Enterprise, a large dry bulk ship, was loading coal at a terminal in the port of Conneaut, Ohio, on Lake Erie. While repositioning so coal could be loaded in a different hold, a self-unloader on the ship struck a land-based coal-loading machine operated by Bessemer & Lake Erie Railroad Co. and The Pittsburgh & Conneaut Dock Co.
Bessemer and its affiliate filed suit against the ship and its owners and operators, seeking recovery of repair costs and lost profits. (Bessemer & Lake Erie Railroad, et al. v. Seaway Marine Transport, Nos. 08-4676/4678, Sixth Circuit, Feb. 25.)
The district court granted Bessemer summary judgment as to liability, finding Seaway and its affiliates wholly at fault. It relied on the 1895 decision The Oregon ' and its rebuttable presumption that, when a moving object strikes a stationary object, the moving object is at fault.
The Sixth Circuit noted, 'admiralty law draws a distinction between allisions and collisions. An allision occurs when a moving vessel strikes a stationary object, and a collision occurs when two moving vessels strike each other.'
The appeals court reversed in part and sent the case back to the district court, finding a genuine dispute of fact existed over Bessemer's comparative negligence.
Seaway conceded that it bore some fault for what happened, but argued it should not be held solely to account for the accident.
The Sixth Circuit agreed that the district court had improperly taken the view that Seaway had to 'rebut the presumption' of fault before it could consider Seaway's comparative negligence defense.
'That is not how the Oregon Rule works. It is a burden-shifting doctrine, not a rule of ultimate liability,' and the case was remanded to the lower court.
On another issue, the court upheld the lower court, disagreeing with Bessemer that the district court abused its discretion when it determined the terminal did not adequately disclose the basis for a 'lost profits' claim during discovery.
The district court had awarded $522,000 in cost-of-repair damages to Bessemer, but determined that Bessemer did not adequately disclose the basis of the lost profits claim.
Bessemer was obligated under Rule 26 of the Federal Rules of Civil Procedure to provide Seaway with 'a computation of each category of damages claimed,' as well as 'the documents or other evidentiary material ' on which each computation is based, including materials bearing on the nature and extent of injuries suffered,' the Sixth Circuit explained. It agreed with the district court that Bessemer fell short of this basic requirement by not disclosing the costs it saved during the time its machinery was under repair and by not timely disclosing a further claim for lost profits based on its loss of a major customer.
A logistics company may be entitled to its day in court, but at what court may be determined by the paperwork of its agreement with a shipper ' even if it has not signed that paperwork. (Total Quality Logistics v. Cavendish Farms Inc., et al., S.D. Ohio, No. 1:09-CV-221, Jan. 26.)
Total Quality Logistics (TQL) sued Cavendish Farms in Ohio state court in February 2009, providing an Ohio address for itself and a North Dakota address for Cavendish. The defendant sought to move the case to federal court.
On Sept. 10, 2009, TQL amended the complaint, adding two trucking companies, Trinity Transport and Karriers, as defendants. TQL said Cavendish owed it money for services it had provided and that the truckers it had retained to transport goods were negligent in their duties.
Cavendish, which said it was a Delaware corporation with a principal place of business in North Dakota, moved to dismiss the claims against it, saying a forum selection clause precluded the case being heard in federal court or in Ohio. Karriers moved to dismiss the claims for failure to state a claim upon which relief can be granted.
Cavendish produced a transportation agreement which incorporated a document called 'General Terms and Conditions for the Supply of Services' that read in part: 'The agreement is to be governed, both with respect to its construction and performance, by the laws of the state or province of the Irving corporation ' ' Cavendish is a member of the Irving Group of companies.
A TQL representative, but not a Cavendish representative, initialed the second page of the Terms and Conditions.
TQL challenged the forum selection clause on the basis that it would be inconvenient for it to file the suit in another forum.
It also argued that the presence of the trucking companies as additional defendants weighed against dismissal of the action because TQL was unsure whether the courts that Irving set forth in the agreement would have jurisdiction over the trucking companies, and that it should not be required to litigate against Cavendish and the truckers in two different venues.
But the court said TQL cited no case law to support this contention. It said the 'mere inconvenience' of TQL's speculation that it might have to pursue separate law suits against Cavendish and the trucking companies in different venues was not sufficient grounds.
TQL also attempted to void the forum selection clause, saying Cavendish's neither signed the contract nor was named as a party in it.
The court said that did not make sense. 'TQL cannot seek to enforce the transportation agreement as a valid contract despite the lack of a Cavendish signature while simultaneously challenging the validity of the incorporated terms and conditions based on the lack of a signature.'
The court found TQL had not met its heavy burden of establishing that the forum selection clause should be set aside. It held the forum selection clause is enforceable and that the Southern District of Ohio was not the proper venue for TQL's suit against Cavendish.
It agreed with Cavendish's request to dismiss the case rather than transfer it pursuant to another federal district court where it might have been brought. The court said Cavendish persuasively argued the agreement meant the dispute should be held in a state, not federal court.
Cavendish suggested the proper venue was the state courts of North Dakota, where both parties agreed Cavendish operated a place of business. So the court chose to dismiss the case on the grounds of forum non conveniens, without prejudice and subject to refiling in the appropriate venue.