Eastman v. FedEx Corp. , 2014 Ohio 4213 ( 2014 )

[Cite as Eastman v. FedEx Corp., 2014-Ohio-4213.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 100873
STEPHANIE EASTMAN
PLAINTIFF-APPELLANT
vs.
FEDEX CORPORATION
DEFENDANT-APPELLEE
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-12-796388
BEFORE: Boyle, A.J., Celebrezze, J., and Stewart, J.
RELEASED AND JOURNALIZED: September 25, 2014
ATTORNEYS FOR APPELLANT
Charles V. Longo
Matthew D. Greenwell
Charles V. Longo Co., L.P.A.
25550 Chagrin Boulevard
Suite 320
Beachwood, Ohio 44122
ATTORNEYS FOR APPELLEE
Colleen D. Hitch Wilson
Robert R. Ross
3620 Hacks Cross Road
Building B
Memphis, Tennessee 38125
MARY J. BOYLE, A.J.:
{¶1} Plaintiff-appellant, Stephanie Eastman, appeals from the trial court’s
decision granting summary judgment to defendant-appellee, Federal Express Corporation
(“FedEx”). She raises the following three assignments of error for our review:
1. The trial court erred when it granted defendant-appellee FedEx Corp.’s
motion for summary judgment because plaintiff-appellant’s claims are not
preempted by the Airline Deregulation Act.
2. The trial court erred when it granted defendant-appellee FedEx Corp.’s
motion for summary judgment because plaintiff-appellant presented
sufficient evidence demonstrating that defendant-appellee FedEx Corp. is
liable for their [sic] breach of contract.
3. The trial court erred when it granted defendant-appellee FedEx Corp.’s
motion for summary judgment because plaintiff-appellant presented
sufficient evidence demonstrating that defendant-appellee FedEx is liable
for Consumer Sales Practice Act violations.
{¶2} Finding no merit to her appeal, we affirm.
Procedural History and Factual Background
{¶3} In November 2012, Eastman filed a complaint against FedEx, setting forth
the following facts (none of which FedEx disputes). Eastman sold a diamond ring to
Ashton Roberts for $6,850. In May 2010, Eastman contracted with FedEx to ship the
diamond ring from a FedEx located in Beachwood, Ohio, to a FedEx located in Houston,
Texas. Eastman shipped the ring using FedEx’s priority overnight service, listing
Roberts as the recipient. She requested that FedEx hold the package at the Houston
location for pick up. Eastman also contracted with FedEx, using its collect on delivery
(“C.O.D.”) service, to collect a secured payment of $6,850 for the ring in the form of a
cashier’s check before releasing the ring.
{¶4} In her complaint, Eastman further alleged that Roberts hired a courier to
pick up the diamond ring and deliver the cashier’s check to FedEx. The courier
delivered the cashier’s check to FedEx and signed for the ring. FedEx delivered the
cashier’s check to Eastman. Eastman later learned from her bank that the cashier’s
check was fraudulent. Eastman brought claims against FedEx for negligence, breach of
contract, and violations of Ohio’s Consumer Sales Practices Act (“CSPA”).
{¶5} FedEx moved for summary judgment in May 2013. In its summary
judgment motion, FedEx argued that Eastman’s negligence and CSPA claims were
preempted by the Airline Deregulation Act. With regard to Eastman’s breach of
contract claims, FedEx argued that it was not liable because the contract specifically
provided that Eastman was “solely responsible for any loss associated with a fraudulent
check,” and that FedEx did
not breach the contract of carriage by delivering the ring to, and collecting a
cashier’s check from, a courier rather than the addressee, because the
contract of carriage expressly allowed FedEx to deliver the ring to someone
other than the designated recipient.
{¶6} The trial court granted FedEx’s summary judgment motion. It is from this
judgment that Eastman appeals.
Standard of Review
{¶7} An appellate court reviews a decision granting summary judgment on a de
novo basis. Grafton v. Ohio Edison Co., 77 Ohio St. 3d 102, 105, 671 N.E.2d 241
(1996). Summary judgment is properly granted when (1) there is no genuine issue as to
any material fact; (2) the moving party is entitled to judgment as a matter of law; and (3)
reasonable minds can come to but one conclusion, and that conclusion is adverse to the
party against whom the motion for summary judgment is made. Civ.R. 56(C); State ex
rel. Duganitz v. Ohio Adult Parole Auth., 77 Ohio St. 3d 190, 191, 672 N.E.2d 654 (1996).
{¶8} The moving party carries an initial burden of setting forth specific facts that
demonstrate his or her entitlement to summary judgment. Dresher v. Burt, 75 Ohio
St.3d 280, 292-293, 662 N.E.2d 264 (1996). If the movant fails to meet this burden,
summary judgment is not appropriate, but if the movant does meet this burden, summary
judgment will be appropriate only if the nonmovant fails to establish the existence of a
genuine issue of material fact. Id. at 293.
Airline Deregulation Act
{¶9} In her first assignment of error, Eastman maintains that the trial court erred
when it granted FedEx’s summary judgment motion because her breach of contract,
negligence, and CSPA claims are not preempted by the Airline Deregulation Act.
FedEx concedes, and the trial court held, that one of Eastman’s claims, namely, her
breach of contract claim, is not preempted by the ADA. Thus, we must determine
whether Eastman’s remaining negligence and CSPA claims are preempted by the ADA.
{¶10} Until 1978, airlines were regulated by the Federal Aviation Act (“FAA”),
which did not prohibit persons or entities from bringing common law or statutory claims
against airlines. Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 222, 115 S. Ct. 817, 130
L. Ed. 2d 715 (1995). In 1978, however, Congress enacted the Airline Deregulation Act.
Id. The enactment was motivated by congressional belief that “‘maximum reliance on
competitive market forces’ would best further ‘efficiency, innovation, and low prices’
as well as ‘variety [and] quality * * * of air transportation services.’” Morales v. Trans
World Airlines, Inc., 504 U.S. 374, 378, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992) (quoting
the ADA). To prevent “states from undoing federal deregulation with regulation of their
own,” Congress included a preemption clause in the ADA. Wolens at 222 (internal
quotation marks omitted).
{¶11} The ADA’s preemption clause provides, in relevant part, that “a State * * *
may not enact or enforce a law, regulation, or other provision having the force and effect
of law related to a price, route, or service of an air carrier that may provide air
transportation under this subpart.” 49 U.S.C. 41713(b)(1). The Supreme Court has
broadly construed the statute’s preemption clause, concluding that the “relating to”
language means “having a connection with, or reference to, airline ‘rates, routes, or
services.’” Wolens at 223, quoting Morales at 378. It further explained that “enacting
or enforcing any law ‘relating to rates, routes, or services’ is most sensibly read, in light
of the ADA’s overarching deregulatory purpose, to mean ‘States may not seek to impose
their own public policies or theories of competition or regulation on the operations of an
air carrier.’” Id. at 229.
{¶12} Applying the “connection with” or “reference to” standard, the Morales
court held that the ADA preempted state enforcement of advertising regulations. Id. at
391. The court reasoned that the advertising provisions related to fares within the
meaning of the ADA not only because they expressly referred to them, but also because
they reduced the incentive to price competitively. Id. at 388 (“‘where consumers have
the benefit of price advertising, retail prices often are dramatically lower than they would
be without advertising.’”).
{¶13} Similarly, in Wolens, the court held that the ADA preempted a claim that
American Airlines’ retroactive modification of its frequent-flyer program violated the
Illinois Consumer Fraud and Deceptive Business Practices Act. Wolens, 513 U.S. 219,
222, 228, 115 S. Ct. 817, 130 L. Ed. 2d 715. The court concluded with no difficulty that the
“claims relate to ‘rates,’ i.e., American’s charges in the form of mileage credits for free
tickets and upgrades, and to ‘services.’” Id. at 226.
{¶14} In Wolens, the court further held that contract claims relating to
frequent-flyer benefits did not involve the enactment or enforcement of state laws,
reasoning that the terms and conditions airlines offer and passengers accept are privately
ordered obligations “and thus do not amount to a State’s ‘enactment or enforcement [of]
any law, rule, regulation, standard or other provision having the force and effect of law.’”
Wolens at 228-229 (citation omitted).
{¶15} After review, we agree with FedEx that Eastman’s CSPA claims are
preempted by the ADA. Eastman alleged that FedEx committed unfair and deceptive
acts or practices by accepting money from her for a specific service, and then failing to
comply with its own policies, representations, and practice. There is no question that
Eastman’s FedEx claims “relate to” FedEx’s service, and seek to “enforce an enactment”
of Ohio’s CSPA. These facts are directly on point with the facts in Wolens.
{¶16} Whether Eastman’s negligence claim is preempted by the ADA is a more
difficult question. Neither Morales, 504 U.S. 374, 378, 112 S. Ct. 2031, 119 L. Ed. 2d
157, nor Wolens directly answers this question. We point out that within her argument,
Eastman does not argue that the trial court erred when it found that her negligence claim
was preempted by the ADA. She does not cite to any cases or make any argument that
support her position that her negligence claims are not preempted by the ADA.
Nonetheless, in the interest of providing a complete analysis, we will address this issue
despite the deficiencies in her brief.
{¶17} Despite the limited applicability of the facts in Morales and Wolens to state
tort claims, the Supreme Court has stated several principles helpful in applying the
ADA’s preemption clause. First, even when Congress enacts an express preemption
clause, its interpretation must begin with the “presumption that Congress does not intend
to supplant state law.” New York State Conference of Blue Cross & Blue Shield v.
Travelers Ins. Co., 514 U.S. 645, 654, 115 S. Ct. 1671, 131 L. Ed. 2d 695 (1995). Second,
there is clearly a limit to the breadth of the ADA’s preemption clause because some state
law claims may affect airline fares or services “in too tenuous, remote, or peripheral a
manner to have preemptive effect.” Morales at 390 (internal quotation marks omitted).
Finally, in drawing the line between preempted claims and tenuously related claims,
courts should consider the purpose behind the preemption clause, which was to “promote
maximum reliance on competitive market forces” and prevent state interference with
federal deregulation of airlines. Wolens, 513 U.S. at 230, 115 S. Ct. 817, 130 L. Ed. 2d
715 (citing 49 U.S.C. 1302(a)(4)); Charas v. Trans World Airlines, Inc., 160 F.3d 1259,
1265 (9th Cir.1998).
{¶18} “The Sixth Circuit has not decided when to apply the ADA’s preemption
clause to state tort claims, and there is no consensus among the other circuits.”
Universal Coin & Bullion, Ltd. v. FedEx Corp., W.D.Tenn. No. 12-2778, 2013 U.S. Dist.
LEXIS 130431, *12 (Sept. 12, 2013), citing Hammond v. N.W. Airlines, E.D.Mich. No.
09-12331, 2009 U.S. Dist. LEXIS 110127 (Nov. 25, 2009). The court in Universal Coin
went on to review how various federal courts have decided the issue, which we will quote
in full because it thoroughly explains how some federal courts have interpreted and
applied the ADA to state tort claims:
The Ninth Circuit focuses on the economic deregulation of the
airline industry, construing “services” narrowly on the basis that, “when
Congress enacted federal economic deregulation of the airlines, it intended
to insulate the industry from possible state economic regulation as well[.]
It did not intend to immunize the airlines from liability for personal injuries
caused by tortious conduct.” Charas, 160 F.3d at 1266 (emphasis in
original).
The Seventh Circuit has similarly considered the economic impact of
state claims, concluding that the ADA did not preempt claims by a travel
agency alleging that an airline uttered slanderous statements because the
claims did not directly relate to or have the “forbidden significant
[economic] effect” on airline rates, routes, or services. Travel All Over
The World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1431 (7th
Cir.1996) (citation omitted). See also S.C. Johnson & Son, Inc. v.
Transport Corp. of America, Inc., 697 F.3d 544, 553 (7th Cir.2012).
The Third Circuit has also construed the ADA’s preemption clause
to exclude from preemption state tort laws that do not have a “regulatory
effect.” Taj Mahal Travel, Inc. v. Delta Airlines, Inc., 164 F.3d 186, 194
(3d Cir.1998). In Taj Mahal Travel, the court held that the ADA did not
preempt state defamation claims because such claims do not “frustrate * * *
deregulation by interfering with competition” and do not amount to “public
utility-style regulation.” Id.
The Fifth Circuit has applied the ADA’s preemption clause by
defining “services” to include only activities “appurtenant and necessarily
included with the contract of carriage between the passenger or shipper and
the airline.” Hodges v. Delta Airlines, Inc., 44 F.3d 334, 336 (5th
Cir.1995) (en banc). Under this view, “federal preemption of state laws,
even certain common law actions ‘related to services’ of an air carrier, does
not displace state tort action for personal physical injuries or property
damage caused by the operation and maintenance of aircraft.” Hodges, 44
F.3d at 336. In Hodges, the Fifth Circuit held that the ADA did not
preempt a state tort claim against Delta Airlines for negligently allowing
storage of a box in an overhead compartment because that storage was not
an element “of the air carrier service bargain * * * such as ticketing,
boarding procedures, provision of food and drink, and baggage handling, in
addition to the transportation itself.” Id. at 336, quoting Hodges v. Delta
Airlines, Inc., 4 F.3d 350, 354 (5th Cir. 1993). The Hodges court
supported its narrow definition of “services” by citing other provisions of
the airline regulatory code that require air carriers to carry insurance “for
the loss of or damage to property of others, resulting from the operation or
maintenance of aircraft.” Id. at 338.
The Southern District of New York has concluded that three primary
factors emerge from the case law construing the preemption clause.
Rombom v. United Air Lines, Inc., 867 F. Supp. 214, 221 (S.D.N.Y. 1994).
The threshold question is (1) whether an activity at issue is an airline
“service.” If the activity is not a service, state laws are not preempted. If
the activity is a service, the question is (2) whether the plaintiff’s claims
affect the service directly or merely tenuously. If the claim does affect the
service directly, the court asks (3) whether “the underlying tortious conduct
was reasonably necessary to the provision of the service.” Id.
Universal Coin at *12-15.
{¶19} After reviewing the various federal district court and circuit court decisions,
the court in Universal Coin concluded in its case that the ADA did not preempt Universal
Coin’s state common law tort claims for the alleged mishandling of private customer
information. It reasoned:
Congress enacted the ADA’s preemption clause to prevent states
from burdening air carriers with invasive regulations that would frustrate
the federal regulatory scheme. The ADA preempts state common law tort
claims only when those claims are sufficiently related to the air carrier’s
rates, routes or services to “undo federal deregulation with regulation of
their own.” See Wolens, 513 U.S. at 222. Here, FedEx’s alleged
mishandling of UCB’s customer information, which allowed the defrauding
of UCB’s customers and a significant reduction in sales, falls within the
category of claims that are “too tenuous, remote, or peripheral” to aviation
regulation to be preempted by the ADA. See Morales, 504 U.S. at 390.
Universal Coin at *17-18.
{¶20} In the case before us, however, we conclude that Eastman’s negligence
allegations are sufficiently related to FedEx’s “rates, routes, and services.” Indeed, they
relate directly — and only — to FedEx’s C.O.D. service. Because of this, her
negligence claims are not “too tenuous, remote, or peripheral,” and are therefore
preempted by the ADA.
{¶21} Accordingly, we agree with the trial court that Eastman’s negligence and
CSPA claims are preempted by the ADA. We therefore overrule Eastman’s first
assignment of error.
Breach of Contract Claim
{¶22} In her second assignment of error, Eastman argues that the trial court erred
when it granted summary judgment to FedEx on her breach of contract claim.
{¶23} In support of its summary judgment motion, FedEx submitted an affidavit
from Paula Cates, a senior paralegal employed in the legal department at its corporate
headquarters in Memphis, Tennessee. She averred that she had personal knowledge of,
and was the custodian of, records that FedEx submitted in support of its motion. She
also identified each document that was attached as a true and accurate copy of a business
record of FedEx.
{¶24} FedEx submitted a copy of an air carrier certificate from the Federal
Aviation Administration, establishing that FedEx Express “met the requirements of the
Federal Aviation Act,” was certified to operate as an air carrier, and was certified to
“conduct common carriage operations in accordance with the Act.”
{¶25} FedEx also attached a copy of the “C.O.D. airbill” that Eastman filled out
when she shipped the diamond ring on May 10, 2010. Eastman listed Roberts as the
recipient of the package. Rather than list Roberts’s address, Eastman listed FedEx’s
Houston address and wrote “HOLD AT LOCATION.” She filled in the “C.O.D.
amount” as $6,850, and checked the box “secured payment” as the “acceptable payment
type.” Secured payment types included “money order, cashier’s check, [or an] official
check.” Eastman chose cashier’s check as her acceptable payment type.
{¶26} The front of the C.O.D. airbill stated that “[b]y using this airbill you agree to
the service conditions on the back of this airbill and in our current service guide,
including terms that limit our liability.” Cates averred that the January 4, 2010 edition
of FedEx’s service guide was the service guide that was in effect at the time Eastman
contracted with FedEx to ship the ring.
{¶27} The reverse side of the C.O.D. airbill listed “C.O.D. Terms and Conditions.”
In the section, “Agreement to Terms,” it states: “By giving us your package to deliver,
you agree to all the terms on this Airbill and in our current Service Guide, which is
available on request.” In the section “C.O.D. Service/C.O.D Amount,” it states that “All
checks and money orders are collected at your risk, including risk of nonpayment and
forgery.”
{¶28} The FedEx service guide further explains terms and conditions related to
“Collect on Delivery (C.O.D.) Service.” It states that “[i]f the shipper marks SECURED
PAYMENT on the C.O.D. airbill, we will collect a cashier’s check, official check, or
money order.” It then states, “Checks (including cashier’s, official, certified, business
and personal checks) and money orders for the C.O.D. amount will be collected at the
shipper’s sole risk, including, but not limited to, all risk of nonpayment, fraud, and
forgery. FedEx has no liability with respect to any such instrument.”
{¶29} The FedEx service guide explains in its “Pickup and Delivery” section that
“[w]e do not offer a restricted-delivery service and may deliver to someone other than the
person or entity named as the recipient.”
{¶30} With respect to the “Hold at FedEx Location” service selected by plaintiff
at the time of the shipment at issue, Fedex.com advised customers that “A
government-issued photo ID is required to pick up packages.”
{¶31} In response to FedEx’s summary judgment motion, Eastman attached the
same C.O.D. airbill that FedEx attached to its motion. She further attached an unsworn
affidavit, and what appeared to be unauthenticated documents that she obtained from
FedEx’s website. FedEx objected to Eastman’s unsworn affidavit and unauthenticated
documents, and the trial court refused to consider them. Accordingly, this court will not
consider Eastman’s affidavit or unauthenticated documents either (although we note that
even if we did consider them, they would not change the outcome of this appeal).
{¶32} The crux of Eastman’s entire argument is that FedEx breached its contract
with her because it permitted a courier, who her recipient hired, to pick up the package for
the recipient from FedEx. Eastman maintains that because FedEx released the package
to the courier, she received a fraudulent cashier’s check.
{¶33} After review, we conclude that there are no genuine issues of material fact
as to whether FedEx breached its contract with Eastman; it did not.
{¶34} The contract at issue is the C.O.D. airbill. On the front of the airbill, it
states that the shipper agrees to the terms and conditions set forth on the back of the
airbill, as well as the provisions stated in the current service guide. The service guide
that was in effect when Eastman contracted with FedEx explicitly states that FedEx “may
deliver to someone other than the person or entity named as the recipient.” Further, the
terms and conditions on the back of the airbill state that “[a]ll checks and money orders
are collected at your risk, including risk of nonpayment and forgery.” The service guide
repeats the same term, i.e., that FedEx bears no responsibility for the risk of nonpayment,
including fraud and forgery. These terms are not ambiguous.
{¶35} Eastman’s argument that a question of fact remains because she did not
declare the ring to be worth $1,000 is irrelevant. According to the terms and conditions
set forth on the reverse side of the C.O.D. airbill, FedEx could have been liable had the
ring been lost, misdelivered, not delivered, damaged, or if there had been a delay in
delivery. FedEx also could have been liable had it not collected a check for the ring, or
if it had collected the wrong type of payment or the wrong amount of payment. But
none of those things occurred here. FedEx performed as it stated it would per the
contract. It collected the cashier’s check, delivered the ring, and delivered the check to
Eastman. Eastman’s claims are against Roberts, not FedEx.
{¶36} Eastman’s second assignment of error is overruled.
{¶37} Eastman’s third assignment of error is moot based on our analysis in the first
assignment of error where we found that her CSPA claims were preempted by the ADA.
{¶38} Judgment affirmed.
It is ordered that appellee recover of appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
MARY J. BOYLE, ADMINISTRATIVE JUDGE
FRANK D. CELEBREZZE, JR., J., and
MELODY J. STEWART, J., CONCUR