Indemnification Without an Agreement

Kevin Anderson Bills of Lading, Cargo Liability, Transportation

One of the risks a carrier often runs involves carrying more valuable cargo than they know about or approve of. This can happen in a number of different scenarios, but one of the riskier situations is where two companies have an existing contract for transportation of goods, and a third party ships goods under that contract. That is what happened in a case earlier this year where a judge had to rule whether indemnification was an option when there was no agreement to indemnify. In that case, Macy’s Corp. Servs., Inc. v. W. Express, Inc., the shipper had a contract to transport goods for Macy’s, and a third party entered into that contract and had the carrier take a load of goods interstate. Before taking off, the third party and the carrier had a bill of lading with a declared value, and sometime during transit the cargo was stolen. In …

Shippers, Carriers in Row Over Standard Bill of Lading

Kevin Anderson Bills of Lading, Transportation

Changes are afoot regarding the standard bill of lading used by carriers who participate in the National Motor Freight Classification. That bill of lading uses the standard tariff and incorporates the terms of a shipment between shipper and carrier. That tariff is created and implemented by the NMF Conference, represented heavily by the bigger carriers in the country. Because the bill of lading is closer to companies doing the shipping, rather than the shippers, it has carrier friendly terms. It is those terms that have brought organizations representing shippers out of the woodwork to fight the changes to the standard bill of lading, and they have laid their claims to the Surface Transportation Board who will accept or reject the new terms. Changes to the Standard Bill of Lading One big change to the new bill of lading is under what terms most less-than-truckload carriers will haul freight in the …

The Right Contract Can Save

Kevin Anderson Bills of Lading, Cargo Liability, Contracts, Transportation

An issue that is consistently raised in Carmack Amendment litigation is whether a bill of lading or shipping contract effectively limits liability. This is an important issue because of the implications it has for carriers’ bottom lines. Based on prior experience, insurance policies, and contracts, a company has a general idea of what their exposure is. But because of different federal laws, a company may be misguided in this notion. The Carmack Amendment works as an all inclusive insurance policy. Most people in the trucking industry know this, but they also know that liability can be limited through a bill of lading. What they may not know is that there are specific requirements that must be met for liability to be limited effectively. In ninety percent of commercial transactions and relationships, the involved parties are free to contract different positions with each other. But in some situations there are laws …

Consignee Liability and Interstate Transportation Contracts

Kevin Anderson Bills of Lading, Cargo Liability, Judgments, Transportation

A lot of transportation litigation takes place under the provisions of the Carmack Amendment. But there are also times when companies and individuals have disputes over payments for goods that arrived in perfect condition. These case can be complex because they will necessarily involve a mix of federal and state law. The trucking industry is constantly on the move. Rates go up and down, and businesses go in and out of solvency. The nature of the industry can lead to big gains and big losses, and many times a company can be left holding a bill when a carrier or end-point company goes out of business without paying their contracts. When that happens, a shipper, carrier, or other entity will do their best to find someone down the line to pay for the finished work. Ninth Circuit Jurisprudence The Ninth Circuit Court of Appeals issues binding precedent on legal issues …

Drafters of Bills of Lading Beware

Kevin Anderson Bills of Lading, Cargo Liability, Transportation

A recent opinion by a U.S. District Court Judge should give shippers and carriers alike pause with how they draft and execute bills of lading. The case was brought under the provisions of the Carmack Amendment. 49 U.S. Code § 14706. As most everyone involved in the trucking industry knows that this is the law which imposes liability on carriers for cargo losses and damages. The provisions of the Carmack Amendment are far reaching and impose absolute liability for losses and damages. The justification for a national law such as the Carmack Amendment is clear: the transportation industry crisscrosses in and out of the fifty states. If there were fifty different sets of laws for liability, transporting goods from state to state would be prohibitively costly. With all of this in mind, there are ways for carriers to limit liability under the Carmack Amendment. But to do so requires planning …

Understanding Interstate Transportation Contract Disputes

Kevin Anderson Bills of Lading, Contracts, Transportation

The trucking industry is one where federal law reigns supreme. And that makes sense because of the interstate nature of the industry. Shipments generally start from one state and are shipped to another, often traveling through one or more states en route. That is the main reason why federal law is the overarching influence when it comes to interstate disputes. Of course, there are exceptions to this that prove the rule. One area is when a contract dispute arises that is not covered by federal law. When that happens, and when a dispute arises whose outcome depends entirely on the language of a contract, state law will usually apply. This is what happened in a 2013 case from the Fourth Circuit Court of Appeals. Third-Party Broker Goes Bankrupt Often times a shipper, carrier, and third party broker will be involved in an on-going relationship to ensure that goods get shipped …

Carmack Amendment Lessons: Limiting Your Company’s Liability

Kevin Anderson Bills of Lading, Cargo Liability, Contracts, Transportation

A seemingly constant theme that enters the legal world of the Carmack Amendment is limiting liability of lost or damaged cargo. Of course this is an important aspect of trucking law because of the nature of the business. Trucking companies transport millions of dollars of cargo everyday, and if that cargo is lost or damaged, it is the trucking company that is responsible for replacing it. The Carmack Amendment, without being modified, requires a carrier to basically insure the loss or damage of a shipper’s cargo in most instances. To make a case against a carrier a shipper must simply show three things: that the shipper delivers the goods to be transported free of damages; that the goods were damaged in some way prior to delivery; and, the amount of damages that the goods suffered. Because the threshold for proving a case under the Carmack Amendment is so low, companies …

Waiving Carmack Remedies: A Federal Court Rules

Kevin Anderson Bills of Lading, Cargo Liability, Contracts, Transportation

A Federal District Court in Minnesota recently clarified when and how the Carmack Amendment applies in the face of arbitration agreements. The case, Federated Mutual Insurance Company v. Con-Way Freight, Inc., began in Texas where the shipper agreed to ship its cargo via a well known shipping company to Minnesota. As you would expect with a cargo claim case, the cargo was damaged sometime during transit. The insurance company that insured the cargo paid a claim of over $30,000 to the cargo’s owner, and then sought to be reimbursed by the trucking company under negligence and breach of contract claims. This scenario plays itself out in the the trucking industry everyday, but there was an interesting twist in this particular case. In this case, both the insurance company and carrier were signatory members of the Arbitration Forums. Being a member of the Arbitration Forums requires that signatories forego the litigation …

Understanding the Carmack Amendment: Bills of Lading

Kevin Anderson Bills of Lading, Cargo Liability, Regulations, Transportation

As we have discussed on this blog, the Carmack Amendment is that portion of federal law that regulates interstate cargo claims. The Carmack Amendment puts certain requirements on different players in the trucking industry, and this article will address one of those requirements – bills of lading. Before we get started on bills of lading, we are going to review how the Carmack Amendment defines the different players in the trucking industry. Motor carriers are those who provide the transportation or or service via motor vehicles for profit. 49 U.S.C. § 13102(14). Freight forwarders hold themselves out to the public as transporters of goods for profit, whether they transport by assembling and consolidating the goods. Freight forwarders assume the responsibility to transport goods from receipt to destination. 49 U.S.C. § 13102(8). Bill of Lading Types Both motor carriers and freight forwarders are required by the Carmack Amendment to provide a …

Cargo Loss and Damage Claims: Cases of Interest

John Anderson Bills of Lading, Cargo Liability, Tariffs, Transportation

Kevin and I recently attended the semi-annual meeting of a relatively small group of transportation attorneys who specialize in freight loss and damage claims.   At the meetings, specific, recently decided legal decisions are summarized by a designated presenter, which then is followed by a group discussion.  Below is a summary of the cases we discussed that should be of interest to you: 1. Fireman’s Fund v Reckart Logistics dealt with identity theft. In that case Alliant (the shipper) sued Reckart (the broker), S&G (the carrier whose identity was stolen), Mr. Bult’s (the real carrier) and Fore (the cross-docker).  Alliant hired Reckart to broker the shipment. Reckart posted the shipment on a load board and was contacted by “S&G” and, at the same time, “Sam” contacted Mr. Bult and hired it to transport the shipment. When Mr. Bult arrived at the origin the driver was told to take the shipment to Chicago rather than …