Court of Appeals of North Carolina.

Terry RAMEY, d/b/a Ramey Wrecker Service, Plaintiff,

v.

Honorable Michael F. EASLEY, The Governor of the State of North Carolina, the

Department of Crime Control and Public Safety, the North Carolina Highway

Patrol, and John Does 1-4, Defendants.

No. COA05-1404.

 

June 20, 2006.

 

TYSON, Judge.

 

Terry Ramey d/b/a Ramey Wrecker Service (“plaintiff”) appeals from order entered denying his motion for summary judgment and granting summary judgment in favor of The Honorable Michael F. Easley, the Department of Crime Control and Public Safety (“DCCPS”), the North Carolina Highway Patrol (“Highway Patrol”), and John Does 1-4 (collectively, “defendants”). We affirm.

 

I. Background

Plaintiff owns and operates Ramey’s Wrecker Service in Haywood County and uses trucks and equipment to tow motor vehicles. The North Carolina Department of Public Safety and Crime Control adopted rules and regulations governing private companies and equipment included on the Wrecker Rotation Services List maintained by the Highway Patrol. These rules and regulations became effective on 1 April 2001. Any wrecker service desiring to be included and remain on the Highway Patrol’s Wrecker Rotation Services List is required to meet certain regulations contained in the North Carolina Administrative Code. Plaintiff’s business was included on the Highway Patrol’s Wrecker Rotation Services List. Plaintiff was removed from the Wrecker Rotation Services List for failing to: (1) respond to at least 75% of the calls made to him by the Highway Patrol; (2) maintain a current Department of Transportation inspection sticker on his large wrecker; and (3) have proper cables installed on his wreckers.

 

Plaintiff initially filed a complaint in the Haywood County District Court against Governor Easley, DCCPS, the Highway Patrol, John Does 1-6, and the Department of Transportation Highway Division (“DOT”). Plaintiff voluntarily dismissed with prejudice his claims against the DOT and John Does 5 and 6. Plaintiff sought a declaratory judgment for the wrecker rotation regulations to be declared illegal. He asserts federal law preempts the Highway Patrol’s ability to establish regulations for private wrecker companies to be included on its Wrecker Rotation Services List. Plaintiff also sought money damages for an alleged interference with business advantage.

 

Defendants moved for summary judgment arguing the declaratory judgment and money damages plaintiff sought were barred by the doctrine of sovereign immunity. Plaintiff also moved for summary judgment. The trial court denied summary judgment for plaintiff and granted summary judgment in favor of defendants. Plaintiff appeals.

 

II. Issues

Plaintiff argues the trial court erred by: (1) failing to grant partial summary judgment in favor of plaintiff because the Highway Patrol has no “grant of rule-making authority” and no authority to regulate private wrecker businesses; and (2) granting summary judgment in favor of defendants because federal law preempts the rules promulgated by defendants.

 

III. Standard of Review

Summary judgment is proper if the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen.Stat. §  1A-1, Rule 56(c) (2005). The evidence must be considered in a light most favorable to the non-moving party. Summey v. Barker, 357 N.C. 492, 496, 586 S.E.2d 247, 249 (2003). When reviewing a lower court’s grant of summary judgment, our standard of review is de novo. Id.

In most cases, the denial of a motion for summary judgment establishes only that there is a genuine issue of material fact, and the ruling does not dispose of the case. However, in the instant case, the denial of [plaintiff’s] summary judgment motion and the grant of summary judgment in favor of … defendants disposed of the cause as to all parties and left nothing to be judicially determined by the trial court. Therefore, [plaintiff’s] appeal of the denial of its summary judgment motion and the grant of summary judgment in favor of defendants was a final judgment on the merits of the case, instead of being an interlocutory appeal.

Carriker v. Carriker, 350 N.C. 71, 73, 511 S.E.2d 2, 4 (1999).

 

Plaintiff sought for a declaratory judgment. See N.C. Gen.Stat. §  1-253  (2005) (“Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations, whether or not further relief is or could be claimed…. The declaration may be either affirmative or negative in form and effect; and such declarations shall have the force and effect of a final judgment or decree.”). We review issues of statutory construction de novo. A & F Trademark, Inc. v. Tolson, 167 N.C.App. 150, 153-54, 605 S.E.2d 187, 190 (2004), cert. denied, — U.S. —-, 126 S.Ct. 353, 163 L.Ed.2d 62 (2005).

 

IV. Summary Judgment in Favor of Plaintiff: Statutory Authority

Plaintiff asserts the trial court erred in failing to grant summary judgment in his favor and argues the Highway Patrol has no grant of rule making authority. We disagree.

 

Article II, Section 1 of the North Carolina Constitution vests the legislative power in the General Assembly. N.C. Const. art. I, sec. 1. The General Assembly is constitutionally prohibited from delegating its law making power to any other branch or agency which it may create. Adams v. North Carolina Dep’t of Natural & Economic Resources, 295 N.C. 683, 696, 249 S.E.2d 402, 410 (1978).

However, it has long been recognized by this Court that the problems which a modern legislature must confront are of such complexity that strict adherence to ideal notions of the non-delegation doctrine would unduly hamper the General Assembly in the exercise of its constitutionally vested powers. A modern legislature must be able to delegate–in proper instances–a limited portion of its legislative powers to administrative bodies which are equipped to adapt legislation to complex conditions involving numerous details with which the Legislature cannot deal directly. Thus, we have repeatedly held that the constitutional inhibition against delegating legislative authority does not preclude the legislature from transferring adjudicative and rule-making powers to administrative bodies provided such transfers are accompanied by adequate guiding standards to govern the exercise of the delegated powers.

Id. at 696-97, 249 S.E.2d at 410 (internal quotations omitted)  (emphasis supplied).

 

N.C. Gen.Stat. §  20-184 (2005) provides:

The Secretary of Crime Control and Public Safety, under the direction of the Governor, shall have supervision, direction and control of the State Highway Patrol. The Secretary shall establish in the Department of Crime Control and Public Safety a State Highway Patrol Division, prescribe regulations governing said Division, and assign to the Division such duties as he may deem proper.

(emphasis supplied). N.C. Gen.Stat. §  20-188 (2005) provides, “[the Highway Patrol] shall be subject to such orders, rules and regulations as may be adopted by the Secretary of Crime Control and Public Safety.” N.C. Gen.Stat. §  20-188 also delegates to the Highway Patrol the duty to “enforce all laws and regulations respecting travel and the use of vehicles upon the highways of the State.”

 

Plaintiff posits the legislature has not granted the Highway Patrol authority to regulate private wrecker businesses. Plaintiff stipulates the legislature granted to defendants the statutory authority to “provide public safety within the State of North Carolina….” Plaintiff argues that the statutes contained in Chapter 20 “only pertain to the granting of the authority specifically necessary for public safety.”

 

The regulations governing the Highway Patrol’s Wrecker Rotation Services List are contained in Title 14A of the North Carolina Administrative Code. See 14A NCAC 9H .0308 (2004). The Administrative Code states, “In order to perform its traffic safety functions, the Patrol is required to use wrecker services to tow disabled, seized, wrecked and abandoned vehicles.” 14A NCAC 9H .0319 (2004). The Administrative Code mandates that the Highway Patrol’s Troop Commander “shall arrange for the Telecommunications Center to maintain a rotation wrecker system within each District of the Troop.” 14A NCAC 9H .0320 (2004). Members of the Highway Patrol must “assure the impartial use of wrecker services” included on the Wrecker Rotation Services List. 14A NCAC 09H .0319. Whenever possible, members of the Highway Patrol are required to dispatch the wrecker service requested by the motorist requiring the wrecker service. Id.

 

In order to perform its traffic safety functions, the Highway Patrol utilizes private wrecker services to remove abandoned, seized, damaged, or disabled vehicles from public roadways. The Highway Patrol promulgated regulations for private wrecker services included on its rotation list to meet in order to be called to the scene and to safely remove vehicles from the public roadways.

 

In the interest of public safety, the Highway Patrol has delegated authority to promulgate regulations setting forth the requirements a private wrecker service must meet in order to be included and remain on the Highway Patrol’s Wrecker Rotation Services List. N.C. Gen.Stat. §  20-184; N.C. Gen.Stat. §  20-188. The challenged regulations clearly relate to public highway safety. The trial court did not err in denying plaintiff’s motion for partial summary judgment. This assignment of error is overruled.

 

V. Summary Judgment in Favor of Defendants: Preemption

Plaintiff asserts the trial court erred in granting summary judgment in favor of defendants and argues federal law preempts the Highway Patrol’s authority to regulate private wrecker companies. We disagree.

 

Plaintiff contends 49 U.S.C. §  14501 preempts the rules promulgated by the Highway Patrol. The statute, entitled, “Federal authority over intrastate transportation,” provides in pertinent part:

(c) Motor carriers of property.

(1) General rule. Except as provided in paragraphs (2) and (3), a State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier (other than a carrier affiliated with a direct air carrier covered by section 41713(b)(4) [49 U.S.C. §  41713(b)(4) ] ) or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

(2) Matters not covered. Paragraph (1)–

(A) shall not restrict the safety regulatory authority of a State with respect to motor vehicles, the authority of a State to impose highway route controls or limitations based on the size or weight of the motor vehicle or the hazardous nature of the cargo, or the authority of a State to regulate motor carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization;

(B) does not apply to the intrastate transportation of household goods; and

(C) does not apply to the authority of a State or a political subdivision of a State to enact or enforce a law, regulation, or other provision relating to the price of for-hire motor vehicle transportation by a tow truck, if such transportation is performed without the prior consent or authorization of the owner or operator of the motor vehicle.

49 U.S.C. §  14501(c) (2005) (emphasis supplied).

 

To determine whether the Highway Patrol’s regulations fall within the “safety regulatory authority” exception in 49 U.S.C. §  14501(c)(2)(A), we review whether the challenged regulations are “genuinely responsive to safety concerns.” See City of Columbus v. Ours Garage & Wrecker Serv., 536 U.S. 424, 442, 122 S.Ct. 2226, 153 L.Ed.2d 430, 446 (2002) (“Local regulation of prices, routes, or services of tow trucks that is not genuinely responsive to safety concerns garners no exemption from §  14501(c)(1)’s preemption rule.”).

 

Although North Carolina courts have not addressed this issue, other jurisdictions have upheld similar regulations under the “safety regulatory authority” exception contained in 49 U.S.C. §  14501(c)(2). See Cole v. City of Dallas, 314 F.3d 730 (5th Cir.2002) (regulation barring applicants from receiving a wrecker driver’s permit to tow motor vehicles if they had a criminal history was held to fall under the safety exception); Ace Auto Body & Towing, Ltd. v. City of New York, 171 F.3d 765, 766 (2d Cir.1999), cert. denied, 528 U.S. 868, 120 S.Ct. 166, 145 L.Ed.2d 140 (2000) (towing ordinance requiring, inter alia, licensing, display of information, record keeping, disclosure of criminal history, and maintaining local storage and repair facilities fell within the safety exception); Hott v. City of San Jose, 92 F.Supp.2d 996, 999 (N.D.Cal.2000) (regulations requiring tow truck operators to maintain liability insurance, pass criminal background checks, and to keep records and display information fell within the safety exception). Plaintiff failed to cite any authority to invalidate the regulations, or to show the regulations are not exempt under the “safety regulatory authority” exception of 49 U.S.C. §  14501.

 

Here, the Rotation Wrecker Service Regulations set forth thirty-two conditions a private wrecker service must meet and comply with in order to be included and remain on the Wrecker Rotation Services List. These regulations require the wrecker service to: (1) maintain legally required lighting and other safety equipment to protect the public; (2) remove all debris from the highway prior to leaving the collision scene; (3) maintain a full-time office within the Rotation Wrecker Zone; (4) consistently respond to calls in a timely manner; (5) impose reasonable charges for work performed; and (6) secure all personal property at the scene of a collision to the extent possible; and (7) preserve personal property in a towed vehicle.

 

The regulations also provide for the type and amount of insurance coverage the wrecker service must maintain, the type of equipment the wrecker service is required to have available, and prohibits persons with convictions for certain crimes from being included on the rotation list.

 

These provisions promote public safety at the scene to which the wrecker service is summoned and the preserves personal property towed from the scene. These regulations protect the public and are “genuinely responsive to safety concerns.” City of Columbus, 536 U.S. at 442, 153 L.Ed.2d at 446.

 

Here, the Highway Patrol’s regulations fall within the “safety regulatory authority” exception set forth in 49 U.S.C. 14501(c)(2)(A), and are not preempted by federal law. The trial court properly granted summary judgment in favor of defendants. This assignment of error is overruled. Our review and decision does not consider or condone laws, rules, or regulations related to price, route, or service of any motor carrier which is not in the interest of public safety or within other statutory exemption. Id.

 

VI. Conclusion

The trial court did not err in denying plaintiff’s motion for partial summary judgment. The General Assembly delegated to the Department of Crime Control and Public Safety and the Highway Patrol the authority to promulgate regulations regarding the requirements a private wrecker service must meet to be included and remain on the Highway Patrol’s Wrecker Rotation Services List in the interest of public safety. N.C. Gen.Stat. §  20-184; N.C. Gen.Stat. §  20- 188; 14 NCAC 9H .0308; 14A NCAC 9H .0319.

 

The trial court did not err in granting summary judgment in favor of defendants. The Highway Patrol’s regulations for private wrecker services to be and remain on the Highway Patrol’s Wrecker Rotation Services List fall within the “safety regulatory authority” exception set forth in 49 U.S.C. §  14501(c)(2)(A) and are not preempted by federal law. The trial court’s order is affirmed.

 

Affirmed.

 

Judges McCULLOUGH and HUDSON concur.

 

— S.E.2d —-, 2006 WL 1675827 (N.C.App.)

 

United States Court of Appeals,

Third Circuit.

EMERSON ELECTRIC SUPPLY COMPANY

v.

ESTES EXPRESS LINES CORPORATION, Appellant.

No. 05-2654.

 

Argued March 31, 2006.

Filed June 16, 2006.

 

OPINION

 

COWEN, Circuit Judge.

 

Estes Express Lines Corporation (“Estes”) appeals the order of the district court granting summary judgment in favor of Emerson Electrical Supply Co. (“Emerson”) requiring Estes to pay for the full value of damaged electrical equipment it transported pursuant to the Carmack Amendment, 49 U.S.C. §  14706. The district court held that the recent legislative changes to the Carmack Amendment did not eliminate the requirement that a carrier such as Estes provide a shipper with a fair opportunity to choose between two or more different rates with corresponding levels of liability. The court concluded that Estes could not limit its liability pursuant to its tariff because it failed to provide Emerson two or more different rates. We will affirm.

 

I.

Emerson is a distributor and seller of electrical equipment produced by various manufacturers, including OEM, Inc. (“OEM”). Electrical Component Sales, Inc. (“ECS”) is a distributor for OEM and provides technical and engineering services to Emerson’s customers. Estes is a licensed and authorized motor carrier that transports goods in interstate commerce.

 

Emerson received a purchase order from Sharon Tube Company for electrical equipment manufactured by OEM. The total price of the equipment was $158,360.00. The shipping arrangements were made by Keith Rypczyk, an employee of ECS. Rypcyzk called Estes to request a quotation for transporting the equipment. Rypcyzk informed Estes that the shipment would consist of four pieces of electrical switch gears, and he provided the approximate dimensions and weight of each piece. Estes sent Rypczyk a fax quoting a shipping price of $450. Estes did not inform Rypcyzk of other shipping rates with corresponding levels of liability if the equipment were to be damaged in transit.

 

Pursuant to Rypcyk’s instructions, Estes picked up the electrical equipment from OEM. The shipment consisted of four uncrated, shrink-wrapped pallets and two packages of lifting angles. OEM produced and signed a bill of lading that stated the shipper agreed to the terms and conditions set forth in the tariff governing the shipment. Pursuant to the bill of lading, the classification of the shipment was class 77.5. The bill of lading contained a declared value section that provided:

NOTE: 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 ____.

(A2 173-74 ¶  12.) OEM left the declared value spaces blank.

 

After OEM signed the bill of lading, Estes’s driver affixed a pro sticker on the bill of lading that stated: “Driver’s signature acknowledges receipt of freight only. Terms of EXLA-105 Rules Tariff apply.” (A2 173 ¶  8.) With respect to uncrated, new equipment, Tariff EXLA-105 provided:

If the shipper fails or declines to release the value of the property to a value not exceeding 10 cents per pound, or designates a value exceeding 10 cents per pound, shipment will not be accepted, but if a shipment is inadvertently accepted, it will be considered as being released to a value of 10 cents per pound and the shipment will move subject to such limitations of liability.

(A2 199.) If the goods were crated, the tariff provided that class 77.5 shipments were limited to a maximum value of $7.90 per pound.

 

The electrical equipment was damaged during shipment. On January 13, 2003, Emerson filed a cargo claim with Estes for $140,000.00. In response to the cargo claim, Estes sent a letter to Emerson stating that its liability was limited to ten cents per pound, or $1,020.00, based on Estes’s Tariff EXLA 105- H.

 

Emerson then commenced an action in the district court to recover the full amount of the damaged shipment pursuant to the Carmack Amendment, 49 U.S.C. §  14706. Estes moved for partial summary judgment to limit its liability to $1,020.00 pursuant to the tariff limitations. Emerson filed a cross motion for summary judgment contending that the equipment was in good condition when the equipment was given to Estes for transport, and Estes did not effectively limit its liability by offering alternative valuations at different rates.

 

On June 29, 2004, the district court denied Estes’s motion for partial summary judgment to limit liability. The district court held that the legislative changes to the Carmack Amendment did not alter the requirement that a carrier offer a shipper two or more levels of liability. It also found that Estes failed to offer Emerson two or more rates with corresponding levels of liability. The district court denied Emerson’s motion for summary judgment without prejudice stating that it failed to offer any evidence that the goods were given to Estes in good condition.

 

On August 26, 2004, Emerson filed a second motion for summary judgment contending that the equipment was in good condition. The district court granted the motion and entered a judgment against Estes and in favor of Emerson for $145,192.80.

 

II.

The district court had jurisdiction under 28 U.S.C. §  1331, and we exercise appellate review pursuant to 28 U.S.C. §  1291. Our review of a grant of summary judgment is plenary. See Gilles v. Davis, 427 F.3d 197, 203 (3d Cir.2005).

 

The first issue we will consider is whether recent legislative changes to the Carmack Amendment permit a carrier to limit its liability for damaged goods without offering the shipper two or more rates with corresponding levels of liability. To address this issue, we delve into release value agreements under the common law, legislative changes made to the Carmack Amendment, and courts’ interpretations of the Carmack Amendment.

 

Release Value Agreements Under the Common Law

At common law, a carrier’s liability for goods damaged in transit was virtually unlimited. [] Nor was a carrier permitted to exculpate itself from liability for its negligent acts. See First Pa. Bank, N.A. v. E. Airlines, Inc., 731 F.2d 1113, 1116 (3d Cir.1984). It could, however, limit its liability for damaged or lost goods pursuant to a release value agreement. See id. Under a release value agreement, a carrier and shipper agreed to a reduced value of the goods in exchange for a reduced shipping rate. See Union Pac. R.R. v. Burke, 255 U.S. 317, 321, 41 S.Ct. 283, 65 L.Ed. 656 (1921). Courts would enforce these release value agreements as long as the carrier gave the shipper the alternative of paying a higher rate in exchange for greater carrier liability. See id. If a carrier failed to provide the shipper with a reasonable opportunity to pay a higher shipping rate in exchange for greater carrier liability, then the carrier would be liable for the actual true value of the damaged or lost property. See First Pa. Bank, N.A., 731 F.2d at 1117.

 

In 1887, Congress passed the Interstate Commerce Act to regulate transportation. Congress established the Interstate Commerce Commission (“ICC”), an independent regulatory agency, to administer the act. S. REP. No. 104-176, at 2 (1995). The ICC initially regulated the railroad industry by requiring rates to be “reasonable and just” and prohibited certain railroad practices, such as rate discrimination, price fixing, and rebating. Id. Congress gradually expanded the authority of the ICC by allowing it to regulate other modes of transportation, including the truck and bus industries. Id. at 2-3.

 

Initially, the Interstate Commerce Act did not contain a provision concerning the liability of carriers for loss or damage to goods. It was also silent on whether carriers could exempt themselves from liability or limit their liability pursuant to an agreement in the bill of lading or elsewhere. 3 SAUL SORKIN, GOODS IN TRANSIT §  13.02, at 13-16.1 (2005).

 

In 1906, Congress addressed carrier liability in the Carmack Amendment, which provided in pertinent part:

That any common carrier, railroad, or transportation company receiving property for transportation from a point in one State to a point in another State shall issue a receipt or bill of lading therefor and shall be liable to the lawful holder thereof for any loss, damage, or injury to such property caused by it … and no contract, receipt, rule or regulation shall exempt such common carrier, railroad, or transportation company from the liability hereby imposed.

Act of June 29, 1906, ch. 3591, §  7, 34 Stat. 593 (1906).

 

In Adams Express Co. v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314 (1913), the United States Supreme Court considered whether the Carmack Amendment prohibited a carrier from limiting its liability by providing a choice of freight rates and corresponding levels of liability in its bill of lading. In Croninger, a diamond ring was lost during shipment. The limitation of liability provision in the bill of lading provided that the carrier would not be held liable for more than fifty dollars unless a greater value was declared. The Court interpreted the Carmack Amendment as a codification of the common law and held that a carrier and shipper were still permitted to enter release value agreements. See id. at 508-12; see also Peyton v. Ry. Express Agency, 316 U.S. 350, 351, 62 S.Ct. 1171, 86 L.Ed. 1525 (1942) (noting that the Supreme Court upheld the power of a carrier to enter into release value agreements following the Carmack Amendment).

 

Overview of Legislative Changes to the Carmack Amendment

 

After the Supreme Court’s decision in Croninger, Congress passed the first Cummins Amendment, 38 Stat. 1196 (1915), which prohibited all released rate arrangements except when the goods were concealed by packaging and the character of the goods was unknown to the carrier. See Shippers Nat’l Freight Claim Council, Inc. v. I.C.C., 712 F.2d 740, 748 n. 6 (3d Cir.1983). Finding the first Cummins Amendment too restrictive, Congress passed the second Cummins Amendment, 39 Stat. 441 (1916), which substantially restored the common law rule expressed in Croninger. See Peyton, 316 U.S. at 352. Pursuant to the second Cummins Amendment, a carrier could be authorized “by order of the Interstate Commerce Commission to establish and maintain rates dependent upon the value declared in writing by the shipper or agreed upon in writing as the released value of the property.” Howe v. Allied Van Lines, Inc., 622 F.2d 1147, 1149 (3d Cir.1980) (quoting previous version of the Carmack Amendment, 49 U.S.C. §  20(11)). [] The ICC would authorize such rates listed in the carrier’s tariff if it found the rates to be just and reasonable. See 3 SORKIN §  13.02, at 13-19.

 

In 1978, Congress passed the Revised Interstate Commerce Act, Pub.L. No. 95-473, 92 Stat. 1337 (1978), which recodified the Carmack Amendment. The expressed legislative intent was to restore without substantive change the applicable laws enacted prior to May 16, 1978. See id. The provisions concerning released rates originally found in 49 U.S.C. §  20(11) were codified at 49 U.S.C. §  10730. See Shippers Nat’l Freight Claim Council, Inc., 712 F.2d at 742 n. 2. Similar to §  20(11), §  10730 provided:

The Interstate Commerce Commission may require or authorize a carrier providing transportation or service subject to its jurisdiction … to establish rates for transportation of property under which the liability of the carrier for that property is limited to a value established by written declaration of the shipper, or by a written agreement, when that value would be reasonable under the circumstances surrounding the transportation.

49 U.S.C. §  10730 (1979). This provision applied to all interstate common carriers of property, other than water carriers. See Shippers Nat’l Freight Claim Council, Inc., 712 F.2d at 742.

 

Congress then amended §  10730 with the Motor Carrier Act of 1980, Pub.L. No. 96-296, 94 Stat. 793 (July 1, 1980). Section 12 of the Motor Carrier Act divided §  10730 into two subsections. Subsection (a) consisted of the prior §  10730 but was made inapplicable to motor carriers of nonhousehold property. The new subsection (b) allowed a motor carrier of nonhousehold property to establish released rates without prior approval of the ICC, but permitted the ICC to require the carrier to have in effect full liability rates as well. [] See id.

 

In enacting subsection (b), Congress sought to deregulate transportation services and allow released value rates to foster more competition in prices. H.R. REP. No. 96-1069, at 26 (1980), as reprinted in 1980 U.S.C.C.A.N. 2283, 2308; S. REP. No. 104-176, at 10 (1995).

 

Congress then passed the Trucking Industry Regulatory Reform Act of 1994,  (“TIRRA”), Pub.L. No. 103-311, 108 Stat. 1673, 1684-85, which eliminated the requirement that nonhousehold good carriers file a tariff containing rates with the ICC. Next, Congress passed the ICC Termination Act of 1995 (“ICCTA”) which replaced §  10730 with §  14706. Under the ICCTA, motor carriers and freight forwarders can establish rates for the transportation of property, other than household goods, under which the liability of the carrier is limited to a value established by written or electronic declaration of the shipper or by written agreement. As to motor carriers, the rate must be reasonable. The Surface Transportation Board, which replaced the ICC, is authorized to determine reasonableness. 3 SORKIN §  13.02, at 13-20.2-13-21.

 

Federal Courts’ Interpretation of the Carmack Amendment

 

In Carmana Designs Ltd. v. North American Van Lines, Inc., 943 F.2d 316 (3d Cir.1991), this Court noted that a carrier’s ability to “limit [its] liability is a carefully defined exception to the Carmack Amendment’s general objective of imposing full liability for the loss of shipped goods; courts, thus, carefully scrutinize agreements purporting to limit such liability.” Id. at 319. Prior to the enactment of the TIRRA and the ICCTA, a carrier had to satisfy four requirements before it could limit its liability under the Carmack Amendment:

(1) maintain a tariff within the prescribed guidelines of the Interstate Commerce Commission; (2) obtain the shipper’s agreement as to [the shipper’s] choice of liability; (3) give the shipper a reasonable opportunity to choose between two or more levels of liability; and (4) issue a receipt or bill of lading prior to moving the shipment.

Carmana Designs Ltd., 943 F.2d at 319; Am. Cyanamid Co. v. New Penn Motor Express, Inc., 979 F.2d 310, 313 (3d Cir.1992); accord Hughes Aircraft Co. v. North Am. Van Lines, Inc., 970 F.2d 609, 611-12 (9th Cir.1992); Norton v. Jim Phillips Horse Transp., Inc., 901 F.2d 821, 827 (10th Cir.1989); Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir.1987). The carrier had the burden of establishing these requirements. See Carmana Designs Ltd., 943 F.2d at 319.

 

In the present case, Estes contends that the third requirement that a carrier offer a shipper two or more levels of liability is no longer mandated pursuant to the ICCTA. Prior to the ICCTA, the liability limiting provisions under §  10730 of the Carmack Amendment provided in pertinent part:

(b)(1) [A] motor common carrier … may … establish rates for the transportation of property … under which the liability of the carrier … for such property is limited to a value established by written 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.

(2) Before a carrier … may establish a rate for any service under paragraph (1) of this subsection, the Commission may require such carrier … to have in effect and keep in effect … a rate for such service which does not limit the liability of the carrier….

49 U.S.C. §  10730(b).

 

Subsequent to the ICCTA, the liability limiting provisions of the Carmack Amendment now state:

(c) Special rules.–

(1) Motor carriers.–

(A) Shipper waiver.–Subject to the provisions of subparagraph (B), a carrier providing transportation or service … may, subject to the provisions of this chapter (including with respect to a motor carrier, the requirements of section 13710(a)), establish rates for the transportation of property (other than household goods described in section 13102(10)(A)) under which the liability of the carrier for such property is limited 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.

(A) Carrier notification.–If the motor carrier is not required to file its tariff with the Board, it shall provide under section 13710(a)(1) 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. The copy provided by the carrier shall clearly state the dates of applicability of the rate, classification, rules, or practices.

49 U.S.C. §  14706. []

 

Estes contends that 49 U.S.C. §  10730(b)(2) codified the release value doctrine, and the ICCTA’s deletion of §  10730(b)(2) indicates Congress’s intent to no longer require carriers to offer two or more levels of liability. We disagree with Estes’s argument. Congress is presumed to know the federal courts’ interpretation of a statute that it intends to amend. See Ankenbrandt v. Richards, 504 U.S. 689, 700, 112 S.Ct. 2206, 119 L.Ed.2d 468 (1992). “[C]ourts presume that Congress will use clear language if it intends to alter an established understanding about what a law means; if Congress fails to do so, courts presume that the new statute has the same effect as the previous version.” Firstar Bank, N.A. v. Faul, 253 F.3d 982, 988 (7th Cir.2001) (citing Cottage Savs. Ass’n v. Comissioner, 499 U.S. 554, 562 (1991)). As noted above, carriers have consistently been permitted to limit their liability subsequent to the second Cummins Amendment through a written declaration of the shipper or by a written agreement between the shipper and carrier. In addition to the statutory requirement of a written agreement between the carrier and shipper, federal courts have required a carrier to offer a shipper two or more rates with corresponding levels of liability in order for a limitation of liability provision to be enforceable. Consistent with prior versions of the Carmack Amendment, the ICCTA permits a carrier to limit its liability through a shipper’s written declaration or a written agreement. The ICCTA does not contain clear language altering the courts’ additional requirement that a carrier offer two or more rates with two or more levels of liability. At most, the deletion of §  10730(b)(2) indicates Congress’s intent to deregulate the motor carrier industry and to abolish the ICC.

 

Moreover, the ICCTA’s legislative history does not reveal a congressional intent to alter the two or more levels of liability requirement. Because the ICCTA and its legislative history do not express an intent to alter the two or more levels of liability requirement, we hold that a carrier must continue to offer two or more rates with corresponding levels of liability in order to successfully limit its liability pursuant to the Carmack Amendment. []

 

Further buttressing our holding is the decision by the Court of Appeals for the Eleventh Circuit in Sassy Doll Creations, Inc. v. Watkins Motor Lines, Inc., 331 F.3d 834, 841 (11th Cir.2003). In Sassy Doll, the Eleventh Circuit considered whether the TIRRA and ICCTA altered the requirement that a carrier provide a shipper with a reasonable opportunity to choose between two or more levels of liability. The Eleventh Circuit stated:

The statutory language concerning liability “limited to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper,” 49 U.S.C. 14706(c)(1)(A), is identical in all material respects in the current and previous versions of the Carmack Amendment…. Notwithstanding the amendments to the Carmack Amendment, a carrier wishing to limit its liability is still required to give the shipper a reasonable opportunity to choose between different levels of liability.

Id. at 841-42.

 

Declared Value Box

 

In the alternative, Estes contends that the presence of a declared value box in the bill of lading satisfied the two or more levels of liability requirement. We disagree. In cases where the presence of a declared value box satisfied the carrier’s obligation to offer two or more levels of liability, the tariff provided the shipper an option to declare a higher value with a corresponding level of liability. See, e.g., Nat’l Small Shipments Traffic Conference, Inc. v. United States, 887 F.2d 443, 444 (3d Cir.1989) (noting that shipper will be insured at lowest rate permitted in tariff if shipper leaves declared value box blank when tariff provided shipper an option to declare a higher value); Hollingsworth & Vose Co. v. A-P-A Transp. Corp., 158 F.3d 617, 619 (1st Cir.1998) (noting that carrier provided shipper with two or more levels of liability because tariff provided for a maximum liability of 10 cents per pound “unless the shipper declare[d] otherwise”). Estes’s tariff limited its liability to ten cents per pound regardless of whether the shipper declared a higher value or left the declared value box blank in the bill of lading. Because the tariff did not provide an option to declare a higher value with a corresponding level of liability, Estes failed to meet the two or more levels of liability requirement.

 

Different Levels of Liability for Different Types of Packaging

 

Estes finally argues that it offered two or more levels of liability because different limitations of liability were offered depending on how the shipment was packaged. Estes asserts that an uncrated shipment had a. 10 per pound limitation of liability while a crated shipment designated as a class 77.5 had a $7.90 per pound limitation of liability. We are not persuaded. To satisfy the two or more levels of liability requirement, a carrier must offer two or more shipping rates with corresponding levels of liability for one type of shipment. See New York, New Haven & Hartford R.R. v. Nothangle, 346 U.S. 128, 134, 73 S.Ct. 986, 97 L.Ed. 1500 (1953) (“[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.”); Union Pac. R.R. v. Burke, 255 U.S. 317, 323, 41 S.Ct. 283, 65 L.Ed. 656 (1921) (refusing to uphold carrier’s limitation of liability provision because carrier failed to offer shipper two or more rates with corresponding levels of liability). Estes failed to establish that it provided a choice of rates for uncrated goods with corresponding levels of liability.

 

III.

For the foregoing reasons, the judgment of the District Court entered on April 1, 2005, will be affirmed.

 

FN* Honorable Harold A. Ackerman, Senior United States District Judge for the District of New Jersey, sitting by designation.

 

Estes did inform Rypcyzk that the “LTL” rate might apply if the shipper did not reference the quotation number Estes provided. The record does not explain what the LTL rate is and whether it would affect Estes’s level of liability.

 

A carrier was liable to the shipper for the full extent of damage to the goods it transported unless the damage was caused by an act of God, a public enemy, the shipper, public authority, or the inherent vice or nature of the goods themselves. See Missouri Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964).

 

After the passage of the Cummins Amendments, the Carmack Amendment, 49 U.S.C. §  20(11), provided in pertinent part:

Any common carrier * * * subject to the provisions of this chapter receiving property for transportation from a point in one State * * * to a point in another State * * * shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage, or injury to such property caused by it * * * and no contract, receipt, rule, regulation, or other limitation of any character whatsoever shall exempt such common carrier * * * from the liability hereby imposed; and any such common carrier * * * shall be liable to the lawful holder of said receipt or bill of lading or to any party entitled to recover thereon, whether such receipt or bill of lading has been issued or not, for the full actual loss, damage, or injury to such property caused by it * * *, notwithstanding any limitation of liability or limitation of the amount of recovery or representation or agreement as to value in any such receipt or bill of lading, or in any contract, rule, regulation, or in any tariff filed with the Interstate Commerce Commission; and any such limitation, without respect to the manner or form in which it is sought to be made is hereby declared to be unlawful and void: * * * Provided, however, That the provisions hereof respecting liability for full actual loss, damage, or injury, notwithstanding any limitation of liability or recovery or representation or agreement or release as to value, and declaring any such limitation to be unlawful and void, shall not apply * * * to property * * * received for transportation concerning which the carrier shall have been or shall be expressly authorized or required by order of the Interstate Commerce Commission to establish and maintain rates dependent upon the value declared in writing by the shipper or agreed upon in writing as the released value of the property, in which case such declaration or agreement shall have no other effect than to limit liability and recovery to an amount not exceeding the value so declared or released, and shall not, so far as relates to values, be held to be a violation of section 10 of this chapter; and any tariff schedule which may be filed with the commission pursuant to such order shall contain specific reference thereto and may establish rates varying with the value so declared and agreed upon.

Caten v. Salt City Movers & Storage Co., 149 F.2d 428, 431 (2d Cir.1945) (citing the version of the Carmack Amendment after Congress passed the Cummins Amendments).

 

Section 10730, as amended by the Motor Carrier Act of 1980, provided:

(a) The Interstate Commerce Commission may require or authorize a carrier (including a motor common carrier of household goods but excluding any other motor common carrier of property and excluding any rail carrier) providing transportation or service subject to its jurisdiction … to establish rates for transportation of property under which the liability of the carrier for that property is limited to a value established by written declaration of the shipper, or by a written agreement, when that value would be reasonable under the circumstances surrounding the transportation….

(b)(1) Subject to the provisions of paragraph (2) of this subsection, a motor common carrier providing transportation or service subject to the jurisdiction of the Commission … may, subject to the provisions of this chapter (including, with respect to a motor carrier, the general tariff requirements of section 10762 of this title), establish rates for the transportation of property (other than household goods) under which the liability of the carrier … for such property is limited to a value established by written 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.

(2) Before a carrier … may establish a rate for any service under paragraph (1) of this subsection, the Commission may require such carrier … to have in effect and keep in effect … a rate for such service which does not limit the liability of the carrier….

Shippers Nat’l Freight Claim Council, Inc., 712 F.2d at 743 (quoting former version of Carmack Amendment, 49 U.S.C. §  10730).

Section 10762 provided in relevant part:

General tariff requirements

(a)(1) A carrier providing transportation or service subject to the jurisdiction of the Interstate Commerce Commission under chapter 105 of this title (except a motor common carrier) shall publish and file with the Commission tariffs containing the rates and (A) if a common carrier, classifications, rules, and practices related to those rates, and (B) if a contract carrier, rules and practices related to those rates, established under this chapter for transportation or service it may provide under this subtitle.

Comsource Indep. Food Serv. Co. v. Union Pac. R.R., 102 F.3d 438, 443 n. 10 (9th Cir.1996) (quoting previous section of Interstate Commerce Act, 49 U.S.C. §  10762).

 

Section 13710(a)(1) provides:

Additional billing and collecting practices (a) Miscellaneous provisions

(1) Information relating to basis of rate.–A motor carrier of property (other than a motor carrier providing transportation in noncontiguous domestic trade) shall 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 its shipment or agreed to between the shipper and carrier is based.

49 U.S.C. §  13710.

 

We also note that the four-prong test in Carmana Designs Ltd. has been altered pursuant to the TIRRA and the ICCTA. As to the first prong, the Surface Transportation Board (“STB”) replaced the ICC. Tariffs need only be filed with the STB in certain circumstances for the transportation of property in noncontiguous trade and household goods. See 49 U.S.C. §  13702(a). For carriers that are not required to file tariffs, they must still “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 … is based.” 49 U.S.C. §  13710(a). The requirements under the second and fourth prongs continue to exist.

 

— F.3d —-, 2006 WL 1660575 (3rd Cir.(Pa.))