Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp.

• Citation: 177 L.Ed.2d 424,130 S.Ct. 2433,561 U.S. 89
• Decision Date: 21 June 2010
• Docket Number: Nos. 08–1553,08–1554.,s. 08–1553
• Parties: KAWASAKI KISEN KAISHA LTD. et al., Petitioners, v. REGAL–BELOIT CORP. et al. Union Pacific Railroad Company, Petitioner, v. Regal–Beloit Corporation et al.
• Court: United States Supreme Court

561 U.S. 89

130 S.Ct. 2433

177 L.Ed.2d 424

KAWASAKI KISEN KAISHA LTD. et al., Petitioners,

v.REGAL–BELOIT CORP. et al.

Union Pacific Railroad Company, Petitioner,

v.Regal–Beloit Corporation et al.

Nos. 08–1553

08–1554.

Supreme Court of the United States

Argued March 24, 2010.

Decided June 21, 2010.

J. Scott Ballenger

(argued), Washington, D.C., for petitioners in Docket No. 08–1554.

Anthony Yang

for U.S. as amicus curiae, by special leave of the Court, supporting petitioners in Docket No. 08–1554.

David C. Frederick

, Washington, D.C., for respondents in Docket No. 08–1554.

J. Michael Hemmer

, Raymond J. Hasiak, Union Pacific Railroad Co., Omaha, NE, Leslie McMurray, Valley Village, CA, Maureen E. Mahoney, Counsel of Record, J. Scott Ballenger, Lori Alvino McGill, Jason R. Burt, Latham & Watkins LLP, Washington, D.C., Petitioner Union Pacific Railroad Co.

John P. Meade, Washington, D.C., Alan Nakazawa

, Cogswell Nakazawa & Chang, LLP, Long Beach, CA, Kathleen M. Sullivan, Counsel of Record, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, Daniel H. Bromberg, Quinn Emanuel Urquhart & Sullivan, LLP, Redwood Shores, CA, for Petitioners Kawasaki Kisen Kaisha, Ltd. and “K” Line America, Inc.

Dennis A. Cammarano

, Cammarano & Sirna, LLP, Long Beach, CA, Erin Glenn Busby, Houston, TX, David C. Frederick, Counsel of Record, Brendan J. Crimmins, Melanie L. Bostwick, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, D.C., for Respondents.

John P. Meade, Washington, D.C., Alan Nakazawa

, Cogswell Nakazawa & Chang, LLP, Long Beach, CA, Kathleen M. Sullivan, Counsel of Record, Quinn Emanuel Urquhart Oliver & Hedges, LLP, New York, NY, Daniel H. Bromberg, Quinn Emanuel Urquhart Oliver & Hedges, LLP, Redwood Shores, CA, for Petitioners Kawasaki Kisen Kaisha, Ltd. and “K” Line America, Inc.

J. Michael Hemmer

, Raymond J. Hasiak, Union Pacific Railroad Company, Omaha, NE, Leslie McMurray, Valley Village, CA, Maureen E. Mahoney, Counsel of Record, J. Scott Ballenger, Lori Alvino McGill, Latham & Watkins LLP, Washington, D.C., for Petitioner Union Pacific Railroad Co.Opinion

Justice KENNEDY

delivered the opinion of the Court.

These cases concern through bills of lading covering cargo for the entire course of shipment, beginning in a foreign, overseas country and continuing to a final, inland destination in the United States. The voyage here included ocean transit followed by transfer to a rail carrier in this country. The Court addressed similar factual circumstances in Norfolk Southern R. Co. v. James N. Kirby, 543 U.S. 14, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004)

. In that case the terms of a through bill were controlled by federal maritime law and by a federal statute known as the Carriage of Goods by Sea Act (COGSA), note following 46 U.S.C. § 30701. Kirby held that bill of lading provisions permissible under COGSA can be invoked by a domestic rail carrier, despite contrary state law.

The instant cases present a question neither raised nor addressed in Kirby.

It is whether the terms of a through bill of lading issued abroad by an ocean carrier can apply to the domestic part of the import's journey by a rail carrier, despite prohibitions or limitations in another federal statute. That statute is known as the Carmack Amendment and it governs the terms of bills of lading issued by domestic rail carriers. 49 U.S.C. § 11706(a).

I

Respondents Regal–Beloit Corporation, Victory Fireworks, Inc., PICC Property & Casualty Company Ltd., and Royal & Sun Alliance Insurance Company Ltd. are cargo owners or insurance firms that paid losses to cargo owners and succeeded to their rights, all referred to as “cargo owners.” To ship their goods from China to inland destinations in the Midwestern United States, the cargo owners delivered the goods in China to petitioners in No. 08–1553, Kawasaki Kisen Kaisha, Ltd., and its agent “K” Line America, Inc., both referred to as “K” Line. All agree the relevant contract terms governing the shipment are contained in four through bills of lading “K” Line issued to the cargo owners. The bills of lading covered the entire course of shipment.

The bills required “K” Line to arrange delivery of the goods from China to their final destinations in the United States, by any mode of transportation of “K” Line's choosing. A bill of lading “records that a carrier has received goods from the party that wishes to ship them, states the terms of carriage, and serves as evidence of the contract for carriage.” Kirby, 543 U.S., at 18–19, 125 S.Ct. 385.

A through bill of lading covers both the ocean and inland portions of the transport in a single document. Id., at 25–26, 125 S.Ct. 385.

“K” Line's through bills contain five relevant provisions. First, they include a so-called “Himalaya Clause,” which extends the bills' defenses and limitations on liability to parties that sign subcontracts to perform services contemplated by the bills. See id., at 20, and n. 2, 125 S.Ct. 385.

Second, the bills permit “K” Line “to sub-contract on any terms whatsoever” for the completion of the journey. App. 145. Third, the bills provide that COGSA's terms govern the entire journey. Fourth, the bills require that any dispute will be governed by Japanese law. Fifth, the bills state that any action relating to the carriage must be brought in “Tokyo District Court in Japan.” Id., at 144. The forum-selection provision in the last clause gives rise to the dispute here.

“K” Line, pursuant to the bills of lading, arranged for the entire journey. It subcontracted with petitioner in No. 08–1554, Union Pacific Railroad Company, for rail shipment in the United States. The goods were to be shipped in a “K” Line vessel to a port in Long Beach, California, and then transferred to Union Pacific for rail carriage to the final destinations.

In March and April 2005, the cargo owners brought four different container shipments to “K” Line vessels in Chinese ports. All parties seem to assume that “K” Line safely transported the cargo across the Pacific Ocean to California.

The containers were then loaded onto a Union Pacific train and that train, or some other train operated by Union Pacific, derailed in Tyrone, Oklahoma, allegedly destroying the cargo.

The cargo owners filed four separate lawsuits in the Superior Court of California, County of Los Angeles. The suit named “K” Line and Union Pacific as defendants.

Union Pacific removed the suits to the United States District Court for the Central District of California. Union Pacific and “K” Line then moved to dismiss based on the parties' Tokyo forum-selection clause. The District Court granted the motion to dismiss. It decided that the forum-selection clause was reasonable and applied to Union Pacific pursuant to the Himalaya Clause in “K” Line's bills of lading. 462 F.Supp.2d 1098, 1102–1103 (2006)

.

The United States Court of Appeals for the Ninth Circuit reversed and remanded. 557 F.3d 985 (2009)

. The court concluded that the Carmack Amendment applied to the inland portion of an international shipment under a through bill of lading and thus trumped the parties' forum-selection clause. Id., at 994–995. The court noted that this view was consistent with the position taken by the Court of Appeals for the Second Circuit, see id., at 994 (citing Sompo Japan Ins. Co. of Am. v. Union Pacific R. Co., 456 F.3d 54 (2006)), but inconsistent with the views of the Courts of Appeals for the Fourth, Sixth, Seventh, and Eleventh Circuits, see 557 F.3d, at 994 (citing Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700 (C.A.4 1993); American Road Serv. Co. v. Consolidated Rail Corp., 348 F.3d 565 (C.A.6 2003); Capitol Converting Equip., Inc. v. LEP Transp., Inc., 965 F.2d 391 (C.A.7 1992); Altadis USA, Inc. ex rel. Fireman's Fund Ins. Co. v. Sea Star Line, LLC, 458 F.3d 1288 (CA11 2006)). This Court granted certiorari to address whether Carmack applies to the inland segment of an overseas import shipment under a through bill of lading. 558 U.S. 969, 130 S.Ct. 459, 175 L.Ed.2d 306 (2009).

II

A

Before turning to Carmack, a brief description of COGSA is in order; for “K” Line's and Union Pacific's primary contention is that COGSA, not Carmack, controls. COGSA governs the terms of bills of lading issued by ocean carriers engaged in foreign trade. 49 Stat. 1207, as amended, note following 46 U.S.C. § 30701

, p. 1178. It requires each carrier to issue to the cargo owner a bill that contains certain terms. § 3(3)-(8), at 1178–1179. Although COGSA imposes some limitations on the parties' authority to adjust liability, it does not limit the parties' ability to adopt forum-selection clauses. See Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 537–539, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995). By its terms, COGSA only applies to shipments from United States ports to ports of foreign countries and vice versa. §§ 1(e), 13, at 1178, 1180. The statute, however, allows parties “the option of extending [certain COGSA terms] by contract” to cover “the entire period in which [the goods] would be under [a carrier's] responsibility, including [a] period of ... inland transport.” Kirby, 543 U.S., at 29, 125 S.Ct. 385 (citing COGSA § 7, at 1180). Ocean carriers, who often must issue COGSA bills of lading, are regulated by the Federal Maritime Commission (Maritime Commission), which is responsible for oversight over “common carriage of goods by water in ... foreign commerce.” 46 U.S.C. § 40101(1).

B

The next statute to consider is the Carmack Amendment, § 7, 34 Stat. 595, which governs the terms of bills of lading issued by domestic rail carriers. Carmack was first enacted in 1906 as an amendment to the Interstate Commerce Act, 24 Stat. 379. The Carmack Amendment has been altered and recodified over the last century. It now provides, in relevant part, as follows:

“(a) A rail carrier providing transportation or service subject to the jurisdiction of the [Surface Transportation Board (STB) ] under this part shall issue a receipt or bill of lading

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