Tariffs Are Still A Trap for The Unwary (Treiber & Staub v. UPS).

[Opie]

In a decision issued January 9, 2007, the United States Court of Appeals for the Seventh Circuit (Illinois, Indiana and Wisconsin) has found that UPS's had adequately disclaimed liability for loss or damage to goods of "unusual value" and was able to avoid liability for loss of a ring worth approximately $105,000. In Treiber & Straub v. United Parcel Service, the plaintiff/shipper, Treiber & Straub, had used UPS to transport an expensive diamond ring via Next Day Air. The shipper also purchased $50,000 of insurance through UPS. UPS lost the ring and the shipper filed suit against UPS and UPS Capital Insurance Agency, Inc., a wholly owned subsidiary of UPS that administers its excess value insurance program.

UPS denied any liability relying on disclaimers in its tariff that when customers ship items of unusual value (in excess of $50,000) there is no liability at all. The Court found that the UPS website and on-line tariff provided sufficient notice to customers that were not permitted to ship items of "unusual value" (meaning worth more than $50,000) and that UPS did not accept liability for loss or damage to high-value items. The Court found significant the fact that the shipper "had to agree not once, but twice, to abide by the Terms and Conditions set forth in order to ship the package" and that the on-line "The Terms and Conditions of Service" referred to pertinent parts of the on-line Tariff limiting liability and prohibiting shipment of goods of usual value.

The Court also found that UPS has no burden to proving actual knowledge by the shipper of the contractual terms and tariff provisions limiting liability:, stating as follows:

UPS does not have the burden of proving that Treiber had actual knowledge of the pertinent restrictions. As the district court observed "[f]ailure of the plaintiff to read the matter plainly placed before it cannot overcome the presumption that the plaintiff assented to the terms of the carrier." [b]This is basic contract law: one cannot accept a contract and then renege based on one's own failure to read it.[b]
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While Treiber may not be a regular user of the UPS website, the company is a business customer that knew about the high value of its package-indeed, it is reasonable to assume that most packages it shipped were relatively high in value. Straub should have taken the time to examine the provisions of the Tariff and/or the Terms and Conditions of Service before he sent an item worth more than $100,000 via UPS.

The shipper argued also that UPS had a duty under the "released value doctrine to offer (1) reasonable notice of limited liability, and (2) a fair opportunity to purchase higher liability. The Court found that UPS met these requirements stating as follows:

If a shipper wants to send a package with an actual value of more than $50,000, however, UPS will neither accept nor insure the package. This is a business decision that UPS is entitled to take.

The Court affirmed the trial Court's decision finding no liability on the part of UPS under the federal common law claim. It also found that federal common law preempted any state law claim stating that:

The shipping contract between a common carrier of packages by air and the shipper, while enforceable in state court, cannot be rewritten by state law. Since that is what Treiber seeks to do, we must find that the state law breach of contract theory in this case is preempted.

Many years ago, the legal interests that I represented in another life (motor carriers and related interests) were criticized for having tariffs that were traps for the unwary. It appears that such claims are true today, notwithstanding the fact that there is no longer a filed tariff doctrine.

Paul Taylor
Truckers Justice Center
Employment Lawyer Burnsville Minnesota Wrongful Termination Whistleblower Attorney

NOTHING IN THIS POST SHOULD BE cONSTRUED AS CREATING AN ATTORNEY-CLIENT RELATIONSHIP.