Thursday, February 6, 2020

Estes v. Whatman Hardwoods - Illustration of the Importance of Tariff Terms

Transportation Lawyers Association
Case Note
February 2020
Jeffrey Cox[1]

             Estes Express Lines v. Whatman Hardwoods, 2019 WL 2273847 / 2019 U.S. Dist. LEXIS 89332 (E.D. Va. 2019)

             This case is significant because it reaffirms the principle that a shipper has notice of a carrier’s tariff or terms and conditions through the execution of a bill of lading.

             Estes Express Lines (“Estes”) is a motor carrier based in Richmond, Virginia that specializes in the interstate transport of less than truckload freight. Whatman Hardwoods (“Whatman”) is an Ohio corporation that is engaged in the business of manufacturing various household furnishings using reclaimed wood.

             Estes filed suit against Whatman in the U.S. District Court for the Eastern District of Virginia for the nonpayment of certain freight charges relating to the shipment it transported on Whatman’s behalf. Whatman moved to dismiss Estes’ Complaint on the basis that the court lacked personal jurisdiction over it.

             Estes countered Whatman’s motion by arguing that personal jurisdiction in Richmond, Virginia was established by the terms of Estes’ tariff. Like many LTL carriers, Estes maintains a comprehensive tariff that governs all aspects of its transportation services. The tariff is maintained on its website and hard copies are provided upon request. Estes argued that Whatman had notice of and accepted the terms of Estes’ tariff by accepting Estes’ pricing agreement and by the short form bills of lading Estes had issued to Whatman for every shipment it had transported. Both the pricing agreement and the bills of lading contained reference to Estes’ tariff. Estes and Whatman had a long business relationship up to the lawsuit with Estes transporting more than 269 shipments for Whatman.

             Whatman argued that it received insufficient notice of Estes’ tariff and the forum selection clause contained within. Whatman asserted that Estes had a duty to produce a copy of its tariff to Whatman and by failing to do so it was not properly notified of its terms and therefore the forum selection clause should not be enforced by the court.

             The court ruled in favor of Estes. In its decision the court noted that Whatman was a sophisticated shipper which had frequently arranged for the transport of its goods in interstate commerce. The court found that Whatman was bound by the tariff as referenced by Estes’ short form bill of lading, and that the act of tendering its goods to Estes was enough to have sufficient notice of the tariff and the terms contained therein. [2] The court noted the longstanding precedent that a bill of lading may reference rules and conditions contained in other documents. The court stated that the rule otherwise would require motor carriers to tender voluminous bills of lading for every shipment thereby creating waste and delay.

             Whatman’s motion to dismiss was denied and the case allowed to proceed on the merits.  

[1] Jeffrey Cox is a Partner at the Vienna, Virginia based firm of Seaton & Husk, LP.
[2] Whatman argued that it had not signed all the bills of lading and the lack of a signature did not signify its assent to Estes’ bill of lading and the tariff. The argument was properly discarded by the court.

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