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Brightstar International Corp v. Minuteman International and

October 4, 2011

BRIGHTSTAR INTERNATIONAL CORP., PLAINTIFF,
v.
MINUTEMAN INTERNATIONAL AND BNSF RAILWAY COMPANY,
DEFENDANTS. BNSF RAILWAY COMPANY, THIRD-PARTY PLAINTIFF,
v.
AZTEC PRODUCTS, INC., THIRD-PARTY DEFENDANT



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

MEMORANDUM OPINION AND ORDER

Plaintiff, Brightstar International Corp. brought suit against Defendants Minuteman International and BNSF Railway Company, seeking damages for the destruction of its goods sustained during interstate shipping. BNSF, as a Third-Party Plaintiff,filed a complaint against Aztec Products, Inc., for indemnity in the event that BNSF is found to be liable to Brightstar. For the reasons set forth below, BNSF's third-party complaint against Aztec is dismissed.

I. Background

The interstate shipment of goods by rail or by truck can be a complicated, and sometimes dangerous, matter. This case arises out of the events that can go wrong when cellular telephones are shipped alongside highly combustible floor scrapers. The Plaintiff, Brightstar International Corp. ("Brightstar"), was the owner of 215 cartons of cell phones. (Complaint at ¶ 6). Brightstar entered into an agreement with BNSF Railway Company ("BNSF"), Defendant and Third-Party Plaintiff, for the shipment of these cell phones by rail from Illinois to California. (Complaints at ¶ 6). The intended destination of Brightstar's shipment was Wal-Mart Stores, Inc., but due to a series of intervening events the cell phones were destroyed en route. (Complaint at ¶ ¶ 7 and 13). What happened to Brightstar's cell phones, and who is responsible for bearing the losses, are the issues at the heart of this litigation.

II. The Facts

BNSF consolidated the shipment of Brightstar's cell phones with battery-powered floor scrapers equipped with butane tanks shipped by the other Defendant in this case, Minuteman International, Inc. ("Minuteman"). (Complaint at ¶ 8). On approximately January 16, 2009, the consolidated shipment arrived in Fontana, California, where it was discovered to be on fire. (Complaint at ¶ 9). Brightstar alleges that the fire was the direct result of the combustion and/or explosion of Minuteman's floor scrapers. (Complaint at ¶ ¶ 11-12). Brightstar brought suit in this Court against BNSF and Minuteman pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1367(a) respectively. As to BNSF, Brightstar claimed losses arising under the Carmack Amendment to the Interstate Commerce Act of 1887 (see 49 U.S.C. § 11706), as well as one count for breach of bailment. (Complaint at ¶ ¶ 18-21; Complaint at ¶ ¶ 22-25, respectively). As to Minuteman, Brightstar claimed that Minuteman was negligent in shipping the floor scrapers. (Complaint at ¶ ¶ 14-17). BNSF turned around and sued Aztec Products, Inc. ("Aztec"), the Third-Party Defendant here, alleging that Aztec manufactured the floor burnishers which are the subject of Brightstar's suit. (Doc. 68, BNSF Railway Company's Amended Third-Party Complaint Against Aztec Products, Inc. at ¶ 3 ("Third-Party Complaint")). BNSF asserts that, should it be determined to be liable to Brightstar, it is entitled to indemnity from Aztec "in any amount BNSF is required to pay Brightstar." (Third-Party Complaint at ¶ 7). BNSF claims that Aztec warranted, either expressly or by implication, that its floor burnishers were "properly prepared for safe shipment in interstate commerce," and that this warranty was breached. (Third-Party Complaint at ¶ ¶ 5-6). Aztec asked this Court to dismiss BNSF's third-party claim again it under Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, Aztec's motion is granted and the claim against it is dismissed.

III. The Standard of Review

When considering a Rule 12(b)(6) motion, the Court accepts as true all facts alleged in the complaint and construes all reasonable inferences in favor of the non-moving party. Murphy v. Walker, 51 F.3d 714, 717 (7th Cir.1995). To properly state a valid claim, the complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "Detailed factual allegations" are not required, but the third-party plaintiff must allege facts that, when "accepted as true ... 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To determine whether a complaint meets this standard the "reviewing court [must] draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950. If the factual allegations are well-pleaded, the Court assumes their veracity and then turns to determine whether they plausibly give rise to an entitlement to relief. Id. A claim has facial plausibility when its factual content allows the Court to draw a reasonable inference that the third-party defendant is liable for the misconduct alleged. See Id. at 1949.

IV. Discussion

A. The Carmack Amendment

The Carmack Amendment creates a nationally uniform system of liability for common carriers shipping goods within the stream of interstate commerce. See The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C. § 11706 (known simply as the Carmack Amendment). Specifically, the statutory scheme prescribes the rule of liability for interstate motor carriers to shippers of goods that are lost or damaged during shipment. The statute provides in relevant part:

A rail carrier providing transportation or service subject to the jurisdiction of the Board under this part shall issue a receipt or bill of lading for property it receives for transportation under this part. That rail carrier...[is] liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this subsection is for the actual loss or injury to the property caused by (1) the receiving rail carrier; (2) the delivering rail carrier; or (3) another rail 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 rail carrier.

49 U.S.C. § 11706(a) (1995). The Amendment was implemented in 1906 to address the disuniformity which existed in the law up to that time. Until the Amendment, the liability of common carriers to shippers was a matter of state common law, federal common law (at least until Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)) or state positive law--producing wildly different outcomes in different jurisdictions. The Amendment was made to simplify and unify the law of interstate shipping so that shippers and common carriers alike had predictable default rules around which they could (to some extent) bargain if they so chose. See 49 U.S.C. §11706(c). The Amendment is essentially "a codification of the common law liability of carriers for damage to shippers' goods, [and] provides a remedy against [common carriers] responsible for damage to a plaintiff's goods unless the [common carrier] can prove that he was free from fault." Pizzo v. Bekin Van Lines Co., 258 F.3d 629, 633 (7th Cir. Ill. 2001) (Posner, J.).

To unify the law in this area, the Supreme Court has observed that Congress rigorously drafted the Carmack Amendment such that "almost every detail of the subject of liability of a carrier is covered so completely [ ] that there can be no doubt that Congress intended to take possession of the subject and supercede all state regulation with reference to it." Adams Express Co. v. Croninger, 226 U.S. 491, 505 (1913). The Seventh Circuit has held that "the Carmack Amendment preempts all state law claims based upon the contract of carriage, in which the harm arises out of the loss of or damage to goods." Gordon v. United Van Lines, 130 F.3d 282, 284 (7th Cir. Ill. 1997) (citing North American Van Lines, Inc. v. Pinkerton Security Systems, Inc., 89 F.3d 452 (7th Cir. 1996)). The preemptive scope of the Amendment, though extraordinarily broad, is not absolute. According to the Seventh Circuit "the ...


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