The Intersection of PACA and Transportation Claims

Per PACA precedent, however, even USDA inspection certificates taken at shipping point (as opposed to the contract destination) are insufficient to prove produce was loaded in suitable shipping condition. The warranty of suitable shipping condition promises the produce will hold up (or more technically, arrive “without abnormal deterioration”) in transit, which is not something that can be determined at shipping point—not even by trained USDA inspectors.

It follows then that a driver’s signature on the bill of lading does not establish that the produce was loaded in suitable shipping condition. Rather the driver’s signature, without any exceptions noted, only suggests there were no readily apparent problems (e.g., crushed or wet boxes) with the product at shipping point, and that it was in fact placed in the trailer, properly loaded and braced.

If, for example, boxes are crushed upon arrival at contract destination, the presumption is this damage was sustained in transit while the product was in the possession and control of the carrier. But in the absence of temperature problems or a significant delay in transit, claimants should be looking to their suppliers if excessive condition problems are discovered upon arrival.

INSPECTION CERTIFICATES REQUIRED
Inspection certificates are pivotal in vendor-to-vendor disputes, as PACA precedent provides that establishing a breach of the seller’s warranty of suitable shipping condition requires a USDA (or similar) inspection certificate showing the produce was “abnormally deteriorated” at contract destination.

For all practical purposes, abnormal deterioration is defined by PACA’s Good Arrival Guidelines, which sets forth the percentage of defects allowed (by default) under the sales agreement.

Conversely, establishing a breach of the contract of carriage (for exempt commodities such as fresh fruits and vegetables) is not about determining the percentage of defects affecting the produce at destination, but proving the carrier failed to use due care to protect the product in its possession (see Uniform Commercial Code Sec. 7-309(a)). Not surprisingly, the specific failure alleged in many carrier claims involving fresh produce is the failure to properly maintain air temperatures in transit, which is best shown with temperature records from a portable and/or reefer-based temperature recorder.

But, of course, proving a breach of the contract of carriage is only half the battle. Additionally, claimants must show the produce was harmed by the alleged breach, and this harm led to financial damages. And what better way to quantify the condition of the produce and the alleged harm than with a timely government inspection certificate? An inspection certificate showing 35% average condition defects will naturally support a greater claim than one showing just 17% average condition defects, assuming both inspections were timely. Timeliness is critical, of course, because even ideal transportation conditions won’t keep produce fresh indefinitely.