The Carmack Amendment and Forum Selection Clauses

A Texas Federal District Court recently ruled on forum selection clauses and the Carmack Amendment in Ledet v. Across USA Moving, Inc., No. 4:14-mc-1846 (S.D. Texas June 11, 2015). The court’s decision is another in a growing trend towards ignoring state forum selection clauses in favor of applying the Carmack Amendment’s forum selection clause. While not unanimous across the country, the trend is for forum selection clauses to yield to federal forums under the Carmack Amendment.

The case at issue involves a family who contracted with a moving and storage company to have their household goods, family furniture, and belongings shipped from Texas to Maryland. The family sued the company because of the job they did, and they brought the case in U.S. District Court for the Southern District of Texas, Houston Division. But the original contract to move the goods included a forum selection clause that would require any dispute between the shipper and carrier to be brought in Dallas County, Texas in a Texas state court. The carrier asked the U.S. District Court to dismiss for improper venue. But the court denied the motion.

Forum Selection Clauses: What Are They?

Contracts are notoriously full of legal information that is hard to understand. Among the many clauses that can be found in convoluted and unnecessarily complicated contracts are forum selection clauses. These particular clauses are not always complicated, and sometimes serve to benefit both a plaintiff and defendant in a case. But more often than not, they are simply an afterthought and included because no one customized the contract, since it may have been easier to just use a pad-contract without any changes.

Forum selection clauses announce where a lawsuit will be brought in the event of a dispute. Typically these clauses are binding, but they can be overturned in certain circumstances. The doctrine of forum non conveniens rules on whether a selection clause will be upheld. This doctrine establishes that the overriding questions for whether a forum selection clause will be upheld asks whether:

  • it is convenient for both parties and the court; And
  • if the interests of justice indicate that the case should be moved.

In the world of enforcing contract clauses, this standard is not terribly burdensome. It leaves a lot of discretion with a court to choose to enforce it or not. In the present case the court chose not to.

Jurisdictions Trending Towards Ignoring Forum Selection Clauses

In issuing its decision to not apply this forum selection clause, this District Court relied on several other courts’ opinions and the text of the Carmack Amendment. The actual text of the Carmack Amendment is very clear and states that an action under the Amendment can be brought in federal court where the carrier operates or where the alleged losses occurred. 49 U.S.C. § 14706(d)(1)-(2). Many courts have taken this language to mean that the Carmack Amendment overrides forum selection clause. Those courts include:

This decision is significant for trucking companies because it puts them and their customers on notice for how their contracts are to be drafted. When it comes to trucking contracts, the Carmack Amendment, and other trucking industry laws, we at Anderson and Yamada, P.C. are here to help. Contact us so we can serve you in all your company’s legal needs.

Containers, Vaults or Pods and Household Goods Regulation in Oregon

The Oregon Department of Transportation (“ODOT”) has made a 180 degree reversal of its heretofore position to regulate Household Goods (“HHG”) transported in containers that are loaded by the customers.  Effective immediately, ODOT is not going to regulate the rates or rules of carriers transporting HHG in containers loaded by the customer.  This came as a complete surprise.

The email we received from ODOT stated its new position as follows:

RE:  Containers, Vaults or Pods and Household Goods Regulation in Oregon

ODOT has recently received revised direction from the Oregon Department of Justice (DOJ) which now concludes that the transportation of household goods loaded in containers by someone other than the motor carrier does not constitute household goods transportation and is no longer subject to ODOT Economic Regulation.

The revised DOJ advice effectively reverses current practice.  Up until this time Oregon held the position that these moves were under the umbrella of household goods regulation.  DOJ last reviewed this decision in 2004.  Significant change has occurred between 2004 and 2013 with regard to economic regulation of household goods carriage.  In particular, the 2009 Oregon Legislature (House Bill 2817) effectively eliminated the entry hurdle for new applicants for household goods carriage authority. In reaching the current decision DOJ considered the fact that HB 2817 effectively eliminated the economic value of HHG authority on a motor carrier balance sheet.

Oregon’s position has historically differed from the Federal Motor Carrier Safety Administration (FMCSA) interpretation whose definition excludes containers.  Specifically, the definition in Part 375.103 states, “household goods motor carrier (3) The term does not include any motor carrier providing transportation of household goods in containers or trailers that are entirely loaded and unloaded by an individual other than an employee or agent of the motor carrier.”   The differences, between the FMCSA and Oregon’s interpretations, were  confusing to the customers and to the Industry.  This change will streamline regulation by making it simpler, speedier and less expensive for motor carriers transporting containers in Oregon. Therefore, going forward it is the position of ODOT that the movement of pods with household goods does not constitute household goods transportation. This direction is consistent with the position of FMCSA and a number of other states that have also reviewed this question.

What does this mean to your company?   If your company does not provide for the loading and unloading of containers, you no longer require Oregon Household Goods Authority or Rate Regulation (tariffs).  Existing tariffs for the transportation of household goods loaded in containers will become moot.  Currently pending reviews of tariffs for the transportation of household goods loaded in containers will be suspended and not processed.