November 9, 2017
Carmack claims are unique animals. Carmack provides a shipper—or its subrogating insurance company—with the sole remedy for damages sustained when goods are shipped between states. As the sole remedy, it’s imperative that a claimant strictly complies with Carmack’s notice of claim requirements and any additional notice requirements outlined in the bill of lading. As subrogation professionals, when a cargo claim comes in, the bill of lading should be the first document reviewed to determine what needs to be done—in addition to the five items listed below—to provide proper notice of the claim to the carrier. Failure to file proper written notice will bar the claim.
The Code of Federal Regulation outlines the minimum requirements necessary to file a proper notice of claim. A notice of claim is sufficient only if it meets the following five requirements:
- The claim must be a written communication. The notice of claim can be electronic only if the shipper and carrier agree that the notice can be made electronically. Absent such an agreement, the written notice of claim should be in the form of a letter to the offending carrier.
- The claim must be filed with a proper carrier within the time limits specified in the bill of lading. Carmack requires that carriers provide at least 9 months for claimants to file their notice of claim. A more benevolent carrier may provide additional time to file the notice of claim, but this is rare. The 9 month time period has been interpreted to begin running the day after the delivery of the cargo where the bill of lading states the notice must be filed “within nine (9) months after delivery.” Where the bill of lading is silent on the written notice filing period, the deadline should be calculated from the date of delivery, not the day after. A claim is “filed” with the carrier when it is delivered to and received by the carrier. As such, the written notice must be placed in the mail with sufficient time for it to be delivered and received by the carrier before the 9 month notice period expires. To memorialize the delivery date, a claimant may consider sending the notice of claim via certified mail return receipt requested so there is proof of delivery and receipt.
- The claim must contain facts sufficient to identify the shipped property. To adequately identify the property, the notice should include the bill of lading number or shipment number, the date of shipment, the date of delivery, a description of the goods, and the identity of the shipper, carrier, and consignee (the entity receiving the shipped goods). It is a best practice to also enclose a copy of the bill of lading with the written notice. Providing such detailed information will ensure that the carrier can easily identify the shipment at issue.
- The claim must assert liability for the alleged loss or damage. The written notice should unequivocally state that the carrier is liable for the damaged goods. There should be no question that the shipper is blaming the carrier for the damaged goods.
- The claim must seek the “payment of a specified or determinable amount of money.” Failure to include such damage information can be fatal to a Carmack claim. There is a split in the federal circuits on the degree of specificity a claimant must include in its notice with respect to “payment of a specified or determinable amount of money.” The First, Second, and Fifth Circuits are considered strict compliance jurisdictions—meaning the notice must include an exact dollar value. The Third, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits utilize a substantial compliance standard—meaning a claimant is not required to state a specific amount but instead must provide a reasonably accurate indication of the value of the claim. Rough or unreasonable estimates will not meet the substantial compliance standard. Whether in strict compliance or substantial compliance jurisdiction, when notified of a cargo loss, claimants should immediately begin assessing and investigating damages so the dollar figure included in the notice of claim is as precise and accurate as possible.
Subrogation professionals must act fast to identify Carmack claims and gather the information necessary to issue the carrier proper written notice of the claim. Failure to do so could wreck your Carmack claim before it gets started. The attorneys at Butler have extensive experience handling Carmack claims. Please feel free to contact Scott Hefner if you have further questions.