                                                                                                                           Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


10-7-2008

CSX Trans Inc v. Port Erie Plastics
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-4546




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                                                  NOT PRECEDENTIAL

         UNITED STATES COURT OF APPEALS
              FOR THE THIRD CIRCUIT
                   ____________

                        No. 06-4546
                       ____________

             CSX TRANSPORTATION, INC.,

                             Appellant,

                              v.

               PORT ERIE PLASTICS, INC.,

                              Appellee.

                       ____________

       On Appeal from the United States District Court
           for the Western District of Pennsylvania
                   (D.C. No. 05-cv-00139E)
        District Judge: Honorable Sean J. McLaughlin
                        ____________

         Submitted Under Third Circuit LAR 34.1(a)
                     October 2, 2008

Before: FISHER, CHAGARES and HARDIMAN, Circuit Judges.

                  (Filed: October 7, 2008 )

                       ____________

                OPINION OF THE COURT
                     ____________
HARDIMAN, Circuit Judge.

       In this appeal, the question is whether CSX Transportation, Inc. (CSX), a railroad

carrier, is entitled to collect demurrage fees 1 from Port Erie Plastics, Inc. (PEP), a

manufacturer of plastic products.

                                               I.

       Because we write for the parties, we mention only briefly the facts essential to our

decision.

       PEP entered into a contract to manufacture plastic DVD cases for NexPak, a

supplier of custom cases for DVDs and related products. NexPak agreed to provide the

requisite plastic resin, which it purchased from BP Amoco on the understanding that

“ownership of the resin will not transfer to [PEP] until the material is delivered to [its]

facility in Harborcreek, PA” and “ownership and all risk of loss will remain with NexPak,

and or the shipping companies, while the resin is in transit or in storage.” BP Amoco

contracted with CSX to ship the resin to Erie, Pennsylvania, and PEP contracted with

Presque Isle Trucking (PIT) to unload the resin and transport it to PEP’s Harborcreek

facility. When shipments arrived in Erie, CSX issued “constructive placement notices”

that notified PIT that a railcar arrived and was available for unloading. PIT did not




       1
         Demurrage fees are “penalties assessed by railroads when shippers or recipients
of freight do not timely return railcars to service after loading or unloading.” CSX
Transp. Co. v. Novolog Bucks County, 502 F.3d 247, 250 (3d Cir. 2007); see also
B LACK’S L AW D ICTIONARY 465 (8th ed. 2004).

                                               2
unload the cars until instructed to do so by PEP, which in turn did not request resin until it

received orders from NexPak.

       At all relevant times, CSX operated under a standard tariff, promulgated pursuant

to 49 U.S.C. § 10743(a)(1), that governs a consignee’s duties with respect to handling

inbound railcars. The tariff provides that “[u]nless otherwise advised, in WRITING, that

another party is willing to accept responsibility for demurrage, consignor at origin or

consignee at destination will be responsible for the payment of demurrage charges.”

According to the tariff, demurrage fees accrue two days after CSX gives the consignee

“constructive placement notice.” Although PEP was identified as the consignee in the

bills of lading for the shipments at issue here,2 PEP designated PIT as the party to whom

“constructive placement notice” should be given.

       Pursuant to the foregoing arrangement, CSX sent fifteen demurrage invoices to

PEP between April 2002 and September 2003 totaling $127,116. PEP refused to pay,

claiming that it never: “directly contracted” with CSX; “consented to act as a consignee”;




       2
           Because CSX uses a cryptic Electronic Data Interchange (EDI) format to prepare
its bills of lading, PEP argues that “[i]t cannot be determined solely from the face of said
documents whether the documents pertain to the freight shipments at issue [or] whether
[PEP] is identified as a consignee.” Recognizing the unintelligibility of the EDI
documents, CSX deposed John Underwood, the individual responsible for CSX’s
demurrage bills. After reviewing the relevant bills of lading, Underwood testified that
they all “identif[y] PEP as the consignee of the shipment.” PEP submitted no evidence to
rebut this testimony and even stipulated to the authenticity of the documents.
Accordingly, the District Court found that “the bills of lading generated by the seller of
the plastic resin designated [PEP] as the consignee of the resin.” We adopt this finding.

                                              3
“knew that it had been listed as a consignee on the bills of lading” generated by BP

Amoco; or “acted in a manner demonstrating ownership or control of the resin.”

       Without the benefit of our decision in CSX Transportation Co. v. Novolog Bucks

County, 502 F.3d 247 (3d Cir. 2007), the District Court granted PEP’s motion for

summary judgment, holding that PEP “was not a consignee as a matter of law,” and was

therefore not responsible for demurrage fees.

                                             II.

       CSX filed a timely notice of appeal and we have jurisdiction pursuant to 28 U.S.C.

§ 1291. The District Court had diversity jurisdiction pursuant to 28 U.S.C. § 1332 and

federal question jurisdiction pursuant to 28 U.S.C. § 1337.

       We review the District Court’s summary judgment in favor of PEP de novo and

apply the same standard as the District Court. Feesers, Inc. v. Michael Foods, Inc., 498

F.3d 206, 212 (3d Cir. 2007). We will affirm the judgment if “the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact” and that PEP is “entitled to

judgment as a matter of law.” F ED. R. C IV. P. 56(c). In making this determination, we

view the facts and draw all inferences in the light most favorable to CSX. Michael

Foods, 498 F.3d at 212 (quoting Farrell v. Planters Lifesavers Co., 206 F.3d 271, 278 (3d

Cir. 2000)).




                                              4
       CSX argues that our decision in Novolog compels us to vacate the District Court’s

order granting summary judgment in favor of PEP. We agree.

       In Novolog, we held that “recipients of freight who are named as consignees on

bills of lading are subject to liability for demurrage charges arising after they accept

delivery unless they act as agents of another and comply with the notification procedures

established in . . . 49 U.S.C. § 10743(a)(1).” 502 F.3d at 250.

       Because there is no genuine issue of material fact regarding PEP’s designation as

consignee in the bills of lading governing the plastic resin shipments, PEP is

presumptively liable for the demurrage fees. Id. PEP can rebut this presumption by

showing that: (1) it never accepted delivery of the shipments, or (2) it was acting as an

agent for NexPak and informed CSX of this arrangement in writing. Id. at 250, 259.

       PEP does not contest the fact that it never notified CSX in writing that it was

acting as NexPak’s agent. Rather, PEP argues that it “was never given notice” and was

never “aware of its designation as consignee,” and therefore, it “cannot be deemed to

have accepted the freight shipments subject to the demurrage charges.” (Emphasis

added). CSX counters that PEP accepted the shipments through PIT, “which was acting

as PEP’s agent, either expressly or under the doctrine of apparent authority, on matters

related to the arrival and unloading of the resin contained within the railcars.”

       The District Court did not decide whether PIT was PEP’s agent for purposes of

accepting delivery. Because the parties vigorously dispute this potentially dispositive



                                              5
question, we will vacate the District Court’s order and remand for further proceedings

consistent with this opinion.




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