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Enbridge Energy, LP v. Imperial Freight Inc.

United States District Court, S.D. Texas, Houston Division

April 25, 2019

Enbridge Energy, LP, Plaintiff,
v.
Imperial Freight Inc., a ah, Defendants.

          OPINION ON SUMMARY JUDGMENT

          LYNN N. HUGHES UNITED STATES DISTRICT JUDGE.

         1. Background.

         Enbridge Energy, LP, bought equipment from Toshiba International Corporation in 2012, including two 3, 500 horsepower variable frequency drives used to control motor speed and torque applied in natural gas compression for pipelines. Under the contract between Enbridge and Toshiba, Toshiba was obliged to ship the drives and equipment to an Enbridge warehouse in Michigan.

         Toshiba had contracted with C.H. Robinson in 2011 for Robinson to be its freight broker. Under this agreement, Toshiba engaged Robinson to hire a trucking company to haul the drives. Robinson retained Imperial Freight Inc. to retrieve the cargo from Toshiba in Houston, load it, and carry it to Michigan. While en route to Michigan, Imperial Freight's driver left the highway so fast that the truck overturned on the off-ramp in Arkansas. The driver was cited for careless and prohibited driving and the drives were damaged beyond economic repair. The total value of the drives at that time was $ 643, 981.80. It cost Enbridge $31, 965.36 to tow it to a storage facility and store it until it could be delivered to the warehouse in Michigan, so Enbridge lost $675, 947.16.

         Enbridge timely filed a loss and damage claim form with Robinson on October 17, 2013. Robinson acknowledged receipt of the claim four days later and advised that it would begin the claims process with the carrier and its insurer. In December 2013, Imperial Freight's insurer denied coverage for Enbridge's claim because the policy did not cover the drives. Enbridge then filed this lawsuit.

         2. Liability Under 49 U.S.C. § 14706.

         Robinson can only be liable to Enbridge under the Carmack Amendment if it is a motor carrier - rather than an independent broker. The Carmack Amendment does not govern the role of brokers with respect to interstate cargo losses and damages[1] A broker is not liable for the negligence of its independent contractor trucking company or the driver hired and supervised by that company.[2]

         Unlike a motor carrier, Robinson does not own or operate trucks or employ drivers. Instead, Robinson connects companies who need to ship goods with other, unrelated trucking companies qualified to haul those goods as independent contractors. That is the function of a broker.

         Robinson located an independent motor carrier - Imperial Freight - and negotiated with it for the shipper. The only direction it gave to Imperial Freight was general instructions on the load, including its origin and destination. Further, the express terms of Robinson's contract with Imperial Freight made Imperial Freight a contractor separate and apart from Robinson as the broker that arranged for the shipment.

         Robinson fits squarely within the definition of a broker.[3] It was not a motor carrier. Accordingly, it is not liable to Enbridge under 49 U.S.C. § 14706.

         3. Preemption.

         The Federal Aviation Administration Authorization Act preempts state regulation of the trucking industry, including state-law private claims. It precludes states from "enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier [or] broker... with respect to the transportation of property."[4] The FAAAA preempts common4aw negligent hiring claims against freight brokers.[5] The claim that a broker failed to verify adequate insurance coverage of cargo also falls within the FAAAA and is, therefore, preempted by it.[6]

         The FAAAA preempts Enbridge's state law claims against Robinson. As discussed below, even if they were not preempted, they would still fail.

         4. Negl ...


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