Norfolk v. Kirby
Kirby, an Australian company, sold machinery to a General Motors plant in Alabama. To fulfill its obligation of delivery, Kirby contracted with ICC, an Australian “freight forwarding” company to coordinate delivery of the goods. ICC issued a bill of lading to Kirby that contained a “Clause Paramount” that invokes the defenses and limitations of liability of the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. §§ 1350-1315. The bill of lading also contained a “Himalaya” clause, which extends the carrier's own defenses and limitations of liability to the carrier's agents and subcontractors. ICC subsequently hired Hamburg Sud, a shipping company to ship the goods overseas. Hamburg Sud shipped the goods from Australia to the United States, and contracted with Norfolk Southern to complete delivery to Alabama. Hamburg Sud issued a bill of lading to ICC that also contained a Clause Paramount and Himalaya clause. After Norfolk Southern's train derailed, allegedly causing $1.5 million of damage to the machinery, Kirby sued Norfolk Southern for negligence and breach of contract. Norfolk Southern claimed that its liability, if any, was limited by the Himalaya clause in its contract with Hamburg Sud, capping Norfolk Southern's liability at $5,000. The trial court ruled for Norfolk Southern and limited liability.
The Eleventh Circuit Court of Appeals reversed, noting that the Supreme Court has constrained the enforceability of Himalaya clauses by stating that “contracts purporting to grant … limitation of liability must be strictly construed and limited to their intended beneficiaries.” Looking to precedent and to the clarity of language in the contract, the Eleventh Circuit held that the Himalaya clause in the ICC bill did not clearly identify Norfolk Southern as an intended beneficiary. The court also held that the ICC bill of lading did not cause ICC to become Kirby's agent; therefore, Kirby was not bound by the Himalaya clause in Norfolk Southern's bill of lading with Hamburg Sud.
Questions Presented:
1. Whether a cargo owner that contracts with a freight forwarder for transportation of goods to a destination in the United States is bound by the
contracts that the freight forwarder makes with carriers to provide that transportation.
2. Whether federal maritime law requires that terms of a bill of lading extending liability limitations under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. app. §§ 1300-1315, to
"independent contractors" used to perform the contract of transportation must be narrowly construed to cover only those independent contractors in privity of contract with the bill's issuer.
