In a case that will be of interest to our trucking and transportation clients, a Mississippi federal court recently considered the applicability of the Carmack Amendment, 49 U.S.C §14706, et seq., in Timberlake Foods, Inc., v. Paladin Freight Solutions, Inc., 2018 WL 1935862 (N.D. Miss. 2018).
Timber Lake Foods, Inc. v. Paladin Freight Solutions, Inc. Background
The suit arose after a truck transporting frozen chicken breasts from California to Texas was involved in a car accident that destroyed the entire load. The shipper, Timber Lake, filed suit in Mississippi state court seeking to recover the full amount of the sale. The carrier, Paladin Freight Solutions, removed the case to federal court on the basis of federal question jurisdiction, 28 U.S.C. §1331. For unspecified reasons, the parties subsequently agreed to a remand of the case, but the shipper, Timber Lake, sought fees and costs incurred as a result of the removal, an award allowed if the removing party had no reasonable grounds for removal.
Did the Carmack Amendment Apply in This Case?
The court first noted the supremacy of the Carmack Amendment as the exclusive cause of action for loss or damages to goods arising from the interstate transportation of goods by a common carrier. If the Carmack Amendment applied to the shipment, it preempted any state-law claims, and Timber Lake’s only cause of action would be a federal one under the Carmack Amendment, giving the court jurisdiction under 28 U.S.C. §1331.
Timber Lake argued that the carrier, Paladin, had no objectively reasonable basis for believing the Carmack Amendment applied to the shipment because the goods—frozen chicken breasts—were exempt under 49 U.S.C. §13506, which exempts from the Carmack Amendment several categories of goods, including ordinary livestock.
The Court’s Opinion in Timber Lake Foods, Inc. v. Paladin Freight Solutions, Inc.
In its opinion, the court noted several cases involving shipment of chicken breasts, which applied the Carmack Amendment without analysis. The absence of discussion, however, did not create a holding that frozen chicken breasts are exempt, but rather that the applicability of the Carmack Amendment to those shipments of chicken breasts was such a fundamental assumption that it did not warrant a discussion by either the parties or the court. Therefore, there was an objectively reasonable basis to believe that the Carmack Amendment applied and that the court had jurisdiction, permitting removal, making an award of fees and costs inappropriate.
With the increasing shipment of livestock across state lines, it is possible that shippers will argue for extensions of the exceptions found in the Carmack Amendment so as to seek potentially higher recoveries in state court and with state-law claims, though the shipper in Timber Lake Foods, Inc., was rebuffed.