Flexport International, LLC v. Am Trans Expedite, Inc., et al.

Background

Flexport sued Am Trans Expedite, Inc., identified in the opinion’s text as Am Trans Expedite, LLC, along with individual officers Jonathan Hackney, Keith Pruchnick, and Michael Wallace, and Sandhu Bro Transport Inc. The suit concerns losses from the theft of Flexport’s cargo during transit. Am Trans and the individual defendants moved to dismiss.

Claims and Arguments

Defendants argued that Am Trans was a broker rather than a motor carrier and that this classification defeated Flexport’s claims. The court explained that deciding whether Am Trans legally bound itself to transport the goods would require resolving factual disputes, which is not appropriate on a motion to dismiss.

Defendants relied on a brokerage agreement and argued that it governed the dispute. The court declined to incorporate that agreement into the complaint because it was not the basis of Flexport’s claims, Flexport did not refer to it extensively, and the parties disputed when it was executed and whether Am Trans existed at one of the relevant times.

As to the breach-of-contract claim, the court rejected Defendants’ effort to dismiss it because their argument depended chiefly on the disputed brokerage agreement.

As to the Carmack Amendment claim, a federal claim concerning responsibility for goods transported in interstate commerce, Flexport alleged that Am Trans agreed to transport goods as a motor carrier and secretly subcontracted the actual transportation to other providers. The court held those allegations sufficient at the pleading stage. It also stated that any broker license held by Am Trans did not determine the issue at that stage, although licensing could later be evidence of Am Trans’s role.

Unlawful-Brokerage Claim

Defendants successfully challenged Flexport’s claim under 49 U.S.C. § 14916, which addresses unlawful brokerage activity. The court reasoned that the statute applies to a person providing interstate brokerage services as a broker, while the statutory definition of broker excludes motor carriers and their agents.

Flexport repeatedly alleged that Am Trans was a motor carrier, not a broker, including in the portion of the complaint asserting unlawful brokerage activity. Flexport also alleged that Am Trans secretly subcontracted transportation, which the court said further undermined the theory that Am Trans provided services as a broker. The court therefore dismissed the unlawful-brokerage claim against Am Trans and the individual defendants.

Disposition

The court granted Defendants’ motion to dismiss in part as to the unlawful-brokerage claim. The opinion states that the breach-of-contract and Carmack Amendment claims were not dismissed. It does not state that the dismissed claim was dismissed with or without prejudice.