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 MITSUI SUMITOMO INSURANCE CO., LTD.,

14

15 Plaintiff-Appellee,

16

17 –v.–

18

19 EVERGREEN MARINE CORP.,

20

21 Defendant-Cross-Claimant-Appellant,

22

23 UNION PACIFIC RAILROAD COMPANY,

24

25 Defendant-Cross-Defendant-Appellant.

26 

27

28 Before: B.D. PARKER, WESLEY, 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 Carmack Amendment

33 applies to the international intermodal shipment at issue in

34 this case. Although the district court applied binding

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 REVERSED and REMANDED. 
2

1 

2

3 JOSEPH DE MAY, JR. (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 BARRY N. GUTTERMAN, Barry N. Gutterman & Associates,

9 P.C., New York, NY, for Appellant Union

10 Pacific Railroad Co.

11

12 DAVID L. MAZAROLI, New York, NY, for Appellee Mitsui

13 Sumitomo Insurance Co., Ltd.

14 

15

16 PER CURIAM:

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 otherwise
3

1 and abrogated Sompo in 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 North
 A 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 Carolina
5

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 from
6

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 entered
 In 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. See 130 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 Sompo and 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-Beloit was 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-Beloit and 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, see 49 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 Transportation
9

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-Beloit was

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 supplemental
 Citing 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 receiving rail 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-Beloit charts 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 transport from

11 another carrier in the middle of 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 its
11

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-Beloit Court 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-Beloit is

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 a
12

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 ended at this country’s ports and the cargo owners

5 then contracted with [UP] to complete a new journey to 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, or
13

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. See 49

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 the
14

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-Beloit should 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-Beloit retroactively 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 of
15

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-Beloit applies 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 REVERSED and the case is REMANDED for

13 further proceedings consistent with this decision.