## Facts

- Stroh Brewery Company, a commercial brewer, arranged for a rail shipment of bulk malt in hopper car CNW 172379 from a supplier to Detroit.
- A different consignee, Rickel Malting Company, arranged a rail shipment of barley in hopper car CNW 173379.
- Both cars were interchanged to Grand Trunk Western Railroad in Chicago and transported to Grand Trunk’s Farnsworth Siding in Detroit.
- Grand Trunk issued placement notices reflecting the inbound descriptions for each car (malt for Stroh; barley for Rickel).
- Stroh requested delivery of multiple cars, including its malt car, to Greater Northern Feed, Inc., Stroh’s wholly owned subsidiary and receiving agent.
- Grand Trunk’s switching crew delivered the Rickel barley car to Stroh instead of Stroh’s malt car.
- Stroh had established receiving procedures requiring inspection and verification of car numbers and sampling/labeling by car and compartment, and Stroh’s records contained the correct car number for its shipment.
- Stroh’s employees did not detect the incorrect car number or that the commodity was barley, and unloaded the barley into Stroh’s system as if it were malt.
- The barley was mixed with malt, contaminating product and damaging grinding equipment; the mixture became unusable for brewing and was sold as feed.
- Stroh compensated Rickel for the value of the barley and sought damages from Grand Trunk, including the value of contaminated materials, cleanup/removal costs, equipment-related loss, and amounts paid to Rickel (net of resale).

## Issues

1. Whether Grand Trunk was liable under the Carmack Amendment and contract principles for misdelivery and the resulting direct loss.
2. Whether Stroh could recover consequential damages for contamination and related harm, or whether foreseeability, proximate cause, and Stroh’s failure to inspect and mitigate limited recovery.

## Decision

- The court found Grand Trunk liable as a common carrier for misdelivery and for direct damages attributable to the failure to deliver the properly consigned car.
- The court limited recovery of consequential damages, concluding that much of the contamination-related loss was attributable to Stroh’s failure to follow its own inspection procedures and to prevent or reduce the harm.
- The court treated Stroh’s omission as a significant break in the causal chain for expanded losses beyond the direct consequences of misdelivery.

## Legal Principles

- Under the Carmack Amendment, a rail carrier that misdelivers a shipment in violation of its bill-of-lading obligation is liable for the shipper’s direct loss from non-delivery or delivery of the wrong goods.
- Consequential damages in carrier/contract cases are recoverable only to the extent they are reasonably foreseeable at contracting and proximately caused by the carrier’s breach.
- A shipper’s unreasonable failure to inspect, prevent commingling, or otherwise mitigate foreseeable harm can bar or reduce consequential damages, particularly where the shipper’s conduct substantially increases the magnitude of the loss.
- Courts distinguish between losses immediately flowing from misdelivery and additional losses primarily resulting from the shipper’s processing or handling decisions after an error that could have been detected through reasonable care.

## Conclusion

The court imposed Carmack-based carrier liability for Grand Trunk’s misdelivery and the direct resulting loss, but denied or reduced consequential damages where Stroh’s failure to verify the car and commodity, despite established procedures and correct records, substantially caused the contamination and related harm.


Stroh Brewery Co. v. Grand Trunk W. R.R. Co., 513 F. Supp. 827 (E.D. Mich. 1981)