Jurisdiction and Preemption With the Carmack Amendment

Kevin Anderson Cargo Liability, Judgments, Transportation

Despite being on the books for many decades now, many people continue to make mistakes with the Carmack Amendment when trying to recover for lost, stolen, or damaged cargo. Often the result of this misunderstanding of basic federal law is an early termination of otherwise expensive lawsuits. A simple and unmovable rule in our legal system is that if a court does not have the authority to hear a case, it must be dismissed.

So a question that must be asked before any suit is filed and anytime a suit is defended is: does the court have the authority to hear and decide this case? This question is best addressed by finding out whether the the court has personal and subject matter jurisdiction to hear and decide a case.

Personal jurisdiction simply asks whether the court has authority over the company or person in question. And subject matter jurisdiction asks whether the law authorizes the court to decide a case. If either of these inquiries are answered in the negative, the court must dismiss the case. And that is what happened in a recently decided case involving the Carmack Amendment in Texas.

In that case, Cioppa v. Schultz, the shipper contracted with a Hawaian shipping company to ship goods from Hawaii to Texas. But according to the lawsuit the shipper’s goods were damaged in transit, and as result he brought suit against the Hawaian shipping company. The suit was brought in Texas, and was based on state law claims. One glaring problem with the suit was that it did not mention the Carmack Amendment, and there were issues about where it was brought.

The Issue of Jurisdiction

Before a court can hear and decide a case it must have authority over the defendant. In this case, the company is based in Hawaii and that is where the contract was entered into. When the contract was signed, there was no mention of Texas in the bill of lading, but it was only after the fact that Texas was chosen as the destination of where the goods would be shipped.

There were several reasons why this case did not establish personal jurisdiction over the defendants. Because Texas was not contemplated in the contract, and because there were no specific allegations about where the goods were damaged, the court in Texas simply did not have the authority to hear and decide this case.

The Issue of Preemption and the Carmack Amendment

Another indispensable part of any case is subject matter jurisdiction. This issue is whether the laws (state or federal) allow a court to hear a case. As almost anyone involved with transportation law knows, a claim over damaged or lost cargo shipped interstate must be brought under the Carmack Amendment. And because this suit did not mention or invoke the Carmack Amendment, it had to be dismissed as well. This was an easier result to get to for the court.

The reason this case is important for those involved in the transportation industry is the value of choosing the right law firm in a related case. Although the Carmack Amendment has been around for nearly a century, it is not a legal concept widely taught in law school, and many attorneys do not know it exists. That is why results like the one in this case are not uncommon.

At Anderson and Yamada we have decades of experience working with the Carmack Amendment and other related transportation laws. When you are choosing a law firm to take your case, contact us. We will put our decades of experience to work for you.