Interstate or Intrastate? How to Apply the Carmack Amendment

Kevin Anderson Cargo Liability, Transportation

The federal law regulating the movement of commercial items from state to state is the Carmack Amendment. It is a federal policy placing the burden of replacing lost, damaged, or stolen goods squarely on the shoulders of interstate carriers shipping those goods. It is an important law because it establishes a national policy to deal with these kinds of losses in a country where a large portion of our commerce is shipped interstate.

This is a straightforward national policy, and one that most trucking firms know and understand. But the applicability of the Carmack Amendment can become quite complex depending on the facts of a given situation. That is why every trucking company needs to have access to a law firm that knows how and when the Carmack Amendment applies.

Interstate Shipment or Intrastate

One such situation that can become complex is when the Carmack Amendment applies because a shipment is interstate and when state law applies because a shipment is intrastate (shipped within a single state). When a shipment is interstate and moves from one state to another, the Carmack Amendment applies. In these cases it also preempts and dismisses any cases based on state law because federal law is superior.

On the other hand, when a shipment moves within one state, state law will (typically apply). This means that loss of a shipment will bring a breach of contract claim, as well as claims grounded in negligence, bailment, and other. The crucial issue here, however, is not whether the goods physically move within one state; instead, the crucial issue is the intent of the shipper and carrier at the time a transportation contract is executed.

Intrastate Shipment Remains Under Carmack Liability

This was the lesson learned by a shipper out of California earlier in 2017. In that case, Sony Biotechnology v. Chipman Logistics and Relocation, the shipper paid to have an expensive piece of equipment shipped from Seattle, Washington to San Diego, California. Based on that fact, it was a clear cut case under the Carmack Amendment. But the plaintiffs made a claim that the equipment was actually damaged while under local shipment from a facility in San Diego to a local university.

The plaintiffs in this case pled both Carmack Amendment claims and state law claims, should the court find that the equipment was damaged while traveling intrastate, from a local hub to the place of delivery. But the court dismissed the state law claims, ordering the Carmack Amendment to apply throughout the case, no matter where the damage occurred.

According to the court’s ruling, it did not matter where the goods were damaged for Carmack Amendment applicability. The court acknowledged several appeals court cases, which hold that for purposes of the Carmack Amendment, the intent of the parties at the time of a contract is what determines whether the shipment is interstate or intrastate (and therefore whether the Carmack Amendment or state law should apply). As a result, the state law claims were dismissed, and only federal law applied going forward.

Your Carmack Amendment Law Firm

Having access to a law firm focused on transportation law is key for any trucking company. At Anderson and Yamada we have decades of experience working with transportation companies of all sizes in Oregon, Washington, California, and the surrounding areas. As your company encounters a legal need, contact us. We look forward to hearing from you soon.