The U.S. District Court for the Middle District of Florida has issued an extensive opinion and order in a three-year saga over a cargo claim involving a truckload of beef that had shifted in transit. The decision provides clarity on several important legal issues for the trucking industry. The issue was whether the motor carrier, Titan Trans, was liable to the broker, Scotlynn USA Division (bringing the claim on assignment), for damage when the beef that was packaged in large cardboard containers tipped over inside Titan’s trailer during transportation.

Taylor & Associates represented the motor carrier, Titan Trans, which won in several ways. A 3-day trial was conducted in April 2021 before Judge Badalamenti via Zoom. This decision carries important takeaways for shippers, receivers, transportation brokers, and motor carriers. It guides shippers in taking care when asserting responsibility for loading and security cargo. It guides receivers and brokers in handling rejection of a shipment upon arrival, proper inspection and assessment of damages, and mitigation of damages. It guides motor carriers not only in the acceptance of freight where they are unable to load and secure the cargo or where poor loading is not readily apparent, but it also guides motor carriers on handling the rejection of cargo upon delivery.

A claimant must show the amount of cargo damage.

First, under the Carmack Amendment claim, in order to be successful in recovering damages, the claimant must show (i) the shipper delivered the goods to the motor carrier in good condition, (ii) the goods were tendered for delivery in a damaged condition, and (iii) the amount or value of the damage to the goods. Therefore, a Carmack Amendment claim cannot stand if the claimant fails to establish any of the three elements required, and each element is equally important. In this case, the claimant, the broker, failed to make a prima facie Carmack Amendment case because it did not establish the amount of damages. While it showed that the beef was delivered to the carrier in good condition and it arrived in a damaged condition, there was evidence that the beef was still very valuable, fit for human consumption, and could be re-worked and subsequently accepted. Our firm emphasized during the trial that Scotlynn had presented zero evidence of the amount of the damages at the time of delivery by Titan. The reason the beef had to be thrown out was not due to any shifting of the freight in transit but to the negligence of the broker after it was instructed to re-deliver the beef. The judge agreed.

The receiver had rejected the entire load of shifted beef as “damaged.” The court found that although the beef had been technically damaged due to shifting (meaning, it was not in the same condition it had been upon tender to the carrier and it had to be reworked in some form), as a result of the receiver immediately and improperly rejecting the beef as worthless, failing to have the load inspected at its facility, and the shipper and broker’s “stumbling actions over the next several days” concerning salvage, the broker was unable to establish and the court was unable to ascertain the amount of damages. This caused the Carmack Amendment claim to fail.

Shippers may be liable if they load and secure the cargo and the carrier is free from negligence.

Second, Titan showed that the shipper was responsible for loading and securing the beef, and that Titan’s driver was free from negligence. One of the exceptions to Carmack Amendment liability of motor carriers arises as a result of an act or default of the shipper, such as where the shipper takes responsibility for loading and securing the cargo. In this case, even though the bill of lading did not note “shipper load and count,” there was sufficient evidence to prove that the shipper had taken full responsibility for loading and securing the beef. Having shown that this was the shipper’s responsibility, Titan then showed that its driver was not negligent or otherwise at fault in failing to discover the loading error or in transporting the beef. The responsibility for the damage, therefore, fell on the shipper’s shoulders.

Receivers and brokers have an obligation to help mitigate damages.

Third, Scotlynn and the receiver did not mitigate damages. The receiver, and the broker acting on its behalf, were responsible for knowing how to properly take care of the beef after it was rejected for shifting. It needed to be reworked, and it needed to be reworked quickly due to the shelf life of fresh product. The Court found that the obligation to instruct on and handle the reprocessing of the beef after Titan’s delivery falls on the broker and the receiver, and because the quality of the beef was degraded due to delays in such instructing and handling, Titan was not responsible for those damages caused by such delay.

Indemnity claims by brokers must be separate and distinct from the cargo claim, and indemnity claims may not be made for damages caused by the claimant.

Fourth, Scotlynn’s contract indemnity action failed because its Carmack Amendment claim failed. The court noted that Scotlynn also failed to show separate conduct that would avoid the preemption of its contract action. Additionally, the Court noted an indemnity claim will not succeed when the claimant is at fault for the damage.

This important 59-page decision provides guidance in Florida, as well as further sound interpretation of the Eleventh Circuit’s prior decision in UPS Supply Chain Sol., Inc. v. Megatrux Transp., Inc., 750 F.3d 1282, 1285 (11th Cir. 2014), regarding contract claims by brokers that coincide with Carmack Amendment cargo claims.

By Kristen MJ Johnson, Bryan Nelson, and John L. Marchione