CSX Transp., Inc. v. Ken's Foods, Inc.
| Decision Date | 19 April 2018 |
| Docket Number | CIVIL ACTION NO. 16–10115–RWZ |
| Citation | 310 F.Supp.3d 254 |
| Parties | CSX TRANSPORTATION, INC. v. KEN'S FOODS, INC. |
| Court | U.S. District Court — District of Massachusetts |
Adam J. Basch, Bacon & Wilson, P.C., Springfield, MA, Jeffrey D. Cohen, Timothy Frey, Keenan Cohen & Merrick PC, Ardmore, PA, for CSX Transportation, Inc.
Lawrence G. Green, Laura Lee Mittelman, Burns & Levinson LLP, Boston, MA, for Ken's Foods, Inc.
ZOBEL, S.D.J.
Plaintiff CSX Transportation, Inc., an interstate rail carrier, brings this action against defendant Ken's Foods, Inc. to collect outstanding freight charges for 68 shipments of tomato paste between July 2014 and March 2015. Both parties contend that no genuine issue of material fact exists and have filed cross-motions for summary judgment on liability (Docket ## 35, 41). Plaintiff additionally seeks summary judgment as to damages (Docket # 41) and also moves to strike portions of the Affidavit of Marie Johnson in Support of Ken's Foods' summary judgment motion (Docket # 53).
Defendant purchased tomato paste from suppliers in California as one of the roughly 800 ingredients used to produce its salad dressings
and other products. It contracted with Distribution Services of America ("DSA") to provide various services related to railroad shipments of the tomato paste. DSA's responsibilities included receiving and reviewing defendant's rail transportation invoices, after which defendant would pay DSA for the invoices and DSA would pay the railroad.2
For the 68 shipments involved in this case, defendant paid DSA for the freight charges billed by plaintiff, the rail carrier. DSA, however, failed to pay plaintiff. Plaintiff sued DSA on May 12, 2015 to recover the unpaid amounts, and DSA filed for bankruptcy in January 2016. Plaintiff then sought to recover the unpaid charges from defendant, filing this suit on January 26, 2016.
It is undisputed that defendant was not notified about DSA's failure to pay the outstanding freight until November 2015 when plaintiff served a subpoena on defendant during the CSX/DSA litigation. By that point, nearly 16 months had passed since the first unpaid shipment. However, defendant was not completely ignorant of problems between plaintiff and DSA. For instance, DSA met with defendant "at least usually once a year" and at some point informed defendant that plaintiff was assessing finance charges for late payments.3 Docket # 44–3 at 150. Nevertheless, defendant never asked DSA to verify paying the freight charges. In fact, defendant never conducted any due diligence or evaluated DSA's financial condition at any point during the companies' 17–plus year relationship.
A. Relevant Contracts and Documents
Determining liability in this case requires analyzing several contracts and documents pertaining to the tomato shipments, including (I) defendant's rate quotation agreement with DSA; (ii) the purchase orders defendant issued to its paste suppliers and the suppliers' invoices; (iii) the suppliers' and railroad's bills of lading for the shipments; and (iv) the UP203–1100 pricing tariff and Union Pacific's "General Rules Circular." I briefly describe each document/document category below.
On July 1, 2014, defendant and DSA entered into a rate quotation agreement for the paste shipments which specified how the tomato paste would be transported, including that the shipments should be sent "freight collect"; that they should travel on Union Pacific's rail lines from California and switch to CSX's lines in Chicago ("UP–CHICAGO; CSXT"); and that the consignee for the shipments should be listed as "DSA For Ken's Foods":
Consignee Address: DSA For Ken's Foods
c/o Foxboro Terminals
208 North Street
Foxboro, MA 02035
Freight Charges: Ship freight collect
Quote: UP 203-1100
Routing: UP-CHICAGO; CSXT
Docket # 38–14 at 3. As discussed below, defendant's purchase orders, its suppliers' invoices, and the shipments' bills of lading are generally consistent with this information for the 68 shipments in this case.
When defendant purchased tomato paste, it generated purchase orders to one of two suppliers: Los Gatos Tomato Products ("Los Gatos") and The Morning Star Packing Co. ("Morning Star"). The suppliers then issued invoices to defendant.
Three of the relevant shipments contained Morning Star tomato paste. For example, on July 28, 2014, defendant purchased tomato paste from Morning Star and generated a purchase order therefor. According to the purchase order, the shipment was to be paid "freight collect" and shipped to "Foxboro Terminal, 208 North Street, Routing UP–CHGO–CSXT, Foxboro, MA 02035." Docket # 44–16 at 3. Morning Star's invoice for this order lists the billing address as "Ken's Foods, 1 De Angelo [sic] Drive, Marlborough, MA," and the shipping address as "DSA for Ken's Foods c/o Foxboro Terminals." Docket # 44–18 at 2.4
Sixty-five of the relevant shipments contained Los Gatos tomato paste. For instance, on September 22, 2014, defendant purchased tomato paste from Los Gatos using a purchase order numbered 135035. Docket # 44–16 at 3. As above, the purchase order states that payment is "freight collect." Id. at 2. It identifies the "ship to" address as "Ken's Foods, Inc. 1 D'Angelo Drive, Marlborough, MA." Id. Los Gatos's invoice for this order identifies "Ken's Foods, Inc." as the recipient of the shipment and specifies delivery terms as "FOB Huron." Docket # 44–17 at 2.
As the shippers/consignors, both Morning Star and Los Gatos generated straight uniform bills of lading for the paste shipments. Morning Star's bill of lading for the July 28, 2014 purchase order, for example, identifies in relevant part: (1) the consignee's address as "DSA for Ken's Foods c/o Foxboro Terminals 208 North Street, Foxboro, MA 02035"; (2) the "Contract Ref[erence]" as "Ken's Foods Marlborough MA"; and (3) that the shipment would be paid "collect." Docket # 44–20 at 2. The bill of lading further states that "every service to be performed hereunder shall be subject to all the bill of lading terms and conditions in the governing classification on the date of shipment." Id. Los Gatos's bill of lading for the September 22, 2014 shipment includes information similar to that on Morning Star's, such as identifying: (1) "Ken's Foods, Inc." as the consignee and (2) "Ken's Foods, Inc. c/o Foxboro Terminals 208 North Street, Foxboro, MA" as the shipping address. Docket # 44–19 at 2. And like the Morning Star bill, the Los Gatos bill of lading also states that it is "subject to the classifications and tariffs in effect on the date of the issue of this Bill of Lading." Id.
Finally, origin rail carrier Union Pacific Railroad ("UP") also issued bills of lading for the above-referenced shipments containing similar information: (1) Foxboro, MA as the rail destination; (2) "CC (Collect)" as the method of payment; (3) UP203–1100 as the pricing tariff information; and (4) "DSA for Ken's Foods" as the consignee. Docket # 44–21 at 2–3.
As noted above, defendant's contract with DSA and the UP bills of lading both reference "UP203–1100" as the "rate authority" or "quote" that set the price for the paste shipments. The parties agree that UP203–1100 is the UP tariff item covering movements of tomato paste in drums or wooden/plastic bins (just like the shipments in this case). Docket ## 38–22 at 2, 38–23 at 2.5 Though defendant disputes that the shipments were in fact subject to UP203–1100, it is undisputed that, if they were so subject, then the shipments' terms necessarily incorporate UP's "General Rules Circular."6 Docket # 49 ¶ 50 and Response.
Several provisions of the Circular are relevant here. First, Exempt Circular UP 4–F, Item 111, "Liability of Consignee & Consignor" states:
The liability of consignor, consignee and beneficial owner of shipment for charges arising out of this offer and its acceptance, through tender of shipment by consignor and through acceptance of delivery by consignee, is joint and several except as provided in Section 7 of Item 25.
Docket # 38–24 at 30 (emphasis added). Second, Section 7 of Item 25, "Terms and Conditions," provides:
(a) All freight and other charges are payable by the shipper, consignor, consignee or beneficial owner immediately upon delivery. Acceptance by the consignee or beneficial owner of the property herein described shall be deemed acceptance by consignee or beneficial owner of responsibility for freight and other charges accruing on said property.
Id. at 20 (emphasis added). And finally, Item 120, "Suit to Collect Charges," states:
In the event that suit must be filed to collect any charge or charges subject to the provisions of this publication, the amount sued upon shall include interest from the date of shipment at the maximum rate of interest allowed by law in the jurisdiction in which it is filed. Court costs and reasonable attorney's fees shall be added to such principal and interest.
Id. at 34 (emphasis added).
Summary judgment is appropriate when the moving party "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "An issue is 'genuine' for purposes of summary judgment if 'the evidence is such that a reasonable jury could return a verdict for the nonmoving party,' and a 'material fact' is one which 'might affect the outcome of the suit under the governing law.' " Poulis–Minott v. Smith, 388 F.3d 354, 363 (1st Cir. 2004) (quoting Hayes v. Douglas Dynamics, Inc., 8 F.3d 88, 90 (1st Cir. 1993) ).
"Cross-motions for summary judgment do not alter the basic Rule 56 standard, but rather simply require us to determine...
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