Safe Harbor Trucker’s Limitation of Liability Under the Carmack Amendment

Safe Harbor Trucker’s Limitation of Liability Under the Carmack Amendment

Motor Carriers, that is interstate trucking companies, are granted the valuable right to define their relationship with shippers through a tariff, which is essentially a document setting out the rates, rules, and classifications pertaining to a shipment of goods.  At one time truckers were required to file these tariffs with the Interstate Commerce Commission (I.C.C.), but today they no longer have to file the tariffs anywhere.  However, the tariffs must be produced to any shipper who requests them.  The most critical element of a tariff will typically be the limitation of liability.

The power of a properly maintained tariff is illustrated by Tronosjet Maint., Inc. v. Con-Way Freight, Inc..[1]  Tronosjet shipped some equipment using Con-Way, the motor carrier, and the equipment arrived damaged.  Tronosjet filed its claim first with Con-Way, and then in court, seeking the full value of the damaged cargo, which was $165,000, “plus reasonable and necessary incidental damages.”  Since Con-Way maintained a tariff—that is, since Con-Way created a document containing its standard terms and conditions and incorporated it, or referred to it, in the bill of lading—Con-Way succeeded in court on a quick and easy motion in which its liability was capped at $819.71.  The Tronosjet decision was issued as a memorandum opinion, which essentially indicates that the decision was an easy one for the court.

The decision was easy for the Tronosjet court, and hundreds like it, because the motor carrier (1) created a tariff, (2) put the tariff on its website, (3) allowed a space on the bill of lading for the shipper to declare the value of the goods and agree to pay for the increased insurance to cover the full value of the goods, and (4) issued the completed bill of lading prior to the beginning of the shipment.  Other trucking companies which adopt these same practices will also be able to avoid drawn-out, contentious litigation with their customers in lieu of a quick, predictable claims process.

The recommended four-step safe harbor is a response to the popular test derived from the case Hughes v. United Van Lines, Inc.[2]  Under the Hughes test, a carrier could limit its liability if it (1) maintained a tariff within the prescribed guidelines of the Interstate Commerce Commission; (2) obtained the shipper’s agreement as to her choice of liability; (3) gave the shipper a reasonable opportunity to choose between two or more levels of liability; and (4) issued a receipt or bill of lading prior to moving the shipment.  Since the I.C.C. was abolished in 1995, a carrier now only needs to make its tariff available to a requesting shipper in order to satisfy the first prong.  Nonetheless, a carrier can eliminate any doubt as to whether or not its tariff was made available by simply putting its tariff on its website.  Consider the “Tariff Library” made available on the website of Con-Way’s successor, XPO Logistics, available at http://xpo.com/content/tariff-library.

The American Moving and Storage Association (AMSA) provides valuable guidance on creating a tariff, though, notably, they do recommend legal guidance because of the various regulatory requirements.  The AMSA guidance should be available at http://www.promover.org/content.asp?pl=62&sl=3&contentid=164.

Finally, the carrier is required to provide a choice to the shipper of different levels of coverage.  The most-recognized, approved method of doing so is by allowing the shipper to declare a value of the goods on the bill of lading.  The concept is that if the shipper does not declare a value, the shipper is choosing the default option, which is the lowest limitation of liability applicable to the particular class of goods being shipped.  A number of carriers will provide a section on declared value in their tariffs specifying these defaults.  Additionally, the Standard Trucking Bill of Lading (STBOL) provides in its terms and conditions that the carrier will not be liable for any item of extraordinary value not specified in the bill of lading.  The space to declare a value is copied below, as it appears on the STBOL.

shipping hrt

Of course, a tariff provides the trucking company the ability to address many issues beyond simply limitation of liability.  These include but are not limited to specifying the claim process and procedures (within certain limits), detention charges and FSC fuel charges, procedures for handling hazardous materials and other dangerous shipments, and inspection procedures.

Tariffs and limitations of liability become exponentially more significant as a motor carrier adds customers.  Nonetheless, a properly maintained tariff can be valuable for even the smallest of mom and pop motor carriers.

 

[1] 2011 U.S. Dist. LEXIS 84503, 2011 WL 3322800 (S.D. Tex – Hous. Aug. 2, 2011).

[2] 829 F.2d 1407, 1415 (7th Cir.1987), cert. denied, 485 U.S. 913, 108 S.Ct. 1068, 99 L. Ed.2d 248 (1988)).

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