Appellate court absolves trucking company of blame for $9M cargo theft
January 3, 2018
A U.S. Court of Appeals has sided with a trucking company and truck stop in a case where an insurance company blamed both for a cargo theft of approximately $9 million of pharmaceuticals. The shipping company’s insurer claimed the carrier was liable for the theft because of a federal shipping law referred to as the Carmack Amendment.
In 2010, Paris pharmaceutical company Sanofi-Aventis and its Paris insurer, AXA Corporate Solutions Assurance, sued Murrysville, Pa.-based Great American Lines to recover the loss resulting from a cargo theft in July 2009. Sanofi-Aventis entered into an agreement with GAL in April 2002.
On July 9, 2009, GAL picked up a shipment from Sanofi-Aventis’ facility in Georgia and was to deliver the pharmaceuticals to McKesson Corp. in Memphis, Tenn. According to district court documents, the tractor-trailer was stolen at a truck stop in Georgia about 200 miles from Sanofi-Aventis while the “truck driver was not attending” the truck. The trucker was taking a shower at the truck stop.
The empty trailer was found in Florida in October 2009 by FBI agents. According to court opinion, six individuals were arrested in possession of the stolen cargo.
Less than a week later, Sanofi-Aventis filed a claim holding GAL liable for the cargo worth nearly $9 million. Sanofi-Aventis claimed that GAL breached the contract, which required the motor carrier to provide GPS tracking equipment, to use electronic data interchange tracking, and to travel no less than 200 miles before the first stop.
The insurance company evoked the Carmack Amendment, which addresses liabilities of shippers and carriers when cargo is lost. Essentially, carriers can avoid liability if they can prove they were not negligent, and one of five exceptions caused the damage or loss. Sanofi-Aventis accused GAL of being liable for the stolen cargo by not adhering to the conditions set by the Carmack Amendment.
However, 49 U.S. Code § 14101(b)(1) allows shippers and carriers to waive the provisions of the Carmack Amendment in an agreement, and sure enough that is exactly what Sanofi-Aventis and GAL did.
In August 2016, a district court judge granted GAL’s motions for summary judgment with respect to the Carmack Amendment and breach of contract claims while denying Sanofi-Aventis’ motion.
In oral arguments during its appeal on June 6, Sanofi-Aventis argued that the contract waiving Carmack Amendment claims was a longstanding agreement between the insurer and GAL “governing the transportation of any freight Sanofi tendered to GAL.” However, Sanofi-Aventis argues the trucker manifest for this specific shipment was the receipt under which GAL was liable for any damage or loss occurring during the transport.
More specifically, the district court ruled that the Carmack Amendment waiver was a contract between Sanofi-Aventis and GAL and “this contract shall be binding upon and inure to the benefit of the parties hereto only.” In other words, McKesson was not bound to the contract and, therefore, subject to holding GAL liable for the shipment per the Carmack Amendment.
Sanofi-Aventis also tried to blame Pilot Travel Centers for the cargo theft since that was where the theft took place. The insurer claimed that lax security at the Pilot truck stop was the cause of theft.
On Dec. 28, U.S. Court of Appeals for the Third Circuit affirmed a District Court’s decision in December 2015 granting summary judgment to GAL and Pilot. The court’s opinion noted that there was not enough evidence to support any claim of negligence or wrongdoing on Pilot’s part:
“Similarly, the absence of evidence of how the thieves accessed the tractor-trailer carrying the freight, a jury finding of a causal link between Pilot’s alleged negligence and the theft would be pure guesswork,” Judge Thomas Vanaskie wrote.