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Federal judge sets aside default against XPO Logistics in case over allegedly missing shipments


By John Severance | Apr 22, 2019

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SAN DIEGO – A federal judge has ruled in favor of a freight company in its case with a technology company over two shipments that were allegedly lost, missing or damaged.

Judge John A. Houston of the U.S. District Court for the Southern District of California on March 19 set aside default against defendant XPO Logistics and ruled against plaintiff Pathway Innovations and Technology, which had filed a motion for default judgment.

The case stems from the plaintiff alleging the defendant was responsible for two shipments containing electronic goods that went lost, missing or were damaged.

Pathway filed a complaint Oct. 17 and XPO was served six days later in Sacramento. The ruling states XPO forwarded the complaint to its claims manager Michael Hintzel, who then forwarded to Allen Jones III, the company’s transportation counsel located in Dublin, Ohio. Hintzel, though, failed to include Jones’ email address so he failed to get the message in a timely fashion, the ruling states.

The defendant claims it was a simple mistake as Jones was addressed in the body of the email.

"At this time, after a brief investigation, defendant discovered the earlier mistake of not sending the complaint to Jones," Houston wrote. "Defendant asserts that sometime between Dec. 28, 2018, and Dec. 31, 2018, defendant’s attorney contacted plaintiff’s counsel by phone requesting the default be set aside. Plaintiff’s counsel denied this request. 

"Defendant argues that it never intentionally avoided obligation to respond to the complaint," Houston wrote.

The defendant claims it was an oversight and a clerical error.

The case began in May of last year when Pathway gave XPO Logistics five pallets to ship. Four of them were delivered May 9 but one of them did not make it.

Pathway CEO Ji Shen testified in court that "the missing pallet contained 195 Ultra8 (HCU-800) document cameras and 160 Solo8+ document cameras. The inventory contained in the missing pallet had been sold to Pathway’s customer for $100,885. A police report has been filed but said pallet has yet to be located. On information and belief, XPO did not locate the missing pallet. XPO did not deliver this pallet of goods to Pathway or its customer. However, Pathway was invoiced $2,055.28 by XPO for the delivery of the five pallets, including the missing pallet that was not delivered to Pathway’s client. This invoice is disputed by Pathway and remains outstanding. Pathway was later required to ship a replacement set of the missing inventory to its customer and was compelled to pay shipping charges of $519.68 to XPO (in addition to the costs of the cameras themselves).’’

Then on June 4, Shin testified that Pathway delivered to XPO a shipment of eight pallets containing a total of 37 television panels for delivery from Pathway’s San Diego warehouse to Pathway’s customer, an elementary school, in Covington, Kentucky.

"These items were sold to Pathway’s customer for the total amount of $59,163. Pathway was informed that the XPO truck was in a single-vehicle accident in Walton, Kentucky on June 8, 2018. On information and belief, two of the 37 television panels were lost, destroyed and never found and 12 of the 37 television panels were severely damaged. Of the remaining 23 panels that were returned to Pathway and were usable, Pathway re-sold 14 panels for a total price of $6,396, less Pathway’s cost for repackaging of approximately $500. Pathway also used four panels as replacement units, which were sent to Pathway’s customer.’’

In all, the damages were estimated at more than $341,000, according to the plaintiffs, and that total is disputed by the defendant.

"The defendant contends that plaintiff fails to provide adequate evidence to support its damage calculation. Defendant asserts that plaintiff does not provide packing lists, invoices, or proof payment, but rather makes hearsay statements that the lost inventory was valued at $100,885.

”Defendant claims that plaintiff fails to show defendant engaged in any culpable conduct. Defendant claims that 'an inadvertent clerical error prevented an appropriate pleading to be filed in a timely manner,'" the ruling states.

Houston summed up the case this way.

"Defendant’s conduct of leaving out one email address, despite addressing the email to that accidentally omitted party, appears to be a common, unintentional mistake. In assessing the aforementioned factors in determining whether to set aside a default, the standard is disjunctive, such that a finding that any one of the factors is sufficient reason for the district court to refuse to set aside the default," Houston wrote.

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