The Carmack Amendment: Removal to Federal Court

Kevin Anderson Transportation

When it comes to claims for interstate commerce, the claims are subject to the laws set forth in the Carmack Amendment. And the proper place for claims related to the Carmack Amendment is federal court. By passing a law that covers interstate commercial shipments, Congress ensured that a uniform body of law would rule over disputes that crossed state lines. But sometimes claimants first bring their claim for breach of contract, negligence, or conversion in state court. So what should the defendant do to get the benefits of federal court and the clear rules of the Carmack Amendment?

This problem presents itself more often than you might think. There are several reasons for this. Among them is the fact that some attorneys simply do not know about the Carmack Amendment prior to filing suit, or that claimants want the ease or convenience that comes with filing in state court versus federal court. When this happens and a defendant wants to put the case in federal court, the proper way to do so is through removal. The rules of removal can be found in the Federal Rules of Civil Procedure, and they are fairly straightforward. Even so, understanding them is important for any attorney involved in a removal case.

Federal District Court Denies Petition for Removal

In a recent case decided in U.S. District Court in Arizona, a federal judge denied motion to have a case removed to federal court because of the Carmack Amendment. In First Solar Inc., v. J.B. Hunt, No. CV-15-00702-PHX-NVW (D. Arizona June 22, 2015), the plaintiff brought suit against their shipper for allegedly damaging electrical equipment during transit. While this sounds like a typical Carmack Amendment case, it wasn’t. The reason it is not a Carmack Amendment case is because the contract for shipment was for moving the equipment within the state of Arizona, and not outside it.

This was a fairly simple case for the judge to decide, and it actually ended up costing the defendant. The Carmack Amendment only applies to interstate commerce. That means that if the goods are shipped only within a state, then state law will apply for any claim that results. But instead of simply denying the petition to have the case removed, the judge in this case awarded attorney’s fees for asking for removal in the first place.

This case should act as a warning to any trucking company. If your company asks to have a case removed to federal court, and there is no merit to the request, then you may be on the hook for the other side’s attorney’s fees. That is what happened in this case because the court held that it was clear that the Carmack Amendment did not apply to a contract for intrastate commerce. The company’s primary argument for why the Carmack Amendment should apply was because the company was licensed to carry goods from state to state. But this is not a good enough reason to bring an intrastate shipment dispute under the jurisdiction of the Carmack Amendment.

We are a law firm that caters our practice to the needs of trucking companies. We understand and stay abreast of the laws and rules that affect trucking companies every day. If you have any questions about your business’s legal welfare, contact us. At Anderson and Yamada, P.C., we will devote our efforts to serving you and your company in every way we can.