Multi-Million Dollar Carmack Amendment Case Winds to a Close

Kevin Anderson Cargo Liability, Transportation

A Carmack Amendment case out of Ohio that could be described as an epic poem is finally (maybe) coming to a close. The storied case, Excel, Inc. v. Southern Refrigerated Transport, Inc., has made its way to district court, the Sixth Circuit Court of Appeals and back over beginning in December of 2007. Now the district court in the case has issued another final ruling, and the case should go away.

This case began when a shipper contracted with a broker to have millions of dollars worth of pharmaceuticals shipped from one state to another. En route, the truck was stolen and all the goods were lost. The truck was never recovered, and the goods were considered a total loss. Under the Carmack Amendment the carrier is liable for the full value of goods lost, stolen, or damaged in transit. But there are exceptions to this rule, and that is what was contested in this case.

The carrier in this case argued to the court that they corrected limited their liability in a bill of lading when they defined the maximum loss value at $2.50 a pound. But the shipper argued that the rigid rules required to limit liability under the Carmack Amendment were not followed, and therefore the carrier was liable for the entire loss. There were also technical legal arguments, and that is largely why the case went back and forth to the court of appeals and back.

Limiting Liability Under the Carmack Amendment

Under the Carmack Amendment a trucking company (carrier) cannot simply limit their liability for lost and damaged goods by adjusting the liability rates on a bill of lading. There are strict rules that must be followed to effectively limit liability, and there are different versions of how to follow those rules in every national circuit.

Among the requirements that must be met to limit liability under the Carmack Amendment are:

  • That the carrier provide the shipper with the opportunity to choose from two or more levels of liability;
  • That the carrier get written consent on the choice of liability; and,
  • A bill of lading is issued memorializing the agreement.

This is not a complete list of the things a carrier must do to limit liability, and each region has its own variation on how liability can be limited under the Carmack Amendment.

It was clear based on the facts of this case that the shipper failed to limit its liability. So instead of paying $50,000 in damages, the carrier will be on the hook for at least $2 million in damages, and probably much more than that. This should act as a lesson for every carrier in the business to get the right advice on how to limit their liability as they contract with different companies to ship their goods.

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