The Importance of a Record in Carmack Amendment Litigation

Kevin Anderson Cargo Liability, Transportation

Under the provisions of the Carmack Amendment, a carrier will be held to absolute liability for cargo loss and damage during a job. If your company is facing or about to defend a Carmack Amendment action, there will be a number of factual questions that need to be answered before the matter is resolved. If you think that your company mitigates potential damages by offering lower levels of liability, you may be surprised to know that there are strict requirements to limit liability under the Carmack Amendment.

The factual questions that any Carmack Amendment case creates include how much the cargo was worth, what is the limit of damages, and what did the parties agree to prior to a shipment. Often these questions do not come up in a competitive industry where every job counts for so much of a company’s bottom line, but ignoring them can result in a catastrophic loss for a company.

9th Circuit Court of Appeals on Establishing Damages Under Carmack Amendment

The 9th Circuit Court of Appeals is the court of appeals on federal issues for California, Oregon, Washington and other western states. In 2013, the 9th Circuit decided an important Carmack Amendment case where they were tasked with determining whether a carrier had effectively mitigated its damages by offering a lower rate of liability that complied with federal law.

In that case, LLoyds v. Baldwin Distribution Services, LTD., No. 12-55166 (9th Cir. 2013), the carrier’s truck overturned during transit and the entire load was lost. This created a number of issues for both the shipper and carrier – how much was the cargo worth? Did the bill of lading establish liability for the carrier? Would the carrier be liable for the entire shipment under the Carmack Amendment?

When the case went to court, the parties made a number of stipulations, which left a scant record. Because of the limited record, the court decided in favor of the shipper and held the carrier liable for the entire shipment under the Carmack Amendment. This result happened despite the carrier’s honest belief that the company was protected by a contract limiting liability.

But the court of appeals disagreed because the contract and the record did not establish the necessary elements to limit liability under the Carmack Amendment. Those essential elements are:

  • providing the shipper with a copy of applicable rates;
  • give the shipper a reasonable opportunity to choose between two or more rates;
  • obtain shippers written agreement on a choice of liability and rates; and
  • issue a bill of lading reflecting shipper’s and carrier’s level of liability.

Without these elements in both the contract and on the record during a suit, a carrier will likely face the full liability that the Carmack Amendment.

A Trucking Law Firm for Your Company

At Anderson and Yamada, P.C., our firm is one of the few in Oregon and the upper northwest with the ability to handle both simple and complex transportation law issues. Whether your company needs help with the Carmack Amendment, or federal or state regulation, our team can help you. Contact us so we can begin serving your transportation company needs today.