RISING UP GARDEN CENTER et al v. ONLINE FREIGHT SERVICES, INC. et al
Filing
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OPINION. Signed by Judge William J. Martini on 6/29/16. (gh, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
RISING UP GARDEN CENTER and
DONALD GURAL,
Civ. No. 2:16-2341 (WJM)
Plaintiffs,
OPINION
v.
ONLINE FREIGHT SERVICES, INC., JOHN
DOE, MARY DOE, STEPHEN DOES (1
THROUGH 10), JANE DOES (1 THROUGH
10) fictitious names of persons or business
entities who are presently known, or unknown
to the Plaintiff, whose conduct may have
contributed to Plaintiff’s damages,
Defendants.
WILLIAM J. MARTINI, U.S.D.J.:
Plaintiffs Rising Up Garden Center and Donald Gural allege that Online Freight
Services, Inc., (“Online Freight”) damaged an order of Christmas trees when delivering
them from Oregon to New Jersey. This matter comes before the Court on Online Freight’s
unopposed motion to dismiss, made pursuant to Federal Rule of Civil Procedure 12(b)(6).
For the reasons that follow, the motion will be GRANTED.
I.
BACKGROUND
The allegations in this case are straightforward. On November 11, 2016, Plaintiffs
ordered Christmas trees from non-party Oregon Evergreen International. Complt. at ¶1.
Plaintiffs enlisted Online Freight to deliver the trees from Oregon to New Jersey. See id.
The bill of lading for the shipment indicated that the trees needed to be held at a temperature
of 35 degrees Fahrenheit. See id. at ¶3. However, according to the complaint, Online
Freight did not adhere to that requirement, which caused the trees to turn brown and have
their needles fall off. See id. at ¶4. Moreover, the shipment was late; while Plaintiffs
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expected the trees to arrive by November 20, 2014, they did not arrive until November 25,
2014.
Plaintiffs filed suit in state court, asserting claims for negligence, breach of contract,
and breach of bailment. Online Freight timely removed, arguing for federal jurisdiction on
the grounds that Plaintiffs’ state law claims are completely preempted by the Carmack
Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706. See ECF No. 1.
Subsequently, Online Freight filed the instant motion to dismiss, which remains
unopposed. See ECF No. 3.
II.
SUBJECT MATTER JURISDICTION
While Plaintiffs have not contested removal, the Court must make a sua sponte
determination as to whether it has subject matter jurisdiction in this case. See, e.g., Golden
ex rel. Golden v. Golden, 382 F.3d 348, 354 (3d Cir. 2004) (federal courts are under “a
continuing obligation to investigate their jurisdiction over matters before them.”); Nesbit
v. Gears Unlimited, Inc., 347 F.3d 72, 76-77 (3d Cir. 2003) (“courts have an independent
obligation to satisfy themselves of jurisdiction if it is in doubt…A necessary corollary is
that the court can raise sua sponte subject-matter jurisdiction concerns.”) Online Freight
argues for jurisdiction on the grounds that the Carmack Amendment completely preempts
Plaintiffs’ state law claims. For the reasons explained below, the Court agrees and
concludes that it possesses subject-matter jurisdiction over this action.
“Only state-court actions that originally could have been filed in federal court may be
removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386,
392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); 28 U.S.C. § 1441(a). Where requirements
under 28 U.S.C. § 1332 have not been met, as is the case here, an action is removable only
where there is “federal question jurisdiction.” Id. at 390. Federal question jurisdiction exists
where an action “aris[es] under the Constitution, laws, or treatises of the United States.”
See 28 U.S.C. § 1331; Gunn v. Minton, ––– U.S. ––––, ––––, 133 S.Ct. 1059, 1065, 185
L.Ed.2d 72 (2013).
The “well-pleaded complaint rule” governs the question of whether federal-question
jurisdiction exists over an action. Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct.
2488, 159 L.Ed.2d 312 (2004). It provides “that federal jurisdiction exists only when a
federal question is presented on the face of the plaintiff's properly pleaded complaint.”
Caterpillar Inc., 482 U.S. at 392. Under the rule, a plaintiff “is the master of the claim”
and may exclusively rely on state law to avoid federal jurisdiction. Id. Complete
preemption is a corollary to the well-pleaded complaint rule; it permits removal where the
state law cause of action asserted by the plaintiff has been replaced by a federal cause of
action. Lehmann v. Brown, 230 F.3d 916, 919–20 (7th Cir.2000). “Complete preemption
applies when the pre-emptive force of the [federal statutory provision] is so powerful as to
displace entirely any state cause of action [addressed by the federal statute].” Dukes v. U.S.
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Healthcare, Inc., 57 F.3d 350, 354 (1995) (citations and quotations omitted). Because it
represents an “extraordinary preemptive power,” Taylor, 481 U.S. at 65, complete
preemption is “quite rare.” Johnson v. MRA Petroleum Co., 701 F.3d 243, 248 (8th
Cir.2012).
The Third Circuit has yet to address the question of whether the Carmack Amendment
has complete preemptive effect.1 Other circuit courts, however, have answered that
question in the affirmative. For example, the Ninth Circuit has held that the Carmack
Amendment “is the exclusive cause of action for interstate-shipping contract claims
alleging loss or damage to property.” See Hall v. North American Van Lines, Inc., 476
F.3d 683, 688 (9th Cir. 2007) (citing Ga., Fla., & Ala. Ry. Co. v. Blish Milling Co., 241
U.S. 190, 195 (1916)). Because the Carmack Amendment provides “a uniform national
liability policy for interstate carriers,” the circuit court held, it completely preempts a claim
against an interstate carrier alleging loss or damage to property. See id. (citing Hughes
Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609, 613 (9th Cir. 1992)). The Fifth Circuit
reached the same conclusion in Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 (5th Cir.
2003). In doing so, the court determined that “Congress intended for the Carmack
Amendment to provide the exclusive cause of action for loss or damages to goods arising
from the interstate transportation of those goods by a common carrier.” Id. (emphasis in
original). Moreover, at least one other judge in the District of New Jersey has concluded
that the Carmack Amendment will completely preempt certain state law claims. See
Louisiana Transp. V. Cowan Sys., LLC, Civ. No. 11-3435, 2012 WL 1664120, *4 (D.N.J.
May 10, 2012).
The Court agrees with the decisions cited above. The Carmack Amendment provides
the exclusive remedy for claims that seek damages arising out of the interstate
transportation of goods by a common carrier. Therefore, while Plaintiffs may have asserted
state law claims in their complaint, their suit “is purely a creature of federal law” such that
the state law claims are transformed into federal claims under the Carmack Amendment.
See Franchise Tax Bd. of State of Cal. v. Const. Laborers Vacation Trust for Southern
California, 463 U.S. 1, 22 (1983) (completely preempted claims are displaced by the
federal statute). Because Plaintiffs’ claims arise under federal law, this Court has subject
matter jurisdiction pursuant to 28 U.S.C. § 1331.2
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The Third Circuit has held that the Carmack Amendment may defeat state law claims on a motion to dismiss under
the doctrine of “ordinary” or “conflict” preemption. See, e.g., Certain Underwriters at Interest at Lloyds of London v.
United Parcel Service of America, 762 F.3d 332 (3d Cir. 2014). That is not the same thing, however, as holding that
the Carmack Amendment has a preemptive force so strong that it transforms a state law claim into a federal one,
thereby providing a basis for federal question jurisdiction. See Giles v. Nylcare Health Plans, Inc., 172 F.3d 332, 337
(5th Cir. 1999) (“[C]onflict [also known as defensive] preemption does not establish federal question jurisdiction.
Rather than transmogrifying a state cause of action into a federal one—as occurs with complete preemption—conflict
preemption serves as a defense to a state action.”)
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Because Plaintiffs seek $15,000 in damages, this case meets the relevant amount-in-controversy requirement. See
28 U.S.C. § 1445(b).
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III.
MOTION TO DISMISS
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in
whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The
moving party bears the burden of showing that no claim has been stated. Hedges v. United
States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under Rule
12(b)(6), a court must take all allegations in the complaint as true and view them in the
light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump
Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998).
Although a complaint need not contain detailed factual allegations, “a plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels
and conclusions, and a formulaic recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations
must be sufficient to raise a plaintiff’s right to relief above a speculative level, such that it
is “plausible on its face.” See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542
F.3d 59, 64 (3d Cir. 2008). 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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly,
550 U.S. at 556). While “[t]he plausibility standard is not akin to a ‘probability
requirement’ . . . it asks for more than a sheer possibility.” Id.
Online Freight appears to argue that because Plaintiffs’ claims are subject to complete
preemption, it necessarily follows that the complaint must also be dismissed. That position,
however, misunderstands the application of the complete preemption doctrine. As
explained earlier, conflict preemption and complete preemption are two different things.
See, e.g., Farina v. Nokia, Inc., 625 F.3d 97, 117 n. 21 (3d Cir. 2010). The former exists a
federal defense that, when successful, will result in the dismissal of the state law claim.
See Krashna v. Oliver Realty, Inc., 895 F.2d 111, 114 n. 3 (3d Cir. 1990). When the latter
is successfully invoked, it will transform the state claim into a federal cause of action,
thereby creating a basis for federal jurisdiction. See, e.g., Metro. Life Ins. Co. v. Taylor,
481 U.S. 58, 66-67 (1987) (complete preemption converts a state law claim into a federal
one). See also Phipps v. F.D.I.C., 417 F.3d 1006, 1010 (8th Cir. 2005) (complete
preemption doctrine “convert[s] complaints purportedly based on the preempted state law
into complaints stating federal claims from their inception.”) Therefore, where complete
preemption applies, the only inevitable consequence is that federal question jurisdiction
will exist. The claim will be subject to dismissal only if the allegations in the complaint
are insufficient to make out the relevant federal cause of action. 3 See, e.g., Darcangelo v.
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As one other district court judge noted:
Having removed the case to this Court, however, Defendant…cannot have its cake and eat it too.
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Verizon Commc’ns, 292 F.3d 181, 195 (4th Cir. 2002) (“[W]hen a claim under state law is
completely preempted and is removed to federal court…the federal court should not
dismiss the claim as preempted, but should treat it as a federal claim….”) Therefore, the
proper approach in this case is to treat Plaintiffs’ complaint as asserting claims under the
Carmack Amendment, and then determine whether Plaintiffs have stated a claim upon
which relief can be granted.
To make out a claim under the Carmack Amendment, a plaintiff must prove the
following three elements: “(1) delivery of the goods to the initial carrier in good condition,
(2) damage of the goods before delivery to their final destination, and (3) the amount of
damages.” Conair Corp. v. Old Dominion Freight Line, Inc., 22 F.3d 529, 531 (3d Cir.
1994) (citing 49 U.S.C. § 11707(a)(1)). Here, Plaintiffs have set forth no allegations
indicating that the Online Freight received the trees in good condition. From the substance
of the complaint, nothing prevents this Court from inferring that once Online Freight
received the trees, they were already damaged. Moreover, Plaintiffs’ complaint seeks
punitive damages, which are not available under the Carmack Amendment. See, e.g.,
Tirgan v. Roadway Package Sys., Inc., Civ. No. 94-2768, 1995 WL 21098, *4 (D.N.J. Jan.
3, 1995).
The Court will therefore GRANT Online Freight’s motion to dismiss. Plaintiffs’
complaint will be DISMISSED WITHOUT PREJUDICE. If Plaintiffs wish to file an
amended complaint under the Carmack Amendment, they must do so within thirty days.
IV.
CONCLUSION
For the reasons that follow, the motion to dismiss is GRANTED. Plaintiffs’ complaint
is DISMIEED WITHOUT PREJUDICE. Plaintiffs will be given thirty days to file an
amended complaint.
/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: June 29, 2016
This Court has subject matter jurisdiction because the [federal statute] converts state claims into
federal causes of action…It would be anomalous indeed to permit a defendant to both remove a case
to federal court because the state law cause of action has been converted into a federal claim and
then have it dismissed because the area of law into which the plaintiff’s claims fall have been
preempted by federal law. One or the other result is perfectly reasonable, and in fact required by
the precedent. Both at once, however, would defy both logic and equity.
Lafayette v. Cobb, 385 F.Supp.2d 1152, 1160 (D.N.M. 2004) (citations omitted).
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