The U.S. Supreme Court has refused to review a Seventh Circuit Court of Appeals decision holding Plano Molding Co. (Plano) was not bound by a warranty that freight carriers said indemnified them from a derailment allegedly caused by Plano’s unsafely packed cargo. The high court’s decision to deny certiorari to Kawasaki Kisen Kaisha Ltd., K Line America Inc. and Union Pacific Railroad Co. officially brought to an end the litigation involving a 2005 train derailment in Oklahoma. The petitioners were claiming that Plano failed to properly pack its cargo. The justices did not provide a reason for the rejection of the appeal.

The transportation companies in August asked the high court to take the case, saying the Seventh Circuit’s ruling that Plano was bound only by a safe-loading warranty in its prime transportation contractor’s bill of lading, but not by a stricter warranty in a subcontract with K Line, contradicted past Supreme Court and Second Circuit precedent. Plano, which sells storage boxes produced from steel injection molds, claimed last month that the high court didn’t need to decide the supposed “circuit split” because an Illinois federal trial court had already decided the case on the merits — finding that Plano’s cargo was probably not, in fact, unsafely packaged.

If the high court felt compelled to resolve the split, Plano argued, it should do so in a case where the justices’ decision will have an actual impact rather than going through an exercise of putting out an “advisory opinion.” The case began in 2004 when Plano ordered two molds and arranged for them to be shipped from China to Illinois. Under the bill of lading, Plano warranted that the “stowage and seals of the containers are safe and proper and suitable for handling and carriage,” and the contract said the company would indemnify cargo carriers for damage, loss or injury caused by its breaches of that warranty. Kawasaki Kisen and K Line transported the molds to California, and Union Pacific handled the rail portion of the delivery. In April 2005, the train derailed in Oklahoma, allegedly because Plano’s molds broke through a shipping container and fell on the track. Cargo owners, whose goods were damaged, sued K Line and Union Pacific. The insurance carriers subsequently sued Plano in federal court, seeking reimbursement for claims they had settled. They also are seeking additional compensation for damages to their own equipment.


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