In the

United States Court of Appeals

For the Seventh Circuit

Nos. 11-2949 & 11-2967

KAWASAKI KISEN KAISHA, LTD., “K” LINE

AMERICA, INC., and UNION PACIFIC RAILROAD CO.,

Plaintiffs-Appellants,

v.

PLANO MOLDING CO.,

Defendant-Appellee.

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 07 C 5675—Harry D. Leinenweber, Judge.

ARGUED MARCH 27, 2012—DECIDED AUGUST 29, 2012

Before FLAUM, WILLIAMS, and TINDER Circuit Judges.

FLAUM, Circuit Judge. On April 21, 2005, a Union

Pacific Railroad Co. train derailed in Oklahoma causing

extensive damage to both the railroad and the train’s

cargo. Kawasaki Kisen Kaisha, Ltd. (“Kawasaki”), “K”

Line America, Inc. (“KAM”) (collectively “K-Line”), and

Union Pacific Railroad Co. (“Union Pacific”) (collectively
2 Nos. 11-2949 & 11-2967

“appellants”) blame Plano Molding Co. (“Plano”) for the

derailment, alleging Plano’s steel injection molds were

improperly packed, broke through their crate, and fell

onto the track. Appellants now attempt to hold Plano

liable for certain damages caused by the derailment, and

seek indemnification for claims made against them by

others who suffered losses in the accident. The district

court granted Plano’s motion for summary judgment.

For the reasons set forth below, we reverse in part,

affirm in part, and remand.

I. Background

A. Factual Background

Plano is an Illinois corporation that designs, manufactures, and sells plastic storage boxes, including tackle

boxes. Identifying a need for new molds, Plano contacted CMT International, Inc. (“CMT”), a service

provider that assists customers in the United States

who wish to purchase products from Asia. After establishing Plano’s mold specifications, CMT solicited bids

from manufacturers in Taiwan and China. CMT presented

Plano with the bids, and Plano selected Kunshan, a Chinese company, as its fabricator. The purchase orders

(“POs”) between CMT and Plano were for the “design,

engineer, construct and supply” of two steel injection

molds for use in Plano’s Illinois factory.

It is undisputed that World, a non-vessel operating

common carrier, was selected to coordinate the molds’

transportation from China to the United States. The

original terms of carriage were Free on Board Shanghai
Nos. 11-2949 & 11-2967 3

(“FOB Shanghai”). The term FOB indicates that the

buyer takes ownership of the goods as soon as it passes

over the rail of the ship. At World’s suggestion, in a series

of emails between Robb Yunger (“Yunger”) of Plano,

John Wember (“Wember”) of World, and Amna Shah

(“Shah”) of CMT, the parties agreed to alter the

delivery terms from FOB Shanghai to Delivered Duty

Paid (“DDP”). Under DDP terms, the buyer does not

take ownership until the goods arrive at its door. World

representative Wember explained that ensuring the

correct shipping terms was paramount because “if anything were to happen in transit you want your paperwork to reflect the true terms.” Despite this discussion,

the World bill of lading indicates that World was the

consignee, consistent with FOB Shanghai shipping

terms. Even so, CMT sent Plano an invoice dated July 14,

2005. This invoice charged Plano for the price of the

molds, as well as shipping; CMT paid World directly

for certain shipping costs, billing Plano later. CMT also

paid the import duty and custom cleared service charge,

and then invoiced Plano. These facts suggest that it

was CMT that arranged the transportation with World

under DDP terms.

As the freight forwarder, World contracted with THI

Group LTD (“THI”) and K-Line to ship the molds from

China to Illinois. K-Line subcontracted the movement

within the United States, from California to Illinois, to

Union Pacific. K-Line supplied the shipping container

to THI, and the molds were packed on-site at Kunshan.

THI delivered the goods, packed in the container, to K-Line
4 Nos. 11-2949 & 11-2967

in Shanghai. K-Line transported the molds from China

to the United States, transferring the molds to a Union

Pacific in California. The train derailed near Tyrone,

Oklahoma on April 21, 2005, causing $2 million in

damage to K-Line customers’ cargo and separately

costing Union Pacific about $2 million.

Plano received World’s bill of lading via email on

April 3, 2005, the day the molds were placed on the

shipping vessel in Shanghai. The World bill of lading

contained a “Himalaya clause” granting World’s subcontractors all warranties and indemnities defined in

the World bill of lading. Relevant to this case, under the

World bill of lading, when a container is packed by a

party other than World, the “Merchant” warrants “that

the stowage and seals of the containers are safe

and proper and suitable for handling and carriage and

indemnifies [World] for any injury, loss or damage

caused by breach of this warranty.” (emphasis added).

Section 2.3 of the World bill of lading defines “Merchant”

as “the Shipper, the Receiver, the Consignor, the Consignee, the Holder of this Bill of Lading and any person

having a present or future interest in the Goods or any

person acting on behalf of any of the above-mentioned

persons.”

K-Line issued its own bill of lading which contained

a similar indemnification provision:

If Goods received by Carrier are in Container(s)

into which contents have been packed by or on

behalf of Merchant, Merchant warrants that the

stowage and securing of the contents of the Con-
Nos. 11-2949 & 11-2967 5

tainer(s) and their closing and sealing are safe and

also warrants that Container(s) and contents

thereof are suitable for Carriage. . . . In the event of

Merchant’s breach of said warranties, Carrier

shall not be responsible for any loss of or damage

to or in connection with goods and Merchant

shall be liable for loss of or damage to any property, or for personal injury . . . and shall defend,

indemnify and hold Carrier harmless against all

loss, damage, liability, cost or expense . . . .

The definition of “Merchant” in K-Line’s bill of lading was

similarly inclusive defining a “Merchant” as “shipper,

consignor, consignee, owner and receiver of goods, and

holder, and anyone acting on behalf of any such person.”

B. Procedural Background

Following the derailment of the Union Pacific train near

Tyrone, Oklahoma, in April of 2005, eight complaints

were filed in the Southern District of New York by

owners of cargo damaged by the derailment, or their

subrogated insurers, against Kawasaki, KAM, and Union

Pacific. Union Pacific also sued Kawasaki and KAM

for damage to the railroad property. Kawasaki and

KAM filed third-party complaints against Plano, World

Commerce Services LLC (“World”) and CMT for indemnity or contribution. Union Pacific filed a third-party

complaint against Plano and CMT on the same

grounds. Four other cargo damage cases were filed

in California.
6 Nos. 11-2949 & 11-2967

The third-party complaints against CMT and Plano

were dismissed by the district court in New York for

lack of personal jurisdiction, and Kawasaki and KAM

then filed an action in the Northern District of Illinois

against Plano and CMT. The Illinois action and the

eight New York actions were centralized for consolidated, pre-trial proceeding in the Southern District of

New York. Union Pacific filed a complaint in intervention.

All cargo claims have settled, as have appellants’ claims

against World and CMT, leaving only the claims of

Kawasaki, KAM, and Union Pacific against Plano. The

Southern District of New York transferred the case to

the Northern District of Illinois, where the district court

granted Plano’s motion for summary judgment. This

appeal followed.

II. Discussion

We review de novo the district court’s grant of summary judgment. O’Leary v. Accretive Health, 657 F.3d 625,

630 (7th Cir. 2011). Summary judgment is appropriate

where the movant demonstrates that there exists no

genuine dispute as to an issue of material fact, and he

is entitled to judgment as a matter of law. FED. R. CIV.

P. 56(a). The court must review the record in the light

most favorable to the non-moving party and construe

all reasonable inferences in that party’s favor. Righi v.

SMC Corp., 632 F.3d 404, 408 (7th Cir. 2011). Here, we

apply federal maritime law because jurisdiction exists

under 28 U.S.C. § 1333. See Norfolk S. Ry. Co. v. Kirby,

543 U.S. 14, 24-25 (2004) (finding bills of lading involving
Nos. 11-2949 & 11-2967 7

overseas shipment of goods to be maritime contracts

even where the last leg of the journey was by rail).

Appellants unsuccessfully sought damages and indemnification from Plano in the district court,

asserting theories grounded both in contract and tort.

Though we conclude that appellants’ negligence claims

were properly rejected, we find unresolved questions

of fact material to the determination of one of appellants’

contract claims. Therefore, we affirm the district court

as to the contract claim based on K-Line’s bill of lading

but reverse as to the contract claim based on World’s bill

of lading. We also affirm the district court’s decision

regarding the negligence claims. We remand for further

proceedings consistent with this opinion.

A. Contract Claims

Appellants assert that Plano is liable for injuries

caused by the train derailment under both the K-Line and

World bills of lading. Under both bills of lading, Plano

could likely be considered a “Merchant” and thus subject

to liability if it breached the warranty to safely and adequately package the molds it handed over for shipment.

First, appellants argue that World was acting as Plano’s

agent under a non-traditional agency theory, and therefore legally bound Plano to the K-Line bill of lading. In

the alternative, appellants argue that Plano is liable

under K-Line’s bill of lading because Plano accepted its

terms through conduct. Finally, appellants contend that

Plano contracted directly with World, and is therefore
8 Nos. 11-2949 & 11-2967

bound to the World bill of lading, which contains explicit

warranties for packaged cargo and applies to K-Line

and Union Pacific through the Himalaya clause.

A bill of lading can serve many functions. Most fundamentally, it is an acknowledgment of the receipt for

goods. Cargill Ferrous Intern. v. Sea Phoenix MV, 325

F.3d 695, 703 (5th Cir. 2003). But it can also be evidence

of title, or more importantly, serve as evidence of a

contract of carriage. Id. “The bill of lading is the basic

transportation contract between the shipper-consignor

and the carrier; its terms and conditions bind the

shipper and all connecting carriers.” S. Pac. Transp. Co. v.

Commercial Metals Co., 456 U.S. 336, 342 (1982); see also

C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d

474, 478-79 (9th Cir. 2000). “Contracts for carriage of

goods by sea must be construed like any other contracts:

by their terms and consistent with the intent of the parties.” Kirby, 543 U.S. at 31. The question here is whether

Plano can be bound to the K-Line and World bills of

lading as the purchaser of the molds.

1. K-Line Bill of Lading

Appellants first attempt to bind Plano to the K-Line

bill of lading under a non-traditional agency theory.

Under traditional approach, an agency relationship

requires that a principal direct an agent to act for the

principal’s benefit, the agent to consent, and the principal

to have the power to control the agent’s actions. United

States v. Aldrige, 642 F.3d 537, 541 (7th Cir. 2011). But as
Nos. 11-2949 & 11-2967 9

the Supreme Court articulated in Kirby, maritime contracts for transport are often not susceptible to such a

traditional analysis. 543 U.S. at 34. Instead, the Supreme

Court set forth a modified test which nonetheless finds

an agency relationship in narrow circumstances. Id.

Here, appellants attempt to bind Plano to the K-Line bill

of lading, contending that World acted as its agent

under the Kirby approach. However, as we will explain, the non-traditional analysis is very limited in its

application, and its employment here is inappropriate.

When a buyer or owner of goods needs to transport

his items, the owner will often contract with a freight

forwarder to assist in the shipment. Sometimes this

forwarder is entrusted with those goods as a first-tier

carrier, but decides to sub-contract the movement to

another second-tier carrier. This was the case in Great

N. Ry. Co. v. O’Connor, 232 U.S. 508, 514-15 (1914). There,

the Court established that a first-tier carrier can enter

into enforceable contracts with second-tier carriers

without the express consent of the owner. Id. Specifically,

the Court held that the agreement between the firstand second-tier carriers to put a ceiling on the value

of owner’s goods was enforceable against the owner,

even though the owner had never agreed to the lower

value. Id. This was because the second-tier carrier “had

the right to assume that the [first-tier carrier] could agree

upon the terms of the shipment.” Id. The result, of course,

was that when the owner’s goods were damaged in

transit, her recovery from the second-tier carrier was

limited to the value negotiated by the first- and secondtier carriers. The Court relied on Great N. Ry. Co. in

Kirby, which expanded on this principle. 543 U.S. at 34.
10 Nos. 11-2949 & 11-2967

In Kirby, a cargo owner hired an intermediary freight

forwarding company to facilitate the transport of his

goods from Australia to the United States. Id. The intermediary then hired a shipping company to transport the

goods, and the shipping company subcontracted the

overland portion of the trip. Id. at 19. Following an overseas journey, the cargo was damaged while being

carried by rail. Id. at 18. There, the intermediary had

negotiated a liability limitation with the shipping company, which was also passed along to the subcontracting

railroad. Id. at 32-33. The railroad argued that its liability

to the cargo owner was capped by a limitation of

liability negotiated by the upstream carrier; plaintiff

cargo owner maintained that it was not bound by the

limitation because it did not agree to those terms.

Id. The Court sided with the railroad holding that an intermediary can bind “a cargo owner to the liability limitations it negotiates with downstream carriers. . . .” Id.

at 34. In reaching this conclusion, the Court held that

an intermediary can serve as the owner’s agent for “a

single, limited purpose: when [the intermediary] contracts with subsequent carriers for limitation on liability.” Id.

An intermediary’s authority to act as the cargo owner’s

agent is narrowly tailored; it would be unsustainable

to recognize an intermediary as an agent for the cargo

owner in “every sense” because of the potential to

expose the owner to unauthorized liability. Kirby, 543

U.S. at 33. As the Supreme Court has recognized, “intermediaries, entrusted with goods, are ‘agents’ only in
Nos. 11-2949 & 11-2967 11

Though appellants argue that the recent Supreme Court case 1

of Kawasaki v. Regal-Beloit, 130 S.Ct. 2433, 2488 (2010), extends

this principle, they misconstrue the import of that case. RegalBeloit dealt with the same derailment at issue here, but the

question before the Court differed significantly. There, the

Court examined whether the venue provisions set forth in a

through bill of lading, which dictated that the entire journey

would be governed by the Carriage of Goods by Sea Act, would

apply to the domestic part of the import’s journey by a rail

carrier, despite prohibitions or limitations in another federal

statute, the Cermack Amendment. 130 S.Ct. at 2439. The Court

answered in the affirmative, holding that the agreed upon

forum-selection terms in the bill of lading bound the cargo

owners. In so holding, the Court found that Cermack’s provisions do not apply to a shipment originating overseas under

a through bill of lading. Id. at 2446. Though the Court determined that the bill of lading bound the cargo owners, the

facts in that case are distinct. There, the owners contracted

directly with K-Line, raising no questions related to first- or

second- tier carrier liability. Id. What we can take from RegalBeloit is the Court’s conclusion that where a cargo owner

agrees to a bill of lading, liability and venue rules contained

therein will be enforceable. Id. at 2448.

their ability to contract for liability limitations with

carriers downstream.” Id. at 35. As we recently explained: 1

The idea is that if A engaged B to handle a shipment, among other things, A has delegated to B the

choice between a lower price with a strict limitation of liability and a higher price without one,

when B engages the services of Carrier C. 
12 Nos. 11-2949 & 11-2967

They ask that we hold Plano liable under the K-Line bill of 2

lading, which contains a warranty and limitation of liability

clause regarding goods packaged by someone other than the

carrier.

Nipponkoa Ins. Co. v. Atlas Van Lines, Inc., ___ F.3d ___, 2012

WL 2580120 (7th Cir. 2012). Though appellants urge us to

classify World as Plano’s agent under this non-traditional

Kirby theory, thereby rendering Plano liable under the KLine bill of lading, we must pause to consider whether the

application of this non-traditional theory is appropriate.

Upon review, we agree with the district court that it is not.

The Supreme Court has limited the assumption of an

agency relationship between an intermediary and a

shipper who contracts for the intermediary’s services to

a narrow circumstance: where an intermediary makes a

contract for liability limitations with carriers downstream.

Kirby, 543 U.S. at 35. While the non-traditional agency

theory is intended to facilitate commerce, the Court has

nonetheless cautioned against recognizing an intermediary as the cargo owner’s agent for all purposes. Id. at

33; In re M/V Rickmers Genoa Lit., 622 F. Supp. 2d 56, 73 n.23

(S.D.N.Y. 2009) (“If taken literally, the notion that consignors and consignees can be assumed to be in a principal/agent relationship would expose consignees to potentially limitless liability for the conduct and contracts

of their consignors.”).

Here appellants attempt to limit their own liability

for damages caused by the train derailment by seeking

reimbursement and damages from Plano. In a broad 2

sense, this goal is consistent with Great Northern and
Nos. 11-2949 & 11-2967 13

Kirby, where the carriers sought to limit their liability

to cargo owners in accordance with their negotiated bills

of lading. Similarly, K-Line’s warranty regarding crated

cargo comports with the Supreme Court’s concern for

ease of commerce, and the practical need of a secondtier carrier to be able to trust and rely on agreements

it forms with a first-tier carrier on behalf of, or in the

interest of, a cargo owner. Though we recognize this

congruence, we must acknowledge the very limited

circumstances in which the Supreme Court has recognized the non-traditional agency relationship. The Court

has employed this approach exclusively where a carrier

and an intermediary negotiated a maximum value for

the transported goods, absent consent from the goods’

owner. In recognizing an agency relationship, the Court

has protected the second-tier carrier by limiting its

liability to the owner of goods damaged in transit to

the value negotiated with the intermediary. In contrast,

here appellants use the K-Line bill of lading as a sword

to obtain indemnification and damages from Plano,

rather than a shield to avoid liability. Appellants wish

to hold Plano accountable as a “Merchant” that broke

its warranty regarding the fitness of its goods for shipment. But, Plano was not a party to the K-Line bill

of lading, nor did Plano actually load the molds into the

crate. Moreover, as we will explain below, there is a

question of fact regarding the actual role Plano played

in obtaining World’s services. Remember, Plano hired

CMT to facilitate the purchase of the molds from China.

We are unconvinced that the Kirby Court envisioned

the result for which appellants advocate. Though World
14 Nos. 11-2949 & 11-2967

was certainly authorized to arrange the molds’ shipment

from China to the United States, we doubt that it could

make guarantees on behalf of Plano, which if breached,

could subject Plano to substantial liability. Given the

Supreme Court’s restraint in recognizing non-traditional

agency relationships, we are unwilling to find one here.

Appellants next argue that Plano is liable under the KLine bill of lading because Plano accepted the bill’s terms

by its conduct throughout the transaction. Although a

bill of lading is a contract between a shipper and a

carrier, it can nonetheless bind a non-party buyer

where there is consent to be bound. Rickmers, 622

F. Supp. 2d at 71. It is undisputed that Plano is not a party

to the K-Line bill of lading, which names THI as the

shipper and World as the consignee. Whether Plano

can nonetheless be bound must be determined by

looking to general principles of contract formation

and interpretation.

A non-party buyer may accept the terms of the bill of

lading where it files a lawsuit under the bill, and attempts

to benefit from its terms. Steel Warehouse Co. v. Abalone

Shipping Ltd., 141 F.3d 234, 237 (5th Cir. 1998). Here,

it is undisputed that Plano did not file a lawsuit under

the K-Line bill of lading, so this theory of liability is

foreclosed to appellants. Appellants note that Plano filed

an insurance claim to recover the value of the damaged

goods, but present no evidence that Plano in fact

sought any benefits under the K-Line bill of lading in

connection with its claim. Moreover, appellants’ suggestion that Plano accepted the bill of lading by receiving
Nos. 11-2949 & 11-2967 15

a “special rate” offered by K-Line for the transport is

supported by no authority and is not relevant to this

determination.

Acceptance may also be shown through an agency

relationship between the shipper and the intermediary.

Rickmers, 622 F. Supp. 2d at 72. As discussed above, the

non-traditional agency analysis articulated in Kirby is not

appropriate here. The use of traditional agency

principles to bind consignees to bills of lading, however,

was called into question by the Supreme Court. Kirby,

543 U.S. at 34. In Kirby, the Court stated that when considering whether an intermediary can bind a shipper to

the terms of a carrier’s bill of lading, “reliance on

agency law is misplaced” because the traditional indicia

of agency, a fiduciary relationship and control by the

principal, are generally lacking in relationships between

cargo owners and freight forwarders. Id. To the extent

that this analysis is proper to determine whether the

shipper accepted the terms of the bill of lading, we

agree with the district court that World was not acting

as Plano’s agent. Under a traditional analysis, an agency

relationship requires a manifestation by the principal to

the agent that the agent may act on his account, consent

by the agent to so act, and the power by the principal to

control the agent’s conduct regarding the entrusted

matters. Aldrige, 642 F.3d at 541. Here, the agency test

must fail because Plano did not have the power to

control World. As we discuss below, the record is unclear

regarding what role Plano played in engaging World.

Moreover, Plano did not direct World as to which

shipper to select, or how to conduct its business. Though
16 Nos. 11-2949 & 11-2967

Plano had a relationship with K-Line, the record does

not indicate that Plano demanded that World contract

with K-Line, much less THI or Union Pacific. Appellants

point to no fact in the record which convinces us that

Plano had the ability to, or did, control World.

For the foregoing reasons, Plano cannot be held to the

terms of the K-Line bill of lading.

2. The World Bill of Lading

Turning to appellants’ final theory of contract liability,

asserting that Plano is bound to the terms of the World

bill of lading as a contracting party, we must consider

Plano’s role in obtaining World as the freight forwarder

for the molds’ transportation. Appellants argue that

Plano was a party to the contract, and was therefore

aware of and accepted the terms of the World bill of

lading. Plano maintains that it was CMT that contracted

with World, and that its role was limited to a mere uninvolved purchaser. The importance of this factual determination can be seen in Rickmers. In Rickmers, an injured

carrier sought to hold a purchaser of goods liable under

bills of lading asserting that the purchaser was the

ultimate consignee of the goods and fit within the

bills’ definition of “Merchant.” 622 F. Supp. 2d at 71. In

rejecting the arguments of the carrier, the Rickmers

court held that though the purchaser likely fell within

the broad scope of the Merchant clause contained in

the bills of lading, the purchaser was not a party to
Nos. 11-2949 & 11-2967 17

In Rickmers, the purchaser, ESM Group, bought SS-89, a 3

desulphurizing reagent in steelmaking, from its wholly-owned

subsidiary, ESMT. While en route on the high seas, the

goods allegedly caused an explosion on board the transporting

vessel. ESMT arranged for the SS-89 to be shipped to the

United States. The carrier asserted a breach of contract claim

against the buyer, ESM Group, who had no hand in arranging

the transport. The court declined to find ESM Group liable to

the carrier because it was not a party to the bill of lading, nor

did it consent to be bound. Id. at 71. There, the bill of lading

contained a provision stating that broadly defined “merchants”

would indemnify the carrier against any claim or loss arising

out of the carriage of dangerous goods. 

either bill, nor did it ever consent to be bound. Id. at 72-73. 3

Though Rickmers, as a district court decision is not

binding here, we nonetheless find its analysis persuasive. Plano similarly argues that it was removed from

all shipping terms because CMT handled the transportation of the molds from China to the United States.

The district court found it undisputed that CMT, not

Plano, “hired” World, and the court determined that

CMT was not Plano’s agent, but a broker that filled its

order. Accordingly, Plano was not a party to the World

bill of lading. The district court also concluded that

Plano could not be bound by the World bill of lading

because it did not negotiate its terms or seek benefits

under it. Appellants, however, maintain that Plano contracted with World directly, or in the alternative, that

there are facts sufficient to create a question of fact as to

this issue. The resolution of this question is important
18 Nos. 11-2949 & 11-2967

because if Plano engaged World to handle the shipment

on its own behalf, it could be found liable to K-Line

and Union Pacific by the plain terms of the World bill

of lading. Contrary to the conclusion of the district court,

we find the evidence surrounding the Plano-CMT-World

transaction murky at best, and conclude that conflicts

in the record regarding this point create a material question of fact requiring remand.

There are several facts which weigh on the determination of Plano’s relationship with World. It is undisputed

that Plano selected World as its forwarder, and instructed

CMT to contact World regarding the shipment. But evidence suggests that it was Plano, not CMT, that actually

arranged the shipment with World. The record also

indicates that it was Plano’s obligation to arrange the

molds’ transportation. First, Samuel Wu of CMT testified

that Plano shipped the molds to the United States

“FOB Shanghai.” Under that term, Plano, not CMT, was

responsible for arranging shipment. Also consistent with

this term, the World bill of lading listed Plano as the

consignee. Wu confirmed in his deposition that Plano

did arrange the molds’ transportation. Plano executive

Yunger similarly confirmed that when a mold is shipped

FOB, the entity making the order arranges for the goods’

transportation. He denies, however, that Plano had any

role in arranging the shipment for the molds at issue.

This assertion is contradicted by Wember of World

who testified that CMT had no role in booking the shipment, and that World had no direct dealings with

CMT; instead, he dealt directly with Yunger at Plano.

Wember also testified that Yunger initially contacted
Nos. 11-2949 & 11-2967 19

The shipping term FCL indicates that all cargo belongs to 4

one consignee, a “full container load.”

World regarding the molds’ shipment and points to an

email sent by Yunger to Wember, copying CMT representatives, where Yunger states “I want to ship the molds

FCL in terms to shipper where FOB Shanghai we can

use a 20-foot container. Please arrange shipping and

billing with EnJinn, CMT and/or Plano same as last

molds except these molds are from China.”4

A series of emails sent between Yunger, Wember, and

Shah raise questions regarding the true terms of the

shipment. In one email, Yunger asked World to begin

arranging the shipment under FOB terms. World then

replied that the shipment should be made DDP and not

FOB. The parties appear to agree to alter the delivery

terms, with Wember emphasizing that correct shipping

terms were paramount because “if anything were to

happen in transit you want your paperwork to reflect

the true terms.” Despite these emails, the bill of lading

reflects FOB shipping terms, listing World as the consignee. The shipping terms are significant in terms of

ownership. Under an FOB arrangement, Plano would

take ownership once the cargo goes over the rail of the

ship. Under a DDP arrangement, Plano would only take

ownership when the goods arrived at its door, and CMT

was responsible for transporting the goods to Illinois.

Although the World bill of lading indicates that the

goods were shipped FOB, Wember testified that this was

an error. He claims that the true purchase terms between
20 Nos. 11-2949 & 11-2967

Plano and CMT were DDP, and that CMT, not Plano,

should have been listed as the consignee on World’s bill of

lading; however, he admitted that no correction or

change was ever made. Further complicating matters is

that CMT sent Plano an invoice dated July 14, 2005. This

invoice charged Plano for the price of the molds, as well

as shipping; CMT paid World directly for certain

shipping costs, billing Plano later. CMT also paid the

import duty and custom cleared service charge, and then

invoiced Plano. These facts suggest DDP shipping terms,

whereby CMT, rather than Plano, would make the shipping arrangements.

On this record, we are unable to ascertain whether

CMT or Plano arranged the molds’ shipment with

World. Without this determination, we cannot conclude

whether or not Plano engaged World in a manner that

would impose liability as a contracting party, and

subject Plano to liability under the World bill of lading.

As to this narrow issue, we reverse the district court’s

grant of summary judgment and remand for further

consideration.

B. Negligence Claims

Appellants assert that the train derailment was caused

by the inadequate packing and bracing of Plano’s molds.

Accordingly, they maintain that Plano may be held

liable for damages caused by the accident because it

owed the carriers a duty to supply a properly packed

container. Appellants seek to impose this duty on

Plano arguing that: (1) it was on notice of the carrier’s
Nos. 11-2949 & 11-2967 21

inability or incompetence to properly pack goods; (2) it

had “unique knowledge” of “inherent risks” presented

by the molds and failed to warn of the foreseeable

danger; (3) Plano exercised substantial control over the

molds’ shipment; and (4) Plano is liable for World’s acts

because World acted as Plano’s agent. The district court

disagreed and found no evidence to suggest that the

parties who packed and shipped the container were

unable to do so properly, or that Plano was aware of any

risk inherent to shipping the molds. It also determined

that Plano exercised no control over World or THI, and

found no agency relationship. We affirm the district

court’s finding regarding negligence.

Under federal maritime law, buyers do not typically

owe carriers and fellow cargo owners a duty of care.

Aslanidis v. U.S. Lines, Inc., 7 F.3d 1067, 1077 (2d Cir.

1993) (“[I]mposing liability on the purchaser of goods

would be both unjustified and illogical.”). This is because

“[a]s between carrier, shipper, and consignee, the consignee would be least likely to possess the necessary

knowledge to have avoided any difficulty arising

from improper packaging.” Atkins Kroll & Co. v. Kedlloyd

Line, 210 F. Supp. 315, 317 (N.D. Cal. 1962). However,

some courts have held that a different rule might

obtain where the buyer had unique knowledge of the

known risks associated with its product. Rickmers, 622

F.Supp.2d at 65. Further, a buyer might be subject to

liability if it was on notice of some incompetence on the

part of the shipper. Id. A duty may be found where

harm is reasonably foreseeable. Schur v. L.A. Weight Loss

Centers, Inc., 577 F.3d 752, 766 (7th Cir. 2009). We focus,
22 Nos. 11-2949 & 11-2967

then, on whether the derailment was reasonably foreseeable given Plano’s decision to use World, or because of

the inherent risk of shipping the molds. It was not.

First, we examine whether the record suggests that

Plano was on notice that World was incapable of safely

and effectively transporting the molds. As an initial

matter, the record indicates that Kunshan loaded the

molds into wooden crates, K-Line supplied a shipping

container, and THI loaded the crates into the KLine container. Plano did not actively participate in

loading the molds. Moreover, Plano had no reason to

question the competence of World, Kunshan, or THI.

World had shipped molds to Plano twenty to thirty times

previously—there is no evidence that Plano ever had

any problems with World’s performance, or that

World’s performance was ever negligent or defective

in any way. Furthermore, there is nothing to hint at any

prior knowledge of incompetence on the part of

Kunshan or THI. 

Next, we consider whether Plano had any unique

knowledge regarding the risks inherent in transporting the

molds. Appellants suggest that transporting the molds

posed a heightened risk because of the “concentrated

footprint” of the molds; the molds were small in size,

compared to their weight. Given this footprint, Plano

allegedly should have accounted for the weight distribution within the containers. Though appellants cite to

several cases to show that Plano had a duty to warn, unlike

those cases, the steel molds at issue here contained no

inherent risk such as toxic contamination, explosion, or
Nos. 11-2949 & 11-2967 23

spontaneous combustion. Edwards v. California Chemical

Co., 245 So.2d 259 (Fl. Ct. App. 1971) (shipment of Ortho

Standard Lead Arsenate, a “highly toxic” product requiring users to “wear protective clothing and employ

a respirator”); Barney v. Burntsenbinder, 64 Barb. 212

(1872) (cargo of highly explosive nitroglycerine). To the

extent that appellants claim that the weight of the

molds made them dangerous, the evidence does not

support the conclusion that Plano had specific knowledge

about the “weight of the steel molds and the risk of

shipping [the] molds without the appropriate use

of blocking, bracing, or load spreading material.” The

weight of the molds was fully disclosed on the face of

both the World and K-Line bills of lading, and no party

has questioned the accuracy of the weight as recorded

on these documents. Though Plano did select the size

of the container because it believed the combined weight of

the molds did not exceed the container’s capacity,

nothing suggests that Plano was aware of any risk presented by the size of the container. Moreover, K-Line

itself supplied the container. Finally, appellants agree

that the weight of the molds was within the weight capacity of a properly maintained 20-foot K-Line container.

Appellants also maintain that the derailment that

occurred in Oklahoma was foreseeable, and cite to RegalBeloit for support. 130 S.Ct. at 2448. This reference is

misplaced. In Regal-Beloit, the Court did not evaluate

the knowledge of any party or evaluate whether it was

foreseeable that the molds themselves would break

through their crates. Instead, the Court simply observed

that it was a “foreseeable event that cargo might be dam-
24 Nos. 11-2949 & 11-2967

aged during carriage.” Id. As we explained above, there

is no evidence to show that it was foreseeable that the

molds would break through their crates and cause a

derailment, and the Court certainly was not suggesting

that Plano should have foreseen that such an accident

would have transpired.

Finally, appellants argue that Plano was liable for the

alleged negligence of World and THI because apparent

authority created an agency relationship between

Plano and World, and because Plano exerted substantial

control over World and THI during the shipping process.

As we concluded previously, World was not acting

as Plano’s agent, and appellants’ assertion of apparent

authority does not alter our conclusion. Appellants

argue that Plano’s act of giving World the steel molds

for shipment cloaked World with apparent authority to

act on Plano’s behalf. But Plano cites to nothing in the

record to show that K-Line or Union Pacific believed

that World was acting as Plano’s agent. Moreover, as

noted supra, Part II.A.2, there is a question of fact

regarding whether Plano or CMT engaged World as a

contracting party. 

The record simply does not support the assertion

that Plano exercised substantial control over either World

or THI during the shipping process. As to World, appellants point to the fact that Plano “ordered” World to

ship the molds “FCL”, that Plano provided World with

the specifications of the molds, and that Plano instructed

CMT on when to initiate the shipping procedure. These

few instructions, however, do not show that Plano “con-
Nos. 11-2949 & 11-2967 25

trolled” World. Rather, Plano simply provided basic

instructions to World regarding the molds’ shipment.

Plano did not instruct World on which carriers to

employ, and no Plano employees had any communications with THI, the company that carried out the

loading and stowage of the molds.

Plano had no indication that World, Kunshan, or THI

would be unable to properly package and transport its

steel molds from China to the United States, nor did

Plano have any special knowledge of any unique

danger the molds would pose during transit. Moreover,

Plano did not form an agency relationship with either

World or THI. Accordingly, Plano owed no special

duty of care to the carriers, and cannot be held liable

for negligence.

III. Conclusion

For the foregoing reasons, we REVERSE the district

court’s grant of summary judgment as to appellants’

contract claims based on the World bill of lading and

REMAND for further disposition consistent with this

opinion. We AFFIRM the district court’s grant of summary

judgment as to appellants’ negligence claims.

8-29-12