Sea-Land Service, Inc. v. Lozen International, LLC
285 F.3d 808 (2002)
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Rule of Law:
A carrier's agent's deliberate refusal to mitigate a known routing error, with knowledge that this inaction will cause damage to the shipper's goods, can constitute an "unreasonable deviation" under maritime law, creating a triable issue of fact that may void the carrier's contractual limitations on liability.
Facts:
- Lozen International, LLC (Lozen) contracted with Sea-Land Service, Inc. (Sea-Land) to transport three containers of perishable grapes from Hermosillo, Mexico, to Felixstowe, England.
- The transport plan involved truck, rail, and a specific ocean vessel, the Mathilde Maersk, with a critical estimated arrival date of June 28, 1999, before cheaper European grapes were expected to enter the market.
- The shipping agreement was made via an electronic "express sea waybill," so Lozen did not receive a physical copy of Sea-Land's standard bill of lading containing its liability limitation clauses.
- Sea-Land's railroad agent, CSX, mistakenly placed the containers on the wrong train, jeopardizing their ability to be loaded onto the Maersk in New Jersey.
- After discovering the error, Sea-Land employees repeatedly asked CSX to allow them to retrieve the containers and transport them by truck to the port in time.
- CSX allegedly refused to cooperate or permit Sea-Land to implement this recovery plan.
- As a direct result of the delay caused by CSX's refusal, the containers missed the Maersk's sailing.
- Consequently, Lozen was forced to sell the time-sensitive grapes domestically at distressed prices, incurring significant financial loss.
Procedural Posture:
- Sea-Land Service, Inc. initiated an action against Lozen International, LLC in federal district court to recover money owed under a shipping contract.
- Lozen filed counterclaims against Sea-Land for breach of contract and cargo loss resulting from the delayed shipment.
- The parties settled Sea-Land's original claim, which the court dismissed.
- Sea-Land then filed a motion for summary judgment on Lozen's remaining counterclaims.
- The district court granted summary judgment in favor of Sea-Land, dismissing Lozen's counterclaims.
- Lozen, as the appellant, appealed the district court's grant of summary judgment to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does a carrier's agent's deliberate refusal to correct a known misrouting error, despite being repeatedly asked to do so and being aware of the time-sensitive nature of the cargo, create a genuine issue of material fact as to whether an "unreasonable deviation" occurred, thus precluding summary judgment for the carrier based on liability limitations in its bill of lading?
Opinions:
Majority - Graber, J.
Yes. A carrier's agent's deliberate refusal to correct a known misrouting error can create a genuine issue of material fact as to whether an 'unreasonable deviation' occurred. An unreasonable deviation requires that the carrier intentionally caused damage to the shipper's goods, which goes beyond mere accident, recklessness, or gross negligence. While the initial misrouting of the grapes was an accident, the court found that an improperly excluded internal Sea-Land e-mail provided evidence that the railroad agent, CSX, deliberately refused to allow Sea-Land to retrieve the containers for trucking despite repeated requests and awareness of the shipment's time-sensitive nature. This evidence permits a reasonable fact-finder to infer that CSX's inaction was an intentional causation of damage, which is sufficient to create a triable issue of fact on the unreasonable deviation claim and, consequently, on the enforceability of Sea-Land's contractual 'liberty clauses'.
Analysis:
This decision clarifies that the doctrine of "unreasonable deviation," historically applied to a ship's geographic departure from its agreed route, can extend to a carrier's agent's deliberate and damaging inaction during an inland leg of a multi-modal shipment. By distinguishing between an initial accident and a subsequent intentional failure to mitigate, the court broadens the shipper's ability to overcome contractual liability limitations. The ruling signals that carriers can be held responsible for the intentional misconduct of their agents in the supply chain, forcing courts to look beyond the initial mistake to the carrier's subsequent conduct in resolving it.
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