In recent years, one of the most litigated issues in cargo law has been what qualifies as a “claim” for purposes of the Carmack Amendment, which defines rights, duties and liabilities of shippers and carriers when it comes to cargo loss. The issue becomes important because the Carmack Amendment permits a carrier to limit the period for filing claims to as little as nine months after a cargo loss. And likewise, the time for filing suit begins to run when a claim is denied by the carrier.
Courts have waxed and waned in their determination to enforce Carmack’s claim filing limitations.[Compare 5K Logistics, Inc. v. Daily Express, Inc.1 (“Were we to create some exception to the statutorily authorized, contractually mandated requirements of prompt filing, we would blow a hole in the balance struck by the Carmack Amendment and undermine Congress’s intent to protect carriers against stale claims.”) with Williams v. N. Am. Van Lines of Texas, Inc.2 (holding that shipper’s demand letter presenting “estimated” damages is sufficient to state a claim).] But whether a communication from a shipper qualifies as a “claim” has importance for both the shipper and the carrier. If a timely filing is a “claim,” it will satisfy the nine month limitation period but its denial will also trigger the two year clock to file suit. Conversely, if it’s not a claim, its denial has no effect on the time bar to filing suit, but, absent a later timely filed claim, the shipper may not comply with the nine month rule.
Both the nine month and the two year time limitations were in question in the recent case of Whatley v. Canadian Pacific Railway Limited.3 This Carmack Amendment case arose from the tragic train derailment in Quebec in 2013 that resulted in the deaths of over forty people. Not surprisingly, because that tragedy involved the transportation of valuable freight, it also led to Carmack Amendment litigation. While the litigation spawned many interesting cargo
The derailment occurred on July 6, 2013. On November 5, 2013, claimant Whatley sent a letter to Canadian Pacific (CP) stating that it was making a claim for damages under Canadian law and expressly stating that it was not making a claim under the Carmack Amendment, which it said it would present at a later date. Shortly after, on November 27, 2013, CP responded by denying the Canadian claim, noting that the November 5 claim was not a claim under the Carmack Amendment, and by saying:
Even if [the claimant] were to submit a proper Carmack Amendment claim, CP’s liability, if any, could not exceed the value of the lading (crude oil) and would not encompass rail-car damage claims or indemnity against third-party tort or governmental environmental claims. Those matters unquestionably go beyond the value of the property that CP received for transportation.
On April 4, 2014, Whatley did indeed send a letter to CP making a claim under the Carmack Amendment. On April 24, 2014, CP again responded, noting that the April 4 claim was a Carmack claim but denied it.
On April 12, 2016, Whatley filed suit against CP alleging claims based on the Carmack Amendment. CP moved for judgment on the pleadings, contending that the suit was not filed within two years of its November 27, 2013 denial of Whatley’s claim. The district court granted the motion and dismissed the suit as untimely. Whatley appealed.
While the litigation and the appeal touched on several matters, the core issue before the court was whether Whatley’s original 2013 communication to CP constituted a claim and whether CP’s denial constituted a denial for purposes of the Carmack Amendment sufficient to start the two year clock for Whatley to file suit. Whatley argued that the 2013 exchange was a nullity for purposes of the Carmack Amendment and its time bars. In its view, the 2014 claim and its subsequent denial by CP—each of which expressly relied on the Carmack Amendment—was alone determinative of timeliness. CP, on the other hand, contended that its 2013 denial was sufficient to begin the time period for Whatley to file suit under the Carmack Amendment.
Predictably, CP relied on cases loosely interpreting the requirement for filing a claim under the Carmack Amendment. Because a claim need not use the words “Carmack Amendment” or provide much specificity beyond the facts necessary to identify the shipment, the claim and damages, CP contended that its denial—which specifically noted that the claim would be denied under Carmack—was effective.
The Eighth Circuit, in a fairly short analysis, ruled against CP. The court concluded that CP’s 2013 letter was an attempt to deny any future claim that might be filed under the Carmack Amendment and that nothing in the statute or past cases permitted a carrier to prospectively deny future claims. The court found statutory support for its holding by citing text from the Carmack Amendment itself that, according to the court, makes the time periods applicable only to Carmack claims:
A rail carrier may not provide by rule, contract or otherwise, a period of less than 9 months for filing a claim against it under this section and a period of less than 2 years for bringing a civil action against it under this section. The period for bringing a civil action is computed from the date the carrier gives a person written notice that the carrier has disallowed any part of the claim specified in the notice.49 U.S.C. § 11706(e) (emphasis added). . . .
The statute itself defines a Carmack Amendment claim as one being brought “under this section.”
And because Whatley’s 2013 claim was not brought “under this section,” it was not subject to the time bars in the statute.
Two other points are significant. First, not surprisingly, the court’s decision seemed to be motivated by “policy” concerns, and that perhaps explains the result. (“We think it would be unwise policy, and actually unfair in this unusually complicated multi-national case, to allow the carrier to start the two-year clock when the shipper had not yet broken the huddle”). Second, and more interestingly, is how the outcome might have been different had each shoe been on the other foot— if the question had been whether Whatley’s 2013 communication qualified as a “claim” sufficient to meet Carmack’s nine month time bar. The court broached this subject: “[I]f [Whatley] had failed to make its April 2014 claim, CP might be arguing that the November notice did not assert a Carmack Amendment claim.”
Indeed, CP’s response to Whatley’s 2013 claim—expressly noting that the claim was not a Carmack claim—hints at that argument. But, it is even more likely that had a later, timely claim not been filed, Whatley would have argued that the 2013 claim was sufficient to meet Carmack’s nine month time bar. No doubt, Whatley would have relied on the many cases loosely interpreting the definition of a “claim” for purposes of Carmack’s requirements, (see Williams, supra) and Whatley probably could have found a court that would have agreed with it despite its express disclaimer of Carmack in the original claim.
The Whatley case will be one to remain on the radar as the song and dance continues between shippers and carriers on claim and denial under Carmack.
1659 F.3d 331 (4th Cir. 2011). | 2731 F.3d 367 (5th Cir. 2013). | 3904 F.3d 614 (8th Cir. 2018).
[View source.]
