The Carmack Amendment and Punitive Damages

Kevin Anderson Cargo Liability, Transportation

One of the most important functions of the Carmack Amendment is to establish a uniform system of liability for interstate carriers of cargo. This is important because it helps trucking companies to know before hand what risk they are taking on when shipping goods from one state to another. It also helps to properly establish insurance rates and premiums, and levels the playing field for both shippers and carriers.

Notwithstanding this level playing field and certainty that comes with the Carmack Amendment, anyone ever involved in a lawsuit knows how soon a simple claim can become quite complicated. These complications often lead to large claims for vast sums of money, and more often than not this includes a claim for punitive damages.

Punitive Damages in General

The term itself of punitive damages has an ominous ring to it. And for any company or individual, the prospect of paying punitive damages can indeed be ominous. A claim for punitive damages in a civil suit is a claim for a monetary reward which punishes the opposing party for some action they took. This kind of a claim is most common in car accident or other personal injury cases, but it can rear its ugly head in contracts or other claims as well.

One question that has arisen over the years is whether the Carmack Amendment allows a party to make a claim for punitive damages when a shipment is lost or damaged. At least two federal appeals courts took this question head on in the past, and they took a different position. But the leading decision, and the one given the most weight in other courts, came from the 7th Circuit court in the late 1990s.

Federal Law on Punitive Damages 

In that case, Gordon v. United Van Lines, Inc., 130 F.3d 282 (7th Cir. 1997), the court addressed the specific language in the Carmack Amendment which precludes the availability of punitive damages claims in a lost or damaged cargo case. According to that court, the main purpose of the Carmack Amendment is to create a uniform guideline to liability for lost and damaged goods shipped interstate. And the specific language of the federal law limits damages in a case to “actual damages.”

This language and the purpose of the Carmack Amendment work to prevent a claim for punitive damages arising out of a claim for lost or damaged cargo. This is not to say that a case involving the Carmack Amendment could not include a claim for punitive damages because of separate action not connected with the actual lost or damaged goods. One could easily think of a scenario where that would be possible. But as a general rule, a Carmack Amendment case involving claims for lost or damaged cargo will not permit an additional claim for punitive damages.

Guiding Your Company

Questions like these are important for any company involved with the interstate transportation of goods. Answering these kinds of questions and providing the best representation in litigations, through regulatory compliance, and other issues requires the right experience and knowledge from a legal team equipped to guide transportation companies. That is who we are at Anderson and Yamada, P.C. As you consider what your company’s legal needs are, contact us today so we can help you.