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Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co.

United States District Court, Seventh Circuit

December 30, 2013




Before the Court are the trial record and post-trial briefs of Plaintiffs Kawasaki Kisen Kaisha, Ltd. and "K" Line America, Inc. (hereinafter, collectively, "K-Line"); Plaintiff Union Pacific Railroad Co. ("UP"); and Defendant Plano Molding Co. ("Plano"). For the reasons stated herein, the Court finds in favor of Defendant.


As the factual background of this dispute has been described repeatedly, see, e.g., ECF No. 78, only a cursory review of the underlying facts is provided here.

Plano is an Illinois corporation that designs, manufactures, and sells plastic storage boxes. Plano contacted CMT International ("CMT"), a company that assists American customers who wish to purchase products from Asia, because it needed new molds. CMT solicited bids from manufacturers, and Plano selected Kunshan, a Chinese company, as its fabricator for two steel molds ("Molds") for its Illinois factory.

World Commerce Services LLC ("World") was selected to coordinate the Molds' transportation from China to the United States. The World Bill of Lading identifies Plano as the consignee. Plano received the World Bill of Lading on April 3, 2005. It contained a "Himalaya clause" that grants World's subcontractors all warranties and indemnities defined in the bill of lading. Under Section 2.3, a "Merchant" is defined as "the Shipper, the Receiver, the Consignor, the Consignee, the Holder of this Bill of Lading and any person having a present or future interest in the Goods or any person acting on behalf of any of the above-mentioned persons." Ex. 79. According to the World Bill of Lading, if any party other than World packs the shipping container, the Merchant warrants "that the stowage and seals of the containers are safe and proper and suitable for handling and carriage and indemnifies [World] for any injury, loss or damage caused by breach of this warranty." Id.

As the freight forwarder, World contracted with THI Group LTD ("THI") and K-Line to ship the Molds from China to Illinois. K-Line, in turn, subcontracted shipping within the United States to UP. The Molds were packed into two crates of different sizes, weighing collectively about 25, 000 lbs. These were then loaded into a large shipping container (the "Container") owned by K-Line. The Molds were on a UP train moving through Oklahoma on April 21, 2005 when the Molds broke through the bottom of the Container and fell onto the track while the train was in transit at approximately 70 m.p.h. The train derailed, causing $4 million of damage to UP and K-Line customers. Plaintiffs claim that the Molds were not secured properly in the Container and were the cause of the derailment. They seek to hold Plano liable for the damage caused by the accident pursuant to the World Bill of Lading.


Following the derailment of the UP train, various Complaints were filed in the Southern District of New York by owners of cargo damaged by the derailment, as well as among the parties to this suit. K-Line filed an action in this District against Plano and CMT, but it was consolidated for pre-trial proceedings in the Southern District of New York with eight other actions. All other claims settled, leaving only Plaintiffs' suit against Plano, which the Southern District of New York transferred back to this District.

On July 27, 2011, this Court granted Plano's Motion for Summary Judgment on Plaintiffs' breach of contract and negligence claims, finding that because it was not a party to the K-Line bill of lading, nor a principal of a party to the bill of lading, it could not be bound by it. Plaintiffs appealed, and the Seventh Circuit affirmed the Court's decision regarding the negligence claims and Plaintiffs' breach of contract claims under the K-Line bill of lading. However, the Seventh Circuit found unresolved questions of fact material to the determination of Plaintiffs' contract claims based on World's Bill of Lading. The court stated that, in analyzing Plaintiffs' contention that Plano is bound by the terms of the World Bill of Lading as a contracting party, "we must consider Plano's role in obtaining World as the freight forwarder for the molds' transportation." Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co., 696 F.3d 647, 656 (7th Cir. 2012). The Seventh Circuit found this question important, because "if Plano engaged World to handle the shipment on its own behalf, it could be found liable to K-Line and Union Pacific by the plain terms of the World Bill of lading." Id. The Court found the evidence surrounding the Plano/CMT/World transaction "murky at best, " and concluded that conflicts in the record created a material question of fact that required remand. Id. As such, the Seventh Circuit concluded:

On this record, we are unable to ascertain whether CMT or Plano arranged the molds' shipment with World. Without this determination, we cannot conclude whether or not Plano engaged World in a manner that would impose liability as a contracting party, and subject Plano to liability under the World bill of lading. As to this narrow issue, we reverse the district court's grant of summary judgment and remand for further consideration.

Id. at 657-58.

On June 24, 2013, the Court conducted a one-day bench trial focusing on the narrow issue raised by the Seventh Circuit with respect to the World Bill of Lading. Plaintiffs and Plano presented both live and deposition testimony regarding the Plano/CMT/World transaction. After the trial concluded, the Court ruled that Plano was bound to the World Bill of Lading and could be held liable to Plaintiffs pursuant to the Merchant and Himalaya clauses in the World Bill of Lading. See, Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co., No. 07 C 5675, 2013 U.S. Dist. LEXIS 101118 (N.D. Ill. July 19, 2013).

The parties had earlier stipulated to delaying determination on causation and damages until after the Court ruled on whether Plano was subject to the World Bill of Lading. Having resolved that issue in the affirmative, the Court set the matter for trial on causation and damages. However, just days before trial began, the parties stipulated to referring the issue of damages calculation to a magistrate judge, should it be necessary. ECF No. 193. Thus, on October 15, 2013, the parties began a three-day trial to determine whether Plano was indeed liable for the accident, and if so, for what categories of damages it was liable.

The trial was a classic "battle of the experts, " with the vast majority of the testimony focusing on presenting evidence and testimony supporting or contesting the expert opinions of the parties. Plaintiffs' expert, Dr. Robert Vecchio, presented his opinion that the crates containing the Molds were loaded improperly into the Container in a manner that did not distribute their weight sufficiently, which overstressed the metal cross-members supporting the floor of the container. According to Dr. Vecchio, the crates were not lashed, and thus experienced "dynamic amplification, " which means, in simple terms, that they bounced. This bouncing increased the stresses on the cross-members until they failed.

Plano responded with the testimony of three experts. Their primary expert, Mitchell Kaplan ("Kaplan"), testified that the cause of the failure was not the loading of the crates or dynamic amplification, but instead the defective condition of the Container. Specifically, the welds fixing the cross-members to the side of the container were defective, which made them weak and unable to withstand the amount of stress they otherwise would. Plano also presented the testimony of two other expert witnesses, Thomas Johnson and Dr. John Slater, who testified to, among other topics, the poor condition of the welds.

Following the witness' testimony, the Court then directed the parties to submit post-trial closing briefs. The parties each filed one closing brief, and a second brief regarding the types of damages at issue in the case.


A. Evidentiary Rulings

Prior to trial, the parties filed Motions in Limine seeking to bar expert testimony pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and various Federal Rules of Evidence. The Court denied the Motions, noting that there is less of a need for the Court to serve as a "gatekeeper" as to expert testimony during a bench trial, since the Court can weigh the expert testimony appropriately while deciding the case. See, Tr. at 4; see also, United States v. Brown, 415 F.3d 1257, 1269 (11th Cir. 2005) ("There is less of a need for the gatekeeper to keep the gate when the gatekeeper is keeping the gate only for himself."). Despite this ruling, the parties in their closing briefs again encourage the Court to exclude expert testimony as improper under Daubert. The Court declines to do so. The Court found all of the experts qualified and their testimony proper for consideration. However, as discussed below, the Court did consider the methods and analyses used by each expert and weighed what testimony it found most persuasive and credible, keeping their credentials and expertise in mind.

There is one other expert issue that the Court feels compelled to address. Plaintiffs did not learn that Plano intended to call Mr. Johnson and Dr. Slater as witnesses until October 4, 2013, eleven days before trial. These disclosures are clearly late under Federal Rule of Civil Procedure 26. Plaintiffs argued that since they were unable to depose these individuals prior to trial due to their late disclosure, that their testimony should be struck.

Under Federal Rule of Civil Procedure 37, "if a party fails to provide timely expert disclosures as required under Rule 26, exclusion of the untimely expert opinion is proper unless the party shows that its late disclosure was justified or harmless." Willis v. Sears Holdings Mgmt. Corp., No. 10 C 5926, 2012 U.S. Dist. LEXIS 128208 at *17 (N.D. Ill. Sept. 7, 2012). Plano made no effort to justify the late disclosure of these witnesses. Despite this failure, however, the Court finds the tardy disclosure harmless. These witnesses are not new to this controversy. Mr. Johnson and Dr. Slater both served as experts for parties involved in earlier stages of this dispute. Thus, the substance of their testimony was not a total surprise to Plaintiffs, as they have had access to Mr. Johnson and Dr. Slater's expert reports for more than five years. Indeed, Plaintiffs' expert, Dr. Vecchio, issued a rebuttal report in 2008 in response to those reports. The Court is convinced that the Plaintiffs suffered no undue surprise or prejudice by the tardy disclosure.

Finally, the parties presented the Court, in their First Amendment to Pretrial Order (ECF No. 188), with a number of objections to evidence and testimony. The Court considered and ruled on some of these objections during trial. Rather than go through and rule on any outstanding objections, the Court will address below ...

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