The Carmack Amendment is part of a comprehensive scheme designed to bring uniform treatment to the carrier-shipper relationship.
In 1887, Congress enacted a national transportation policy in the original Interstate Commerce Act (the “ICA”), 49 U.S.C. § 1, et seq., in response to the chaotic disparity which resulted from the application of varying state laws to interstate shipping transactions. By implementing the ICA, Congress intended that federal rather than state law regulate the field of interstate transportation of goods.
However, the ICA did not specifically define the rights and obligations of shippers or carriers. Consequently, inconsistent state laws continued to govern interstate transportation and, as a result, similar claims received widely divergent legal treatment depending on the forum. As a result, neither shippers nor carriers could reasonably predict their rights or obligations in any given situation.
In response to the significant burden this confusion placed on interstate commerce, Congress enacted the Carmack Amendment to the ICA in 1906. The Carmack Amendment defined the parameters of carrier liability for loss and damage to goods transported under interstate bills of lading.
The Amendment is set forth in 49 U.S.C. § 14706 and states, in relevant part:
A carrier providing transportation or service subject to jurisdiction under subchapter I or III of chapter 135 shall issue a receipt or bill of lading for property it receives for transportation under this part. That carrier and any other carrier that delivers the property and is providing transportation or service subject to jurisdiction under subchapter I or III of chapter 135 or chapter 105 are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property ….
Within a few years of the Carmack Amendment’s passage, the United States Supreme Court addressed Carmack’s dual goals of uniformity and preemptive scope. In the seminal case of Adams Express Co. v. Croninger, 226 U.S. 491 (1913), the Supreme Court defined Carmack preemption in the broadest terms:
Almost every detail of the subject [interstate carriers] is covered so completely that there can be no rational doubt but that congress intended to take possession of the subject, and supersede all state regulations with reference to it…
Adams Express held that claims arising out of loss or damage to property transported in interstate commerce are governed by the Carmack Amendment and that all state law claims are preempted. The Court explained the primary objective of Carmack is the establishment of a uniform national policy governing liability of interstate carriers.
[T]his branch of interstate commerce was being subjected to such a diversity of legislative and judicial holding that it was practically impossible for a shipper engaged in a business that extended beyond the confines of his own state, or a carrier whose lines were extensive, to know, without considerable investigation and trouble, and even then oftentimes with but little certainty, what would be the carrier’s actual responsibility as to the goods delivered to it for transportation form one state to another. The congressional action has made an end to this diversity…
Three years later, the Supreme Court reaffirmed Adams Express in Georgia, Florida and Alabama Ry. Co. v. Blish Milling Co., 241 U.S. 190 (1916). Blish Milling held that the Carmack Amendment is “comprehensive enough to embrace responsibility for all losses resulting from any failure to discharge a carrier’s duty as to any part of the agreed transportation.”
The Carmack Amendment represents a conscious balancing of shipper and carrier interests. Under the Carmack Amendment, shippers are relieved of the burden of meeting traditional tort requirements (i.e., proving which of several potential carriers caused their loss, or whether the carrier’s conduct actually or proximately caused the loss). The Amendment replaces tort principles with a type of strict carrier liability. A shipper must only prove three elements to establish a right to relief under the Carmack Amendment: (1) the goods were in good condition upon receipt by the carrier; (2) the goods were not delivered or arrived damaged; and (3) the amount of damages measured by “actual loss.” Missouri Pacific R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 138 (1964), see also, Reider v. Thompson, 339 U.S. 113, 119 (1950) (Carmack Amendment relieves shipper of the burden of searching for the particular carrier at fault).
However, while carriers lost common law defenses pursuant to the Carmack Amendment, they gained the certainty that accompanies application of a nationally uniform liability regime. In other words, rules regarding both proof of loss or damage and carrier liability are now universally applied, regardless of what route a shipment might take. See Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987) (“The purpose of this statute [Carmack] is to establish uniform federal guidelines designed in part to remove the uncertainty surrounding a carrier’s liability when damage occurs to a shipper’s interstate shipment.”) In addition, the general public benefits from this legislative compromise as a result of lower, more stable transportation rates, and a uniform liability scheme.