JOHN G. KOELTL, District Judge:
Thunder Bay Regional Health Sciences Center ("Thunder Bay"), which was insured by Aviva Trucking Special Lines ("Aviva"), contracted with the defendant Farber Specialty Vehicles ("Farber") to transport Thunder Bay's bus carrying a custom medical unit from Canada to New York. Farber, in turn, contracted with Bennett Truck Transport, LLC and Bennett DriveAway to drive the bus from Farmingdale, New York to Reynoldsburg, Ohio. Bennett employed Darnell M. Ashe, Sr. who drove the vehicle and Ashe allegedly damaged the bus by driving it negligently on the FDR Drive in New York City. The plaintiff Aviva, for itself and as subrogee for its insured, Thunder Bay, now sues Farber and the three Bennett defendants under various state law claims for the damage to the bus. The Bennett defendants move to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, preempts the state law claims. The plaintiff Aviva for itself and as subrogee for Thunder Bay and defendant Farber argue that the contract between Farber and the Bennett defendants waived the Carmack Amendment and therefore the state law claims are not preempted.
For the following reasons, the motion to dismiss the state law claims is
In deciding a motion to dismiss pursuant to Rule 12(b)(6), the allegations in the complaint are accepted as true, and all reasonable inferences must be drawn in the plaintiff's favor.
While the Court should construe the factual allegations in the light most favorable to the plaintiff, "the tenet that a court must accept as true all of the allegations contained in the complaint is inapplicable to legal conclusions."
The following facts alleged in the Complaint are accepted as true for the purposes of ruling on the motion to dismiss.
Farber signed a standard rate Confirmation Sheet prepared by Bennett DriveAway, which included attached Terms and Conditions. Nwaneri Decl. Exs. B, C. Clause 8 of the Terms and Conditions reads: "Contract Carrier: This contract service is designed to meet the distinct needs of the customer and the parties expressly waive all rights and obligations allowed by 49 U.S.C. 14101 to the extent [they] conflict with the terms of this contract."
On or about February 23, 2016, Mr. Ashe was driving the plaintiff's vehicle towards an underpass at the entrance to the FDR Drive in New York City. Compl. ¶¶ 16-17. As a result of Mr. Ashe's allegedly negligent driving, the vehicle struck the overpass and was damaged.
On October 10, 2018, the plaintiff filed suit in the Supreme Court of New York, New York County. Dkt. No. 4-1. On November 30, 2018, the defendants removed the case to this Court, invoking the Court's diversity jurisdiction under 28 U.S.C. § 1332(a), as well as its jurisdiction under 28 U.S.C. § 1337(a) and 49 U.S.C. § 14706, the Carmack Amendment to the Interstate Commerce Act. Pet. of Removal ¶¶ 10-13.
The Bennett defendants filed the current motion to dismiss pursuant to Rule 12(b)(6) on the grounds that the state law claims in the Complaint are preempted by the Carmack Amendment. The plaintiff and Farber oppose the motion to dismiss on the grounds that the contract between Farber and the Bennett defendants waived the Carmack Amendment.
The plaintiff and Farber acknowledge that, in general, the Carmack Amendment preempts all state law claims, but allege that Clauses 8 and 11 of the Terms and Conditions of the contract between the Bennett defendants and Farber waived the Carmack Amendment. If the parties waived the Carmack Amendment, then the state law claims are not preempted. Thus, the operative question at this stage is whether the contract between Farber and Bennett, specifically Clauses 8 and 11 of the Terms and Conditions, constitutes a valid waiver of the Carmack Amendment.
The Carmack Amendment to the Interstate Commerce Act requires that "[a] carrier and any other carrier that deliver[] the property and is providing transportation or service subject to jurisdiction under [49 U.S.C. § 13501] are liable to the person entitled to recover under the receipt or bill of lading." 49 U.S.C. § 14706(a)(1). The Amendment further specifies that "liability imposed under this paragraph is for the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route
The Carmack Amendment preempts all state law on the issue of interstate carrier liability.
Thus, in the first instance, the Carmack Amendment covers any claims arising out of the shipment of the plaintiff's vehicle by Farber and its subcontractors, the Bennett defendants, from New York to Ohio because the shipment was an interstate shipment and was made by motor carrier, namely by a motor vehicle. Without more, the Carmack Amendment preempts the plaintiff's state law claims for the "actual loss or injury to the property caused by" the defendant carriers. 49 U.S.C. § 14706(a)(1).
However, parties to a shipping contract may validly waive the Carmack Amendment if they, "in writing, expressly waive any or all rights and remedies under [the part of the United States Code governing the liability of carriers that includes the Carmack Amendment] for the transportation covered by the contract." 49 U.S.C. § 14101(b)(1).
A waiver is effective when it expressly appears on the face of the contract provision in question. In
On the other hand, courts have refused to imply waivers of the Carmack Amendment from contract provisions that were not express waivers.
In this case, while Clause 11 — the choice of law provision — is not an express waiver of the Carmack Amendment, it is plain that Clause 8 expressly waives the Carmack Amendment by stating that "[t]his contract service is designed to meet the distinct needs of the customer and the parties expressly waive all rights and obligations allowed by 49 U.S.C. 14101 to the extent [they] conflict with the terms of this contract." Nwaneri Decl. Ex. C. Clause 8 is substantially similar to the waivers found valid in
The Bennett defendants raise several points to argue for the first time in the reply brief that Clause 8 is an ineffective waiver. Generally, "a court should not consider arguments that are raised for the first time in a reply brief."
First, the Bennett defendants argue that Clause 8 is ineffective because it does not refer to the "ICC Termination Act," "Carmack," or "49 U.S.C. § 14706." However, the inclusion of such "magic words" is unnecessary for a provision to constitute an effective waiver. All that is necessary is that the Carmack Amendment be "expressly waive[d]." 49 U.S.C. § 14101(b)(1). The provision in § 14101(b)(1) that authorizes express waivers refers to the rights and remedies "under this part," which is to say the part of the United States Code relating to carriers that includes 49 U.S.C. § 14706, the Carmack Amendment. The waiver provision in this case, like the waiver provisions found effective in
The Bennett defendants next argue that there is no express waiver of the Carmack Amendment because Clause 8 waives only "rights" and "obligations," and does not mention "remedies" under the Carmack Amendment. Reply, at 3. No case supports such an argument, and there is no reasonable basis to ignore the express waiver of rights and obligations in Clause 8 simply because it did not include the word "remedies."
The Bennett defendants also cite
Next, the Bennett defendants argue that Clause 8 is not an effective waiver because although it purports to waive "all rights and obligations allowed by 49 U.S.C. § 14101," it does so only "to the extent they conflict with the terms of this contract," and there is no conflict between the Carmack Amendment and the Confirmation Sheet. Reply, at 5. However, there is a conflict to the extent that the Carmack Amendment preempts state law causes of action that otherwise would be permitted under the contract, for example state claims maintained under Clause 11. Moreover, in
Finally, reading Clause 8 as an effective waiver of the Carmack Amendment prevents the Clause from becoming meaningless surplusage in the contract.
The Court has considered all of the arguments of the parties. To the extent not specifically addressed, the arguments are either moot or without merit. For the reasons explained above, the motion by the Bennett defendants to dismiss the plaintiff's causes of actions as pre-empted by the Carmack Amendment is