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Golden Hawk Metallurgical, Inc. v. Federal Express Corp.

United States District Court, E.D. Michigan, Southern Division

October 4, 2016




         Plaintiff Golden Hawk M lurgical, Inc. seeks recovery from Defendant Federal Express Corporation for the loss of two of Plaintiff's shipments. Plaintiff asserts three theories of liability: Count I, breach of contract; Count II, breach of duty as a bailee; and Count III, conversion. (Dkt. 1-1.) Defendant has moved for partial summary judgment, asking the Court to hold that: (1) federal law preempts Counts II and III; and (2) Count I is limited to $100 per shipment. (Dkt. 10.) For the reasons stated below, the Court GRANTS Defendant's motion for partial summary judgment.

         I. Background

         In August 2015, the parties entered into two contracts to ship Plaintiff's precious m s and gems via overnight air mail. The first shipment, bearing tracking number 774191828584, was destined for Fairfield, Ohio. (Dkt. 10-1.) The second shipment, bearing tracking number 774190982603, was destined for Attleboro, Massachusetts. (Id.) Plaintiff alleges that Defendant failed to deliver the precious m s and gems in either shipment. (Dkt. 12, at 5.) Plaintiff further alleges that one of Defendant's employees likely stole the goods, replacing them with rocks from one of Defendant's shipping locations. (Id.)

         The terms and conditions of the parties' contracts appear on the airbills (Dkt. 12, at 21) and the FedEx Service Guide referenced on both. (Dkt. 12, at 22-31.) These terms expressly limit Defendant's liability to $100, "unless a higher value is declared and paid for." (Dkt. 10-1.) Plaintiff did not declare a value on either shipment, nor did Plaintiff pay a value higher than $100 in relation to either shipping contract. (Dkt. 10-2, at 3.)

         Plaintiff originally filed suit in state court, and Defendant removed the case to this Court in November 2015. (Dkt. 1.) Defendant now moves for partial summary judgment.

         II. Standard

         Summary judgment under Federal Rule of Civil Procedure 56 is proper when the movant “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). When reviewing the record, “the court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor.” U.S. S.E.C. v. Sierra Brokerage Servs., Inc., 712 F.3d 321, 327 (6th Cir. 2013) (internal citation omitted). “[S]ummary judgment will not lie if the dispute about a material fact is ‘genuine, ' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

         III. Analysis

         A. Preemption of Counts II and III

         Through Count II, breach of duty as bailee, and Count III, conversion, Plaintiff seeks to have the Court enforce Michigan statutory and common law. Defendant argues that the Airline Deregulation Act of 1978 (ADA) preempts both of these claims, entitling Defendant to judgment as a matter of law.[1] For the reasons stated below, the Court agrees with Defendant.

         The ADA contains the following preemption provision: "[A] State, a political subdivision of a state ... may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart." 49 U.S.C. § 41713(b)(1). In Morales v. Trans World Airlines, Inc., the Supreme Court construed this provision broadly to preclude all claims "having a connection with, or reference to, airline rates, routes, or services." 504 U.S. 374, 384 (1992). The Court determined that Congress included a broad preemption provision to promote competition and "ensure that the States would not undo federal deregulation with regulation of their own." Id. at 378.

         Since Morales, the Court has further defined the scope of the preemption provision. In American Airlines v. Wolens, it determined that the ADA preempted suits alleging a "violation of state-imposed obligations" but not suits alleging a breach of "self-imposed undertakings." 513 U.S. 219, 228 (1995). The plaintiffs in Wolens had asserted one claim for breach of contract and another for a violation of the Illinois Consumer Fraud Act. Id. The Court ultimately held that the ADA preempted the statutory fraud claim but not the breach of contract claim. Id. The Act pre-empted only the fraud claim, the Court explained, because that cause of action did more than "simply give effect to bargains offered by the airlines and accepted by airline customers." Id. at 228.

         Next, in Northwest Inc. v. Ginsberg, the Court reaffirmed that preemption under the ADA depends on whether a claim "is based on a state-imposed obligation or simply one that the parties voluntarily undertook." 134 S.Ct. 1422, 1431 (2014). The Court went on to hold that the ADA pre-empted a claim alleging a breach of the covenant of ...

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