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Kawasaki Kisen Kaisha, Ltd., and "K" Line America, Inc v. Plano Molding Co

July 27, 2011

KAWASAKI KISEN KAISHA, LTD., AND "K" LINE AMERICA, INC., PLAINTIFFS, AND UNION PACIFIC RAILROAD CO., INTERVENING PLAINTIFF,
v.
PLANO MOLDING CO., DEFENDANT.



The opinion of the court was delivered by: Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court is Defendant Plano Molding Co.'s ("Plano") Motion for Summary Judgment. Plaintiffs Kawasaki Kisen Kaisha, Ltd. ("KL") and "K" Line America, Inc. ("KAM") (collectively, "KLine"), as well as intervening plaintiff Union Pacific Railroad Co. ("Union Pacific") (collectively the "Plaintiffs"), have brought breach of contract and negligence claims against Plano. They seek to hold Plano liable for damages suffered by Plaintiffs in a Union Pacific train derailment and seek indemnification for claims made against Plaintiffs by others who suffered losses in the derailment. Plaintiffs allege the derailment occurred because steel injection molds ordered by Plano broke through their shipping container and the floor of the rail car and fell onto the rail bed, where they were struck by the next railcar. For the reasons that follow, Plano's Motion for Summary Judgment is granted.

I. BACKGROUND

The instant case was originally brought by K-Line as a Third--Party Complaint against Plano and CMT International, Inc. ("CMT") in the Southern District of New York in response to a lawsuit against Plaintiffs by Indemnity Insurance Co. seeking to recover for cargo shipments damaged in the train derailment. Because that court did not have personal jurisdiction over Plano and CMT, the suit was dismissed and re--filed in this Court. The Multi-District Litigation Panel subsequently transferred the case to the Southern District of New York pursuant to 28 U.S.C. § 1407(a) for consolidated pretrial proceedings with other cases involving common questions of fact. Those consolidated proceedings have concluded, and the case has been returned to this Court to decide Plano's fully briefed Motion for Summary Judgment.

The following facts are taken from the parties' Local Rule 56.1 statements, deposition testimony, and exhibits. Plano is an Illinois corporation that designs, manufactures, and sells storage boxes, including fishing tackle boxes, tool boxes, and cosmetic organizers. Plano uses steel injection molds to make these products. In November 2004, Plano decided to order two new injection molds and sent out specification sheets to various mold makers, including CMT. CMT obtained price specifications from Kunshan Yuanjin Plastic & Electronic Co., Ltd. ("Kunshan"), a Chinese company. Kunshan manufactured the steel molds at issue here.

At the request of Plano, CMT retained World Commerce Services, LLC, ("World"), a non-vessel operating common carrier, which in turn arranged the shipment of the steel molds from China to Illinois. (Non-vessel common carriers are middlemen who consolidate cargoes belonging to many different shippers and charter a ship to carry them.) World then contracted with THI Group, Inc. ("THI"), a Chinese corporation, to handle the booking of the shipment of steel molds. THI contracted with KL, a Japanese corporation that is an ocean common carrier, to transport the steel molds from Shanghai to Illinois.

World issued a bill of lading identifying Kunshan as the shipper and Plano as the consignee, or the entity designated to receive goods from the carrier. KL issued a waybill that identified THI as the shipper and World as the consignee. The KL waybill incorporated the terms and conditions of KL's bill of lading.

Kunshan loaded the steel molds into wooden crates. KL supplied the shipping container for the molds. THI loaded the steel molds into the shipping container and delivered the sealed container to KL. After receiving the container, KL transported it to California, transferring the molds to Union Pacific in Los Angeles. Union Pacific then began transport of the molds from California to Illinois, where they were to be delivered to Plano.

While en route, the train derailed near Tyrone, Oklahoma, on April 25, 2005. Plaintiffs allege the derailment was caused by the improper loading of the steel molds in their shipping container. Specifically, they contend that the molds were packed in a manner that concentrated their weight in too small an area. For the purposes of this motion, Plano does not dispute Plaintiff's theory as to the cause of the derailment. The derailment damaged KL's shipping containers, as well as the Union Pacific's tracks, railcars and other equipment. Plaintiffs settled virtually all of the cargo claims, and now seek indemnity from Plano under the indemnity provisions of the KL and World bills of lading.

II. LEGAL STANDARD

Plaintiffs assert admiralty jurisdiction under 28 U.S.C. § 1333, so the Court will apply federal maritime law. In re M/V Rickmers Genoa Litigation, 622 F.Supp.2d 56, 64 (S.D.N.Y. 2009); see Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 24--25 (2004)(finding bills of lading to involving overseas shipment of goods to be maritime contracts where the last leg of the journey was by rail).

Summary judgment is appropriate even though the record shows that there is no genuine dispute as to an issue of material fact. FED. R. CIV. P. 56(a). This means that if, after adequate time for discovery, the non-moving party cannot establish the existence of an element essential to that party's case, and on which the party bears the burden of proof, summary judgment should be granted. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In addressing a motion for summary judgment, the court must review the record in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Vanasco v. National-Louis Univ., 137 F.3d 962, 965 (7th Cir. 1998). However, a genuine issue of fact is not shown by "some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists only if a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

III. ANALYSIS

Plaintiffs' breach of contract claims rest on obligations they assert Plano owed them under the World and KL bills of lading, while their negligence claims contend that Plano knew, or should have known, that the steel molds posed a significant risk of harm if they were not properly loaded, ...


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