Scotlynn USA Div., Inc. v. Titan Trans Corp.

555 F.Supp.3d 1246

SCOTLYNN USA DIVISION, INC., Plaintiff,

v.TITAN TRANS CORPORATION, Defendant.

Case No: 2:18-cv-521-JLB-NPM

United States District Court, M.D. Florida, Fort Myers Division.

Signed August 20, 2021

Katy Koestner Esquivel, Esquivel Law, Chartered, Naples, FL, Michael J. Connick, Pro Hac Vice, Michael J. Connick Co., LPA, Zanesville, OH, for Plaintiff.

Kristen Marie Johnson, Elena Pauline Adang, Taylor & Associates, Attorneys at Law, Pl, Winter Haven, FL, for Defendant Titan Trans Corporation.

ORDER

JOHN L. BADALAMENTI, United States District Judge

This matter is before the Court after a three-day bench trial on a claim brought under the Carmack Amendment to the Interstate Commerce Act. See 49 U.S.C. § 14706. Plaintiff Scotlynn USA Division, Inc. ("Scotlynn") is a motor freight brokerage company, which contracts with others to transport freight throughout the country. Defendant Titan Trans Corporation ("Titan") is a motor carrier, which, from at least May 12, 2014 through September 30, 2016, transported freight by truck. The issue is whether Titan is liable to Scotlynn for damage to a cargo of raw beef (the "Cargo"), where the cardboard containers in which the beef was packaged tipped over inside the trailer of Titan's truck during transportation.

The Court has considered the pleadings, the testimony of the witnesses, the documents in evidence, and the parties’ joint stipulations. Being fully advised in the premises, the Court now makes its findings of facts and conclusions of law as required by Rule 52 of the Federal Rules of Civil Procedure.¹ The Court finds that Scotlynn has not established a prima facie case under the Carmack Amendment to recover for the Cargo because there is no evidence that the delivered beef was worthless, and Scotlynn has also failed to prove up a specified amount of damage to the beef. Further, even if Scotlynn has shown a specified amount of damage to the beef, the damage to the Cargo was caused by the manner in which the shipper loaded the Cargo. Finally, efforts to mitigate the loss were not reasonable. For the foregoing reasons, as discussed below, final judgment will be entered in favor of Titan.

I. FINDINGS OF FACT ²

A. CONTRACTUAL RELATIONSHIPS

1. SCOTLYNN AND TITAN

1. Scotlynn is a Florida corporation with its principal place of business in Fort Myers, Florida. Scotlynn provides transportation brokering services and holds a property broker license issued by the Federal Motor Carrier Safety Administration ("FMCSA").

2. Titan is an Illinois corporation with its principal place of business in Hanover Park, Illinois. At all relevant times, Titan operated as a motor carrier under a license issued by the FMCSA.

3. On May 12, 2014, Scotlynn and Titan entered into a Broker-Carrier Agreement pursuant to which Titan provided cargo transportation for Scotlynn's customers.

4. The Broker-Carrier Agreement did not include terms as to specific shipments, such as the identity of shippers or descriptions, origins, destinations, or values of items to be transported. Instead, the Broker-Carrier Agreement governed the relationship between Scotlynn and Titan by, among other things, establishing non-exclusivity, delineating various delivery terms, and establishing billing arrangements and insurance requirements.

5. Pursuant to the agreement, Scotlynn and Titan waived inconsistent rights and obligations under the Carmack Amendment. (Doc. 147-1 at 7-8, ¶¶ 7, 11.) Titan agreed to be liable for any loss to a shipment as follows:

Carrier shall be responsible for the proper care and handling of freight moving under this Agreement, and shall be liable to Broker and Broker's Customers for the full actual loss, damage, or injury to property occurring while in the custody, possession or under the control of Carrier, its employees, or its contractors and agents. For purposes of this Agreement, the term "full actual loss" shall mean the value of the cargo as determined by Shipper.

(Id. at 8, ¶ 11.)

6. The Broker-Carrier Agreement also required Titan to indemnify Scotlynn and its customers for any "[l]oss, damage or delay in transit as to all goods which Carrier receives for transport under this Agreement (to wit: cargo), until Carrier delivers such goods and the same are signed for and accepted by the consignee." (Id. at 9, ¶ 12(c).) The provision excluded indemnification "contrary to any government law that prohibits indemnification against loss, liability, costs or expenses incident thereto caused by the negligence of such indemnity." (Id. at ¶ 12.)

2. SCOTLYNN AND CARGILL

7. Cargill, Inc. ("Cargill") is a global food corporation, which owns and operates a facility in Butler, Wisconsin that produces frozen ground beef patties and other food products.

8. Cargill Meat Logistics Solutions Brokerage Division ("Cargill Logistics") is a division of Cargill that provides transportation, transportation brokering, and related logistical services within Cargill and to outside customers.

9. On September 25, 2009, Cargill Logistics and Scotlynn³ entered into a Contract Carrier Agreement, pursuant to which Cargill Logistics as "Broker" agreed to "offer for shipment," and Scotlynn as "Carrier" agreed "to transport in its own equipment" shipments of freight in such amounts and quantities as Cargill Logistics "may tender, subject to availability of suitable equipment." (Doc. 147-68 at ¶ 1.)

10. Pursuant to the agreement, Cargill Logistics and Scotlynn waived inconsistent rights and obligations under the Carmack Amendment. (Id. at ¶ 5.) The agreement further provided that Scotlynn would be "liable to the customer or to [Cargill Logistics] as the agent of a claim of a customer, for loss, damage or delay of a shipment received by [Scotlynn] for transportation under the terms of this Agreement." (Id. at ¶ 8.)

11. Pursuant to the Contract Carrier Agreement, Scotlynn "warrant[ed] ... that no operations w[ould] be conducted as a ... broker," and that it would not "assign ... any of its respective rights or obligations under th[e] Agreement except with prior written consent of [Cargill Logistics]." (Id. at ¶¶ 5, 19.)

12. Because Cargill Logistics brokers transportation for Cargill, Cargill typically does not require an outside transportation broker. (Doc. 147-141 at 8, Tr. at 26–27.) Cargill does not "double broker loads" to maintain a direct line of communication with, and control over, the transporting carrier. (Id. at 8, Tr. at 27–28.)

13. Cargill ceased its relationship with Scotlynn after discovering that Scotlynn had brokered shipments without authorization. (Doc. 147-130 at 8, Tr. at 26–27; Doc. 147-141 at 3, Tr. at 8–9.)⁴

3. CARGILL AND FPL

14. FPL Foods, LLC ("FPL") is a processor of fresh beef products located in Augusta, Georgia.

15. In 2016, FPL sought to build and expand its relationship with Cargill.

16. FPL executed a contract with Cargill whereby FPL agreed to supply, and Cargill agreed to purchase, approximately 1.2 million pounds of beef (about thirty to thirty-five truckloads) per week.

17. On September 21, 2016, Cargill purchased 42,147 pounds of beef trim from FPL for $89,823.68. Beef trimmings are pieces of meat remaining after steaks, roasts, and other cuts are removed. Cargill intended to use the beef trimmings to make ground beef for hamburger patties at its facility in Butler, Wisconsin. A "Dispatch Print" prepared by FPL shows that the September 21, 2016 shipment contained eleven combos of one type of beef trim and ten combos of another type.⁵ (Doc. 147-27 at 2.) A "Detailed Pallet Report," also prepared by FPL, listed the twenty-one combos individually, indicating each combo's weight (between 1,780 and 2,166 pounds) and pack date (either September 20 or 21, 2016). (Id. at 3.)

18. FPL prepares the bill of lading for its shipments to Cargill using its Straight Bill of Lading Form.⁶ FPL's September 21, 2016 Straight Bill of Lading for the Cargo (the "Bill of Lading") named FPL as the "shipper" and Cargill as both the consignee⁷ and the "carrier." (Id. at 1.) Essentially, this arrangement required Cargill to provide its own transportation from FPL's facility in Georgia to Cargill's facility in Wisconsin.

B. TRANSPORTATION ARRANGEMENTS

19. Cargill hired Scotlynn to transport the Cargo pursuant to the Contract Carrier Agreement. Richard Miller, a Cargill Logistics senior logistics broker, contacted Richard Sowell, a Scotlynn logistics account manager, to arrange transportation.

20. Mr. Miller believed that Scotlynn would transport the Cargo itself. Unbeknownst to Mr. Miller or anyone at Cargill, however, Mr. Sowell hired Titan to transport the Cargo on Scotlynn's behalf.

21. Cargill became aware of Scotlynn's brokering of the Cargo after Cargill rejected the Cargo and a claim was filed to recover for the loss.

C. FPL'S PACKAGING AND LOADING OF THE CARGO ⁸

22. FPL packages its beef for shipment in cardboard bins called combos.

23. To make the outer packaging of a combo, an FPL employee connects interlocking flaps on a flat piece of cardboard to create the bottom of a barrel-shaped container. The pieces of cardboard are pre-banded with horizontal black fiber or plastic straps woven into the cardboard for reinforcement around the sides of the bin. The bottom of a combo has no additional reinforcement; the combo's design relies on the weight of the meat to keep the interlocking flaps connected.

24. A plastic liner or bag is placed inside the assembled cardboard container, and the meat is sealed inside the bag. The containers are then capped with plastic pieces (sometimes a double layer is used), which are secured to the outside of the container with white tape.

25. The assembled combos are placed on wooden pallets, 40 x 48 inches in size, one combo per pallet. Pallets allow the combos to be loaded onto and unloaded from a truck using a forklift. The size of a combo varies, and its circumference may reach the outer edges of the pallet or leave as much as four inches between it and the edge of the pallet. No...