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Read your United Parcel Service invoices carefully. According to a Pennsylvania Superior Court opinion released late last week, the company cannot provide complete insurance for items lost or received late if you don’t tell them in advance how much your package is worth. A three-judge panel in Todd Heller Inc. v. United Parcel Service Inc. said UPS’ limitations on liability are crystal clear on shipping invoices — packages are only insured for $100 unless the customer indicates otherwise, no matter how much they are really worth. And don’t blame it on the small print. The court had no pity for plaintiff Thomas Heller Inc.’s complaint that it wasn’t aware of UPS’ limitation of liability policy because it was written in such a tiny typeface. Heller sells recycled glass for various industrial purposes. In December 1997, it received word that the Indiana Department of Transportation was accepting bids for the purchase of glass beads to be used in making the reflective paint for the lines on state highways. InDOT required bidders to submit three samples of glass beads no later than Dec. 17, 1997. Heller got the samples together and then made arrangements with UPS to have them picked up on Dec. 16. Heller, which had an account with UPS, shipped several packages a year with the company. When UPS drivers arrived at Heller to retrieve the packages they were made aware of the delivery’s importance. Before the drivers left, Heller’s office manager signed shipping documents for each package. The office manager did not provide a declared value of the contents. Cercone explained that the UPS Next Day Air/UPS Worldwide Shipping Document is a preprinted form that includes the recipient, the type of service requested and the value of the contents in the package. That document clearly states that packages are automatically protected up to $100, although customers can claim a higher value. Heller’s office manager did not declare a greater amount because the intrinsic value of the glass was about $8, Cercone said. The document also states, in small, black print found to the left of the line the office manager signed, that “the carrier shall not be liable for any special, incidental or consequential damages.” That same information is also found on the back of the document. The office manager did not read either statement. The next day, three of the four packages were delivered. The fourth arrived one day late. InDOT later told Heller it did not consider its bid because one of the packages had not arrived on time. However, InDOT could not say whether it would have given the job to Heller had it received all four packages before the deadline. Heller sued UPS for $395,581 — the amount it allegedly would have received if it won the bid — for delivering the fourth package late. A Northampton County, Pa., trial court judge awarded UPS’ motion for summary judgment, limiting Heller’s recovery to $100. SHIPPING EXPERIENCE On appeal to the Pennsylvania Superior Court, Heller argued whether UPS’ disclaimer is enforceable “even though it is deliberately obscure and does not put the shipper on reasonable notice that there is a limitation of liability for consequential damages.” Cercone said the trial court relied on the “Responsibility for Loss or Damage” provision found on the form. The provision says “unless a greater value for insurance is declared in writing in the space provided …, the shipper declares the released value of each shipment to be no more than $100.” Considering that provision and the fact that Heller had dealt with UPS many times in the past, the trial court found Heller should have been aware that the shipment’s protection would be limited unless it claimed a higher value. Cercone said the Pennsylvania Superior Court agreed. Heller was given ample and clear notice of UPS’ limitations on liability, especially since it had shipped with UPS so many times in the past. Other courts have come to similar conclusions, including the Court of Appeals for the Middle District of Pennsylvania in Uniden v. Federal Express, from 1986. The plaintiff corporation in Uniden wanted to bid on a project managed by the commonwealth’s Department of General Services. One of the bidding requirements was to post a performance bond on a specific date. Uniden sent the letter through Federal Express’ overnight service. Fed Ex’s shipping documents contained a limitation of liability provision very similar to UPS’, also insuring packages up to $100 automatically. Uniden lost the bid because the letter was not received on time and sued Fed Ex. Middle District Judge Sylvia Rambo entered summary judgment in Fed Ex’s favor, finding that its limits on liability were clearly detailed on the shipping form. “Thus it is clear that those in [Heller's] position who utilize a commercial shipping service for delivery of time-sensitive documents such as a bid should be aware that they are bound by the terms of the shipping contract which they enter into as set forth in that contract,” Cercone said. “Their recourse, should the shipment not be delivered in a timely fashion, is accordingly limited by the terms of that contract.” ALWAYS READ THE SMALL PRINT But Heller claimed the trial court did not properly consider one key piece of evidence — the affidavit of the owner and general manager of a printshop, Wilhelm Meisenger. Meisenger had provided an expert opinion that the typeface used in the limitation of liability clauses was not conspicuous. Heller said that created an issue of material fact which warranted a reversal of the grant of summary judgment. The court agreed with UPS’ contention that the perceptibility of contract language is not an appropriate subject for expert testimony. “Whether or not the typeface of a document is conspicuous to the unaided human eye is a matter which is clearly within the knowledge and experience of every human being, since the functioning of modern society renders reading an integral part of a person’s day to day activities,” Cercone said. “Thus, the owner of the print shop would not have been permitted to testify at trial as an expert.” Cercone said Diero v. American Airlines Inc. illustrated that point. The plaintiff, a longtime airline traveler, wanted to transport racing greyhounds as baggage on a commercial flight. On the dog owner’s ticket was a limitation of liability provision that was printed much like the provision in Heller’s case. The provision also appeared inside the ticket book in larger print. During the trip, the greyhounds died from heat exposure. The owner tried to sue for their value — $900,000 — but was restricted by the airline’s stated liability limit of $750 because he had not claimed a higher value. The 9th U.S. Circuit Court of Appeals affirmed the district court’s ruling, but was concerned that the limitation of liability clauses were printed in very small typeface. However, the court was more persuaded by other factors. “The court gave great weight to the fact that the dog owner was a veteran sophisticated airline traveler who flew commercial airlines six to 10 times a year,” Cercone said. “The owner was also aware that there was writing printed on the ticket and had an opportunity to examine the provisions of the ticket before the flight was to take place. … “Thus, even if a party successfully establishes that the language of a shipping contract is inconspicuous, a court will still enforce the contract provision in situations where the shipper had an opportunity to review the contract or had previous experience dealing with the carrier.” ADHENSION CONTRACT Because the document gave Heller no choice but to accept its terms or not ship with UPS at all, Heller claimed it constituted an adhesion contract whose essential terms were unconscionable. The court accepted the argument that the document was an adhesion contract because Heller sought consequential damages, which the shipping document forbade outright. But in order to conclude that provisions of such a contract are unconscionable, the court would have to find they are unreasonably favorable to the drafter and there is no meaningful choice for the other party but to accept them. The court could not find that was true in UPS’ case. “By virtue of its status as a commercial carrier, UPS handles a[n] exceedingly high volume of packages on a daily basis,” Cercone said. “Courts have recognized that commercial carriers like UPS are justly entitled to reasonably limit their staggering monetary liability for the infinite possible panoply of consequential damages which could result from the failure to deliver one of those packages, due to the fact that the shipper has paid them a comparatively small sum of money for the package’s delivery.” In his concurring opinion, Superior Court Judge James Cavanaugh agreed with the majority but said too much emphasis was placed on the fact that Heller was an experienced shipper. “I believe that the limitation is applicable to any shipper who seeks to place a value in excess of $100 on the goods shipped and to make the enforceability in any way dependent on a business to business transaction, or the sophistication of the shipper in commercial matters is to unnecessarily introduce a variable which is unrelated to the reasonable burden which is placed upon any user of the parcel service,” Cavanaugh said. Cavanaugh also did not believe the invoice was an adhesion contract. “In my view, the exclusion of liability for special, incidental or consequential damages, while it may be non-negotiable in that it is included on a take it or leave it basis, is simply a reasonable disclaimer of liability for forms of damages which no reasonable user of a parcel service should expect in return for the shipping fee charged,” he said.

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