Before You Ship that Package with United Parcel Service…

The average private shipper probably doesn’t know several aspects of the real terms associated with shipping a package with United Parcel Service

United Parcel ServiceIn fact, there is a lot that most business shippers probably don’t know about the packages they ship with UPS or, for that matter, any other shipper (although this blog addresses experience with UPS – we can only hope that other shippers are a bit more honest with its customers). Come to think of it, there is probably a lot that 90% of attorneys probably don’t know about the laws of shipping packages with a carrier like UPS, and much they don’t know about the impunity UPS enjoys under federal law.

Picture this nightmare scenario:

You meet that special someone and decide it is time to tie the knot. This person is really special and you believe what the jeweler told you about needing to spend three months’ salary on an appropriate diamond ring for that special someone (although they don’t say which three months…I digress). So you buy her, (or him?) the ring, get engaged, but lo and behold, things don’t work out. You come to find out the jeweler from whom you bought the ring is only going to offer you one-third or maybe one-half of what you paid for the ring just a few months earlier. The same is true with all the other shops in town, and the pawnshops will offer even less.

Now, by this time, you are already having a “bad hair day.”

Probably more like a bad hair month or hair quarter, but you’re not in the mood to lose $6,000 on top of your misfortunes to date. So you place the ring on Craigslist, knowing you’re going to have to wade through 10 to 15 emails from scammers and knowing that you’ll have to figure out a way to ensure that the package will be sent and paid for without issue, assuming you can find somebody to buy it. Among the responses you receive, you get one that sounds pretty legitimate. Some fellow whom you “Google,” (safe to use this as a verb in 2012 I presume) and who appears to actually exist, emails you from New Orleans. He is going to be in Denver and asks all the right questions about the ring, giving you a decent feeling that he’s not some semi-literate “Sudanese prince” in some internet café in Cameroon phishing for a credit card number. You even take the extra step of talking to the guy on the phone, and everything is still checking out. The number is the right area code, the person is clearly not a scammer in Africa but even has a “Nawlins” accent. You strike the deal: He’s going to pay approximately $10,000 for the ring, and you’re going to ship it to his hotel in Denver where he will receive it, make payment, and give it to his wife for that romantic weekend in the Rockies.

 But it’s still a little nerve-wracking, right?

So, you go to the central UPS shipping station in Albuquerque, New Mexico, not wanting to deal with the “UPS Stores,” as they are likely just franchisees. The folks at the company-owned shipping hub, you calculate, are true professionals and know exactly what they’re doing. So you explain the entire scenario. The knowledgeable shipping clerk recommends three services to “absolutely guarantee” that you can’t be scammed and, even if you do, that UPS will just write you a check for the amount of “insurance” (because that’s what the UPS shipping clerk calls it, “insurance”… repeatedly uses that word). She recommends 1) signature delivery— Insures that the recipient named on the package is the one who signs for the package. (The clerk assures you that the driver is well trained in verifying photo ID); 2) collect on delivery, or “COD,” option—The clerk touts how sophisticated and foolproof UPS’ COD techniques are. UPS personnel will obtain a check, and she even assures you that because the check is for over $10,000, the driver actually enters the check into the UPS system right there in the field to verify that it is a real account and, of course, the driver knows exactly what to look for and how to spot a fraudulent check; 3) “insurance”—Just in case No. 1 and 2 somehow go wrong, (hard to imagine), you can also insure the package so that if UPS somehow manages to bungle steps one and two, you’d be covered like a little baby blanket, right? (Insert loud buzzer sound here) .

With all these services and guarantees confidently explained to you, you plunk down almost $200 for these wonderful- sounding services confidently marketed to you by the UPS shipping clerk, and she hands you a receipt. On the back of the receipt– although this was never discussed with you prior to your making the decision to go forward with the services she sold you (you attorneys should be thinking about offer, acceptance, consideration, and all that good stuff from Contracts 101)– in tiny print is the phrase, “For additional terms and conditions, please see www.ups.com.” You probably know where this story is going, but it’s worse than you think.

You also know that I would not be writing a blog about this incident if the package had been delivered, paid for, and everybody lived happily ever after.

That probably happens more often than not, but those aren’t the situations for which individuals or business owners buy insurance. Needless to say, things got a little off track. The package was shipped to a La Quinta Hotel in Denver, Colorado. The person to whom the shipper thought he was sending the package, “Phillip Kelly,” calls the desk clerk at La Quinta and let her know that a package was expected to be delivered to the La Quinta and asks her to sign for it, because he will not be getting to Denver until much later. He then tells her he will have a runner come by for the package. The La Quinta desk clerk verifies that, in fact, “Phillip Kelly” is registered as a guest that evening, so it all sounds legitimate enough. But when the package is delivered, according to the sworn testimony of the La Quinta desk clerk, La Quinta’s usual UPS driver simply dropped it off and never made any mention of collecting a check. She called “Phillip Kelly” to let him know the package had arrived and, like clockwork, the runner comes by and picks up the package and it is never seen again.

Mysteriously, however, UPS manages to deliver you a check for the ring, a check that a second grader would recognize as a fake, and which is immediately suspicious. He takes it to his bank and notifies them of his concern and asks if it can verify the check. The bank promptly informs him that his suspicions are correct and it is indeed a fake. Miraculously, the scam slips past all of UPS’ touted security protocols, including the fact that, at least according to the La Quinta desk clerk, the UPS driver never even asked for a check, raising the question of how the fake check even got into UPS’ possession, but we’re just getting started here.

No problem, right?

Just go to UPS, and they will write the check for having dropped the ball. That’s where common sense and the law part ways completely in a way that would make most average Americans, and certainly most business people, and even a majority of lawyers scratch their heads in disbelief. It turns out, due to a legal doctrine called “preemption,” UPS can say whatever it wants about what its services are, can make any promise to the shipper, no matter how false, and are absolutely immune to any consequences whatsoever. Without diving too deeply into preemption, it is basically a legal doctrine whereby federal law controls certain questions exclusively.

Preemption is the law in a majority of states, but it appears that New Mexico state courts have not yet ruled on the issue. Like aviation, for example. Cities, counties, and states can pass aviation laws until they are blue in the face, but not one of them would ever be enforceable, because the federal government has exclusive legal control over air travel. When it comes to shipping packages, there are various federal laws that, where preemption has been upheld, preempt or render unenforceable any state laws. All of the causes of action that you could pursue against UPS in this scenario, whether common law or very well-defined consumer protection statues are simply thrown out the window. At most, our shipper could, if he proves his claim, recoup the value of the package, which, at over $10,000, is certainly not chickenfeed, but no attorneys in their right minds would ever take that case. UPS and its army of attorneys and lobbyists know this and work hard to protect there immunity so the company can continue to promise whatever it wants to promise and have absolutely no accountability when things go wrong .

As you might have surmised, this nightmare scenario was no nightmare at all, but a very real series of events that happened to John Trujillo, an average, hard-working corrections officer from New Mexico, who made the mistake of believing what the UPS shipping clerk told him and, shame on him, did not understand preemption as well as he should have. (John Trujillo v. United Parcel Serv., Inc., No. CV-2011-02793. You can view the case docket at www.nmcourts.gov.)

I have to admit, I did okay in law school, and I even managed to pull off a decent GPA, but I never fully understood preemption myself, and I certainly don’t understand why preemption would protect UPS in a situation like this one.

It probably made sense back in the days when you shipped a package and it went through the hands of several different stagecoach operators, railroad operators, and local delivery folks, but it doesn’t make sense in an era where, at any given moment, UPS can track a package in the field using GPS and satellite technology and even upload that to its website in real time. Its application has been taken to an extreme, and it appears that it has had the effect of encouraging shippers to train their personnel to knowingly misrepresent the nature of their services and protections, or at least encouraging shippers to have no protocol in place whatsoever to provide accurate training to their personnel. After all, why bother? The law completely protects them in the event that a shipper does what UPS did here. Sort of like robbing a bank in broad daylight and high-fiving the police officer on your way out of the building. None of this makes sense in 2012.

When Mr. Trujillo reported the loss to UPS, the company immediately locked down all of the records and referred him to its legal department, who in turn has shown Mr. Trujillo and his attorneys the equivalent of its proudly extended middle finger and has, in numerous court documents, admitted that the facts don’t really matter and that there is no way UPS can be held accountable under state law. Sadly for Mr. Trujillo, as well as thousands of businesses who depend on UPS to ship packages, the company is actually correct about this. So next time you see a UPS commercial or even next time you talk to a UPS employee who tells you how wonderful its services are, just keep in mind that it doesn’t matter if UPS is wrong, it doesn’t even matter if UPS knows it is wrong and intentionally tells you what it tells you to get your money with no intention of ever making good on a claim.

The judge in this case recently ruled that none of New Mexico’s common law or statutory law governing the handling of insurance claims, unfair trade practices, or the recruiting or training of employees (like the driver who appears to be criminally liable for being involved in a conspiracy) apply to help an average litigant who is defrauded like poor Mr. Trujillo has been.

Albuquerque Business Law will be taking the matter up on appeal after trying the only claim that remains after the trial court’s ruling (a $13,000 breach of contract claim). So we will see where the New Mexico courts come down on the insanity of preemption and whether they will uphold UPS’ right to defraud average citizens with utter and unapologetic impunity.

Here are some other facts that should make your stomach turn if you’re not yet a little bit queasy:

  • Under oath, the shipping clerk did not materially dispute Mr. Trujillo’s version of events.
  • Remember that shipping ticket indicating that there were additional “terms and conditions” at www.ups.com? Well, the additional “terms and conditions” that UPS says govern this transaction are a 40 some-odd page document to be found somewhere on its website (which is referred to as a “shipping tariff”). The ticket, which the shipper doesn’t even receive until after having been sold the services described above, says “Shipper agrees to the UPS Terms and Conditions of Carriage/Service found at www.ups.com and at UPS service centers.” So, does that make clear to the average, heck, even the ABOVE average person, that they need to be searching the UPS website for something called a tariff? You could probably be forgiven for thinking a tariff was something that involves international trade.
  • UPS contends that the reference on the back of the shipping label somehow incorporates the official UPS tariff, a 40+-page document which was never mentioned, much less provided, to Mr. Trujillo and which itself is internally inconsistent. When Mr. Trujillo’s attorneys took the deposition of the “most knowledgeable person” within the entire UPS corporation about this so-called tariff, the results were downright comical if they had not been so financially devastating to Mr. Trujillo. The head of loss prevention, when presented with a mouse, a keyboard, and internet access during the deposition, was unable to locate the tariff on the UPS website. So here we have the smartest guy in the room when it comes to the UPS tariff (which is still never mentioned on the back of the receipt), and he can’t even find the document on the UPS website. Amazing! This should be legally significant, right? Wrong. Doesn’t matter. Shame on Mr. Trujillo for not asking for the “tariff” from the shipping clerk. He should have known better, according to the law.
  • The shipping clerk, when shown a copy of the check, agreed that it appeared fake to her.
  • UPS never obtained the signature of the person to whom the package would be sent, and instead got the desk-clerk at the La Quinta to sign for the package.
  • The desk-clerk swore under oath that she never saw a check and that the UPS driver never asked for one, yet somehow, the fake check made it into the UPS system. UPS refuses to disclose in discovery what steps, if any, they took on the other end of the transaction to verify this check, but certainly did not do as the shipping clerk had promised they would do and verify that it was from a real bank account.

At the end of the day, Mr. Trujillo was never paid for the $10,000+ package.

UPS denied his insurance claim and forced him to file his lawsuit. The state Court judge found that the federal doctrine of preemption excluded all of New Mexico’s consumer protection laws and also shielded UPS from any scrutiny about the training and supervision of their drivers, including whether or not the driver may have himself been in on the scam.

In the coming months, this case goes to trial on the very limited issue of breach of contract, meaning Mr. Trujillo’s maximum award at trial will be the value of the package. Needless to say, we will be appealing this case, regardless of the outcome at trial.

But you should beware as a shipper that UPS’s promises at the counter are, as things currently stand, quite hollow and apparently without consequence. We hope to break new legal ground on this issue, but just be very careful in shipping any package, and know that UPS will not honor any of their promises and will instead hide behind archaic, 18th century law to avoid following through on their obligations to you as a shipper. We are not sure if other carriers are better, but read the fine print, and if you are shipping a package of any significant value, obtain third-party insurance and make sure you understand that insurance!

 

Albuquerque Business Law, P.C.
1803 Rio Grande Boulevard Northwest AlbuquerqueNM87104 USA 
 • 505-246-2880

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About Patrick J. Griebel

Patrick has represented hundreds of clients in a wide variety of practice areas. Outside of the practice of law, Patrick J. Griebel started and successfully managed businesses of his own, focusing on New Mexico’s abundant renewable energy resources. Patrick has also advised and managed start-ups, as well as established businesses in business planning, business organization, marketing, sales, hiring, and training.

  • Helena

    Any update on this fascinating case?