Pleading in the Alternative and The Carmack Amendment

Kevin Anderson Cargo Liability, Transportation

An important strategy Carmack Amendment litigation can often be pleading in the alternative. Just like it sounds, pleading in the alternative allows a litigant to make a primary argument on which a judge should rule, and if it fails for a particular reason, then the litigant advances an alternative argument as a fallback.

Given the nature of the law, the technical requirements for meeting elements of a legal doctrine, and other peculiarities, it can be very helpful. In fact, the Federal Rules of Civil Procedure have a specific rule that allows for pleading in the alternative, Fed. R. Civ. Pro. 8(a)(3). And this kind of pleading recently happened in a federal Carmack Amendment case in Illinois.

Shipper Pleads in the Alternative

In this case, Sompo Japan Insurance Co. v. B&H Freight, Inc., the shipper contracted with what they thought was a carrier to ship a large load of expensive cameras and related equipment. Unfortunately for all of those involved, the shipper claimed that the cameras never arrived at the appointed destination. As anyone involved in a situation would do, the shipper sued for the value of the cameras and equipment, but they sued on two different theories of recovery.

That the shipper was forced to sue on two different theories may show a weakness in the litigation system. Afterall, if a company is liable for lost goods during transit then they should just be liable. But as discussed above, there are so many technicalities and rules involved in the law, and a good defense team can easily defeat a claim, leaving the wronged party without any recovery. To prevent this from happening, the shipper pled their case in chief and then in the alternative.

The shipper’s first argument was that the company acted as a shipper or freight forwarder and therefore should be held liable for the lost goods under the Carmack Amendment. Of course, the Carmack Amendment is federal law that mandates a carrier be liable for lost or damaged goods that travel across state lines. If successful on this count, then the carrier would have to pay the entire cost of the loss.

Knowing that the carrier in this case might win an argument that they were not a shipper or freight forwarder but a broker, the shipper pled in the alternative. Their alternative pleading was that if the carrier argued they were a broker, then they should be held liable under state laws for failing to hire a reputable or reliable carrier to ship the goods. And it was this state law argument that the carrier argued should have been dismissed as preempted by the Carmack Amendment.

Understandably, the federal court did not buy this argument. The court ruled that the alternative pleading was valid, and that it should not be dismissed. This is a clear example of how important understanding the federal rules, trial strategies, and the finer points of litigation can be.

Whether to take on an active litigation or help advise through the complex web state and federal laws dealing with the trucking industry, your company needs a legal partner. At Anderson and Yamada, P.C., we have the experience and knowledge that your company needs. Contact us so we can be your company’s legal partner going forward.