A. KATHLEEN TOMLINSON, Magistrate Judge.
Plaintiff Schenker, Inc. ("Plaintiff") commenced the instant action against Defendant Arnoff Moving & Storage, Inc. ("Defendant" or "Arnoff") seeking damages for losses sustained when cargo which the Defendant was carrying on behalf of Plaintiff's clients — a transaction brokered by Plaintiff — was damaged in transit. See generally Plaintiff's Complaint ("Compl.") [DE 1-1]. Plaintiff asserts claims under the "Carmack Amendment" to the Interstate Commerce Act, 49 U.S.C. § 14706 (Count I) and under New York common law for breach of contract (Counts II-VI). Defendant has filed a motion to dismiss Plaintiff's Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6) [DE 7-4]. Judge Feuerstein referred Defendant's motion to this Court for a recommendation as to whether the motion should be granted. For the reasons which follow, the Court respectfully recommends to Judge Feuerstein that Defendant's motion be DENIED, without prejudice.
The following factual allegations have been taken from Plaintiff's Complaint. All facts alleged by Plaintiff are assumed to be true for purposes of deciding the motion to dismiss and are construed in a light most favorable to Plaintiff as the non-moving party. See, e.g., LaFaro v. N.Y. Cardiothoracic Grp., 570 F.3d 471, 475 (2d Cir. 2009); Matthews v. City of N.Y., 889 F.Supp.2d 418, 425 (E.D.N.Y. 2012).
Plaintiff is a "full-service international logistics company" which provides "an array of integrated transportation and logistics solutions for the movement of goods and supply chains." Compl. ¶ 1. Defendant is an interstate motor carrier. Id. ¶ 4. Plaintiff and Defendant negotiated a "Contract for Motor Transportation Services" (the "Contract") which was executed in July of 2014, whereby Defendant "would transport by motor vehicle as a contract carrier in inter- and intra-state commerce and provide related transportation and logistics services as specified by [Plaintiff]." Id. ¶¶ 24-25.
On or about December 21, 2015, the cargo was extensively damaged during transport. Compl. ¶ 16. As a result, Plaintiff's customer, Global Foundries, incurred a total loss in the amount of $213,949.05, which included: (1) $192,229.05 to repair the damaged cargo; (2) $8,795.00 to ship the damaged cargo from New York to California for repairs; and (3) $12,925.00 to ship the repaired cargo from California to New York. Id. ¶ 18. Plaintiff states it paid, or may be liable to pay, Global Foundries the full amount of $213,949.05 for the repairs and subsequent shipments of the damaged cargo. Id. ¶ 19. Plaintiff claims that, pursuant to the contract, it performed all valid conditions precedent. Id. ¶ 21.
Plaintiff commenced the instant action to recover damages in the amount of $213,949.05, contending that Defendant is liable to Plaintiff: (1) under the "Carmack Amendment" to the Interstate Commerce Act, 49 U.S.C. § 14706 (Count I), see Compl. ¶¶ 9-22; or, in the alternative, under the terms of the contract; (2) for breach of one or more of the contract's indemnification provisions (Count II), see id. ¶¶ 23-37; (3) for breach of one or more of the contract's provisions regarding shipping and routing guidelines (Count III), see id. ¶¶ 38-43; (4) for breach of one or more of the contract's provisions requiring prior authorization before engaging a subcontractor (Count IV), see id. ¶¶ 44-51; for breach of one or more of the contract's provisions regarding insurance requirements (Count V), see id. ¶¶ 52-55; and (6) for attorneys' fees and costs (Count VI). See id. ¶¶ 56-58.
Plaintiff commenced this action in New York State Supreme Court for the County of Nassau on or about April 13, 2017. See DE 1-1. Defendant filed a Notice of Removal on or about May 15, 2017, asserting that Plaintiff's claim under the Carmack Amendment, 49 U.S.C. § 14706, vests this Court with jurisdiction pursuant to 28 U.S.C. §§ 1131 and 1337. See DE 1. Defendant filed its motion to dismiss Plaintiff's Complaint
Defendant moves to dismiss Plaintiff's state law claims on the grounds that the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, preempts each of Plaintiff's claims arising under New York law. See generally Defendant's Memorandum in Support of its Motion to Dismiss ("Def.'s Mem.") [DE 7-5/DE 8-2/DE 14-1]. According to the Defendant, the law in the Second Circuit as to preemption in these circumstances is unequivocally clear. See id. at 4 (citing North America Phillips Corp. v. Emery Air Freight Corp., 579 F.2d 229 (2d Cir. 1978); Cleveland v. Beltman N. Am. Co., 30 F.3d 373, 379 (2d Cir. 1994)).
In opposing Defendant's motion,
Additionally, Plaintiff argues that even if the Carmack Amendment does govern Defendant's liability, it does not preempt all of Plaintiff's breach of contract claims. Relying on case law from other circuits, Plaintiff maintains that its breach of contract claims for Defendant's impermissible subcontracting, failure to procure insurance for Plaintiff's benefit, and attorneys' fees are "separate and distinct" from damage to the cargo. See Pl.'s Opp.'n at 16. "These three causes of action seek different remedies than the compensatory damages for cargo damage and are actionable without the cargo damage on the basis of the Contract for Motor Transportation Services between [Plaintiff] and [Defendant]." Id. As such, Plaintiff contends they are not preempted by the Carmack Amendment. See id. at 13-17.
In its reply memorandum, Defendant argues that Plaintiff is an assignee of its customer shipper's rights, and therefore can maintain a Carmack Amendment claim even though it is a "broker." See Defendant's Reply Memorandum ("Def.'s Reply") [DE 9/DE 14-4] at 2. In support, Defendant argues that "[t]he definition of `transportation' under the Carmack Amendment is broad and includes arranging for transportation of property, receiving property, storing property, delivering property and resolving disputes via the claims process." Id. at 3 (citations omitted). Because of this, "only extra-contractual, separate and distinct conduct falls outside the preemptive scope of the Carmack Amendment." Id. No such conduct exists in the instant action Defendant argues, and, more as such, each of Plaintiff's breach of contract claims is preempted. Id. at 3-6. Lastly, Defendant argues that Plaintiff cannot recover attorneys' fees under the Carmack Amendment. Id. at 6.
A motion to dismiss for "failure to state a claim (or one of the other non-waivable defenses under Rule 12 (h)) that is styled as arising under Rule 12(b) but is filed after the close of pleadings, should be construed by the District Court as a motion for judgment on the pleadings under Rule 12(c)." Patel v. Contemporary Classics of Beverly Hills, 259 F.3d 123, 126 (2d Cir. 2001); see Lawson v. Broome County, 3:14-CV-0195, 2016 WL 427898, at *4 (N.D.N.Y. Feb. 3, 2016) (citing Patel, 259 F.3d at 126.) Whether the Court construes the instant motion as a motion for judgment on the pleadings pursuant to Rule 12(c) as Plaintiff argues, see Pl.'s Mem. at 3, or as a motion to dismiss pursuant to Rule 12(b)(6), the Court applies the same standard of review. See Hogan v. Fischer, 738 F.3d 509, 514-15 (2d Cir. 2013); Olivo v. City of New York, 14-CV-4966, 2015 WL 4645271, at *2 (E.D.N.Y. Aug. 4, 2015); State Farm Mut. Auto. Ins. Co. v. Cohan, 12-CV-1956, 2013 WL 4500730, at *3 (E.D.N.Y. Aug. 20, 2013). The Court must liberally construe the Complaint's claims, accept all factual allegations as true, and draw all reasonable inferences in favor of Plaintiff. See Aegis Ins. Servs., Inc. v. 7 World Trade Co., L.P., 737 F.3d 166, 176 (2d Cir. 2013) (quotations and citation omitted); Grullon v. City of New Haven, 720 F.3d 133, 139 (2d Cir. 2013). The plaintiff must satisfy "a flexible `plausibility standard.'" Iqbal v. Hasty, 490 F.3d 143, 157 (2d Cir. 2007), rev'd on other grounds sub nom. Ashcroft v. Iqbal, 556 U.S. 662 (2009). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 546 (2007). The Court, therefore, does not require "heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face." Id. at 570; see Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 91 (2d Cir. 2010) (holding that a complaint must set forth "a plausible set of facts sufficient `to raise a right to relief above the speculative level'") (quoting Twombly, 550 U.S. at 555).
The Supreme Court clarified the appropriate pleading standard in Ashcroft v. Iqbal, 556 U.S. 662 (2009), in which the Court set forth a two-pronged approach to be utilized in analyzing a motion to dismiss. District courts are to first "identify [ ] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679; see id. at 678 ("A pleading that offers `labels and conclusions' or `a formulaic recitation of the elements of a cause of action will not do.'") (quoting Twombly, 550 U.S. at 555)). Though "legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Ashcroft, 556 U.S. at 679. Second, if a complaint contains "well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. "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. The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. at 678 (citing Twombly, 550 U.S. at 556-57) (internal citations omitted).
"In adjudicating a Rule 12(c) motion, the Court examines the `complaint, the answer, any written documents attached to them,' and any items of which the Court may take judicial notice." Grecco v. Associated Press, 16-CV-6240, 2017 WL 2913501, at *1 (S.D.N.Y. July 7, 2017) (quoting L-7 Designs, Inc. v. Old Navy LLC, 647 F.3d 419, 422 (2d Cir. 2011)). "A complaint is also deemed to include `any written instrument attached to it as an exhibit, materials incorporated by reference and documents that, although not incorporated by reference, are `integral' to the complaint.'" L-7 Designs, 647 F.3d at 422 (quoting Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004) (citations omitted); Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002).
As an initial matter, the Court points out that both Defendant and Plaintiff have submitted, in addition to memoranda of law, declarations in support of their respective positions and exhibits attached to those declarations which contain supplemental materials. See DE 7-2/DE 8-1/DE 14A; DE 12. After reviewing the Complaint in conjunction with these materials, the Court finds that the materials encompassed within each Defendant's declaration are either incorporated in the Complaint by reference, or consist of documents whose terms and effect are relied upon heavily in the Complaint and, thus, are rendered "integral" to the Complaint. See L-7 Designs, 647 F.3d at 422; DiFolco v. MSNBC Cable, LLC, 622 F.3d 104, 111 (2d Cir. 2010); Chambers, 282 F.3d at 152-53. As such, the Court exercises its discretion to consider these documents in analyzing the motion to dismiss. See Grecco, 2017 WL 2913501, at *2 (on a Rule 12(c) motion, "[a] court may consider a document that is not attached as an Exhibit to a pleading or incorporated by reference into the complaint if the complaint `relies heavily upon [the document's] terms and effect,' thereby rendering the document "integral" to the complaint.'") (quoting DiFolco, 622 F.3d at 111); Moreno v. Episcopal Disease of Long Island, CV 14-7231, 2016 WL 8711448, at *6 (E.D.N.Y. Jan 20, 2016) report and recommendation adopted by 16-CV-7231, 2014 WL 8711394 (E.D.N.Y. Mar. 4, 2016) (noting that on a Rule 12(c) motion, the Court considers documents rendered "integral" to the complaint).
The threshold question presented by Defendant's motion, and the question the Court must address before moving to any potential preclusion issue, is whether the Carmack Amendment to the Interstate Commerce Act actually applies to the circumstances alleged in Plaintiff's Complaint.
The Carmack Amendment was enacted in 1906 as an amendment to the Interstate Commerce Act of 1887 to provide interstate carriers with reasonable certainty and uniformity in assessing their risks and predicting their potential liability. Project Hope v. M/V IBN SINA, 250 F.3d 67, 73 n.6 (2d Cir. 2001) (citing Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 381 (5th Cir.1998); Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700, 704 (4th Cir.1993)). To that end, the Carmack Amendment established a single uniform regime for shippers to recover directly from carriers in whose care their items are damaged. Project Hope, 250 F.3d at 73 n.6 (quotation omitted). The Carmack Amendment provides, in pertinent part, as follows:
49 U.S.C. § 14706(a)(1). It is firmly established in the Second Circuit that the Carmack Amendment fully occupies the field of carrier liability and thus completely preempts state common law claims by a shipper against a carrier arising from damage to goods in transit. Guru Kripa Foods, Inc. v. Inter, Inc., No. 10-CV-0229, 2012 WL 3306520, at *10 (E.D.N.Y. Aug. 10, 2012) ("[T]he Second Circuit has concluded that the statutory scheme provided by the Carmack Amendment is the exclusive remedy whereby a shipper may seek reimbursement from a carrier for damage to his or her property that occurred during shipment.") (quoting Commercial Union Ins. Co. v. Forward Air, Inc., 50 F.Supp.2d 255, 257 (S.D.N.Y.1999)); Materazzi v. Atlas Van Lines, Inc., 180 F.Supp.2d 408, 410 (E.D.N.Y. 2001) (citing North American Phillips Corp. v. Emery Air Freight Corp., 579 F.2d 229, 233-34 (2d Cir.1978)); see Cleveland v. Beltman N. Am. Co., 30 F.3d 373, 381 (2d Cir. 1994).
What is less clear, and where courts have differed, is to what extent the Carmack Amendment governs the liability of a carrier as to a non-shipper broker — that is, whether and when a broker, as opposed to a shipper, has a direct cause of action under the Carmack Amendment against a carrier.
Multiple courts from beyond the Second Circuit have also attempted to address the issue of carrier liability as to non-shipper brokers under Carmack. In Exel, Inc. v. S. Refrigerated Transp., Inc., the Sixth Circuit opined that the congressional intent behind the Carmack Amendment was concerned exclusively with the shipper-carrier relationship, and "[n]othing in the Carmack Amendment suggests that Congress also intended to protect the broker-carrier relationship by granting brokers a direct right to sue under the statute." 807 F.3d 140, 148-49 (6th Cir. 2015)
For purposes of Defendant's motion to dismiss, the Court determines that Plaintiff has alleged facts sufficient to establish that it is a "broker" as that term is defined by 49 U.S.C. § 13102.
Plaintiff's Complaint alleges that the cargo of electronics was tendered to Defendant, and/or Defendant's subcontractor and/or agent, CRST Specialized Transportation, Inc., d/b/a STIdelivers, in good order and condition, on or about December 18, 2015. Compl. ¶ 13. The relevant bill of lading is attached to the Complaint as Exhibit 1 and is referenced in detail in the Complaint beginning at ¶ 14. "[B]ills of lading are contracts between shippers and carriers that spell out the carrier's obligation to deliver specific goods to specific people or places." Italverde Trading, Inc. v. Four Bills of Lading Numbered LRNNN 120950, LRNNN 122950, LRNN 123580, MSLNV 254064, 485 F.Supp.2d 187, 197 (E.D.N.Y. 2007) (quoting Int'l Knitwear Co. v. M/V Zim Canada, No. 92 Civ. 7508, 1994 WL 924203, at *3 (S.D.N.Y. Oct.6, 1994)). The instant bill of lading presents as a shipping contract between Defendant Arnoff and STIdelivers. See Compl, Ex. 1. A review of the bill of lading shows that "5 CRATES OF ELECTRONICS / SEMICONDUCTOR EQUIPMENT" were to be shipped from "Mattson Technology" in Fremont, California, to "Arnoff Moving & Stg" in Albany, New York, with Arnoff to be billed for the transport. Id. Accordingly, Defendant Arnoff appears to be the "consignee" under the bill of lading.
Conspicuously absent from the bill of lading is a clear reference to Plaintiff or Plaintiff's customer, Global Foundries. Nor is it apparent what if any rights of recovery Plaintiff has under the bill. Additionally, the bill of lading was issued by a third party, STIdelivers, and it is not clear to what extent Plaintiff ever saw or approved of the terms of the bill. See Total Quality Logistics, LLC v. Macktoon, Inc., No. 12-CV-620, 2014 WL 4426184, at *2 (S.D. Ohio Sept. 9, 2014) (finding that an attorneys' fees provision in a broker-carrier agreement was not precluded by Carmack where neither plaintiff nor defendant, but rather a third-party, issued the bill of lading, and there was no indication that plaintiff-broker ever saw the bill of lading or intended to be bound by it). For these reasons, there are insufficient facts before the Court to plausibly show that the minimum condition precedent for standing under the Carmack Amendment — that Plaintiff be "entitled to recover under the receipt or bill of lading" — has been satisfied.
Defendant argues that despite being a broker, Plaintiff "brings this action on its own behalf and as an agent and/or trustee on behalf of, and for the interest of, all parties who may be or become interested in the shipment," Compl. ¶ 29, and, as such, "alleges that [Plaintiff] is an assignee of its customer shipper's rights." Def.'s Reply at 2. This assertion invokes Carmack liability, the argument goes, and Carmack preemption of all Plaintiff's state law claims along with it. While this may be the case, the facts currently before the Court as to the contractual relationship between Plaintiff and Global Foundries are insufficient to draw such a conclusion. Moreover, the cases cited by Defendant in its reply memorandum to support this proposition are distinguishable on their facts from those alleged in the Complaint. For example, Roger Miller Music, Inc. v. Sony/ATV Publ'g, LLC, 672 F.3d 434 (6th Cir. 2012)) deals with copyright interests; R.E.I. Transp., Inc. v. C.H. Robinson Worldwide, Inc., 2007 WL 854005 (S.D. Ill. Mar. 16, 2007) concerns a broker who has a right of recovery under the bill of lading; and OneBeacon Ins. Co. v. Haas Indus., Inc. 634 F.3d 1092 (9th Cir. 2011) deals with an insurer's rights of subrogation.
The Court concludes, for purposes of Defendant's motion to dismiss, that an examination of the Complaint and the several documents either incorporated in it or integral to the allegations set forth in it, does not permit a legal determination as to the applicability of the Carmack Amendment at this juncture. See JAS Forwarding (USA), Inc., 2017 WL 5054715, at *6 (denying a motion to dismiss a Carmack Amendment claim where the Court could not determine as a matter of law whether the Carmack Amendment was applicable). It may be that fact discovery will sufficiently illuminate the nature of the relationship between Plaintiff, Global Foundries, and the Defendant so that the Court is in a position to actually make a determination whether the Carmack Amendment to the Interstate Commerce Act is the correct and exclusive cause of action.
"Because this Court cannot determine as a matter of law that the Carmack Amendment is applicable here, the Court can likewise not rule as a matter of law that Plaintiff's breach of contract . . . claims are preempted by the Carmack Amendment." JAS Forwarding (USA), Inc., 2017 WL 5054715, at *6; see Brody v. Liffey Van Lines, Inc., No. 13 CIV. 5719, 2014 WL 2450807, at *7 (S.D.N.Y. May 29, 2014) ("[W]hether Carmack bars the assertion of state law claims against [Defendant] cannot be determined on the pleadings."). Moreover, as Plaintiff points out, Federal Rule of Civil Procedure 8 allows a plaintiff "to set forth two or more statements of a claim or defense alternatively or hypothetically, either in one count or defense or in separate counts or defenses." FED. R. CIV. P. 8(2); see Pl.'s Opp'n. at 5. As the Court is unable to determine that Plaintiff's state law claims are preempted by application of the Carmack Amendment, the Court respectfully recommends to Judge Feuerstein that Defendant's motion to dismiss Counts II-VI of Plaintiff's Complaint be DENIED, without prejudice.
For the foregoing reasons, the Court respectfully recommends to Judge Feuerstein that Defendant's motion to dismiss be DENIED, without prejudice.
Pursuant to 28 U.S.C. § 636(b)(1)(c) and Rule 72 of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report and Recommendation to file written objections. See also FED. R. CIV. P. 6(a), (e). Such objections by an attorney of record shall be filed with the Clerk of the Court via ECF.
Great W. Cas. Co., 605 F. Supp. 2d at 965 (citing S. Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. 336, 342 (1982); The Carlos F. Roses, 177 U.S. 655, 665, 20 S.Ct. 803, 807, 44 S.Ct. 929 (1900)).
