9th Circuit Court of Appeals: Limiting Liability Under the Carmack Amendment

Kevin Anderson Cargo Liability, Regulations, Tariffs, Transportation

As we have discussed numerous times on this blog, the Carmack Amendment is a vast, ever-expanding set of rules and regulations that regulates liability for interstate cargo transportation.

While one of the overall goals of the Carmack Amendment is to ensure there is a single set of rules trucking companies need to know to assess their liability, the actual state of the law is not that simple. The Carmack Amendment is federal law, its source being one text from 49 U.S.C. § 1706 et seq., but this federal law is interpreted in different ways by 94 district level trial courts following decisions by 13 courts of appeal.

The Supreme Court has rendered a number of decisions regarding the Carmack Amendment, but it could not possibly rule on every rule and interpretation of all the courts of appeal. So what we end up with is a host of different rules that need to be understood before any legal action is advanced or defended.

Limiting Liability According to the 9th Circuit Court of Appeals

The 9th Circuit Court of Appeals hands down decisions based in federal law for most of the Western United States, Hawaii, Alaska, Guam, and the Northern Mariana Islands. And there is a specific set of rules emanating from the 9th Circuit when it comes to limiting liability under the Carmack Amendment.

The 9th Circuit Court of Appeals first handed down their rules on limiting liability under the Carmack Amendment in 1992, in a case known as Hughes v. North American Van Lines, 970 F. 2d 609 (9th Cir. 1992). A set of rules was needed because under the provisions of the Carmack Amendment a carrier is liable for the full cost of a shipment unless both parties agree in advance that liability will be reduced. In the framework laid out by the 9th Circuit, to limit liability, a carrier had to complete four steps:

  1. Maintain a tariff in compliance with the requirements of the Interstate Commerce Commission.
  2. Give the shipper a reasonable opportunity to choose between two or more levels of liability.
  3. Obtain the shipper’s agreement as to his choice of carrier liability limit.
  4. Issue a bill of lading prior to moving the shipment that included the terms of the modified agreement.

Each of these rules had their own nuances, but represented the basic steps that a carrier had to follow to limit liability under the Carmack Amendment.

This test, known as the Hughes test, remained law until 2011 when the 9th Circuit changed it somewhat. In the case of One Beacon Ins. Co. v. Haas Industries, Inc., 634 F. 3d 1092 (9th Cir. 2011), the court held that all of the steps recognized in the Hughes test remained valid, save one. The step they replaced was the first, and instead of maintaining a tariff in compliance with the ICC, a carrier must now, at the request of the shipper, provide the shipper with a list of the rates, classifications, rules, and practices that forms the base of the rate the carrier is charging the shipper.

Staying Up-to-Date with the Carmack Amendment

As you can see, the law concerning the Carmack Amendment not only changes, but is subject to the interpretations of all the courts through which your company operates. That is why your company can benefit from a law firm that is dedicated to understanding and keeping up-to-date on all the developments in truck law. That is what our practice is dedicated to at Anderson and Yamada, P.C. Contact us so we can serve you and your company.