TLA Feature Articles and Case Notes

rejected shipper’s claim that the carrier’s breach of part of the contract warranted voiding the entire agreement.26 The Court relied on the parties’ pricing agreement which included a severability clause reciting that if any part of the agreement is declared unlawful or unenforceable, the rest of the agreement would remain in effect.27 Finally, the Court found the shipper intentionally opted for a $.60 per pound released valuation in exchange for lower transportation rates.28

Sixth Circuit

In a 2018 ruling, the Sixth Circuit Court of Appeals noted in dicta that it has never applied the material deviation doctrine and held the issue moot because the motor carrier did not comply with “fair opportunity” criteria to limit its cargo liability.29

In Tokio Marine & Nichido Fire Ins. Co., Ltd. v. Flash Expedited Services, Inc.,30 an Ohio federal court declined to apply “material deviation” to void the carrier’s limitation of liability where there was no agreement for extra safety measures and no consideration was paid to the carrier for such measures. In The Limited, Inc. vs. PDQ Transit, Inc.,31 the motor carrier moved to dismiss the plaintiff’s material deviation claim. The judge accepted as true the plaintiff’s factual allegation that the carrier’s driver left the loaded trailer unhooked at shipper’s facility when no one was present and failed to secure it before leaving. When the goods were stolen, the shipper argued that the carrier “materially deviated” from the contract by deliberately abandoning the merchandise. The Court rejected that argument:

Plaintiffs in this case do not allege in their complaint that they paid a higher fee for a specialized service. The only specialized service that they requested is that the trailer should not be left unhooked and the PDQ drivers were instructed to at all times stay with the LDS loaded trailers. There was no higher fee paid for the service so Praxair is not applicable here.32

Seventh Circuit

Barrett Moving & Storage Company v.

All States Air Cargo33 involved a shipment of computer equipment from Illinois to Alaska. The shipper tendered the equipment to an air freight forwarder who arranged for motor transportation. The equipment was transported pursuant to an airbill limiting the carrier’s liability to $.50 per pound. The shipper did not declare or pay for a higher value on the goods. After the equipment arrived damaged, the shipper invoked “material deviation,” claiming the shipment was supposed to go by air, but instead went by truck, substantially increasing the risk. An Illinois District Court was unpersuaded and declined to apply maritime deviation to inland transportation.34 Because the airbill conditions allowed the goods to be tendered to a motor carrier “unless shipper gives other instructions hereon,” the Court found no unreasonable diversion of the goods.35 The shipper presented evidence of an oral request for air shipment. The Court found that, even if the oral instruction was made, it conflicted with the written airbill and the plaintiff could have insisted on air shipment by including a written instruction to that effect on the airbill.36 An Indiana federal court recently held, “Since the [Carmack] amendment, Congress has not adopted a national deviation doctrine … and the Court declines the invitation to create such an exception to a carefully crafted legislative framework.”37

Eighth Circuit

In Rocky Ford Moving Vans, Inc. v. U.S.,38 the Eighth Circuit Court of Appeals issued a benchmark decision in one of the earliest federal appellate court rulings on material deviation. There, a household goods motor carrier diverted a shipment from its warehouse to another facility which was destroyed by fire. Rejecting material deviation, the Eighth Circuit held:

In adopting the Carmack Amendment, Congress intended to impose a single uniform federal rule upon the obligations of carriers operating in interstate commerce ... [W]e agree with [the District Court] that admiralty law doctrine has no application in the context of regulated interstate commerce, which is governed by the overriding federal policy of uniformity.39

The Court of Appeals was also unmoved by the Government’s attempt to differentiate between a carrier’s willful and negligent contract breaches for purposes of enforcing its limitation of liability:

Nor do we find merit ... in the government’s attempted distinction between willful breaches of carriage contracts and those which are merely negligent ... This is not a case where the carrier has purposefully converted the entrusted property for its own use or gain [citations omitted] ... In any event, [the carrier’s employee] did not willfully ignite the property in question.40

Ninth Circuit

In Deiro v. Am. Airlines, Inc.,41 the Ninth Circuit Court of Appeals rejected the plaintiff’s “gross negligence” exception to the carrier’s limitation of liability. The Court held under federal common law, only the carrier’s conversion of the shipper’s property for its own use vitiates a limitation of liability.”42 A year later, the Ninth Circuit held an airline’s requirement that a passenger check luggage containing her husband’s cremated remains, contrary to its tariff rule requiring passengers to personally carry “valuables,” barred the airline from enforcing its limitation of liability under the theories of frustration of consideration, waiver and estoppel.43

Personal Communications Devices v. Platinum Cargo Logistics, Inc.44 involved the theft of a shipment of cell phones transported under a shipper-prepared bill of lading declaring a $35,000,00 per shipment value. The shipper argued that the carrier’s failure to properly train its drivers and their failure to guaranteed security precautions was a material deviation warranting nullification of the bill of lading declared value limitations. A California federal court rejected the shipper’s contention that “… material deviation should be extended to the Carmack context. To the contrary, the Ninth Circuit has applied Carmack Amendment limitations of liability even when a carrier fails to provide a special condition in the contract of carriage.”45

Tenth Circuit

In Conoco, Inc. v. Andrews Van Lines, Inc.,46 the motor carrier moved to limit its liability to $.60 per pound per article under its bill of lading. The shipper argued the carrier’s abandonment of the goods was a material deviation. An Oklahoma federal court rejected the shipper’s argument and enforced the carrier’s limited liability.47 Relying on Rocky Ford, the Court held the material deviation doctrine inapplicable.48

Eleventh Circuit

Two decisions from the Southern District of Florida merit attention. In Lloyds v. B.E. Logistics, Inc.,49 a shipment of computers was stolen when it was left unattended in an unlocked vehicle. Surveying precedents from other circuits, the Court rejected the material deviation theory:

[T]hese security measures were not negotiated specifically for the Plaintiff’s deliveries, but are B.E. Logistics’ general security protocols. Moreover, Plaintiff does not point to any evidence that special consideration was paid, above B.E. Logistics’ usual shipping rates, for added security measures . . . The security measures are not specific to the shipment in question and there is no evidence of negotiation or additional consideration

Endnotes