Certain Underwriters at Interest at Lloyds of London v. United Parcel Service of America, 762 F.3d 332

First State Depository used UPS to ship valuable coins/special metals; 27 shipments valued at $150,000 allegedly lost or stolen in transit.
The Underwriters (First State’s insurers) sued UPS in federal court on diversity grounds, asserting state-law claims: breach of contract, negligence, negligent supervision, and “true and fraudulent conversion.”
The District Court dismissed for failure to state a claim, holding the Carmack Amendment preempted the state-law claims and that the ``true conversion'' doctrine did not defeat preemption; it also noted a Rule 9(b) pleading issue for the conversion claim.
On appeal, the Third Circuit reviewed de novo whether the Carmack Amendment preempts the Underwriters’ claims and whether the “true conversion” exception affects preemption or only liability limits.
The court reaffirmed that the Carmack Amendment preempts all state-law remedies for loss or damage to interstate shipments and concluded the “true conversion” exception is limited to vitiating liability limits under Carmack, not to carving out an exception to preemption.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the Carmack Amendment preempt state-law claims for loss/damage to interstate shipments?	State-law conversion and tort claims should proceed under state law.	Carmack preempts all state-law remedies for loss/damage in interstate carriage.	Preempted: Carmack occupies the field; state claims dismissed.
Does the “true conversion” doctrine permit state-law conversion actions despite Carmack preemption?	True conversion can be an exception to preemption allowing state conversion suits.	True conversion at most defeats liability limits under Carmack, not preemption itself.	Exception is to Carmack’s liability limits only; it does not overcome preemption.
If true conversion occurred, what remedy was available?	Underwriters sought full recovery via state conversion.	Remedy must be sought under Carmack; then plaintiff may argue to avoid Carmack liability limits by alleging true conversion.	Must bring a Carmack claim to seek relief; cannot proceed solely under state law.
Did the complaint satisfy Rule 9(b) for conversion/fraud allegations?	Plaintiffs pled conversion/fraud sufficiently.	District Court found pleading insufficient under Rule 9(b).	Court did not decide due to preemption; Rule 9(b) issue unnecessary to resolve.

Adams Express Co. v. Croninger, 226 U.S. 491 (establishing Congress’ intent to create a uniform federal scheme for carrier liability)
N.Y., New Haven, & Hartford R.R. v. Nothnagle, 346 U.S. 128 (describing Carmack’s compromise of strict liability with contractual limitation)
Am. Ry. Express Co. v. Levee, 263 U.S. 19 (holding state conversion actions are preempted by Carmack)
Ga., Fla. & Ala. Ry. v. Blish Milling Co., 241 U.S. 190 (explaining Carmack’s broad preemptive scope over shipping losses)
Emerson Elec. Supply Co. v. Estes Express Lines Corp., 451 F.3d 179 (3d Cir.) (background on evolution of interstate carrier liability)