Limiting Liability Under the Carmack Amendment

Kevin Anderson Cargo Liability, Transportation

In ABB Inc. v. CSX Transp. Inc., 721 F.3d 135 (4th Cir. 2014), the Fourth Circuit Court of Appeals decided when and how carriers are allowed to limit their liability under the Carmack Amendment. This case involved a carrier shipping a large, complex piece of machinery valued at over $1.3 million dollars. During shipping the piece of machinery was damaged to the tune of $550,000 dollars. The shipper sued the carrier for the amount of damage that happened to the machinery, but the carrier responded that the Bill of Lading limited the carrier’s liability to $25,000.

At the trial court level the court agreed with the carrier. The Bill of Lading clearly limited liability to $25,000, so that was then end of the story. But the court of appeals disagreed. According to the Fourth Circuit Court of Appeals, a carrier must show four things to prove that it limited its liability under the Carmack Amendment.

  1. Did the carrier supply a copy of its rate schedule when requested?
  2. Did the carrier give the shipper the opportunity to choose different levels of liability?
  3. Did the carrier get the shipper’s agreement on choice of liability level?
  4. Did the carrier issue a Bill of Lading?

According to the Fourth Circuit, all of those steps must be fulfilled to effectively limit a carrier’s liability under the Carmack Amendment.

While the Carmack Amendment is over 100 years old, it continues to be interpreted by courts across the country. The law evolves over time, so making sure your business is up to date on how to limit liability, construe contracts, and implement sound business plans requires a law firm that dedicates its practice to transportation law. The attorneys at Anderson & Yamada, P.C. dedicate their legal practice to transportation law; contact Anderson & Yamada for all of your transportation law needs.