Hijacked in Mexico
On two separate occasions Apparel Production Services Inc. had shipments hijacked in the Mexican border town of Nuevo Laredo.
APS filed two suits under the Carmack Amendment, saying the law applied in cases where shipments were moving to adjacent countries.
The defendants argued Carmack, a federal law that establishes a uniform national liability system for interstate carriers, cannot apply to losses of cargo occurring in Mexico.
The judge hearing this case disagreed, finding Carmack can apply to extraterritorial losses. But he nevertheless dismissed the plaintiff's motion for summary judgment on the Carmack Amendment claim and granted the counter motions of the defendants under Carmack for different reasons. (Apparel Production Services Inc. v. Indiana Transport, Apparel Production Services Inc. v. Transportes de Carga FEMA, L-08-26, L-08-62, S.D. Texas, March 28)
In both cases, APS had sewing machines and fabric delivered from several U.S. locations to a warehouse of Trafago Forwarding in Laredo, Texas. Trafago, an affiliate of one of the defendants, Indiana Transport, obtained customs documents and prepared the goods for shipment from Laredo to Nuevo Laredo.
Trafago chose Indiana Transport in one instance and Transportes de Carga FEMA in the other to carry the goods to Nuevo Laredo, where Mexican line haul carrier Aril was to pick up the goods and carry them to their final destinations in Puebla/Xalapa, Mexico. Aril's selection was arranged by APS.
After passing through Mexican customs, but before delivering the goods to Aril, FEMA and Indiana's drivers were hijacked by unknown criminals, and the goods were stolen.
APS filed two actions against the defendants under the Carmack Amendment, 49 U.S.C. ' 14706, and state tort and contract law. Carmack establishes liability 'for the actual loss or injury to property caused by A, the receiving carrier, B, the delivering carrier, or C, another carrier over whose line or route the property is transported in the United States or from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading.'
While often heard in discussions about shipping and logistics, the court hearing this case said neither the Carmack Amendment, the Federal Bills of Lading Act, 49 U.S.C. ' 80101, et seq., nor the Uniform Commercial Code define a 'through bill of lading.' Whether there was a 'through bill of lading' in this case turned out to be key.
Both APS and the defendants made a motion for summary judgment on the Carmack Amendment claims.
The defendants argued that Carmack could not apply to extraterritorial losses. They pointed to 49 U.S.C. ' 13501(1)(E) where the Transportation Department secretary and Surface Transportation Board are given jurisdiction over not only strictly domestic motor carrier transportation but transport between a place in 'the United States and a place in a foreign country to the extent the transportation is in the United States.'
The defendants argued this meant there was a strict geographical limitation to the secretary's jurisdiction and, therefore, negated Carmack's applicability to losses occurring outside the United States.
But the district court in Texas hearing the APS case said, 'other courts have consistently applied, or been ready to apply, the Carmack Amendment to cover losses occurring in Mexico or Canada during through transportation initiated in the United States.'
It pointed to the recent Second Circuit decision (Sompo Japan Ins. Co. v. Union Pacific R.R. Co., 456 F.3d 54, 66 2d Cir. 2006), which it said, 'concluded that transportation to or from an adjacent foreign country can come under the Carmack Amendment so long as there is a through bill of lading governing the transportation.'
So the court in this case found the losses could be subject to Carmack under ' 14706(a), but only if the goods were being transported 'under a through bill of lading.'
Then it turned to a discussion of through bills of lading. As mentioned before, it said the term is not defined in Carmack, the Federal Bills of Lading Act or UCC, but said courts 'have defined a through bill of lading as a bill of lading in which a carrier agrees to transport goods from a point of origin to a designated point of destination, even though different carriers may perform a portion of the contracted shipment.'
The question of 'whether a particular document is a through bill of lading is a question of fact,' the court said. Prior decisions say that is to be determined by looking at various factors, such as 'the final destination indicated on the document, the conduct of the shipper and the carriers, and whether the connecting carriers were compensated by the payment made to the initial carrier or by separate consideration from the shipper.'
Here, APS produced two Spanish-language documents, called ''rdenes de remisi'n,' which were prepared by Trafago and said to contain the signature of a FEMA/Indiana driver.
While the Carmack Amendment requires a carrier to issue a receipt or bill of lading, it also provides that failure to do so does not affect the carrier's liability. And while those provisions seem to be internally inconsistent, the court said a 2006 decision by the Southern District of Texas found that the specific requirement in the Carmack Amendment of a through bill of lading 'necessarily requires a written instrument.' (Mapfre Tepeyac SA v. Robbins Motor Transp. Inc., No. H-05-1908, 2006 WL 3694502 S.D.Tex. Dec. 13, 2006)
'There can be no such thing as an oral through bill of lading,' the court said, and 'therefore, whether or not a written bill of lading is always needed under Carmack, it is clearly needed for Carmack to apply to loss or damage in an adjacent foreign country.'
The court concluded that the only way a carrier can be liable under Carmack for a loss in Mexico is if the loss occurred during transportation under a written through bill of lading, or similar document.
'The only documents that could possibly fit that description are the two 'rdenes in evidence. Those documents specifically pertain to transportation entirely between Mexican locales. Signatures or handwritten notes of uncertain origin on those documents cannot convert them into through bills of lading from Laredo to any Mexican locale,' it said.
Based on its review of the documents in this case, the court decided to deny APS's motions for summary judgment and grant the motion to the defendants to dismiss the Carmack Amendment claims. The remaining claims were based on state tort or contract common law. The court directed the parties to complete discovery and report back to it.