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Zumba Fitness, LLC v. ABF Logistics, Inc.

United States District Court, W.D. Arkansas, Fort Smith Division

August 30, 2016




         Now pending before the Court are cross-Motions for Partial Summary Judgment filed by Defendant ABF Logistics, Inc. ("ABF Logistics") (Doc. 25), and Plaintiff Zumba Fitness, LLC ("Zumba") (Doc. 31), and a Motion to Strike filed by Zumba (Doc. 35). The motions have been fully briefed and are ripe for decision. For the reasons stated herein, Zumba's Motion to Strike (Doc. 35) is DENIED. ABF Logistics' Motion for Partial Summary Judgment (Doc. 25) is GRANTED IN PART and the Court DEFERS RULING in part. Zumba's Amended Motion for Partial Summary Judgment (Doc. 31) is DENIED.[1]

         I. BACKGROUND

         This case involves a shipment of fitness apparel and DVDs that was stolen en route from Miami to Orlando for a fitness convention and trade show. Zumba is a Florida LLC with its principal place of business in Hallandale Beach, Florida. It is a widely- known global lifestyle and fitness brand that provides products and services-most notably its dance fitness program-to customers worldwide. ABF Logistics is an Arkansas corporation with its principal place of business in Fort Smith, Arkansas. It is a wholly owned subsidiary of ABF Logistics II, Inc., which in turn is a wholly owned subsidiary of ArcBest Corporation. ArcBest also has a wholly owned subsidiary called ABF Freight Services, Inc. According to its website, ABF Logistics "provides third-party logistics services including brokerage, intermodal, ocean transport, transportation management, warehousing and household moving." (Doc. 27-2, p. 27). And, when "shipments do not fit on ABF vans or need special equipment, " its d/b/a ABF Multimodal, Inc., "offers alternative options from a network of reliable carriers." Id. at 29. Quick Cool Transport, LLC ("Quick Cool") defaulted in this case, but is apparently a Florida LLC with its principal place of business in Hialeah, Florida.

         In June of 2014, Zumba sought to transport certain goods from Miami, Florida to Orlando, Florida for a fitness convention at the Orlando Convention Center. Working with Ozburn-Hessey Logistics, LLC ("OHL")-a company it uses for warehousing and related services-Zumba engaged ABF Logistics to arrange the transportation of five[2]freight trailers from Miami to Orlando. ABF Logistics then engaged Oliva Delivery Corp. ("Oliva") and Gemcap Trucking to effect the transportation of the goods. The goods were to be picked up on August 8, 2014 at OHL's Miami warehouse, and transported to Orlando in time for August 11, 2014.

         On August 7, 2014, a representative from Oliva informed ABF Logistics that it could not provide a truck for one of the five shipments. David Moore of ABF Logistics then contacted Quick Cool to see if it could take Oliva's place in transporting one of the trailers. Quick Cool agreed, and ABF assigned it to transport the shipment corresponding with Bill of Lading 426306509 ("BOL 509"). Quick Cool's driver, however, ended up with Bill of Lading 426306506 ("BOL 506"). Both BOLs are signed by Alfredo Munoz, an employee of a company called InfoSonic, Inc. that was located at OHL's Miami warehouse at the time. Both BOLs also identify Oliva as the carrier.

         The shipment transported by Quick Cool never made it to Orlando. Instead, the driver of the truck parked in a BJ's Wholesale parking lot, and the truck was stolen. It was later found unlocked and unsecured, with all of its contents removed. On October 17, 2014, Zumba filed a claim with ABF Logistics, indicating a $464, 874.94 loss. In a letter dated October 23, 2014, an employee of ABF Freight named Christopher A. Boatright denied Zumba's claim, relying on a $5.00 per pound or $100, 000 per trailer limitation of liability provision found in the bill of lading.[3]

         Zumba then filed a Complaint (Doc. 1) in this Court on August 3, 2015, seeking a declaration of its rights under the bill of lading, and alleging breach of contract against ABF Logistics and Quick Cool. It later filed an Amended Complaint (Doc. 23) adding a negligence claim against both Defendants. ABF Logistics answered both (Docs. 8, 24), generally denying the claims against it and filing a cross claim against Quick Cool. The Court held a Case Management Hearing with the parties on December 21, 2015. Therein, the Court noted a "fundamental disagreement as to whether, how and to what extent this dispute is governed by the 'Carmack Amendment' [49 U.S.C. § 14706]." (Doc. 19, p. 2) (Interim Case Management Order). The parties agreed that "the scope and expense of the litigation can be best managed by focusing on this 'threshold issue, ' prior to engaging in full merits and damages discovery." Id. Accordingly, the Court set interim deadlines for discovery and dispositive motions related to the threshold issue of whether, how, and to what extent the Carmack Amendment applies in this case. Pursuant to those deadlines, ABF Logistics filed its Motion for Partial Summary Judgment (Doc. 25) on July 6, 2016. Exhibit C to the Statement of Facts filed contemporaneously with that Motion is an affidavit of Alfredo Munoz, (Doc. 27-3), which Zumba has moved to strike (Doc. 35). Zumba filed its Motion for Partial Summary Judgment on July 6, 2016 (Doc. 28), and filed an Amended Motion for Partial Summary Judgment (Doc. 31) a day later. All three motions are ripe for decision.


         A party moving for summary judgment must establish both the absence of a genuine dispute of material fact and its entitlement to judgment as a matter of law. See Fed. R. Civ. P. 56; Matsushita Bee. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Natl Bank of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602 (8th Cir. 1999). The same standard applies where, as here, the parties have filed cross-motions for summary judgment. When there exists no genuine issue as to any material fact, "summary judgment is a useful tool whereby needless trials may be avoided, and it should not be withheld in an appropriate case." United States v. Porter, 581 F.2d 698, 703 (8th Cir. 1978). Each motion should be reviewed in its own right, however, with each side "entitled to the benefit of all inferences favorable to them which might reasonably be drawn from the record." Wermager v. Cormorant Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983); see also Canada v. Union Bee. Co., 135 F.3d 1211, 1212-13 (8th Cir. 1998). In order for there to be a genuine issue of material fact, the non-moving party must produce evidence "such that a reasonable jury could return a verdict for the nonmoving party." Allison v. Flexway Trucking, Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).


         A. Zumba's Motion to Strike

         Zumba asks the Court to strike the affidavit of Alfredo Munoz, which is attached to ABF Logistics' Statement of Facts. (Doc. 27-3). It asserts two bases for striking the affidavit. First, Zumba contends that ABF Logistics failed to disclose Munoz as a potential witness in its Rule 26 disclosures. Alternatively, Zumba suggests that Munoz' affidavit is internally inconsistent with ABF's Statement of Facts and the positions it has taken in this matter, and must be stricken for those substantive reasons. ABF Logistics admits that it did not specifically identify Munoz in its Rule 26 disclosures, but counters that the following statement from its disclosures satisfies Rule 26: "In addition to the foregoing [list of potential witnesses], ABF reserves the right to use as witnesses any persons . . . identified as persons with knowledge or potential witnesses by any party in discovery." (Docs. 38, pp. 4-5; 35-1, p. 3; 35-1, p. 7). In OHL employee Cari Cossio's deposition, that argument continues, she identified Munoz as the signee of the bill(s) of lading at issue in this case, bringing him within the scope of the aforementioned clause. Alternatively, ABF Logistics submits that any failure to disclose Munoz was substantially justified and was harmless, and that there are no substantive issues with his affidavit that would warrant striking it.

         Federal Rule of Civil Procedure 26(a)(1)(A)(i), "Initial Disclosures, " provides that a party must disclose "the name and, if known, the address and telephone number of each individual likely to have discoverable information-along with the subjects of that information-that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment." Rule 26(e) then provides that "[a] party who has made a disclosure under Rule 26(a) . . . must supplement or correct its disclosure or response ... if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Finally, under Rule 37(c)(1), "[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion . . . unless the failure was substantially justified or is harmless." To be sure, best practice would have been for ABF Logistics' counsel to supplement his initial disclosures to specifically identify Munoz. Nonetheless, ABF Logistics' actions were consistent with Rule 26. Under Rule 26(e), a party must supplement or correct its initial disclosures only "if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Ironically, a case provided to the Court by Zumba illustrates how Rule 26(e) applies favorably to ABF Logistics in the instant case. In Green v. Logan's Roadhouse, Inc., 2014 WL 6871196 (S.D.Miss. Dec. 3, 2014), the court declined to strike an affidavit because the moving party "knew [the witness's] identity and his alleged role in the events leading to this lawsuit throughout the entire discovery period." Id. at 1. While the non-moving party in Green did more to notify his opponent of the witness, the principle carries to the instant case. Cari Cassio was the first witness deposed by the parties, see Doc. 30-3, p. 8, and she discussed Munoz' involvement in the case at length, id. pp. 6-7. Moreover, Munoz signed the bill(s) of lading at issue in this case. (Docs. 27-1, p. 4; 30-4, p. 4). It would stretch credulity to assume that Zumba's counsel was unaware of Munoz' identity and his role in the events leading to this lawsuit.

         But even if ABF Logistics' counsel's failure to supplement its initial disclosures violated Rule 26, that failure was substantially justified and harmless. In evaluating a failure to disclose, courts should consider "the reason for noncompliance, the surprise and prejudice to the opposing party, the extent to which allowing the information or testimony would disrupt the order and efficiency of the trial, and the importance of the information or testimony." Wegener v. Johnson, 527 F.3d 687, 692 (8th Cir. 2008); see also Jenkins v. Med. Labs, of E. Iowa, Inc., 880 F.Supp.2d 946, 956 (N.D. Iowa 2012) (applying the Wegener factors and finding that a failure to disclose was substantially justified and harmless).

         The Court's analysis focuses on the first two Wegener factors. As to the reason for noncompliance, ABF Logistics' counsel "believed Mr. Munoz has been disclosed by Zumba's witness in discovery and that no further disclosure of Mr. Munoz was necessary." (Doc. 38, p. 4). This was certainly a reasonable assumption for counsel to draw, and it serves as a factor against striking the affidavit. Next, as discussed above, there is no surprise or prejudice to Zumba. Munoz was identified early on in the discovery process, and Zumba was well aware of his role in the events leading up to the case. Far from coming out of left field, Munoz is a witness positioned squarely within the infield diamond. Moreover, including Munoz' affidavit as an exhibit to ABF Logistics' Motion does not prejudice Zumba because all of the material information contained in the affidavit is also found in Cossio's uncontroverted deposition testimony. Indeed, given Cossio's deposition, Munoz' affidavit has no effect on the outcome of the parties' cross-Motions for Partial Summary Judgment.

         Finally, Munoz' affidavit is not "internally inconsistent with ABF's Statement of Facts and the positions it has taken in this matter." (Doc. 35, p. 3). Zumba offers two examples that supposedly show an internal inconsistency. The first is that ABF Logistics' Statement of Facts claims "the driver was given [BOL 506] by Alfredo Munoz, " (Doc. 27, ¶ 17 (citing to Munoz' affidavit)), yet "nowhere in the Affidavit does Mr. Munoz state that he was the one who gave the driver the Bill of Lading." (Doc. 35, ¶ 10). This minor discrepancy between the exact phraseology of Munoz' affidavit and ABF Logistics' Statement of Facts does not create an internal inconsistency anywhere near sufficient to warrant striking the affidavit: The exact manner in which the bill(s) of lading changed hands from Munoz to the drivers is simply unimportant to the Court's adjudication of the instant Motions for Partial Summary Judgment.

         Zumba's second example similarly does not evince an internal inconsistency. It argues that because Munoz-who signed the relevant bill(s) of lading-identifies himself as neither an employee of Zumba or OHL, his affidavit is inconsistent with ABF Logistics' argument that Zumba is bound by the bill(s) of lading. This is certainly a legal argument that Zumba has made, but Zumba's disagreement with ABF Logistics about the legal consequences of Munoz' involvement does nothing to render his affidavit inconsistent with ABF Logistics' position. To the contrary, as the Court will discuss below, that position is quite consistent.

         In sum, Zumba's Motion to Strike (Doc. 35) is DENIED. ABF Logistics did not violate Rule 26, and even if it did, its failure to disclose was substantially justified and harmless. Munoz' affidavit also is not internally inconsistent with any of ABF's positions. Finally, the Court notes that the inclusion of Munoz' affidavit in these proceedings does not affect the Court's adjudication of the parties' Motions for Partial Summary Judgment.

         B. Applicability of the Carmack Amendment to ABF Logistics

         Having disposed of Zumba's Motion to Strike, the Court turns its attention to the parties' cross-Motions for Partial Summary Judgment. As noted above, the parties have a fundamental disagreement about the applicability of the Carmack Amendment to this case. This disagreement manifests itself in two forms. First, the parties disagree on whether the Carmack Amendment is at all applicable to Zumba's claims against ABF Logistics. Second, assuming it is applicable, the parties disagree on whether a limitation of liability provision included in the relevant pricing schedule and bill(s) of lading complies with the Carmack Amendment. The Court finds that the Carmack Amendment does not apply to Zumba's claims against ABF, so it does not reach the second part of the parties' dispute.

         1. Carmack Amendment Legal Principles

         The Carmack Amendment provides, in relevant part, that "[a] carrier providing transportation or service . . . shall issue a receipt or bill of lading for property it receives for transportation .... That carrier and any other carrier that delivers the property and is providing transportation or service ... are liable to the person entitled to recover under the receipt or bill of lading." 49 U.S.C. § 14706(a)(1). "The purpose of the Carmack Amendment was to relieve shippers of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods." Reider v. Thompson, 339 U.S. 113, 119 (1950). A carrier may, however, limit its liability under certain circumstances by establishing

rates for the transportation of property . . . under which the liability of the carrier for such property is limited to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances surrounding the transportation.

49 U.S.C. § 14706(c)(1)(A).

         Crucially, it is well established that the Carmack Amendment applies to carriers and freight forwarders, not brokers. E.g., Chemsource, Inc. v. Hub Group, Inc., 106 F.3d 1358, 1361 (7th Cir. 1997) ("The Carmack Amendment . . . imposes liability ... on 'carriers' and 'freight forwarders.'"); Hewlett-Packard Co. v. Brother's Trucking Enters., Inc., 373 F.Supp.2d 1349, 1352 (S.D. Fla. 2005) ("The Carmack Amendment governs carriers, not brokers."); Lumbermens Mut. Cas. Co. v. GES Exposition Servs., Inc., 303 F.Supp.2d 920, 921 (N.D. III. 2003) ("[T]he question is whether GES was a broker (in which case it is not liable under the amendment) or a carrier or freight forwarder (in which case it is liable)."). The Carmack Amendment defines "Broker" as "a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation." 49 U.S.C. § 13102(2). The term "Carrier" means "a motor carrier, a water carrier, and a freight forwarder." Id. at 13102(3). "Motor Carrier, " in turn, is defined as "a person providing motor vehicle transportation for compensation." Id. at 13102(14). And, a "Freight Forwarder" is

a person holding itself out to the general public ... to provide transportation of property for compensation and in the ordinary course of its business-
(A) assembles and consolidates, or provides for assembling and consolidating, shipments and performs or provides for break-bulk and distribution operations of the shipments;
(B) assumes responsibility for the transportation from the place of receipt to the place of destination; and
(C) uses for any part of the transportation a carrier subject to jurisdiction ...

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