United States District Court, N.D. Georgia, Atlanta Division
OPINION AND ORDER
WILLIAM S. DLTFEY, JR. UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendant XPO Intermodal,
Inc.'s (“XPO”) Partial Motion to Dismiss
Plaintiff's First Amended Complaint  (the
“Motion to Dismiss”).
dispute arises from alleged misrepresentations and
confidentiality breaches in connection with the purchase and
sale of 340 railcars (the “Railcars”) for
approximately $22 million. Plaintiff Infinity Transportation
III LLC (“Infinity”) purchased the Railcars
pursuant to a purchase and sale agreement effective May 29,
2015 (the “Purchase Agreement”). (Compl. Ex. 2).
At the time of sale, the Railcars were included in a pool of
other railcars available for lease to national railroad
companies (the “Pool”). Infinity alleges there
were preexisting commercial relationships between XPO and
major railroads that XPO represented did not exist. These
preexisting relationships impacted the inclusion of the
Railcars in the Pool, thus impacting the value of the
Railcars to Infinity.
are used by railroads to carry shipping containers throughout
the United States. (Compl. ¶ 14). These railcars, owned
by different owners, operate in a pool. The owner of the cars
in the pool are paid by railway companies based on a
“car hire” rate. This rate is calculated based on
the amount of time the railcar is used and the distance
traveled. (Id. ¶ 16). When a loaded railcar in
the Pool reaches its destination, it is unloaded, and
reloaded if a railroad customer wants to transport shipping
containers to another location. If the railcar is not
reloaded, it is redirected elsewhere until it is
needed. Even though empty, the railcar continues
to earn “car hire” from the railroads on whose
lines the car travels. (Id. ¶ 18).
one of the nation's largest logistics and intermodal
companies. (Id. ¶ 2). It owns or otherwise has
an interest in a fleet of railcars that it operates in the
Pool. The Railcars XPO sold to Infinity were in the Pool.
(Id. ¶ 22).
about April 13, 2015, Infinity and XPO entered into a
non-disclosure agreement (the “Nondisclosure
Agreement”) in connection with their discussions
regarding the possibility of XPO selling railcars to
Infinity. (Id. ¶ 28; Ex. 1). In the
Nondisclosure Agreement the parties agreed not to disclose
the fact of their discussions. (Id. Ex. 1.).
their negotiations, Infinity asked XPO to expressly represent
that the Railcars in the Pool were not subject to any special
arrangement XPO had with any railroad. Infinity wanted to
confirm that XPO had not entered into any side agreements or
understandings that would adversely affect the Railcars'
use in the Pool after XPO sold the Railcars to Infinity.
(Id. ¶ 32).
April 7, 2015, an Infinity executive, Paul Goss, sent an
e-mail to Phil Harrison, XPO's agent for the sale, asking
XPO to “[c]larify any formal or implied ‘quid pro
quo' agreements, if any, between [XPO] and any railroads
or shippers that bind use of this equipment to business
activity originated by [XPO].” (Id. ¶
34). Harrison expressly represented that he was unaware of
any agreements and that there were no arrangements between
XPO and any railroad that would impact the continued use of
the Railcars in the Pool. (Id. ¶ 35).
the diligence period, the parties entered into the Purchase
Agreement in which Infinity purchased the Railcars for
approximately $22 million. In the Purchase Agreement, XPO
represented in paragraph 5.1(b):
To XPO's knowledge, XPO's ownership of any of the
Railcars is not a condition precedent (either formal or
informal, contractual or noncontractual, oral or written) to
any railroad's willingness to load, unload, move, or
accept any of the Railcars for movement; provided, however,
XPO makes no representations or warranties about the
practices or preferences of any railroad, it being understood
that in any event the Railcars operate subject to the AAR
Code of Car Service Rules/Code of Car Hire Rules.
(Id. Ex. 2 ¶ 5.1(b)).
Purchase Agreement also contains a confidentiality provision
(“Confidentiality Provision”) that requires the
to keep confidential and not to disclose to any person or
entity, other than its employees, attorneys, advisors and
financiers, this Agreement and the contents hereof, including
without limitation, the purchase price and other terms and
conditions of this Agreement and the Transactions, except as
may be required by applicable law, necessary for UMLER
modifications, or permitted under the parties'
Confidentiality Agreement dated April 13, 2015. The parties
agree not to make any press release or public announcement
with respect to this Agreement or the Transactions without
the parties' mutual consent or except as may be required
by applicable law. XPO and Buyer shall jointly prepare such
notifications to third parties as may be necessary or
appropriate with respect to the Transactions contemplated
(Id. Ex. 2, ¶ 23).
1, 2015, Dan Heird, XPO's VP of Railcar Assets, sent an
email to Jean Chavez at Union Pacific railroad informing
Union Pacific that the Railcars had been sold to Infinity.
(Id. ¶ 43; id. Ex. 3). Between June 1,
2015, and June 5, 2015, XPO also informed CSX railroad that
XPO sold the Railcars to Infinity. (Id. ¶ 44).
Shortly thereafter, Union Pacific rejected several Railcars.
(Id. ¶ 46). CSX also informed Infinity it would
not accept the Railcars for reloading on its lines.
(Id.). Sometime later, Norfolk Southern railroad
told Infinity that it would not accept the Railcars on its
line. (Id. ¶ 47). Infinity has not been able to
reliably circulate Railcars within the Pool, significantly
diminishing their value to Infinity, including by loss of
railroads elected not to use the Railcars, Infinity claimed
to have learned, through discussions with XPO, that XPO had
misrepresented the nature of its prior arrangements with the
railroads. (Id. ¶ 52). XPO admitted it had an
arrangement with Union Pacific that governed use of the
Railcars when they were owned by XPO. (Id. ¶
53). Infinity claims Union Pacific agreed to act as a Home
Road for XPO's Railcars. This ...