GEORGE E. WARREN CORPORATION v. COLONIAL PIPELINE COMPANY

Filing 20

OPINION AND ORDER Granting 5 MOTION to Dismiss Count II of the Complaint by COLONIAL PIPELINE COMPANY. Signed by Judge Kevin McNulty on 7/17/2017. (JB, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Civ. No. l7-1205-KM-JBC

GEORGE E. WARREN CORPORATION,
Plaintiff,

OPINION and ORDER
V.

COLONIAL PIPELINE COMPANY,
Defendant.

KEVIN MCNULTY, U.S.D.J.:

This matter comes before the court on the motion of the defendant,
Colonial Pipeline Company, to dismiss Count H of this two-count complaint for
failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons
stated herein, the motion will be granted.
I.

BACKGROUND

The allegations of the Complaint (“Cplt.”, ECF no. 1) are assumed to be
true for purposes of this motion. (See Section II.A, infra.) Because Colonial
presents a pure issue of law, the following summary is brief.
Defendant Colonial, a common carrier, operates an interstate pipeline
which transports gasoline and other petroleum products. As a common carrier,
Colonial performs a service for hire; it does not own the petroleum products
that it transports. Plaintiff George E. Warren Corporation (“OEW”) regularly
uses Colonial’s pipeline to transport its petroleum products from Texas to New
Jersey. At its plants in New Jersey, 0EV! blends the petroleum product.
GEW has announced that a Joint Venture of which GEW is a member is
building a blending facility in Georgia. That blending facility will inject butane
into the shippers’ gasoline as it passes through the pipeline. Colonial will
thereby dilute the gasoline and create excess product, which Colonial will sell
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for its own profit. GEW alleges that it will be harmed by receiving diluted,
degraded product, and by losing the benefit of the excess product siphoned off
by Colonial.’ In particular, the already-blended product will be in a diluted
state, so that GEW cannot blend it further. (Cplt.

¶

23)

The Complaint has two Counts. Count I seeks a declaratory judgment
and damages under the Carmack Amendment. Count II seeks a declaratory
judgment and damages under the state law tort of conversion. Count II is
expressly pled in the alternative, “[ijf the Court determines the conduct
described above is outside the Carmack Amendment.” (Cplt.

¶

36)

Colonial moves to dismiss Count II of the Complaint only. (ECF no. 5)
GEW has filed a response (ECF no. 8), and Colonial has filed a reply (ECF no.
9). The matter is thus fully briefed and ripe for decision. Because I agree that
the state-law tort allegations are subsumed and preempted by the Carmack
Amendment, I will grant the motion.

II.

DISCUSSION
A. Standard on a Rule 12(b)(6) Motion
Fed. R. Civ. P. 12(b)(6) provides for the dismissal of a complaint, in whole

or in part, if it falls 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, a court must take all allegations in the complaint as true and view
them in the light most favorable to the plaintiff. See Warth

ii.

Seldin, 422 U.s.

490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140
F.3d 478, 483 (3d Cir. 1998); see also Phillips v. County of Allegheny, 515 F.3d
224, 231 (3d Cir. 2008) (“reasonable inferences” principle not undermined by
later Supreme Court Twombly case, infra).

Colonial has allegedly announced that it will begin the blending operation in

early 2017. (Cplt. ¶ 20) The papers do not reveal whether the plan has been
implemented on schedule.
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Fed. R. Civ. P. 8(a) does not require that a complaint contain detailed
factual allegations. Nevertheless, “a plaintiffs obligation to provide the
‘grounds’ of his ‘entitlement to relief requires more than labels and
conclusions, and formulaic recitation of the elements of a cause of action will
not do.” Bell Ati. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual
allegations must be sufficient to raise a plaintiffs 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. Seru., 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 u. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556). While “[tihe plausibility standard is not akin to a
‘probability requirement’

...

it asks for more than a sheer possibility.” Iqbal, 556

U.S. at 678 (2009).
B.

Carmack Amendment Preemption of State Conversion Claim

The Carmack Amendment2 “preempts all state or common law remedies
available to a shipper against a carrier for loss or damage to interstate
shipments.” See Certain Underwriters at Interest at Lloyds of London v. United
Parcel Seru. of Am., Inc., 762 F.3d 332, 336 (3d Cir. 2014) (quoting N. Am. Van
Lines, Inc. u. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 456 (7th Cir. 1996));
Atchison, Topeka & Santa Fe Railway Co. v. Harold, 241 U.S. 371, 378 (1916)
(“[t}he Carmack Amendment.. .was an assertion of the power of Congress over
the subject of interstate shipments.. .which, in the nature of things, excluded
state action”); Intech, Inc. v. Consolidated Freightways, Inc., 836 F.2d 672, 677

The Complaint cites 49 U.S.C. § 15906(a). Colonial raises the technical point
that the section applicable to an oil pipeline is actually 49 U.S.C. § 20(11), although
the standards are identical. Compare Missouri Pac. R. Co. v. Elmore & Stahl, 377 U.S.
134, 138 (1964) (stating elements ofaptimafacie case under 49 U.S.C. § 20(11)), with
Soares v. Bekins Van Lines, Co., 2016 WL 797046 at *2 fD.N.J. March 1, 2016) (stating
similar elements for a claim under 49 U.S.C. § 11706). I therefore set the distinction
aside.
2

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(1st Cir.1987) (“the Carmack Amendment provides the exclusive remedy” for
“an action for damages against the delivering carrier”).
That is clear enough. Colonial is a common carrier transporting GEW’s
product. GEW’s conversion claim, like its Carmack Amendment claim, is based
on damage to its product via Colonial’s dilution of it while in transit from Texas
to New Jersey. That is a claim for “loss or damage to interstate shipments.”
Certain Underwriters, 762 F.2d at 336.
But wait, says GEW; this is not a case of loss or damage, but outright
theft by the shipper itself. GEW notes that issue of whether such true
conversion claims are preempted by the Carmack Amendment has given rise to
“a split in the circuits.”
We, however, are in the Third Circuit. The U.S. Court of Appeals for the
Third Circuit has held squarely that claims for conversion, like others, are
preempted:
The Courts of Appeals have also unanimously held that the
Carmack Amendment preempts all state or common law remedies
available to a shipper against a carrier for loss or damage to
interstate shipments... .They have dismissed state and common law
claims for breach of contract, negligence, conversion and every
other action for loss of or injury to a shipment of goods. Courts of
Appeals from the First, Second, Fourth, Fifth, Sixth, Seventh,
Eighth, Ninth, Tenth, and Eleventh Circuits have consistently held
that the Carmack Amendment is the ‘exclusive cause of action for
interstate-shipping contract [and tort] claims alleging loss or
damage to property...
We have already held in passing that the state law breach of
contract and negligence claims against a carrier for loss of or
damage to goods are preempted. We affirm that holding today. We
also conclude that state law conversion claims are likewise
preempted, just as the Supreme Court itself has instructed.
Certain Underwriters, 762 F.2d at 336.
GEW cites contrary cases from the First and Ninth Circuits, and states
that the split is “not yet resolved by the United States Supreme Court.” (GEW
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BRf. 7 n.4) Those cases, however, date from 1997 and 1954. GEW points to no
indications that resolution of the Circuit split is imminent. As things stand, I
am obligated to follow current Third Circuit law, Of course, if the Supreme
Court were to hold to the contrary during the pendency of this action, I would
be obligated to follow that controlling case law. And I will state squarely that
GEW has preserved its position on the issue.
GEW’s response, in essence, is that it is not being unreasonable—and
indeed it is not. GEW pled conversion in the alternative, in the event the Court
should find that the Carmack Amendment does not apply. And a party may, of
course, set forth alternative versions of a claim in its pleadings. Fed. R. Civ. P.
8(d)(2). Still, a court need not go forward with discovery on an alternative
theory that is legally defective; that would impose a pointless burden on the
parties, who would have to brief and litigate state law, choice of law issues, and
the like. Uniformity and avoidance of such legal fragmentation are the very
reason for the Carmack Amendment, see Certain Underwriters, 762 F.3d at
338, and I would not circumvent that policy, even temporarily, without good
reason.4

3

R&d a United Van Lines, Inc., 104 F.3d 502, 506 (1st Cfr. 1997); Glickfeld a

Howard Van Lines, Inc., 213 F.2d 723, 727

(9th

Cir. 1954).

American Rock Salt Co., LLC u. Norfolk Southern Corp., 180 F. Supp. 2d 420, 426
(W.D.N.Y. 2001), cited by GEW, did allow contract and Carmack Amendment claims to
proceed in the altemadve. The issue there, however, was one that the court could not
resolve on a motion to dismiss: whether the carrier’s parent corporation was a party to
a contract which, if applicable, might have vitiated the effect of federal statutory
standards. Here, by contrast, the parties present a pure issue of law that is controlled
by Third Circuit precedent.

5

ORDER

For the reasons set forth above,
IT IS this 17th day of July, 2017
ORDERED that the defendant’s motion (ECF no.5) to dismiss Count II of
the Complaint is GRANTED.

LL

/4

H N. KEVIN MCNULTY, U.S. .J

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