The U.S. Court of Appeals for the Third Circuit determined that C.H. Robinson Worldwide Inc. was liable for $124,000 worth of miniature chocolate liqueur bottles that melted even though the company didn’t transport the candy.
On April 19, the three-judge panel upheld a previous district court ruling, saying Eden Prairie, Minn.-based C.H. Robinson assumed the appearance of a carrier even though another company transported the cargo.
The case focused on whether or not C.H. Robinson acted as a broker or a carrier. A broker would not be held liable.
In 2013, Toms Confectionary Group, a Danish chocolate company, hired C.H. Robinson to transport a shipment of miniature chocolate liqueur bottles from Levittown, Pa., to Cranbury, N.J.
According to the court documents, C.H. Robinson subcontracted with National Refrigerated Trucking to transport the chocolate, and the agreement between the two companies contained a confidentiality clause.
During National Refrigerated Trucking’s delivery to Coregistics, a malfunction of the truck’s refrigeration system caused the chocolate to melt and the load to be destroyed. Toms later submitted a claim to C.H. Robinson, which did not accept the claim or pay the loss. Toms’ insurer, Tryg, eventually paid the value of the cargo minus Toms’ deductible under its insurance policy.
Toms and Tryg filed a lawsuit against C.H. Robinson for breach of contract of motor carriage. The parties agreed that C.H. Robinson could only be held liable if it were a carrier, not a broker.
While the district court found that C.H. Robinson possessed a broker’s license and not a motor carrier’s license, and did not own trucks or other equipment to transport cargo, the company “held itself out as a carrier” and was liable for the damages.
C.H. Robinson appealed that decision to the Third Circuit.
The panel agreed with the district court.
“As the district court correctly stated, in determining whether a party is a carrier or a broker, the crucial question is whether the party has legally bound itself to transport goods by accepting responsibility for ensuring the delivery of the goods,” the Third Circuit wrote. “If an entity accepts responsibility for ensuring the delivery of goods, then that entity qualifies as a carrier regardless of whether it conducted the physical transportation.”
On the other hand, the court said an entity is acting as a broker if it only agrees to locate and hire a third party to transport the goods.
According to court documents, the bill of lading and packing list identified C.H. Robinson as the carrier. C.H. Robinson’s invoice to Toms did not refer to brokerage commissions or National Refrigerated Trucking’s role in the transportation.
“While C.H. Robinson’s terms and conditions suggest that C.H. Robinson is a nonasset based transportation provider, they do not make clear that C.H. Robinson is only a broker,” the Third Circuit wrote.
The ruling by the Third Circuit did not set precedent.
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