United States District Court, C.D. Illinois
January 13, 2004.
Milo Glass and Jerolene Glass, Plaintiffs Crimmins Transfer Company, United Van Lines, and Quad City Moving Co., Defendants
The opinion of the court was delivered by: JOHN GORMAN, Magistrate Judge
The parties have consented to have this case heard to judgment by a
United States Magistrate Judge pursuant to 28 U.S.C. § 636(c), and
the District Judge has referred the case to me. Now before the court are
three motions for summary judgment one by each defendant, as well as a
motion to strike the defendants" reply briefs. The motions are fully
briefed and the court has carefully considered the matters discussed
therein. For the following reasons, two of the motions for summary
judgment are allowed and one motion for summary judgment is allowed in
part and denied in part. The motion to strike is denied.
MOTION TO STRIKE
In the motion to strike, plaintiffs argue that the reply briefs were
untimely. Plaintiffs fail to take into account the exclusion of weekends
and other non-business days in calculating the date on which the reply
briefs were due. In addition, the Local Rules of this court do solicit
reply briefs as part of the briefing schedule in summary judgment
motions. There is a purpose for the reply brief, especially in cases such
as this one that present rather novel issues of law, replies assist the
court in ruling on motions based on the merits. In a hotly disputed case
such as this one, the 10 days would, in all likelihood, have been
extended by a day or two had the replies actually been late. I see
no prejudice to the plaintiffs and the delay in this situation has caused
no difficulty for the court. For both of those reasons, the motion to
strike is denied.
SUMMARY JUDGMENT MOTIONS GENERALLY
Summary judgment is appropriate if all evidence submitted shows that
there is no genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Cox
v. Acme Health Serv., 55 F.3d 1304, 1308 (7th Cir. 1995). In ruling
on a summary judgment motion, the court may not weigh the evidence or
resolve issues of fact; disputed facts must be left for resolution at
trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986).
The court is to examine all admissible facts, viewing the entirety of the
record and accepting all facts and drawing all reasonable inferences in
favor of the non-movant, Erdman v. City of Ft. Atkinson,
84 F.3d 960, 961 (7th Cir. 1996); Vukadinovich v. Bd. of Sch.
Trustees, 978 F.2d 403, 408 (7th Cir. 1992), cert. denied,
510 U.S. 844 (1993); Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir.
1990); DeValk Lincoln-Mercury, Inc. v. Ford Motor Co.,
811 F.2d 326, 329 (7th Cir. 1987); Bartman v. Allis Chalmers Corp.,
799 F.2d 311, 312 (7th Cir. 1986), cert. denied, 479 U.S. 1092 (1987),
and construing any doubts against the moving party. Adickes v. S.H.
Kress & Co., 398 U.S. 144 (1970); Trotter v. Anderson,
417 F.2d 1191 (7th Cir. 1969).
If the facts indicate that no reasonable jury could find for the party
opposing the motion, then summary judgment must be granted. Hedberg
v. Indiana Bell Tel. Co., 47 F.3d 928, 931 (7th Cir. 1995), citing
Anderson, 477 U.S. at 248. 1995). If the non-moving party fails
to make a showing sufficient to establish the existence of an element
essential to that party and on which that party will bear the burden of
proof at trial, then summary
judgment is proper. Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986); Waldridae v. American Hoechst Corp.,
24 F.3d 918, 920 (7th Cir. 1994). In other words, a plaintiff may not simply
rest on allegations without significant probative evidence tending to
support the complaint. First Nat'l Bank of Arizona v. Cities Serv. Co.,
391 U.S. 253, 290 (1968). See also Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986)(when the moving party
has met its burden, non-moving party must do more than show some
"metaphysical doubt" as to material facts). A scintilla of evidence in
support of the non-moving party's position is not sufficient to oppose
successfully a summary judgment motion; "there must be evidence on which
the jury could reasonably find for the [non-movant]." Anderson,
477 U.S. at 250.
The purpose of summary judgment is to "pierce the pleadings and to
assess the proof in order to see whether there is a genuine need for
trial." Matsushita Elec. Indus. Co., Ltd, v. Zenith Radio
Corp., 475 U.S. 574, 587(1986). On a motion for summary judgment,
the moving parties must first identify those portions of the pleadings,
depositions, answers to interrogatories, and admissions on file, together
with affidavits, if any, that the parties believe demonstrate the absence
of a genuine issue of material fact. Fed.R.Civ.P. 56(c); Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving parties
have met the threshold burden of supporting the motion, the opposing
party must "set forth specific facts showing that there is a genuine
issue for trial." Fed.R.Civ.P. 56(e).
In determining whether a genuine issue of material fact exists, the
court must construe all facts in the light most favorable to and draw all
reasonable inferences in favor of the non-moving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Haefling v.
United Parcel Serv., Inc., 169 F.3d 494, 497 (7th Cir. 1999). The
"some alleged factual dispute between the parties," or "some
metaphysical doubt," however, does not create a genuine issue of fact.
Piscione v. Ernst & Young. L.L.P., 171 F.3d 527, 532 (7th
Cir. 1999). The proper inquiry is whether a rational trier of fact could
reasonably find for the party opposing the motion with respect to the
particular issue. See, e.g., Jordan v. Summers, 205 F.3d 337,
342 (7th Cir. 2000).
The following facts are taken from the parties' statements of
undisputed facts, the responses thereto, and the documentary evidence
submitted by the parties, unless otherwise noted.
In 1995, the plaintiffs began preparing for a move from Iowa to
Florida. As part of the preparation, they arranged for United Van Lines
("United") to facilitate the move. United designated Crimmins Transfer
Company ("Crimmins") as its agent for transportation and related moving
services. On September 7, 1999, a group of buyers, calling themselves
Quad Cities Moving and Storage entered into an asset purchase agreement
with Crimmins. Then, on November 5, 1999, Quad Cities Moving and Storage
Inc. ("QCMS") incorporated under the laws of Illinois.
In May and June of 1995, Crimmins packed some of plaintiffs' personal
property and moved it to a storage facility in Illinois. Additional items
were packed and stored in October of 1997. This personal property was to
be stored at Crimmins' warehouse until the plaintiffs' new home in
Florida was completed; the property was then to be transported to
Florida. In May of 1998, a flood occurred at the warehouse. The stored
items became wet and then later developed mold, mildew and fungus.
On about September 16, 1999, United retrieved the stored items and
moved them to plaintiffs' new Florida residence, where the property was
delivered on September 24, 1999. Shortly after the movers began unloading
the truck in Florida, plaintiff Jerolene Glass noticed the smell and saw
water damage on the furniture. Nearly all the furniture and accessories
was either damaged or destroyed by the mold and mildew.
A Crimmins/Quad City employee, Tim Tallman, who assisted in loading the
property onto the truck in Illinois and off the truck in Florida noticed
(and documented on the inventory) a "musty, mildew odor" and mildew
damage on some of the items. Jennifer Hagar, a manager for Crimmins and a
vice president of QCMS until June of 2001, knew about the Glasses' claim
for damages to their property before closing the purchase of Crimmins by
QCMS. In addition to the obvious property damage, plaintiffs allege that
numerous health problems have resulted from the molds.
The Glasses filed this suit against Crimmins, United and QCMS, seeking
compensation for their property damage, emotional distress, and physical
injury. Count I alleges breach of contract against Crimmins, and Count II
alleges breach of contract by QCMS as successor in interest to Crimmins.
Count III alleges fraudulent concealment by Crimmins and QCMS. In Count
IV, plaintiffs allege fraudulent concealment against QCMS and Crimmins,
seeking punitive damages. Counts V and VI allege negligence resulting in
personal injury to the two plaintiffs. Count VII alleges that United
violated the Carmack Amendment, while Count VIII alleges the same
violation against QCMS and Crimmins. Counts IX and X allege negligence
resulting in personal injury to the plaintiffs.
The suit was filed in Rock Island County, Illinois, and was removed to
this court on the basis of federal question jurisdiction. Each of the
three defendants has moved for
summary judgment as to some of the claims alleged against them.
Specifically, United moves for judgment as to counts IX and X; QCMS as to
counts II, III, IV, V, VI and VIII; and Crimmins as to counts I, III,
IV, V and VI.
Congress has defined federal-question jurisdiction as encompassing:
any civil action or proceeding arising under any
Act of Congress regulating commerce or protecting
trade and commerce against restraints and
monopolies: Provided, however, that the district
courts shall have original jurisdiction of an
action brought under section 11706 or 14706 of
title 49, only if the matter in controversy for
each receipt or bill of lading exceeds $10,000,
exclusive of interest and costs."
28 U.S.C.A. § 1337. Here, the complaint seeks well in excess of
that amount, and Counts VII and VIII are expressly brought under section
14706 of Title 49. This court has original subject matter jurisdiction
over those two counts and has supplemental jurisdiction over the
remaining counts pursuant to 18 U.S.C. § 1367. See, e.g., Line
Equipment Services, Inc. v. Signal Medical Services, Inc.,
319 F.3d 288
(7th Cir. 2003); Pizzo v. Bekin Van Lines Co., 258 F.3d 629
(7th Cir. 2001); Taisho Marine and Fire Ins, v. Maersk Line.
Inc., 7 F.3d 238 (Table), text at 1993 WL 406499, Oct 12, 1993 (7th
SUMMARY JUDGMENT MOTIONS
Preemption by the Carmack Amendment
In their motions for summary judgment, each defendant argues that the
plaintiffs' claims under Illinois law, as well certain of their prayers
for relief, are preempted by the Carmack Amendment. The Carmack
Amendment, enacted in 1906, 49 U.S.C. § 14706(a)(1), formerly
49 U.S.C. § 11707(a)(1), provides in pertinent part:
A carrier providing transportation or
service . . . shall issue a receipt or bill of
lading for property it receives for transportation
under this part. That carrier and any other
carrier that delivers the property and is
providing transportation or service . . . are
liable to the person entitled to recover under the
receipt or bill of lading. The liability imposed
under this paragraph is for the actual loss or
injury to the property caused by (A) the receiving
carrier, (B) the delivering carrier, or
(C) another carrier over whose line or route the
property is transported in the United States.
Failure to issue a receipt or bill of lading does
not affect the liability of a carrier."
The purpose of the Carmack Amendment is "to establish uniform federal
guidelines 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, 829 F.2d 1407
, 1415 (7th
Cir. 1987). The Carmack Amendment contains a comprehensive remedial
scheme whereby a shipper whose cargo is lost or damaged by a carrier may
recover damages for that loss. The amount of the recovery is limited to
actual losses, unless the shipper and carrier negotiate for lower
rates a lower cap on potential losses. The agreement must be set
out in a bill of lading, and the bill of lading becomes the governing
contract between the parties; Carmack's provisions are deemed
incorporated into all such contracts.
Claims arising out of the interstate shipment of goods raise two
distinct but often intertwined issues: preemption of state law claims by
Carmack and the use or creation of federal common law to supplement
Carmack. In 1913, the Supreme Court held that an interstate carrier's
liability is limited to the actual loss or damage to the shipped goods,
in an amount stipulated in the bill of lading. Adams Express Co. v.
Croninger, 226 U.S. 491 (1913). In addition, the Adams
Express court held that the savings clause (which saves common law
rights and remedies) means only federal common law rights and
remedies, not state rights and remedies, Id. at 507. The bottom
line of Adams Express and its
progeny is that state statutes and common law are preempted by the
Carmack Amendment if they "in any way enlarge the responsibility of the
carrier" for losses or if they "at all affect the ground of recovery or
the measure of recovery." Charleston & W.C. Ry. Co. v.
Varnville, 237 U.S. 597, 604 (U.S. 1915).
In Missouri. Kansas & Texas Rv. Co. v. Harris,
234 U.S. 412, 420 (1914), the Supreme Court held that Carmack did not bar a
$20 attorney fee award to a shipper under Texas law because it did not
increase liability for loss of goods and only "incidentally" affected the
remedy for enforcing the carrier's responsibility. The Court rejected the
proposition that this was a prohibited penalty, finding instead that it
was a "compensatory allowance" to the shipper resulting in only a
"moderate increment" in suit costs, Id. at 421.
The breadth of Carmack's preemption was reiterated in Southeastern
Express Co. v. Pastime Amusement Co., 299 U.S. 28, 29 (1936):
The words of the [Carmack Amendment] are
comprehensive enough to embrace all damages
resulting from any failure to discharge a
carrier's duty with respect to any part of the
transportation to the agreed destination . . . The
underlying principle is that the carrier is
entitled to base rates upon value and that its
compensation should bear a reasonable relation to
the risk and responsibility assumed. The broad
purpose of the federal act is to compel the
establishment of reasonable rates and to provide
for their uniform application.
Since these cases, the Supreme Court has held consistently that federal
law excludes all other rights and remedies with respect to interstate
transportation agreements, e.g., Thurston Motor Lines, Inc. v.
Jordan K. Rand. Ltd., 460 U.S. 533
, 535 (1983), and that a carrier's
rights and obligations, as defined by its published tariff, cannot be
any alleged tort of the carrier. Maislin Indus. U.S. Inc. v.
Primary Steel, Inc., 497 U.S. 116
, 126 (1990).
In Hughes v. United Van Lines, 829 F.2d 1407 (7th Cir. 1987),
cert. denied, 485 U.S. 913 (1988), the Seventh Circuit affirmed dismissal
of state law claims for negligence, conversion and negligent infliction
of emotional distress, arising out of fire damage to household goods.
After holding that the "remedy provision of the Carmack Amendment
preempts all state and common law remedies inconsistent with the
Interstate Commerce Act," id. at 1415, the Court of Appeals
The purpose of this statute is to establish
uniform federal guidelines designed in part to
remove the uncertainty surrounding a carrier's
liability when damage occurs to a shipper's
interstate shipment. To permit a shipper to choose
among various types of remedies would cause
confusion and insurmountable problems and defeat
the Act's purpose of eliminating uncertainty as to
a carrier's liability by injecting uncertainty
back into this area of transportation Congress has
sought to regulate.
In North American Van Lines Inc. v. Pinkerton Sec. Systems.
Inc., 89 F.3d 452 (7th Cir. 1996), the Seventh Circuit discussed the
Carmack Amendment in a different context, namely in determining whether
the Illinois Contribution Act applied to a carrier's third party claim
against the provider of security services. The District Court had
rejected preemption arguments and concluded that the Contribution Act
barred the claim because the carrier had settled the shipper's property
loss claim without following the procedures mandated by that Act. The
Appellate Court reversed, finding that the shipper was not potentially
subject to liability "in tort" as the Act requires, so the Act did not
apply at all. In reaching that conclusion, the Court commented:
We recognize that carriers may be liable to
shippers in tort for incidental harms associated
with the loss or damage of cargo. See, e.g.,
Mesta v. Allied Van Lines Int'l. Inc.,
695 F. Supp. 63, 65 (D.Mass. 1988) (finding that a
carrier may be liable to
a shipper under statute prohibiting deceptive
trade practices in addition to liability under
Carmack Amendment): Sokhos v. Mayflower
Transit, Inc., 691 F. Supp. 1578, 1581
(D.Mass. 1988) (same): Starmakers Publ. Corp.
v. Acme Fast Freight, Inc., 615 F. Supp. 787,
791 (S.D.N.Y. 1985) (stating that a bailor can
recover from a bailee in tort if claim for relief
does not depend upon existence of a contract).
However, these cases involved a separate and
independently actionable harm to the shipper as
distinct from the loss of, or damage to, the
goods. In Mesta and
Sokhos, the harm was the carrier's
failure to provide the shipper with information
required by state law. In Starmakers.
the harm was the carrier's breach of an
North American Van Lines, Inc., 89 F.3d
at 458 [emphasis added].
In Gordon v. United Van Lines Inc., 130 F.3d 282 (7th Cir.
1997), the Court of Appeals adopted the Second Circuit's reasoning that
federal common law may not be used to create remedies, such as punitive
damages, not authorized in Carmack's comprehensive legislative scheme.
Id at 286, citing Cleveland v. Beltman North American
Co., 30 F.3d 373
(2d Cir. 1994). See also, Morris v. Covan
Worldwide Moving Inc., 144 F.3d 377
(5th Cir. 1998)(federal common
law remedies can afford "no greater relief" than what Carmack
The Gordon court, however, relied on Rini v. United Van
Lines, Inc., 104 F.3d 502 (1 st Cir. 1997), as well as
Hughes and Pinkerton, to formulate an exception to
preemption of state law claims that "allege liability on a ground that is
separate and distinct from the loss of, or damage to, the goods that were
shipped." In Rini, the First Circuit had suggested in
dicta that preemption might not extend so far as to bar torts
based on injury "independent from the loss or damage to goods,"
mentioning as examples assault and intentional infliction of emotional
The Gordon Court held that a carrier "must be sheltered from
liability except insofar as it may also engage in conduct that is
sufficiently distinct from the contract of carriage that a separate
and independent claim arises." Applying that test, the Court concluded
the plaintiff's claim for intentional infliction of emotional
distress was not preempted by Carmack, while the common law fraud claims
(fraud in the inducement and in the claims process) were preempted.
Accord, Smith v. United Parcel Service, 296 F.3d 1244 (11th
Cir. 2002) (all state law claims are preempted by Carmack unless they are
based on "separate and distinct conduct rather than injury"); Hull
v. United Van Lines, No. 402CV133 (S.D.Ga. Jan. 6, 2003) (plaintiffs'
claim for intentional infliction of emotional distress preempted because
it was based on mishandling of goods and attempts to conceal damage,
conduct not "separate and distinct from a failure to properly transport
and deliver goods"); See also, Hubbard v. All States Relocation
Serv. Inc., 139 F. Supp.2d 1374 (S.D.Ga. 2000) (claim for injury
personally to shipper, such as emotional distress, not preempted);
Lamm v. Bekins Van Lines Co., 139 F. Supp.2d 1300
(D.Ala. 2001) (emotional distress and outrage claims not preempted);
Rosenthal v. United Van Lines, LLC. 174 F. Supp.2d 1331
(N.D.Ga. 2001)(emotional distress and loss of consortium claims not
Applying this analysis to the claims of the plaintiffs, I conclude that
the state law claims for breach of contract and fraudulent concealment of
the fact of water damage and mold contamination are preempted by Carmack.
These claims arise directly from and are based solely upon loss of and/or
damage to the property that the Glasses consigned to the defendants for
shipment. The claim for punitive damages is preempted if brought under
Illinois common law, and it is not permitted as a matter of federal
The Glasses claims for emotional distress and personal injury, however,
are not quite so easily resolved. Although in Gordon the
Seventh Circuit allowed a claim for intentional infliction of emotion
distress to survive, the emotional distress there arose from
overt conduct blatant and multiple misrepresentations made to
the plaintiff about the shipment of her property and not simply
from loss of or damage to her property. Here, however, the emotional
distress and physical injuries arose directly from the carrier's
mishandling of the property and the subsequent claims. Although the
plaintiffs have alleged that the defendants' concealment of the property
damage was intentional, the duty to disclose was one that arose from the
contractual relationship and from nowhere else. The duty to disclose
damage to goods was therefore part and parcel of the shipment, storage
and delivery of the furniture, and cannot therefore be considered a
"separate" harm. The claims do not fall within the exception carved out
by Gordon and Rini, I find that the state law claims
are preempted by Carmack.
The Carmack Amendment has not altered the common law rule that special,
or consequential, damages are not usually recoverable in an
action for breach of contract. See Reed v. Aaacon Auto Transport.
Inc., 637 F.2d 1302, 1305-06 (10th Cir. 1981); Contempo Metal
Furniture Co. of California v. East Texas Motor Freight Lines, Inc.,
661 F.2d 761, 765 (9th Cir. 1981). The Seventh Circuit has explained that
consequential damages are available under Supreme Court rulings:
In the words of the Supreme Court, the Carmack
Amendment is "comprehensive enough to embrace all
damages resulting from any failure to discharge a
carrier's duty with respect to any part of the
transportation to the agreed destination."
Southeastern Express Co. v. Pastime Amusement
Co., 299 U.S. 28, 29 (1936) Recoverable
damages includes damages for delay, see
id. lost profits (unless they are
speculative), see Camar Corp. v. Preston
Trucking Co., 221 F.3d 271, 277 (1 st
Cir. 2000), and all reasonably foreseeable
consequential damages, see Air Prods. &
Chems., Inc. v. Illinois Cent. Gulf R.R. Co.,
721 F.2d 483, 485 (5th Cir. 1983).
American Nat. Fire Ins. Co. ex rel. Tabacalera Contreras Cigar
Co. v. Yellow Freight Systems, Inc., 325 F.3d 924
, 931 (7th
Special or consequential damages are those that the carrier did not
have reason to foresee as ordinary, natural consequences of a breach when
the contract was made. See Reed, 637 F.2d at 1305; Hector
Martinez & Co. v. Southern Pacific Transportation Co.,
606 F.2d 106, 108-11 (5th Cir. 1979), cert. denied, 446 U.S. 982 (1980). To
recover special damages, the plaintiff must show that the carrier had
notice of the special circumstances from which such damages would flow.
See Illinois Central Gulf Railroad v. Southern Rock, Inc.,
644 F.2d 1138, 1141 (5th Cir. 1981); Reed, 637 F.2d at 1306.
The cases cited above deal with special damages such as loss of use,
lost profits and other business related damages. The issue of whether
special damages for personal injury can be recovered under a Carmack
claim was considered by the court in Tavloe v. Kachina Moving &
Storage Inc., 16 F. Supp.2d 1123 (D.Ariz.1998), a case remarkably
similar on its facts to the case before this court. In Tavloe,
the carrier temporarily stored plaintiff's household furnishings while
their new house was being completed. While the property was stored, some
of it became water damaged and moldy. Upon delivery of the property,
plaintiff developed a severe allergic reaction to the mold, requiring
several hospitalizations. The Tavloe court applied the
principles articulated above, finding that a question of fact existed
regarding whether notice of special conditions, required for proof of
special damages, had been given to the defendant of the special
See also, Messandra v. Mullen Brothers Inc., No. 98-5967,
1999 WL 959684, Sept. 22, 1999 (Sup.Ct.Mass.)(plaintiffs' state law
claims for physical injuries arising from application of pesticides to
stored goods arose out of Carmack claim and therefore were preempted);
Strike v. Atlas Van Lines Inc., 102 F. Supp.2d 599, 600
2000) (Carmack preemption extends to claims involving personal
injuries resulting from reaction to gasoline negligently spilled on
However, even if one accepts that special damages are recoverable under
Carmack, as the Tavloe court did, those special damages would
still be governed by the statutory language and clear Supreme Court
guidance that damages are limited to and capped by actual loss or damage
to the property. In other words, there is no possibility of recovering
damages resulting from personal injury in a Carmack claim, absent a tort
that is independent from the shipping of goods. Accordingly, I also find
that plaintiffs may not seek recovery for their personal injuries in the
form of special damages under the Carmack claims.
Defendants' causation argument arises from their belief that plaintiffs
experts will not be allowed to testify as to causation. As discussed
further below, I have held that one of plaintiffs' experts, Richard
Lipsey, may not testify as to causation. However, I reject as I
have on several other occasions the notion that plaintiffs'
treating physicians cannot testify about causation unless they were both
disclosed as testifying experts and produced a report. Treating
physicians are fact witnesses qualified to render opinions, and they may
therefore testify about causation. Accordingly, to the extent that the
motions are based on causation, they are denied.
QCMS also moves for summary judgment on the basis that Illinois law
does not recognize a theory of corporate successor liability when the
buyer of assets does not also assume the liabilities of the selling
corporation. The generally accepted rule in Illinois is that a
corporation which merges with another corporation takes on the latter
corporation's obligations and liabilities, while a successor corporation
which purchases the business assets of another corporation does not
become liable for the debts of the seller in the absence of an express
agreement to assume the seller's debts. See, e.g., Myers v.
PUtzmeister, Inc., 596 N.E.2d 754 (Ill.App. 1992); Green v.
Firestone Tire & Rubber Co., 460 N.E.2d 895 (1984):
Gonzalez v. Rock Wool Engineering & Equipment Co.,
453 N.E.2d 792 (1983).
Plaintiffs respond, however, that it is federal, not state law that
controls this issue. In Moriarty v. Svec, 164 F.3d 323, 327-28
(7th Cir. 1999), plaintiffs brought an ERIS claim against a funeral home.
The sole proprietor of the funeral home had died, and his son had become
the new sole proprietor. He argued that there was no successor liability
under Illinois law because there was no identity of ownership. The
District Court found that there was a clear Congressional intent to avoid
conflict with state law under ERISA, and that federal common law
therefore governed. In affirming that holding (other aspects of the case
were reversed), the Court of Appeals noted:
The district court did not dispute this
interpretation of state law. Instead it held the
Illinois successor liability rule had been
preempted in the situation by federal common law.
Upholsterers Internat'l Pension Fund v.
Artistic Furniture, 920 F.2d 1323 (7th Cir.
1990). In Artistic Furniture, we stated
that in order to further Congressional objectives,
successor entities can be liable . . . if (1) there
is sufficient continuity between the two companies
and (2) the successor company had notice of the
predecessor's liability . . . Atherton [v.
FDIC, 519 U.S. 213 (1997)] does not preclude
courts from applying appropriate federal rules in
areas where Congress manifests a desire to avoid
Like ERISA claims, Carmack claims arise under a federal statute clearly
demonstrating Congressional intent to avoid conflicts with the varying
state laws that might otherwise apply in individual situations. I
therefore find that Carmack preempts Illinois law regarding successor
liability, in favor of federal common law on the subject. Any other
ruling would thwart the clear intent of Congress.
The Moriarty Court discussed the federal common law doctrine
of successor liability:
To hold a successor liable we must find that there
exists sufficient indicia of continuity between
the two companies and that the successor firm had
notice of its predecessor's liability. Continuity
of operations is easily established here. Artistic
employs substantially all of [defendant's] work
force and it appears supervisory personnel as
well. It used [defendant's] plant, machinery and
equipment and manufactured the same products. Work
orders not completed by [defendant] prior to its
termination were completed by Artistic. Artistic
also agreed to honor warranty claims for good sold
by [defendant]. Finally, [two Vice Presidents]
stayed on in the same positions under Artistic's
management. These facts establish adequate
continuity of operations for purpose of imposing
In the case before the court, there was no change in the identity of
employees when Crimmins changed to QCMS; Crimmins' employees simply
continued to work. QCMS took over the same physical plant and equipment
that Crimmins had used. Two Crimmins employees Jim LaCamera and
Jennifer Hagar who had been responsible for running Crimmins'
day-to-day operations became president and vice president of QCMS. QCMS
continued operating, at least for a time, under Crimmins' interstate
license and advertised in the yellow pages as Crimmins Transfer,
"operating for more than 30 years in the Quad Cities."
The second requirement is that the successor firm had notice of
predecessor's liability. LaCamera and Hagar have admitted knowledge that
the Glasses had outstanding claims before the change in corporate
structure took place.
The evidence submitted by plaintiff is at least enough to create a
question of fact regarding successor liability; in other words, it is
enough to defeat the motion for summary judgment filed by QCMS, at least
to the extent it is based on a denial of successor liability.
MOTION TO EXCLUDE TESTIMONY
Defendants Crimmins and United have moved to exclude plaintiff's
expert, Richard Lipsey, from testifying at trial, because in their
opinion his testimony is unreliable and misleading. I find as follows:
1. Lipsey is sufficiently qualified to testify,
except as noted below. The criticisms about his
qualifications are criticisms that go to the
weight accorded his testimony and to his
credibility. The issues raised may be explored on
2. Again with the exception noted below, the
opinions and report are consistent with Lipsey's
stated expertise and could prove helpful to a
3. However, Lipsey may not testify that the mold
and bacteria "caused the adverse health effects to
the family members" nor may he opine any other
formulation of a causal link between the toxins
and the plaintiff's injuries. He is not a
physician and his qualifications regarding toxic
materials do not extend to medical causation in
The motion is therefore granted in part and denied
For the reasons stated herein, the motion to strike (#49) is denied.
The motion to exclude (#33) is granted in part and denied in part. The
motions for summary judgment (#29 and #31) filed by United and Crimmins
are allowed, and the motion for summary judgment (#36) filed by QCMS is
allowed in part and denied in part. Judgment is entered in favor of
defendants on the following counts: Count I, II, III, IV, V, VI, IX and
X, leaving only the Carmack Amendment claims in Counts VII and VIII
pending for trial.
This case is set for a telephone status conference on January 27, 2004
at 10:30 a.m. to discuss trial of the Carmack claims. The court will
place the call.
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