Strategies, Challenges, and Answers

Third Circuit Rejects “True Conversion” Exception To Carmack Amendment Preemption

Exception To Carmack Amendment PreemptionIn the case of Dynamic Transit v. Trans Pac. Ventures, 128 Nev. Adv. Op. 69, 291 P.3d 114 (2012), the Nevada Supreme Court opined that there was a “true conversion” exception to the doctrine of Carmack Amendment preemption of all state law claims.  (49 U.S.C. § 14706).  For more details on that case, see HERE.  Regular readers of this blog know that the motor carrier, Dynamic Transit, sought review by the U. S. Supreme Court and that Mills & Associates was privileged to represent the Trucking Industry Defense Association as an Amicus which challenged the Nevada decision.  See HERE.  The High Court chose not to review the Dynamic case leaving the issue open for further discussion.

Recently, the Third Circuit took up this question.  Contrary to the Nevada court, the Third Circuit Court of Appeals rejected the concept of a true conversion exception to the Carmack Amendment’s preemption of state law claim in Certain Underwriters v. United Parcel Service, 2014 WL 3906951 (3rd Cir., Aug. 12, 2014).  In that case, the shipper, First State Depository, supplied coins and special metals to its customers.  When 27 different shipments went missing, the cargo insurer paid $150,000 in indemnity to the shipper and then sued the motor carrier in subrogation.  However, Plaintiff’s complaint included only state law claims.  There was no claim under Carmack.  In particular, Plaintiff alleged that UPS had committed a “true [and] fraudulent conversion” of the goods.

UPS responded to the Complaint, filing a Motion to Dismiss, arguing that the Carmack Amendment preempted all state law claims.  The District Court granted the Motion to Dismiss.  The Court found that all state law claims, even those of “true conversion”, were preempted.  However, the Court found that in the case of a “true conversion”, the shipper could to avoid any limitation of liability that had been negotiated between the shipper and the motor carrier.  Mills & Associates made this very argument in TIDA’s Amicus Brief to the U.S. Supreme Court.  See the Brief HERE beginning at Section II.

The Plaintiff appealed the decision of the U.S. District Court.  The Third Circuit upheld that decision saying:

We hold that the Carmack Amendment preempts all state law claims for compensation for the loss of or damage to goods shipped by a ground carrier in interstate commerce. We also conclude that the “true conversion” exception is an exception to the liability limiting features of the Carmack Amendment, not an exception to its preemptive scope.  We will therefore affirm the order of the District Court.

To read the full opinion click HERE.

We at Mills & Associates anticipate that this disagreement will rage unabated until the U.S. Supreme Court steps in and resolves it.  If you have questions about the Carmack Amendment or a cargo claim in general, feel free to contact Mike Mills at Mills & Associates, 702-240-6060 x114.  Mike will be glad to speak with you.

“Reasonable Rental Cost” Not “Financing Cost” Is The Proper Measure Of Damages For Loss Of Use

Loss of Use

Disputes over the value of loss of use are common. Sometimes these disputes are small such as the loss of use of a car following an auto accident. Other times, the dispute involves a much bigger piece of equipment. For example, Asphalt Products … [Continue reading]

Nevada Follows The “Initial Permission” Rule When Dealing With Questions Of Permissive Use

Nevada Follows The “Initial Permission” Rule

Normally, it is easy to know whether the person whose name is on the auto insurance policy has liability coverage when operating his or her insured car. But that analysis becomes more difficult when the driver is not a named insured. Nevada Law … [Continue reading]

Back to Basics: The Elements Of A Nevada Negligence Claim

Nevada Negligence Claim

Sometimes it is good to get back to basics.  Let’s quickly review what it takes to prove a negligence claim in Nevada.  The case of Turner v. Mandaly Sports Entm’t, LLC, 124 Nev. 213, 180 P.3d 1172 (2008) reminds us of the elements of that cause of … [Continue reading]

Please Nominate “Nevada Insurance Law” For The 2014 ABA Journal Blawg 100 Award

Film Award

Since 2007, the American Bar Association has annually recognized 100 law blogs that are helpful, creative and engaging.  Mills & Associates believes that our Nevada Insurance Law blog should join the list of ABA Blawg Honorees in 2014. Before … [Continue reading]