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Krauss v. IRIS USA, Inc.

United States District Court, E.D. Pennsylvania

May 3, 2018

DONALD J. KRAUSS et al., Plaintiffs,
IRIS USA, INC. et al., Defendants.


          Gene E.K. Pratter United States District Judge.


         These motions to dismiss and for summary judgment in this interstate shipping case present questions of federal preemption and litigation management. On both scores, the Court draws mixed conclusions.

         As to preemption: the Court concludes that the Federal Aviation Administration Authorization Act preempts personal injury claims against defendant C.H. Robinson, the freight broker in this case. But the Court also concludes that defendant IRIS, the seller of goods that caused the injury in this case, cannot find solace or sanctuary in FAAAA preemption.

         As to litigation management: the Court concludes that a contract claim against the broker should survive, notwithstanding a partial stipulation of dismissal. The Court further concludes that several plaintiffs, originally included in the lawsuit “out of an abundance of caution, ” do not belong in the case because they were not privy to any contract and because their alleged damages are duplicative of the main plaintiffs'.


         Facts. Fightback for Autism, a charity in Pennsylvania, contracted to buy a mass quantity of Legos from IRIS, a seller in Wisconsin. IRIS hired a freight broker, C.H. Robinson, which in turn hired a carrier, KV Load, to deliver the Legos. But the seller (IRIS) and carrier (KV Load) did not load the Legos in the safe arrangement that the charity had requested. Instead, they used old pallets of the wrong size, dangerously stacking the pallets on top of one another. The shoddy loading damaged the Legos in transit and caused a pallet to crack during unloading, which injured a volunteer for the charity and damaged his forklift as well.[1]

         Parties. The plaintiffs are a cluster of charities (Fightback, JC Rehab, and CGB Rehab), the charities' President and CEO (Cindy G. Brillman), and the injured volunteer (Donald J. Krauss). The defendants are IRIS, the seller of the Lego baseplates; C.H. Robinson, the freight broker; and KV Load, the shipper.

         Prior Opinion. Last year, the Court granted the partial motion to dismiss of the carrier KV Load on the ground that the common law claims were preempted by the Carmack Amendment to the federal interstate shipping law. See Krauss v. IRIS USA, Inc., No. 17-778, 2017 WL 5624951 (E.D. Pa. Nov. 22, 2017). The Carmack Amendment limits a carrier's liability to the “actual loss or injury” of the goods in transit, see 49 U.S.C. § 14706(a)(1), meaning that the carrier, KV Load, was not liable for common-law claims for Mr. Krauss's personal injuries or for the damage to the forklift. The parties then settled their remaining claims against KV Load, who has been dismissed from the case.

         Counts in the Current Complaint. In the latest iteration of the complaint, the five plaintiffs bring three counts against the remaining two defendants - Lego seller IRIS and freight broker C.H. Robinson. The counts against each defendant are:

1. Negligence. (As against the freight broker, C.H. Robinson, this count is specifically for negligent hiring of the carrier, KV Load.)
2. Negligent Infliction of Emotional Distress.
3. Breach of Contract.

         Now, broker C.H. Robinson has filed a motion to dismiss and seller IRIS has filed a motion for summary judgment. For the reasons that follow, the Court grants in part and denies in part both motions.

         Analysis of C.H. Robinson's Motion to Dismiss

         After recounting the standard of review, the Court grants in part and denies in part C.H. Robinson's motion to dismiss. First, the Federal Aviation Administration Authorization Act preempts claims for personal injuries brought against C.H. Robinson. Second, the contract claim against C.H. Robinson survives because Fightback for Autism was a third-party beneficiary of Robinson's contract with IRIS and KV Load.

         I. Standard of Review

         A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint. To survive a motion to dismiss, the plaintiff must plead “factual content that allows 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). Specifically, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The question is not whether the claimant “will ultimately prevail . . . but whether his complaint [is] sufficient to cross the federal court's threshold.” Skinner v. Switzer, 562 U.S. 521, 530 (2011) (citation and internal quotation marks omitted).

         In evaluating the sufficiency of a complaint, the Court adheres to certain well-recognized parameters. For one, the Court “must consider only those facts alleged in the complaint and accept all of the allegations as true.” ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994). Also, the Court must accept as true all reasonable inferences emanating from the allegations, and view those facts and inferences in the light most favorable to the nonmoving party. See Revell v. Port Auth., 598 F.3d 128, 134 (3d Cir. 2010).

         That admonition does not demand that the Court ignore or even discount reality. “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft, 556 U.S. at 678. If a claim “is vulnerable to 12(b)(6) dismissal, a district court must permit a curative amendment, unless an amendment would be inequitable or futile.” Phillips v. County of Allegheny, 515 F.3d 224, 236 (3d Cir. 2008).

         II. The FAAAA preempts personal injury claims against C.H. Robinson.

         In this case, the remaining claims are not for damage to the Legos. Instead, they are for injuries to Mr. Krauss and for damage to the forklift. C.H. Robinson (the freight broker) argues that these latter claims are preempted by the Federal Aviation Administration Authorization Act, 49 U.S.C. § 14501.

         After summarizing the framework and general scope of FAAAA preemption, the Court concludes that the FAAAA preempts Mr. Krauss's personal injury claim against C.H. Robinson.

         A. FAAAA Preemption - Framework

         The preemption provision of the FAAAA provides that no state may:

enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . broker, or freight forwarder with respect to the transportation of property.

49 U.S.C. § 14501(c)(1).

         The FAAAA's preemption provision was modeled on similar language in the Airline Deregulation Act of 1978, which had already been interpreted by the Supreme Court in Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992). See Rowe v. New Hampshire Motor Transp. Ass'n, 552 U.S. 364, 368 (2008). The ADA's preemption provision bars state laws “related to a price, route, or service of an air carrier that may provide air transportation. See 49 U.S.C. § 41713(b)(1). For purposes of statutory interpretation, “when judicial interpretations have settled the meaning of an existing statutory provision, repetition of the same language in a new statute indicates, as a general matter, the intent to incorporate its judicial interpretations as well.” Rowe, 552 U.S. at 370 (quoting Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit,547 U.S. 71, 85 (2006)). Because the Congress that passed the ...

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