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July 20 2020

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44 The Journal of Commerce | July 20 2020 By Colin Barrett Q&A Q A Divided liability I am a third-party agent. One of my customers sent a shipment consisting of four control panels that were fully crated. The consignee signed for a clear delivery — i.e., with no visible damage to the crate. Upon opening, it was discovered that one panel was, in fact, damaged. My customer submitted a concealed damage claim to the carrier for the full amount of the one panel, $710, plus freight charges. The carrier replied with an offer of $212.85 to settle the claim. Of course, my customer is not happy with that determi- nation. The carrier says they're offering that amount because they aren't completely responsible. They say responsibility should be divided, one-third to the shipper, one-third to the receiver, and one-third to the carrier because each handled the shipment. Is there any recourse at all, or do you just have to take what they give? I mentioned to the customer the possibility of going to arbitration, but that incurs more expense. Any insight and direction on this would be much appreciated. THAT TIRED OLD business again! The former Interstate Commerce Commission tried to bury the old three-way split of responsibility back in the 1970s in Loss and Damage Claims, 340 I.C.C. 515, but carriers keep reviving it ad hoc. To be sure, the ICC is long gone. Its decision on that question wasn't based on its regulatory powers, though; it was merely an accurate reading of long-established law. As a matter of law, liability for a freight claim is sort of like pregnancy — one either is or one isn't; there's no such thing as "a little bit" or "partially." This was the basis for the ICC's ruling and is just as valid today as ever. The Supreme Court spelled it out even more explic- itly in M. P. R. Co. v. Elmore & Stahl, 337 U.S. 134 (1964), reh. den. 377 U.S. 948: A claimant bears the threefold burden of proving (1) it tendered sound goods to the carrier in a certain quantity at origin; (2) at destination a lesser quantity of goods, or goods in damaged condition, was delivered; and (3) as a result thereof the claimant suffered specific economic injury. After that the burden of proof "shifts to the carrier and remains there," according to Super Service Motor Freight Co. v. U.S., 350 F.2d 541 (U.S.C.A.6, 1965). That is, it's up to the carrier to exonerate itself based on the so-called excepted causes that excuse it from liability — e.g., an act of God, act of a public enemy, act of a public authority, act or omission of the shipper, or "inherent vice" of the goods — and prove it was not negligent in its handling of the shipment. If the carrier cannot present such evidence, it is 100 percent lia- ble, no matter who else handled the shipment. So your customer has a solid case, but your proposal that the company pursue arbitration isn't well conceived. Arbitration requires that both parties agree, and I doubt the carrier would go along. Further, as you note, there would be costs incurred, and they'd almost certainly exceed the few hundred dollars in dispute here. There are alternatives. One of them is a setoff against future freight charges owing to the carrier. This claim is a prime candidate for such an approach; to recover its unpaid freight charges, the carrier would have to go to court itself, and not only would it face the same cost problem in doing so, it has to know it has a losing case. Unfortunately, there's a snag. It's you, the third party, who owes the carrier freight charges, but the car- rier's obligation isn't to you but rather to your customer. The only way around this is for you to accept "assign- ment" of the claim from your customer, which you do by paying it; you then recoup your payment by the setoff against the carrier. But that gets you directly involved in this claim, and in my experience, most third parties aren't willing to go that far. Beyond this, the only option I see is for your cus- tomer to take the carrier to small claims court. But this, too, has its drawbacks. As a corporation, it would need to be represented by counsel, which once again hikes the cost beyond what's reasonable here. Those seem to me the only choices. Otherwise, your customer might as well take the $212.85 (which, by the way, is still significantly less than a full one-third), because without aggressive action, it probably won't be able to get more. JOC Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455, phone (843) 559-1277, e-mail For compiled past columns and other transportation-related publications visit If the carrier cannot present such evidence, it is 100 percent liable, no matter who else handled the shipment.

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