The following case study is based on a claim filed with Blue Book Services. The facts described below set up a classic dispute between a carrier, receiver, and grower-shipper.
The claimant, a carrier, was hired by a grocery wholesaler to haul a truckload of strawberries from Salinas, CA to the grocer’s facility in New York state. The truck was loaded on May 1 and delivered very early in the morning of May 5. The load consisted of 3,102 cases of strawberries packed in four different lots.
Three of the lots were accepted at destination, but a lot consisting of 1,430 cases of strawberries, identified on the bill of lading as “4/2 lb. consumer” was rejected and ultimately salvaged for far less than the original selling price, leading to the dispute that is the subject of this claim.
A timely U.S. Department of Agriculture (USDA) inspection of the lot indicated all 1,430 cases were made available for inspection and that the product was affected with 22 percent average condition defects and 17 percent serious defects, including bruising and decay.
Additionally, the inspector noted the following on the certificate: “Calyxes fresh and green. Berries generally bright, few fairly bright. Generally ripe and firm. Decay is in early stages.” Pulp temperatures at the time of inspection ranged from 32 to 38°F.
A review of the temperature information shows that transit temperatures were unusually low in transit. The bill of lading instructs the carrier to maintain air temperatures between 32 and 34°F, and yet the portable recorder indicates air temperatures were at or below 28°F for nearly 24 hours, and below the instructed temperature range for the majority of the trip. Similarly, the reefer download shows abnormally low temperatures, including supply air readings in the mid-to-low 20s during the final day before arrival in New York.
At the outset, we note that when produce is sold on an f.o.b. basis, sellers are contractually obligated to load product that will withstand normal transportation conditions to arrive at contract destination in good condition as defined (in essence) by the Perishable Agricultural Commodities Act’s (PACA’s) good arrival guidelines, unless different terms are agreed to by contract.
The warranty of suitable shipping condition applies to f.o.b. sales of produce and is defined, in relevant part, as follows by PACA regulation (7 C.F.R. 46.43(k)):
“Suitable shipping condition”…means that the commodity, at time of [shipping], is in a condition which, if the shipment is handled under normal transportation service and conditions, will assure delivery without abnormal deterioration at the contract destination agreed upon between the parties.