Ronate C2C, Inc. v. Express Logistics, Inc. ( 2024 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 RONATE C2C, INC., a California Case No.: 23-cv-01917-DMS-BLM Corporation, 11 ORDER GRANTING DEFENDANTS Plaintiff, 12 AAA TRANSPORTATION & CLEAR v. LANE FREIGHT SYSTEM’S 13 MOTION TO DISMISS EXPRESS LOGISTICS, INC., an Iowa 14 PLAINTIFF’S COMPLAINT Corporation, et al. 15 Defendants. 16 17 18 Pending before the Court is Defendant AAA Cooper Transportation, Inc.’s (“Defendant 19 AAA”) motion to dismiss Plaintiff Ronate C2C, Inc.’s Complaint for failure to state a claim 20 (ECF No. 4.) Defendant Clear Lane Freight System, Inc. (“Defendant Clear Lane”) joined 21 Defendant AAA’s motion to dismiss. (ECF No. 5.) Plaintiff filed an opposition, (ECF No. 22 9), and Defendants AAA and Clear Lane filed replies. (ECF No. 10, 11.) Defendant 23 Express Logistics, Inc. (“Defendant Express Logistics”) has not made an appearance in the 24 matter. For the following reasons, Defendant AAA and Clear Lane’s motion to dismiss is 25 granted. 26 I. BACKGROUND 27 Plaintiff is a distributor of chemical supplies, equipment, and related services. 28 Plaintiff and Defendant Express Logistics entered into a brokerage agreement in which 1 Defendant Express Logistics “promised to identify and locate reputable, but cost-effective, 2 carriers for Plaintiff’s shipping needs.” (Opp’n at 2.) In accordance with the agreement, 3 on August 2, 2022, Plaintiff asked Defendant Express Logistics to arrange for shipping of 4 a $14,000 Rectifier from San Diego, California, to Plaintiff’s client located in Sparks, 5 Nevada. Per Defendant Express Logistics’ recommendation, Plaintiff hired Defendant 6 Clear Lane to ship the goods. However, Plaintiff contends that Defendant Clear Lane 7 subcontracted with Defendant AAA to serve as Plaintiff’s carrier without Plaintiff’s 8 knowledge or consent. 9 On August 26, 2022, Plaintiff discovered that the Rectifier was not delivered to their 10 client. Defendant Express Logistics informed Plaintiff the Rectifier was lost. Plaintiff 11 filed an insurance claim and recovered $3,600; however, Plaintiff claims this amount does 12 not satisfy Plaintiff’s actual damages of $14,000. Thus, Plaintiff filed a claim for breach 13 of contract against Defendant Express Logistics and a claim for negligence against all 14 Defendants in the Superior Court of California, County of San Diego. Defendant AAA 15 filed a Notice of Removal to this Court because Defendant contends Plaintiff’s claims are 16 preempted by the Carmack Amendment, 49 U.SC. § 14706. 17 II. LEGAL STANDARD 18 Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss 19 on the grounds that a complaint “fail[s] to state a claim upon which relief can be granted.” 20 Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) “tests the legal 21 sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To survive 22 a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, 23 to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 24 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim 25 has facial plausibility when the plaintiff pleads factual content that allows the court to draw 26 the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 27 “Determining whether a complaint states a plausible claim for relief will . . . be a context- 28 specific task that requires the reviewing court to draw on its judicial experience and 1 common sense.” Id. at 679. “Factual allegations must be enough to raise a right to relief 2 above the speculative level.” Twombly, 550 U.S. at 555. If Plaintiff “ha[s] not nudged 3 [his] claims across the line from conceivable to plausible,” the complaint “must be 4 dismissed.” Id. at 570. 5 In reviewing the plausibility of a complaint on a motion to dismiss, a court must 6 “accept factual allegations in the complaint as true and construe the pleadings in the light 7 most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 8 519 F.3d 1025, 1031 (9th Cir. 2008). But courts are not “required to accept as true 9 allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable 10 inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (quoting 11 Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). 12 When a court grants a motion to dismiss a complaint, it must then decide whether to 13 grant leave to amend. Leave to amend “shall be freely given when justice so requires,” 14 Fed. R. Civ. P. 15(a), and “this policy is to be applied with extreme liberality.” Morongo 15 Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). A court should 16 grant leave to amend where there is no (1) “undue delay,” (2) “bad faith or dilatory motive,” 17 (3) “undue prejudice to the opposing party” if amendment were allowed, or (4) “futility” 18 in allowing amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). Dismissal without 19 leave to amend is proper only if it is clear that “the complaint could not be saved by any 20 amendment.” Intri-Plex Techs. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th Cir. 2007). 21 III. DISCUSSION 22 A. Subject Matter Jurisdiction 23 To render a binding judgment, the Court must have subject matter jurisdiction over 24 the underlying claim. “Under 28 U.S.C. § 1141(a), the district courts have removal 25 jurisdiction over any claim that could have been brought in federal court originally.” Hall 26 v. North American Van Lines, Inc., 476 F.3d 683, 686-87 (9th Cir. 2007). “The presence 27 or absence of federal-question jurisdiction is governed by the ‘well-pleaded complaint 28 rule,’ which provides that federal jurisdiction exists only when a federal question is 1 presented on the face of the plaintiff's properly pleaded complaint.” Caterpillar Inc. v. 2 Williams, 482 U.S. 386, 392 (1987). However, there are “a handful of ‘extraordinary 3 situations where even a well-pleaded state law complaint will be deemed to arise under 4 federal law for jurisdictional purposes.” Holman v. Laulo-Rowe Agency, 994 F.2d 666, 5 668 (9th Cir. 1993). “A complaint containing a completely preempted claim may be 6 removed to district court under § 1441.” Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 8 7 (2003). 8 Plaintiff’s complaint alleges state law claims for breach of contract and negligence.1 9 The complaint does not contain a well-pleaded federal claim on its face as each claim relies 10 exclusively on state law. However, Defendant AAA filed a notice of removal under 28 11 U.S.C. § 1441(a) contending the Court has jurisdiction over this claim because Plaintiff’s 12 state law claims are completely preempted by the Carmack Amendment, 49 U.S.C. § 13 14706. The Ninth Circuit has described the Carmack Amendment as “a uniform national 14 liability policy for interstate carriers.” Hughes Aircraft Co. v. N. Am. Van Lines, Inc., 970 15 F.2d 609, 613 (9th Cir. 1992). “It is well settled that the Carmack Amendment is the 16 exclusive cause of action for interstate-shipping contract claims alleging loss or damage to 17 property” as “Congress intended for the Carmack Amendment to provide the exclusive 18 cause of action for loss or damages to goods arising from the interstate transportation of 19 those goods by a common carrier.” Hall, 476 P.3d at 688 (quoting Hoskins v. Bekins Van 20 Lines, 343 F.3d 769, 778 (5th Cir. 2003). Because “the Carmack Amendment completely 21 preempts a contract claim alleging loss or damage to property,” the Court has removal 22 jurisdiction over the instant case. Id. 23 24 25 1 Plaintiff’s complaint alleges two claims: breach of contract and negligence. The breach of contract claim 26 is against only Defendant Express Logistics. The negligence claim, however, is against all Defendants. Because Defendant Express Logistics has yet to appear in the underlying matter, the Court addresses only 27 the claims against Defendants AAA and Clear Lane. 28 1 B. Preemption and the Carmack Amendment 2 “A fundamental principle of the Constitution is that Congress has the power to preempt 3 state law.” Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372 (2000). A federal 4 statute completely preempts a state action when “the scope of a statute indicates that 5 Congress intended federal law to occupy a field exclusively.” Freightliner Corp. v. Myrick, 6 514 U.S. 280, 287 (1995). In 1906, Congress enacted the Carmack Amendment to the 7 Interstate Commerce Act to establish a unified standard of liability for carriers transporting 8 goods across state lines. The Supreme Court and the Ninth Circuit have held that the 9 Carmack Amendment completely preempts state law claims relating to loss or damage of 10 property against interstate carriers. See, e.g., Missouri Pacific R.R. Co. v. Elmore & Stahl, 11 377 U.S. 134, 137, (1964); New York, New Haven & Hartford R.R. Co. v. Nothnagle, 346 12 U.S. 128, 131, (1953); Hall, 476 F.3d at 688 (holding that the Carmack Amendment is the 13 “exclusive cause of action” against a carrier of interstate goods, and this extends to “all 14 manner of harms” arising from loss or damage to the shipment); Hughes Aircraft Co., 970 15 F.2d at 613 (9th Cir. 1992) (holding that the Carmack Amendment preempts state law 16 causes of action where the carrier is operating on a contract basis). 17 Defendants AAA and Clear Lane contend Plaintiff’s state law claim is preempted by 18 the Carmack Amendment because Plaintiff’s complaint seeks to recover damages arising 19 solely from the interstate transportation of Plaintiff’s goods. Plaintiff contends the 20 Carmack Amendment does not preempt its state law claims because the Carmack 21 Amendment applies only to carriers, not brokers. The Court agrees the Carmack 22 Amendment does not apply to brokers; however, Plaintiff’s complaint and opposition does 23 not allege any facts sufficient to support a finding that Defendants are brokers as opposed 24 to carriers. See Rohr, Inc. v. UPS-Supply Chain Solutions, Inc., 939 F. Supp.2d 1041 at n. 25 26 (S.D. Cal. Apr. 8, 2013); Chubb Group of Ins. Cos. v. H.A. Transp. Sys., Inc., 243 F. 26 Supp.2d 1064, 1069 (C.D. Cal. 2002) (holding that the Carmack Amendment applies only 27 to carriers, not brokers). In fact, as Defendants AAA and Clear Lane state in their replies, 28 Plaintiff’s complaint unambiguously refers to Defendants as carriers. (Plaintiff’s 1 Complaint, (“Pl.’s Comp.”), ECF No. 1 at Exhibit A at ¶ 11) (“Plaintiff filed a claim for 2 the lost Rectifier with Defendant Express Logistics, and during the claim process, 3 discovered that Defendant AAA was used as the carrier of the Rectifier, NOT Defendant 4 Clear Lane”) (emphasis added); (Id. at ¶ 9) (“Plaintiff chose to use Defendant Clear Lane 5 and Defendant Express Logistics issued Plaintiff a bill of landing that identified Defendant 6 Clear Lane as the shipping carrier.”) (emphasis added). Nowhere in the complaint or 7 opposition does Plaintiff allege Defendants acted as brokers as opposed to carriers. 8 Because the Court must accept Plaintiff’s allegations in the complaint as true, the Court 9 finds the Carmack Amendment preempts Plaintiff’s negligence claims against Defendants 10 AAA and Clear Lane. Thus, the Court GRANTS Defendants’ motion to dismiss Plaintiff’s 11 claims against Defendants AAA and Clear Lane. However, because amendment would 12 not be futile, the Court grants Plaintiff leave to amend its complaint to plead a claim under 13 the Carmack Amendment. Plaintiff shall file an amended complaint within 20 days of the 14 filing of this Order. 15 IV. CONCLUSION AND ORDER 16 For the foregoing reasons, the Court GRANTS Defendants’ AAA and Clear Lane’s 17 motion to dismiss. Plaintiff’s negligence claim against Defendants’ AAA and Clear Lane 18 is dismissed but with leave to amend to plead a claim under the Carmack Amendment. 19 IT IS SO ORDERED. 20 Dated: May 22, 2024 ____________________________ 21 Hon. Dana M. Sabraw, Chief Judge United States District Court 22 23 24 25 26 27 28