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Mayer Brown's Supreme Court and Appellate Practice Group distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community. We also email the Docket Report to our subscribed members and if you don't already subscribe to the Docket Report and would like to, please click here.

October Term 2009 - October 20, 2009

Today the Supreme Court granted certiorari in one case of interest to the business community:

Intermodal Shipping—The Carmack Amendment—Carriage of Goods by Sea Act

No single federal statute governs so-called “intermodal” shipments—the international shipment of goods that are transported by ocean vessels and then unloaded onto rail or motor carriers for inland transportation. The ocean leg is governed by the Carriage of Goods by Sea Act (“COGSA”), while the inland leg is governed by the Carmack Amendment to the Interstate Commerce Act. There are important differences between the two statutes. For example, the Carmack Amendment imposes something akin to strict liability on carriers (see 49 U.S.C. §§ 11706(a), 14706(a)), but liability under COGSA is based upon negligence (see 46 U.S.C. § 30701 Note § 4.). COGSA also affords greater contractual freedom than the Carmack Amendment, which limits what parties may agree to contractually by, among other things, imposing venue restrictions that parties may avoid only if they comply with certain procedures.

Under modern shipping practices, parties contracting for intermodal shipments typically use a single “through bill of lading,” which controls both land and sea transportation. Today the Supreme Court granted certiorari in two consolidated cases, Kawasaki Kisen Kaisha v. Regal-Beloit Corporation, No. 08-1553, and Union Pacific Railroad Company v. Regal-Beloit Corporation, No. 08-1554, to determine whether the inland portion of an intermodal shipment is subject to the Carmack Amendment even when no separate domestic bill of lading is issued. 

Given the significant differences between COGSA and the Carmack Amendment with respect to both liability and venue, the Court’s resolution of this issue—as to which the lower courts are divided—will be important to all businesses involved in intermodal shipping, whether as carriers, customers, or insurers.

Several American companies contracted with Kawasaki Kisen Kaisha, Ltd. and its U.S. agent, K-Line America, Inc. (collectively “K-Line”), to ship goods from China to various destinations in the Midwest. K-Line issued each company a “through bill of lading” covering both the ocean and land portion of their respective shipments. The through bills of lading contained a provision pursuant to which COGSA would apply to the inland leg. They also contained a forum selection clause requiring that any actions against K-Line be brought in Japan. The forum selection clause would be valid under COGSA, but not under the Carmack Amendment. K-Line used its own ocean liner to carry the companies’ goods to a port in California, and subcontracted with Union Pacific Railroad Co. to transport the goods to their final inland destinations. The cargo was allegedly damaged when Union Pacific’s train derailed in Oklahoma. 

The shippers sued K-Line and Union Pacific in California state court. After being removed to federal court, the case was dismissed by the trial judge on the grounds that the parties had validly opted out of the venue restrictions of the Carmack Amendment and that the case should have therefore been brought in Japan pursuant to the forum selection clause contained in the bills of lading. The Ninth Circuit disagreed. First, the court of appeals held that the Carmack Amendment, rather than COGSA, applied to the rail leg notwithstanding the parties’ contractual agreement to the contrary unless the parties had satisfied the applicable opt-out procedures. Second, because the Surface Transportation Board has exempted from regulation transportation that “is provided by a rail carrier as part of a continuous intermodal movement,” the Ninth Circuit held that the applicable procedures were those set forth in 49 U.S.C. § 10502(e), not § 10709. Because the district court had failed to analyze whether those procedures were followed, the Ninth Circuit remanded.

Absent extensions, amicus briefs in support of the petitioners will be due on December 11, 2009, and amicus briefs in support of the respondents will be due on January 11, 2010. Any questions about this case should be directed to Andrew Tauber (+1 202 263 3324) in Mayer Brown’s Washington, D.C. office.

Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at atauber@mayerbrown.com or +1 202 263 3324).

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