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Hughes v. United Van Lines Inc.

decided: September 11, 1987.

EDWARD AND NANCY HUGHES, PLAINTIFFS-APPELLANTS,
v.
UNITED VAN LINES, INC., AND 291 SISSER BROTHERS, INC., DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 84 C 4367, Paul E. Plunkett, Judge.

Bauer, Chief Judge, and Coffey and Easterbrook, Circuit Judges.

Author: Coffey

COFFEY, Circuit Judge.

Plaintiffs Edward and Nancy Hughes, brought suit against defendants United Van Lines, Inc. (United) and 291 Sisser Bros., Inc. (Sisser Inc.) to recover the full value of their household goods destroyed by fire while in transit in United's van between New Medford, New Jersey, and Chicago, Illinois. The district court found United had limited its liability with the plaintiffs to $3.00 per pound pursuant to its contract and awarded plaintiffs $26,180.00*fn1 and also denied the plaintiffs' state and common law theories of recovery. Plaintiffs appeal the district court's award contending that (1) the district court erred in holding that the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 11707, preempted their state and common law theories of recovery; and (2) the district court erroneously found that the defendants properly limited their liability (in this case to $3.00 per pound) under the Carmack Amendment. Thus, the questions on appeal are, whether the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 11707, preempts state and common law remedies; and second, whether the district court erred in holding that the defendants satisfied the conditions necessary to limit their liability under the Carmack Amendment. We affirm on both issues.

I

In the spring of 1982, after accepting a new position, plaintiff Edward Hughes moved his family from Medford, New Jersey, to Chicago, Illinois. Mrs. Hughes initiated the moving arrangements by contacting Larry Haney, a United Van Lines agent who had organized the Hughes' moves on several previous occasions. Haney in turn made arrangements for Sisser Inc., the local United Van Lines subsidiary moving company in New Jersey, to meet with the Hughes to plan their move. Subsequently, Cy Pavliga, a representative of Sisser Inc., met with Mrs. Hughes to arrange the move of their personal belongings and household goods to Illinois. Pavliga conducted a survey of the Hughes' furniture, clothing and other household and personal items and completed the ICC required Estimated Costs of Service Form. Upon completion of this form, the carrier is required to estimate the weight of the shipment while the shipper must choose the level of liability at which he wishes to insure his goods. Pavliga estimated the weight of the Hughes' shipment at 12,000 pounds and discussed with Mrs. Hughes the various levels of carrier liability insurance available. He stated that he also provided Mrs. Hughes with several Interstate Commerce Commission (ICC) prescribed explanatory pamphlets.*fn2 The pamphlets included information on how the shipper is to declare a value for his goods and the liability the carrier assumes based on that declared value. The pamphlets also recited warnings to the shipper that he "fully understand the maximum liability of the option [the shipper] desire[s] before signing any documents;" and a recommendation that the shipper not transport family heirlooms or small articles of high value. (Defendants Exhibits 3 and 4). Mrs. Hughes then selected the liability package entitled " Gold Umbrella Protection-Full Value Guarantee " based on the weight of the shipment at $3.00 per pound.*fn3 The $3.00 per pound is the lowest valuation available under the "full value protection" package for the household goods. Based on the assumption that the household goods weighed 12,000 pounds, Mrs. Hughes ordered $36,000 worth of coverage at $3.00 per pound. Mrs. Hughes signed and kept a copy of the Estimate for Services form, which provided that United's liability was limited to $36,000.

Subsequent to the meeting with Pavliga, Dave Hendershott, a sales coordinator with Sisser Inc., sent Mrs. Hughes the required ICC Order for Service form with a letter stating:

"It is necessary to sign in two places and declare a value and return to us in the accompanying envelope. We have shown the desired areas for signing as well as the place for valuation. (We understand that you desire full coverage, minimum $3.00 per pound, which is what you should enter in that area.)"

Mrs. Hughes signed the blanks on the ICC Order for Service form indicating that she had received a summary of the information provided shippers of household goods and declared that the coverage chosen was limited to $3.00 per pound.

In the early morning hours of June 25, 1982, employees of Sisser Inc. completed loading the Hughes' goods in a United moving van. The driver prepared a list of the items loaded which her husband, Ed Hughes, signed. The driver also presented Mr. Hughes with a Uniform Household Goods Bill of Lading and Freight Bill which required the shipper to declare and fill in the blank indicating the valuation rate of the goods shipped and the signature of the shipper. Ed Hughes signed his name in the appropriate space reserved for the shipper's signature, but mistakenly signed his name a second time in the space reserved for the shipper's signature, but mistakenly signed his name a second time in the space reserved for the shipper's declared value rate. Thus, because Hughes claims that he mistakenly signed the bill of lading where he was supposed to declare a value for the goods, the Uniform Household Goods Bill of Lading and Freight Bill form failed to expressly state and set forth the shippers' declared value rate for the goods shipped.

Immediately after departing New Jersey, the moving van stopped at a weight station and recorded the weight of the shipment at 17,060 pounds or 5,060 pounds over the estimate of 12,000 pounds Sisser Inc.'s agent made. While in transit on the Ohio Turnpike, a fire on board the moving van destroyed a substantial portion of the Hughes' shipment. Defendants concede liability for the loss incurred by the Hughes, but challenge the extent (limitation) of their liability.*fn4

On May 21, 1984, the Hughes filed a complaint against the defendants for full replacement cost or $111,848.31 of their personal belongings and household goods damaged or destroyed in the fire. On February 11, 1985, the Hughes amended their complaint to include eighth state and common law counts for recovery.*fn5 The district court determined that the Hughes were entitled to coverage of $51,180.00 ($3.00 per pound x 17,060 lbs.) and entered judgment for the Hughes in that amount, less the $25,000.00 the defendants had already paid, or $26,180.00. In addition, the district court denied plaintiffs' state and common law counts holding that the Carmack Amendment to the Interstate Commerce Act preempted all state and common law theories to recovery. Plaintiffs appeal the district court's holding that their state and common law theories of recovery are preempted by federal law and that their recovery under federal law is limited to $3.00 per pound.

II. CARMACK AMENDMENT

The plaintiffs initially argue that the Carmack Amendment*fn6 does not preempt existing state and common law remedies and rely upon 49 U.S.C. § 10103 which provides:

"Except as otherwise provided in this subtitle, the remedies provided under this subtitle are in addition to remedies existing under another law or at common law."

49 U.S.C. § 10103 (Revised Interstate Commerce Act). A federal law may only preempt state and common laws if it can be established that Congress so intended. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 1152, 91 L. Ed. 1447 (1947). It is not necessary for a federal statute to provide explicitly that particular state laws are preempted. Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707, 85 L. Ed. 2d 714, 105 S. Ct. 2371 (1985). Congress' intent to supersede state law may be evidenced in several ways: preemption may be inferred where Congress has legislated so comprehensively that it has left no room for supplementary state legislation, Rice v. Santa Fe Elevator Corp., supra, at 230; further preemption may be inferred where state legislation would impede the very purpose and objectives of Congress as expressed in its legislative enactment. Hillsborough County v. Automated Medical Laboratories, Inc., supra at 713.

The United States Supreme Court addressed the preemptive scope of the Carmack Amendment relating to state regulation of carrier liability in Adams Express Co. v. Croninger, 226 U.S. 491, 33 S. Ct. 148, 57 L. Ed. 1137 (1913). There, the Court held that:

"[a]lmost every detail of the subject is covered as 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 v. Croniger, supra at 504. Although the issue in Croniger was whether the states could regulate carrier liability despite the Carmack Amendment, the Court went further and delineated the preemptive scope of the Carmack Amendment as it relates to the availability of state and common law remedies. The Court stated:

"But it has been argued that the non-exclusive character of this regulation is manifested by the proviso of the section, and that state legislation upon the same subject is not superseded, and that the holder of any such bill of lading may resort to any right of action against such a carrier conferred by existing state law. This view is untenable. It would result in the nullification of the regulation of a national subject and operate to maintain the confusion of the diverse regulation which it was the purpose of Congress to put an end to.

What this court said of § 22 of this act of 1906 in the case of Texas & Pac. Ry. v. Abilene Cotton Mills, 204 U.S. 426, 51 L. Ed. 553, 27 S. Ct. 350, is applicable to this contention. It was claimed that that section continued to force all rights and remedies under the common law or other statutes. But this court said of that contention what must be said of the proviso in § 20, that it was 'evidently only intended to continue in existence such other rights or remedies for the redress of some specific wrong or injury, whether given by the Interstate Commerce Act, or by state statute, or common law, not inconsistent with the rules and regulations prescribed by the provisions of this act.' Again, it was said, of the same clause, in the same case, that it could 'not in reason be construed as continuing in a shipper a common law right the existence of which would be inconsistent with the provisions of the act. In other words, the act cannot be said to destroy itself.'

To construe this proviso as preserving to the holder of any such bill of lading any right or remedy which he may have had under existing Federal law at the time of this action, gives to it a more rational interpretation than one which would preserve rights and remedies under existing state laws, for the latter view would cause the proviso to destroy the act itself."

Croniger at 507-08. Plaintiffs argue that to the extent that the holding in Croniger preempted state and common law remedies in 1913, that holding was overturned with the First Cummins Amendment adopted by Congress in 1915. Plaintiffs point to the provision in the revised 1915 version of the Carmack Amendment to support their argument that Congress intended to preserve for shippers state and common law remedies. That provision stated:

"Provided further, that nothing in this section shall deprive any holder of such receipt or bill of lading of any remedy or right of action which he has under the existing law."

In rejecting the plaintiffs' argument, we initially note that the remedy provision cited by the plaintiffs in the First Cummins Amendment (incorporated into the Carmack Amendment) and recodified in § 10103 of the revised Interstate Commerce Act is the very provision the Supreme Court considered in Croniger . As mentioned earlier, the Court interpreted this provision as meaning that all state and common law remedies, as of that date, inconsistent with the Carmack Amendment, were preempted. In contrast to the plaintiffs' contention that the First Cummins Amendment was an attempt to overrule the holding in Croniger regarding the remedy provision, the First Cummins Amendment added nothing to the Carmack Amendment concerning remedies. Rather, the specific additions include (1) expanding the statute's scope to carriage of goods in adjacent foreign countries, (2) specifically providing that the carriers were liable "for the full actual loss, damage or injury" to property transported (except for property received for transportation where the shipper declares or agrees in writing to a release value for the property), and (3) allowing carriers to require that shippers give them notice of the contents of articles concealed in "wrapping, boxing or other means" in which event the carrier could require the shipper to declare a value thereby limiting carriers' liability. Thus, contrary to the plaintiff's contentions, the First Cummins Amendment addressed issues wholly separate from that of preserving for shippers their state and common law remedies; rather, it addressed the scope of the statute as it applied to the carriage of goods in foreign countries, the scope of the carrier's liability, and notice requirements for "concealed" goods. Furthermore, the Supreme Court has held since Croniger that the Carmack Amendment, even with the addition of the First Cummins Amendment, preempts state and common law remedies inconsistent with the federal Act. See American Railway Express Co. v. Levee, 263 U.S. 19, 44 S. Ct. 11, 68 L. Ed. 140 (1923) ("The law of the United States cannot be evaded by the forms of local practice . . . the limitation of liability was valid, whatever may be the law of the State in cases within its control."). Galveston, Harrisburg & San Antonio Railway Co. v. Woodbury, 254 U.S. 357, 41 S. Ct. 114, 65 L. Ed. 301 (1920).

Finally, the majority of circuit courts have addressed the issue of whether or note state and common law remedies are preempted where goods are damaged or lost in interstate commerce have held that the Carmack Amendment does preempt state and common law remedies based on the Croniger decision. See Air Products & Chemicals, Inc. v. Illinois Central Gulf Railroad Co., 721 F.2d 483 (5th Cir. 1983) (" . . . the Carmack Amendment, as judicially interpreted, provides an exclusive remedy for a breach of contract of carriage provided by a bill of lading. . ."); W.D. Lawson & Company v. Penn Central Company, 456 F.2d 419 (6th Cir. 1972) ("As to the [] issue . . . [of] whether or note the Carmack Amendment preempted common law suits . . . we hold that it did"); R.H. Fulton v. Chicago Rock Island and Pacific Railroad Company, 481 F.2d 326 (8th Cir. 1973) ("The cases made it clear that when damages are sought against a common carrier for failure to properly perform, or for negligent performance of an interstate contract of carriage, the Carmack Amendment governs" quoting American Synthetic Rubber Corp. v. Louisville & N.R.R. Co., 422 F.2d 462, 468 (6th Cir. 1970)); George R. Hall, Inc. v. Superior Trucking Co., 514 F. Supp. 581 (N.D. Ga. 1981) ("Though the Court is impressed by the reasoning in Litvak . . . seventy-five years of judicial interpretation of the Carmack Amendment have now settled the question of the availability of state remedies against a common carrier . . . [u]nder the Carmack Amendment and the judicial decisions interpreted it, plaintiff may only rely on the remedies provided by the bill of lading. . .").

Although the Seventh Circuit has not previously addressed this issue, a district court trial judge in Wirth v. Silvretta, 575 F. Supp. 1274 (N.D. Ill. 1984), held that the Carmack Amendment does indeed bar a shipper from seeking any other remedy either state or common law against a carrier for damages to the shipper's goods that have been transferred in interstate commerce. The trial judge stated:

"Though the court spoke in Croniger of the validity of state restrictions on limitation of a carrier's liability, and not squarely on the subject of the continued existence of state common law remedies, we think that the case clearly implies that Congress has shown a purpose of occupy the field of regulating claims for damages to goods shipped interstate. We therefore agree with those ...


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