UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
December 16, 2009
THE MISSING LINK JEWELERS, INC., ON BEHALF OF ITSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
UNITED PARCEL SERVICE, INC., DEFENDANT.
The opinion of the court was delivered by: Marvin E. Aspen, United States District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff The Missing Link Jewelers, Inc. ("Missing Link") filed a class action complaint, alleging that Defendant United Parcel Service, Inc. ("UPS") breached its contract with Plaintiff and putative class members by charging late payment fees that violate Illinois law. Presently before us is UPS's motion to dismiss, which asserts that Missing Link's claim is preempted by federal law. For the following reasons, we grant the motion.
UPS, a large package delivery company, charged a five percent late payment fee to customers who failed to pay their invoices within fourteen days of the due date. (Compl. ¶¶ 8, 16.) The relevant term in UPS's standard contract sets such fees at "five percent (5%) of the total past due balance . . . or the maximum permitted by applicable law, whichever is less." (See id. ¶ 21.) Missing Link alleges that the five percent fee charged by UPS is an unenforceable penalty under Illinois law, and therefore that the fee exceeds "the maximum permitted by applicable law." (Id. ¶¶ 22--27.) Thus, according to Missing Link, by charging the five percent fee UPS has breached its contract. (Id.)
UPS counters that state common law contract penalty rules are not applicable in this case because they are preempted by federal law governing the rates charged by motor carriers. (Mot. at 3--14.) UPS argues that Missing Link's contract claim merely seeks to enforce a preempted state law and must be dismissed. (Id.)
II. STANDARD OF REVIEW
The purpose of a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is to test the sufficiency of the complaint, not to decide the merits of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). Accordingly, a court may grant a motion to dismiss under Rule 12(b)(6) only if a complaint lacks "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974 (2007); see Killingsworth v. HSBC Bank Nev., 507 F.3d 614, 618--19 (7th Cir. 2007); EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776--77 (7th Cir. 2007). Preemption is an appropriate issue for a motion to dismiss. See, e.g., Vill. of DePue v. Exxon Mobil Corp., 537 F.3d 775, 789 (7th Cir. 2008).
Under the Federal Aviation Administration Authorization Act of 1994 ("FAAAA"), "a State . . . may not enact or enforce a law . . . related to a price, route, or service of any motor carrier . . . with respect to the transportation of property." 49 U.S.C. § 14501(c)(1); see also § 41713(b)(4)(A). The Supreme Court has previously said that delivery services, such as UPS, are motor carriers within the meaning of the FAAAA. See Rowe v. N.H. Motor Transp. Ass'n, 128 S.Ct. 989, 995 (2008). Therefore, to determine whether Illinois common law contract penalty rules are preempted by the FAAAA in this case, we must decide whether, when applied to UPS's late fee, they relate to "price, route, or service." Id.
When interpreting the meaning of "price, route, or service" within the FAAAA, our analysis is governed by the Supreme Court's interpretation of the Airline Deregulation Act of 1978 ("ADA") in Morales v. Trans World Airlines, Inc., 504 U.S. 374, 112 S.Ct. 2031 (1992), and its progeny. See Rowe, 128 S.Ct. at 994. According to Morales, "[s]tate enforcement actions having a connection with or reference to [carrier] 'rates, routes, or services' are preempted under [the ADA]," and such preemption may occur even if a state law's effect on rates, routes, or services is only indirect. 504 U.S. at 384, 386, 112 S.Ct. at 2037--38; see also Rowe, 128 S.Ct. at 995.*fn1
In a similar way, in the present case the late payment fee charged by UPS relates to the price it charges for its shipping service-by imposing the fee, UPS requires delinquent customers to pay a higher price for that service. Consequently, when, as here, a party attempts to use Illinois common law to challenge these late fees, that party is asking the court to enforce a state law that relates to the price charged by a motor carrier. This request is in direct contravention of the FAAAA and therefore is preempted.
Missing Link, nevertheless, alleges that its claim should survive UPS's motion to dismiss because Missing Link is seeking not to enforce state law to regulate UPS's late fee, but rather to simply enforce the terms of the contract. The FAAAA does not bar routine contract claims "alleging no violation of state-imposed obligations," see Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 228, 115 S.Ct. 817, 824 (1995), and Missing Link argues that its claim falls within this exception.*fn2
Although Missing Link attempts to avoid FAAAA preemption by construing its complaint as a routine breach of contract falling within the Wolens exception, to assess this claim would require us to apply Illinois law which, as stated above, is preempted by the FAAAA. Thus, Missing Link's claim falls outside the Wolens exception and must be dismissed.*fn3
For the foregoing reasons, Defendant's motion to dismiss is granted. It is so ordered.
MARVIN E. ASPEN United States District Judge