Court Opinion

ID: 2994163
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:13:10.05884+00
Date Added: 2024-06-11T11:45:17.332831
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 99-3024

Allied Tube & Conduit Corporation,

Plaintiff-Appellee,

v.

Southern Pacific Transportation Company,

Defendant-Appellant.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 97 C 4594--Charles R. Norgle, Sr., Judge.

Argued February 10, 2000--Decided April 28, 2000

      Before Coffey, Flaum, and Diane P. Wood, Circuit
Judges.

      Flaum, Circuit Judge. Allied Tube and Conduit
Corporation ("Allied") brought suit under the
Carmack Amendment, 49 U.S.C. sec. 14706, against
Southern Pacific Transportation Company
("Southern Pacific") for damages allegedly
sustained to its steel pipes during transit. The
district court entered judgment in favor of
Allied in the amount of $47,490.15. For the
reasons stated herein, we affirm.

Background

      In June 1996, Southern Pacific agreed to
transport a shipment of approximately eighty
bundles of fire protection/sprinkler system pipe
to Hayward, California for Allied. Pursuant to
their agreement, Allied paid $2,916 in freight
charges to Southern Pacific, and Southern Pacific
issued to Allied a bill of lading. Allied loaded
the shipment onto one of Southern Pacific’s rail
cars--an open top, bulkhead type flatcar--at
Allied’s manufacturing plant in Illinois. Allied
did not cover the pipe shipment with protective
covering. Allied then tendered the railcar to
Illinois Central Railroad Company for carriage to
St. Louis, where Illinois Central tendered it to
Southern Pacific for carriage to California.
      When Southern Pacific presented the shipment at
its California destination, the pipe was
contaminated, pitted, and corroded by what
appeared to be rock salt. Allied rejected the
entire shipment. Southern Pacific learned that
the shipment had been damaged, but it chose not
to inspect it. Allied ultimately salvaged the
shipment for scrap iron at auction for $6,211.

      On June 26, 1997, Allied sued Southern Pacific
for the value of the shipment pursuant to the
Carmack Amendment, 49 U.S.C sec. 14706. Following
a bench trial, the district court found in favor
of Allied for $47,490.15./1 Southern Pacific now
appeals.

Discussion

      The Carmack Amendment, a section of the
Interstate Commerce Act, provides shippers with
the statutory right to recover for actual losses
to their property caused by carriers. See Gordon
v. United Van Lines, Inc., 130 F.3d 282, 285-86
(7th Cir. 1997). It "has been interpreted by the
Supreme Court and this Court to provide that ’a
common carrier is liable for all losses which
occurred while the goods were being transported
by it, unless the carrier can demonstrate it is
free from fault.’" Pharma Bio, Inc. v. TNT
Holland Motor Express, Inc., 102 F.3d 914, 916
(7th Cir. 1996) (quoting Jos. Schlitz Brewing Co.
v. Transcon Lines, 757 F.3d 171, 176 (7th Cir.
1985)). Pursuant to this statute, in an action to
recover from a carrier for damage to a shipment,
the shipper establishes a prima facie case when
it shows (1) delivery in good condition; (2)
arrival in damaged condition; and (3) the amount
of damages. Upon such a showing, the burden
shifts to the carrier to show both that it was
free from negligence and that the damage to the
cargo was due to one of the excepted causes
relieving the carrier of liability./2 See
Missouri Pacific Railroad Co. v. Elmore & Stahl,
377 U.S. 134, 137-38 (1964).

      The district court found that Allied had
established a prima facie case under this scheme
and that Southern Pacific failed to meet its
burden to avoid liability. Southern Pacific
argues that this conclusion was erroneous in
several respects.

1.   Burden of Proof

      Allied first argues that the district court
erroneously failed to find that this case
involved a "shipper’s load and count" shipment,
in which case the burden would be on Allied to
show that Southern Pacific acted negligently. The
district court relied on the fact that no express
language on Southern Pacific’s bill of lading,
nor anything else in the record, indicated that
this was to be a "shipper’s load and count"
shipment, and it concluded that this was not such
a shipment. Southern Pacific contends that the
circumstances of this transaction--in particular,
that Allied Tube packed and loaded the pipe and
selected the type of rail car on which the pipe
was shipped--prove that this was, indeed, a
"shipper’s load and count" shipment, and
therefore the district court should have required
Allied to show Southern Pacific’s negligence.

      We find no error in the district court’s
finding that this was not a "shipper’s load and
count" shipment. As noted by the district court,
other jurisdictions have generally looked to
whether a "shipper’s load and count" designation
appears on the face of the bill before shifting
the burden of proof. See, e.g., Johnson & Johnson
v. Chief Freight Lines Co., 679 F.2d 421, 422-23
(5th Cir. 1982); Minneapolis St. Paul & Sault
Ste. Marie R.R. v. Metal-Matic, Inc., 323 F.2d
903, 905 (8th Cir. 1963). Even the federal
statutory provision that Southern Pacific invokes
for the proposition that a common carrier is not
liable for damages caused by improper loading if
the shipper loads the goods actually supports the
district court’s decision; that provision
requires that the words "shipper’s load and
count" be printed on the bill of lading./3
Moreover, the New Jersey district court case that
Southern Pacific cites for the proposition that
a shipper’s load and count shipment need not be
expressly designated as such on the bill of
lading actually supports the opposite conclusion.
Modern Tool Corp. v. Pennsylvania Railroad Co.,
100 F.Supp. 595, 596-97 (D.N.J. 1951), suggests
that omission of such a designation "serves to
shift upon the carrier the burden of proving that
the goods were improperly loaded by the shipper,
and that the damage ensued from that cause."

      The district court did not err in finding that
Allied’s shipment was not a "shipper’s load and
count" shipment. Accordingly, Allied was not
required to prove Southern Pacific’s negligence
to establish its prima facie case.

2.   Allied’s Prima Facie Case

      As noted above, the Carmack Amendment does not
place upon a shipper the burden of proving that
a carrier was negligent in order to recover for
damage to the shipment. Rather, once a shipper
demonstrates (1) delivery of its goods to the
carrier in good condition; (2) arrival in damaged
condition; and (3) specific damages, the burden
of proof shifts to the carrier, who can avoid
liability if it shows that (1) it was not
negligent; and (2) the damage to the cargo was
caused by, among other things, the act of the
shipper.

      Southern Pacific argues that Allied failed to
prove the first element: that the steel pipe was
in good condition at the time it was delivered to
Southern Pacific by Illinois Central, or when it
was loaded by Allied. According to Southern
Pacific, the only evidence Allied offered in this
regard was the testimony of one of its forklift
operators, Arturo Zambrano, who testified about
the general procedures used by Allied. However,
Zambrano did not know whether he loaded this
particular shipment. Southern Pacific argues that
this testimony was insufficient to establish good
condition, and therefore Allied had the burden of
proving Southern Pacific negligent--a burden it
never met.

      We remain unpersuaded that the district court’s
finding should be disturbed. This Court has
previously held that a shipper may establish by
circumstantial evidence that its cargo was in
good condition upon delivery to the carrier. See
Pharma Bio, 102 F.3d at 917; see also Fine
Foliage of Florida, Inc. v. Bowman
Transportation, Inc., 901 F.2d 1034, 1038-1039
(11th Cir. 1990). For example, in Pharma Bio, the
shipper was not able to present any direct
evidence regarding the condition of its goods
when delivered to the carrier, but this Court
ruled that the shipper had successfully proven
good delivery based upon the reasonable
inferences drawn from testimony about general
procedures used in preparing goods for shipment.
102 F.3d at 917. Likewise, it was proper for the
district court to draw inferences about the
condition of this shipment from Zambrano’s
testimony about Allied’s standard procedures for
selecting, inspecting, and loading pipe. These
inferences were further supported in this case by
the fact that when Illinois Central, the
intermediate rail carrier, received Allied’s
shipment, it issued its own waybill without
noting any exceptions regarding the shipment’s
condition. Finally, Southern Pacific’s bill of
lading notes no exceptions regarding the
condition of the shipment and states that it
received the shipment "in apparent good order."
Although the issuance of a waybill or a bill of
lading, on its own, may not necessarily establish
a prima facie case that an entire shipment was
received in good order, see Blue Bird Food
Products Co. v. Baltimore & Ohio Railroad Co.,
474 F.3d 102 (3d Cir. 1972); Hoover Motor Express
Co. v. United States, 262 F.2d 832 (6th Cir.
1959), the documents in this case are
corroborative. We see no reason to reverse the
district court’s conclusion, considering the
evidence as a whole, that Allied established that
it delivered the shipment in good condition.

      Southern Pacific also argues that Allied failed
to prove that the pipe was ruined, and that
Allied could not determine the extent of damage
with the specificity needed to make out a prima
facie case. See Pharma Bio, 102 F.3d at 916.
Southern Pacific contends that Allied never
proved that the pipe was unsuitable for its
intended use. When the pipe arrived in
California, Allied performed only a visual
inspection of about one-third of the shipment. At
that time, it was still stacked in bundles, and
no attempt was made to determine whether the
entire shipment, including interior bundles, was
damaged.

      The district court specifically found that
"Allied establishes that the pipe was a total
loss at the time of delivery to Hayward,
California because pit marks marred 100 percent
of the pipes inspected," and our own review of
the record reveals no reason to revisit this
factual dispute. The district court relied on the
testimony of Mary Ann Peddie, a representative of
the consignee. Peddie personally inspected a
truckload of the pipe and closely inspected
approximately ten to fifteen bundles of the pipe
unloaded from the truck. She further testified
that it was unnecessary to break the bundles
apart because it was clear that no customer would
accept fire-protection pipe that appeared to be
damaged, and she testified that one hundred
percent of the pipe she inspected showed pitting
and erosion. We have previously held that a
plaintiff in this situation need not test every
single one of the goods in a shipment. Rather,
"[a] sampling will be accepted as proof of
damages when ’a reasonably representative sample
has been taken and so long as the sample is
sufficient to indicate fairly the quality,
condition and nature of damage to the whole cargo.’"
S.C. Johnson & Son v. Louisville & Nashville
Railroad Co., 695 F.2d 253, 259 (7th Cir. 1982)
(citations omitted); see also Thousand Springs
Trout Farms v. IML Freight, Inc., 558 F.2d 539
(9th Cir. 1977) (holding that an inspection of a
small sample of the total was sufficient to
establish total loss of a shipment). The district
court was entitled to rely on Peddie’s testimony
and Southern Pacific has failed to call into
doubt the district court’s finding regarding the
full extent of Allied’s loss.

      Based on the foregoing, the district court’s
holding that Allied successfully established each
of the elements necessary to establish a prima
facie case of liability against Southern Pacific
was proper. At that point, the burden was no
longer on Allied to prove Southern Pacific’s
negligence. Rather, the burden was on Southern
Pacific to demonstrate, among other things, that
it was free from negligence. Having failed to
rebut this presumption, Southern Pacific was
properly held liable for the damage to the
shipment.

3.    Mitigation of Damages

      Southern Pacific’s final argument is that Allied
failed to mitigate damages, and the district
court therefore erred in awarding Allied the
entire cost of the pipe shipment. Southern
Pacific contends that Allied did not attempt to
clean the pipe immediately, and by the time
Allied finally tried to sell it, it could only be
sold for scrap.

      We agree with the district court’s rejection of
this mitigation argument. Illinois law requires
that, "[i]n the event [an injured party] fails to
take reasonable steps to avoid additional harm,
he bears the risk of any increased dangers which
could have been avoided." Toledo Peoria and
Western Railway v. Metro Waste Systems, Inc., 59
F.3d 637, 640 (7th Cir. 1995). Neither below nor
here does Southern Pacific offer any evidence
that the shipment was damaged further between the
time it arrived in California and the time it was
sold as scrap, nor does it offer any valuation of
the additional loss caused by delay. Southern
Pacific bears the burden of proving failure to
mitigate and it has failed to meet that burden.

Conclusion

      For the reasons stated herein, the decision of
the district court is AFFIRMED.

/1 The damages were calculated as follows: the cost
of the shipment ($50,785.15) plus Allied’s
shipping costs ($2,916.00) minus the shipment’s
salvage value ($6,211.00).

/2 The excepted causes are: acts of God, the public
enemy, the act of the shipper himself, public
authority, or the inherent vice or nature of the
goods. See Missouri Pacific, 377 U.S. at 137.

/3 Southern Pacific refers us to 49 U.S.C. sec.
80113(c), which provides:

A common carrier issuing a bill of lading is not
liable for damages caused by improper loading
if--

(1)    the shipper loads the goods; and
(2) the bill contains the words "shipper’s
weight, load, and count", or words of the same
meaning indicating the shipper loaded the goods.