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So you've just dropped $6,500 on a dead mint pre-war Gibson L-5 worthy of inclusion in the Smithsonian. The dealer has given you three dozen photos of the guitar and you know that this is "the one." What do you do when that museum quality instrument shows up on your doorstep with a broken headstock, cracks up and down the top and back and a neck joint with gaps so big that you could run a table knife through them? This article will alert you to some basic and practical information that you will need to know about the laws that govern these situations in order to negotiate settlements with shipping companies intelligently and, if necessary, bring them to court and win. In the vast majority of cases, the shipping company --- known as a "common carrier" --- who damages an instrument during shipping will provide the shipper of the instrument with a check in the amount for which the guitar was "insured" OR the decrease in the instrument's value associated with the damage done. The vast majority of common carriers are, by and large, very reputable businesses. Even on a large institutional level most carriers know that stiffing their customers at the first sign of trouble is no way to do business. Assuming that you are reasonable and accommodating in permitting agents of the carrier to inspect the damage to a broken instrument you can expect the same sort of reasonable and accommodating spirit and cooperation from the carrier. However, make no mistake --- carrier's are in business to make money and will often decline to reimburse their customers for damage to a parcel for any one of a number of reasons --- some of them legal and some of them not. Here's what to do when this happens to you. The Carmack Amendment Is Your Best Friend
Here's how the law worked. Common carriers were up in arms because every time they moved a shipment into a new state they were subjected to a completely different set of laws governing their civil liability for damages if they lost the shipment or broke the contents. What the Carmack Amendment did, and still does today, is make a single set of federal laws that supersede any state law that might otherwise apply. So instead of 50 different state laws you have a single federal statute that determines the rights and liability of a shipper and common carrier. The Carmack Amendment is a federal law that supercedes or replaces any remedies or legal claims you might have under your own state laws. Technically, you cannot sue a common carrier for a breach of contract or negligence if and when the carrier loses or damages your goods. You can only sue the carrier under the terms of the Carmack Amendment. The text of the statute is found in Title 49 of the United States Code at section 14706 et. seq. Your local librarian can help you find the appropriate materials. The abbreviated citation to the statute is 49 U.S.C. §14706 et. seq. You can also look the statute up online in any number of government and law-related web pages. Here's what the pertinent part of the law says:
The Carmack Amendment generally provides that a common carrier can limit its liability for loss or damage to goods in the contract you sign when you turn to goods over to the carrier for delivery. The limitation of liability varies from carrier to carrier, but it is typically $100. This means that, in most cases, the carrier only has to pay its customer $100 even if it loses or destroys a package that contains $150,000 in diamonds. Now here's why the Carmack Amendment is the best friend of anyone who has ever taken delivery of a broken guitar or amp from a common carrier. In exchange for the ability to limit their liability generally, the carriers have to give something up. Every contract of carriage (known as a "Bill of Lading" to lawyers) provides the shipper (you) the opportunity to pay a "declared value" premium --- this is what most of us call "insurance." The insurance charge increases in proportion to the declared value of the parcel. Even though it is technically not correct to call the "declared value" charge insurance I will continue to do so just to keep things logical and clear. Here's the bottom line . . . if you have not paid to insure the guitar and it shows up broken or not at all there is virtually NOTHING you can do about it. The carrier's normal limitation on liability ($100) is just about as close to absolute as the law ever gets. Even if you have proof that the carrier acted with gross negligence you will likely be foreclosed from bringing a negligence or other type of claim against the carrier because the Carmack Amendment provides your EXCLUSIVE remedy. However, if you HAVE paid to insure the shipment it is a long tough row to hoe for the carrier to beat you in court if you bring a claim for damages to or loss of the shipment. The following steps should guide you through the process of getting your money back from the common carrier who lost or damaged your shipment. Who Are Common Carriers
Inspection Time
Ninety nine times out of a hundred the carrier will get back to you with a report within a few days and will offer you a reasonable amount of compensation for a damaged instrument or tender the full amount of the declared value if the package was actually lost in transit. For that one in a hundred chance that, for whatever reason, the carrier doesn't pay, you may need to bring the carrier to court. The Risk of Loss
Regardless of whether you have purchased an instrument from a dealer or in a private sale via the internet, GuitarBase classifieds or the like, either the person who shipped the instrument OR the person who was supposed to receive the instrument has the ability to bring a claim against the carrier. This is known as "standing" to sue. The Carmack Amendment protects not only shippers but also anyone with a "beneficial interest" in the shipment. Accordingly, even if you do not have possession of the bill of lading, you can still bring a claim against the carrier if you were the beneficiary of that contract --- the person to whom the shipment was intended for delivery. All this being said, the person who will ultimately bring a claim against the carrier may depend largely, if not exclusively, on where and when the "risk of loss" of the shipment passed from the seller to the buyer. Typically, the shipper will bring the claim simply because he or she hired the carrier and is the holder of the "bill of lading" --- the contract that entitles the shipper to relief. However, this isn't necessarily the case. Buyers and sellers of vintage instruments rarely take the time to agree on when the risk of loss or damage to an instrument being shipped cross-country passes. Article 2 of the Uniform Commercial Code ("U.C.C."), which is adopted in one form or another in all the states, generally allows parties to a sales contract to shift the risk of loss however they chose. If the parties make no provision about risk of loss it is more likely than not that the risk of loss stays with the seller until the shipment reaches its final destination and the buyer can take delivery. (See section 2-509 of the Uniform Commercial Code). For example, assume that a buyer in New York agrees to pay $1,000 for a refinished 1957 LP Junior she saw in a GuitarBase classified from a dealer in California. The buyer and seller do not make any provision on risk of loss but agree that the seller will deliver the guitar to the buyer via a common carrier at the buyer's home address. The guitar arrives with a broken headstock and finish cracks all over the guitar. In this case, the seller should refund the buyer's money because the risk of loss remained with the seller during shipment. The seller should then make a claim against the carrier under the Carmack Amendment if the carrier declines to reimburse the seller for the damage. If, on the other hand, the parties to sale described above decide that the risk of loss will shift to the buyer as soon as the seller delivers the instrument to the carrier, then the buyer would likely not be entitled to a refund from the seller and would have to bring a claim for the damage against the carrier herself. Picking Your Court
If you have been reasonable with the carrier and the carrier still will not settle your claim to your satisfaction you probably will need to take them to court. This is not as intimidating a process as you might think. If you have a lawyer in the family or know of a lawyer who might help walk you through the process by all means contact them for advice. However, anybody can bring a case to small claims court without the help of a lawyer. Every state in the union has a state court system. Most people know the difference between an "appellate court" --- one where the decisions of lower courts are reviewed by particularly learned judges and either upheld or reversed --- and "trial courts" --- ones where criminal and civil cases are actually heard for the first time. Within the network of your state's trial court there is a separate pecking order. The biggest cases are usually heard in what is generally called a "superior" court. Smaller cases tend to be decided in the "district courts" of your state. Finally, within the district court system of your state, there will be a "small claims" division or session for VERY small cases. A "small claims" court is generally NOT a separate court, but simply a special session of the state's district court designed for disposing of very small and simple cases quickly. Typically it takes only a month or two to get a result in small claims court while it can take well over a year to get a trial date in a bigger case in district or superior courts. Depending upon the nature of your claim and the rules of court in your state you may be able to bring your case against a common carrier in only one of these courts or in any one of them. Generally, small claims cases are limited to cases involving $2500 in damages or less, but this limit will vary from state to state and, sometimes, from county to county within your own state. Keep in mind that there are no juries in small claims cases so if you decide to bring your claim there your case will be decided by a judge or a court clerk. If your case involves particularly significant damages it may be worth your while to retain a lawyer to prosecute your claim. If you don't want to incur the expense of a lawyer, but feel you need help to obtain relief from a carrier that has denied your claim you can try contacting a legal aid society in your area. Your state's bar association will have information about the available agencies. Volunteer Lawyers for the Arts is a particularly good organization staffed by able lawyers with offices in many major cities. If you have questions about where to bring a claim or where to file your complaint you should contact the court clerk for the appropriate superior, district or small claims court in your little corner of the world. Be polite, patient and courteous and the clerks will too. Keep in mind that clerks in most state court systems are extraordinarily overworked, but they will make a sincere effort to help anyone who extends them a little courtesy. What to Tell The Judge
The Carmack Amendment is not something that lawyers study in law school and it does not exactly come up in our daily practices unless you happen to have clients in the transportation industry. Therefore, after reading this article YOU will probably know as much or more about the Carmack Amendment as most lawyers and judges do. To help explain your case you should bring a copy of the Carmack Amendment with you and give it to the judge. You can get a copy from your local library or print one out online as instructed above. I have listed below several other "legal points" that you should make to the judge. Not all of these points will apply in your case, but you should keep them in mind if you have to present a case in small claims court.
The first point you should make is one that I discussed above. The Carmack Amendment is the exclusive remedy for any party (shipper or recipient) aggrieved by damage or loss to goods shipped via a bill of lading. All other claims or legal theories for recovery under state law (such as breach of contract or negligence claims) are "preempted" by the Carmack Amendment. Preemption is simply a catch phrase that refers to the Constitutional doctrine that states may not enact laws that conflict with federal laws and that, when Congress has evidenced an intention to occupy the entire field of an area of law with its own legislation, states cannot even enforce their own laws that relate to the same topic. This is a gross oversimplification of the rule and probably more information that you will ever need to know about preemption under the federal Constitution, but the judge might appreciate a civics lesson on the subject. The basic point here is to tell the judge that the ONLY law that applies and the only rules that he or she need examine in deciding your case are the rules that govern the application of the Carmack Amendment. If the judge wants proof that you know what you're talking about you should refer him or her to a Supreme Court case entitled Missouri Pacific Railroad Company v. Elmore & Stahl, 377 U.S. 134 (1964). You can obtain a copy of this case in your local library or online at one of the government web pages that provide access to Supreme Court decisions. It would be a VERY good idea to bring this case to court with you and give a copy to the judge.
Simply because it is unusual to apply federal laws in a small claims proceeding, the judge may be confused about whether he or she has "jurisdiction" to hear your claim. You can point out to the judge that the text of the Carmack Amendment itself provides that private claims (such as yours) may be brought either in a Federal District Court or in any state court of competent jurisdiction. Assuming that the amount of your claim is within the limits of your state's small claims rules, you should be fine. You should refer the judge to 49 United States Code section 14706(d) if he or she has any question about jurisdiction. This is the section of the Carmack Amendment that says you can bring claims in either state or federal court.
This will probably be the most important point you will make so I will try to explain the rule as simply as possible. "Strict Liability" means that a party cannot escape liability for its actions when certain facts are shown. In layman's terms it is the moral equivalent of an "open and shut case." The Supreme Court has specifically stated that the Carmack Amendment imposes upon common carriers "strict liability" for damages or loss to parcels in the carrier's care. Again, you should refer the judge to the Missouri Pacific case as support for this proposition.
In order to prove a carrier is "strictly liable" as described above you will need to prove your "prima facia case" (pronounced PR-EYE-MA FASHIA). This is a latin term that lawyers sometimes use to confuse people into thinking that we're smarter than we really are. Loosely translated, the "prima facie case" is simply the "essential elements" of your claim. According to the Missouri Pacific case identified above, once you prove these essential elements you are just about home. To prove your prima facie case (essential elements) you need to show ONLY the following three things:
There is no magic formula for proving these three things. You simply have to tell your story. To prove the guitar or amp at issue was in good condition when it was delivered to the common carrier you would simply testify that, when you dropped the piece off at UPS, FedEx, DHL, etc. the gear was in mint shape. You can bring along photos of the equipment showing its condition prior to shipping. You can get affidavits from your guitar playing buddies who have seen and played the instrument and can aver to its condition. If you are not the shipper of the guitar you will want to get a written statement or affidavit from the shipper that the guitar was in good/excellent/pristine condition when he or she put it in the hands of the carrier. To prove that the gear arrived in damaged condition you need only bring in the damaged goods. If there is damage that is not visible to the instrument you may need to explain the nature of the injury to the judge, but in most cases the damage will be self evident. You should also bring the packing materials. If the box in which the gear was packaged does not show any visible damage you may need to explain to the judge that a guitar can be severely damaged when dropped even though the box shows no signs of abuse. To prove the amount of your damages you will need to testify (1) about the value of the guitar before it was shipped and (2) its current value. You should bring along any appraisals you might have and copies of the various price guides (The Vintage Guitar Magazine Price Guide was accepted as a "learned treatise" on the value of vintage guitars in my own case against a common carrier). A shipper may offer you the cost of repair as compensation and may decline to tender the diminished value of a repaired vintage instrument. In such a case it will be up to you to explain to a judge why it is that a $20,000 1957 goldtop requiring a $300 headstock repair after being shipped by UPS is only worth $10,000. A judge or jury, and the customer reps from your carrier, will probably not understand why a repaired guitar is worth so much less than a pristine example. It will be up to you to educate the judge on this subject, so bring whatever books, research and articles you have on the subject to court with you. If you give a reasonably articulate explanation you should collect the full amount of the diminished value. Once you have proved these three simple things to the satisfaction of the judge (assuming of course that you can) you should win the day, if the court applies the federal law the way it is supposed to.
There is an additional point that you will want to make to the judge with respect to the first element of your "prima facie case" --- proving that the goods were in good condition when the carrier got them. This point is a little more technical, but I will try to explain it simply. When a common carrier issues to a shipper what is known as a "clean bill of lading" and when the goods were not sealed in a way that the common carrier could not see them without ripping the package apart, the law PRESUMES that the goods were in good condition when the carrier got them. For example, let's assume that you bring a guitar to a common carrier just in a guitar case or in an unsealed box. Let's further assume that as part of the shipping contract you ask the carrier to box up the guitar and/or seal your box. Finally, let's assume that, after having such an opportunity to inspect the goods, the carrier does not make any notation of the condition of the goods on the contract (a "clean bill of lading"). In this case the law PRESUMES that the contents of the package were in good condition because the carrier had a chance to see them and didn't indicate that the goods were in anything other than good condition. This is why I ALWAYS show the contents of a package to the carrier before boxing them up and sealing them. This rule will obviously only apply when the carrier has this opportunity to inspect the package before it is finally sealed and given over to them for delivery. Nevertheless, when the facts support application of this rule, your case against the carrier is even stronger. For cases that describe this rule about the above described "presumption" you should look up and print out copies of the following cases. Centennial Insurance Company v. M.V. Constellation Enterprise, 639 Federal Supplement 1261 (Southern District of New York 1986) and Caribbean Produce Exchange v. Sea Land Service, 415 Federal Supplement 88 (District of Puerto Rico 1976).
In proving both that the guitar or amp at issue was in good condition when the common carrier took possession of it AND that it was damaged when it reached its final destination you may rely on circumstantial evidence. The case that supports this point is entitled Fine Foliage of Florida v. Bowman Transportation, 910 Federal Reporter 2nd 1024 (11th Circuit 1990).
If you read the portion of the Carmack Amendment that I quoted at the beginning of this Magnum Opus on carrier liability you will see that the law makes ANY carrier involved in delivering your gear liable for any damage sustained or loss occurring during shipment. Most guitar traders simply send their gear via a large commercial carrier such as UPS, FedEx or DHL. These carriers have a huge network of trucks and planes and generally, once a package is left in their corporate mits it tends to stay there until it is delivered. However, many common carriers will engage OTHER carriers to complete a shipment. For example, if you hire carrier A in California to deliver a package to Maine carrier A might drive the parcel as far as Arizona and contract with carrier B to finish the shipment. Carrier B might get the package as far as Ohio and then enter into another contract with carrier C to finish the job. In this situation, all three carriers would be liable for ANY damage or loss to the shipment between California and Maine. Why? Because the Carmack Amendment says so. The law is designed SPECIFICALLY so that an innocent shipper won't have to beat the bushes to figure out when and where a parcel was damaged and then sue the carrier that had control of it at the point of damage. That would be nearly impossible to do. Congress recognized that the CARRIERS are in the best position to figure out when and where a package was damaged. Therefore, when you get that broken guitar, all you have to do is sue one or more of the carriers involved in the delivery. Each one of them is liable. The carriers can then fight amongst themselves about who should bear the brunt of the liability. It is extremely unlikely that this situation will ever come up in a typical guitar deal. However, some dealers who buy and sell in very large volumes of instruments may use more economical carriers for a large shipment and these carriers often sub-contract the job. Accordingly, it is important to remember that the Carmack Amendment protects you against any and all carriers who even touched your package on its way from point A to point B.
A common carrier cannot put into its contract for carriage (bills of lading) any provisions that contradict or differ from the rules set out by the Carmack Amendment. If they try to enforce a provision of the bill of lading against you in a way that contradicts the Carmack Amendment such a provision is "void as against public policy" and what lawyers commonly refer to as a "nullity." The Fine Foliage case referred to above supports this proposition. This simple rule means that a common carrier cannot try an end run around its own liability under the federal law by inserting in its contracts language or provisions that the federal law says shouldn't be there in the first place.
As described above, once you have proven the three parts of your "prima facie" case you are as close to having the proverbial open and shut case as you are ever going to get. However, there are a few limited defenses available to carrier. The only defenses that might ever apply are known as the "act of shipper" defense, the "act of God" defense and the "act of public enemy" defense. The "act of shipper defense" might apply if the common carrier can prove that you did something that was so mind-boggling stupid that the package at issue was destined to show up broken. For example, if you decide to protect the headstock of your vintage ES-345 by placing it between two large bricks before putting the guitar in the case you might lose your right to recover under the "act of shipper" defense. If, after locating that elusive $300 Gibson Corvus that you had waited months to acquire, the guitar is whisked away in a freak tornado, the carrier might raise a defense that the damage was the result of an act of God. Finally, if militant terrorists declare a holy war against the shipping industry in the continental United States and select as their first target the big brown truck carrying your new Gibson RD Artist (complete with batteries) the carrier will likely defend your claim by saying that the damage was the result of an act of a "public enemy." In these cases you might not be able to recover from the carrier, but these situations will be few and far between. If these facts apply to your case you might want to think more seriously about seeking advice from a lawyer.
Just about every state in the union has laws that are designed to protect consumers. Many of these laws are copies of the Federal Trade Commission Act. Known as "mini FTC acts" in the various states, these consumer protection laws generally provide legal claims to anyone who has been injured by an "unfair or deceptive" business practice of another. Although the Carmack Amendment "preempts" state laws that might otherwise apply to a carrier's failure to deliver a package in good condition (breach of contract or negligence) your state's consumer protection statute might apply in your case. Because the consumer protection laws are there to prevent unfair business practices, you can argue that you should be entitled to relief under these laws if the common carrier dealt with your claim for relief in an unfair or deceptive way. Thus, you would have two claims. The first claim would be your Carmack Amendment claim for failing to deliver the package in good condition. You second claim would be your consumer protection claim for being treated deceptively and unfairly by the carrier AFTER it had already lost or damaged your package. It is important to note that consumer protection laws generally apply only to particularly egregious conduct. If the conduct of the common carrier was particularly dastardly in your case you should look into a claim under your state's consumer protection statute. The laws will differ in each state, but most provide that a person injured by unfair or deceptive business practices may be entitled to two or three times his or her actual damages. This is designed to punish a business for acting like a jerk and to encourage them to treat people better. If the nature of your dispute is simply an honest difference of opinion over who is liable for the damage, the consumer protection law might not apply. Your state probably has a consumer protection board that can help you with any consumer protection claims you might have. You can check with the Attorney General's office's of your home state for more details. Parting Words
Hopefully this material will give you the background necessary to settle any dispute you may have with your favorite carrier. |