United States District Court,

S.D. New York.

ROYAL & SUN ALLIANCE INSURANCE PLC, Plaintiff,

v.

UPS SUPPLY CHAIN SOLUTIONS, INC., Worldwide Dedicated Services, Inc., and International Management Services Company, Inc., Defendants.

 

No. 09 C 5935.

Aug. 31, 2011.

 

MEMORANDUM OPINION AND ORDER DENYING MOTION TO BIFURCATE

MARVIN E. ASPEN, District Judge.

Presently before is a motion for bifurcation filed by Defendant International Management Services Company, Inc. (“IMSCO”) (Dkt.Nos.164–65). IMSCO seeks to initially limit the scope of trial to address whether it is entitled, under the federal common law of bailment, to the limited liability provision agreed-upon between Ethicon, and its bailee, UPS Supply Chain Solutions, Inc. (“UPS”). Plaintiff Royal & Sun Alliance Insurance PLC (“Royal Sun”), Ethicon’s insurer, objects to the motion on multiple grounds. As set forth below, the motion is denied.

 

BACKGROUND

 

We presume familiarity with the nature of the dispute and the underlying record.

 

Although the pending motion is styled as a Rule 42 motion for bifurcation, the parties’ briefs hardly touch on the appropriateness of bifurcating the upcoming bench trial. Instead, the parties dispute whether the issue IMSCO seeks to try separately should in fact be tried at all.

 

IMSCO asserts that, as a sub-bailee under common law, it may claim a liability limitation based on the terms of the Logistics Services Agreement (“LSA”) entered into between Ethicon and UPS. The LSA limited UPS’ liability, as bailee, to $250,000 in the event of loss or damages to the cargo transported for Ethicon. UPS contracted with IMSCO pursuant to a Staffing Services Agreement (“SSA”) to provide drivers for transportation of cargo. An IMSCO truck driver, James Crews, was involved in the March 2009 crash that destroyed the Ethicon cargo and led to this suit. UPS has already paid Royal Sun $250,000 pursuant to the limitation in the LSA for the loss of the cargo. IMSCO claims that, as Ethicon’s sub-bailee, its potential liability is also subject to the $250,000 limitation. Moreover, because UPS satisfied that obligation, IMSCO asserts that its liability must be zero. (Mem. at 1–4.) IMSCO argues that this issue should be bifurcated for a short trial prior to any trial on liability, should that become necessary.

 

UPS’ subsidiary, Worldwide Dedicated Services, Inc. (“WDS”), executed the SSA with ISMCO.

 

Royal Sun objects to the motion on the grounds that IMSCO cannot seek limited liability as a subcontractor, for a variety of legal reasons. Royal Sun contends that IMSCO impermissibly seeks reconsideration of Judge Swain’s July 23, 2010 summary judgment order, running afoul of the law of the case doctrine as well as Local Rule 6.3. (Opp’n at 3–4, 7–8.) Royal Sun also argues that IMSCO is barred from raising this issue because it failed to argue it at the summary judgment stage and, moreover, entered into a damages stipulation that did not account for the liability limitation. (Id. at 4–7.) Finally, Royal Sun contends that IMSCO’s claim to the limitation fails on its merits. (Id. at 9–12.) We need not address each of these arguments but will consider the merits of IMSCO’s position and the related applicability of the law of the case doctrine.

 

ANALYSIS

We begin with the essential backdrop underpinning IMSCO’s theory. Generally speaking, a federal statute—the Carmack Amendment—imposes strict liability on motor carriers providing interstate transportation services “for the actual loss or injury to the property caused by … the delivering carrier.” 49 U.S.C. § 14706(a)(1). The Carmack Amendment thus codified the long-standing federal common law principle that “a common carrier cannot exempt himself from liability,” although “the rigor of this liability might be modified through any fair, reasonable, and just agreement with the shipper.” Adams Exp. Co. v. Croninger, 226 U.S. 491, 509, 33 S.Ct. 148, 153, 57 L.Ed. 314 (1913); see also Emerson Elec. Supply Co. v. Estes Exp. Lines Corp., 451 F.3d 179, 183 (3d Cir.2006); Shippers Nat’l Freight Claim Council v. I.C.C., 712 F.2d 740, 745–46 (2d Cir.1983); AIG Europe (Netherlands), N.V. v. UPS Supply Chain Solutions, 765 F.Supp.2d 472, 482 (S.D.N.Y.2011). Under both common law and the Carmack Amendment, motor carriers can limit (though not escape) their potential liability through the express terms of their contracts with the cargo shippers retaining their services. 49 U.S.C. § 14706(c)(1)(A); Croninger, 226 U.S. at 509, 33 S.Ct. at 153; see Royal & Sun Alliance Ins. PLC v. Rogers Transp. Mgmt. Servs., Inc., 737 F.Supp.2d 154, 159 (S.D.N.Y.2010) [hereinafter Rogers ].

 

In addition, under certain circumstances liability limitations may apply to “downstream” third parties, including agents of the carrier or independent contractors retained by the carrier to assist with the transportation of the cargo. For example, the contract between a cargo shipper and the carrier may include sweeping limitation language—often referred to as a Himalaya clause—that covers unspecified contractors and additional bailees. See Norfolk S. Rwy. Co. v. Kirby, 543 U.S. 14, 20, 125 S.Ct. 385, 391, 160 L.Ed.2d 283 (2004) (noting that the relevant bills of lading included Himalaya clauses, which covered “any servant, agent or other person (including any independent contractor) whose services have been used in order to perform the contract”); American Home Assur. Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313, 317 & n. 2 (2d Cir.2006) (explaining that because the pertinent statute protected only the primary carrier but not its agents or others, “a Himalaya Clause is necessary to extend this limitation beyond its normal parameters”). Or, the contract between a carrier and its subcontractor may include language that limits the subcontractor’s liability to the shipper, even though the shipper may be unaware of this downstream arrangement. Norfolk S. Rwy. Co., 543 U.S. at 33–34, 125 S.Ct. at 398–99 (holding that “an intermediary binds a cargo owner to the liability limitations it negotiates with downstream carriers”); see also Rogers, 737 F.Supp.2d at 160–61 (limiting subcontractor’s damages to $250,000 pursuant to its contract with intermediary, even though subcontractor was deemed liable for the entire loss under the shipper—intermediary agreement). Determining the applicability of limited liability provisions is “a simple question of contract interpretation.”   Norfolk S. Rwy. Co., 543 U.S. at 30, 125 S.Ct. at 397; Toyomenka, Inc. v. S.S. Tosaharu Maru, 523 F.3d 518, 522 (2d Cir.1975) (“[E]ach case turns on the provisions of the particular bill of lading.”); see also Royal & Sun Alliance Ins. PLC v. UPS Supply Chain Solutions, Inc., No. 09 C 5935, 2010 WL 3000052, at(S.D.N.Y. July 23, 2010) (evaluating applicable contract terms) [hereinafter Royal Sun I ].

 

At the summary judgment stage, the parties agreed that IMSCO is not a “motor carrier” as defined by the Carmack Amendment. (See Defs.’ Facts ¶ 15, Dkt. No. 31.) In her July 23, 2010 opinion, Judge Swain held that the limited liability provision included in the LSA, while valid under the Carmack Amendment as to UPS, did not insulate IMSCO as a downstream independent contractor. Royal Sun I, 2010 WL 3000052, at *4–6. Judge Swain reasoned that “[e]xtension of contracted-for liability to all agents and subcontractors can be negotiated under the statute where deemed necessary by the parties.” Id. at(citing Norfolk S. Rwy. Co., 543 U.S. at 20, 125 S.Ct. at 391). Here, however, the LSA does not include a Himalaya clause or other language evidencing Ethicon’s and UPS’ intent to limit the liability of anticipated third-party contractors. Id. at *6. (See also Bruce Lindsay 4/22/11Decl, Ex. A, LSA ¶ 10.) After interpreting the LSA, Judge Swain concluded that IMSCO was not an intended beneficiary of the limited liability clause and could not claim its benefit. Royal Sun I, 2010 WL 3000052, at *5–6.

 

Having been denied the LSA’s protection in Judge Swain’s Carmack Amendment analysis, IMSCO now argues that it is entitled to the liability limitation under principles of federal common law. As Royal Sun correctly points out, IMSCO fails to recognize that the common law analysis of the applicability of the limitation is precisely the same as the statutory analysis previously conducted by Judge Swain. That is, the extension of the liability limitation to downstream carriers boils down to “a simple question of contract interpretation” under either the Carmack Amendment or common law principles. Norfolk S. Rwy. Co., 543 U.S. at 30, 125 S.Ct. at 397; see Rogers, 737 F.Supp.2d at 159–61 (evaluating plain language of the contracts to determine the applicability of the limitation under federal common law); Royal Sun I, 2010 WL 3000052, at *5–6 (reviewing LSA in overall context of Carmack Amendment, though having found that IMSCO was not subject to the Carmack Amendment). This approach makes sense because, as mentioned earlier, the Carmack Amendment adopted the common law principles that govern here. See Croninger, 226 U.S. at 509, 33 S.Ct. at 153.

 

Royal Sun has not challenged IMSCO’s reliance on federal common law. We deem this reliance appropriate because, as Judge Swain previously held, the claims against IMSCO fall outside the literal scope of the Carmack Amendment. Rogers, 737 F.Supp.2d at n. 31; Ingram Micro, Inc. v. Airoute Cargo Exp., Inc., 154 F.Supp.2d 834, 839 (S.D.N.Y.2001) ( “[C]ourts have held that federal common law is properly applied where the particular facts of a case may fall outside the literal coverage of a federal statute, but the use of common law will fill gaps in the congressional statutory pattern.”).

 

In light of the above, we find that IMSCO’s argument is foreclosed by the law of the case doctrine. IMSCO’s common law theory requires us to evaluate the terms of the LSA, where Judge Swain previously did so and ruled on the LSA’s applicability to IMSCO. The Second Circuit has repeatedly stated that our discretion to revisit a non-final ruling is “subject to the caveat that ‘where litigants have once battled for the court’s decision, they should neither be required, nor without good reason permitted, to battle for it again.’ “ Official Comm. of Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, 322 F.2d 147, 167 (2d Cir.2003) (quoting Zdanok v. Glidden Corp., 327 F.2d 944, 953 (2d Cir.1964)); Bergerson v. New York State Office of Mental Health, No. 10 C 1040, 2011 WL 2899237, at(2d Cir. July 21, 2011); see also In re Ski Train Fire in Kaprun, Austria, 224 F.R.D. 543, 546 (S.D.N.Y.2004). Reconsideration is appropriate only if “ ‘there is an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent a manifest injustice.’ “ In re Ski Train Fire in Kaprun, Austria, 224 F.R.D. at 546 (quoting Color Tile, Inc., 322 F.3d at 167). None of these circumstances are present here, and we are “understandably reluctant to reopen a ruling once made.” Ali v. Mukasey, 529 .3d 478, 490 (2d Cir.2008) (quoting Lillbask v. Conn. Dept. of Educ., 397 F.3d 77, 94 (2d Cir.2005)) (adding that such reluctance is particularly warranted “when one judge … is asked to consider the ruling of a different judge”).

 

Even if the law of the case doctrine did not apply, our analysis of the LSA would not stray from Judge Swain’s earlier discussion and holding. Indeed, IMSCO has not challenged Judge Swain’s interpretation of the LSA. Rather, IMSCO attempts to skirt the contract interpretation issue by claiming that the federal common law of bailment requires extension of the limitation. But again IMSCO ignores the fact that the source of any limitation under common law must be a contract. The cases cited by IMSCO are readily distinguishable because they concern federal conventions, New York state law concepts, or contracts expressly covering downstream third parties—none of which are relevant here. See, e.g., Lerakoli, Inc. v. Pan Am. World Airways, Inc., 783 F.2d 33, 35–37 (2d Cir.1986) (relying on state law principles and the Warsaw and Lausanne Conventions to extend limitation to an agent of the USPS); Leather’s Best, Inc. v. Tidewater Terminal, Inc., 346 F.Supp. 962, 963, 967–68 (S.D.N.Y.1972) (holding that a Himalaya clause limitation present in the bill of lading would comport with state law). None of these cases support IMSCO’s suggestion that we gloss over the express terms of the LSA and extend the liability limitation to insulate it from all liability in this matter.

 

IMSCO does not argue that the terms of the SSA limit its liability.

 

CONCLUSION

For the reasons set forth above, IMSCO’s motion is denied.

 

SO ORDERED

United States District Court,

N.D. Oklahoma.

Richard ADREAN, Plaintiff,

v.

Jose LOPEZ, Swift Transportation Company, Inc., and Mohave Transportation Insurance Company, Defendants.

 

No. 10–CV–0670–CVE–FHM.

Sept. 2, 2011.

 

Rhonda G. Thomas, Boettcher & Lobaugh, Tulsa, OK, for Plaintiff.

 

David Charles Senger, Robert P. Coffey, Jr, Stephen L. McClellan, Coffey Gudgel & McDaniel PLLC, Tulsa, OK, for Defendants.

 

OPINION AND ORDER

CLAIRE V. EAGAN, Chief Judge.

Now before the Court is Defendant Mohave Transportation Insurance Company’s Motion for Summary Judgment and Brief in Support (Dkt.# 38). Plaintiff did not file a response.

 

I.

Plaintiff Richard Adrean’s claims arise out of a motor vehicle collision that occurred in Tulsa County, State of Oklahoma, on or about December 7, 2008. Dkt. # 2–2, at 1. Plaintiff alleges that, at the time of that collision, defendant Jose Lopez was operating a motor vehicle during the course of and within the scope of his employment for defendant Swift Transportation Company, Inc. (Swift), and that Swift is a common carrier insured by defendant Mohave Transportation Insurance Company (Mohave). Adrean claims that he suffered damages and injuries as a consequence of the collision. He also alleges that, because Lopez’s negligence caused the collision, he is entitled to damages. Id. Adrean filed his petition in the District Court of Tulsa County, State of Oklahoma, on October 1, 2010. Dkt. # 2–2. On October 21, 2010, defendants removed to this Court. Dkt. # 2. Complete diversity of citizenship exists between plaintiff and defendants, and plaintiff seeks damages in excess of $75,000, exclusive of interest and costs. Dkt.2; 2–2, at 2. Jurisdiction is therefore proper pursuant to 28 U.S.C. § 1332.

 

II.

Summary judgment pursuant to Fed.R.Civ.P. 56 is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v.. Catrett, 477 U.S. 317, 322–23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Kendall v. Watkins, 998 F.2d 848, 850 (10th Cir.1993). The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 317. “Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy and inexpensive determination of every action.’ “ Id . at 327.

 

“When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts…. Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.’ “ Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986) (citations omitted). “The mere existence of a scintilla of evidence in support of the plaintiff’s position will be insufficient; there must be evidence on which the [trier of fact] could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252. In essence, the inquiry for the Court is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 250. In its review, the Court construes the record in the light most favorable to the party opposing summary judgment.   Garratt v. Walker, 164 F.3d 1249, 1251 (10th Cir.1998).

 

III.

Mohave seeks summary judgment on all of plaintiff’s claims against it on the ground that Oklahoma law does not permit a direct action against it. Mohave’s statement of uncontroverted facts states that, at the time of the collision, Swift was self-insured. Dkt. # 38, at 2. It states that Swift is a Delaware corporation and an interstate motor carrier operating under United States Department of Transportation Number 542883, and that Swift maintains its United Carrier Registration in Indiana, not Oklahoma. Id. at 3. Finally, it states that Lopez was a company driver at the time of the accident, not an owner/operator. Mohave has supported those statements by reference to particular parts of materials in the record, as required by Fed.R.Civ.P. 56(c). Adrean has not filed a response to Mohave’s motion for summary judgment. Pursuant to Fed.R.Civ.P. 56(e), the Court will therefore consider Mohave’s statement of facts undisputed for purposes of this motion. Thus, the only issue before the Court is whether Mohave is entitled to judgment as a matter of law.

 

Mohave argues that, under Oklahoma law, Adrean cannot maintain a direct action against it as a liability insurer for a motor carrier. Plaintiff’s claim is based upon diversity jurisdiction. As a result, the law of Oklahoma is to be applied in determining the substantive rights of the parties to the action.   Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938). “The common law system of remedies remains in full force in Oklahoma … [and][u]nless a statute expressly creates a remedy not existent at common law none will be found to exist.” Hubbard v. Liberty Mut. Fire Ins. Co., 2007 WL 1299270, at * 2 (E.D.Okla.2007)(citing Ricks v. Exploration Co., 695 P.2d 498, 504 (Okla.1984)).

 

Oklahoma adheres to the majority rule that a defendant’s insurer cannot be directly sued by a plaintiff. Daigle v. Hamilton, 782 P.2d 1379, 1381 n. 1 (Okla.1989). Oklahoma law does, however, have “two statutory provisions which have been previously interpreted to allow direct actions against an insurer of a motor carrier:” OKLA. STAT. tit. 47, § 169 and Okla. Stat. tit. 47, § 230.30. Hubbard, 2007 WL 1299270, at * 2. Section 169 “applies to motor carriers of household goods or used emigrant moveables and provides that no certificate or permit shall be issued by the Oklahoma Corporation Commission (OCC) until after such motor carrier files with the OCC a liability insurance policy or bond covering public liability and property damage.” Id. The provisions of § 169 pertaining to proof of liability insurance apply only to carriers whose principal place of business is in Oklahoma. Id. Because it is undisputed that Swift’s principal place of business is not in Oklahoma, Dkt.2, at 2; 38, at 7, § 169 is therefore inapplicable. Id.

 

“The Oklahoma Motor Carriers Act [OKLA. STAT. tit. 47, § 230 .21 et. seq.] has permitted a direct action against the insurer of a motor carrier who has registered and filed a certificate of insurance with the [OCC].” Id. Section 230.30 of the Motor Carriers Act applies only to motor carriers subject to the licensing requirements of the OCC. To state a claim against an insurer under § 230.30, a plaintiff must allege that: “(1) he suffered injury; (2) the injury occurred by operation of a motor carrier; and (3) the motor carrier was required to be and was in fact insured pursuant to § 230.30.” Mize v. Liberty Mut. Ins. Co., 393 F.Supp.2d 1223, 1226 (W.D.Okla.2005). The licensing and insurance requirements of § 230.30 apply only to carriers whose principal place of business is in Oklahoma. OKLA. STAT. tit. 47, § 230.30(B); see also Hubbard, 2007 WL 1299270, at * 3.

 

Oklahoma takes part in the “single state system … where interstate motor carriers register and insure in their home states.”   Fierro v. Lincoln Gen. Ins. Co., 217 P.3d 158, 160 (Okla.Civ.App.2009).

 

Swift has not obtained an Oklahoma license from the OCC pursuant to § 230.23(3), and did not file with the OCC a liability insurance policy or bond covering public liability and property damage pursuant to § 230.30(A). Dkt. # 38, at 7. Therefore, § 230.30 is inapplicable to Swift. Hubbard, 2007 WL 1299270, at * 3. Further, a direct action against the insurer is not authorized by federal law. Id. (citing 49 C.F.R. § 387.15). “[U]nder the standard Form MCS– 90 which is required of motor carriers’ insurers, an insurer agrees to pay any final judgment recovered against the insured motor carrier for public liability resulting from negligence in the operation of a motor vehicle.” Id. But since there is not yet judgment in favor of the plaintiff and against the defendant motor carrier, “the plaintiff may not recover directly from [Mohave].” Id.; see also Fierro, 217 P.3d at 161 (noting that no prejudice arises from a grant of summary judgment in favor of a liability insurer where a plaintiff may proceed against the insurer if he prevails in his lawsuit). Because there is no means of direct recovery against it under Oklahoma law, Mohave is entitled to judgment as a matter of law.

 

In Hubbard, the court rejected the plaintiff’s argument that the defendant carrier had subjected itself to the requirements of § 230.30 simply by operating as a motor carrier in Oklahoma, or that registration under the single state registration system fulfilled the requirements of § 230.30.2007 WL 1299270, at * 3.

 

Because the Court grants Mohave’s motion for summary judgment, it need not address its argument that it is an improper party in this case. Dkt. # 38, at 19.

 

IT IS THEREFORE ORDERED that Defendant Mohave Transportation Insurance Company’s Motion for Summary Judgment and Brief in Support (Dkt.# 38) is granted. Defendant Mohave Transportation Insurance Company is terminated as a party defendant.