E.J. Rogers, Inc. v. United Parcel Service, Inc.

• Decision Date: 23 September 2004
• Docket Number: No. 2:04-CV-153-LJM-WGH.,2:04-CV-153-LJM-WGH.
• Citation: 338 F.Supp.2d 935
• Parties: E.J. ROGERS, INC., d/b/a Rogers Jewelers, Plaintiff, v. UNITED PARCEL SERVICE, INC., a/k/a United Parcel Service Co., a/k/a UPS, and UPS Capital Insurance Agency, Inc., Defendants.
• Court: U.S. District Court — Southern District of Indiana

338 F.Supp.2d 935

E.J. ROGERS, INC., d/b/a Rogers Jewelers, Plaintiff, v. UNITED PARCEL SERVICE, INC., a/k/a United Parcel Service Co., a/k/a UPS, and UPS Capital Insurance Agency, Inc., Defendants.

No. 2:04-CV-153-LJM-WGH.

United States District Court, S.D. Indiana, Terre Haute Division.

September 23, 2004.

Michael T. Ellis, Attorney at Law, Terre Haute, IN.

ORDER ON DEFENDANT'S MOTION TO DISMISS

MCKINNEY, Chief Judge.

This matter comes before the Court on defendant's, United Parcel Service, Inc. ("UPS"), Motion to Dismiss the claims of plaintiff, E.J. Rogers, Inc. ("Rogers"). Rogers brought this action against UPS under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, and alternatively for breach of contract. Rogers seeks compensation in the amount of $11,063.40, and reasonable attorney fees. In the instant motion, UPS seeks dismissal of Rogers' claim. For the reasons set forth below, the Court DENIES the motion.

I. BACKGROUND

For purposes of this motion, the Court accepts the following well-pleaded factual allegations from the complaint as true. Rogers is in the business of selling jewelry. Comp ¶ 5. On May 26, 2003, Rogers delivered a 2.64 Ct., H Color, VS2 Clarity, Princess Cut Diamond, with a wholesale value of $10,956.00 to UPS at its Terre Haute customer counter located on State Road 46, Terre Haute, Indiana, to be delivered to Jeanex Corporation ("Jeanex"). Comp. ¶ 9. Rogers' representative informed a UPS employee, Brent Ennen ("Ennen"), that the item was a loose stone and that Rogers wanted the stone insured for delivery. Comp ¶ 10. UPS agreed to ship the package, insured in the amount of $11,000.00, by UPS Capital Insurance Agency, Inc. ("UPS Capital"), an entity providing insurance coverage on items shipped via UPS. Comp. ¶¶ 7, 11, 13, Exh. C. UPS charged Rogers $63.40 for "Next Day Air" shipping and insurance on the package. Comp. ¶¶ 12, 14, Exh. C. The documentation provided to Rogers did not contain reference to the UPS tariff ("Tariff"). Comp. ¶ 15, Exh. C. UPS failed to deliver the package to its intended destination and failed to return the package to Rogers. Comp. ¶ 16. To date, UPS has failed to locate the package. Comp. ¶ 19. UPS has refused to honor Rogers' claim regarding the package. Comp. ¶¶ 25-29. Rogers fully reimbursed Jeanex for the stone. Comp. ¶ 30.

II. JURISDICTION

Rogers filed a complaint against UPS in Vigo County Superior Court, which UPS removed to this Court on June 23, 2004, pursuant to 28 U.S.C. §§ 1331 (federal question) and 1337 (Act of Congress regulating commerce). While at first glance this appears to be a simple contract dispute governed by state law, controlling preemptive statutes, 49 U.S.C. §§ 14501(c)(1) and 41713(b)(4)(A), "preclude the enactment or enforcement of state laws related to the `price, route or service' of motor carriers and inter-modal ground/air carriers such as UPS." Mudd-Lyman Sales and Service Corp. v. United Parcel Service, Inc., 236 F.Supp.2d 907, 909 (N.D.Ill.2002) (citations omitted). Where Congress has manifested an intent to completely preempt an area of the law, any action arising within the scope of the federal law is necessarily federal by nature. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66-67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987); Lister v. Stark, 890 F.2d 941, 943 (7th Cir.1989), cert. denied, 498 U.S. 1011, 111 S.Ct. 579, 112 L.Ed.2d 584 (1990). Federal common law occupies the field, and a dispute relating to limitation of liability in an inter-modal carrier contract of carriage, like the one presently before the Court, is properly adjudicated pursuant to the Court's federal question jurisdiction. See Pierre v. United Parcel Service, Inc., 774 F.Supp. 1149, 1151 (N.D.Ill.1991); United States Gold Corp. v. Federal Express Corp., 719 F.Supp. 1217, 1224 (S.D.N.Y.1989); Angela Cummings, Inc. v. Purolator Courier Corp., 670 F.Supp. 92, 94 (S.D.N.Y.1987) (cited with approval in an unpublished opinion of the Seventh Circuit, Milam Audio Co. v. Federal Express Corp., 41 F.3d 1511 (Table), 1994 WL 602716, at 1 (7th Cir.Nov.2, 1994)).

III. STANDARD

UPS seeks to dismiss this case under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. When ruling on a motion to dismiss for failure to state a claim, pursuant to Rule 12(b)(6), the Court accepts as true all well-pleaded factual allegations in the complaint and the inferences reasonably drawn from them. See Baxter by Baxter v. Vigo County Sch. Corp., 26 F.3d 728, 730 (7th Cir.1994). The Court can consider the facts alleged in the complaint as well as documents attached to or incorporated into a complaint when reviewing under a motion to dismiss standard. See Albany Bank & Trust Co., v. Exxon Mobil Corp., 310 F.3d 969, 971 (7th Cir.2002). Dismissal is appropriate only if it appears beyond doubt that plaintiff can prove no set of facts consistent with the allegations in the complaint that would entitle it to relief. See Hi-Lite Prods. Co. v. Am. Home Prods. Corp., 11 F.3d 1402, 1405 (7th Cir.1993). This standard means that if any set of facts, even hypothesized facts, could be proven consistent with the complaint, then the complaint must not be dismissed. See Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir.1994).

Further, plaintiff is "not required to plead the particulars of [its] claim[s]," Hammes v. AAMCO Transmissions, Inc., 33 F.3d 774 (7th Cir.1994), except in cases alleging fraud or mistake where plaintiffs must plead the circumstances constituting such fraud or mistake with particularity. See Fed.R.Civ.P. 9(b); Hammes, 33 F.3d at 778. "Particularity" requires plaintiffs to plead the who, what, when, where, and how of the alleged fraud. See Ackerman v. N.W. Mut. Life Ins. Co., 172 F.3d 467, 469 (7th Cir.1999); DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.1990). Finally, the Court need not ignore facts set out in the complaint that undermine Plaintiff's claims, see Homeyer v. Stanley Tulchin Assoc., 91 F.3d 959, 961 (7th Cir.1996) (citing Am. Nurses' Ass'n v. State of Illinois, 783 F.2d 716, 724 (7th Cir.1986)), nor is the Court required to accept Plaintiff's legal conclusions. See Reed v. City of Chicago, 77 F.3d 1049, 1051 (7th Cir.1996); Gray v. Dane County, 854 F.2d 179, 182 (7th Cir.1988).

IV. DISCUSSION

United Parcel Service contends that Rogers has failed to state a claim upon which relief can be granted because, as permitted by federal common law, the UPS shipping contract at issue avoids liability for loss of Rogers' shipment of a loose diamond.¹ Def.'s Mot. Supp. at 4-6.

A shipper can bring a cause of action against an air carrier under federal common law for goods lost or damaged by the air carrier. See, e.g., Sam L. Majors Jewelers v. ABX, Inc., 117 F.3d 922, 928, 929 (5th Cir.1997). The airbill, receipt, or bill of lading issued by the carrier serves as a "contract for carriage." S. Pac. Transp. Co. v. Commercial Metals, 456 U.S. 336, 341, 102 S.Ct. 1815, 72 L.Ed.2d 114 (1982). The airbill can incorporate by reference outside materials limiting liability. See Sam Majors, 117 F.3d at 930-31. UPS argues the shipping contract is comprised of the Tariff, the UPS Rate and Service Guide, and the UPS pickup or shipping record, which constitutes the full written agreement between UPS and Rogers. Def.'s Mot. Supp. at 4.

The Tariff in effect in May 2003, then available at www.ups.com, provides: "UPS will not be liable or responsible for the loss of or damage to any package, the contents of which shippers are prohibited from shipping." Def.'s Exh. A, Item 535. Further, the Tariff prohibits the shipment of "articles of unusual value." Def.'s Exh. A, Item 460. Articles of unusual value are defined as including, but not limited to "coins ... currency, postage stamps, negotiable instruments, money orders, unset precious stones, industrial diamonds, human remains, and works of art." Def.'s Exh. A, Item 460 (emphasis added). UPS contends that because Rogers shipped an item defined as an "article of unusual value" by the Tariff, Rogers is not entitled to recover for the shipment. Def.'s Mot. at 4-6.

UPS relies on a variety of authority to support its position that the Tariff was incorporated into the airbill and thus was part of the shipping contract between the parties. However, this reliance is not well founded. Virtually all of the cases cited by UPS are distinguishable, because the UPS airbill in this case makes absolutely no reference to the Tariff or other extrinsic documents. See Comp., Exh. C. Another district court, in Apartment Specialists, Inc. v. Purolator Courier Corp., 628 F.Supp. 55, 57-58 (D.D.C.1986), cited by UPS, found the contract governing a shipment to consist of the bill of lading, service guide, and tariff, when the bill of lading contained language that the bill was subject to conditions of the contract set forth on the reverse side of the shipper's copy — which included the limitation of liability. See id. Further, the bill of lading made express reference to the tariff. See id. at 58. In North American Phillips Corp. v. Emery Air Freight Corp., 579 F.2d 229, 234 (2d Cir.1978), also cited by UPS, the Second Circuit affirmed a district court's finding of limited liability, but the bill of lading governing the shipment specifically provided that the goods were received "subject to the classifications and tariffs in effect on the date of the issue of this Bill of Lading," which contained the liability provisions. Id. Likewise, in Commodities Recovery Corp. v. Emery Worldwide, 756 F.Supp. 210 (D.N.J.1991), another district court upheld a carrier's limitation on liability, but the airbill again contained explicit language referencing the limitation on liability, located on the back of the form. See id. at 211.

Finally, UPS bases much of its argument on Sam Majors Jewelers, 117 F.3d 922, asserting that it is directly analogous to this...