(2) In all other trades where the Hague Rules apply the Carrier's maximum liability shall in no event exceed $ : 100.00 lawful money of the United Kingdom per package or unit [with the identical "unless" clause].
Thus B P 6(1) mirrors B P 5(2)(a)'s incorporation by reference of COGSA (and more particularly Section 1304(5)) in that the former quite explicitly limits Maersk Line's potential liability to $ 500, while the latter would have imposed an identical limit if the damage had occurred while the Machine was in transit with Maersk Line itself. Indeed, Taisho has not contested that reading. Instead, the parties' disagreement ultimately centers on whether Bridge Terminal is also protected by the $ 500 limit under B P 6(1) coupled with B P 5(1).
Deriving its name from the name of the steamship involved in Adler v. Dixon,  1 Q.B. 158 (C.A. 1954), a "Himalaya Clause" is a bill of lading provision that extends the protections and immunities of a carrier to its agents and subcontractors. Maersk Line's Himalaya Clause is found in B P 3(2) and purports to extend protection to every "servant, agent, stevedore and sub-contractor" of Maersk Line. Taisho urges that Bridge Terminal is not within that language because the language is too vague and does not explicitly mention inland carriers among the parties covered.
There are to be sure some general principles of law disfavoring bill of lading provisions that would limit liability. Thus Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 305, 3 L. Ed. 2d 820, 79 S. Ct. 766 (1959), quoting the concurring opinion in Boston Metals Co. v. The Winding Gulf, 349 U.S. 122, 123-24, 99 L. Ed. 933, 75 S. Ct. 649 (1955), says:
Contracts purporting to grant immunity from, or limitation of, liability must be strictly construed and limited to intended beneficiaries, for they "are not to be applied to alter familiar rules visiting liability upon a tortfeasor for the consequences of his negligence, unless the clarity of the language used expresses such to be the understanding of the contracting parties."
And in the process of a court's determining that understanding, any ambiguity in such clauses must be construed in favor of the shipper and against the carrier who claims to be protected ( Citrus Mktg. Bd. of Israel v. J. Lauritzen A/S, 943 F.2d 220, 223 (2d Cir. 1991); Institute of London Underwriters v. Sea-Land Service, Inc., 881 F.2d 761, 767 (9th Cir. 1989)).
But while Herd expressly refused to extend a bill of lading's general protection to subcontractors in the absence of a Himalaya Clause, several Courts of Appeals that have since discussed Himalaya Clauses (our own has not) have held that Herd does not require every intended beneficiary to be mentioned specifically in such clauses. They have rather followed the principle explained in Certain Underwriters at Lloyds' v. Barber Blue Sea Line, 675 F.2d 266, 270 (11th Cir. 1982):
The [Herd] "clarity of language" requirement does not mean, however, that COGSA
benefits extend only to parties specifically enumerated in the bill of lading. It is sufficient that the terms express a clear intent to extend benefits to a well-defined class of readily identifiable persons. When a bill refers to a class of persons such as "agents" and "independent contractors" it is clear that the contract includes all those persons engaged by the carrier to perform the functions and duties of the carrier within the scope of the carriage contract. No further degree of clarity is necessary.
In addition to the reaffirmation of that approach by the same Circuit in Assicurazioni Generali and in Hiram Walker & Sons, Inc. v. Kirk Line, 877 F.2d 1508, 1516 (11th Cir. 1989), it has been adopted elsewhere in Taisho Marine & Fire Ins. Co. v. The Vessel "Gladiolus", 762 F.2d 1364, 1366-67 (9th Cir. 1985) and Barretto Peat, Inc. v. Luis Ayala Colon Sucrs., Inc., 896 F.2d 656, 660 (1st Cir. 1990).
As the Ninth Circuit's Taisho case reflects (762 F.2d at 1367), two factors enter into deciding the Underwriters at Lloyds' inquiry as to whether the agent or subcontractor was "engaged by the carrier to perform the functions and duties of the carrier within the scope of the carriage contract":
1. "the contractual relation between the party seeking protection and the ocean carrier" and
2. "the nature of the services performed compared to the carrier's responsibilities under the carriage contract."
Accord, Barretto Peat, 896 F.2d at 660. And in this instance both those factors support the conclusion that Bridge Terminal was acting as an agent of Maersk Line when the Machine was damaged.
First, Bridge Terminal was engaged directly by Maersk Line to transport the Machine from the Chicago railhead to the Chicago container yard (GR 12(m) P 11). Second, the document at issue is plainly a through bill of lading
intended to cover the shipment of the Machine during its entire journey from Tokyo to the container yard in Chicago. It is entitled "Combined Transport Bill of Lading" and lists "Chicago CY" as the Machine's "place of delivery" (GR 12(m) Ex. 1), and its B P 5 explicitly discusses the prospect of damage while the Goods are in the custody of inland carriers after having defined the scope of the Carrier's undertaking in these terms:
The Carrier undertakes responsibility from the place of receipt if named herein or from the port of loading to the port of discharge or the place of delivery if named herein. . . .
Hence Bridge Terminal's portion of the trip was unquestionably within the scope of Maersk Line's contractual obligation to Hamai, a conclusion additionally supported by the fact that Bridge Terminal did not issue a separate bill of lading to cover its portion of the transport (GR 12(m) P 11). Understandably the parties have agreed in GR 12(m) P 13:
Maersk was responsible for transportation of the Hamai container from Tokyo, Japan to its container yard in Chicago including the hiring of [Bridge Terminal]. . . .
As an agent engaged by Maersk Line to perform services within the direct scope of that responsibility, Bridge Terminal must perforce be viewed as an intended beneficiary of Maersk Line's Himalaya Clause.
Nor is that plain-language reading at odds with the three cases, all factually distinguishable in a material (that is, outcome-determinative) sense, that Taisho cites in support of its contrary position. One of those cases calls for a degree of explanation, while the other two cases require only brief discussion, to demonstrate that.
Caterpillar Overseas, S.A. v. Marine Transport Inc., 900 F.2d 714 (4th Cir. 1990) involved damage that occurred while a tractor was being transported by truck between two ports before its shipment overseas. Although the carrier had hired the trucker, Caterpillar, 900 F.2d at 726 held that the latter was not covered by a presumed Himalaya Clause extending protection to independent contractors as well as the carrier itself. But that case was an odd one in which there was no actual bill of lading issued, so that the court looked to the imputed terms of a presumptive document based on the parties' "long record of doing business with each other" ( id. at 719). And if that bit of fiction were not enough, the transportation by truck that led to the damage had not been anticipated--it resulted because the originally intended shipment via Vessel A from Port X had to be switched to a shipment via Vessel B from Port Y ( id. at 716-17). Even though none of those things was held sufficient to render the COGSA limitation of liability unavailable to the carrier itself ( id. at 719-24), the notion that the third-party trucker could invoke the same limitation was perceived by the court as a real strain on the language of the nonexistent document. And perhaps most importantly, the trucker was seeking to obtain the vicarious benefit of a limitation under COGSA's Section 1304(5)--by definition a maritime limitation.
Hence the Caterpillar court emphasized that any liability limitation had to relate by definition to the carrier's maritime services, though it might also extend to such of those services as might be farmed out to independent contractors. But the court found that the trucker in that case was engaged in activity far removed from the maritime setting, "hauling the tractor a score of miles over a federal highway" ( id. at 726):
Marine had both the custody and responsibility for the safety of the tractor while it was transporting the tractor in a truck owned and operated by it over a section of federal-state highway chosen by it and being operated by a driver hired and controlled by it. This is a far different situation than that of the stevedore whose services are rendered in the terminal facilities while engaged in actually loading directly the cargo on the ship. Stevedoring is essentially a maritime trade. Transporting cargo down a group of public highways for a stretch of miles, on the contrary, is not a normal maritime operation.
By contrast, here Bridge Terminal was performing the tag end of the activity that Maersk Line had contractually undertaken and had then--as permitted--partially subcontracted to Bridge Terminal. And Bridge Terminal is not looking to COGSA as its source of relief--as explained later, it cannot do so--but instead to the provisions of the bill of lading that extend limited liability beyond that statute. It would distort the language of the actual bill of lading here to exclude Bridge Terminal from the normal scope of its express references to "subcontractors" and "inland carriers." In sum, Caterpillar does not dictate a different conclusion here.
Little needs to be said to demonstrate just how inapposite the second case on which Taisho relies-- Lucky-Goldstar Int'l (America), Inc., v. S.S. California Mercury, 750 F. Supp. 141 (S.D.N.Y. 1990)--is to the situation here. In that case, the railroad involved (Conrail) had been hired by a third party and was not in any contractual relationship with the carrier itself ( id. at 146). Accordingly Conrail was held not to be among the carrier's "sub-contractors" for purposes of the carrier's Himalaya Clause (id.).9
Finally, Royal Ins. Co. v. Westwood Transpacific Service, 1990 U.S. Dist. LEXIS 19930 (W.D. Wash. 1990) also involved a railroad that provided part of the transportation of goods and sought to piggyback onto a Himalaya Clause in the maritime carrier's bill of lading. Because that "bill of lading by inference provides that [the railroad's] terms and conditions of carriage govern the inland transportation of the goods" (id. at *4), the railroad ran head-on into overriding statutory provisions that forbade its invocation of any such liability limitation--the Staggers Amendment (49 U.S.C. § 10505(e)) and Carmack Amendment (49 U.S.C. §§ 11707(c)(1) and (4) and 10730(c)), which are specially applicable to rail carriers (id. at *4 to *6). Again by contrast, no such superseding statutory bar operates to inhibit Bridge Terminal from calling the provisions discussed in this opinion into play. Just last week our Court of Appeals reconfirmed the inapplicability of the Carmack Amendment to through bills of lading "issued in a foreign country to govern a shipment throughout its transportation from abroad to its final destination in the United States" (Capitol Converting Equip., Inc. v. LEP Transp., Inc., No. 91-2658, slip op. at 4-5 (7th Cir. June 5, 1992))--the precise situation here--and the same principle applies to any attempted reliance on the Staggers Amendment.
Nor is this Court persuaded by Taisho's argument that Maersk Line's failure to give specific mention to inland carriers in B P 3(2) (the Himalaya Clause) while including them in B P 5 reflects an intention that such carriers should not be included in the Himalaya Clause coverage. In fact, the interrelationship between the two paragraphs supports the opposite conclusion. B P 3, entitled "Sub-Contracting," discusses subcontracting in general and states in that context that all contractual protections and limitations relating to liability (without purporting to define them) shall also extend to subcontractors. Then B P 5 in turn delineates those protections and limitations, discussing them in the two contexts of land and water transport. Thus by its explicit discussion of inland carriers, B P 5--the obvious referent of B P 3(2)'s "all limitations of and exonerations from liability"--makes it more plain, and not less so, that inland carriers were intended to be included among the parties covered by the B P 3(2) Himalaya Clause.
$ 500 Limit
Taisho also contends that even if the Himalaya Clause covers inland carriers, neither the B P 5(2) COGSA $ 500 limitation nor the B P 6(1) general $ 500 limitation applies to inland carriers. Taisho is right as to B P 5(2), which applies only:
where loss or damage has occurred between the time of receipt of the Goods by the Carrier at the port of loading and the time of delivery by the Carrier at the port of discharge, or during any prior or subsequent period of carriage by water. . . .
By contrast to that provision governing damage sustained during any transportation via water, any damage that has occurred "while the goods were in the custody of an inland carrier" is discussed in B P 5(1), which provides that in those circumstances:
the liability of the Carrier and the limitation thereof shall be determined in accordance with the inland carrier's contracts of carriage and tariffs, or in the absence of such contracts or tariffs, in accordance with the internal law of the state where the loss or damage occurred.
Because Bridge Terminal did not provide a separate bill of lading, its potential liability would therefore be determined in accordance with Illinois law, and it would not be affected by COGSA.
But the analytic journey does not end there. As already stated, B P 5 also provides in a later clause that covers both its subsections (1) and (2):
In no event shall the liability of the Carrier exceed the amount of compensation payable under Clause 6.
And the already-quoted B P 6 provides in relevant part:
For shipments to or from ports in the United States of America 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 $ 500.00 per package . . . unless the nature and value of such Goods have been declared by the shipper before shipment. . . .
Thus B P 6 necessarily limits B P 5(1), so that in this instance the inland carrier's liability is governed by Illinois law except that the liability may not exceed $ 500.
Taisho argues that B P 6 does not cover inland carriers because its limitation to "shipments to or from ports in the United States of America" makes it applicable only to damage that occurs during maritime transport. But that contention wars with the plain meaning of the contractual language.
First, as Maersk points out, the B P 6(1) reference to "shipments to or from ports in the United States" must be understood in light of the parallel B P 6(2) reference to "in all other trades where the Hague Rules apply." Those two clauses draw a distinction not between land and water shipment, but between shipment to and from the United States and shipment among other countries.
In addition, B P 6(1) precisely replicates the language of Section 1304(5), which sets out the COGSA $ 500 liability limitation. That being so, if B P 6(1) were to be read as if intended to apply only to damage that occurred on water in shipments to or from United States ports, it would be wholly redundant of B P 5(2)(a), which by its own terms makes COGSA expressly applicable to damage that occurs on water during shipment to or from the United States. In other words, the fact of B P 6(1)'s inclusion as a separate section, when read together with B P 5's equally express incorporation of B P 6 through the B P 5 "in no event" clause, teaches (1) that B P 6 must necessarily have some meaning other than a mere parroting of B P 5(2)(a) and (2) that such additional meaning of B P 6 is that it relates to both the land and water alternatives of B P 5. Because the B P 6 limitation thus squarely relates back to both B P 5(1) and B P 5(2), it covers Bridge Terminal's potential liability.
There is no genuine issue of material fact, and Maersk is entitled to a judgment as to its limited liability as a matter of law. Maersk Line is indisputably covered by the $ 500 liability limitation in its bill of lading. Bridge Terminal is also covered. It is an intended beneficiary of the bill of lading's Himalaya Clause, and the B P 6(1) $ 500 limitation applies to Bridge Terminal's overland portion of the trip. This action is set for a next status date at 9 a.m. on June 18, 1992 to discuss the procedures for arriving at a final judgment.
Milton I. Shadur
United States District Judge
Date: June 8, 1992