Codan Forsikring A/S v. Conglobal Indus., Inc.

• Decision Date: 04 June 2018
• Docket Number: No. 17 C 06921,17 C 06921
• Citation: 315 F.Supp.3d 1085
• Parties: CODAN FORSIKRING A/S a/s/o, Tomex Foods, ApS; and Tomex Foods, ApS, Plaintiffs, v. CONGLOBAL INDUSTRIES, INC.; City Haul, Inc.; and Summit Cold Storage Corporation, Defendants.
• Court: U.S. District Court — Northern District of Illinois

315 F.Supp.3d 1085

CODAN FORSIKRING A/S a/s/o, Tomex Foods, ApS; and Tomex Foods, ApS, Plaintiffs,

v.CONGLOBAL INDUSTRIES, INC.; City Haul, Inc.; and Summit Cold Storage Corporation, Defendants.

No. 17 C 06921

United States District Court, N.D. Illinois, Eastern Division.

Signed June 4, 2018

Jason Randall Pearlman, Hennessy & Roach, Chicago, IL, Nathan Thomas Williams, Pro Hac Vice, Kennedy Lillis Schmidt & English, New York, NY, for Plaintiffs.

James Brandon Hiller, Erin Anne House, Gordon & Rees LLP, Stephanie Frances Jones, Riley Safer Holmes & Cancila, LLP, Scott C. Bentivenga, Thomas M. Wolf, Lewis Brisbois Bisgaard & Smith, LLP, Lloyd Sonenthal, Lloyd M. Sonenthal, Ltd., Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Honorable Edmond E. Chang, United States District JudgeThis case arises out of the unfortunate spoilage of over 53,000 pounds of frozen pork. The pork thawed in transit when its refrigeration temperature was improperly set to a spring-like temperature of +18° C (64° F) instead of -18° C (0° F). R. 39, Am. Compl.¹ In its journey from Illinois to the Dominican Republic, the pork changed hands several times among different motor and rail carriers. Id. ¶ 22. The seller, Tomex Foods, and its insurer, Codan Forsikring, brought suit against ConGlobal Industries, City Haul Inc., and Summit Cold Storage Corp., alleging various violations of the Carmack Amendment, as well as alternative breach of contract and negligence claims, in an effort to recover nearly $70,000 in damages. See generally Am. Compl.² ConGlobal moves to dismiss all claims, arguing that it is not a proper defendant for Carmack liability, that the Carmack Amendment preempts the state law actions, and even if it does not, that the Plaintiffs fail to state a claim. R. 45, Def. Br. at 1–3. For the reasons described in the Opinion, the motion to dismiss is denied.

I. Background

For the purposes of this motion, the Court accepts as true the allegations in the Amended Complaint. Erickson v. Pardus , 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). Tomex, a Danish food corporation, hired Summit Cold Storage to store its frozen pork as Tomex looked for a buyer. Am. Compl. ¶ 20. In March 2016, Tomex sold the product to a supermarket chain in the Dominican Republic, so Tomex had to arrange for overseas transportation. Id. ¶¶ 21–22. It hired City Haul to carry the cargo by truck from Summit's cold storage facility to the Landers Rail Terminal in Chicago. Id. ¶¶ 22. From there, non-party Mitsui O.S.K. Lines would take it by train to Virginia and then by ship to the Dominican Republic. Id. It was Mitsui that allegedly contracted with ConGlobal to provide a refrigerated shipping container for the product. Id. ¶ 24. Tomex instructed each of its vendors—Summit, City Haul, and Mitsui—that the cargo's temperature had to be maintained at -18° C (0° F), so that it would not thaw and spoil. Id. ¶ 23. Mitsui allegedly passed this instruction on to ConGlobal. Id. ¶ 25.

At the end of March, the cargo began its journey when City Haul picked up the empty refrigerated container from ConGlobal, which had allegedly set the container's thermostat to +18° C (instead of -18° C), and brought it to Summit's cold storage facility to be loaded. Am. Compl. ¶¶ 26–27. Summit employees packed the frozen pork into the container—without adjusting it to the required -18° C. Id. at ¶ 29. At that point, the container's thermostat was still set to +18° C, presumably the temperature since the container's pick-up and where it remained the entire time that the container held the product. See id. ¶ 29. Once loaded, City Haul picked up the cargo, issued or accepted a bill of lading to cover the shipment, and agreed to carry it to Landers Rail Terminal. Id. ¶ 30. City Haul never adjusted the temperature, even though it too had been instructed to keep the cargo at -18° C. Id. ¶ 31. For reasons unexplained in the complaint, City Haul brought the container to ConGlobal rather than to the Landers Rail Terminal (as it was contracted to do). Id. ¶ 32. At that point, ConGlobal apparently too did not adjust the temperature from its setting of +18° C. See id. ¶ 26. Then, it was allegedly ConGlobal that "transferred it to Landers Rail Terminal," where the container was ramped onto the rail carrier for its trip to Virginia. Id. ¶ 32.

When the container arrived in Virginia in early April 2016, Mitsui discovered that the pork had thawed during its travel. Am. Compl. ¶ 33. The thermostat on the container was still set to +18° C. Id. The thawed meat was (not surprisingly) a total loss, and Tomex suffered losses totaling $69,356.55. Id. ¶ 34. Tomex submitted a claim to its insurer, Codan, which paid the claim minus a deductible, and Codan became subrogated to the rights of Tomex to sue for damages. Id. ¶ 35.

II. Standard of Review

Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This short and plain statement must "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (cleaned up).³ The Seventh Circuit has explained that this rule "reflects a liberal notice pleading regime, which is intended to ‘focus litigation on the merits of a claim’ rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross , 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A. , 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) ).

"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7 , 570 F.3d 811, 820 (7th Cir. 2009). "[A] complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). These allegations "must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. The allegations that are entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal , 556 U.S. at 678–79, 129 S.Ct. 1937.

III. Analysis

A. Carmack Amendment

In its primary cause of action, Codan⁴ claims that both City Haul and ConGlobal breached their contracts of motor carriage. Am. Compl. ¶ 38. The Carmack Amendment to the Interstate Commerce Act governs hired interstate transporters, including motor carriers. See 49 U.S.C. § 14706 et seq. The main provision of the Carmack Amendment codifies the "common law liability of carriers" for damage to a shipper's goods. Pizzo v. Bekin Van Lines Co. , 258 F.3d 629, 633 (7th Cir. 2001) ; see 49 U.S.C. § 14706. Put simply, the Amendment "provides shippers with the statutory right to recover for actual losses or injuries to their property caused by carriers involved in the shipment." Gordon v. United Van Lines, Inc. , 130 F.3d 282, 286 (7th Cir. 1997). This strict liability attaches to a "carrier" that is "providing transportation or service" to a shipper. 49 U.S.C. § 14706(a)(1).⁵

To state a claim under Carmack, Codan must sufficiently allege that ConGlobal is a "carrier," and that as a carrier, it provided "transportation or service[s]" to a shipper. 49 U.S.C. § 14706(a)(1). A carrier includes a "motor carrier," 49 U.S.C. § 13102(3), and the statute defines a motor carrier as someone who provides "motor vehicle transportation for compensation." 49 U.S.C. § 13102(14). While that might seem simple enough, the statutory definition of "transportation" is more detailed and goes beyond just movement—it even covers buildings and places, as well as services. Transportation includes "a motor vehicle, vessel, warehouse, ... yard, property, facility, instrumentality, or equipment of any kind related to the movement" of property "regardless of ownership or an agreement concerning use." 49 U.S.C. § 13102(23)(A) ; see, e.g. , Mitsui Sumitomo Ins. Grp. v. Navistar, Inc. , 2014 WL 1245290, at *2 (N.D. Ill. Mar. 26, 2014). And transportation also includes "services related" to that movement of property, including such things as "arranging for ... refrigeration, ... storage, handling, packing, ... and interchange" of property. 49 U.S.C. § 13102(23)(B).

The parties disagree over whether ConGlobal qualifies as a "carrier." Codan's broadest argument is that it matters not whether ConGlobal was hired as a carrier for this case; it is enough that ConGlobal generally holds itself out as a carrier-for-hire. R. 52, Pl. Resp. at 7–8. Codan hangs its hat on PNH Corp. v. Hullquist Corp., 843 F.2d 586, 591 (1st Cir. 1988), but that opinion does not actually help Codan. In PNH Corporation, a cargo shipment of coffee was stolen at some point in its journey from Massachusetts to Saudi Arabia. Id. at 587. As it changed hands among shippers, the coffee was loaded by Garvey Transport into an empty container supplied by Hullquist Corporation, and Garvey drove the container back to Hullquist's facility. Id. Ordinarily, Hullquist did not store containers overnight, but the shipper that was supposed to pick up the container could not do so until the next morning. Id. at 588. Hullquist allowed the container to remain at its facility overnight. Id. The late-arriving shipper then picked up the container the next morning. Id. At the final destination, however, it was discovered that the coffee had been stolen. Id.

In response to that set of facts, the First Circuit made this statement: "if Hullquist is otherwise a motor carrier, its storage facilities are ‘transportation’ within the meaning of the Act." Id. at 591. Hullquist argued that it had not acted as a carrier for the coffee, just a place for overnight...