Defendant's Attorney: Paul J. Hemming, Mark F. Rosenberg, Timothy R. Thornton
Description: Joe Whatley, Trustee of the wrongful death claimants' trust (WD Trust),appeals the district court's order finding that his claim under the CarmackAmendment, 49 U.S.C. § 11706, against Canadian Pacific Railway was untimely. Wereverse and remand for further proceedings.
On June 29, 2013, a train carrying crude oil left New Town, North Dakota,destined for an oil refinery near Saint John, New Brunswick, in Canada. The bill oflading for the train's cargo designated Western Petroleum Company1 (WFE) as theshipper, Irving Oil Ltd. as the consignee, and Canadian Pacific Railway (CP) as thecarrier. (CP is the parent company of the other rail defendants, including Soo LineRailroad Company, and we will refer to the defendants collectively as CP). The billof lading was drafted and issued by CP and accepted by WFE through an onlineprocess. The online form did not indicate or designate any particular tariffs, pricelists or any limitations of liability by CP. Soo Line transported the train from NewTown, North Dakota, to just over the Canadian border. From there, Canadian Pacifictook the train to its rail yard outside of Montreal, Quebec, where it turned the trainover to Montreal Maine & Atlantic Railway (MAR) Canada.
Around midnight on July 5, 2013, MAR parked the train on the main tracks andleft it unattended. At some point early in the morning of July 6, 2013, the unattendedtrain began rolling downhill toward Lac-Mégantic, Quebec. As the runaway trainentered Lac-Mégantic, sixty-three of the train's seventy-two tanker cars derailed,spilling crude oil and causing a series of massive explosions. The derailment andsubsequent explosions killed approximately forty-seven people and destroyed nearlythe entire town of Lac-Mégantic. Obviously, neither the tanker cars nor the cargomade it to the intended destination and Irving did not receive the shipment.
On August 7, 2013, MAR filed for bankruptcy protection. On November 5,2013, WFE sent a notice of damages related to the derailment to CP. This letternotified CP that it was making a claim under Canadian law, and expressly stated that
1Western Petroleum is one of several related entities that we collectively refer
to as the World Fuel Entities (WFE).
it was not making a claim under the Carmack Amendment. See 49 U.S.C. § 11706(codifying the exclusive remedy for the liability of rail carriers under receipts andbills of lading). This WFE letter further stated that a Carmack Amendment claimwould be sent at a later date. On November 27, 2013, CP responded to WFE bydenying the Canadian claim, and by noting that the Canadian claim was indeed nota claim pursuant to the Carmack Amendment. CP also stated in the November 27denial that,
even if [WFE] were to submit a proper Carmack Amendment claim, CP'sliability, if any, could not exceed the value of the lading (crude oil) andwould not encompass rail-car damage claims or indemnity against third-party tort or governmental environmental claims. Those mattersunquestionably go beyond the value of the property that CP received fortransportation.
Appellant's App. at 1944.
On April 4, 2014, WFE sent a notice of claim to CP under the CarmackAmendment for all damages arising out of the derailment, including any amounts thatWFE might be liable for to injured parties or for environmental cleanup. CP sent aletter in response to WFE on April 24 acknowledging that the April 4 claim wasproper notice for the Carmack Amendment claim, and that WFE's November 5 claimwas under Canadian law, but ultimately disallowing the Carmack Amendment claimbased upon WFE's alleged negligent conduct.2
2In its November 2013 and April 2014 denial letters, CP references several
different tariffs, including ones that allegedly incorporate the Uniform Straight Bill
of Lading. Addendum at 21-24; 28-31. However, the actual tariffs or their contents
are apparently not in the record. In a submission to a Canadian Minister of the
Environment, WFE references a similar tariff which allegedly incorporates the
Uniform Straight Bill of Lading. App. at 2246.
Irving sent CP a letter on April 16, 2015, notifying it of potential derailmentclaims under various laws, including the Carmack Amendment. CP did not respondto Irving's letter. In October 2015, a bankruptcy court in Maine confirmed the MARbankruptcy plan, and the federal district court in Maine adopted this order. CPwithdrew its objections to confirmation of the plan. As may be relevant, thebankruptcy plan tolled any and all applicable limitations periods.
WFE and Irving settled its negligence claims against MAR's Chapter 11Trustee and the Canadian insolvency monitor for $110 million U.S. dollars and $75million in Canadian currency, respectively. The Trustee assigned Whatley, theTrustee of the WD Trust, the rights of both WFE and Irving to bring any possibleclaims against CP under the Carmack Amendment. Whatley brought claims pursuantto the Carmack Amendment in the District Court of North Dakota on behalf of WFEand Irving on April 12, 2016. CP filed an answer to the complaint in May 2016, anda motion for judgment on the pleadings or in the alternative, for summary judgment,in November 2016, seeking to dismiss the Carmack Amendment claims as untimelyand for other reasons. In March 2017, the district court granted the motion. Thecourt rejected Whatley's arguments that CP was barred by res judicata from denyingthe claims because it did not object when the bankruptcy Trustee was consideringwhether to assign the Carmack Amendment claims to the WD Trust. The courtdetermined that it should consider WFE's and Irving's claims separately, and ruledthat WFE's Carmack Amendment claim was untimely because suit was not filedwithin two years of the denial letter sent by CP on November 27, 2013. The courtfurther held that while Irving had standing to pursue its claim, it was also untimelybecause it did not provide notice of the claim within nine months of the incident. Thedistrict court did not specify whether the ruling was on the pleadings or on summaryjudgment grounds. Whatley appeals.
A motion for judgment on the pleadings is reviewed de novo and should begranted only if the moving party has clearly demonstrated that no material issue offact remains and the moving party is entitled to judgment as a matter of law. Elnashar v. U.S. Dep't of Justice, 446 F.3d 792, 794 (8th Cir. 2006). We construe the facts inthe complaint as true, and all reasonable inferences are drawn in the plaintiff's favor. Id. When matters outside the pleadings are considered by the court, the motion shallbe treated as one for summary judgment. McAuley v. Fed. Ins. Co., 500 F.3d 784,787 (8th Cir. 2007).
The Carmack Amendment "imposes upon 'receiving rail carrier[s]' and'delivering rail carrier[s]' liability for damage caused during the rail route under thebill of lading, regardless of which carrier caused the damage." Kawasaki KisenKaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 98 (2010) (alterations in original)(quoting 49 U.S.C. § 11706(a)). Its purpose is to relieve cargo owners "of the burdenof searching out a particular negligent carrier from among the often numerous carriershandling an interstate shipment of goods." Reider v. Thompson, 339 U.S. 113, 119(1950). To help achieve this goal, the Carmack Amendment constrains carriers'ability to limit liability by contract. 49 U.S.C. § 11706(c).
As noted, a claim under the Carmack Amendment is the exclusive remedy torecover under a bill of lading. The statute sets forth the following language regardingwhen claims for recovery can be made:
A rail carrier may not provide by rule, contract, or otherwise, a periodof less than 9 months for filing a claim against it under this section anda period of less than 2 years for bringing a civil action against it underthis section. The period for bringing a civil action is computed from thedate the carrier gives a person written notice that the carrier hasdisallowed any part of the claim specified in the notice.
49 U.S.C. § 11706(e) (emphasis added). Thus, the statute sets forth the floor–theminimum period which a carrier must give the shipper to give notice of a claim undersection 11706. See Louisiana & W. R.R. Co. v. Gardiner, 273 U.S. 280, 284 (1927)(noting that similar language from an earlier version of the Carmack Amendment wasnot "intended to operate as a statute of limitation" but rather was meant to "restrictthe freedom of carriers to fix the period within which suit could be brought"). Anappendix to the implementing regulation, 49 C.F.R. pt. 1035, on the other hand,appears to set forth a clear time limitation. See 49 C.F.R. pt. 1035, App. B, § 2(b)(stating that when a carrier fails to deliver cargo, "[a]s a condition precedent torecovery, claims must be filed in writing with the [carrier] . . . within nine monthsafter a reasonable time for delivery has elapsed" and further specifying that a lawsuitmust be filed "within two years and one day from the day" the carrier gave writtennotice denying the claim). The regulation states that rail carriers "are required to usestraight bills of lading as prescribed in Appendix . . . B." 49 C.F.R. pt. 1035.1(a).3 The record in the instant matter contains a rather generic bill of lading but there isnothing specific in the bill of lading in this record about whether the parties agreedto the uniform language set forth in the regulation.
Whatley pleaded a prima facie case under the Carmack Amendment by settingforth facts establishing: (a) that WFE delivered the cargo to CP in good order and
3However, we are perplexed by the fact that this regulation appendix language
seems to mandate a nine-month notice and two-year lawsuit ceiling when the
unambiguous statute sets a floor for these same time limits. This makes the
regulation completely at odds with the statute; for instance, the regulation requires
that notice of a claim be given within nine months, while the statute clearly states that
a carrier may not provide a period of less than nine months for filing a claim. 49
C.F.R. pt. 1035, App. B, § 2(b); 49 U.S.C. § 11706(e). However, the validity of this
particular regulation has not been called into question in this case and we express no
opinion on the subject.
condition; (b) that the cargo did not arrive; and (c) the amount of damages incurred. See Mo. Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 138 (1964) (listing elementsof prima facie case under the Carmack Amendment). Thus, if the district court erredin finding the claim to be untimely, reversal is warranted at this stage of theproceedings–either judgment on the pleadings or summary judgment. AlthoughWhatley has been assigned the right to bring claims for both entities, because WFEand Irving are somewhat differently situated, we discuss them separately.
As stated, it is unclear from the current record whether the parties agreed to theuniform language from the regulation appendix setting a nine-month time period fornotice, and a two-year (and a day) time limit for filing suit from the date that theclaim was denied. Because of the outcome of our WFE analysis, we will assume thatthose time limits did, indeed, apply to WFE in this case. Given that assumption,unless the November 2013 exchange of correspondence between WFE and CP canbe construed as a claim and a denial under the Carmack Amendment, WFE's claimbased upon the claim letter and denial in April 2014 make Whatley's April 2016lawsuit timely in any event.
Whatley alleges that the claims in the complaint were timely pursuant to theApril 4, 2014, notice, the April 24, 2014, response and the filing of this April 12,2016, suit in federal court. It is clear that WFE timely filed its notice of claim bysending its Carmack Amendment notice on April 4, 2014. The incident occurred onJuly 7, 2013. April 4 is less than nine months later. Thus, the essence of WFE'sdispute centers on the effect of the November 27, 2013, denial issued by CP forWFE's Canadian claims. If, as CP asserts, the November denial was a blanket denialof all claims, including any possible future Carmack Amendment claims, the two-year"limitations" period bars Whatley's claim because it ran in November 2015. If,however, the November 2013 denial did not affect the future, as-yet-to-be-asserted
Carmack Amendment claims, the suit was timely brought within two years of the CPdenial in April 2014.
CP alleges WFE's written notice in November 2013 started the two-year clock,and the fact that the November 5, 2013, letter from WFE specifically disclaims anyreference to a Carmack Amendment claim does not matter because the notice of claimneed not reference the Carmack Amendment; instead, CP asserts, any form of claimdenial starts the limitations period, citing Adams Express Co. v. Croninger, 226 U.S.491 (1913); Gulf Rice Arkansas, LLC v. Union Pacific Railroad Co., 376 F. Supp. 2d715 (S.D. Tex. 2005); Zarnoski-McCathern v. Eagle Van Lines, No. 04-CV-0155,2005 WL 292439 (N.D. Tex. Feb. 8, 2005); and Conagra, Inc. v. Burlington Northern,Inc., 438 F. Supp. 1266, 1268 (D. Neb. 1977) ("Any written document whichidentifies the damaged shipment and indicates an intention to hold the carrierresponsible is sufficient."), in support of its arguments.
The two Texas district court cases are quite distinguishable as they involveshippers' attempts to bring state law claims against the carriers, and once the caseswere removed to the Texas federal district courts, the courts appropriately found thestate claims preempted by the Carmack Amendment. Gulf Rice Ark., 376 F. Supp.2d at 719; Eagle Van Lines, 2005 WL 292439, at *2. Moreover, the courts in thesecases analyzed the specific language of the agreements entered into by the parties toassess timeliness, and therefore these cases do not support the assertion that any formof claim denial will start the running of a two-year limitations period as a matter oflaw. See Gulf Rice Ark., 376 F. Supp. 2d at 724; Eagle Van Lines, 2005 WL 292439,at *3. And the Burlington Northern case cited by CP is not at all on point; in that casethe issue was whether the Carmack Amendment notification needed to be a"[d]etailed documentation of the claim," rather than a simple notice. 438 F. Supp. at1268. It was not a situation where a claim other than one under the CarmackAmendment was initially alleged or a matter discussing the adequacy of a denial. Id. The Croninger case is one of the first few Supreme Court cases construing the
Carmack Amendment, which was enacted in 1906 as an amendment to the InterstateCommerce Act (although the Amendment has been altered and recodified over thelast century). See Kawasaki Kisen Kaisha, 561 U.S. at 96. Among other things,Croninger addressed the shipper's limited recovery options when it elected a lowershipping rate in exchange for releasing its goods at the standard value of the goods. 226 U.S. at 509. While Croninger does stand for the proposition that common lawclaims against carriers are preempted by the Carmack Amendment, id. at 510-11,nothing in Croninger suggests that a carrier can preemptively deny a CarmackAmendment claim before it has been asserted.
Here we have the unusual situation where the first claim made was pursuant toCanadian law. According to the November letter, WFE was required by Canadianlaw to submit notice of this claim within four months of the occurrence. WFE'sNovember 5 notice expressly denied that WFE was making its Carmack Amendmentclaim, and noted that it would do so at a later time. The statute itself defines aCarmack Amendment claim as one being brought "under this section." 49 U.S.C. §11706(e). Indeed, if WFE had failed to make its April 2014 claim, CP might bearguing that the November notice did not assert a Carmack Amendment claim. See,e.g., Am. Rock Salt Co., LLC v. Norfolk S. Corp., 387 F. Supp. 2d 197, 204(W.D.N.Y. 2005) (holding that shipper who gave written notice that it would be filinga claim "at some unspecified later date" but did not do so within nine months, did notadequately preserve its Carmack Amendment claim). To be sure, American Rock Saltis a bit distinguishable because the "will be filing" notice contained no specifics aboutdamages. Id. at 203. Here, by necessity and due to the operation of Canadian law,damages (in the amount of approximately $4.9 million) were mentioned in theNovember 2013 correspondence. But equally clear in WFE's Novembercorrespondence was the notation that WFE was not yet making its CarmackAmendment claim. When it ultimately gave its Carmack Amendment notice in April2014, WFE asked for damages in the amount of $6,670,593.27 and also noted thatother damages (for property and wrongful death) were yet to be determined. We
think it would be unwise policy, and actually unfair in this unusually complicatedmulti-national case, to allow the carrier to start the two-year clock when the shipperhad not yet broken the huddle. We certainly agree that a denial starts the clock; butaccording to the statute, the denial must be from a claim brought "under this section." 49 U.S.C. § 11706(e). WFE's November claim was assuredly and explicitly notbrought pursuant to 49 U.S.C. § 11706. Accordingly we reverse the district court'sgrant of judgment on the pleadings (or summary judgment) as to Whatley's claim onbehalf of WFE.
Whatley's Irving claim is more problematic because Irving first gave notice inApril 2015. If, indeed, the time limitations presumed in the previous section appliedto the bill of lading in this case, Whatley's claim on behalf of Irving could be time-barred. Whatley alleges that since Irving was not a party to the bill of lading, it wasnot bound by any possible nine-month period for bringing suit. And, Irving allegesit was not required to provide notice of a claim until it was able to calculate itsdamages with reasonable precision. Because many of the claims against Irving werenot alleged until the MAR bankruptcy case took shape, and the bankruptcy plan wasconfirmed in October 2015, Irving argues that its claim, made in April 2015, was astimely as reasonably possible. Finally, it alleges that the bankruptcy plan tolled anyapplicable statutes of limitations, including ones that may apply to the CarmackAmendment claims. However, CP points out that Irving cannot both escape thetiming rules (that CP alleges are in the bill of lading and tariffs) and reap the benefitsof the damages provisions by way of the bill of lading through the CarmackAmendment.
More persuasively, however, Whatley alleges that there is a genuine disputeover the very existence of contractual terms in the bill of lading providing for a nine-month notice period and a two-year suit limitation, precluding both dismissal on the
pleadings or summary judgment as a matter of law. Whatley alleged in the pleadingsthat the bill of lading did not contain terms setting forth the nine-month notice andtwo-year period for bringing suit. And as previously noted, the specific languageand/or the tariffs themselves do not appear to be in the record on appeal. Thisomission and factual dispute precludes judgment on the pleadings or summaryjudgment in favor of CP with regard to Irving's claims. See Shao v. Link Cargo(Taiwan) Ltd., 986 F.2d 700, 707-08 (4th Cir. 1993) (holding that the record wasinsufficient to determine whether contractual time limits applied to bar the CarmackAmendment claim, and thus, remand was warranted); Tr. of Oral Decision, In re:Maine Montreal & Atlantic Ry., Ltd., Adv. No. 13-01033 (Bankr. D. Me. June 22,2018) (rejecting argument that the bill of lading governing the same train at issue inthe instant dispute automatically incorporated the terms of the uniform bill of lading). Although WFE may have arguably conceded this point, see ante n.2, Irving has not. If on remand it becomes clear that the nine-month notice and two-year lawsuit limitscontractually apply, then Irving's Carmack Amendment claim is untimely, unlessIrving's tolling arguments, based upon MAR's bankruptcy action, are meritorious. Asthe district court did not address Irving's tolling arguments below, we leave it to thedistrict court to discern the applicability of any tolling, if necessary.
Accordingly, we reverse and remand for proceedings consistent with thisopinion.
GRUENDER, Circuit Judge, concurring in part and dissenting in part.
Over the past several decades, deregulation has revolutionized the lawgoverning the interstate shipment of goods. See 22 Richard A. Lord, Williston onContracts § 59:1 (4th ed. 2018). While these changes have given shippers andcarriers greater freedom in making contracts, in this case the law mandated the
contractual terms at issue. For this reason, I disagree that there is a genuine disputeover the contractual terms governing Whatley’s Irving Oil claim, and I respectfullydissent from Part II.B of the court’s decision. Because the two-year limitation onWhatley’s WFE claim ran from the April 24, 2014 denial letter rather than theNovember 27, 2013 denial letter, I agree that the WFE claim is timely and concur inthat portion of the court’s opinion and judgment.
For shipments subject to the Carmack Amendment, rail carriers must use theuniform straight bill of lading prescribed by federal regulations.4 49 C.F.R. § 1035.1;id. pt. 1035, apps. A, B; see also C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc.,213 F.3d 474, 478 (9th Cir. 2000) (explaining that rail and water carriers, but notmotor carriers, must use the uniform straight bill of lading). Under § 2(b) of theuniform straight bill of lading, claims involving a failure to make delivery must befiled in writing with the carrier “within nine months after a reasonable time fordelivery has elapsed.” 49 C.F.R. pt. 1035, app. B. Likewise, § 2(b) permits a lawsuitto be filed “only within two years and one day from the day when notice in writingis given by the carrier to the claimant that the carrier has disallowed the claim or anypart or parts thereof specified in the notice.”5 Id.
4The Carmack Amendment does not necessarily apply to rail shipments. As
part of the deregulation of the transportation industry, “shippers and carriers [may]
sidestep federal regulation of transportation agreements by entering into private
contracts” that are not subject to the Carmack Amendment, 49 U.S.C. § 11706, but
instead are governed by 49 U.S.C. § 10709. Babcock & Wilcox Co. v. Kansas City
S. Ry., 557 F.3d 134, 138 (3d Cir. 2009); see also 1 Saul Sorkin, Goods in Transit
§ 5.02 n.167 (2018). But the parties here have made no argument that this contract
is governed by § 10709. On the contrary, Whatley states that his claims arise under
5As Whatley notes, 49 U.S.C. § 11706(e) requires a minimum of nine months
for claims and two years for instituting suits but otherwise allows parties to negotiate
limitations periods. Before the ICC Termination Act of 1995, these floors were
codified at 49 U.S.C. § 11707(e) and applied to carriers generally. For rail and water
As the court points out, it is not clear from the record whether WFE and IrvingOil expressly agreed to this language. Ante, at 7. But because the uniform bill oflading is required by federal law, the time limitation requirements bind the partiesregardless. See Comsource Indep. Foodservice Cos. v. Union Pac. R.R., 102 F.3d438, 443-44 (9th Cir. 1996); Glenn Hunter & Assocs. v. Union Pac. R.R., No.3:01-CV-7602, 2003 WL 403178, at *1 (N.D. Ohio Jan. 22, 2003) (“The omission ofthe required language does not relieve the Union Pacific of its effect, because theapplicable regulation requires the inclusion of that language in the bill of lading.”);2 Sorkin, supra n.1, § 10.02 (“If the contractual limitation of action is provided forin the tariff and regulations, no other notice is required to the shipper.”). Consequently, I disagree with the court that “there is a genuine dispute over the veryexistence of contractual terms in the bill of lading” that precludes dismissal of theuntimely Irving Oil claim.
Under the uniform straight bill of lading, Irving Oil had nine months after “areasonable time for delivery has elapsed” to submit its claim to Canadian Pacific, butit did not submit any claim until April 16, 2015. Given that the accident occurred onJuly 6, 2013, this was well more than nine months after a reasonable time for delivery
carriers, the Interstate Commerce Commission (“ICC”) prescribed the uniform
straight bill of lading, which mandated the precise time periods described above. See
Bills of Lading, 58 Fed. Reg. 60797 (Nov. 18, 1993) (to be codified at 49 C.F.R.
pt. 1035); Bills of Lading, 9 I.C.C.2d 1137 (1993). Thus, there was no inconsistency
between the statute, which generally gave carriers the freedom to impose time
limitations by rule or contract subject to the statutory floors, and the regulation, which
imposed more stringent standards on rail and water carriers by requiring them to use
the uniform straight bill of lading. The ICC Termination Act transformed § 11707
and created separate statutory provisions for different types of carriers. 49 U.S.C.
§ 11706 (rail carriers), § 14706 (motor carriers and freight forwarders), § 15906
(pipeline carriers). But because the ICC Termination Act contains a savings clause
stipulating that previous ICC regulations remain in force, Pub. L. No. 104-88, § 204,
109 Stat. 803, 941 (1995), there is no reason to read § 11706(e) as casting doubt on
the continuing validity of 49 C.F.R. § 1035.1.
had elapsed. See Imperial News Co. v. P-I-E Nationwide, Inc., 905 F.2d 641, 644 (2dCir. 1990) (finding 124 days “more than a reasonable time” for delivery). Whatleytries to excuse Irving Oil’s failure to submit a timely claim by arguing that it waiteduntil it could calculate damages with reasonable precision in light of the ongoingbankruptcy proceedings. See Pathway Bellows, Inc. v. Blanchette, 630 F.2d 900, 905n.10 (2d Cir. 1980). But Whatley did not make this argument below. Gap, Inc. v. GKDev., Inc., 843 F.3d 744, 748 (8th Cir. 2016) (“Ordinarily, this court will not consideran argument raised for the first time on appeal.” (internal quotation marks omitted)). And in any event, a party cannot wait until its total financial burden is clear to bringa claim if it reasonably knows the value of the damaged cargo. See 5K Logistics, Inc.v. Daily Express, Inc., 659 F.3d 331, 336 (4th Cir. 2011). Moreover, Irving Oil couldat least have filed a partial claim. See Am. Rock Salt Co. v. Norfolk S. Corp., 387 F.Supp. 2d 197, 205 (W.D.N.Y. 2005). Indeed, the fact that WFE filed its claim withina year of the accident undermines Whatley’s argument that Irving Oil was unable tofile a claim until almost two years had lapsed.6 See id.
I join the court’s opinion and judgment on the more difficult question of thetimeliness of the WFE claim. And though Canadian Pacific has made several otherarguments that might justify dismissal of that claim, I agree that we should allow thedistrict court to consider them in the first instance.
6For these reasons, the Irving Oil claim would be untimely even if the
limitations periods are tolled pursuant to Whatley’s interpretation of the bankruptcy
plan. Under that plan, statutes of limitations must be tolled from the Execution
Date—here March 2, 2015—to the Plan Implementation Date. By the time the tolling
period began, however, Irving Oil’s claim was already untimely.