United States: Beware! Reference To Tariff In Bill Of Lading May Not Limit Liability

Jameson Rice is an Associate in Holland & Knight's Tampa office and William P Byrne is a Partner in Holland & Knight's Jacksonville office.

The standard practice for many motor carriers and railroads is to quote rates for service that are subject to limited liability. The shipper may request full liability coverage from the carrier (for a higher rate), but in practice, shippers often obtain insurance to cover the gap between the carrier's limited liability and the value of the goods being shipped. This standard practice is at odds with the default federal statutory liability scheme for motor carriers and railroads (49 USC § 14706 and 49 USC § 11706, respectively, the "Carmack Amendment"), which imposes upon the carrier liability for the "actual loss or injury," unless the shipper and carrier have limited the carrier's liability. One means of doing so is to enter into a written agreement to limit liability. This clash between the statutory scheme and common practice has led to disparate outcomes in cargo liability cases. One recent decision, following an earlier Fourth Circuit decision, ABB Inc. v. CSX Transp., Inc., 721 F.3d 135 (4th Cir. 2013), may be alarming to carriers.

In Natural Polymer Int'l Corp. v. FedEx Freight, Inc., 4:16-CV-00359, 2017 WL 3537324 (E.D. Tex Aug 17, 2017), AZCO Corporation ("AZCO"), as the agent for its customer Natural Polymer International Corporation ("Polymer"), hired FedEx Freight, Inc. ("FedEx") to carry six machines from New Jersey to Texas. The machines were destroyed in transit. AZCO provided the FedEx driver with its standard bill of lading, which stated that it is:

  • subject to the classifications and lawfully filed tariffs in effect on the date of issue of this Bill of Lading
  • all or any of said property that any service to be performed hereunder shall be subject to . . . the applicable motor carrier classification or tariff
  • shipper hereby certifies that he is familiar with all the terms . . . set forth in the classifications or tariff
  • those terms are "hereby agreed to by the shipper and accepted for himself and his assigns"

FedEx published on its website its "FedEx 100-M Rules Tariff," which limited liability to $30,000. Despite these references to the tariff in the shipper-drafted bill of lading, and the certification that the shipper was familiar with the terms of the tariff, the Court held that "Polymer did not incorporate the Rules Tariff into the [bill of lading]" and thus FedEx's limitation of liability did not apply.

In order for liability to be limited under the Carmack Amendment, the carrier bears the burden to persuade the Court that, among other things, the shipper agreed to limited liability. Hughes v. United Van Lines, 829 F.2d 1407 (7th Cir. 1987). FedEx argued that the fact that the shipper drafted the bill of lading should be interpreted against the shipper, citing the Eleventh Circuit decision in Siren, Inc. v. Estes Express Lines, 249 F.3d 1268 (11th Cir. 2001). The Court disagreed, stating that the "general contract principle that any ambiguity should be construed against the drafter has been preempted by the Carmack Amendment," which "unambiguously imposes the risk of error on one particular party, the carrier, to the exclusion of the other party, the shipper." (citing ABB, 721 F.3d at 141 and 49 U.S.C. § 14706(c)). Notwithstanding that reference to the preemption of contract construction principles, the Court then spent a significant amount of its analysis on Texas state law contract construction principles, ultimately concluding that the rule of construction governing the incorporation of another term had not been satisfied by FedEx.

In doing so, the Court also stated that "an antiquated reference to a sixty-seven page document did not 'plainly refer'" to the limitation of liability and "the reference to a purported liability limitation is outdated and generic." The Court determined that the reference was "antiquated" and "outdated" because "tariff" refers to documents that used to be filed with the Interstate Commerce Commission but are no longer required to be filed (the Interstate Commerce Commission was terminated in 1995 and replaced with the Surface Transportation Board and only certain tariffs not relevant here are required to be filed).

The Natural Polymer Court distinguished the Siren case, in which the shipper drafted bill of lading referenced "Class 85." The Siren court determined that "Class 85" was understood throughout the trucking industry to limit liability, as compared to the more general incorporation of the tariff in the bill of lading at issue in Natural Polymer.

The fact that FedEx's tariff was publically available on its website did not sway the Court. The Court determined that "[t]he Fifth Circuit has not found that a shipper agreed to limit liability on the basis of constructive knowledge alone. . . . Polymer has shown that it did not read the Rules Tariff and did not take any actions indicating that it knew about one or more levels of liability."

The Court held that "[n]either Polymer, nor AZCO, had previously done business with FedEx Freight. The BOL was not the result of any negotiations; it was presented to FedEx for the first time when the shipment was loaded into the truck. Finally, there is no evidence that the rate was any different than it would be for a different liability level. Therefore, FedEx has not shown that the shipper had knowledge of or chose a limitation on liability. Without such knowledge, the Court finds that Polymer did not incorporate the Rules Tariff into the BOL." (internal citation omitted).

A few additional facts are useful in interpreting the Court's ruling:

  • It is true that the reference to "lawfully filed tariffs" is outdated: it used to be contained in the uniform bill of lading but has since been replaced. However, while in most cases tariffs no longer need to be filed with the government, similar unfiled "tariffs" remain ubiquitous, and use of the term "tariff" is not at all antiquated: the term remains prevalent in the industry – FedEx even used the word "tariff" in the title of its document.
  • The Court characterizes the shipper's knowledge as "constructive," but that phrase, as it is typically used, may not capture the facts of this case. It was not simply that the shipper should have known about the carrier's tariff (even though many courts have found constructive notice to be sufficient). In this case, the shipper affirmatively declared in the bill of lading, without any obligation to do so, and in a bill of lading that it drafted, that the shipper was familiar with the carrier's tariff. Specifically, the Court stated "Polymer did not incorporate the Rules Tariff into the [bill of lading]." It seems illogical that the Court would conclude that Polymer is not bound by those words. Presumably FedEx should have been able to rely on those statements as well, but the Court did not address that related issue.
  • The Court's statement that the Carmack Amendment "unambiguously imposes the risk of error on one particular party, the carrier, to the exclusion of the other party, the shipper" and thus preempts the "general contract principle that any ambiguity should be construed against the drafter" is not derived from any statement in the statute itself. That statute provides that a carrier and a shipper may limit liability by "written agreement" between the carrier and shipper. See 14706(c)(1)(A) (motor carriers); see also 11706(c)(3)(A) (rail carriers). Rather, it was judicially derived in ABB from the fact that the default liability scheme is full liability. While it may be argued that as a consequence of that default liability scheme, the carrier bears the burden of persuasion with respect to limited liability, it is not clear why the rules of contract construction and an admission by the shipper, as factors in the carrier's ability to meet that burden of persuasion, are preempted by the statute.
  • Limitation of liability is standard in the industry. The fact that the tariff would include a limitation of liability, or that the carriage would be subject to limited liability, would not likely be surprising to any sophisticated shipper.
  • The Court relies frequently, and in pivotal places, on ABB. There were several similarities between the cases and a similar result was reached by a divided Fourth Circuit panel, which overturned the District Court that had granted summary judgment on the issue. ABB was not binding precedent, but in the four years since it was decided, it has been cited even outside of the Fourth Circuit in a few rulings that have favored the shipper.

FedEx could have taken actions to help ensure that its limitation of liability terms would be enforced. The Natural Polymer Court even explained what FedEx could have done to limit its liability, stating that: "Under certain circumstances, FedEx would be able to rely on the shipper's generic reference. For instance, if FedEx and the shipper actively negotiated a contract or FedEx had knowledge that the shipper knew of FedEx's tariff, then FedEx would be able to prove mutual assent. Similarly, if FedEx had many prior dealings with a shipper, it would be able to prove that the shipper had knowledge of and assented to its terms." Both the Natural Polymer and ABB Court indicated that liability would have been limited if a more specific reference to limitation of liability was included.

The result in Natural Polymer, like ABB before it, reveals that the Court may have interpreted the Carmack Amendment without an appreciation for the customs and practices in the industry. Other courts have reached different conclusions, but the Natural Polymer decision demonstrates that ABB continues to echo. Every new case presents an opportunity to educate the court and create more favorable precedent, but in the meantime, carriers attempting to limit their liability would be wise to keep in mind that a court hearing a Carmack case is likely not familiar with industry norms.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions