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
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,
[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).
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 Pife’ 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.
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:
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(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).
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 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 ups.com/billing;
—Email a request to UPS through ups.com®; or
—Mail a request to United Parcel Service, P.O. Box 7247-0244, Philadelphia, PA 19170-0001;
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 here, the Terms describe the relationship between UPS and these “Third-Party Retailers:”
The UPS Store® locations ... [and o]ther Third-Party Retailers are independently owned and operated businesses and are not agents of UPS. UPS assumes no liability other than to the Third-Party Retailer as the shipper of the package, for lost, damaged or delayed packages sent via the Third-Party Retailer. Any such liability to the Third-Party Retailer is subject to the limitations set forth in the Terms. All inquiries regarding packages shipped via any Third-Party Retailer must be directed to the Third Party Retailer that shipped the package. UPS will deal solely with the Third-Party Retailer in all matters concerning packages shipped via any Third-Party Retailer including,but not limited to: ... billing. Even if UPS responds directly to customers of the Third-Party Retailer regarding tracking requests, UPS will not be liable to those customers. The Third-Party Retailer is solely responsible for the issuance of any refunds and claims to those who shipped packages via the Third-Party Retailer.... The Third-Party Retailer shall indemnify and hold harmless UPS in any action against UPS arising from the loss, damage, or delay of a package shipped via the Third-Party Retailer.
{Id. at § 15).
D. Plaintiffs’ Claims
Based on the “Declared Value for Carriage” language above, Plaintiffs contend that “UPS plainly states in its Terms that the first $100 of coverage is free or at no additional charge, whether or not a shipper purchases additional declared value coverage.” (Plfs’ Am. Compl., Dkt. # 13, at ¶2). But the problem, according to Plaintiffs, is that when a shipper declares a value in excess of $100.00 and is therefore charged $0.85 per each portion of $100.00, UPS does not actually provide the first $100.00 of coverage for free:
Despite the promise by UPS that the first $100 of declared value coverage is free or at no additional charge, UPS has systematically charged and caused its agent and sales network to charge customers an additional amount for coverage for the first $100 when they purchase additional declared value coverage.
{Id. at ¶ 3). This “problem” actually kicks in when a shipper declares a value in excess of $300.00. {Id. at ¶¶ 30-31). This is because the Service Guide provides 9 for a $2.55 minimum for additional' coverage, which divided by $0.85 equates to 3 portions of $100.00. In other words, when a customer declares a value between $100.01 and $300.00, UPS charges the customer $2.55 for additional declared value coverage without apportioning $0.85 per $100.00 in coverage.
But when a customer declares a value above $300.00, Plaintiffs claim that UPS overcharges that customer by $0.85 by failing to account for the first $100.00 in free coverage that they assert the Shipping Contract promises. {Id. at ¶ 32). A simple chart perhaps better illustrates Plaintiffs’ argument as to how UPS charges its customers versus how UPS should charge its customers:
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And, these overcharges add up dramatically when one considers how many parcels UPS ships annually (referenced above), as well as its business structure: there are
These overcharges, assert Plaintiffs, “reflect a deliberate breach of contract with and intentional effort to defraud its customers.” (Id. at ¶ 8). For evidence of this deliberative misconduct, Plaintiffs note that a cottage industry has developed over the last 18 months of shipping consultants who audit large companies’ shipping costs for savings and overcharges. (Id. at ¶¶ 4, 39). These shipping consultants have raised this practice of charging for the first $100.00 with UPS, which despite “acknowledging] that the charge was not proper,” has not “fix[ed] the problem.” (Id. at ¶¶ 5, 42). UPS’s standard practice is to just credit accounts for those customers who complain — namely large volume shippers — knowing that the bulk of its customers lack the means or sophistication to hire consultants to audit their shipping expenses. (Id. at ¶¶ 6, 8, 33, 40, 42).
Plaintiffs’ purported class action seeks to halt this practice of defrauding its customers in the name of a “critical loss theory” scheme. (Id. ¶ 43). That is, deliberately overcharging all of its customers and then issuing refunds to those who complain, while knowing that most will not. Given the amount of packages UPS ships in a given year, this scheme is quite lucrative: “[Assuming UPS earns $200 million in overcharges, and it refunds $10 million to those [large volume shippers who complain], UPS knows that it will get way with a net profit from the scheme of $190 million without risk of being held accountable.” (Id.).
Several factual intricacies and processes help facilitaté this scheme. “[T]he additional declared value charges are not itemized” for its customers; in order to properly evaluate the declared value charge, allege Plaintiffs, “a customer would have to ‘back out’ the math” which is “impracticable and normally practically or actually impossible to do while standing in line at a UPS shipping counter or UPS drop box or store.” (Id. at ¶ 38). For example, International Samaritan’s Source Document does not contain a separate line detailing how much the UPS Store charged when it declared a value of $2,000.00. (Ex. A to Plfs’ Resp., Dkt. #25, at 4). Plaintiffs also note that UPS has contractually limited its exposure to liability by requiring shippers to raise billing disputes “within 180 days of receiving the contested invoice.” (Ex. A to Plfs’ Am. Compl., Dkt. # 13, § 47. I).
Plaintiffs’ Amended Complaint therefore sets forth six different causes of action: (1) Breach of Contract; (2) Declaratory Relief; (3) Violation of 49 U.S.C. § 13708, which regulates a motor carrier’s billing and collection practices; (4) Unjust En
III. DISCUSSION
A. Standard of Review
Because UPS answered Plaintiffs’ original Complaint before moving to dismiss (Dkt. # 4), UPS’s Rule 12(b)(6) motion is arguably untimely. Scheid v. Fanny Fanner Candy Shops, Inc.,
In deciding such a motion, the Court must construe the complaint in the light most favorable to Plaintiffs and accept all well-pled factual allegations as true. League of United Latin Am. Citizens v. Bredesen,
The Sixth Circuit has emphasized that the “combined effect of Twombly and Iqbal [is to] require [a] plaintiff to have a greater knowledge ... of factual details in order to draft a ‘plausible complaint.’ ” New Albany Tractor, Inc. v. Louisville Tractor, Inc.,
1. Plaintiffs’ Contractual Claims— Counts I and II — Fail as a Matter of Law
The crux of Plaintiffs’ case rests upon the notion that UPS’s Shipping Contract provides customers with the first $100.00 of liability coverage for free and that despite this “contractual obligation,” UPS charges its customers for this “free” coverage when it ships items with a declared value in excess of $300.00. Counts I and Counts II — Breach of Contract and Declaratory Relief — expressly arise out of the terms of the Shipping Contract and rise and fall together. As set forth below, Plaintiffs’ construction of the Shipping Contract renders its plain and unambiguous language meaningless.
It is well-settled under Michigan law that courts must construe contracts according to their unambiguous terms. Wilkie v. Auto-Owners Ins. Co.,
Upon review of the Declared Value for Carriage language and the Shipping Contract as a whole, the Court concludes that the Shipping Contract unambiguously precludes Plaintiffs’ constrained contractual interpretation. The Shipping Contract makes clear that “UPS’s liability for loss or damage to a shipment is limited to $100.00 without a declaration of value.” For packages with a declared value of “$0.00-$100.00,” it provides a charge of $0.00. In cases where a customer wants to increase UPS’s liability, he or she must do
Plaintiffs argue that the word “ ‘total’ clearly qualifies a specified range ($100.01-$50,000.00) such that for all of the increments ... there is a charge of $0.85 for the total value declared.” (Plfs’ Resp., Dkt. # 19, at 16). By placing the “total value declared” language after the specified range, Plaintiffs argue, the Shipping Contract “indicates that [the ‘total’ qualifier] means the total declared value in that range.” (Id.) In so stretching this language, Plaintiffs’ Response shows the nature of their constrained reading as they must add language — “in that range” — in order to phrase the contract in a way that fits their theory. Essentially, Plaintiffs ask that this Court add the following language to give life to their contractual theories: “$100.01-$50,000 for each $100.00 ... of the total value declared above $100.00.” This Court will not rewrite an unambiguous contract.
Indeed, the placement of the phrase “total value declared” supports a finding of unambiguity. That phrase is immediately preceded not by a “specified range” as Plaintiffs insist, but rather by the dollar value that provides the applicable apportionment of the $0.85 cents: “for each $100.00 (or portion of $100.00) of the total value declared.” The only possible reading is that when one declares a value of $100.01-$50,000.00, UPS charges $0.85 “for each $100.00 (or portion of $100.00) of the total value declared.” Accordingly, the “total value declared” language clarifies that the additional charge applies to the entire value and not just the entire value above $100.00.
Plaintiffs’ interpretation also cannot be reconciled with the $2.55 minimum charge, a charge that must be read in conjunction with the rest of the table. Plaintiffs essentially maintain that the Shipping Contract charges $0.85 for each $100.00 or portion thereof and that the “first” $100.00 is free. In sum, this would operate as follows:
[[Image here]]
But Plaintiffs do not assert that UPS “overcharges” its customers for shipments with declared values between $100.01 and $300.00. Nor could they. The presence of the $2.55 minimum charge confirms that UPS does not provide the first $100.00 in free coverage for declared values over $100.00. To accept Plaintiffs’ premise, this Court would also need to read out the minimum charge. This Court will not so modify unambiguous language.
The same is true with respect to declared values of more than $50,000 for international shipments. As set forth above, the language in that provision instructs shippers that “for shipments with a declared value of more than $50,000, multiply the total declared value by the rate to determine the declared value charge for the shipment.” Or, “$0.0085 times the declared value.” If the Shipping Contract provides the first $100.00 for free as alleged by Plaintiffs, this unambiguous lan
Finally, the Court notes that other provisions within the “Value-Added Services” section of the Service Guide references some “free” services that UPS provides to certain shippers:
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(Ex. B to Plfs’ Am. Compl., Dkt. # 19, at 128). The Service Guide also references offering other services for “no additional charge.” (Id. at 62, 87, 190, 199). UPS’s use of these terms — especially the use of the word “free” within the same “Value-Added Services” section — completely undermines any argument that the Shipping Contract does not permit billing for the first $100.00 of declared value coverage without charge for packages with a declared value of over $300.00.
The Court therefore Ends that the Shipping Contract is unambiguous and may not be rewritten to fit Plaintiffs’ interpretation. Plaintiffs’ claims for breach of contract and declaratory relief must be dismissed.
2. Plaintiffs’ Unjust Enrichment Claim — Count IV — Fails as a Matter of Law
Plaintiffs plead their Unjust Enrichment claim in the alternative to their contract claim. (Plfs’ Am. Compl., Dkt. # 13, at ¶¶ 75-81). There is no question that the Federal Rules of Civil Procedure permit parties to plead alternative theories, even theories that are inconsistent. Detroit Tigers, Inc. v. Ignite Sports Media, LLC,
With that said, the Federal Rules’ mere permission to plead in the alternative does not automatically necessitate a finding that an unjust enrichment claim may proceed in the face of pleading that a contract exists. It is well-settled that “[u]njust enrichment ... is not applicable when the parties are bound by an express written agreement.” APJ Associates, Inc. v. N. Am. Philips Coup.,
The elements of a claim for unjust enrichment are: (1) receipt of a benefit by the defendant from the plaintiff and (2) an inequity resulting to plaintiff because of the retention of the benefit by defendant. In such instances, the law operates to imply a contract in order to prevent unjust enrichment. However, a contract will be implied only if there is no express contract covering the same subject matter.
Barber v. SMH (US), Inc.,
Here, Plaintiffs’ Amended Complaint only relies upon the existence of the Shipping Contract to form the basis of their claim that UPS systematically overcharges those who declare values in excess of $300.00. It unequivocally asserts that “Plaintiffs and the members of the [purported] Class are parties to uniform contracts with UPS regarding the shipment of items.” (Plfs’ Am. Compl., Dkt. # 13, at ¶ 56). Their Amended Complaint also makes clear that UPS’s Terms “contain[ ] ‘the general terms and conditions of contract under which ... [UPS] is engaged in the transportation of shipments.’ ” (Id. at ¶ 26) (citing the Terms). And “[p]ursuant to the terms of [the Shipping Contract], UPS is contractually obligated to provide[] Plaintiffs and the members of the [purported] Class with $100 of coverage for loss of damage at no additional charge for each shipment.” (Id. at ¶ 57).
Plaintiffs have failed to adequately plead unjust enrichment. They have identified no conduct by UPS representing that it would provide the first $100.00 of liability coverage free of charge other than the express language addressed above within the Shipping Contract. It is clear under Michigan law that Plaintiffs and UPS have a contractual relationship by virtue of Plaintiffs shipping packages pursuant to the Shipping Contract, and that this contractual relationship precludes Plaintiffs from bringing their unjust enrichment claim. Simply, Michigan law does not permit this Court to imply a contract where there is an express contract covering the same subject matter. Barber,
Accordingly, Plaintiffs’ Unjust Enrichment claim fails.
1. Plaintiffs’ 49 U.S.C. § 13708 Claim — Count III — Fails as a Matter of Law
49 U.S.C. § 13708 sets forth UPS’s various billing and collection obligations as a motor carrier. In relevant part, it provides as follows:
(a) Disclosure. A motor carrier subject to jurisdiction under subchapter I of chapter 135 shall disclose, when a document is presented or electronically transmitted for payment to the person responsible directly to the motor carrier for payment or agent of such responsible person, the actual rates, charges, or allowances for any transportation service and shall also disclose, at such time, whether and to whom any allowance or reduction in charges is made.
(b) False or misleading information. No person may cause a motor carrier to present false or misleading information on a document about the actual rate, charge, or allowance to any party to the transaction.
§ 13708(a-b). Plaintiffs allege that by charging customers for the first $100.00 for packages with a declared value in excess of $300.00 notwithstanding its representations in the Shipping Contract to the contrary, UPS violates both of these subsections. (Plfs’ Am. Compl., Dkt. # 13, at ¶¶ 70-71).
Very few federal courts have addressed such claims. At the outset and though not raised by the parties, the Court notes that the Sixth Circuit has not examined whether 49 U.S.C. § 14704(a)(2)-the Interstate Commerce Commission Termination Act’s “Rights and remedies of persons injured by carriers or brokers” provision — creates a private right of action for Plaintiffs’ claims. See also Mason and Dixon Lines, Inc. v. Steudle,
First, Plaintiffs premise their Section 13708 claim solely on their view of the Shipping Contract. Having comprehensively addressed this constrained view above, Plaintiffs’ Section 13708 theory col
Second, even if this Court concluded otherwise, it is persuaded that Section 13708 does not support a claim that a common carrier overbilled for shipping services. Though very few district courts have addressed the scope of Section 13708, the U1IT4less matter out of the Southern District of New York presents analogous facts and claims and contains significant on-point discussion that is well-reasoned. Accordingly, this Court finds it to be persuasive and therefore alternatively finds that Plaintiffs’ Section 13708 claim is not supported in law.
In U1IT4less, the plaintiff shipped hundreds of packages weekly via Fed.Ex.
In addition to “upweighting,” the plaintiff also alleged FedEx' overcharged for custom fees on shipments to Canada and failed to apply certain discounts. Id. at 283-84. As to the former, the shipper was to pay Canadian customs charges under FedEx’s standard shipping agreement unless the shipper informed FedEx that the recipient would pay. Id. at 283. The plaintiff so informed FedEx, but FedEx charged customs fees anyway. Id. As to the latter, the plaintiff alleged that FedEx’s pricing agreement entitled it to certain discounts that FedEx did not apply. Id. at 284.
On these facts, the plaintiff alleged that FexEx violated Section 13708(b)’s prohibition against presenting “false or misleading information on a document about the actual rate, charge, or allowance to any party to the transaction.” The U1IT4less court dismissed this claim, finding that “Section 13708 requires disclosure of (and prohibits false or misleading information associated with) off-bill discounts and the like.... [Accordingly, it] proscribe^] presentation of a document (such as an invoice) indicating that a customer was charged a certain amount, when in fact the carrier actually charged that customer a lesser amount.” Id. at 294. In so holding, the court discussed the section’s legislative history and agency guidance:
Section 7 of the Negotiated Rates Act of 1993 amended the predecessor of Section 13708 to state:
(a) REGULATIONS LIMITING REDUCED RATES. — Not later than 120 days after the date of the enactment of this section,' the Commission shall issue regulations that prohibit a motor carrier subject to the jurisdiction of the Commission under subchapter II of chapter 105 of this title from providing a reduction in a rate set forth in its tariff or contract for the provision of transportation of property to any person other than (1) the person paying the motor carrier directly for the transportation service according to the bill of lading, receipt, or contract, or (2) an agent of the person paying for the transportation.
(b) DISCLOSURE OF ACTUAL RATES, CHARGES, AND ALLOWANCES.' — -The regulations of the Commission issued pursuant to this section shall require a motor carrier to disclose, when a document is presented or transmitted electronically for payment to the person responsible directly to the motor carrier for payment or agent of such responsible person, the- actual rates, charges, or allowances for the transportation service and shall prohibit any person from causing a motor carrier to present false or misleading information on a document about the actual rate, charge, or allowance to any party to the transaction. Where the actual rate, charge, or allowance is dependent upon the performance of a service by a party to the transportation arrangement, such as tendering a volume of freight over a stated period of time, the motor carrier shall indicate in any document presented for payment to the person responsible directly to the motor carrier for the payment that a reduction, allowance, or other adjustment may apply.
Negotiated Rates Act of 1993, Pub.L. No. 103-180, § 7, 107 Stat.2044, repealed by ICC Termination Act of 1995, § 102(a), Pub.L. No. 104-88, 109 Stat. 803, 804. Section 7(a) mandated regulations prohibiting “off-bill discounting”— that is “a practice by which motor carriers provide discounts, credits or allowances to parties other than the freight bill payer, without notice to the payer.” See Regulations Implementing Section 7 of the Negotiated Rates Act of 1993, Ex Parte No. MC-180 (Sub-No. 3), 2 S.T.B. 73 ,1997 WL 106986 , at *1 (Feb. 25, 1997). Section 7(b)-the nearly-verbatim predecessor to Section 13708— mandated “truth-in-billing” regulations, i.e., regulations requiring disclosure of the “actual rate, charge or allowances for the transportation service[s].” See id. at *1 & n. 6. The ICC Termination Act of 1995 (which created the STB) repealed the Section 7(a) mandate to issue off-bill discount regulations, and placed the Section 7(b) truth-in-billing requirements directly into Section 13708. See §§ 102(a), 103,109 Stat. at 804, 873 ; Regulations Implementing Section 7 of the Negotiated Rates Act of 1993,1997 WL 106986 , at *2 (“Now, the statute no longer requires that we maintain regulations prohibiting the practice of granting off-bill discounts; it does, however, affirmatively require carriers to disclose certain information when they engage in the practice.”); id. at *4 (“Off-bill discounting is not prohibited by statute, while truth-in-billing provisions are expressly embodied in the statute.”).
Id. at 293-94.
Against this statutory and regulatory backdrop, the U1IT4less court drew a distinction between what the statute proscribed and what the plaintiff alleged:
[T]he statute is not directed at activity alleged in connection with the upweight-ing and Canadian Customs schemes. The statute prohibits invoices hiding off-bill discounts; Plaintiff does not allege that Defendants did that. While the upweighting or Canadian Customs schemes might be said to involve invoices that overcharged Plaintiff, it cannot be said that these invoices misrepresented that a higher rate was charged when actually a lower rate was charged. With respect to the “missing discounts,” Plaintiff alleges it was entitled to receive certain discounts, and that “defendants failed to apply or improperly applied the discounts to which plaintiff was entitled.” This is not the hiding of off-bill discounts to which Section 13708(b) is directed; Defendants are not alleged to have actually granted a discount that did not appear on a bill. Instead, Plaintiff alleges it was entitled to discounts it did not receive. Section 13708(b) simply does not apply to this activity.
In other words, Section 13708(b) prohibits issuing a bill for amount x when the actual charge is less than x. Here, Defendants are alleged to have actually charged x when by contract Plaintiff should have been charged less than x. Defendants’ conduct did not misrepresent the “actual rate [or] charge” within the meaning of Section 13708(b), and thus the Motion to Dismiss Count IV is granted.
Id. at 294 (internal record citations omitted).
This Court finds the U1IT4less decision to be well-reasoned and persuasive. Both matters present the indistinguishable allegation that a common carrier overbilled for shipping services. Section 13708(a) and (b) address “truth-in-billing,” mandating that bills reflect the actual charges assessed — including an explanation of discounts that are applied off the four corners of an invoice. It simply does not apply to Plaintiffs’ allegations that
2. Plaintiffs’ RICO Claims — Counts V and VII — Fail as a Matter of Law
In coordination with its affiliated franchises and sales network, Plaintiffs allege that UPS “engaged in a scheme to defraud Plaintiffs” by fraudulently overcharging customers for declared value coverage. (Plfs’ Am. Compl., Dkt. # 13, at ¶¶ 82-99). By “using the wires and mail to bill and cause charges to be billed to Plaintiffs ... .that include the Declared Value Overcharge,” Plaintiffs assert that UPS is liable under RICO for participating in an enterprise of racketeering activity in violation of 18 U.S.C. § 1962(c) and for conspiring to do so in violation of 18 U.S.C. § 1962(d). (Id. at ¶ 87). More “specifically,” Plaintiffs assert that “UPS and the Declared Value Enterprise members knew the bills for the first $100 of Declared Value coverage was fraudulent and unauthorized. UPS has been repeatedly informed of the impropriety of this charge, as has its partners, and they nonetheless have failed to take corrective action and instead have knowingly or at least recklessly failed to alter its behavior.” (Id. at ¶ 90). UPS argues that this Court should dismiss these claims for a host of reasons, including because Plaintiffs have not identified a “misrepresentation” sufficient to infer a scheme to defraud. This Court agrees.
18 U.S.C. § 1962(c) provides that:
It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.
It is well-established that in order to prevail on a RICO cause of action, a plaintiff must establish “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Moon v. Harrison Piping Supply,
The Sixth Circuit recently described the pleading requirements for setting forth predicate acts of mail and wire fraud sufficient to state a RICO claim as follows:
Mail fraud consists of “(1) a scheme to defraud, and (2) use of the mails in furtherance of the scheme.” United States v. Jamieson,427 F.3d 394 , 402(6th Cir.2005). The elements of wire fraud are essentially the same except that one must use the wires in furtherance of the scheme to defraud. United States v. Daniel, 329 F.3d 480 , 486 n. 1 (6th Cir.2003) (noting that the statutes share the same relevant .language and the same analysis should be used for each). “A scheme to defraud includes any plan or course of action by which someone uses false, deceptive, or fraudulent pretenses, representations, or promises to deprive someone else of money.” Jamieson,427 F.3d at 402 . A plaintiff must also demonstrate scienter to establish a scheme to defraud, which is satisfied by showing the defendant acted either with a specific intent to defraud or with recklessness with respect to potentially misleading information. United States v. DeSantis,134 F.3d 760 , 764 (6th Cir.1998).
When pleading predicate acts of mail or wire fraud, in order to satisfy the heightened pleading requirements of Rule 9(b), a plaintiff must “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Frank v. Dana Corp.,547 F.3d 564 , 570 (6th Cir.2008) (quoting Gupta v. Terra Nitrogen Corp.,10 F.Supp.2d 879 , 883 (N.D.Ohio 1998)). A RICO plaintiff is not required to plead or prove first-party reliance on an allegedly false statement. See Bridge v. Phoenix Bond & Indem. Co.,553 U.S. 639 , 648,128 S.Ct. 2131 ,170 L.Ed.2d 1012 (2008). To allege a valid RICO claim, however, a plaintiff must show not only that the predicate act was a “but for” cause of plaintiffs injuries, but also that it was a proximate cause. Holmes v. Sec. Investor Prot. Corp.,503 U.S. 258 , 268,112 S.Ct. 1311 ,117 L.Ed.2d 532 (1992). A plaintiff must show “some direct relation between the injury asserted and the injurious conduct alleged.” Id.
Heinrich v. Waiting Angels Adoption Servs., Inc.,
Courts, including the Sixth Circuit, are skeptical of finding RICO claims that “sound[] in contract. [One] cannot successfully transmute them into RICO claims by simply appending the terms ‘false’ and ‘fraudulent.’” Kolar v. Preferred Real Estate Investments, Inc.,
The fact that the parties take different positions under the contract as to the appropriate prime rate, or the fact that the defendant charged too high a “prime rate” and thereby concealed or refused to disclose what the plaintiff considers the true prime rate called for under the contract, does not give rise to a valid claim for fraud.... The plaintiff has not alleged with particularity any such false statement of fact and therefore the District Court was correct in dismissing the complaint. Sending a financial statement which misconstrues the prime rate provided by the terms of the contract may breach the contract but it does not amount to a RICO mail fraud cause of action. Rule 9(b) requiring “averments of fraud ... with particularity” is designed to allow the District Court to distinguish valid from invalid claims in just such cases as this one andto terminate needless litigation early in the proceedings.
Other courts within this District and across the United States are in accord with Blount’s general holding that RICO claims arising out of contracts must sufficiently plead fraudulent acts independent of a breach of contract. In Kevelighan v. Trott & Trott, P.C., for example, Judge Duggan of this District dismissed an allegation that various entities fraudulently enforced mortgage agreements through “Pooling and Servicing Agreements” “by sending billing notices that attempted to collect excessive attorney fees and/or repayment of advances not yet due.”
To be sure, the Sixth Circuit has subsequently clarified that “Blount does not stand for a blanket prohibition of RICO claims related to contract disputes.” Dana Corp. v. Blue Cross & Blue Shield Mut. of N. Ohio,
The district court dismissed Dana’s RICO claims for failing to state a claim and denied leave to amend, even though Dana alleged, as pertinent here, “specific instances of intentional false representations made by Blue Cross to Dana” and “that Blue Cross similarly defrauded a number of other [similar] clients.” Id at 884-85. In reversing, the Sixth Circuit contrasted the lack of allegations of specific misrepresentations in Blount with those in Dana:
We hold that Dana made sufficient allegations of intentional fraud by Blue Cross to withstand a Fed.R.Civ.P. 12(b)(6) motion to dismiss, for the focus is upon the pleadings, not any proof or evidence. Blount does not stand for a blanket prohibition of RICO claims related to contract disputes. Rather, the reason for dismissal in Blount was that the plaintiff failed to make sufficient allegations of “misrepresentations or omissions which were ‘reasonably calculated to deceive persons of ordinary prudence and comprehension.’ ” 819 F.2dat 153 (citation omitted). In contrast, Dana has made such allegations of misrepresentations and omissions by Blue Cross.... We also note that Dana’s allegations are partially based upon “information and belief.” However, in the proposed second amended complaint, Dana made specific allegations of fraud, including the letters alleged to contain misrepresentations. Issues as to Dana’s proof of its allegations can be decided at a later stage; Dana’s present allegations of intent are sufficient to state a claim.
Id. at 885-86 (emphasis added).
Here, Plaintiffs’ Amended Complaint makes clear that the. “fraudulent activity” about which they complain is derived solely from their flawed interpretation of the Shipping Contract. As discussed above, they do not allege any “fraudulent conduct” outside of Plaintiffs’ own attempt to twist the Shipping Contract’s language into something that it does not say. They have not, for example, pointed to any other writing by UPS or a statement by one of its employees that could be construed as being part of a scheme to misrepresent the manner in which UPS charges for declared values in excess of $300.00.
IV. CONCLUSION
For these reasons,
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss Plaintiffs’ First Amended Complaint in its Entirety or, in the alternative, for Judgment on the Pleadings [Dkt. # 14] is GRANTED;
IT IS FURTHER ORDERED that Plaintiffs’ First Amended Complaint is dismissed with prejudice; and
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Leave to File Sur-Reply in Opposition to Motion to Dismiss [Dkt. # 30] is DENIED.
IT IS SO ORDERED.
OPINION AND ORDER DENYING PLAINTIFFS’ RULE 60(b)(6). MOTION FOR RELIEF FROM JUDGMENT, TO CONSOLIDATE, AND FOR LEAVE TO FILE AMENDED CONSOLIDATED COMPLAINT
I. INTRODUCTION
On July 1, 2014, this Court dismissed Plaintiffs’ First Amended Complaint with
II. PERTINENT PROCEDURAL HISTORY AND BACKGROUND
On December 27, 2013, Plaintiffs’ counsel filed two separate, but nearly identical lawsuits challenging the manner in which UPS charges customers for additional liability coverage, one in the Eastern District of Michigan (this matter) and one in the Central District of California (Solo v. UPS, 13-CV-9515).
The Solo Plaintiffs subsequently dismissed their Complaint without prejudice and refiled it as a “companion case” here in the Eastern District of Michigan on July 11, 2014, which was assigned to the Honorable Judith E. Levy. (14-cv-12719). This Court accepted reassignment pursuant to Local Rule 83.11 on July 28, 2014. (Id. at Dkt. # 6). UPS has neither appeared nor filed a responsive' pleading in the Solo matter, and the parties have stipulated to extend UPS’s response date through August 29, 2014. (Id. at Dkt. # 7).
The Sivak Plaintiffs filed this instant Motion on July 31, 2014. They request unique relief under Federal Rule of Civil Procedure 60(b). Plaintiffs request that this Court: (1) vacate its July 1, 2014 judgment under Rule 60(b)’s catch-all provision; (2) consolidate Sivak and Solo-, (3) permit the filing of a single consolidated amended complaint (a draft of which is attached to their Motion); (4) deem UPS’s previously filed Motion to Dismiss to be refiled against this new complaint and permit the parties to just rest on their previously submitted briefs; and (5) dismiss the single consolidated amended complaint with “a new, one-sentence judgment ... on the basis of its July 1, 2014 Opinion and Order.” (Plfs’ Mtn., Dkt. #38, at 36). They advance this plan in the name of judicial economy: it would obviate the need for the parties to file responsive pleadings in the Solo matter and would avoid duplicative appellate practice. (Id. at 36, 42-45). While a noble consideration, this Court cannot .conclude that Rule 60(b) supports such relief.
III. DISCUSSION
A. Standard of Review
Federal Rule of Civil Procedure 60(b) governs Plaintiffs’ Motion, and provides as follows:
On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have
’ been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;'
(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief. Fed.R.Civ.P. 60(b). Plaintiffs only rely upon the “any other reason that justifies relief’ catch-all provision. (Plfs’ Mtn., Dkt. # 38, at 40 n. 2).
The Sixth Circuit recently summarized relief under Rule 60(b)(6) in McGuire v. Warden, Chillicothe Correctional Institute,
“Relief under Rule 60(b) is circumscribed by public policy favoring finality of judgments and termination of litigation. This is especially true in an application of subsection (6) of Rule 60(b), which applies only in exceptional or extraordinary circumstances which are not addressed by the first five numbered clauses of the Rule.” Ford Motor Co. v. Mustangs Unlimited, Inc.,487 F.3d 465 , 468 (6th Cir.2007) (alteration and quotation marks omitted) (citation omitted). Relief is limited to “unusual and extreme situations where principles of equity mandate relief.” Id. (quoting Olle v. Henry & Wright Corp.,910 F.2d 357 , 365 (6th Cir.1990)). “The decision to grant Rule 60(b)(6) relief is a case-by-case inquiry that requires the trial court to intensively balance numerous factors, including the competing policies of the finality of judgments and the incessant command of the court’s conscience that justice be done in light of all the facts.” Thompson v. Bell,580 F.3d 423 , 442 (6th Cir.2009) (quoting Blue Diamond Coal Co. v. Trustees of UMWA Combined Benefits Fund,249 F.3d 519 , 529 (6th Cir.2001)) (alteration omitted).
Id. at 750. Stated differently, “district courts may employ subsection (b)(6) as a means to achieve substantial justice when ‘something more’ than one of the grounds contained in Rule 60(b)’s first five clauses is present.” Hopper v. Euclid Manor Nursing Home, Inc.,
B. Plaintiffs have not shown that the principles of equity mandate relief
It is clear that Plaintiffs’ Motion does not advance an argument that the “principles of equity mandate relief.” Plaintiffs concede as such, but argue that because they “are not challenging the finality or propriety of this Court’s rulings,” they “need not show an extraordinary ground for relief.” (Plfs’ Mtn., Dkt. # 38, at 42). Their motive, rather, “is purely administrative and to promote the efficient administration of justice.” (Id.). However well-intentioned their motive may be,
With that said, the Court appreciates that Plaintiffs have raised the issue of judicial economy. In Sivak, this Court rejected Plaintiffs’ fundamental premise that UPS’s Shipping Contract provided “the first $100.00 of declared value coverage without charge for packages with a declared value of over $300.00” and dismissed Plaintiffs’ contractual, unjust enrichment, 49 U.S.C. § 13708(a-b), and RICO claims. Sivak,
In short, Plaintiffs’ promised forthcoming appeal in the Sivak matter will govern the Solo matter. The Court is also not aware of any unique issue to be litigated in the Solo matter that would support consolidation for the purpose of the Sivak appeal.
IV. CONCLUSION
For these reasons,
IT IS HEREBY ORDERED that Plaintiffs’ Rule 60(b)(6) Motion for Relief From Judgment, To Consolidate, And For Leave To File Amended Consolidated Complaint (Dkt. # 38) is DENIED.
IT IS SO ORDERED.
Notes
. 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.,
. Both Plaintiffs allege that they substantially complied with the Terms’ 180-day requirement. Sivak tried to file a claim through UPS's website, but could not do so because he does not have a tracking number and does not have a UPS account. (Plfs’ Am. Compl., Dkt. # 13, at ¶ 16). And even if he did have a tracking number, UPS's website would not permit him to submit a formal claim without registering and agreeing to a separate agreement, which he chose not to do. (Id.). International Samaritan also tried to file a claim through UPS’s website, but was rejected from doing so because the tracking numbers it submitted were outside the 180-day limit. (Id. at ¶ 18).
. Plaintiffs have also moved for leave to file a sur-reply (Dkt. # 30) addressing the Supreme Court’s recent preemption decision in Northwest, Inc. v. Ginsberg, - U.S. -,
. Given this Court’s conclusion regarding the insufficiency of Plaintiffs’ state law claims, it declines to decide whether Plaintiffs were obligated to contest the overcharges within 180 days under both the Shipping Contract and 49 U.S.C. § 13710(a)(3)(B), as well as whether the Federal Aviation Administration Authorization Act preempts Plaintiffs' unjust enrichment claim.
. Plaintiffs’ briefing also argues that Defendant’s "lack of contractual privity” affirmative defense (presumably in reference to its use of third-party retailers) raises issues regarding the scope of the Shipping Contract that are not appropriate at this procedural posture. (Plfs' Resp., Dkt. # 19, at 19). "For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment.” JPMorgan Chase Bank, N.A. v. Winget,
. ' Plaintiffs apparently recognize their pleading problem with respect to subsection (b), .arguing in Response that discovery may reveal that UPS "caused its affiliated motor carriers to present false and misleading rate information in the alleged billing scheme” or that "UPS gives third-party retailers a portion of the alleged overcharge.” (Plfs’ Resp., Dkt. # 19, at 36-38 & n. 24). There are two problems with this argument. First, Plaintiffs have not alleged such facts in their Amended Complaint. Second and even if they did, their "overcharge” allegation falls apart when one reviews the plain language of the Shipping Contract.
. Plaintiffs' reliance on Grocery Haulers does not change this Court's conclusion that Section 13708 does not apply to "other types of misleading billing practices.” (Plfs' Resp., Dkt. # 19, at 37). In that matter, a carrier transported goods directly to customers instead of to a consignee as agreed with the shipper. Grocery Haulers,
. At best, Plaintiffs have alleged “on information and belief' that unidentified “shipping consultants” have brought “UPS's practice of charging for the first $100 ... to UPS’s attention” and that "UPS routinely acknowledges the overcharge and credits the account.” (Plfs' Am. Compl., Dkt. #13, at ¶¶ 5, 8, 33, 42). Such an allegation falls well short of Rule 9(b)'s heightened pleading standards. Plaintiffs have not identified a specific shipping consultant, a shipper who received a credit, or set forth specific facts as to how UPS acknowledged that the charge was improper.
. It is this Court’s general practice to provide a plaintiff with an opportunity to amend a Complaint when faced with a dismissal that is readily curable because slight defects should not condemn an otherwise viable complaint. This practice need not be followed here, however, because amendment would be futile. See, e.g., Rose v. Hartford Underwriters Ins. Co.,
. Jeffrey A. Leon and Andrew J. McGuinness filed the initial Complaint in Sivak. Leon (but not McGuinness) was also part of a team of lawyers who filed Solo. On June 23, 2014, this Court granted Leon’s motion to withdraw as the Sivak Plaintiffs’ attorney. McGuinness now represents both the Solo and Sivak Plaintiffs.
. They do not, however, allege violations of RICO or 49 U.S.C. § 13708(a). The Court also notes — and Plaintiffs acknowledge — that UPS may elect to raise different defenses in the Solo matter. This may include, for example, whether personal jurisdiction is appropriate.
. Plaintiffs argue that “the fact that plaintiffs in the Solo action allege compliance with UPS’s asserted 180-day notice condition provides a further basis for the conclusion that the efficient administration of justice will be advanced by consolidation of two cases at this juncture.” (Plfs’ Mtn., Dkt. # 38, at 42). But as they admit, this Court declined to address the 180-day argument. Sivak,