Sour pickles not spoiled

Indiana has enacted an anti-indemnification law largely based on the American Trucking Associations’ model anti-indemnification legislation and supported by the Indiana Motor Truck Association. The law applies to contracts entered into or renewed after June 30, and generally renders unenforceable indemnity provisions in motor carrier transportation contracts. Shipper-driven contracts often require motor carriers to indemnify or hold the shipper harmless for its negligence or even intentional misconduct.

Yellow Corp. did not violate the Americans with Disabilities Act when it terminated a driver for unsatisfactory job performance and for making false statements on his employment application by failing to disclose an accident, the U.S. Court of Appeals for the 10th Circuit ruled. The court said the driver, Ralph Endlich, failed to
provide any evidence of how Yellow regarded him as being substantially limited in any major life activity.

Several major TV programmers – including ABC, CBS and Fox – filed a federal lawsuit against Flying J, charging the truck stop chain with copyright infringement and unfair competition for replacing regularly scheduled TV commercials with ads sold by the chain that specifically target truckers and can be viewed in Flying J’s driver lounges. Virginia Parker, Flying J’s marketing director, said that SegOne – the company that supplies the technology that enables Flying J’s service – and its legal representatives “believe that the plaintiffs’ claims are without merit.”

Q We recently delivered a load of pickles sealed in glass jars, packaged in boxes and shrink-wrapped onto pallets. At delivery, the trailer seal had been broken, but the freight clearly was intact; none of the pallets had been moved, the shrink wrap was not cut, the boxes were not open and the lids were still on each pickle jar. Still, the consignee rejected the load, and the shipper – out of fear of product liability or possible terrorist contamination – destroyed it and demanded we pay for the unmitigated loss. What are my options?

A You are in a fine pickle, but I do not think you are liable for the loss under this unique fact situation. There is no evidence to suggest that the absence of the seal, whatever the cause, was a result of the act of a terrorist, or that the shipment was in any way contaminated as a result. There currently is no federal mandate that foodstuff shipments be delivered with seal intact or that the absence of a seal requires destruction or quarantine of the goods. The shipper would be hard-pressed to prove that there was any foundation for its fear of contamination, since the shrink wrap, the boxes and the jar lids all were intact.

Clearly, the consignee has the duty to mitigate any prospective loss and to accept a shipment that is not “practically worthless.” If someone with a larcenous heart broke the seal in transit, more than likely they concluded a load of pickles could not be fenced easily. To believe someone intentionally contaminated the pickles is far-fetched.

Unless you signed some contractual provision that waived the shipper’s duty to mitigate or allowed unrestrained discretion under these odd circumstances, I do not believe the shipper can establish your liability under the statute.

Also, one of the five common law exceptions to liability is “act of the public enemy.” That exception is little used and does not apply to garden-variety thieves. Yet, our nation has declared “war on terrorism,” and if a terrorist were to contaminate a water supply or poison the food chain, no doubt the public enemy exception could be argued. It follows that a shipper’s decision to destroy a load out of fear of such an action could similarly qualify as an exclusion to liability.

Finally, it should be noted that often seal-intact requirements exist for fungible goods like bulk shipments of flour, corn syrup, etc., but the possibility of contamination to individually wrapped and boxed goods is a different matter.
Henry Seaton is a transportation lawyer who represents carriers.

Estes loses release value case
Estes Express Lines last month lost its appeal of a judgment of more than $145,000 for damage to electrical equipment it transported on behalf of Emerson Electric Supply Co. Estes had declared that its liability for the equipment was limited to 10 cents per pound, or $1,020.

The U.S. Court of Appeals for the Third Circuit upheld the district court’s conclusion that Estes could not limit its liability pursuant to its tariff because it failed to provide Emerson two or more different rates. Estes had argued that the ICC Termination Act of 1995 eliminated the requirement under the Carmack Amendment that a carrier provide a shipper an opportunity to choose between two or more different rates with corresponding levels of liability.

Although the ICC Termination Act did change the wording of the relevant section of the Carmack Amendment, Congress did not clearly indicate a change to previous law, the appeals court ruled. Nor does the legislative history reveal an intent to alter the requirement that carriers offer two or more rates if they want to provide for limited liability, it said.

The court also rejected Estes’ two alternate arguments that the requirement for two or more levels of liability was satisfied because of (1) the presence of a declared value box in the bill of lading and (2) the offer of different limitations of liability depending on how the shipment was packaged. The Third Circuit’s opinion in Emerson Electric Supply Co. vs. Estes Express Lines Corp. (Case No. 05-2654) is available online at this site.

FedEx Ground ordered to pay $61 million
FedEx Ground suffered a judgment of $11 million in compensatory damages and $50 million in punitive damages over alleged harassment by the Oakland, Calif., terminal of two drivers of Lebanese descent. The company said it planned to appeal the judgment from a Superior Court jury in Alameda County, Calif.