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Royal Sun Alliance Insurance Plc v. Ta Operating LLC

April 21, 2011


The opinion of the court was delivered by: Robert P. Patterson, Jr., U.S.D.J.


Defendant TA Operating LLC ("TA") moves for summary judgment of all claims asserted by Plaintiff in its complaint. Plaintiff Royal Sun Alliance Insurance PLC ("RSA") moves for partial summary judgment on the issue of damages. Third-party Defendant Prime, Inc. ("Prime") moves for summary judgment in its favor on TA's claim against Prime for contribution.


In 2007, Johnson and Johnson Sales and Logistics Company, LLC, a subsidiary of Johnson & Johnson ("J&J"), whose insurer was Plaintiff Royal Sun Alliance Insurance, PLC ("RSA"), entered into a Motor Carrier Agreement with third-party Defendant Prime, Inc. (Def.'s Statement of Undisputed Facts Pursuant to Local Rule 56.1 ("Def.'s 56.1 Statement") at ¶ 2.)*fn1 Pursuant to this contract, Prime agreed to transport cargo, including pharmaceuticals, tendered by companies within the J&J family of companies. (Def.'s 56.1 Statement at ¶ 3; Pl.'s Counterstatement of Undisputed Facts Pursuant to Local Rule 56.1 ("Pl.'s 56.1 Counterstatement") at ¶ 3.)

I. The Antioch Theft

On May 6, 2008, Prime driver Weston Davis picked up a load of pharmaceuticals from a JOM Pharmaceutical Services' (a subsidiary of Johnson & Johnson) distribution facility in Shepherdsville, Kentucky. (Def.'s 56.1 Statement at ¶ 5.) The load was scheduled for a May 7, 2008 delivery to Oncology Therapeutics Network ("OTN") located approximately 170 miles away in LaVergne, Tennessee. (Id.) J&J and Prime considered this shipment of pharmaceuticals to be a "High Value Load" ("HVL") due to its contents and their value. (Id. at ¶ 5.) As a result, Prime's transport of this load was subject to certain heightened safety procedures ("HVL Procedures") agreed to between Prime and J&J/JOM. (Id.) These procedures required drivers to 1) drive at least 200 miles before stopping; 2) use air brake locking systems while stopped; 3) maintain visual observation of the tractor and trailer at all times; and 4) never leave an HVL unattended outside of a secure yard. (Id. at ¶ 7.) These procedures were subject to the need for necessary bathroom and food stops. (Pl.'s 56.1 Counterstatement at ¶ 7.)

Davis left the JOM facility in the afternoon of May 6 and arrived at Defendant TA's Antioch truck stop, less than 200 miles away, at approximately 6:00 p.m. (Def.'s 56.1 Statement at ¶ 8.) Davis parked his tractor trailer and left the tractor trailer unattended while he walked his dog and entered TA's facility. (Id. at ¶ 9.) Davis did not apply the "cuff lock" air brake locking mechanism, as required by the HVL procedures, before leaving the tractor trailer. (Id.) Prime's records demonstrate that the vehicle was left unattended in the parking lot for more than an hour. (Pl.'s 56.1 Counterstatement at ¶ 10.) The records show that at 6:56 p.m. the ignition of the tractor was turned on, presumably by the thieves. (Id.) Upon Davis's return to the parking lot, he noticed that the tractor trailer was missing and reported the theft to Prime. (Id.) An eyewitness reported that he saw the tractor trailer drive off the TA Antioch lot at approximately 6:30 p.m. (Def.'s 56.1 Statement at ¶ 11.)

The tractor was recovered shortly after the theft approximately six miles from the Antioch TA. (Id. at ¶ 12.) The trailer was recovered thirteen months later in Tampa, FL. (Id.) The pharmaceuticals were never recovered. (Id.) The price invoiced to Ontological Therapeutics Network for these pharmaceuticals totaled $4,127,409.60. (Williams Decl., ¶ 5, Ex. C.)

II. Jeffersonville, Ohio Theft

On July 16, 2008, Prime drivers Jon Elam and Kathy Gordon picked up a load of pharmaceuticals from the same JOM facility in Shepherdsville, Kentucky. (Def.'s 56.1 Statement at ¶ 20.) The load was scheduled for delivery the following day to AmerisourceBergen Corp., located approximately 220 miles away in Lockbourne, Ohio. (Id. at ¶ 21.) This load was also designated an HVL and subject to the HVL procedures. (Id. at ¶ 22.) In addition, as a response to the May 2008 theft, JOM had instituted additional HVL procedures in an effort to more effectively secure HVL load. (Id.) These additional HVL procedures included a requirement that drivers remain at JOM's facility until a time designated by JOM/J&J called the "must depart time." (Id. at ¶ 23.) The procedures also included a requirement for tandem or team drivers. (Deposition of Pamela Odum, Kinney Decl., Ex. E at 31.)

The Prime drivers left the JOM facility early, in violation of the "must depart time" policy, departing at 12:30 p.m. on July 16th for a scheduled delivery 19 hours later at a location only 220 miles away, along with a tandem vehicle. (Def.'s 56.1 Statement at ¶¶ 23-24; Pl.'s 56.1 Counterstatement at ¶¶ 23-24.) Gordon and Elam lost contact with their tandem vehicle immediately upon leaving the facility. (Kinney Decl., Ex. Q at 11.) Prime's records show that Gordon and Elam arrived at the Jeffersonville TA at 5:14 p.m. (Pl.'s 56.1 Counterstatement at ¶ 27.) The drivers parked in an "IdleAire" parking spot. (Def.'s 56.1 Counterstatement at ¶ 27.) The IdleAire parking system allows drivers to park their tractor trailers without operating their engines, in exchange for a fee. (Id. at ¶ 28; Pl.'s 56.1 Statement at ¶ 28.) Air conditioning and electric power are supplied to the cab of the tractor trailer through a ground connection. (Def.'s 56.1 Statement at ¶ 28.) Closed circuit TV cameras were located above the IdleAire parking spots. (Id. at ¶ 29.)

After parking the tractor trailer, the drivers left the vehicle unattended and entered the TA facility together to use the restrooms and get drinks. (Kinney Decl., Ex. Q at 11.) They failed to engage the "air cuff" locking mechanism. (Def.'s 56.1 Statement at ¶ 35.) Upon exiting the facility Gordon realized that the truck was missing. (Def.'s 56.1 Statement at ¶ 30.) At 6:00 p.m., the truck was reported stolen. (Pl.'s 56.1 Counterstatement at ¶ 30.)

Shortly after the theft, two eyewitnesses reported that they saw the subject tractor trailer parked on the side of a road approximately ten miles away from the Jeffersonville TA. (Def.'s 56.1 Statement at ¶ 31.) The witnesses reported that the trailer was unhitched from its tractor, attached to another tractor, and driven away. (Id. at ¶ 32.) The tractor was located two hours later, approximately six miles from the Jeffersonville TA. (Id.) The trailer was located, empty, the next day in Kentucky. (Id. at ¶ 33.) The price invoiced to Amerisource Bergen Corp. for these pharmaceuticals totaled $1,376,398.36. (Williams Decl., ¶ 5, Ex. D.)

Law enforcement officials, Prime's Director of Security, and the experts retained in this case all suspect that the thieves of these pharmaceutical loads were professional, highly sophisticated and organized, and part of a network of several cargo theft groups operating in the United States. (Def.'s 56.1 Statement at ¶ 46.)

III. Post-Theft Developments

As a result of the thefts, Plaintiff RSA paid two insurance claims, totaling $5.5 million, and pursued subrogation against Prime. (Id. at ¶ 52.) RSA demanded the full invoice value, totaling $5.5 million, from Prime. (Id. at ¶ 53.) Prime threatened to discontinue transporting goods on behalf of J&J unless Prime's exposure was limited to $250,000 per theft pursuant to the limitation of liability provision contained within its contract with J&J and JOM. (Id. at ¶ 54.) RSA ultimately accepted a payment of $250,000 per theft from Prime. (Id. at ¶ 55.)

On June 18, 2009, Plaintiff RSA filed this action against TA, asserting causes of action for negligence and breach of bailment with regard to the May and July thefts, pursuant to Tennessee and Ohio state law, respectively. On April 9, 2010, this Court granted Defendant TA's motion to implead Prime with regard to the Ohio theft.*fn2


Three motions are currently pending before the court: 1) Defendant's motion for summary judgment; 2) Plaintiff's motion for partial summary judgment on the issue of damages; and 3) Third Party Defendant Prime's motion for summary judgment. For the reasons discussed below, Defendant's motion is denied in part and granted in part, Plaintiff's motion is denied, and Third Party Defendant Prime's motion is dismissed as moot.

I. Defendant's Motion for Summary Judgment

On October 15, 2010, Defendant TA moved for summary judgment and dismissal of all claims. TA contends that it is entitled to summary judgment on Plaintiff's negligence claims because TA never owed a duty of care to RSA's subrogors and because Plaintiff cannot establish that any act or omission of Defendant's was a proximate cause of injury to it or to its insured. TA also argues that it is entitled to summary judgment on Plaintiff's breach of bailment claim because it never had exclusive possession of the tractor trailer, and therefore a bailment was never formed. Plaintiff filed a brief in opposition on November 16, 2010 contending that TA does owe its subrogors a duty because each of the thefts was foreseeable under the applicable law, and that under the law of Tennessee and Ohio causation is an issue of fact for the jury. In response to Defendant's arguments regarding the bailment claims, Plaintiff withdrew its Tennessee ...

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