This question alone has been the subject of much litigation over the years and could be argued either way. Given the way bills of lading tend to be used in the fresh produce industry (i.e., largely as a pickup receipt rather than a contract), and given the roughly equal bargaining power between carriers and the parties that hire them in the fresh produce industry (a far cry from the historical context in which laws applicable to common carriage arose to protect the public from one-sided terms imposed by railroads in the early 1900s), we have generally been inclined to view carriers that haul fresh produce as contract carriers. (Note: suggestions that deregulation ended the distinction between contract and common carriage disregard the fact that fresh produce hauls are generally exempt from federal economic regulation per 49 U.S.C. Sec. 13506 (a)(6)).
Consequently, it is not at all clear that the carrier can properly rely on the “totally worthless” rule to argue that the retailer was obligated to receive the berries. And even if the carrier were to establish that this rule should apply (i.e., that it was acting as a common carrier, and the perfect tender rule does not apply for some reason), it would still be responsible for damages resulting from its delay—as opposed to damages following the rejection.
In other words, even in cases where the “totally worthless” rule is applied, it does not prevent a consignee from refusing delivery and claiming damages against the carrier. At most, the rule provides a basis for reducing the amount of the claim, if the carrier can show the rejecting party could have salvaged the product for more than the carrier was able to realize.
Therefore, the “totally worthless” rule, even if it were to apply to the facts presented, is really very similar to the general principle that following a breach of the contract of carriage, all parties have a duty to take reasonable steps to mitigate losses—which, depending on the circumstances presented, may be inconsistent with rejecting the produce to a carrier.
Accordingly, for mediation purposes, when produce is sold on a delivered basis, we have generally recognized a buyer’s right to reject to the distributor under the perfect tender rule for transportation (delivery) problems. But when considering any right the party that hired the breaching carrier may have to reject to the carrier, we need to take a closer look at whether it appears the party that hired the carrier took reasonable steps to mitigate losses.
For instance, if after the retailer’s rejection to the distributor under the perfect tender rule, it offered to place the product with an area wholesaler on consignment for the carrier’s account (or “for the account of whomever it concerns”), but the carrier refused to take the product there for whatever reason, we would generally consider this a sufficient effort to mitigate damages prior to rejecting.
Of course, if the distributor can show it made continued efforts to find an acceptable wholesaler (nearby, reputable, etc.), this would further strengthen its position.
