J.B. Hunt Transport, Inc. v. Liverpool Trucking Company, Inc.
Filing
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MEMORANDUM AND ORDER denying deft Liverpool's motion to remand to state court or to stay the action 16 . (See memo & order for complete details.) Signed by Honorable Christopher C. Conner on 06/07/12. (ki)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
J.B. HUNT TRANSPORT, INC.,
:
:
Plaintiff
:
:
v.
:
:
LIVERPOOL TRUCKING COMPANY, :
INC.,
:
:
Defendant.
:
CIVIL ACTION NO. 1:11-CV-1751
(Judge Conner)
MEMORANDUM
Presently before the court is defendant Liverpool Trucking Company’s
(“Liverpool”) Motion to Remand to State Court or to Stay (Doc. 16) the abovecaptioned action. Liverpool contends that the court lacks proper subject matter
jurisdiction pursuant to 28 U.S.C. § 1332(a) because the amount in controversy does
not exceed $75,000. Liverpool, therefore, requests this matter to be remanded to
state court, or, in the alternative, stayed pending the resolution of two state
workers’ compensation claims. For the reasons that follow, the court will deny the
motion.
I.
Statement of Facts and Procedural History
This case stems from an Outsource Carrier Agreement (“Agreement”)
between J.B. Hunt Transport, Inc. (“J.B. Hunt”) and Liverpool dated February 29,
2008. (See Doc. 15, Ex. A). Pursuant to the Agreement, Liverpool contracted to
perform certain transportation services for J.B. Hunt. (Id.). Within the
Agreement’s extensive provisions, Section 2.1 establishes Liverpool’s role as an
“independent contractor.” (Id.). Pursuant to Section 2.2 Liverpool agreed to
“assume[] full responsibility and liability for the payment of . . . worker’s
compensation . . . with respect to persons engaged in the performance of said
transportation services.” (Id.)
On February 29, 2008, J.B. Hunt and Liverpool executed a Hold Harmless
Covenant for Workers’ Compensation (“Covenant”). (Doc. 15, Ex. B). Signed and
dated by Liverpool management, the Covenant specifies that “no certificate
evidencing workers’ compensation and employers’ liability coverage will be
furnished to Hunt” due to an exemption from coverage provided by state and
federal law. (Id.). The Covenant also states that Liverpool agrees to fulfill the
Agreement’s terms and conditions regarding the procurement of workers’
compensation should it not be exempt from coverage. (Id.). Finally, the Covenant
states that, absent obtaining the required coverage, Liverpool “assumes full and
complete responsibility for compensation of any and all work-related injury
occurring to any of its personnel during the term of the Agreement.” (Id.).
On August 16, 2010, Awad Idries (“Idries”) was operating a truck for
Liverpool. (Doc. 15 ¶ 13, Ex. C). In the course of two deliveries for J.B. Hunt
customers, Idries was involved in a motor vehicle accident resulting in the loss of
his left arm. (Id. at ¶ 14). On April 13, 2011, Idries filed a Claim Petition with the
Commonwealth of Pennsylvania Bureau of Workers’ Compensation (“Bureau”),
seeking benefits and listing J.B. Hunt as his statutory employer. (Doc. 15, Ex. E).
Idries claims that he is statutorily entitled to at least $78,620. (Doc. 15 ¶ 28). J.B.
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Hunt also claims that it has expended $6,000 in legal fees in defending the workers’
compensation claim. (Id. at ¶ 29).
On May 14, 2011, Dane Merritt (“Merritt”) was operating a truck for
Liverpool. (Doc. 15 ¶ 16, Ex. F). Like Idries, Merritt was making deliveries for J.B.
Hunt customers when he became involved in a motor vehicle accident resulting in
several serious injuries.1 On June 9, 2011, Merritt filed a Claim Petition with the
Bureau, listing Liverpool as his statutory employer. (Doc. 15, Ex. G). Merritt claims
lost wages totaling $365,000 and is seeking payment for medical bills and legal fees.
(Doc. 15 ¶ 30, Ex. B). Thereafter, the Bureau’s Uninsured Employer Guaranty Fund
filed a petition for Joinder of Additional Defendant, J.B. Hunt, averring that J.B.
Hunt is the statutory employer of Merritt pursuant to Section 302(a) of the
Pennsylvania Workers’ Compensation Act. (Doc. 15, Ex. H).
On September 20, 2011, J.B. Hunt instituted this action against Liverpool,
invoking the court’s diversity jurisdiction and alleging that Liverpool breached the
Agreement with J.B. Hunt. (Doc. 1). On December 15, 2011, J.B. Hunt filed an
amended complaint. (Doc. 15). J.B. Hunt seeks damages resulting from breach of
contract and a declaratory judgment finding that Liverpool has an obligation to
defend and indemnify J.B. Hunt in the workers’ compensation matters. (Doc. 15
¶ 32). On December 23, 2011, Liverpool filed the instant motion to remand the
matter to state court, or, in the alternative to stay the suit pending resolution of the
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Merritt allegedly sustained “various injuries including concussion, headaches,
facial contusions, and injuries to the cervical, thoracic and lumbar spine.” (Doc. 15
¶ 17; Ex. G).
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claims before the Bureau. (Doc. 16). Liverpool argues that the matter in
controversy will not exceed $75,000 as required in federal diversity cases. See
28 U.S.C. § 1332(a). The motion has been fully briefed and is ripe for disposition.
II.
Standard of Review
For a plaintiff to establish diversity jurisdiction, the amount in controversy
must exceed $75,000 exclusive of interest and costs. 28 U.S.C. § 1332(a). The United
States Supreme Court established the prevailing standard by which federal courts
must consider a challenge to the amount in controversy requirement:
The rule governing dismissal for want of jurisdiction in cases brought in the
federal court is that, unless the law gives a different rule, the sum claimed by
the plaintiff controls if the claim is apparently made in good faith. It must
appear to a legal certainty that the claim is really for less than the
jurisdictional amount to justify dismissal.
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938). When
applying this standard, federal courts must be certain that the jurisdictional
threshold cannot be met before dismissal is appropriate. See, e.g., Columbia Gas
Transmission Corp. v. Tarbuck, 62 F.3d 538, 541 (3d Cir. 1995); Nelson v. Keefer,
451 F.2d 289, 293 (3d Cir. 1971); Jaconski v. Avisun Corp., 359 F.2d 931(3d Cir. 1966)
(“[The test] is whether it appears to a ‘legal certainty’ that he cannot recover an
amount above the jurisdictional minimum.”). This inquiry involves “minimal
scrutiny” of the plaintiff’s claims without consideration of the “legal sufficiency of
those claims or whether the legal theory advanced by the plaintiffs is probably
unsound.” Suber v. Chrysler Corp., 104 F.3d 578, 583 (3d Cir. 1997).
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III.
Discussion
With the above legal standard in mind, the court must review the complaint
for failure to establish subject matter jurisdiction. The facts alleged in the
complaint, taken as true, must be sufficient to invoke jurisdiction. Licata v. U.S.
Postal Serv., 33 F.3d 259, 260 (3d Cir. 1994). In diversity cases, federal courts apply
substantive law of the states where they sit. Erie Railroad Co. v. Tompkins, 304
U.S. 64, 78 (1938) (“Except in matters governed by the Federal Constitution or by
acts of Congress, the law to be applied in any case is the law of the state.”). The
relevant question, therefore, is whether J.B. Hunt has pleaded facts that would
enable it to recover more than $75,000 under Pennsylvania law. Accord Suber v.
Chrysler Corp., 104 F.3d at 584 (stating that, in a diversity case, the court must
apply substantive state law to determine whether the amount in controversy
requirement is satisfied).
A.
Amount in Controversy Requirement
Liverpool contends that the amount in controversy requirement has not been
satisfied because recovery will be limited to attorneys fees and the amount awarded
by the Bureau under Section 302(a) of the Pennsylvania Workers’ Compensation
Act. (Doc. 16, at 2). Liverpool asserts that the compensation awards and attorneys
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fees will not exceed $75,000.2 (Doc. 17, at 1). Section 302(a), codified at 77 P.S. § 461
(hereinafter “Section 302(a)”), provides, in pertinent part:
A contractor who subcontracts all or any part of a contract and his
insurer shall be liable for the payment of compensation to the
employes of the subcontractor unless the subcontractor primarily
liable for the payment of such compensation has secured its payment
as provided for in this act. Any contractor or his insurer who shall
become liable hereunder for such compensation may recover the
amount thereof paid and any necessary expenses from the
subcontractor primarily liable therefor.
77 P.S. § 461. Section 302(a) further provides: “a person who contracts with
another . . . to have work performed of a kind which is a regular or recurrent part of
the business, occupation, profession or trade of such person shall be deemed a
contractor, and such other person a subcontractor.” Id.
Although Liverpool contends that the amount in controversy “will be” less
than $75,000, (Doc. 17, at 1), this position is inconsistent with the standard set forth
by the Supreme Court in St. Paul Mercury. Dismissal is appropriate only when the
court is certain that the jurisdictional threshold cannot be satisfied. See St. Paul
Mercury, 303 U.S. at 288-89. Idries filed a claim—seeking benefits for the loss of his
left arm, hand, and fingers, (Doc 15, Ex. E)—in which he advised the Bureau that he
is statutorily entitled to receive at least $78,000. (Doc. 15 ¶ 28). Likewise, Merritt
2
The court must determine whether J.B. Hunt pleaded facts that conceivably
would permit recovery exceeding $75,000. Liverpool concedes in its brief that there
is a possible scenario in which “Plaintiff’s alleged damages would exceed the
jurisdictional limit.” (Doc. 17, at 2). Hence, Liverpool appears to have answered
that question in the affirmative. Notwithstanding Liverpool’s statement, the court
will review the alleged facts and applicable law to determine whether the diversity
jurisdiction requirements have been satisfied.
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advised the Bureau that he is statutorily entitled to receive approximately $365,000
based on lost wages alone. (Doc. 15 ¶ 30).
In its brief in opposition to Liverpool’s motion, J.B. Hunt supports the
alleged value of the two workers’ compensation claims filed by Idries and Merritt by
referencing specific provisions in the Pennsylvania Workers’ Compensation Act.
For instance, J.B. Hunt states that “Idries is statutorily entitled to receive
compensation for the loss of an arm in the amount of ‘sixty-six and two-thirds per
centum of wages during four hundred ten weeks’ . . . . an additional twenty weeks
for a ‘healing period’ . . . . [t]herefore, at a minimum, Idries is statutorily entitled to
compensation in the amount of $78,620.” (Doc 16, at 4-5 (citing Sections 306(c)(3)
and 206(c)(25) of the Pennsylvania Workers’ Compensation Act, codified at 77 P.S.
§ 513(3) and 77 P.S. § 513(25), respectively)). It is not the court’s role at this stage to
determine the legal sufficiency of these claims. Rather, the court must use
“minimal scrutiny” to determine whether J.B. Hunt could conceivably recover
more than $75,000. See, e.g., Suber, 104 F.3d at 583.
After considering the St. Paul Mercury standard and the facts alleged in the
complaint, the court concludes that J.B. Hunt has met the amount in controversy
requirement as required by 28 U.S.C. § 1332(a).3
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Since the time of filing of Liverpool’s Motion to Remand to State Court or Stay
the Action, a decision has been rendered in the workers’ compensation action filed
by Idries. (Doc. 21, at 2). Judge Karl Baldys ruled that J.B. Hunt is the statutory
employer of Idries through the contract with Liverpool. (Doc. 21, Ex. A, at 21). In
addition, Judge Baldys ruled that J.B. Hunt is liable for Liverpool’s share—that is,
50 percent—of the determined liability. (Id.). Another company, Fuel City Truck
Stop Inc., has been found to be liable for the remaining 50 percent of determined
liability. (Id.).
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B.
Staying the Proceeding
The other issue for the court to consider is whether this matter should be
stayed pending resolution of the workers’ compensation claims. Without providing
legal or factual support for its contention, Liverpool argues that the matter should
be stayed pending the Bureau’s determinations. (See Doc. 16, at 3; Doc. 17, at 4).
By contrast, J.B. Hunt contends that the matter should not be stayed because the
instant action relates solely to the Agreement between the parties and is entirely
separate from the workers’ compensation matters. (Doc. 18, at 6).
The United States Supreme Court has provided clear guidance to lower
courts on appropriate circumstances for a stay of proceedings. See, e.g., Landis v.
North American Co., 299 U.S. 248, 254 (1936) (“[T]he power to stay any proceedings
is incidental to the power inherent in every court to control the disposition of the
causes on its docket with the economy of time and effort for itself, for counsel, and
for litigants.”). Although federal courts have such authority, a stay is an
extraordinary measure that is only justified in “exceptional circumstances.” See
Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976).
See also United States v. Breyer, 41 F.3d 884, 893 (3d Cir. 1994).
In determining whether to stay proceedings, federal courts must carefully
balance competing interests. Landis, 299 U.S. at 254-55; Texaco, Inc. v. Borda, 383
F.2d 607, 608 (3d Cir. 1967). It is well settled that, before a stay may be issued, the
movant must demonstrate “a clear case of hardship or inequity,” if there is “even a
fair possibility” that a stay would work damage on another party. Landis, 299 U.S.
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at 255. Other considerations outlined by the Landis Court include (1) the
reasonableness of the length of stay requested, id. at 257, and (2) whether the stay
would simplify issues and promote judicial economy, id. at 256. These factors must
be incorporated in the court’s ultimate calculus in which it weighs “the benefit and
hardship” of staying the proceeding. See id. at 259.
After careful consideration of the Landis factors, the court concludes that
Liverpool’s request should be denied. Liverpool fails to provide justification for
staying the proceeding other than stating that it would “obviate the need to litigate
this case.” However, since the filing of Liverpool’s motion, the Bureau determined
that J.B. Hunt is the statutory employer of Idries and is therefore liable for the
determined liability. (Doc. 21, Ex. A, at 22). The decision also stated: “This order is
without prejudice to the contractual rights . . . of J.B. Hunt . . . against Liverpool.”
(Id.). Accordingly, resolution of the two compensation claims will not resolve J.B.
Hunt’s breach of contract claim nor will it automatically provide J.B. Hunt with a
right of recovery against Liverpool.
The court also concludes that moving forward with the instant matter will
simplify the issues in this case and promote judicial economy. The court’s findings
concerning the Agreement and the indemnification remedy provided by Section
302(a) of the Workers’ Compensation Act will ultimately determine who bears
liability for the compensation benefits. Moreover, moving forward with the instant
matter will resolve all other issues concerning damages arising from the alleged
breach of contract claim.
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Finally, the court finds that J.B. Hunt would be prejudiced should the court
grant the motion to stay the action. At present, J.B. Hunt is required to pay the
determined liability in the workers’ compensation claim filed by Idries. (Doc. 21,
Ex. A, at 21-22). By contrast, Liverpool does not bear any liability for either of the
workers’ compensation claims. Liverpool has not demonstrated “a clear case of
hardship or inequity” in moving forward. Landis, 299 U.S. at 255. All of these
considerations conclusively weigh against the issuance of a stay.
IV.
Conclusion
For the foregoing reasons, Liverpool’s Motion to Remand to State Court or to
Stay the Action (Doc. 16) will be denied. An appropriate order follows.
S/ Christopher C. Conner
CHRISTOPHER C. CONNER
United States District Judge
Dated:
June 7, 2012
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
J.B. HUNT TRANSPORT, INC.,
:
:
Plaintiff
:
:
v.
:
:
LIVERPOOL TRUCKING COMPANY, :
INC.,
:
:
Defendant.
:
CIVIL ACTION NO. 1:11-CV-1751
(Judge Conner)
ORDER
AND NOW, this 7th day of June, 2012, upon consideration of the Motion to
Remand to State Court or to Stay the Action (Doc. 16), filed by defendant Liverpool,
and for the reasons set forth in the accompanying memorandum, it is hereby
ORDERED that the motion (Doc. 16) is DENIED.
S/ Christopher C. Conner
CHRISTOPHER C. CONNER
United States District Judge
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