Carmack Damages Must Be Proven With Demonstrable Evidence, Even After Entry of Default
Ameriswiss Technology, LLC v. Midway Line of Illinois, Inc., 2012 WL 5567186 (D. N.H. 2012).
Ameriswiss Technology is in the business of refurbishing used equipment. It paid $44,800 to buy 13 used escomatic screw machines, and a month later hired trucker Midway Line of Illinois to haul them interstate. The Midway truck was involved in an accident damaging the machines. Ameriswiss sued Midway in the District of New Hampshire, and the carrier defaulted. Ameriswiss moved for entry of judgment in the amount of $545,000, which it claimed was the machine’s value at destination.
Under Carmack, a shipper whose freight is damaged is entitled to recover “the actual loss or injury to [its] property.” But what was Ameriswiss’s actual loss? In support of its motion, the shipper submitted an appraiser’s declaration that just proclaimed the machines’ value to be 545 grand. No explanation was stated. The sources of his opinion weren’t revealed. No comparable sales were cited.
While the court noted that, surprisingly enough, it couldn’t find a similar precedent, it ruled that a barebones appraiser’s declaration doesn’t do the trick. While a shipper’s damages needn’t be proven with mathematical certainty, they can’t be speculative either. Thus, the only substantiated value the court could ascribe to the machines was $44,800, and any other value was necessarily “speculative.”
But the court didn’t stop there. Ameriswiss, like all other Carmack claimants, has a duty to mitigate its losses. It did get its damaged machines back, and they presumptively had salvage value. Before the court would issue a final ruling (i.e., $44,800 less salvage value), it ordered Ameriswiss to produce evidence of salvage value, and admonished the shipper to show that the salvage it claimed was the best that could reasonably be achieved.
A District Court Rules That Carmack Governs Shipments Inbound From Canada
Atlas Aerospace, LLC v. Advanced Transportation, Inc., et al., 2012 WL 5398027 (D. Kan 2012)
The U.S. District Court for the District of Kansas has ruled that Carmack governs claims for lost/damaged freight when the shipment originates in a foreign country (here, Canada), and the move is governed by a single bill of lading. Shipper Atlas Aerospace’s freight arrived damaged after transit from Ontario to Wichita, and it sued based on common law theories of liability. Carrier BRK moved to dismiss based on Carmack preemption. Atlas pointed to an array of cases demonstrating that, hey, that’s not how it works.
Admittedly, Carmack’s statutory wording is confusing, as it states that the federal cargo liability regime applies “between a place … (E) in the United States and a place in a foreign country to the extent the transportation is in the United States …” The word “between” suggests both directions.
Atlas argued that prior to Carmack’s 1978 recodification, the applicability language was “from any point in the United States to a point in an adjacent foreign country,” and that Congress instructed that the recodification S“may not be construed as making a substantive change in the law” (as stated in the Supreme Court’s landmark K-Line v. Regal-Beloit decision in 2010). The court didn’t buy that interpretation of Regal-Beloit of Congress’s pronouncement because the case dealt with an intermodal through bill of lading. Moreover, the court found a pre-1978 case that interpreted “from … to” to also mean “between.”
Although it recognized Atlas’s cases going the other way, the court found the Second Circuit’s 2006 decision in Sompo Japan Ins. Co. v. Union Pacific Ry. instructive as to what Congress intended (ironically not mentioning that Sompo Japan, too, involved an intermodal bill of lading, and is at least widely understood, if not definitively stated, to have been reversed by Regal Beloit). The court determined that Sompo Japan had concluded that pre-1978 “from … to” language in the jurisdictional provision of the Interstate Commerce Act meant “transportation in either direction and thus encompassed both imports and exports,” and that there was no reason to believe Congress intended a different definition of the clause for Carmack. Also, courts tend to rule that changes in statutory wording are intended to accomplish a result.
Atlas can amend its complaint to state a claim in Carmack, so it’s not tossed out of court. However, if the District of Kansas’s reasoning receives strong precedential value, Carmack’s applicability will be expanded significantly.
Notwithstanding Carmack’s Venue Provisions, Courts Can Ship Cases Out to Better Locales
Tokio Marine & Nichido Fire Ins. Co. Ltd. v. Flash Expedited Services, Inc., 2012 WL 5721163 (D. N.J. 2012)
Tokio Marine’s insured, Nikon, shipped a load of cameras from Louisville, Kentucky to Jamesburg, New Jersey with carrier Flash Expedited Services. Flash’s drivers left the load unattended at a truck stop in Ohio. Of course, it was stolen, and the insurer paid Nikon 361 grand. It sued Flash in subrogation in the U.S. District Court for the District of New Jersey.
Why shouldn’t it be able to bring suit there? Carmack provides that district courts sitting in territories through which a delivering carrier operates have jurisdiction, and a plaintiff axiomatically gets to choose its venue, so long as the law countenances that venue. On its own motion, opposed only by the insurer, the court didn’t see it that way, and bounced the subro claim to the District of Ohio.
Other courts have ruled that, notwithstanding Carmack’s venue provisions, giving a plaintiff shipper the “unfettered choice of forum … in any forum where a defendant carrier operates, ‘could lead to an absurd result, such as a carrier being sued in a state that otherwise bears no connection to the parties or the shipments at issue.’” Thus, the courts have discretion based on “fairness considerations” to transfer venue.
The court considered the facts that the insurer wasn’t a New Jersey company; the loss occurred and cause of action arose in Ohio, so witnesses and evidence would be there; and Ohio has the strongest interest in deciding a local controversy.
Interesting Jurisdictional Issues Aside, Federal Law Preempts a State’s Regulation of Rates, Routes and Services
Nationwide Freight Systems, Inc. v. Illinois Commerce Commission, et al., 2012 WL 5906538 (N. D. Ill. 2012)
The Prairie State, through its Illinois Commerce Commission (“ICC,” ironically enough), apparently hassled a few motor carriers for allegedly operating interstate through Illinois without a state license and, as part of the process, issued citations and assessed fines based on the truckers’ refusal to produce various records (bills of lading, driver logs, invoices, and the such). The truckers sued ICC, as well as some of ICC’s enforcement agents, in the U.S. District Court for the Northern District of Illinois, asserting federal jurisdiction pursuant to 28 USC §1337 on the ground the issues affected interstate commerce, as well as under §1331 based on a federal question. They felt ICC regs by which state authorities attempted to force records out of them were preempted by 49 USC §14501(c)(1), which forbids states from regulating rates, routes and services of interstate surface carriers. They also felt the ICC agents were out of line by trying to enforce those regs.
In analyzing the defendants’ motion to dismiss, the court went through an interesting analysis of the U.S. Constitution’s Eleventh Amendment, which basically excludes from federal jurisdiction actions brought against a state (or its agencies) by citizens of another. The court declined §1337 jurisdiction, observing that §14501(c)(1) doesn’t create a cause of action in favor of individual motor carriers, and dismissed ICC from the suit. However, the court found federal question jurisdiction based on the Constitution’s Supremacy Clause on the ground there was a preemption question related to alleged improper enforcement efforts by ICC’s agents.
States are allowed to enforce safety, financial responsibility and insurance regs, but no evidence suggested the records ICC’s agents sought to extract from the truckers had anything to do with those subjects. Thus, the individuals are still on the hook in federal court for allegedly seeking to enforce state regs which might interfere with interstate commerce, but the agency itself must be taken to task in state court.
Co-Brokered Carrier’s Bill of Lading Doesn’t (Necessarily) Protect Original Carrier
Siemens Water Technology Corp. v. Trans-United, Inc., 2012 WL 5832373 (S.D. Tex. 2012)
For all the virtues and practical necessities the motor carrier practice of co-brokering loads provides, that practice can’t boast of certainty of documentation and shipping terms, particularly when a daisy chain of players are involved. The longer the chain, and the more players involved, the more likely someone’s interests aren’t adequately protected.
The Southern District of Texas recently took a look at a scenario involving an international shipper, a broker, three truckers and a steamship line. The freight, an expensive reactor, started off in Wisconsin, and was trucked to the Port of Houston on its way to India. The reactor arrived in India trashed to the tune of some 290 grand.
The originating carrier, Trans-United, signed the broker’s load receipt, but second carrier 24/7 Express issued the only bill of lading, and third carrier Pathway actually ran the load to Houston. Some kind of minor accident interrupted the haul, but the shipper, Siemens Water Technology, blessed it for onward delivery, accepting a delivery receipt that noted only some scratches and the like. Siemens sued Trans-United for the loss.
Trans-United moved for summary judgment, asserting that 24/7’s bill of lading applied to it as the originating carrier, and claiming that Siemens had failed to comply with the document’s nine-month notice of claim term. It also alleged that if it is liable, its liability is limited to peanuts per another bill of lading clause. In this complicated scenario, the court found a world of questions of fact sufficient to defeat summary judgment. First, nothing more than a he-said-she-said controversy was behind whether the parties intended 24/7’s bill of lading to apply to Trans-United. If they did, it’s not it clear whether Siemens ever got notice of incorporated terms and conditions on 24/7’s website, as the copy of the bill of lading Siemens received had a blank reverse side. Thus, the parties will have to do battle over whether the bill of lading applies, and if so, what terms are enforceable.
Questions of fact abound regarding when Siemens learned of the damage, which starts the nine-month clock ticking, and the bill of lading didn’t have adequate info about condition and count in Houston. And limitation of liability is subject to its own factual determinations in the context of enforceable bill of lading terms. Slack documentation leads to trouble once again!
Written Notice of Claim Must Include Specific Dollar Amount, Under Most Circumstances
Bowman v. Mayflower Transit, LLC, 2012 WL 4787354 (D. Mass 2012)
Per 49 CFR §370.3(a), motor carriers are actually prohibited from paying claims for lost/damaged freight unless the shipper submits a timely, written notice of claim stating a specific dollar demand. While we’ve seen courts interpret that reg rather loosey-goosey, the First Circuit directs its courts to interpret and apply it strictly. The District of Massachusetts obeys that direction. Just ask Ca’Ryna Bowman, whose lawsuit against Mayflower for allegedly damaging her stuff during a household goods move from California to New Hampshire and Massachusetts recently was tossed based on inadequate notice of claim.
She did send a written notice within the nine months Mayflower is entitled to require it, and the claim even stated a dollar amount, but that figure was her freight charge only. She ID’ed her purportedly damaged stuff, and asserted that she hadn’t had a chance to value it.
But she never did. An exception is made for claimants who are unable with due diligence to come up with a dollar value of their damaged freight within the allotted time, but nothing suggested Ms. Bowman didn’t have enough time here. Another exception applies when the motor carrier leads its shipper on by stating everything it needed was in hand, but that wasn’t the case here either, despite the shipper’s claim that Mayflower’s moving booklet tells its customers to complete written claim forms “to the best of your ability” (that same booklet also states that a claim must include a specific amount of money).