Ore-Ida Foods, Inc. v. RICHMOND TRANSP. SERV.

• Decision Date: 04 February 1992
• Docket Number: No. 90 C 3924.,90 C 3924.
• Parties: ORE-IDA FOODS, INC., Plaintiff, v. RICHMOND TRANSPORTATION SERVICES, INC., Bradley Transportation, Inc., Zurich Insurance Company, Hartford Fire Insurance Company, Defendants.
• Court: U.S. District Court — Northern District of Illinois

783 F. Supp. 382

ORE-IDA FOODS, INC., Plaintiff, v. RICHMOND TRANSPORTATION SERVICES, INC., Bradley Transportation, Inc., Zurich Insurance Company, Hartford Fire Insurance Company, Defendants.

No. 90 C 3924.

United States District Court, N.D. Illinois, E.D.

February 4, 1992.

COPYRIGHT MATERIAL OMITTED

William Allen Kummerer, Schwartz & Freeman, Steven C. Weiss, Martin, Craig, Chester & Sonnenschein, Chicago, Ill., for plaintiff.

Carl N. Graf, Jr., Teresa Hoffman Liston, Carl N. Graf, Jr. & Associates, Morton Grove, Ill., for defendants Bradley Transp., Inc. and Richmond Transp. Services, Inc.

Thomas J. Finn, Crystal, Heytow, Alfieri & Warnick, Chicago, Ill., for Zurich Ins. Co.

Richard Dennis Heytow, Chicago, Ill., for Hartford Fire Ins.

ORDER

NORGLE, District Judge.

Before the court are the motions to dismiss Ore-Ida Foods, Incorporated's amended complaint presented by Hartford Fire Insurance Company and Zurich Insurance Company. For reasons that follow, the court grants both motions.

FACTS

Ore-Ida Foods, Incorporated ("Ore-Ida") contracted with two common carriers, Bradley Transportation, Incorporated ("Bradley") and Richmond Transportation Services, Incorporated ("Richmond"), for a June 22, 1989 shipment of potatoes and dozens of other items to New Jersey from Ore-Ida facilities in Wisconsin. The goods were picked up but were damaged in transit.

Prior to transporting these goods, Bradley obtained insurance with Zurich Insurance Company ("Zurich"). In accord with the strictures of 49 C.F.R. § 1043.1, Zurich filed a Motor Carrier Cargo Liability Certificate of Insurance, also known as a form B.M.C. 34 (hereinafter referred to as a "B.M.C. 34"). In the B.M.C. 34 Zurich certified that it issued a B.M.C. 32 in accord with 49 C.F.R. § 1043.2 (hereinafter referred to as a "B.M.C. 32"). Presumably, Hartford Insurance Company ("Hartford") filed the same forms when it insured Richmond.

The terms of the B.M.C. 32 and B.M.C. 34 endorsements are critical here. Zurich's B.M.C. 34 endorsement provides that Zurich "has issued ... a policy of cargo insurance which, by the attachment of endorsement, form number B.M.C. 32 ... has or have been amended to provide compensation for loss of or damage to all property belonging to shippers or consignees and coming into possession of the insured shipper. ..." The B.M.C. 32 endorsement states that Zurich "agrees to pay ... any shipper or consignee for all loss or damage to all property belonging to such shipper or consignee ... for which loss the insured may be held legally liable...."

Ore-Ida sued in federal court seeking to recover monies for the damaged goods. Jurisdiction, Ore-Ida alleged, was based on a federal question, 28 U.S.C. 1337. Specifically, Ore-Ida claimed that 49 U.S.C. §§ 10101 et seq. (the Revised Interstate Commerce Act) governed this case and that the controversies arising under this Act were sufficient to confer subject matter jurisdiction for federal question purposes.

The amended complaint named Richmond, Bradley, Zurich, and Hartford as defendants. Ore-Ida's theory against Richmond and Bradley was simple — the goods were not delivered to the New Jersey site in the condition in which they were released to Bradley and thus the common carriers were responsible for the loss. Against Zurich and Hartford, Ore-Ida alleged that these companies insured Richmond and/or Bradley and that the B.M.C. 32 and B.M.C. 34 created a right to proceed directly against Zurich and Hartford. Both insurers have moved to dismiss. Zurich moved to dismiss claiming the case amounted to a direct action against an insurer prohibited by Illinois law. Hartford moved to dismiss on the independent ground that there is no subject matter jurisdiction in this court.

DISCUSSION

On a motion to dismiss, all well-pleaded factual allegations are taken as true. Johnson v. Martin, 943 F.2d 15, 16 (7th Cir.1991). All reasonable inferences to be drawn from those allegations are also accepted as true. Meriwether v. Faulkner, 821 F.2d 408, 410 (7th Cir.), cert. denied, 484 U.S. 935, 108 S.Ct. 311, 98 L.Ed.2d 269 (1987). Dismissal pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction is not proper unless it appears certain that Ore-Ida cannot prove sufficient facts upon which jurisdiction could be determined. See Fed.R.Civ.P. 12(b)(1).

I.

Hartford has moved to dismiss Ore-Ida's amended complaint asserting that this case presents no valid federal question. The federal question statute, 28 U.S.C. § 1331,¹ provides "the district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." The court is therefore presented with two questions for resolution: what law or laws has Ore-Ida asserted confer jurisdiction, and does this legal basis comport with the § 1331 definition of "arising under"? The first question is simply answered. Ore-Ida points to 49 U.S.C. § 10927 and 49 C.F.R. §§ 1043.1, 1043.2 as conferring jurisdiction on this court. The issue of whether these laws are sufficient to confer jurisdiction on this court as a federal question is more problematic.

Whether a claim arises under federal law must be determined by reference to the well-pleaded complaint. Oklahoma Tax Comm'n v. Graham, 489 U.S. 838, 840, 109 S.Ct. 1519, 1520-21, 103 L.Ed.2d 924 (1989). "Arising under" has no uniform definition.

This much, however, is clear. The "vast majority" of cases that come within this grant of jurisdiction are covered by Justice Holmes' statement that a "`suit arises under the law that creates the cause of action.'" Thus, the vast majority of cases brought under the federal-question jurisdiction of the federal courts are those in which federal law creates the cause of action.

Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 3232, 92 L.Ed.2d 650 (1986) (citation omitted) (quoting Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-10, 103 S.Ct. 2841, 2846-47, 77 L.Ed.2d 420 (1983) (quoting American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 586, 60 L.Ed. 987 (1916))). This is the type of action Ore-Ida claims is present here.

Ore-Ida's amended complaint asserts this "cause of action arises under the Revised Interstate Commerce Act, Title 49 U.S.C. Section 10101 et seq., and more specifically Section 10927(a)(3)." In its reply to Hartford's motion, Ore-Ida also directs the court's attention to 49 C.F.R. §§ 1043.1, 1043.2.

Beginning with § 10927(a)(3), that section provides:

The Interstate Commerce Commission may require a motor carrier providing transportation under a certificate to file with the Commission a type of security sufficient to pay a shipper or consignee for damage to property of the shipper or consignee placed in the possession of the motor common carrier as the result of transportation provided under this subtitle. A carrier required by law to pay a shipper or consignee for loss, damage, or default for which a connecting motor common carrier is responsible is subrogated, to the extent of the amount paid, to the rights of the shipper or consignee under any such security.

Even a cursory reading of this section does not support Ore-Ida's contention that this section supports a federal claim. Section 10927(a)(3) states only that the Interstate Commerce Commission ("ICC") may require a carrier to obtain insurance. It creates no rights, duties, or obligations. Rather, it gives the ICC the ability to require, if it so chooses, a motor common carrier to obtain certain security. No federal cause of action was intended to be created.

What Ore-Ida seeks is damages for its mangled goods. This may be a proper state action based on the contract between all the parties. However, the mere fact that the ICC mandates that some terms be included in that contract does not make the case a federal question "arising under" that law. The suit is instead a state law case based on the terms of that agreement. The concern with federal law is negligible at best. Ore-Ida's claim that the ICC required terms or even approved of the contract does not alter this conclusion. Peoria & P. U. Ry. Co. v. Chicago & N.W. Transp. Co., 446 F.Supp. 1115, 1117 (S.D.Ill.1978) (mere approval of terms by ICC insufficient to create jurisdiction) (following Chicago & N.W. Ry. v. Toledo, P. & W. Ry., 324 F.2d 936 (7th Cir.1963).

Ore-Ida's interpretation misunderstands the purpose of its own cause of action. Ore-Ida does not sue Hartford for violation of § 10927(a)(3). It actually sues Hartford for complying with the statute. Even assuming Ore-Ida could properly sue Hartford for violation of this statute, its seeking to sue Hartford for compliance further supports the conclusion that the case has no footing in this federal statute.

The court's conclusion that this section does not create a federal cause of action is supported by yet another reason: there is no legislative history to support such a conclusion. There are no committee comments of note on the section. Not even the legislative history of the law supports such an interpretation.

Furthermore, judicial prudence weighs against a finding of federal-question jurisdiction. If this section were construed to create a federal cause of action, Ore-Ida's reading, every accident involving a common carrier could end up in the federal courts. This construction would vastly enlarge the federal court's jurisdiction. The judiciary should avoid creating an additional jurisdictional basis when Congress has not indicated an intent to create one for to do so would abandon the court's traditional adjudicative role. Here, such a tremendous expansion of federal-question jurisdiction, in an age where access to federal courts is becoming more limited, is wholly unrealistic. This court concludes, that this case does not "arise under" the laws of the United States. See Merrell Dow, 478 U.S. at 817, 106 S.Ct. at 3236-37; acc...