Norfolk Southern Railway Company v. Asphalt Supply Atlanta LLC et al

Filing 38

MEMORANDUM OPINION AND ORDER granting in part, denying in part #29 MOTION to Dismiss Defendants' Counterclaim filed by Norfolk Southern Railway Company. (Ordered by Senior Judge Sidney A Fitzwater on 10/4/2018) (Senior Judge Sidney A Fitzwater)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NORFOLK SOUTHERN RAILWAY
COMPANY
Plaintiff-counterdefendant,
VS.
ASPHALT SUPPLY ATLANTA,
LLC, and ASPHALT REFINING AND
TECHNOLOGY COMPANY, LLC,
Defendants-counterplaintiffsthird-party plaintiffs,
VS.
LION OIL COMPANY,
Third-party defendant.

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MEMORANDUM OPINION
AND ORDER
In this action arising under the Interstate Commerce Commission Termination Act of
1995 (“ICCTA”), 49 U.S.C. § 10101 et seq.,1 plaintiff-counterdefendant Norfolk Southern
Railway Company (“Norfolk Southern”) moves under Fed. R. Civ. P. 12(b)(1) and (6) to
dismiss the counterclaim for overcharges of demurrage fees asserted by defendantscounterplaintiffs-third-party plaintiffs Asphalt Supply Atlanta, LLC (“ASA”) and Asphalt
Refining and Technology Company, LLC (“ARTC”). For the following reasons, the court
denies the Rule 12(b)(1) motion, and it grants in part and denies in part the Rule 12(b)(6)
1

The parties cite this statute as the “Interstate Commerce Act.”

motion.
I
Norfolk Southern, an interstate rail carrier, brings this action against ASA and ARTC,
alleging that they failed to pay a July 2015 demurrage invoice and that they owe Norfolk
Southern the sum of $180,920 for outstanding demurrage charges. ASA and ARTC have
counterclaimed against Norfolk Southern for overcharges of demurrage fees. They allege
that, on May 27, 2015, ASA timely paid Invoice 3132233046 (“Invoice 046”) in the amount
of $73,920; that, on June 26, 2015, ASA timely paid Invoice 0096080022 (“Invoice 022”)
in the amount of $29,240; that Invoice 046 contained charges for hazardous materials in the
amount of approximately $46,700; that Invoice 022 contained charges for hazardous
materials in the amount of $20,300; that ASA paid Norfolk Southern other demurrage
charges pertaining to hazardous materials in invoices dated January 1, 2013 forward (the
“Prior Invoices”); that the asphalt and asphalt-related materials contained in the rail cars that
were the subject of Invoice 046, Invoice 022, and the Prior Invoices were improperly
classified as hazardous materials during the dates that the charges were incurred; and that,
based on the improper classification, Norfolk Southern overcharged ASA in amount equal
to or in excess of $67,000, and ASA is now entitled to reimbursement in this amount.
Norfolk Southern moves under Rules 12(b)(1) and 12(b)(6) to dismiss the
counterclaim. ASA and ARTC oppose the motion.

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II
Norfolk Southern moves to dismiss under Rule 12(b)(1), contending that the court
lacks subject matter jurisdiction over ASA and ARTC’s counterclaim because the
counterclaim does not arise under the same transaction or occurrence as does Norfolk
Southern’s affirmative claim and ASA and ARTC have failed to plead a viable independent
basis for subject matter jurisdiction over the counterclaim. The court disagrees.
ASA and ARTC plead 28 U.S.C. § 1337 as the basis for jurisdiction,2 asserting that
their counterclaim arises under the ICCTA. See Countercl. ¶ 7. Although they do not cite
a specific statutory provision in the counterclaim itself, ASA and ARTC allege that they have
been overcharged demurrage fees. 49 U.S.C. § 11704(b) provides that “[a] rail carrier
providing transportation subject to the jurisdiction of the [Surface Transportation Board
(“Board”)] under this part is liable to a person for amounts charged that exceed the applicable
rate for the transportation.” Section 11704(c) provides that “[a] person may file a complaint
with the Board under section 11701(b) of this title or bring a civil action under subsection
(b) of this section to enforce liability against a rail carrier providing transportation subject
to the jurisdiction of the Board[.]” 49 U.S.C. § 11704(c) (emphasis added). To the extent

2

ASA and ARTC also assert diversity jurisdiction under 28 U.S.C. § 1332. Because
ASA and ARTC are both limited liability companies, to establish diversity jurisdiction, they
must identify and properly allege the citizenship of all of their members. See, e.g., Rolling
Greens MHP, L.P. v. Comcast SCH Holdings L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004)
(per curiam) (“To sufficiently allege the citizenships of these unincorporated business
entities, a party must list the citizenships of all the members of the limited liability
company[.]”). Because they have failed to do so, the court cannot say that it has diversity
jurisdiction.
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ASA and ARTC are seeking to recover overcharges pursuant to § 11704, a federal statute,
the court has subject matter jurisdiction over the counterclaim. See 28 U.S.C. § 1331 (“The
district courts shall have original jurisdiction of all civil actions arising under the
Constitution, laws, or treaties of the United States.”); 28 U.S.C. § 1337(a) (“The district
courts shall have original jurisdiction of any civil action or proceeding arising under any Act
of Congress regulating commerce[.]”); see also Pejepscot Indus. Park, Inc. v. Maine Cent.
R.R. Co., 215 F.3d 195, 205 (1st Cir. 2000) (concluding that district court had subject matter
jurisdiction under 28 U.S.C. §§ 1331 and 1337(a) over claim brought pursuant to ICCTA,
but that it should have stayed that claim while referring it to the Board under the doctrine of
primary jurisdiction).
Accordingly, the court denies Norfolk Southern’s Rule 12(b)(1) motion.
III
Norfolk Southern also moves to dismiss under Rule 12(b)(6) for failure to state a
claim on which relief can be granted.
A
Under Rule 12(b)(6), the court evaluates the pleadings by “accept[ing] ‘all
well-pleaded facts as true, viewing them in the light most favorable to the
[counterplaintiffs].’” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007)
(quoting Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir.
2004)). To survive a motion to dismiss under Rule 12(b)(6), ASA and ARTC must plead
“enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
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Twombly, 550 U. S. 544, 570 (2007). “A [counterclaim] has facial plausibility when the
[counterplaintiff] pleads factual content that allows the court to draw the reasonable inference
that the [counterdefendant] is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it
asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting
Twombly, 550 U.S. at 556); see also Twombly, 550 U.S. at 555 (“Factual allegations must
be enough to raise a right to relief above the speculative level[.]”).

“[W]here the

well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged—but it has not ‘shown’—‘that the pleader is entitled
to relief.’” Iqbal, 556 U.S. at 679 (brackets omitted) (quoting Rule 8(a)(2)). “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Id. at 678 (citation omitted).
To obtain a Rule 12(b)(6) dismissal based on an affirmative defense, the “successful
affirmative defense [must] appear[] clearly on the face of the pleadings.” Cochran v. Astrue,
2011 WL 5604024, at *1 (N.D. Tex. Nov. 17, 2011) (Fitzwater, C.J.) (quoting Sivertson v.
Clinton, 2011 WL 4100958, at *2 (N.D. Tex. Sept. 14, 2011) (Fitzwater, C.J.)). In other
words, Norfolk Southern is not entitled to dismissal under Rule 12(b)(6) based on an
affirmative defense unless ASA and ARTC have “pleaded [themselves] out of court by
admitting to all of the elements of the defense.” Id. (quoting Sivertson, 2011 WL 4100958,
at *3).

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B
1
Norfolk Southern contends that ARTC cannot assert a claim for overcharges on bills
that ARTC did not actually receive or pay. Norfolk Southern maintains that the counterclaim
does not allege that Norfolk Southern ever charged any hazardous-materials demurrage to
ARTC or that ARTC ever paid any demurrage charges to Norfolk Southern; instead, the
counterclaim alleges that all such charges were assessed to, and paid by, ASA. ASA and
ARTC respond that a close reading of the complaint “reveals that nowhere does Plaintiff
allege, in particular, whether it was ARTC or ASA that allegedly failed to pay demurrage
charges. Rather, in both the Complaint and the Counterclaim, ARTC and ASA are
collectively referred to as Defendants.” Ds. Br. 3.
The counterclaim alleges, inter alia, that ASA paid Invoice 046 and Invoice 022 and
that “ASA is entitled to, and claims, reimbursement from Norfolk Southern of the Hazardous
Material Charges in an amount equal to or in excess of $67,000.00.” Countercl. ¶ 17. ASA
and ARTC do not plead that ARTC paid any invoice that contained improperly classified
hazardous material charges, and there is no indication in the counterclaim that the term
“ASA” is intended to refer to both ASA and ARTC. Accordingly, to the extent ARTC
asserts the counterclaim for overcharges of demurrage fees, the court agrees that ARTC has
failed to state a claim upon which relief can be granted. Accordingly, the court grants
Norfolk Southern’s motion to dismiss the counterclaim to the extent it is asserted by ARTC.

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2
Norfolk Southern next contends that ASA and ARTC have failed to state a claim on
which relief can be granted because they have not alleged, and cannot allege, that Norfolk
Southern classified the subject freight as hazardous. According to Norfolk Southern:
[i]f Defendants (or those on their behalf) represented that the
freight being tendered to Norfolk Southern was hazardous when
requesting rail transportation, and Norfolk Southern agreed to
transport (and did transport) this freight as hazardous in
exchange for an agreed higher price (which ASA paid)
associated with the transportation of hazardous freight, Norfolk
Southern cannot have overcharged ASA.
P. Br. 6-7. ASA and ARTC respond that what is relevant is whether the material in the tank
cars in question was properly classified as hazardous or not hazardous at the time the
demurrage charges were incurred, and that the determination of that issue will control
whether the charges were properly assessed.
49 U.S.C. § 11704(b) prohibits a rail carrier from charging amounts that exceed the
applicable rate for the transportation. ASA and ARTC have plausibly alleged that Norfolk
Southern charged them amounts that exceeded the applicable rate for transportation because
Norfolk Southern included hazardous material charges in certain invoices for freight that was
improperly classified as hazardous. ASA and ARTC have not actually pleaded, as Norfolk
Southern suggests in its motion to dismiss, that the improper hazardous material
classification was the result of their own mistake or misrepresentation. And Norfolk

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Southern has failed to point the court to any case, statute, or regulation3 that would require
ASA and ARTC to affirmatively allege at the pleading stage4 that it was Norfolk Southern
who improperly classified the freight as hazardous in order to be entitled to recovery of
overcharges under § 11704.
Accordingly, the court denies this ground of Norfolk Southern’s motion to dismiss.
C
The court now turns to Norfolk Southern’s motion to dismiss based on the affirmative
defense of limitations.

Norfolk Southern maintains that ASA and ARTC’s counterclaim

is untimely under the 3-year statute of limitations, which commences upon delivery or tender
of delivery by the rail carrier. See 49 U.S.C. § 11705(b) (“[a] person must begin a civil
action to recover overcharges under section 11704(b) of this title within 3 years after the
claim accrues.”); 49 U.S.C. § 11705(g) (“A claim related to a shipment of property accrues
under this section on delivery or tender of delivery by the rail carrier.”). Norfolk Southern
contends that although the two most recent demurrage invoices in the counterclaim have
invoice dates of May and June 2015, “[t]he starting point for the statute of limitations is

3

Norfolk Southern relies on 49 C.F.R. § 171.1(b) to argue that it is the duty of the
shipper, not the rail carrier, to identify whether material to be shipped by rail is hazardous,
and to mark and placard it as such for rail transportation. Although Norfolk Southern is
correct that § 171.1(b) places on the shipper many of the burdens related to hazardous
materials, it does not address who is liable under 49 U.S.C. § 11704(b)—the shipper or the
rail carrier—when there is an overcharge related to hazardous materials.
4

In denying Norfolk Southern’s motion to dismiss, the court does not suggest that
Norfolk Southern will be unable to prevail at the summary judgment stage or at trial based
on the arguments set forth in its motion.
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delivery of the railcars, and nowhere in their Counterclaim do Defendants state when any of
the rail cars that form the basis of their overcharge claim were delivered.” P. Br. 8.
Insofar as ASA and ARTC base their overcharges of demurrage fees counterclaim on
“Prior Invoices” from January 1, 2013 onward, the court agrees that the claim is time-barred
to the extent any “Prior Invoice” is for rail cars delivered before May 2, 2015. But for
invoices with a delivery date after May 2, 2015, the claims are not time-barred. Because
ASA and ARTC have not pleaded when the rail cars that are the subject of Invoice 022 or
Invoice 046 were delivered, and because the court will not dismiss a claim based on an
affirmative defense unless it appears on the face of the pleadings, the court denies Norfolk
Southern’s motion to dismiss, based on the statute of limitations, to the extent ASA and
ARTC’s counterclaim is based on Invoice 022, Invoice 046, or any other invoice for rail cars
delivered after May 2, 2015.
*

*

*

Accordingly, for the reasons explained, Norfolk Southern’s Rule 12(b)(1) motion to
dismiss based on lack of subject matter jurisdiction is denied. Norfolk Southern’s Rule
12(b)(6) motion to dismiss for failure to state a claim is granted in part and denied in part.
SO ORDERED.
October 4, 2018.

_________________________________
SIDNEY A. FITZWATER
SENIOR JUDGE
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