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Logo Icon TRANSPORTATION: THE CARMACK AMENDMENT: LIMITING LIABILITY OF LOST OR DAMAGED CARGO

The Carmack Amendment is a uniform national liability system for interstate carriers which provides certainty to both carrier and shipper. It specifically allows a carrier to require that all claims for loss or damage by a shipper be made in writing within nine months from the date of the loss. It also allows a carrier to limit its liability if all prerequisites have been met.

The Carmack Amendment requires a carrier to basically insure the loss or damage of a shipper’s cargo in most instances. To make a case against a carrier, a shipper must show that: (1) the shipper delivers the goods to be transported free of damages; (2) that the goods were damaged in some way prior to delivery; and (3) the amount of damages that the goods suffered.

The Carmack Amendment preempts state law. In California, the Ninth Circuit has specifically stated that common law causes of action are preempted by the Carmack Amendment pursuant to Hughes v. United Van Lines, Inc. (1987) 970 F.2d 613. In that case, the shipping contract had called for the interstate transportation of household products and included a $0.60 per pound limitation of liability. Hughes Aircraft, the shipper, argued that its state law claims for breach of contract and negligence were not preempted where the common carrier was operating on a contract basis. The Court stated that Hughes Aircraft’s argument was “completely meritless” and ruled that the Carmack Amendment preempted all of Hughes Aircraft’s state law causes of action.

The basic rules for limiting liability under the Carmack Amendment include the carrier offering the shipper an agreement that adheres to the following steps: obtain an agreement from the shipper on a choice of the carrier’s liability; give the shipper a choice between two or more levels of liability; obtain the shipper’s agreement as to their choice of carrier liability limit; and, issue a receipt or a bill of lading to the shipper to memorialize the agreement modifying liability.

Poole & Shaffery provides exceptional legal guidance navigating the complexities of trucking issues such as cargo damage/loss. As the law firm for your business, we take pride in providing you with solutions in all aspects of the transportation industry.