Divided Fourth Circuit Panel Rules No Carmack Amendment Limitation for Damaged Shipment

A divided panel of the U.S. Court of Appeals for the Fourth Circuit, ruled today that a rail carrier was responsible for all damage caused during shipment to a $1.3 million electrical transformer. The Opinion in ABB Inc. v. CSX Transportation, Inc. is attached here. The majority of the three-judge panel held that the railroad had not limited its liability under the Carmack Amendment (49 U.S.C. sec. 11706). Holding that in order to overcome the default posture of the Carmack Amendment, which imposes all liability for losses in shipment on the carrier, the Court explained "the carrier and the shipper must have a written agreement that is sufficiently specific to manifest that the shipper in fact agreed to a limitation of liability." The Court's decision turned largely on the absence of a specific reference to the carrier's rate terms on the Bill of Lading issued by the shipper. The shipper-issued bill of lading did not reference the carrier's price publication, and the shipper acknowledged its own computer program prevented it from inserting the price code referencing the carrier's terms. However, the bill of lading did state that the shipper was aware of all carrier terms covering the shipment. Therefore, even though bill of lading generated by the shipper stated it was bound to the carrier terms covering the movement, because there was no actual reference the carrier's price terms, the Court found the parties did not actually agree in writing to limit the carrier's liability. One interesting portion of the majority opinion is the discounting of the word "tariff" as an out dated term no longer operative in a de-regulated rail industry. Noting that prior to de-regulation, shippers were held to have constructive knowledge of published rail tariffs, the Court distinguished the current practice where rail tariffs are no longer required to be published with the government, but rather are available from carriers by request. Terming the phrase "tariff" as used in the shipper's own bill of lading as "generic and outdated" the majority simply did not consider the limitation of liability specific enough. In a strongly-worded dissent, Circuit Judge Agee pointed out that the shipper was essentially seeking relief from the contract it drafted, i.e. the bill of lading, which incorporated by reference the carrier rate rules which limited liability. Taking issue with the majority's view that "tariff" terms are generic and outdated, and referring to the shipper-generated bill of lading referencing agreement to the carrier's terms, the dissent stated, "Nothing in the Carmack Amendment requires the carrier to hold the shipper harmless from the shipper's negligence, particularly where the carrier has every reason to take the shipper at its word."

Fourth Circuit Holds Piracy Means an Attack, not Just Seizing a Vessel

Yesterday, the U.S. Court of Appeals for the Fourth Circuit in Richmond, VA, upheld the first piracy convictions in a U.S. Court in nearly 200 years. In U.S. v. Abdi Wali Dire, the Court rejected the arguments by convicted Somali pirates that their life sentences should be overturned because their unsuccessful attack on a U.S. warship did not constitute piracy under the law.

Attached here is a press release about the decision from the U.S. Attorney's Office for the Eastern District of Virginia.

The cases arise from the April 1, 2010 attack by a group of Somali Pirates on the USS Nicholas in the Indian Ocean.

The legal issue before the Court was whether the Somalis' failed attack on the USS Nicholas constituted piracy under 18 U.S.C. sec. 1651, which states:

Whoever, on the high seas commits the crime of piracy as defined by the law of
nations, and is afterward brought into or found in the Unites States, shall
be imprisoned for life.

Under cases dating from the original enactment of sec. 1651's predecessor in 1819, piracy had been defined as "robbery upon the sea." United States v. Smith, 18 U.S. (5 Wheat.) 153 (1820). Reasoning that piracy was defined by statute under the "law of nations" the Court looked to two international agreements, the Geneva Convention on the High Seas (1958, ratified by U.S. in 1961), and the United Nations Convention on the Law of the Sea (UNCLOS - 1982), which has not been ratified by the U.S. Both conventions define piracy to include "illegal acts of violence."

Ultimately, the Court found that the 1819 definition of piracy, requiring an act of robbery, was inconsistent with the evolution of the law of nations as to piracy since 1819, and that even in 1819, violent acts themselves were considered piracy.

The opinion, by Judge King (of W.Va. I might add) offers an interesting, and detailed history of the treatment of piracy in the U.S., and the international evolution of its prosecution.

Fourth Circuit Requires Foreign Seaman to Arbitrate Claims in Home Country

The U.S. Court of Appeals for the Fourth Circuit (based in Richmond, VA), ruled on March 16, 2012, that a Filipino seaman injured in the U.S., was required by his employment contract to arbitrate his injury claims in the Philippines. The Court's decision rested largely on the application of the "Convention Act" 9 U.S.C. sec. 201, which recognizes and enforces commercial arbitration agreements in international contracts. The Fourth Circuit, in line with prior rulings by the 9th and 11th Circuit Courts, ruled that the Convention Act, and hence the arbitration agreement in the employment contract, supplanted the Seaman's Wage Act (46 U.S.C. 10313), and required arbitration of the wage and other claims.

Addressing the injured seaman's Jones Act claim, and specifically his argument that requiring arbitration would contravene U.S. public policy by denying him access to U.S. law under the Jones Act, the Court did not entirely foreclose a public policy argument. What the Court did was to find that a public-policy argument (i.e. a non-U.S. arbitration could deprive the injured seaman of a Jones Act remedy), could be made only after an arbitration award was made, in what it termed the "award-enforcement stage."

Ultimately the Court also found the lower court (U.S. District Court/Maryland), erred in its dismissal of the case even though it agreed with the lower court's enforcement of the arbitration requirement. The Fourth Circuit held that the District Court could retain jurisdiction over the case after the arbitration award stage to later consider the policy arguments made by the seaman.

The Court also found the District Court could retain jurisdiction over the seaman's request for injunctive relief regarding maintenance and cure benefits, which the District Court had denied as moot when it ordered arbitration.