Amring Pharmaceuticals Inc. v. UPS-Supply Chain Solutions, Inc. et al

Filing 31

MEMORANDUM, OPINION AND ORDER by Senior Judge Thomas B. Russell on 4/19/2018; re 22 MOTION for Default Judgment as to Edin Transfer, Inc. filed by Amring Pharmaceuticals Inc. A separate judgment shall enter.cc:counsel (KJA)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
CIVIL ACTION NO. 3:17-CV-190-TBR
AMRING PHARMACEUTICALS, INC.,

PLAINTIFF

v.
UPS-SUPPLY CHAIN SOLUTIONS, INC., et al.,

DEFENDANTS

Memorandum Opinion & Order
This matter comes before the Court upon Motion by Plaintiff Amring Pharmaceuticals,
Inc., (“Amring”), for default judgment against Defendant Edin Transfer, Inc. (“Edin”). [DN 22.]
This Motion was filed on January 24, 2018, and Edin has failed to file a Response. For the
following reasons, IT IS HEREBY ORDERED that Amring’s Motion [DN 22] is GRANTED.
I. Factual Background
The following Factual Background section is taken from Amring’s Complaint, [DN 1],
Amended Complaint, [DN 10], and Amring’s instant Motion. [DN 22.] Amring is a
pharmaceutical company “which sells, among other…goods, desmopressin acetate,” which “is a
man-made form of a naturally occurring hormone, and is used to treat bed-wetting, central
cranial diabetes insipidus and increased thirst and urination caused by head surgery or head
trauma.” [DN 1, at 3.] According to Amring, due to “its chemical makeup, desmopressin acetate
must be stored between 2-8 degrees Celsius. Deviation from this temperature range for any
significant time will result in permanent damages and render the drug unusable.” [Id.] Amring
and Defendant UPS-Supply Chain Solutions, (“UPS-SCS”), entered into a logistical services
agreement, part of which entrusted UPS-SCS to complete two shipments of desmopressin from

1

Chicago, Illinois to Brooks, Kentucky. [Id.] Amring believes that UPS-SCS subcontracted these
shipments to Defendant Mid-American Specialized Transport (“MAST”). [Id. at 4.]
The first shipment of the drug, in March 2016, according to remote data loggers installed
with the shipment by Amring, was allegedly subjected to temperatures below 0 degrees Celsius
for at least ten hours during the shipment to Kentucky. [Id.] Amring alleges that “[t]he declared
value of damaged product with respect to this claim was $447,952.49.” [Id.] The second
shipment, which occurred in April 2016, had the same result, with the drug allegedly being
subjected to temperatures below 0 degrees Celsius for at least ten hours. [Id. at 5.] This time, the
alleged loss in value was $357,870.90. [Id. at 6.] On July 28, 2017, Amring filed an Amended
Complaint. [DN 10.] Therein, Amring added two more defendants to the action: Edin and CKR
Transport, Ltd. (“CKR”). [Id.] According to the Amended Complaint, “MAST provided
transportation services” for the drug “and contracted with Edin for the transport of [it]…from
O’Hare International Airport to Brooks, Kentucky.” [Id. at 6.] In other words, Amring alleges
that “Edin assumed responsibility for, and was responsible for, the care and custody of the March
Shipment [of the drug]….” [Id. at 19.] Amring alleges that the portions of the shipment were
damaged while in the custody and control of Edin, and that Edin is liable for the loss. [Id.]
As a result of these incidents, Amring filed suit in federal court and, in its Amended
Complaint, it alleges the following causes of action (1) breach of contract against UPS-SCS; (2)
breach of the duty to cooperate against UPS-SCS; (3) breach of the implied covenant of good
faith and fair dealing against UPS-SCS; (4) negligence against UPS-SCS; (5) breach of contract
and/or duties under the Carmack Amendment against MAST; (6) a bailment claim against
MAST; (7) negligence against MAST; (8) breach of a third party beneficiary contract against
MAST; (9) breach of the implied covenant of good faith and fair dealing against MAST; (10)

2

breach of contract and/or duties under the Carmack Amendment against Edin; (11) a bailment
claim against Edin; (12) breach of contract and/or duties under the Carmack Amendment against
CKR; and (13) a bailment claim against CKR. [See generally id.]
II. Legal Standard
Pursuant to Federal Rule of Civil Procedure 55(a), “[w]hen a party against whom a
judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure
is shown by affidavit or otherwise, the clerk must enter the party’s default.” Next, under Rule
55(b), default judgment may be entered either by the Clerk under subsection (b)(1), or by the
Court under subsection (b)(2). Rule 55(b)(2) permits the Court to enter a default judgment where
the plaintiff’s claim is not for a sum certain. See Fed. R. Civ. P. 55(b)(1)-(2). Specifically, “the
party must apply to the court for a default judgment,” which the Court may then set aside at a
later date pursuant to Rule 60(b). See Fed. R. Civ. P. 55(b)(2), (c).
Importantly, in reaching a determination regarding whether to enter a default judgment,
courts in the Sixth Circuit usually consider factors such as the following:
[1] the amount of money potentially involved; [2] whether material issues of fact
or issues of substantial public importance are at issue; [3] whether the default is
largely technical; [4] whether plaintiff has been substantially prejudiced by the
delay involved; [5] and whether the grounds for default are clearly established or
are in doubt.
Joe Hand Promotions, Inc. v. Dick, No. 5:15-cv-00202, 2017 WL 1313792, at *2 (Apr. 5, 2017)
(quoting 10A Charles A. Wright et al., Federal Practice and Procedure § 2685 (4th ed.),
Westlaw (database updated January 2017) (footnotes omitted)).
III. Discussion
Amring filed its original Complaint in this action on March 30, 2017. [DN 1.] Later, it
filed an Amended Complaint, naming Edin as a co-defendant in the action, on July 28, 2017.

3

[DN 10.] In the interim period spanning approximately nine months, Edin has not entered an
appearance or otherwise answered the Amended Complaint, [id.], the Motion for Entry of
Default, [DN 18], or the Motion for Default Judgment. [DN 22.] In short, Edin has failed to
defend this action in any way. Thus, the question becomes whether, after having properly applied
for an entry of default with the Clerk of Court, Amring is now entitled to a default judgment
against Edin. The Court holds that Amring is entitled to such relief, and will enter a default
judgment against Edin in favor of Amring at this time.
A.
Pursuant to Fed. R. Civ. P. 8(b)(6), once Edin failed to enter an appearance and the Clerk
entered a default against it, all facts in Amring’s Amended Complaint against it were considered
admitted. See Fed. R. Civ. P. 8(b)(6) (“An allegation—other than one relating to the amount of
damages—is admitted if a responsive pleading is required and the allegation is not denied.”); see
also Thomas v. Miller, 489 F.3d 293, 299 (6th Cir. 2007). Notably, “Fed. R. Civ. P. 55 does not
require a presentation of evidence as a prerequisite to the entry of a default judgment, although it
empowers the court to conduct such hearings as it deems necessary and proper to enable it to
enter judgment or carry it into effect.” Ford Motor Co. v. Cross, 441 F. Supp. 2d 837, 848 (E.D.
Mich. 2006) (citations omitted). Notably though, “Rule 55 does not require an evidentiary
hearing as a prerequisite to the entry of default judgment if damages are contained in
documentary evidence or detailed affidavits and can be ascertained by computation on the record
before the Court.” G & G Closed-Circuit Events, LLC v. Potopsky, No. 1:11-cv-00140, 2012 WL
11130, at *1 (N. D. Ohio Jan. 3, 2012) (emphasis added).
In support of its Motion for default judgment, Amring has provided the following
information to the Court: (1) Edin’s summons and proof of service [DN 22-2]; (2) a commercial

4

invoice dated February 11, 2016, indicating a March 1, 2016 delivery date, totaling $257,051.19
[DN 22-4]; (3) a second commercial invoice bearing the same dates, totaling $190,901.30 [id.];
(4) the affidavit of Walter Kibbe, the Associate Director of Amring’s supply chain operations
[DN 22-5]; (5) a Cargo Claim Form dated March 28, 2016, detailing the drugs Amring alleges
were damaged in transit [DN 22-6]; and (6) the affidavit of Todd Greer, local counsel for
Amring. [DN 22-7.] The Court finds, based upon these attachments, that there is sufficient
evidence to ascertain Amring’s damages, and an evidentiary hearing is therefore unnecessary to
determine the required sum certain pursuant to Rule 55.
B.
As noted above, Amring has two claims against Edin: one for breach of contract and/or
duties under the Carmack Amendment, and one bailment claim. [See DN 10.] Thus, the issue for
the Court to decide here is whether the facts set forth by Amring in its Amended Complaint
entitle it to recover the damages it seeks from Edin based on either theory. These two claims
arise from the same nucleus of operative facts. In other words, Amring proceeds against Edin
under the Carmack Amendment, and pleads in the alternative that, even if Edin does not qualify
as a motor carrier under the Carmack Amendment, Edin acted as bailee of the goods and
breached its duty to Amring. [See DN 10, at 19-20.] With respect to the breach of contract claim,
the Court finds that Amring has pleaded sufficient facts to set out a claim.
“The Carmack Amendment, enacted in 1906 as an amendment to the Interstate
Commerce Act, 24 Stat. 379, created a national scheme of carrier liability for loss or damages to
goods transported in interstate commerce.” Exel, Inc. v. S. Refrigerated Transp., Inc., 807 F.3d
140, 148 (6th Cir. 2015) (citing Adams Express Co. v. Croninger, 226 U.S. 491, 503-06 (1913)).
In essence, “[t]he Amendment restricts carriers’ ability to limit their liability for cargo damage. It

5

makes a motor carrier fully liable for damage to its cargo unless the shipper has agreed to some
limitation in writing.” Id. (citing 49 U.S.C. § 11706(a), (c), § 14101(b)). “Making carriers strictly
liable relieves shippers of the burden of determining which carrier caused the loss as well as the
burden of proving negligence.” Id. (citing Certain Underwriters at Interest at Lloyds of London
v. UPS, 762 F.3d 332, 335 (3d Cir. 2014)). “Carriers in turn acquire reasonable certainty in
predicting potential liability because shippers’ state and common law claims against a carrier for
loss to or damage were preempted.” Id. (citing Lloyds of London, 762 F.3d at 335).
Within the Carmack Amendment, “Section 14706(a)(1) makes the carrier liable to the
person entitled to recover under the receipt or bill of lading.” Id. (citing 49 U.S.C. §
14706(a)(1)). “The Carmack Amendment permits parties to recover damages for ‘actual loss or
injury to the property.’” L.A. Enters., Inc. v. Roadway Exp., Inc., No. 1:06-cv-11, 2006 WL
1129389, at *2 (E.D. Tenn. Apr. 24, 2006) (quoting 49 U.S.C. § 14706(a)(1)). “The amount of
actual loss to property is generally the difference between the market value of the property in the
condition in which it should have arrived at its destination and its market value in the condition
in which it did arrive.” Id. (citing Contempo Metal Furniture Co. of California v. E. Texas Motor
Freight Lines, Inc., 661 F.2d 761, 764 (9th Cir. 1981)). Also, “[s]ome courts have held that it can
be proper to include freight charges in the calculation of actual loss.” Id. (citing Marquette
Cement Mfg. Co. v. Louisville & Nashville R.R. Co., 406 F.2d 731, 732 (6th Cir. 1969),
Contempo Metal Furniture, 661 F.2d at 764).
The Sixth Circuit Court of Appeals has explained that “the shipper may establish a prima
facie case” for a claim under the Carmack Amendment “with a showing of three basic elements:
(1) that the initial (‘receiving’) carrier received the cargo in good condition, (2) that the cargo
was lost or damaged, and (3) the amount of actual loss or damages.” CNA Ins. Co. v. Hyundai

6

Merchant Marine Co., Ltd., 747 F.3d 339, 353 (6th Cir. 2014). It presents a “very low
threshold.” Id.1
Amring has sufficiently alleged facts in its Amended Complaint which, taken as true for
purposes of this Motion, satisfy the three above elements. First, Amring has alleged that “[t]he
March Shipment was delivered to Edin in good order and condition,” thereby satisfying element
one. [See DN 10, at 19.] Next Amring has alleged that “[p]ortions of the March Shipment being
transported by Edin [were] damaged during transit when the temperature dropped below the
acceptable range specified by Amring, permanently damaging the cargo.” [Id.] Finally, Amring
has sufficiently alleged “the amount of actual loss or damages.” See CNA Ins. Co., 747 F.3d at
353. Specifically, in its Carmack Amendment claim section against Edin, Amring states that it
“has sustained damages in an amount in excess of $805,823.39, plus related fees, charges, and
expenses.” [DN 10, at 19.] Additionally, discussing the March Shipment in particular, Amring
states that “[t]he declared value of the damages product…was $447,952.49.” [Id. at 6.] Plainly
then, Amring has sufficiently alleged facts which, taken as true, establish a prima facie case for a
violation of the Carmack Amendment by Edin.
The only issue remaining for the Court, then, is whether Amring has carried its burden of
establishing its entitlement to the amount of damages it has requested in the instant Motion. In
support of its contention that it is entitled to a default judgment against Edin in the amount of
$447,952.49, plus post-judgment interest at the rate of 6% per annum from the date of the

1

In the typical case, after a plaintiff establishes a prima facie case under the Carmack Amendment, “the burden
shifts to the defendant-carrier to show both that it was not negligent and that the damage was instead due to one of
five excepted causes,” which are “(1) an act of God; (2) an act of terrorism or war; (3) an act of the shipper itself; (4)
an act of public authority; or (5) the inherent vice or nature of the goods.” CNA Ins. Co., 747 F.3d at 353 (citing
Missouri Pac. R.R. v. Elmore & Stahl, 377 U.S. 134, 137-38 (1964)). However, as this is a Motion for default
judgment, and Edin has neither entered an appearance nor otherwise defended itself against this Motion, there is no
need for the Court to engage with the burden-shifting portion of the analysis. That Amring can establish a prima
facie case is sufficient for purposes of this Motion.

7

judgment herein, Amring has provided the following documents: two invoices, with a
corresponding affidavit attesting to their validity, and a Cargo Claim Form.
The first invoice, dated February 11, 2016, (“Invoice One”), shows Amring as the buyer
of a large quantity of Desmopressin Acetate from Ferring Pharmaceuticals, (“Ferring”), to be
shipped from Germany through Chicago to Brooks, Kentucky. [DN 22-4, at 1.] The total cost
evidenced by Invoice One is $257,051.19. [Id.] The second invoice, also dated February 11,
2016, (“Invoice Two”), shows Amring as the buyer of another large quantity of Desmopressin
Acetate from Ferring, to be shipped along the same route. [Id. at 3.] The total cost evidenced by
Invoice Two is $190,901.30. [Id.] The corresponding affidavit is from Walter Kibbe, (“Kibbe”),
Associate Director of Amring’s supply chain operations. [DN 22-5.] Therein, Kibbe avers that
the two previously-described invoices “are true and accurate copies of two invoices reflecting
Amring’s purchase of the Subject Desmopressin Acetate,” the total of which is $447,952.49.
[Id.] Kibbe further avers that “[t]he Subject Desmopressin Acetate was subsequently transported
by Edin…from O’Hare Airport in Chicago, Illinois to a storage facility in Brooks, Kentucky.
During this transport, the Subject Desmopressin Acetate was destroyed.” [Id. at 1-2.]
Accordingly, he avers that “Amring suffered a loss of $447,952.49, which is the price Amring
paid for the Subject Desmopressin Acetate.” [Id. at 2.] Finally, Amring attached a Cargo Claim
Form submitted to UPS-SCS for the same amount: $447,952.49. [DN 22-6, at 1.]
The Court concludes that Invoices One and Two, the corresponding affidavit, and the
Cargo Claim Form all combine to provide more than sufficient evidence to establish Amring’s
entitlement to the $447,952.49 it claims it is owed. Amring has also requested that post-judgment
interest be awarded at six percent per annum as of the date of entry of this Memorandum
Opinion & Order. [DN 22-8, at 1.] However, the relevant statute, 28 U.S.C. § 1961(a), provides

8

that post-judgment interest under these circumstances shall be allowed, but “shall be calculated
from the date of the entry of the judgment, at a rate equal to the weekly average 1-year constant
maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System,
for the calendar week preceding the date of the judgment.” Subsection (b) notes that “[i]nterest
shall be computed daily to the date of payment,” and should be compounded each year. 28
U.S.C. § 1961(b). Therefore, while Amring will be entitled to post-judgment interest, it will be
set at a rate of 2.12%, which is consistent with the statute and the corresponding interest rate
figures, available at https://www.federalreserve.gov/releases/h15/.
IV. Conclusion
Accordingly, IT IS HEREBY ORDERED that Amring’s Motion for default judgment,
[DN 22], against Edin is GRANTED.
There being no just cause for delay in its entry, this is a final order.
A separate judgment will be entered in accordance with this Opinion and Order.
IT IS SO ORDERED.

April 19, 2018

cc:

Counsel of Record

9