Norfolk Southern Railway Company v. James N. Kirby, Pty Ltd.

Facts

Kirby (P), an Australian manufacturing company, sold 10 containers of machinery to the General Motors plant located outside Huntsville, Alabama. P hired International Cargo Control (ICC), an Australian freight forwarding company, to arrange for delivery by 'through' (i.e., end-to-end) transportation. ICC issued a bill of lading to P. The bill designates Sydney, Australia, as the port of loading, Savannah, Georgia, as the port of discharge, and Huntsville as the ultimate destination for delivery. P had the opportunity to declare the full value of the machinery and to have ICC assume liability for that value. P accepted a contractual liability limitation for ICC below the machinery's true value. The ICC bill invokes the default liability rule set forth in the COGSA. The COGSA 'package limitation' provides: 'Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States . . . unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.' Liability computed per package for the 10 containers, for example, was approximately $17,373 when the bill of lading was issued in June 1997, $17,231 when the goods were damaged on October 9, 1997, and $9,763 when the case was argued. The bill also contains a so-called 'Himalaya Clause.' It provides: 'These conditions [for limitations on liability] apply whenever claims relating to the performance of the contract evidenced by this [bill of lading] are made against any servant, agent or other person (including any independent contractor) whose services have been used in order to perform the contract.' P separately insured the cargo for its true value with its co-respondent in this case, Allianz Australia Insurance Ltd. ICC hired Hamburg Sud, a German ocean shipping company, to transport the containers. Hamburg Sud issued its own bill of lading to ICC (Hamburg Sud bill). That bill designates Sydney as the port of loading, Savannah as the port of discharge, and Huntsville as the ultimate destination for delivery. It adopts COGSA's default rule in limiting the liability of Hamburg Sud, the bill's designated carrier, to $500 per package. It also contains a clause extending that liability limitation beyond the 'tackles'--that is, to potential damage on land as well as on sea. Finally, it too contains a Himalaya Clause extending the benefit of its liability limitation to 'all agents . . . (including inland) carriers . . . and all independent contractors whatsoever.' Hamburg Sud hired D to transport the machinery from the Savannah port to Huntsville. The train carrying the machinery derailed en route, causing $1.5 million in damages. P's insurance company reimbursed P for the loss. P and its insurer then sued D asserting diversity jurisdiction and alleging tort and contract claims. D argued that P's potential recovery could not exceed the amounts set forth in the liability limitations contained in the bills of lading for the machinery's carriage. The District Court granted D's motion for partial summary judgment, holding that Norfolk's liability was limited to $500 per container. The District Court then certified its decision for interlocutory review pursuant to 28 U.S.C. § 1292(b). The Eleventh Circuit reversed. It held that D could not claim protection under the Himalaya Clause in the first contract, the ICC bill. The majority also suggested that 'a special degree of linguistic specificity is required to extend the benefits of a Himalaya clause to an inland carrier.' As for the Hamburg Sud bill, the court held that P could be bound by the bill's liability limitation 'only if ICC was acting as P's agent when it received Hamburg Sud's bill.' Applying basic agency law principles, the Court of Appeals concluded that ICC had not been acting as P's agent when it received the bill. D appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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