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Allianz Global Risks U.S. Insurance Co. v. Kutzler Express, Inc.

United States District Court, E.D. Wisconsin

October 19, 2016



          J.P. Stadtmueller U.S. District Judge

         On August 12, 2016, Plaintiffs filed a motion to amend their responses to certain of Defendant's requests for admission. (Docket #23). Defendant responded on September 14, 2016, and Plaintiffs replied on September 28, 2016. (Dockets #26 and 27). For the reasons stated below, the Court will grant the motion.

         The national retailer Target purchased several batches of cellular phones from T-Mobile. (Docket #1 at ¶ 7). Target hired Plaintiff NFI Industries, Inc. (“NFI”) to arrange for delivery of the phones. Id. at ¶ 8. NFI thereafter hired Defendant Kutzler Express, Inc. (“Kutzler”) to transport the phones from Kentucky to Illinois. Id. at ¶¶ 9-10. Kutzler never completed the delivery, however, because the phones were stolen at a truck stop in Indiana. Id. at ¶ 11. Plaintiffs sued Kutzler to recover the value of the shipment under the Carmack Amendment, which holds a carrier strictly liable for the “actual loss or injury to [] property” in its control. 49 U.S.C. § 14706(a)(1); (Docket #1 at ¶¶ 17-18). According to Plaintiffs, the value of the shipment of phones was $212, 861.55. (Docket #1 at ¶ 13).

         The Carmack Amendment establishes uniform federal guidelines for liability between interstate carriers and shippers of goods. See Id. The law was “designed in part to remove the uncertainty surrounding a carrier's liability when damage occurs to a shipper's interstate shipment.” Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987). The Amendment applies in cases of third-party theft. See UPS Supply Chain Solutions, Inc. v. Megatrux Transp., Inc., 750 F.3d 1282, 1287 (11th Cir. 2014); Korer v. Danita Corp., 584 F.Supp.2d 1103, 1104 (N.D. Ill. 2008).

         Carriers can take steps to avoid the strict liability imposed by the Amendment. To do so, the carrier must: (1) obtain the shipper's agreement as to a choice of liability; (2) give the shipper a reasonable opportunity to choose between two or more levels of liability; and (3) issue a receipt or bill of lading prior to moving the shipment. Nipponkoa Ins. Co., Ltd. v. Atlas Van Lines, Inc., 687 F.3d 780, 782 (7th Cir. 2012). In this case, prior to shipment, NFI, on behalf of the shipper, Target, provided Kutzler, the carrier, a Master Bill of Lading for the phone delivery. The Master Bill of Lading references National Motor Freight Traffic Association Classification (“NMFC”) number 62820-1. See (Docket #8 at 6). This classification number denotes a certain type of commodity being transported and defines an industry-standard limit on liability for loss of that type of commodity. Id. Liability for commodities bearing classification number 62820-1 is limited to $3.00 per pound of freight lost. Id. For the phones at issue here, the total liability under this classification would be $15, 678.00. Id.

         One key dispute in this case is whether the Master Bill of Lading and the NMFC classification therein govern Kutzler's liability for the lost phone shipment. If they do, Plaintiffs' damages shrink to less than a tenth the amount alleged in their Complaint. The core of the dispute is whether NFI had control over the drafting or terms of the Master Bill of Lading and, if so, whether that means NFI can be held to those terms. As the Court observed in a prior opinion denying Plaintiffs' summary judgment, “the bills of lading in this case were issued by NFI, not Kutzler.” (Docket #20 at 3). The Court found this important because it created an issue of fact as to “whether NFI was offered, and agreed to, a limitation of liability by Kutzler”-namely, the NMFC classification. (Id. at 4). As explained further below, the Court need not decide the merits of this dispute to resolve the instant motion.

         Kutzler propounded several requests for admission on Plaintiffs pursuant to Federal Rule of Civil Procedure 36. Two of those requests are at issue here, and each touches on the issue of NFI's participation in creating the Master Bill of Lading. Request for Admission 1 asks Plaintiffs to admit that “Exhibit 1 is a true and accurate copy of the Master Bill of Lading issued by [NFI] relative to the transportation of the load of cellular phones that is the subject matter of this lawsuit.” (Docket #23-1 at 1) (emphasis added). Request for Admission 26 asks Plaintiffs to admit that “Group Exhibit 2 consist [sic] of true and accurate copies of twenty-six (26) underlying Bills of Lading issued by [NFI] that were incorporated into the Master Bill of Lading (Ex. 1), relative to the transportation of the load of cellular phones that is the subject matter of this lawsuit.” Id. at 2 (emphasis added).

         Approximately one month after the Court's order denying them summary judgment, Plaintiffs answered these requests, admitting both without objection or qualification. By admitting these requests, Plaintiffs argue that they did no more than admit the genuineness of the documents themselves. (Docket #23 at 2). Their admissions do not, in their view, extend to the authorship of the documents. Id. Kutzler disagrees, contending that Plaintiffs' admissions establish that NFI “issued” the Master Bill of Lading, either by actually drafting it or presenting it to Kutzler as agent for the shipper, Target. (Docket #26 at 9-10).

         Rule 36 permits a party to serve on his opponent “a written request to admit, for purposes of the pending action only, the truth of any matters within the scope of Rule 26(b)(1) relating to: (A) facts, the application of law to fact, or opinions about either; and (B) the genuineness of any described documents.” Fed.R.Civ.P. 36(a)(1). The responding party may admit the matter contemplated in the request, deny it, state that the party lacks the ability to admit or deny it after a reasonable investigation, or object to it. See id. 36(a)(4)-(5). The Rule further provides:

A matter admitted under this rule is conclusively established unless the court, on motion, permits the admission to be withdrawn or amended. Subject to Rule 16(e), the court may permit withdrawal or amendment if it would promote the presentation of the merits of the action and if the court is not persuaded that it would prejudice the requesting party in maintaining or defending the action on the merits. An admission under this rule is not an admission for any other purpose and cannot be used against the party in any other proceeding.

Id. 36(b). The party requesting to withdraw admissions bears the ultimate burden to prove that the withdrawal is appropriate. See Bryant v. Fort Wayne Metropolitan Human Relations Comm'n, 284 Fed. App'x 335, 338 (7th Cir. 2008).[1] The Rule, as the Seventh Circuit has explained, “allows parties to narrow the issues to be resolved at trial by effectively identifying and eliminating those matters on which the parties agree.” United States v. Kasuboski, 834 F.2d 1345, 1350 (7th Cir. 1987). Additionally, the Rule forestalls a party from “flip-flopping” on important evidentiary issues as the winds of litigation change. See Banos v. City of Chicago, 398 F.3d 889, 892 (7th Cir. 2005).

         The advisory committee opined that the provision for withdrawal or amendment of an admission is meant to “emphasiz[e] the importance of having the action resolved on the merits, while at the same time assuring each party that justified reliance on an admission in preparation for trial will not operate to his prejudice.” Fed.R.Civ.P. 36 advisory committee notes. In considering whether allowing the withdrawal of admissions would promote presentation of the merits, the Court may consider whether the admissions are contrary to the record in the case. Centrifugal Acquisition Corp. v. Moon, 267 F.R.D. 240, 241 (E.D. Wis. 2010) (citing Ropfogel v. United States, 138 F.R.D. 579, 583 (D. Kan. 1991)). Withdrawal may be proper “when an admission is no longer true because of changed circumstances or when through an honest error a party has made an improvident admission.” Ropfogel, 138 F.R.D. at 583 (citing Jones v. Emp'rs Ins. of Wausau, 96 F.R.D. 227, 229 (N.D.Ga. 1982)). The prejudice contemplated by Rule 36(b) generally “‘relates to the difficulty a party may face in proving its case' because of the sudden need to obtain evidence required to prove the matter that had been admitted.” Id. (quoting Gutting v. Falstaff Brewing Corp., 710 F.2d 1309, 1314 (10th Cir. 1983)). As a result, “[r]eliance on admissions in preparing for trial may show prejudice” and “[a]llowing the withdrawal of admissions on the eve of trial could unfairly disrupt trial preparations.” Id.

         Plaintiffs request that the Court permit them to withdraw their admission of Kutzler's Requests for Admission 1 and 6. First, Plaintiffs contend that doing so will promote presentation of the case on its merits because NFI's corporate representative testified that admission of those requests was improper. (Docket #23 at 2-3). That witness testified that NFI itself did not draft or prepare the Master Bill of Lading but merely communicated it to Kutzler on behalf of Target. Id. Again, Plaintiffs believe that the requests only sought to authenticate the documents and did not bear on their drafting. Id.

         Second, Plaintiffs assert that Kutzler will suffer no prejudice if the admissions are withdrawn, noting that this motion comes well before the deadline for dispositive motions and the trial date. (Docket #23 at 4). As such, Kutzler should have ample time to prepare any additional evidence or argument it may need to prove matters related to the drafting of the Master Bill of Lading. Id. Moreover, Plaintiffs argue, Kutzler knew of the discrepancy between Plaintiffs' admissions and Plaintiffs' litigation position as early as the first deposition taken in this case. Id. Thus, Kutzler has been on notice for some time that Plaintiffs' admissions were a mistake that should not be a permanent part of the ...

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