UPS Class Action Defense Cases-Barber v. United Parcel Services: Alabama Federal Court Grants Defense Motion For Judgment On The Pleadings In Breach Of Contract Class Action Based On FAAAA Preemption And Statute Of Limitations

Oct 25, 2007 | By: Michael J. Hassen

Injunctive Relief Claims in Class Action Alleging Breach of Contract for Shipping Services Preempted by Federal Aviation Administration Authorization Act (FAAAA) and Contract Claims Time-Barred under Interstate Commerce Act Alabama Federal Court Holds

Plaintiff Barber Auto Sales filed a putative class action against United Parcel Services for breach of contract, alleging that it overcharged customers for shipping services. Barber Auto Sales, Inc. v. United Parcel Services, Inc., 494 F.Supp.2d 1290, 1291 (N.D. Ala. 2007). Defense attorneys moved for judgment on the pleadings, arguing that the Federal Aviation Administration Authorization Act (FAAAA) preempted the class action claim for equitable relief, and that the breach of contract claims were time-barred under the Interstate Commerce Act. The district court granted the defense motion and dismissed the class action.

Barber and UPS entered into a shipping contract under which the rates charged by UPS would vary “based upon a number of factors including the level of service provided and the weight and size of the shipment.” Barber, at 1291. The contract also provided that UPS would charge the greater of the “actual weight” or the “dimensional weight.” Id. Because the contract permitted plaintiff to “self-select” the “level of service and weights and sizes of the packages it ships and by which it is charged for UPS services,” UPS was permitted to audit the shipments to insure that plaintiff was not under- or over-charged. Id. Further, the contract required plaintiff to dispute any shipping charges within 180 days of its receipt of the relevant invoice. Id., at 1291-92.

Plaintiff’s class action complaint alleged that UPS breached the terms of the shipping contract by manipulating the audit process “so that it could improperly invoice plaintiff increased shipping charges based on false dimensions.” Barber, at 1292. The putative class action sought “(1) monetary damages for breach of contract, (2) an order voiding all contracts ‘to the extent that [UPS] assessed improper increased shipping charge corrections’ on packages; and (3) an injunction prohibiting UPS from assessing improper shipping charges and requiring UPS to conform its practices to comply with the terms and conditions and courses of dealing between the parties.” Id.

The district court first addressed defense claims that the class action complaint could not seek equitable relief because those claims were preempted by the FAAAA, 49 U.S.C. § 14501©(1) and § 41713(b)(4). Barber, at 1292. UPS did not dispute that the “routine breach of contract claims” were not preempted by the FAAAA, but vigorously argued that the class action claims for equitable relief fell squarely within the preemption. Id., at 1293-94. The district court rejected plaintiff’s claim that the equitable relief is “essentially based on UPS’s contractual obligations and are therefore not preempted.” Id., at 1294. Because the FAAAA preempts efforts to expand liability beyond the benefit of the bargain, it applied to this case. The district court explained at page 1294, “[T]he court finds that injunctive relief would constitute an enlargement or enhancement of the parties’ bargain. An injunction is an extraordinary remedy that would go beyond the remedies available in a ‘routine breach of contract action.’… Thus, the court finds that Barber’s claims for injunctive relief are preempted by the FAAAA.” (Citations omitted.) The same rationale applied to the class action complaint’s rescission claim, id. And because the injunctive relief claims failed, the federal court held that UPS was entitled to judgment on the pleadings as to the effort to certify a class action under Rule 23(b)(2). Id.

Next, the court turned to the defense claim that the breach of contract claims in the class action complaint were time-barred under 49 U.S.C. § 14705(b), which requires that “a claim for overcharges brought by a shipper against carrier must be brought within 18 months after the claim accrues.” Barber, at 1294. Plaintiff argued that his breach of contract claim is brought under state law and so the 18-month time period did not apply; the district court disagreed, rejecting two court decisions in Learning Links, Inc. v. United Parcel Service of America, No. 03-7902, see 2006 WL 785274 (S.D.N.Y. March 27, 2006) and 2006 WL 2466252 (S.D.N.Y. August 24, 2006). Barber, at 13294-95. The district court held that “[t]he plain language of § 14705(b) states that, with respect to claims for overcharges brought against carriers, the individual must begin any civil action within 18 months after the claim accrues” and that nothing in the statute limited it in the manner advanced by plaintiff. Id., at 1295. “Accordingly, the court finds that the 18 month limitations period set out in § 14705(b) applies to [the] state-law breach of contract claim.” Id. The federal court also granted the defense motion for judgment on the pleadings as to all contract claims for which plaintiff failed to give the contractually-required notice within 180 days of receiving the relevant invoice. Id., at 1295-96.

Accordingly, the district court dismissed the equitable relief claims with prejudice, dismissed the Rule 23(b)(2) class action claims with prejudice, and dismissed the contract claims with prejudice. Id., at 1296.

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