Herod's Stone Design (HSD) sued Mediterranean Shipping Company SA (MSC) and MSC's appointed rail carrier, BNSF Railway Co (BNSF), in the New Jersey State Court for state law consumer fraud, contract, and tort claims relating to damage to HSD's cargo of marble tiles shipped from China to Long Beach by sea, and then to New York by rail. After removal and transfer, the District Court for the Southern District of New York granted summary judgment in favour of MSC and dismissed the claims against BNSF, holding, among other things, that the US Carriage of Goods by Sea Act, 46 USC § 30701 note (COGSA), pre-empted HSD's state law claims, and that HSD's claims were time-barred under COGSA's statute of limitations. The Court also found that HSD's claims against BNSF were barred by the terms and conditions in the sea waybill which governed the agreement between HSD and MSC for the carriage of HSD's goods: see Herod’s Stone Design v Mediterranean Shipping Company SA, 434 F Supp 3d 142 (SDNY 2020) (CMI671).

HSD appealed, arguing that COGSA does not have pre-emptive force when extended to inland activity by contract, and that HSD's claims are not time-barred.

Held: Appeal dismissed; District Court judgment affirmed.

The District Court correctly held that the waybill's terms bar suit against subcontractors, including BNSF. As the District Court recognised, the Second Circuit has held that an exoneration clause that unambiguously relieves subcontractors of liability - like that contained in the waybill - is enforceable and prohibits suits against parties other than the carrier (MSC): Sompo Japan Ins Co of Am v Norfolk S Ry Co, 762 F 3d 165, 178, 180 (2d Cir 2014). The waybill expressly relieves MSC's subcontractors, including rail transport operators like BNSF, from suit.

By its terms, COGSA governs bills of lading for the carriage of goods 'from the time when the goods are loaded on to the time when they are discharged from the ship': Norfolk S Ry Co v Kirby, 543 US 14, 29 (2004) (quoting 46 USC § 1301(e)) (see CMI1454). In addition, 'COGSA also gives the option of extending its rule[s] by contract', including to periods of inland transport: id (citing 46 USC § 1307). Contracts with the 'primary objective' to transport goods by sea are maritime contracts, even if they 'call for some performance on land', such as when the 'final leg' of a journey is 'by rail': id, 24.

The waybill is a maritime contract governed by federal maritime law, as its primary purpose was to transport goods by sea from China to California, and then, by amendment, by rail to New York. By its language, the waybill's terms and conditions extend COGSA to inland carriage. Because HSD sued under this through waybill, it is uncontested that the parties are bound by its terms - including, therefore, COGSA. Kirby's reasoning demonstrates that COGSA should be understood to pre-empt contrary state law claims of liability where, as here, COGSA's default rules are extended by a maritime contract and governed under federal maritime law. In light of Kirby and Sompo, the waybill, and COGSA's limitations on liability incorporated therein, does not yield to conflicting state law, and HSD's attempts to distinguish its position from Kirby and Sompo are meritless. So too is HSD's belief that § 3(8) of COGSA voids agreements that relieve the carrier from negligence liability, as that provision voids such agreements 'other ... than as provided in this chapter'. It is therefore inapplicable here, where the dispute centers on COGSA's own liability limitations.

HSD argues that even if COGSA's statute of limitation applies, its claims - which would otherwise be time-barred - would be subject to equitable estoppel. Here, there is no genuine question of fact as to whether MSC lulled HSD into a false sense of security. Evidence from both parties shows that MSC consistently requested documentation from HSD before it could process the claim. On the facts, HSD could not have had a sense of security that MSC would pay its claim. Accordingly, the District Court properly rejected HSD's equitable estoppel argument.