Subcontractor Causes Troubles for Motor Carrier

Kevin Anderson Cargo Liability, Contracts, Transportation

The old adage of you are only as strong as your weakest link holds true with the link of different players that are typically involved in shipping goods from one state to another. Because of these complex relations, one breakdown with one or more of the players can put a company at risk, and cause severe damage to reputations, bottom lines, and company survival. This was the lesson learned as a trucking company lost an entire truckload of lobster recently. A news report from Massachusetts explains that a trucking company is being sued over a lost or stolen load of lobsters that could cost that company hundreds of thousands in legal fees and damages. The story reports about a lawsuit filed in federal court in Massachusetts that is claiming the shipping company is liable for an entire load of lobsters that was supposed to end up in California, but was …

Court Issues Opinion on Second and Third Levels of Insurance

Kevin Anderson Cargo Liability, Transportation

Anyone involved in the trucking and transportation industry understands how complex the relationships used to move products can be. Many times there is a shipper, freight broker, motor carrier, at least one insurance company, assigned shipment receiver and more who are involved in a complex relationship to move goods across the country. And each one of those relationships is ruled (or should be) by a written contract that determines what should happen when the relationship goes south. In most cases, what should happen after cargo is lost, damaged, destroyed, or stolen is clear. The Carmack Amendment is a federal policy which holds motor carriers one hundred percent liable, unless the liability is waived. This policy is one of the reasons why insurance companies are so heavily involved with most shipments. Secondary and Tertiary Insurance Policies A recent case out of the Northern District of Illinois illustrates how different insurance policies …

Limits on Liability, Crux of Carmack Cases

Kevin Anderson Cargo Liability, Transportation

More often than not, a Carmack Amendment case comes down to one simple issue, and that issue is one of the most misunderstood in the industry. The crux of the majority of Carmack Amendment cases revolves around whether a carrier properly limited their liability prior to shipment. Obviously in the wake of lost or damaged cargo, the shipper almost always attempts to avoid full liability, while carriers universally affirm liability was limited. This argument surfaces again and again in Carmack Amendment cases, in part, because of nature of the carrier shipper relationship. Anytime a relationship begins between shipper and carrier, the two do not hope or anticipate anything going wrong with the shipment, and expectations are high that the cargo will make it to its destination without any problems. But that is just the sort of thinking that gets carriers into trouble and stuck with giant bills that can break …

Declaratory Judgment: A Tool for the Carmack Amendment

Kevin Anderson Cargo Liability, Transportation

Carriers involved in the shipment of goods from state to state are typically on the receiving end of a Carmack Amendment claim. But that does not always have to be the case. In fact, in some situations it is beneficial for a company to take the initiative and have their rights under the act declared by a federal judge. This is the lesson learned from a recent case out of the Northern District of California. That case, United Van Lines, LLC v. Deming, was initiated by the carrier after claims for lost and damaged goods were made by the shipper. The case began when a company relocating one of its employees contracted with a relocation company to have their employee’s goods transported from one state to another. As part of the transaction, the transportation services company agreed with the carrier to limit their liability to the lesser of $100,000 or …

When Carmack and FAAAA Do Not Preempt State Law

Kevin Anderson Cargo Liability, Transportation

An interesting case recently decided in a federal court in Illinois should be of note to any company involved in the trucking and transportation industry. That case, Muzzarelli v. United Parcel Service, Inc., presents two compelling issues related to trucking and transportation law. The first is related to the Carmack Amendment and when that federal statute does not preempt state law. And the second is a similar issue, although it regards the Federal Aviation Administration Authorization Act. The facts of this case involve a well known package delivery company and a property owner who sued them for injuries they suffered. The case began when one of that company’s employee’s left a package on the front porch of a house (a fairly common occurrence for the company and people). The conflict began when a woman living at the house tripped over the package and was injured as a result. A lawsuit …

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 …

The Carmack Amendment in Historical Context

Kevin Anderson Cargo Liability, Transportation

One of the great aspects of our interstate trucking framework is comprised of the laws that regulate liability to carriers if cargo is damaged, lost, or stolen. Thankfully we have the Carmack Amendment, a body of laws regulating when, how, and why a carrier can be held liable when cargo is lost, damaged, or stolen. Without it we would live in a world with fifty competing legal systems, each one imposing its own definition of what causes liability, and commerce would not be nearly as free flowing as it is. But the state of interstate commerce was not always thus. Prior to the 1900s the law was not nearly as clear as it now regarding carrier liability for interstate shipments. Though it was widely known that Congress and the federal government had the prerogative to regulate interstate commerce, in many parts of the country that was secondary to the individual …

Household Goods, Carmack Amendment, and Arbitration Clauses

Kevin Anderson Cargo Liability, Transportation

Arbitration clauses are included in a wide array of contracts spanning most if not all industries. They have an interesting appeal for large companies and parties desiring to control a contractual relationship because they force complaints to be brought in specific forums under specific rules. In addition, many times the cost of entering an arbitration can be prohibitive. Under United States federal law, there is a presumption favoring the enforcement of arbitration clauses. But this general rule has exceptions; notably, there is an exception that touches transportation law. This exception is specific to companies dealing with the transportation of household goods across state lines. Dealing in Household Goods The Carmack Amendment is a uniform policy of liability for the loss or damage that can happen to goods shipped interstate. It typically treats one kind of freight the same as another, but household goods get special attention for a number of …

It Still Happens: Damaged Claims Fail to Mention Carmack Amendment

Kevin Anderson Cargo Liability, Transportation

One of the most common occurrences in transportation law related litigation is for a complaint alleging damaged or lost goods to fail to mention the Carmack Amendment. This happens for a number of reasons, and can work in favor of carriers facing lawsuits over lost or stolen goods. The biggest reason that lawsuits fail to include a claim under the Carmack Amendment is because it is relatively unknown in the legal world. During law school a law student will not learn about the Carmack Amendment, but will learn about other legal principles that should apply in most cases. Those include breach of contract, negligence, bailment, and other laws which typically would apply when goods are lost or get damaged. The problem with these legal principles when applied to the trucking industry is the fact that they are state-based. True, the principles are generally the same across state lines, but each …

Multi-Million Dollar Carmack Amendment Case Winds to a Close

Kevin Anderson Cargo Liability, Transportation

A Carmack Amendment case out of Ohio that could be described as an epic poem is finally (maybe) coming to a close. The storied case, Excel, Inc. v. Southern Refrigerated Transport, Inc., has made its way to district court, the Sixth Circuit Court of Appeals and back over beginning in December of 2007. Now the district court in the case has issued another final ruling, and the case should go away. This case began when a shipper contracted with a broker to have millions of dollars worth of pharmaceuticals shipped from one state to another. En route, the truck was stolen and all the goods were lost. The truck was never recovered, and the goods were considered a total loss. Under the Carmack Amendment the carrier is liable for the full value of goods lost, stolen, or damaged in transit. But there are exceptions to this rule, and that is …