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Travelers Insurance v. Panalpina Inc.

September 30, 2010


The opinion of the court was delivered by: Judge Virginia M. Kendall


Plaintiffs Travelers Insurance and Vera Bradley Designs (collectively "Vera Bradley") sued Defendants Panalpina, Inc. ("Panalpina"), ITG Transportation Services, Inc. ("ITG"), and Buckley Transportation, Inc. ("Buckley") (collectively "Defendants") alleging violation of the Carmark Amendment.*fn1 Vera Bradley also alleges a common law bailment count against Buckley.*fn2 Vera Bradley moves for partial summary judgment on Counts II and III, which alleged that ITG and Buckley violated the Carmark Amendment. Specifically, Vera Bradley seeks summary judgment against ITG on the issue of liability, claiming that ITG was a "carrier" instead of a "broker," and therefore liable under the Carmack Amendment for damage caused to Vera Bradley's shipment of pajamas. In addition, Vera Bradley moves for summary judgment against Buckley on the issue of liability. In turn, ITG filed a motion for summary judgment, claiming it was a "broker" and not a "carrier." For the reasons stated below, the Court grants in part and denies in part Vera Bradley's Motion for Summary Judgment and denies ITG's Motion for Summary Judgment.


I. Destruction of Vera Bradley's Pajama Container

This case involves the destruction of Vera Bradley's pajamas while en route from Elwood, Illinois to Vera Bradley's warehouse in Roanoke, Indiana. (VB 56.1 Resp. ITG ¶¶ 15, 19.) The pajama shipment originated in Hong Kong and entered the United States in Seattle, Washington. (ITG 56.1 Resp. VB ¶ 6.) The shipment was packaged in a container comprising 1,112 cartons of 100% cotton women's pajamas. (ITG 56.1 Resp. VB ¶ 6.) Hanjin, the company that transported the pajamas from Hong Kong to Seattle, then sent them by rail to the Burling Northern Santa Fe rail yard in Elwood, Illinois, just outside Chicago. (ITG 56.1 Resp. VB ¶ 6.) The container arrived at the rail yard on February 20, 2007. (VB 56.1 Resp. ITG ¶ 11.)

Vera Bradley retained Panalpina to coordinate transportation by truck of the container from the rail yard to Vera Bradley's warehouse in Roanoke, Indiana. (ITG 56.1 Resp. VB ¶ 7.) On February 19, 2007, a day before the container arrived at the rail yard, Panalpina issued a Delivery Order "dispatching" the shipment to ITG. (ITG 56.1 Resp. VB ¶ 10.) During this time, ITG had a property broker's license but not a license to be a carrier of goods. (VB Resp. ITG Add. Facts ¶¶ 7, 8.) The Delivery Order identified ITG Trucking as the entity that would "deliver or transfer" the container. (ITG 56.1 Resp. VB ¶ 10.) Lisa Kernan, who tracks shipments for Panalpina, sent ITG an email with the Delivery Order that explained "attached is the delivery order for a container going to Vera Bradley. The LFD is 2/20, so please pull this container and hold in the trucker's yard until Vera Bradley is able to take the container." (VB Resp. ITG Add. Facts ¶ 2.)

In the past, after Panalpina retained ITG, ITG would then contact the carrier of its choice to transport the freight in the way requested by Panalpina or the customer. (ITG 56.1 Resp. VB ¶ 25.) In this case, after receiving the Delivery Order, ITG was free to subcontract the transportation of the container to another entity. (ITG 56.1 Resp. VB ¶ 13.) ITG did this by directing a Delivery Order to Buckley ("Buckley Delivery Order"). (ITG 56.1 Resp. VB ¶ 28.) ITG and Buckley assented to the terms of the Buckley Delivery Order, which contractually obligated Buckley to transport the container from the rail yard in Elwood, Illinois to Roanoke, Indiana. (ITG 56.1 Reply to VB Resp. ¶ 15; ITG 56.1 Resp. VB ¶ 30.) The Buckley Delivery Order contained no reference to Panalpina and instructed Buckley to contact ITG about any delivery delays or deviations from the Order's terms. (ITG 56.1 Resp. VB ¶ 29.)

On February 20, 2007, pursuant to its contract with ITG, Buckley picked up the container from the rail yard and delivered it to its trucking facility in Rockdale, Illinois. (VB 56.1 Resp. Buckley ¶ 1.) Buckley was to hold the container at its facility until making the delivery to Roanoke, Indiana on February 23, 2007. (VB 56.1 Resp. Buckley ¶ 1.) In the early morning hours of February 22, 2007, a fire broke out at Buckley's trucking yard. (VB 56.1 Resp. Buckley ¶ 3.) Apparently, a tractor in the trucking yard was set on fire and rolled down a hill and collided with the trailer containing the pajamas. (VB 56.1 Resp. Buckley ¶¶ 4, 5.) The fire department arrived on the scene, and upon opening the smoke-filled Vera Bradley trailer, smoke rushed out so the fire department hosed the inside of the trailer. (VB 56.1 Resp. Buckley ¶¶ 6, 7.) The fire and smoke from the fire damaged a portion of the pajamas inside. (ITG 56.1 Reply to VB Resp. ¶ 19.)

The cause of the fire is under investigation by the Bureau of Alcohol, Tobacco, Firearms, and Explosives ("ATF"). (VB 56.1 Resp. Buckley ¶ 11.) Upon arriving on the scene, Mr. Buckley observed that gasoline had been poured into the tractors. (VB 56.1 Resp. Buckley ¶ 8). The Rockdale Police Department's report described the source of the fire as "possible arson." (VB 56.1 Resp. Buckley ¶¶ 9, 10.)

On February 26, 2007, within a few days after the fire at Buckley's trucking yard, Panalpina sent ITG a formal notice of loss, which noted that Panalpina was holding ITG responsible for the loss it sustained. (ITG 56.1 Resp. VB ¶ 15.) There is no indication that any other company received a similar notice from Panalpina. (ITG 56.1 Resp. VB ¶ 15.) Further, it was only after the fire occurred that Panalpina found out that ITG had retained Buckley to transport the container.*fn4 (ITG 56.1 Resp. VB ¶ 14.) Panalpina had no business relationship with Buckley during this time. (ITG 56.1 Resp. VB ¶ 17.) When Panalpina learned of the fire at Buckley's trucking yard, it considered Buckley to be ITG's subcontracted trucker. (ITG 56.1 Resp. VB ¶ 14.)

II. The Nature of Panalpina and ITG's Business Relationship

Employees of ITG and Panalpina testified about the type of work they thought ITG conducted, which is relevant to the determination of whether ITG was a carrier or broker. Clifford Pinto, the Ocean Import Manager for Panalpina, testified that he was under the impression that ITG was the trucker and would transport the container to Vera Bradley's warehouse in Indiana. (ITG 56.1 Resp. VB ¶ 11.) Earlier, however, he testified that ITG was a truck broker that arranges transportation. (ITG 56.1 Resp. VB ¶ 11.) Pinto did not know whether or not ITG would be the entity that would possess, store (if needed), and deliver the container to Vera Bradley. (VB Resp. ITG Add. Facts ¶ 8.) In fact, Pinto had no involvement with shipping the Vera Bradley container until after the fire broke out at Buckley's trucking yard. (VB Resp. ITG Add. Facts ¶¶ 9, 10.)

Lisa Kernan, who works under Pinto at Panalpina and is responsible for tracking shipments, prepared the Delivery Order that Panalpina sent to ITG. (ITG 56.1 Resp. VB ¶ 19.) At the time of the shipment, Kernan did not know whether or not ITG was a broker.*fn5 (VB 56.1 Reply to ITG Resp. ¶ 19.) Kernan's primary concern was that Panalpina's client, Vera Bradley, received its shipment, and she was less concerned about whether ITG was a broker, used a third party, or delivered the shipment itself. (VB 56.1 Reply to ITG Resp. ¶ 12.) In past dealings with Vera Bradley, Kernan never heard from Vera Bradley that ITG had personally delivered a shipment. (VB 56.1 Reply to ITG Resp. ¶ 15.)

Patricia Cermak is the Vice President of Marketing and Operations for ITG Transportation Services. (ITG 56.1 Resp. VB ¶ 22.) Cermak has held that position since 1986 and is the only person at ITG responsible for marketing the company. (ITG 56.1 Resp. VB ¶ 22.) On emails that Cermak sends, under her name and title it states, "ITG Services -- Local Trucking Every Major City N.A. -- Over the Road Trucking N.A."*fn6 (ITG 56.1 Resp. VB ¶ 21.) Cermak made about four sales calls a year to Panalpina prior to February 2007, and in those calls she would discuss how ITG could assist Panalpina in meeting its trucking requirements. (ITG 56.1 Resp. VB ¶¶ 22, 23.) Cermak described ITG's services as transporting customers' freight "from origin to destination," after determining "where we pick it up" and "where we're ...

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