ABB, Inc. v. CSX Transp., Inc.

862 F.Supp.2d 467

ABB, INC., Plaintiff,

v.CSX TRANSPORTATION, INC., Defendant.

No. 5:08–CV–25–F.

United States District Court,

E.D. North Carolina,

Western Division.

March 22, 2012.

Dauna L. Bartley, Ellis & Winters, LLP, Cary, NC, Jeffrey M. Young, Ellis & Winters, LLP, Raleigh, NC, for Plaintiff.

Thomas D. Garlitz, Thomas D. Garlitz, PLLC, Charlotte, NC, for Defendant.

ORDER

JAMES C. FOX, Senior District Judge.

Plaintiff, ABB, Inc. (“ABB”), filed this action against defendant, CSX Transportation, Inc. (“CSXT”), to recover monetary damages for alleged in-transit damage and loss to a large, expensive electrical transformer that CSXT shipped by rail in 2006, between ABB's manufacturing facility in St. Louis, Missouri, and ABB's customer's facility in Pennsylvania. ABB seeks to recover “the value of the actual loss or injury arising from damage to the transformer” pursuant to the Carmack Amendment, 49 U.S.C. § 11706 (“Carmack”), to the former Interstate Commerce Act; or, alternatively to recover all damages under Missouri common law for (i) breach of contract, or (ii) negligence. See Complaint [DE–1], p. 6. Pending before the court are CSXT's Motion for Summary Judgment as to ABB's substantive claims [DE–48.1], and as to its limitation of liability defense [DE–48.2]; and ABB's Cross–Motion for Partial Summary Judgment [DE–75] on the issue of CSXT's alleged limitation of liability.

I. Legal Standard

Summary judgment is authorized if the movant establishes that there is no genuine dispute about any material fact and the law entitles it to judgment. Fed.R.Civ.P. 56(c). Disputes about material facts are “genuine” if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Supreme Court has interpreted the plain language of Rule 56(c) to mandate 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 Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets this burden, Rule 56(c) requires the nonmovant to go beyond the pleadings and show by affidavits, depositions, answers to interrogatories, admissions on file, or other admissible evidence that specific facts exist over which there is a genuine issue for trial. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) ( en banc ). In reviewing the evidence “the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).

II. Applicable Law

The underlying factual predicate for this lawsuit is best appreciated within the framework of the governing law. Thus, a preliminary description of the legal context in which this dispute arises best precedes a recitation of the facts.

Carmack creates “a national scheme of carrier liability for goods damaged or lost during interstate shipment under a valid bill of lading.” 5K Logistics, Inc. v. Daily Express, Inc., 659 F.3d 331, 335 (4th Cir.2011) (citation omitted); see also York v. Day Transfer Co., 525 F.Supp.2d 289, 297 (D.R.I.2007) (“The princip[al] purpose of the Carmack Amendment was to achieve national uniformity in the liability assigned to carriers.”) (citation and internal quotation marks omitted). Rail carriers, governed by the Carmack provision in 49 U.S.C. § 11706, are a subset of the carriers covered by Title 49.¹ Under Carmack, a rail carrier of property in interstate commerce that damages or loses a shipment generally is liable “for the actual loss or injury to the property caused by” the carrier. 49 U.S.C. § 11706(a). Nevertheless, a carrier may limit its liability “to a value established by written declaration of the shipper or by a written agreement between the shipper and the carrier.” Id. § 11706(c)(3)(A).

Here, ABB contends that CSXT is fully liable under § 11706(a) for all actual damages and losses incurred during CSXT's shipment of the transformer pursuant to the bill of lading for that shipment, in a sum up to the “value” ABB placed on the transformer. CSXT denies the applicability of Carmack to the instant matter, but for purposes of the summary judgment motions, contends that it limited its liability to $25,000 for loss or damages to this shipment under Carmack's § 11706(c). That is, even if ABB could prove that CSXT is liable for damages to the shipment under Carmack,² CSXT contends that such liability may not exceed $25,000, regardless of the value of the transformer or the losses ABB may have incurred from damage thereto in transit. As CSXT filed the first motion for summary judgment, the court first will examine its limitation of liability affirmative defense. See, e.g., Siemens Power Transmission & Distrib., Inc. v. Norfolk Southern Ry. Co., No. 6:02–CV–1024–Orl–22KRS, 2006 WL 5110365 (M.D.Fla. March 24, 2006). In so doing, the court does not express any finding or opinion whether ABB can make a prima facie case under § 11706(a).

A. Lexicon

As the terms are used herein, “shipper” refers to ABB. CSXT is both the “receiving carrier” and the “delivering carrier,” pursuant to § 11706(a), Complaint [DE–1] ¶ 3. Duquesene Electric, ABB's customer who purchased the transformer, is the “consignee.”

A “bill of lading” is a contract that records that a carrier has received goods from the shipping party, states the terms of carriage, and is evidence of a contract for carriage. See Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 18–19, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004). A bill of lading also is a receipt for goods to be transported, and usually contains the description, quantity and condition of the goods, their classification and, traditionally, reference to the carrier's filed “tariff.” Although the carrier “issues” the bill of lading, it is not unusual for the shipper to prepare the document in the first instance, as ABB did here, using its own form. The bill of lading form used in this case is a non-negotiable, “straight bill of lading,” and was both created and completed by ABB. It is referred to herein as “the BOL.”

B. The Carmack Amendment & Full Carrier Liability

The Carmack Amendment, enacted as part of the former Interstate Commerce Act (“ICA”), refers collectively to federal statutory provisions governing freight carriers' liability for interstate shipments. These provisions “have at one time or another since 1906 resided in different sections of Title 49 of the United States Code.” North Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 454 (7th Cir.1996).³ The Carmack provision applicable to rail carriers under § 11706(a)(1) codifies the common law rule that a carrier generally is liable for the actual loss or injury to the property.⁴ That is, § 11706(a) requires the carrier to bear full liability for the goods it transports, and essentially renders the carrier an insurer of safe delivery under the terms of the bill of lading. See, e.g., Rankin v. Allstate Ins. Co., 336 F.3d 8, 9 (1st Cir.2003). The phrase, “Carmack Liability” is used herein to describe § 11706(a) full, and effectively strict, carrier liability. However, as the facts of this case and many like it demonstrate, in practice, most commercial rail shipments occur under the § 11706(c) exception to the traditional full liability rule by which carriers offer much lower shipping rates in exchange for a much lower and predetermined limitation of their liability.

C. The Exception is the Rule

In order to temper high shipping rates charged by carriers commensurate with full Carmack Liability, Congress provided specifically for negotiation and agreement between the parties to a rail shipping arrangement. Subsection § 11706(c)(1) provides an exception to the statutory “default” of subsection (a) by permitting a rail carrier to limit its exposure to liability for damages by agreement with the shipper.⁵See Kawasaki Kisen Kaisha, Ltd. v. Regal–Beloit Corp. ––– U.S. ––––, 130 S.Ct. 2433, 2441, 177 L.Ed.2d 424 (2010) (explaining that under § 11706(c), Carmack “constrains carriers' ability to limit liability by contract”).

Even though formal tariffs have been abolished in most instances, many rail carriers, including CSXT in this instance, continue to maintain tariff-like rate schedules based on the classification of goods to be shipped. Rate publications, price lists, or off-the-rack rate schedules, still commonly referred to as “tariffs,” may be in brochure form and/or available online, are time-sensitive, and must be disclosed by the carrier upon request by a shipper or prospective shipper. Where, as here, a commercial shipper needs a rate quote for shipping a commodity such as an electrical transformer by rail, the shipper consults the selected carrier's current published circular or rates brochure or, if a printed rate schedule is not available, locates the published rate information online or directly contacts a representative of the carrier via telephonic or electronic means. See49 U.S.C. § 11101(b); 49 C.F.R. §§ 1300.2 & 1300.3.

Ordinarily, the price lists or off-the-rack rates cover limited carrier liability. That is, the standard published rates are relatively low and carry a commensurately low limitation of liability. In order to comply with Carmack, however, the carrier must afford shippers the option of choosing a higher rate in order to obtain full Carmack Liability.⁶See, e.g., Hughes Aircraft Co. v. North Amer. Van Lines, Inc., 970 F.2d 609 (9th Cir.1992); Hansa Meyer Transp. GmbH & Co., KG v. Norfolk Southern Ry. Co., No. 8:06–CV–924, 2008 WL 2168760 (D.S.C. May 20, 2008). Federal regulations promulgated by the STB concerning...