Court Opinion

ID: 4300548
Source: CourtListenerOpinion
Date Created: 2018-08-02 18:00:25.05173+00
Date Added: 2024-06-11T14:41:43.738041
License: Public Domain

Case: 17-30543   Document: 00514583051     Page: 1   Date Filed: 08/02/2018

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT      United States Court of Appeals
                                                     Fifth Circuit

                                                                          FILED
                                                                       August 2, 2018
                                 No. 17-30543
                                                                       Lyle W. Cayce
                                                                            Clerk
ROYAL SMIT TRANSFORMERS BV; AXA VERSICHERUNG AG; HDI-
GERLING INDUSTRIE VERSICHERUNG AG; BASLER
SACHVERSICHERUNG AG; ERGO VERSICHERUNG AG,

             Plaintiffs - Appellants

v.

ONEGO SHIPPING & CHARTERING, BV; ILLINOIS CENTRAL
RAILROAD COMPANY; BERARD TRANSPORTATION, INCORPORATED,
in personam,

             Defendants - Appellees

                Appeal from the United States District Court
                   for the Eastern District of Louisiana

Before HIGGINBOTHAM, SMITH, and CLEMENT, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:
      Royal SMIT tried to ship a few of its transformers from the Netherlands
to Louisiana. It contracted with an intermediary to arrange the transport. The
transformers were damaged along the way, so Royal SMIT and its insurers
tried to sue the carriers with whom the intermediary had contracted. But the
district court concluded they were precluded from doing so because of a
Himalaya Clause in the company’s agreement with the intermediary. The
court granted summary judgment in favor of the carriers. That decision was
appealed, and we affirm.
     Case: 17-30543       Document: 00514583051          Page: 2     Date Filed: 08/02/2018

                                       No. 17-30543
                                              I.
       Plaintiff Royal SMIT Transformers B.V. (“Royal”) is a company based in
the Netherlands that manufactures large power transformers. In November
2015, Royal sold three of its transformers to Entergy Louisiana, LLC, for use
at one of its substations in St. Gabriel, Louisiana. The transformers were
insured by the co-plaintiffs-appellants AXA Versicherung AG, HDI-Gerling
Industrie-Versicherung         AG,    Basler       Sachversicherung       AG,    and     Ergo
Versicherung AG.
       One month later, Royal contracted with Central Oceans USA, LLC
(“Central Oceans”) to facilitate the delivery of the three transformers from the
Port of Rotterdam to St. Gabriel. The arrangement was established by a
multimodal through bill of lading 1 between the parties.
       The delivery comprised three legs: ocean transportation from Rotterdam
to New Orleans, rail transportation from New Orleans to St. Gabriel, and truck
transportation to Entergy’s substation. Central Oceans contracted with the
defendants to carry out each part of the journey: Onego Shipping & Chartering,
B.V. (“Onego”) provided the ocean carriage to New Orleans; Illinois Central
Railroad Company (“IC”) provided rail carriage to St. Gabriel; and Berard
Transportation, Inc. (“Berard”) provided truck carriage to the final destination.
       All of these arrangements were negotiated separately. The defendants
were not involved in—nor aware of—the agreement between Central Oceans
and Royal, and Royal was not a party to the contracts Central Oceans signed

       1  “Multimodal” transport refers to a delivery that entails some combination of air,
land, and sea travel. 1 T. Schoenbaum, Admiralty and Maritime Law, § 10-4 (5th ed. 2017).
A “bill of lading” refers to a document that memorializes the terms of a shipping agreement.
Id. § 10-11. And a “through bill of lading” refers to a bill of lading that allows cargo owners
to contract with an intermediary for a multimodal transportation in a single transaction.
Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 25–26 (2004). The intermediary, in turn, arranges
for the transportation with various carriers.
                                              2
    Case: 17-30543    Document: 00514583051     Page: 3   Date Filed: 08/02/2018

                                 No. 17-30543
with the defendants. Each defendant negotiated its agreement with Central
Oceans independently and memorialized its terms in separate documents.
      The terms of the agreement between Royal and Central Oceans were
initially set forth in a Request for Transport Quotation (“RFQ”) issued by
Royal, which incorporated terms from two other documents: a Shipment of
Transformers Procedure and a General Terms and Conditions of Purchase. The
Terms and Conditions stated that Central Oceans would be held liable “for all
cases of loss or damage suffered by [Royal] . . . caused by [Central Oceans’s]
performance” of the contract. It also anticipated that Central Oceans might
subcontract with a third party to perform part of its duties. It warned that
Central Oceans was “not release[d] . . . from any obligation or liability” as a
result of subcontracting its duty, but was still required to “indemnify [Royal]
in full against [resultant liability].” Further, Central Oceans was required to
“bind [the] third party fully to the provisions of these terms and conditions.”
The Terms and Conditions did not, however, specify whether or to what extent
the third parties were liable to Royal.
      The Purchase Order between the parties noted that “[a]ll services
provided” were pursuant to the RFQ, and “expressly den[ied] the applicability
of any other terms and conditions.” Notwithstanding this provision, the parties
then executed the through bill of lading, which stated that its “provisions . . .
apply to all claims against [Central Oceans] relating to the performance of the
Multimodal Transport Contract.”
      Like the Terms and Conditions, the bill also anticipated that, as Royal’s
intermediary, Central Oceans would facilitate the transport by contracting
with other entities. Those entities were designated as agents acting on behalf
of Central Oceans. Central Oceans, in turn, was liable for their actions:

                                          3
    Case: 17-30543   Document: 00514583051      Page: 4   Date Filed: 08/02/2018

                                No. 17-30543
           10. Basis of Liability
           ....
           (c) [Central Oceans] shall be responsible for the acts
           and omissions of his servants or agents when any such
           servant or agent is acting within the scope of his
           employment, or of any other person of whose services
           he makes use for the performance of the Contract, as
           if such acts and omissions were his own.
     The bill of lading limited both the amount and source of Royal’s recovery
if something went wrong. Specifically, it set a per-package limitation on
liability in accordance with requirements set by the Carriage of Goods by Sea
Act (“COGSA”), 46 U.S.C. § 30701, note § 4(5). And, relevant to the present
appeal, it also contained a Himalaya Clause, which prohibited Royal from
suing Central Oceans’s subcontractors:
           15. Defenses and limits for [Central Oceans],
           Servants, etc.
                  ....
           (b) [Royal] undertakes that no claim shall be made
           against any servant, agent, or other persons whose
           services [Central Oceans] has used in order to perform
           the Multimodal Transport Contract and if any claim
           should nevertheless be made, to indemnify [Central
           Oceans] against all consequences thereof.

           (c) However, the provisions of this Contract apply
           whenever claims relating to the performance of the
           Multimodal Transport Contract are made against any
           servant, agent or other person whose services [Central
           Oceans] has used in order to perform the Multimodal
           Transport Contract, whether such claims are founded
           in contract or in tort. In entering into this Contract,
           [Central Oceans] . . . does so not only on his own behalf
           but also as agent or trustee for such persons.
     The transformers were delivered to the final destination in January
2016, where an inspection revealed that the transformers had been damaged

                                      4
    Case: 17-30543         Document: 00514583051         Page: 5     Date Filed: 08/02/2018

                                        No. 17-30543
by “excessive vibration” somewhere along the journey. 2 Royal and its insurers 3
then sued Central Oceans and the defendants on September 12, 2016, for
breach of contract, fault, and negligence, seeking over $1,600,000 in damages.
Notably, the complaint alleged that “Royal . . . contracted with Central Oceans
. . . pursuant to” the through bill of lading. It did not mention the RFQ or
Purchase Order.
      Central Oceans filed a motion to transfer venue three months later,
relying on the mandatory forum selection clause in the multimodal through
bill of lading. Royal’s opposition again did not contest the applicability of the
bill of lading; rather, it was based on convenience to the remaining defendants,
who were “not privy to the contractual forum select clause” therein. Royal
admitted, in fact, that its “claims against Central Oceans [were] under the”
multimodal bill of lading, and it justified its opposition to transfer in part by
relying on the bill.
      The district court granted the motion in part, severing Royal’s claims
against Central Oceans and transferring them to the Western District of
Virginia. The court noted that “[n]o one disputes the validity of the forum
selection clause” in the bill of lading, and that Royal must abide by the terms
it negotiated with Central Oceans. The court also concluded that the claims
against the defendants could not be transferred because they were not bound
by the clause.
      The remaining defendants collectively filed a summary judgment motion
on April 21, 2017, arguing that they were protected from suit by the Himalaya
Clause. In response, Royal submitted an affidavit from Niek Vehreschild, its
Strategic Procurement Manager, denying that Royal agreed to this clause.

      2   The record does not establish where the damage occurred or which carrier caused it.
      3   For clarity, we will continue to use “Royal” to refer to these entities collectively.
                                               5
    Case: 17-30543     Document: 00514583051      Page: 6   Date Filed: 08/02/2018

                                  No. 17-30543
Vehreschild asserted, “In engaging Central Oceans . . . for the transportation
services at issue . . . [Royal] did not agree to be bound by any contractual terms
barring [Royal] from filing any action and seeking recovery for damages
sustained to its transformers from any . . . entities involved in their transport.”
Royal also submitted certain documents received from the defendants during
discovery, which outlined the terms of their carrier agreements with Central
Oceans.
      The district court granted the defendants’ motion. Relying on two
Supreme Court opinions, Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14
(2004) and Kawasaki Kisen Kaisha, Ltd. v. Regal-Beloit Corp., 561 U.S. 89
(2010), the court concluded that “actual carriers who fall within the scope of
Himalaya Clauses can rely on those clauses to limit their liability.” The court
also observed that enforcing Himalaya Clauses that shield downstream
carriers from liability had become “common practice.” Because the defendants
fell within the scope of the Himalaya Clause’s protection, they could not be
sued. Royal timely appealed.
                                        II.
      This court reviews grants of summary judgment de novo, applying the
same standard as the district court. Star Fin. Servs., Inc. v. Cardtronics USA,
Inc., 882 F.3d 176, 179 (5th Cir. 2018). Summary judgment is appropriate “if
the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
Once the movant carries its burden, the nonmovant must point to specific
evidence that demonstrates a genuine dispute of material fact exists. See
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
                                        A.
      We begin by addressing a preliminary legal question that is not
contested by the parties, yet has never been addressed by our court: whether
                                        6
    Case: 17-30543     Document: 00514583051      Page: 7   Date Filed: 08/02/2018

                                  No. 17-30543
the specific type of Himalaya Clause at issue here is enforceable. We hereby
join our sister courts in the Second and Ninth Circuits in concluding that it is.
Cf. Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co., 762 F.3d 165 (2d Cir.
2014); Fed. Ins. Co. v. Union Pac. R.R. Co., 651 F.3d 1175 (9th Cir. 2011).
      As the Supreme Court has noted, through bills of lading are central to
modern maritime commerce, which has embraced “door-to-door transport
based on efficient use of all available modes of transportation by air, water,
and land.”    Kirby, 543 U.S. at 25 (citation omitted); see William Coffey,
Multimodalism and the American Carrier, 64 TUL. L. REV. 569, 593 (1989)
(observing that the through bill of lading is the “dominant instrument of
trade”). The through bill allows a cargo owner to arrange for a complex
transportation of goods in a single transaction, “rather than [having] to
negotiate a separate contract” for each leg. Kirby, 543 U.S. at 26; see also Regal-
Beloit, 561 U.S. at 109. Accordingly, through bills promote efficient
contracting—a point of emphasis in this area of law. See Regal-Beloit, 561 U.S.
at 109; Kirby, 543 U.S. at 29.
      Himalaya Clauses “extend[] the bills’ defenses and limitations on
liability to parties that sign subcontracts to perform services contemplated by
the bills.” Regal-Beloit, 561 U.S. at 94. In other words, they operate much like
the mountain range by the same name, creating a barrier between the cargo
owner and downstream carriers that can be neither scaled nor circumvented.
      The Supreme Court has twice enforced Himalaya Clauses in through
bills. See Kirby, 543 U.S. at 31–32; Regal-Beloit, 561 U.S. at 109–10. Kirby, in
particular, demonstrates the strong protection such Clauses afford. There, the
Court held that two different Himalaya Clauses introduced by separate bills of
lading within the same multimodal transportation were enforceable. 543 U.S.
at 36. The two clauses limited the amount of damages the cargo owner could
receive from the intermediary’s subcontractors. Id. at 32. Despite the fact that
                                        7
    Case: 17-30543     Document: 00514583051      Page: 8   Date Filed: 08/02/2018

                                  No. 17-30543
the Clauses did not specifically name to whom they applied (instead naming
“any servant” of the intermediary), id. at 31, and the fact that the cargo owner
was not even a party to one of bills, id. at 33–34, the Court held that both
protected a downstream carrier from the cargo owner.
      In Regal-Beloit, the Court enforced a Himalaya Clause that afforded a
very different protection to downstream carriers: a forum selection clause
negotiated between the cargo owner and intermediary. 561 U.S. at 109–10.
Applying the terms of the through bill of lading, the Court held that “any suit
relating to the cargo” filed by the cargo owner against downstream carriers had
to be conducted in Japan, id. at 110–11, regardless of any practical difficulties
this might cause.
      Here, the through bill of lading’s Himalaya Clause protects downstream
carriers from being sued by Royal. Although it offers a protection distinct from
what was provided in Kirby and Regal-Beloit, we see no reason why the result
should be different.
      In reaching the same conclusion, both the Second and Ninth Circuits
acknowledged a potential pitfall—namely, that such Himalaya Clauses
implicate a longstanding policy in maritime law against agreements that
improperly limit the recovery to which the cargo owner is entitled. See Sompo
Japan Ins. Co., 762 F.3d at 181; Fed Ins. Co., 651 F.3d at 1180. Indeed, COGSA
itself states:
             Any clause, covenant, or agreement in a contract of
             carriage relieving the carrier or the ship from liability
             for loss or damage to or in connection with the goods,
             arising from negligence, fault, or failure in the duties
             and obligations provided in this section, or lessening
             such liability otherwise than as provided in this
             chapter [this note], shall be null and void and of no
             effect.

                                        8
    Case: 17-30543    Document: 00514583051     Page: 9   Date Filed: 08/02/2018

                                 No. 17-30543
46 U.S.C. § 30701, note § 3(8). As the Supreme Court has observed, this
provision was enacted in response to abuses by common carriers that were able
to leverage their bargaining advantage over the cargo owner by “insert[ing]
clauses in bills of lading exempting themselves from liability for damage or loss
. . . and capping any damages awards.” Vimar Seguros y Reaseguros, S.A. v.
M/V Sky Reefer, 515 U.S. 528, 534–35 (1995). Indeed the courts themselves
had long before fashioned a similar rule to protect the cargo owner’s
“unquestioned right . . . to recover full damages from a noncarrying vessel.”
United States v. Atl. Mut. Ins. Co., 343 U.S. 236, 239–42 (1952).
      Both the Second and Ninth Circuits concluded that Himalaya Clauses
shielding a common carrier’s agents from suit did not run afoul of this general
prohibition, though the justifications for this conclusion differed slightly. The
Second Circuit observed that the Supreme Court had two major concerns about
such clauses: (1) that the cargo owner might not receive full recovery, and (2)
that actual carriers would not be properly incentivized to exercise due care.
Sompo Japan Ins. Co., 762 F.3d at 182–83 (citing Atl. Mut. Ins. Co., 343 U.S.
at 241–42; Hart v. Pa. R. Co., 112 U.S. 331, 340 (1884)). It noted that neither
was violated because the Clause does not “exonerate[] a common carrier or its
agent from liability for damages caused by their negligence.” Id. at 182.
Instead, it is properly construed as “an ordering mechanism” that “regulate[s]
who will be responsible to whom”—specifically, the common carrier to the cargo
owner, and the actual carriers to the common carrier. Id. at 182–83.
Accordingly, the cargo owner would still receive the recovery to which it was
entitled (albeit perhaps through more inconvenient means). And the actual
carriers, which remain liable to the common carrier for mistakes, would still
be incentivized to exercise due care. Id.
      The Ninth Circuit relied on a single Supreme Court opinion, Sky Reefer.
Fed. Ins. Co., 651 F.3d at 1179–80. In Sky Reefer, the Supreme Court
                                        9
      Case: 17-30543    Document: 00514583051     Page: 10    Date Filed: 08/02/2018

                                   No. 17-30543
established a distinction between limitations on liability, which are
impermissible in certain cases, and “mechanisms for [the] enforcement” of that
liability, which are permissible. Sky Reefer, 515 U.S. at 534–35. The Court then
concluded the bill of lading’s forum selection clause fell into the latter category,
despite the fact that it would impose heightened transaction costs on the cargo
owner’s ability to vindicate its interests. Id. at 533–36. The Ninth Circuit,
relying on Sky Reefer, held that the Himalaya Clause was akin to a forum
selection clause—that is, “an enforcement mechanism rather than a reduction
of the carrier’s obligations to the cargo owner below what COGSA guarantees.”
Fed. Ins. Co., 651 F.3d at 1180 (quoting Sky Reefer, 515 U.S. at 539) (internal
quotation marks omitted). Like the Second Circuit, the court acknowledged—
and was unaffected by—the fact that the Himalaya Clause might “make it
more difficult as a practical matter for [the cargo owner] to recover damages.”
Id.
        As the reasoning of our sister courts highlights, the bottom line is this: a
Himalaya Clause that protects downstream carriers from suit by a cargo owner
does not, in and of itself, limit the cargo owner’s ability to receive the recovery
to which it is entitled. Here, for example, Royal agreed with Central Oceans to
a COGSA-authorized damages limitation. The mere fact that Royal must
recover its remedy only from Central Oceans does not prevent it from receiving
the full measure of that bargain. Moreover, nothing in the Himalaya Clause
precludes Central Oceans from suing the defendants to recoup its losses from
Royal. Accordingly, the extension of Kirby and Regal-Beloit is appropriate. We
hold that the downstream carriers are entitled to the protection of such
Himalaya Clauses.
                                         B.
        As noted, Royal does not contest this legal conclusion. Instead, Royal
contends that the Himalaya Clause was never meant to be enforced. Its
                                         10
    Case: 17-30543       Document: 00514583051          Page: 11     Date Filed: 08/02/2018

                                       No. 17-30543
argument is notable for what it does not state. Royal does not contest that the
Clause is part of a multimodal through bill of lading, which established other
contractual obligations between itself and Central Oceans. It does not contest
that the Himalaya Clause, by its clear terms, blocks Royal from suing the
Clause’s beneficiaries. Nor does Royal contest that the defendants qualify as
those beneficiaries.
       Instead, Royal argues that there is a material issue of fact as to whether
the parties agreed to be bound by the Himalaya Clause within the bill of lading.
It cites (1) evidence that allegedly shows Royal neither negotiated nor agreed
to the Himalaya Clause and (2) evidence that allegedly suggests the
defendants executed other agreements independent of the bill of lading. 4 The
district court concluded that neither strand of evidence should impact the
enforcement of the Himalaya Clause. We agree.

       4  Royal also notes in passing that there is a dispute as to whether Central Oceans
should qualify as a freight forwarder or non-vessel operating common carrier (“NVOCC”),
which are two types of intermediaries. The defendants assert that Central Oceans is an
NVOCC, but Royal points out that Central Oceans referred to itself as a freight forwarder in
a letter Royal received.
        Both roles serve as middlemen between cargo owners and actual carriers in the
negotiation of multimodal transports. Whereas the freight forwarder largely coordinates and
organizes the various deals with the carriers, the NVOCC participates as a party to the
transactions. See 1 Schoenbaum, § 10-7; compare Constructores Tecnicos, S. de R.L. v. Sea-
Land Serv., Inc., 945 F.2d 841, 846 (5th Cir. 1991) (defining the freight forwarder role), with
GIC Servs., L.L.C. v. Freightplus USA, Inc., 866 F.3d 649, 657 (5th Cir. 2017) (defining the
NVOCC role).
        Admittedly, whether an intermediary participates as a freight forwarder or an
NVOCC has some legal significance in other contexts. 1 Schoenbaum, § 10-7 (noting
differences in their status as “carriers” under the law). But Royal fails to offer any
explanation as to its impact on the interpretation of a through bill of lading, which can be
issued by freight forwarders and NVOCCs alike. Michael Crowley, The Limited Scope of the
Cargo Liability Regime Covering Carriage of Goods by Sea: The Multimodal Problem, 79 TUL.
L. REV. 1461, 1462 (2005). Notably, Kirby concerned a bill of lading issued by a freight
forwarder, 543 U.S. at 19, and Sompo Japan Insurance Co., which relied on Kirby, concerned
a bill of lading issued by an NVOCC, 762 F.3d at 168, 184. Accordingly, even if Royal’s
assertion that Central Oceans is a freight forwarder has merit, the dispute is immaterial.
                                             11
    Case: 17-30543    Document: 00514583051       Page: 12   Date Filed: 08/02/2018

                                  No. 17-30543
                                         1.
      As to the former, Royal highlights the Vehreschild affidavit, which
asserted that Royal did not intend to be so bound; the provision in its purchase
order that expressly denied terms or conditions not contained in the purchase
order or RFQ; and specific provisions in the RFQ that, according to Royal,
demonstrate that subcontractors were meant to be held liable to Royal. But,
again, Royal does not dispute the validity of the through bill of lading itself as
a binding maritime contract. Royal’s complaint, in fact, asserted that it
“contracted with Central Oceans . . . pursuant to” the multimodal through bill
of lading.
      Particularly in light of these concessions, we discern several problems
with Royal’s argument. First, this court has long held that, “by filing a lawsuit
for damages under the bill of lading, [the party] has accepted the terms of the
bill of lading, including . . . unnegotiated” clauses. Mitsui & Co. (USA), Inc. v.
Mira M/V, 111 F.3d 33, 36 (5th Cir. 1997) (rejecting the party’s claim that the
bill in question was “a contract of adhesion which it did not negotiate and
which therefore should not bind it”). As noted above, Royal’s complaint plainly
relied on the bill of lading as the basis for its suit, omitting all other documents
that memorialized the agreement. And, as noted, Royal has not challenged the
validity of the bill of lading itself as a binding agreement. Its attempt to
disavow the application of the Himalaya Clause within this agreement because
the clause was not part of its negotiations is foreclosed by Mitsui.
      Furthermore, to the extent that Royal would have us look to extrinsic
evidence to discern an intent contrary to the plain text of the bill of lading,
basic principles of maritime law governing the interpretation of contracts
foreclose such an argument. Specifically, much as for ordinary contract
interpretation, we “may not look beyond the written language of the document
to determine the intent of the parties unless the disputed contract provision
                                        12
    Case: 17-30543       Document: 00514583051          Page: 13     Date Filed: 08/02/2018

                                       No. 17-30543
is ambiguous.” Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 332–33 (5th
Cir. Unit A Aug. 1981); cf. Kirby, 543 U.S. at 31–32. Further, to the extent a
bill of lading’s terms differ from prior agreements, the bill of lading supersedes
them. See W. India Indus., Inc. v. Tradex, 664 F.2d 946, 949–50 (5th Cir. 1981)
(noting that parties may agree to terms in a bill of lading that are different
from a prior agreement and “thereby make a new and different contract”
(quoting N. Pac. Ry. Co. v. Am. Trading Co., 195 U.S. 439, 463 (1904))); 1 T.
Schoenbaum, Admiralty and Maritime Law, § 10-11 (5th ed. 2017) (“The terms
of the bill of lading may supersede an earlier term or agreement negotiated
between the parties unless it is specifically preserved in the bill of lading.”).
Accordingly, insofar as Royal would have us read out a clear provision in the
bill of lading based on an affidavit concerning Royal’s private intention or
conflicting provisions in prior agreements, its argument must be rejected. 5
       Last, we agree with the district court that Royal’s argument runs afoul
of Supreme Court guidance. A point of emphasis in Kirby was the importance
of protecting downstream carriers according to the text of through bills of
lading. There, the Court applied the terms of a Himalaya Clause protecting a
downstream carrier from the cargo owner despite the fact that the through bill
of lading was negotiated between the common carrier and another actual
carrier higher up in the chain—not the cargo owner. Kirby, 543 U.S. at 32–35.
Rejecting the cargo owner’s argument that it should not be bound by a
Himalaya Clause to which it had not agreed, the Court highlighted the
complexity of multimodal transactions and the extreme, “even impossible”

       5 We add that, contrary to Royal’s assertions, there does not appear to be any conflict
between the bill of lading and the RFQ. In its sole references to the defendants, the RFQ only
requires Central Oceans’s agents to abide by its terms. These provisions do not explicitly
require that the defendants be liable to Royal. To the contrary, the RFQ merely states that
Central Oceans remains liable for their actions. We discern no conflict between the Himalaya
Clause and the RFQ’s terms.
                                             13
    Case: 17-30543        Document: 00514583051          Page: 14     Date Filed: 08/02/2018

                                       No. 17-30543
burden it would place on downstream carriers if they were required “to assure
themselves that their contractual liability limitations provide true protection.”
Id. at 35.
       The Supreme Court’s reasoning looms large here. Royal seeks to override
the plain text of its own through bill of lading based on private intentions and
agreements between Royal and Central Oceans. The defendants were never
made privy to either source. Yet, by Royal’s logic, downstream carriers should
not be able to rely on the plain text of a through bill of lading to which the cargo
owner agreed; instead, they must conduct a thorough search for other
agreements between the cargo owner and intermediary that might evince
contradictory provisions or intent. As the district court noted, such a burden
is, if anything, more extreme than what the Supreme Court concluded was
untenable in Kirby. And it would certainly hinder the underlying policy goal of
this area of the law generally and through bills specifically—namely, efficient
contracting. See id. at 25–26, 29.
       We therefore agree with the district court that Central Oceans’s
arguments seeking to undermine the plain terms of the through bill are
irrelevant; the defendants are entitled to rely on that plain text.
                                              2.
       Next we consider Royal’s citation to documents that allegedly show the
defendants did not understand the bill of lading as enforceable “to the
exclusion” of their individual agreements. Royal cites documents that record
these agreements for support, but have no binding legal authority. 6 Here
again, we disagree.

       6 Royal also references in passing the defendants’ arguments in response to Central
Oceans’s motion to transfer—i.e., that the bill of lading’s forum selection clause did not apply
to them because they were not parties to the contract. Royal does not explain what
significance—legal or otherwise—this should have. We fail to see why the defendants’
                                              14
    Case: 17-30543       Document: 00514583051        Page: 15     Date Filed: 08/02/2018

                                      No. 17-30543
       The key is Royal’s concession that its bill of lading with Central Oceans
is a through bill of lading. As noted, through bills have become the “dominant
instrument of trade,” Coffey, 64 TUL. L. REV. at 593, in international maritime
commerce precisely because they allow cargo owners to avoid having to
contract separately with actual carriers. Kirby, 543 U.S. at 25–26. Instead,
that task is passed on to the intermediary, which must coordinate the network
of shipping contracts required to complete the delivery. Accordingly, the
downstream carriers will come to specific agreements with the intermediary,
but these agreements do not, in and of themselves, affect the terms of the
Himalaya Clause in the through bill of lading. In other words, the contracts
between downstream carriers and an intermediary do not impact the
protections negotiated by that intermediary with the cargo owner. Cf. id. at 36
(defining—in a far more complex multimodal transport involving numerous,
coordinated entities—the downstream carrier’s protection from the cargo
owner by sole reference to the through bills of lading).
       In other words, it is not merely usual, but expected that the defendants
would have come to separate arrangements regarding the transportation. And
the existence of such agreements does not weaken the binding effect of a
Himalaya Clause in applicable through bills of lading. Indeed, allowing such
individual agreements to call into question the terms of the through bill of
lading would seem to turn the industry practice on its head.
       We add that all three of the documents highlighted by Royal are
consistent with standard practice. The documents attributed to Berard and IC
are copies of their bids to Central Oceans to serve as a carrier to the transport.
Similarly, Onego’s non-negotiable bill of lading is a common means by which

argument concerning a forum selection clause of the bill of lading should preclude or affect
their argument that the Himalaya Clause expressly protects them from being sued.
                                            15
    Case: 17-30543        Document: 00514583051          Page: 16     Date Filed: 08/02/2018

                                       No. 17-30543
downstream carriers memorialize their contracts as part of a multimodal
transport. See 1 Schoenbaum, § 10-11 (noting that such bills serve as mere
receipts, not separate contracts). 7 We decline to deprive the defendants of the
Himalaya Clause’s protection on this basis. 8
       In short, Royal has again failed to articulate a basis for overriding the
clear terms of the through bill of lading.
                                             III.

       The summary judgment is AFFIRMED.

       7  Royal’s argument that Onego’s bill of lading is a separate contract with Royal itself
is solely based on the fact that Royal is listed as a “shipper” on the document. To the extent
this argument is relevant, its error is clear from the document itself. Central Oceans is listed
as the Merchant on a signed page within the same document. That same page includes
signatures only from representatives of the Carrier (Onego) and the Merchant (Central
Oceans). This is immediately followed by the Conditions of Carriage between the Merchant
and Carrier. Onego and Central Oceans are clearly the parties between which the bill of
lading was formed. Moreover, Royal admitted in its response to the Defendants’ Statement
of Uncontested Material Facts that “the Defendants did not sign a contract with Royal.”
        8 We also note that the presence of a through bill renders the sole case Royal cites for

support—an unpublished district court opinion from another jurisdiction—inapplicable. See
LIG Ins. Co. v. ZP Transport, Inc., Civ. A. No. 14-4007, 2015 WL 4725004, at *4 (N.D. Ill.
July 31, 2015) (noting that application of Kirby and Regal-Beloit was inappropriate because
they involved through bills).
                                              16