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Illinois Central Railroad Co. v. Kinder Morgan Liquids Terminals

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

May 9, 2017

ILLINOIS CENTRAL RAILROAD COMPANY, an Illinois Corporation, d/b/a CN, Plaintiff,
v.
KINDER MORGAN LIQUIDS TERMINALS, a Delaware LLC, Defendant.

MEMORANDUM OPINION

          CHARLES P. KOCORAS, District Judge.

         Before the Court is Defendant Kinder Morgan Liquids Terminals' (“Kinder Morgan”) motion to dismiss Plaintiff Illinois Central Railroad's (“CN”) Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court grants in part and denies in part Kinder Morgan's motion.

         BACKGROUND

         The following facts are taken from CN's Amended Complaint and are assumed to be true for purposes of this motion. See Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). The Court draws all reasonable inferences in favor of CN. See Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).

         This lawsuit stems from alleged charges assessed by CN for demurrage[1] and intraplant switching[2] fees. According to CN's Amended Complaint, between August 2015 and October 2016, CN transported freight rail cars to Kinder Morgan's Argo Facility. The Argo Terminal acts as a rail transportation intermediary that will transload shipped materials by moving them from the railroad to another form of transportation, such as pipeline or truck, or will temporarily store shipped materials for the owner. CN alleges that Kinder Morgan is responsible for $1, 841, 045 in demurrage fees assessed in 95 invoices from August 2015 to October 2016. These invoices relate to rail cars allegedly delayed at the Argo Terminal. CN seeks to recover the balance of its invoices pursuant to the demurrage regulations and its demurrage tariff. Additionally, CN claims Kinder Morgan is liable for $28, 577.00 in intraplant switching charges between August 2015 and October 2016. According to CN, Kinder Morgan requested intraplant switching services which CN performed. Furthermore, CN asserts they have not received payment for services rendered.

         LEGAL STANDARD

         A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) “tests the sufficiency of the complaint, not the merits of the case.” McReynolds v. Merrill Lynch & Co., 694 F.3d 873, 878 (7th Cir. 2012). The allegations in a complaint must set forth a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A plaintiff need not provide detailed factual allegations, but must provide enough factual support to raise his right to relief above a speculative level. Bell Atlantic. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A claim must be facially plausible, meaning that the pleadings must “allow . . . the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The claim must be described “in sufficient detail to give the defendant ‘fair notice of what the . . . claim is and the grounds upon which it rests.'” E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” are insufficient to withstand a 12(b)(6) motion to dismiss. Iqbal, 556 U.S. at 678.

         DISCUSSION

         I. Count I-Demurrage Charges

         Kinder Morgan argues that Count I of CN's Amended Complaint should be dismissed because: (i) demurrage regulations do not apply to this dispute; (ii) CN fails to allege that Kinder Morgan unduly caused the rail car delays; and (iii) CN fails to allege that it provided Kinder Morgan with proper notice of the material changes to its tariff.

         A. Demurrage Regulations

         Under the guidelines promulgated by the Surface Transportation Board (the “STB”),

Demurrage shall be assessed by the serving rail carrier, i.e., the rail carrier providing rail cars to a shipper at an origin point or delivering them to a receiver at an end-point or intermediate destination. A serving carrier and its customers (including those to which it delivers rail cars at origin or destination) may enter into contracts pertaining to demurrage, but in the absence of ...

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