A U.S. District judge in Ohio on Aug. 26 awarded Westerville, Ohio-based broker Exel Inc. $5.9 million in its case against Southern Refrigerated Transport Inc. of Texarkana, Ark. At issue was a 2008 shipment of pharmaceuticals stolen from a rest stop near Dickson, Tenn., while en route from Exel’s Mechanicsburg, Pa., warehouse to Memphis.
Following the theft of the shipment, Exel filed a claim with SRT on behalf of pharmaceutical maker Sandoz for $8,583,671.12, the alleged actual value of the lost goods. SRT denied the claim.
This case turned on the contract language in the contract between the broker and the carrier. The contract called for the terms of the contract to preempt the limitations of the Carmack Amendment, and provided for full or actual value of the goods. The carrier apparently “assumed” that the limitations of their bill of lading would put the value of the loss at $56,766, within their insurance coverage. The Court ruled that the language of the contract between the carrier and broker preempted Carmack.
The holding should be taken to show the critical importance of fully reviewing all contract language among shipper, broker and carrier in all brokered loads. Brokers should take notice of this case, not only for the narrow ruling here, but also for the importance of making sure that all their obligations to their shipper customer are reflected in their contracts with the carriers they use for transport.