Solectron Us ex rel. Fidelity v. Fedex

• Decision Date: 11 October 2007
• Docket Number: No. 2:07-CV-2438 JPM-TMP.,2:07-CV-2438 JPM-TMP.
• Citation: 520 F.Supp.2d 904
• Parties: SOLECTRON USA, INC., for the Use and Benefit of FIDELITY & DEPOSIT COMPANY OF MARYLAND, Plaintiff, v. FEDEX GROUND PACKAGE SYSTEMS, INC., Defendant.
• Court: U.S. District Court — Western District of Tennessee

Page 904

520 F.Supp.2d 904

SOLECTRON USA, INC., for the Use and Benefit of FIDELITY & DEPOSIT COMPANY OF MARYLAND, Plaintiff, v. FEDEX GROUND PACKAGE SYSTEMS, INC., Defendant.

No. 2:07-CV-2438 JPM-TMP.

United States District Court, W.D. Tennessee, Western Division.

October 11, 2007.

COPYRIGHT MATERIAL OMITTED

Michael G. McLaren, Black McLaren Jones & Ryland, Memphis, TN, for Plaintiff.

James R. Mulroy, II, Richard Alex Boals, Kiesewetter Wise Kaplan & Prather, PLC, Memphis, TN, for Defendant.

ORDER DENYING MOTION TO REMAND

JON P. McCALLA, District Judge.

Before the Court is Plaintiff's Motion to Remand (DE # 6), filed July 23, 2007. Defendant responded in opposition (DE # 9) on August 6, 2007. Defendant removed the case on the basis of both federal question jurisdiction and diversity of citizenship. For the following reasons, the Court finds that federal question jurisdiction exists under 49 U.S.C. § 14706 ("the Carmack Amendment") and 28 U.S.C. § 1331 such that removal pursuant to 28 U.S.C. § 1441(b) was proper. Therefore, Plaintiffs Motion to Remand is DENIED.

Alternatively, the Court finds that diversity of citizenship jurisdiction exists pursuant to 28 U.S.C. § 1332, and removal to this Court was proper under 28 U.S.C. § 1441(a).

I. Factual Background

Plaintiff, Solectron USA, Inc. for the use and benefit of Fidelity & Deposit Company of Maryland ("Fidelity" or "Plaintiff') filed this action as subrogee to its policyholder, Solectron USA, Inc. ("Solectron"), against Defendant FedEx Ground Package System, Inc. ("Defendant" or "FedEx Ground"), in the Circuit Court of Tennessee for the Thirtieth Judicial District at Memphis, Shelby County. On June 22, 2007, Defendant filed a Notice of Removal in this Court.

Solectron's predecessor-in-interest (hereinafter, Solectron and its predecessor-in-interest are collectively referred to as "Solectron") entered into a contract with Hewlett-Packard Company ("HP"), whereby Solectron "became HP's non-exclusive repair service contractor for HP's facility located at 421 Sanford Road, LaVergne, Tennessee (hereinafter referred to as the laVergne Facility')." (Compl. ¶ 5.) Solectron "provided labor, materials, and necessary shipping" to perform the contract between Solectron and HP. (Id.) Solectron was the named insured under a Commercial Crime Select Insurance Policy ("the Policy"), issued by Fidelity. (Id. at ¶ 8.)

Fidelity asserts that from November 2001, until mid-September 2002, two Solectron employees who worked at the LaVergne Facility conspired with a FedEx Ground truck driver to "transport stolen goods, including DVDs, digital cameras and printers off the LaVergne Facility." (Id. at ¶ 10.) The truck driver worked out of Defendant's Murfreesboro, Tennessee terminal in Rutherford County. (Id. at ¶ 15.) Solectron, FedEx Ground, state authorities, and local authorities conducted an investigation of the scheme. (Id. at ¶¶ 15-16.)

In' March 2003, Solectron made a $1,726,601 claim on the Policy, and Fidelity settled that claim with Solectron for $580,000. "In consideration for the payment, Solectron assigned, subrogated, transferred, and set over to [Fidelity] all of [Solectron's] rights, actions, and causes of action it has against any person, firm or corporation." (Id. at ¶¶ 22-23.)

Fidelity now seeks the entire amount of that settlement from Defendant. Fidelity alleges that Defendant is vicariously liable for the actions of the FedEx Ground truck driver, and as a result, Defendant breached its shipping contract with Solectron. (Id. at ¶ 25.) Solectron transferred and subrogated its cause of action to Fidelity, and Fidelity brings the instant case to recover the 8580,000 it paid Solectron under the Policy. (Id. at ¶ 26.)

II. Standard of Review

A. 28 U.S.C. § 1441(b) Removal based on Federal Question Jurisdiction

Pursuant to 28 U.S.C. § 1441(b), a defendant may remove a case to federal court if the claim arises under federal law. The question of whether a claim arises under federal law is "determined by reference to the`well-pleaded complaint.'" Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986) (citations omitted). "The wellpleaded complaint rule generally provides that the plaintiff is the master of his complaint, and the fact that the wrong asserted could be addressed under either state or federal law does not ordinarily diminish the plaintiffs right to choose a state law cause of action." Loftis v. United Parcel Serv., Inc., 342 F.3d 509, 515 (6th Cir.2003)(quoting Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 943 (6th Cir. 1994)).

The doctrine of complete preemption constitutes a narrow exception to the well-pleaded complaint rule. Although federal preemption is typically a defense to a plaintiffs action and does not authorize removal to a federal court, in some cases "the preemptive force of [federal law] is so `extraordinary' that it`converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.'" Caterpillar Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)(quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)); see also Ritchie v. Williams, 395 F.3d 283, 286 (6th Cir.2005).

When it applies, the Carmack Amendment "provide[s] the exclusive cause of action for loss or damages to goods arising from the interstate transportation of those goods by a common carrier ... [and] the complete pre-emption doctrine applies." Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 (5th Cir.2003); see also Hall v. N. Am. Van Lines, Inc. 476 F.3d 683, 687-89 (9th Cir.2007)(holding that the Carmack Amendment is "among the few statutes that completely preempt well-pleaded state claims by providing the exclusive cause of action for [interstate shipping contract claims]"); Am. Synthetic Rubber Corp. v. Louisville Nashville R.R. Co., 422 F.2d 462, 465-66 (6th Cir.1970)(recognizing that the Carmack Amendment completely preempts state law claims regarding interstate shipping contracts). Thus, the Carmack Amendment, when it applies, converts a state common-law claim into a federal question claim, allowing removal to federal court under 28 U.S.C. 1441(b). Hall, 476 F.3d at 689; Hoskins, 343 F.3d at 778; Am. Synthetic, 422 F.2d at 467.

B. 28 U.S.C. § 1441(a) Removal based on Diversity Jurisdiction

28 U.S.C. § 1441(a) provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Federal courts have original jurisdiction over disputes between diverse parties where the amount in controversy exceeds $75,000. 28 U.S.C. 1332(a). In order to remove based on diversity jurisdiction, complete diversity must exist at the time of removal. Coyne v. Am. Tobacco Co., 183 F.3d 488, 492 (6th Cir.1999). To establish complete diversity, "all parties on one side of the litigation [must be] of a different citizenship from all parties on the other side of the litigation." SHR, Ltd. P'ship. v. Braun, 888 F.2d 455, 456 (6th Cir.1989).

The defendant desiring to remove bears the burden of proving that diversity jurisdiction exists. Gafford v. General Elec. Co., 997 F.2d 150, 155 (6th Cir.1993). "[S]tatutes conferring removal jurisdiction are ... construed strictly because removal jurisdiction encroaches on a state court's jurisdiction." Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 534 (6th Cir.1999) (citations omitted). Doubts about removal "should be resolved in favor of remand to the state courts." Id.; see also Nasco Inc. v. Norsworthy, 785 F.Supp. 707, 710 (M.D.Tenn.1992)(noting that removal statutes "are to be strictly construed ... in favor of remand").

III. Analysis

A. 28 U.S.C. § 1441(b) Removal based on Federal Question Jurisdiction

The parties agree that "the Carmack Amendment preempts all state and common law claims and provides the sole and exclusive remedy to shippers for loss or damage in interstate transit." (Pl. Mem. Supp. Mot. Remand, DE # 6-2, at 5; see Def. Resp. Opp. Mot. Remand, DE # 9, at 5.) The Plaintiff contends that the Carmack Amendment does not apply to this case because "the loss that occurred in this action did not involve interstate transit" as "all allegations against defendant in Solectron's Complaint occurred in the state of Tennessee and involved transportation of goods in intrastate commerce." (Pl. Mem. Supp. Mot. Remand, DE # 6-2, at 5-6.) The Court disagrees with Plaintiffs characterization of the claims in the instant case as intrastate in nature. The Court finds that the Carmack Amendment applies to Plaintiffs claims and that the Court has federal question jurisdiction.

The Carmack Amendment "provide[s] the exclusive cause of action for loss or damages to goods arising from the interstate transportation of those goods by a common carrier...." Hoskins, 343 F.3d at 778. In determining whether a particular shipment involves interstate commerce, "the intention existing at the time the movement starts governs and fixes the character of the shipment," regardless of temporary stoppages within the state. Swift Textiles, Inc. v. Watkins Motor Lines, Inc., 799 F.2d 697, 699 (11th Cir. 1986) quoting Texas v. Anderson, Clayton & Co., 92 F.2d 104, 107 (5th Cir.1937).

"The nature of the shipment is not dependant upon the question when or to whom title passes;" instead, "it is determined by the essential character of the commerce ... [and] the continuing intent that it should be transported [interstate]." U.S. v. Erie R. Co., 280 U.S. 98, 101-02, 50 S.Ct. 51, 74 L.Ed. 187 (1929). "The determination of the character of the commerce is a matter of weighing the whole group of facts in respect to it." Atl. Coast Line...