The Carmack Amendment governs the liability of motor carriers for goods lost or damaged during transportation. It provides that a motor carrier is liable "for the actual loss or injury to the property" incurred during transportation.

    However, there is an exception to this rule under which the motor carrier may establish rates for the transportation of property under which the liability of the carrier for such property "is limited to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances surrounding the transportation". In order to effectively limit its liability, a motor carrier must maintain a valid tariff (or if the motor carrier is not required to file its tariff, it must provide the shipper upon request a written or electronic copy of the rate, classification, rules, and practices upon which the rate is based) and must provide the shipper with a choice of liability coverage.

    In a recent case decided by a federal court in Illinois, the factual situation was that the motor carrier never expressly informed the shipper that it was paying a lower freight rate in exchange for the motor carrier's limited liability or that the shipper could pay more for full liability. However, the bill of lading, which was prepared by the shipper, incorporated the motor carrier's unfiled tariff, which contained those limitation provisions.

    The court grappled with whether the law requires a bill of lading provision offering different rates for different carrier liability. The court concluded that a tariff provision is enough when you're dealing with a sophisticated shipper who should know to request the tariff. The statute provides that where the motor carrier is not required to file a tariff, it shall on the request of the shipper provide it with "the rate, classification, rules, and practices upon which any rate applicable to a shipment, or agreed to between the shipper and the carrier, is based". Under these circumstances, the court determined that the shipper had been given a fair chance to opt for full liability.

    The federal court in Illinois came to a different conclusion than some other courts involving this issue of whether the statute requires a bill of lading provision offering different rates for different carrier liability. Also, the holding in this case appears to have been based on the fact that the motor carrier was dealing with a sophisticated shipper. A different court confronted with this issue could arrive at a different conclusion.

This article is not meant to provide legal advice or offer solutions to individual problems. Specific cases should be discussed with an attorney. The opinions stated in this column are strictly those of the author, and do not represent an official position of the publisher.

William Gray, a transportation attorney, is a partner in the Law Firm of Vuono & Gray, LLC in Pittsburgh, PA. (412) 471-1800