13 F. Supp. 3d 277
S.D.N.Y.2014Background
- Crown shipped three containers from Ohio/Indiana to Australia under a through bill of lading issued by ocean carrier Maersk; Maersk subcontracted the U.S. rail leg to BNSF.
- Crown insured the cargo with American Home, which subrogated to Crown’s claim after the goods were damaged in a 2006 BNSF train derailment in California.
- Maersk’s standard bill of lading (electronic) contained provisions: different loss rules by stage of carriage, a Himalaya clause (extend protections to subcontractors), a covenant barring suit against subcontractors, and §6.2(d) (liability for inland U.S. damage determined by inland carrier contract/tariff and New York law).
- Prior rulings: Judge Jones held the Carmack Amendment governs this loss (preferring Carmack over COGSA); Judge Preska later concluded that, because Carmack governs, any maritime claims are preempted and dismissed BNSF from the case.
- American Home sued Maersk under the Carmack regime (as subrogee). Maersk moved for summary judgment arguing it is not a "rail carrier" under Carmack and did not contract into Carmack liability; American Home argues Maersk contractually agreed to be bound by the Carmack regime.
- This Court granted Maersk summary judgment, holding Maersk is not statutorily a Carmack "rail carrier" and did not contractually adopt Carmack liability via the bill of lading.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Maersk is statutorily liable under the Carmack Amendment | American Home argued Maersk can be liable under Carmack as part of the through-transport chain | Maersk argued Carmack applies only to rail carriers/freight forwarders; Maersk is an ocean carrier, not a rail carrier or Carmack freight forwarder | Maersk is not a Carmack "rail carrier" or freight forwarder; no statutory Carmack liability |
| Whether Maersk contracted into Carmack liability via its bill of lading (§6.2 provisions) | American Home contended §6.2(d) (and earlier §6.2(a) arguments) bind Maersk to the inland carrier liability regime (i.e., Carmack) | Maersk said §6.2(d) is a choice-of-law/contract-reference to inland carrier contracts (not adoption of Carmack), and §6.2(a) does not bind to Carmack; Preska's ruling also preempts maritime contract-based claims | Court held Maersk did not contractually agree to be bound by Carmack; §6.2(d) is a choice-of-law/reference to inland carrier contract, not an adoption of Carmack |
| Effect of prior rulings that Carmack governs the case | American Home relied on law-of-the-case to pursue Carmack-based recovery from Maersk | Maersk argued law-of-the-case forecloses maritime contract arguments and that statutory Carmack does not reach ocean carriers | Court applied law-of-the-case: Carmack governs but does not reach ocean carriers; contractual attempt to import Carmack fails |
| Whether Royal & Sun and other precedents permit importing Carmack into maritime bills | American Home tried to distinguish (import vs. export) or rely on bill language to import Carmack | Maersk relied on Royal & Sun, Regal-Beloit, Rexroth, etc., to show courts refuse to treat ocean carriers as rail carriers or to allow contracting into Carmack | Court followed Second Circuit and Supreme Court precedent: bills of lading like Maersk’s do not convert ocean carriers into Carmack rail carriers nor bind them to Carmack |
Key Cases Cited
- Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89 (Sup. Ct. 2010) (ocean carrier not subject to Carmack merely because it arranges rail carriage in a through maritime contract)
- Rexroth B.V. v. Ocean World Lines Inc., 547 F.3d 351 (2d Cir. 2008) (entity arranging rail transport is not a Carmack "rail carrier")
- Mitsui Sumitomo Ins. Co. Ltd. v. Evergreen Marine Corp., 621 F.3d 215 (2d Cir. 2010) (describing the distinct liability regimes of Carmack and COGSA)
- Reider v. Thompson, 339 U.S. 113 (Sup. Ct. 1950) (Carmack relieves shippers from searching for the negligent carrier among many handlers)
- Prima U.S. Inc. v. Panalpina, Inc., 223 F.3d 126 (2d Cir. 2000) (freight forwarders distinct from carriers; role of freight forwarder under Carmack analysis)
- Royal & Sun Alliance Ins., PLC v. Ocean World Lines, Inc., 612 F.3d 138 (2d Cir. 2010) (bill language nearly identical to §6.2(a) does not evidence intent to contract into Carmack)
- Cleveland v. Beltman North Am. Co., Inc., 30 F.3d 373 (2d Cir. 1994) (Carmack provides the exclusive remedy for interstate rail shipment loss)