Opinion
Case No. 3:01CV7602
January 22, 2003
ORDER
This is a suit by the purchaser of used refractory brick, which was to be shipped from Seattle, Washington, to Liberty Center, Ohio, via the defendants Union Pacific Railroad Company and Norfolk Southern Corporation. The brick was to be shipped in three gondola cars. Two of the three carloads arrived loaded with brick. On or about February 23, 2000, plaintiff learned that the third car was empty.
Within a week thereafter, plaintiff gave defendant Norfolk Southern written notice of its loss claim. On September 19, 2000, Norfolk Southern rejected the claim on the basis that the car had been weighed empty before being received by it.
Sometime prior to April 20, 2001, plaintiff filed a claim for its loss with the defendant Union Pacific; on that date Union Pacific rejected the claim. Plaintiff filed this suit on November 27, 2001.
Defendants have moved for summary judgment on the basis that the plaintiff had to file this suit within one year of Norfolk Southern's rejection of its claim. Plaintiff contends that the limitations period was two years, and that it was without reasonable notice of any purportedly shorter limitations period.
For the reasons that follow, the defendants' motion for summary judgment shall be denied
The defendants base their contention that a one year limitations period applies on the bill of lading, the Union Pacific's price quote, which was incorporated in the bill of lading, and Union Pacific's Rules Circular UP 6600-B, which was incorporated by cross-reference in the price quote.
Plaintiff did not have a copy of the Rules Circular and was unaware of its contents.
The Circular stated, inter alia, that claims of loss had to be filed with the receiving (i.e., Union Pacific) or delivering (i.e., Norfolk Southern) carrier within nine months, and suit had to be filed within one year of the shipper's "receipt of the first written notice from Railroad rejecting a claim, either in full or in part." In addition, the Circular stated that "Any rejection of a claim shall start the time period for filing a lawsuit." (Doc. 30, Exh. E).
Plaintiff contends that the one year limitations period stated in the Rules Circular is unenforceable because it did not have reasonable notice of the limitations period stated in the Circular. The bill of lading, plaintiff notes, must, pursuant to 49 C.F.R. § 1035.1, include language specifying that suits are to be filed within two years and one day from the date on which a claim is rejected.
The bill of lading in this case appears to have been one-sided, containing none of the standard language normally found on a uniform bill of lading. The omission of the required language does not relieve the Union Pacific of its effect, because the applicable regulation requires the inclusion of that language in the bill of lading.
I conclude that the bill of lading must be read as if it included the mandatory language about a two year limitations period. For the carrier to enjoy the benefit of a shorter period, it should be required to make reasonable efforts to make the shipper aware that a shorter, rather than the longer period described in a bill of lading, controls. Here no such effort was made: nothing called plaintiff's attention to the shorter period being imposed by it via the Rules Circular.
As plaintiff argues, the Ninth Circuit's decision in Comsource Independent Foodservice Companies, Inc. v. Union Pacific R. Co., 102 F.3d 438 (9th Cir. 1996), should be followed in this case. In Comsource the shipper's tariff contained a shorter limitations period than that provided by statute. The court held that the shorter period would not prevail over the longer statutory period where the shipper was not reasonably on notice of the shorter period.
The court in Comsource pointed out that: the railroad had not specifically called the tariff provision's shorter period to the shipper's attention; the shipper had not drafted the bill of lading or negotiated its terms, including the shorter limitations period (though the shipper had prepared the bill with its incorporation of the rate sheet, which in turn incorporated the tariff); and the tariff's shorter period was not specifically reproduced or recited in the bill of lading. The court also considered whether the shipper was sophisticated or had had extensive prior dealings with the railroad. 102 F.3d at 444.
The circumstances in Comsource are not materially different from those in this case. The longer limitations period is to be referenced pursuant to 49 C.F.R. § 1035.1 in the bill of lading, and the shorter period was neither the subject of negotiation between the parties nor stated in any of the documents handled by them. The railroad does not suggest that the plaintiff should have sought to obtain a copy of the Rules Circular, or that it was either a sophisticated shipper or had had extensive prior dealings with the railroad.
I conclude, accordingly, that the plaintiff was not bound by the shorter limitations period stated in the Rules Circular.
It is, therefore,
ORDERED THAT defendants' motion for summary judgment be, and the same hereby is denied.
A settlement conference is scheduled for February 10, 2003 at 2:30 p.m. All lead counsel and representatives of the parties with full authority to settle plaintiff's claim shall attend the conference in person. Ex parte narrative statements shall be faxed to the undersigned not later than one week prior to the conference.
So ordered.