National Polymer International Corporation v. FedEx Freight, Inc.
MEMORANDUM OPINION AND ORDER - It is therefore ORDERED that Natural Polymer International Corporation's Motion for Summary Judgment (Dkt. 19 ) is hereby GRANTED. The Court finds FedEx failed to properly limit its liability under the Carmack Amendment. As a result, FedEx is liable for the full amount of damages. It is further ORDERED that FedEx Freight, Inc.'s Motion for Summary Judgment (Dkt. 20 ) is hereby DENIED. It is further ORDERED that Plaintiff Natural Polymer International Corporation file a proposed final judgment within five (5) days of this order. Signed by Judge Amos L. Mazzant, III on 8/17/2017. (baf, )
United States District Court
EASTERN DISTRICT OF TEXAS
NATURAL POLYMER INTERNATIONAL
FEDEX FREIGHT, INC.
Civil Action No. 4:16-CV-00359
MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiff Natural Polymer International Corporation’s Motion
for Summary Judgment (Dkt. #19) and Defendant FedEx Freight, Inc.’s Motion for Summary
Judgment (Dkt. #20). After reviewing the relevant pleadings and motions, the Court finds
Plaintiff’s motion should be granted and Defendant’s motion should be denied.
Natural Polymer International Corporation (“Polymer”) manufactures pet products in
Plano, Texas. In 2014, Polymer ordered six machines from AZCO Corporation (“AZCO”), an
equipment manufacturer in Fairfield, New Jersey. After a failed attempt to ship the machines
with another carrier, AZCO used FedEx Freight Inc. (“FedEx”) as the carrier under Polymer’s
FedEx Freight account number. In July 2015, FedEx arrived at AZCO’s facility to load and ship
the machines. The machines had a total value of $81,796.1 The machines were destroyed during
transit to Polymer’s Plano facility.
At the time of shipping, AZCO presented the FedEx driver with its standard bill of lading
(“BOL”). A BOL is a contract between a shipper and a carrier. Like any contract, it conveys the
parties’ information, the subject matter, and the contract price. Here, the BOL contains a
FedEx has already paid $30,000 of this amount. Although Polymer claims $81,796 in its complaint, it only asserts
$48,966 in its motion for summary judgment.
provision that states that the BOL is “subject to the classifications and lawfully filed tariffs in
effect on the date of issue of this Bill of Lading” and that “all or any of said property that any
service to be performed hereunder shall be subject to . . . the applicable motor carrier
classification or tariff” (Dkt. #23, Exhibit 1). Further, the BOL states that the “[s]hipper hereby
certifies that he is familiar with all the terms . . . set forth in the classifications or tariff” and
those terms are “hereby agreed to by the shipper and accepted for himself and his assigns”
(Dkt. #23, Exhibit 1). FedEx maintains a “FedEx 100-M Rules Tariff” (“Rules Tariff”) on its
The Rules Tariff was published and in effect throughout the transaction. A tariff outlines
the terms and conditions that govern shipment. For example, a tariff may proscribe restrictions
on certain cargo such as alcoholic beverages or firearms, or promulgate limitations on legal
action such as a choice of law provision. Here, the relevant tariff provision establishes a liability
limitation (Dkt. #23, Exhibit 1). Per Rule 420 of the Rules Tariff, FedEx asserts its liability is
limited to $30,000.
It is undisputed that the parties are subject to the BOL and that the Rules Tariff, if
applicable, limits FedEx’s liability. However, the dispute involves the connection between the
two documents. FedEx contends that the BOL, by reference to “lawfully filed tariffs,”
incorporated its Rules Tariff, thus limiting its liability. Polymer, by contrast, asserts that the tariff
reference is insufficient to limit FedEx’s liability under 49 U.S.C. § 14706 (the “Carmack
Amendment”). Therefore, Polymer seeks the full amount of damages.
On April 18, 2016, Polymer filed suit in state court under the Carmack Amendment
alleging $81,796 in damages for the destroyed equipment (Dkt. #3). On May 27, 2016, FedEx
removed the case to federal court and asserted that its liability is limited to $30,000 under the
BOL and other related documents (Dkt. #1; Dkt. #5).
On January 26, 2017, Polymer filed its Motion for Summary Judgment (Dkt. #19). On
March 1, 2017, FedEx filed a response (Dkt. #24). On March 8, 2017, Polymer filed a reply
(Dkt. #25). On March 15, 2017, FedEx filed a surreply (Dkt. #27).
Also on January 26, 2017, FedEx filed its Motion for Summary Judgment (Dkt. #20). On
March 1, 2017, Polymer filed a response (Dkt. #23). On March 8, 2017, FedEx filed a reply
Summary Judgment is proper when “the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(a). A dispute is genuine “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Substantive law identifies which facts are material. Id. The moving party bears the initial burden
of identifying the basis for its motion and identifying “depositions, documents, electronically
stored information, affidavits or declarations, stipulations (including those made for purposes of
the motion only), admissions, interrogatory answers, or other materials” that demonstrate the
absence of a genuine issue of material fact. Fed. R. Civ. P. 56(c)(1)(A); Nola Spice Designs,
L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015). If the moving party satisfies its
burden, the nonmovant must present affirmative evidence showing that there is a genuine issue
for trial. Anderson, 477 U.S. at 257; Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). Mere
denials of material facts, unsworn allegations, or arguments and assertions in briefs will not
suffice to carry this burden. The Court must consider all of the evidence in the light most
favorable to the nonmovant, with all reasonable inferences from the evidence made in favor of
the nonmovant. Nola Spice, 783 F.3d at 536. However, the Court must “refrain from making any
credibility determinations or weighing the evidence.” Turner v. Baylor Richardson Med. Ctr.,
476 F.3d 337, 343 (5th Cir. 2007).
FedEx agrees that the Carmack Amendment applies to this dispute and that it is liable to
Polymer. FedEx argues, however, that it limited its liability under the Carmack Amendment’s
liability limitation provision.
Under the Carmack Amendment a carrier may limit its liability “to a value established by
written or electronic declaration of the shipper or by written agreement between the carrier and
shipper if that value would be reasonable under the circumstances surrounding the
transportation.” 49 U.S.C. § 14706(a), (c); Excel, Inc. v. S. Refrigerated Transp., Inc., 807 F.3d
140, 148 (6th Cir. 2015); Certain Underwriters at Interest at Lloyds of London v. UPS, 762 F.3d
332, 335 (3d Cir. 2014); ABB Inc. v. CSX Transp., Inc., 721 F.3d 135, 141 (4th Cir. 2013). The
leading case interpreting this provision is Hughes v. United Van Lines, 829 F.2d 1407 (7th Cir.
1987). Under Hughes, a carrier must show that it (1) maintained a tariff with the Interstate
Commerce Commission (now the Surface Transportation Board); (2) that it gave the shipper a
reasonable opportunity to choose between two or more levels of liability; (3) that it obtained the
shipper’s agreement as to its choice of liability; and (4) that it issued a receipt or BOL before
moving the shipment. Hughes, 829 F.3d at 1416. Following the enactment of the Trucking
Industry Regulatory Reform Act of 1994 and the Interstate Commerce Commission Termination
Act of 1995, the first part of the Hughes test is no longer applicable. Nipponkoa Ins. Co. v. Atlas
Van Lines, Inc., 687 F.3d 780, 782 (7th Cir. 2012). However, the carrier must provide to the
shipper, “on request of the shipper, a written or electronic copy of the rate, classification, rules,
and practices upon which any rate applicable to a shipment, or agreed to between the shipper and
the carrier, is based.” 49 U.S.C. § 14706(c)(1)(B).
The limited liability subsection is a very narrow exception to the general rule of full
liability. Excel, 807 F.3d at 150. It is the carrier’s burden to prove that the parties had a written
agreement to limit the carrier’s liability. ABB, 721 F.3d at 145. The risk of error falls on the
Polymer does not dispute the first or fourth elements. Instead, Polymer focuses on the
second and third elements, specifically whether Polymer incorporated FedEx’s Rules Tariff into
the BOL. The Court finds that Polymer did not incorporate FedEx’s Rules Tariff into the BOL
and thus FedEx did not obtain Polymer’s agreement to limit FedEx’s liability.
A BOL is construed using contract principles. Mich. Cent. R.R. Co. v. Mark Owen & Co.,
256 U.S. 427, 430 (1921). When construing a contract, the primary goal is to determine the
parties’ intent as expressed in the terms of the contract. Chrysler Ins. Co. v. Greenspoint Dodge
of Hous., Inc., 297 S.W.3d 248, 252 (Tex. 2009). The first step a court must take is to determine
if the contract is unambiguous. Whether a contract is unambiguous is a question of law that must
be decided by examining the contract as a whole in light of the circumstances present when the
contract was entered. David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008);
Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). A
contract is ambiguous when it is subject to two or more reasonable interpretations. Columbia
Gas, 940 S.W.2d at 589 (citing Glover v. Nat’l Ins. Underwriters, 545 S.W2d 755, 761 (Tex.
1977)). When a contract is unambiguous, the court determines the parties’ intent from the terms
of the written contract, without reference to parol evidence. David J. Sacks, P.C., 266 S.W.3d
at 450. When a contract is ambiguous, the meaning of the terms is a question of fact. Id.
However, when there is no dispute as to the circumstances, the construction is still a matter of
law for the court. In re Hite, 700 S.W.2d 713, 718 (Tex. App.—Corpus Christi 1985, writ ref’d
n.r.e.) (citing Brown v. Payne, 176 S.W.2d 306, 308 (Tex. 1943)). Here, the dispute centers on
whether Polymer, through its agent AZCO, incorporated the FedEx Rules Tariff .
Unsigned documents may be incorporated into and become part of a contract if the
contract “plainly refers” to the unsigned document. In re 24R, Inc., 324 S.W.3d 564, 567 (Tex.
2010) (orig. proceeding) (per curiam); Owen v. Hendricks, 433 S.W.2d 164, 167 (Tex. 1968).
Incorporation by reference requires more than merely mentioning the document. Bob
Montgomery Chevrolet, Inc. v. Dent Zone Cos., 409 S.W.3d 181, 189 (Tex. App.—Dallas 2013,
no pet.) (citation omitted). The language in the signed document must show the parties intended
for the unsigned document to become part of the agreement. Id.; see also One Beacon Ins. Co. v.
Crowley Marine Serves., Inc., 648 F.3d 258, 268 (5th Cir. 2011) (citing 11 Williston on
Contracts § 30:25 (4th ed. 1999) (“[I]n order to uphold the validity of terms incorporated by
reference, it must be clear that the parties to the agreement had knowledge of and assented to the
FedEx argues that the BOL incorporated the Rules Tariff and therefore incorporated the
limitation on liability. FedEx argues that the BOL should be interpreted against Polymer because
Polymer’s agent, AZCO, drafted the BOL. FedEx argues that AZCO, as an agent for the shipper
Polymer, declared in writing that the Rules Tariff would govern this shipment when it referenced
“lawfully filed tariffs in effect on the date of issue of this Bill of Lading.” FedEx argues that the
Eleventh Circuit deviated from Hughes when it considered the fact that the shipper, rather than
the carrier, drafted the BOL. Siren, Inc. v. Estes Express Lines, 249 F.3d 1268 (11th Cir. 2001).
FedEx argues that Siren created a bright-line rule that when a shipper drafts the BOL, the shipper
is charged with constructive knowledge of any limitations contained in the documents that are
incorporated into the BOL because “court[s] do not deem it proper or necessary to protect
shippers from themselves” (Dkt. #20 at p. 20). FedEx argues that Siren is analogous to the
present case because a sophisticated shipper, who was familiar with FedEx, drafted the BOL.
Polymer distinguishes Siren and argues that even if AZCO had authority to act on
Polymer’s behalf in completing the shipment, AZCO’s outdated, generic reference to a tariff
does not constitute a meaningful choice in limitation of liability by the shipper. Polymer also
argues that FedEx did not meet its burden to show an agreement to limit liability between the
shipper and carrier.
The Court finds that Polymer did not include the Rules Tariff because the use of an
antiquated reference to a sixty-seven page document did not “plainly refer” to Rule 420 therein.
First, Siren is distinguishable. In Siren, the shipper drafted a BOL that contained very
little information. 249 F.3d at 1269. However, the shipper indicated twice that the commodities
would travel under “Class 85.” Id. “Class 85” was understood throughout the trucking industry to
mean that the carrier’s liability would be limited to $11.87 per pound, regardless of any further
limitation provided by a carrier. Id. at 1269 n.2. The shipper received, and knew it received, a
discount from the full freight rate and knew that the carrier would use “Class 85” to determine
the rate. Id. The shipper never asked for the carrier’s tariff. Id.
The Eleventh Circuit held that the issue of whether the BOL incorporated the carrier’s
tariff was irrelevant. Id. at 1270–71. Rather, the Eleventh Circuit held that the shipper and carrier
were only required to agree in writing to a reasonable value, above which the carrier would not
be liable. Id. at 1271. Although the Eleventh Circuit did rely in part on the shipper drafting the
BOL, the court emphasized that its decision was based on the fact that the limitation was clear on
the face of the BOL. See id. at 1269–70. The Eleventh Circuit did not find it necessary to hold
that the tariff was incorporated into the BOL. Id. at 1274 n.5. The Eleventh Circuit ultimately
reasoned that an experienced party that wrote the BOL to include terms generally known in the
industry to limit liability, and who received a discount for including such terms, should be
charged with knowledge of the effect of those terms. Id. at 1273.
The Court disagrees with FedEx in its claim that Siren created a bright-line rule because
the Eleventh Circuit in Siren considered many factors besides the fact that the shipper drafted the
BOL. Id. at 1274. Of utmost importance was the use of “Class 85.” Because the parties here did
not use a term similar to “Class 85,” this case is distinguishable from Siren.2
Here, the shipper drafted the BOL, which stated:
RECEIVED, subject to the classifications and lawfully filed tariffs in effect on the
date of issue of this Bill of Lading . . . any service to be performed hereunder shall
be subject to all the terms and conditions of the Uniform Domestic Straight Bill
of Lading set forth . . . in the applicable motor carrier classification or tariff.
(Dkt. #23, Exhibit 1). Later, the rate authority box where the shipper could declare the value of
property was left blank.
In Siren, the reference to “Class 85” was well-known throughout the industry to give a
maximum amount of liability and the shipper received a discount for including this in their
BOLs. Siren, 249 F.3d at 1269. Here, the reference to a purported liability limitation is outdated
and generic. It refers to pre-1995 law that required carriers to file their tariffs with the Interstate
Commerce Commission. This was eliminated by the ICC Termination Act of 1995. ICC
Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803 (1995); Nipponkoa Ins. Co. v. Atlas
Van Lines, Inc., 687 F.3d 780, 782 (7th Cir. 2012). Despite this, the purported reference to a
Additionally, the Eleventh Circuit did not rely on the shipper incorporating the carrier’s BOL. Id. at 1274 n.5.
tariff does not point to any identifiable rate or tariff created by the parties or known in the
The facts here are similar to those in ABB. In ABB, the BOL stated that the product value
was $1,384,000, but it did not include a price for the shipment or indicate the level of liability
assumed by the carrier. 721 F.3d at 140. The space labeled “rate authority” was left blank. Id.
Finally, the BOL stated that “every service to be performed hereunder shall be subject to all the
terms and conditions the Uniform Domestic Straight Bill of Lading set forth . . . in Uniform
Freight Classification in effect on the date hereof.” Id. The carrier argued that this reference
incorporated its “Price List 4605,” a privately held list that provides a price that the shipper must
use to negotiate a rate directly with the carrier. Id. at 141, 143. However, the shipper had never
shipped cargo under Price List 4605. Id. at 143. The Fourth Circuit rejected the carrier’s
argument and held that the Carmack Amendment imposed full liability because the BOL did not
reference an identifiable classification, rate authority code, price list, or any other indication that
the carrier assumed only limited liability. Id. at 142–43. Similarly, here, there is no reference to
an identifiable classification, code, list, or other indication of a limitation on liability; the “rate
authority” box is blank; and Polymer had never shipped with FedEx Freight or under the Rules
Further, the fact that the tariff in this case is available online rather than a private list as in
ABB is not dispositive. The Fifth Circuit has not found that a shipper agreed to limit liability on
the basis of constructive knowledge alone. See, e.g., Hoskins v. Belkins Van Lines, 343 F.3d 769,
778–79 (5th Cir. 2003) (holding that the shipper clearly agreed to limited liability because she
was handed the carrier’s “Interstate Order for Service” and changed the level of liability on the
day of shipping). While Polymer could have found the Rules Tariff, 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.
Neither 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. One Beacon Ins. Co. v. Crowley
Marine Serves., Inc., 648 F.3d at 268 267 (5th Cir. 2011) (quoting 11 Williston on Contracts
§ 30:25 (4th ed. 1999)).
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. This is not one of those situations.
FedEx also argues that when the shipper drafts a BOL, the shipper’s choice of liability
should control, and any ambiguity should be construed against the shipper. The Court disagrees.
The Carmack Amendment unambiguously imposes the risk of error on one particular party, the
carrier, to the exclusion of the other party, the shipper. See 49 U.S.C. § 14706(c); ABB, 721 F.3d
at 145. Thus, the general contract principle that any ambiguity should be construed against the
drafter has been preempted by the Carmack Amendment.
Polymer has shown, as a matter of law, that the BOL’s vague, antiquated reference to a
sixty-seven page document did not “plainly refer” to Rule 420 of the Rules Tariff. Thus, FedEx
has not met its burden to establish the limitation of liability provision in the Carmack
Amendment and is therefore liable for the full amount of damages.
It is therefore ORDERED that Natural Polymer International Corporation’s Motion for
Summary Judgment (Dkt. #19) is hereby GRANTED.
The Court finds FedEx failed to properly limit its liability under the Carmack
Amendment. As a result, FedEx is liable for the full amount of damages.
It is further ORDERED that FedEx Freight, Inc.’s Motion for Summary Judgment
(Dkt. #20) is hereby DENIED.
It is further ORDERED that Plaintiff Natural Polymer International Corporation file a
proposed final judgment within five (5) days of this order.
SIGNED this 17th day of August, 2017.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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