Suppose that you are a motor carrier that picked up cargo in Phoenix for carriage to Toronto. The cargo arrives damaged at the destination. The affected party commences an action. You might assume when your counsel prepares your defense that American law (i.e., the Carmack Amendment) will govern the dispute. Will this, however, necessarily be the case? What if the shipment originated in Toronto, arriving damaged in Phoenix? Would Canadian law necessarily govern?
In the United States, the Carmack Amendment governs exclusively the liability of a carrier for loss or damage to interstate shipments of cargo. 49 U.S.C. § 14706. Carmack's core elements include the following:
Federal law preempts all state law claims arising from or related to an interstate shipment, see, e.g., Hall v. N. Am. Van Lines, 476 F.3d 683 (9th Cir. 2007); A liable carrier would assume liability for "actual loss or injury to the property" transported, 49 U.S.C. § 14706(a)(1); A carrier has the authority to designate claim and lawsuit-filing requirements in the bill of lading, 49 U.S.C. § 14706(e); A carrier has the authority to limit its liability by agreement with a shipper for an amount less than the value of the goods, in exchange for lower freight charges, 49 U.S.C. § 14706(c) (commercial freight) & (f) (household goods); Carmack establishes concurrent jurisdiction in both state and federal courts to preside over and adjudicate Carmack-related claims, but proper federal jurisdiction requires the loss or damage claim to exceed $10,000, see 28 U.S.C. § 1331, 1337(a) & 1445(b); and Carmack requires a carrier to issue a bill of lading or receipt for property that it receives, but failure to do so does not affect its liability. 49 U.S.C. § 14706(a)(1). In cases filed in the United States, courts take different approaches when deciding which law governs. As discussed below, they will not always apply Carmack if the shipment originates in Canada.
Cases Filed in a U.S. Court: The Different Approaches
When dealing with shipments from the United States to Canada, the U.S. courts have no problem figuring out which law applies. Carmack is clear on this direction of shipments. Carmack expressly applies to shipments from the United States to adjacent foreign countries, such as Canada, transported on a through bill of lading. Specifically, 49 U.S.C. 14706(a)(1) provides:
The liability imposed . . . is for the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported . . . . from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading . . . ." (emphasis added).
The courts have a tougher time figuring out which law applies when the shipments originate in Canada and will be transported to a destination in the United States under a through bill of lading. The U.S. courts take three different approaches to shipments from Canada to the United States:
The majority rule is that the Carmack Amendment does not apply to shipments from Canada to the United States under a through bill of lading. Most likely, Canadian law would apply to the cross-border shipment. On the other hand, Carmack would apply to a shipment from Canada to United States if the damage or the loss occurred while the goods were being transported within the United States and a separate bill of lading was issued for the United States leg of the transportation. A second view is that although Carmack does not apply by its express language, a conflict of laws analysis must be used to determine what law applies (e.g., Canadian, federal common law...