Just stick to Carmack

The Uniformed Services Employment and Reemployment Rights Act (USERRA), which allows members of the armed forces to sue over employment rights, does not override contract provisions that require arbitration between employers and employees, the U.S. Court of Appeals for the Fifth Circuit ruled. For the appeals court decision, visit this site.

Illinois legislation that would restrict the idling of diesel engines has passed both the House and Senate. HB 4782 would prohibit idling for more than 10 minutes in the Chicagoland area and in the St. Louis Metro-East Region. If convicted, a violator could be fined $50 for a first offense and $150 for a second or subsequent offense within any 12-month period.

An unlicensed Los Angeles insurance agent has been sentenced to one year of summary probation and ordered to reimburse the California Department of Insurance $10,000 for investigative costs for his crime of theft of premiums. According to investigators, Jose Miguel Marquez collected $18,000 during an 18-month period from several clients for commercial truck insurance; Marquez kept the money and issued bogus proof-of-insurance documents.

U.S. District Court on April 10 sentenced Andre Donaldson of Detroit to a year in prison for helping sell fake driver’s licenses, including commercial driver’s licenses. According to prosecutors, Donaldson referred people who wanted fake licenses to Regjean Welch, a former employee of the Michigan Department of State, who supplied them for $100 to $500 each.

Q On a brokered load, the consignee rejected a perishable shipment from Texas to California, and the goods were destroyed – although they were perfectly fit for human consumption. The broker paid the claim in full and sued us in Oregon, where a default judgment was entered. (We never got notice of the suit.) As the plaintiff, the broker now seeks to domesticate the judgment in our home state. What recourse do we have?

A You have more problems than Carter has liver pills. Apparently, you have selected an agent for a service-of-process company that does not have attorney agents in each state, and as a result, you did not get the suit papers in a timely fashion. You have recourse to the agent and can contest the default, but it will cost you.

Of greater instructional interest is how and why you let yourself get sued under these circumstances. In this column, I have cautioned carriers repeatedly to “watch what you sign.” As a carrier, you have a right under the standard terms and conditions of the bill of lading and the Carmack Amendment to expect a shipper and consignee to mitigate damages. You can and should establish service conditions that require a shipper to follow salvage procedures and file claims under federal regulations that allow for a proper insurance adjustment.

In this case, the broker – who under common law has no liability for cargo claims in the absence of its negligence – nonetheless claims it was required by its private contract with the shipper to pay for the full cargo loss without mitigation. It then in turn sued you for “indemnity,” claiming that you agreed to indemnify it by contract. Using this circuitous reasoning, the broker now claims it can trump the bill of lading terms and conditions, gut the preemptive effect of the Carmack Amendment, and overcome any common law duty the consignee had to accept and mitigate the damages.

All too frequently, I fear, this is what can happen when carriers, without thinking, sign broker- and shipper-prepared contracts and do not insist upon express incorporation of the Carmack Amendment, standard bill of lading terms and conditions, claims procedures and duty to mitigate.

Carriers should provide that all cargo claims are governed by Carmack, 49 U.S.C.