Allianz Global Risks US Insurance Company et al v. Kutzler Express Inc

Filing 28

ORDER signed by Judge J P Stadtmueller on 10/19/16 granting 23 Plaintiffs' Motion to Amend responses to Defendant's requests for admission. (cc: all counsel) (nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
ALLIANZ GLOBAL RISKS U.S.
INSURANCE COMPANY and
NFI INDUSTRIES, INC.,
Case No. 15-CV-1047-JPS
Plaintiffs,
v.
KUTZLER EXPRESS, INC.,

ORDER

Defendant.
On August 12, 2016, Plaintiffs filed a motion to amend their responses
to certain of Defendant’s requests for admission. (Docket #23). Defendant
responded on September 14, 2016, and Plaintiffs replied on September 28,
2016. (Dockets #26 and 27). For the reasons stated below, the Court will grant
the motion.
The national retailer Target purchased several batches of cellular
phones from T-Mobile. (Docket #1 at ¶ 7). Target hired Plaintiff NFI
Industries, Inc. (“NFI”) to arrange for delivery of the phones. Id. at ¶ 8. NFI
thereafter hired Defendant Kutzler Express, Inc. (“Kutzler”) to transport the
phones from Kentucky to Illinois. Id. at ¶¶ 9–10. Kutzler never completed the
delivery, however, because the phones were stolen at a truck stop in Indiana.
Id. at ¶ 11. Plaintiffs sued Kutzler to recover the value of the shipment under
the Carmack Amendment, which holds a carrier strictly liable for the “actual
loss or injury to [] property” in its control. 49 U.S.C. § 14706(a)(1); (Docket #1
at ¶¶ 17–18). According to Plaintiffs, the value of the shipment of phones was
$212,861.55. (Docket #1 at ¶ 13).

The Carmack Amendment establishes uniform federal guidelines for
liability between interstate carriers and shippers of goods. See id. The law was
“designed in part to remove the uncertainty surrounding a carrier’s liability
when damage occurs to a shipper’s interstate shipment.” Hughes v. United
Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987). The Amendment applies
in cases of third-party theft. See UPS Supply Chain Solutions, Inc. v. Megatrux
Transp., Inc., 750 F.3d 1282, 1287 (11th Cir. 2014); Korer v. Danita Corp., 584 F.
Supp. 2d 1103, 1104 (N.D. Ill. 2008).
Carriers can take steps to avoid the strict liability imposed by the
Amendment. To do so, the carrier must: (1) obtain the shipper’s agreement
as to a choice of liability; (2) give the shipper a reasonable opportunity to
choose between two or more levels of liability; and (3) issue a receipt or bill
of lading prior to moving the shipment. Nipponkoa Ins. Co., Ltd. v. Atlas Van
Lines, Inc., 687 F.3d 780, 782 (7th Cir. 2012). In this case, prior to shipment,
NFI, on behalf of the shipper, Target, provided Kutzler, the carrier, a Master
Bill of Lading for the phone delivery. The Master Bill of Lading references
National Motor Freight Traffic Association Classification (“NMFC”) number
62820-1. See (Docket #8 at 6). This classification number denotes a certain type
of commodity being transported and defines an industry-standard limit on
liability for loss of that type of commodity. Id. Liability for commodities
bearing classification number 62820-1 is limited to $3.00 per pound of freight
lost. Id. For the phones at issue here, the total liability under this classification
would be $15,678.00. Id.
One key dispute in this case is whether the Master Bill of Lading and
the NMFC classification therein govern Kutzler’s liability for the lost phone
shipment. If they do, Plaintiffs’ damages shrink to less than a tenth the
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amount alleged in their Complaint. The core of the dispute is whether NFI
had control over the drafting or terms of the Master Bill of Lading and, if so,
whether that means NFI can be held to those terms. As the Court observed
in a prior opinion denying Plaintiffs’ summary judgment, “the bills of lading
in this case were issued by NFI, not Kutzler.” (Docket #20 at 3). The Court
found this important because it created an issue of fact as to “whether NFI
was offered, and agreed to, a limitation of liability by Kutzler”—namely, the
NMFC classification. (Id. at 4). As explained further below, the Court need
not decide the merits of this dispute to resolve the instant motion.
Kutzler propounded several requests for admission on Plaintiffs
pursuant to Federal Rule of Civil Procedure 36. Two of those requests are at
issue here, and each touches on the issue of NFI’s participation in creating the
Master Bill of Lading. Request for Admission 1 asks Plaintiffs to admit that
“Exhibit 1 is a true and accurate copy of the Master Bill of Lading issued by
[NFI] relative to the transportation of the load of cellular phones that is the
subject matter of this lawsuit.” (Docket #23-1 at 1) (emphasis added). Request
for Admission 26 asks Plaintiffs to admit that “Group Exhibit 2 consist [sic]
of true and accurate copies of twenty-six (26) underlying Bills of Lading
issued by [NFI] that were incorporated into the Master Bill of Lading (Ex. 1),
relative to the transportation of the load of cellular phones that is the subject
matter of this lawsuit.” Id. at 2 (emphasis added).
Approximately one month after the Court’s order denying them
summary judgment, Plaintiffs answered these requests, admitting both
without objection or qualification. By admitting these requests, Plaintiffs
argue that they did no more than admit the genuineness of the documents
themselves. (Docket #23 at 2). Their admissions do not, in their view, extend
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to the authorship of the documents. Id. Kutzler disagrees, contending that
Plaintiffs’ admissions establish that NFI “issued” the Master Bill of Lading,
either by actually drafting it or presenting it to Kutzler as agent for the
shipper, Target. (Docket #26 at 9–10).
Rule 36 permits a party to serve on his opponent “a written request to
admit, for purposes of the pending action only, the truth of any matters
within the scope of Rule 26(b)(1) relating to: (A) facts, the application of law
to fact, or opinions about either; and (B) the genuineness of any described
documents.” Fed. R. Civ. P. 36(a)(1). The responding party may admit the
matter contemplated in the request, deny it, state that the party lacks the
ability to admit or deny it after a reasonable investigation, or object to it. See
id. 36(a)(4)–(5). The Rule further provides:
A matter admitted under this rule is conclusively established
unless the court, on motion, permits the admission to be
withdrawn or amended. Subject to Rule 16(e), the court may
permit withdrawal or amendment if it would promote the
presentation of the merits of the action and if the court is not
persuaded that it would prejudice the requesting party in
maintaining or defending the action on the merits. An
admission under this rule is not an admission for any other
purpose and cannot be used against the party in any other
proceeding.
Id. 36(b). The party requesting to withdraw admissions bears the ultimate
burden to prove that the withdrawal is appropriate. See Bryant v. Fort Wayne
Metropolitan Human Relations Comm’n, 284 Fed. App’x 335, 338 (7th Cir.

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2008).1 The Rule, as the Seventh Circuit has explained, “allows parties to
narrow the issues to be resolved at trial by effectively identifying and
eliminating those matters on which the parties agree.” United States v.
Kasuboski, 834 F.2d 1345, 1350 (7th Cir. 1987). Additionally, the Rule forestalls
a party from “flip-flopping” on important evidentiary issues as the winds of
litigation change. See Banos v. City of Chicago, 398 F.3d 889, 892 (7th Cir. 2005).
The advisory committee opined that the provision for withdrawal or
amendment of an admission is meant to “emphasiz[e] the importance of
having the action resolved on the merits, while at the same time assuring
each party that justified reliance on an admission in preparation for trial will
not operate to his prejudice.” Fed. R. Civ. P. 36 advisory committee notes. In
considering whether allowing the withdrawal of admissions would promote
presentation of the merits, the Court may consider whether the admissions
are contrary to the record in the case. Centrifugal Acquisition Corp. v. Moon,
267 F.R.D. 240, 241 (E.D. Wis. 2010) (citing Ropfogel v. United States, 138 F.R.D.

1

Plaintiffs contend that the party who obtained the admissions must
demonstrate prejudice, citing Centrifugal Acquisition Corp. v. Moon, 267 F.R.D. 240,
241 (E.D. Wis. 2010). Their reliance on Moon is misplaced, however. Moon cites
Ropfogel v. United States, 138 F.R.D. 579, 583 (D. Kan. 1991), for this proposition, but
Ropfogel was decided under a prior version of the Rule which apportioned the
burden of proving prejudice on the party who had obtained the admissions. Id. at
582. The current version of the Rule does not make an express assignment of
burden. See Fed. R. Civ. P. 36(b). The Court finds, consistent with the most recent
amendments to the Rules in 2015, that each party should, as a general matter,
contribute to the assessment of prejudice according to their ability. See id. 26
advisory committee notes (explaining that all parties should provide information
relevant to the proportionality inquiry of Rule 26(b)(1) consistent with their ability
to do so). In practical terms, it is more likely that the party who stands to lose the
benefit of admissions would be in a better position to explain the prejudice it would
suffer. But in light of the clear change in language in Rule 36 from the version
applied in Ropfogel, the Court will not expressly place the burden on that party.

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579, 583 (D. Kan. 1991)). Withdrawal may be proper “when an admission is
no longer true because of changed circumstances or when through an honest
error a party has made an improvident admission.” Ropfogel, 138 F.R.D. at
583 (citing Jones v. Emp’rs Ins. of Wausau, 96 F.R.D. 227, 229 (N.D. Ga. 1982)).
The prejudice contemplated by Rule 36(b) generally “‘relates to the difficulty
a party may face in proving its case’ because of the sudden need to obtain
evidence required to prove the matter that had been admitted.” Id. (quoting
Gutting v. Falstaff Brewing Corp., 710 F.2d 1309, 1314 (10th Cir. 1983)). As a
result, “[r]eliance on admissions in preparing for trial may show prejudice”
and “[a]llowing the withdrawal of admissions on the eve of trial could
unfairly disrupt trial preparations.” Id.
Plaintiffs request that the Court permit them to withdraw their
admission of Kutzler’s Requests for Admission 1 and 6. First, Plaintiffs
contend that doing so will promote presentation of the case on its merits
because NFI’s corporate representative testified that admission of those
requests was improper. (Docket #23 at 2–3). That witness testified that NFI
itself did not draft or prepare the Master Bill of Lading but merely
communicated it to Kutzler on behalf of Target. Id. Again, Plaintiffs believe
that the requests only sought to authenticate the documents and did not bear
on their drafting. Id.
Second, Plaintiffs assert that Kutzler will suffer no prejudice if the
admissions are withdrawn, noting that this motion comes well before the
deadline for dispositive motions and the trial date. (Docket #23 at 4). As such,
Kutzler should have ample time to prepare any additional evidence or
argument it may need to prove matters related to the drafting of the Master
Bill of Lading. Id. Moreover, Plaintiffs argue, Kutzler knew of the
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discrepancy between Plaintiffs’ admissions and Plaintiffs’ litigation position
as early as the first deposition taken in this case. Id. Thus, Kutzler has been
on notice for some time that Plaintiffs’ admissions were a mistake that should
not be a permanent part of the record. Id. Kutzler, on the other hand, believes
that withdrawal of the admissions would unfairly require it to take
additional, burdensome discovery to prove the facts admitted. (Docket #26
at 11).
The Court finds that Plaintiffs have met their burden under Rule 36 to
justify withdrawing their admissions. As noted above, the Court does not
decide here whether the admissions actually establish that Plaintiffs should
be bound to the terms of the Master Bill of Lading. Instead, given the
centrality of the Master Bill of Lading—and, by extension, its authorship—to
this case, the Court finds that permitting the admissions to stand would
subserve the presentation of the case on the merits. Allowing Kutzler to seize
upon Plaintiffs’ error—one which appears to be based on a simple
misapprehension of what information the requests were seeking—would not
serve the purpose of Rule 36. See Ropfogel, 138 F.R.D. at 583. That Rule was
intended to identify areas in which the parties agree and prevent parties from
“flip-flopping” on key evidentiary matters. There is no evidence that
Plaintiffs are engaged in such gamesmanship.
Moreover, the admissions, even if they were permitted to stand, do
not appear to be dispositive to the extent Kutzler believes. Kutzler views the
admissions as conclusive evidence that Plaintiffs should be bound by the
terms of the Master Bill of Lading. The admissions, while arguably probative
on that issue, would at most establish that Plaintiffs “issued” the Master Bill
of Lading. Whether “issuing” the document means that Plaintiffs are bound

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by it would remain a question for the jury to decide. Permitting Plaintiffs to
withdraw the admissions will, in the Court’s view, encourage the parties to
devote more energy and evidence to this important topic rather than rest on
admissions of possibly limited evidentiary value.
Furthermore, Kutzler does not point to any concrete evidence that it
would suffer prejudice as a result of withdrawal of the admissions. There is
substantial time remaining for the parties to prepare for dispositive motion
practice and trial, and Kutzler has not directed the Court to any instance
where it has actually relied on the admissions to its detriment. See Gardner v.
So. Ry. Sys., 675 F.2d 949, 954 (7th Cir. 1982); Ropfogel, 138 F.R.D. at 583. There
are also nearly two months remaining for the parties to seek any additional
discovery they believe they may need at trial. Smith v. Farley, 52 F.3d 328 (7th
Cir. 1995). At best, Kutzler asserts that it will be prejudiced by its inability to
rely upon these admissions in the future, but unrealized future reliance is not
the sort of prejudice the Rule contemplates. Kutzler itself admits that it
would suffer no prejudice from withdrawal of the admissions when it asserts
that taking additional discovery on how the Master Bill of Lading was
created “would not change the fact that NFI was acting on Target’s behalf
with regard to arranging for the transportation of the subject shipment.”
(Docket #26 at 12). If the facts in the record already show, according to
Kutzler, the NFI should be bound by the terms of the Master Bill of Lading,
withdrawal of Plaintiffs’ admissions should do nothing to change Kutzler’s

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litigation position.2 The Court, therefore, finds that withdrawal of Plaintiffs’
admissions would promote presentation of this case on its merits and that
Kutzler would suffer no prejudice from that withdrawal.
Accordingly,
IT IS ORDERED that Plaintiffs’ motion to amend responses to
Defendant’s requests for admission (Docket #23) be and the same is hereby
GRANTED.
Dated at Milwaukee, Wisconsin, this 19th day of October, 2016.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

2

Kutzler argues that Plaintiffs would suffer prejudice from the proposed
withdrawal as well. Kutzler reasons that Plaintiffs only have standing to recover
under the Carmack Amendment if they are entitled to recover under the Master Bill
of Lading. See (Docket #26 at 7–8). If Plaintiffs did not issue that document, Kutzler
argues, their claim will fail. Whatever the merits of this argument, Plaintiffs, like
Kutzler, have time enough left to conduct discovery on whatever questions remain
after withdrawal of the admissions.

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