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Polesuk v. CBR Systems

September 28, 2006

JONATHAN D. POLESUK, PERI POLESUK MEMORANDUM DECISION AND CAMERON POLESUK, AND ORDER PLAINTIFF,
v.
CBR SYSTEMS, INC. A/K/A CORD BLOOD REGISTRY SYSTEMS, Q INTERNATIONAL COURIER, INC. A/K/A QUICK INTERNATIONAL COURIER AND AMERICAN AIRLINES, INC., DEFENDANTS.



The opinion of the court was delivered by: George B. Daniels, District Judge.

Defendant Q International Courier, Inc. a/k/a Quick International Courier ("Quick"), a common carrier, is moving, pursuant to Fed.R.Civ.P. 12(b)(6), to dismiss the complaint on the grounds that the state law claims asserted against it are preempted by the Carmack Amendment of the Interstate Commerce Act, 49 U.S.C. § 14706. The Carmack Amendment governs the liability of interstate carriers for the loss or damage to property during transport. Quick seeks, in the alternative, to limit its liability to two hundred dollars ($200.00), which it claims is the maximum dollar amount provided for in the liability provisions of the parties' bill of lading. Additionally, Quick is seeking an order dismissing the cross-claims asserted against it by co-defendant CBR Systems, Inc. ("CBR") or, in the alternative, staying the litigation of such claims pending arbitration.*fn1

CBR has cross-moved to dismiss the complaint against it "on the grounds that CBR is an implied carrier in the stream of commerce under the 'Carmack Amendment' and as such, CBR's liability should likewise be limited to $200 or in the alternative that CBR is a third-party beneficiary of the bill of lading and by a parity of reasoning CBR's liability therefore should also be limited to $200. To the extent that the Court is not inclined to grant the same remedy and relief to CBR that is requested by Quick, then CBR opposes Quick's motion on the grounds that Quick's motion is premature in light of the fact that no substantive pre-trial discovery has occurred and the facts and circumstances of the loss and evidence necessary to oppose Quick's motion may not be in CBR's possession." (CBR's Mem. at 2).

Additionally, plaintiffs have cross-moved, pursuant to Fed.R.Civ.P. 15(a), for an order granting them leave to amend their complaint to assert additional causes of action against Quick, including a claim under the Carmack Amendment.*fn2

The state law causes of action against Quick are dismissed as preempted by the Carmack Amendment. Plaintiffs are granted leave to file an amended complaint, but only to the extent that they may assert a cause of action under the Carmack Amendment against Quick and plead additional factual allegations. CBR's cross-claims against Quick are stayed pending arbitration. The motions are denied in all other respects.

This action arises as the result of the destruction of placenta cord blood while in transit to CBR's facility for cryogenic freezing. The blood was to be stored for the potential future use in stem cell therapy for the newborn himself or other family members. Plaintiffs Jonathan and Peri Polesuk were allegedly contacted by CBR while Ms. Polesuk was pregnant with her son, the infant plaintiff. Plaintiffs allege that CBR "is a clinical-stage biotechnology company in the business of, among other things, collecting, testing, processing, and preserving umbilical cord blood ("Cord Blood") - a procedure known as 'banking.'" (Compl. ¶ 3). Plaintiffs assert that "Cord Blood, which is also called 'placenta blood,' is the blood that remains in the umbilical cord and placenta following birth and after the cord is cut. In the past, Cord Blood was routinely discarded with the placenta and umbilical cord." (Id. ¶ 7). Plaintiffs claim that "[t]he stem cell found in the cord blood are genetically unique to the baby and the family." (Id. ¶ 8). Plaintiffs contend that "[t]he actual and potential uses of neonatal stem cells found in Cord Blood to treat and cure disease are significant and growing." (Id. ¶ 10).

Plaintiffs allege that CBR sent them various promotional and registration materials wherein CBR represented that it "is the most trusted name in Cord Blood banking." (Id. ¶ 16). Plaintiffs further allege that "via the CBR's website, CBR also made the following representations to prospective customers with regard to the transportation of the Cord Blood to CBR:

'One-Step shipping service, which requires only a single phone call after your baby's birth. CBR's systems are fully integrated with Quick International Courier to provide easy pick-up and seamless tracking . . .'

and

'CBR offers simple, prearranged shipping with an experienced courier, requiring only one phone call after your baby's birth. Our automated tracking system is designed to help facilitate timely delivery of your baby's cord blood to our laboratory. You can relax with your new baby while we track your sample every step of the way.'" (Id. ¶ 17).*fn3

Plaintiffs allege that CBR's representations as to the ease of shipping the cord blood were made for the purpose of inducing plaintiffs to enter into a contract with CBR, and that plaintiffs were so induced. (Id. ¶¶ 24-24, 27-28). Plaintiffs allege that CBR's representations, in this regard, were false because "CBR did not use adequate level of standards to transport the [plaintiffs'] newborn son's Cord Blood units to CBR's Cord Blood Banking facility, given the nature and importance of the shipment." (Id. ¶ 19). Plaintiffs claim that Quick couriers would deliver the cord blood to CBR's facility by placing it on regularly scheduled airline flights and having other Quick couriers pick up the shipments at the destination airlines' baggage terminals. (Id. ¶ 22). Plaintiffs maintain that "[g]iven the nature of the specimens, greater care should have been taken with the materials." (Id. ¶ 23).

Plaintiffs further allege that immediately after their son's birth in 2003, CBR arranged for Quick to pick up the cord blood unit for transport to CBR's banking facility located in Arizona.*fn4

(Id. ¶ 29). Plaintiffs contend that at the time of the pick up, a representative of Quick gave plaintiff Jonathan Polesuk a receipt. (J. Polesuk Aff. ¶ 9). Quick maintains that the "receipt" was a bill of lading. The address for "CBR Systems, Inc. Stem Cell Bank" was preprinted on the delivery information portion of the form. Jonathan Polesuk's signature appears in the spaced designated for "Shipper's Signature." In the "Special Instruction" section, the phrase "UMBILICAL BLOOD FOR STORAGE" was preprinted. The form contains two boxes that the shipper may check: one is for "Basic $200 Insurance" and the other is "Shipper Waives Insurance." Neither box was marked. Additionally, the area allowing for the monetary insurance value to be filled in was left blank. The form provides that the "Shipper certifies that the commercial value, nature of the goods, and the content are true and correct, assumes responsibility for charges, and agrees to conditions on the reverse side."

Plaintiffs maintain that the reverse side of the form given to them was blank; a claim which Quick disputes. Quick submitted a photocopy of the front side of the bill of lading allegedly issued to plaintiffs at the time of the pick up, as well as a copy of the front and back of a sample bill of lading form, which Quick was allegedly utilizing in 2003. (Greenberg Aff. ¶¶ 2-3, Ex. A, B). Quick's copy of the purported bill of lading issued to plaintiffs differs from the form submitted by plaintiffs. Plaintiffs' form identifies itself as "QUICK BILLING COPY 2." The form submitted by Quick, although somewhat blurred, does not state it is a billing copy. The sample bill of lading form, which Quick claims is similar to the bill of lading at issue, identifies itself as "SHIPPER'S RECEIPT 1." On the reverse side of the sample copy of shipper's receipt form, it states, in part:

Acceptance of this bill of lading by the shipper shall constitute the shipper's agreement to the following:

2. The shipment is insured by Quick for loss, damage or destruction, irrespective of the cause including but not limited to negligence, to actual fair market value (limit $200.00) during pick-up, transport and delivery. There is a charge of $3.00 for this insurance and it will be charged automatically unless shipper waives all coverage by checking appropriate box on front of this bill of lading. The responsibility of Quick under this paragraph shall be reduced to the extent of the value of any insurance carried by the shipper [f]or any lost or damaged shipment.

3. Quick shall not be liable for any loss other than or in an amount in excess of that which is described in paragraph 2 above unless arrangements concerning the same are made in advance of shipment. Shipper may request additional insurance up to a maximum of $5,000.00 per shipment by showing the amount on the face of this bill of lading and by paying an additional fee as agreed to by the shipper and Quick. The additional valuation and fee must be agreed upon by Quick prior to shipment and must be entered on the face of this bill of lading.

Plaintiffs maintain that when they contacted CBR twenty-four hours after handing over the cord blood, CBR informed them that the cord blood had been destroyed. Plaintiffs allege that "while the Cord Blood was being transported from the Quick Courier to American Airlines, the Cord Blood units were completely destroyed." (Compl. ¶ 37). CBR allegedly advised plaintiffs that a gust of wind caused the box containing the blood to fall from a luggage cart onto the tarmac at an airport in Texas. A truck subsequently ran over the box destroying the cord blood.

Plaintiffs contend that "Quick was negligent by failing to use its promised highest level of standards to transport Plaintiffs' Cord Blood . . ., failing to have a secure chain of custody in play for Plaintiffs' Cord Blood shipment to ensure delivery within 32 hours of birth and failing to have a proper standard of care for handling such fragile and irreplaceable goods." (Id. ¶ 45). Plaintiffs further claim that Quick had negligently interfered with plaintiffs' contract with CBR because, despite Quick's knowledge that the failure to timely deliver the cord blood could threaten its viability, Quick negligently failed to transport the blood in a timely fashion in that it failed to take ordinary and basic precautions to protect the shipment and to treat it as a fragile, perishable and unique item. (Id. ¶¶ 50, 51).

Plaintiffs have asserted claims against CBR for fraud, breach of contract and negligence.

The two cause of action asserted against defendants Quick and American Airlines are pled as state law claims for negligence and negligent interference with a contract.*fn5 CBR has asserted cross-claims against Quick and American Airlines for contractual indemnification, common law indemnification, breach of contract for failing to obtain insurance coverage, and contribution.

Plaintiff is seeking to amend the complaint to add three additional causes of action against Quick, namely: tortious interference with a contract for allegedly intentionally interfering with plaintiffs' contract with CBR; a Carmack Amendment claim, and a breach of Quick and CBR's "Professional Service Agreement" ("Service Agreement"). With regard to the proposed claim for breach of the Service Agreement, plaintiffs contend that they were third-party beneficiaries to that contract.

The Service Agreement provides that Quick was to act as a "Contractor" to provide delivery of the cord blood to CBR's facilities. Paragraph six of the Service Agreement states, in pertinent part:

RELATIONSHIP OF PARTIES. The relationship between the Parties is solely an independent contractor relationship. Contractor and its agents and employees are not agents or employees of CBR, and have no authority to act for or on behalf of CBR or to bind CBR to any contract or in any manner ...


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