Mecca & Sons Trucking Corp v. White Arrow LLC

• Court: Court of Appeals for the Third Circuit
• Decided: March 25, 2019
• Docket: 17-3121
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________

No. 17-3121 _____________

MECCA & SONS TRUCKING CORP.

v.

WHITE ARROW, LLC; ABC CORPORATIONS 1-5, (said names being fictitious); JOH DOES 1-6, (said names being fictitious); TRADER JOE’S COMPANY, INC.

White Arrow, LLC,

Appellant ______________

On Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 2-14-cv-07915) District Judge: Honorable Stanley R. Chesler ______________

Submitted Pursuant to Third Circuit L.A.R. 34.1(a) July 13, 2018 ______________

Before: McKEE, VANASKIE* and RESTREPO, Circuit Judges.

(Filed: March 25, 2019)

* The Honorable Thomas I. Vanaskie retired from the Court on January 1, 2019 after the argument and conference in this case, but before the filing of the opinion. This opinion is filed by a quorum of the panel pursuant to 28 U.S.C. § 46(d) and Third Circuit I.O.P. Chapter 12. ______________

OPINION** ______________

RESTREPO, Circuit Judge.

Before us is a dispute over a rejected shipment of cheese. Trader Joe’s, a national

grocery chain, rejected a shipment of its private-label cheese based on high temperature

readings during transit. The cheese was then destroyed due to safety concerns. The

parties now dispute which should ultimately bear the cost of this loss. Because we agree

with the District Court’s judgment in this case, we will affirm.

I

As we write principally for the parties, we recite only the facts necessary for our

discussion. Trader Joe’s ordered a shipment of its private-label cheese from dairy

manufacturer Singletons Dairy. This shipment was governed by a Master Vendor

Agreement between the two parties, which required refrigerated products to “be shipped

and received at 40°F or less” and to be monitored by a temperature monitoring device

during transit. J.A. 384. Singletons retained Mecca & Sons Trucking Corp. to handle the

shipment. Mecca, in turn, retained White Arrow to carry the shipment from Bayonne,

New Jersey, to Fontana, California, with the email instruction that it be “chilled 40

degrees.” J.A. 491.

The shipment, comprising seventeen pallets of cheese, was loaded into the

** This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does not constitute binding precedent. 2 refrigerated truck, or “reefer,” in good condition. However, when it arrived in Fontana,

the temperature monitoring devices on some pallets evidenced reefer temperatures above

forty degrees for prolonged periods during transit, including some readings above sixty

degrees. Based on these readings, Trader Joe’s representatives rejected part of the

shipment “due to warm temp.” J.A. 351, 353, 355. Mecca arranged for the rejected

cheese to be transported to a cold storage facility, where it was tested by White Arrow’s

expert and eventually destroyed. Mecca then paid Singletons damages in the amount of

$73,581.16, the value of the lost shipment. Mecca now seeks from White Arrow that

amount plus $7,600.00 in additional costs under the Carmack Amendment, 49 U.S.C. §

14706. White Arrow denies Mecca’s claim and maintains a cross-claim against Trader

Joe’s for wrongful rejection of cheese.

After a series of procedural back-and-forths, the District Court ultimately granted

summary judgment in favor of Trader Joe’s on White Arrow’s wrongful rejection claim;

granted summary judgment in favor of Mecca on its Carmack Amendment claim and

damages; and granted summary judgment in favor of White Arrow on Mecca’s claims of

negligence and indemnification as preempted by the Carmack Amendment. White Arrow

now appeals the District Court’s grant of summary judgment in favor of Mecca and

Trader Joe’s.

II

The District Court had jurisdiction pursuant to 28 U.S.C. § 1337. We have

jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review over the District

Court’s grant of summary judgment. DiFiore v. CSL Behring, LLC, 879 F.3d 71, 75 (3d

3 Cir. 2018). Summary judgment is appropriate 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).

III

A. Mecca’s Standing to Bring a Carmack Amendment Claim

As a threshold matter, we first address White Arrow’s argument that Mecca, a

broker, lacks standing to recover its losses under the Carmack Amendment. While White

Arrow is correct in noting that the Carmack Amendment does not grant brokers a right to

sue, Mecca may still avail itself of the provision granting a right of action to a “person

entitled to recover under the receipt or bill of lading.” 49 U.S.C. § 14706(a)(1). White

Arrow has failed to demonstrate that Mecca is not a person entitled to recover its losses

under this provision. 1 Further, as the District Court noted, Mecca’s claim reasonably

could be considered under a theory of equitable subrogation or as an action for

apportionment under 49 U.S.C. § 14706(b), and White Arrow has made no attempt to

rebut either of these findings. Therefore, absent a persuasive argument to the contrary, we

1 White Arrow relies heavily on the Sixth Circuit’s decision in Exel, Inc. v. Southern Refrigerated Transport, Inc., 807 F.3d 140 (6th Cir. 2015), which rejected a broker’s attempt to recover losses from a carrier under the Carmack Amendment. However, that case is easily distinguished from the issue before us, as the broker in that case sought to recover two types of losses not represented here. First, the broker had not reimbursed the shipper for its losses; it was only attempting to recover from the carrier on the shipper’s behalf. Second, the broker was also seeking its own recovery for the carrier’s alleged violation of their separate transportation agreement. Mecca does not fit either of these scenarios—instead, it is standing in Singletons’ shoes after suffering Singletons’ loss.

4 determine that Mecca has standing to assert a claim under the Carmack Amendment.2

B. Mecca’s Prima Facie Case

We now turn to the question of whether Mecca was properly granted summary

judgment against White Arrow on its Carmack Amendment claim. To recover under the

Carmack Amendment, a plaintiff must first establish a prima facie case by proving the

following three elements: “(1) delivery of the goods to the initial carrier in good

condition, (2) damage of the goods before delivery to their final destination, and (3) the

amount of damages.” Paper Magic Grp., Inc. v. J.B. Hunt Transp., Inc., 318 F.3d 458,

461 (3d Cir. 2003) (internal citation omitted). The first element is not contested here. The

second element—whether the goods were damaged before delivery—presents the critical

question in this case.

To establish the damaged condition of the goods upon delivery, a plaintiff must

present direct or circumstantial evidence that is “sufficient to establish by a

preponderance of all the evidence the condition of the goods upon delivery.” Beta Spawn,

Inc. v. FFE Transp. Servs., Inc., 250 F.3d 218, 225 (3d Cir. 2001) (internal citation

omitted). Here, all parties agree that the rejected cheese pallets’ temperature recording

devices reflected temperatures above forty degrees at multiple points during transit, in

violation of Trader Joe’s vendor agreement with Singletons. Both Mecca and Trader

2 White Arrow itself has previously conceded Mecca’s standing on this claim. During proceedings in the District Court, White Arrow successfully argued that Mecca’s state law claims for damages were “preempted by federal law which exclusively governs this matter involving transportation in interstate commerce.” J.A. 91. It cannot now argue that the same federal law is inapplicable to Mecca’s claims. 5 Joe’s argue that these temperature readings are direct and irrefutable evidence that the

cheese was already damaged at delivery, allowing Trader Joe’s to reject the shipment.

White Arrow disagrees, arguing that the pallet temperature readings alone do not

demonstrate any damage to the cheese itself, and that Trader Joe’s was “required to

conduct an immediate inspection of the goods to thoroughly document the nature and

extent of damage.” White Arrow Br. 12. It further argues that “[n]o evidence was

produced by Mecca or Trader Joe’s of any contamination and that the increased

temperatures in transit rendered the cheese unsafe for human consumption by the public.”

Id. at 15. However, White Arrow misses the critical point in Mecca’s claim, instead

relying on cases that are distinguishable from the present circumstances.

Our case law makes clear that carriers are “strictly liable for damages” under the

Carmack Amendment, Certain Underwriters at Interest at Lloyds of London v. United

Parcel Serv. of Am., Inc., 762 F.3d 332, 335 (3d Cir. 2014), up to “the actual loss or

injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or

(C) [certain intermediary carriers].” 49 U.S.C. § 14706(a)(1). Although carriers and

shippers can agree to limit the carrier’s liability in accordance with certain conditions, 49

U.S.C. § 14706(c)(1)(A), no such limitations are at issue in this case.

Here, Singletons—and, eventually, Mecca—suffered an actual loss of property

when its cheese product was subject to conditions that violated the transportation

requirements set out in its Master Vendor Agreement with Trader Joe’s and

communicated to White Arrow via email. Whether experts could reasonably disagree as

to the safety of the cheese, and whether Trader Joe’s could have kept the cheese under

6 observation for spoilage, is beside the point. Trader Joe’s had contracted to accept the

shipment only if it had been “shipped and received at 40°F or less,” with the packaging

clean and intact, free of dents or tears, and seals intact. 3 J.A. 384. For any party to show

that the goods had been damaged before delivery, they needed only show by a

preponderance of the evidence that one of Trader Joe’s requirements had been violated,

as a violation would render the goods unsaleable. 4 That evidence is clearly present in

this case.

Mecca has also proven damages satisfactory to establish the third element of its

claim. For the purpose of a Carmack Amendment claim, damages are ordinarily

measured by “the difference between the market value of goods at the time of delivery,

and the time when they should have been delivered.” Paper Magic, 318 F.3d at 461

(internal citation omitted). The market value may be determined by the “invoice price,”

id. at 462, or the “contract price,” Robert Burton Assocs., Inc. v. Preston Trucking Co.,

Inc., 149 F.3d 218, 221 (3d Cir. 1998) (internal citation omitted), less any recovered

value from salvage or resale, Paper Magic, 318 F.3d at 461. Here, the damages

3 These requirements speak to “the gravity of the duty for a retailer like Trader Joe’s to assure the safety of food that it sells to consumers,” as the District Court aptly described. Mecca & Sons Trucking Corp. v. White Arrow, LLC, No. 14-7915, 2016 WL 5859018, at *4 (D.N.J. Sept. 16, 2016). 4 White Arrow’s argument that the majority of temperature readings were near forty degrees is unavailing. For Trader Joe’s to accept the cheese shipment as undamaged, it had to “be shipped and received at 40°F or less.” J.A. 384. White Arrow’s second argument, that it followed its instruction to keep the shipment “chilled 40 degrees,” J.A. 491, by setting the reefer to forty degrees, is also without merit. The fact remains that multiple pallets of cheese were not maintained at the required temperature. 7 determination for the shipment itself is simple and well supported. Mecca paid Singletons

$73,581.16, the invoice price of the damaged cheese as reflected in the bills of lading. It

now seeks that same amount in damages from White Arrow. Given that the cheese was

destroyed, no salvage value remains, leaving $73,581.16 as the proper amount of

damages for the lost shipment.

Mecca also seeks to recover the cost of transporting, storing, and destroying the

rejected cheese, at a total of $7,600.00. While this claim goes beyond the market value of

the shipment, “the Supreme Court has recognized that the test of market value is at best

but a convenient means of getting at the loss suffered” and that “other more accurate

means” may be used. Robert Burton, 149 F.3d at 221. Indeed, in our discussion regarding

the Carmack Amendment’s preemptive power, we noted that its scope is “broad enough

to embrace ‘all losses resulting from any failure to discharge a carrier’s duty as to any

part of the agreed transportation,’” Lloyds of London, 762 F.3d at 335 (quoting Ga., Fla.

& Ala. Ry. v. Blish Milling Co., 241 U.S. 190, 196 (1916)), so long as they are

“foreseeable to a reasonable [person],” Paper Magic, 318 F.3d at 461. Further, special

damages may be allowed when a plaintiff “actually notified the carrier that the goods

required special handling of some kind, thereby giving the carrier notice and making the

damages foreseeable.” Id. at 462. Here, we agree with the District Court that Mecca need

not pursue recovery of its additional costs under the category of special damages, as the

costs associated with the handling of the rejected cheese were foreseeable by a reasonable

person. As to proof, Mecca has provided adequate evidence of its costs, and White Arrow

8 has not challenged its calculations.5 Therefore, Mecca has succeeded in establishing all

three elements of its prima facie case.

Once a plaintiff is able to establish a prima facie case, “the burden shifts to the

carrier to prove that it was free from negligence and that the damage was caused solely

by (a) the act of God; (b) the public enemy; (c) the act of the shipper himself; (d) public

authority; (e) or the inherent vice or nature of the goods.” Beta Spawn, 250 F.3d at 223

(internal citation omitted).White Arrow has not presented persuasive evidence in support

of any of these defenses and has therefore failed to meet its burden. Thus, we can only

conclude that White Arrow is liable to Mecca under the Carmack Amendment for the

losses incurred by the rejected cheese.

C. Trader Joe’s Rejection of the Cheese

To the extent that we have not already addressed White Arrow’s wrongful

rejection claim against Trader Joe’s in our discussion above, we now state plainly that

this claim is without merit. Trader Joe’s only obligations in relation to the cheese were

determined by the Master Vendor Agreement between it and Singletons. It had no

separate contractual relationship with White Arrow, and White Arrow was not a third-

party beneficiary of the Master Vendor Agreement. Even assuming, arguendo, that one

could identify a contractual obligation between the two parties, the temperature

requirement remained in place at all times. Therefore, Trader Joe’s was still within its

5 White Arrow emphatically challenges the timeliness of Mecca’s evidence submissions. However, the District Court’s determination on this issue was well-reasoned and we see no grounds on which to disturb it. 9 rights to reject any portion of the shipment that had not been chilled at forty degrees.

Thus, we conclude that the District Court properly granted summary judgment in favor of

Trader Joe’s on White Arrow’s cross-claim.

IV

For the foregoing reasons, we will affirm the judgment of District Court.