Federal District Court Clarifies Applicability of the Carmack Amendment

Kevin Anderson Cargo Liability, Transportation

The recent case of Muzi v. North American Van Lines, No. 8:14CV267 (D. Court, D. Nebraska 2015) clarified how the Carmack Amendment applies to interstate cargo claims. In that case, the plaintiff contracted with the defendant to have her personal belongings transported from Alabama to Nebraska. It was a typical transaction where both parties agreed in the bill of lading that the total value of the property to be shipped was $125,000. Where the deal went south (as it traveled north) was the plaintiff’s claim that her property was damaged by water and mold, and that the defendants were responsible for the damages.

Believing that the defendants were responsible, the plaintiff sued to be compensated for the damages under the Carmack Amendment. As we have discussed on this blog, the Carmack Amendment 49 U.S.C. § 14706 is where all claims for damaged interstate cargo begin and end. But in this case, the plaintiff went beyond a simple Carmack Amendment complaint. They claimed that in addition to being liable for the damages, the trucking company was also liable under a Nebraska tort claim of bad faith for refusing to settle a case in connection with a policy of insurance, Neb. Rev. State. § 44-359. The defendants flinched at the second claim, and asked the court to dismiss it because the Carmack Amendment preempted, or prevented, the ability to file an additional, state-law claim.

In discussing the case, the court went over the general rules of the Carmack Amendment. The decision retraced the fact that the Carmack Amendment regulates liability of trucking companies for damaged interstate cargo. The decision also stated quite plainly that the Carmack Amendment does preempt state law claims – related to the damage of goods shipped interstate. At the same time, the court noted, state-law claims separate and distinct from the loss or damage to goods are not preempted and may be made alongside Carmack Amendment claims.

The primary issue, then, was whether the bill of lading agreement between the two parties constituted an additional insurance policy. If yes, then the state-law claim was properly made because the Carmack Amendment would not preempt it. The separate, state-law claim was for bad faith in refusing to settle an insurance claim. The Carmack Amendment would not preempt that claim because it does not deal with the transportation of goods or damage to them, but simply one side acting in bad faith and refusing to settle a claim. Since it still was not clear if the plaintiff had a separate insurance claim with the defendant, the court decided to not dismiss the claim, and let the parties continue to litigate the case on both claims.

Illustrated in this case is the fact that the Carmack Amendment is the lifeblood of interstate commerce claims involving trucking companies. Understanding it and knowing how it applies to your business is key. At Anderson and Yamada, P.C., we focus our practice on trucking law, and we know the ins and outs of the Carmack Amendment. Contact us so we can help you and your business stay on the road.