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Starr Indemnity & Liability Company v. YRC, Inc.

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

February 15, 2018

STARR INDEMNITY & LIABILITY COMPANY, a/s/o CESSNA AIRCRAFT COMPANY, Plaintiff,
v.
YRC, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          Robert M. Dow, Jr. United States District Judge.

         “All's well that ends well, ” the proverb from the Middle Ages made famous by Shakespeare's play of the same name, captures the Court's hopes for the future of this case. To date, the case has presented a struggle for the parties and the Court. Now pending before the Court is Plaintiff's motion for leave to file a third amended complaint [49], in which Plaintiff proposes to correct a regulatory citation and set forth additional supporting statutory and regulatory provisions to support Counts II, III, and IV. Also pending before the Court is Defendant's motion for reconsideration [36] of the Court's prior order denying its motion to dismiss those same counts. Both motions are fully briefed-and, indeed, Defendant's reply in support of its motion for reconsideration has spawned a further request by Plaintiff to file a sur-reply. After careful consideration of all of these materials, the Court concludes that it should allow the filing of the proposed third (and hopefully last) amended complaint, which will fix a target at which Defendant may direct the full panoply of its arguments regarding the broad preemptive sweep of the Carmack Amendment, some of which are previewed below. Accordingly, Plaintiff's motion for leave to file a third amended complaint [49] is granted and Plaintiff is given until March 13, 2018 to file a third amended complaint correcting the C.F.R citation in Count II and setting forth additional supporting statutory and regulatory provisions in Counts II-IV. Plaintiffs additional request for leave to file a sur-reply is denied as moot. Defendant's motion [36] for reconsideration also is denied as moot in light of the Court's decision to allow Plaintiff an opportunity to amend its complaint. This decision is without prejudice to any arguments-relating to preemption or otherwise-that Defendant may wish to raise in its response to the amended complaint. Given that the parties were able to work out the issues relating to Defendant's recently-filed motion for issuance of letters rogatory [56], the status hearing previously set for March 6, 2018 is stricken and reset to April 19, 2018 at 9:00 a.m., by which time Defendant will have filed its response to Plaintiffs latest amended complaint.

         I. Background

         The full background of this case is set forth in the Court's previous opinion, knowledge of which is assumed here. [See 29, at 1-5.] Briefly stated, Plaintiff Starr Indemnity & Liability Company, as subrogee of Cessna Aircraft Company (“Plaintiff), brings claims against Defendant YRC Inc. (“Defendant”) for damage to two jet engines (“the cargo”) that Cessna had tendered to Defendant for transportation from Orlando, Florida to Bridgeport, West Virginia in August 2014. [18, at Count I ¶¶ 6-9.] According to Plaintiff, as a result of this damage to the cargo, Plaintiff was compelled to pay its insured, Cessna, the sum of $1, 916, 413.26. [Id., at Count I ¶ 9.] In its First Amended Complaint, [1] Plaintiff brings four counts against Defendant. In Count I, Plaintiff alleges liability against Defendant for damage to the cargo, as well as prejudgment and post-judgment interest, under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706.[2] In Counts II through IV, Plaintiff alleges that Defendant violated the Interstate Commerce Commission Termination Act of 1995 (“ICCTA”), 49 U.S.C. § 14704(a)(2) and 14704(e).[3] Plaintiff alleges that Defendant violated the ICCTA when it violated several Federal Motor Carrier Safety Regulations (“FMCSRs”) to which Defendant is subject, including the safe loading requirements of 49 C.F.R. § 398.4(g)(1) (Count II); the requirements to observe driver regulations and conform with speed limits of 49 C.F.R. §§ 390.11 and 392.6 (Count III); and the annual inquiry and review of driving record, maintenance of driver qualification files, and duty to conform to the speed limit requirements of 49 C.F.R. §§ 391.25, 391.51, and 392.6 (Count IV).

         Defendant moved to dismiss Counts II, III, and IV of the First Amended Complaint in July 2016. [See 22.] In support of its motion, Defendant argued that Plaintiffs sole and exclusive remedy for damage to cargo transported in interstate commerce (such as the cargo at issue here) is the Carmack Amendment, “to the exclusion of all other sources of law.” [23, at 4-5.] Thus, according to Defendant, Counts II, III, and IV of Plaintiff s complaint were subject to dismissal because they stem from the same loss of or damage to goods shipped in interstate commerce underlying Plaintiff's Carmack Amendment claim in Count I. See [22], [23].

         On January 17, 2017, the Court denied Defendant's motion to dismiss. [See 29.] After considering the background of both the Carmack Amendment and the ICCTA, the Court concluded that Defendant had not provided any support for its argument that the Carmack Amendment preempts another federal statute, namely § 14704(a)(2). [Id., at 10.] Although the Court noted that the Carmack Amendment's preemptive scope is broad and that it does preempt state and common law remedies, the Court also noted that this preemptive scope is not “all-inclusive” and Defendant had not cited to any case law supporting its argument that the Carmack Amendment preempts another federal statute. [Id., at 9-10.] Therefore, although the Court expressed no opinion on the merits of Plaintiff's claims under the ICCTA, the Court declined to dismiss Counts II, III, and IV. The Court also declined to address the issue of whether § 14704 provides a private right of action for violations of the federal regulations that Plaintiff alleges, because Defendant had not raised this challenge in its motion. [Id., at 10.]

         Defendant moved [36] the Court to reconsider its previous decision in May 2017. Plaintiff opposed Defendant's motion [43], and Defendant filed a reply [48]. Plaintiff has also moved [49] for leave to file a third amended complaint and a sur-reply to Defendant's reply in support of its motion for reconsideration, which Defendant has opposed [53].

         II. Legal Standard

         Because there has not yet been a final judgment in this case, Rule 54(b) governs Defendant's motion for reconsideration. Under Rule 54(b), “any order or other decision [ ] that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.” Fed.R.Civ.P. 54(b); see also Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir.), opinion amended on denial of reh'g, 835 F.2d 710 (7th Cir. 1987) (affirming district court's denial of motion to reconsider under Rule 54(b)).

         Revisions under Rule 54(b) are discouraged and should be reserved for circumstances in which the initial decision was “clearly erroneous and would work a manifest injustice.” See Ghashiyah v. Frank, 2008 WL 680203, at *3 (E.D. Wis. Mar. 10, 2008) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988)) (internal quotation marks omitted). In general, “litigants must fight an uphill battle in order to prevail on a motion for reconsideration.” Id. (citation and internal quotation marks omitted).

         Motions to reconsider under Rule 54(b) “are judged by largely the same standards as motions to alter or amend a judgment under Rule 59(e).” Ghashiyah, 2008 WL 680203, at *3. The Court may grant a Rule 59(e) motion to alter or amend the judgment if the movant presents newly discovered evidence that was not available at the time of trial, points to evidence in the record that clearly establishes a manifest error of law or fact, or if the Court previously misunderstood a party's arguments. Miller v. Safeco Ins. Co. of Am., 683 F.3d 805, 813 (7th Cir. 2012); United States v. Ligas, 549 F.3d 497, 501 (7th Cir. 2008). Rule 59(e) “enables the court to correct its own errors and thus avoid unnecessary appellate procedures.” Miller, 683 F.3d at 813 (citation and internal quotation marks omitted). Rule 59(e) motions are “not appropriately used to advance arguments or theories that could and should have been made before the district court rendered a judgment, or to present evidence that was available earlier.” Id. (citation and internal quotation marks omitted). Additionally, “‘manifest error' is not demonstrated by the disappointment of the losing party. It is the ‘wholesale disregard, misapplication, or failure to recognize controlling precedent.'” Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000) (quoting Sedrak v. Callahan, 987 F.Supp. 1063, 1069 (N.D. Ill. 1997)).

         As to Plaintiffs motion to amend its complaint, leave to amend should “freely” be granted “when justice so requires.” Fed.R.Civ.P. 15(a)(2). “This liberal policy of granting amendments is based in part on the belief that decisions on the merits should be made whenever possible, absent countervailing considerations.” Olech v. Vill of Willow brook, 138 F.Supp.2d 1036, 1040 (N.D. Ill. 2000) (citation omitted). Ultimately, “‘[t]he decision to grant or deny a motion to file an amended pleading is a matter purely within the sound discretion of the district court.'” Soltys v. Costello, 520 F.3d 737, 743 (7th Cir. 2008) (quoting Brunt v. Serv. Emps. Int'l Union, 284 F.3d 715, 720 (7th Cir. 2002)).

         III. Analysis

         In its opening brief, Defendant makes two primary arguments to support its motion for reconsideration. First, Defendant argues that § 14704 does not create a private right of action to recover damages for loss or damage to cargo transported in interstate commerce.[4] In support of this argument, Defendant contends that the legislative history of § 14704 demonstrates that Congress, in enacting this statute, only intended to transfer private disputes previously within the scope of the Interstate Commerce Commission's (“ICCs”) jurisdiction to federal courts; it did not intend to create new private causes of action or remedies where none had previously existed. Because the ICC did not previously have jurisdiction over claims for loss or damage to property resulting from a breach of a contract of carriage, Congress could not have intended to create a private right of action under § 14704 for such claims. And, because Plaintiffs claims in Counts II, III, and IV are really only claiming loss or damage to property resulting from a breach of a contract of carriage, these claims are not cognizable under § 14704. [37, at 3-8.] Second, Defendant argues that recognizing a claim under § 14704(a)(2) to recover for what are fundamentally Carmack Amendment claims “would essentially render the Carmack Amendment meaningless, ” in contravention of binding precedent. [Id., at 8-9.] Plaintiff responds that the legislative history raised by Defendant ultimately is irrelevant because the plain language of ยง 14704(a)(2) creates an independent federal cause of action for its claims, separate and apart from the Carmack Amendment. [43, at 7-12.] In reply, Defendant raises a plain language ...


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