Volume 2, Issue 9 - May 15th, 2014
The U.S. Supreme Court has upheld a federal appeals court ruling that limitation of cargo liability must be specifically included in the bill of lading governing the shipment, not just in the carrier’s tariff.
“Carriers are well advised to review current business practices to ensure that limitations of liability are being incorporated as specifically as possible into every customer transaction, said Marc S. Blubaugh, an attorney with the law firm of Benesch Friedlander Coplan & Aronoff LLC.
“Shippers and carriers will both benefit from using precision in their contracting practices.” Blubaugh observed.
In the case under review, CSX Transportation had damaged an electrical transformer worth about $1.3 million which the shipper, ABB Inc., said amounted to more than $550,000.
The railroad contended its liability was limited to a maximum of $25,000 under the bill of lading because it had incorporated a reference to a $25,000 liability limitation in a separate price list.
However, the appeals court decided that the bill of lading was silent regarding the extent of CSX’s liability. The space on the BOL labeled “rate authority” – where a notation regarding rate and liability normally was listed – had been left blank. (ACWI Advance, 3-31-14, p. 3)
Because other appeals courts have ruled differently, right now this decision applies directly only to movements within the Fourth Circuit’s jurisdcition, including the states of West Virginia, Virginia, Maryland and North and South Carolina.
However, given the Supreme Court refusal to hear this case, other courts that have not yet ruled on the issue may chose to follow the Fourth Circuit’s example in future cases.