Beta Spawn Inc. v. FFE Transportation Serv. Inc.

• Decision Date: 31 May 2001
• Docket Number: No. 00-1332,00-1332
• Citation: 250 F.3d 218
• Parties: (3rd Cir. 2001) BETA SPAWN, INC. v. FFE TRANSPORTATION SERVICES, INC., Appellant
• Court: U.S. Court of Appeals — Third Circuit

Page 218

250 F.3d 218 (3rd Cir. 2001)

BETA SPAWN, INC. v. FFE TRANSPORTATION SERVICES, INC., Appellant

No. 00-1332

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued March 8, 2001

Filed May 15, 2001

Amended May 31, 2001

[Copyrighted Material Omitted] ROBERT C. HOUPT, ESQ. (ARGUED), Houpt & Wolffe, Ltd., Paoli, PA, Counsel for Appellee.

JACK L. COKE, JR., ESQ. (ARGUED), Dallas, TX. CHARLES L. HOWARD, Gollatz, Griffin, & Ewing, P.C., Philadelphia, PA, Counsel for Appellant.

Before: ALITO, McKEE, and KRAVITCH,^* Circuit Judges.

OPINION: OPINION OF THE COURT

KRAVITCH, Circuit Judge:

FFE Transportation Services, Inc. ("FFE") appeals from the judgment of the district court finding FFE liable to Beta Spawn, Inc. for the value of a shipment of mushroom spawn damaged during transport. FFE contends that the district court erred in finding (1) that Beta Spawn established a prima facie case under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 11706; (2) that FFE's tariff was not applicable to the shipment at issue; and (3) that FFE had agreed to maintain the temperature of its trailer at 34 degrees Fahrenheit¹ when transporting the spawn. Because we hold that the district court ruled correctly on all three issues, we affirm the judgment of the district court in favor of Beta Spawn on its claim for damages and against FFE on its counter claim to recover freight charges.

I. Background

Beta Spawn, a Pennsylvania corporation, supplies mushroom spawn to the mushroom industry.² At all times relevant to this case, Beta Spawn has been the exclusive distributor of a variety of spawn from Italy known as Italspawn. FFE is a common carrier hired by Beta Spawn to transport a shipment of Italspawn from Camarillo, California to Beta Spawn's facility in Pennsylvania.

According to the district court's findings, mushroom spawn are "living, breathing" organisms that must be maintained at a temperature of approximately 36 degrees. Harry Testa, vice-president of Beta Spawn, testified that when spawn are exposed to higher temperatures, they begin to generate their own heat and to ferment. Spawn that have begun to ferment are damaged and lose their viability. Once spawn are exposed to heat, attempts to re-cool the spawn will not be successful. Because spawn are fragile, they must breathe filtered air to avoid contamination. For that reason, spawn are packaged in clear, plastic bags with air filters on each bag. Condensation and yellow discoloration are signs of contaminated spawn. Damaged spawn also have a characteristic odor similar to that of vinegar.

In June 1997, Beta Spawn sold a truckload shipment of Italspawn (the "June Shipment") to Peterson's Ranch in Camarillo, California.³ Louis Peterson, an officer and director of Mushrooms, Etc. who received the shipment in California, testified that some of the boxes containing the spawn were torn and crushed at the time of arrival. Nevertheless, Peterson used spawn out of those damaged boxes to grow his first crop of mushrooms.

In September 1997, Peterson agreed to sell 16,000 units of the Italspawn back to Beta Spawn. These spawn had been stored for three months in a facility that was nearby, but not on, the farm premises and, according to Peterson, had remained refrigerated the entire time. Peterson testified that about three weeks after the spawn were shipped to Beta Spawn, he used a remaining portion of the June Shipment to grow a successful crop of mushrooms. That portion, however, was not stored in the same facility as the spawn sold to Beta Spawn.

On behalf of Beta Spawn, Testa contacted Michael Conn of FFE to arrange for the shipment of the spawn from California to Beta Spawn's facility in Pennsylvania. During their conversation, Testa and Conn verbally agreed that FFE would transport the spawn at a temperature of approximately 34 degrees. FFE had shipped spawn for Beta Spawn before and had always transported the spawn in a trailer maintained at 34 degrees.

On September 23, 1997, FFE entered into a bill of lading/contract of carriage with Mushrooms, Etc. of California for the transportation of the spawn to Pennsylvania. Mushrooms, Etc. requested that FFE provide it with less-than-truckload ("LTL"), "chilled" service. Beta Spawn, as consignee, agreed to pay FFE $ 2,685.36 for the shipment upon delivery. The bill of lading, prepared by Peterson Ranch, called for the transport of 16,000 units of spawn, packed in 400 boxes. The spawn were packed in clear plastic bags, three bags to a box, separated by cardboard dividers. Each cardboard box contained holes to permit air circulation. Peterson loaded the boxes into FFE's refrigerated trailer on 10 pallets, 40 boxes to a pallet. Initially, the boxes were only secured to the pallets with clear plastic tape, but after the pallets were loaded onto the truck, William Forbito, the driver for FFE, shrink-wrapped the boxes to prevent their falling over during transport.

Forbito testified that when he picked up the spawn, he asked Peterson at what temperature he was to maintain the shipment. After Peterson responded "it goes chilled," Forbito recorded the word "chill" on the bill of lading. Forbito also wrote the words "Temp. 34 degrees" on the bill of lading. At trial, Forbito explained that when he accepted the spawn in California, he took the temperature inside one of the boxes and found it to be 34 degrees.

Forbito also gave testimony regarding the condition of the boxes. He stated that the bottom "two layers" of boxes on every pallet "were bubbled out like they're getting ready to bust open. The boxes was [sic] torn, they were crushed. And boxes open." Forbito did not recall seeing any actual torn bags of spawn. After observing the damaged condition of the boxes, Forbito called his dispatcher and was told he could accept the load as long as he noted the damage on the bill of lading. Forbito then took exception to the condition of the entire load by writing "400" on the bill of lading.

Peterson testified that before the boxes were loaded onto FFE's trailer, he opened one of the boxes and removed a bag of spawn for inspection. Peterson's inspection of that bag consisted of a visual examination of the spawn's coloring and a "sniff test" through the air filter on the bag for the odor of spawn fermentation. Based on these tests, Peterson determined that the spawn were in good condition because there was no yellowish tint and no odor. Peterson also looked through cracks of the torn boxes in order to see whether the bags in those boxes were ripped or open. Peterson testified that he saw no open bags.

Forbito set the temperature of the trailer at 34 degrees and transported the shipment of spawn to Cudahy, California, where he loaded it onto another trailer that was also set at 34 degrees. A different driver then carried the shipment from California to Chicago. When the driver arrived in Chicago, approximately 100 boxes were crushed, but the temperature of the product was 34 degrees. In Chicago, boxes were removed from the truck, placed in a warehouse and later reloaded onto another truck bound for Pennsylvania. When the boxes left Chicago, approximately 20 of the boxes had "leaking product exposed."

The shipment of spawn arrived at Beta Spawn's facility in Pennsylvania on September 29, 1997. Testa, who was present when it arrived, described the shipment as a "big mess." Specifically, he stated that "the bags were broke [sic] on quite a few boxes" and that "there were [sic] a distinct odor that the spawn had started to sour." Testa checked the temperature of the spawn in approximately 10 boxes and found it to be between 48 and 58 degrees, which meant the spawn were no longer viable. Thus, Testa refused to accept delivery and notified FFE of Beta Spawn's claim for damages.

Beta Spawn originally brought its claim against FFE for damage to its freight in the Court of Common Pleas of Delaware County, Pennsylvania. FFE removed the case to federal court and filed a counterclaim for its freight charges. The district court held a bench trial and granted judgment in favor of Beta Spawn. This appeal followed.

II. Standard of Review

This court has plenary review over the district court's choice and interpretation of legal standards and its application of those standards to the facts of the case. See Louis W. Epstein Family P'ship v. Kmart Corp., 13 F.3d 762, 765-66 (3rd Cir. 1994); Polselli v. Nationwide Mut. Fire Ins. Co., 23 F.3d 747, 750 (3rd Cir. 1994). We review the district court's findings of fact for clear error. See Country Floors, Inc. v. P'ship of Gepner and Ford, 930 F.2d 1056, 1062 (3rd Cir. 1991) (citing Fed. R. Civ. P. 52(a)).

III. Discussion

A. Beta Spawn's Prima Facie Case

To establish a prima facie case against a common carrier under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 11706,⁴ a plaintiff must prove the following three elements: "(1) delivery of the goods to the initial carrier in good condition, (2) damage of the goods before delivery to their final destination, and (3) the amount of damages." Conair Corp. v. Old Dominion Freight Line, Inc., 22 F.3d 529, 531 (3rd Cir. 1994) (citation omitted); see also Missouri Pacific R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 138, 12 L. Ed. 2d 194, 84 S. Ct. 1142 (1964). After a bench trial, the district court found that Beta Spawn succeeded in establishing each of these elements.

FFE's main argument on appeal is that there was no competent evidence for the trial court to find that the spawn were delivered to FFE in good condition.⁵ Specifically, FFE contends that under the law of this circuit, a shipper must prove by "direct evidence" that the merchandise was in good condition when tendered to the carrier if such merchandise was not visible or open to inspection at the time it was tendered. In support of its contention, FFE points to Blue Bird Food Prods. Co., v. Baltimore & Ohio R.R. Co., 474 F.2d 102 (3rd Cir. 1973) ("Blue...