Kaisha v. Burlington and Northern Santa Fe Railway

Decision Date08 April 2005
Docket NumberNo. CV 03-6523GAFRZX.,CV 03-6523GAFRZX.
Citation367 F.Supp.2d 1292
PartiesNIPPON YUSEN KAISHA, Plaintiff, v. The BURLINGTON AND NORTHERN SANTA FE RAILWAY CO. et al., Defendants.
CourtU.S. District Court — Central District of California

Erich P. Wise, Nicholas S. Politis, Thomas C. Jorgensen, Flynn Delich & Wise, Long Beach, CA, for Plaintiff.

Leslie G. McMurray, Leslie G. McMurray Law Offices, Valley Village, CA, for Defendants.

MEMORANDUM AND ORDER REGARDING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

FEESS, District Judge.

I. INTRODUCTION

Plaintiff Nippon Yusen Kaisha ("NYK") is an ocean carrier that ships cargo on marine vessels all over the world. NYK was hired by Matsushita, the parent company of Panasonic, to move various electronics from Japan to Texas. NYK subcontracted with Defendant Burlington & Northern Santa Fe Railway Co. ("BNSF") for rail transportation for the California to Texas leg of the journey. The BNSF train crashed en route damaging the Matsushita cargo. In this suit, NYK seeks to recover from BNSF the approximately $387,000 it was forced to pay to Matsushita for the damaged cargo pursuant to the terms of the waybill. The question of whether BNSF is required to shoulder these costs is complicated by a series of federal statutes and regulations governing railroads.

Now before the Court is BNSF's motion for summary judgment. Plaintiff's complaint alleges six causes of action — five under common law and one under the federal Carmack Amendment. The Court finds that all five common law claims are preempted by the Carmack Amendment but that Plaintiff's cause of action under the Carmack Amendment survives. Accordingly, BNSF's motion for summary judgment is GRANTED IN PART and DENIED IN PART.

II. STATEMENT OF FACTS
A. THE NYK WAYBILLS ISSUED TO MATSUSHITA

In September 2002, Plaintiff NYK issued four waybills (bills of lading)1 to shipper Matsushita Electric Industrial Company. (Hooker Decl., Exs. A-D). The waybills were for the shipment of five containers containing commercial microwave ovens, and Panasonic televisions and plasma screens. (Id.). The goods were to be picked up in Japan and delivered to Roanoke, Texas, to the offices of Matsushita's subsidiary, Panasonic. (Id.). The waybills specified that NYK was to transport the goods across the ocean via the "NYK Starlight," to discharge at the Port of Los Angeles, California, with continued inland shipment to Roanoke. (Id.). The waybills did not incorporate the liability limitations provided by the Carriage of Goods by Sea Act ("COGSA"), but instead the higher values provided by the Hague Visby Rules, for which Matsushita presumably paid a higher shipping rate. (Id. ¶ 6).

B. THE NYK-BNSF CONTRACT

On June 1, 2001, NYK and BNSF entered into an agreement referred to by the parties as "MA 60," which apparently governs the repeat business conducted between the two carriers. (Statement of Genuine Issues "SGI" ¶ 3). At some point before October 2002, BNSF agreed to transport the five Matsushita containers from California to Texas under the terms of MA 60. (Id.). MA 60 provides that the terms and conditions of the contract are governed by the "BNSF Rules and Policies Guide," which BNSF updates periodically. (Id.; Johnson Decl. ¶ 3, Ex. B). When BNSF agreed to ship the Matsushita containers, the BNSF Intermodal Rules and Policies Guide ("the Guide") issued January 2002 was in effect. (SGI ¶ 3).

The Guide offers two forms of liability protection for shippers. First, BNSF offers full-value liability as provided under the Carmack Amendment, which is referred to in the Guide by its code section number and labeled "49 USC 11706 LIABILITY TERMS." (Johnson Decl., Ex. C at 36). In order to ship goods under the full liability coverage provided in this section, a shipper must comply with a series of five requirements, which includes paying a 200% increase in the limited liability shipping rate. (Id.). It is undisputed that NYK did not take steps necessary to ship under these liability terms.2 (SGI ¶ 4).

The second form of liability protection is the default and provides that,

BNSF SHALL NOT BE LIABLE FOR LOSS OR DAMAGE TO LADING UNLESS THERE IS PROOF OF BNSF NEGLIGENCE CAUSING THE LOSS OR DAMAGE.

In any event, BNSF has limited liability of $250,000 per shipment, except for tank container shipments that carry a limited liability of $100,000.

In addition, BNSF will not be liable for damages where BNSF's liability is determined to be $250 or less.

If the shipper wished to obtain a higher loss or damages limit, the shipper has the following two options:

• The shipper may obtain insurance; OR

• The shipper may obtain coverage under the terms of 49 USC 11706.

(Johnson Decl., Ex. C at 35-36). The terms of the contract are controlled by Texas state law. (McMurray Decl., Ex. I).

C. THE CRASH AND NYK'S PAYMENT TO MATSUSHITA

On October 24, 2002, the BNSF train carrying the Matsushita containers derailed. (SGI ¶ 6). At the time of derailment, the BNSF train was operated by a BNSF engineer on tracks owned by Union Pacific Railroad ("UPRR"), pursuant to a contract between BNSF and Union Pacific. (SGI ¶¶ 6, 37, 39). NYK paid Matsushita $387,349.83 for damage to the goods resulting from the derailment. (BNSF's Response to SGI "RSGI" ¶ 26). This was allegedly the amount owing to Matsushita under the terms of waybills (the Hague Visby Rule amounts) provided by NYK. (Id.).

D. THE FEDERAL SUIT

NYK brought the instant action against BNSF in California state court alleging breach of contract, negligence, breach of bailment duties, indemnity and contribution, and declaratory relief. (Compl.¶¶ 10-31). Phrased as an "alternative" cause of action, NYK also claimed that "if it is determined that the Carmack Amendment does apply," BNSF is liable for the full value of damaged goods. (Id. ¶¶ 23-25). BNSF timely removed the action to federal court. Now before the Court is BNSF's motion for summary judgment.

III. ANALYSIS
A. SUMMARY JUDGMENT STANDARD

On motion for summary judgment under Federal Rule of Civil Procedure 56(c), this Court must decide whether there exist "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A party opposing a properly made and supported motion for summary judgment may not rest upon mere denials but "must set forth specific facts showing that there is a genuine issue for trial," Fed.R.Civ.P. 56(e). Moreover, the non-moving party who bears the burden of proving an element essential to its case must make a showing sufficient to establish a genuine issue of fact with respect to the existence of that element of the case or be subject to summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

An issue is genuine if there is evidence produced that would allow a reasonable jury to reach a verdict in favor of the non-moving party. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The Court will assume the truth of direct evidence set forth by the opposing party. See Hanon v. Dataproducts Corp., 976 F.2d 497, 507 (9th Cir.1992). But where circumstantial evidence is presented, the Court may consider the plausibility and reasonableness of inferences arising therefrom. See Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505; TW Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631-32 (9th Cir.1987). In that regard, "[a] mere `scintilla' of evidence will not be sufficient to defeat a properly supported motion for summary judgment; rather the nonmoving party must introduce some significant probative evidence tending to support the claim.'" Summers v. Teichert & Son, Inc., 127 F.3d 1150, 1152 (9th Cir.1997) (quoting Anderson, 477 U.S. at 252, 249, 106 S.Ct. 2505); Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288 (9th Cir.1987) (summary judgment may be granted if "the evidence is merely colorable ... or is not significantly probative"). Thus, if a defendant moves for summary judgment and establishes that the undisputed facts prove that the plaintiff's case lacks one of its essential elements, the motion must be granted.

B. NYK'S COMMON LAW CLAIMS ARE PREEMPTED BY THE CARMACK AMENDMENT

BNSF's arguments for summary judgment of NYK's common law claims can be summarized in three parts: 1) the Carmack Amendment provides the exclusive avenue for recovery in any suit brought against an interstate carrier for loss or damage to transported goods; 2) 49 U.S.C. § 10502(e) allows rail carriers to offer terms less than the full value recovery provided by the Carmack Amendment; and 3) even when suing under such alternative terms, the only proper cause of action is under the Carmack Amendment and all other claims are preempted. The Court agrees.

1. Background on the Carmack Amendment

The Carmack Amendment, now at 49 U.S.C. § 11706, was enacted in 1906 as part of the former Interstate Commerce Act. NYK Line v. BNSF Ry. Co., 222 F.Supp.2d 1176, 1179 (C.D.Cal.2002). "The purpose of the Carmack Amendment was to relieve shippers of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods." Reider v. Thompson, 339 U.S. 113, 119, 70 S.Ct. 499, 94 L.Ed. 698 (1950). The amendment provides a statutory right of recovery and subjects a rail "carrier transporting cargo in interstate commerce to absolute liability for actual loss or injury to property." Hughes Aircraft Co. v. North Am. Van Lines, Inc., 970 F.2d 609, 611 (9th Cir.1992). It states in relevant part that

(a) A rail carrier providing transportation or service subject to the jurisdiction of the Board under this part shall issue a receipt or bill of lading for property it receives for transportation under this part. That rail carrier and any other carrier that delivers the property and is providing transportation or service...

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