The Honorable Jane A. Restani, Chief Judge of the United States * Court of International Trade, sitting by designation. 08-5184-cv Mitsui Sumitomo Insurance Co., Ltd. v. Evergreen Marine Corp. 1 UNITED STATES COURT OF APPEALS 2 3 FOR THE SECOND CIRCUIT 4 5 6 August Term, 2009 7 8 (Argued: September 10, 2009 Decided: September 22, 2010) 9 10 Docket No. 08-5184-cv 11 12 13 M ITS UI S UMI TOMO I NSURANCE C O ., L TD ., 14 15 Plaintiff-Appellee , 16 17 –v.– 18 19 E VERGRE EN MARI NE C ORP ., 20 21 Defendant-Cross-Claimant-Appellant , 22 23 U NION P ACI FIC RAIL ROAD C OMPANY , 24 25 Defendant-Cross-Defendant-Appellant . 26 27 28 Before: B.D. P ARKER , W ESL EY , Circuit Judges , and RESTANI , 29 Judge . * 30 31 Appeal from an order entering partial summary judgment in 32 favor of plaintiff, and holding that the C a rmack Amendment 33 applies to the international intermodal shipment at issue in 34 this case. Although the district court applie db i nding 35 precedent at the time, an intervening decision of the Supreme 36 Court has abrogated that authority. See Kawasaki Kisen Kaisha 37 Ltd. v. Regal-Beloit Corp. , 130 S. Ct. 2433 (2010). Under 38 Regal-Beloit , the Carmack Amendment does not apply. 39 40 REVE RSE Dand REMANDE D .2 1 2 3 J OSE PH D E MAY , J R . (Paul M. Keane, on the brief ), 4 Cichanowicz, Callan, Keane, Vengrow & Textor, 5 LLP, New York, NY, for Appellant Evergreen 6 Marine Corp. 7 8 B ARRY N. G UTT ERMAN , Barry N. Gutterman & Associates, 9 P.C., New York, NY, for Appellant Union 10 Pacific Railroad Co. 11 12 D AVI D L. MAZAROL I , New York, NY, for Appellee Mitsui 13 Sumitomo Insurance Co., Ltd. 14 15 16 P ER C URI AM : 17 This is another “maritime case about a train wreck.” 18 Norfolk S. Ry. Co. v. Kirby , 543 U.S. 14, 18 (2004). We are 19 again asked which federal statutory scheme governs the 20 extent of the parties’ liability: the Carmack Amendment, 49 21 U.S.C. § 11706, which imposes something akin to strict 22 liability on shippers; or the Carriage of Goods and Sea Act 23 (“COGSA”), 46 U.S.C. § 30701 note, which creates negligence24 based liability with a $500-per-package damages cap. 25 Relying on our decision in Sompo Japan Insurance Co. of 26 America v. Union Pacific Railroad Co. (“ Sompo ”), 456 F.3d 54 27 (2d Cir. 2006), the district court held that the Carmack 28 Amendment applied. See Mitsui Sumitomo Ins. Co. v. 29 Evergreen Marine Corp. , 578 F. Supp. 2d 575, 584 (S.D.N.Y. 30 2008). However, the Supreme Court has since held otherwise3 1 and abrogated Sompoin a case involving facts that are 2 materially indistinguishable from the one now before us. 3 See Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp. 4 ( “ Regal-Beloit ”), 130 S. Ct. 2433, 2443 (2010). 5 Accordingly, we vacate the judgment of the district court 6 and remand for further proceedings consistent with this 7 opinion. 8 I. BACKGROUND 9 Mitsui Sumitomo Insurance Co., Ltd. (“Mitsui”) 10 commenced this action as the subrogor of non-party Asmo 11 North Carolina, Inc. (“Asmo”). Asmo imports, manufacturers, 12 and distributes motorized automotive parts. In March 2006, 13 Asmo purchased on FOB terms a shipment of motors and other 14 parts from an affiliate in Japan. The affiliate arranged 15 for the cargo to be shipped from Shimizu, Japan to Asmo’s 16 facilities in Statesville, North Carolina. 17 Evergreen Marine Corp. (“Evergreen”) was hired to 18 transport the cargo. The job required ocean carriage from 19 Japan to the Port of Los Angeles and rail carriage from the 20 port to North Carolina. Evergreen — a vessel operating 21 common carrier (“VOCC”) — issued an intermodal through 22 waybill relating to the entire shipment from Japan to NorthA waybill typically functions in the same way as a 1 bill of lading, except that it is non-negotiable. See Royal & Sun Alliance Ins., PLC v. Ocean World Lines, Inc. (“Royal & Sun ”), 612 F.3d 138, 142 n.6 (2d Cir. 2010). The document serves to acknowledge that the carrier has received the goods, and it operates as a contract for the carriage. See id. at 141 nn.3 & 5. The term “intermodal” indicates that the waybill covered “multiple modes of transport — that is, more than one of truck, rail, sea, and air.” Id. at 141 n.4. In the parlance of the maritime shipping industry,

2 the provision of the Waybill that indicated that COGSA supplied the governing law regarding shippers’ liability is known as a “Clause Paramount.” See Royal & Sun , 612 F.3d at 142 & n.6. The Waybill’s Clause Paramount purported to extend COGSA’s application “beyond the tackles,” i.e. , to the inland portion of the shipment. Id. at 142 & n.7. The provision of the Waybill that permitted Evergreen’s subcontractors to invoke COGSA’s liability limitations is known as a Himalaya Clause. See id. at 142 & n.9. 4 1 Carolina (the “Waybill”). The Waybill did not reference 1 2 the Carmack Amendment. Instead, it contained provisions 3 that: (1) indicated that COGSA’s terms governed the 4 carriage, subject to certain exceptions not pertinent here; 5 (2) authorized Evergreen to enter into subcontracts to 6 complete the shipment; and (3) extended the defenses and 7 liability limitations available under the Waybill to any 8 subcontractors engaged by Evergreen. 2 9 Evergreen entered into a subcontract with the Union 10 Pacific Railroad Company (“UP”), which agreed to ship the 11 cargo by rail from the Port of Los Angeles to North Carolina5 1 under the terms of a standing contract titled the “Exempt 2 Rail Transportation Agreement” (“ERTA”). The ERTA 3 incorporated by reference the then-existing version of UP’s 4 “Exempt Circular Master Intermodal Transportation Agreement” 5 (“MITA-2A”). Like the Waybill, the MITA 2-A sought to limit 6 UP’s liability exposure in the event of damage to the cargo. 7 It stated, inter alia , that: (1) UP’s “maximum liability 8 for US inland loss or damage shall be limited to $500.00 per 9 package,” the same damages cap imposed by COGSA; and (2) in 10 order to qualify for “full-value liability” coverage under 11 the Carmack Amendment, the shipper was required to notify UP 12 of the full value of the cargo and to prepay an increased 13 rate. 14 “In practice almost all shippers decline to declare a 15 value, because a maritime insurance company is generally 16 willing to assume the risk of loss or damage for a cheaper 17 price than the carrier would be.” Royal & Sun Alliance 18 Ins., PLC v. Ocean World Lines, Inc. (“ Royal & Sun ”), 612 19 F.3d 138, 142 n.8 (2d Cir. 2010). That is precisely what 20 happened here. Neither Asmo nor its affiliate declared the 21 full value of the cargo or paid increased shipping rates, 22 and Asmo instead purchased insurance on the shipment from6 1 Mitsui. Evergreen subsequently took possession of the cargo 2 in Japan, delivered it to the Port of Los Angeles via a 3 vessel known as the “Ever Union,” and transferred it to UP 4 without incident. However, UP’s train derailed near 5 Nigginson, Arkansas, causing the property damage at the 6 center of the parties’ dispute. 7 Mitsui paid Asmo $385,105.70 on the insurance policy, 8 and then brought claims against Evergreen and UP. Evergreen 9 filed crossclaims against UP, and UP ultimately admitted 10 liability to Mitsui and took up Evergreen’s defense. 11 Following discovery, “[t]he only live issue in [the] case 12 [was] the amount of damages owed.” Mitsui Sumitomo Ins. 13 Co. , 578 F. Supp. 2d at 579. The parties filed cross14 motions for partial summary judgment on that basis. Mitsui 15 argued that Evergreen and UP were liable for the full value 16 of the damages under the Carmack Amendment, which “imposes 17 something close to strict liability upon originating and 18 delivering carriers.” Rankin v. Allstate Ins. Co. , 336 F.3d 19 8, 9 (1st Cir. 2003). Evergreen and UP argued that, under 20 COGSA and all the relevant agreements, their financial 21 exposure was capped at $500 per package. The district court 22 held that the Carmack Amendment governed and enteredIn Regal-Beloit , the Supreme Court addressed two 3 separate disputes with similar parties. The respondents were all either cargo owners or insurance firms acting as subrogors of cargo owners. See130 S. Ct. at 2439. In both cases, “K” Line was hired to provide intermodal transportation services, it issued intermodal through bills of lading, and it subcontracted with UP for a portion of those services. See id. 7 1 judgment in favor of Mitsui. 2 II. DISCUSSION 3 The foundation of the district court’s holding that the 4 Carmack Amendment applies in this case was our decision in 5 Sompo , 456 F.3d 54. However, as we recently recognized in 6 Royal & Sun , 612 F.3d at 138, the Supreme Court abrogated 7 Sompoand its progeny in Regal-Beloit , 130 S. Ct. at 2443. 8 Under Regal-Beloit , the Carmack Amendment does not apply to 9 the shipment in this case. 10 The shipment in Regal-Beloitwas nearly identical to 11 the one here. The cargo owners hired “K” Line, a VOCC, to 12 ship cargo from China to the Midwestern United States 13 pursuant to bills of lading issued by “K” Line. Id. at 14 2439. The bills of lading contained terms that were 3 15 similar in most material respects to the terms of 16 Evergreen’s Waybill. See id. (noting that “K” Line’s bills 17 of lading selected COGSA as the applicable liability regime,8 1 permitted subcontracting, extended COGSA beyond the tackles, 2 and contained a Himalaya Clause). “K” Line subcontracted 3 with UP — a party common to Regal-Beloitand this case — to 4 transport the cargo over the inland United States via rail. 5 See id. “K” Line successfully shipped the cargo from China 6 to California and transferred it to UP, but a rail accident 7 caused damage to the cargo while it was in UP’s possession. 8 See id. 9 Answering a question it had not previously addressed, 10 see Sompo , 456 F.3d at 74, the Supreme Court held that the 11 Carmack Amendment did not apply to an intermodal shipment 12 that originated outside the United States and was performed 13 pursuant to a single through bill of lading issued by a 14 VOCC. Rather, Carmack only applies to a shipment of goods 15 where a “receiving rail carrier” — as opposed to a 16 “delivering” or connecting rail carrier, see49 U.S.C. § 17 11706(a) — is required to issue a Carmack-compliant contract 18 for the carriage of goods. Regal Beloit , 130 S. Ct. at 19 2444. This new standard requires that two conditions be met 20 before the Carmack Amendment applies to a shipment. “First, 21 the rail carrier must ‘provid[e] transportation or service 22 subject to the jurisdiction of the [Surface Transportation9 1 Board (“STB”)].’ Second, that carrier must ‘receiv[e]’ the 2 property ‘for transportation under this part,’ where ‘this 3 part’ is the STB’s jurisdiction over domestic rail 4 transport.” Id. (quoting 49 U.S.C. § 11706) (alterations in 5 original). 6 As we have noted, the Supreme Court’s application of 7 these principles to the facts of Regal-Beloitwas 8 “straightforward.” Royal & Sun , 612 F.3d at 144. “‘K’ Line 9 received the cargo in China for intermodal transport, not in 10 the United States for rail transport.” Id. at 145. 11 Therefore, it was not a “receiving rail carrier” for 12 purposes of the Carmack Amendment. The Supreme Court 13 reached the same conclusion as to UP, reasoning that it 14 would be “counterintuitive[]” to consider a “connecting or 15 delivering carrier during an international through shipment” 16 to be a “receiving rail carrier” under the Carmack 17 Amendment. Regal Beloit , 130 S. Ct. at 2445. Such an 18 interpretation of the statute “would in effect outlaw 19 through shipments under a single bill of lading,” which is a 20 more “efficient mode of international shipping.” Id. 21 Following Regal-Beloit , decided while this appeal was 22 sub judice , we invited the parties to submit supplementalCiting Rexroth Hydraudyne B.V. v. Ocean World Lines, 4 Inc. , 547 F.3d 351 (2d Cir. 2008), Mitsui asserts that Regal-Beloit“did not address whether a multimodal carrier who issues a through bill of lading for combined ocean and land carriage can itself be a rail carrier.” However, under Regal-Beloit , the pertinent question is whether the carrier functioned as a receivingrail carrier. The Court plainly addressed that narrower issue and found that “K” Line did not meet that definition. Applying its analysis, we reach the same conclusion in this case as to Evergreen. Moreover, to state the obvious, to the extent Regal-Beloitcharts a different course for Carmack analysis than we set Rexroth , the Supreme Court’s decision abrogates ours. 10 1 briefing regarding the effect of the Supreme Court’s 2 decision. Having reviewed the parties’ submissions, we are 3 persuaded that the Carmack Amendment does not apply. 4 Evergreen is not a “receiving rail carrier.” It “receive[d] 5 the property at the shipment’s point of origin” in Japan, 6 and it took possession of the cargo to perform “overseas 7 multimodal import transport, not domestic rail transport.” 8 Id. at 2444. Moreover, as in Regal-Beloit , the same is 4 9 true of UP. A rail carrier “does not become a receiving 10 carrier simply by accepting goods for further transportfrom 11 another carrier in the middleof an international shipment 12 under a through bill.” Id. at 2445 (emphases added). 13 Therefore, Carmack does not apply to either Evergreen or UP. 14 In an attempt to evade the holding of Regal-Beloit , 15 Mitsui presents a series of unpersuasive arguments in its11 1 supplemental brief. First, it argues that the Supreme Court 2 reached its conclusion as to UP based on a concession at 3 oral argument by the railroad’s counsel that UP was a “mere 4 delivering carrier” in that case. Regal-Beloit , 130 S. Ct. 5 at 2445. This assertion misreads the Supreme Court’s 6 opinion. Although the Regal-BeloitCourt noted the 7 concession by UP’s counsel, it characterized the concession 8 as a “necessary” one under the terms of the statute. Id. 9 We therefore readily reject Mitsui’s contention that the 10 lack of such a concession in this case warrants a different 11 outcome. 12 Second, Mitsui asserts that Regal-Beloitis 13 distinguishable because, in this case, UP transported the 14 cargo pursuant to a “separate bill of lading for the 15 interstate rail carriage,” presumably referring to the MITA16 2A and the ERTA. The Supreme Court did not describe the 17 documents that governed UP’s carriage of the cargo at issue 18 in Regal-Beloit . However, this is a distinction without a 19 difference. Like “K” Line’s bills of lading in Regal20 Beloit , the Waybill issued by Evergreen called for 21 transportation between Japan and North Carolina. The Port 22 of Los Angeles was a midpoint along that journey, not a12 1 second, separate point of origin. 2 The Supreme Court indicated that it “would be a quite 3 different case if . . . the bills of lading for the overseas 4 transport endedat this country’s ports and the cargo owners 5 then contracted with [UP] to complete a new journeyto an 6 inland destination in the United States.” 130 S. Ct. at 7 2445 (emphases added). But this is not such a case. The 8 MITA-2A and the ERTA did not call for a “new journey.” 9 Collectively, the documents represented a subcontract 10 between Evergreen and UP for the inland portion of the 11 carriage. Such subcontracts were expressly contemplated by 12 the Waybill and, under Regal-Beloit , they fall outside the 13 purview of the Carmack Amendment. 14 Third, Mitsui asserts that the Supreme Court also 15 relied “in large part on the determination that suit could 16 not be filed in a Carmack-compliant venue, i.e. a district 17 court in the United States.” The observation is correct to 18 some extent, but nevertheless unavailing. In Regal-Beloit , 19 the Court reasoned that Carmack’s venue-selection provisions 20 reinforced its conclusion. Id. at 2445-46. Specifically, a 21 suit against a receiving rail carrier “that has not actually 22 caused the damage to the goods” — such as “K” Line, or13 1 Evergreen in this case — “‘may only be brought . . . in the 2 judicial district in which the point of origin is located .’” 3 Id. at 2446 (emphasis added) (quoting 49 U.S.C. § 4 11706(d)(2)(A)(i)). The term “judicial district” refers to 5 state and federal courts within the United States. See49 6 U.S.C. § 11706(d)(2)(B). However, China was the “point of 7 origin” of the shipment in Regal-Beloit . And, if the 8 Carmack Amendment applied, there would be no “judicial 9 district[s]” in which suit could be brought in that country. 10 “The far more likely conclusion,” the Supreme Court 11 reasoned, “is that ‘K’ Line is not a receiving rail carrier 12 at all under Carmack, and thus Carmack, including its venue 13 provisions, does not apply to property shipped under ‘K’ 14 Line’s through bills.” Regal-Beloit , 130 S. Ct. at 2446. 15 Mitsui contends that this case is different because 16 Evergreen’s Waybill provides that “all claims arising 17 hereunder must be brought and heard solely” in the federal 18 or state courts of New York. But this fact does no violence 19 to the Supreme Court’s observation that its conclusion was 20 consistent with the Carmack Amendment’s venue provisions. 21 Whatever the parties’ agreements may say about venue and 22 choice of law, Japan is the “point of origin” of the14 1 shipment at issue. There is no “judicial district,” for 2 purposes of the Carmack Amendment, “in which the point of 3 origin is located.” 49 U.S.C. § 11706(d)(2)(A)(i). As 4 such, even if we were to somehow shoehorn Evergreen or UP 5 into the category of a receiving rail carrier, we would be 6 left with “an awkward fit with Carmack’s venue provisions.” 7 Regal-Beloit , 130 S. Ct. at 2446. As in Regal-Beloit , this 8 point “reinforce[s] the interpretation that Carmack does not 9 apply to this carriage.” Id. 10 Finally, Mitsui argues that Regal-Beloitshould not be 11 applied retroactively. Although this issue was not directly 12 addressed in Royal & Sun , that case was pending on direct 13 appeal when the Supreme Court issued its decision, and we 14 applied the holding of Regal-Beloitretroactively to those 15 parties. See Royal & Sun , 612 F.3d at 138. This 16 application was consistent with the principle that when the 17 Supreme Court or this Court “‘applies a rule of federal law 18 to the parties before it, that rule is the controlling 19 interpretation of federal law and must be given full 20 retroactive effect in all cases still open on direct 21 review.’” Hawknet, Ltd. v. Overseas Shipping Agencies , 590 22 F.3d 87, 91 (2d Cir. 2009) (quoting Harper v. Va. Dep’t of15 1 Taxation , 509 U.S. 86, 97 (1993)). The Supreme Court 2 applied its holding to the parties before it in Regal3 Beloit , as did we in Royal & Sun . Therefore, we now make 4 clear that Regal-Beloitapplies retroactively to all cases 5 open on direct review at the time the Supreme Court issued 6 its decision. 7 III. CONCLUSION 8 For the foregoing reasons, under Regal-Beloit , the 9 Carmack Amendment does not apply to the shipment at issue in 10 this case. Accordingly, the judgment of the district court, 11 which was entered without the benefit of the Supreme Court’s 12 guidance, is hereby REVERSEDand the case is REMANDEDfor 13 further proceedings consistent with this decision.