The Carmack Amendment and Default Judgment

Kevin Anderson Cargo Liability, Transportation

The Carmack Amendment creates a uniform system of liability for damaged or lost goods shipped from one state to or through another. It is a nationwide policy that eliminates the need for trucking companies to be aware of and plan for different state liability laws. But the policy itself is harsh to carriers who do the actual work of shipping goods across the state.

Under the Carmack Amendment, a carrier is one hundred percent liable for loss and damage of shipped goods. Once a shipper shows that she delivered the goods in good condition, the burden is then on the carrier to explain why the goods were damaged, and there are only a few exceptions to making the carrier responsible for lost, damaged, or stolen goods.

Because of this policy, most Carmack Amendment cases are fairly straightforward, and come down to fighting over what the number should be regarding damages. And sometimes, as happened in the case we are about to write about, the carrier does not even show up to contest the allegations.

In Travelers Property Casualty v. ASF Intermodal, LLC, the case involved the loss of over $90,000 worth of aluminum can tops. According to the complaint, one of the carrier’s trucks backed into the trailer carrying the aluminum, and caused the can tops to be environmentally contaminated. Minus the value of the aluminum on the secondary market, the shipment was a complete loss.

The insurer paid off the shipper, and then went after the carrier for the balance of its losses. They sued, and the carrier simply did not contest the results, so the case went to the federal judge on a motion for default judgment. Default judgment means that because the defendant does not answer the claim, the plaintiff automatically wins with no contest over the claims.

Legal Standard on Default Judgments

It is rare for a court to grant default, and they are disfavored under the law. Before a judge can rule on a default judgment, they have to make several findings, and establish the following standards:

  • Conduct an accounting of the case;
  • Establish what the damages are;
  • Ensure that all allegations are supported by evidence;
  • Investigate other matters that would affect dispensing justice in the case.

While these standards are high, it is not difficult for a suing party to establish them when there is no other part challenging what happened.

For a case to proceed like this is rare. Most cases involving the Carmack Amendment have two different business fighting over how much is owed, so both businesses have a vested interest in the outcome. It is understandable why the law disfavors default judgments, because of the burden it puts on judges, and basic lack of a hearing from the party who will face paying the judgment.

Understanding how the Carmack Amendment works in federal district court is a big part of our practice at Anderson and Yamada. We have decades of experience helping trucking companies in all the aspects of transportation law. Contact us today.