Martin v. DHL Express (USA), Inc.

• Decision Date: 20 January 2022
• Docket Number: Civil Action No. 3:21-cv-13363
• Citation: 580 F.Supp.3d 66
• Parties: Noam MARTIN, on behalf of himself and all other persons similarly situated, Plaintiff, v. DHL EXPRESS (USA), INC., Defendants.
• Court: U.S. District Court — District of New Jersey

580 F.Supp.3d 66

Noam MARTIN, on behalf of himself and all other persons similarly situated, Plaintiff,

v.DHL EXPRESS (USA), INC., Defendants.

Civil Action No. 3:21-cv-13363

United States District Court, D. New Jersey.

Signed January 20, 2022

Stephen Patrick Denittis, Denittis Osefchen, PC, Marlton, NJ, for Plaintiff.

David J. Masson, University of Michigan Office of the General Counsel, Ann Arbor, MI, for Defendant.

MEMORANDUM AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

PETER G. SHERIDAN, U.S.D.J.

This case is before the Court on Defendant's Motion to Dismiss Plaintiff's First Amended Putative Class Action Complaint. (ECF No. 9). The Court heard oral argument on October 27, 2021. For the reasons that follow, Defendant's motion is granted.¹ The Court has jurisdiction over the matter pursuant to 28 U.S.C. § 1332(d).

I.

A. Facts

According to the First Amended Complaint (FAC), Plaintiff Noam Martin purchased goods from Brickshop Holland, B.V., an overseas merchant. (FAC, Ex. A, ECF No. 7). Brickshop Holland contracted with Defendant DHL Express (USA), Inc. ("DHLE") to ship the goods to Martin, who resided in New Jersey. (See FAC at ¶¶25-28). According to the FAC, merchants (such as Brickshop) are responsible for the fees and charges owed to DHLE. (Id. at ¶28). However, after the goods enter into the United States, the United States imposes a duty and DHLE charges the recipient of the goods (Martin) for said duty.² (Id. at ¶29). DHLE alerts the recipient via written notice that "[i]f the duty is not paid within 5 days, the parcel will be returned to the shipper." (Id. ). Martin received such notice from DHLE. (Id. at ¶22). Allegedly, DHLE adds on "an undisclosed uniform $17 service charge" as part of the duty charge. (Id. at ¶¶38-39). According to the FAC, the $17 charge is "an additional, undisclosed, and totally unauthorized source of profit." (Id. at ¶42). Once the recipient pays the cost of the duty – including the undisclosed service charge – DHLE sends a second email confirming the payment and delivers the goods. (Id. at ¶34).

B. Procedural History

DHLE removed the case to this Court under the Class Action Fairness Act (CAFA), 28 U.S.C § 1332(d). (Notice of Removal, ECF No. 1). Thereafter, DHLE moved to dismiss Martin's original complaint. (Motion to Dismiss Plaintiff's Original Complaint, ECF No. 6). In that motion, DHLE argued the statutory and common law claims were preempted by the Airline Deregulation Act, 49 U.S.C. § 41713(b)(4)(A) (ADA), and the Federal Aviation Administration Authorization Act, 49 U.S.C. § 14501(c)(1) (FAAAA). Those federal statutes preempt state laws "related to a price, route, or service" of any air or motor carrier like DHLE. (Id. at 5-14).

Recognizing the deficiency in the Original Complaint, Martin filed the FAC immediately after the motion to dismiss was filed. (ECF No. 7). The FAC dropped all of the statutory and common law claims presented in the original complaint, and instead alleged an exception to the preemption doctrine – a breach of contract claim against DHLE. (Compare Original Complaint at ¶¶58-103 with First Amended Complaint at ¶¶59-62). Martin's legal theory is as follows:

7. The legal theory underlying this First Amended Complaint is that [the] two written form email communications sent by DHL[E], and the statement on the DHL[E] website to which class members are directed, constitute an offer to contract to each class member under which DHL[E] promises to deliver the recipient's package if the recipient reimburses DHL[E] for the import duties DHL[E] paid for said package.

8. That offer is then accepted by the subsequent conduct/performance of the recipient and a binding contract is formed.

9. The gravamen of this breach of contract action is that DHL[E] commits a class-wide breach of said contract by charging each class member/recipient more than what is required in order to reimburse DHL[E] for any government duties and/or taxes paid by DHL[E].

....

30. Nothing in [the] DHL[E] email communication states or discloses that DHL[E] is seeking any monies whatsoever from the recipient other than the amounts which "DHL Express has paid the duty for your parcel."

31. The purchaser/recipient is not advised of any other charges beyond reimbursement to DHL[E] for such "import duties."

....

38. Specifically, in addition to any government import duties, taxes, or governmental charges paid by DHL[E] – for which class members have agreed to reimburse DHL[E] – DHL[E] also imposes an undisclosed uniform $17 service charge on class members; a $17 charge which goes directly to DHL[E] and which is not reimbursement for any cost whatsoever but rather is additional profit for DHL[E].

(FAC at ¶¶7-9, 30-31, 38). DHLE re-filed its motion to dismiss, contending the breach of contract exception does not apply. (ECF No. 9).

II.

A. Legal Standard

"In deciding a Rule 12(b)(6) motion, a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff." United States v. Loving Care Agency, Inc. , 226 F. Supp. 3d 357, 362-63 (D.N.J. 2016). The plaintiff's factual allegations must give rise to a claim for relief that is "plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). 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." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The court should disregard legal conclusions and "recitals of the elements of a cause of action, supported by mere conclusory statements." Santiago v. Warminster Township , 629 F.3d 121, 128 (3d. Cir. 2010) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ).

The Third Circuit set forth a three-part test for determining whether a complaint should be dismissed for failure to state a claim:

First, the court must "tak[e] note of the elements a plaintiff must plead to state a claim." Second, the court should identify allegations that, "because they are no more than conclusions, are not entitled to the assumption of truth." Finally, "where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief."

Id. at 130 (alteration in original) (quoting Iqbal , 556 U.S. at 675, 679, 129 S.Ct. 1937 ).

B. Preemption under the ADA and FAAAA

By way of background, prior to enactment of the ADA, the Federal Aviation Act of 1958 contained a savings provision. The savings provision preserved pre-existing state statutory and common law remedies. Northwest, Inc. v. Ginsberg , 572 U.S. 273, 279-80, 134 S.Ct. 1422, 188 L.Ed.2d 538 (2014). This caused varying and conflicting government oversight pursuant to a "baffling patchwork of rules." Id. at 279-80, 88, 134 S.Ct. 1422. To cure this predicament, Congress enacted the ADA "includ[ing] a preemption provision in order to ‘ensure that the States would not undo federal deregulation with regulation of their own.’ " Id. at 280, 134 S.Ct. 1422 (quoting Morales v. Trans World Airlines, Inc. , 504 U. S. 374, 378, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) ). The preemption section of the ADA reads:

[A] State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier or carrier affiliated with a direct air carrier through common controlling ownership when such carrier is transporting property by aircraft or by motor vehicle (whether or not such property has had or will have a prior or subsequent air movement).

49 U.S.C. § 41713(b)(4)(A).³

The Supreme Court has reviewed the preemption provision on several occasions. Morales , 504 U. S. at 374, 112 S.Ct. 2031 ; Am. Airlines, Inc. v. Wolens , 513 U.S. 219, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995) ; Ginsberg , 572 U.S. at 273, 134 S.Ct. 1422. Within those cases, the Court found the preemption provision expresses a "broad pre-emptive purpose," as the preemption provision bars any action that has a "connection with or reference to airlines routes and services." Morales , 504 U.S. at 383, 112 S.Ct. 2031. Subsequent to Morales , the Court held that the preemption provision barred any statutory consumer fraud cause of action, but it did not bar a breach of contract claim. The Court distinguished between the two, in that the terms of a contract are "privately ordered obligations and thus do not amount to a State's enactment or enforcement of any law, rule, regulation, standard, or other provision having the force and effect of law ...." Id. at 228-29, 115 S.Ct. 817 (internal quotation marks omitted).

Finally, the Court reviewed whether the implied covenant of good faith and fair dealing was barred by the preemption clause. Ginsberg , 572 U.S. at 281, 134 S.Ct. 1422. The implied covenant is not a privately negotiated obligation of the parties, but is a common law obligation adopted by the Courts that is read into each contract. As such, the ADA's preemption provision applies to both state legislation and regulations but also to a "common-law rule like the implied covenant of good faith and fair dealing." Id. at 281, 134 S.Ct. 1422. The reason is that an implied covenant is more similar to a provision of common law than to a term negotiated by the parties. Id. at 281-82, 134 S.Ct. 1422.

C. Plaintiff's Claim

As set forth above, Martin presents his claim as a breach of contract claim negotiated by the parties. (Id. at ¶¶59-62). According to Plaintiff, the sole claim in the FAC is that the emails Martin received from DHLE created a contractual agreement between the parties to deliver the goods he ordered from Brickshop in exchange for his reimbursing DHLE for the duty on the goods, and DHLE allegedly breached that contract by charging an additional "service...