Sompo Japan Ins. Co. v. Union Pacific R. Co.
United States District Court,S.D. New York.
SOMPO JAPAN INSURANCE COMPANY, Plaintiff,
v.
UNION PACIFIC RAILROAD COMPANY, Defendant.
Aug. 2, 2007.
DECISION AND ORDER GRANTING PLAINTIFF’S RENEWED MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING DEFENDANT’S RENEWED MOTION FOR PARTIAL SUMMARY JUDGMENT
McMAHON, J.
Plaintiff Sompo Japan Insurance Company (“ Sompo” ) originally filed a complaint against Defendant Union Pacific Railroad Company (“ UP” ) for damages related to a shipment of tractors from Tokyo, Japan to Swanee, Georgia. The District Court (Duffy, J.) granted partial summary judgment in favor of UP, giving effect to the contract for carriage which incorporated by reference the Carriage of Goods by Sea Act (“ COGSA” ), 46 U.S.C. app. §§ 1301-15, and declining to apply the Carmack Amendment (49 U.S.C. § 11706) and the Staggers Act (49 U.S.C. § 10502(e)), effectively limiting UP’s liability to $500 per parcel. See Sompo Japan Ins. Co. v. Union Pac. R.R. Co., No. 03 Civ. 1604, 2003 WL 22510361 (S.D.N.Y. Nov. 3, 2003) (“ Sompo I” ). Sompo appealed the Sompo I decision to the Second Circuit.
This case comes before this court on remand from the Second Circuit, which reviewed the district court’s findings de novo, and resolved the previously unsettled question of what law applies to the United States rail leg of an international multimodal shipment. See Sompo Japan Ins. Co. v. Union Pac. R.R. Co., 456 F.3d 54 (2d Cir.2006) (“ Sompo II” ). The Second Circuit undertook a detailed analysis of COGSA, the Carmack Amendment, and the Staggers Act to determine which regime should be applied. It concluded that the Carmack Amendment and the Staggers Act should be applied; refused to apply COGSA even though it appeared to be incorporated by reference in a through bill of lading; and reversed and remanded. The mandate stated that the district court was “ to consider any other potential arguments that Union Pacific might raise that it complied with the requirements of Carmack and Staggers.” Sompo II, 456 F.3d at 76.
As the Second Circuit has already given a thorough and complete discussion of the history and application of Carmack, Staggers, and COGSA, I will not do so here.
Sompo renewed its prior motion for partial summary judgment on October 13, 2006. UP filed an opposition and renewed its prior cross-motion for partial summary judgment on November 7, 2006. On July 5, 2007, the parties stipulated that principal amount of damages suffered by the plaintiff was $328,129.32 and agreed that the case could be decided on the papers.
I. Facts
Except where noted, the material facts are undisputed. Liability and the amount of actual damages incurred are not in dispute.
Kubota Tractor Corporation (“ Kubota” ) hired Mitsui OSK Line Ltd. (“ MOL” ), an ocean shipping company, to ship thirty-two tractors from Tokyo, Japan to Swanee, Georgia. This shipment was insured by the plaintiff for $479,500. MOL issued intermodal ‘ through’ bills of lading for the shipment. Bills of lading are contracts that “ record that a carrier has received goods from the party that wishes to ship them, state the terms of carriage, and serve as evidence of the contract for carriage.” Sompo II, 456 F.3d at 56 (citing Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 18, 125 S.Ct. 385 (2004)). These bills covered the entire journey from start to finish, including both the ocean and the land legs of transport, and multiple modes of transportation, including ocean and rail carriage.
MOL shipped the tractors by ocean transit from Tokyo, Japan to Los Angeles, California. In Los Angeles, the tractors were transferred from MOL’s ship to MOL’s subcontractor, UP, for rail carriage to Georgia. The shipment was en route when the UP train carrying the cargo derailed in Texas. The tractors were severely damaged, and Kubota collected the full value of the tractors from Sompo. Sompo subrogated the claim and brought the instant suit against defendant UP.
There is some dispute as to how the shipment was subcontracted to UP. See Sompo II, 456 F.3d at 56 n. 3; Sompo I, 2003 WL 22510361, atn. 2. What is certain is that, at some point, UP entered into an agreement with CSX Intermodal (“ CSXI” ) to carry certain goods. UP alleges the Kubota tractors were shipped pursuant to this agreement, while Sompo and MOL dispute that they ever involved CSXI.
The three electronic waybills, separate from the bills of lading MOL issued, that UP issued to CSXI for the shipment make reference to SPD-5152. (Def.’s Rule 56.1 Statement ¶ 6; Pl.’s Ex. B.) UP has a contract with CSXI, numbered SPT-5152, providing that UP’s liability for loss of or damage to the lading in any container shall be subject to the released values as established by UP in UP’s Circular 1000-Series and its successors. (Def.’s Rule 56.1 Statement ¶¶ 9, 10.) The parties dispute whether “ SPD-5152” is a typo and whether or not SPT-5152 is applicable in this case. (Def.’s Rule 56.1 Statement ¶ 8; Pf.’s Response to Def.’s Rule 56.1 Statement ¶ 8.)
The SP-1000-B circular was succeeded by UP Exempt Circular 20-B on January 1, 1998. (Def.’s Rule 56.1 Statement ¶ 11.) Circular 20-B contains Item 142-B(3)(L), which purports to limit liability in international shipments under an intermodal or Ocean Bill of Lading to $500.00 per package. (Pl.’s Ex. T.) Circular 20-B also contains Items 142-B(1)(C) and 143-B, which purport to offer Carmack liability on domestic shipments originating in the United States. (Pl.’s Ex. T.)
II. Standard of Review
A motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure will be granted if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U .S. 317, 106 S.Ct. 2548 (1986): see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505 (1986). The moving party always bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. FDIC v. Giammettei, 34 F.3d 51, 54 (2d Cir.1994) (citing Celotex, 477 U.S. at 323, 106 S.Ct. at 2553); see also Fed.R.Civ.P. 56(c). An issue of fact is “ genuine” if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Jeffreys v. City of New York, 426 F.3d 549, 553 (2d Cir.2005) (citing Anderson, 477 U.S. at 248, 106 S.Ct. at 2510).
In deciding the motion, a court draws all reasonable inferences and resolves any ambiguities in favor of the nonmoving party. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994 (1962) (per curiam); Donahue v. Windsor Locks Bd. of Fire Comm’rs, 834 F.2d 54, 57 (2d Cir.1987). Summary judgment for the moving party is appropriate “ where the nonmovant’s evidence is merely colorable, conclusory, speculative, or not significantly probative.” Travelers Ins. Co. v. Broadway W. St. Assocs., 164 F.R.D. 154, 160 (S.D.N.Y.1995) (citing Anderson, 477 U.S. at 248, 106 S.Ct. at 2510).
“ When faced with cross-motions for summary judgment, a district court is not required to grant judgment as a matter of law for one side or the other. Rather, the court must evaluate each party’s motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.” Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir.1993) (citations and internal quotation marks omitted). Of course, if no purported issues of fact prove to be genuine and material, then summary judgment can be properly granted.
The only issue of fact that is in controversy concerns how MOL, UP, and CSXI were involved in the contract. This dispute, while genuine, ultimately proves to be immaterial, and summary judgment can be granted as a matter of law.
III. Discussion
As the parties have stipulated to the amount of actual damages incurred by Sompo, the sole issue remaining in this case is whether UP’s liability is limited to $16,000 ($500 per parcel) or the stipulated $328,192.32 of damages that Sompo actually incurred.
Sompo advances three arguments in its renewed motion: (1) that the issue of whether UP is liable for full Carmack liability has already been litigated and is thus precluded; (2) that, in light of the Second Circuit’s remand instructions in Sampo II, UP cannot raise new arguments about the applicability of Carmack; and (3) that the UP circular does not offer full liability pursuant to Carmack (“ Carmack liability” ).
UP advances two arguments in its counter-motion: (1) that Carmack does not apply because UP alleges it utilized a § 10709 contract; and in the alternative, (2) that UP complied with Carmack and Staggers and provided the option of full Carmack liability.
The parties’ arguments are fairly distinct and do not involve any factual disputes, save for the dispute over whether UP offered full Carmack liability. As a result, the various issues are examined at the same time. The court finds that, given the decision in Sompo II, UP is precluded from raising new arguments about the applicability of Carmack, and there is no need to examine the issue of collateral estoppel. The court further finds that, in addressing the mandate from the Second Circuit, UP did not comply with the provisions of Carmack and Staggers. Accordingly, UP is found to be liable for the stipulated amount of $328,192.32.
A. It is the law of the case that Carmack governs UP’s liability
1. The law of the case was announced by the Second Circuit
The Second Circuit concluded that, for the rail leg of an intermodal international shipment, Carmack trumps a contractual extension of COGSA. Sompo II, 456 F.3d at 75. Accordingly, the Second Circuit “ conclude[d] that Carmack governs Union Pacific’s liability in this case.” Id. at 76. This is the law of the case as given by the Second Circuit. It is determinative and it precludes any argument that Carmack does not govern. The panel found that only “ one question remain[ed]: when Union Pacific negotiated the applicable terms of carriage of Kubota’s tractors, did it provide the shipper an opportunity, consistent with Staggers, to receive full Carmack liability coverage as well as ‘ alternative terms’?” Id. at 75 (citations omitted).
2. This finding of the law of the case is confirmed by the limited mandate given to this court
The Second Circuit issued a mandate that requires this court “ to consider any other potential arguments that Union Pacific might raise that it complied with the requirements of Carmack and Staggers .” Id. at 76. The panel found it “ prudent to remand the case to the district court to address whether Union Pacific satisfied the requirements of 49 U.S.C. § 10502(e).” Id. at 75.
“ Under the doctrine of law of the case, a district court generally may not deviate from a mandate issued by an appellate court.” In re Ivan F. Boesky Securities Litigation. 957 F.2d 65, 69 (2d Cir.1992). “ The district court’s actions on remand should not be inconsistent with either the express terms or the spirit of the mandate.” Id. “ [W]here issues have been explicitly or implicitly decided on appeal, the district court is obliged, on remand, to follow the decision of the appellate court.” United States v. Minicone, 994 F.2d 86, 89 (2d Cir.1993); see also Day v. Moscow, 955 F.2d 807, 813 (2d Cir.1992).
The Second Circuit has spoken on the issue of raising new arguments on remand: “ It has become almost a judicial commonplace to say the litigation must end somewhere, and we reiterate our firm belief that courts should not encourage the reopening of final judgments or casually permit the relitigation of litigated issues out of a friendliness to claims of unfortunate failures to put in one’s best case.” United States v. Cirami, 563 F.2d 26, 33 (2d Cir.1977). “ To determine whether an issue remains open for reconsideration on remand, the trial court should look to both the specific dictates of the remand order as well as the broader ‘ spirit of the mandate.’ “ United States v. Ben Zvi, 242 F.3d 89, 95 (2d Cir.2001).
As the scope of the mandate was compliance with the requirements of 49 U.S.C. § 10502(e), all other issues beyond that question were implicitly or explicitly decided on appeal. The ‘ spirit of the mandate’ is such that this court is obliged to confine itself to consider only the § 10502(e) issue and nothing further.
I will, therefore, not consider any arguments against the application of Carmack. Nor is it necessary to address collateral estoppel arguments based on a decision by Judge Batts in another case against UP. The Second Circuit has already determined the law of this case in Sompo II and decided against UP. The only thing I will consider is what the Second Circuit told me to consider in its mandate.
B. There was no offer of Carmack liability in the shipping documents
1. The paper trail is so confusing that no reasonable shipper would have been on notice of a limitation in liability
UP alleges that the following chain of facts, inferences, and papers should have put Kubota on notice of a choice between a limitation in liability and an offer of Carmack liability contained in the UP Exempt 20-B Circular: (1) CSXI booked the inland rail carriage with UP on behalf of MOL; (2) CSXI noted at the bottom of the electronic waybills “ Customer furnished contract data-SPD 005152” ; (3) SPD 005152 actually referred to a contract for rail services between CSXI and Southern Pacific numbered SPT-5152; (4) Southern Pacific was merged into UP, and the contract was adopted by UP; (5) SPT-5152 makes reference to and incorporates the SP-1000 circular series; (6) at the time of the shipment, SP-1000 had been cancelled, and CSXI was on notice that it was replaced by UP Exempt Circular 20-B; (7) the 20-B circular contains Items 142-B and 143-B; (8) Items 142-B and 143-B contain terms which either limit liability to $500 per parcel under COGSA or offer Carmack liability for domestic shipments. (See Def.’s Mem. Opp. Renewed Mot. Summ. J. 3-4; Pl.’s Mem. Supp. Renewed Mot. Summ. J. 6.)
Contractual provisions which purport to limit a carrier’s liability are enforceable only if they are (1) reasonably communicative so as to result in a fair, open, just and reasonable agreement; and (2) offer the shipper a possibility of a higher recovery by paying a higher rate. See Nippon Fire & Marine Ins. Co. v. Skyway Freight Systems, Inc., 235 F.3d 53, 59-60 (2d Cir.2000). The chain of inferences and documents leading to any indication of liability-while not quite to the level of the “ Twelve Days of Christmas,” as Sompo alleges-certainly goes well beyond what is reasonable for a shipper to know when contracting for the shipment of goods. The reference to a contract is unclear and does not indicate that it limits liability merely by stating “ Customer furnished contract data-SPD 005152” ; the reference to a contract is incorrect, citing SPD-5152 instead of SPT-5152; the contract refers to a now-defunct circular, the 1000-Series; a new circular, UP Exempt Circular 20-B, supercedes the now-defunct circular; and the shipper was never given a copy of the CSXI-UP agreement nor was the shipper a party to this private agreement. No reasonable shipper would have known of any limitation in liability as a result of this chain.
2. UP did not offer Carmack liability for international shipments
UP argues that Carmack liability is offered by Item 143-B in the circular. Even if this court assumes that the circular was properly integrated into the contracts, UP has not established that it offered Carmack liability for international shipments.
UP argues that Item 143-B (see Pl.’s Ex. T) provides for “ full value and other liability terms” under Carmack. (Def.’s Mem. Opp. Renewed Mot. Summ. J. 15.) However, Item 142-B(1)(C) explicitly limits the terms of Item 143-B to “ domestic moves that originate in the United States.” (See Pl.’s Ex. T.) As UP has already argued that Item 142-B(3)(L) applies because the tractors were part of an international shipment, it is odd indeed for UP to turn around and allege that a purely domestic provision applies. UP cannot have its cake and eat it, too. The shipment is either part of an international shipment, or it is a domestic move. As UP has conceded that the tractors were part of an international shipment throughout its papers and motions, and UP has sidestepped the issue of 142-B(1)(C) limiting the offer of Carmack liability to domestic shipments, I must conclude that no Carmack liability was offered for the shipment in question.
Conclusion
For the forgoing reasons, plaintiff Sompo’s motion for partial summary judgment is granted, and defendant UP’s motion for partial summary judgment is denied. As there are no outstanding issues, damages of $328,192.32 are awarded to Plaintiff. The Clerk of the Court is directed to enter judgment for plaintiff and thereafter to close the case.
This constitutes the decision and order of the Court.
S.D.N.Y.,2007.
Sompo Japan Ins. Co. v. Union Pacific R. Co.
