Sivak et al v. United Parcel Service Co.

OPINION and ORDER granting Defendant's 14 Motion to Dismiss Plaintiffs' First 13 Amended Complaint in its Entirety or, in the Alternative for Judgment on the Pleadings. Signed by District Judge Gerald E. Rosen. (JOwe)

Eastern District of Michigan, mied-2:2013-cv-15263

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Case 2:13-cv-15263-GER-RSW ECF No. 36 filed 07/01/14 PageID.750 Page 1 of 40 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION STEVEN B. SIVAK, and INTERNATIONAL SAMARITAN, on behalf of themselves and all others similarly situated, Plaintiffs, No. 13-cv-15263 vs. Hon. Gerald E. Rosen UNITED PARCEL SERVICE COMPANY, Defendant. ___________________________________/ OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFFS' FIRST AMENDED COMPLAINT IN ITS ENTIRETY OR, IN THE ALTERNATIVE, FOR JUDGMENT ON THE PLEADINGS I. INTRODUCTION Plaintiffs Steven B. Sivak and International Samaritan contend that United Parcel Service (UPS) intentionally overcharges customers who purchase additional liability coverage for packages with a declared value of over $300.00. Each overcharge may be less than $1.00, but these overcharges can quickly add up given UPS's position as the world's largest package delivery company. Under Plaintiffs' theory, UPS lines its pockets with these overcharges and pays off those who complain -- knowing that most will not do so for such a small overcharge per package. Plaintiffs' Amended Complaint therefore seeks class-wide relief for a 1 Case 2:13-cv-15263-GER-RSW ECF No. 36 filed 07/01/14 PageID.751 Page 2 of 40 variety of causes of action under state and federal law. Presently before the Court is UPS's Motion to Dismiss, or in the alternative, for Judgment on the Pleadings. Having reviewed and considered UPS's Motion and supporting brief, Plaintiffs' response thereto, and the entire record of this matter, the Court has determined that the relevant allegations, facts, and legal arguments are adequately presented in these written submissions, and that oral argument would not aid the decisional process. Therefore, the Court will decide this matter "on the briefs." See Eastern District of Michigan Local Rule 7.1(f)(2). II. PERTINENT BACKGROUND AND FACTS A. Federal Law Governing Carrier Liability This action relates to -- but does not arise out of -- the Carmack Amendment, 49 U.S.C. § 13101 et seq., which renders common carriers like UPS liable for "actual loss or injury to. . . property" during interstate transport. 49 U.S.C. § 14706(a). Its purpose is "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). The Carmack Amendment has the effect of "codif[ing] the common-law rule that a carrier, though not an absolute insurer, is liable for damage to goods transported by it unless it can show that the damage was caused by (a) the act of God; (b) the public enemy; (c) the act of the shipper himself; (d) public authority; (e) or the 2 Case 2:13-cv-15263-GER-RSW ECF No. 36 filed 07/01/14 PageID.752 Page 3 of 40 inherent vice or nature of the goods." Mo. Pacific R.R. v. Elmore & Stahl, 377 U.S. 134, 137 (1964) (citations omitted). As pertinent here, it also allows carriers to limit their liability in exchange for charging a shipper a lower transportation rate: [A] carrier providing transportation or service. . . may. . . establish 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. § 14706(c)(1)(A). B. The Parties Plaintiff Steven B. Sivak is a resident of Ann Arbor, Michigan. (Plfs' Am. Compl., Dkt. # 13, at ¶ 10). Plaintiff International Samaritan is an Ohio nonprofit corporation with its principal place of business in Ann Arbor, Michigan. (Id. at ¶ 11). Defendant UPS is a Delaware corporation and is headquartered in Atlanta, Georgia. (Id. at ¶ 21). UPS is the "world's largest package delivery company. . . . In 2012, [for example, it] delivered an average of 16.3 million pieces per day worldwide, or a total of 4.1 billion packages." (Id. at ¶ 34) (citing UPS's 2012 10- K filing with the Securities and Exchange Commission). At issue in this litigation is UPS's practice of offering the "Value-Added Service" of increasing UPS's default $100.00 liability limit on packages in exchange for an additional fee. Both Sivak and International Samaritan have used 3 Case 2:13-cv-15263-GER-RSW ECF No. 36 filed 07/01/14 PageID.753 Page 4 of 40 UPS to ship items in the past six years. (Id. at ¶ 13). For some of these shipments, they each declared that the value of their respective shipments was in excess of $300.00 and therefore purchased additional liability coverage. (Id. at ¶¶ 12-13). Sivak shipped, for example, home stereo equipment and firearms on multiple occasions within the past six years, each with a declared value in excess of $300.00. (Id. at ¶ 14). The same is true for International Samaritan: it shipped two separate packages in October 2012 with a declared value in excess of $2,000.00. (Id. at ¶ 15; Ex. A to Plfs' Resp., Dkt. # 25). C. The UPS Shipping Contract Three documents govern Plaintiffs' shipment of packages through UPS: (1) the UPS Tariff/Terms and Conditions of Service (Terms); (2) the UPS Rate and Service Guide (Service Guide); and (3) Plaintiffs' Source Document from the shipment (collectively, the Shipping Contract). (Ex. A to Plfs' Am. Compl., Dkt. # 13, § 53). Within the Shipping Contract, three separate provisions are pertinent to Plaintiffs' claims: (1) UPS's $100.00 Liability Limit as set forth in the Terms and further detailed in the Service Guide and in the Source Document; (2) the Terms' 180-Day Notice Requirement; and (3) the Terms' discussion of Third-Party Retailers. 4 Case 2:13-cv-15263-GER-RSW ECF No. 36 filed 07/01/14 PageID.754 Page 5 of 40 1. UPS's $100.00 Liability Limit Under Section 50 of the Terms and pursuant to the Carmack Amendment, UPS limits its liability for loss or damage to $100.00: UPS's liability for loss or damage to each UPS domestic package or international shipment, or to each pallet in a UPS Worldwide Express Freight™ shipment, is limited to a value of $100, except as set forth below. Unless a greater value is recorded in the declared value field of the UPS Source Document or the UPS Automated Shipping System used, the shipper agrees that the released value of each domestic package or international shipment, or pallet is no greater than $100, which is a reasonable value under the circumstances surrounding the transportation, and that UPS shall not be liable for more than $100 for each domestic package or international shipment or pallet. To increase UPS's limit of liability for loss or damage above $100, the shipper must declare a value in excess of $100 for each package or pallet in the declared value field of the UPS Source Document or the UPS Automated Shipping System used and pay an additional charge. (Id. at § 50) (emphasis added). The Service Guide then sets forth the pricing for this "Declared Value of Carriage" for both domestic and international shipments. For domestic shipments, it provides as follows: (Ex. B to Plfs' Am. Compl., Dkt. # 22, at 74). There is a similar rate structure for international shipments: 5 Case 2:13-cv-15263-GER-RSW ECF No. 36 filed 07/01/14 PageID.755 Page 6 of 40 (Id. at 140). In Response, International Samaritan attached a Source Document from its October 23, 2012 shipment of goods with a declared value of $2,000.00. (Ex. A to Plfs' Resp., Dkt. # 25).1 The Source Document is International Samaritan's shipping receipt from the UPS Store (a Third-Party Retailer discussed in more detail below) and sets forth the Declared Value Terms & Conditions: Declared value coverage will be available only if You have complied with all Declared Value Terms & Conditions. For an additional fee, We will obtain declared value coverage for Your shipment through the carrier designated on this PSO. We surcharge the cost of this product. You expressly acknowledge that the value of each parcel does not exceed the amount You listed below as Declared Value and stated on the transaction receipt. If no amount is specified, You agree that the value of the parcel(s) shall not exceed $100. If you refuse additional declared value coverage for items of greater value than $100, You will be limited to a maximum declared value coverage of $100. Each declared value provider designates monetary limits coverage. The declared value terms and conditions of the various 1 Plaintiffs argue, and UPS does not dispute, that this Court may consider this document -- one that was attached to Plaintiffs' Response -- without converting UPS's Motion to one for summary judgment because it is a transactional document relating to facts expressly alleged in Plaintiffs' First Amended Complaint and is central to their claims. This Court agrees. See, e.g., Weiner v. Klais and Co., Inc., 108 F.3d 86, 88 (6th Cir. 1997). 6 Case 2:13-cv-15263-GER-RSW ECF No. 36 filed 07/01/14 PageID.756 Page 7 of 40 carriers are listed in the carrier service guide for coverage provided by the carriers and are also available at this location upon request. Consult the Declared Value Terms & Conditions and terms of coverage for further information. (Id. at ¶ 10). It further sets forth limitations on liability: Our liability, the carrier's liability for loss or damage to Your parcel is limited to Your actual damages or $100, whichever is less, unless you declare and pay for a higher authorized value. . . . Limitations of liability can be found in the carrier's service guide or tariff. (Id. at ¶ 11). 2. UPS's 180-Day Notice Requirement Under the Terms, a "shipper" is "the party contracting with UPS for services." (Ex. A to Plfs' Am. Compl., Dkt. # 13, at 2). Section 47.1 of the Terms spell out a shipper's obligation to bring certain billing disputes to UPS's attention within 180 days or else it is deemed waived: Shippers requesting an invoice adjustment (e.g., adjustment of Charges based on an incorrect rate, billable weight, account number, failure to tender a shipment, type of service, shipping charge correction, etc.) or a refund due to a duplicate payment must notify UPS of the request within 180 days of receiving the contested invoice, or any billing dispute is waived. Notification to UPS of a request for an invoice adjustment must be made in writing using one of the following methods: –Submit a request through UPS's online Billing Center at; –Email a request to UPS through®; or –Mail a request to United Parcel Service, P.O. Box 7247- 0244, Philadelphia, PA 19170-0001; 7 Case 2:13-cv-15263-GER-RSW ECF No. 36 filed 07/01/14 PageID.757 Page 8 of 40 The notification to UPS must include the date of shipment, the tracking number for each disputed charge, and the reason for the disputed charge. A partial payment against an invoice is not considered a request for an invoice adjustment or notice to UPS of a disputed charge. UPS reserves the right to refuse to issue any invoice adjustment until all outstanding charges owing to UPS have been paid in full. (Id. at § 47.1). In addition, the Source Document attached by International Samaritan discusses the steps one must take to file a claim: "Any and all claims must be in writing and received by Us within the carrier's required time frame. Claims not made within the prescribed time frame are waived and will not be paid." (Ex. A to Plfs' Resp., Dkt. # 25, at ¶ 12). 3. Third-Party Retailers Finally, the Terms recognize that UPS utilizes a variety of franchises to facilitate shipment of packages (such as the one International Samaritan used). The Terms define these "Third-Party Retailers" as "locations of The UPS Store®, UPS Authorized Shipping Outlet locations, and UPS Alliance Locations (located within Office Depot® and Staples® retail locations)." (Ex. A to Plfs' Am. Compl., Dkt. # 13, at § 2). And as pertinent h