Jurisdictional Requirements for Carmack Amendment Claim

Kevin Anderson Cargo Liability, Transportation

The Carmack Amendment is a federal law and policy enacted to provide a uniform system of liability for lost, stolen, or damaged goods transported across state lines by a carrier. This is an area of law that the federal government has completely occupied, and it therefore preempts any state laws dealing with such claims based on state laws. Meaning, if as a carrier you are sued in state court over damages to cargo you shipped, then it should be removed to federal court.

Removing a damaged goods or cargo case to federal court is important to carriers for a number of reasons. In the first instance, state laws can often impose extra penalties and cases can quickly become more expensive than they should. Once a case is in federal court and the Carmack Amendment is being applied, it is straightforward and can be dealt with on a uniform basis.

Threshold for Entering Federal Court

These are a few of the general principles of damaged, lost, or stolen goods when applying the Carmack Amendment. But from the outset, there is always a threshold that must be met before a federal district court will hear any case, including cases involving the Carmack Amendment. Such requirements are built into the foundations of the federal judiciary.

Under the provisions of the Article III Section 2 of the U.S. Constitution, federal courts are only allowed to hear and adjudicate actual cases and controversies. This means that there must actually be a dispute between two parties before a court can hear the case, and the dispute must fall under one of the areas of jurisdiction described by U.S. law. All of these requirements fall under a legal doctrine known as jurisdiction.

Under U.S. law, there are two basic ways that a case can fall within federal jurisdiction. One, the two parties are from two different states and the amount in controversy exceeds $75,000. Or two, the case is based entirely on a federal law. Carmack Amendment cases fall within the second type of jurisdiction because it is a federal law. But that is not the only requirement for a Carmack Amendment case to be heard in federal court.

Amount in Controversy

Under the provisions of the Carmack Amendment, there is another requirement for a case to be heard in federal court, and that is that the amount in controversy exceeds $10,000. This helps keep small cases out of federal court, and allows state courts to resolve smaller amounts. It can be a frustrating requirement for many carriers dealing with these kinds of claims.

When a case starts in state court and is based on damage to goods that were transported interstate, it is the defendant who must prove the case should be in federal court. The burden is entirely on the defendant to show a federal court that the case is under the provisions of the Carmack Amendment, and that the case is worth more than $10,000. That was the lesson learned recently in a federal district court case out of Alabama. In that case the judge refused to hear a case because the defendants could not show that the amount involved was more than $10,000. As a result, they must now defend the case in state court.

Your Pacific Northwest Transportation Law Team

If you are a transportation company from Oregon, Washington, or California and need legal representation, contact us. At Anderson and Yamada we have decades of legal experience helping trucking and transportation of all sizes with all kinds of legal issues. We look forward to hearing from you soon.