Court Opinion

ID: 768579
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:08:22+00
Date Added: 2024-06-11T17:55:36.609355
License: Public Domain

211 F.3d 367 (7th Cir. 2000)
Allied Tube & Conduit Corporation,    Plaintiff-Appellee,v.Southern Pacific Transportation Company,    Defendant-Appellant.
No. 99-3024
In the  United States Court of Appeals  For the Seventh Circuit
Argued February 10, 2000
Decided April 28, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 97 C 4594--Charles R. Norgle, Sr., Judge. [Copyrighted Material Omitted]
Before Coffey, Flaum, and Diane P. Wood, Circuit  Judges.
Flaum, Circuit Judge.

1
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

2
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.

3
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.

4
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

5
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).

6
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

7
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.

8
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."

9
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

10
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.

11
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.

12
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.

13
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.

14
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.

15
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

16
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.

17
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

18
For the reasons stated herein, the decision of  the district court is AFFIRMED.

Notes:

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.