UPS Supply Chain Solutions, Inc. v. Megatrux Transportation, Inc.

750 F.3d 1282, 2014 A.M.C. 1636, 2014 WL 1816946, 2014 U.S. App. LEXIS 8663
CourtCourt of Appeals for the Eleventh Circuit
DecidedMay 8, 2014
Docket13-10517
StatusPublished
Cited by26 cases

This text of 750 F.3d 1282 (UPS Supply Chain Solutions, Inc. v. Megatrux Transportation, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
UPS Supply Chain Solutions, Inc. v. Megatrux Transportation, Inc., 750 F.3d 1282, 2014 A.M.C. 1636, 2014 WL 1816946, 2014 U.S. App. LEXIS 8663 (11th Cir. 2014).

Opinion

MIDDLEBROOKS, District Judge:

This ease involves a pirated shipment of disk drives, two logistics contracts, and application of the Carmack Amendment, 49 U.S.C. § 14706, a federal law regulating the interstate transportation of goods. It requires us to address the ability of intermediaries to negotiate limitations on liability, the sufficiency of proof of loss, and the scope of federal preemption with respect to a third-party logistic company’s contract-based claim for attorney’s fees.

I. Background

On September 18, 2009, a shipment of new and refurbished disk drives owned by Seagate Technology, LLC (“Seagate”) was stolen while in transit. Although the identities of the thieves are not known, the cargo is presumed to have been stolen by drivers posing as employees of Stallion Carrier Corporation (“Stallion”). Unbeknownst to Seagate, and without authorization of its logistics provider, UPS Supply Chain Solutions, Inc. (“UPS”), Stallion had been subcontracted by the defendant, Megatrux Transportation, Inc. (“Megatrux”), to transport the disk drives from Los Angeles, California to McAllen, Texas.

Seagate had contracted with UPS to provide transportation, custom brokerage services, and warehousing and freight management services on an exclusive basis throughout the Americas for air, land, or sea. The Global Logistics Service Provider Agreement (“GLSPA”) between Sea-gate and UPS allowed UPS to subcontract obligations under the contract to third parties, and limited the liability of UPS and *1284 its subcontractors to $100,000, except where the loss was due to gross negligence. The GLSPA was effective December 19, 2008, and continued until terminated by the parties.

UPS, in turn, had a non-exclusive contract with Megatrux for Megatrux to provide ground transportation services to UPS and its customers. However, pursuant to the Master Transportation Services Agreement (“MTSA”) between UPS and Megatrux, dated August 14, 2009, Megatrux was not allowed to subcontract its work to others without the consent of UPS. 1 Despite this prohibition and without informing UPS, Megatrux subcontracted with individuals it thought to be associated with Stallion, a company it had not previously used, to haul the Seagate disk drives.

The MTSA between UPS and Megatrux contains several other provisions pertinent here. Section 10.1 provides:

Liability. Full liability for risk of delay, loss or damage to cargo transported under this Agreement shall at all times remain with Carrier while such items are in Carrier’s possession, custody, or control, or the possession, custody or control of Subcontractors, and Carrier’s liability for such delay, loss or damage shall be the Customer’s actual loss or injury without regard to salvage, including delivery and freight handling charges.

(MTSA, at 8). Section 15, entitled “INDEMNIFICATION,” provides in pertinent part:

Carrier shall indemnify and hold harmless UPS and its affiliates, and its or their officers, directors, employees and agents, from and against any and all loss, expense, damage, injury or claim, including attorneys’ fees [], resulting from or occurring in connection with (a) the Services or any of Carrier’s activities in connection with its performance of its obligations under this Agreement, including, without limitation, Carrier’s use of UPS’s or its customer’s equipment; and (b) any breach of this Agreement. ...

(MTSA, at 10). Section 20.9 states in relevant part:

Entire Agreement; Amendment. This Agreement, including all Incorporated Documents, sets forth the full and complete understanding of the parties with respect to the matters herein and supersedes any and all prior or contemporaneous agreements or understandings, written or oral, between the parties as to the subject matter of this Agreement. Any terms and conditions printed on transportation documents such as bills of lading or delivery receipts will not change or supersede the terms of this Agreement, and such documents will operate solely as receipts.

(MTSA, at 13) (italicized emphasis added). Finally, Section 20.10 provides: “Each Services Recipient is an intended third[-]party beneficiary of Carrier’s obligations and liabilities under this Agreement and, as such, shall have the right to enforce this Agreement to the same extent as UPS.” (MTSA, at 13).

After the load was stolen, UPS agreed to pay Seagate $246,022 and, as consideration for payment by UPS, Seagate assigned to UPS its rights, claims, and *1285 causes of action against Megatrux and others arising out of the loss. Pursuant to the assignment, all sums recovered in excess of $246,022, less reasonable attorney’s fees, should be payable to Seagate. Sea-gate reserved any rights, if any may continue to exist, to make further recovery from UPS. UPS then sued Megatrux for liability pursuant to the Carmack Amendment; breach of the MTSA contract, including its indemnification requirements; and negligence. UPS subsequently amended its complaint to add a claim for attorney’s fees pursuant to a Georgia statute pertaining to vexatious litigation, as well as a claim for punitive damages pursuant to a Georgia statute allowing such in cases of willful misconduct or fraud.

Following a bench trial, the district court found in favor of UPS, concluding that under the Carmack Amendment, UPS was entitled to recover the full amount of the actual cargo loss, an amount totaling $461,849.82. The court concluded that the state law claims for breach of contract and negligence were preempted by the Car-mack Amendment. The court also denied UPS’s claim for attorney’s fees under the indemnity provision in the MTSA, concluding that an award of attorney’s fees would allow for an award higher than the plaintiffs actual loss or injury, an outcome inconsistent with the Carmack Amendment. In addition, the court found that UPS was not entitled to fees under the Georgia statute because there had been a bona fide dispute between the parties.

On appeal, Megatrux argues that the district court erred in failing to limit damages to $100,000 pursuant to the provisions of the GLSPA or, alternatively, to $32,213.68 pursuant to the bills of lading. Megatrux also argues that the court erred in accepting customs invoices, photographs, and the condition of the disk drives that were recovered by Seagate’s investigators after the theft as sufficient proof of the condition and contents of the stolen shipment. In its cross appeal, UPS contends that the Carmack Amendment does not preempt its claim for attorney’s fees pursuant to the indemnification provisions of the MTSA.

II. Standard of Review

On an appeal following a bench trial, we review the district court’s legal conclusions de novo and findings of fact for clear error. Mitchell v. Hillsborough Cnty., 468 F.3d 1276, 1282 (11th Cir.2006).

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Cite This Page — Counsel Stack

Bluebook (online)
750 F.3d 1282, 2014 A.M.C. 1636, 2014 WL 1816946, 2014 U.S. App. LEXIS 8663, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ups-supply-chain-solutions-inc-v-megatrux-transportation-inc-ca11-2014.