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Mount Olive Pickle Co., Inc. v. Tidewater Transit Co., Inc.

United States District Court, E.D. North Carolina, Western Division

August 9, 2019

MOUNT OLIVE PICKLE COMPANY, INC., Plaintiff,
v.
TIDEWATER TRANSIT CO., INC., Defendant.

          ORDER

          TERRENCE W. BOYLE CHIEF UNITED STATES DISTRICT JUDGE.

         This cause comes before the Court on plaintiffs motion to remand and defendant's motion to compel arbitration and stay proceedings. The appropriate responses and replied have been filed, and a hearing was held before the undersigned on July 17, 2019, at Raleigh, North Carolina. For the reasons that follow, plaintiffs motion to remand is denied and defendant's motion to compel arbitration and stay proceedings is granted.

         BACKGROUND

         This case concerns a load of salt transported by defendant Tidewater to plaintiff Mount Olive Pickle. Tidewater is a motor carrier located in Fayetteville, North Carolina which transports, among other things, food-grade salt for Cargill, Inc. to a number of purchasers using dedicated trailers. The salt arrived at Tidewater by rail from Cargill's salt production facilities in other states, including New York. Tidewater transferred the salt from the rail car to a dedicated trailer and then transported the salt by tractor trailer to Cargill's purchasers, here Mount Olive Pickle. The salt was then pumped via a closed system directly from Tidewater's trailer into Mount Olive Pickle's lixator, a chamber that creates the brine for the pickling process. On some occasions extra salt was also pumped from the Tidewater truck to a salt pad that Mount Olive Pickle used to increase the salinity of the pickling brine if needed. Mount Olive Pickle ordered salt directly from Cargill by providing it with a purchase order number and a requested delivery date. Cargill then issued a bill of lading to Tidewater, which then transferred salt from the railcars to its dedicated trailers and delivered the salt to Mount Olive Pickle.

         On Friday, September 29, 2017, Mount Olive Pickle discovered small transparent and white plastic pellets in its lixator and on the salt pad. As it had been unaware that the salt had been contaminated with plastic pellets, Mount Olive Pickle used the salt in its pickling process and contaminated its consumable pickle products. Mount Olive Pickle notified Cargill of its discovery, and Cargill notified Tidewater. During a meeting between the three, Mount Olive Pickle discovered that Tidewater also transports plastic pellets of the same type found in Mount Olive Pickle's equipment out of its Fayetteville depot.

         This lawsuit ensued and was filed by Mount Olive Pickle in Wayne County, North Carolina Superior Court on February 8, 2019. [DE 1-6]. Mount Olive Pickle's complaint alleges a single count of negligence. On March 14, 2019, Tidewater removed the action to this Court on the basis of its federal question jurisdiction. [DE 1]. Specifically, Tidewater contends that Mount Olive Pickle's claim arises from the transportation of goods by motor carrier involving interstate commerce, and the claim for negligence is preempted and governed by the Carmack Amendment, 49 U.S.C. § 14706.

         DISCUSSION

         I. Motion to remand.

         The first question before this Court is whether the instant action arises under federal law such that federal jurisdiction exists. Removal of a civil action from state court is only proper where the federal district courts would have original jurisdiction, 28 U.S.C. § 1441, and it is the burden of the removing party to show that jurisdiction lies in the federal court. Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004) (en banc). Federal district courts have original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Generally, whether the district courts have federal question jurisdiction "is governed by the 'well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiffs properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). But district courts also have federal question jurisdiction over state law claims that are completely preempted by federal law. See Lontz v. Tharp, 413 F.3d 435, 439- 440 (4th Cir. 2005).

         The Carmack Amendment to the Interstate Commerce Act of 1887 "addresses the liability of common carriers for goods lost or damaged during a shipment over which the Interstate Commerce Commission has jurisdiction[and creates a] national scheme of carrier liability for goods damaged or lost during interstate shipment under a valid bill of lading." Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700, 704 (4th Cir. 1993); see also 49 U.S.C. § 13501(1)(A). The Carmack Amendment "provide[s] the exclusive cause of action for claims arising out of the interstate transportation of goods by a common carrier." Hoskins v. Bekins Van Lines, 343 F.3d 769, 776 (5th Cir. 2003) (emphasis in original). Because claims implicating the Carmack Amendment are completely preempted, removal under 28 U.S.C. § 1441 is appropriate. Id. at 778.

         Whether the Carmack Amendment governs Mount Olive Pickle's negligence claim depends on whether the nature of the shipment at issue was inter-or-intrastate.

Whether transportation is interstate or intrastate is determined by the essential character of the commerce, manifested by shipper's fixed and persisting transportation intent at the time of the shipment, and is ascertained from all of the facts and circumstances surrounding the transportation.

S. Pac. Transp. Co. v. I.C.C, 565 F.2d 615, 617 (9th Cir. 1977) (citation omitted). "[I]f the final intended destination at the time the shipment begins is another state, the Carmack Amendment applies throughout the shipment, even as to a carrier that is only responsible for an intrastate leg of the shipment." Project Hope v. M/VIBNSINA, 250 F.3d 67, 75 (2d Cir. 2001).

         There is no dispute that Cargill's salt that Tidewater transported to Mount Olive Pickle was transported from New York to North Carolina and therefore traveled in interstate commerce in order to reach North Carolina. Mount Olive Pickle contends that, however, the conduct at issue here involved only the intrastate shipment of Cargill's salt from Tidewater's depot in Fayetteville, North Carolina to Mount Olive Pickle's facility in Mount Olive, North Carolina. In support, Mount Olive Pickle relies on its complaint which references only salt that is transported from a third-party vendor to Mount Olive Pickle Company by Tidewater by truck, [DE 1-6] Compl. ΒΆΒΆ 5, 7, and a bill of lading which shows a shipment originating in Fayetteville and terminating in Mount Olive. [DE 14-3] Bowen Decl. Ex. 2. Mount Olive Pickle further contends that the intent of Cargill, the shipper, was not fixed until the final destination of the salt was identified, and that Cargill could not form such intent until Mount Olive Pickle placed an order for salt, which would then be shipped from Tidewater's depot to Mount Olive. In other words, in Mount Olive Pickle's view, Cargill shipped its salt ...


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