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Bits & Pieces

Ducham v. Reebie Allied

United States District Court,

N.D. Illinois,

Eastern Division.

Dennis DUCHAM, Plaintiff,

v.

REEBIE ALLIED MOVING AND STORAGE, INC., Defendant.

June 3, 2005.

MEMORANDUM OPINION AND ORDER

SHADUR, Senior District J.

Reebie Storage & Moving Company, Inc. (“Reebie,” named in the Complaint as “Reebie Allied Moving and Storage, Inc.”) has filed a timely Notice of Removal (“Notice”), [FN1] seeking to bring this action from the Circuit Court of Cook County to this District Court. Reebie has simultaneously tendered a Fed.R.Civ.P. (“Rule”) 12(b)(6) motion to dismiss the Complaint brought against it by Dennis Ducham (“Ducham”), noticing up that motion for proposed presentment on June 13. Because the removal was improvident, and because a federal court’s initial obligation is to determine the existence or nonexistence of federal jurisdiction (Cook v. Winfrey, 141 F.3d 322, 325 (7th Cir.1998)), this Court sua sponte remands the action to its place of origin for lack of such jurisdiction.

Ducham’s Complaint can be searched in vain for the statement of any claim that he has framed in federal terms. Instead the three-count Complaint sounds alternatively in breach of contract and intentional misrepresentation, coupled with a claim under the Illinois Consumer Fraud Act, with all of those claims stemming from Ducham’s assertedly having been hornswoggled by Reebie after he had hired it for the removal of his household goods from Park Ridge, Illinois to Livermore, California.

In brief, Reebie had provided Ducham with a firm price quote with a “guaranteed price pledge” not to be changed unless there were “unknown additional services,” and the parties reached an agreement on that basis. But once Reebie took possession of the household goods (thus eliminating the availability of any alternatives or any bargaining power on Ducham’s part) it escalated the price from the stipulated $16,635.45 figure to $21,652.77, then to $24,942.45 and ultimately to $25,564.67.

That course of conduct (which must be accepted as accurate for purposes of removal and under Rule 12(b)(6)) certainly smacks of duress and fraud–even approaching highway robbery. [FN2] And it would seem on the face of things to call into play Justice Holmes’ famous aphorism of more than nine decades ago in The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 57 L.Ed. 716 (1913):

Of course, the party who brings a suit is master to decide what law he will rely upon, and therefore does determine whether he will bring a “suit arising under” the patent or other law of the United States by his declaration or bill. That question cannot depend upon the answer, and accordingly jurisdiction cannot be conferred by the defense, even when anticipated and replied to in the bill.

That doctrine remains alive and well and living in Washington–see, e.g., Caterpillar Inc. v. Williams, 482 U.S. 386, 392 n. 7, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987), citing The Fair and other cases for the identical proposition that “the plaintiff [is] the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law” (id. at 392).

Not so, says Reebie. Instead it urges that all of Ducham’s claims are instinct with federal questions under the Carmack Amendment (Notice ¶ 6). [FN3] Indeed, Reebie’s Rule 12(b)(6) motion goes even farther by asserting that all state law claims are preempted by what was originally the Carmack Amendment and has now been distributed among several sections of Title 49 by the I.C.C. Termination Act of 1995. [FN4]

There is however a fundamental flaw in Reebie’s position, one that cannot be papered over by the virtual blizzard of cases cited in the memorandum of law that it offers to support its Rule 12(b)(6) motion to dismiss. Although Reebie may well seek to meet some of Ducham’s claims by a preemption defense, that alone cannot serve as the predicate for removal–as Caterpillar, 42 U.S. at 393 (citing Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 12, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)) puts it succinctly:

Thus, it is now settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in the plaintiff’s complaint, and even if both parties concede that the federal defense is the only question truly at issue.

There is a narrow exception to that fundamental principle–the “complete pre-emption” doctrine. As Caterpillar, id. (footnote omitted) describes that exception:

On occasion, the Court has concluded that the pre-emptive force of a statute is so “extraordinary” that it “converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.” Metropolitan Life Insurance Co. [v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) ]. Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law. See Franchise Tax Board, supra, at 24 (“[I]f a federal cause of action completely pre-empts a state cause of action any complaint that comes within the scope of the federal cause of action necessarily ‘arises under’ federal law”).

As Reebie would have it, the provisions of the Carmack Amendment fit that exception. But the host of cases that it cites in attempted support of its position deal with the subjects of loss of or injury to the property or delays in delivery, subjects as to which a plaintiff’s recharacterization of his or her claims as breach of contract or even fraud in the inducement–perhaps even triggering a punitive damage claim–would not be permitted to supplant the Carmack Amendment’s coverage. By contrast, if a household goods agent such as Reebie were to hold up its consumer customer at gunpoint to exact an added $9,000, nothing in the cases that Reebie cites (or, for that matter, in common sense) would place the customer’s claim under the rubric of the Carmack Amendment. And the principle is no different where the robbery at gunpoint is figurative rather than literal–where the added $9,000 has been extracted from Ducham “only under duress” (Complaint ¶ 23).

That precise distinction has been recognized and applied by our Court of Appeals in Gordon v. United Van Lines, Inc., 130 F.3d 282, 288-89 (7th Cir.1997). Gordon ‘s discussion should be read in its entirety for a full appreciation of the distinction, but this excerpt suffices to illustrate it:

3 Like this court in [N. Am. Van Lines, Inc. v. Pinkerton Sec. Svs., Inc., 89 F.3d 452 (7th Cir.1996) ], however, the First Circuit specifically noted that not all state claims would be preempted. It held that “liability arising from separate harms–apart from the loss or damage of goods–is not preempted. For example, if an employee of the carrier assaulted and injured the shipper, state law remedies would not be preempted. Similarly, a claim for intentional infliction of emotional distress alleges a harm to the shipper that is independent from the loss or damage to goods and, as such, would not be preempted.” Rini [v. United Van Lines, Inc.], 104 F.3d [502], 506 [ (1st Cir.1997) ]. Taking Hughes, Pinkerton, and Rini together, we too conclude that the Carmack Amendment does not preempt those state law claims that allege liability on a ground that is separate and distinct from the loss of, or the damage to, the goods that were shipped in interstate commerce.

Just as both the First Circuit’s Rini case and our Court of Appeals’ Gordon decision have held that state law claims of intentional infliction of emotional distress were not preempted by the Carmack Amendment, so too Ducham’s claim of fraud–not at all in connection with the loss of or damage to his goods, but rather in the extortion of a large added payment under duress–are not. Most importantly, that lack of preemption places Reebie’s other preemption claims into the category of federal defenses, rather than in the “complete preemption” category. And under Caterpillar and like cases, that is fatal to Reebie’s attempted removal here.

In sum, it is really an understatement to say that “it appears that the district court lacks subject matter jurisdiction” (28 U.S.C. § 1447(c)), so that the same subsection mandates that “the case shall be remanded.” As authorized by this District Court’s LR 81.2(b), the Clerk is directed to mail the certified copy of the remand order forthwith.

FN1. Reebie’s counsel inexplicably labels the Notice as “Defendant’s Petition for Removal,” even though nearly 17 years have elapsed since the 1988 amendments to the removal statutes that in part changed that now-outmoded “petition” usage.

FN2. Bad pun intended.

FN3. Under the recodification of that statute, the several aspects of its coverage were severed by amendatory legislation a decade ago. For example, statutory provisions as to household goods agents for motor carriers transporting household goods (this is how Reebie describes itself, with the motor carrier being Allied Van Lines, Inc .) are now found at 49 U.S.C. § 13907.

FN4. Because so much of the caselaw in this area, including the bulk of the cases on which Reebie seeks to rely, predate the 1995 recodification, this opinion employs the old Carmack Amendment locution irrespective of whether cases antedate or postdate the recodification.

CPCI v. Technical Transportation

United States District Court,

W.D. Washington.

CPCI, Plaintiff,

v.

TECHNICAL TRANSPORTATION, INC., Defendant.

June 3, 2005.

.

ORDER REGARDING MOTION FOR PARTIAL SUMMARY JUDGMENT

 

LASNIK, J.

I. INTRODUCTION

This matter comes before the Court on a motion for partial summary judgment filed by defendant Technical Transportation, Inc. (“Tech Trans”). (Dkt.# 19). Tech Trans seeks an order limiting its potential liability in this matter. For the reasons set forth below, the Court denies Tech Trans’ motion for partial summary judgment.

II. DISCUSSION

A. Background Facts.

In December 2001, Impart, Inc. (“Impart”) purchased approximately 184 used plasma screen television sets from NEC for $400 per set. Impart then pre-sold the sets to consumers for $2,800 per set; demand exceeded supply. Impart contracted with Digitron Communications, Inc. (“Digitron”) to de-install the sets from various locations across the country and transport them to Impart’s facility in Seattle. Impart paid Digitron $730 per set for its services. Digitron subcontracted the transportation of the sets to Tech Trans, a certified and registered surface forwarder of freight. Impart subsequently determined that 63 of the sets arrived with latent transit damage. Impart did not attempt to sell the sets and determined that they were a total constructive loss.

Digitron insured the sets on Impart’s behalf for $2,800 with The Hartford Insurance Company, which is subrogated to Digitron’s rights regarding the claim at issue; plaintiff CPCI is the assignee of The Hartford’s claims regarding the loss.

In retailing the sets for $2,800 each, Impart was selling and receiving payment for (1) its $400 per set cost to NEC; (2) its costs of de-installing and transporting the sets from their original locations to Impart’s facility; (3) testing, cleaning, and repairing the sets in Impart’s warehouse facility; (4) re-boxing the sets; (5) transporting and installing the sets at the premises of Impart’s customers; (6) a 30-day warranty to Impart’s customers; and (7) Impart’s profit margin. Declaration of Steven Corey at ¶ 4. Other than the purchase price to NEC and transportation costs to Digitron, Impart is unable to establish the specific amount of the remainder of its costs or the amount of its profit. Id. at ¶ 5.

B. Summary Judgment Standard.

On a motion for summary judgment, the Court must “view the evidence in the light most favorable to the nonmoving party and determine whether there are any genuine issues of material fact….” Holley v. Crank, 386 F.3d 1248, 1255 (9th Cir.2004). All reasonable inferences supported by the evidence are to be drawn in favor of the nonmoving party. See Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir.2002). “[I]f a rational trier of fact might resolve the issues in favor of the nonmoving party, summary judgment must be denied.” T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 631 (9th Cir.1987).

C. Valuation of Damages.

The parties agree that the general rule for measuring damages is the market value at destination, and in this case, liability is limited to the sets’ market value at their destination at Impart’s facility in Seattle. Defendant’s Motion at p. 4 (citing the Carmack Amendment, 49 U.S.C. § 11706(a)); see also Neptune Orient Lines, Ltd. v. Burlington Northern & Santa Fe. Ry. Co., 213 F.3d 1118 (9th Cir.2000). Under the Carmack Amendment, damages are to be measured by “actual loss or injury to the property.” 49 U.S.C. § 11706(a). Courts have interpreted the actual loss to be “the difference between the market value of the property in the condition in which it should have arrived at its destination and its market value in the damaged condition in which it did arrive.” Neptune, 213 F.3d at 1120. When, as here, “the property does not arrive at all, [courts] are left to determine its market value at the destination had it arrived safely.” Id.

The parties dispute the market value of the television sets at destination. Plaintiff argues that the market value is $2,800, the amount for which Impart had pre-sold the sets. Tech Trans counters that the market value is $400 per set, which is the contract price that Impart paid NEC for each set. Tech Trans’ argument is undermined by the fact that the sets were not replaceable. The initial purchase price of the goods is usually the most accurate measure of their market value when goods are replaceable. In this case, however, it is undisputed that the sets were not replaceable for $400 each, or for any price at or below $2,800. Under these circumstances, $400 per set is not an accurate measure of the sets’ market value at their destination in Seattle. See, e.g., Neptune, 213 F.3d at 1120 (rejecting defendant’s argument that actual loss was limited to the amount that plaintiff paid to its manufacturer to obtain the goods where goods were not replaceable).

The Neptune case involved a factually similar situation and is instructive. In that case, Nike contracted with Neptune Orient Lines, Ltd. to transport shoes; Neptune subcontracted with BNSF. While in transit with BNSF, a container of shoes was stolen and not recovered. The shoes had been pre-sold and were not replaceable. Neptune reimbursed Nike for its agreed selling price to third parties less costs saved, then sought to recover that amount from BNSF. BNSF, like Tech Trans, argued that Nike’s damages should be limited to the price it paid the manufacturer, and any amount in excess was special or consequential damages and not recoverable. The court, in awarding the damages requested, held that Nike’s lost profits, or “lost markup,” was properly viewed as part of the “actual loss;” mere replacement cost was not a proper measure of damages because Nike could not replace the lost property. Id. at 1120. The Neptune case therefore supports plaintiff’s claim in this case that the price agreed to by the third party purchasers, rather than Impart’s purchase price, is the more accurate measure of market value. In fact, plaintiff’s argument is stronger than Nike’s because in this case, Tech Trans, unlike BNSF, was aware that the sets had a declared value of $2,800 each. See Deposition of James Edward Anker at p. 206.

Tech Trans argues that any damages in excess of $400 should be denied because Impart, unlike Nike, cannot estimate its costs and profits with specificity. However, based on the current record, it appears that Impart’s profits are not so speculative as to be illusory. Instead, the undisputed evidence shows that purchasers were willing to pay $2,800 for each set. The actual amount of Impart’s avoided costs and its profits, and the issue of whether the profits are sufficiently definite, present issues of fact which cannot be resolved as a matter of law based on the current record. Accordingly, Tech Trans’ motion to limit its liability to $400 per set is denied. [FN1]

FN1. The market value is certainly higher than $400 per set. Based on the current record, it appears likely that the market value of the sets is $2,800 or close to it, reflecting the price willing consumers agreed to pay for the sets. See, e.g., Elmhurst Cemetery Co. of Joliet v. Comm’r, 300 U.S. 37, 39, 57 S.Ct. 324, 81 L.Ed. 491 (1937) (noting that fair market value is usually defined as “the price which property will bring when offered by a willing seller to a willing buyer, neither being obligated to sell or buy”).

III. CONCLUSION

For all of the foregoing reasons, the Court DENIES Tech Trans’ motion for partial summary judgment (Dkt.# 19).

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