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Discussion Starter · #1 ·
I second the question - Who *do* we ship with?


By the way, what if you used a Fedex Ground service? No airplane, no ADA coverage?


Andy K.
 

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This is the most informative posting I've read in weeks here. Thanks a bunch, Kirk.


Seems to me as though someone (hint, hint) could go after Fed-eX for charging all those people money for insurance when they know they have no intention of paying out on it. Isn't that fraud?


Anyway, I second the question above, if not fed-ex then who? And who would be a 3rd party insurer?




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Andy K-


Wouldn't you know it- there's actually another piece of federal legislation know as the "Carmack Amendment," 46 U.S.C. §14706, governing ground shipments, whose provisions have been construed in an almost identical manner as those under the ADA. In other words, the Carmack Amendment has its own version of the Released Value doctrine which would yield the same result. As an aside, you might find it interesting that the 9th Cicuit has suggested that the Carmack Amendment does not even apply to an air carrier like FedEx, notwithstanding that a portion of their business is by ground. Federal Express Corp. v. California Public Utilities Commission, 936 F.2d 1075, 1078 (9th Cir. 1991).


Dan & PAP-


Keep in mind that the ADA applies to all air carriers, not just FedEx. My suggestion to you if you want protection is to purchase insurance from a third party to cover you above FedEx's $500 liability cap. As for referrals, I have no personal experience, but I know from doing the research that Kemper and Reliance insurance companies have, at least in the past, offered this type of coverage. How do I know? They were the losing parties in some of the reported decisions I came across!


Kirk
 

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I have shipped items with both Fedex and UPS and have had claims paid by both of them that were in the thousands of dollars for parcels damaged in shipment. I always take out specified value coverage for an additional premium and they have never disputed payment of a claim.
 

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As I recall in the original thread, didn't the customer purchase insurance from Fed Ex for a much higher amount?


I can see why Fed Ex may not be liable due to the ADA, but aren't they liable for selling insurance that they never intend to honor? I would think that at least the insurance premium should be refundable.
 

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Quote:
Originally posted by dhanson:
As I recall in the original thread, didn't the customer purchase insurance from Fed Ex for a much higher amount?


I can see why Fed Ex may not be liable due to the ADA, but aren't they liable for selling insurance that they never intend to honor? I would think that at least the insurance premium should be refundable.
That's some nice work by Kirk. dhanson's concern that there's something fishy going on still seems valid though.


Kirk says: "Under federal common law, carriers may limit their liability to the value of the shipment if (1) the shipper has reasonable notice of the rate structure and (2) is given the option to pay a higher price for greater protection. "


How is it that FedEx can satisfy the first prong of this test, when they accept payment for insurance of extraordinaily valuable items beyond the $500 dollars of coverage they provide? How can the shipper be deemd to have reasonable notice of the rate structure when FedEx doesn't seem to apply the proper rate structure themselves? That is, it seems as though FedEx's actual rate structure for items of extraordinary value precludes insuring them for more than $500. If FedEx accepts (and charges) a premium that appears to provide extra coverage (contrary to their own stated rate structure), how can we assume that the shipper has reasonable notice of the rate structure? Because if the shipper did have actual notice, they would certainly never pay for any coverage beyond the $500 limit. Seems strange to me. Does't it leave open the argument that either there isn't reasonable notice, or FedEx has waived or is estopped from claiming that they gave reasonable notice. -- Herb



[This message has been edited by hsitz (edited 07-30-2001).]
 

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The level of professionalism and knowledge on this forum never ceases to amaze me. Nice job Kirk! Having said that, I just sent FedEx a nastygram indicating the growing distaste shared by a growing group of once potential customers.



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It sounds like the US Congress is part of this fraud. I bet if this information become more widely known, these shipping companies would change their policies. UPS could run a nice ad showing what FedEx does. I would definitely go out of my way to ship with a company that would cover the damage they did.
 

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Both UPS and Fedex are self insured due to the incredible volume of parcels which they ship daily. They make an incredible amount of money on the insurance as they generally speaking both have very low breakage rates. I have found that shipping with Fedex requires that you check with the counter person handling your airbill to make certain that they have calculated the correct rate with insurance. I always use stated value amounts and invariably if I do not point it out to them they overlook it and fail to charge me for the insurance. Guess who is at fault if something is lost or damaged in this case!


[This message has been edited by ghibliss (edited 07-30-2001).]
 

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Definition

ex·traor·di·nar·y adj. 1. Beyond what is ordinary or usual: extraordinary authority. 2. Highly exceptional; remarkable: an extraordinary achievement. 3. Employed or used for a special service, function, or occasion: a minister extraordinary; an extraordinary professor. [Middle English extraordinarie from Latin extraordinariusextra outside; See extra-o rdo ordin-order; See order ] ex·traor â€di·nar“i·ly .


Thesaurus*******

1. (adj.) Splendid; wonderful:

· marvelous

· awesome (informal)

· brilliant

· bully

· excellent

· fabulous

· fantastic

· heavenly

· mind-blowing (slang)

· stupendous

· super

· superb

· superlative

· terrific

· wondrous

· ordinary (antonym)

· average (antonym)

· terrible (antonym)


Now apply the synonyms.......


marvelous value

awesome value

excellent value

.......and so on.


Does this mean that if you bought a $500 watch for $50 it would be an extraordinary value?




[This message has been edited by Tony Costanza (edited 07-30-2001).]
 

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I have entered a lawsuit against Fed-Ex for $18,000. The amount of an insured COD shipment. In this case Fed-EX did not collect certified funds as stated in the Airbill. THe financial document later bounced and I was the out the money.


I filed a claim within 30 days however the claim window was stated as 15 days deeper in the rules of service. I did not even know I had a claim within 15 days..so fed-ex collects a non-certified check which is no good then says too late....


THeir web-site was ambiguous on the filing date on a faq page but it was later found out to be clearer deeper in the terms of service pages....



Regards,

JOhn
 

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Several weeks ago a thread was started by forum member Mike Newman concerning his frustration over FedEx's refusal to pay anything more than $500 to satisfy his claim for a plasma monitor that was damaged during shipment. As a matter of common sense, it didn't seem fair that FedEx could limit its liability to a paltry $500 on a plasma monitor whose declared value was $5,500 and for which a concomitant shipping premium was paid. Many of you chimed in with similar tales of outrage over the paucity of remedies available to shippers when a carrier damages their delicate AV goods during shipment. I offered to look into the matter for Mike, but cautioned there was a strong possibility that the Airline Deregulation Act would preempt any state law claims and most likely leave the shipper without a remedy beyond the contractual limit specified in FedEx's contract (i.e., the Airbill and the Service Guide).


For those of you with neither the time nor patience to read through the following detailed explanation, here is the short answer: The ADA does indeed apply, and in virtually all cases, preempts state law claims against an interstate carrier. What this leaves a shipper with is a contract claim which is only viable if the carrier breaches one of its own contract provisions. In the absence of such a breach, the shipper is locked into the contractual limits of liability specified in the Airbill and in the Service Guide. For us HT nuts, that means that currently, FedEx's liability is limited to the lesser of your actual damages or $100, unless you declare a higher value, pay an additional charge, and document your actual loss in a timely manner. However, even if your item has a declared value in excess of $100, the highest declared value allowed for FedEx is $50,000 unless your package contains items of "extraordinary value," in which case the highest declared value allowed is $500. Not surprisingly, virtually everything a forum member would ship (i.e., projectors, monitors, audio equipment, etc.) falls within the definition of items of "extraordinary value." Thus, the moral of the story is if you're going to ship via FedEx, and want to be insured for the full value of your item, you must procure insurance above and beyond $500 from a third-party insurer. Also, if you do elect to ship via FedEx an item of "extraordinary value" with a declared value in excess of $500, any increased premium you pay might as well be considered a tip.


Now here is the long version. The Airline Deregulation Act ("ADA"), 49 U.S.C. § 1305, prohibits states from enacting or enforcing any law relating to the rates, routes, or services of any air carrier authorized by the FAA. The U.S. Supreme Court in American Airlines v Wolens, 513 U.S. 219, 115 S.Ct. 817, 826, 130 L.Ed.2d 715 (1995), held that the ADA does not preempt "routine contract claims" against air carriers because of a savings clause made part of the 1958 Federal Aviation Act ("FAA"), 49 U.S.C. App § 1301 et seq. This "savings clause" states that the FAA does not in any way "abridge or alter" existing common law or statutory remedies, but merely adds to them those remedies it makes available. 49 U.S.C. § 40120(c). This clause has been construed to save any federal common law remedies which existed prior to deregulation. Thus, where a claim is for lost or damaged shipments, federal law will control.


That brings us to FedEx's contract language purporting to limit its liability. Under federal common law, carriers may limit their liability to the value of the shipment if (1) the shipper has reasonable notice of the rate structure and (2) is given the option to pay a higher price for greater protection. The federal common law requirement that the carrier give the shipper an option of greater protection in order to limit its liability validly is called the "Released Value Doctrine." Basically, this means that in exchange for a lower shipping rate, the shipper is deemed to have released the carrier from liability beyond a stated amount. However, the shipper is bound by this agreement only if he has reasonable notice of the rate structure and is given a fair opportunity to pay a higher rate in order to obtain greater protection. For our purposes, not much discussion is required concerning the shipper's reasonable notice of the rate structure. FedEx prints its liability limitation information on the back of its Airbills and also on its Service Guide. Under such circumstances, the courts have held that limited liability provisions are prima facie valid if the face of the contract recites the liability limitation and the "means to avoid it." The burden then shifts to the shipper to prove that it did not have a "fair opportunity" to purchase greater liability coverage.


That brings us to the second prong of the test. Courts have found the "fair opportunity" requirement satisfied where the carrier offers the shipper a choice of paying a higher rate for greater protection. Virtually every court that has considered this issue has held that by offering the shipper the opportunity to increase the amount of its coverage to $500 (from the ordinary $100 limit) with the payment of a higher shipping premium, the carrier satisfies this test. Now, the question most likely on all of your minds at this point is: "How can the FedEx rate structure be one that gives the shipper a fair opportunity to pay a higher rate in order to obtain greater protection when the most protection a shipper will ever get is $500 irrespective of the declared value of the shipped item?" Indeed, this is especially true when the $500 limit applies only to goods of "extraordinary value" such as plasma monitors, projectors, etc., which are by definition worth significantly more than that limit. Well, the courts have uniformly held that the option of increasing your coverage from $100 to $500 is sufficient to satisfy the "fair opportunity" test. Also, they seem to agree that the obligation to provide a bona fide alternative that gives greater protection than the lower liability limit does not bar a company from capping the highest valuation for which it would accept liability. FedEx clearly limits its liability both on the back of the Airbill and in its Service Guide when it states that ". . . the highest declared value allowed is $50,000 unless your package contains items of ‘extraordinary value,' in which case the highest declared value allowed is $500." It should also be noted that the Service Guide also states that exposure to losses in excess of the declared value are either assumed by the shipper or transferred to an insurance carrier by the shipper through the purchase of an insurance policy. The Service Guide also expressly states that FedEx does not provide insurance coverage, and that if the shipper desires such coverage, he or she should contact his own third-party insurance agent.


So that's quite literally, the long and the short of it. Govern yourself accordingly.
 

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Kirk,


Thanks for this post. I have a filed a lawsuit against FEd-Ex for other issues but this is very important information for any company or individual who does internet business with items of so called extraordinary values.


Regards,

John
 

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OK, so who do we have our stuff shipped with? I'm buying a Krell amp for about $1,800.


Go for it John!


Dan
 

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A friend of mine who runs a national textiles business asked me to post this:

Quote:
I am a commercial shipper that sends many packages out every day UPS and Fed-Ex... we NEVER insure thru the carrier for more than the default $100., we always use a third party insurer because the unit rate per hundred is cheaper and their liablity is not limited by acts of congress, like the ADA.

We use P.I.P. (Parcel Insurance Plan Inc.)

Specialists in Insuring Packages

PO Box 66708 St. Louis, MO 63166 - 800-325-7390
I found it interesting that he's been avoiding UPS/FedEx's insurance-scam for years. He's probably been bitten too many times.


I think there are definitely grounds for a class-action suit against FedEx & UPS. They accept 'insurance' money for something they know they will not actually insure. What a scam.


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Thanks for that, Patrick. Here's their website for those interested...
http://www.pipinsure.com/


After a quick read through it appears that it would be very

useful for those shipping in volume. But it's not really suitable for the occasional shipper. I wonder if any third party insurance alternatives are available to those of us who ship infrequently?


Bob Wood


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[This message has been edited by RobertWood (edited 07-31-2001).]
 

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How do we submit this info for a “Fleecing of America†story. I think it would make a great one about how much money people are wasting on false claims of insurance.


Are there national laws against insurance fraud?




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I never returned to the office yesterday afternoon, so I didn't see some of the follow-up posts.


As for Herb and dhanson's posts, here's another provision from the all-mighty Service Guide:


"ANY EFFORT TO DECLARE A VALUE IN EXCESS OF THE MAXIMUMS ALLOWED IN THIS SERVICE GUIDE IS NULL AND VOID AND THE ACCEPTANCE FOR CARRIAGE OF ANY SHIPMENT BEARING A DECLARED VALUE IN EXCESS OF THE ALLOWED MAXIMUMS DOES NOT CONSTITUTE A WAIVER OF THIS PROVISION TO SUCH SHIPMENT."


By virtue of it being contained within the Service Guide (which the Airbill-big surprise-incorporates by reference), you're chances of claiming you did not have reasonable notice of the rate structure are basically nil.


As for common law or equitable defenses like waiver, estoppel and the like, the above-quoted contract language would rule them out. Additionally, the courts have refused to allow defenses to the liability cap based on public policy grounds once the "Released Value" test is met because they would enlarge the contract terms through reliance on policies beyond the contract itself. This rationale has been employed even in situations where FedEx employees stole the shipped goods! The only instance in which a shipper can defeat the liability caps is where the carrier has appropriated the property for its own use or gain. Wilful misconduct is not enough.


JOhn-


I hate to be the harbinger of bad news, but as for your suit based on FedEx's failure to accept only certified funds, the cases suggest you may have a problem, timely notice issues aside. The Service Guide and Airbill warn that checks for C.O.D. amounts are collected at the shipper's sole risk, including, but not limited to, all risk for non-payment, fraud, and forgery. Have your lawyer review SVT v. Federal Express Corporation, 1997 WL 285051 (N.D.Cal. 1997). In that case the shipper sent computer chips C.O.D. via FedEx and didn't declare a value on the airbill. FedEx picked up a check from the recipient for the correct amount, but it had stamped in large block letters: "POST DATED CHECK NOT VALID BEFORE THIS DATE." As you might imagine, the shipper was later unable to collect on this check. The district granted FedEx's motion for summary judgment on SVT's breach of contract claim, holding:


"Pursuant to the provisions of [the Service Guide] the shipper accepts the sole risk of non-payment. Contrary to plaintiff's argument, the conditions include 'all risks of non-payment.' SVT accepted the risk of a post-dated check when it shipped the goods C.O.D. Therefore, defendant is entitled to summary judgment on the breach of contract claim."


Obviously I don't know all of the facts involved with your transaction, and I hope there's something up your lawyer's sleeve to get around this precedent. I would, nevertheless, bring this citation to his attention ASAP.


Kirk
 
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