In a decision having to do with the theft of a cosmetic shipment (Blinc, Inc. v. AZ Miami Corp. U.S. District Court, S.D. Florida. No. 14–23998. June 30.), a federal judge agreed with a request by the plaintiff to remand a case back to state court.
On April 5, 2014, a shipment of 67,040 units of “Blinc” mascara and eyeliner was shipped from the manufacturer’s facility in Japan to Blinc in Boca Raton, Fla.
(The court said its summary of the facts came from the plaintiff’s complaint.)
The shipment traveled under a Fedex Trade Networks uniform straight bill of lading.
The cargo made the first leg of the journey aboard the Sea–Land Comet and arrived on April 16 at the Port of Los Angeles and was transported to defendant AZ’s warehouse in Medley, Fla., where it arrived in good order and condition.
The shipment was cleared by U.S. Customs on May 6 and scheduled for delivery.
The court said that same day the merchandise was released by AZ warehouse personnel to “criminals who had been made aware of the arrival and pending release” of the cosmetics.
Some of the merchandise was recovered on May 19, 2014, but the recovered product had to be destroyed because of contamination and preservation issues.
The unrecovered merchandise was offered for sale on secondary markets at reduced prices.
Blinc brought claims of negligent bailment (safekeeping) and negligence.
AZ removed the case to federal court, stating it had jurisdiction to hear this case because Blinc’s state law causes of action were preempted either by the Carmack Amendment to the Interstate Commerce Act or the Carriage of Goods by Sea Act (COGSA). AZ also sought dismissal on the same preemption grounds.
Blinc, on the other hand, sought to remand the case back to state court on the grounds that AZ failed to prove that the federal court had federal question jurisdiction
The court noted the burden of proving jurisdiction lies with the removing defendant. Because federal courts have limited jurisdiction, there is a presumption against the exercise of federal jurisdiction.
The court pointed to past decisions that have said “all uncertainties as to removal jurisdiction are to be resolved in favor of remand” and “removal statutes are construed narrowly.”
However, the Southern District of Florida also held in a 2011 decision that “A party may remove state law claims to federal court when Congress expressly so provides or when a federal statute wholly displaces the state-law cause of action through complete pre-emption.” (Eurosistemas, S.A. v. Antillean Marine Shipping, Inc., No. 11–21546, 2011 WL 3878357.)
AZ removed the case on the basis of 28 U.S.C. Section 1337 which states, “The district courts shall have original jurisdiction of any civil action or proceeding arising under any act of Congress regulating commerce…”
While Blinc only asserted state causes of action-negligent bailment and negligence, AZ initially argued that the claims of the cosmetics company are exclusively governed by the Carmack Amendment—or alternately, that the cargo is subject to COGSA to the extent the ocean bill of lading contains a so-called “Himalaya clause,” which extends certain privileges and immunities to land-based contractors, such as AZ.
If a Himalaya clause is contained in the ocean bill of lading, AZ argued, the preemptive effect of COGSA would extend to AZ.
Regardless of whether the claims were preempted by the Carmack Amendment or COGSA, AZ moved to dismiss the complaint on preemption grounds.
However, in response to interrogatories from Blinc, AZ said “it has been clarified that the Carmack Amendment does not apply to this shipment,” so that the only potential remaining grounds for federal jurisdiction was the argument that Blinc’s causes of action were preempted by COGSA.
The court explained that COGSA governs all foreign trade contracts for the carriage of goods by sea to or from U.S. ports. It governs a carrier’s duties from the time cargo is loaded onto a ship until it is discharged.
With respect to cargo, COGSA specifies the carrier must “properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.”
In the Eurosistemas decision, the court noted “Under COGSA, claims made pursuant to a bill of lading completely preempt state law causes of action and confer jurisdiction to federal district courts; plaintiffs are entitled to a single remedy and all other tort claims are excluded.”
It added “Although COGSA expressly applies duties to carriers during the sea transport, the parties may agree to extend the applicability of the act to the pre-loading and post-discharge period under COGSA § 7. When the parties extend COGSA to pre-loading and post-discharge periods, however, they must comport with the Harter Act, which was codified into COGSA in 1936.”
A combined transport bill of lading, including terms and conditions, obtained by AZ had terms that “clearly extend COGSA to the pre-loading and post-discharge periods,” the court said, but the bill of lading “does not prove that COGSA applies to the parties’ relationship.”
The court said the face of the bill of lading provided that the place of delivery by the carrier would be a Miami container freight station.
But paragraph 10 of Blinc’s complaint, however, stated the shipment was from the port of Tokyo, Japan, to Blinc in Boca Raton, Fla.
“The goods were allegedly lost after defendant obtained the merchandise in good condition in their warehouse in Miami, and subsequently released them to thieves with falsified documents,” the court noted.
Therefore, the court said “It is unclear from the evidence presented by defendant whether the bill of lading’s terms and conditions continued to apply after the goods were delivered in Miami to defendant.
“Given the uncertainty as to whether COGSA was extended to encompass the final leg of the shipment—from Miami to Boca Raton—defendant has not carried its burden of demonstrating that COGSA preempts plaintiffs causes of action, and that this court has federal question jurisdiction,” the court said.
“Accordingly, remand is warranted,” it concluded.
This article was published in the October 2015 issue of American Shipper.
