Consignee Liability and Interstate Transportation Contracts

Kevin Anderson Bills of Lading, Cargo Liability, Judgments, Transportation

A lot of transportation litigation takes place under the provisions of the Carmack Amendment. But there are also times when companies and individuals have disputes over payments for goods that arrived in perfect condition. These case can be complex because they will necessarily involve a mix of federal and state law.

The trucking industry is constantly on the move. Rates go up and down, and businesses go in and out of solvency. The nature of the industry can lead to big gains and big losses, and many times a company can be left holding a bill when a carrier or end-point company goes out of business without paying their contracts. When that happens, a shipper, carrier, or other entity will do their best to find someone down the line to pay for the finished work.

Ninth Circuit Jurisprudence

The Ninth Circuit Court of Appeals issues binding precedent on legal issues affecting the trucking industry in Oregon, California, and elsewhere in the west. In 2000, they addressed the issue of consignee liability and whether truck drivers could bind their companies by signing liability waivers. The case, Car Transp. Brokerage v. Darden Restaurants, 213 F.3d 474 (9th Cir. 2000) remains an important opinion for transportation law in the Ninth Circuit.

In that case, a shipper contracted with a carrier to transport several loads of shrimp under a interstate transportation contract. The broker in this case arranged with three different carriers to accomplish the shipments, and all were delivered on time, and in good order. But when it came time to pay the bills for the transportation, the broker was left holding a bill of lading without any payment.

As a broker, the plaintiff in this case contracted with another broker to have all the shipments made. The plaintiff took on all the charges, and then billed the second broker once the work was done. But that is where the problems started. After receiving the bill, the second broker declared bankruptcy and could not pay the original broker who was left looking for someone else to pay for the services rendered.

The plaintiffs then looked to the shipper and restaurants who received the benefit of the transportation services. But they had already paid the now defunct broker, and they obligated the delivery drivers to sign a waiver of liability claims when the shrimp was delivered. And they argued in court that the waiver should be enough to dismiss the plaintiff’s claims. And the court agreed.

Agent Principal Relationship

The broker in this case argued that a company’s drivers do not have the authority to bind a company and waive contractual rights. But under the law of principal and agents that is not the case. As long as a company employee has the authority, or appears to have the authority to bind their company they may do so. This is an important lesson for trucking companies to fully describe their driver’s authority on bills of lading and other documents so clients and business partners cannot take advantage of this kind of maneuver.

Doing business in the trucking company is rewarding and difficult work. To make it go as smoothly as possible, your company needs the right legal team for counsel and representation on these and other complex issues. At Anderson and Yamada we have been representing trucking companies for decades. Contact us today so we can contribute to your company’s success.