, that a passenger's allegation that airline should have provided more leg room to avoid deep vein thrombosis "would necessarily reduce the number of seats" and "impose a standard `relating to price' under § 41713(b)(1) and is accordingly preempted").
Even if a finding of preemption were not a matter of statutory interpretation, that is, a matter of law, this court's May 28 decision rested on more than ADA preemption: "This outcome results under federal common law, on which Samtech itself relies for its claim, which makes reasonable contractual limitations periods enforceable. . . . This outcome also results from preemption under the ADA, which does not permit the application of state law to expand or enlarge parties' contractual obligations by external requirements, such as requiring parties to allow suit after their contractually agreed period for filing has expired." (Docket Entry No. 28, p. 23 (citations omitted)).
III. Conclusion
Samtech's motion for reconsideration is denied.