Rohner Gehrig Company, Inc. v. Tri-State Motor Transit

WIENER, Circuit Judge,

concurring in part and dissenting in part.

I concur in the majority opinion penned by Judge Vela to the extent it announces for the first time in this circuit that bills of lading that substantially comply with their related tariffs may be sufficient to limit the liability of the carrier to the same extent as would bills of lading that strictly comply. With genuine respect, however, I am constrained to dissent from the remainder of the majority opinion that, in testing TriState’s bill of lading for compliance with its related tariff, sanctions the purely subjective examination of the degree of sophistication possessed by the individual who completes the shipping documents on behalf of the shipper to limit the carrier’s liability when those documents on their face would disallow limitation.

I read the opinion of the majority in this case to agree with the district court, as do I, that Tri-State’s bill of lading facially fails to comply, either strictly or substantially, with Tri-State’s tariff. That failure results first from the almost total absence in the bill of lading of notice language about the tariff and the shipper’s opportunity to effect a change in the carrier’s liability, and second from the facts that (1) the modicum of limitation language that does appear in the bill of lading is not printed in a bolder, larger or different type *1124and is not set off in a box or other indicia of special importance, and (2) there are no special blanks near the signature blank for use by the shipper in selecting different rates. So, but for its willingness to consider the degree of sophistication possessed by the particular agent of the shipper as a “circumstance[ ] surrounding the transportation,” 49 U.S.C. § 10730(b), contributing to the reasonableness of limiting the carrier’s liability, the majority too I sense would have found the bill of lading in neither strict nor substantial compliance with the tariff.

My concern with the majority’s opinion as a significant departure from the Congressional policy regarding limitation of a carrier’s liability and from the principal jurisprudence on point is not so much with its resort to consideration of sophistication — although I do feel such a resort is unwarranted under the facts of the instant case — but with the subjective examination of the degree of sophistication possessed by the individual agent of the shipper rather than the objective examination of a “reasonable shipper” similarly situated.

Even if I were to concede, arguendo, that sophistication is a circumstance to be examined, I am satisfied that the test should be objective rather than subjective. The summary judgment record in this case reflects that the shipper’s employee, Burnett, was quite experienced and knowledgeable. Relying on that, the majority opinion concludes that “[wjhile Tri-State’s bill of lading did not conform perfectly with its tariff, this court is not in a position to find that Rohner, through Burnett, did not know the significance of what was signed” (emphasis added) — clearly looking subjectively to Mr. Burnett’s degree of sophistication in the industry. Presumably, then, if Rohner’s employee had been a young, uneducated new hire on his first day at work, the majority would have concluded that Rohner, through its brand new employee, could not possibly have known the significance of what was signed, and thus there would be no limitation of Tri-State’s liability.

It is clear to me that that approach could lead to the anomalous result of Tri-State’s facially defective bill of lading, upon presentation to the same shipper (Rohner) on consecutive days, being in compliance on one day and not in compliance on the next, depending on who might be manning the desk in the shipping department on a given day. I cannot believe Congress intended for carriers’ limitations of liability to be decided on such serendipitous circumstances. This is borne out, I believe, by an analysis of the legal history of the limitation of carriers’ liability, as lucidly set forth in part I. of the majority opinion.

From 1906 until adoption of the Cummings Amendment,1 the clear public policy of Congress, as reflected in the Carmack Amendment,2 was to prohibit absolutely any limitation on the liability of a carrier. The Cummings Amendment modified that public policy to allow limitation, but put the onus squarely on carriers who wanted to limit their liability by requiring them to file tariffs and then furnish bills of lading which complied with those tariffs. Thus, failure of a carrier’s bill of lading to comply with the tariff as filed would foil such carrier’s attempt to limit its liability.

As the law developed, a carrier desiring to meet the burden of compliance was required to present bills of lading which, at a minimum, provided notice to shippers by “red flagging” the limitation through highly visible printing in different type style and size, preferably set off by lines, boxes, indentation or the like, and by providing clearly identifiable blanks to be filled in by a shipper who was unwilling to abide by the carrier’s limitation of its own liability. The purpose of the required treatment was to ensure that the shipper was put on notice of the limitation and of his right to vary from the carrier’s proposed limitation, and at the same time to give the shipper adequate, designated space on the shipping documents in which to specify other rates. See Hughes v. United Van Lines, Inc., 829 *1125F.2d 1407 (7th Cir.1987), cert. denied, 485 U.S. 913, 108 S.Ct. 1068, 99 L.Ed.2d 248 (1988). Initially, no exceptions were permitted for failure strictly to comply; neither were exceptions carved out on the basis of the shippers’ sophistication or the lack thereof.

The burden that carriers had to meet to limit their liability was eased somewhat with the jurisprudential advent of substantial as distinct from strict compliance with tariffs by bills of lading. But even then substantial compliance would suffice only if it were reasonable to conclude that, under the circumstances, the shipper had reasonable notice of the tariff provisions and an opportunity to choose a higher release rate. See Hughes, 829 F.2d at 1421; Caspe v. Aacon Auto Transport, Inc., 658 F.2d 613, 615-16 (8th Cir.1981); Anton v. Greyhound Van Lines, Inc., 591 F.2d 103 (1st Cir.1978).

The move to substantial compliance was not, I believe, intended to eliminate the bright line test under Carmack and Cummings; it was at most meant to blur the edges a bit. But a full blown subjective test of the sophistication of the shipper’s employee cannot help but result in the combined elements of sophistication and substantial compliance swallowing the objective yard stick intended by Congress. I cannot help but conclude that looking to the degree of sophistication possessed by the shipper, as done by the majority in this case, is the wrong approach for two reasons: First, each earlier case in which a court referred to sophistication of the shipper involved a unique or unusual fact situation rather than a “plain vanilla” submission of a printed bill of lading from a common carrier to a shipper, as in the instant case. Second, in those cases the courts’ searches for sophistication were performed objectively, based on the nature of the shipper (experienced business establishment vis-a-vis naive homeowner), and not subjectively as to the particular employee who happened to participate in the shipment. It seems to me that the appropriate inquiry to make when testing a bill of lading for compliance with the carrier’s posted or published tariff is: “Does the bill of lading give the average, reasonable shipper, under the same circumstances, (1) sufficient notice that the carrier intends to limit its liability, and (2) an opportunity to choose a higher release rate?”

With sincere deference to my colleagues of the majority, I still find the cases cited in the first paragraph of part C. Sophistication, in the majority opinion inapposite, principally because they do not deal with typical fact situations, such as the one under consideration in this case, when a carrier with a tariff on file submits its own preprinted bill of lading to a shipper. CoOperative Shippers, Inc. v. Atchison, T. & S.F. Co., 840 F.2d 447 (7th Cir.1988) did not involve tariffs and bills of lading. Rather, the plaintiff/shipper and defendant/carrier had negotiated a long-term, bulk contract for volume shipments. That agreement and related documentary' evidence were construed objectively. The court merely noted in passing that the parties (not the individuals) were experienced and of equal commercial awareness, so that neither was entitled to any equitable consideration for lack of sophistication. Hughes involved the shipper of household goods. The shipper was not the usual, inexperienced homeowner, however, but a person who had moved numerous times over the previous years and was well acquainted with shipping practices. The case did not turn on the bill of lading’s compliance with the tariff but on the fact that, despite the non-compliance, the shipper was found to have been put on notice of the carrier’s limited liability because the carrier’s agent had discussed the various limitation amounts with the wife. See Hughes, 829 F.2d at 1421. In that instance, the court held the husband, who happened to sign the bill of lading, to the same standard of notice as the wife and refused to disallow the limitation.

Mechanical Technology, Inc. v. Ryder Truck Lines, Inc., 776 F.2d 1085 (2d Cir.1985) involved a shipper that prepared its own bill of lading using the carrier’s standard bill of lading as a guide. Moreover, the goods damaged in shipment were computers; the I.C.C. had issued special pre*1126cautions for shipping such products, but none had been heeded by the shipper. Although the court mentioned that the parties were of equal economic stature and commercial acuity, sophistication or lack thereof was not a key element. And, like the other cases cited by the majority, this one did not involve the customary fact pattern of a carrier with a filed tariff presenting its own printed bill of lading which, on its face, neither strictly nor substantially complied with the tariff.

Following oral argument of the instant case to this panel, both counsel for both parties submitted letters pursuant to Rule 28(j), Federal Rules of Appellate Procedure, inviting this court to consider cases not previously cited. In one, Norton v. Jim Phillips Horse Transp., Inc., 901 F.2d 821 (10th Cir.1989), the court found that the bill of lading substantially complied with the tariff. It is axiomatic that once there is a finding of either strict or substantial compliance, the carrier's liability is limited. All that the Norton court did was to underscore the equity of the limitation in that case by pointing out that the shipping of high priced horses is a specialized field, and that both shipper and carrier were experienced and of equal equine transportation acumen.

The two other Rule 28(j) cases submitted for our consideration, Cincinnati Milacron, Ltd. v. M/V American Legend, 784 F.2d 1161, rev’d en banc, 804 F.2d 837 (4th Cir.1986), and Caterpillar Overseas, S.A. v. Marine Transport, Inc., 900 F.2d 714 (4th Cir.1990), involved shipments under the Carriage of Goods by Sea Act (COG-SA).3 Cincinnati Milacron is inapplicable because there the court was dealing with the issue of incorporation by reference in a “short form” bill of lading under COGSA. At most the court speculated in dictum about what the result might be if a COGSA shipper were unsophisticated. Caterpillar Overseas is another COGSA case not directly concerned with the Carmack/Cum-mings situation. In Caterpillar Overseas, there was no bill of lading whatsoever, but because the parties had dealt with each other in the past and were commercially experienced and of equal economic status, the court was willing to go so far as to find that the parties “intended” to use the carrier’s standard bill of lading. See Caterpillar Overseas, 900 F.2d at 719-20. In fact, the shipper had already prepared a bill of lading of its own using the carrier’s standard form to go by, but did not plan to have it signed until the goods were on board the vessel.

I find that (with the possible exception of a household goods situation in which the average reasonable homeowner is not expected to be sophisticated in the shipping industry) the cases involving sophistication or lack thereof have not considered that factor when determining whether, in an ordinary commercial transaction such as the one in the instant case, the bill of lading substantially complies with the tariff. As noted earlier, I infer that the majority opinion here would agree with the district judge and me that, but for the element of Mr. Burnett’s subjectively high degree of sophistication, the bill of lading under consideration neither strictly nor substantially complies with the tariff. Until Congress sees fit to legislate an even more subjective double standard for unsophisticated and sophisticated shippers by providing something like “Truth in Shipping”' regulations for the former category, I believe we are making a mistake to test compliance of bills of lading on the basis of that trait, particularly if we do so subjectively as to the particular individual involved in signing the shipping papers.

I cannot avoid the conclusion that, by permitting the carrier that furnishes a bill of lading, which on its face neither strictly nor substantially complies with the tariff, to have it subjectively converted to one that does substantially comply solely because it has been submitted to a sophisticated employee of the shipper, we emasculate the intentionally objective, restrictive law of limitation of liability that Congress sought to impose on carriers. Under today’s majority opinion, instead of continuing to proscribe a carrier’s limitation of *1127its own liability unless its bill of lading gives notice to the shipper and a reasonable opportunity for the shipper to choose a higher released rate through strict or substantial compliance with its tariffs, we move to a highly subjective, fact intensive, case by case determination every time there is a loss of or damage to goods in shipment. Doing that impresses me as a frustration of the Congressional policy embodied in the applicable statutes — one almost certain to foment litigation, destroy predictability and stability, and ultimately increase the cost of transporting goods.

. 49 U.S.C. § 10730 [Supp.1990],

. 49 U.S.C. § 11707 [Supp.1990],

. 46 U.S.C.App. §§ 1300-1315 (1982).