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MUDD-LYMAN SALES AND SERVICE v. UPS

November 26, 2002

MUDD-LYMAN SALES AND SERVICE CORPORATION, PLAINTIFF,
V.
UNITED PARCEL SERVICE, DEFENDANT.



The opinion of the court was delivered by: Harry D. Leinenweber, United States District Judge.

MEMORANDUM OPINION AND ORDER

Before Lhe Court is Defendant United Parcel Service Inc.'s ("UPS") Motion for Summary Judgment. Also before the Court is Plaintiff Mudd-Lyman Sales and Service Corp.'s ("Mudd-Lyman") Cross-Motion for Summary Judgment and Motion to Strike.

BACKGROUND

Mudd-Lyman, an Illinois corporation with its principal place of business in Skokie, Illinois, sells and markets hardware products; to retailers and wholesalers. UPS is a shipping service corporation organized under the laws of Ohio with its principal place of business in Atlanta, Georgia. At a trade show held in October 1999, Mudd-Lyman marketed a variety of power-painting and spray-painting products on behalf of one of its manufacturing clients, Wagner Spray Tech ("Wagner"). The trade show drew approximately 5,5000 Ace hardware stores from across the nation, and Mudd-Lyman procured purchase orders for Wagner products totaling $809,888.00. On October 11, 1999, Mudd-Lyman shipped a package containing those purchase orders via UPS "Next Day Air" delivery to Wagner's office in Minneapolis. Mudd-Lyman prepared the package for shipment via UPS by entering the shipping information into the UPS-installed software on its computers. When placing the order, Mudd-Lyman did not declare the value of the contents or pay for any additional coverage for loss or damages. Prior to shipping, Mudd-Lyman made no copies of the purchase orders, nor did it otherwise duplicate or retain the information recorded on them. UPS picked up the shipment, but the package never arrived at its destination in Minneapolis and UPS was unable to determine its fate.

Mudd-Lyman claims that its commission on the Wagner sales' would have totaled approximately $50,000.00 to $60,000.00, and that UPS is liable for this entire amount due to its negligence in losing the package. UPS contends that, because Mudd-Lyman failed to request additional coverage for the package or otherwise declare a value in excess of $100.00, by the terms of the limitation on liability set forth in its Service Guide, UPS is not liable to Mudd-Lyman for any losses beyond the $100.00. In its briefs, Mudd-Lyman does not contend that UPS tailed to provide adequate notice of its limited liability, but instead argues that this case must be decided under the substantive law of Georgia, which would, according to Mudd-Lyman, require summary judgment in its favor.

MOTION TO STRIKE

In the Rule 56.1 materials submitted in support of its Motion for Summary Judgment, UPS repeatedly references a chart purporting to list the total number of packages shipped by Mudd-Lyman via UPS for the years 1999-2002. This chart is copied from the August 30, 2002 affidavit of Pat Spang ("Spang"), a UPS employee. Spang states in his affidavit that the chart is based on his review of UPS's records for the Mudd-Lyman account for those years. During discovery, Mudd-Lyman specifically requested from UPS "any UPS account statements [or] documents reflecting account activity with Mudd-Lyman." As this chart was not previously disclosed in this form during discovery, Mudd-Lyman requests that all references to it be stricken front the record pursuant to Federal Rule of Civil Procedure 37.

Under Federal Rule of Civil Procedure 37(a), a "party that without substantial justification fails to disclose information required by Rule 26(a) or 26(e)(1) shall not, unless such failure is harmless, be permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed." Rule 37(a)'s "sanction of exclusion is automatic and mandatory unless the sanctioned party can show that its violation of Rule 26(a) was either justified or harmless." Salgado v. General Motors Corp., 150 F.3d 735, 739-43 (7th Cir. 1998). UPS's justifications for failing to disclose this summary of Mudd-Lyman's account information sooner are not particularly compelling. However, Mudd-Lyman does not dispute the accuracy of the information, and it is difficult to see how Mudd-Lyman is prejudiced by the introduction of this summary of its account activity. Mudd-Lyman's Motion to Strike is therefore DENIED.

CROSS-MOTIONS FOR SUMMARY JUDGMENT

Standard

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). A court must "review the record in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor." Vanasco v. National-Louis Univ., 137 F.3d 962, 964 (7th Cir. 1998). Nevertheless, the party who bears the burden of proof on an issue may not rest on the pleadings, but must affirmatively demonstrate that there is a genuine issue of material fact that requires trial. Warsco v. Preferred Technical Group, 258 F.3d 557, 563 (7th Cir. 2001).

DISCUSSION

Jurisdiction

In an earlier opinion in this case, the Court expressed some doubt as to whether this controversy was properly before the Court under its federal question jurisdiction pursuant to 28 U.S.C. § 1331. At that time, the Court allowed the case to proceed based on its conclusion that the Court could exercise jurisdiction over this matter based on diversity of citizenship, and that neither 49 U.S.C. § 14706(a)(1) ("Carmack Amendment") nor federal common law controlled the determination of the issues presented. See Mudd-Lyman Sales dnd Service Corp. v. United Parcel Service, Inc., 2002 WI. 908710, at *3 (N.D. Ill. May 6, 2002). Subsequent review of relevant case law has caused the Court to reconsider some aspects of that opinion, and now leads the Court to a somewhat different conclusion. The Court's prior opinion was correct in its determination that this dispute does not fall within the scope of the Carmack Amendment. See Shorts v. United Parcel Service, 1999 WI. 118791, at *3-4 (N.D. Tex. Feb. 25, 1999). It is equally clear, however, that the controlling preemptive statutes, 49 U.S.C. § 14501(c)(1) and 41713(b)(4)(A), "preclude the enactment or enforcement of state laws related to the `price, route or service' of motor carriers and inter-modal ground/air carriers such as UPS." Vieira v. United Parcel Service, Inc., 1996 WI. 478696, at *1 (M.D. Cal. Aug. 5, 1996) (citation omitted); Shorts, 1999 WL 118791, at *4. Federal common law occupies the field, and a dispute relating to limitation of liability in an inter-modal carrier contract of carriage, like the one presently before the Court, is properly ajudicated pursuant to the Court's federal question jurisdiction. See Pierre v. ...


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