A recent Fourth Circuit Court decision in the case of ABB Inc versus CSX Transportation illustrates the importance of completing a proper bill of lading (721 F.3d 135 4th Cir. 2013.) Although this case concerned a rail carrier (ABB), the regulations for motor carriers under the Carmack Amendment are nearly identical.

To establish carrier liability under the Carmack Amendment, a shipper must deliver the freight in good condition to the carrier; show that the goods arrived damaged; and state the amount of damages. A bill of lading document that the carrier has received the goods; detail the terms of shipment; and functions as evidence of contract.

In this court case, an electric transformer worth $1.3 million transported by CSX from ABB’s plant in St. Louis to a customer in Pennsylvania was damaged in an amount over $550,000. CSX maintained that under the bill of lading, its liability was limited to $25,000. The federal district court affirmed the limitation but under appeal the Fourth Circuit overturned the decision. The court determined that the Carmack Amendment (49 U.S.C. 11706) made CSX fully liable for the shipment and that the bill of lading, as completed, did not change CSX’s degree of liability (see 49 U.S.C.14706 for motor carriers.)

The court referred the Eleventh Circuit Court case of Siren, Inc. versus Estes Express Lines, which ruled in favor of the motor carrier because the BOL stated twice that the shipment would move under Class 85, which limits liability to a specific amount per pound of freight.

The Fourth Circuit court concluded that the bill of lading was silent as regards to CSX’s liability. Instead of noting the rate and liability, the rate authority space on the BOL was left blank. In addition, the BOL did not reference any particular classification, rate authority code, price list (4605) or any other proof of limited liability by CSX. The language of the Carmack Amendment requires the carrier to show that the parties concluded a written agreement that limits the carrier’s liability even when drafted by the shipper.

Carriers must ensure that the bill of lading specifically states the classification, rate authority or price list containing the provision for limited liability.