Litvak Meat Company v. George P. Baker, and Scott Truck Line, Inc., A Nebraska Corporation, 446 F.2d 329, 10th Cir. (1971)
Litvak Meat Company v. George P. Baker, and Scott Truck Line, Inc., A Nebraska Corporation, 446 F.2d 329, 10th Cir. (1971)
2d 329
Four claims for damage to fresh meat shipments were brought by a shipper
against two common carriers, the Penn Central Railroad and the Scott Truck
Lines. Following a motion by the railroad to quash service on the grounds that
the minimum contacts required for in personam jurisdiction in Colorado were
not present, the claims against Penn Central were dismissed. This appeal by
both the shipper and the motor truck carrier1 presents three separate questions
of jurisdiction:
(1) Whether Penn Central met the appropriate tests of doing business in
Colorado to make it there amenable to service of process in a diversity suit
based on negligence;
(2) Whether the alleged amount in controversy meets the statutory requirement
in diversity cases. 28 U.S.C. 1332;
The complaint charged that plaintiff delivered the chilled meat to Scott in
Adams County, Colorado, where it was placed in Scott's trailers and thence
trucked to Chicago, Illinois, where the trailers were placed in Penn Central's
flatcars for shipment east; that the meat arrived at its destination in a "tainted,
sour, or putrid condition," (first claim), "partially frozen" (second claim); "dark
in color, sticky in places, dull in appearance," (third and fourth claims). Both
defendants were charged with negligence in failing to provide the meat with
proper refrigeration facilities while in transit (all claims); the railroad with use
of defective flatcars and improper shifting thereof resulting in delivery delays
(third and fourth claims). Although each claim sounded in negligence based on
diversity jurisdiction against both defendants, it was additionally averred that
plaintiff "relies in part" upon provisions of the Carmack Amendment and that
the parties "have in their possession copies of all relevant documents relating to
the subject matter of this claim including [inter alia] the uniform order bill of
lading."
I.
6
The first question is whether the district court erred in finding insufficient
contacts in Colorado to render Penn Central amenable to service in that state.
From affidavits filed in support of the railroad's motion to dismiss under Rule
12(b) and answers to interrogatories, it appears that Penn Central maintains a
Denver, Colorado, office, which is listed in both the white and yellow pages of
the telephone directory and is staffed by three employees a district sales
manager, a sales representative, and an office manager who from there
solicit business for the company in Colorado, Wyoming and Utah. In addition,
the Denver staff keeps records, charts Colorado business trends and conditions,
and responds to inquiries relating to company services, including routings,
rates, movements, and handling of freight. Office rent and staff salaries are paid
by the railroad company, which also sends its vice-president and vice-president
in charge of sales several times a year to visit Colorado on business. The
railroad has 399 clients or accounts located in Colorado. Approximately 9,000
freight cars annually originate in that state destined for Penn Central carriage.
Personal property taxes are paid by the railroad to the City and County of
Denver.
There is formidable authority for the proposition that in diversity cases, state
law determines whether a corporation is subject to process in the state and that
federal decisions are important only in ascertaining whether the state law is
within constitutional bounds. Arrowsmith v. United Press International, 320
F.2d 219 (2 Cir., 1963).2 In Arrowsmith, the majority of the court, en banc,
adopted the view originally propounded by Judge Goodrich of the Third
Circuit,3 and overruled Jaftex Corp. v. Randolph Mills, Inc., 282 F.2d 508 (2
Cir. 1960), which had proclaimed a federal standard. Jaftex still commands the
support of many commentators.4
10
We are persuaded that the facts presented in the instant case amply met the
tests of Vandermee and White-Rodgers under a state amenability-to-process
standard coextensive with federal standards and constitutional due process tests.
We hold that the district court erred in its conclusion that there were insufficient
minimal contacts to subject Penn Central to service of process.
II.
11
Apart from its attack on jurisdiction over the person, Penn Central advances a
second contention designed to defeat subject matter jurisdiction. It argues that
since the complaint consists of four separate claims, not one of which exceeds
$10,000,7 plaintiff failed to meet the amount in controversy requirement of 28
U.S.C. 1332.8 In contending that a single plaintiff bringing a multi-count
complaint in a diversity action may not aggregate claims to satisfy this
requirement, Penn Central seems to be arguing against a proposition that
appears to have the persuasion of settled law both in this circuit, Kimel v.
Missouri State Life Ins. Co., 71 F.2d 921 (10 Cir. 1934), and elsewhere.9 In
Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969), the
landmark case prohibiting the aggregation of claims by two or more plaintiffs,
even members of a class, the court was careful to observe: "Aggregation has
been permitted * * * in cases in which a single plaintiff seeks to aggregate two
or more of his own claims against a single defendant. * * *" Professor Wright
comments: "If a single plaintiff is suing a single defendant, Rule 18 permits the
plaintiff to join as many claims as he may have against the defendant,
regardless of their nature, and the value of all the claims is added together in
determining whether the jurisdictional amount is met," Wright, at 121. The
only distinction between this principle and the instant case is that here there is a
single plaintiff and two defendants. We perceive this to be a distinction without
a difference where, as here, liability is asserted against both defendants in all
four claims. We accept the conclusion reached in Siegerist v. Blaw-Knox Co.,
414 F.2d 375, 381 (8 Cir. 1969), that the claims "were pressed against the
[defendants] jointly and the aggregate value of these claims is the proper
measure for determining jurisdiction under 28 U.S.C. 1332(a). 1 Moore's
Federal Practice, 0.97 [2] (2d ed. 1964)."
III.
12
For its final argument Penn Central presents a second attack on jurisdiction over
the person, contending that the Carmack Amendment to the Interstate
Commerce Act10 has preempted other substantive law in this field, and that,
under its provisions, Penn Central may not be subject to process in Colorado
because it does not operate a line of railroad in that state.11
13
supersedes any state legislation on the same subject, Adams Express Co. v.
Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314 (1913) and that any "rule,
regulation, or other limitation of any character whatsoever" purporting to limit
its effect are by its terms declared null and void, Missouri Pacific R.R. v.
Elmore and Stahl, 377 U.S. 134, 136, 137, 84 S.Ct. 1142, 1144, 12 L.Ed.2d 194
(1964).
14
15
The railroad reads too much into the language of the decisions and the statute.
By its very terms the statute did not intend to preempt every cause of action
brought by a shipper against a carrier for damage to its interstate shipment. The
Carmack Amendment was not designed as a comprehensive restatement of the
law, redefining with encyclopedic breadth and detail all rights and
responsibilities of interstate freight shippers and carriers. Rather, the Act
confines itself to a statement of the rights of a legal holder of a receipt or bill of
lading issued by a carrier upon receiving property for interstate transportation
and the responsibilities of a carrier to such holder. The Act requires a "common
carrier, railroad, or transportation company" to issue such receipt or bill of
lading and makes the carrier, with certain exceptions not pertinent here, liable
to such holder "for the full actual loss, damage, or injury to such property
caused by it or by any such common carrier, railroad, or transportation
company to which such property may be delivered * * * notwithstanding any
limitation of liability" imposed by "contract, rule, regulation, or in any tariff"
filed with the Interstate Commerce Commission or promulgated by state law.
Adams Express Co., supra.
16
It explicitly provided that "nothing in this section shall deprive any holder of
such receipt or bill of lading of any remedy or right of action which he has
under the existing law." This court has held that "[t]he Carmack Amendment
does not change the common law rule." L. E. Whitlock Truck Service, Inc. v.
Regal Drilling Co., 333 F.2d 488, 491 (10 Cir. 1964), and that it "continues in
effect the common law applicable to the liability of carriers."
17
In Whitlock, 333 F.2d at 491, this court summarized the liability of a carrier at
common law:
18
At common law a common carrier undertook to carry the shipment safely, and
it was liable for all loss or injury excepting only that due to acts of God, public
enemy, and those arising from the inherent nature of the goods transported or
resulting from the fault of the shipper. It was also a rule of common law that as
to these excepted causes of damage the carrier could nevertheless be held liable
if it were negligent. The carrier was liable for damages whether negligent or
not if the loss was not due to the excepted causes. Therefore a carrier could not
escape liability by a showing of the absence of negligence on its part.
Chesapeake & Ohio Ry. Co. v. Thompson Mfg. Co., 270 U.S. 416, 46 S.Ct.
318, 70 L.Ed. 659.
19
20
shift in the burden of proof, which still remains with the plaintiff," Hipps v.
Hennig, 167 Colo. 358, 447 P.2d 700, 701 (1968).
21
Thus, the existence of a contractual remedy at common law does not prevent
the shipper from bringing an action based solely on negligence. To be sure, in
such an action, a greater burden is imposed on the plaintiff, for he must prove
more than the fact of damage to the goods in shipment by the defendant; he
must also prove that negligence of the defendant was the proximate cause of
the damage claimed. To say that such a remedy exists is not to say that it is
often utilized by a bailor-shipper against a bailee-common carrier. The relative
ease of proving a case in contract, either at common law or under the Carmack
Amendment, militates against its use, and is, to be sure, the more practical,
available remedy. But here we are not dealing with the practicability of a
remedy in negligence or the advisability of using it. Our inquiry is limited to a
determination that such a remedy exists, apart from the contractual remedy
offered by the Carmack Amendment.
22
23
Nor does the somewhat awkward averment that "[i]n bringing this action,
Plaintiff relies in part, upon the provisions of 49 U.S.C.A. 20(11)" render the
complaint fatally inconsistent. We recognize, of course, that because Penn
Central does not maintain lines in Colorado, venue does not lie against it in an
action based on the Carmack Amendment.12 But with two common carriers
named as defendants, it is possible that plaintiff intended to proceed against
Penn Central in negligence and against Scott Truck Line for breaching duties
owed a holder of a receipt or bill of lading.13 This would be permissible, as
would alternative pleadings in negligence against Scott, F.R.Civ.P. 8(a). At this
stage of the proceedings in the district court, plaintiff was not required to make
an election.
24
The order of the district court dismissing plaintiff's complaint against Penn
Central and the cross-claim of Scott Truck Lines Inc. against Penn Central is
reversed.
Notes:
Notes:
*
Also dismissed was a cross-claim of Scott Truck Line against Penn Central for
liability over
Judge Friendly spoke for the majority in this classic debate; Judge Clark, one of
the leading architects of the Federal Rules of Civil Procedure, dissented. The
majority buttressed its position by quoting Hart and Weschsler, The Federal
Courts and the Federal System, 1953, p. 959, "Rule 4(d) (3) of the Rules of
Civil Procedure tells how service of process is to be made upon a corporation
which is subject to service; but it does not tell when the corporation is so
subject." See National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 84
S.Ct. 411, 11 L. Ed.2d 354 (1964), and cases cited in 4 Wright and Miller,
Federal Practice and Procedure, 1075 n. 50; Note, In Personam Jurisdiction of
the Federal Courts Over Foreign Corporations in Diversity Cases: State versus
Federal Law under Erie R.R. v. Tompkins, 38 St. John's L.Rev. 327 (1964). See
also ALI Study, pp. 133-134
Pulson v. American Rolling Mill Co., 170 F.2d 193 (1 Cir. 1948), Goodrich, J.,
sitting by designation
See Comment, Federal Jurisdiction Over Foreign Corporations and the Erie
Doctrine, 1964, 64 Col.L.Rev. 685; Comment, Personal Jurisdiction Over
Foreign Corporations in Diversity Actions: A Tiltyard for the Knights of Erie,
1964, 31 U. Chi.L.Rev. 752; Note, Diversity Jurisdiction of the Federal Courts
Over Foreign Corporations, 1964, 49 Iowa L.Rev. 1224; Note, Corporate
Amenability to Process in the Federal Courts: State or Federal Jurisdictional
Standards: 1964, 48 Minn.L.Rev. 1131. See also Comment, Choice of Law in
the Federal Courts: Use of State or Federal Law to Determine Foreign
Corporation's Amenability to Suit, 1964 Duke L.J. 351.
Professor Moore is critical of the resuit of Arrowsmith, claiming the decision
"is a scholastic attack upon diversity, and diversity deserves juristic support so
long as it is on the books; may prove troublesome relative to bulge service
under Rule 4(f); and will prove divisive and troublesome where plaintiff's
action contains a federal claim and a non-federal claim, whether or not this
latter claim is supported by pendent jurisdiction or solely by diversity. * * *
Sound judicial administration is furthered by Jaftex and undermined by
Arrowsmith." 2 Moore, Federal Practice 4.25 [7], at 1183 (2d ed. 1965).
Forrester, Federal Jurisdiction and Procedure, Casebook Series, (Second
First count, $9,806.29; second count, $2,809.86; third count, $2,286.84; fourth
count, $1,103.61
28 U.S.C. 1332(a);
The district courts shall have original jurisdiction of all civil actions where the
matter in controversy exceeds the sum or value of $10,000, exclusive of interest
and costs * * *.
10
49 U.S.C. 20(11):
Liability of initial and delivering carrier for loss; limitation of liability; notice
and filing of claim. Any common carrier, railroad, or transportation company
subject to the provisions of this chapter receiving property for transportation
from a point in one State or Territory or the District of Columbia to a point in
another State, Territory, District of Columbia, or from any point in the United
States to a point in an adjacent foreign country shall issue a receipt or bill of
lading therefor, and shall be liable to the lawful holder thereof for any loss,
damage, or injury to such property caused by it or by any common carrier,
railroad, or transportation company to which such property may be delivered or
over whose line or lines such property may pass within the United States or
within an adjacent foreign country when transported on a through bill of lading,
agreed values would, in its opinion, be just and reasonable under the
circumstances and conditions surrounding the transportation. The term
"ordinary livestock" shall include all cattle, swine, sheep, goats, horses, and
mules, except such as are chiefly valuable for breeding, racing, show purposes,
or other special uses: Provided further, That nothing in this section shall
deprive any holder of such receipt or bill of lading of any remedy or right of
action which he has under the existing law: Provided further, That all actions
brought under and by virtue of this paragraph against the delivering carrier shall
be brought, and may be maintained, if in a district court of the United States,
only in a district, and if in a State court, only in a State through or into which
the defendant carrier operates a line of railroad: Provided further, That it shall
be unlawful for any such receiving or delivering common carrier to provide by
rule, contract, regulation, or otherwise a shorter period for the filing of claims
than nine months, and for the institution of suits than two years, such period for
institution of suits to be computed from the day when notice in writing is given
by the carrier to the claimant that the carrier has disallowed the claim or any
part or parts thereof specified in the notice: And provided further, That for the
purposes of this paragraph and of paragraph (12) of this section the delivering
carrier shall be construed to be the carrier performing the line-haul service
nearest to the point of destination and not a carrier performing merely a
switching service at the point of destination: And provided further, That the
liability imposed by this paragraph shall also apply in the case of property
reconsigned or diverted in accordance with the applicable tariffs filed as in this
chapter provided. Feb. 4, 1887, c. 104, Pt. I, 20, 24 Stat. 386; June 29, 1906,
c. 3591, 7, 34 Stat. 593; Mar. 4, 1915, c. 176, 1, 38 Stat. 1196; Aug. 9,
1916, c. 301, 39 Stat. 441; Feb. 28, 1920, c. 91, 436-438, 41 Stat. 494; July
3, 1926, c. 761, 44 Stat. 835; Mar. 4, 1927, c. 510, 3, 44 Stat. 1448; Apr. 23,
1930, c. 208, 46 Stat. 251; Aug. 9, 1935, c. 498, 1, 49 Stat. 543; Sept. 18,
1940, c. 722, Title I, 13(b), 54 Stat. 919.
11. * * * all actions brought under and by virtue of this paragraph against the
delivering carrier shall be brought, and may be maintained, if in a district court
of the United States, only in a district, and if a State Court, only in a State
through or into which the defendant carrier operates a line of railroad.
12
13
49 U.S.C. 319:
The provisions of section 20(11) and (12) of this title, together with such other
provisions of chapter 1 of this title (including penalties) as may be necessary
for the enforcement of such provisions, shall apply with respect to common
carriers by motor vehicle with like force and effect as in the case of those