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Exel, Inc. v. Southern Refrigerated Transport, Inc.

United States District Court, S.D. Ohio, Eastern Division

August 22, 2017

EXEL, INC. F/U/B/O SANDOZ, INC., Plaintiff,

          Jolson Magistrate Judge.

          OPINION & ORDER


         Defendant Southern Refrigerated Transport, Inc. (“SRT”) moves for reconsideration of this Court's May 8, 2017 summary judgment order. (Op. & Order, Doc. 184). The parties also filed cross-motions in limine regarding the burden of proof on the issue of damages. (Docs. 198, 199).

         I. Facts

         To say this case has a lengthy and tortuous history is an understatement. With almost seven years of litigation, the Court recites only the relevant parts of the history of this case. First, the Court lays out some basic background facts. Second, the Court revisits its Opinion and Order on the parties' cross-motions for summary judgment, which is the subject of SRT's Motion for Reconsideration. Third, the Court describes the facts pertinent to the damages issues analyzed in this order.

         A. Background

A truck filled with millions of dollars' worth of pharmaceuticals was stolen. The trucking company-Southern Refrigerated Transport, Inc. (“SRT”)-is at fault. The shipper-Sandoz, Inc. (“Sandoz”)-claims that the pharmaceuticals were worth $8.6 million. A federal statute-the Carmack Amendment, 49 U.S.C. § 14706 et seq.-imposes strict liability on motor carriers for “actual loss or injury to property, ” but a narrow exception applies if the shipper agrees to a limitation of liability.

(Op. & Order at 1). The three entities involved in this case each had a distinct role in the shipping process:

A “shipper” is “[s]omeone who ships goods to another.” Shipper, Black's Law Dictionary (10th ed. 2014). Here, Sandoz is the shipper.
A “carrier” is “[a]n individual or organization (such as a shipowner, a railroad, or an airline) that contracts to transport passengers or goods for a fee.” Carrier, Black's Law Dictionary (10th ed. 2014). Here, SRT is the carrier.
A “broker” is “[a]n agent who acts as an intermediary or negotiator, esp. between prospective buyers and sellers; a person employed to make bargains and contracts between other persons in matters of trade, commerce, or navigation.” Broker, Black's Law Dictionary (10th ed. 2014). . . . Here, Exel is the broker.

(Op. & Order at 2, Doc. 184).

         Sandoz is a pharmaceutical company. Sandoz was shipping the truckload of pharmaceuticals to its customer, McKesson, Inc. Sandoz assigned its claim for loss to Exel.

         B. Summary Judgment

         The parties in this case presented cross-motions for summary judgment. (Docs. 153, 155). The Court denied SRT's Motion for Summary Judgment and denied in part and granted in part Exel's Motion for Summary Judgment. Specifically, the Court found that SRT was liable to Exel for the stolen truckload of pharmaceuticals without any limitation of liability. The Court left open the question of the proper measure of damages, whether market value or replacement cost, citing a lack of evidence on the issue. SRT asks the Court to reconsider two parts of its order regarding damages.

         First, SRT asks the Court to reconsider its denial of summary judgment on the issue of the proper measure of damages. Specifically, SRT points to the freshly filed, and complete, deposition transcript of Martin Gargiule to support its argument that Sandoz should only be compensated for the replacement value of the stolen pharmaceuticals. Second, SRT asks the Court to reconsider granting summary judgment on the amount of damages if replacement value were to be the proper measure. The Court found that the evidence supported a replacement value of approximately $5.9 million, but SRT argues that the replacement value should be approximately $2.4 million.

         C. Factual Background Regarding Damages

         The central issue before the Court is what measure of damages to apply, and if replacement cost is the proper measure of damages, what is the proper amount of damages? The factual background relevant to this includes Sandoz's damages calculations, Sandoz's witness's testi- mony on damages, and other evidence that Sandoz was able to replace the shipment to its customer, McKesson.

         In its Complaint, Exel indicated that its damages equaled “the value of the lost Shipment.” (Compl. at ¶¶ 27, 34, 47, Doc. 2). In its Amended Initial Disclosures, Exel continued to indicate that its damages equaled the value of the stolen cargo. (Ex. A to SRT's Mot. Limine to Exclude Undisclosed Evidence and Testimony at 3, Doc. 205-1).

         Sandoz produced spreadsheets showing its calculations for the value of the stolen McKesson shipment. (See Docs. 100-1, 155-17). The value could be the “Net Delivery Cost”: $8, 583, 631.10, it could be the “Net Cost”: $5, 890, 338.82, or it could be the “Consolidated Net Cost”: $ 2, 317, 634.73. (Docs. 100-1, 155-17). The parties agree that the “Net Delivery Cost” is equal to market value. The parties disagree about what constitutes replacement cost.

         The Gargiule deposition lies at the center of the Court's inquiry. Martin Gargiule was, at the time of his deposition, the Director of Finance in Sandoz's Business Planning and Analysis group. (Gargiule Dep. at 6:2-3, Doc. 189-1). Gargiule was, at the time of the incident, the associate director of financial reporting and accounting at Sandoz. (See Id. at 11:6-12:4). Gargiule and his team within Sandoz's financial reporting and accounting group prepared the spreadsheet reports that show Sandoz's damages calculations. (Id. at 12:21-14:9). Gargiule, while he was not involved in replacing the McKesson order, testified about the nature of Sandoz's ordering system, its inventory procedures, and its customer service reports, all of which serve as indirect evidence regarding the McKesson replacement order and other sales. Gargiule also testified extensively about damages calculations contained in the spreadsheets his team at Sandoz produced. He explained how each category of costs was derived and why each was distinct.

         Also relevant to the damages inquiry are two email chains. One includes correspondence from Sandoz's Director of Supply Chain Management, Penny Schumacher, in which Schumacher said that “apparently the replacement order for McKesson was placed yesterday.” (Doc. 161-2, PageID 4454). The other email chain includes correspondence from a Sandoz Transportation Supervisor, Robin Ochs, in which Ochs states that “[o]ur cost has been finally derived. It's $2.4 mil.” (Doc. 161-3 at PageID 4460). Ochs also states in the same email chain that the net price of the stolen shipment was $8.5 million, (PageID 4463), and that Sandoz's cost of goods was $5.9 million, (Id.).

         Also, the parties' joint final pretrial statement indicates that it is uncontroverted that “Sandoz provided McKesson with a subsequent shipment to replace the stolen shipment.” (Joint Final Pretrial Statement at 3-4, Doc. 195).

         II. Legal Standards

         While the federal rules don't contemplate a motion for reconsideration, they don't forbid it either. Courts may entertain such motions on interlocutory orders. See Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 F.App'x 949, 952 (6th Cir. 2004). Indeed, “[d]istrict courts have authority both under common law and Rule 54(b) to reconsider interlocutory orders and to reopen any part of a case before entry of final judgment.” Id. at 959.

         Since the Court is asked to reconsider part of its ruling on a motion for summary judgment, the familiar summary judgment standard applies to the Court's analysis. “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine dispute is one where “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And distilled to its essence, the inquiry under Rule 56 is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251-52.

         “The purpose of a motion in limine is to permit the Court to decide evidentiary issues in advance of trial in order to avoid delay and ensure an evenhanded and expeditious trial.” DWS Int'l, Inc. v. Meixia Arts & Handicrafts, Co., No. C-3:09-CV-458, 2011 WL 13157175, at *1 (S.D. Ohio June 3, 2011). Here, the Court decides the issue of which party bears the burden of proof to justify a departure from the default measure of damages under the Carmack Amendment, which is market value.

         III. ...

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