Time is on your side – or not

Deadlines on claims are governed by federal law

Henry Seaton -- info@transportationlaw.comHenry Seaton -- info@transportationlaw.com

By Henry Seaton


Q  As a shipper, we are being dunned for waiver of discount by a less-than-truckload carrier for shipments that are more than two years old. Is this legal?

A broker now refuses to pay current freight bills because of a cargo claim it never processed with us that occurred more than four years ago. Is there a statute of limitations?



A  It is surprising that I should receive two questions concerning time limitations – one from a shipper and one from a carrier – in the same month. I previously have discussed time limits for freight charges and cargo claims, but a simple review of the applicable law probably is helpful.

As a result of deregulation, shippers were faced with millions in undercharge claims during the 1980s that led to

an important change in the federal statute concerning the collection of freight charges. Two time limits

are involved.

Overcharge/undercharge claims

Both shippers and carriers now are governed by the so-called 180-day rule for noticing up overcharges and undercharges. A shipper has 180 days from receipt of the initial freight invoice to contest the rate. “A shipper must contest the original bill or a subsequent bill within 180 days of receipt of the bill in order to have the right to contest such charges.” [See 49 U.S.C. 13710(A)(3)(b).]

Similarly, a carrier has 180 days from the initial invoice to submit a supplemental bill, notice of waiver of discount, or invoice for an adjusted amount. Failure to submit timely written notice results in barring overcharge and undercharge claims. “A carrier must issue any bill for charges in addition to those originally billed within 180 days of the receipt of the original bill in order to have a right to collect such charges.” [See 49 U.S.C. 13710(A)(3)(a).] [See Carolina Traffic Services of Gastonia, Petition for Declaratory Order, 1996 Federal Carrier Cases (CCH) ¶38,285 at 48,048.]

Moreover, the statute for suing to collect freight charges has been shortened from three years to 18 months. [See 49 U.S.C. 14705.] As a result of these notification and statutory changes, the important dates to remember are six months to post-audit and give notice, and 18 months to sue for outstanding freight charges.

Cargo claims

Pursuant to federal statute on cargo claims, a carrier may not by rule, contract or otherwise establish a period of less than nine months for filing a claim against it or a period of less than two years for bringing a civil action against it. [See 49 U.S.C. 14706(e).] Incorporation of the uniform or standard bill of lading – either by usage, by contract or in a carrier’s rules circular – will suffice to establish these deadlines for claims.

Delaying a response to a shipper’s claims won’t thwart a lawsuit.

It is important that a carrier ensure these deadlines are part of the transaction since the statute is permissive only. If not incorporated by contract, a shipper may file a claim subject only to the equitable doctrine of laches and any state law-applicable statute of limitations in contract or tort. Even if you did not have the benefit of the federal statute, four years to tell you about a claim does not seem equitable, and laches may apply if the applicable state law statute of limitations has not run already.

One other pointer to carriers is important: The two-year federal statute for bringing civil actions on cargo claims does not begin to run until the carrier gives written notice that the claim has been disallowed. As a result, simply delaying a response to the claim or not stating affirmatively in your response that the claim is denied only prolongs the statute.

Remember, whether you are a shipper or a carrier, these general rules of commerce can be altered in a written contract that expressly waives general principles of federal transportation law and statutes under 49 U.S.C. 14101(b). In the name of consistency and evenhanded treatment of shippers, brokers and carriers, I recommend that these statutes and time limits be accepted readily by all parties.

– Henry Seaton is a transportation lawyer who represents carriers.


Court lets ABF challenge YRC Worldwide-Teamsters deal

A federal appeals court on July 6 overturned a lower court’s ruling that ABF Freight System Inc. did not have standing to challenge a series of wage and benefit concessions reached between three YRC Worldwide Inc. entities and the International Brotherhood of Teamsters. The U.S. Court of Appeals for the Eighth Circuit in St. Louis ruled that the case be returned to the U.S. District Court for the Western District of Arkansas for further proceedings.

ABF was appealing U.S. District Court Judge Susan Webber Wright’s decision handed down Dec. 17, 2010, to dismiss its legal challenge of concessions negotiated between the YRC Worldwide entities and the Teamsters. ABF had argued that the concession agreements violate the National Master Freight Agreement.

The Fort Smith, Ark.-based company sent its case to the federal appeals court on Jan. 18. “ABF is very pleased with this decision and looks forward to further proceedings on its lawsuit seeking to level the playing field for all parties of the National Master Freight Agreement,” the company says.

YRC Inc., New Penn Motor Express Inc. and USF Holland Inc. on Nov. 16, 2010, had asked the lower court to dismiss ABF’s complaint because ABF was not a party to the NMFA. ABF argued that the Teamsters violated the NMFA in 2009 and 2010 by entering into concessionary side agreements with the YRC Worldwide companies to the exclusion of ABF and other companies signatory to the NMFA.

ABF, with more than 8,000 union employees, argued the third and latest amendment to the NMFA – negotiated between the YRC Worldwide entities and the Teamsters in September 2010 and ratified by union members in October 2010 as part of a restructuring plan aimed at saving both the Overland Park, Kan.-based company and more than 25,000 union jobs – would provide further wage, benefit and work rule changes that would generate an average of $350 million in annual savings through the end of the extended agreement.

ABF also sought financial damages in an amount estimated to be about $750 million by the time the NMFA is set to expire on March 31, 2013. “ABF will continue to seek that relief on remand,” the company says.



IN BRIEF

* Eric Hernandez, a Federal Motor Carrier Safety Administration safety specialist and border inspector, was indicted last month in U.S. District Court in Laredo, Texas, on a charge of accepting a bribe. According to the Department of Transportation’s Office of Inspector General, Hernandez allegedly sold a Level I Commercial Vehicle Safety Alliance decal to the driver of a commercial motor vehicle knowing that the vehicle had not been inspected.

* James H. Wood, a former FMCSA supervisory highway safety specialist, last month pled guilty in U.S. District Court in Buffalo, N.Y., to bribery. According to the DOT Office of Inspector General, Wood requested and accepted payments from Canadian trucking safety consultants to postpone safety audits of Canadian trucking companies, provide satisfactory ratings to Canadian trucking companies and supply internal FMCSA information, including lists of scheduled safety audits to Canadian safety consultants.

* Thomas Watson and Cathy Watson, principal operators of now-dissolved TomCat Trucking Inc., each were sentenced to three years’ probation, a $5,000 fine and a $100 special assessment fee for conspiracy to violate federal hazardous materials transportation regulations by transporting numerous loads of placardable quantities of hazardous materials between January and July 2009 following a January 2009 out-of-service order revoking their operating certificate.

* LoadTraining, a freight brokering educational program, is offering a free copy of its first DVD lesson, “Voluntarily Claims Resolution,” which provides details on how traffic and purchasing managers can proactively handle expensive and time-consuming problem claims before they go to court. Go to www.loadtraining.com or call 800-776-7067.