Rational Software v. Sterling Corp.

Citation: Rational Software Corp. v. Sterling Corp., 311 F. Supp. 2d 203 (D. Mass. 2004), aff’d, 393 F.3d 276 (1st Cir. 2005).

Factual Background
Between 1997 and 2001, Rational, a California company, used Sterling Corporation over 200 times to move items between its Massachusetts facilities. On February 1, 2001, it hired Sterling to move a computer disk array, weighing 1,540 pounds and worth $250,000 from one Massachusetts facility to another. During the move, Sterling’s employees broke the equipment.

While Sterling did not send Rational a bill of lading before the move, Judge Joseph Tauro found that previous bills of lading had put Rational on notice of Sterling’s limitation of liability, which said in bold print:


 * “Unless A Different Value is Declared, The Shipper Hereby Releases The Property To A Value of $.60 Per Pound Per Article.”

And Sterling had filed the sixty cent limit with the Massachusetts Department of Telecommunications and Energy. In addition, Sterling orally advised its customers of the liability limit. Of the over 200 times Sterling moved items for Rational, Rational employees initialed the limitation only three times.

Judge Tauro concluded that Sterling owed Rational only $924. Plaintiff appealed, and the First Circuit, in a short opinion, affirmed. Since the damage occurred in Massachusetts, Mass. Gen. L. ch. 106 § 7-309(2), part of the Uniform Commercial Code, controlled. And this provision quite specifically permits a common carrier to limit its liability. And the prior course of dealing between the parties was sufficient to prove an agreement that Sterling’s liability was limited to $.60 per pound.