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H. Kramer & Co. v. Cdn Logistics, Inc.

United States District Court, N.D. Illinois, Eastern Division

July 11, 2014

H. KRAMER & CO. and ZURICH AMERICAN INSURANCE CO., a/s/o H. KRAMER & CO., Plaintiffs,
v.
CDN LOGISTICS, INC., Defendant.

MEMORANDUM OPINION & ORDER

JOAN B. GOTTSCHALL, District Judge.

H. Kramer & Co. hired CDN Logistics, Inc. to transport 44, 842 brass ingots from Illinois to Iowa. On their way to Iowa, the ingots were stolen, resulting in a loss to H. Kramer of $148, 646.20. H. Kramer sued CDN for this amount under the Carmack Amendment, 49 U.S.C. § 14706, which makes carriers who transport goods liable to shippers when the goods are damaged in transport. CDN moves to dismiss the complaint, arguing that the parties agreed that CDN would not be held liable for losses resulting from criminal acts such as theft. To limit its liability under the Carmack Amendment, a carrier like CDN must satisfy a number of requirements. Because the court cannot determine as a matter of law that CDN has satisfied those requirements here, the motion to dismiss is denied.

I. BACKGROUND

H. Kramer recycles brass and copper ingots at a facility in Chicago, Illinois. On November 2, 2012, H. Kramer contracted with CDN to transport 44, 842 of these ingots to Iowa. CDN took possession of the ingots and transported them in a trailer to a storage facility in Melrose Park, Illinois. While the ingots were in Melrose Park, the trailer and the ingots were stolen. Although the trailer was later recovered, the ingots were never found.

When H. Kramer delivered the ingots to CDN, it prepared a bill of lading. The bill of lading stated that the bill was "subject to the classifications and tariffs in effect on the date of the issue in this Bill of Lading." (Mot. to Dismiss Ex. A, ECF No. 12-1.) It further provided:

Shipper [H. Kramer] hereby certifies that he is familiar with all the terms and conditions of the said bill of lading, including those on the back thereof, set forth in the classification or tariff which governs the transportation of the shipment, and the said terms and conditions are hereby agreed to by the shipper and accepted for himself and his assigns.

( Id. ) CDN's "tariff" in turn provided in relevant part, "CDN will not be liable to any party to the shipping transaction for loss, damage or delay caused by any of the following:... (b) perils of the air, criminal acts of any person or entity...." ( Id. )

II. LEGAL STANDARD

To survive a motion to dismiss pursuant to Rule 12(b)(6), a complaint must "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim satisfies this pleading standard when its factual allegations "raise a right to relief above the speculative level." Twombly, 550 U.S. at 555-56; see also Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010) ("[P]laintiff must give enough details about the subject-matter of the case to present a story that holds together."). For purposes of the motion to dismiss, the court takes all facts alleged by the plaintiff as true and draws all reasonable inferences from those facts in the plaintiff's favor, although conclusory allegations that merely recite the elements of a claim are not entitled to this presumption of truth. Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011).

III. ANALYSIS

The Carmack Amendment "cured a number of maladies that had afflicted the market for the interstate shipment of goods, " including "the disparate schemes of carrier liability that existed among the states, some of which allowed carriers to limit or disclaim liability, others that permitted full recovery." REI Transp., Inc. v. C.H. Robinson Worldwide, Inc., 519 F.3d 693, 697 (7th Cir. 2008). To solve this problem, the Carmack Amendment "created a nationally uniform rule of carrier liability concerning interstate shipments." Id. (internal quotation marks omitted).

Under the Carmack Amendment, carriers are liable "to the person entitled to recover under the receipt or bill of lading" for the "actual loss or injury to the property caused by" any carrier in the course of the interstate shipment. 49 U.S.C. § 14706(a)(1). "A shipper can thus be confident that the carrier will be liable for any damage that occurs to its shipment. And a carrier can accurately gauge, and thus insure against, any liability it may face when it agrees to carry something." REI Transp., 519 F.3d at 697.

There is a "narrow exception" to the Carmack Amendment's general rule that carriers are to be held liable for damage they cause in the course of an interstate shipment. Id. at 698. Section 14706(c)(1)(A) provides:

A carrier... may... establish rates for the transportation of property... under which the liability of the carrier for such property is limited to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and the shipper if that value ...

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