117 F.3d 922 (5th Cir. 1997), 96-50146, Sam L. Majors Jewelers v. ABX, Inc.

Docket Nº:96-50146.
Citation:117 F.3d 922
Party Name:SAM L. MAJORS JEWELERS, Plaintiff-Appellant, v. ABX, INC., doing business as Airborne Express; Airborne Freight Corporation; ABX Air Incorporated, Defendants-Appellees.
Case Date:July 30, 1997
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 922

117 F.3d 922 (5th Cir. 1997)

SAM L. MAJORS JEWELERS, Plaintiff-Appellant,

v.

ABX, INC., doing business as Airborne Express; Airborne

Freight Corporation; ABX Air Incorporated,

Defendants-Appellees.

No. 96-50146.

United States Court of Appeals, Fifth Circuit

July 30, 1997

Page 923

James P. Boldrick, James W. Essman, Boldrick, Clifton, Nelson & Holland, Midland, TX, for Plaintiff-Appellant.

David R. Shane, Shane & Taitz, San Francisco, CA, for Defendants-Appellees.

Dwayne Samuel Byrd, Legal Dept., Memphis, TN, for Federal Express Co. and Cargo Airlines Assoc.

Jeffrey A. Clair, U.S. Department of Justice, Civil Division, Appellate Staff, Washington, DC, for United States Department of Transportation, amicus curiae.

Appeal from the United States District Court for the Western District of Texas.

Before KING, JOLLY and DENNIS, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

Sam L. Majors Jewelers ("Jewelers") sued ABX Air, Inc. d/b/a Airborne Express ("Airborne") for the value of three packages containing jewelry that were lost after being entrusted for shipping to Airborne. The important and difficult question in this case is whether there is a basis for federal jurisdiction, the monetary amount at issue being insufficient to raise diversity jurisdiction. We hold that Jewelers' claim raises federal question jurisdiction based on the federal common law that controls an action seeking to recover damages against an airline for lost or damaged shipments. We further hold that Airborne is not liable for the value of the lost packages because the airbills used in shipping restricted its liability. We therefore affirm the decision of the district court granting Airborne's motion for summary judgment.

I

This case arises from three transactions between Jewelers and Airborne, which occurred

Page 924

in the spring of 1995. On each occasion, Jewelers contracted with Airborne to transport packages from Texas to New York. The contents of these shipments were:

Shipment # 1: gold Rolex watch (declared value $3500)

Shipment # 2: special design necklace, 2.2 carat loose diamond (declared value $6000)

Shipment # 3: enamel earrings (declared value $3000).

Jewelers completed an airbill for each shipment, indicating that the packages contained "mdse" or "merch," presumably intending to identify the contents as merchandise. Jewelers paid an additional fee because of the high declared value of the goods.

On the back of the airbill, Airborne included terms excluding liability for "coins of any kind, currency, furs in any form, gems or stones (cut or uncut), industrial diamonds, or precious metals of any type or form lost during shipping." The airbill also incorporated by reference the Airborne Express Service Guide, which provided that Airborne was not liable for the loss of "jewelry." These service guides were available at Airborne stations, and were sent to customers free of charge on request.

The three shipments were not received by the addressee in New York and Jewelers sued to recover the value of the goods. The district court entered summary judgment in favor of Airborne, and Jewelers appeals.

II

Before reaching the merits, we must decide whether we have jurisdiction to resolve this case. Jewelers filed its original complaint in Texas state court, alleging breach of contract, negligence, and violations of the Texas deceptive trade practice law. Airborne removed the action to the federal district court, asserting that Jewelers' claims against a common carrier, and any corresponding liability on the part of Airborne, were governed by federal law. Jewelers did not contest removal.

In determining whether removal is proper, we begin with the fundamental principal that only actions that originally could have been filed in federal court can be removed to federal court. 28 U.S.C. § 1441, Caterpillar Inc. v. Williams, 482 U.S. 386, 390, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987). 1 Absent diversity of citizenship, federal question jurisdiction is required to support removal. Id. at 392, 107 S.Ct. at 2429. Because the claims involved here are insufficient to satisfy the minimum monetary requirements for diversity jurisdiction, this case could only be removed properly under federal question jurisdiction. Federal jurisdiction exists when a federal question is presented on the face of a plaintiff's properly pleaded complaint. Id. at 392, 107 S.Ct. at 2429. The existence of a defense based upon federal law is insufficient to support jurisdiction. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 8-12, 103 S.Ct. 2841, 2845-47.

There are three theories that might support federal question jurisdiction in a case such as this one. First, jurisdiction may be found when the complaint raises an express or implied cause of action that exists under a federal statute. Second, jurisdiction will lie if an area of law is completely preempted by the federal regulatory regime. Finally, if the cause of action arises under federal common law principles, jurisdiction may be asserted. 2

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A

Suits arising under a federal statute plainly come within the jurisdiction of the federal courts. Although the airline industry was regulated throughout most of its history, in 1978 Congress substantially deregulated the industry. Under the new, limited regulatory regime, there is no express private right of action to recover the value of damaged or lost cargo. We also find no indication that Congress implicitly intended a private right of action to arise under the statutory scheme. 3 We therefore turn to consider whether jurisdiction is supported by federal preemption.

The Airline Deregulation Act of 1978, 92 Stat. 1705, (the "ADA") contains a preemption clause that preempts any state law relating to the rates, routes or services of air carriers. 49 U.S.C. § 41713(b)(4)(A). This preemption clause, standing alone, does not give rise to federal jurisdiction, however. As the Court in Caterpillar noted:

It is now well settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, 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.

Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430 (citing Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 12, 103 S.Ct. 2841, 2847).

Although a preemption defense will not support jurisdiction, in exceptional circumstances courts may find that a federal regulatory regime is so extensive and comprehensive that it is possible to infer that Congress intended any related cause of action to be governed under federal law. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 1546-47, 95 L.Ed.2d 55 (1987); Aaron v. National Union Fire Ins. Co. of Pittsburg, 876 F.2d 1157 (5th Cir.1989)(discussing at length the complete preemption doctrine).

This "complete preemption" occurs only when Congress intends not merely to preempt a certain amount of state law, but also intends to transfer jurisdiction of the subject matter from state to federal courts. See Metropolitan Life, 481 U.S. at 65-66, 107 S.Ct. at 1547-48. Unless Congress clearly manifests an intention to transfer jurisdiction to federal courts, there is no basis for invoking federal judicial power. See Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1189-90, 55 L.Ed.2d 443 (1978); Stamps v. Collagen Corp., 984 F.2d 1416, 1420 (5th Cir.), cert. denied, 510 U.S. 824, 114 S.Ct. 86, 126 L.Ed.2d 54 (1993).

We agree with the Sixth Circuit's conclusion that Congress did not intend to completely preempt state law:

Examining the text of the ADA and its legislative history, we see no evidence that Congress intended the federal courts to have exclusive subject matter jurisdiction over the preemption defenses to state law claims against air carriers. Quite to the contrary: if the Supreme Court was correct to state that the ADA, unlike ERISA, did not intend to "channel actions into federal court," American Airlines [v. Wolens, 513 U.S. 219, 230, 115 S.Ct. 817, 825, 130 L.Ed.2d 715 (1995) ], then only a state

Page 926

court, or a federal court sitting in diversity, is an appropriate forum for resolution of [the plaintiff's fraud] claims.

Musson Theatrical, Inc., 89 F.3d at 1253.

Because Jewelers' action does not arise under a federal statute and because jurisdiction is not supported by complete preemption, we must determine whether Jewelers' claim arises under federal common law.

B

(1)

Federal jurisdiction exists if the claims in this case arise under federal common law. Illinois v. City of Milwaukee, 406 U.S. 91, 100, 92 S.Ct. 1385, 1391, 31 L.Ed.2d 712 (1972)(noting "[w]e see no reason not to give 'laws' its natural meaning, and therefore conclude that § 1331 jurisdiction will support claims founded upon federal common law as well as those of a statutory origin."); see also, National Farmers Union Ins. Co. v. Crow Tribe, 471 U.S. 845, 850, 105 S.Ct. 2447, 2450, 85 L.Ed.2d 818 (1972). We must, therefore, determine whether a cause of action against air carriers for lost or damaged goods arises under federal common law. We begin our analysis by tracing the history of federal regulation of air carriers.

Before federal statutory regulation, the liability of common carriers was dictated by federal and state common law. 4 The Carmack Amendment to the Interstate Commerce Act of February 4, 1887, the first comprehensive statutes governing ground transportation by common carriers, specified that federal law, controlled liability for goods lost or damaged...

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