True for rail, true for road
What’s true for rail is true for the road, the U.S. Court of Appeals for the 2nd Circuit has determined.
Last month, the U.S. Supreme Court, in a 6-3 decision, reversed the 9th Circuit Court of Appeals and found in the case of Kawasaki Kisen Kaisha Ltd. ('K' Line), et al. v. Regal-Beloit Corp., that a dispute over an intermodal shipment damaged in a railroad derailment. The shipment originated overseas and was moving under a through bill of lading, an 'essentially maritime' contract. As a result, the court said, it is subject to the Carriage of Goods at Sea Act (COGSA), not the so-called “Carmack Amendment” which covers domestic shipments.
The high court’s decision, handed down June 21, resolved a split between the 2nd and 9th Circuit Court of Appeals and the 4th, 6th, 7th and 11th Circuits.
After remanding 'K' Line v. Regal-Beloit Corp. to the 9th Circuit, the court followed up with an order on June 28 granting a writ of certiorari in another case, an appeal from the 2nd Circuit — Union Pacific Railroad Co. v. Sompo Japan Ins. Co. That order vacated the decision and sent it back to New York for further consideration in light of 'K' Line v. Regal-Beloit Corp.
Last week the 2nd Circuit issued a decision on July 20 in Royal & Sun Alliance Insurance PLC v. Ocean World Lines Inc., holding that “although Sompo was the law of this Circuit at the time of the district court’s decision, we now, of course, follow the holding of Regal-Beloit.”
A twist in the Royal & Sun case, is that the dispute revolved around a printing press that was damaged when a truck crashed into an overpass.
But the 2nd Circuit said the two versions of the Carmack amendment in the U.S. Code — one for railroads, the other for motor carriers and freight forwarders — “are substantially the same” and that the policy arguments made by the Supreme Court in its decision are equally applicable to both modes.
So the 2nd Circuit rejected Royal & Sun’s arguments for Carmack liability and concluded the defendants in the case were entitled to the COGSA $500 per package limitation.
The entire decision can be seen here.
Peter D. Clark, a partner at Clark, Atcheson & Reisert who represented the non-vessel-operating common carrier in the case, has written a comprehensive article on the Regal-Beloit decision in TT Talk, the newsletter of the mutual insurance company TT Club. ' Chris Dupin