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Industrial Risk Insurance v. United Parcel Service

March 07, 2000


Before Judges Wallace, Jr., and Lesemann.

The opinion of the court was delivered by: Lesemann, J.A.D.


Argued October 19, 1999 - Decided March 7, 2000

On appeal from the Superior Court of New Jersey, Law Division, Morris County.

This case involves a theft, from Seiko Corporation of America (Seiko), of products which Seiko had loaded onto a United Parcel Service (UPS) owned trailer, for pickup and later delivery by UPS. The two companies had a longstanding relationship which included a pattern (sanctioned by federal law known as the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C.A. 14706) under which the shipping charges paid by Seiko were premised on a $100 per package limitation of UPS's liability for any loss or damage to Seiko's goods. The loss here occurred when thieves impersonated UPS employees and stole a loaded UPS trailer from Seiko's property. Seiko claimed that UPS had caused the loss through its negligence, but that the loss limitation provision did not apply because the stolen goods had not yet been delivered to UPS when they were stolen. *fn1

We agree with UPS's argument that the intent of the Carmack Amendment was to create one uniform rule of liability covering the entire body of services involved in transporting goods in interstate commerce; that the statute's applicability is not limited to the time when goods are actually in motion; that once Seiko had done all it was required to do (by loading the goods onto the UPS trailer), the goods were properly regarded as within the possession of UPS; and thus the liability limitation provision applied. We therefore affirm the trial court's grant of summary judgment in favor of UPS, dismissing plaintiff's attempt to recover damages in excess of the agreed upon liability limitation, and its denial of plaintiff's cross-motion for summary judgment in its favor.

There are no material issues of fact and thus resolution by summary judgment is appropriate. Brill v. Guardian Life Ins. Co., 142 N.J. 520 (1995); Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67 (1954). The undisputed facts are as follows:

Prior to the theft that led to this suit, UPS and Seiko had developed what plaintiff describes as "an ongoing business relationship and . . . a customary course of dealing." That pattern included UPS providing Seiko with an empty trailer on a regular basis, with Seiko then loading its goods onto the trailer. Seiko would notify UPS when the trailer was loaded and UPS would then pick up the trailer and leave a new, empty trailer, so the process could be repeated.

UPS employees, driving a UPS tractor, would normally pick up the loaded trailer by attaching the tractor to the loaded UPS trailer. UPS had provided Seiko with a supply of shipping forms denominated "pickup record - UPS consignee billing" on which Seiko employees would enter the particulars of each shipment. When the UPS driver received the loaded trailer, the driver would sign the "pickup record", retain one copy and give one copy to Seiko. The "pickup record" included the following printed statement:

Unless a greater value is declared in writing on this receipt, the shipper hereby declares and agrees that the released value of each package or article not enclosed in a package covered by this receipt is $100, which is a reasonable value under the circumstances surrounding the transportation.

One portion of the pickup record form included blank spaces where the shipper could designate any articles it might wish to exclude from the $100 liability limitation. That portion was headed by an instruction to, "List all declared valued packages at full declared value." Immediately under that statement were two columns, one designed for a description of particular goods, headed "Consignee Billing I.D. No.," and immediately next to it, a corresponding column entitled, "Declared Value." On the day with which we are concerned, Seiko listed no articles in those portions of the "pickup record" and did not declare any value in excess of $100. *fn2

Because of inclement weather on December 19, 1995, Seiko telephoned UPS on that day and asked UPS to make its pickup in the early afternoon rather than at its customary time of 5:30 p.m. UPS agreed, and at approximately 12:30 p.m., two men dressed as UPS drivers and driving a UPS tractor arrived at Seiko's premises. They were apparently familiar with the normal procedures between UPS and Seiko. They signed the normal pickup record which Seiko had prepared. They left the customary replacement trailer for Seiko and drove off with the loaded trailer. In fact, they were not UPS employees, but imposters who stole the contents of the trailer. The empty trailer was then abandoned and found by the authorities the next day.

There is no question that if the goods here had been removed from the Seiko premises by bonafide UPS employees in the normal way, and had thereafter been damaged or destroyed by UPS or its employees, the quoted provisions of the "pickup record" would limit UPS's liability to $100 per package. The issue is whether that normal rule applies in view of the device by which the thieves obtained the goods and the manner in which the theft was accomplished. We believe it does, and that neither the policy of the federal legislation nor the reasonable understandings of the parties would support a contrary conclusion.


Although sometimes cast in abstruse language, the rules governing carrier liability (at least as they apply here) are in reality quite simple.

The Carmack Amendment to the Interstate Commerce Act, 49 U.S.C.A. § 14706, established a national uniform policy governing the liability of interstate carriers for loss or damage to property entrusted to them. A. T. Clayton & Co. v. Missouri-Kan.-Tex. R.R. Co., 901 F.2d 833, 834 (10th Cir. 1990). State law inconsistent with the Carmack Amendment is, to that extent, preempted. Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987), cert. denied, 485 U.S. 913, 108 S. Ct. 1068, 99 L. Ed. 2d 248 (1988); Arnell v. Mayflower Transit, Inc., 986 F. Supp. 521, 524 (D. Nev. 1997). The Carmack Amendment regulates the entire shipping transaction, and a central purpose of the statute is to prevent ...

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