American Synthetic Rubber Corp. v. Louisville & NR Co.

• Decision Date: 17 September 1968
• Docket Number: Civ. A. No. 5639.
• Citation: 291 F. Supp. 723
• Parties: AMERICAN SYNTHETIC RUBBER CORPORATION and American Rubber and Chemical Company, Plaintiffs, v. LOUISVILLE AND NASHVILLE RAILROAD COMPANY, Defendant. LOUISVILLE AND NASHVILLE RAILROAD COMPANY, Defendant and Third-Party Plaintiff, v. KENTUCKY AND INDIANA TERMINAL RAILROAD COMPANY, Third-Party Defendant.
• Court: U.S. District Court — Western District of Kentucky

291 F. Supp. 723

AMERICAN SYNTHETIC RUBBER CORPORATION and American Rubber and Chemical Company, Plaintiffs, v. LOUISVILLE AND NASHVILLE RAILROAD COMPANY, Defendant.

LOUISVILLE AND NASHVILLE RAILROAD COMPANY, Defendant and Third-Party Plaintiff, v. KENTUCKY AND INDIANA TERMINAL RAILROAD COMPANY, Third-Party Defendant.

Civ. A. No. 5639.

United States District Court W. D. Kentucky, at Louisville.

December 22, 1967.

As corrected—January 23, 1968.

Order September 17, 1968.

Hubert T. Willis and O. Grant Bruton, Louisville, Ky., counsel, for plaintiffs.

Joseph E. Stopher and A. J. Deindoerfer, Eugene W. Herde, Louisville, Ky., counsel for defendants.

Lively M. Wilson, Louisville, Ky., counsel for third party defendants.

MEMORANDUM

BROOKS, Chief Judge.

This case is submitted on plaintiffs' motion to reconsider the order of this Court denying plaintiffs' motion to remand. The action is brought to recover damages which occurred after a railroad carload of the wrong chemical was delivered to the plaintiffs, American Synthetic Rubber Corporation and American Rubber and Chemical Company, and after that chemical was mixed with other raw materials in the plaintiffs' manufacturing process. The action originated in the state court and the defendant, the Louisville and Nashville Railroad Company, an interstate common carrier, removed it contending that the action is one "arising under" the laws of the United States. Title 28 United States Code Sections 1337, 1441(b) and 1445(b). The plaintiffs maintain that the action is one arising under the common law either for a breach of contract or for the negligent transportation of the chemicals. The question of jurisdiction, therefore, centers upon a determination of whether the action arises under the Carmack Amendment to the Interstate Commerce Act. Title 49 United States Code Section 20(11).

The facts for the purpose of this motion are not in dispute. In March, 1966, a number of tank carloads of butadiene, a chemical used in the plaintiffs' manufacturing process, was ordered from the Monsanto Chemical Company. Monsanto, by an agreement with a corporation in Houston, Texas, directed that a carload of butadiene be shipped from the Texas plant to the plaintiffs in Louisville, Kentucky. The defendant, Louisville and Nashville, received the carload of butadiene from another carrier at Memphis, Tennessee. Upon transfer, L & N received certain documents identifying the car as number GATX 84196 containing butadiene. This carload was to be delivered to the Kentucky and Indiana Terminal Railroad Company which had tracks leading to the plaintiffs' plant. The L & N did not have tracks servicing the plaintiffs. Instead of transferring the correct carload to the K & I, the L & N transferred a car identified as GATX 84796 loaded with ethylene oxide together with the documents identifying the car as number GATX 84196. When the carload of ethylene oxide arrived accompanied by documents specifying that it contained butadiene, the plaintiff, American Synthetic, unloaded the car into its storage tanks for butadiene of which the joint use was shared by its affiliate, American Rubber and Chemical Company. The mistake was not discovered by the plaintiffs until the ethylene oxide had been mixed with other raw materials and ingredients which resulted in considerable damage to the plaintiffs.

The general rule is that the removability of an action is determined by the plaintiff's pleading. Peyton v. Railway Express Agency, Inc., 316 U.S. 350, 62 S.Ct. 1171, 86 L.Ed. 1525 (1942). The fact that the complaint in no way purports to rely on any federal law is not determinative of jurisdiction when the facts stated therein clearly show that the gravamen of the action is governed by federal law. Georgia, Florida & Alabama Railway Company v. Blish Milling Company, 241 U.S. 190, 36 S.Ct. 541, 60 L.Ed. 948 (1916); Sylgab Steel and Wire Corp. v. Strickland Transportation Company, Inc., 270 F.Supp. 264 (E.D. N.Y.1967). The plaintiffs are not in disagreement with the general rule, but they contend that the gravamen of this action is not within the scope of the Carmack Amendment.

There is little doubt that this action would be controlled by the Carmack Amendment, if the claim was for direct damage or injury to the property transported in interstate commerce. Missouri Pacific R. Co. v. Elmore & Stahl, 377 U.S. 134, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964). The plaintiffs maintain, however, that the Carmack Amendment does not cover actions for the negligence of intermediate carriers resulting in consequential damages which were not the result of loss, damage or delay in the shipment covered by the bill of lading.

Plaintiffs rely primarily on Peter Kiewit Sons' Co. v. Colorado & Southern Ry. Co., 199 F.Supp. 261 (D.C.Colo.1961). In that case the Colorado District Court, in distinguishing a long line of Supreme Court cases dealing with the Carmack Amendment, relied upon two factors: first, that the suit sought recovery of consequential damages rather than damage to the property being shipped, and second, that the defendant was an intermediate carrier rather than an initial or delivering carrier. While it cannot be determined from the record whether L & N is an intermediate or delivering carrier, neither of the factors relied on in Kiewit can be said to be a valid ground for distinction. In Southeastern Express Co. v. Pastime Amusement Co., 299 U.S. 28, 57 S.Ct. 73, 81 L.Ed. 20 (1936) which also involved a suit seeking recovery of consequential damages, the Supreme Court held the Carmack Amendment to be applicable saying, "The words of the statute `are comprehensive enough to embrace all damages resulting from any failure to discharge a carrier's duty with respect to any part of the transportation to the agreed destination.'" p. 29, p. 74 of 57 S.Ct. Furthermore, whenever the Supreme Court has considered the applicability of the Carmack Amendment to suits against an intermediate carrier or a carrier which at the time the suit arose held the same...