Union Pacific Railroad Company v. Plano Molding Company

782 F.3d 353, 2015 A.M.C. 1030, 2015 U.S. App. LEXIS 5212
CourtCourt of Appeals for the Seventh Circuit
DecidedMarch 31, 2015
Docket14-1171, 14-1189
StatusPublished
Cited by16 cases

This text of 782 F.3d 353 (Union Pacific Railroad Company v. Plano Molding Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Union Pacific Railroad Company v. Plano Molding Company, 782 F.3d 353, 2015 A.M.C. 1030, 2015 U.S. App. LEXIS 5212 (7th Cir. 2015).

Opinion

FLAUM, Circuit Judge.

On April 21, 2005, a Union Pacific freight train derailed in Oklahoma. The train was carrying two steel injection molds being delivered to Plano Molding Company in Illinois. The derailment occurred after the molds broke through the floor of their shipping container, causing that train car and many behind it to derail and resulting in approximately $4 million in total damage. The molds had been manufactured in China and shipped to the United States before being transferred to the Union Pacific train for the final leg of their journey.

At issue in this case is the reason that the molds broke through the floor. The appellants are three companies that were involved in the shipment of the molds and sustained losses from the accident: Kawasaki Kisen Kaisha, Ltd., “K” Line America, Inc. (collectively, “K-Line”), and Union Pacific Railroad Co. (“Union Pacific”). They sued Plano, claiming that Plano was at fault because a company it hired packed the molds into the shipping container improperly, causing the floor of the container to break and ultimately causing the derailment. If true, Plano would be liable to appellants for breach of a warranty found in a document known as the “World Bill of Lading,” which provided contractual terms for the shipment of the molds. Plano, in defense, argued that the molds were properly packed and that they fell through the floor of the container because the container was defective.

In a bench trial, the district court found in favor of Plano, concluding that appellants had not proved that the molds were improperly packed. The court also held that the derailment was in fact caused by deficiencies in the container. On appeal, the plaintiffs contest these factual conclusions, as well as a number of other aspects of the district court’s opinion. For the reasons set forth below, we affirm.

I. Background

Plano is an Illinois corporation that designs, manufactures, and sells plastic storage boxes. In 2004, Plano identified a need to purchase two new steel injection molds, which it uses to manufacture its plastic boxes, and so it contacted CMT International, Inc. (“CMT”), a company that assists customers in the United States who wish to purchase products from Asia. CMT provided Plano with bids, and Plano selected Kunshan Yuanjin Plastic & Electronic Co., Ltd. (“Kunshan”), a Chinese company, to make the molds. Kunshan manufactured the molds and loaded them into wooden crates.

*356 Plano hired World Commerce Services (“World”), 1 a non-vessel operating common carrier, 2 to arrange for the shipment of the molds from China to Plano’s factory in Illinois. World then contracted with the THI Group LTD (“THI”) and K-Line for the physical shipment of the molds. THI, in turn, hired Shanghai Haixing Yuancang Container Transportation Co. (“Haixing”) to load the molds into an intermodal shipping container and hired Shanghai Ocean Tally Company as a “checker,” which ensured that the molds were properly loaded. That shipping container carried Plano’s molds (inside of their wooden crates) from the moment they were packed in China until the Union Pacific train derailed in Oklahoma. Both World and K-Line issued bills of lading covering the shipment of the molds. K-Line handled the ocean part of the voyage, but subcontracted the overland movement of the molds within the United States to Union Pacific. Once the shipping container carrying Plano’s molds arrived' in the U.S., it was transferred from K-Line to Union Pacific, which began transporting the container by train from California to Illinois. During the voyage, the molds somehow broke through the floor of the shipping container, causing the train to derail in Oklahoma. The accident caused approximately $2 million in damage to the cargo of K-Line’s customers and $2 million in costs to Union Pacific.

Appellants sued in federal court, attempting to hold Plano liable for certain damages caused by the derailment and seeking indemnification for claims made against appellants by third parties who suffered damages in the accident. The district court initially granted summary judgment in Plano’s favor on all of appellants’ claims, but this court reversed on one claim — a breach of contract claim based on a warranty in the bill of lading issued by World. Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co., 696 F.3d 647, 657-58 (7th Cir.2012). We remanded to the district court to determine whether Plano was subject to the terms of the World Bill of Lading. After a one-day trial, the district court held that Plano was bound by the World Bill of Lading and could be held liable to appellants if it violated the terms of that agreement. Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co., No. 07 C 5675, 2013 WL 3791609, at *8 (N.D.Ill. July 19, 2013) {“Kawasaki I”). Plano does not appeal that ruling.

The district court then held a three-day trial to determine whether Plano breached Clause 10(2) of the World Bill of Lading, which states:

If Carrier receives the goods already packed into containers:
(2) Merchant warrants that the stowage and seals of the containers are safe and proper and suitable for handling and carriage and indemnifies Carrier for any injury, loss, or damage caused by the breach of this warranty

Plano, the parties agree, was a “Merchant” as defined in Clause 2(3) of the World Bill of Lading. The World Bill of Lading defined World as the “Carrier,” but Clause 3 *357 provides that World’s contractors and subcontractors — including all of the appellants — are entitled to all of the Carrier’s rights under the Bill of Lading.

The trial consisted largely of expert testimony. Appellants sought to prove that Plano breached Clause 10(2) by improperly stowing and securing the molds in the shipping container. 3 There was no direct evidence of how the molds were packed into the container, and neither party presented witnesses who were involved in the loading of the container. That is in part because the container was packed in China, making it difficult to obtain this information.

The derailment itself also made it very difficult to determine after the fact how the container had been loaded. Much of what was inside of the container before the crash ended up outside of it, spread over the miles-long crash site. About 60% of the floor of the container was missing after the accident, allowing much to fall out during the derailment. There was, however, some physical evidence about the stowage of the molds. Together, the two molds weighed 25,000 pounds, and each was packed into its own wooden crate. One mold was much'larger than the other — it weighed 18,900 pounds, while other weighed 6,100 pounds. When packing shipping containers, packers use wooden pallets, wooden beams, and other types of dunnage (all types of inexpensive waste materials) to support and distribute the weight of cargo. After the derailment, all that was found in the shipping container was one 43-inch long wooden pallet, which presumably supported, at least in part, the weight of one of the crates.

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782 F.3d 353, 2015 A.M.C. 1030, 2015 U.S. App. LEXIS 5212, Counsel Stack Legal Research, https://law.counselstack.com/opinion/union-pacific-railroad-company-v-plano-molding-company-ca7-2015.