Pyramid Transportation, Inc. v. Greatwide Dallas Mavis, LLC, 2013 WL 840664 (N.D. Tex. 2013)

Shipper Macias engaged broker Pyramid Transportation to arrange transit of a dump truck from Georgia to Texas. Pyramid booked the load with carrier Greatwide Dallas Mavis, whose truck was involved in an accident en route that damaged the cargo. Pyramid had to pay another carrier to complete the haul, and a storage facility to hold on to it, pending resolution of the parties’ disputes. Meanwhile, a disgruntled Macias refused to pay Pyramid for this and other services. It gave the broker a durable power of attorney, but not an assignment of rights, to pursue its cargo claims against Greatwide. Pyramid sued Greatwide in a Texas state court, alleging claims under Carmack, as well as state and common law causes of action. Greatwide removed the action to the U.S. District Court for the Northern District of Texas on the basis of federal questions the Carmack claims raised.

On the parties’ cross motions for summary judgment, Greatwide raised Pyramid’s standing to sue under Carmack. To address this issue, the court went through an interesting analysis of “constitutional” versus “prudential” standing. Greatwide had only raised the former, asserting that Pyramid hadn’t been “injured in fact,” because it didn’t actually own the cargo. Pyramid responded by pointing to the many thousands of dollars it had to spend to retrieve and store the truck, and by way of uncollected charges due from Macias. The court found this to be demonstrated injury enough to give Pyramid constitutional rights to sue to recover its losses.

But that wasn’t the end of it. The court brought its own motion to dismiss sua sponte (literally, “of its own accord”) based on Pyramid’s lack of prudential standing, a concept that Congress can define through legislation that states exactly who has rights under a statute. Carmack empowers only parties to bills of lading, i.e., shippers, to sue carriers for lost/ damaged/destroyed cargo. Pyramid was party only to a load receipt, which the court found inadequate, and legal subrogation didn’t apply because Pyramid had independent contract rights vis-à-vis Macias. At the heart of the analysis was the fact that Pyramid hadn’t obtained an actual assignment of rights from Macias, a simple and typically applied mechanism that would allow the broker to stand in its shipper’s shoes. Pyramid gets to respond to the court’s sua sponte motion, but let’s face it, when your adversary is the decision maker, the cards are stacked against you. Dismissal of the Carmack claim would destroy federal question jurisdiction, so issues of diversity remain as to whether the court will send the matter back to state court to adjudicate Pyramid’s contract claims in the event it doesn’t have Carmack standing.