Under the common law of common carriage, carriers often have to prove freedom from negligence and shipper error to avoid responsibility for claims involving fresh produce.
This liability standard tends to disadvantage carriers where claimants can make a prima facie case showing that the produce was received by the carrier in good condition and arrived at destination in a defective condition.
This, however, does not mean that carriers—by signing the bill of lading clean (e.g., without “shipper’s load and count” language)—somehow certify that produce is loaded in “suitable shipping condition” under the U.S. Department of Agriculture (USDA) Perishable Agricultural Commodities Act (PACA or the Act).
In fact, per PACA precedent, even trained USDA inspectors cannot conclusively assess suitable shipping condition at shipping point.
The only way to really know if product was loaded in suitable shipping condition is to see how it held up en route to the contracted destination under proper temperature control and otherwise normal transportation conditions.
Consequently, if a shipment of produce is shown to have been abnormally deteriorated at destination despite evidence the carrier provided proper temperature control throughout the trailer during the trip, Blue Book Services would be unlikely to recognize a carrier claim.
PACA
The Perishable Agricultural Commodities Act gives the USDA the ability to regulate the purchase and sale of produce in interstate or foreign commerce with the aim of protecting produce suppliers from unfair trade practices.
The regulations promulgated under PACA affect the way produce is traded in the United States each and every day.
Among other things, these regulations provide default payment terms between vendors (e.g., 10 days after acceptance), shipping terms (e.g., FOB and FOB acceptance), and timeframes for the acceptance and rejection of a shipment of produce.
Although these terms can be modified by agreement between the parties, as defaults they allow routine transactions to occur with fairness and efficiency.
However, despite all the good PACA does for the produce industry, the Act does not apply to carriers or provide any mechanism for resolving disputes between produce vendors and transportation firms.
Still, a general understanding of the Act, and precedent decisions issued under it, is helpful when assessing carrier claims involving produce.
Many times, PACA standards—such as the need to provide a USDA inspection and detailed account of sales in support of alleged damages—will apply to carrier claims by analogy.
For example, if a produce buyer is able to provide a produce seller with an inspection certificate and a detailed accounting as proof of its damages following a breach of the sales agreement, then surely it can support its damages against a carrier in the same way.
No lesser standard can be justified in the context of a carrier claim.
Good Arrival
Other trading standards or principles, however, cannot be simply lifted from PACA and applied to carrier claims.
For example, the warranty of suitable shipping condition, or the requirement that fresh produce make good arrival (i.e., arrive “without abnormal deterioration”) at the destination specified in the sales agreement, is a warranty made by produce sellers.
The regulations specifically provide that shippers who place produce at shipping point warrant that the produce will be in “suitable shipping condition.” (7 CFR 46.43(i)).
Suitable shipping condition is then defined as follows—
Suitable shipping condition…means that the commodity [at time of shipment] is in a condition which, if the shipment is handled under (1) normal transportation…conditions, will assure delivery (2) without abnormal deterioration at the (3) contract destination agreed upon between the parties…. (7 CFR 46.43(j))
So, by definition, only produce sellers can breach this warranty.
Yet, produce vendors will sometimes rely on a clause in the bill of lading providing that the produce “was received in apparent good order” as support for the idea that the driver’s signature at shipping point demonstrates the product in question was loaded in suitable shipping condition.
In fact, however, PACA precedent decisions tell us that even certificates of USDA inspections taken at shipping point (as opposed to the contract destination) are insufficient to show that a shipment of produce was loaded in suitable shipping condition.
It must be remembered that this warranty promises the produce will hold up in transit, which is not something that can be conclusively determined at shipping point—not even by trained USDA inspectors.
It follows then that a driver’s signature on the bill of lading does not establish that a shipment of produce was loaded in suitable shipping condition.
The driver’s signature (without any exceptions noted) simply suggests that (i) there were no readily apparent problems (e.g. crushed or wet boxes) with the product at shipping point, (ii) the product described on the bill of lading was placed in the trailer, and (iii) the load was properly loaded and braced.
If, for example, boxes are crushed upon arrival at destination, then the presumption would arise that this damage was sustained in transit, which the carrier could only rebut with proof of freedom of negligence and shipper error (or one of the other less-common common law defenses such as inherent vice of the product or act of God).
But where the condition of the produce at destination is the issue (e.g., the defects documented by a timely USDA inspection are in excess of PACA Good Arrival Guidelines), in the absence of temperature control problems demonstrated by a portable recorder and/or reefer download, or a significant delay in transit, shippers will generally be unable to show the product was in good condition at shipping point as needed to support a carrier claim.
Conclusion
While a familiarity with PACA regulations and precedent is helpful when assessing carrier claims involving fresh produce, it is important to be careful about applying vendor-to-vendor rules and warranties to carrier claims.
Intermingling transportation law with produce-specific sales law risks complicating claim resolution.
Generally speaking, when a carrier provides normal temperature control, reasonable dispatch, and avoids shifting in transit, the carrier has done its job—and condition problems discovered at destination will need to be resolved between the buyer and seller.
This is a Trading Assistance article from the May/June 2023 issue of Produce Blueprints Magazine. Click here to read the whole issue.
