Declaratory Judgment: A Tool for the Carmack Amendment

Kevin Anderson Cargo Liability, Transportation

Carriers involved in the shipment of goods from state to state are typically on the receiving end of a Carmack Amendment claim. But that does not always have to be the case. In fact, in some situations it is beneficial for a company to take the initiative and have their rights under the act declared by a federal judge. This is the lesson learned from a recent case out of the Northern District of California.

That case, United Van Lines, LLC v. Deming, was initiated by the carrier after claims for lost and damaged goods were made by the shipper. The case began when a company relocating one of its employees contracted with a relocation company to have their employee’s goods transported from one state to another. As part of the transaction, the transportation services company agreed with the carrier to limit their liability to the lesser of $100,000 or $5.00 a pound of the shipment.

As so often happens in these cases, the goods were damaged in route to their destination. In response to the damages, the shippers made a claim against the van company for $48,002.64. The carrier responded that the maximum amount of liability based on the bill of lading was $5,330. Then the carrier took their case to court to have it declare that the bill of lading should rule the relationship, and that it properly limited the liability in the case.

Carmack Amendment and Limiting Liability

Unless properly modified through a contractual relationship between shipper and carrier, the Carmack Amendment can deal deadly blows to shipping companies. Under the provisions of the federal law, a carrier is one hundred percent liable for the damage or loss to goods during transit from one state to another. This can only be adjusted through complying with specific steps to limit liability under the Carmack Amendment.

In our circuit, there are four critical elements to limiting liability under the Carmack Amendment. Those elements are:

  • Maintain a tariff in compliance with the Interstate Commerce Commission;
  • Give the shipper a reasonable opportunity to choose between two or more levels of liability;
  • Obtain the shipper’s agreement as to the choice of limited liability;
  • Issue a bill of lading reflecting the agreement and terms.

While the elements to limiting liability are clear, there is no standard bill of lading issued by the government reflecting compliance with the provisions of the Carmack Amendment. And even if there were, it would be difficult when each carrier has its own modes of attracting and keeping customers.

In this case, the carrier took to federal court to have it announced that its agreement with the shipper complied with the elements of limiting liability. And the carrier survived a first motion to dismiss, but it remains to be seen whether it will be ultimately successful. In either case, it is an example of one of the many ways to deal with a claim for damaged or lost goods.

At Anderson and Yamada we have decades of experience guiding, counseling, and representing trucking companies of all sizes. We would love to put that experience to work for you, contact us today.