Jurisdiction and Preemption With the Carmack Amendment

Kevin Anderson Cargo Liability, Judgments, Transportation

Despite being on the books for many decades now, many people continue to make mistakes with the Carmack Amendment when trying to recover for lost, stolen, or damaged cargo. Often the result of this misunderstanding of basic federal law is an early termination of otherwise expensive lawsuits. A simple and unmovable rule in our legal system is that if a court does not have the authority to hear a case, it must be dismissed. So a question that must be asked before any suit is filed and anytime a suit is defended is: does the court have the authority to hear and decide this case? This question is best addressed by finding out whether the the court has personal and subject matter jurisdiction to hear and decide a case. Personal jurisdiction simply asks whether the court has authority over the company or person in question. And subject matter jurisdiction asks …

Small Details of Litigation

Kevin Anderson Cargo Liability, Judgments, Transportation

The Carmack Amendment is a federal law which provides consistency and continuity for truckers, shippers, brokers, and other involved in interstate trucking. Under its provisions, a carrier is strictly liable for the damages and loss that can occur to shipments that are shipped in interstate commerce. Of course this is not a new proposition to anyone in the industry itself. While the rule and principle of the Carmack Amendment is simple and clear, getting from damages to a court ruling can be complex and difficult. First a claim must be filed, in federal court, and then the long and often complex road of litigation must be taken to get a result. Along that road are potholes, soft shoulders, and other distractions that are best navigated by the right legal team. Initial Discovery One of the first stops on the litigation road is discovery. This is a tool used by both …

$80,000 in Cheese and the Carmack Amendment

Kevin Anderson Cargo Liability, Contracts, Transportation

The Carmack Amendment is not limited in the types of cargo it is meant to protect and essentially insure on the interstate highway system. One case out of New Jersey recently put that principle on display with a case involving over $80,000 of cheese. This case involved the issue of when a destination company can reject a shipment because of an unfulfilled clause in the contract. In this case, a well known California-based grocery store chain ordered over $80,000 in cheese from a New Jersey farmer. In the master vendor agreement, the shipper agreed to send the cheese across the country to the store at 40 degrees or less. The shipper contracted with a transportation company to ship the cheese, and that company subcontracted with another to finish the transportation of the product. The problems began once the cheese arrived in California at the grocery store, but the temperature gauges …

$9 Million in Claims Dismissed in Carmack Amendment Case

Kevin Anderson Cargo Liability, Contracts, Transportation

In a rare move, a federal district court out of New Jersey reversed itself on a motion for reconsideration in a $9 million transportation contract dispute. The issues presented to the court for another ruling included dismissal of the claim under the Carmack Amendment, negligence by the truck stop in allowing the goods to be stolen, and breach of contract. This case was first decided by the district court in December of 2015. The reason this case is in litigation is because in 2009 a contracted truck company stopped at a Pilot truck stop while en route to deliver $9 million in pharmaceuticals. When the driver returned to his truck, he discovered that all of the drugs had been stolen. The insurance company involved reimbursed the shipper for the stolen goods, and then they joined up to go after the truck stop and carrier for reimbursement. Court’s Original Ruling A …

A Shipper’s (and Carrier’s) Worst Nightmare

Kevin Anderson Cargo Liability, Contracts, Transportation

A healthy amount of trust is needed for a shipper to engage a carrier to ship goods from one state to another. Nowhere in the industry is this more true than in the shipping of personal goods in an interstate move. In those cases, the shipper is trusting the carrier with personal valuables, keepsakes, heirlooms, and other important goods. Given this fact, it is no wonder that when something goes wrong with a move, expensive litigation results. This is what happened recently in a lawsuit involving the Carmack Amendment and other claims because of a botched move. The facts described in the opinion demonstrate what would be a shipper’s worst nightmare. What Happened in This Case This all began when a family contracted with a large, well-known moving company to move their goods from Florida to Connecticut in late 2013. As part of their contract, the shipper arranged for the …

Prior Rate Agreements Found to be Binding in Carmack Amendment Case

Kevin Anderson Cargo Liability, Transportation

A shipper recently lost their arguments against a national cargo transportation company regarding whether that carrier adequately limited their liability. This case, decided by a federal court in Michigan, underscores the importance of understanding the documents, contracts, and bills of lading used to ship goods from state to state. One sentence in a contract can alter and direct the outcome of litigation involving millions of dollars. This case also highlights another issue that raises itself on a regular basis in Carmack Amendment cases: limiting liability. Of course this would be a common issue because a shipper is constantly seeking to get as much money for lost or damaged goods it can, while a carrier wants to pay as little as possible. The original purpose of the Carmack Amendment was to create a uniform scheme of liability that applies from state to state, across the nation. Keeping that in mind, the …

Carmack Amendment and Broker Liability

Kevin Anderson Cargo Liability, Transportation

An interesting Carmack Amendment case was decided by a federal judge earlier this year. The case, Traffic Tech, Inc. v. Arts Transportation, Inc., No. 15 C 8014 (N. D. Ill. 2016), involved the liability of a carrier to a broker for damaged or spoiled goods. The case is unique because the broker claimed Carmack Amendment liability against the carrier, and the shipper was not involved. In this case a company was contracted to ship a load of apple slices from Washington state to a food processing facility in Iowa. According to the complaint, after the food company made the contract, the broker in the case contracted with a carrier to accomplish the shipment. During transit, the carrier put spare tires in the truck’s trailer, and when the apple slices were delivered, the destination rejected them. According to them, storing apple slices with tires in transit violated food safety laws, and …

Carmack Amendment and Freight Brokers

Kevin Anderson Cargo Liability, Transportation

One interesting issue that becomes relevant in many Carmack Amendment cases is liability for brokers involved in transactions. In a typical case, a broker is not necessarily liable for losses in a Carmack Amendment case. In fact, the federal code explicitly holds carriers, not brokers, liable under the Carmack Amendment. 49 U.S.C. § 14706(a). But there are situations where a broker can indeed be held liable under the Carmack Amendment for loss or damage of freight. The key question to answer that regards a broker in a Carmack Amendment case is whether the broker held themselves out to the shipper as a broker or a carrier. If the facts show that the broker was in fact holding itself out as a carrier, then it may be held liable under the provisions of the Carmack Amendment. Federal Court Resolves Issue of Broker Liability This issue was recently decided by a federal …

The Importance of a Record in Carmack Amendment Litigation

Kevin Anderson Cargo Liability, Transportation

Under the provisions of the Carmack Amendment, a carrier will be held to absolute liability for cargo loss and damage during a job. If your company is facing or about to defend a Carmack Amendment action, there will be a number of factual questions that need to be answered before the matter is resolved. If you think that your company mitigates potential damages by offering lower levels of liability, you may be surprised to know that there are strict requirements to limit liability under the Carmack Amendment. The factual questions that any Carmack Amendment case creates include how much the cargo was worth, what is the limit of damages, and what did the parties agree to prior to a shipment. Often these questions do not come up in a competitive industry where every job counts for so much of a company’s bottom line, but ignoring them can result in a …

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 …