NORFOLK SOUTHERN RAILWAY COMPANY v. NEW YORK TERMINALS, LLC
2:14-cv-07664
D.N.J.Sep 12, 2017Background
- Norfolk Southern (rail carrier) sued New York Terminals, LLC (NYT) for $294,360 in demurrage and related hazardous-material charges arising from railcar deliveries of liquid asphalt between Nov. 2013–May 2014.
- Bills of lading for the shipments listed NYT as the sole consignee; NYT received electronic notice when cars were constructively placed and accepted the shipments.
- NYT had an agreement with NJ Asphalt Terminals (NJAT) to be listed as consignee to avoid delivery delays; NYT contends NJAT was the true beneficial owner and responsible party.
- Norfolk assessed additional $100/day hazardous-material surcharge based on shipper’s certification and DOT hazardous-material identifications on the bills of lading.
- NYT asserted force majeure (severe winter weather) and that the asphalt was non-hazardous once cooled, but did not follow Norfolk’s tariff notice procedures required to obtain relief.
- Court addressed only Norfolk’s summary-judgment motion against NYT (third-party claims between NYT and NJAT unresolved) and granted summary judgment for Norfolk.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NYT is liable for demurrage as consignee on bills of lading | Norfolk: NYT is presumptively liable because it is named sole consignee on bills of lading and accepted delivery | NYT: It was merely the destination/agent; NJAT was the beneficial owner and true consignee | NYT is liable; presumption not rebutted because NYT gave no written notice under 49 U.S.C. § 10743(a)(1) that it acted as agent |
| Whether NYT may avoid demurrage via force majeure (winter weather) | Norfolk: NYT failed to comply with tariff’s procedures and timing for weather-related relief | NYT: Severe winter weather Dec 2013–Feb 2014 caused operational delays justifying relief | Force majeure defense fails; tariff requires timely online notification (within 5 days) and NYT did not follow it |
| Whether NYT may avoid charges for frozen/congealed material (heating needed) | Norfolk: Tariff prescribes notice and charge rules; NYT didn’t comply with notice requirements | NYT: Needed to reheat/unload and notified Norfolk of heating needs | NYT not entitled to relief; failed to comply with tariff’s 10-day notice requirement for frozen material |
| Validity of hazardous-material surcharge | Norfolk: Carrier may rely on shipper’s hazardous designation; bills listed DOT hazard IDs so surcharge valid | NYT: Asphalt cooled below hazard threshold and thus was not hazardous (invoked STB comment) | Hazardous-material charge upheld; carrier entitled to rely on shipper’s certification and NYT offered no admissible evidence to the contrary |
Key Cases Cited
- CSX Transp. Co. v. Novolog Bucks Cnty., 502 F.3d 247 (3d Cir. 2007) (consignee named on bill of lading is presumptively liable for demurrage unless timely written notice of agency/beneficial owner is given)
- CSX Transp., Inc. v. Port Erie Plastics, Inc., [citation="295 F. App'x 496"] (3d Cir. 2008) (consignee can rebut presumption by showing nonacceptance of delivery or written agency notice)
- Southern Pacific Co. v. Miller Abattoir Co., 454 F.2d 357 (3d Cir. 1972) (one who accepts goods consigned to him is liable for freight charges under applicable tariffs)
- Borger v. CSX Transp., Inc., 571 F.3d 559 (6th Cir. 2009) (carrier may rely on shipper’s hazardous-material certification unless it has reason to know of discrepancy)