Norfolk Southern Railway Co. v. James N. Kirby, Pty Ltd.
Norfolk Southern Ry. v. James N. Kirby, Pty Ltd., 543 U.S. 14 (2004), was a United States Supreme Court case that dealt with the extent to which maritime bills of lading cover non-maritime portions of a shipment, together with connected clauses for exclusion of liability. Background. In August 1997, James N. Kirby, Pty Ltd., an Australian manufacturer, hired International Cargo Control Pty Ltd. (ICC) as a shipping intermediary to arrange a shipment of goods from Milperra, New South Wales to Athens, Alabama. The total shipment consisted of fifty containers , of which forty were routed through the port of Long Beach, California and the rail terminal in Memphis, Tennessee. The remaining ten oversized containers, because of logistical constraints, were routed through the port of Savannah, Georgia. For these ten containers, ICC Ltd. arranged for carriage by truck from Milperra to Sydney, by sea from Sydney to Savannah, by rail from Savannah to Huntsville, Alabama, and by truck from Huntsville to Athens. ICC subcontracted with motor carriers for the truck movements in Australia and Alabama and subcontracted with an ocean carrier for the sea and rail movements. ICC issued Kirby a  bill of lading, which invoked liability limitations provided by the "Carriage of Goods by Sea Act" (COGSA), as well as a Himalaya clause which extended ICC's limitations of liability to companies ICC hired. ICC hired Hamburg Süd to transport the goods, and Hamburg Süd issued ICC a bill of lading that also invoked COGSA protections and included a Himalaya clause. The limitation specified in COGSA was: Hamburg Süd carried the goods on a ship to Savannah, Georgia and subcontracted Norfolk Southern Railway to transport the goods inland to Alabama. In October 1997, the train derailed near Littleville, Alabama. Kirby  sued Norfolk Southern in October 1998 to recover the $1.5 million in damages he claimed the derailment caused his goods. The courts below. The United States District Court for the Northern District of Georgia ruled Norfolk Southern could limit its liability to Kirby on the basis of the Himalaya clause in the Hamburg Süd contract. As the Himalaya clause in the Hamburg Süd bill incorporated COGSA, which specified that liability was limited to $500 per package, and the shipment was packed in ten containers, Norfolk Southern's total liability was therefore $5000. On the joint motion of  the parties, the district court certified its order for interlocutory appeal. The United States Court of Appeals for the Eleventh Circuit reversed and ruled the Hamburg Süd bill did not limit Norfolk Southern's liability to Kirby because Kirby was not bound by its terms. The 11th Circuit observed that previous jurisprudence supported the proposition that Himalaya clauses did not extend to inland carriers that had not been in privity with ICC when ICC issued the bill.: Decision of the Supreme Court. In a unanimous opinion delivered by Justice Sandra Day O'Connor, the Court held that federal law controlled the  interpretation of both bills, because they were maritime contracts and the dispute was not inherently local. The Court also held that the 11th Circuit misinterpreted the bills as not protecting Norfolk. In summary, it was held: In Particular, the Court held that the 11th Circuit misinterpreted the Court's previous ruling in "Robert C. Herd & Co. v. Krawill Machinery Corp." "Herd" simply says that 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. If anything, "Herd" stands for the proposition that there is no  special rule for Himalaya Clauses: Subsequent developments. In 2010, "Kirby" was extended to cover domestic rail shipments for which bills of lading had been issued by domestic rail carriers with respect to shipments originating overseas, in the Supreme Court's ruling in "Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp." This effectively overruled the Carmack Amendment, which was previously considered to apply in such circumstances. The Supreme Court rarely takes on appeals in maritime law cases such as "Kirby" and "Regal-Beloit" in fact, there were none in between these two with respect to a through transport situation, so it  is advisable to study both of these cases to assess the current position of the Court. It is also a reason to heed the parting words of Justice O’Connor in "Kirby":