BARBARA MILANO KEENAN, Circuit Judge:
In March 2006, rail carrier CSX Transportation, Inc. (CSX) transported an electrical transformer worth about $1.3 million from shipper ABB Inc.'s plant in St. Louis, Missouri to a customer in Pittsburgh, Pennsylvania (the March 2006 shipment). ABB Inc. (ABB) later filed a complaint in the district court alleging that the transformer was damaged in transit, and that CSX was liable for over $550,000, the full amount of the damage. CSX denied full liability, and alternatively contended that even if the court found CSX liable for the cargo damage, the parties had agreed in the bill of lading to limit CSX's liability to a maximum of $25,000.
The district court held that the parties had limited CSX's potential liability in the bill of lading to $25,000. The parties thereafter entered into a consent judgment, reserving ABB's right to appeal the district court's resolution of the liability limit issue. Upon our review, we conclude that the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 11706, subjected CSX to full liability for the shipment, and that the parties did not modify CSX's level of liability by written agreement as permitted in that statute. We therefore vacate the portion of the district court's judgment limiting any liability on the part of CSX to $25,000.
We begin with a discussion of the complex regulatory scheme governing interstate freight shipments, and the historical context in which the shipment in this case occurred. We also address the role of the Carmack Amendment, which restricts carriers' ability to limit their liability for cargo damage.
In 1887, Congress enacted the Interstate Commerce Act (ICA), 24 Stat. 379, to regulate the transportation industry. Emerson Elec. Supply Co. v. Estes Express Lines Corp., 451 F.3d 179, 183 (3d Cir. 2006). The Interstate Commerce Commission (ICC) initially was designated to administer this regulatory regime, but was replaced in 1995 by the Surface Transportation Board. Id. at 183, 186; ICC Termination Act of 1995, Pub.L. No. 104-88, 109 Stat. 803, 932-34. Among other things, the ICC "regulated the railroad industry by requiring rates to be `reasonable and just' and prohibited certain railroad practices, such as rate discrimination [and] price fixing," and eventually expanded to include the regulation of motor vehicle transportation. Emerson, 451 F.3d at 183.
Until 1995, carriers were required to file their rates, or "tariffs," publicly with the ICC. Tempel Steel Corp. v. Landstar Inway, Inc., 211 F.3d 1029, 1030 (7th Cir. 2000); Comsource Indep. Foodserv. Cos. v. Union Pac. R.R., 102 F.3d 438, 442 (9th Cir.1996). Under this scheme, "the filed rate govern[ed] the legal relationship between shipper and carrier," and the carrier could not deviate from the published tariff. Maislin Indus., U.S. v. Primary Steel, 497 U.S. 116, 119-20, 126, 110 S.Ct. 2759, 111 L.Ed.2d 94 (1990). For these reasons, shippers and carriers generally were
In 1995, in an effort to ease regulatory burdens on the transportation industry, Congress abolished the requirement that tariffs be filed as public documents. ICC Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803; Tempel Steel Corp., 211 F.3d at 1030. The term "tariff," even when still used by shippers and carriers "out of habit," is now merely a contractual term with "no effect apart from [its] status as [a] contract[ ]."
The Carmack Amendment, 49 U.S.C. § 11706,
Subsection (c) of the statute provides only a limited exception to full carrier liability:
49 U.S.C. § 11706(c) (emphasis added). In other words, the Carmack Amendment "constrains carriers' ability to limit liability by contract," Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., ___ U.S. ___, 130 S.Ct. 2433, 2441, 177 L.Ed.2d 424 (2010), by requiring that a rail carrier remains fully liable for damage caused to its freight unless the shipper has agreed otherwise in writing. 49 U.S.C. § 11706(a), (c); see also Emerson, 451 F.3d at 186 ("[A] carrier's ability to limit [its] liability is a carefully defined exception to the Carmack Amendment's general objective of imposing full liability for the loss of shipped goods.") (quoting Carmana Designs Ltd. v. N. Am. Van Lines, Inc., 943 F.2d 316, 319 (3d Cir.1991)) (internal quotation marks omitted).
To determine whether a carrier has limited its liability consistent with the strictures of the Carmack Amendment, courts have applied a four-part test, under which carriers must: (1) provide the shipper, upon request, a copy of its rate schedule;
In its complaint filed against CSX, ABB alleged that CSX was liable for the "actual
CSX did not admit liability, but raised as an affirmative defense that any liability on its part was limited to a maximum of $25,000.
The district court did not consider the issue whether ABB had established a prima facie case of liability against CSX but, on submissions by the parties, proceeded to consider the liability limitation issue. The court awarded summary judgment to CSX based on its defense that it had limited its liability. The court also reasoned that the Carmack Amendment did not apply to the shipment because the shipper, rather than the carrier, had drafted the BOL. Pursuant to the consent judgment entered into by the parties, ABB timely appealed from the district court's determination regarding CSX's limitation of liability.
Before beginning our analysis of the Carmack Amendment, we describe the two documents central to our resolution of this appeal. First, the BOL governing the March 2006 shipment is a partially completed copy of ABB's standardized bill of lading. The BOL included general information about the shipment, such as the date of transport, pick-up and destination locations, and scheduled transportation route. In the space on the form labeled "product value," ABB's traffic manager, Brian Brueggeman, entered "$1,384,000." Although the box labeled "prepaid" (compared with "collect") was marked, the BOL did not include a price for the shipment or indicate the level of liability assumed by CSX for lost or damaged cargo.
The BOL also included certification language, which provided in part:
(emphasis added).
The second document at issue in this appeal is CSX Price List 4605, which was "issued" by CSX on November 18, 2005 and became "effective" on December 14, 2005. This twelve-page document sets forth numerous rules applicable to CSX's transportation of machinery, such as, for example, procedures related to billing and to the loading and unloading of cargo. Relevant to this appeal is the section of Price List 4605 entitled "price restrictions." This section lists eighteen provisions, including the following:
CSX's corporate representative, Joseph McCauley, testified in his deposition that Price List 4605 does not provide varying rates associated with different levels of liability, and that in order to receive coverage for full liability under the list, a shipper must negotiate a rate directly with the carrier.
Neither Brueggeman nor his predecessor in ABB's traffic manager position, Craig Steffey, was aware of the existence of Price List 4605 prior to the March 2006 shipment. During his tenure, Steffey had obtained rate information from CSX by contacting the carrier directly and obtaining a quote specific to the intended shipment.
With respect to the March 2006 shipment at issue in this appeal, Brueggeman sought rate information on multiple occasions without success from CSX personnel and from the CSX website,
ABB argues that the district court erred in failing to apply the Carmack Amendment to ABB's shipment. According to ABB, because the parties did not agree in writing to limit the carrier's liability, CSX is liable under the plain language of the Carmack Amendment for the full value of the cargo damage.
In response, CSX argues that ABB, as the drafter of the BOL, is not entitled to the protection of the Carmack Amendment
We nevertheless observe at the outset that ABB's problem in this case is partly of its own making. The record reflects that Brueggeman did not exercise due diligence in performing a key aspect of his job, namely, negotiating and obtaining rate and liability information for the shipment of very expensive equipment.
Despite ABB's failures, however, the Carmack Amendment imposed the burden of securing limited liability on the carrier, CSX, not on the shipper, ABB. 49 U.S.C. § 11706; Acro Automation Sys., 706 F.Supp. at 416. The plain language of the statute provides that in the absence of a clear, written agreement by the shipper, the carrier is subject to full liability for actual losses. See 49 U.S.C. § 11706(a), (c).
To overcome this default posture of full liability imposed by the Carmack Amendment, the carrier and the shipper must have a written agreement that is sufficiently specific to manifest that the shipper in fact agreed to a limitation of liability. "[A] carrier cannot limit liability by implication. There must be an absolute, deliberate and well-informed choice by the shipper." Acro Automation Sys., 706 F.Supp. at 416 (citation omitted). Without a rule requiring at least some specificity in a written agreement, the shipper would not have "a reasonable opportunity to choose between two or more levels of liability," OneBeacon Ins. Co., 634 F.3d at 1099, but instead would be automatically and unwittingly subject to the carrier's unilateral choice of a rate authority. Cf. N.Y., New Haven & Hartford R.R. Co. v. Nothnagle, 346 U.S. 128, 135-36, 73 S.Ct. 986, 97 L.Ed. 1500 (1953) ("Binding [the shipper] by a limitation which [the shipper] had no reasonable opportunity to discover would effectively deprive [the shipper] of the requisite choice; such an arrangement would amount to a forbidden attempt to exonerate a carrier from the consequences of its own negligent acts.").
We disagree with the district court's conclusion that, as a general matter, the Carmack Amendment does not apply when the shipper drafts the bill of lading. The text of the Carmack Amendment imposes full liability on carriers, without regard to which party prepared the bill of lading. The statute provides that a carrier's failure to issue a bill of lading "does not affect the liability of a rail carrier." 49 U.S.C. § 11706(a).
In this case, the parties did not reach a written agreement to limit CSX's liability and, accordingly, the Carmack Amendment operated to impose full liability on CSX. On its face, the BOL governing the March 2006 shipment was silent regarding the extent of CSX's liability. The space on
CSX contends, nonetheless, that Price List 4605 is incorporated by reference into the BOL through standardized language appearing on the BOL, indicating that the shipper agreed to the terms and conditions in "the classification or tariff which governs the transportation of this shipment." In CSX's view, this standardized language is adequate to meet the "written agreement" exception for avoiding full liability under the Carmack Amendment.
We cannot endorse CSX's position urging limited liability under these circumstances, because the language in the BOL does not specifically reference Price List 4605. Under CSX's proposed rule, shippers would be charged with notice of a private price list created by the carrier, even when the list was not filed for public inspection, the shipper had not previously shipped cargo pursuant to that list, and the shipper had sought the pricing information unsuccessfully from the carrier before drafting the BOL. Under such a theory, the shipper's "knowledge" of the list could be proved solely by use of the generic and outdated word "tariff" being employed as standard language in a bill of lading.
Prior to deregulation, courts reasonably held shippers to constructive knowledge of a published tariff based on a generic reference to the tariff in a bill of lading. See Mech. Tech. Inc. v. Ryder Truck Lines, Inc., 776 F.2d 1085, 1087-89 (2d Cir.1985). Today, however, carriers are not required to file such public tariffs. Tempel Steel Corp., 211 F.3d at 1030. To permit a carrier to assume that a shipper is familiar with a carrier's price list, without any manifestation of that familiarity in the bill of lading or in an external agreement limiting the carrier's liability, would be contrary to the Carmack Amendment's command that a carrier may only limit liability pursuant to an express, written agreement with the shipper. 49 U.S.C. § 11706(c).
Extended to its logical extreme, CSX's proposed rule would encourage absurd results. One such example would be a situation in which the bill of lading references a general "tariff," but does not specify a particular rate authority or other code indicating the applicable rate and liability level. In the absence of publicly filed tariffs, or a citation to a specific rate authority or code, a carrier could change unilaterally its level of liability, unbeknownst to the shipper, by altering its price list a day before the shipment takes place.
Additionally, we observe that a decision in favor of CSX would be required if Price List 4605 had been referenced specifically in the BOL, even if ABB had not actually been aware of the limitation of liability contained in that price list. In such a circumstance, the shipper reasonably would be charged with notice of the meaning of a precise, currently applicable term that the shipper included in the BOL.
The Eleventh Circuit's decision in Siren, Inc. v. Estes Express Lines, 249 F.3d 1268 (11th Cir.2001), on which the district court and CSX have relied, is distinguishable on this basis. In Siren, the shipper prepared the bill of lading and noted twice that the shipment would move under "Class 85," a term understood in the trucking industry as limiting liability to a certain amount per pound of cargo, although the shipper maintained it had no actual knowledge that this class designation provided such a limitation of liability. 249 F.3d at 1269, 1272. Nevertheless, the shipper was aware that
We agree with the Eleventh Circuit's determination that, by including a specific class designation in the bill of lading, the shipper was bound to the terms and conditions associated with that class designation. Cf. Hughes Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609, 612 (9th Cir.1992) (holding that a shipper had "reasonable notice and an opportunity to make a deliberate, thoughtful choice in selecting" a limit of liability when the shipper drafted the bill of lading and negotiated its terms). In the present case, however, the BOL is entirely silent regarding any current rate, classification, or other specific authority governing the shipment. There also is no evidence that the parties had a written agreement establishing a limit of liability separate from the BOL. Therefore, as discussed above, we decline to conclude that a shipper should be held to notice of a privately held price list based only on generic and ambiguous language referencing a "tariff" or "classification."
Our conclusion that the parties did not agree to a liability limitation is not altered by CSX's reliance on its past course of dealing with ABB. The Carmack Amendment's requirement of a written agreement undermines CSX's argument that the parties' alleged course of dealing can serve as a substitute for a written limitation of liability for a particular shipment. See Mooney v. Farrell Lines, Inc., 616 F.2d 619, 626 (2d Cir.1980) (declining to limit a carrier's liability by evidence of the parties' course of dealing, when the liability limit was not included in the bill of lading); cf. Camar Corp. v. Preston Trucking Co., 18 F.Supp.2d 112, 115 (D.Mass.1998) (rejecting argument that the shipper's sophistication and the parties' course of dealing evidenced an "absolute, deliberate and well-informed choice by the shipper" to limit the carrier's liability, in the absence of a bill of lading or other written agreement).
Moreover, the present record lacks any evidence that ABB previously had shipped under the terms of Price List 4605, or otherwise was familiar with that list. Of the seventy-three total bills of lading pre-dating
Of the nine ABB-CSX bills of lading included in the record, several different rate authority codes were used, and the record contains no evidence regarding the limits of liability associated with those codes.
We appreciate the common sense observation that a shipper drafting an imprecise bill of lading should not stand to benefit from its own lack of precision, as well as the district court's reflection that such a shipper need not be protected from itself. Nevertheless, we are bound by the express language of the Carmack Amendment, which puts the burden on the carrier to demonstrate that the parties had a written agreement to limit the carrier's liability, irrespective whether the shipper drafted the bill of lading. See 49 U.S.C. § 11706(a), (c). The general contract principle that ambiguous contracts be construed against the drafter, see, e.g., Wheeler v. Dynamic Eng'g, 62 F.3d 634, 638 (4th Cir.1995), is inapplicable in the face of statutory language that unambiguously imposes the risk of error on one particular party, the carrier, to the exclusion of the other party, the shipper.
Finally, we note that important practical considerations support the conclusion we reach today. Shippers by necessity entrust rail carriers with the safekeeping of expensive cargo and, under the Carmack Amendment, are entitled to presume that carriers will be held fully responsible for damage incurred during transit unless otherwise agreed. Our ruling encourages parties to employ precise bills of lading, which reflect fully and specifically the parties' choice of liability terms, and to memorialize these terms in writing as Congress intended by passage of the Carmack Amendment. See 49 U.S.C. § 11706.
In sum, we conclude that the district court erred in awarding summary judgment in favor of CSX on its claimed liability limitation of $25,000. We therefore vacate the portion of the district court's
VACATED IN PART AND REMANDED.
AGEE, Circuit Judge, concurring in part and dissenting in part:
I concur in the majority opinion except as to those parts of Sections III and IV that conclude that the district court improperly granted CSX's
As a preliminary matter, the BOL in the transaction at issue was drafted by ABB, the shipper, on its own standardized form. The BOL clearly stated,
J.A. 121.
CSX's effective rate schedule at the time of the shipment, Price List 4605, clearly stated, "Carriers' maximum liability for lading loss or damage will not exceed $25,000 per shipment. Full liability coverage is only available by calling your sales representative for a specific quote." J.A. 117.
Although ABB employees testified that they were not aware of Price List 4605 prior to drafting the BOL, CSX employees testified that Price List 4605 was published on the CSX company website and was available upon request from any of its sales representatives. ABB does not dispute that Price List 4605 was available on CSX's company website. ABB merely asserts that its employees attempted to contact CSX to obtain a price quote, but had no success in receiving rate information by telephone.
The majority holds that "the parties did not reach a written agreement to limit CSX's liability and, accordingly, the Carmack Amendment operated to impose full liability on CSX." Majority Op. 142.
The Carmack Amendment allows a commercial rail carrier to limit its liability with the shipper's written consent.
49 U.S.C. § 11706(c)(3).
Courts determine whether such written consent is effective under the Carmack Amendment by considering whether the carrier (1) provided a tariff to the shipper upon the shipper's request,
Two of the above requirements are easily disposed of As to the first requirement, ABB does not dispute that CSX never, in fact, received a request for its rates or tariff from ABB. While ABB asserts that it made several telephone calls to CSX that went unreturned, ABB presented no evidence that it ever made actual contact with an authorized CSX agent to request CSX's rate information. Nor does ABB present any evidence to rebut CSX's testimony that its rate information was available on its website. And courts have concluded that the fourth requirement,
The record reflects that CSX provided ABB with a reasonable opportunity to choose between different levels of liability coverage. The facts of this case seem indistinguishable from those in Werner Enterprises v. Westwind Maritime International, Inc.
ABB makes the same argument rejected by the Eleventh Circuit in Werner — that CSX's default policy of limited liability deprived it of a reasonable opportunity to choose full liability coverage. Yet like the carrier in Werner, CSX merely reserved "the right to approve the request [for full liability coverage] and charge a correspondingly higher rate." Id. CSX's effective tariff, Price List 4605, incorporated by reference in the BOL, provided shippers with the right to elect full liability coverage.
Although ABB argues that it was not aware of Price List 4605, it is undisputed that CSX's policy requiring its shippers to affirmatively request full liability coverage was not new to Price List 4605 and was not a change in policy from prior dealings between CSX and ABB. In fact, ABB admits that in its past dealings with CSX as well as other carriers, it always had to expressly request full liability coverage in order to receive it and that it was aware that rail carriers limited their liability to amounts as low as $25,000 prior to the shipment at issue. It is therefore easy to conclude that, as in Werner, CSX provided ABB with a reasonable opportunity to elect full liability coverage, an opportunity ABB chose not to avail itself of for reasons known only to ABB.
Moreover, ABB agreed in writing to CSX's limitation on liability. On its face, the BOL unambiguously incorporated CSX's effective tariff, which was Price List 4605, and therefore functioned to limit CSX's liability in accordance with the Carmack Amendment. Specifically, ABB certified that it was "familiar with all the terms and conditions ... set forth in the classification or tariff which governs the transportation of this shipment" and that it agreed to be bound by those terms and conditions. J.A. 121. The majority opinion treats this unambiguous, binding contract language as inoperative, however, because (1) the reference to the "tariff which governs the transportation of this shipment" is generic boilerplate language and (2) the BOL does not specifically mention Price List 4605.
ABB concedes that the BOL is a valid, binding contract between the parties. The Court must therefore read that contract consistently with the applicable contract law of the state in which the contract was formed. See CTI/DC, Inc. v. Selective Ins. Co. of Am., 392 F.3d 114, 118 (4th Cir. 2004). Because ABB asserts that the contract was formed in Missouri and CSX does not argue otherwise on appeal, we apply Missouri law.
Under Missouri law, the parol evidence rule bars courts from considering whether a party to a contract may have "intended anything other than what was written" in the contract document. See Celtic Corp. v. Tinnea, 254 S.W.3d 137, 143 (Mo.Ct.App. 2008). One party's unilateral mistake cannot serve as the basis of rescission under Missouri law unless the mistake related to a material fact and the other party to the contract knew or should have known of the mistake. See Kassebaum v. Kassebaum, 42 S.W.3d 685, 693 (Mo.Ct.App.2001).
ABB concedes in its opening brief, "There is nothing ambiguous about the form language in the BOL." Appellant's Brief 47. Nonetheless, ABB argues that the court should not bind it to its unambiguous contract provision because ABB did not have actual knowledge of CSX's effective tariff and because the provision at issue was outdated boilerplate language
The majority rejects the plain language interpretation of the BOL, arguing that under such an interpretation, "the shipper's `knowledge' of the [effective price] list could be proved solely by use of the generic and outdated word `tariff' being employed as standard language in a bill of lading." Majority Op. 143. Having already demonstrated that the term "tariff" remains in common usage in the shipping
Ultimately, it is undisputed that ABB is "an experienced shipper[,] was not forced to employ [CSX]," and used its own BOL contract. Mech. Tech. Inc. v. Ryder Truck Lines, Inc., 776 F.2d 1085, 1088 (2d Cir. 1985). It is therefore appropriate to bind ABB to its own choices, even if ABB now argues it made those choices by its own unilateral mistake. See Norton, 901 F.2d at 830 ("Carriers should not be held to a standard that would impose liability on them due to a unilateral mistake by an experienced shipper."); see also Siren, 249 F.3d at 1272 (refusing to reform a shipping contract subject to the Carmack Amendment when the shipper made a unilateral mistake). As expressly contemplated in Siren, ABB "agree[d] in writing to a limitation of liability" by "prepar[ing] a bill of lading which incorporate[d] [CSX's] tariff by reference," and CSX's tariff "contain[ed] an applicable limitation of liability provision." Siren, 249 F.3d at 1270.
For all the foregoing reasons, I conclude that the BOL, incorporating Price List 4605 and its limitation on liability, fully complies with the Carmack Amendment as a "written agreement between the shipper and the carrier." 49 U.S.C. § 11706(c)(3). I would therefore hold that the district court properly applied the Carmack Amendment exception for written agreements of limited liability and, thus, properly granted partial summary judgment to CSX. Accordingly, I respectfully dissent from the portion of Section III of the majority opinion regarding the majority's interpretation of the BOL and from Section IV of the majority opinion. I would affirm the district court's order granting CSX's motion for partial summary judgment.
554 F.3d at 1322. In the present case, however, the BOL did not contain any such limiting language. In light of this material distinction, we conclude that Werner is inapposite.
ABB argues that Price List 4605 is not a "tariff" because the term "tariff" refers only to tariffs lawfully filed with the ICC prior to deregulation, rendering that term essentially meaningless in the deregulation era. Yet even after deregulation, rate schedules and price lists, such as Price List 4605, are still commonly referred to as tariffs. See, e.g., Sassy Doll Creations, Inc. v. Watkins Motor Lines, Inc., 331 F.3d 834, 841 (11th Cir.2003). As discussed more fully below, post-deregulation, a "tariff" and "schedule of rates" are equivalent terms in the contemporary trade.
