Carmack Preemption Remains Alive and Well

On September 16, 2014, Judge Staci M. Yandle of the United States District Court for the Southern District of Illinois issued a decision granting our motor carrier client’s motion to dismiss a shipper-defendant’s counterclaim holding that the Carmack Amendment preempted claims for negligence in The Mason and Dixon Lines, Inc. v. Walters Metal Fabrication, Inc., 13 CV 1262-SMY-DGW (S.D. Ill. Sep. 16, 2014).

The case arose out of an incident that occurred on December 29, 2012 whereby a truck operating under The Mason and Dixon Lines, Inc.’s (“MADL’s”) motor carrier authority struck the underside of Herrin Road Bridge on Interstate 57 in Southern Illinois. At the time of the accident, the truck was hauling a large piece of machinery for Walters Metal Fabrication, Inc. (“Walters Metal”) under an overheight permit allowing a load of up to 15’9”. Walters Metal claimed that the machinery was worth in excess of $391,000.

After the traffic court dismissed a claim against the driver for violation of permit, MADL filed a Complaint for Declaratory Judgment against Walters Metal asserting (1) MADL was excused from liability under force majeure because MADL’s load was within the permit height requirements and MADL was simply following the routing assigned to it by the Illinois Department of Transportation, and (2) in any event, MADL’s liability was limited to $100,000 under MADL’s Rules and Regulations which were incorporated into the bill of lading contract.

Walters Metal filed a counterclaim and then an amended counterclaim seeking in excess of $391,000 for the loss of the machinery and alleging negligence. MADL moved to dismiss Walters Metal amended counterclaim asserting the Walters Metal’s negligence causes of action were preempted by the Carmack Amendment, 49 U.S.C. § 14706, which preempts state law causes of action against motor carriers for injury to cargo being transported in interstate commerce.

In response to MADL’s motion, Walters Metal countered that dismissal on the basis of Carmack preemption was premature because Walters Metal had alleged that MADL was both a “freight carrier and freight broker”. Walters Metal argued that because Carmack does not preempt claims against freight brokers, a finding of Carmack preemption could not be made at this stage of the litigation as a matter of law.

The Court agreed with our client and held that Walters Metal’s negligence claim was, in fact, preempted pursuant to Carmack. Notwithstanding Walters Metal’s conclusory allegation that MADL was both a carrier and a broker, the Court noted that Walters Metal also alleged that MADL was contracted “to haul cargo from [Walters Metal’s] facility” and that MADL obtained permits for the transportation of the load. Because these are tasks that only a carrier and not a broker performs, the Court held that “based on the facts pleaded in the counterclaim, Walters has ‘plead[ed] itself out of court’ with respect to its negligence claim.”