Confusion abounds concerning the time limitations set forth under the Carmack Amendment for cargo claims. The 9-month and 2-year limits in the federal law are not themselves statutes of limitations. Instead, they represent the minimum claim and lawsuit time limitations that carriers must honor. In other words, a floor that cannot be shortened. Contract terms relating to time limitations on filing claims can be — and in many cases should be — negotiated.
The Carmack Amendment is a federal statute, found at 49 U.S. C. §14706. The law includes express provisions relating to the rights, duties, and liability of shippers, receivers, carriers, and freight forwarders in situations involving cargo loss.
The law and the accompanying claim regulations, found at 49 C.F.R. §370, govern cargo loss claims against motor carriers handling interstate shipments of goods. There are limited exceptions, including those who transport exempt commodities, such as farmers and fishermen.
Subsection (e)(1) of the law sets a minimum period for filing claims:
A 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.
This provision gives rise to one of the most common misconceptions about the Carmack Amendment. The 9-month and 2-year limitations are not statutes of limitations, but minimum amounts of time a carrier must allow for filing a claim and initiating a legal action in court.
In interpreting this provision, the federal courts reiterate the fact that the provision sets only statutory minimums or a floor. Contracting for greater time periods is permissible — and can often be the subject of bargaining.
The courts look to the contract of the parties when upholding a time limitation. In the case of Skanes v. FedEx (734 Fed. Appx. 671), the shipper filed a Carmack Amendment claim in federal district court asserting a shipment delay against the package shipping company. The contract between the parties provided that a written claim must be filed within 9 months of the date of delivery before initiating legal action — but the shipper did not file any written claim before filing the action in federal court. The United States Court of Appeals for the Eleventh Circuit upheld the lower court’s grant of summary judgment, concluding that court action is barred because the contract’s 9-month filing limit was not met.
The Skanes case represents an unfortunate (but often occurring) situation. When the contract establishes a 9-month requirement for submitting a written claim, failure to satisfy that requirement may result in losing the ability to bring a court action to pursue the claim. This case demonstrates just how important it is to read and abide by the terms of your contract or the carrier’s terms and conditions when you have a cargo claim to pursue.
Since the minimums for both the initial period for filing a written claim (9 months) and the secondary period for filing a court action following denial of a claim (2 years) are relatively short, a delay in pursuing a cargo claim can adversely affect your legal rights. It is always critical to be aware of the applicable time limitations in your contract when a potential claim arises.
Equally important is the fact that the Carmack Amendment limits are only minimum standards. Those time limitations can be lengthened by the parties to the contract. There are times when the parties may want to agree to longer times to allow a longer period of time for providing the claim to a carrier.
Taking it one step further: The time limits in the federal law are minimums by which the carrier must abide. However, they only apply if the carrier sets forth such time limitations in the contract or within its tariff. If the contract terms do not address either the initial filing period or the longer period for filing a court action at all, the 9-month and 2-year limitations do not apply. There likely will be a federal common law statute of limitation (4 years) that applies to initiating a court action, though. Finally, for purposes of another blog post, these time limitations — including the claim regulations altogether — do not apply to a broker unless the broker agrees.
Reading your contract when you have a potential claim is extremely important. Reading your contract before you sign is just as critical. In many cases, you may be able to negotiate more favorable terms, especially if you consult with a knowledgeable transportation agreement attorney.
At Mitchell - Handschuh Law Group, we assist clients with all aspects of cargo claims and provide a comprehensive range of legal services for transportation and logistics companies. We welcome inquiries about our transportation claims and litigation practice, as well as our other legal services for transportation companies. Our attorneys assist clients with legal matters in Metro Atlanta, throughout the State of Georgia, and in other states. Contact us by calling (404) 262-9488 or using our online contact form.