Contracts 

Issues: Whether the Carmack Amendment to the Interstate Commerce Act applied; 49 USC § 11706; Royal & Sun Alliance Ins. v. Ocean World Lines, Inc. (2nd Cir.); Missouri Pac. R.R. v. Elmore & Stahl; Atlantic Coast Line R.R. v. Riverside Mills; Adams Express Co. v. Croninger; Norfolk & W. R.R. v. Dixie Tobacco Co.; Missouri, K & T R.R. v. Ward; Missouri Pac. R.R. v. Porter; Mexican Light & Power Co. v. Texas Mexican R.R.; Reider v. Thompson; Norfolk S. R.R. v. Kirby; Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp.; American Rd. Serv. Co. v. Consolidated Rail Corp.; Carriage of Goods by Sea Act; 46 USC § 30701; Viability of the plaintiff's tort-based claims; International Ore & Fertilizer Corp. v. SGS Control Servs., Inc. (2nd Cir.); Claim for breach of the Service Contract; In re M/V Rickmers Genoa Litig. (SD NY); Fed.R.Civ.P. 61; 28 USC § 2111; Rosencrantz v. Lafler; Prejudgment interest; Werner Enters. v. Westwind Mar. Int'l (11th Cir.)

Court: U.S. Court of Appeals Sixth Circuit

Case Name: CNA Ins. Co. v. Hyundai Merch. Marine Co.

e-Journal Number: 56741

Judge(s): Batchelder and Cook; Concurring in part, Dissenting in part – O’Malley

 

Where plaintiff-CNA's insured (Corning) hired defendant-Hyundai to transport cargo overseas and the cargo was accidently destroyed during transit, the district court erred by solely applying the Carmack Amendment in this case as it did. However, Hyundai's contractual liability to CNA "must be resolved under Carmack." The defendants in the case were Hyundai and two rail carriers with which it subcontracted in connection with shipping glass for Corning. The containers at issue never made it on the ship. The Carmack Amendment, which allows an aggrieved shipper to sue only the initial (receiving) or final (delivering) carrier, "does not apply to the road or rail leg of an intermodal overseas export shipped under a single through bill of lading." CNA also could not maintain bailment or negligence actions against the carriers because the Service Contract controlled. The only parties to the Service Contract were CNA (Corning) and Hyundai. The rail carriers were not bound by it. In fact, the Service Contract showed "the parties' clear intent not to bind subcontractors . . . to CNA, nor to hold them directly liable to CNA for damage to the cargo." Therefore, CNA could not sue the rail carriers for contract breach. The district court erred by denying them summary judgment, and the court reversed the district court's decision in this respect and vacated the judgments against those two defendants. However, "Hyundai is liable 'to the extent to which [a road or rail carrier] would have been liable to [the shipper] if it had made a direct and separate contract with [the shipper]' for that carrier's portion of the journey." The court concluded that while the district court "erred by applying Carmack to this case as a general principle, that error was ultimately harmless because the court would have properly applied Carmack under a straight forward breach-of-contract action." Hyundai was liable to CNA for the full extent of the liability specified in the Carmack Amendment - $498,509.91. The district court's judgment against Hyundai was affirmed. The case was remanded to reconsider the issue of prejudgment interest.

 

Full Text Opinion

This summary also appears under Employment & Labor Law

 

Issues: Whether the employment contract's arbitration clause had post-expiration effect; Federal policy in favor of arbitration; Litton Fin. Printing Div., Litton Bus. Sys., Inc. v. NLRB; Zucker v. After Six, Inc. (Unpub. 6th Cir.); Masco Corp. v. Zurich Am. Ins. Co.; Nestle Waters N. Am., Inc. v. Bollman; Contra proferentum doctrine (resolving ambiguities against the agreement's drafter); Expressio unius doctrine (express mention of some contractual provisions is tantamount to intentional exclusion of the others); West Liberty Foods, L.L.C. v. Moroni Feed Co. (SD IA); Whether the contract should be considered "as a whole"; Symyx Techs., Inc. v. Stargate Mobile L.L.C. (Unpub. ED MI); Class-wide arbitration; Reed Elsevier, Inc. ex rel. LexisNexis Div. v. Crockett

Court: U.S. Court of Appeals Sixth Circuit

Case Name: Huffman v. The Hilltop Co.

e-Journal Number: 56747

Judge(s): McKeague, Gilman, and Cook

 

In this case of first impression, the court held that the strong presumption in favor of arbitration applied post-expiration, even though the arbitration clauses in the plaintiffs' employment contracts were not listed in the survival clause. The district court erred by finding that the presumption in favor of arbitration was rebutted. There is a "strong federal policy in favor of arbitration." The arbitration clause at issue was "broadly-worded," so there was a "presumption of arbitrability." The omission of the arbitration clause from the survival clause "did not clearly imply that the parties did not intend for the arbitration clause to have post-expiration effect . . . ." Even though defendant drafted the agreements, the presumption in favor of arbitration trumps the contra proferentum doctrine. The court rejected the plaintiffs' argument that "the omission from the survival clause is tantamount to a clear implication that the parties did not intend the arbitration clause to have post-expiration effect in light of the doctrine of expressio unius." The court concluded that "considering the contract as a whole - the survival clause and its relationship to the other clauses in the agreement - is the correct way to determine whether the parties unambiguously intended for the arbitration clause to expire with the contract." It found that "the parties did not clearly intend for the survival clause to serve as an exhaustive list of the provisions that would survive expiration of the agreement." The non-compete clause remained in effect for 12 months after expiration, but it was not listed in the survival clause. The court noted that the Eastern District of Michigan in Symyx applied "the strong presumption in favor of arbitration where an agreement's survival clause did not list the agreement's broad arbitration clause." The court also concluded that the contracts at issue did not provide for class-wide arbitration. As in Reed Elsevier, the parties' agreement was "silent as to whether an arbitrator or a court should determine the question of classwide arbitrability, meaning the determination lies with this court." As was also the case in Reed Elsevier, the parties' arbitration clause nowhere mentioned classwide arbitration. Thus, the court determined that the arbitration clause did not authorize classwide arbitration, and held that plaintiffs must proceed individually. It reversed the district court's denial of defendant's motion to dismiss and compel arbitration.

 

Full Text Opinion
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