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WIRTH, LTD. v. SILVRETTA

United States District Court, Northern District of Illinois, E.D


January 9, 1984

WIRTH, LTD., PLAINTIFF,
v.
THE SILVRETTA, HER ENGINES, TACKLE, BOILERS, MACHINERY, APPAREL, AND FURNITURE, CAST SHIPPING, LTD., CAST SHIP SERVICES, N.V., OCEANA SHIPPING, CERES MARINE TERMINALS, INC., CHICAGO AND NORTHWESTERN TRANSPORTATION COMPANY, CONSOLIDATED RAIL CORP., ILLINOIS CENTRAL GULF RAILROAD COMPANY, AND REGIONAL TRANSPORTATION AUTHORITY, DEFENDANTS.

The opinion of the court was delivered by: Prentice H. Marshall, District Judge.

MEMORANDUM OPINION

Defendants Consolidated Rail Corporation ("Conrail"), Illinois Central Gulf Railroad Company ("ICG"), and Chicago and Northwestern Transportation Company ("CNW") have moved to dismiss the claims against them of plaintiff Wirth, Ltd. ("Wirth") under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted. By way of background, plaintiff relates the following facts in its response to the motions.

In July 1981 Wirth contracted with the Regional Transportation Authority ("RTA") to provide the RTA with steel rails to be delivered to ICG's and CNW's rail welding plants in Centralia, Illinois and Tama, Iowa respectively. Wirth ordered the rails from a French manufacturer, and they were shipped from Belgium aboard the Silvretta in early October 1981. The rails arrived at Burns Harbor, Indiana in late October and were unloaded by defendant Ceres Marine Terminals, Inc. Ceres loaded the rails onto cars provided by Conrail. Conrail transferred them to CNW and to ICG for delivery to their rail welding plants. No connecting carriers were involved. Subsequently, the RTA notified Wirth that the shipments had arrived in a damaged condition, and it rejected all of the Centralia shipment and part of the Tama shipment.

Wirth filed this action in October 1982. Its claims against Conrail, ICG, and CNW were based on 49 U.S.C. § 11707 (Supp. V 1981), which provides for the liability of common carriers for damage to property shipped under bills of lading. The railroads moved to dismiss on several grounds, including improper venue under the statute (commonly known as the Carmack Amendment). We dismissed the claims against the railroads on March 1, 1983 for improper venue. Wirth subsequently filed an action under the Carmack Amendment against Conrail, the initial carrier, in the United States District Court for the Northern District of Indiana. Some time thereafter, Wirth sought leave to amend the complaint here to file a breach of contract action against the RTA and common law negligence claims against the railroads. We granted that motion on August 24, 1983. These motions to dismiss followed.

Defendants raise several grounds in support of their motion to dismiss: 1) that the claims against the railroads are duplicative of the suit in the Northern District of Indiana; 2) that any common law claim against the railroads has been preempted by the Carmack Amendment; 3) that the Illinois courts would not entertain an action against a railroad in these circumstances and that under the rule of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), Illinois law mandates dismissal of the claims here; 4) that Wirth has failed to allege compliance with a condition precedent to recovery; and 5) that Wirth cannot maintain an action here since it has not qualified to do business in Illinois.

As far as the last ground is concerned, we agree with plaintiff that defendants have failed to meet their burden of proof to show that Wirth is doing business in Illinois in violation of Ill.Rev.Stat. ch. 32, § 157.125 (1981), which forbids a company not authorized to do business in Illinois from maintaining an action in any court of the state. See Charter Finance Co. v. Henderson, 60 Ill.2d 323, 326 N.E.2d 372 (1975) (company transacting isolated business acts is not doing business in Illinois within meaning of statute); Vernon Co. v. Trimble, 23 Ill. App.3d 240, 318 N.E.2d 666 (1974) (burden is on defendant to show that foreign corporation is doing business in violation of statute).

  The Seventh Circuit has not addressed the issue whether the
Carmack Amendment preempts common law actions against
railroads for damage to interstate shipments. Several other
courts of appeal have addressed the issue, however, and have
split as to its resolution. See Fulton v. Chicago, Rock Island
and Pacific R. Co., 481 F.2d 326 (8th Cir.), cert. denied,
414 U.S. 1040, 94 S.Ct. 540, 38 L.Ed. 2d 330 (1973) (common law
action preempted); Litvak Meat Co. v. Baker, 446 F.2d 329 (10th
Cir. 1971) (common law action not preempted); American
Synthetic Rubber Corp. v. Louisville & Nashville R. Co.,
422 F.2d 462 (6th Cir. 1970) (common law action preempted); Chicago
& North Western Ry. Co. v. Davenport, 205 F.2d 589 (5th Cir.
1953), cert. denied, 346 U.S. 930, 74 S.Ct. 320, 98 L.Ed. 422
(1954) (common law action preempted). See also, e.g.,
Season-All Industries, Inc. v. Merchant Shippers, 451 F. Supp. 727
 (W.D.Pa. 1978) (common law action not preempted); George
R. Hall, Inc. v. Superior Trucking Co., 514 F. Supp. 581
(N.D.Ga. 1981) (common law action preempted).

Under § 11707, a common carrier providing service subject to the jurisdiction of the Interstate Commerce Commission — e.g., interstate rail service, see 49 U.S.C. § 10501(a), (b) (Supp. V 1981) — is required to issue a receipt or bill of lading for property received for shipment. Id. § 11707(a)(1). However, under the same section the carrier's liability is not affected by its failure to issue a receipt or bill of lading. The carrier that issues the bill of lading is liable under the bill for loss or injury to the property caused by the receiving carrier, the delivering carrier, and any other carrier over whose line the property is transported. This is presumably the reason why Wirth has sued only Conrail in Indiana.

In Adams Express Co. v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314 (1913), the Supreme Court examined the question whether a limitation on liability contained in a bill of lading was valid. It was valid under the Interstate Commerce Act, but under state law the limit would have been invalid. The Court ruled that the validity of the limitation was governed by the Interstate Commerce Act, holding that the purpose of the Carmack Amendment was to bring contracts for interstate shipments under a uniform rule of law:

  That the legislation supersedes all the
  regulations and policies of a particular State
  upon the same subject results from its general
  character. It embraces the subject of the
  liability of the carrier under a bill of lading
  which he must issue and limits his power to
  exempt himself by rule, regulation or contract.
  Almost every detail of the subject is covered so
  completely that there can be no rational doubt
  but that Congress intended to take possession of
  the subject and supersede all state regulation
  with reference to it. Only the silence of
  Congress authorized the exercise of the police
  power of the State upon the subject of such
  contracts. But when Congress acted in such a way
  as to manifest a purpose to exercise its conceded
  authority the regulating power of the State
  ceased to exist.

Id. at 505-06, 33 S.Ct. at 151-52 (citations omitted). Though the Court spoke in Croninger of the validity of state restrictions on limitation of a carrier's liability, and not squarely on the subject of the continued existence of state common law remedies, we think that the case clearly implies that Congress has shown a purpose to occupy the field of regulating claims for damages to goods shipped interstate. We therefore agree with those courts that have held that the Carmack Amendment preempts state common law remedies in the present situation.*fn1

For this reason, counts 5 through 8 of Wirth's amended complaint are dismissed for failure to state a claim upon which relief may be granted. Since, as we noted in our March 1, 1983 opinion dismissing the Carmack Amendment claims for improper venue, the claims against the railroads are severable from plaintiff's remaining claims, we find that there is no just reason for delay and expressly direct the Clerk to enter a final judgment dismissing counts 5, 6, 7, and 8 of plaintiff's amended complaint. Fed.R.Civ.P. 54(b). As to the remaining claims the schedule is: discovery closed May 1, 1984, final pre-trial materials May 15, 1984; final pre-trial conference June 6, 1984, at 4:30 p.m. and trial June 13, 1984.


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