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The Ninth Circuit Court of Appeals has rejected a dissatisfied moving company customer’s challenge to an arbitration award and has adopted the rule that claims for intentional infliction of emotional distress arising out of the same conduct as produced a property loss are preempted by the Carmack Amendment.
In White v. Mayflower Transit, L.L.C., No. 07-55528, 2008 WL 4181600 (9th Cir. Sept. 12, 2008), White contracted with Mayflower to move his belongings cross-country. The moving contract contained an arbitration agreement. White alleged that his property was damaged during the move and filed a demand for arbitration. The arbitrator issued an award in favor of Mayflower.
Believing that the arbitrator was biased, White filed suit in state court, alleging fraud, negligence, improper insurance, property damage, and intentional infliction of emotional distress. After successfully removing the case to federal court, Mayflower moved to confirm the arbitration award. The trial court granted the motion.
On appeal from that ruling, the Court first rejected White’s argument that the case was improperly removed to federal court, noting that the Carmack Amendment provides "the exclusive cause of action for interstate shipping contract claims." 49 U.S.C. § 14706; Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 687-88 (9th Cir. 2007) (holding Carmack Amendment completely preempts claims for "delay, loss, failure to deliver, and damage to property").
The Court next rejected White’s contention that his claims did not fall within the scope of the arbitration award. It noted that White’s claims for fraud, improper insurance, and property damage were specifically addressed in the award and could not be "relitigated." As to the state common law claims for negligence and conversion, the Court found the Carmack Amendment clearly preempted these state causes of action as related to property loss. It also observed that White had failed to produce any specific evidence that the arbitrator was in fact biased against him.
The Court recognized a split among circuit courts considering when intentional infliction of emotional distress claims are preempted by the Carmack Amendment, with some focusing on whether the conduct producing distress is distinct from that resulting in property loss or damage, and others focusing on whether the harm from the distress is distinct from the harm to property. Compare, e.g., Smith v. United Parcel Serv., 296 F.3d 1244, 1249 (11th Cir. 2002) with Rini v. United Van Lines, Inc., 104 F.3d 502, 506 (1st Cir. 1997).
Characterizing the rule focusing on distinctiveness of conduct as the majority rule and the harm-focused rule as mere dicta, the Court adopted the "conduct" test as articulated in Smith. It held that the events leading to White’s allegation of intentional infliction of emotional distress arose "from the same conduct as the claims for delay, loss, or damage to shipped property," and were therefore preempted by the Carmack Amendment.
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