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When cargo goes missing-in-action – Produce Blue Book

When cargo goes missing-in-action – Produce Blue Book
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When the quantity of cargo received at destination is less than the quantity listed on the bill of lading, carriers feel the squeeze.

If, for example, the driver signed the bill of lading for 1,000 cases of fruit but only delivered 900, it seems natural enough to look to the carrier for compensation. But, of course, things aren’t always so clear-cut.

What if the carrier wasn’t given the opportunity to observe the loading? What if the trailer was sealed and the seal was intact upon arrival at destination?

In this article we’ll take a look at loss and shortage claims against motor carriers.

The Johnson & Johnson Case
The case of Johnson & Johnson v. Chief Freight Lines Company, 679 F.2d 421 (5th Cir. 1982), has been cited favorably by courts ruling on loss and shortage claims.

In Johnson & Johnson, the shipper sued the defendant motor carriers for the value of 990 cases of baby products (shampoo, lotion, and powder) that were listed on the bill of lading but reported missing upon arrival at destination.

The shipper, Johnson & Johnson, pointed to the bill of lading as proof that the missing cargo was received by the carrier.

For its part, the carrier-defendant argued this was a “shipper’s load and count” shipment and therefore the shipper needed to do more than point to the bill of lading to prove what was loaded at origin.

At the outset, the Johnson & Johnson court explained that the shipper establishes a prima facie (on first impression) case against the carrier by proving: (i) delivery of the cargo to the originating carrier; (ii) receipt by the consignee of less goods at the destination; and (iii) damages, as the carrier is responsible for the lost cargo unless it can show it was both “free from negligence” and the loss was due to shipper error or one of the other excepted causes (eg, an act of God) .

The court further explained that the first element of the claimant-shipper’s prima facie case could not be established with just the bill of lading in cases where the carrier “expressly disavowed any agreement as to the kind and quality of the goods received and the loading thereof ” with a shipper’s load and count or similar notation on the bill of lading.

But as in the Johnson & Johnson case, where no shipper’s load and count notation appears on the face of the bill of lading, the court explained that a clean bill of lading is sufficient to establish a presumption that the quantity listed on the bill of lading was in fact loaded, leaving carriers with the “affirmative burden” of overcoming this presumption to defend against claims based on alleged shortages.

Takeaways
The Johnson & Johnson decision makes it clear that carriers are expected to expressly note “shipper’s load and count” on the bill of lading if they are not able to observe the loading.

Carriers that sign the bill of lading “clean” and then attempt to defend against the claim solely by establishing the driver was not allowed to observe the loading of the trailer are going against the grain of prevailing law.

The shipper’s load and count notation may be thought of as factual and contractual: factual, in that it shows the driver was not able to observe the loading; and contractual, because by signing the bill of lading with a shipper’s load and count notation, the carrier puts the shipper on notice that in the event of a dispute as to count, the claimant-shipper will be expected to come forward with affirmative evidence ( beyond the face of the bill of lading) to prove the quantity of cargo it loaded in the trailer.

In the absence of a shipper’s load and count notation, the face of the bill of lading may be enough for the shipper to establish the first element of its prima facie case.

One scenario that might test the limits of Johnson & Johnson, however, would be when the trailer is sealed and the carrier arrives at destination with the seal intact.

Here, even if the driver signed the bill of lading as clean, if the carrier can establish that it had no opportunity to witness the loading, the shipper should be prepared to come forward with evidence (beyond the face of the bill of lading) to establish the count loaded at origin.

Otherwise, the carrier can be expected to point to the intact seal as proof that the shipper failed to load the quantity indicated on the bill of lading.

One problem with this approach from the carrier’s perspective is that trailer doors may be removed from the hinges and then replaced with the seal intact.

While this may seem farfetched when the load is produced as opposed to high-value electronics, this is a controversy all parties can avoid by allowing the driver the opportunity to witness the loading.

Conclusion
If the driver is not permitted to witness the loading of the trailer, a shipper’s load and count notation on the bill of lading or a similar provision in the transportation agreement gives the carrier some protection against dubious shortage claims.

Such a notation would likely compel the shipper to come forward with video or pictures and/or statements from its operations personnel (in addition to the bill of lading) to prove what it loaded on the trailer.

Although perfect protection from bad actors is not realistic, shippers can take some uncertainty and legal headaches out of the equation by giving drivers the opportunity to observe the loading of the trailer.

And if carriers aren’t given a fair opportunity to verify the accuracy of the bill of lading, then it is certainly reasonable for them to insist upon “shipper’s load and count” language on the bill of lading or in transportation agreements with these shippers.

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