If you are a motor carrier or broker defending a claim of any sort, you generally want to be in Federal Court rather than State Court. But this is especially true on cargo claims. Federal judges are typically more familiar with the law governing cargo claims, are more likely to enforce contractual terms limiting the claimant's liability, and are more likely to grant summary judgment in favor of defendants. It is no secret that for these reasons brokers and carriers prefer to be in Federal Court. But until recently it was unclear whether brokers and carriers have the ability to remove a case from State Court to Federal Court where the cargo claim at issue arose from intrastate transportation. The recent case of Desiree Luccio and Reed Frerichs v. UPS Co., 2017 WL 412126 (SD Fla. Jan. 31, 2017), clarifies that these claims can be removed to Federal Court.

In the Desiree Luccio case, plaintiffs shipped cryopreserved embryos intrastate within the State of Florida. The embryos were allegedly mishandled and damaged during their transportation to a storage facility. As a result, plaintiffs brought suit against the medical providers involved and also against UPS, the defendant carrier. Plaintiffs alleged negligence against UPS for its handling and storage of the embryos during their transportation across Florida.

UPS removed the case to Federal Court, contending that there was federal question jurisdiction under 28 U.S.C. §§ 1331 and 1337 because plaintiff's complaint alleged a violation of state law which is preempted under the Federal Aviation Administration Authorization Act of 1994 ("FAAAA"), 49 U.S.C. §§ 14501(c)(1) and 41713(b)(4). Although a carrier would normally remove the case to Federal Court under the Carmack Amendment, 49 U.S.C. §14706, it is clear that the Carmack Amendment applies only to damages arising from the interstate transportation of goods. Accordingly, UPS was forced to remove and argue preemption under the FAAAA. Because no federal cause of action was pled on the face of plaintiff's complaint, UPS also had to argue that the FAAAA completely preempted the plaintiff's state law claims to support federal jurisdiction. Not surprisingly, plaintiffs moved to remand the case to state court, arguing that the FAAAA does not reach plaintiffs' claims because the shipment of embryos was intrastate.

The United States District Court for the Southern District of Florida denied plaintiffs' motion to remand. In so doing, the Court found that the plain text of the FAAAA preempts state laws that are related to price, route, or service of a carrier with respect to transportation of property without regard to whether the transportation is intrastate or interstate. The Court noted that there was no exemption in the statute for the intrastate transportation of goods except for the transportation of household goods as defined in 49 U.S.C. § 13102. As the Court concluded that the embryos that were being transported were not household goods, it held that the transportation of them did not fall within the statutory exemption. Furthermore, the Court noted that 49 U.S.C. § 14501 is captioned "Federal Authority Over Intrastate Transportation," which implies that the statute is meant to apply to intrastate transportation. Concluding that Plaintiffs' negligence claim against UPS related to the price, route, or service of UPS' transportation of the embryos, the Court found that plaintiffs' claims were preempted.

The Desiree Luccio case is important because it not only holds that the FAAAA preempts claims for damages arising from intrastate transportation, but it also concludes that this preemption is broad and complete enough to support removal to Federal Court even where the plaintiff does not plead a federal cause of action on the face of the complaint. Because state law claims are preempted, plaintiff's claims arising from damage in intrastate transportation will presumably proceed in Federal Court under the federal common law applicable to the transportation of goods, much as claims against air carriers or claims for damage to exempt commodities transported in interstate transportation do. Plaintiffs therefore continue to enjoy an avenue of recovery against carriers and brokers. However, carriers can derive the benefits of defending such claims in Federal Court. Brokers, too, should be able to benefit since they also are covered by FAAAA preemption. The decision Desiree Luccio, therefore, brings clarity to the law that governs the intrastate transportation of goods.

Click here to view the Spring 2017 print edition of the Transportation Newsletter.