Q: We are a motor carrier and have a major customer who has some rigid ideas about the importance of seals.
On one recent load, our driver mistakenly took the load to the wrong consignee. They broke the seal, but as soon as they looked inside, they realized it wasn’t their freight. The driver corrected his error and then took the load to the correct address, but because the seal had been broken, the load was refused and the shipper is claiming full value of the load based on possible contamination. They won’t even allow us to salvage the load, but insist that it be destroyed.
The thing is, this was a load of canned and bottled drinks! The shrink-wrap on the pallets was intact, the cartons in which the drinks were packed were unopened, and, inside, the cans and glass and/or plastic bottles were also fine. We have no idea how the drinks could have been contaminated.
This company and its lawyers, though, tell us they need to protect themselves against possible lawsuits. One of the lawyers, for example, said a terrorist could use a syringe to inject some toxic substance through a plastic bottle to contaminate the contents and poison a bunch of people. They tell us the integrity of the seal is critical, and that if the seal isn’t intact on delivery, it’s their policy to treat the load as a total loss.
Are we liable for this claim and others like it? I have to tell you that we signed a contract with this shipper agreeing to the policy I’ve described, because they insisted on it and it was the only way we could get the business. For us, this is a major shipper, and the only way we can keep their business seems to be to pay claims such as this, which fortunately don’t happen very often. Can you help us?
A: Not unless you regard my telling you pretty much what you already know as “help:” that your shipper’s claims are rubbish, but that paying them is probably the only way you’ll keep that shipper.
In fact, I can’t even tell you with any certainty that you can legally avoid paying the claims. By any objective legal standard, the shipper hasn’t a leg to stand on; the claims are nothing more than a product of what amounts to organizational paranoia.
Trouble is, you say you’ve contractually committed yourself to paying them. I’d have to read the contracts to know this for sure, but please recall that carriers and shippers alike may “expressly waive any rights and remedies” under transportation law by contract (49 U.S.C. Section 14101(b)), and, further, that as a general rule of law, contracts aren’t subject to judicial oversight.
That means you already may have agreed to surrender your right to contest the claims you describe, notwithstanding that they’re substantively meretricious.
Now, if you hadn’t given up that right, you’d win this in a walk, should the shipper be so ill-advised as to sue. Contamination isn’t a matter of guesswork; it’s a question of proof, the burden of which falls initially on the claimant. Absent testing to show the contrary, there’s nary a shred of evidence that the seal-broken loads you describe are even arguably contaminated.
In particular, the scenario your shipper’s lawyer describes involving the syringe-wielding terrorist gives me the giggles. I mean, if somebody sticks a needle into a plastic bottle, the bottle doesn’t seal itself back up. The hole remains, and the contents will start leaking out. Take a sewing needle and try it if you like; just make sure the bottle’s sitting on something you don’t mind getting pretty wet pretty quick.
Actually, I think the shipper’s policy verges on insanity. It’s trusting to a tiny tinfoil seal to safeguard its goods and ignoring the much sturdier protection of shrink-wrap, cartons and unbreached cans and bottles. You think that seal can’t be bypassed? Not many criminals would agree.
So are the claims legally valid in the circumstances you describe? Of course not, other than by your contractual agreement. But will the shipper drop you flat if you either challenge that agreement or withdraw it for the future? Given what you tell me, I’d bet on it.
What you have is strictly a business decision: Pay the claims and keep the shipper, or contest them and lose it. I’d suggest you base that decision strictly on economics: Which is best for your bottom line? Just do the math.
Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.