Next F/X, Inc. v. DHL Aviation Ams., Inc.

• Decision Date: 16 December 2019
• Docket Number: CIVIL ACTION NO. 19-76-DLB-CJS
• Citation: 429 F.Supp.3d 350
• Parties: NEXT F/X, INC., Plaintiff v. DHL AVIATION AMERICAS, INC., et al., Defendants
• Court: U.S. District Court — Eastern District of Kentucky

429 F.Supp.3d 350

NEXT F/X, INC., Plaintiff

v.DHL AVIATION AMERICAS, INC., et al., Defendants

CIVIL ACTION NO. 19-76-DLB-CJS

United States District Court, E.D. Kentucky, Northern Division. at Covington.

Signed December 16, 2019

Corey T. Gamm, Adams, Stepner, Woltermann & Dusing, PLLC, Covington, KY, for Plaintiff.

Jeremy J. Nelson, Wilson Elser Moskowitz Edelman & Dicker LLP, Joseph Patrick Hummel, Lynch, Cox, Gilman & Goodman P.S.C., Louisville, KY, for Defendants.

MEMORANDUM OPINION AND ORDER

David L. Bunning, United States District Judge

This matter is before the Court on a Motion to Dismiss (Doc. # 10) filed by Defendant Old Dominion Freight Line, Inc. The Motion has been fully briefed, (Docs. # 11 and 12), and is now ripe for the Court's review. For the reasons set forth herein, the Motion to Dismiss is granted in part and denied in part .

I. FACTUAL AND PROCEDURAL BACKGROUND

On May 21, 2018, Plaintiff Next F/X purchased 615 pieces of "pyrotechnic articles" ("the goods") from Pirotecnia Ricardo Caballer, S.A. ("PRC"), a Spanish supplier. (Doc. # 1 at ¶¶ 7–8). PRC arranged for Defendant DHL Aviation Americas, Inc. ("DHL") to transport the goods from the airport in Valencia, Spain ("VLC") to the Cincinnati Northern Kentucky International Airport ("CVG").¹ Id. at ¶ 8. Two Master Air Waybills² were issued for the shipment (one consisting of 259 pieces and another consisting of 356 pieces). Id. at ¶ 10. Once the goods arrived at CVG, Coppersmith Global Logistics ("Coppersmith")—a freight broker—was to ensure that the goods cleared customs. Id. at ¶ 9. The goods arrived at CVG on May 29, 2018³ ; at that point Defendant Old Dominion Freight Lines ("Old Dominion") was contracted by Next F/X, through Coppersmith, to pick up the goods and transport them to a Next F/X facility in Columbus, Montana. Id. at ¶¶ 9, 11–12.

As instructed, on June 8, 2018, an Old Dominion truck went to the DHL warehouse near CVG to retrieve the goods for shipment to Montana. Id. at ¶ 12–13. It is alleged that, at some point and for unknown reasons, "DHL broke up the original shipment as packaged by PRC and repackaged the pieces of freight. After repackaging the shipment, DHL only loaded 481 of the 615 pieces onto the [Old Dominion] Truck." Id. at ¶ 14. As a result, only 481 pieces were delivered to Next F/X.⁴ Id. at ¶ 15. Prior to the arrival of only a portion of the goods, Next F/X had received no notification that some of the goods had not been retrieved from the DHL warehouse near CVG. Id.

Next F/X alleges that it and PRC reached out to DHL about the missing goods, and "DHL failed to provide ... any clear details as to the location or status of the undelivered pieces." Id. at ¶ 16. Eventually, around June 21, 2018, DHL indicated that when Old Dominion arrived to pick up the goods, it did not have room on its truck for the entire shipment; DHL said, however, that Old Dominion picked up some of the shipment on June 8, 2018 and returned for the remaining 134 pieces of the shipment on June 9, 2018. See id. In reality, Old Dominion had not picked up the rest of the shipment, which was still sitting in the DHL warehouse. Id. at ¶ 17.

Once Next F/X became aware of the location of the remaining goods, it attempted to have Old Dominion pick them up so they could be delivered to Montana. Id. at ¶ 18. Next F/X alleges that Old Dominion attempted to pick up the goods on multiple occasions between July 5th and July 11th but Old Dominion would not take the goods because "DHL refused to provide the required [hazardous substance] placards." Id. at ¶ 19. Old Dominion eventually secured the necessary placards and attempted to retrieve the remaining goods, but "DHL then refused to release the cargo ... claiming that storage charges had accrued against the cargo and those fees had to be paid before DHL would release the cargo." Id. at ¶ 20. Next F/X alleges that DHL is refusing to release the goods until Next F/X pays the storage fees, which Next F/X argues are "unreasonable, extortionate, and constitute an unfair and deceptive trade practice"; DHL claims these fees began accumulating on June 11, 2018. Id. at ¶ 23–24. Coppersmith "offered to pay a portion of the fees to secure the release of the cargo," but DHL refused to agree to such an arrangement. Id. at ¶ 22.

In light of these events, Next F/X filed suit against DHL and Old Dominion. (Doc. # 1). Next F/X alleges five claims against DHL: violation of the Montreal Convention, fraud, negligence, conversion, and a claim for punitive damages.⁵ Id. Against Old Dominion, Next F/X brings three claims: violation of the Carmack Amendment, negligence, and violation of KY. REV. STAT. § 355.7-301. Id. at ¶¶ 25–68. In addition to its request for statutory, exemplary, and punitive damages, Next F/X requests that it be awarded attorneys' fees. Id. at 11. Old Dominion responded to the Complaint with a Motion to Dismiss, arguing that Next F/X failed to state a claim under the Carmack Amendment upon which relief could be granted, that the state-law claims brought against it are preempted by the Carmack Amendment, and attorneys' fees are not recoverable under the Carmack Amendment. See (Doc. # 10). Briefing of the Motion is complete, (Docs. # 11 and 12), and the Motion is ready for disposition.

II. ANALYSIS

A. Standard of Review

Pursuant to the Federal Rules of Civil Procedure, pleadings which fail to "state a claim upon which relief can be granted" may be dismissed. See FED. R. CIV. P. 12(b)(6). In order to survive a motion to dismiss, a pleading must present "enough facts to state 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 complaint need not include "detailed factual allegations" but must offer more than "a formulaic recitation of the elements of a cause of action" or " ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ " Id. (quoting Twombly , 550 U.S. at 555, 557, 127 S.Ct. 1955 ). In other words, the "allegations must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955.

In reviewing a motion to dismiss, a court must "construe the complaint in the light most favorable to the plaintiff, accept all well-pleaded factual allegations in the complaint as true, and draw all reasonable inferences in favor of the plaintiff." Cahoo v. SAS Analytics, Inc. , 912 F.3d 887, 897 (6th Cir. 2019) (quoting Courtright v. City of Battle Creek , 839 F.3d 513, 518 (6th Cir. 2016) ).

B. The Carmack Amendment

The Carmack Amendment is an amendment to the Interstate Commerce Act that "created a national scheme of carrier liability for loss or damages to goods transported in interstate commerce."⁶ Val's Auto Sales & Repair, LLC v. Garcia , 367 F. Supp. 3d 613, 619 (E.D. Ky. 2019) (quoting Exel, Inc. v. Transp., Inc. , 807 F.3d 140, 148 (6th Cir. 2015) ). "The Amendment restricts carriers' ability to limit their liability for cargo damage [and] [i]t makes a motor carrier fully liable for damage to its cargo unless the shipper has agreed to some limitation in writing." Exel, Inc. , 807 F.3d at 148 (citations omitted). "Though it might not be obvious from the text, ‘Carmack's original premise is that the [initial] receiving carrier is liable for damage caused by the other [subsequent] carriers in the delivery chain.’ " CNA Ins. Co. , 747 F.3d at 353 (alteration in original) (quoting Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp. , 561 U.S. 89, 100, 106, 130 S.Ct. 2433, 177 L.Ed.2d 424 (2010) ). The current version "makes the final, or ‘delivering,’ carrier liable to the shipper as well." Id. "The Carmack Amendment only applies to shipping contracts that begin in one state and terminate in another. It does not apply to shipping contracts where shipment begins and ends in the same state." Strong v. Passport Auto Logistics, LLC , No. 16-14169, 2018 WL 352891, at *4 (E.D. Mich. Jan. 10, 2018) (citing CNA Ins. Co. , 747 F.3d at 354 ).

The Amendment specifically deals with liability for "carrier[s] providing transportation or service," 49 U.S.C. § 14706, which includes coverage of "a motor vehicle ... warehouse ... property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both" and the "services related to that movement, including arranging for, receipt, delivery ... storage, handling, packing, unpacking, and interchange of passengers and property." 49 U.S.C. § 13102(23) (defining "transportation").

C. Federal Claim

Old Dominion argues that the federal claim under the Carmack Amendment must be dismissed because Next F/X has not alleged facts which make out a prima-facie case under the Amendment. (Doc. # 10-1 at 8–9). Next F/X disagrees. (Doc. # 11 at 5–9).

1. Interstate Requirement

There is a threshold requirement for application of the Amendment to a particular scenario that the Court must consider first; the Carmack Amendment only applies to interstate commerce. Exel, Inc. , 807 F.3d at 148. The Amendment does not "apply to a shipment originating overseas under a single through bill of lading " which "covers the transport into an inland location in the United States." Kawasaki , 561 U.S. at 100, 103, 130 S.Ct. 2433 (emphasis added).⁷ "A through bill of lading covers both the ocean and inland portions of the transport in a single document." Id. at 93, 130 S.Ct. 2433. For example, a through bill of lading was employed in Kawasaki , when the cargo owners contracted with "K" Line to "arrange delivery of the good from China to their final destinations in the United States, by any mode of transportation of ‘K’ Line's choosing." Id. at 93, 130 S.Ct. 2433. In other words, " ‘K’ Line...