Appeals Court Finds CF 7512 Isn't Proof Carrier Received Shipment in Full, Reverses 3PL Damages for Loss of Goods
The 5th Circuit U.S. Court of Appeals reversed on Dec. 30 a lower court’s award of damages from a third-party logistics provider to a Mexican import-export company for the loss of goods while in transit through the U.S. to Mexico. The Southern Texas U.S. District Court in October 2012 had ordered Transmaritime to pay Mexican import-export company Mari Jose $300,000 in damages for the loss of nearly 2,000 boxes of Christmas lights. The appeals court, however, found Mari Jose had failed to establish that the loss occurred while the goods were in Transmaritime’s possession.
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The Christmas lights had been imported in 2008 from China to Mexico. Mari Jose bought 11,490 boxes of lights, and shipped them to the Port of Lazaro Cardenas on the west coast. Unable to move the lights directly from port to the Mexican interior as it had originally planned, Mari Jose decided to ship the goods from Mexico to the port of Long Beach, then move them in-bond across the U.S. to Laredo, Texas, where they would be again imported into Mexico by truck. Mari Jose tapped Transmaritime to arrange for the in-bond shipment.
Once the goods arrived at the Port of Long Beach in January 2009, Transmaritime filed copies of Form 7512 with CBP to secure release and in-bond movement of 11,490 boxes of Christmas lights. It didn’t issue bills of lading, which were instead issued by the ocean shipper, Chilena. The bill of lading also said the shipment consisted of 11,490 boxes of Christmas lights. CBP released the shipment, and Transmaritime moved the 15 containers to a container freight station.
But eight days later at the container freight station, Transmaritime discovered a discrepancy. Upon inspecting the containers, the 3PL found they held only 9,578 boxes of Christmas lights. A total of 1,912 boxes were missing. Transmaritime continued the shipment to Laredo on bills of lading issued by several trucking companies that reflected the revised total. It also filed a manifest discrepancy report with CBP, and the agency allowed Transmaritime to amend the CF 7512. Once the lights arrived in Laredo, Transmaritime confirmed the discrepancy and in February notified Mari Jose. The lights were released from Transmaritime’s facility in April 2009. Mari Jose filed suit claiming damages for the losses under the Carmack Amendment.
In Carmack cases, shippers must establish that the loss or damage of goods was due to the carrier’s negligence. First, the shipper must show the goods were delivered in good condition to the carrier. Then it must show that the goods were subsequently received by the shipper with less or damaged goods, and it must prove the amount of damages. Once these conditions are satisfied, the onus is on the carrier to show it wasn’t negligent.
The Southern Texas U.S. District Court took the CF 7512 filed by Transmaritime as evidence that it received the full complement of goods. It found the loss could very well have occurred during the eight-day delay between release of the goods and their receipt by the container freight station at Long Beach. It ordered Transatlantic to pay Mari Jose $300,000 to cover the losses.
The 5th Circuit disagreed, saying the CF 7512 was not evidence that Transmaritime received the goods in good condition and in full. Bills of lading have been used as evidence in past Carmack cases to prove a carrier’s receipt of goods in full. But Transmaritime didn’t issue the bill of lading, and CF 7512s don't carry the same weight, said the appeals court. Importantly, the CF 7512 was filed before the goods were released and Transmaritime was able to inspect them. Transmaritime based the quantity of the shipment on the bill of lading issued by the ocean carrier, said the appeals court.
And even if the CF 7512 did carry the same weight as a bill of lading, the forms had an “apparent good order” clause, which means they could only serve of proof as receipt in good order for portions of the shipment that were open for inspection. When the containers arrived at the freight station, the seal had only been broken on one of fifteen containers. According to the appeals court, Transmaritime found discrepancies in four out of 15, leaving unexplained the loss of lights in multiple containers that the 3PL hadn’t opened.
(Distribuidora Mari Jose, S.A. de C.V. v. Transmaritime, Inc.; CA5C No. 13-40147, dated 12/30/13)