Texas Bar Journal June 2022
Claims For Loss, Damage, and
What Congress appears to give with one
it preempts with the other.
Written by Vic Houston Henry, Emileigh Hubbard and Davinder Jassal
When property is transported interstate—across state or international boundaries—property can get damaged, lost, or delayed. Federal law provides the sole remedy to interstate shippers and consignees for recovery for loss, damage, and delay of shipments or property. An interstate carrier’s responsibility for the cargo or goods it transports is governed by the Carmack Amendment to the Interstate Commerce Act. “[T]he Carmack Amendment ‘supersedes all state laws as to the rights and liabilities and exemptions created by such transaction[s].’”1 Accordingly, Congress has determined that federal law completely preempts claims asserted against a carrier for loss, damage, and delay. Thus, traditional state and common law claims for breach of contract, negligence, bailment, and even statutory claims for deceptive trade practices and attorneys’ fees are completely preempted. This article is intended to set out the liability framework for property damage claims against interstate carriers.
In 1906, Congress enacted the Carmack Amendment, now codified as 49 U.S.C. § 11706 for rail carriers and 49 U.S.C. § 14706 for motor carriers, to create a uniform national policy regarding an interstate carrier’s liability for property loss or damage.2 The liability of motor carriers for loss and damage arising from an interstate shipment is exclusively governed by the Carmack Amendment.3 The Carmack Amendment provides, in relevant part, as follows:
(1) Motor Carriers and Freight Forwarders. A carrier providing transportation or service…shall issue a receipt or bill of lading for property it receives for transportation under this part. That carrier and any other carrier that delivers the property and is providing transportation or service…are liable to the person entitled to recover under the receipt or bill of lading.4
To state a claim for loss, damage, or delay under the Carmack Amendment, a shipper or consignee must prove: (1) tender to the carrier of the property in good condition, (2) receipt by the consignee of less or damaged goods, and (3) the amount of damages.5 This framework applies to both rail and motor carrier shipments and has often been likened to a strict liability framework for interstate carriers when cargo or goods are damaged in the carrier’s possession, custody, or control. The shipper may sue the originating carrier, the delivering carrier, or both, and venue for a Carmack Amendment action is proper anywhere the shipment was transported. Under the Carmack Amendment, the shipper does not have to prove negligence and does not have to prove where, or on which carrier’s vehicle, the damage occurred. While the statute does not specifically state that the Carmack Amendment applies to delay claims, caselaw has consistently included the delay of a shipment as actionable under the Carmack Amendment. In fact, the U.S. Supreme Court held the duty to transport goods with reasonable dispatch is “an integral part of the normal undertaking of the carrier.”6 While the prima facie bar for a Carmack Amendment claim is relatively low, and jurisdiction and venue rules are substantially more liberal than other federal causes of action, under the Carmack Amendment, a shipper’s recovery is limited to the actual loss or damage to property caused by an interstate carrier.7
Since its enactment, the U.S. Supreme Court has held that the Carmack Amendment fully occupies—that is, completely preempts—the field of interstate carrier liability for loss or damage to goods. In 1913, the Supreme Court in Adams Express Co. v. Croninger, expressed that “[a]lmost every detail of the subject is covered so completely that there could be no rational doubt that Congress intended to take possession of this subject, and supersede all state regulation with reference to it . . .”8 A few years later, the Supreme Court reaffirmed in Atchison, T. & S.F. Ry. Co. v. Harold that:
[I]t is not disputable that what is known as the Carmack Amendment to the act to regulate commerce…was an assertion of the power of Congress over the subject of interstate shipments, the duty to issue bills of lading, and the responsibilities thereunder, which, in the nature of things, excluded state action.9
Based on Adams Express Co. and Atchison, the whole “subject of interstate shipments” is regulated by Congress, and the liability of a carrier who provides interstate transportation or other service is governed exclusively by the Carmack Amendment.10
Congress’ intent in enacting the Carmack Amendment was to ensure the uniform application of the liability of motor carriers traveling between states, as recognized by the U.S. Court of Appeals for the 5th Circuit in Moffit v. Bekins Van Lines, Co.:
[A] purpose of the Carmack Amendment was to ‘substitute a paramount and national law as to the rights and liabilities of interstate carriers subject to the Amendment.’ … Therefore, we find that the district court correctly held that federal law, via the Carmack Amendment, preempts the [shippers’] state law claims. To hold otherwise would only defeat the purpose of the statute, which was to create uniformity out of disparity.11
In Moffit, the 5th Circuit held that the Carmack Amendment preempted all the shipper’s state law claims against a motor carrier engaged in interstate transport. Several years later, in Hoskins v. Bekins Van Lines, the 5th Circuit explained the exclusive nature of federal preemption of actions for loss or damage to goods in interstate transportation as follows:
We are persuaded by the preceding decisions and analysis offered by the Supreme Court, and this Court, that Congress intended for the Carmack Amendment to provide the exclusive cause of action for loss or damages to goods arising from the interstate transportation of those goods by a common carrier. Accordingly, we hold that the complete preemption doctrine applies.12
Every federal circuit court that has addressed this issue has come to the same conclusion.13 Similarly, Texas federal courts have uniformly recognized the broad preemption of the Carmack Amendment over state statutory and common law causes of action.14
Often, shippers and consignees attempt to avoid Carmack preemption—and removal to federal court—by artfully pleading only state law claims. The 5th Circuit has rejected this tactic, stating that, “[w]hen the federal statute completely pre-empts the state law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law.”15
Shippers and consignees seeking to recover attorneys’ fees pursuant to an agreement between the parties or under Section 38.001 of the Texas Civil Practices and Remedies Code also face Carmack Amendment preemption. Federal courts in Texas routinely recognize that “[t]here is no provision in the Carmack Amendment which authorizes an award of attorneys’ fees and the Carmack Amendment preempts any state law basis for the recovery of attorneys’ fees.”16 In Accura Systems, the court reaffirmed the 5th Circuit rule that “attorney’s fees authorized by state law are not available in Carmack Amendment actions.”17
Indeed, the preemptive scope of the Carmack Amendment is “sweeping.”18 Courts have rejected nearly all state law claims related to goods lost or damaged in interstate commerce as preempted.19 In Solectron De Mexico S.A. De C.V. v. Pablo Garza & Co. Forwarding Agents, the plaintiff asserted various state law claims, including breach of duty of care, bailment, and negligence, which arose from damage to equipment shipped interstate.20 The Solectron court concluded, after considering Supreme Court and 5th Circuit decisions, that the plaintiff’s claims “whether pled as in tort or contract,” are preempted by the Carmack Amendment because such claims result from damage to cargo shipped in interstate commerce pursuant to a bill-of-lading contract.21 Additionally, the Carmack Amendment preempts claims for overcharging freight rates, as well as for claim handling by carriers or their representatives.22
State and common law claims against surface carriers and transportation brokers can also be preempted by another federal statute—the Federal Aviation Administration Authorization Act, or FAAAA.23 In general, the FAAAA “preempts state regulation of the trucking industry, including state law private claims.”24 The FAAAA precludes states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier [or] broker...with respect to the transportation of property.”25 The FAAAA preempts state law claims for negligence and breach of contract against either carriers or brokers.26
Therefore, while Congress has lowered the liability, venue, and jurisdictional hurdles for shippers making claims against interstate carriers, Congress has also limited damages to the actual loss or damage to property suffered by the shipper and sweepingly barred claims for attorneys’ fees, punitive damages, and state statutory remedies. As confirmed by the 5th Circuit, the purpose of this balance was to create “uniformity out of disparity,” and to allow shippers, consignees, and carriers to reach agreements regarding the movement of cargo with clear knowledge of the available claim in the event of loss, damage, or delay, and the applicable limitations on the carrier’s liability should a claim be filed. TBJ
VIC HOUSTON HENRY is a shareholder in Henry Oddo Austin & Fletcher in Dallas and Denver. He practices principally in the areas of transportation law, negligence, products liability, and mass tort defense.
EMILEIGH HUBBARD is a shareholder in Henry Oddo Austin & Fletcher in Dallas and Denver and practices primarily in the areas of transportation, personal injury, employment, and property owners’ association law. Hubbard represents clients in all stages of litigation and specializes in representation in federal court.
DAVINDER JASSAL is an associate attorney at Henry Oddo Austin & Fletcher in Dallas. He practices in the firm's Litigation Department and focuses his practice on transportation law. Jassal obtained his law degree from Texas Tech University School of Law in 2018.