Clean Harbors Recylcing Servs. Ctr. of Chi., LLC v. Harold Marcus Ltd.

• Decision Date: 29 March 2013
• Docket Number: CIVIL ACTION NO. 12-10594-DPW
• Citation: Clean Harbors Recylcing Servs. Ctr. of Chi., LLC v. Harold Marcus Ltd., CIVIL ACTION NO. 12-10594-DPW (D. Mass. Mar 29, 2013)
• Parties: CLEAN HARBORS RECYLCING SERVICES CENTER OF CHICAGO, LLC, and CLEAN HARBORS ENVIRONMENTAL SERVICES, INC., Plaintiffs, v. HAROLD MARCUS LIMITED, Defendant.
• Court: U.S. District Court — District of Massachusetts

CLEAN HARBORS RECYLCING SERVICES CENTER OF CHICAGO, LLC,and CLEAN HARBORS ENVIRONMENTAL SERVICES, INC., Plaintiffs,

v.HAROLD MARCUS LIMITED, Defendant.

CIVIL ACTION NO. 12-10594-DPW

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

March 29, 2013

MEMORANDUM AND ORDER

I. BACKGROUND

Harold Marcus Limited ("Harold Marcus" or "defendant") provided interstate transportation of waste materials for Clean Harbors Recycling Services Center of Chicago, LLC, and Clean Harbors Environmental Services, Inc. (collectively, "Clean Harbors" or "plaintiffs"), pursuant to a May 9, 2008 Waste Transportation Agreement ("WTA"). In a Standby Emergency Response Agreement ("SERA") of the same day, Clean Harbors agreed to provide remediation services--including containment, disposal, and decontamination--for discharges of hazardous materials that might occur in the course of Harold Marcus' shipping activities.

On July 21, 2011, a Harold Marcus tractor and tanker carrying waste materials for Clean Harbors exploded in Michigan,while en route from a Clean Harbors facility in Indiana to another in Ontario, Canada. Pursuant to the SERA, Clean Harbors provided cleanup services for the resulting release of waste materials into the environment. Clean Harbors sent Harold Marcus invoices for $688,806.05 for work performed between July 21, 2011 and September 9, 2011. To date, Harold Marcus has not paid Clean Harbors for its emergency response services.

Meanwhile, in December 2011, the Michigan Department of Environmental Quality, Water Resources Division ("MDEQ") commenced an administrative action against Clean Harbors for the resulting discharge from the explosion. That action was resolved pursuant to a consent order, under which Clean Harbors agreed to pay $100,000 to MDEQ. Clean Harbors may also be subject to penalties from the U.S. Environmental Protection Agency and U.S. Department of Transportation for the incident.

Clean Harbors initiated this action in Norfolk Superior Court in February 2012. Harold Marcus removed to this court on April 3, 2012, on the basis of both diversity and federal question jurisdiction. The operative amended complaint includes four breach of contract counts as to the SERA and WTA. Count I alleges breach of the SERA. Count II seeks declaratory judgment as to breach of WTA Section 7, in which Harold Marcus agreed to indemnify Clean Harbors for liabilities it may incur as a result of "destruction or damage to any property, contamination oradverse effects on the environment, or any violation of applicable federal, state and local laws" to the extent caused by Harold Marcus' negligence or breach of the WTA. Count III seeks declaratory judgment as to breach of WTA Section 8, under which Harold Marcus agreed to maintain certain insurance coverage levels. Count IV alleges breach of the WTA by Harold Marcus based on its use of a tanker incompatible with the waste materials it agreed to transport.

On July 19, 2012, prior to discovery, Harold Marcus moved for summary judgment, arguing that plaintiffs' claims are preempted by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706. Defendant also moved in the alternative to dismiss Counts II and III as unripe for adjudication.

II. ANALYSIS

A. Legal Framework

The Carmack Amendment requires interstate motor carriers like Harold Marcus to provide a "receipt or bill of lading for property it receives for transportation." 49 U.S.C. § 14706(a)(1).¹ The Amendment then imposes liability on such carriers "for the actual loss or injury to the property" detailed in the receipt caused by the carrier or other carriers in thedelivery chain. Id. Although the Amendment was originally adopted without discussion or debate, the Supreme Court concluded long ago that "it is evident that Congress intended to adopt a uniform rule and relieve [bills of lading] from the diverse regulation to which they had been theretofore subject." Adams Express Co. v. Croninger, 226 U.S. 491, 506 (1913); Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987) ("The purpose of this statute is to establish uniform federal guidelines designed in part to remove the uncertainty surrounding a carrier's liability when damage occurs to a shipper's interstate shipment.").

The Court has concluded that the Amendment has broad preemptive effect:

That the legislation supersedes all the regulations and policies of a particular state upon the same subject results from its general character. It embraces the subject of the liability of the carrier under a bill of lading which he must issue, and limits his power to exempt himself by rule, regulation, or contract. Almost every detail of the subject is covered so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it.

Adams Express, 226 U.S. at 505-06; Rini v. United Van Lines, Inc., 104 F.3d 502, 504 (1st Cir. 1997) ("The preemptive effect of the Carmack Amendment over state law governing damages for the loss or damage of goods has been reiterated by the Supreme Court in many cases and is well established.") (collecting cases). The precise contours of preemption under the Carmack Amendment,however, remain unclear. Rini, 104 F.3d at 504-05.

The Court has, at times, used exceptionally broad language to describe the Amendment's preemptive scope. E.g., New York, P. & N. R. Co. v. Peninsula Produce Exch. of Maryland, 240 U.S. 34, 38 (1916) (Carmack Amendment "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"); Georgia, F. & A. Ry. Co. v. Blish Milling Co., 241 U.S. 190, 196 (1916) ("[T]he words of the statute are comprehensive enough to embrace responsibility for all losses resulting from any failure to discharge a carrier's duty as to any part of the agreed transportation."); see also Smith v. United Parcel Serv., 296 F.3d 1244, 1246 (11th Cir. 2002) ("[T]he Carmack Amendment preempts state law claims arising from failures in the transportation and delivery of goods."); Am. Synthetic Rubber Corp. v. Louisville & N. R. Co., 422 F.2d 462, 466 (6th Cir. 1970) (Carmack Amendendment effectively preempts any claim for "breach of contract of carriage").

However, some lower courts--including the First Circuit--have recognized that such broad language can be misleading, and that the Carmack Amendment's preemptive effect is limited to "state laws that impose liability on carriers based on the loss or damage of shipped goods." Rini, 104 F.3d at 506; accord Gordon v. United Van Lines, Inc., 130 F.3d 282, 289 (7thCir. 1997) ("[N]ot every claim even remotely associated with the transfer of goods from one place to another is necessarily a claim for damages to the shippers' goods."). Accordingly, "liability arising from separate harms--apart from the loss or damage of goods--is not preempted." Rini, 104 F.3d at 506; cf. Smith v. United Parcel Service, 296 F.3d 1244 (11th Cir. 2002) (state law claims preempted by Carmack unless based on "conduct separate and distinct from the delivery, loss of, or damage to goods"); Gordon, 130 F.3d at 290 (state law claims preempted except as to "conduct that is sufficiently distinct from the contract of carriage that a separate and independent claim arises"); N. Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 458 (7th Cir. 1996) (relevant question for Carmack Amendment preemption is whether there is a "separate and independently actionable harm to the shipper as distinct from the loss of, or damage to, the goods").

In the final analysis, the Amendment's preemptive scope is substantial, and includes at its core "liability stemming from damage or loss of goods, liability stemming from the claims process, and liability related to the payment of claims." Rini, 104 F.3d at 506.

B. Breach of SERA (Count I)

Harold Marcus argues that Count I is preempted because Clean Harbors seeks damages for services "related to" the loss of itsshipment. Defendant, however, has created this standard from whole cloth. It bear reemphasizing the First Circuit in Rini described preemption of claims seeking to impose "liability stemming from damage or loss of goods." 104 F.3d at 506 (emphasis added).

Count I does not stem from the loss of goods, or even the parties' contract for transportation services. Instead, liability here derives from the SERA, which is an independent agreement for cleanup services in the event of release of hazardous materials. Harold Marcus might have made such an agreement for remediation services with any provider, and a state law breach of contract claim as to that agreement would not be preempted by the Carmack Amendment merely because the release of hazardous materials occurred in the course of Harold Marcus' activities as an interstate carrier.

That Harold Marcus contracted for such services with the shipper in this instance is immaterial. Clean Harbors does not seek to recover for any breach of Harold Marcus' duties as common carrier. Indeed, loss of the shipment is irrelevant beyond providing the factual background for this particular release of hazardous materials. Liability for breach of contract here entails nothing more than the question of whether Clean Harbors provided services it agreed to provide in the SERA, and whetherHarold Marcus supplied the agreed-upon remuneration for those services.

This claim does not raise a concern about expanding the scope of carrier liability. If Harold Marcus had incurred liability under state law for cleanup services provided by an entirely independent entity, it could have the same state law claim for contribution or indemnity against Clean Harbors (in its role as shipper) as it has under the current arrangement. E.g., Symington v. Great W. Trucking Co., Inc., 668 F. Supp. 1278 (S.D. Iowa 1987); see also Part II.C. infra.

The dispute about payment...