GERALD E. ROSEN, Chief Judge.
Plaintiffs Steven B. Sivak and International Samaritan contend that United
This action relates to — but does not arise out of — the Carmack Amendment, 49 U.S.C. § 13101 et seq., which renders common carriers like UPS liable for "actual loss or injury to ... property" during interstate transport. 49 U.S.C. § 14706(a). Its purpose is "to relieve shippers of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods." Reider v. Thompson, 339 U.S. 113, 119, 70 S.Ct. 499, 94 L.Ed. 698 (1950). The Carmack Amendment has the effect of "codif[ing] the common-law rule that a carrier, though not an absolute insurer, is liable for damage to goods transported by it unless it can show that the damage was caused by (a) the act of God; (b) the public enemy; (c) the act of the shipper himself; (d) public authority; (e) or the inherent vice or nature of the goods." Mo. Pacific R.R. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964) (citations omitted). As pertinent here, it also allows carriers to limit their liability in exchange for charging a shipper a lower transportation rate:
§ 14706(c)(1)(A).
Plaintiff Steven B. Sivak is a resident of Ann Arbor, Michigan. (Plfs' Am. Compl., Dkt. # 13, at ¶ 10). Plaintiff International Samaritan is an Ohio nonprofit corporation with its principal place of business in Ann Arbor, Michigan. (Id. at ¶ 11). Defendant UPS is a Delaware corporation and is headquartered in Atlanta, Georgia. (Id. at ¶ 21). UPS is the "world's largest package delivery company.... In 2012, [for example, it] delivered an average of 16.3 million pieces per day worldwide, or a total of 4.1 billion packages." (Id. at ¶ 34) (citing UPS's 2012 10-K filing with the Securities and Exchange Commission).
Three documents govern Plaintiffs' shipment of packages through UPS: (1) the UPS Tariff/Terms and Conditions of Service (Terms); (2) the UPS Rate and Service Guide (Service Guide); and (3) Plaintiffs' Source Document from the shipment (collectively, the Shipping Contract). (Ex. A to Plfs' Am. Compl., Dkt. # 13, § 53). Within the Shipping Contract, three separate provisions are pertinent to Plaintiffs' claims: (1) UPS's $100.00 Liability Limit as set forth in the Terms and further detailed in the Service Guide and in the Source Document; (2) the Terms' 180-Day Notice Requirement; and (3) the Terms' discussion of Third-Party Retailers.
Under Section 50 of the Terms and pursuant to the Carmack Amendment, UPS limits its liability for loss or damage to $100.00:
(Id. at § 50) (emphasis added). The Service Guide then sets forth the pricing for this "Declared Value of Carriage" for both domestic and international shipments. For domestic shipments, it provides as follows:
(Ex. B to Plfs' Am. Compl., Dkt. # 22, at 74). There is a similar rate structure for international shipments:
(Id. at 140).
In Response, International Samaritan attached a Source Document from its October 23, 2012 shipment of goods with a declared value of $2,000.00. (Ex. A to Plfs' Resp., Dkt. # 25).
(Id. at ¶ 10). It further sets forth limitations on liability:
(Id. at ¶ 11).
Under the Terms, a "shipper" is "the party contracting with UPS for services." (Ex. A to Plfs' Am. Compl., Dkt. # 13, at 2). Section 47.1 of the Terms spell out a shipper's obligation to bring certain billing disputes to UPS's attention within 180 days or else it is deemed waived:
(Id. at § 47.1). In addition, the Source Document attached by International Samaritan discusses the steps one must take to file a claim: "Any and all claims must be in writing and received by Us within the carrier's required time frame. Claims not made within the prescribed time frame are waived and will not be paid." (Ex. A to Plfs' Resp., Dkt. # 25, at ¶ 12).
Finally, the Terms recognize that UPS utilizes a variety of franchises to facilitate shipment of packages (such as the one International Samaritan used). The Terms define these "Third-Party Retailers" as "locations of The UPS Store®, UPS Authorized Shipping Outlet locations, and UPS Alliance Locations (located within Office Depot® and Staples® retail locations)." (Ex. A to Plfs' Am. Compl., Dkt. # 13, at § 2). And as pertinent here, the Terms describe the relationship between UPS and these "Third-Party Retailers:"
(Id. at § 15).
Based on the "Declared Value for Carriage" language above, Plaintiffs contend that "UPS plainly states in its Terms that the first $100 of coverage is free or at no additional charge, whether or not a shipper purchases additional declared value coverage." (Plfs' Am. Compl., Dkt. # 13, at ¶ 2). But the problem, according to Plaintiffs, is that when a shipper declares a value in excess of $100.00 and is therefore charged $0.85 per each portion of $100.00, UPS does not actually provide the first $100.00 of coverage for free:
(Id. at ¶ 3). This "problem" actually kicks in when a shipper declares a value in excess of $300.00. (Id. at ¶¶ 30-31). This is because the Service Guide provides 9 for a $2.55 minimum for additional coverage, which divided by $0.85 equates to 3 portions of $100.00. In other words, when a customer declares a value between $100.01 and $300.00, UPS charges the customer $2.55 for additional declared value coverage without apportioning $0.85 per $100.00 in coverage.
But when a customer declares a value above $300.00, Plaintiffs claim that UPS overcharges that customer by $0.85 by failing to account for the first $100.00 in free coverage that they assert the Shipping Contract promises. (Id. at ¶ 32). A simple chart perhaps better illustrates Plaintiffs' argument as to how UPS charges its customers versus how UPS should charge its customers:
Declared Value UPS Charges UPS Should Charge $0.00-$100.00 $0.00 $0.00 $100.01-$300.00 $2.55 Plaintiffs make no claim that UPS overcharges customers in this category. $300.01-$400.00 $3.40 (4 portions of $100.00 — $0.85 $2.55 (3 portions of $100.00 over times 4 equals $3.40). the initial first $100.00 in free coverage — $0.85 times 3 equals $2.55). $400.01-$500.00 $4.25 (5 portions of $100.00 — $0.85 $3.40 (4 portions of $100.00 over times 5 equals $4.25). the initial first $100.00 in free coverage — $0.85 times 4 equals $3.40).
And, these overcharges add up dramatically when one considers how many parcels UPS ships annually (referenced above), as well as its business structure: there are
These overcharges, assert Plaintiffs, "reflect a deliberate breach of contract with and intentional effort to defraud its customers." (Id. at ¶ 8). For evidence of this deliberative misconduct, Plaintiffs note that a cottage industry has developed over the last 18 months of shipping consultants who audit large companies' shipping costs for savings and overcharges. (Id. at ¶¶ 4, 39). These shipping consultants have raised this practice of charging for the first $100.00 with UPS, which despite "acknowledg[ing] that the charge was not proper," has not "fix[ed] the problem." (Id. at ¶¶ 5, 42). UPS's standard practice is to just credit accounts for those customers who complain — namely large volume shippers — knowing that the bulk of its customers lack the means or sophistication to hire consultants to audit their shipping expenses. (Id. at ¶¶ 6, 8, 33, 40, 42).
Plaintiffs' purported class action seeks to halt this practice of defrauding its customers in the name of a "critical loss theory" scheme. (Id. ¶ 43). That is, deliberately overcharging all of its customers and then issuing refunds to those who complain, while knowing that most will not. Given the amount of packages UPS ships in a given year, this scheme is quite lucrative: "[A]ssuming UPS earns $200 million in overcharges, and it refunds $10 million to those [large volume shippers who complain], UPS knows that it will get way with a net profit from the scheme of $190 million without risk of being held accountable." (Id.).
Several factual intricacies and processes help facilitate this scheme. "[T]he additional declared value charges are not itemized" for its customers; in order to properly evaluate the declared value charge, allege Plaintiffs, "a customer would have to `back out' the math" which is "impracticable and normally practically or actually impossible to do while standing in line at a UPS shipping counter or UPS drop box or store." (Id. at ¶ 38). For example, International Samaritan's Source Document does not contain a separate line detailing how much the UPS Store charged when it declared a value of $2,000.00. (Ex. A to Plfs' Resp., Dkt. # 25, at 4). Plaintiffs also note that UPS has contractually limited its exposure to liability by requiring shippers to raise billing disputes "within 180 days of receiving the contested invoice." (Ex. A to Plfs' Am. Compl., Dkt. # 13, § 47. 1).
Plaintiffs' Amended Complaint therefore sets forth six different causes of action: (1) Breach of Contract; (2) Declaratory Relief; (3) Violation of 49 U.S.C. § 13708, which regulates a motor carrier's billing and collection practices; (4) Unjust Enrichment;
Because UPS answered Plaintiffs' original Complaint before moving to dismiss (Dkt. # 4), UPS's Rule 12(b)(6) motion is arguably untimely. Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 n. 1 (6th Cir.1988). Plaintiffs subsequently amended their Complaint as a matter of course pursuant to Federal Rule of Civil Procedure 15(a)(1)(B). (Dkt. # 13). UPS did not answer Plaintiffs' Amended Complaint and instead filed the present Motion under Rule 12(b)(6), and in the alternative under 12(c). Whether Rule 12(b)(6) or 12(c) applies to UPS's Motion is but an academic exercise: even if Defendants' Motion is more properly construed as one for judgment on the pleadings, a 12(c) motion is "evaluated ... under the standards for dismissal under Rule 12(b)(6)." Scheid, 859 F.2d at 436 n. 1.
In deciding such a motion, the Court must construe the complaint in the light most favorable to Plaintiffs and accept all well-pled factual allegations as true. League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir.2007). To withstand a motion to dismiss, however, a complaint "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The factual allegations in the complaint, accepted as true, "must be enough to raise a right to relief above the speculative level," and must "state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955. "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 plausibility of an inference depends on a host of considerations, including common sense and the strength of competing explanations for defendant's conduct." 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 504 (6th Cir.2013).
The Sixth Circuit has emphasized that the "combined effect of Twombly and Iqbal [is to] require [a] plaintiff to have a greater knowledge ... of factual details in order to draft a `plausible complaint.'" New Albany Tractor, Inc. v. Louisville Tractor, Inc., 650 F.3d 1046, 1051 (6th Cir.2011) (citation omitted). Put another way, complaints must contain "plausible statements as to when, where, in what or by whom," Center for Bio-Ethical Reform, Inc. v. Napolitano, 648 F.3d 365, 373 (6th Cir.2011), in order to avoid merely pleading an "unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
The crux of Plaintiffs' case rests upon the notion that UPS's Shipping Contract provides customers with the first $100.00 of liability coverage for free and that despite this "contractual obligation," UPS charges its customers for this "free" coverage when it ships items with a declared value in excess of $300.00. Counts I and Counts II — Breach of Contract and Declaratory Relief — expressly arise out of the terms of the Shipping Contract and rise and fall together. As set forth below, Plaintiffs' construction of the Shipping Contract renders its plain and unambiguous language meaningless.
It is well-settled under Michigan law that courts must construe contracts according to their unambiguous terms. Wilkie v. Auto-Owners Ins. Co., 469 Mich. 41, 53, 664 N.W.2d 776 (2003). The initial determination whether contract language is ambiguous is a question of law; if there is no ambiguity, the meaning of the contract likewise is a question of law for the Court to decide. Port Huron Educ. Ass'n v. Port Huron Area School Dist., 452 Mich. 309, 323, 550 N.W.2d 228 (1996). "If the plain language is clear, there can be only one reasonable interpretation of its meaning and, therefore, only one meaning the parties could reasonabl[y] expect to apply." Wilkie, 469 Mich. at 61, 664 N.W.2d 776 (citation omitted). Only "[w]here the contract language is unclear or susceptible to multiple meanings" does its interpretation become a question for the trier of fact. Port Huron, 452 Mich. at 323, 550 N.W.2d 228. A court, however, must take care to avoid "creat[ing] ambiguity where none exists." Smith v. Physicians Health Plan, Inc., 444 Mich. 743, 759, 514 N.W.2d 150 (1994). Rather, a contract is ambiguous only if "its words may reasonably be understood in different ways." Raska v. Farm Bureau Mut. Ins. Co., 412 Mich. 355, 362, 314 N.W.2d 440 (1982). In resolving this matter, a court must construe a contract "according to its plain and ordinary meaning, and technical or constrained constructions are to be avoided." Dillon v. DeNooyer Chevrolet Geo, 217 Mich.App. 163, 166, 550 N.W.2d 846 (1996). And as with statutory construction, the Court should "give effect to every word, phrase, and clause in a contract and avoid an interpretation that would render any part of the contract surplusage or nugatory." Klapp v. United Ins. Grp. Agency, Inc., 468 Mich. 459, 468, 663 N.W.2d 447 (2003). "Courts may [also] rely on dictionary definitions to find the meaning of terms used in a contract." Morley v. Auto. Club of Michigan, 458 Mich. 459, 470, 581 N.W.2d 237 (1998) (citation omitted).
Upon review of the Declared Value for Carriage language and the Shipping Contract as a whole, the Court concludes that the Shipping Contract unambiguously precludes Plaintiffs' constrained contractual interpretation. The Shipping Contract makes clear that "UPS's liability for loss or damage to a shipment is limited to $100.00 without a declaration of value." For packages with a declared value of "$0.00-$100.00," it provides a charge of $0.00. In cases where a customer wants to increase UPS's liability, he or she must do
Plaintiffs argue that the word "`total' clearly qualifies a specified range ($100.01-$50,000.00) such that for all of the increments... there is a charge of $0.85 for the total value declared." (Plfs' Resp., Dkt. # 19, at 16). By placing the "total value declared" language after the specified range, Plaintiffs argue, the Shipping Contract "indicates that [the `total' qualifier] means the total declared value in that range." (Id.) In so stretching this language, Plaintiffs' Response shows the nature of their constrained reading as they must add language — "in that range" — in order to phrase the contract in a way that fits their theory. Essentially, Plaintiffs ask that this Court add the following language to give life to their contractual theories: "$100.01-$50,000 for each $100.00 ... of the total value declared above $100.00." This Court will not rewrite an unambiguous contract.
Indeed, the placement of the phrase "total value declared" supports a finding of unambiguity. That phrase is immediately preceded not by a "specified range" as Plaintiffs insist, but rather by the dollar value that provides the applicable apportionment of the $0.85 cents: "for each $100.00 (or portion of $100.00) of the total value declared." The only possible reading is that when one declares a value of $100.01-$50,000.00, UPS charges $0.85 "for each $100.00 (or portion of $100.00) of the total value declared." Accordingly, the "total value declared" language clarifies that the additional charge applies to the entire value and not just the entire value above $100.00.
Plaintiffs' interpretation also cannot be reconciled with the $2.55 minimum charge, a charge that must be read in conjunction with the rest of the table. Plaintiffs essentially maintain that the Shipping Contract charges $0.85 for each $100.00 or portion thereof and that the "first" $100.00 is free. In sum, this would operate as follows:
Declared Value Additional Charge $0.00-$100.00 $0.00 $100.01-$200.00 $0.85 $200.01-$300.00 $1.70 $300.01-$400.00 $2.55
But Plaintiffs do not assert that UPS "overcharges" its customers for shipments with declared values between $100.01 and $300.00. Nor could they. The presence of the $2.55 minimum charge confirms that UPS does not provide the first $100.00 in free coverage for declared values over $100.00. To accept Plaintiffs' premise, this Court would also need to read out the minimum charge. This Court will not so modify unambiguous language.
The same is true with respect to declared values of more than $50,000 for international shipments. As set forth above, the language in that provision instructs shippers that "for shipments with a declared value of more than $50,000, multiply the total declared value by the rate to determine the declared value charge for the shipment." Or, "$0.0085 times the declared value." If the Shipping Contract provides the first $100.00 for free as alleged by Plaintiffs, this unambiguous language
Finally, the Court notes that other provisions within the "Value-Added Services" section of the Service Guide references some "free" services that UPS provides to certain shippers:
(Ex. B to Plfs' Am. Compl., Dkt. # 19, at 128). The Service Guide also references offering other services for "no additional charge." (Id. at 62, 87, 190, 199). UPS's use of these terms — especially the use of the word "free" within the same "Value-Added Services" section — completely undermines any argument that the Shipping Contract does not permit billing for the first $100.00 of declared value coverage without charge for packages with a declared value of over $300.00.
The Court therefore finds that the Shipping Contract is unambiguous and may not be rewritten to fit Plaintiffs' interpretation. Plaintiffs' claims for breach of contract and declaratory relief must be dismissed.
Plaintiffs plead their Unjust Enrichment claim in the alternative to their contract claim. (Plfs' Am. Compl., Dkt. # 13, at ¶¶ 75-81). There is no question that the Federal Rules of Civil Procedure permit parties to plead alternative theories, even theories that are inconsistent. Detroit Tigers, Inc. v. Ignite Sports Media, LLC, 203 F.Supp.2d 789, 793 (E.D.Mich.2002) (Borman, J.) (citing Fed. R.Civ.P. 8(d)(2)-(3)). "In other words, a pleading does not become insufficient by reason of a party having made alternative, or even contradictory, claims." Id. (citing Rowe v. Cleveland Pneumatic Co., 690 F.2d 88, 92 (6th Cir.1982)).
With that said, the Federal Rules' mere permission to plead in the alternative does not automatically necessitate a finding that an unjust enrichment claim may proceed in the face of pleading that a contract exists. It is well-settled that "[u]njust enrichment ... is not applicable when the parties are bound by an express written agreement." APJ Associates, Inc. v. N. Am. Philips Corp., 317 F.3d 610, 617 (6th Cir.2003). Under Michigan law,
Barber v. SMH (US), Inc., 202 Mich.App. 366, 375, 509 N.W.2d 791 (1993) (internal citations omitted and emphasis added).
Here, Plaintiffs' Amended Complaint only relies upon the existence of the Shipping Contract to form the basis of their claim that UPS systematically overcharges those who declare values in excess of $300.00. It unequivocally asserts that "Plaintiffs and the members of the [purported] Class are parties to uniform contracts with UPS regarding the shipment of items." (Plfs' Am. Compl., Dkt. # 13, at ¶ 56). Their Amended Complaint also makes clear that UPS's Terms "contain[] `the general terms and conditions of contract under which ... [UPS] is engaged in the transportation of shipments.'" (Id. at ¶ 26) (citing the Terms). And "[p]ursuant to the terms of [the Shipping Contract], UPS is contractually obligated to provide[] Plaintiffs and the members of the [purported] Class with $100 of coverage for loss of damage at no additional charge for each shipment." (Id. at ¶ 57).
Plaintiffs have failed to adequately plead unjust enrichment. They have identified no conduct by UPS representing that it would provide the first $100.00 of liability coverage free of charge other than the express language addressed above within the Shipping Contract. It is clear under Michigan law that Plaintiffs and UPS have a contractual relationship by virtue of Plaintiffs shipping packages pursuant to the Shipping Contract, and that this contractual relationship precludes Plaintiffs from bringing their unjust enrichment claim. Simply, Michigan law does not permit this Court to imply a contract where there is an express contract covering the same subject matter. Barber, 202 Mich. App. at 375, 509 N.W.2d 791; Ealey v. Benjigates Estates, LLC, 2013 WL 6409987, at *5 (E.D.Mich. Dec. 9, 2013) (Berg, J.) (similar); Savett v. Whirlpool Corp., 2012 WL 3780451, at *7 (N.D.Ohio Aug. 31, 2012) ("[C]ommon sense dictates that an ordinary consumer transaction ... is governed by a contract. Because the dispute centers around whether defendant delivered what it promised, the existence of an express contract bars an unjust enrichment claim."). Plaintiffs have just not put forth any argument distinguishing this well-settled principle from those deviating cases where there was a question as to whether the contract at issue applied. (Plfs' Resp., Dkt. # 19, at 18-19).
Accordingly, Plaintiffs' Unjust Enrichment claim fails.
49 U.S.C. § 13708 sets forth UPS's various billing and collection obligations as a motor carrier. In relevant part, it provides as follows:
§ 13708(a-b). Plaintiffs allege that by charging customers for the first $100.00 for packages with a declared value in excess of $300.00 notwithstanding its representations in the Shipping Contract to the contrary, UPS violates both of these subsections. (Plfs' Am. Compl., Dkt. # 13, at ¶¶ 70-71).
Very few federal courts have addressed such claims. At the outset and though not raised by the parties, the Court notes that the Sixth Circuit has not examined whether 49 U.S.C. § 14704(a)(2) — the Interstate Commerce Commission Termination Act's "Rights and remedies of persons injured by carriers or brokers" provision — creates a private right of action for Plaintiffs' claims. See also Mason and Dixon Lines, Inc. v. Steudle, 761 F.Supp.2d 611, 622 (E.D.Mich.2011) (Lawson, J.) ("Courts have reached inconsistent results on whether 49 U.S.C. § 14704(a)(2) creates a private right of action."). The bulk of the case law suggests that because Section 14704(a)(2) makes a "carrier or broker ... liable for damages sustained by a person as a result of an act or omission of that carrier or broker in violation of this part" and because the legislative history and regulatory guidance suggest private enforcement, Section 14704(a)(2) creates a private right of action. See, e.g., Fulfillment Servs. Inc. v. United Parcel Serv., Inc., 528 F.3d 614, 620-21 (9th Cir.2008) (rejecting UPS's argument that § 14704(a)(2) did not authorize a right of action to bring a claim under another provision of the Interstate Commerce Commission Termination Act, § 13703, noting that "[a]lthough Congress may have had different purposes in enacting different provisions of the [Motor Carrier Act], the plain language of § 14704(a)(2) provides equally a damages remedy for `an act or omission ... in violation' of the [Act], without discriminating as to provisions under the Act."); see also Owner-Operator Indep. Drivers Assoc., Inc. v. New Prime, Inc., 192 F.3d 778, 783-85 (8th Cir.1999) (similar); Fitzpatrick v. Morgan Southern, Inc., 261 F.Supp.2d 978, 979-81 (W.D.Tenn.2003) (similar); Tayssoun Transp., Inc. v. Universal Am-Can, Ltd., 2005 WL 1185811, at *12-16 (S.D.Tex. Apr. 20, 2005) (collecting cases). This Court need not reach a conclusion on this issue because even assuming that Section 14704(a)(2) authorizes Plaintiffs to sue UPS for violations of Section 13708, Plaintiffs have not stated a claim for relief under Section 13708 for two reasons.
First, Plaintiffs premise their Section 13708 claim solely on their view of the Shipping Contract. Having comprehensively addressed this constrained view above, Plaintiffs' Section 13708 theory collapses
Second, even if this Court concluded otherwise, it is persuaded that Section 13708 does not support a claim that a common carrier overbilled for shipping services. Though very few district courts have addressed the scope of Section 13708, the U1IT4less matter out of the Southern District of New York presents analogous facts and claims and contains significant on-point discussion that is well-reasoned. Accordingly, this Court finds it to be persuasive and therefore alternatively finds that Plaintiffs' Section 13708 claim is not supported in law.
In U1IT4less, the plaintiff shipped hundreds of packages weekly via FedEx. 896 F.Supp.2d at 281. The plaintiff did so by licensing FedEx's shipping software so that it "could transmit details of each of its shipments to [FedEx], print shipping labels, and schedule pick-ups with FedEx." Id. As pertinent here, the plaintiff alleged that FedEx charged plaintiff "for a shipment weight that was greater than the actual package weight." Id. This "upweighting" occurred because FedEx's software "cause[d] package weight ... to be fixed at a fictive higher weight than its actual weight." Id. at 282. FedEx knew this, alleged plaintiff, but concealed it by utilizing "a labyrinthine and corrupt" billing model that "obscure[d] billing discrepancies, and ... include[d] draconian billing adjustment terms and conditions, and other unfair and deceptive structures, terms and tools designed to disadvantage customers in their transactions with [FexEx]."
In addition to "upweighting," the plaintiff also alleged FedEx overcharged for custom fees on shipments to Canada and failed to apply certain discounts. Id. at 283-84. As to the former, the shipper was to pay Canadian customs charges under FedEx's standard shipping agreement unless the shipper informed FedEx that the recipient would pay. Id. at 283. The plaintiff so informed FedEx, but FedEx charged customs fees anyway. Id. As to the latter, the plaintiff alleged that FedEx's pricing agreement entitled it to certain discounts that FedEx did not apply. Id. at 284.
On these facts, the plaintiff alleged that FexEx violated Section 13708(b)'s prohibition against presenting "false or misleading information on a document about the actual rate, charge, or allowance to any party to the transaction." The U1IT4less court dismissed this claim, finding that "Section 13708 requires disclosure of (and prohibits false or misleading information associated with) off-bill discounts and the like.... [Accordingly, it] proscribe[s] presentation of a document (such as an invoice) indicating that a customer was charged a certain amount, when in fact the carrier actually charged that customer a lesser amount." Id. at 294. In so holding, the court discussed the section's legislative history and agency guidance:
Id. at 293-94.
Against this statutory and regulatory backdrop, the U1IT4less court drew a distinction between what the statute proscribed and what the plaintiff alleged:
Id. at 294 (internal record citations omitted).
This Court finds the U1IT4less decision to be well-reasoned and persuasive. Both matters present the indistinguishable allegation that a common carrier overbilled for shipping services. Section 13708(a) and (b) address "truth-in-billing," mandating that bills reflect the actual charges assessed — including an explanation of discounts that are applied off the four corners of an invoice. It simply does not apply to Plaintiffs' allegations that
In coordination with its affiliated franchises and sales network, Plaintiffs allege that UPS "engaged in a scheme to defraud Plaintiffs" by fraudulently overcharging customers for declared value coverage. (Plfs' Am. Compl., Dkt. # 13, at ¶¶ 82-99). By "using the wires and mail to bill and cause charges to be billed to Plaintiffs ... that include the Declared Value Overcharge," Plaintiffs assert that UPS is liable under RICO for participating in an enterprise of racketeering activity in violation of 18 U.S.C. § 1962(c) and for conspiring to do so in violation of 18 U.S.C. § 1962(d). (Id. at ¶ 87). More "specifically," Plaintiffs assert that "UPS and the Declared Value Enterprise members knew the bills for the first $100 of Declared Value coverage was fraudulent and unauthorized. UPS has been repeatedly informed of the impropriety of this charge, as has its partners, and they nonetheless have failed to take corrective action and instead have knowingly or at least recklessly failed to alter its behavior." (Id. at ¶ 90). UPS argues that this Court should dismiss these claims for a host of reasons, including because Plaintiffs have not identified a "misrepresentation" sufficient to infer a scheme to defraud. This Court agrees.
18 U.S.C. § 1962(c) provides that:
It is well-established that in order to prevail on a RICO cause of action, a plaintiff must establish "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Moon v. Harrison Piping Supply, 465 F.3d 719, 723 (6th Cir. 2006) (quoting Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)). "Racketeering activity" is any act that is indictable under certain enumerated federal criminal statutes. 18 U.S.C. § 1961(1)(B); Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 176 F.3d 315, 322 (6th Cir. 1999). In this case, Plaintiffs have identified UPS's alleged "racketeering activity" as mail fraud in violation of 18 U.S.C. § 1341 and wire fraud in violation of § 1343. (Plfs' Am. Compl., Dkt. # 13, at ¶ 89).
The Sixth Circuit recently described the pleading requirements for setting forth predicate acts of mail and wire fraud sufficient to state a RICO claim as follows:
Heinrich v. Waiting Angels Adoption Servs., Inc., 668 F.3d 393, 404-05 (6th Cir. 2012). Plaintiffs' RICO claims do not satisfy this standard.
Courts, including the Sixth Circuit, are skeptical of finding RICO claims that "sound[] in contract. [One] cannot successfully transmute them into RICO claims by simply appending the terms `false' and `fraudulent.'" Kolar v. Preferred Real Estate Investments, Inc., 361 Fed.Appx. 354, 363 (3d Cir.2010). In Blount Financial Services, Inc. v. Walter E. Heller & Company, for example, the Sixth Circuit dismissed a RICO claim "arising from a financing contract" where the plaintiff alleged that the defendant "charged a rate of interest which was illegal under the contract between the parties:"
819 F.2d 151, 152-53 (6th Cir.1987) (emphasis added).
Other courts within this District and across the United States are in accord with Blount's general holding that RICO claims arising out of contracts must sufficiently plead fraudulent acts independent of a breach of contract. In Kevelighan v. Trott & Trott, P.C., for example, Judge Duggan of this District dismissed an allegation that various entities fraudulently enforced mortgage agreements through "Pooling and Servicing Agreements" "by sending billing notices that attempted to collect excessive attorney fees and/or repayment of advances not yet due." 771 F.Supp.2d 763, 778 (E.D.Mich.2010) (Duggan, J.). In so dismissing the plaintiffs' RICO claims, Judge Duggan noted that the claims "primarily sound[ed] in contract. The parties simply dispute, under the relevant mortgage terms, the amount of attorney fees that can be charged and when repayment of advancements become due. Plaintiffs cannot transform these claims into RICO claims by merely alleging that the purported attempts to breach the mortgage terms were done `fraudulently.'" Id. (citing Blount and Kolar). Similarly, Judge Steeh recently dismissed RICO claims where the plaintiff "claim[ed] that [the] defendants billed plaintiff for tax related services at a rate that was not agreed to by the parties. However, sending billing invoices which erroneously apply a charge for tax related services under the terms of a contract does not amount to fraud." C & L Ward Bros., Co. v. Outsource Solutions, Inc., 2012 WL 3157005, at *5 (E.D.Mich. Aug. 3, 2012) (Steeh, J.); see also Renaissance Ctr. Venture v. Lozovoj, 884 F.Supp. 1132, 1144 (E.D.Mich.1995) (Hackett, J.) (similar); Kolar, 361 Fed.Appx. at 363 (collecting cases).
To be sure, the Sixth Circuit has subsequently clarified that "Blount does not stand for a blanket prohibition of RICO claims related to contract disputes." Dana Corp. v. Blue Cross & Blue Shield Mut. of N. Ohio, 900 F.2d 882, 885 (6th Cir.1990). In that case, Dana Corporation entered into an agreement with Blue Cross, whereby Blue Cross would administer its benefits plan. Id. at 884. Under the terms of the contract, Dana was to pay Blue Cross a refund if it exceeded certain cost limitations. Id. Blue Cross was supposed to adjust its charges to Dana to reflect these refunds, but allegedly never did. Id. Dana also alleged that "Blue Cross represented at meetings that Dana was receiving the benefit of Blue Cross's cost reductions resulting from any hospital rebates." Id.
The district court dismissed Dana's RICO claims for failing to state a claim and denied leave to amend, even though Dana alleged, as pertinent here, "specific instances of intentional false representations made by Blue Cross to Dana" and "that Blue Cross similarly defrauded a number of other [similar] clients." Id. at 884-85. In reversing, the Sixth Circuit contrasted the lack of allegations of specific misrepresentations in Blount with those in Dana:
Id. at 885-86 (emphasis added).
Here, Plaintiffs' Amended Complaint makes clear that the "fraudulent activity" about which they complain is derived solely from their flawed interpretation of the Shipping Contract. As discussed above, they do not allege any "fraudulent conduct" outside of Plaintiffs' own attempt to twist the Shipping Contract's language into something that it does not say. They have not, for example, pointed to any other writing by UPS or a statement by one of its employees that could be construed as being part of a scheme to misrepresent the manner in which UPS charges for declared values in excess of $300.00.
For these reasons,
IT IS HEREBY ORDERED that Defendant's Motion to Dismiss Plaintiffs' First Amended Complaint in its Entirety or, in the alternative, for Judgment on the Pleadings [Dkt. # 14] is GRANTED;
IT IS FURTHER ORDERED that Plaintiffs' First Amended Complaint is dismissed with prejudice; and
IT IS FURTHER ORDERED that Plaintiffs' Motion for Leave to File Sur-Reply in Opposition to Motion to Dismiss [Dkt. # 30] is DENIED.
On July 1, 2014, this Court dismissed Plaintiffs' First Amended Complaint with
On December 27, 2013, Plaintiffs' counsel filed two separate, but nearly identical lawsuits challenging the manner in which UPS charges customers for additional liability coverage, one in the Eastern District of Michigan (this matter) and one in the Central District of California (Solo v. UPS, 13-cv-9515).
The Solo Plaintiffs subsequently dismissed their Complaint without prejudice and refiled it as a "companion case" here in the Eastern District of Michigan on July 11, 2014, which was assigned to the Honorable Judith E. Levy. (14-cv-12719). This Court accepted reassignment pursuant to Local Rule 83.11 on July 28, 2014. (Id. at Dkt. # 6). UPS has neither appeared nor filed a responsive pleading in the Solo matter, and the parties have stipulated to extend UPS's response date through August 29, 2014. (Id. at Dkt. # 7).
The Sivak Plaintiffs filed this instant Motion on July 31, 2014. They request unique relief under Federal Rule of Civil Procedure 60(b). Plaintiffs request that this Court: (1) vacate its July 1, 2014 judgment under Rule 60(b)'s catch-all provision; (2) consolidate Sivak and Solo; (3) permit the filing of a single consolidated amended complaint (a draft of which is attached to their Motion); (4) deem UPS's previously filed Motion to Dismiss to be refiled against this new complaint and permit the parties to just rest on their previously submitted briefs; and (5) dismiss the single consolidated amended complaint with "a new, one-sentence judgment ... on the basis of its July 1, 2014 Opinion and Order." (Plfs' Mtn., Dkt. # 38, at 36). They advance this plan in the name of judicial economy: it would obviate the need for the parties to file responsive pleadings in the Solo matter and would avoid duplicative appellate practice. (Id. at 36, 42-45). While a noble consideration, this Court cannot conclude that Rule 60(b) supports such relief.
Federal Rule of Civil Procedure 60(b) governs Plaintiffs' Motion, and provides as follows:
Fed.R.Civ.P. 60(b). Plaintiffs only rely upon the "any other reason that justifies relief" catch-all provision. (Plfs' Mtn., Dkt. # 38, at 40 n. 2).
The Sixth Circuit recently summarized relief under Rule 60(b)(6) in McGuire v. Warden, Chillicothe Correctional Institute, 738 F.3d 741 (6th Cir.2013) as follows:
Id. at 750. Stated differently, "district courts may employ subsection (b)(6) as a means to achieve substantial justice when `something more' than one of the grounds contained in Rule 60(b)'s first five clauses is present." Hopper v. Euclid Manor Nursing Home, Inc., 867 F.2d 291, 294 (6th Cir.1989). The Sixth Circuit has also stressed that "parties may not use a Rule 60(b) motion as a substitute for an appeal or as a technique to avoid the consequences of decisions deliberately made yet later revealed to be unwise." Id. (internal citations omitted). Finally, a district court has "especially broad" discretion under Rule 60(b)(6) "given the underlying equitable principles involved." Id.
It is clear that Plaintiffs' Motion does not advance an argument that the "principles of equity mandate relief." Plaintiffs concede as such, but argue that because they "are not challenging the finality or propriety of this Court's rulings," they "need not show an extraordinary ground for relief." (Plfs' Mtn., Dkt. # 38, at 42). Their motive, rather, "is purely administrative and to promote the efficient administration of justice." (Id.). However well-intentioned their motive may be,
With that said, the Court appreciates that Plaintiffs have raised the issue of judicial economy. In Sivak, this Court rejected Plaintiffs' fundamental premise that UPS's Shipping Contract provided "the first $100.00 of declared value coverage without charge for packages with a declared value of over $300.00" and dismissed Plaintiffs' contractual, unjust enrichment, 49 U.S.C. § 13708(a-b), and RICO claims. Sivak, 28 F.Supp.3d at 712-22, 2014 WL 2938088, at *8-18. The Solo Plaintiffs — and the proposed single consolidated amended complaint — essentially echo this theory and these claims.
In short, Plaintiffs' promised forthcoming appeal in the Sivak matter will govern the Solo matter. The Court is also not aware of any unique issue to be litigated in the Solo matter that would support consolidation for the purpose of the Sivak appeal.
For these reasons,
IT IS HEREBY ORDERED that Plaintiffs' Rule 60(b)(6) Motion for Relief From Judgment, To Consolidate, And For Leave To File Amended Consolidated Complaint (Dkt. # 38) is DENIED.
