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TOKIO MAR. & FIRE INS. GP. v. J.J. PHN. EX.

United States District Court, Northern District of Illinois, Eastern Division


July 6, 2000

TOKIO MARINE & FIRE INSURANCE GROUP, AS SUBROGEE OF TANITA CORP. OF AMERICA, PLAINTIFF,
V.
J.J. PHOENIX EXPRESS, LTD., ET AL., DEFENDANTS.

The opinion of the court was delivered by: Milton I. Shadur, Senior United States District Judge.

MEMORANDUM OPINION AND ORDER

Nissin International Transport USA, Inc. ("Nissin," incorrectly spelled in the pleading at issue as "Nissen") has moved to dismiss the Third Party Complaint ("TPC") of Airco International, Inc. ("Airco"), which is one of two defendants in this Carmack Amendment action brought by Tokio Marine and Fire Insurance Group, as subrogee of Tanita Corp. of America ("Tanita"). Airco has come back with some shifty moves worthy of Barry Sanders. But as best as can be made out from Airco's response to Nissin's motion, the correct course of action now is to grant Nissin's motion — albeit with leave granted to Airco to replead if its counsel can do so in the exercise of the objective good faith mandated by Fed. R. Civ. P. ("Rule") 11.

In the TPC itself, Airco has charged Nissin with having "prepared a Straight Bill of Lading and acted as the initial receiving carrier for cargo from Tanita Corp." (TPC ¶ 2), with having "negligently issued an improper Straight Bill of Lading" (TPC ¶ 4(a)) and with having "failed to handle the cargo in a manner which would avoid loss and the risk of loss" (TPC ¶ 4(b)). But when it was then challenged by Nissin, Airco shifted gears to a contention that "at all relevant times, Nissin was a freight forwarder (and thus deemed an initial carrier) subject to liability under the Carmack Amendment" (Airco Mem. 4). That type of strict liability departure from Airco's original negligence claims is entirely understandable, given the facts (1) that Airco has made no effort at all to identify just what was assertedly wrong in the issuance of a straight bill of lading*fn1 and (2) that it was Airco and not Nissin that hired J.J. Phoenix Express, Ltd. ("Phoenix") to store the cargo overnight.*fn2

What we are left with, then, is Airco's altered position that Nissin bears a kind of strict liability under the Carmack Amendment because it was a "freight forwarder" within the definition set out in 49 U.S.C. § 13102 (8) (and it was thus deemed to be an "initial carrier" for Carmack purposes). To that end Airco points to that statutory definition of "freight forwarder," urging that Nissin indeed proffers the various services identified in the statute:

(8) The term "freight forwarder" means a person holding itself out to the general public (other than as a pipeline, rail, motor, or water carrier) to provide transportation of property for compensation and in the ordinary course of its business —

(A) assembles and consolidates, or provides for assembling and consolidating, shipments and performs or provides for break-bulk and distribution operations of the shipments;

(B) assumes responsibility for the transportation from the place of receipt to the place of destination; and

(C) uses for any part of the transportation a carrier subject to jurisdiction under this subtitle.

The term does not include a person using transportation of an air carrier subject to part A of subtitle VII.

But the difficulty with that contention is that although Nissin is indeed a licensed freight forwarder (as acknowledged by its R. Mem. 10 n. 8), it was not performing that role in the transaction at issue. First, as indicated by the bill of lading, which lists "Tanita do Nissin" as the shipper, Nissin is a distributor for Tanita, which was the reason that the cargo had been in storage in Nissin's warehouse to begin with.*fn3 It thus did not carry out the subsection (A) assemblage and consolidation function in any conventional sense of that concept. And as this Court stated in Independent Mach., Inc. v. Kuchne & Nagel. Inc., 867 F. Supp. 752, 759 (N.D. Ill. 1994):

Nothing in the litigants' submissions deals with, and this Court has not located any appellate tribunal's discussion of, the question whether a company that provides assemblage and consolidation services "in the ordinary course of its business" but has not done so in the transaction at issue — this time doing nothing more than arranging for the transportation of a single item — is still subject to the strictures of the Carmack Amendment as to that item. That certainly would seem to be a strained reading of the statute, for it would impose strict liability on an entity that was not in fact performing freight forwarding services in the case at issue — a sort of revivification of the older concept described in [Chicago. M., St. P. & P. R.R. v.] Acme Fast Freight [Inc.], 336 U.S. [465,] 484 [(1949)], 69 S.Ct. [692,] 701. Thus K & N's sworn submission ought logically to be enough to take it out of the ambit of the Carmack Amendment (accord, Pacific Austral Party, Ltd. v. Intermodal Express, Inc., No. 88 C 10470, 1990 WL 141010, at *1-2, 1990 U.S. Dist LEXIS 12638, at *3-*4 (N.D. Ill. Sept. 26)).*fn4

At least as importantly, there is also nothing here to confirm that Nissin assumed responsibility in the fashion that subsection (B) requires — a requirement that our Court of Appeals in Chemsource, Inc. v. Hub Group, Inc., 106 F.3d 1358, 1362 (7th Cir. 1997) has expressly held to be an essential ingredient of "freight forwarder" status, and hence of Carmack Amendment liability.*fn5 And that factor alone suffices to defeat Airco's TPC.

Conclusion

Nissin's motion to dismiss the Airco TPC is granted.*fn6 This Court of course recognizes that the discussion and analysis here have in part drawn upon information submitted by Nissin outside of the four corners of the TPC, while normally a Rule 12(b)(6) motion requires that the pleading under attack be accepted as gospel. But that has been done only to facilitate matters, both (1) because there is no reason to believe that the Nissin assertions are inaccurate and (2) because Airco is granted leave to file an amended TPC on or before July 17, 2000 — if, as stated earlier, such a pleading can be drafted based on what Airco knows of the facts and on what its counsel can assert in good conscience as the predicate for such a claim.


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