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Federated Mutual Insurance Co. v. Con-Way Freight, Inc

United States District Court, District of Minnesota

May 11, 2015

Federated Mutual Insurance Company, Plaintiff,
v.
Con-Way Freight, Inc., Defendant.

Anthony J. Kane, Esq., Terhaar, Archibald, Pfefferle & Griebel, LLP, Minneapolis, MN, on behalf of Plaintiff.

Robyn K. Johnson, Esq., Cousineau McGuire Chartered, Minneapolis, MN, on behalf of Defendant.

MEMORANDUM OPINION AND ORDER

ANN D. MONTGOMERY, U.S. DISTRICT JUDGE.

I. INTRODUCTION

This matter is before the undersigned United States District Judge for a ruling on Defendant Con-Way Freight, Inc.’s (“Con-Way”) Motion to Vacate Arbitration Award [Docket No. 5] and Plaintiff Federated Mutual Insurance Company’s (“Federated”) Motion to Remand [Docket No. 11]. For the reasons set forth below, Con-Way’s motion is granted and Federated’s motion is denied.

II.BACKGROUND

The facts of this dispute are straightforward. On February 7, 2013, Con-Way picked up cargo in Laredo, Texas for delivery to Wanamingo, Minnesota. Notice of Removal [Docket No. 1] ¶ 4. The cargo was insured by Federated. Id. Sometime during transit, the cargo was damaged. As a result of the damage, Federated paid its insured $32, 405.28 for the damaged cargo. Id. Attach. 4.

Con-Way and Federated are members of Arbitration Forums, Inc. (“Arbitration Forums”). Kane Aff. [Docket No. 14] Ex. C. Federated contends, and Con-Way does not dispute, that membership to Arbitration Forums requires agreeing to a Property Subrogation Arbitration Agreement (the “Agreement”). Id. Ex. B. Pursuant to the Agreement, signatory companies agree to “forego litigation and submit any personal, commercial, or self-insured property subrogation claims to Arbitration Forums.” Id.

Federated commenced an Arbitration Forums proceeding against Con-Way on February 5, 2014, seeking to recover the $32, 405.28 Federated paid to the insured. Con-Way did not participate in the arbitration proceeding. On April 16, 2014, the Arbitration Forums arbitrator determined that Con-Way failed to adequately care and protect the cargo. As a result of Con-Way’s negligence and breach of contract as bailee of the cargo, the arbitrator determined that Federated was entitled to recover the full $32, 405.28 from Con-Way. Notice of Removal Attach. 4.

Federated was unable to collect the arbitration award directly from Con-Way. On January 26, 2015, Federated brought a motion in Steele County District Court to confirm the arbitration award. Notice of Removal Attach. 3. Con-Way filed its Notice of Removal on February 5, 2015, arguing that federal jurisdiction was proper under 28 U.S.C. § 1331 because Federated’s claims are governed by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706.

Shortly after removal, Con-Way filed the instant Motion to Vacate. Con-Way argues that the Arbitration Forums arbitrator lacked jurisdiction because Federated’s claims are preempted by the Carmack Amendment. Federated disagrees and argues that the arbitrator acted with authority and that remand is appropriate because Con-Way expressly waived its rights under the Carmack Amendment.

III. DISCUSSION

Both parties agree that the Carmack Amendment provides the exclusive remedy for cargo damage claims. Additionally, it is undisputed that commercial carriers can waive their rights under the Carmack Amendment. The parties disagree, however, on whether ...


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