Cariati Developers, Inc. v. XPO Logistics Freight, Inc.
| Docket Number | Civil Action 3:22-cv-0383 (CSH) |
| Decision Date | 05 July 2023 |
| Parties | CARIATI DEVELOPERS, INC., Plaintiff, v. XPO LOGISTICS FREIGHT, INC., d/b/a XPO FREIGHT LINES; VZ UNITED, INC.; SOLVOJ, LLC; and KB XPRESS, CORP., Defendants. |
| Court | U.S. District Court — District of Connecticut |
RULING ON DEFENDANT XPO FREIGHT'S MOTION TO DISMISS [DOC. 12] AND DEFENDANT SOLVOJ'S MOTION TO DISMISS [DOC. 22]
Plaintiff Cariati Developers, Inc. ("Cariati") commenced this action against XPO Logistics Freight, Inc. ("XPO Freight"), VZ United, Inc. ("VZ United") Solvoj, LLC ("Solvoj"), and KB Xpress, Corp. ("KB Xpress") (collectively "Defendants"), relating to shipments of Cariati's goods from Connecticut to New York in 2020. In its Complaint, Cariati has set forth two claims against all Defendants: negligence and violation of the Carmack Amendment, 49 U.S.C. § 14706, et seq.
In support of its claims, Cariati has alleged the following facts in its Complaint. During the COVID-19 pandemic, the City of New York, through the New York City Department of Sanitation ("DSNY") and the City of New York Office of Emergency Management ("OEM"), created and expanded its Emergency Adult Food Access Program to "provide immediate assistance to New York residents [who] were at risk of becoming, or . . . had already become, food insecure as a result of the COVID-19 pandemic's impact." Doc. 1 ("Complaint"), ¶¶ 13-14. On April 9, 2020, Cariati entered into a contract with DSNY and OEM to provide prepared meal boxes to designated locations throughout New York (herein "Contract"). Id. ¶ 16.
Due to the "extreme and urgent need for meal boxes," the requirements under the Contract were expected to "ramp up" in volume as "more prepared meal boxes" would be required by DSNY and OEM. Id. ¶ 17. To fulfill the Contract, Cariati chose to engage subcontractors to assist in creating and delivering meal boxes to New York. Id. ¶ 18. Cariati thus entered a subcontract with XPO Logistics, LLC, to "arrange for the transportation of the prepared meal boxes from Plaintiff's site to the various designated sites throughout New York via motor carriers." Id. ¶¶ 19-20. As a result of that subcontract, XPO engaged motor carriers "XPO Freight Lines, VZ United, Solvoj, and KB Xpress to provide [these] delivery services." Id. ¶ 21.
Plaintiff "coordinated the preparation of the boxes and delivery dates to the DSNY and OEM designated sites" in New York, and "Defendants were to load, package, ship, and deliver the meal boxes" to those sites from Plaintiff's warehouse in Connecticut. Id. ¶¶ 22- 23. However, according to Cariati, "there were a number of issues with Defendants' performance and delivery of the meal boxes." Id. ¶ 24. Throughout the Contract term (from April 13, 2020, to May 3, 2020), Defendants allegedly "failed to properly load, package, ship and deliver the meal boxes." Id. ¶ 25. Moreover, "[o]n multiple occasions, thousands of meal boxes . . . were damaged in transit and declared unusable by recipients DSNY and OEM." Id. ¶ 26. Certain deliveries were also "untimely, not within the designated time period, or delivered to the wrong location." Id. ¶ 27.
As a result of Defendants' alleged negligent conduct, "DSNY and OEM terminated the Contract with [Cariati], effective May 3, 2020." Id. ¶¶ 25-29. Specifically, Cariati alleges that the Contract ended because "the majority of meal boxes Defendants delivered were damaged, smashed, or otherwise unusable, the deliveries were late, and the deliveries were not to all designated locations." Id. ¶¶ 25, 29. Cariati further states that as a result of the Contract's termination, Cariati lost nearly $500,000 worth of food inventory, as well as expected future revenue and business under the Contract.[1] Id. ¶¶ 32-35.
In its Complaint, Cariati has set forth two claims against the Defendant motor carriers: (1) common law negligence and (2) violation of the Carmack Amendment of the Interstate Commerce Act, 49 U.S.C. § 14706. In support of its claims, Plaintiff alleges that Defendants damaged the goods, boxed meals, in the course of interstate transit and/or delivered them late or to the wrong locations. See Doc. 1 ("Complaint"), ¶¶ 22, 25-27, 37-43, 48-53.
Pending before the Court are two motions to dismiss: one by Defendant XPO Freight and the other by Defendant Solvoj. Doc. 12, 22. Each motion asserts that Plaintiff's negligence claim, set forth in Count One of its Complaint, "fail[s] to state a claim upon which relief can be granted," Fed. R. Civ. P 12(b)(6). As XPO Freight summarizes, "[b]ecause this action consists of claims for alleged damage to goods during interstate transportation, any liability by [the Defendant motor carriers] is governed exclusively by the Carmack Amendment." Doc. 13, at 2 (emphasis in original). Accordingly, Cariati's negligence claim against XPO Freight is statutorily "preempted . . . and must be dismissed." Id. Similarly, in its "Motion to Dismiss," Solvoj asserts: Cariati's "negligence cause of action . . . should be dismissed as to Solvoj because it is based upon Solvoj's liability as a motor carrier providing interstate transportation services, limiting Cariati's potential remedy against Solvoj to that set forth by the Carmack Amendment of the Interstate Commerce Act, 49 U.S.C. § 14706." Doc. 22, at 1. The Court resolves both motions to dismiss herein.
A Rule 12(b)(6) motion to dismiss tests the adequacy of the complaint. United States v. City of New York, 359 F.3d 83, 88 (2d Cir. 2004). "A district court properly dismisses an action under Fed.R.Civ.P. 12(b)(6) when the pleadings fail to 'contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Brokamp v. James, 66 F.4th 374, 386 (2d Cir. 2023) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).[2] "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.[3]
In deciding a Rule 12(b)(6) motion to dismiss, the court must "accept[ ] all factual allegations in the complaint as true and draw[ ] all reasonable inferences in favor of the plaintiff." Olson v. Major League Baseball, 29 F.4th 59, 71 (2d Cir. 2022) ). The complaint must provide "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. "[W]hether a complaint states a plausible claim for relief will [ultimately] . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. When "well-pleaded factual allegations" are present, "a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. Factual disputes do not factor into a plausibility analysis under Iqbal and its progeny.
A complaint challenged by a Rule 12(b)(6) motion must be construed liberally. See Rescuecom Corp. v. Google, Inc., 562 F.3d 123, 127 (2d Cir. 2009); Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009). "A well-pleaded complaint will include facts that raise a right to relief above the speculative level." Palin v. New York Times Co., 940 F.3d 804, 810 (2d Cir. 2019) (citation and internal quotation marks omitted). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Iqbal, 556 U.S. at 678).[4]
"Although all allegations contained in the complaint are assumed to be true, this tenet is 'inapplicable to legal conclusions.'" LaMagna v. Brown, 474 Fed.Appx. 788, 789 (2d Cir. 2012) (quoting Iqbal, 556 U.S. at 678). See also Amaker v. New York State Dep't of Corr. Servs., 435 Fed.Appx. 52, 54 (2d Cir. 2011) (same). Accordingly, the Court is not "bound to accept conclusory allegations or legal conclusions masquerading as factual conclusions." Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011) (quoting Rolon v. Henneman, 517 F.3d 140, 149 (2d Cir. 2008) (internal quotation marks omitted). "Allegations are deemed 'conclusory' where they recite only the elements of the claim." Arar v. Ashcroft, 585 F.3d 559, 617 (2d Cir. 2009) (Parker, J., dissenting).[5]"They become implausible when the court's commonsense credits far more likely inferences from the available facts." Id. (citing Harris v. Mills, 572 F.3d 66, 71-72 (2d Cir. 2009)). In sum, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).
Defendants XPO Freight and Solvoj each move to dismiss Plaintiff's negligence cause of action on the grounds that the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. §14706, is the exclusive remedy for loss or damage to goods during interstate transport. Doc. 13, at 3; Doc. 22, at 1. As Solvoj notes, "[i]n 1913, the United States Supreme Court . . . established that the Carmack Amendment . . . preempted state and common law remedies in cases involving damage to goods during interstate commerce." Doc. 22-1, at 6 (citing Adams Express Co. v. Croninger, 226 U.S. 491, 505-06 (1913)).
By its enactment, the Carmack Amendment "superseded diverse state laws with a nationally uniform policy governing interstate carriers' liability for property loss." New York, N.H. & H.R. Co. v. Nothnagle, 346 U.S 128, 131 (1953) (citing, inter alia, Adams Express Co., 226 U.S. at...
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