Hollingsworth & Vose v. A-P-A Transportation

• Court: Court of Appeals for the First Circuit
• Decided: October 26, 1998
• Docket: 97-2428
• Status: Published

Opinion

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit


No. 97-2428



                  HOLLINGSWORTH & VOSE COMPANY,



                            Appellant,



                                v.



                   A-P-A TRANSPORTATION CORP.,



                            Appellee.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



         [Hon. Robert B. Collings, U.S. Magistrate Judge]


Before



                     Boudin, Circuit Judge,

Schwarzer, Senior District Judge,

and Saris, District Judge.


Leonard M. Singer with whom Heidlage & Reece, P.C. was on

brief for appellant.

     Thomas J. Hogan with whom Kroll, Rubin & Fiorella LLP was on

brief for appellee.


October 23, 1998


BOUDIN, Circuit Judge.  Hollingsworth & Vose Company

("Hollingsworth") appeals from the denial of its motion for summary

judgment and the grant of summary judgment to A-P-A Transportation

Corporation ("A-P-A").  The issue turns on a tariff provision

limiting the carrier's liability for goods damaged during shipment

in exchange for a lower transportation charge.  The federal statute

governing such tariff provisions has long been a source of

litigation.

  The pertinent facts are undisputed.  In March 1993,

Hollingsworth arranged to ship a large metal cylinder used to

produce fabric--the device is called a calendar roll--from its

plant in Floyd, Virginia, to KRH Rolls, Inc. ("KRH"), in Orange,

Massachusetts.  KRH recommended A-P-A as a carrier, and when

Hollingsworth agreed, KRH made the shipping arrangements.  In

preparation, Hollingsworth's shipping clerk filled out a standard

bill-of-lading form regularly used by Hollingsworth.  In the

bill's "name of carrier" section, the clerk typed "APA Trucking."

     Because A-P-A did not serve Floyd, Virginia, it arranged

for another carrier, Wilson Trucking Company, to pick up the

shipment and deliver it to A-P-A in Lexington, Virginia. 

Hollingsworth did not learn of this arrangement until Wilson's

driver arrived at the plant and told the shipping clerk that he

would be taking the calendar roll.  Without objection from

Hollingsworth, the Wilson driver added "Wilson via Lexington VA" in

the "name of carrier" section of the bill of lading.  Wilson

delivered the calendar roll to A-P-A in a damaged condition.

     Hollingsworth sued A-P-A for damages, and both parties

moved for summary judgment on a joint stipulation of agreed facts. 

A-P-A contended that the bill of lading incorporated the terms of

Wilson's tariff, duly filed with the Interstate Commerce

Commission, limiting Wilson's liability to 10 cents per pound.  The

magistrate judge wrote a very able opinion concluding that this

provision limited the carrier liability.  The judge required A-P-A

to pay $650 in damages, corresponding to the calendar roll's weight

of 6,500 pounds.  Hollingsworth's actual loss was substantially

higher.  This appeal followed.

     The 1906 Carmack Amendment to the Interstate Commerce Act

addresses a carrier's liability for shipments in interstate

commerce.  See 49 U.S.C.  10730, 11707.  Under that statute, a

carrier is fully liable for the "actual loss or injury to the

property," id.  11707(a), unless--as provided by the Cummins

Amendments a decade later--it takes specific actions to limit its

liability, id.  10730(b)(1).  So far as pertinent here, such

actions include two separate steps, one involving the tariff and

the other the bill of lading.

     First, under 49 U.S.C.  10730(a), the carrier must

maintain a valid tariff with the ICC that contains a limited

liability rate but also makes an unlimited liability rate available

to the shipper (normally, the rate charged for the latter would be

higher).  Second, the carrier must also obtain the "written

declaration of the shipper or . . . written agreement between the

carrier . . . and shipper" as to the "limited" value of the

shipment.  Id.  10730(b)(1).

     It is undisputed in this case that the first requirement

(of a compliant tariff) was met.  The applicable tariff, which both

parties concede to be Wilson's, provides for a maximum liability of

10 cents per pound unless the shipper declares otherwise.  No one

disputes that under the tariff Hollingsworth could have increased

its protection by declaring a greater value and by paying a higher

rate.

     Hollingsworth does deny that the second requirement was

satisfied, namely, a written declaration or agreement of the

shipper as to the limited value of the shipment.  Hollingsworth's

bill of lading contained a section for a declaration.  It reads:

     Where the rate is dependent on value, shippers

     are required to state specifically in writing

     the agreed or declared value of the property. 

     The agreed or declared value of the property

     is hereby specifically stated by the shipper

     to be not exceeding _____ per _____.



Hollingsworth's clerk left these entries blank, so we agree with

Hollingsworth that there was no declared value on the bill of

lading meeting the Carmack Amendment's requirement of a "written

declaration" by the shipper.

     However, the Carmack Amendment provides in the

alternative for a "written agreement between carrier . . . and

shipper" as to the limited value of the shipment.  The tariff

provides in substance that the shipment's value is a maximum of 10

cents per pound unless the shipper declares otherwise.  Since the

shipper is charged with knowledge of the tariff, American Ry.

Express Co. v. Daniel, 269 U.S. 40, 41-42 (1925), it follows that

Hollingsworth, in leaving the declaration space blank in the bill

of lading, agreed--by virtue of the tariff's "unless" clause--to

the 10-cents-per-pound maximum valuation.

     As a fall-back defense, Hollingsworth argues that the

bill of lading it originally prepared listed A-P-A as the carrier. 

Since A-P-A's tariff does not limit its liability, Hollingsworth

would have enjoyed full protection had A-P-A, instead of Wilson,

picked up the calendar roll.  Because the carrier name was changed

by Wilson's driver, not Hollingsworth's clerk, Hollingsworth argues

that the bill of lading does not reflect its agreement to adopt

Wilson's tariff limitations instead of the full liability available

from A-P-A.

     Normally a party to a contract may not unilaterally alter

its terms.  But Hollingsworth does not claim that Wilson wrote in

Wilson's name without Hollingsworth's knowledge and approval.  In

effect, the bill of lading tendered by Hollingsworth was still a

proposed agreement under negotiation when Wilson's driver sought to

amend the proposal.  Both parties assented to the altered form,

substituting Wilson as the carrier, so the Wilson tariff was

adopted as part of the written agreement.  Thus, the Carmack

Amendment's literal terms were met in this case.

     Hollingsworth's last--and best--defense is drawn from New

York, New Haven & Hartford R. R. v. Nothnagle, 346 U.S. 128 (1953). 

There, a passenger sued the railroad after a porter lost the

passenger's suitcase.  The railroad invoked a tariff provision

limiting recovery to $25 unless the passenger had declared a higher

valuation in writing.  See id. at 129.  The Supreme Court rejected

the tariff limitation because "[t]here was no 'value declared in

writing by the shipper or agreed upon in writing'; in fact, not

even a baggage check reciting a limitation provision changed

hands."  Id. at 135.

     Since in Nothnagle there was no written declaration or

agreement of any kind by the passenger, the decision would be

irrelevant here, save that the Supreme Court continued almost

immediately by making the following observation:

     [O]nly by granting its customers a fair

     opportunity to choose between higher or lower

     liability by paying a correspondingly greater

     or lesser charge can a carrier lawfully limit

     recovery to an amount less than the actual

     loss sustained. . . .  Binding respondent by a

     limitation which she had no reasonable

     opportunity to discover would effectively

     deprive her of the requisite choice . . . .



Id. at 135-36 (citations omitted).  This "fair opportunity"

language, which was in some measure surplus, has taken on a life of

its own, and later circuit cases have treated the rubric almost as

if it were an independent requirement of the Carmack Amendment. 

What has developed is a continuing controversy about how to decide

whether there has been such a "fair opportunity."

     The problem is that the circuit courts have not been able

to agree on any single, bright-line test for what is a "fair

opportunity."  Partly this results from the diversity of fact-

patterns (e.g., obscure bill-of-lading language, affirmative

carrier misrepresentations).  But partly it may be due to a

resistance, in the face of the "fair opportunity" language, to the

ordinary law of contracts and tariffs that makes a party pretty

much responsible for whatever he or she signs and charges the

shipper with knowledge of filed tariffs.

     This circuit has confused matters further with its

decision in Anton v. Greyhound Van Lines, 591 F.2d 103, 107-10 (1st

Cir. 1978), understandably relied upon by Hollingsworth.  In that

case, the Air Force shipped under its own bill of lading the goods

of a retiring officer who requested the shipment.  See id. at 105. 

After damage occurred, the carrier invoked the tariff which

contained a per-pound limit on liability.  See id. at 106.  This

court rejected the limitation under the Carmack Amendment, saying

that there was no "writing of plaintiff indicating any assent to a

limitation of liability."  Id. at 108.

     Anton notwithstanding, the Air Force had acted at the

officer's request in arranging the shipment, and its own bill of

lading incorporated a government-shipment tariff limiting the

carrier's liability to "$.60 per pound per article unless otherwise

specifically annotated thereon [i.e., on the bill of lading]." Id.at 105 n.2.  Nowhere does Anton explain why this bill of lading was

not a "written agreement between the carrier . . . and shipper," 49

U.S.C.  10730(b)(1), limiting value of the shipment.  Manifestly,

the government was either the shipper itself or, if the officer is

regarded as the shipper, then the shipper's agent.

     In our own case, the magistrate judge thought that Antonhad been qualified or overruled by then-Chief Judge Breyer's later

decision in Hill Constr. Corp. v. American Airlines, 996 F.2d 1315

(1st Cir. 1993).  While the attitude of the Hill case is certainly

very different, Hill involved the limited liability provision of an

airline waybill construed by its own terms and without reference to

the Carmack Amendment.  Accordingly, we think it better candidly to

disavow the reasoning of Anton.  Even without Anton, the question

remains whether under Nothnagle there was a "fair opportunity" for

Hollingsworth to choose a higher liability limit.

     There are less than a dozen or so circuit court cases

that touch on the "fair opportunity" question, occasionally

conflating it with the question whether there was an agreement at

all.  See note 3, above.  In some, the shipper has prevailed, but

because of some atypical quirk, such as where the carrier

affirmatively misled the shipper or failed to provide a blank

declaring a higher value.  See, e.g., Rohner, 950 F.2d at 1082-84. 

Perhaps only four circuit cases confront the naked issue whether a

"fair opportunity" is afforded by a legally adequate tariff,

standard bill-of-lading language, and a blank for the shipper to

insert a higher declared value.

     Three of the decisions--Mechanical, 776 F.2d at 1088

(Second Circuit), Norton, 901 F.2d at 824-25 (Tenth Circuit), and

Hughes, 829 F.2d at 1423-24 (Seventh Circuit)--uphold the

limitation of liability.  But of the three, only Norton (and a

concurring opinion by Judge Winter in Mechanical, 776 F.2d at 1089-

90) says or suggests that this is the proper result as to any

commercial shipper, see Norton, 901 F.2d at 824-25.  The panel

majorities in the Mechanical and Hughes decisions can be taken to

have decided the matter on specific facts (e.g., how sophisticated

was the shipper, who prepared the bill of lading, etc.).

     By contrast, in Toledo the Sixth Circuit came close to

finding that the carrier's standard tariff and bill of lading

language, including the standard declared-value blank, neither

provides the "fair opportunity" contemplated by Nothnagle, nor

constitutes an "agreement" (for lack of an "absolute, deliberate

and well-informed choice by the shipper").  Toledo, 133 F.3d at

443.  Toledo implies that something close to a separate, consumer-

friendly, specific warning to the shipper is necessary.  Anton has

general language reflecting the same attitude.  See Anton, 591 F.2d

at 108.

     Nevertheless, among the few holdings, Toledo's approach

is a minority position.  It undercuts general principles that make

the shipper (like any other contracting party) responsible for what

the bill of lading says; and it reflects a reading of Nothnagle's

"fair opportunity" language that is miles away from the actual

facts of that case (where the "shipper" made no written agreement

or declaration of any kind).  See Nothnagle, 346 U.S. at 129-30. 

Nor does it help to say that the Carmack Amendment was designed to

protect shippers, where, as here, the question is how much and in

what respect.

     We see no reason to choose between the "on-the-facts"

approach of the Second Circuit majority in Mechanical and the

"bright line" approach endorsed by Judge Winter in the same case

(and arguably by the Tenth Circuit in Norton, 901 F.2d at 830

(citing Judge Winter)).  It is enough that the tariff made both

coverages available, the bill of lading afforded the shipper a

reasonable opportunity to choose between them (it was actually

proposed by Hollingsworth), and the shipper was a substantial

commercial enterprise capable of understanding the agreements it

signed.  In our view, that is normally enough to give this shipper

a "fair opportunity" to opt for more coverage in exchange for a

higher rate.

     Since our facts are fairly typical (apart from the last-

minute switch of carrier), this outcome makes the law predictable

in the ordinary case involving a sophisticated commercial shipper

and standard language.  Yet, as the circuit cases illustrate, there

are so many variations--including inadequate bills of lading and

affirmative misrepresentations by carriers--that we cannot lay down

a universal rule for cases that deviate from the ordinary case.

     Affirmed.