Monday, April 25, 2011

The Shipping News

A case recently came down from the U.S. Court of Appeals for the 9th Circuit entitled OneBeacon Insurance Co. v. Haas Industries, Inc. (No. 08-16826/D.C. No. 3:07-cv-03540-BZ) that has key implications for those in the arts -- especially those involved in property management and the transportation of everything from cameras to costumes to things craft services.
           Without going into all of the procedural details of this appellate case, the crux of the matter is that a transportation or carrier company (e.g., FedEx) can limit its liability -- meaning that it is very important for those in charge of that which is being transported to carefully review the tariff(s) provided by the carrier because a carrier is now only required to:
  1. provide a shipper with the carrier’s tariff if the shipper requests it;
  2. give the shipper a reasonable opportunity to choose between two or more levels of liability;
  3. obtain the shipper’s agreement as to the shipper's choice of carrier liability limit; and,
  4. issue a bill of lading prior to moving the shipment that reflects any such agreement.
           Number one above is the rub: if a shipper fails to request a tariff or ask about increased levels for insuring the goods during transportation, a claim for lost goods might just end up being based one something like a plain-vanilla, per pound value that comes with the basic tariff.
Let's say you are the producer of a Shakespearean show that is going to move from venue A to venue B (and B here stands for Bigger venue, with Bigger ticket prices and a much Bigger audience...I do like to be optimistic...). Assume that the aggregate value of the struck set, costumes, lighting and effects is over $200,000.00. However, the weight for all of this is only 300 pounds. If you -- as the shipper -- do not ask to see the tariff and select a higher level of coverage (sometimes nominated as "excess valuation" or "declared value"), the struck set, hand embroidered costumes, lighting equipment and effects that cost thousands of dollars that end up getting lost and/or damaged in transit might only have a claim value of $2.00 per pound, resulting in only $600.00 (cue the screechy horror film violins here).
           In light of this, always ask to see a carrier's tariff(s) and reflect upon whether it makes sense to select a level of coverage above and beyond the carrier's "standard" tariff either directly from the carrier or under supplemental insurance that your production company either has for the production from one or more entertainment industry insurers or can be purchased on a one-time basis for the particular shipping from venue A to venue B. Often, extra coverage is not that cost-prohibitive and can really result in peace of mind for the shipper, as well as more money should a claim for loss have to be made. If all of this seems to call for more paperwork than you might want to handle then, well, cue your lawyer here.
           For shippers, chances are you've already got a website. In California (and as discussed within this Blog) a Privacy Policy is if you've taken the time and trouble to post a Privacy Policy and the website's Terms of Use, why not post up your tariffs too? Again, cue your lawyer here to have him or her draft and/or review the tariff to be posted. Also, take the time to have your counsel look over all of your forms for clarity as real clarity often help prevents misunderstandings; and prevented misunderstandings reduce -- if not eliminate -- lawsuits before they begin.
           Put into an analogous concept, shippers should think about their documents along the same lines that they think about their fleet: quality machinery helps for timely shipment and delivery (and thus payment), all helping a shipper run the shipping business more smoothly and profitably. A shipper's contractual documents are -- if you'll forgive me a pun here -- part and parcel to transportation success.
           And here endeth the lesson...for now....

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