Carmack Amendment Preempts State Law Claims Against Common Carriers

March 13, 2014 in Creditors Rights, Ohio Courts, UCC by Brad Council

The Federal Carmack Amendment preempts all state law claims against common carriers for damaged interstate shipments according to the Ohio Court of Appeals in the Fourth Appellate District. Originally enacted in 1906 as an amendment to the Interstate Commerce Act of 1887, the Carmack Amendment is designed to provide a uniform nationwide method of recovery for damage to shipments on common carriers. The appeals court found that only federal law claims could be brought against UPS for a damaged shipment in state court and any state statutory and common law claims are preempted. Dean v. UPS Legal Dept., 4th Dist. No. 13CA21, 2014-Ohio-619.

In Dean, Jared Dean purchased a tankless water heater from a local retailer for $500 and sold it through eBay for $1,600 to a buyer in California. He took the water heater to Staples where he purchased shipping and surrendered the package for shipment. UPS then shipped the package to California where it was refused due to damage. Dean’s claims with UPS and Staples were denied due to improper packaging.

Dean then filed a small claims petition in the Athens County Municipal Court against UPS for $1,740 representing the resale value of the water heater and the shipping cost. The complaint did not specify the legal theory or cause of action for which he was seeking damages. The trial court interpreted his claims under the Ohio common law rather than federal law, despite UPS briefing on the preemption of state law by the Carmack Amendment. Dean was awarded $1,600 by the trial court and UPS appealed asserting a number of errors including preemption of state law by the Carmack Amendment.

Citing significant case law, the appeals court found that Congress intended to completely preempt all state statutory and common law when it enacted the Carmack Amendment in order to provide a single method of recovery for shippers to recover damages to delivered property. The appeals court quoted the Supreme Court noting “Almost every detail of the subject is covered so completely that there can be no rational doubt that Congress intended to take possession of the subject, and supersede all state regulation with reference to it.” Adams Express Co. v. Croninger, 226 U.S. 491 (1913).

The court also noted that state courts still have jurisdiction over claims against common carriers if the claims are brought under federal rather than state law. Dean did not specify federal law or the Carmack Amendment in his complaint and the trial court interpreted his claims under state law. As such, the Carmack Amendment served as a complete defense to Dean’s state law claims and the appeals court reversed the judgment against UPS. By UPS’s request, on remand the trial court was instructed to interpret Dean’s claims under the Carmack Amendment.

The Full Text of the Court’s Opinion May Be Found Here: http://www.sconet.state.oh.us/rod/docs/pdf/4/2014/2014-ohio-619.pdf

The Text of the Carmack Amendment May Be Found Here: http://www.law.cornell.edu/uscode/text/49/14706?qt-us_code_tabs=3

** Many thanks to William Abbey for his contributions to this article.  William is a law clerk with Slovin & Associates Co., L.P.A. and student at the University of Cincinnati College of Law.  **