891 F. Supp. 2d 489
S.D.N.Y.2012Background
- Derailment of a train near Dallas, Texas on April 18, 2006 damaged cargo insured by Sompo and Nipponkoa, with NSR, NSC, and KCSR as the rail defendants.
- Sompo and Nipponkoa sued under federal and common law theories as subrogees of the insureds; cross-motions for summary judgment were filed.
- Cargo for Sompo covered Kubota tractors, Hoshizaki appliances, Canon, and Unisia; shipments originated in Japan or China and moved to Georgia via multiple carriers.
- Nipponkoa insured Enplas auto parts and Fuji engine parts; Nippon Express hired Yang Ming to execute ocean leg and Inland carriage contracted with NSR via ITA.
- The inland leg transferred to NSR in Dallas; Yang Ming operated as carrier and intermediary; Nippon Express and Yang Ming issued the relevant bills of lading.
- Procedural history includes an initial grant of summary judgment on Carmack Amendment claims based on pre-Regal-Beloit precedent, then Regal-Beloit abrogation by Supreme Court, with remand and cross-motions for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Carmack apply to through overseas bills? | Carmack applied to inland leg of foreign shipments under existing Second Circuit precedent. | Regal-Beloit abrogates that rule; Carmack does not apply to shipments originating overseas under a single through bill. | Carmack does not apply to shipments originating overseas under a single through bill. |
| Are covenants not to sue enforceable against downstream carriers under the Yang Ming bill? | Yang Ming bill restricts sue to the carrier; downstream rail carriers cannot be sued. | Covenants not to sue apply to downstream carriers via Himalaya Clauses; enforceable to bar suit against non-carrier entities. | Yang Ming covenant not to sue precludes claims against downstream carriers; enforceable. |
| Is Nippon Express bill of lading ambiguous about liability and thus precluded from summary judgment? | Nippon Express language clearly limits liability to carrier and downstream entities; should preclude suit against others. | Nippon Express provisions are ambiguous; ambiguity requires extrinsic evidence on intent; summary judgment not proper. | Nippon Express bill is ambiguous; deny summary judgment on Nippon Express shipments. |
| Are covenants not to sue and related liability limitations compatible with Harter Act/COGSA/Hague Rules and public policy? | Harter Act/COGSA/Hague Rules bar these limitations; plaintiffs should not be bound by such provisions. | Himalaya Clause-based limitations permit directing suit to the carrier while preserving full recovery from the carrier; compliant with regimes. | Liability limitations are enforceable; do not violate Harter Act, COGSA, or Hague Rules; plaintiffs can pursue carrier and seek indemnification. |
Key Cases Cited
- Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14 (U.S. 2004) (multimodal bills and Himalaya Clauses; inland carriers may be protected)
- Regal-Beloit Corp. v. Kawasaki Kisen Kaisha, 130 S. Ct. 2433 (U.S. 2010) (abrogated prior Carmack interpretation for through bills)
- Royal & Sun Alliance Ins. PLC v. Ocean World Lines, Inc., 612 F.3d 138 (2d Cir. 2010) (through bills and covenants not to sue; enforceability considerations)
- Federal Insurance Co. v. Union Pacific Railroad Co., 651 F.3d 1174 (9th Cir. 2011) (enforcement of Himalaya Clauses and liability mechanisms under COGSA/Hague Rules)
- Atlantic Mutual Insurance Co. v. APL Co. Singapore Ltd., 343 U.S. 236 (Supreme Court 1952) (general rule of immunity provisions and their limits)
- Kirby, supra, 543 U.S. 14 (U.S. 2004) (multimodal through bills; liability allocation and enforcement)