Smallwood v. Allied Van Lines

The Carmack Amendment does not necessarily fail for foreign arbitration clauses, and a shipper may agree to arbitrate the claim after the dispute arises with an interstate motor carrier but may not be forced to at the time of contracting; Congress intended Carmack to be a minor exception to the Federal Arbitration Act (“FAA”) by enacting provisions of the Amendment after the passage of the FAA.

In 2007, Gary Smallwood accepted a job in Abu Dhabi. He hired Allied Van Lines, Inc. and various affiliates (collectively “AVL”) to move his household goods to the United Arab Emirates and store his firearms and ammunition in California. “Instead, AVL shipped his weapons to the UAE.” Smallwood was arrested and imprisoned in the UAE on weapons charges and is allegedly facing deportation. Smallwood sued AVL in contract and on various tort theories including negligence and negligent infliction of emotional distress. The district court ruled that some of these claims were covered by the Carmack Amendment, which gives a shipper a choice of certain venues for his claims against an interstate motor carrier, the district court refused to enforce AVL’s arbitration clause in the bill of lading. AVL appealed, arguing that “(1) the Carmack Amendment permits foreign arbitration clauses; or (2) the Federal Arbitration Act (“FAA”) requires enforcement of the clause” because Carmack was enacted before the FAA. The Ninth Circuit held that as far as the first argument, Carmack’s statutory scheme and plain language protects Smallwood’s right to reject the clause in this instance, and regarding the second argument, the controlling sections of Carmack were enacted after the FAA. AFFIRMED.