Jim Ball Pontiac-Buick-GMC, Inc. v. DHL Express (USA), Inc. et al

Filing 86

DECISION AND ORDER denying #78 Renewed Motion to Certify Class. Signed by Hon. John T. Curtin on 1/25/2012. (JEC)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

JIM BALL PONTIAC-BUICK-GMC, INC.
Plaintiff,
-vs-

08-CV-761C

DHL EXPRESS (USA), INC., et al,
Defendants.

APPEARANCES:

HODGSON RUSS LLP (DANIEL C. OLIVERIO,
ESQ., JOSEPH V. SEDITA, ESQ., KEVIN M.
KEARNEY, ESQ., and JOHN L. SINATRA, ESQ., OF
COUNSEL), Buffalo, New York, Attorneys for Plaintiff.
QUINN EMANUAL URQUHART & SULLIVAN, LLP
(RICHARD I. WERDER, JR., ESQ., OF COUNSEL),
New York, New York (Attorneys for Plaintiff).
DECHERT LLP (JOSEPH F. DONLEY, ESQ.,
WILLIAM K. DODDS, ESQ., ANDREW S. WONG,
ESQ., CHRISTOPHER S. RUHLAND, ESQ., EDWIN
V. WOODSOME, ESQ., and WILLIAM W. OXLEY,
ESQ., OF COUNSEL), New York, New York,
Attorneys for Defendants.

BACKGROUND
Presently before the court is plaintiff’s renewed motion for class certification
(Item 78). Plaintiff, on behalf of itself and others similarly situated, seeks to recover
damages from defendants for the alleged improper application of jet fuel surcharges for
retail shipping services delivered by ground transportation. In a Decision and Order
dated May 7, 2010, the court denied the parties’ cross motions for partial summary
judgment on liability, finding that the term “Air Express” in DHL’s 2008 Rate Guide was

susceptible of more than one meaning (Item 33). On March 2, 2011, the court denied
the plaintiff’s initial motion for class certification (Item 58). Thereafter, the court denied
the plaintiff’s renewed motion for partial summary judgment (Item 61). The renewed
motion to certify the class was filed on September 28, 2011 (Item 78). Defendants filed
their response to the motion on October 22, 2011 (Item 79). Plaintiff filed a reply
declaration on November 1, 2011 (Item 80). The court declined to hear oral argument.
For the reasons that follow, the renewed motion to certify the class is denied.

FACTS
According to the amended complaint (Item 3), defendants, collectively referred
to as “DHL,” are a shipping company that transports packages for a fee by motor
vehicle and airplane. Plaintiff is an automobile dealership that has used DHL for
shipping services. DHL offers “Next Day,” “2nd Day,” and “Ground” delivery service. In
its “U.S. Fees” document, DHL states that “Air Express shipments” are assessed a jet
fuel surcharge, while “Ground Shipments” are assessed a fuel surcharge indexed to the
United States Department of Energy’s diesel fuel index. Regardless of the service
category, DHL reserves the right to transport each shipment as it chooses, whether by
air or ground. At all times relevant to the complaint, the jet fuel surcharge has been
substantially higher than the ground fuel surcharge (Item 3, ¶¶ 35-43).
Plaintiff alleges that, pursuant to the contract, all shipments transported solely by
ground are subject to the ground fuel surcharge, not the jet fuel surcharge. Plaintiff
further alleges that DHL often ships “Next Day” or “2nd day” shipments by ground
transportation where practicable. However, plaintiff states that DHL applies the jet fuel
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surcharge to these shipments in breach of the contract (Item 3, ¶¶ 45-48).
In its renewed motion for class certification, plaintiff proposes a putative class
consisting of
all individuals and entities who have, at any time from 2003 to the date of
any class certification order, paid DHL a jet fuel surcharge for DHL Next
Day or 2nd Day package deliveries within the United States that DHL
transported solely by ground transportation pursuant to any DHL contract
that permitted jet fuel surcharges solely on Air Express shipments; the
class excludes customers who purchased DHL services through resellers,
and excludes DHL customers with embedded or zero jet fuel surcharges;
the class also excludes the judge, attorneys, consultants, and their
respective staffs who are working on this case, DHL’s employees, DHL’s
independent contractor delivery network, and federal, state, and local
government entities.

(Item 78, Att. 3, p. 2). In support of the motion, plaintiff has incorporated its prior
submissions and has submitted a letter dated October 10, 2008 from plaintiff’s counsel
to DHL (Item 78, Att. 2, Exh. A), excerpts from the depositions of Hank Gibson and
Charles Boice (Item 78, Att. 2, Exhs. B, F), and a 51-jurisdiction survey of the law
relating to the use of extrinsic evidence in resolving contractual ambiguities (Item 78,
Att. 2, Exh. C).1

DISCUSSION
In its renewed motion for class certification, plaintiff purports to narrow the
proposed class by excluding those customers who purchased DHL shipping services
through a reseller and customers with “embedded” or “zero” jet fuel surcharges. In all

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Plaintiff advises the court that all jurisdictions com port with New York law and allow the
adm ission of extrinsic evidence to resolve am biguities.

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other respects, the proposed class is identical to the class proposed in the previous
motion for class certification.
Pursuant to Rule 23(a), plaintiffs must demonstrate that four conditions have
been met before a court will certify a class: (1) the class is so numerous that joinder of
all members is impracticable; (2) there are questions of law or fact common to the
class; (3) the claims or defenses of the representative parties are typical of the claims
or defenses of the class; and (4) the representative parties will fairly and adequately
protect the interests of the class. Fed.R.Civ.P. 23(a); Teamsters Local 445 Freight Div.
v. Bombardier, Inc., 546 F.3d 196, 201–02 (2d Cir. 2008). In addition, “Rule 23
contains an implicit requirement that the proposed class be precise, objective and
presently ascertainable. Thus, a proposed class must be clearly defined so that it is
administratively feasible for a court to determine whether a particular individual is a
member.” Bakalar v. Vavra, 237 F.R.D. 59, 64 (S.D.N.Y. 2006) (quoting Burley v. City of
New York, 2005 WL 668789, at *8 (S.D.N.Y. March 23, 2005) (citations omitted)).
Finally, the plaintiff must also demonstrate that a class action is maintainable under one
of several different theories. Here, plaintiff argues that the class action is maintainable
pursuant to Rule 23(b)(3), which requires a court to find (1) that questions of law or fact
common to the members of the class predominate over any questions affecting only
individual members, and (2) that a class action is superior to other available methods
for fairly and efficiently adjudicating the controversy. Fed.R.Civ.P.23(b)(3); Myers v.
Hertz Corp., 624 F.3d 537, 547 (2d Cir. 2010), cert. denied, 132 S.Ct. 368 (2011). The
plaintiff bears the burden of showing each of these elements by a preponderance of the

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evidence. Teamsters Local, 546 F.3d at 202.
Plaintiff’s new proposed class does not adequately address the court’s previous
concerns with regard to ascertainability and predominance. “Class membership must
be readily identifiable such that a court can determine who is in the class and bound by
its ruling without engaging in numerous fact-intensive inquiries.” Bakalar, 237 F.R.D. at
64 (citing Fears v. Wilhelmina Model Agency, Inc., 2003 WL 21659373, at *2 (S.D.N.Y.
July 15, 2003); Daniels v. City of New York, 198 F.R.D. 409, 414 (S.D.N.Y.2001)).
Here, despite a narrowed proposed class definition, the court would nonetheless be
forced to engage in individual inquiries regarding the class members satisfaction of a
condition precedent to suit.
As stated in the court’s previous decision on class certification (Item 58), DHL is
a “motor carrier” pursuant to the Interstate Commerce Commission Termination Act
(“ICCTA”), 49 U.S.C. § 13102(14); see Cerdant, Inc. v. DHL Express (USA), Inc., 2010
WL 3397501, *5 (S.D.Ohio August 25, 2010). The ICCTA provides in part that if a
shipping customer wishes to contest charges originally or subsequently billed, it “must
contest the original bill or subsequent bill within 180 days of receipt of the bill in order to
have the right to contest such charges.” 49 U.S.C. § 13710(a)(3)(B). Plaintiff argues in
its renewed motion that the 180-day period does not apply to actions brought in courts,
only to matters before the Surface Transportation Board (“the Board’). However, the
Board has stated that the 180-day rule applies to all billing errors and disputes, not
simply matters before the Board. See Nat’l Assoc. Of Freight Transp. Consultants, Inc.
- Petition for Declaratory Order, 1997 WL 189658, *4-5 (S.T.B. April 9, 1997); see also

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Avery Dennison Corp. v. Conway Transp. Serv., Inc., 2006 WL 3350761, *4 (Ohio Ct.
App. November 17, 2006) (a shipper loses any right to contest charges, whether before
the Board, in court, or both, if it does not notify the carrier of its disagreement within 180
days of receiving the disputed bill, as required by ICCTA). Under the terms of the
statute, any DHL customer who failed to contest a bill within 180 days lacks standing to
sue. Cerdant, 2010 WL 3397501, at *6. To the extent that the proposed class
definition does not limit the class to those DHL customers who complied with the
180-day notice provision, it is overbroad. Additionally, as the court would be required to
engage in individualized factual inquiries to determine those putative class members
who complied with the 180-day requirement, the class is not ascertainable. Cerdant,
2010 WL 3397501, at *6 (class certification denied where class not limited to those
customers who complied with 180-day provision).
Plaintiff further argues that the 180-day period is “uniformly and completely
trumped” by a one-year notice provision found in the DHL waybill (Item 78, Att. 3, p. 9).
The waybill requires that a shipper contest an invoice within one year from the date
DHL accepted the shipment and apparently provides a more generous time period in
which the shipper must contest an invoice (Item 44, Att. 3, Exh. B). However, the
ICCTA provides that the transportation provided by a contract is subject to those rights
and remedies provided by the ICCTA unless “the shipper and carrier, in writing,
expressly waive any or all rights and remedies under this part . . ..” 49 U.S.C. §
14101(b)(1). The language in the DHL waybill is not an express written waiver of any
rights afforded by the ICCTA, particularly the 180-day provision. Accordingly, the court
does not read the waybill language as an abrogation of the 180-day time period. Even
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assuming that the one-year provision is controlling, the court would nonetheless be
required to individually determine whether the class members satisfied the more liberal
notice provision. Such individual inquiries are inconsistent with class certification. See
Fogarazzao v. Lehman Bros., Inc., 232 F.R.D. 176, 181 (S.D.N.Y. 2005); Daniels v. City
of New York, 198 F.R.D. at 414.
Additionally, plaintiff contends that its attorney wrote to DHL before the case was
filed and contested the allegedly improper jet fuel surcharges on behalf of all putative
class members. In a letter dated October 10, 2008, counsel for plaintiff wrote to Jon E.
Olin, Esq., Senior Vice President, Secretary, and General Counsel for DHL, to notify
DHL that plaintiff was being improperly assessed jet fuel surcharges on Next Day and
2nd Day deliveries that were transported solely by ground transportation (Item 78, Att. 2,
Exh. A). The notice was purported to have been provided on behalf of plaintiff “and all
other similarly-situated United States customers of DHL” and was provided without the
waiver of “any rights or arguments about the applicability and/or effect of this notice,
including the existence of any requirement therefor . . ..” Id.2
Plaintiff relies on two cases in support of its argument that this letter to DHL
provided notice of the claims of all putative class members. In Kornberg v. Carnival
Cruise Lines, Inc., 741 F.2d 1332, 1336-37 (11th Cir. 1984), the contract of passage
required that a notice of claim be filed within 185 days and a class action complaint was
filed within that time period. The court held that the filing of a timely class action

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The letter of October 2008 provided notice to DHL of plaintiff’s dispute regarding shipm ents that
occurred within the previous 180 days, or those shipm ents invoiced from April 13, 2008 (Exh. 80, ¶ 6).
Plaintiff concedes that it began to purchase its shipping from a reseller in April 2008, but states that it had
at least six shipm ents whose invoices fell within the 180-day period.

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complaint commenced the suit for all members of the class as subsequently
determined, regardless of whether every member of the class was cognizant of the
action, citing Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 550 (1974). The Kornberg
court thus found that the plaintiffs had satisfied the numerosity requirement and
remanded the case for further consideration of the remaining factors. Upon remand in
Kornberg, the court decertified the class finding that only the named plaintiffs had given
timely notice of their claims in accordance with the contract of passage such that
joinder was not impracticable, and that the class action had not been shown to be a fair
and efficient method of adjudication. Kornberg v. Carnival Cruise Lines, Inc., 1985 WL
69, *2 (S.D.Fla. June 17, 1985). Plaintiff also relies on Freeman v. Celebrity Cruises,
Inc., 1994 WL 689809 (S.D.N.Y. December 8, 1994). In Freeman, the defendants did
not object to the certification of the class, but the court included passengers who had
not filed a written notice of claim as required by the contract of passage. It reasoned
that, if the plaintiff was authorized to commence an action on behalf of all putative class
members, the filing of its claim satisfied the contractual requirement on behalf of all
putative members, relying on the Eleventh Circuit opinion in Kornberg.
This court declines to adopt the reasoning of the Freeman court as it appears to
have extended the Kornberg analysis in an unwarranted fashion. As noted above,
upon remand in Kornberg, the district court decertified the class finding that only the
named plaintiffs had given timely notice of their claims as required by the contract of
passage. While the case law on this issue is scant, the contractual notice requirement
has been treated as a condition precedent to suit. See Donnelly v. Klosters Rederi A/S,

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1982 WL 574 (S.D. Fla. February 17, 1982) (motion to certify class denied where only
named plaintiffs complied with notice provision) (citing Anschul v. Sitmar Cruises, Inc.,
67 F.R.D. 455 (N.D.Ill. 1974) (where only four passengers gave timely notice of claims,
it was improbable that class would be so numerous that joinder would be
impracticable)); see also Mulligan v. Port Authority of New York and New Jersey, 2002
WL 31233245, *1 (S.D.N.Y. October 04, 2002) (class certification denied where each
purported class member had not complied with New York statute requiring individual
notice of claim).
In Cerdant, Inc. v. DHL Express (USA), Inc., 2010 WL 3397501 (S.D.Ohio
August 25, 2010), plaintiffs alleged that DHL charged customers for items it never
delivered, by assessing shipping fees and fuel surcharges as soon as a shipping waybill
was generated, regardless of whether the waybill was actually used to ship a package.
They sought to certify a class consisting of all individuals and business who had been
charged shipping fees and/or fuel surcharges by DHL for items that were never
tendered to DHL for delivery. Relying on its previous ruling that DHL was a “motor
carrier” under the ICCTA, the court held that any shipping customer who failed to
contest a bill within 180 days lacked standing to sue and that any proposed class must
be limited to those DHL customers who complied with the 180-day notice provision of
the ICCTA. This court finds that, as in Cerdant, the proposed class in plaintiff’s
renewed motion for class certification includes DHL customers who failed to contest
invoices in accordance with the ICCTA and is thus overbroad and unascertainable.
Finally, plaintiff argues that any notice period is subject to federal equitable
tolling. Equitable tolling is generally appropriate “where the plaintiff actively pursued
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judicial remedies but filed a defective pleading during the specified time period,” Brown
v. Parkchester S. Condos., 287 F.3d 58, 60 (2d Cir. 2002) (internal quotation marks
omitted); where plaintiff was unaware of his or her cause of action due to misleading
conduct of the defendant, see Miller v. Int'l Tel. & Tel. Corp., 755 F.2d 20, 24 (2d Cir.
1985); or where a plaintiff's medical condition or mental impairment prevented her from
proceeding in a timely fashion, see, e.g., Brown, 287 F.3d at 60; Canales v. Sullivan,
936 F.2d 755, 758 (2d Cir. 1991). When determining whether equitable tolling is
applicable, a district court must consider whether the person seeking application of the
equitable tolling doctrine (1) has “acted with reasonable diligence during the time period
she seeks to have tolled,” and (2) has proved that the circumstances are so
extraordinary that the doctrine should apply. Zerilli-Edelglass v. New York City Transit
Auth., 333 F.3d 74, 80-81 (2d Cir. 2003) (quoting Chapman v. ChoiceCare Long Island
Term Disability Plan, 288 F.3d 506, 512 (2d Cir. 2002)).
Here, plaintiff argues that all time limitations should be equitably tolled as to all
putative class members because DHL’s invoices did not reveal its fuel surcharge
practice and customers had no way of knowing they were being billed for jet fuel
surcharges on Next Day or 2nd Day shipments that traveled by ground transportation.
Defendant states that the application of jet fuel surcharges for all Air Express shipments
is a standard industry practice, and its rate guide and fee documents can be read to
support that position. Under the circumstances, it cannot be said that plaintiff acted
with reasonable diligence as it could simply have asked, at any time, for a clarification
or explanation of defendant’s fuel surcharge policy. Additionally, “[e]quitable tolling is

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only appropriate in rare and exceptional circumstances....” Paneccasio v. Unisource
Worldwide, Inc., 532 F.3d 101, 112 (2d Cir. 2008).
Plaintiff’s renewed class certification motion likewise does not adequately
address the court’s concern with predominance. The predominance requirement under
Rule 23(b)(3) is much more stringent than the commonality requirement under Rule
23(a) and requires that common questions be the focus of the litigation. Steinberg v.
Nationwide Mut. Ins. Co., 224 F.R.D. 67, 73 (E.D.N.Y. 2004). Common questions of
law and fact predominate when issues subject to generalized proof and applicable to
the class as a whole predominate over, and are more substantial than, issues that are
subject to individualized proof. See In re Visa Check/MasterMoney Antitrust Litig., 280
F.3d 124, 136 (2d Cir. 2001), abrogated on other grounds by, In re IPO, 471 F.3d 24
(2d Cir. 2006).
In its renewed motion, plaintiff admits that DHL shipments were governed by
various contractual arrangements, not simply the standard rate guide and fee
documents. It is undisputed that some putative members of the class purchased
shipping services over the internet, while some had individual agreements with DHL.
Plaintiff states, however, that the application of the jet fuel surcharge to shipments that
traveled by ground transportation was uniform as to all customers who paid a jet fuel
surcharge and that differences in contracts or customer type are irrelevant. The
narrowed proposed class excludes those DHL customers who paid no surcharge or had
their surcharge embedded in the total costs of the shipment.
While the application of the jet fuel surcharge was a common practice among

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DHL customers regardless of the contract, proof of class members’ claims would
require individual analysis of the contracts at issue and a determination of whether the
contracts were ambiguous and whether DHL breached the contract in its application of
the jet fuel surcharge. Plaintiff purchased its shipping services pursuant to DHL’s
standard rate guide, and the court previously found it ambiguous whether the term “Air
Express” referred to a category of service or merely a mode of transportation. The
court must look to extrinsic evidence, including the course of dealing and the
understanding of the parties, to resolve the ambiguity.
Courts have denied class certification where numerous individual inquiries were
required to determine whether a breach of the contract could be found. See, e.g.,
Spagnola v. Chubb Corp., 264 F.R.D. 76, 98 (S.D.N.Y. 2010); Pastor v. State Farm
Mut. Auto. Ins. Co., 2005 WL 2453900 (N.D.Ill. September 30, 2005), aff’d, 487 F.3d
1042 (7th Cir. 2007); Adams v. Kansas City Life Ins. Co., 192 F.R.D. 274 (W.D.Mo.
2000); Sparano v. Southland Corp., 1996 WL 681273 (N.D.Ill. November 21, 1996).
Here, class certification would require “mini trials” of the individual claims of all putative
class members. As such, issues subject to individual proof predominate over the
common questions subject to class-wide proof.
Finally, certification of a nationwide class is sought. To render certification of a
proposed multi-state class action appropriate, plaintiff must credibly demonstrate
through an extensive analysis of state law variances, that class certification does not
present the court with “insuperable obstacles.” Adams, 192 F.R.D. at 278 (quoting
Walsh v. Ford Motor Co., 807 F.2d 1000, 1017 (D.C.Cir. 1986), cert. denied, 482 U.S.

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(1987). The court previously ruled on a motion for summary judgment that “Air
Express” as used in the defendant’s standard rate guide is an ambiguous term, and it
could not be determined as a matter of law whether the application of the jet fuel
surcharge to shipments that traveled by ground transportation constituted a breach of
contract. In New York, where the terms of a contract are ambiguous and susceptible of
more than one meaning, the court may consider evidence outside of the contract,
including the parties’ intent, as an aid to interpret the meaning of the language that the
parties chose. See Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan,
7 F.3d 1091, 1095 (2d Cir. 1993). Plaintiff has submitted a multi-jurisdictional review of
the law and advises the court that all jurisdictions comport with New York and allow the
admission of extrinsic evidence to resolve contractual ambiguities. Here, however, the
parties agree that other contractual arrangements were utilized in addition to the
standard rate guide and the court would be forced to individually analyze the various
agreements at issue. Variations in state law with regard to contract interpretation,
including the use of extrinsic evidence to determine ambiguity in the first instance,
would overwhelm the common issues subject to generalized proof and defeat
predominance. See In re U.S. Foodservice Inc. Pricing Litigation, 2011 WL 6013551,
*13 (D.Conn. November 29, 2011) (the need to rely on extrinsic evidence in a breach of
contract claim weighs against class certification); Sacred Heart Health Sys., Inc. v.
Humana, 601 F.3d 1159, 1176–77 (11th Cir. 2010) (“Even the most common of
contractual questions—those arising, for example, from the alleged breach of a form
contract—do not guarantee predominance if individualized extrinsic evidence bears
heavily on the interpretation of the class members' agreements.”). Accordingly, the
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court finds plaintiff has failed to establish that common issues predominate and that the
class action is the superior method for fairly and efficiently adjudicating this controversy.

CONCLUSION
The renewed motion for class certification (Item 78) is denied.
So ordered.

________\s\ John T. Curtin
JOHN T. CURTIN
United States District Judge
Dated: 1/25

, 2012

p:\pending\2008\08-761.dec1411

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