Wis. Cent. Ltd. v. TiEnergy, LLC

• Decision Date: 03 July 2018
• Docket Number: No. 17-2343,17-2343
• Citation: Wis. Cent. Ltd. v. TiEnergy, LLC, 894 F.3d 851 (7th Cir. 2018)
• Parties: WISCONSIN CENTRAL LIMITED, Plaintiff-Appellee, v. TIENERGY, LLC, Defendant/Third Party Plaintiff-Appellant, v. Allied Track Services, Inc., Third Party Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

894 F.3d 851

WISCONSIN CENTRAL LIMITED, Plaintiff-Appellee,

v.TIENERGY, LLC, Defendant/Third Party Plaintiff-Appellant,

v.Allied Track Services, Inc., Third Party Defendant-Appellee.

No. 17-2343

United States Court of Appeals, Seventh Circuit.

Argued January 11, 2018

Decided July 3, 2018

Rehearing and Rehearing En Banc Denied August 8, 2018^*

John K. Fiorilla, Attorney, Capehart & Scatchard, P.A., Mt. Laurel, NJ, Richard Michael Kates, I, Attorney, Law Office of Richard M. Kates, Chicago, IL, for Plaintiff-Appellee.

James K. Borcia, Attorney, Tressler LLP, Chicago, IL, for Defendant-Appellant.

Nicholas John DiCesare, Attorney, Barclay Damon, LLP, Buffalo, NY, for Defendant-Appellee.

Before Easterbrook and Barrett, Circuit Judges, and Stadtmueller, District Judge.^*

Barrett, Circuit Judge.

Demurrage is a charge that rail carriers are statutorily required to impose when rail cars are detained beyond the time the tariff allows for loading or unloading. It serves two functions: it secures the rail carrier compensation for the use of the car, and it serves the public’s interest in making the cars available to transport other property. The sooner a car is back in service, the sooner it is available to move the property of others.

This case involves demurrage that accrued when rail cars belonging to Wisconsin Central were detained at TiEnergy’s facility after delivering a load of railroad ties. Wisconsin Central sued TiEnergy to recover the charges, asserting that TiEnergy was liable for them as consignee of the goods. TiEnergy argued that it had not agreed to be the consignee; it maintained that Allied, the company that shipped the ties, should foot the bill. The district court held TiEnergy responsible, and we affirm its judgment.

I.

Allied Track Services, Inc. entered into two agreements to facilitate the shipment of approximately 100,000 railroad ties. It contracted with Wisconsin Central Limited’s parent company, Canadian National Railway, to have Wisconsin Central ship the ties to TiEnergy, LLC’s facility in Wisconsin. That contract incorporated CN Tariff 9000, which provided that demurrage would begin to accrue on the cars after two days of unloading time. Wisconsin Central also entered into an oral agreement with TiEnergy, which is in the business of processing and disposing of used railroad ties. TiEnergy agreed to receive the ties at its Wisconsin facility, where it would grind them. It would then sell the ties to Xcel Energy, which would burn them to generate power. When the process was complete, TiEnergy would provide Allied with proof that the ties had been incinerated in an environmentally safe manner.

Allied listed TiEnergy as the consignee of the railroad ties on all relevant bills of lading, and the ties were shipped to TiEnergy’s Wisconsin facility. After receiving the ties, TiEnergy went forward with its plan: it unloaded, ground, and sold them to Xcel Energy. The approximately 100 rail cars used to ship the ties, however, remained on the track and sidetrack beyond the two-day unloading period permitted by the tariff. Daily demurrage charges started to accrue on each car.

Canadian National began billing TiEnergy for the demurrage. When it received the invoices, TiEnergy contacted both Canadian National and Allied to object. TiEnergy said that it had not agreed to be identified as the consignee on the bills of lading and that it thus could not be held responsible for demurrage. In the meantime, the cars remained on TiEnergy’s track, and the demurrage charges continued to climb.

Wisconsin Central sued TiEnergy, seeking to recover approximately $100,000 in demurrage. TiEnergy filed a third-party complaint against Allied seeking indemnification or contribution. A flurry of motions followed the close of discovery: Wisconsin Central filed a motion for summary judgment against TiEnergy, TiEnergy filed a cross-motion for summary judgment against Wisconsin Central, and Allied filed a motion for summary judgment against TiEnergy. In its opinion, the district court granted the motions filed by Wisconsin Central and Allied; it denied the one filed by TiEnergy. TiEnergy appeals the district court’s grants of summary judgment in favor of Wisconsin Central and Allied.¹

II.

Before we turn to the merits, we have two jurisdictional matters to address. The first concerns appellate jurisdiction. TiEnergy invoked our jurisdiction under 28 U.S.C. § 1291, which gives us "jurisdiction of appeals from all final decisions of the district courts of the United States." To make the entry of final judgment clear, Federal Rule of Civil Procedure 58(a) provides that "[e]very judgment and amended judgment must be set out in a separate document." While the district court docketed a Rule 58 judgment order reflecting its final disposition of the claims brought by Wisconsin Central against TiEnergy, it did not do so for the third-party claim that TiEnergy asserted against Allied. Because a judgment is not final for purposes of § 1291 until it disposes of all claims in the suit, General Insurance Co. of America v. Clark Mall Corp ., 644 F.3d 375, 379 (7th Cir. 2011), the absence of the Rule 58 judgment order disposing of TiEnergy’s third-party claim creates some uncertainty about our appellate jurisdiction.

We asked the parties to address this issue in supplemental briefing. They contend—and we agree—that although the district court failed to issue a separate judgment disposing of all the claims, it clearly signaled in its opinion that it was finished with the case. Rule 58 ’s "separate document" requirement is important because it keeps jurisdictional lines clear. We have said, however, that a district court’s failure to comply with the formal requirement is not fatal to our jurisdiction if the district court has otherwise indicated its intent to finally dispose of all claims. Borrero v. City of Chicago , 456 F.3d 698, 699–700 (7th Cir. 2006). The district court did so here. See Wisconsin Cent., Ltd. v. TiEnergy, LLC , No. 15 C 2489, 2017 WL 1427065 (N.D. Ill. Apr. 21, 2017).

The second matter—and one on which we also ordered supplemental briefing—concerns original jurisdiction. Because this case focuses on the bill of lading, which is the shipping contract between the parties, it sounds like a breach-of-contract claim. But if this case is simply a contract dispute, we probably lack jurisdiction over it. Contract claims arise under state law, so they typically require diversity jurisdiction, and both Wisconsin Central and TiEnergy are citizens of Illinois. 28 U.S.C. § 1332 ; see also Strawbridge v. Curtiss , 7 U.S. 3 Cranch 267, 2 L.Ed. 435 (1806) (holding that the diversity statute requires that the citizenship of all plaintiffs be different from the citizenship of all defendants). In an exceptional circumstance, the presence of a federal issue can transform a state-law claim into one that arises under federal law. See Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing , 545 U.S. 308, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005) (holding that a state cause of action arises under federal law if, among other things, it requires resolution of a substantial and contested federal issue). There might be an argument for that here, but Wisconsin Central has not made it.²

Rather than asserting a contract claim that nonetheless arises under federal law, Wisconsin Central’s complaint sought to recover demurrage pursuant to a provision of the Interstate Commerce Commission Termination Act that assigns liability for the payment of transportation rates. 49 U.S.C. § 10743. Demurrage charges have long been treated as "rates for transportation" under that provision, see CSX Transportation Co. v. Novolog Bucks County , 502 F.3d 247, 256–57 (3rd Cir. 2007) (interpreting and recounting the history of the phrase), and consignees are presumptively liable for it. Section 10743(c) grants rail carriers a cause of action to enforce that liability, and Wisconsin Central has invoked that grant here. A cause of action arises under the law that created it, American Well Works Co. v. Layne & Bowler Co. , 241 U.S. 257, 260, 36 S.Ct. 585, 60 L.Ed. 987 (1916), which means that this case arises under federal law. Jurisdiction exists pursuant to 28 U.S.C. § 1337(a), which grants jurisdiction over "any civil action or proceeding arising under any Act of Congress regulating commerce."

In its supplemental brief, TiEnergy contends that § 1337(a) carries an amount-in-controversy requirement that deprives us of jurisdiction. That provision limits federal jurisdiction over cases filed under 49 U.S.C. § 11706 or 49 U.S.C. § 14706 when the "matter in controversy for each receipt or bill of lading exceeds $10,000." TiEnergy says that this limit applies, because the demurrage charges sought by Wisconsin Central include numerous invoices for less than $10,000.

This argument is frivolous. Section 1337(a) ’s amount-in-controversy limitation is plainly applicable only to cases filed under 49 U.S.C. § 11706 or 49 U.S.C. § 14706, and Wisconsin Central brought this action pursuant to 49 U.S.C. § 10743. Moreover, the causes of action that § 1337 limits—those brought under § 11706 or § 14706 —involve actions brought against , not by rail carriers. This suit presents a federal question over which we have jurisdiction, and nothing in § 1337(a) changes that.

III.

Section 10743 codifies the common-law rule that the consignee of freight is presumptively liable for demurrage accrued at the destination. Illinois Cent. R.R. Co. v. South Tec Dev. Warehouse , Inc. , 337 F.3d 813, 820 (7th Cir. 2003) (explaining that in the absence of a contract providing otherwise, only a consignee is liable for demurrage). Given this presumption, the parties agree that TiEnergy’s liability for demurrage turns on whether it is a "consignee" for purposes of § 10743. The tricky thing is that being a consignee under 10743 requires more than mere custody of the freight. Cf. BLACK’S LAW DICTIONARY (9th ed. 2009) (...