Fourth Circuit Sets Tough Cargo Liability Standard for Rail Carriers

Agreements to limit rail carrier liability must be explicit and in writing, and not just adopted by reference in a bill of lading, said the Fourth U.S. Circuit Court of Appeals, as it sent back down a lower court’s ruling. The Eastern North Carolina District Court had ruled that CSX was only liable for $25,000 of the $550,000 in damage to shipper ABB’s electrical transformer that occurred in transit from St. Louis to Pittsburgh. The bill of lading associated with the shipment had been drafted by ABB instead of CSX, and in any case referenced a CSX “tariff” that limited carrier liability to $25,000, the district court reasoned. Therefore, it met an exception to the Carmack Amendment’s strict requirement for rail carriers to bear full liability for damages to goods in transit. But the appeals court said the identity of the drafter of the bill of lading is irrelevant for Carmack Amendment purposes, and incorporation of a tariff by reference does not meet the written agreement standard for waiving liability set forth in the law.