Information represented in bills of lading can help sway courts

June 7, 2011 By    

Our firm recently used a bill of lading argument as the foundation for dismissal from a mass toxic tort lawsuit in Arkansas.

The case had its genesis in a warehouse explosion in November 2000 in Helena, Ark. Our client acted as a broker of a substance listed on our bill of lading as zinc oxide. According to the bill of lading shipping document, this material was not toxic, flammable or explosive.

Despite these representations in the bill of lading, the zinc oxide in the warehouse and in a separate load on a transport truck outside the warehouse spontaneously ignited and released possible toxic gases. The materials in both locations also burst into flames. During firefighting efforts, a Material Safety Data Sheet (MSDS) was obtained for zinc oxide, also indicating it was a nonflammable and benign substance.

Because the fire and release of gases at the two locations were inconsistent with the MSDS and bill of lading, the local authorities were concerned with the release of toxic gases and as a precaution evacuated the population in the two-and-a-half-mile radius from the fire scene. Ultimately, the fires were subdued and the residents were permitted to return to their homes several days later.

In the years that followed, there were efforts to determine what caused these fires and how a substance identified as benign and nonflammable zinc oxide could burst into flames.

In addition, a series of lawsuits followed in state and federal court that were at various times classified as class actions and mass toxic torts. These lawsuits sought recovery for various damages, personal injuries and medical monitoring needs into the future. These claims were in the range of $30 million.

Our firm was asked to enter the case about two years ago to see if we could move it to closure. Our analysis focused on several legal theories that had not been pursued or had been overlooked by previous counsel for our client. The court used our bill of lading argument, which we developed during our involvement in the case, in its decision to dismiss our client.

As the broker of the zinc oxide, we relied on representations in the bill of lading from our supplier that we were shipping benign and nonflammable zinc oxide. Under various laws, we were entitled to rely in good faith on the representations in the bill of lading. If the product we received was not as represented in these bills of lading, we were entitled to essentially seek to rescind or reject these shipments of product and avoid any potential legal liability that might arise from shipping, what the law calls, nonconforming goods.

The court in this case accepted our argument that if the zinc oxide ignited and emitted toxic gases then it was not as described in the MSDS and bill of lading, and we were entitled to reject the shipments and avoid liability. This was the essential basis for our dismissal from this mass toxic tort lawsuit.

In cases involving propane companies and claims of odorant deficiencies, a similar argument may be available when it comes to levels of odorant.

The typical bill of lading indicates the amount of odorant injected, which is often about 1.5 pounds per 10,000 gallons. When a transfer is made into the bulk plant storage tank, code requires a sniff test to confirm the presence of odorant in the gas. However, the sniff test does not confirm the level of odorant in the gas.

If testing after an accident shows an odorant level less than code requires, the recipient of that gas can refer to the bill of lading as the foundation for an argument similar to the Arkansas toxic tort case.

This article is tagged with , , and posted in Current Issue, Legal

About the Author:

Comments are currently closed.