TRANSPORTATION LAWYERS ASSOCIATION
COMMITTEE ON FREIGHT CLAIMS
TRANSPORTATION CASE SUMMARIES
1By: Wesley S. Chused
1. McLaughlin Transportation Systems, Inc. v. Barbara Rubinstein, 2005 U.S.
Dist. LEXIS 19932 (D. Mass. 2005) (“specified or determinable” claim-filing requirement –
strict interpretation). After delivery of her household goods shipment, shipper claimed loss and damage and the motor carrier sent her a claim form with instructions to file it in writing within the nine month time period prescribed by the Bill of Lading. About 8 ? months after delivery, shipper‟s lawyer wrote to the carrier asserting a claim for “payment of $100,000,” adding, “This is the claim anticipated by your letter to [shipper]. . . . I will provide further
particulars in due course.” The specific claim information was not forthcoming until 11 months after delivery, and the carrier denied the claim as untimely. The carrier then filed a declaratory judgment action in federal court seeking to have shipper‟s claim declared untimely. Shipper
counterclaimed for an assortment of state and common law claims and for punitive damages. In granting the carrier‟s motion for summary judgment, the Court noted that Massachusetts, being part of the First Circuit, is a “strict compliance” jurisdiction in which estimations and
approximations of damage amounts are insufficient to meet the “specified or determinable” claim-filing requirement of the FMCSA (49 C.F.R. ?370.3). The Court noted that the shipper was not excused from the nine month claim filing requirement, ruled the shipper‟s counterclaim for unfair and deceptive practices under Massachusetts state law was preempted by the Carmack Amendment, and denied the shipper‟ motion for judgment on the pleadings.
2. Siemens Power Transmission & Distribution, Inc. v. Norfolk Southern Railway thCompany, 2005 U.S. App. LEXIS 17202 (11 Cir. 2005) (“specified or determinable” claim-
filing requirement – liberal interpretation). An electrical transformer was damaged during
rail transportation from Virginia to Florida. Plaintiff shipped the transformer back to Germany for repairs, notifying the rail carrier it estimated “a total cost of $700,000 - $800,000 [as] the
amount of our claim.” The District Court had granted the railroad‟s motion for summary judgment on the grounds that the shipper had failed to file a claim within nine months of the date of delivery. The Eleventh Circuit reversed. Following an analysis of the history of the claim filing requirements under the Carmack Amendment, and the minimum claim filing rules originally promulgated by the former Interstate Commerce Commission, the Court noted that the circuits have not uniformly applied the “specified or determinable amount of money” claim filing requirement, with some courts holding that the rule applies only to “uncontested” claims. The Court ruled that the claim filing requirement was intended to put the carrier on notice so as to enable the carrier to exactly compute its losses, and that the language of the statute should be interpreted according to its ordinary, contemporary and common meaning. The Court liberally construed the claim filing regulations and held that the plaintiff‟s notice of claim together with its offer to have the carrier inspect the damage were sufficient. The Court rejected numerous
1 By Wesley S. Chused, Chairman, Transportation Lawyers Association Committee on Freight Claims. WSC/TLA/Case Summaries/November 2005
cases cited by the defendant railroad that required actual compliance with the “specified or determinable amount” regulation and rejected the notion that its liberal interpretation of the regulation would allow shippers to bypass the mandated claims process.
th Cir. 2005) (attorneys’ fees 3. Campbell v. Allied Van Lines, Inc., 410 F.3d 618 (9
award to household goods shipper). The Court affirmed a U.S. District Court award of
attorneys‟ fees to household goods shippers even though they had not sought arbitration under 49 U.S.C. ?14708 prior to bringing suit. In a two-to-one decision, the Ninth Circuit construed ?14708‟s attorneys‟ fee provision very narrowly, literally and out of context. The appellant carrier contended that the language of ?14708(d)(3) bars shippers from receiving an award of attorneys‟ fees unless the shippers first participate in the arbitration program described in the preceding sections of ?14708. The majority rejected that argument and ruled that a shipper may obtain an award of attorneys‟ fees under subsection (d)(3)(A) simply by showing there was no arbitration decision, thereby disregarding the other requirements of the statute that called for arbitration. The dissent provides some colorful and interesting reading in which the dissenting judge found that, “The most reasonable interpretation of ?14708(d)(3)(A) is that it makes attorneys‟ fees available if the shipper takes advantage of the opportunity for arbitration that the carrier is statutorily bound to provide and no decision is rendered within the sixty day period 2provided.”
4. Delta Research Corporation v. EMS, Inc., 2005 U.S. Dist. LEXIS 18353 (S.D.
Mich. 2005) (carrier, freight forwarder or broker?). Plaintiff Delta sought to recover for the
destruction of a $290,000 boring mill destroyed during transportation by motor vehicle from Ohio to Michigan. Delta had hired defendant S.K. Rigging Co. to load and transport the machine, and S. K. in turn hired defendant EMS, Inc. to provide the actual flatbed/truck transportation. Delta filed a two-count complaint against S.K., alleging a claim under the Carmack Amendment and a claim of negligence. On cross-motions for summary judgment, Delta contended that S.K. was liable either as a carrier, freight forwarder or a broker, while S.K. asserted that based on the allegations in the complaint it was neither a carrier nor a freight forwarder, and hence, not subject to Carmack Amendment liability. Following a detailed discussion of the differences between carriers, freight forwarders and brokers, the Court denied Delta‟s motion for summary judgment, finding that there were questions of fact that remained as to exactly what S.K.‟s status was, and therefore also denied S.K.‟s motion for summary on the Carmack Amendment count.
However, the Court granted S.K.‟s motion for summary judgment on Delta‟s negligence count, ruling that in the event the fact finder determined that S.K. was acting as a common carrier, then any state common law negligence claim would be preempted and, conversely, if S.K. was not acting as a motor carrier, it could not be vicariously liable for any negligence of EMS, an independent contractor.
5. Jason York v. Day Transfer Company, et al., Civil Action No. 04-551A (D. R.I.
2005) (broker/carrier liability; “inducement by misrepresentation”). A federal court judge
in Rhode Island granted in part and denied in part the motion of the plaintiff/household goods shippers to amend their complaint to add claims of broker liability, inducement by misrepresentation and negligence in voiding their insurance coverage in connection with a
2 Congress has since amended ?14708 in an effort to clarify that a shipper of household goods may receive an award of attorneys‟ fees only after she has first taken advantage of the arbitration program.
WSC/TLA/Case Summaries/November 2005 2
household goods shipment that, apparently, the defendants transported from a storage warehouse. The Court first denied plaintiffs‟ motion to amend their complaint to add a claim of broker
liability on the part of defendant Day Transfer, on the basis that the amended complaint alleged that Day Transfer was engaged to provide services with respect to the transportation of plaintiffs‟ household goods. The Court recognized the definition of “transportation” at 49 U.S.C. ?13102(21) and Carmack Amendment preemption of claims sounding in negligence, and it therefore ruled that since the plaintiffs did not dispute Day Transfer‟s claim that it was a motor carrier subject to the Carmack Amendment, there could be no state law claim for broker liability. Next, the Court overruled the objections of defendant Apollo to the plaintiffs‟ motion to amend their complaint and add a claim of “inducement by misrepresentation” in connection with the limitation of liability on the bill of lading, because it was unable to conclude from the bill of lading exhibits whether plaintiffs had failed to allege sufficient facts. Finally, the Court denied plaintiffs‟ motion to amend and add a claim of negligence against the defendant warehouseman, Andrews, alleging that Andrews was negligent because it permitted the plaintiff‟s household goods to be damaged by mold during storage in Andrews‟ warehouse, and that Andrews knew or should have known that mold would be excluded under the plaintiffs‟ insurance policy. The Court ruled that Andrews could not be said to have caused the loss of any such insurance.
6. PCI Transportation, Inc. v. Fort Worth & Western Railroad Company, 2005 th Cir. 2005) (rail contract, removal, preemption). The U.S. Court U.S. App. LEXIS 15251 (5
of Appeals for the Fifth Circuit affirmed a decision of the District Court denying the plaintiff‟s motion to remand the case to the state court and plaintiff‟s motion for preliminary injunction.
Plaintiff PCI Transportation operated a distribution warehouse in Fort Worth, Texas that was served by the defendant railroad‟s spur. Although the parties had entered into a one-page letter
agreement specifying the number of demurrage-free days and the number of switches per day to which PCI would be entitled, a dispute evolved nonetheless, and PCI filed suit in state court alleging that the railroad had violated their agreement and engaged in various practices that resulted in improper demurrage fees being charged to PCI. After the railroad removed the case to federal court, PCI moved to remand the case to state court, claiming that its dispute with the railroad was exclusively within the scope of the one-page contract and that the contract was not subject to STB jurisdiction under 49 U.S.C. ?10709. The Court rejected this argument, finding that the contract‟s coverage was not exclusively within the scope of ?10709 and that the injunctive relief PCI sought was broader than that which the contract contemplated. The Court also denied the plaintiff‟s motion to remand, citing its own prior decision in Hoskins v. Bekins
Van Lines, which applied the complete preemption test in response to the Supreme Court‟s 2003 decision in Beneficial National Bank v. Anderson. Finally, the Court denied PCI‟s request for a
preliminary injunction because PCI had failed to establish a substantial likelihood that it would prevail on the merits, as it had never submitted the contract to the District Court for review.
7. Royal Air, Inc. v. AAA Cooper Transportation, Inc., 2005 U.S. Dist. LEXIS
14880 (W.D. La. 2005) (unsigned bill of lading; released rate). Plaintiff sued the defendant
motor carrier, AAA Cooper, for damage to a used airplane engine transported from Louisiana to Oklahoma. The carrier obtained a clear delivery receipt at destination, and about one month later the shipper filed a claim for concealed damage. AAA Cooper denied the claim due to the clear delivery receipt but later offered to settle for $400 based on the $0.50 per pound (for used equipment) limitation of liability in its tariff. Significantly, the bill of lading issued by the carrier WSC/TLA/Case Summaries/November 2005 3
at origin was not signed by the shipper but contained the now-standard “Note 2” which referred
to the possible application of a limitation of liability. The defendant removed the case from state to federal court and filed a motion for partial summary judgment on the released rate limitation. In granting the defendant‟s motion, the District Court noted that the signing of the bill of lading
by the shipper was not required so long as the bill of lading was accepted by the shipper, and that acceptance constitutes the shipper‟s agreement to its terms. The Court concluded that plaintiff‟s mere failure to sign the carrier‟s straight bill of lading did not in and of itself preclude defendant from limiting its liability in accordance with its tariff. The Court also ruled that the Carmack Amendment preempted plaintiff‟s request for attorneys‟ fees.
th Cir. 8. The National Hispanic Circus, Inc. v. Rex Trucking Inc., 414 F.3d 546 (5
2005) (special damages). The defendant motor carrier lost a set of the plaintiff‟s circus
bleachers, as a result of which the plaintiff circus had to rent replacement bleachers and ultimately order a new set of bleachers costing $87,500, plus shipping of $36,000. Three months 3later the defendant located the trailer containing the original lost bleachers. At trial the jury
awarded the circus $123,000 in damages for its purchase and shipping of the new bleachers. The defendant appealed the District Court‟s denial of its motion for judgment as a matter of law, in which it argued that the Court erred by permitting the jury to decide the question of foreseeablility. The Fifth Circuit Court of Appeals affirmed the District Court‟s denial of the defendant‟s motion and ruled that the District Court had properly submitted the issue of foreseeability to the jury for determination. The Court also rejected the defendant‟s argument that the District Court erred in excluding from evidence the opinion testimony of its claims manager as to the resale value of the original “found” bleachers because he had no first-hand
knowledge or experience with respect to the resale value of used, custom made bleachers. The Court rejected the defendant‟s argument that it did not actually “lose” the bleachers but only “misplaced” them for several months and therefore it should be liable only for damages resulting from the rental value of the temporary bleachers. The Court observed that although, ordinarily, the measure of damages is the difference between the market value of the goods at the time of delivery and the time when they should have been delivered, this case was one in which awarding such “market value” diminution would not be appropriate because the award would not fairly compensate the plaintiff for its actual loss. Since the plaintiff circus required custom made bleachers to fit its tent, the cost of the new bleachers was a proper basis for calculation of damages.
9. Hewlett-Packard Co. v. Brother’s Trucking Enterprises, Inc., 373 F. Supp. 2d
1349 (S.D. Fla. 2005) (broker liability). Plaintiff contracted with defendant Salem Logistics,
Inc. to transport a shipment of electronic equipment from California to Florida. Through an 4Internet freight matching website, Salem hired defendant Brothers Trucking Enterprises, Inc. to
perform the transportation, but the shipment was stolen when the vehicle was left unattended in Hialeah, Florida. Salem moved for summary judgment on the plaintiff‟s claims of carrier
liability under the Carmack Amendment and in negligence, claiming it was not the carrier. The Court denied Salem‟s motion, ruling that there remained genuine issues of fact for trial as to
3 Curiously, the carrier did not tender delivery of the “found” shipment, but merely told the circus where it was located, requiring the circus to send a tow truck to pick it up. 4 Brothers defaulted in the case.
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5 it had made to whether Salem was acting as a motor carrier because of various representationsthe shipper concerning the transportation services and savings the shipper would enjoy by using Salem. The Court found that Salem‟s representations suggested that its actions were not limited
to arranging transport, and that a fact finder could find that it was acting as a motor carrier. The court also denied Salem‟s motion on the negligence claim, ruling that although the Carmack Amendment applies only to carriers, if Salem were found to be a broker, it could be liable in negligence based on the facts of the case.
10. Roadmaster (USA) Corp. v. Calmodal Freight Systems, Inc., 2005 U.S. App. rdLEXIS 23203 (3 Cir. 2005) (broker liability). Roadmaster sued defendant Calmodal for
breach of an oral agreement dealing with the interstate transportation of goods, contending that Calmodal acted as an interstate motor carrier, rather than as a broker, as defined by the Carmack Amendment. Calmodal denied liability, claiming it acted only as broker in arranging for the transportation of the goods, and counterclaimed for $238,000 in unpaid invoices it had submitted to Roadmaster. The U.S. Court of Appeals affirmed the judgment of the district court that Calmodal was not liable for the value of the goods transported because its status was that of a broker, not a carrier. The Court rejected Roadmaster‟s argument that its contract with Calmodal was invalid because Calmodal was unlicensed, because Roadmaster had not raised that argument in the district court. Interestingly, the Court also held that even if Roadmaster‟s argument had been timely made, and if Calmodal had operated illegally without a broker‟s license, the civil penalty for such illegal operation is prescribed by 49 U.S.C. ? 14901(a) and it would be inappropriate for the Court to “add judicially to the remedies” by rendering a