Who is Liable for Carton Damage?

Who is Liable for Carton Damage?

Copyright 2008, Traffic World, Inc.

Q:

We had six ocean containers arrive from China into Seattle. Due to a need for expedited delivery of the product to Alabama, we contracted with a warehouse to perform the transload of the product from the ocean containers into over-the-road vans.

When the trucks arrived in Alabama, the product in four of the six vans was damaged - several thousands of dollars worth of damage in each van.

Apparently the drivers of the four vans with damaged product said, after they delivered the product, that "the warehouse in Seattle was just pushing the cartons out of the containers and they were dropping to the floor." Yet all four drivers signed for the freight in Seattle as "clean."

The company in Seattle has since gone out of the warehouse business, so we have no recourse there. Internally, I''m being told that we''ll probably "not get a dime" out of the trucking companies.

There''s where I pose the question: Why not? We supplied marine insurance on the ocean freight, but once the product was taken out of the containers and put into the vans, I would presume the liability falls upon the domestic trucker. Yes?

A:

I always hate it when co-workers run around talking gloom and doom like latter-day Cassandras about projects that aren''t even their affair, don''t you?

I especially hate it when they turn out to be right, as yours may well be.

The problem here is that this shipment was subject to two different liability regimes en route from China to Alabama - a maritime regime under the revised Hague Rules as codified in the Carriage of Goods by Sea Act, and a domestic trucking regime under the U.S. common law and the Carmack Amendment to the Interstate Commerce Act, now 49 U.S.C. ? 14706.

And the two regimes are incompatible, meaning that from a liability standpoint this wasn''t a through movement in which the carriers share liability wherever along the route the damage occurred. Each party, that is, contracted and acted independently, and you have to be able to show in whose custody it happened.

Your Seattle warehouse operator is also involved. But never mind about its going out of business - you couldn''t collect from them no matter what.

They''re under yet a third regime, which makes them liable only for damage resulting from their own negligence; and while you have the drivers'' parole evidence that they did act negligently, this is both self-serving (if you''d damaged the goods wouldn''t you try to pin the tail on somebody else''s donkey?) and contradicted by their clear receipts.

And the same clear receipts also mean you won''t be able to get anything from the ocean shipline, since they stand as evidence the shipment was undamaged after it left the shipline''s custody.

There does, however, remain some hope of collecting from the trucker. You don''t describe the damage in any detail, so I can''t be sure, but what you need to determine is whether the cartons as well as the contents were damaged.

I''m not talking about little dings and scrapes; I mean really blatant stuff. Gouges or holes in the pasteboard, deformed sides, broken closures, things like that - things that not even the most casual observer could miss, and which practically shout out that the contents aren''t intact.

It doesn''t even have to be every carton, just visible damage to some should be enough.

If such is the case, those clear receipts are going to come back to bite the trucker right in the rear. To the drivers'' testimony about careless warehouse handling you simply respond, "if they dinged it up this obviously then how come you signed for it clear?"

And you keep asking that right into the courtroom if you have to. Provided you can present clear evidence of visible damage - photographs or videotapes are best - I think most courts would find this constitutes proof that the damage took place while the trucker had your shipments.

To be sure there are other elements, such as: Were the drivers coerced by the warehouse into signing clear? But with four drivers that''s a lot of coercion; I doubt many courts would buy it.

Otherwise, however - if the damage was mainly or wholly concealed, with the cartons showing no signs of mishandling - I''m afraid your co-workers are right.

Such concealed damage could have occurred during the ocean voyage, during the transload, or during the domestic move. And without clear evidence of when it happened, you can''t hold any of the participants liable.

Of course, even if the damage was visible, that doesn''t necessarily mean the trucker was really responsible. Its drivers may have simply been too sloppy or lazy to make the extra effort to take exception at the time of pickup, and it may be unfair to hold the trucker liable.

But nobody ever said life is always fair. The carrier signed clear and delivered damaged. So long as the damage was apparent to the naked eye, that''s enough to render it legally liable wherever actual responsibility lies.



-- 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 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping. Later compilations by request.