Tran Enterprises, LLC v. DHL EXP.(USA), INC.

REVISED JANUARY 3, 2011

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit

FILED
No. 10-20115 December 13, 2010

Lyle W. Cayce
Clerk
TRAN ENTERPRISES, LLC d/b/a NUTRITION DEPOT

Plaintiff-Appellant
v.

DHL EXPRESS (USA), INC.

Defendant-Appellee

Appeal from the United States District Court
for the Southern District of Texas

Before KING, GARWOOD, and DAVIS, Circuit Judges.
PER CURIAM:
Plaintiff-appellant Tran Enterprises LLC, doing business as Nutrition
Depot, entered into contracts with defendant-appellee DHL Express (USA), Inc.
for numerous shipments of merchandise to its customers. This appeal concerns
twenty-one shipments delivered between April 3, 2006, and January 31, 2007,
for which DHL failed to remit collect-on-delivery (COD) payments totaling
$21,991.72 to Nutrition Depot. Nutrition Depot alleged Texas common-law
claims for breach of fiduciary duty, breach of contract, and conversion, as well
as a claim under the Texas Theft Liability Act, TEX. CIV. PRAC. & REM. CODE §
134.001, et seq. Nutrition Depot also asserted that the Carmack Amendment to
 No. 10-20115

the Interstate Commerce Act, 49 U.S.C. § 14706, applied and prohibited the
limited liability provisions of the contract. DHL removed the case to the district
court below. Both parties moved for summary judgment, and the district court
granted DHL’s motion. Nutrition Depot appeals.
While the district court ultimately found, by a status hearing, that there
were twenty-four contested shipments, the district court’s summary judgment
order that is challenged on appeal dealt only with twenty-one shipments. Of
these twenty-one shipments, the evidence shows that DHL collected COD checks
for only ten. Of the remaining eleven shipments, one check was not collected
because DHL failed to deliver the goods altogether, and the remaining ten
checks simply were not collected by DHL’s employees upon delivery of the
merchandise. All of the shipments were by ground transport save one, to
Honalulu, Hawaii; that air shipment is among the ten for which DHL did collect
a COD check. Nutrition Depot paid a seven dollar fee per shipment for COD
service for twenty of the checks.1
All twenty-one disputed shipments were governed by a contract of
carriage, which included the Waybill, DHL Express Terms and Conditions of
Carriage, DHL Express Terms and Conditions of Service, DHL Express COD
Service Conditions, and DHL Express Ground Tariff. These Terms and
Conditions state that DHL’s liability is limited to one hundred dollars per
shipment, unless the shipper requests and pays an additional fee for “Shipment
Value Protection.” Nutrition Depot did not request, pay for or obtain Shipment
Value Protection for any of the twenty-one disputed shipments. In recognition
of its failure to collect some of the checks and Nutrition Depot’s non-receipt of

1
Neither party contests on appeal the district court’s rulings or judgment with respect
to the three other shipments not expressly addressed in the district court’s summary judgment
order. Nor does either party attach any significance to the failure to pay the COD seven dollar
fee on one of the ground shipments, or seek to have that shipment treated differently from any
other.

2
 No. 10-20115

the collected checks, DHL issued twenty-one settlement checks to Nutrition
Depot each in the amount of one hundred dollars.
The district court found that the Carmack Amendment applied to the
shipments at issue and that all of Nutrition Depot’s state-law claims were
preempted thereunder. The district court further found that the one hundred
dollar limit on liability found in DHL’s Terms and Conditions was valid and
enforceable under the Carmack Amendment. As a result, the district court
granted summary judgment to DHL that its liability was limited to one hundred
dollars per shipment, as provided in the contract of carriage, and that Nutrition
Depot was not entitled to collect attorney’s fees. The district court then held a
status conference to determine exactly how many checks were at issue,
ultimately finding that there were twenty-four contested checks and entering a
final judgment requiring DHL to pay $2,400 to satisfy its liability to Nutrition
Depot. Nutrition Depot now appeals, challenging the district court’s grant of
summary judgment to DHL.
This court reviews a district court’s award of summary judgment de novo.
Morris v. Covan World Wide Moving, 144 F.3d 377, 380 (5th Cir. 1998).
Summary judgment is appropriate if no genuine issues of material fact exist and
the movant demonstrates it is entitled to judgment as a matter of law. FED. R.
CIV. P. 56(a); Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir. 2007).
This case centers around the applicability and effect of the Carmack
Amendment, 49 U.S.C. § 14706. The only issue that has been properly asserted
by Nutrition Depot on appeal is whether the Carmack Amendment preempts
Nutrition Depot’s state law claims.
Nutrition Depot argues that its state law claims are not preempted by the
Carmack Amendment because they are predicated on harm independent of any
conduct related to the shipping itself. The Supreme Court has held that the
Carmack Amendment is "comprehensive enough to embrace responsibility for

3
 No. 10-20115

all losses resulting from any failure to discharge a carrier's duty as to any part
of the agreed transportation...." Georgia, Florida & Alabama Rwy. v. Blish
Milling Co.,36 S.Ct. 541, 544 (1916). The Fifth Circuit has also construed the
preemptive scope of the Carmack Amendment to be sweeping, holding that
“Congress intended for the Carmack Amendment to provide the exclusive cause
of action for loss or damages to goods arising from the interstate transportation
of those goods by a common carrier.” Hoskins v. Bekins Van Lines, 343 F.3d 769,
778 (5th Cir. 2003) (emphasis in original) (finding that doctrine of complete
preemption applied). Indeed, the Fifth Circuit has rejected nearly all state-law
claims regarding loss of or damage to goods in interstate ground shipping as
preempted by the Amendment. See, e.g. Moffit v. Bekins Van Lines Co., 6 F.3d
305, 306-307 (5th Cir. 1993) (finding that Carmack Amendment preempted
plaintiff's claims for the tort of outrage, intentional infliction of emotional
distress, negligent infliction of emotional distress, breach of contract, breach of
implied warranty, breach of express warranty, violation of the Texas Deceptive
Trade Practices Act, slander, misrepresentation, fraud, negligence, gross
negligence, and violation of common carrier duties under state law).
Nutrition Depot asserts that this case is distinguishable from existing
Carmack Amendment jurisprudence because it does not involve loss or damage
to goods shipped, but instead involves the carrier’s alleged failure to remit COD
payments for goods that were properly delivered. However, the Supreme Court
and Fifth Circuit have found preemption not only in cases where there was
actual damage to the goods shipped, but also when there has been "any failure
to discharge a carrier's duty with respect to any part of the transportation to the
agreed destination." New York, Philadelphia & Norfolk R.R. Co. v. Peninsula
Produce Exch. of Maryland, 36 S.Ct. 230, 232 (1916). See also Air Products &
Chemicals, Inc. v. Ill. Central Gulf R.R. Co., 721 F.2d 483, 486 (5th Cir. 1983);
Moffit,6 F.3d at 306-07. (Carmack Amendment preempted claims dealing with

4
 No. 10-20115

failure to ship goods on time); Duerrmeyer v. Alamo Moving and Storage One,
Cor., 49 F.Supp.2d 934, 936 (W.D. Tex. 1999) (Carmack Amendment preempted
state law conversion claim arising out of carrier's placement of household items
in storage due to dispute over transport costs). Here, it is undisputed that the
contract of carriage between Nutrition Depot and DHL respecting COD items
required DHL to pick up Nutrition Depot’s customers’ checks for the goods when
DHL delivered them to the customers and to return such checks to Nutrition
Depot. One court, relying on the breadth of the Supreme Court’s broad
preemption language, has specifically extended the Carmack Amendment to a
case where, as here, a carrier allegedly failed to remit COD payments for
properly delivered goods. See Circle Redmont, Inc. v. Mercer Transportation Co.,
795 So.2d 239, 242 (Fla. Dist. Ct. App. 2001) ("although the express language of
the Carmack Amendment only makes reference to the actual loss, damage, or
injury to property during shipping, and thus Mercer's failure to collect C.O.D.
charges does not fall within the literal terms of the amendment, the United
States Supreme Court has interpreted the scope of the Carmack Amendment's
preemption so broadly that such claims necessarily come within its scope."). In
keeping with the foregoing Supreme Court and Fifth Circuit precedent, this
court, like the Circle Redmont court, finds that loss of COD checks constitutes
a failure to discharge the carrier’s duties under the transportation contract, and
as such falls within the reach of Carmack Amendment preemption.
Nutrition Depot further asserts that its conversion and theft claims are
beyond the Carmack Amendment’s broad preemptive reach because these claims
are for“separate harms,” unrelated to the contract of carriage. Nutrition Depot
relies particularly on the First Circuit case of Rini v. United Van Lines, Inc., 104
F.3d 502, 505-06 (1st Cir. 1997), which held that "[l]iability arising from
separate harms–apart from the loss or damage of goods–is not preempted." That
court listed as examples of separate harms assault by an employee of the carrier

5
 No. 10-20115

on the shipper, and intentional infliction of emotional distress, explaining that
these harms would be independent from the loss or damage to goods. Id. See
also Gordon v. United Van Lines, Inc., 130 F.3d 282, 289 (7th Cir. 1997) (also
finding intentional infliction of emotional distress to be a “separate harm” that
was not preempted). Nutrition Depot asserts that DHL’s alleged conversion of
the COD checks constitutes such a “separate harm,” and cites several cases that
have discussed a “conversion exception” in the context of applicability of limited
liability provisions. See, e.g. Glickfield v. Howard Van Lines, Inc., 213 F.2d 723,
727-28 (9th Cir. 1954); Kemper Ins. Cos. v. Federal Express Corp., 252 F.3d 509,
512 (1st Cir. 2001) (citing Deiro v. American Airlines, Inc., 816 F.2d 1360, 1366
(9th Cir. 1987)). We acknowledge that in some circumstances, where a carrier
has intentionally converted for its own purposes the property of the shipper,
traditional true conversion claims should be allowed to proceed and limitations
on liability should be considered inapplicable. See, e.g., Glickfield, 213 F.2d at
727 (requiring proof that the carrier has appropriated the property for its own
use or gain, rather than the simple fact that the property has gone missing);
Nippon Fire & Marine Ins. Co. v. Holmes Transp. Inc., 616 F. Supp. 610
(S.D.N.Y. 1985) (same). See also Mayflower Transit, Inc. v. Weil, Gotshal &
Manges L.L.P.,2000 WL 34479959 (N.D.Tex.2000) (finding conversion claim to
be outside preemptive scope of Carmack Amendment because stolen jewelry was
not part of goods to be shipped). However, to justify such a conversion claim
exception to the preemptive scope of the Carmack Amendment, the party
asserting such an exception would, we hold, bear the burden of proof at trial.
With respect to an issue on which the nonmovant would bear the burden of proof
at trial, if the movant for summary judgment correctly points to the absence of
evidence supporting the nonmovant with respect to such an issue, the
nonmovant, in order to avoid an adverse summary judgment on that issue, must
produce sufficient summary judgment evidence to sustain a finding in its favor

6
 No. 10-20115

on the issue. Anderson v. Liberty Lobby Inc., 106 S.Ct. 2505, 2511 (1986);
Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2552-53 (1986); Johnson v. Deep East
Texas Narcotics Trafficking Task Force, 379 F.3d 293, 337 (5th Cir. 2004); Burge
v. St. Tammany Parish, 336 F.3d 363, 374 (5th Cir. 2003).
In the instant case, Nutrition Depot failed to present any summary
judgment evidence that true conversion has occurred, instead merely offering the
fact that it did not receive the checks. DHL provided evidence that some COD
checks were never collected at all, and that all the COD payments it did collect
from Nutrition Depot’s customers were logged in its system and likely sent to
Nutrition Depot shortly after collection. Nutrition Depot produces no evidence
in response indicating that DHL instead converted those checks for its own gain,
citing instead only to its own filings at earlier stages of the case. Nutrition
Depot made no effort at discovery from its customers, or otherwise, to determine
if any of the COD checks had been cashed, and, if so, when or by whom or the
like.
Nutrition Depot’s remaining claims for breach of contract and breach of
fiduciary duty arise directly from the performance of the contract of carriage
since the contracted-for COD shipments include the delivery of the shipment, the
pick-up of the COD check, and the return of the COD check to the shipper.
Accordingly, these claims are preempted by the Carmack Amendment. See Air
Prods., 721 F.2d at 485-86. Therefore, we affirm the district court’s finding that
all of Nutrition Depot’s state law claims are preempted by the Carmack
Amendment.
The other arguments urged by Nutrition Depot are raised in this court for
the first time in its reply brief in this court (and, to some extent, only at oral
argument). These contentions, which relate to the validity of the limited liability
provisions under the Carmack Amendment, and applicability of the Carmack
Amendment to the one shipment that traveled by air to Honolulu, are not

7
 No. 10-20115

properly before the court. See, e.g. United States v. Bonilla-Mungia, 422 F.3d
316, 319 (5th Cir. 2005) ("[W]e will not entertain issues first raised by an
appellant in his reply brief."). We will nevertheless briefly touch on each of these
issues to show, first, that they have been waived by Nutrition Depot, and
second, that even had the arguments been properly raised here, they would be
unavailing.
First, while Nutrition Depot did argue before the district court that the
limited liability provisions of the contract are invalid under the Carmack
Amendment, Nutrition Depot did not raise this argument on appeal save in its
reply brief. Even assuming, arguendo, that this argument was properly raised
on appeal, the district court was correct in holding that the shipping contract’s
limitation of liability to one hundred dollars per shipment is indeed valid under
the Carmack Amendment. The Carmack Amendment provides a general rule
that motor carriers transporting property are liable to shippers "for the actual
loss or injury to the property," 49 U.S.C. § 14706(a)(1), but allows for an
exception under which a shipper 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.” 49 U.S.C.
§ 14706(c)(1)(A). This court has adopted a four-pronged test for determining
whether a contract's limited liability provision is valid under the statute. Under
this test, a carrier may limit its liability if it: “(1) maintains a tariff within the
prescribed guidelines of the Interstate Commerce Commission (now the Surface
Transportation Board); (2) obtains the shipper's agreement as to her choice of
liability; (3) gives the shipper a reasonable opportunity to choose between two
or more levels of liability; and (4) issues a receipt or bill of lading prior to moving

8
 No. 10-20115

the shipment." Hoskins, 343 F.3d at 778 (citing Rohner Gehrig Co. v. Tri-State
Motor Transit, 950 F.2d 1079, 1081 (5th Cir. 1992) (en banc)).
We agree with the district court that the limited liability provision at issue
in this litigation meets these four requirements, for the reasons given by the
district court. Namely, DHL maintains a ground tariff that is clearly posted on
its internet site; Nutrition Depot agreed to the liability limit following
reasonable opportunity to choose between levels of liability; and Nutrition Depot
received the waybill denoting the terms before the shipment took place. The
crux of Nutrition Depot’s untimely argument concerns the third prong, that it
was not given a meaningful opportunity to choose between levels of protection.
But in creating its online waybills, Nutrition Depot selected ground shipping,
declined the available Shipment Value Protection, and agreed to the Terms and
Conditions of Carriage, Terms and Conditions of Service, COD Service
Conditions, and the Ground Tariff, all of which stated that DHL’s liability was
limited to one hundred dollars per shipment unless Shipment Value Protection
was selected. While Nutrition Depot contends that the labeling of their waybills
as “airbills” undermines the applicability of the limited liability terms to their
shipments, the Terms and Conditions of Service clearly state that "[a] ‘waybill'
shall include any...air waybill...and shall incorporate these Terms and
Conditions" so it is clear that the Terms and Conditions did, in fact, apply.
Thus, even assuming arguendo that this limited liability issue was not waived,
we would affirm the district court’s conclusion that the limited liability
provisions in the contract of carriage between DHL and Nutrition Depot are
valid.
Nutrition Depot also attempts to argue that the Carmack Amendment
does not apply to the one air shipment to Honolulu. However, Nutrition Depot
had argued at all stages of this litigation that the Carmack Amendment applied
to all of the contested shipments, until mentioning in its reply brief before this

9
 No. 10-20115

court that it would not apply to the air shipment. Because appellants failed to
raise this issue until their reply brief on appeal, it has been waived.
Bonilla-Mungia, 422 F.3d at 319. Furthermore, no injustice is done by declining
to fully address this issue because consideration of this shipment under the
Airline Deregulation Act and federal common law applicable to air shipments
would not result in a different outcome due to the near-identity of the
preemptive effect and limited liability requirements for air and ground
shipments.2 See Sam L. Majors Jewelers v. ABX, Inc., 117 F.3d 922 (5th Cir.
1997).
Accordingly, the judgment of the district court is
AFFIRMED.

2
For shipments traveling by air, the Airline Deregulation Act preempts state law
causes of action aside from routine breach of contract claims. See American Airlines, Inc. v.
Wolens, 115 S.Ct. 817, 824-826 (1995). The breach of contract claim in this case is not
"routine," because the appellant seeks to avoid a limited liability term in the contract, rather
than simply seeking to enforce the contract. See Read-Rite Corp. v. Burlington Air Express,
Ltd., 186 F.3d 1190, 1197 (1999); Trieber & Straub, Inc. v. United Parcel Service, Inc., 474 F.3d
379, 386-87 (7th Cir. 2007). The Airline Deregulation Act's savings clause does, however,
preserve the pre-existing federal common law remedies against air carriers for lost shipments.
See Sam L. Majors Jewelers, 117 F.3d at 928; accord Deiro v. American Airlines, Inc., 816 F.2d
1360 (9th Cir. 1987). Under this common law, limited liability is enforceable if there is
reasonable notice to the shipper of the limited liability and fair opportunity to purchase higher
liability. See Read-Rite Corp., 186 F.3d at 1198. This test is highly similar to the
requirements for limited liability enforceability under the Carmack Amendment, and indeed
has been interpreted by some courts as being identical. See, e.g. Kemper Ins. Cos. v. Federal
Express Corp., 252 F.3d 509, 514 (1st Cir. 2001) (“[W]ith respect to the fair opportunity to
declare a higher rate, the constraints on limitation clauses are the same for motor carriers
covered by the Carmack Amendment as they are for air carriers covered by the released value
doctrine.”). Thus, for the reasons already discussed earlier in this opinion for the four-pronged
Carmack Amendment limited liability test, and for the reasons given by the district court, the
limited liability provision in the contract of carriage here is enforceable with respect to air
shipments, as well as with respect to the ground shipments.

10