Estes Express Lines v. United States , 739 F.3d 689 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
ESTES EXPRESS LINES,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
______________________
2013-5056
______________________
Appeal from the United States Court of Federal
Claims in No. 11-CV-0597, Judge Francis M. Allegra.
______________________
Decided: January 3, 2014
______________________
ROBERT D. MOSELEY, JR., Smith Moore Leatherwood,
LLP, of Greenville, South Carolina, argued for plaintiff-
appellant.
DANIEL B. VOLK, Trial Attorney, Commercial Litiga-
tion Branch, Civil Division, United States Department of
Justice, of Washington, DC, argued for defendant-
appellee. With him on the brief were STUART F. DELERY,
Acting Assistant Attorney General, JEANNE E. DAVIDSON,
Director, and MARTIN F. HOCKEY, JR., Assistant Director.
______________________
Before PROST, REYNA, and TARANTO, Circuit Judges.
2 ESTES EXPRESS LINES v. US
REYNA, Circuit Judge.
Estes Express Lines (“Estes”) appeals from a final or-
der of the Court of Federal Claims (“Claims Court”)
dismissing Estes’s complaint for lack of subject matter
jurisdiction. Estes Express Lines v. United States, 108
Fed. Cl. 416 (2013). For the reasons below, we reverse
and remand for further proceedings.
BACKGROUND
Estes, a federal motor carrier, seeks to recover from
the Government freight charges incurred by Marine Corps
Community Services (“MCCS”). The charges in question
correspond to shipments arranged on behalf of MCCS by a
freight broker, Salem Logistics (“Salem”), for deliveries
between June 2008 and February 2009. Estes and Salem
do not have a written contract, and Estes handled all
shipments under its common carrier tariff.
Salem arranged the shipments pursuant to a contract
with MCCS (“the Salem-MCCS contract”). Under this
contract, Salem agreed to provide MCCS with certain
transportation and freight management services, includ-
ing coordinating the pick-up, transport and delivery of
vendor products to various MCCS or Marine Corps Ex-
change (“MCX”) 1 locations around the country. Specifical-
ly, upon being contacted by a vendor who received an
order from MCCS or MCX, Salem would select a carrier to
move the merchandise from the vendor to the MCCS/MCX
destination. The contract provided that Salem would pay
the carriers directly and then invoice MCCS. Salem
further agreed not to represent itself as an agent or
representative of MCCS.
Each shipment handled by Estes was identified by a
bill of lading, a freight bill, and a delivery receipt. All
1 MCX is a division of MCCS.
ESTES EXPRESS LINES v. US 3
bills of lading listed a MCCS or MCX destination as the
“consignee,” and most bills of lading identified the third-
party vendor as the “shipper.” In some instances, goods
were moved from a Navy Exchange location to an MCX
location, or from one MCX location to another, in which
case a government entity was listed as the “shipper.”
Pursuant to the Salem-MCCS contract, all bills of lading
further indicated that “third party freight charges” were
to be billed to “Marine Corps Exchange C/O Salem Logis-
tics.” The delivery receipts also specified that charges
should be billed to the “Marine Corps Exchange.” Each
delivery receipt was signed by a representative of the
MCCS or MCX location to which the goods were delivered.
Following delivery, Estes invoiced “MCX, care of Sa-
lem” for freight charges. Although MCCS paid Salem for
some of the shipments, it appears that Salem never
remitted payment to Estes. After it became aware that
Salem was failing to pay Estes and other carriers, MCCS
began paying carriers directly, but only for shipments for
which it had not yet paid Salem.
On February 3, 2010, Estes filed suit against Salem
and the Government in district court seeking to recover
$147,645.33 in freight charges for which it allegedly had
not received payment from Salem or MCCS. On July 8,
2011, the case was transferred to the Claims Court. On
January 6, 2012, the Government moved to dismiss
pursuant to Rules 12(b)(1) and 12(b)(6) of the Rules of the
Court of Federal Claims (“RCFC”). Although Estes did
not attach any shipping documents to its complaint, it
included copies of exemplary bills of lading and delivery
receipts in its opposition to the Government’s motion to
dismiss.
On January 15, 2013, the Claims Court dismissed Es-
tes’s complaint pursuant to RCFC 12(b)(1) for lack of
subject matter jurisdiction. The Claims Court held that
there is no direct privity of contract between Estes and
4 ESTES EXPRESS LINES v. US
the Government because “[i]t was Salem, and not Estes
Express, that had a contractual relationship with defend-
ant; Estes Express’ contractual relationship was with
Salem only, as a subcontractor.” 108 Fed. Cl. at 421.
According to the Claims Court, this relationship “is plain-
ly reflected in the contract that defendant had with Sa-
lem,” and “[n]othing in the bills of lading that plaintiff has
introduced into the record contradicts this notion.” Id.
The Claims Court also rejected Estes’s “deemed privity”
theory, finding that Salem did not act as the Govern-
ment’s agent. Finally, the Claims Court also rejected
Estes’s claim under 49 U.S.C. § 13706, which governs the
liability of consignees for shipping charges incurred by a
common carrier, following Claims Court precedent hold-
ing that the statute does not “create liability in the con-
signee in the face of an express contractual allocation
elsewhere of freight charges.” Id. at 422 (citing Cent.
Freight Lines, Inc. v. United States, 87 Fed. Cl. 104, 112
(2009); Cent. Transp. Int’l, Inc. v. United States, 63 Fed.
Cl. 336, 340 (2004)).
Estes timely appealed. We have jurisdiction pursuant
to 28 U.S.C. § 1295(a)(3).
DISCUSSION
We review de novo whether the Claims Court pos-
sessed jurisdiction. Maher v. United States, 314 F.3d 600,
603 (Fed. Cir. 2002). The plaintiff bears the burden of
establishing subject matter jurisdiction by a preponder-
ance of the evidence. Reynolds v. Army & Air Force Exch.
Serv., 846 F.2d 746, 748 (Fed. Cir. 1988). In deciding a
motion to dismiss for lack of subject matter jurisdiction,
the court accepts as true all uncontroverted factual alle-
gations in the complaint, and construes them in the light
most favorable to the plaintiff. See Cedars-Sinai Med.
Ctr. v. Watkins, 11 F.3d 1573, 1583-84 (Fed. Cir. 1993).
The Tucker Act, 28 U.S.C. § 1491, confers jurisdiction
on the Claims Court and waives sovereign immunity for
ESTES EXPRESS LINES v. US 5
certain claims for monetary relief against the United
States. But the Tucker Act itself does not create a sub-
stantive cause of action; to demonstrate that the Claims
Court has jurisdiction to entertain its claim under the
Tucker Act, the plaintiff must identify a constitutional
provision, federal statute, executive agency regulation, or
“any express or implied contract with the United States”
that creates the right to money damages. See 28 U.S.C.
§ 1491(a)(1). Estes advances two grounds upon which it
argues the Claims Court has Tucker Act jurisdiction.
First, Estes asserts a claim based on contract, arguing
that a contractual relationship with the Government
exists either directly under the bills of lading or, alterna-
tively, because Salem acted as an agent of the Govern-
ment, binding the Government under a “deemed privity”
theory. Second, Estes asserts a claim under 49 U.S.C.
§ 13706, arguing that the Government is directly liable as
the consignee and owner of the freight.
To maintain a cause of action under the Tucker Act
based on a contract, Estes must show that there is a
contract directly between itself and the Government, i.e.,
that there is privity of contract. See Cienega Gardens v.
United States, 194 F.3d 1231, 1239 (Fed. Cir. 1998);
Anderson v. United States, 344 F.3d 1343, 1351 (Fed. Cir.
2003). The effect of finding privity of contract is to find a
waiver of sovereign immunity. Cienega Gardens, 194
F.3d at 1239. Whether a contract exists is a mixed ques-
tion of law and fact, but where “the parties do not dispute
the relevant facts, the privity issue reduces to a question
of law, which we review de novo.” Id.
The Claims Court found a lack of direct privity be-
tween Estes and the Government because “[i]t was Salem,
and not Estes Express, that had a contractual relation-
ship with defendant; Estes Express’ contractual relation-
ship was with Salem only, as a subcontractor.” 108 Fed.
Cl. at 421. The Claims Court based its conclusion mainly
on the MCCS-Salem contract, which “describe[s] the
6 ESTES EXPRESS LINES v. US
nature of [Salem’s] services and the invoicing mechanisms
that would be employed in reimbursing Salem for the
amounts that it paid to its carriers, such as Estes Ex-
press.” Id. But regardless of whether the contract re-
flects an agreement between Salem and MCCS regarding
payment logistics, it also reflects MCCS’s intention that
“[a]ll shipments that are F.O.B. origin must be shipped on
a third party collect bill of lading” and that freight charg-
es should be “third party billed to Marine Corps Exchange
C/O Salem Logistics.” In other words, MCCS intended to
be bound by bills of lading that would reflect not only that
it was the consignee and owner of the freight, but also the
party ultimately responsible for freight charges. Accord-
ingly, the MCCS-Salem contract does not foreclose the
existence of a separate contractual relationship between
Estes and the Government that may have arisen under
the bills of lading it elected to use.
The bill of lading is “the basic transportation contract
between the shipper-consignor and the carrier; its terms
and conditions bind the shipper and all connecting carri-
ers.” S. Pac. Transp. Co. v. Commercial Metals Co., 456
U.S. 336, 342 (1982). Ordinarily, under default bill of
lading terms, the shipper or consignor assumes the obli-
gation to pay freight charges. But a party to the ship-
ment may assume liability where the terms of the bill of
lading so provide and the party accepts the shipment
subject to the terms of the bill of lading. See Louisville &
N.R. Co. v. Cent. Iron & Coal Co., 265 U.S. 59, 70 (1924).
Here, the undisputed facts are sufficient to establish
that the Government is a party to the bills of lading not
only as the “bill to” party, but also as the shipper at least
in those instances in which goods were moved from one
Government location to another. MCCS expressly author-
ized, by contract, its designation as a party to the bills of
lading. Indeed, the Government concedes that all bills of
lading were generated consistent with the instructions in
the MCCS-Salem contract. The Claims Court also found
ESTES EXPRESS LINES v. US 7
that MCX accepted all shipments without exception, and
that a MCX representative signed each delivery receipt
listing MCX as the “bill to” party. Under these circum-
stances, the bills of lading are sufficient to meet Estes’s
burden to show privity with the Government.
To be clear, we need not, and do not decide the ques-
tion of whether the Government may be liable for freight
charges solely on the basis that it is the consignee and
owner of the freight. We recognize previous decisions by
the Claims Court, relied on by the court below, finding
that uniform straight bills of lading were insufficient to
establish privity of contract with the Government. See
Cent. Freight Lines, 87 Fed. Cl. at 110-11; Cent. Transp.,
63 Fed. Cl. at 338-39. Those decisions are not binding on
us, and are distinguishable as well. In those cases, unlike
in this case, the Government was not a party to the
commercial bills of lading in question, which were instead
between the carriers and the brokers and did not list the
Government as the party to be billed. See Cent. Freight
Lines, 87 Fed. Cl. at 107, 109; Cent. Transp., 63 Fed. Cl.
at 337-38.
The Claims Court erred in dismissing the weight of
the bills of lading on the basis of the MCCS-Salem con-
tract. Although the parties to a freight shipment are
generally free to modify default bill of lading terms by a
separate contract, see Louisville, 265 U.S. at 66, a con-
tract with a broker who is not a party to the bills of lading
does not necessarily accomplish the same. In this case,
there is no indication that Estes agreed to any terms in
the Salem-MCCS contract purporting to allocate liability.
There is also no evidence that Estes agreed to release
MCCS from liability upon MCCS forwarding payment to
Salem, or that Salem otherwise acted as an agent of Estes
in collecting payment. Therefore, the provisions of the
MCCS-Salem contract cannot alter any contractual obli-
gations arising separately under the bills of lading.
8 ESTES EXPRESS LINES v. US
CONCLUSION
The Claims Court erred in dismissing Estes’s com-
plaint for lack of subject matter jurisdiction. Although we
do not express any opinion regarding the merits of Estes’s
claims and the issue of ultimate liability, we conclude that
the bills of lading are sufficient to establish privity. We
decline to address Estes’s “deemed privity” theory and
whether 49 U.S.C. § 13706 provides the Claims Court
with jurisdiction. Accordingly, we
REVERSE AND REMAND
COSTS
Each party shall bear its own costs.