Federal District Court on Third-Party Removal

Kevin Anderson Cargo Liability, Transportation

An interesting case was recently posted out of federal court for the Southern District of Texas, Houston Division. In Air Liquide Mexico S. de R.L. de C.V. v. Hansa Meyer Global Transport USA, LLC, Civil Action No. H-15-0557 (S.D. Tex. 2015) the case involved the Carmack Amendment, a third-party removal petition, and at least $1 million in damaged property.

This lawsuit, typical of Carmack Amendment lawsuits, came about because of damaged cargo. Unfortunately, damaged cargo is a fact of life in the trucking industry – a contingency that every trucking company must prepare for. That is why it is so important for a trucking company, and even more important for a company’s attorneys, to understand the ins and outs of the Carmack Amendment.

The damaged cargo in this case was worth at least $1 million. A company contracted with a transport company to have their expensive piece of equipment shipped to India. As is common in the industry, the transport company contracted with another, third company, to ship the equipment for a part of the trip to India. En route, the third company’s truck was hit by a train while at a grade crossing and the shipper’s goods were damaged.

Complex, Third-Party Litigations

The laws of who can join or be forced to join a lawsuit in court are very permissive. As a result, many lawsuits become extraordinarily complex. In this case, the shipper sued the company they contracted with because their equipment was damaged. But the second company was not the actual cargo company. Because the transportation company contracted out the transport to another company, the second company sued the actual shipping company who had the equipment when it was hit by a train and damaged.

As you can see, the simple explanation of how third-parties become part of a suit can be complex and confusing. But once a third-party is joined to a suit they can be on the hook for a judgement just like an original defendant. And the shipping company in this case was properly added to the suit.

This case was originally brought in state court. The original defendant wanted to remove the case to federal court, and so brought this action arguing that as a dispute over damaged interstate cargo, this case should be in federal court under the provisions of the Carmack Amendment.

Court’s Decision and Third-Party Removal

In this case the court determined that as a third party, the shipping company did not have the right to remove the case to federal court. This is in contrast to a typical case involving only two parties. In any other case this would be an easy decision for removal, but because the actual language of the Carmack Amendment limits removal to “defendants” the court ruled that a third-party defendant had no right to have the case removed. It was a blow to the third-party defendant, and it serves as precedent for future cases with similar fact patterns.

This case represents how the Carmack Amendment and the rulings interpreting it contain a number of intricacies. That is why having attorneys with a practice dedicated to the trucking industry is so important for trucking companies. At Anderson and Yamada, P.C., our practice is dedicated to the companies in the trucking industry, and we can help guide your company into the future. Contact us for all of your trucking law needs.