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 court in Florida as a shipper, broker, and freight carrier’s case over lost cargo was being litigated in court. In that case, National Union Fire Insurance Comp. of Pittsburgh v. All American Freight et. al, Case No. 14-CIV-62262-Bloom/Vale (S.D. Florida 2016), a broker arranged with a shipper to ship over $100,000 worth of coffee from Florida to Texas. The shipper’s instructions to the carrier were to take the coffee beans straight to Texas after receipt.

During transit, while the driver was taking a break, the trailer with the coffee beans was stolen by a thief. Unfortunately for everyone involved, the location where the trailer was stolen did not have operational cameras and the goods were never recovered. The insurance company paid the insurance claim, but then sought reimbursement from the broker for the lost cargo.

Of course in this scenario the broker denied liability as the Carmack Amendment does not hold brokers liable, only carriers. But the shipper’s argument was that in this case, the broker actually held itself out as a carrier, and not a broker. Therefore, it should be held liable for the losses. This is a fact based issue, and all the facts involved will actually determine liability. As such, a court or judge is not the right entity to make the decision.

You can see that in a situation like this the stakes are very high. Brokers do not carry the kind of insurance that carriers do, and could therefore be facing very high losses if a trailer full of freight goes missing. But, when a carrier holds itself out to the shipper or public as a carrier, then they could be held liable.

The court in this case ruled that whether the broker was a carrier or broker in this situations was a dispute of fact. Disputes of fact are sent to a jury at trial, and judges do not decide them. So now the fate of whether the broker will be held liable is in the hands of a jury, or settlement talks between the parties involved.

Your Transportation Company’s Partner

Litigation in the trucking industry is high stakes and carries heavy consequences. When the fate of your company is in the balance, you need to be able to trust a legal partner with the experience your case needs and deserves. At Anderson and Yamada, P.C., we have that experience that your case needs. Contact us for all your transportation law needs.