Carmack Amendment and Remand

Kevin Anderson Cargo Liability, Transportation

A federal district court in Texas was recently tasked with deciding whether a case involving loss of cargo should be remanded to a state court or remain under federal jurisdiction. In legal jargon, this is known as remand.

One of the most commonly litigated issues in cases involving damaged or lost cargo is where the claim should be heard. Many times, the person or company whose cargo was damaged will bring the case in state court. This might happen for a number of reasons, including that state court can often times be a more comfortable venue for particular attorneys or their clients.

On the other hand, federal court is a preferred venue of litigation and claims for large companies whose business spans the nation. This makes sense on several levels, including the fact that most of the claims these companies deal with on a regular basis are in federal court, and therefore they are more comfortable there.

Of course this is a simplification of the issue about whether to litigate a claim in federal or state court, but it gives an idea of the thinking that is involved. In this case, the plaintiff originally brought the suit in state court on claims of conversion and seeking declaratory judgement. The case was brought against a well-known trucking and small package company that immediately sought to have the case sent to federal court, and it was. But the plaintiff asked the federal court to remand the case to state court.

Remand Issues and Arguments

To have the case removed to federal court, the large company argued that because it involved an interstate claim for lost cargo, it should have been brought under the Carmack Amendment, and that a federal court was the right place to litigate the issue.

The plaintiff argued that the Carmack Amendment was not implicated for a number of reasons. First, the claim was for less than $10,000, the jurisdictional amount needed to bring a Carmack Amendment claim in federal court as required by 28 U.S.C. ยง 1337(a). Second, the plaintiff argued that the large corporation could not use the Carmack Amendment as a defense against litigating their case in state court.

But both of those arguments failed for the plaintiff. In the first argument, while the plaintiff argued that the amount disputed by the two parties was less than $10,000, the actual amount paid for was more than $12,000. So the court denied that argument. And in the second place, the court ruled that the federal government has completely preempted claims involving common carriers, and therefore the case should be heard in federal court.

Lessons Learned

There are several lessons that a transportation company should take from this case. One of the most important is choosing the right law firm to represent your interests. The right firm will be able to help you choose the right forum to bring or defend a lawsuit in, and feel comfortable in either state or federal court. At Anderson and Yamada, P.C., our team of professionals have experience in state and federal court, and we can represent your company in either situation. Contact us, and so we can help advise your company towards a successful future.