Petition for Writ of Certiorari — Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp.

Suprems Court, U.S.

FILE DO

081554 JUN 1 8 2009

No. O€FICE OF THE CLERK

In the

Supreme Court of the Gnited States

UNION PACIFIC RAILROAD COMPANY,

Petitioner,

V.

REGAL-BELOIT CORPORATION, et al.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

J. MICHAEL HEMMER MAUREEN E. MAHONEY

RAYMOND J. HASIAK Counsel of Record

UNION PACIFIC J. SCOTT BALLENGER

RAILROAD COMPANY LORI ALVINO MCGILL

1400 Douglas Street LATHAM & WATKINS LLP

Stop 1580 555 11th Street, NW

Omaha, NE 68154 Suite 1000

(402) 544-3052 Washington, DC 20004

LESLIE MCMURRAY (202) 637-2200

12520 Magnolia Boulevard

Suite 206

Valley Village, CA 91607

(818) 505-9902

Counsel for Petitioner Union Pacific Railroad Co.

i

QUESTION PRESENTED

Most imports to or exports from the United States

are transported in containers that are carried both by

sea on ships and by land on trains or trucks. Such

“intermodal!” or “multimodal” transportation of goods

now accounts for more than $1 trillion each year in U.S.

trade. The Carriage of Goods by Sea Act, 46 U.S.C.

§30701 (Notes) (““COGSA”), governs the rights and

liabilities of parties to an international maritime bill of

lading. COGSA allows parties to such maritime

contracts to extend COGSA liability terms by contract

for the entire carriage—including any inland leg of the

journey. 46 U.S.C. §30701 (Notes Secs. 7, 13). The

Carmack Amendment to the Interstate Commerce Act

(“ICA”), now codified at 49 U.S.C. §11706 (rail carriers)

and 49 U.S.C. §14706 (motor carriers), supplies the

default liability regime for rail and motor carrier

transportation within the United States. Other

provisions of the ICA authorize carriers to contract out

of Carmack’s default rules. See 49 U.S.C. §10709. The

question presented is:

Whether the Ninth Circuit must be reversed

because it erroneously held, in conflict with four other

circuits, that the Carmack Amendment applies to the

inland leg of an international, multimodal shipment

under a “through” bill of lading, and also erred by

holding that carriers providing exempt transportation

cannot contract out of Carmack under 49 U.S.C. §10709

or by offering Carmack-compliant terms to the rail

carrier’s own direct customer?

ii

LIST OF PARTIES

1. Petitioner Union Pacific Railroad Company was

a defendant in the district court and an appellee in the

court of appeals.

2. Petitioners Kawasaki Kisen Kaisha, Ltd. and K-

Line America, Inc. were defendants in the district

court and appellees in the court of appeals.

3. Respondents Regal-Beloit Corporation, Victory

Fireworks, Inc., PICC Property & Casualty Co. Ltd.

(Shanghai Branch), and Royal Sun Alliance Insurance

Co. Ltd. were plaintiffs in the district court and

appellants in the court of appeals.

RULE 29.6 STATEMENT

Union Pacific Railroad Company was formerly

known as the Southern Pacific Transportation

Company. Union Pacific Corporation owns 62.6

percent of Union Pacifie Railroad Company’s stock and

also wholly owns the Southern Pacific Rail

Corporation. Union Pacific Corperation has issued

publicly traded securities, and Union Pacific Railroad

Company has issued publicly traded debt securities.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED............. jacniainesiilnenidiinpintainis i

I ic idadceiedaiattnnttiemeinnanedinnatantanens ii

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I cttensesnrecececenvecsivenserseniseccensitinneiin iii

py gs gy |. EEE vii

TTT TTT ETE l

iii aiinsidcpniiteesintensnenenation 1

STATUTORY PROVISIONS INVOLVED.........0000... 1

STATEMENT OF THE CASE. ..............cscccscsssosssssssseseees 1

REASONS FOR GRANTING THE WRIT................. 13

I. THE NINTH CIRCUITS DECISION

PERPETUATES A DEEP AND

ACKNOWLEDGED CIRCUIT SPLIT............... 16

A. Four Circuits Have Squarely Held

That Carmack Does Not Apply To The

Inland Leg Of A Multimodal Shipment

Covered By A_ Single Maritime

IE Ge Oe RA ricecesccescccensessessccscoesess 16

B. Two Circuits Have Squarely Held That

Carmack Applies To The Inland Leg

Of A Multimodal Shipment Covered

By A Single Maritime Through Bill of

IIE sntlbinictilisninitlipiesciacnpuiabendisiandinbidianiahinenieitinviannin 20

iv

TABLE OF CONTENTS—Continued

Page

Il. THIS CASE PRESENTS ISSUES OF

EXCEPTIONAL IMPORTANCE TO

INTERNATIONAL SHIPPING. ...........cccescceseees 24

A. Shippers And Carriers Need

Predictable, Uniform Rules Governing

All Legs Of Intermodal Shipments................. 24

B. The Ninth Circuit Has Adopted An

Erroneous Interpretation Of The ICA

That Threatens To Destroy

Consistency And Uniformity In

Intermodal Shipping Transactions ................ 25

1. Carmack Does Not Apply To The

Inland Leg Of A _ Maritime

Shipment Under A Through Bill

SN riisceiacinsinatinenssinnindneseiinsidbibbnnitinacesesetants 26

2. The Ninth Circuit’s Decision

Undermines The Opt-Out

Provisions Of The ICA. .......ccccccccccccssecceeee 28

3. Union Pacific Complied With Any

Obligation To Offer Carmack-

IEE SII ceriiscastnencunsastssdtpestansatacosssess 32

Ce IIEY cicnctsitsensencssedatpiccneinttinitansncstintinieninnicaieussiae 35

APPENDIX

Regal-Beloit Corp. v. Kawasaki Kisen Kaisha

Ltd.,

557 F.3d 965 (Sth Cit. 2OOD) ..........scsccccssorscscsescorsees la

v

TABLE OF CONTENTS—Continued

Page

Regal-Beloit Corp. v. Kawasaki Kisen Kaisha

Ltd.,

462 F. Supp. 2d 1098 (C.D. Cal. 2006)...............0e. 26a

Carriage of Goods by Sea Act

46 U.S.C.A. §30701 Notes (2009) 0.0.0... ceeeeeeeee ees 48a

Interstate Commerce Act

GD UGA, Ge a cncescceccsccccccccscnscccescsncscend 62a

as Se ittncsenscsicecvcsstsciiseiitininmaeal 63a

Es ee asnccncecnssicncntnciincisstiadiianiiniimas 65a

The Carmack Amendment

es ee crccinicssiencsccnciiinnaittitesiasiniioa 69a

as i icicicnsiccscocisnictatuaidininisnedaiaau 73a

The Staggers Rail Act

Pub. L. No. 96-448, §10713,

| gM meN Rye . 79a

Pub. L. No. 96-448, §10505,

SO ne II. caecatiendettiiali nian 85a

1978 Codification

Pub. L. No. 95-473, $11707 [Carmack],

ee I iia niicenbensieicdiiinaedinnb aia 86a

Pub. L. No. 95-473, $10501,

ee Ree FI CIGD ccceccvsesnscsncncesnscesnncnstacsnesonsnionmmenii Wa

vi

TABLE OF CONTENTS—Continued

Page

Former ICA Jurisdictional Provision

a 92a

Former Versions of the Carmack

Amendment

An Act to Regulate Commerce, ch. 3591, 34

as atnbadinbnneonnnnesi 93a

Interstate Commerce Act Amendment,

i ts IEP CIE cccccscesncecssccesnotccscsscesesnes 95a

ST 98a

Motor Carrier Act of 1935

Interstate Commerce Act Amendment,

ch. 498, 49 Stat. 543 (1935) ..........cccccccccosssccccsesseeees 102a

STB Regulation Exempting Intermodal

Transportation

ss coscuinaiesaiasiie 104a

FMC Regulations

i cueuituioesnions 105a

a cssensnonnonanons 106a

Master Intermodal Transportation Agreement

(“MITA”) dated June 1, 2003 (excerpts)............. ll6a

vii

TABLE OF AUTHORITIES

Page(s)

CASES

Altadis USA, Inc. v. Sea Star Line, LLC,

458 F.3d 1288 (11th Cir. 2006)................ 14, 16, 18, 19

Altadis USA, Inc. v. Sea Star Line, LLC,

EET 13

Altadis USA, Inc. v. Sea Star Line, LLC,

ee Se ii scicennnsstenetniinscenissatmnmnnninncensinciiis 13

Alwine v. Pennsylvania Railroad Co.,

15 A.2d 507 (Pa. Super. Ct. 1940)...........ccceceeeeeeenees 22

American Road Service Co. v. Consolidated

Rail Corp.,

PL ee 20

Capitol Converting Equipment, Inc. v. LEP

Transport, Inc.,

fe | Tv, Lo A; eee 19, 26

Condakes v. Smith,

218 F. Supp. 1014 (D. Mass. 1968).................... eee. 22

Consolidated Rail Corp.-Declaratory Order-

Exemption,

TT CONT

Florida Department of Revenue v. Piccadilly

Cafeterias, Inc.,

ee al ID cciicevsesdstntinscesinnsionsnstnchstcnnmnebiases 29

viii

TABLE OF AUTHORITIES—Continued

Page(s)

Galveston, Harrisburg & San Antonio Railway

Co. v. Woodbury,

Cee een NTE 21

Great Northern Railway Co. v. O’Connor,

TT iicncciticiciiminescnniapipitncsinintiduemnmiinasiin 34

Indemnity Insurance Co. of North America v.

Hanjin Shipping Co.,

ee 28

Keene Corp. v. United States,

ee Day ae 26

Kenny’s Automobile Parts, Inc. v. Baker,

478 F. Supp. 461 (E.D. Pa. 1979) .000. eee eeeeeeeeeeee 22

Lorillard v. Pons,

TTI A TE TTT 26

Neptune Orient Lines, Ltd. v. Burlington

Northern & Santa Fe Railway Co.,

213 F.3d 1118 (9th Cir. 2000)... 10, 11, 23

Norfolk Southern Railway Co. v. James N.

Kirby, Pty Ltd.,

eID itcccssnsscniensnntssinnnidninagenenineninias passim

Porter v. Nussle,

a TTI aR EEE TT 29

Reider v. Thompson,

eh ED wicenicrenensnensrsntninvinnsonssiniiaieniei 19, 26, 32

ix

TABLE OF AUTHORITIES—Continued

Page(s)

Shao v. Link Cargo (Taiwan) Ltd.,

986 F.2d 700 (4th Cir. 1993)........... emaninemmnentbiintith 20, 26

Sklaroff v. Pennsylvania Railroad Co.,

184 F.2d 575 (Sd Cir. 1950)...............ccccesccerscoccccssessees 22

Sompo Japan Insurance Co. of America v.

Union Pacific Railroad Co.,

456 F.3d 54 (2d Cir. 2006)................eccseseseeeeeees passim

Starrag v. Maersk, Inc.,

486 F.3d G07 (Sth Cir. 2007) .......cccccccccccscscsscesccesescceees 7

Strachman v. Palmer,

ig es ne 22

Swift Textiles, Inc. v. Watkins Motor Lines,

Inc.,

799 F.2d 697 (11th Cir. 1986), cert. denied,

ST a conieceeiipeniinominbadnnenee 17, 26

Tokio Marine & Fire Insurance Co. v. Amato

Motors, Inc.,

Re ee re Ce Gy BID ccecceccsccccsccsocecccenscsesessseees 29

Vimar Seguros y Reaseguros, S.A. v. M/V Sky

Reefer,

Re Ps SE 6 III ccansessnnscnsinnctannmetenceecsmosnescaninaned 6,7,8

Wachovia Bank v. Schmidt,

ET a er 30

x

TABLE OF AUTHORITIES—Continued

Page(s)

STATUTES, REGULATIONS AND

LEGISLATIVE HISTORY

Be ee ST siiccctniniciincnpsdlisiintscsnieninniadncinnninneminicndiintes 1

46 U.S.C. SB0TO1 (Note]s)....00000..cccccccccccccscecccsceseess 2,7,8, 12

ie Se Ce ecicrcnctcctsccecscecnssnseensesennennsiiii 3, 18

i tnrstnncsinsnnsmnienetsniimenniammnnitil 6

ee ITED cncctcnsiccnicnscinctinasbetebinmunacnsiaamiiiiinaiiel 6

i ialllaliiasad 4

I iene caiadiltetidhitaeiniiainnaeeaidel 4

0s cr srcnrnctinntccendiipaninnsinsinmnniniiliall 5

I ac cilidemacameciialiadal 5, 31

49 U.S.C. $10502() ....cescecccoeccoecscesoeesseeseeesees 2,5, 12, 15, 30

SEES ae ete ann eae PP TEER Se 4

iii cinecientariniiiceecenicliandianniiiiatl 2,6, 10

LE ete RIS BO ROE A 12, 33

ER RA ee Re OE 1,2

a viiicciicasscncinnnstcsasesstiniacandiibicinaantal 3

EE a noe ae INC enn EE 2

alia 3

re I eiecctiiciinsisniiniciscsiteninnisiiatinnsbatiannsichitansiibiaieainsaasial 2

a I tote nrernsiccsameiiiananinnminneniintimeesindtinniiiidie 2

es STINE D sccstciconinstiniintnainsctiieinniisulentninininnell

xi

TABLE OF AUTHORITIES—Continued

Page(s)

Act of Feb. 4, 1887, ch. 104, 24 Stat. 379 00... eee 2

Act of June 29, 1906, ch. 3591, 34 Stat. 584.0... 3

Act of February 28, 1920, ch. 91, 41 Stat. 456 00... 22

The Carriage of Goods at Sea Act, ch. 229, 49

Stat. 1207 (1936) (46 U.S.C. §30701 (Notes))............ 2

Pub. L. No. 94-210, 90 Stat. 31 (1976)... eee eeeeeeeeenees 4

Pub. L. No. 95-473, 92 Stat. 1837 (1978).........ceecsesseeee 3,4

Pub. L. No. 96-448, 94 Stat. 1895 (1980)...........0..... 4,5, 29

Pub. L. No. 104-88, 109 Stat. 803 (1985)... 4

i I IEE nctincccnncicincnsnsesentnancinienienanednenetsiennnntioninied 4

er cae Se eictnsesetosenicscnstrinsnnsnpssnsnsenscsmsscosneanei 4, 15, 30

H.R. Rep. No. 95-1395 (1978), reprinted in 1978

ens Ci cccscctenecccctanensinianesnneteenibuetonscntsnn 3, 26

H.R. Rep. No. 96-1035 (1980), 1980

na Ie eiitiiensesinsiatsinntdtonsedsanscdensninénneesininéncaniined 6

Improvement of TOFC/COFC Regulation, 46

Fed. Reg. 14,348, 14,351 (Feb. 27, 1981) cescccccsccsesee. 5

xii

TABLE OF AUTHORITIES—Continued

Page(s)

OTHER AUTHORITY

Grant Gilmore & Charles L. Black, Jr., The Law

of Admiralty (2d ed. 1975) ..........ccscessesesssesesseeeeeeesens 7

Note, Foreign Commerce and the Interstate

Commerce Act, 40 Harv. L. Rev. 1130 (1927)........ 22

1 Thomas J. Schoenbaum, Admiralty &

Maritime Law 589 (4th ed. 2004).................... 1, 7, 24

Brief for United States as Amicus Curiae,

Norfolk Southern Railway Co. v. James N.

Kirby, Pty Ltd., 543 U.S. 14 (2004) (No. 02-

Sia isoneisiicsnintdeiinanidanediniasinasibniniaaciinatedbaniniseieonsa 2, 15, 24, 31

Brief for United States as Amicus Curiae

Supporting Petitioner, Norfolk Southern

Railway Co. v. James N. Kirby, Pty Ltd.,

543 U.S. 14 (2004) (No. 02-1028)... cece eeeeeeeseeeeeeee 34

]

OPINIONS BELOW

The opinion of the Court of Appeals (Pet.App.la-

35a) is reported at 557 F.3d 985. The opinion of the

District Court (Pet.App.36a-47a) is reported at 462 F.

Supp. 2d 1098.

JURISDICTION

The Ninth Circuit entered its opinion and judgment

on February 4, 2009, and no party sought rehearing.

On April 20, Justice Kennedy extended the time for

filing any petition to and including June 18, 2009. This

Court has jurisdiction under 28 U.S.C. §1254(1).

STATUTORY PROVISIONS INVOLVED

The text of the Carmack Amendment, 49 U.S.C.

§§11706 and 14706, other relevant provisions of the

Interstate Commerce Act (codified at Title 49), and the

Carriage of Goods by Sea Act, 46 U.S.C. §30701

(Notes), are reproduced at Pet.App.48a-115a.

STATEMENT OF THE CASE

Most foreign trade is transported in freight

containers that are carried both by sea on ships and by

land on trains or trucks. Such “multimodal” or

“intermodal” shipments now account for more than $1

trillion each year in U.S. trade. The modern industry

practice is for shippers to arrange on a “through”

contract basis for “door-to-door transport” across

oceans and to inland destinations making “efficient use

of all available modes of transportation by air, water,

and land.” Norfolk S. Ry. Co. v. James N. Kirby, Pty

Ltd., 543 U.S. 14, 25 (2004) (quoting 1 Thomas J.

Schoenbaum, Admiralty & Maritime Law 589 (4th ed.

2004) (“Schoenbaum”’)).

This case involves contracts for the continuous

carriage of goods from China to various destinations in

2

the United States. The issues presented arise from the

confluence of two statutory schemes. The Carmack

Amendment to the Interstate Commerce Act (“ICA”),

now codified at 49 U.S.C. §11706 (rail carriers) and 49

U.S.C. §$14706 (motor carriers), supplies the default

liability regime for rail and motor common carrier

transportation within the United States and strictly

limits the venue in which any suit for cargo damage

may be brought. 49 U.S.C. §11706(d)(2). Parties may,

however, opt out of the ICA, including the Carmack

Amendment, by entering into a contract for service on

specified terms. See 49 U.S.C. §10709; cf. id.

$§10502(e), 11706(c).

The Carriage of Goods by Sea Act (“COGSA”), ch.

229, 49 Stat. 1207 (1936) (46 U.S.C. §30701 (Notes)),

governs the rights and liabilities of parties to an

international maritime bill of lading. COGSA allows

parties to agree to COGSA liability terms for the entire

carriage—including any inland leg of the journey.

(Notes Secs. 7, 13).

The issue here is whether the carriers may enforce

* the forum selection clause in the maritime contracts to

which the shippers agreed. [f, as the Ninth Circuit

below held, the Carmack Amendment applies to the

inland rai’ portion of this contract carriage, then the

forum selection clause is unenforceable. If the parties’

contracts govern, as four other circuits have held, the

forum selection clause is enforceable. The resolution of

that issue will also determine the fundamental liability

rules governing the suit.

Statutory Background

l.a. In 1887, Congress enacted the ICA and

created the Interstate Commerce Commission (“ICC”)

to regulate railroad transportation. Act of Feb. 4, 1887,

3

ch. 104, 24 Stat. 379. In 1906 Congress added the

Carmack Amendment. Act of June 29, 1906, ch. 3591,

§7, 34 Stat. 584, 595. Under Carmack, a shipper may

recover actual damages sustained as a result of loss or

damage to its cargo, from either the delivering carrier

or the carrier that issued the bill of lading. 49 U.S.C.

§11706(a)(1)-(3).1 Courts have characterized Carmack

as imposing on carriers “something close to strict

liability.”” Sompo Japan Ins. Co. of Am. v. Union Pac.

R.R. Co., 456 F.3d 54, 59 (2d Cir. 2006) (citation

omitted). Carmack also expressly limits the venues in

which a claim may be brought. See 49 U.S.C.

§11706(d)(2). Forum selection clauses in a bill of lading

subject to Carmack are. therefore’ generally

unenforceable.

Carmack has always applied to domestic interstate

transportation. But from 1915 until 1978, its

application to foreign trade was expressly limited to

transportation “from any point in the United States to

a point in an adjacent foreign country.” 49 U.S.C.

§20(11) (1976). For decades courts held that Carmack

applied to the inland leg of a multimodal ocean

shipment only if a separate bill of lading was issued for

the inland leg, rendering it a separate domestic

shipment within Carmack’s terms. Infra, at 22.

Congress enacted the ICA into positive law in 1978,

“without substantive changes.” Pub. L. No. 95-473, §3,

92 Stat. 13837, 1466 (1978); see also H.R. Rep. No. 95-

1395, at 9 (1978), reprinted in 1978 U.S.C.C.A.N. 3009,

1 Jn certain circumstances a rail 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.” 49

U.S.C. §11706(c)(3) A); see also id. §14706(c)(1)(A) (motor

carriers).

4

3018 (Congress intended to “make[] no substantive

change in the law”). The codified version of Carmack

refers, however, to “transportation or service subject to

the jurisdiction of’ the ICC. 92 Stat. at 1453. Carmack

was again reenacted in 1995, without any change to the

relevant language, except that it now refers to the

jurisdiction of “the Board,” rather than the ICC.

Interstate Commerce Commission Termination Act of

1985 (“ICCTA”), Pub. L. No. 104-88, 109 Stat. 803

(codified at 49 U.S.C. §11706).

The Board’s jurisdiction includes transportation

within the United States that is “between a place in ...

the United States and a place in a foreign country.” 49

U.S.C. §10901(a).

b. From 1976 to 1980 Congress undertook an

expansive deregulation of the rail industry. The

Railroad Revitalization and Regulatory Reform Act of

1976 created a mechanism through which the STB may

“exempt” a carrier, class of carriers, or a particular

service from some or all of the I[CA’s regulatory

requirements. Pub. L. No. 94-210, 90 Stat. 31 (1976)

(codified as amended at 49 U.S.C. §10502(a)).

Four years later, Congress passed the Staggers

Rail Act. Pub. L. No. 96-448, 94 Stat. 1895, 1896-97

(1980) (“Staggers”) (finding that “regulations affecting

railroads have become unnecessary and inefficient” and

“greater reliance on the marketplace is essential”).

Among other things, Congress added to the exemption

provision a subsection explicitly authorizing the Board

“to exempt transportation that is provided by a rail

carrier as a part of a continuous’ intermodal

movement.” Staggers, §213, 94 Stat. at 1918 (codified

at 49 U.S.C. §10502(f)). The Board has exercised that

authority. See 49 C.F.R. §§1090.1(4), 1090.2. The

5

Board “may specify the period of time during which an

exemption granted under this section is effective,” 49

U.S.C. §10502(c), and retains the power to “revoke an

exemption,” id. §10502(d). Such “exempt” carriage

thus remains subject to the Board’s jurisdiction. See

Improvement of TOFC/COFC Regulation, 46 Fed.

Reg. 14,348, 14,351 (Feb. 27, 1981) (“Nothing in this

exemption shall be construed to affect our jurisdiction

a, *

Staggers also made clear that carriers may contract

out of the ICA, including Carmack’s default liability

and venue rules. It added 49 U.S.C. §10502(e), which

clarifies that an exemption from regulation pursuant to

§$10502(a) does not itself “relieve any rail carrier from

an obligation to provide contractual] terms for liability

and claims which are consistent with the provisions of

[the Carmack Amendment],” but also provides that

“(njothing in this subsection or |Carmack|] shall prevent

rail carriers from offering alternative terms nor give

the Board the authority to require any specific level of

rates or services based upon the provisions of

(Carmack].” Staggers, §213(e), 94 Stat. at 1913.

Staggers also added §10713 (now codified as

amended at 49 U.S.C. §10709), which applies to al/

carriage “subject to the jurisdiction of the Board” and

states:

(a) One or more rail carriers _ providing

transportation subject to the jurisdiction of the

Board under this part may enter into a

contract with one or more purchasers of rail

services to provide specified services under

specified rates and conditions.

6

(b) A party to a contract entered into under this

section shall have no duty in connection with

services provided under such contract other

than those duties specified by the terms of the

contract.

(c)

(2) The exclusive remedy for any alleged breach

of a contract entered into under this section

shall be an action in an appropriate State

court or United States district court, wnless

the parties otherwise agree.

(emphasis added). The service provided under such

contracts is therefore “exempt ... from all regulation

and all of the requirements of the Interstate Commerce

Act,” H.R. Rep. No. 96-1035, at 100 (1980), 1980

U.S.C.C.A.N. 3978, 4132, including Carmack’s venue

rules.

Congress amended and recodified §10709 in 1995 as

part of the ICCTA, which abolished the ICC, created

the STB, and revamped Title 49 “to minimize the need

for Federal regulatory control over the rail

transportation system” in order “to ensure the

development and continuation of ... effective

competition a: 1ong rail carriers.” 49 U.S.C. §10101(2),

(4).

2.a. COGSA “is the culmination of a multilateral

effort ‘to establish uniform ocean bills of lading to

govern the rights and liabilities of carriers and

shippers inter se in international trade.” Vimar

Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515

U.S. 528, 537 (1995) (citation omitted).

A bill of lading is a contract recording that a carrier

has received certain goods from a _ shipper and

7

establishing other conditions that “govern{] the

relationship of the parties before delivery of the

goods.” 1 Schoenbaum, supra, at 621. Historically,

ocean bills of lading were not uniformly enforceable in

all nations. See Grant Gilmore & Charles L. Black, Jr.,

The Law of Admiralty 142-43 (2d ed. 1975). That

“distressing lack of uniformity in shipping practice and

law” prompted efforts to establish “uniform

international regulation of the rights and duties of

carriers of ocean cargo.” 1 Schoenbaum, supra, at 636.

The Hague Rules of 1921 established uniform

international law governing the carriage of goods by

sea. In 1936, Congress implemented those rules (as

amended by international convention in 1924) by

enacting COGSA. Sky Reefer, 515 U.S. at 536-37.

b. COGSA governs “[e]very bill of lading ... for the

carriage of goods by sea to or from ports of the United

States, in foreign trade.” 46 U.S.C. §30701 (Notes). It

guarantees shippers’ rights against carriers and

establishes the carriers’ minimum liability to shippers

for cargo damage or loss. (Notes Secs. 2-4).

By its terms, COGSA applies to “the period from

the time when the goods are loaded on to the time

when they are discharged from the ship,” the so-called

“tackle-to-tackle” period. (Notes Sec. l(e)). But the

statute also permits the carrier and shipper to agree to

COGSA terms for “the entire period in which the

[cargo] would be under [the shipper’s] responsibility,

including the period of the inland transport.” Kirby,

543 U.S. at 29 (citing (Notes Sec. 7)). “[(CJontractual

extension of COGSA is now routine in the shipping

industry.” Starrag v. Maersk, Inc., 486 F.3d 607, 614

(9th Cir. 2007). A so-called “clause paramount” in a bill

of lading extends COGSA’s liability rules beyond the

8

tackle-to-tackle period to the cargo’s final destination.

A “Himalaya clause” extends the terms of the bill of

lading, including the contractual extension of COGSA,

to parties with whom the ocean carrier has

subcontracted for inland transportation.

ce. Under COGSA, the parties may agree to a

liability limitation. The default (and minimum) liability

cap is $500 per package. 46 U.S.C. §30701 (Notes Sec.

4(5)). Shippers and carriers typically opt to retain

COGSA’s liability limitation. Shippers pay a reduced

transport rate that reflects the carriers’ reduced risk,

and (like the shippers in this case) obtain private

insurance for the excess value of their goods. Kirby,

543 U.S. at 19-21 (citation omitted). COGSA also

permits the parties to choose the forum in which any

disputes concerning the carriage will be litigated. Sky

Reefer, 515 U.S. at 535-37.

Factual Context

1. During March and April 2005, Defendant

Kawasaki jGisen Kaisha, Ltd. (“K”-Line) accepted

cargo shipments to be carried from Shanghai, China to

various delivery points within the United States via

the Port of Long Beach, California. Pet.App.2a. These

shipments for “through” (door-to-door) transportation

of cargo were undertaken pursuant to through bills of

lading between “K”-Line and the shipper Plaintiffs.2

The intermodal through bills of lading that govern

the shipments in this case—like the vast majority of

2 Plaintiffs are Regal-Beloit Corporation, Victory Fireworks,

Inc. (both Wisconsin corporations), and two foreign insurers—

PICC Property and Casualty Company, Ltd. (based in Shanghai,

China) and Royal Sun Alliance Insurance Co., Ltd. (based in the

United Kingdom). Each filed separately, but the cases were

consolidated.

9

such contracts—contain both a Himalaya clause

(extending the contract to any subcontractors) and a

clause paramount (extending COGSA to the inland

leg). Pet.App.6a & nn.4, 5. The through bills authorize

“K”-Line “to sub-contract on any terms whatsoever

Carriage ... by any of the following: (1) any Connecting

Carrier ... (III) sub-contractors, .. agents and

independent contractors ....”" Pet.App.38a (quoting

bills of lading) (emphasis added). The bills of lading

also include a forum selection clause providing that

‘“any action [under the bill of lading] or in connection

with Carriage of Goods shall be brought before the

Tokyo District Court in Japan, to whose jurisdiction

[the shippers] irrevocably consent.” Jd.

2. Through its American agent, K-Line America,

Inc. (“KAM”), “K”-Line contracted with Union Pacific

(“UP”) to provide the inland rail transportation

contemplated by the through bills of lading. /d. at 6a.

The “Exempt Rail Transportation Agreement” to

which “K”-Line and UP agreed incorporated lability

terms from UP’s “Master Intermodal Transportation

Agreement” (“MITA”). Pet.App.6a-7a. The MITA

explicitly invokes §10709 (the ICA opt-out provision)

and offered “K”-Line the option of electing Carmack-

compliant terms for inland domestic carriage, provided

the nature of the goods is declared to UP.

Pet.App.117a. (Without such disclosure, UP would

have no way to price the insurance implicit in

Carmack’s expansive and essentially strict liability

regime.) Consistent with its right under the ocean bill

of lading to subcontract “on any terms whatsoever,”

“K”-Line instead elected a cheaper non-Carmack

shipping option.

10

3. The cargo was loaded on vessels in Shanghai and

Hong Kong, carried across the Pacific Ocean to Long

Beach, and then delivered to UP to be carried by rail to

its final destination. Pet.App.39a. The cargo was

allegedly damaged when the train carrying it derailed

in Oklahoma. Pet.App.3a.

Proceedings Below

l.a. Plaintiffs sued “K”-Line, KAM, and UP in Los

Angeles Superior Court. UP removed the actions to

the United States District Court for the Central

District of California. Pet.App.7a. Thereafter, UP and

the ocean carrier defendants moved to dismiss based

on the Tokyo forum selection clause in the bills of

lading. Jd. Plaintiffs argued that the action was wholly

governed by the Carmack Amendment, which would

render the Tokyo forum selection clause unenforceable.

b. Relying on Neptune Orient Lines, Ltd. v.

Burlington Northern & Santa Fe Railway Co., 213

F.3d 1118 (9th Cir. 2000), the district court first held

that the Carmack Amendment applies to “the inland

leg of an overseas shipment conducted under a single

“through” bill of lading,’ such as the one in this case.”

Pet.App.44a (citation omitted).

The district court further held the parties had

contracted out of Carmack under 49 U.S.C. §10709.

Pet.App.45a. Because $10709 “specifically

contemplates that the parties to a rail service contract

may contractually agree to litigate in a forum other

than that provided by the Carmack Amendment,”

Pet.App.46a, the district court concluded, Plaintiffs’

actions must be brought in Tokyo.

2. The United States Court of Appeals for the

Ninth Circuit reversed.

11

a. The Court of Appeals recognized that in four

other circuits Carmack does not apply to the inland leg

of a continuous intermodal shipment from a foreign

country under a through ocean bill of lading.

Pet.App.17a. “Despite this weight of authority,” the

court held, “our own precedent expressly forecloses”

that interpretation. /d. (citing Neptune, 213 F.3d at

1119).

b. The Court next considered whether the “the

parties’ explicit contractual extension of COGSA inland

should take precedence” over Carmack. Pet.App.19a.

The Ninth Circuit first acknowledged that “[tjhe

unanimous [Supreme] Court in Kirby ... observed that

an inability to extend COGSA’s default rules to inland

transport, so that entire shipments could be governed

by the same liability regime, would defeat ‘the

apparent purpose of COGSA[] to facilitate efficient

contracting ... for carriage by sea.” Pet.App.24a

(fourth alteration in original). The Court of Appeals

further observed that “[ijgnoring a _ contractual

provision incorporating COGSA seems particularly

inappropriate where, as here, ‘the parties to the bill of

lading were sophisticated business entities that should

rarely be released from contractual obligations.”’ /d.

(citation omitted). It recognized that the “policies

recently endorsed by the Supreme Court [in Kirby|—

such as uniformity in the law of maritime contracts and

contractual autonomy for sophisticated shippers and

carriers—recommend applying COGSA here.”

Pet.App.1lla. The Ninth Circuit nevertheless

concluded that “Kirby does not control.” Pet.App.25a.

The Ninth Circuit further held that contractual

extensions of COGSA lack statutory force and must

12

give way to “conflicting law.” Pet.App.22a (citing 46

U.S.C. §30701 (Notes sees. 7, 12, 13)).

ce. The Court of Appeals next considered whether

the parties “complied with the applicable requirements

for opting out of Carmack.” Pet.App.26a. The court

noted that “the Board has exempted the transportation

at issue here” and observed that an exemption does not

relieve a carrier of its obligations under Carmack.

Pet.App.27a-28a (citing 49 U.S.C. §10502(e)).

Lamenting the lack of “guidance regarding how to

read §10502 and §$10709 in tandem,” Pet.App.30a, the

Ninth Circuit concluded that exempt carriers may not

contract out of Carmack through §10709. It reasoned

that exempt services are not “subject to the

jurisdiction of the Board” for purposes of §10709,

Pet.App.28a-29a (quoting 49 U.S.C. §10709(a)

(emphasis added by court of appeals)), even though it

had concluded that such transportation is subject to

the jurisdiction of the Board for purposes of applying

Carmack in the (first instance. Pet.App.18a

(“Carmack’s reach is coextensive with the Board’s

jurisdiction.”). Neither the Ninth Circuit nor Plaintiffs

contend that the MITA contract was deficient in any

other respect under §10709.

Adopting the Second Circuit’s holding in Sompo

Japan Insurance Co. of America v. Union Pacific

Railroad Co., 456 F.3d 54 (2d Cir. 2006), the Ninth

Circuit held that §10502(e) provides a_ separate

mechanism through which exempt transportation may

avoid Carmack’s default liability regime. In the Second

and Ninth Circuits’ view, however, $10502(e) “requires

carriers providing exempt transportation to offer

Carmack protections before they can _ successfully

contract for alternative terms.” Pet.App.29a. The

13

Ninth Circuit acknowledged that UP’s MITA

agreement offered “K”-Line the option to “select the

liability provisions set forth in [Carmack]” for

domestic transportation. Pet.App.33a (quoting MITA).

The Court of Appeals held, however, that “K-line

needed to offer Carmack’s protections when

contracting with Plaintiffs.” Id. (emphasis added).

The court remanded for a determination of whether

“K”-Line offered Carmack-compliant terms to the

shippers in China. Jd. at 35a.

REASONS FOR GRANTING THE WRIT

This case presents the Court with the opportunity

to resolve a widely acknowledged, firmly entrenched

circuit conflict on a question of enormous significance

to international trade. The shipment in this case is

representative of great numbers of international

multimodal transactions, for which uniform rules of law

are essential.

The Ninth Circuit’s decision solidifies a 2-to-4

circuit split as to whether the Carmack Amendment

applies to the inland leg of a multimodal shipment,

irrespective of the terms of the maritime contract that

the parties agreed would govern the entire carriage at

sea and on land. This question has been percolating in

the lower courts for years and is ripe for this Court’s

review. This Court granted review to resolve this

conflict two years ago, Altadis USA, Inc. v. Sea Star

Line, LLC, 549 U.S. 1106 (2007), but the parties settled

before that case could be heard on the merits, 549 U.S.

1189 (2007). Since then, the conflict has become only

more entrenched.

Four of the first five courts of appeals that

addressed this question—the Fourth, Fifth, Seventh,

and Eleventh Circuits—concluded that the Carmack

14

Amendment does not apply to the inland leg of a

multimodal shipment under a single through bill of

lading. That conclusion is consistent with Congress’s

intent to limit Carmack’s applicability, in the context of

international “through” shipments, to transportation

from the United States to an adjacent foreign country.

In accord with this Court’s decision in Kirby, the four-

circuit majority enforces the terms of through

maritime bills of lading, including the parties’

contractual extension of COGSA to the inland leg of a

multimodal shipment. Since this Court’s decision in

Kirby, the Eleventh Circuit has reaffirmed this rule.

See Altadis USA, Inc. v. Sea Star Line, LLC, 458 F.3d

1288, 1291-94 (11th Cir. 2006).

By contrast, the Second and Ninth Circuits have

held that the Carmack Amendment applies to the

inland leg of a continuous multimodal shipment. The

Ninth Circuit further held that a carrier providing such

service may not opt out of Carmack unless it somehow

ensures that the overseas shipper—with whom the

carrier has no direct contact—is first offered

contractual terms consistent with Carmack. The

resulting uncertainty in the law of multimodal

transportation threatens a huge segment of U.S.-

foreign trade.

Like this case, Kirby involved a one-stop-shopping

arrangement. Kirby had hired an Australian freight

forwarding company to arrange through transportation

from Australia to Huntsville, Alabama, via the port of

Savannah, Georgia. 543 U.S. at 18-19. The shipment

was covered by a through bill of lading that contained a

liability limitation under COGSA and a Himalaya

clause extending its benefits to inland carriers. /d. at

19-20. The train carrying Kirby’s cargo from Savannah

15

to Huntsville derailed, allegediy causing damage. /d. at

21.

This Court held that the multimodal through bill of

lading was a maritime contract governed by federal

law, id. at 23-24, and that downstream rail and motor

carriers were entitled to rely upon and enforce its

terms, id. at 31-32. In so holding, this Court was not

ignorant of the potential applicability of the Carmack

Amendment to the inland portion of the journey;

rather, the United States and the parties in Kirby took

the position (rejected by the Ninth Circuit below) that

the inland transportation was provided under a

contract for specified services under §10709, and was

therefore not subject to Carmack. See, e.g., Brief for

United States as Amicus Curiae at 12, Kirby, 543 U.S.

14 (2004) (No. 02-1028) (“U.S. Kirby Invitation Brief’).

The United States articulated that position in Kirby,

and this Court accepted it, even though all multimodal

carriage was then (and still is) exempt pursuant to

§10502.3 The Ninth Circuit’s decision thus conflicts

with a central premise upon which this Court’s decision

in Kirby was based.

The Second and Ninth Circuit’s decisions have

upended the settled expectations of innumerable

multimodal carriers, which have understandably relied

upon this Court's holding that downstream carriers are

entitled to enforce the terms of a through bill of lading

under a Himalaya clause. The United States

represented to this Court in its Invitation Brief in

Kirby (at 12) that as of 2008 well over half of all

3 See U.S. Kirby Invitation Brief at 11 n.4 (noting that “{tJhe

particular shipments at issue here are exempt,” and that “such

exempt freight is generally subject to the liability rules of

|Carmack]” (citing 49 C.F_R. $1090.2, 49 U.S.C. $10502(e)).

16

containerized rail freight was transported under

“contract-carriage arrangements, to which the

Carmack Amendment’s liability regime does not

apply.” The Ninth Circuit’s holding that Carmack does

apply notwithstanding the parties’ contract-carriage

arrangement thus has far-reaching consequences.

In light of the key differences between the liability

regimes of COGSA and Carmack, the huge volume of

trade that depends on certainty in applying those rules,

and the opportunity for forum-shopping presented by

the current state of the law, this Court should grant

and consolidate the petitions for certiorari filed by UP

and the ocean carrier defendants.

I. THE NINTH CIRCUIT'S DECISION

PERPETUATES A DEEP AND

ACKNOWLEDGED CIRCUIT SPLIT.

All but one of the major port circuits (the exception

being the Fifth Circuit) have now weighed in on the

question presented, and the result is a deep and

acknowledged conflict.

A. Four Circuits Have Squarely Held

That Carmack Does Not Apply To

The Inland Leg Of A Multimodal

Shipment Covered By A Single

Maritime Through Bill Of Lading

The Fourth, Sixth, Seventh, and Eleventh Circuits

have all held that the Carmack Amendment does not

apply to the inland leg of a multimodal shipment under

a through a bill of lading. This well-established four-

circuit rule is consistent with this Court’s decision in

Kirby and was recently reaffirmed by the Eleventh

Circuit in Altadis USA, Inc. v. Sea Star Line, LLC, 458

F.3d 1288 (11th Cir. 2006). Had this suit been brought

17

in any one of these circuits, the Tokyo forum selection

clause would have been enforced.

Eleventh Circuit. Swift Textiles, Inc. v. Watkins

Motor Lines, Inc., 799 F.2d 697 (11th Cir. 1986), cert.

denied, 480 U.S. 935 (1987), involved a shipment of

machinery by rail from Switzerland to Germany, then

by water to Charleston, South Carolina, and finally by

truck to Savannah and then LaGrange, Georgia. A

separate bill of lading covered the domestic inland leg

from Savannah to LaGrange. /d. at 698.

Without examining the statutory history, the Swift

court cursorily concluded that the scope of Carmack

was coextensive with the ICC’s jurisdiction and hence

reached the domestic portion of all foreign trade. The

court held that the separate domestic bill of lading did

not transform the international shipment into a

domestic intrastate movement (which, at the time,

Carmack did not reach). When stating its holding,

however, the Swift court wrote that

when a shipment of foreign goods is sent

to the United States with the intention

that it come to final rest at a specific

destination beyond its port of discharge,

then the domestic leg of the journey ...

will be subject to the Carmack

Amendment as long as the domestic leg is

covered by separate bill or bills of lading.

Id. at 701 (emphasis added).

The Swift court’s articulation of the test for

Carmack’s applicability is in some tension with other

aspects of its reasoning, but that test correctly

implements the statutory language of Carmack prior to

the 1978 codification—which extended to interstate

domestic shipments and shipments “from any point in

18

the United States to a point in an adjacent foreign

country” (2.e., exports over land) but not to multimodal

shipments from outside the United States to a point

inside the United States. 49 U.S.C. §20(11) (1976). The

Swift formulation proved to be highly influential.

Twenty years later, and two years after this Court’s

decision in Kirby, the Eleventh Circuit reaffirmed the

rule as stated in Swift. Altadis USA, Inc. v. Sea Star

Line, LLC involved a shipment from Puerto Rico to

Tampa, Florida. A single through bill of lading

designated COGSA as the governing law for the entire

carriage. 458 F.3d at 1289-90 & n.l. The cargo was

apparently stolen while in the inland motor carrier’s

possession. /d. at 1289-90.

The Eleventh Circuit held that the Carmack

Amendment did not apply. The court first noted the

weight of authority that “the Carmack Amendment

does not apply to a shipment from a foreign country to

the United States ... unless the domestic, overland leg

is covered by a separate bill of lading.” Jd. at 1291. It

then explained that a contrary interpretation would be

inconsistent with this Court’s decision in Airby:

The [Kirby] Court emphasized the

importance of the uniformity of the

general maritime law, ... the need to

reinforce the liability regime Congress

established in COGSA, and the apparent

purpose of COGSA to facilitate efficient

contracting in contracts for carriage by

sea. The Court also noted that a “single

Himalaya Clause can cover both sea and

land carriers downstream.” Finally, the

Court pointed out that COGSA explicitly

authorizes such clauses. Thus, the Court

19

held that ... the rail carrier ... was

entitled to the protection of the liability

limitations in the through bill of lading.

Id. at 1294 (citations omitted). The Eleventh Circuit

concluded that applying Carmack in the face of a

through bill of lading “would introduce uncertainty and

lack of uniformity into the process of contracting for

carriage by sea, upsetting contractual expectations

expressed in through bills of lading.” Jd.

Seventh Circuit. In Capitol Converting

Equipment, Inc. v. LEP Transport, Inc., 965 F.2d 391

(7th Cir. 1992), the Seventh Circuit likewise held that

Carmack “does not extend to shipments by water, rail

or motor carriers from a foreign country to the United

States, unless a domestic segment of the shipment is

covered by a separate bill of lading.” Jd. at 394

(citations omitted). The shipper hired the defendant to

transport machinery from Italy to Chicago under a

through bill of lading. /d. at 392-94. The cargo was lost

in transit, and the shipper sued invoking Carmack. /d.

Citing the Eleventh Circuit’s decision in Swift and this

Court’s decision in Reider v. Thompson, 339 U.S. 113

(1950), the court explained that “({bJecause such a

‘through’ bill of lading includes no separate domestic

segment ... the Carmack Amendment is inapplicable.”

965 F.2d at 394-95.

Reider involved a shipment of goods sent from

Buenos Aires under an ocean bill of lading to New

Orleans, and then under a separate bill of lading from

New Orleans to Boston. In holding that the Carmack

Amendment applied, this Court emphasized that

“(t]here was no through bill of lading from Buenos

Aires to Boston.” 339 U.S. at 117 (emphasis added).

20

Fourth Circuit. In Shao v. Link Cargo (Taiwan)

Ltd., 986 F.2d 700 (4th Cir. 1993), a shipper contracted

to have personal belongings shipped from Taiwan to

Baltimore, Maryland. The goods were shipped first to

California and then inadvertently forwarded to Miami,

where they were destroyed by fire. Jd. at 701. Two

defendants argued that Carmack did not apply to the

inland journey “because the shipment originated

outside of the United States.” Jd. at 703. Citing

Reider, Swift, and Capitol Converting Equipment, the

court agreed and held that Carmack does not apply

“unless a domestic segment of the shipment is covered

by a separate domestic bill of lading.” Jd.

Sixth Circuit. In American Road Service Co. v.

Consolidated Rail Corp., 348 F.3d 565 (6th Cir. 2003),

the Sixth Circuit joined the Eleventh, Seventh, and

Fourth Circuits in holding that Carmack applies to the

inland portion of an international multimodal shipment

only where a separate bill of lading is issued for the

inland journey. That case involved a containerized

shipment sent from Germany to Detroit via Newark,

New Jersey, pursuant to a single through bill of lading.

Id. at 566-67. The cargo was destroyed by fire while in

the rail carrier’s possession. /d. at 567. Finding no

evidence “that a domestic bill of lading was issued,” the

court held that Carmack did not apply. /d. at 569.

B. Two Circuits Have Squarely Held

That Carmack Applies To The

Inland Leg Of A Multimodal

Shipment Covered By A Single

Maritime Through Bill of Lading

By contrast, the Second and Ninth Circuits have

held that the Carmack Amendment does apply to the

21

inland portion of a multimodal shipment, even where

there is a through bill of lading.

Second Circutt. Sompo Japan Insurance v. Union

Pacific Railroad involved a shipment of tractors from

Japan to Georgia that was allegedly damaged by a

derailment in Texas. 456 F.3d at 55. As in Kirby, the

bills of lading contained both a clause paramount

(identifying COGSA as the law governing the entire

shipment) and a Himalaya clause (extending the

contractual provisions of the bills of lading to

downstream carriers). Jd. at 56-57.

Agreeing with the Eleventh Circuit’s “mode of

analysis” in Swift but dismissing its holding as “fatally

flawed,” id. at 61, the Second Circuit held that the

presence of a through bill of lading is irrelevant to

whether Carmack applies, id. at 63. The Second

Circuit acknowledged that the pre-1978 Carmack

language is controlling, because “courts should not

‘infer[] that Congress, in revising and consolidating the

laws, intended to change their effect, unless such

intention is clearly expressed,” and “Congress made

clear that the bill was intended to leave the law

substantively unchanged.” /d. at 64 (citation omitted).

But the Second Circuit noted that this Court’s decision

in Galveston, Harrisburg & San Antonio Railway Co.

v. Woodbury, 254 U.S. 357, 359-60 (1920), had

interpreted the phrase “from any place in the United

States to an adjacent foreign country” in a pre-1920

version of the [CC jurisdictional provision to cover

imports as well as exports. /d. at 65. The Second

Circuit concluded that Congress would have

22

understood ...e parallel language in Carmack to have

the same (atextual) meaning.* Id. at 65-66.

The Second Circuit acknowledged (at 66) that the

courts generally “resisted that inclination” after

Woodbury and continued to give a plain language

interpretation to Carmack, following the “influential”

decision in Alwine v. Pennsylvania Raiiroad Co., 15

A.2d 507 (Pa. Super. Ct. 1940).5 Alwine declined to

extend the Woodbury interpretation to Carmack in

part because Congress amended the ICC jurisdictional

provision shortly before Woodbury was decided, to

conform the actual text to the result this Court

ultimately reached. See Act of February 28, 1920, ch.

91, 41 Stat. 456, 474 (replacing “from ... to” with “from

or to ... to or from”). Although Congress made minor

changes to Carmack at the same time, it did not change

the language rage, Carmack’s application to foreign

trade to exports to adjacent countries. Jd. at 494-95.

The Second Circuit acknowledged a “fair|]

objection” that, even if “from ... to” can mean “to ...

from,” the precodification version of Carmack was also

limited to shipments involving adjacent foreign

countries—and “the codification bill’s omission of the

word ‘adjacent’ should not be interpreted as a change

in the law.” 456 F.3d at 68 n.13. Even if this Court’s

4 Commentators recognized that Woodbury’s interpretation of

the ICC jurisdictional provision was a “prodigious feat of

interpretation.” Note, Foreign Commerce and the Interstate

Commerce Act, 40 Harv. L. Rev. 1130, 1134 (1927).

® See also Sklaroff v. Pa. R.R. Co., 184 F.2d 575, 575 (3d Cir.

1950); Strachman v. Palmer, 177 F.2d 427, 429 (Ist Cir. 1949);

Kenny's Auto Parts, Inc. v. Baker, 478 F. Supp, 461, 463-64 (E.D.

Pa. 1979); Condakes v. Smith, 218 F. Supp. 10#4, 1015 (D. Mass.

1968).

23

decision in Woodbury applies, the word “adjacent”

excludes from Carmack the great majority of

intermodal international shipping under a through bill

of lading. The Sompo court seemed to find that point

persuasive, but concluded it was bound by a prior

Second Circuit panel that had “[fjocus[ed] solely on the

post-codification language” and applied Carmack to a

shipment involving a non-adjacent country. /d.

After deciding that the actual pre-1978 language of

Carmack should be disregarded in favor of this Court’s

atextual interpretation of a different provision, the

Second Circuit held that the parties’ extension of

COGSA to the inland rail journey lacked “the force of

statute with the capability to supersede” the Carmack

Amendment. /d. at 70-71. Attempting to distinguish

this Court’s decision in Kirby, the Second Circuit

offered that “[iJn Kirby, the Court was primarily

concerned with the lack of uniformity and consistency

that would result if state law were applied to contracts

extending COGSA’s terms inland.” /d. at 74.

Finally, the Second Circuit held—without any

analysis or explanation—that §10502(e) requires an

exempt carrier to “provide the shipper an opportunity

... to reezive full Carmack liability coverage” before it

may contract out of Carmack. /d. at 75. The court

remanded the case to the district court to address

whether the carrier had done so.

Ninth Circuit. The Ninth Circuit's holding below

was foreshadowed by its earlier holding in Neptune,

where the court stated that “the language of [Carmack |

encompasses the inland leg of an overseas shipment

conducted under a single ‘through’ bill of lading.” 213

F.3d at 1119. Following Neptune on that question, and

adopting the Second Circuit’s holding concerning the

24

requirements for exempt carriage to contract out of

Carmack, the Ninth Circuit held—contrary to Kirby—

that the inland carrier could not enforce the terms of

the maritime contract to which the shippers had

agreed.

II. THIS CASE PRESENTS ISSUES OF

EXCEPTIONAL IMPORTANCE TO

INTERNATIONAL SHIPPING

A. Shippers And Carriers Need

Predictable, Uniform Rules

Governing All Legs Of Intermodal

Shipments

Whether the Carmack Amendment applies to

inland segments of multimodal shipments under a

through bill of lading is an exceptionally important

question because it affects a very large segment of the

United States economy. This Court and industry

commentators have recognized the _ increasingly

important role of through bills of lading in international

multimodal shipments. See, e.g., Kirby, 543 U.S. at 26

(noting “(t]he popularity of that efficient choice” and

observing that “it is to Kirby’s advantage to arrange

for transport from Sydney to Huntsville in one bill of

lading, rather than to negotiate a separate contract—

and to find an American railroad itself—for the land

leg”); 1 Schoenbaum, supra, at 595 (“[I)nstead of using

separate bills of lading for each mode of carriage, an

ocean carrier typically issues an international through

bill of lading either directly or through an agent.”);

U.S. Kirby Invitation Brief, supra, at 10 (“{A] single

‘through bill of lading’ commonly covers transport of a

shipper’s goods all the way to an inland destination.’’).

The question presented in this case implicates the

same need for certainty and uniformity that this Court

25

recognized in Kirby: cargo interests and carriers alike

must be able to assess and insure against the risks to

which they are exposed under multimodal through bills

of lading.

This case is an excellent vehicle through which to

resolve the confusion in the circuits. It involves claims

against both a rail carrier and an ocean carrier. There

are no preliminary or threshold issues, the essential

facts are undisputed, and the forum selection clause at

issue is unenforceable if Carmack applies and is

enforceable if Carmack does not apply. And unlike in

some of the prior cases (including Kirby) the parties

here vigorously litigated, and the Ninth Circuit

resolved, both the scope of Carmack and the operation

of its contractual opt-out mechanism.

B. The Ninth Circuit Has Adopted An

Erroneous Interpretation Of The

ICA That Threatens To Destroy

Consistency And Uniformity In

Intermodal Shipping Transactions

Prior to the decisions of the Ninth Circuit in

Neptune and the Second Circuit in Sompo, the long-

settled judicial consensus and the understanding of the

transportation industry was that Carmack does not

apply to the domestic inland leg of an international

multimodal shipment unless a separate bill of lading is

issued. That was the plain meaning of the pre-1978

statutory language, see supra, at 21-23, and is the best

reading of this Court’s holding in Reider v. Thompson.

Regardless, UP’s contract for rail carriage with

“K”"-Line opted out of Carmack under §10709, which

does not require that the shipper must be offered

Carmack-compliant terms. Even if there were such a

26

requirement, offering Carmack terms to the railroad’s

direct customer must be sufficient.

1. Carmack Does Not Apply To The

Inland Leg Of A Maritime

Shipment Under A Through Bill

Of Lading

This Court held in Reider that the applicability of

Carmack turns upon “where the obligation of the

carrier as receiving carrier originated’”—in that case,

New Orleans, where the “contract for ocean

transportation terminated.” 339 U.S. at 117. This

Court clearly believed in Reider that Carmack would

not have applied if the shipment had moved from -

Argentina (a non-adjacent foreign country) to Boston

on a single through bill of lading. /d.

Congress emphasized that the 1978 codification

made “no substantive change in the law” and that “the

precedent value of earlier judicial decisions and other

interpretations” remained in force. H.R. Rep. No. 95-

1395, at 9 (1978), reprinted in 1978 U.S.C.C.A.N. 3009,

3018. Despite the differences between the pre- and

post-codification text of Carmack, the courts that

interpreted Carmack between 1978 and 1995 adhered

to the settled understanding that Carmack applied to

international multimodal shipping only if a separate

domestic bill of lading was issued. See Swift, 799 F.2d

at 701; Capitol Converting Equip., 965 F.2d at 394-95;

Shao, 986 F.2d at 703-04. “Congress was aware of ...

and, in effect, adopted” that consistent judicial

interpretation when it again reenacted Carmack in

1995 without substantive change. Keene Corp. v.

United States, 508 U.S. 200, 212 (1993) (citing Lorillard

v. Pons, 434 U.S. 575, 580 (1978)).

27

The Second Circuit recognized in Sompo that the

1978 codification was supposed to be non-substantive

and that Carmack should be interpreted in a manner

consistent with the prior statutory language. In

rejecting the longstanding interpretation of that pre-

1978 language, the Second Circuit placed far too much

weight on this Court’s curious decision in Woodbury,

and far too little weight on Congress’s action

immediately before Woodbury, on the decades of

judicial interpretation of Carmack and _ repeated

congressional ratification of that interpretation, and on

the policies discussed in Kirby.

Even if Sompo were otherwise persuasive,

Carmack still would not apply to the vast majority of

intermodal shipping on a single through bill of lading—

including the shipment in this case—because of the

statutory limitation to countries “adjacent” to the

United States. The Sompo panel acknowledged that

limitation, but followed prior Second Circuit precedent

that was not well reasoned. 456 F.3d at 68 n.13. The

limitation to shipments involving “adjacent” countries

reinforces Congress’s obvious desire to exclude

maritime shipping, including associated inland rail

transport on a single through bill of lading, from the

scope of Carmack.

Any remaining doubt should be resolved by the

strong federal policy favoring uniform rules for

maritime contracts, explained by this Court in Kirby.

“COGSA ... gives the option of extending its rule by

contract.” Kirby, 543 U.S. at 29. A great many ocean

shippers now choose to extend COGSA’s rules to the

entire period for which the ocean carrier is responsible

for the cargo—including the inland transport. /d.

Maritime commerce “would not enjoy the efficiencies of

28

the [(COGSA] default rule” and “the apparent purpose

of COGSA ... would be defeated” if it “did not apply

equally to all legs of the journey.” Jd. It would be

incredibly “inefficient ... [to apply] different

substantive law to the container depending on whether

it is sitting on board a ship, on a rail car, or on a truck.”

Indem. Ins. Co. of N. Am. v. Hanjin Shipping Co., 348

F.3d 628, 636 (7th Cir. 2003). Damage often is not even

discovered until a sealed container reaches its

destination, at which point there may be no way to

know whether the damage occurred at sea or over land.

In the Ninth and Second Circuits, therefore, the entire

legal regime governing damage (including the

appropriate forum for litigation) depends on a factual

question that will often be highly disputed.

Congress cannot have intended such an unwieldy

and unpredictable regime. Enforcing the contractual

extensions Congress contemplated when it enacted

COGSA is also perfectly consonant with Congress’s

aggressive deregulation of the railroad industry over

the last four decades.

2. The Ninth Circuit’s Decision

Undermines The Opt-Out

Provisions Of The ICA

Even if Carmack does apply to the inland leg of an

intermodal shipment under a through bill of lading,

shippers and carriers may opt out of Carmack by

contract. The Ninth Circuit below acknowledged that

the direct parties to the rail service contract here (UP

and “K”-Line) intended to do so. But the Ninth Circuit

wrongly believed that for exempt shipments (which

would include all intermodal shipments) such opt-outs

should be construed as “alternative terms” permitted

by §10502(e), not contracts governed by §10709, and

29

that Carmack-compliant terms must be offered as an

alternative.

Congress enacted the Staggers Act in 1980 “to rid

railroads of unnecessary and inefficient regulations

that impeded the railroads’ ability to compete with

other modes of transportation.” Tokio Marine & Fire

Ins. Co. v. Amato Motors, Inc., 996 F.2d 874, 877 (7th

Cir. 1993). Section 213 of the Staggers Act added

subsection (e) to the provisions now codified at §10502,

and §208(a) of the Act added the provision now codified

at §10709. See Pub. L. No. 96-448, §§208(a), 213, 94

Stat. 1895, 1908, 1913 (1980). Through different

mechanisms, §§10709 and 10502 operate to remove rail

carriers from the requirements of the ICA.

Section 10502 empowers the STB to “exempt” “a

person, class of persons, or a transaction or service”

from the ICA’s requirements. Section 10502 is directed

solely at the STB’s regulatory exemption power, as

demonstrated by its heading—-“Authority to exempt

rail carrier transportation”—and the plain language of

its various subsections. See Fla. Dep’t of Revenue v.

Piccadilly Cafeterias, Inc., 128 S. Ct. 2326, 2336 (2008)

(explaining that “statutory titles and section headings

‘are tools available for the resolution of a doubt about

the meaning of a statute”’ (quoting Porter v. Nussle,

534 U.S. 516, 528 (2002))). Subsection 10502(e) limits

the STB’s exemption power in one crucial respect. An

STB exemption order will not alone relieve a rail

carrier from Carmack’s default liability provisions:

No exemption order issued pursuant to this

section shall operate to relieve any rail

carrier from an obligation to provide

contractual terms for liability and claims

30

which are consistent with the provisions of

section 11706 of this title [7.e., Carmack].

49 U.S.C. §10502(e) (emphasis added). Although

Congress withheld this power from the STB, Congress

made clear in the next sentence of §10502(e) that this

limitation does not affect the ability of the exempt

carrier to contract out of Carmack:

Nothing in this subsection or section 11706

of this title shall prevent rail carriers from

offering alternative terms nor give the

Board the authority to require any specific

level of rates or services based upon the

provisions of section 11706 of this title.

Id. (emphasis added).

Section 10502(e) thus simply carves out from the

STB’s power the ability to issue a blanket exemption

from Carmack, while preserving the ability of shippers

and carriers to modify Carmack’s terms by whatever

means the ICA permits—including the simultaneously

enacted §10709. See Wachovia Bank v. Schmidt, 546

U.S. 308, 315-16 (2006) (provisions of the same Act of

Congress should be construed in pari materia). The

Ninth Circuit clearly erred in concluding that §10502(e)

is meaningless if §10709 is available in the context of

exempt carriage; it limits the effect of an STB

exemption. See 49 C.F.R. §1090.2 (“The exemption

does not ... operate to relieve any carrier of any

obligation it would otherwise have, absent the

exemption, with respect to providing contractual terms

for liability and claims.” (emphasis added)).

The Ninth Circuit also erred by holding that §10709

does not apply because exempt shipments are no

longer “transportation subject to the jurisdiction of the

Board” within the meaning of §10709(a). The Ninth

31

Circuit’s holding rests on the implausible premise that

this transportation is within the jurisdiction of the

Board for purposes of triggering the Carmack

Amendment, §11706, but not within the jurisdiction of

the Board for purposes of Carmack’s contractual opt-

out provision, §10709, even though the relevant

language of the two provisions is identical. There is

nothing in the text or the history of the provisions to

suggest that Congress intended such a result.

The text and structure of §10502 demonstrate that

a discretionary exemption does not strip the Board of

jurisdiction over the exempted transportation. The

STB retains the power to revoke an exemption at any

time. See 49 U.S.C. §10502(d). As the ICC explained,

“unless this revocation power is a nullity, the granting

of an exemption is not—and cannot be—a permanent

abrogation of federal jurisdiction. The potential for

total or partial reimposition of regulation is always

present.” Consolidated Rail Corp.—Declaratory

Order—-Exemption, 1 1.C0.C.2d 895, 899 (1986).

“Granting an exemption on the basis of the statutorily

required findings merely affects ‘the application of a

provision of [the ICA].’ Facially, the statute does not

empower the ICC to remove any matter from its

statutory jurisdiction.” Jd. at 898 (citation omitted)

(alteration in original).

The United States has recognized that exempt

transportation may contract out of the ICA through

§10709. In its Invitation Brief urging the Court to

grant certiorari in Kirby, the United States stressed

that “the rail transport in this case was provided as

contract carriage under 49 U.S.C. 10709, which would

make the transport exempt from the Carmack

Amendment’s liability rules.” U.S. Kirby Invitation

32

Brief at 12 (emphasis added). The United States was

well aware that the rail carrier in Kirby, as in this case,

was providing exempt transportation under 49 C.F.R.

§1090.2. Jd. at 11 n.4. The Ninth Circuit’s decision thus

conflicts in every respect with the United States’s

position in Kirby. And this Court squarely held in

Kirby that Norfolk Southern could enforce the non-

Carmack liability terms in the through bill of lading—

indicating that this Court either agreed with the

United States about §10709 or believed that Carmack

simply does not apply to intermodal shipping under a

through bill.

Nothing in §10709 requires a carrier to offer

Carmack-compliant terms before entering into a

contract. The Ninth Circuit’s confusion about whether

such terms were offered here is therefore legally

irrelevant.

3. Union Pacific Complied With

Any Obligation To Offer

Carmack-Compliant Terms

Even if the combined effect of §$10502(e) and 10709

is that UP was required to offer “Carmack-compliant”

liability terms as an alternative, it did so. Plaintiffs do

not dispute, and the Ninth Circuit acknowledged, that

UP’s contract with its customer, “K”-Line, specifically

provides that “[oJn domestic shipments that originate

in the United States, Shippers may, at their option,

select the liability provisions set forth in [Carmack].””

Pet.App.33a (quoting MITA) (first alteration in

original). Like the shipper in Reider, “K”-Line easily

could have written its ocean bill of lading such that “the

foreign portion of the journey terminated at the border

of the United States,” 339 U.S. at 117, and then could

have contracted with UP for a separate shipment

33

originating in the United States. It simply chose not

to, because the domestic rates (and particularly the

Carmack-compliant domestic rates) are significantly

higher. UP therefore complied with any requirement

to offer a “Carmack alternative” before entering into a

§10709 contract with the “purchaser[] of [its] rail

services.” 49 U.S.C. §10709(a).

The Ninth Circuit believed, however, that UP and

its customer could not contract out of Carmack unless

Carmack-compliant terms were also offered to the

original shippers in China. Pet.App.33a (“To comply

with §10502, K-line needed to offer Carmack’s

protections when contracting with Plaintiffs.”). That is

utterly impractical and inconsistent with Kirby.

The shipper plaintiffs in this case made an efficient

choice to contract with “K”-Line for through

transportation, rather than arranging for rail

transportation directly. They agreed to a maritime bill

of lading that expressly applied to inland carriage

through a Himalaya clause and authorized the ocean

carrier to subcontract for rail services “on any terms

whatsoever.” The shippers’ recourse against “K’’-Line,

and any subcontracting carrier, for damage to the

cargo is explicitly limited by the terms of that bill—and

the shippers obtained separate insurance to protect

themselves from loss. That common arrangement

reflects the obvious reality that shippers are far better

insurers than carriers of the risks of damage to sealed,

containerized cargo. If the shippers had wanted a bill

of lading with different terms (such as a requirement

that “K”-Line choose Carmack-compliant rail carriage

in the United States) the shippers could have

negotiated for such terms, presumably at a higher cost.

After opting for the convenience and efficiency of one-

34

stop shopping, and a price reflecting “K’’-Line’s right to

arrange rail transport “on any terms whatsoever,”

Plaintiffs and their insurers now seek to avoid the

bargain they struck.

This Court explained in Kirby that even when

authority to subcontract “on any terms” is not granted,

“(wlhen an intermediary contracts with a carrier to

transport goods, the cargo owner’s recovery against

the carrier is limited by the liability limitation to which

the intermediary and carrier agreed.” 543 U.S. at 33.

Relying on Great Northern Railway Co. v. O’Connor,

232 U.S. 508, 514 (1914), this Court held that a “carrier

hals] the right to assume that [the intermediary] could

agree upon the terms of the shipment,” id. at 34

(second alteration in original), and “could not be

expected to know if the [intermediary] had any

outstanding, conflicting obligation to another party,”

id. at 33. This Court explained that “[iJn

intercontinental ocean shipping, carriers may not know

if they are dealing with an intermediary, rather than

with a cargo owner,” and a rule requiring carriers to

“seek out more information before contracting, so as to

assure themselves that their contractual liability

limitations provide true protection,” would be wholly

unworkable. /d. at 34-35. The necessary “information

gathering might be very costly or even impossible,”

and carriers would want to charge’ shipping

intermediaries higher rates, “interferl{ing] with

statutory and decisional law promoting

nondiscrimination in common carriage.” Jd. at 35. This

Court explained that its holding “produces an equitable

result” because the cargo owner could always sue the

party with which it initially contracted. Jd.; see also

Brief for United States as Amicus Curiae Supporting

35

Petitioners at 29-30, Kirby (merits) (arguing that

allowing the intermediary to bind the cargo owner to

terms of shipment permits “the underlying carrier [to]

base its rates on an accurate understanding of its

potential exposure to suit, without discriminating

among shippers in a manner that federal law forbids”).

The Ninth Circuit’s holding that UP cannot rely on

terms negotiated with “K”-Line unless those terms

were somehow presented to the shippers on the other

side of the world is directly contrary to this Court’s

hoiding in Kirby that shipping intermediaries can bind

shippers to limited liability terms with downstream

carriers (even if, unlike here, the intermediary lacks

contractual authority to do so). UP offered Carmack-

compliant terms to its own customer, which is the most

that was necessary (or even possible).

CONCLUSION

This Court should grant this petition for certiorari

and the separate petition filed by “K”-Line. The two

petitions should be consolidated for argument.

36

Respectfully submitted,

J. MICHAEL HEMMER MAUREEN E. MAHONEY

RAYMOND J. HASIAK Counsel of Record

UNION PACIFIC J. SCOTT BALLENGER

RAILROAD COMPANY LORI ALVINO MCGILL

1400 Douglas Street LATHAM & WATKINS LLP

Stop 1580 555 11th Street, NW

Omaha, NE 68154 Suite 1000

(402) 544-3052 Washington, DC 20004

LESLIE MCMURRAY (202) 687-2200

12520 Magnolia Boulevard

Suite 206

Valley Village, CA 91607

(818) 505-9902

Counsel for Petitioner Union Pacific Railroad Co.