Total Quality Logistics, LLC v. Frye Trucking, LLC, 2014 WL 407645 (E.D.N.C. 2014)
Shipper Total Quality Logistics hired carrier Frye Trucking to haul a load of fruit from New Jersey and Pennsylvania to Georgia. Shipper-prepared bills of lading were issued at the origins, and after delivering the cargo, the consignee accepted the cargo by stamping the bills of lading with notations that everything was in good order.
After delivery, the driver departed, and only later did the consignee learn that the fruit had spoiled due to improper temperature maintenance. A USDA report confirmed this, and it was determined that the foodstuff cargo had no salvage value. Total Quality sued Frye in a North Carolina state court, and the matter was removed to the U.S. District Court for the Eastern District of North Carolina based on Carmack. Frye promptly moved to dismiss, pointing to the bill of lading notation, and shrugging its shoulders with a “hey, the bill of lading confirms no damage upon delivery.” All other Carmack elements were conceded.
In a rare judicial move, the federal court not only denied Frye’s motion, but granted non-moving party Total Quality summary judgment based on the undisputed USDA report. Following other federal precedents, the court concluded that a clean bill of lading and delivery receipt “merely establishes a presumption of good condition and is subject to rebuttal by evidence of damage.” Because all evidence demonstrated spoilage occurred while the cargo was in the carrier’s possession, the court had heard enough.
Ridley Electric Co., Inc. v. Liebert Corp. and Con-Way Freight, Inc., 2014 WL 409104 (N.D.N.Y. 2014)
Ridley Electric Company bought two power centers from Liebert Corp., in Delaware, for delivery to Ridley’s facility in New York. The sales contract was FOB, such that Liebert’s responsibility ended when the cargo left its possession.
The cargo checked out fine when it was tested before departure, and Ridley signed a clean delivery receipt confirming no damage when carrier Con-Way Freight delivered it. The cargo sat in Ridley’s warehouse 27 days before it was moved to a jobsite. There, behold, Ridley saw damage to one of the units. Ridley submitted claims to both Liebert and Con-Way, both of which were denied. Ridley sued both in the U. S. District Court for the Northern District of New York, and both defendants moved for summary judgment.
Ridley’s claims against Liebert sounded in state breach of contract law, and the claims against Con-Way were based on Carmack. Both defendants submitted affidavits that the cargo was fine when in their respective possessions, that their employees did everything right, and that no evidence demonstrated anything to the contrary. Con-Way didn’t assert any of the recognized Carmack defenses.
But something must have happened somewhere, when the cargo was in someone’s possession! The court concluded that a jury could make credibility determinations about witnesses for the defendants, and find one or both liable. Alternatively, the jury could determine that the evidence is insufficient against either defendant, and find no one liable. The court doesn’t go through a specific Carmack analysis, but presumably was thinking that evidence could demonstrate the cargo wasn’t in good order and condition at the time of tender, which would absolve Con-Way of Carmack liability.
And no, the clean delivery receipt isn’t enough to get Con-Way off the hook, as Ridley submitted evidence it didn’t damage the cargo after delivery. This one goes forward.
Distribuidora Mari Jose, S.A. de C.V. v. Transmaritime, Inc., 738 F.3d 703 (5th Cir. 2013)
Mexican importer Distribuidora Mari Jose (Mari Jose) booked transit of 11,490 boxes of Christmas lights from China to Mexica, and problems forced the transit to go through the Port of Long Beach. Mari Jose hired broker Transmaritime to take possession of the freight from ocean carrier Compania Chilena de Navegacion Interoccania and truck them down to Mexico. Chilena issued bills of lading for the freight’s full count, and named Transmaritime as the consignee. Transmaritime processed customs clearance by issuing customs forms 7512 that stated 11,490 boxes, and booked surface transit with a series of truckers which issued their own bills of lading. When the ocean containers were unsealed, inventoried, and reloaded, it was discovered that the total load was some 2,000 boxes short. The truckers’ bills of lading documented only 9,578 boxes.
Mari Jose sued Transmaritime in the U.S. District Court for the Southern District of Texas, and moved for summary judgment based on Carmack. The court agreed, and found that Transmaritime’s issuance of the forms 7512 was confirmation of the freight volume it had received. On appeal to the Fifth Circuit, Transmaritime argued Mari Jose had failed to establish Carmack’s first prong – good order and condition at time of tender, such that summary judgment was improper. The court agreed and reversed the trial court’s ruling. Transmaritime didn’t issue a bill of lading or other documentation which effectively acknowledged the cargo count (indeed, how could it be liable as a carrier in the first place). It didn’t have an opportunity to inspect the load before issuing the forms 7512 (14 of 15 containers remained sealed), and those forms aren’t designed for the purpose Mari Jose was asserting. Back we go to the trial court to analyze evidence of order and condition upon tender.
Estes Express Lines v. United States, 739 F.3d 689 (Fed. Cir. 2014)
The Marine Corps Community Services (MCCS), i.e., the federal government, contracted with broker Salem Logistics to arrange transportation of cargo to Marine Corps facilities around the country. The MCCS-Salem contract provided that motor carriers would issue bills of lading and freight charge bills to MCCS. Salem booked transit of a series of transports for MCCS with carrier Estes Express Lines, which issued its freight invoices to the government “care of Salem.” Apparently, Salem collected freight charges from MCCS, but failed to remit some of them to Estes, to the tune of 147 grand.
Estes sued the government in the U.S. Court of Federal Claims, and Uncle Sam moved to dismiss for lack of subject matter jurisdiction. The Tucker Act, 28 USC §1491, provides that to get Court of Claims jurisdiction over a government agency, there must be an express or implied contract. The court agreed and dismissed the action based on the absence of direct privity of contract between MCCS and Estes, ruling that Estes was only Salem’s “subcontractor.”
Up the hill in the U.S. Court of Appeals for the Federal Circuit, Estes successfully demonstrated that this was inaccurate – factually and legally. The Salem-MCCS contract contemplated shipments on “a third-party collect bill of lading,” such that MCCS clearly intended to be bound by carrier bills of lading. The bill of lading is “the basic transportation contract between the shipper-consignor and the carrier; its terms and conditions bind the shipper and all connecting carriers.” Moreover, nothing suggested Estes agreed to be bound by the Salem-MCCS contract. The dismissal was reversed with the court underscoring that it wasn’t addressing whether the government may be liable for freight charges based solely on its owning the freight, a concept that’s in flux in government claims.
Stewart v. American Van Lines, et al., 2014 WL 243509 (E.D. Tex. 2014)
Household goods shipper Barbara Stewart booked transit of her stuff from Texas to Mississippi with carrier U.S. Van Lines (USVL), and bought from USVL cargo “insurance.” USVL issued a bill of lading containing a forum selection clause mandating that litigation take place in Florida. USVL handed the load off to carrier American Van Lines (AVL). AVL wouldn’t accept a credit card or check for additional freight charges it said were due for a narrow delivery street. Stewart wouldn’t pay with cash, so AVL hauled her stuff to Florida, where USVL held and refused to release it.
Stewart sued both carriers in the U.S. District Court for the Eastern District of Texas, where the court addressed multiple issues. First, Stewart claimed the federal court should exercise supplemental jurisdiction over her “insurance claim” because it derived from the same “case and controversy” as her Carmack cargo claim. The court recognized that “considerations of judicial economy, convenience and fairness” are at the heart of a supplemental jurisdiction analysis, but found an insurance claim is only loosely connected to one for cargo loss and involves questions of state insurance law. The court refused to hear the insurance claim consequently.
Second, both carriers moved to transfer venue to Florida under USVL’s forum selection clause. The court denied that motion. AVL wasn’t a party to the bill of lading, and had no basis to transfer. While courts generally enforce forum selection clauses, this one found that Carmack contains its own venue provisions which allow a shipper to file suit (among other places) at the place of a loss. Thus, the court concluded that Carmack “essentially prohibits enforcement of forum-selection clauses …”
Third, after dismissing claims against individual defendants employed by the carriers, the court ruled that Stewart doesn’t have a private right of action for attorneys’ fees based on 49 CFR §375 and 49 USC §14708 et seq. based on the carriers’ failure to advise her about the federally mandated arbitration program. The regs and statutes she relied on just don’t provide that.
Saacke North America, LLC v. Landstar Carrier Services, Inc., 2013 WL 7121197 (W.D.N.C. 2013)
Global Experience Specialists (GES) sponsors and manages trade shows, including the International Machinists’ Trade Show in Chicago in September 2010. Show participant Saacke GmbH & Company KG (Saacke) shipped its wares to Chicago, and upon the show’s completion, GES produced a “bill of lading” covering removal of Saacke’s materials to a loading area. GES hired broker MI Logistics (MIL) to facilitate the process, which included quoting Saacke a freight charge and booking Saack’s cargo with carrier Landstar for transit to North Carolina. One of seven items of cargo disappeared somewhere along the way. GES refused responsibility, stating there was no exception on its bill of lading noted at the time it tendered the cargo to Landstar.
Saacke sued Landstar in the U.S. District Court for the Western District of North Carolina under Carmack. It pointed to the GES bill of lading as demonstrating the cargo’s good order and condition at time of tender. Landstar argued that GES isn’t a motor carrier, and was at most a freight broker, such that Carmack doesn’t govern it or any documentation it issued.
On cross motions for summary judgment, the court disagreed with Landstar and found it liable. GES qualified as a “receiving carrier” for Carmack purposes, with Landstar being the “delivering carrier.” The fact GES is registered with FMCSA only as a broker is a consideration, but isn’t determinative, and the fact it didn’t procure Landstar’s services (MIL did) renders that argument even less persuasive. The facts that GES issued a bill of lading (which included “GES Logistics Terms and Conditions”). Moreover, GES performed (again, in accordance with its bill of lading’s terms) “handling, moving, assembling and packing” services for Saacke. All told, no reasonable jury could find two separate and distinct shipments here (even though Saacke paid Landstar separately). Because GES was a receiving carrier of the freight Landstar hauled, the cargo description in its bill of lading satisfies good order and condition for Carmack purposes.
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