Union Pacific Railroad Company v. Plano Molding Company ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 14-1171 & 14-1189
KAWASAKI KISEN KAISHA, LTD., “K” LINE AMERICA, INC., and
UNION PACIFIC RAILROAD CO.,
Plaintiffs-Appellants,
v.
PLANO MOLDING CO.,
Defendant-Appellee.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 07 C 5675 — Harry D. Leinenweber, Judge.
____________________
ARGUED JANUARY 6, 2015 — DECIDED MARCH 31, 2015
____________________
Before FLAUM, WILLIAMS, and TINDER, Circuit Judges.
FLAUM, Circuit Judge. On April 21, 2005, a Union Pacific
freight train derailed in Oklahoma. The train was carrying
two steel injection molds being delivered to Plano Molding
Company in Illinois. The derailment occurred after the
molds broke through the floor of their shipping container,
causing that train car and many behind it to derail and re-
sulting in approximately $4 million in total damage. The
2 Nos. 14-1171 & 14-1189
molds had been manufactured in China and shipped to the
United States before being transferred to the Union Pacific
train for the final leg of their journey.
At issue in this case is the reason that the molds broke
through the floor. The appellants are three companies that
were involved in the shipment of the molds and sustained
losses from the accident: Kawasaki Kisen Kaisha, Ltd., “K”
Line America, Inc. (collectively, “K-Line”), and Union Pacific
Railroad Co. (“Union Pacific”). They sued Plano, claiming
that Plano was at fault because a company it hired packed
the molds into the shipping container improperly, causing
the floor of the container to break and ultimately causing the
derailment. If true, Plano would be liable to appellants for
breach of a warranty found in a document known as the
“World Bill of Lading,” which provided contractual terms
for the shipment of the molds. Plano, in defense, argued that
the molds were properly packed and that they fell through
the floor of the container because the container was defec-
tive.
In a bench trial, the district court found in favor of Plano,
concluding that appellants had not proved that the molds
were improperly packed. The court also held that the de-
railment was in fact caused by deficiencies in the container.
On appeal, the plaintiffs contest these factual conclusions, as
well as a number of other aspects of the district court’s opin-
ion. For the reasons set forth below, we affirm.
I. Background
Plano is an Illinois corporation that designs, manufac-
tures, and sells plastic storage boxes. In 2004, Plano identi-
fied a need to purchase two new steel injection molds, which
Nos. 14-1171 & 14-1189 3
it uses to manufacture its plastic boxes, and so it contacted
CMT International, Inc. (“CMT”), a company that assists
customers in the United States who wish to purchase prod-
ucts from Asia. CMT provided Plano with bids, and Plano
selected Kunshan Yuanjin Plastic & Electronic Co., Ltd.
(“Kunshan”), a Chinese company, to make the molds. Kun-
shan manufactured the molds and loaded them into wooden
crates.
Plano hired World Commerce Services (“World”), 1 a non-
vessel operating common carrier, 2 to arrange for the ship-
ment of the molds from China to Plano’s factory in Illinois.
World then contracted with the THI Group LTD (“THI”) and
K-Line for the physical shipment of the molds. THI, in turn,
hired Shanghai Haixing Yuancang Container Transportation
Co. (“Haixing”) to load the molds into an intermodal ship-
ping container and hired Shanghai Ocean Tally Company as
a “checker,” which ensured that the molds were properly
loaded. That shipping container carried Plano’s molds (in-
side of their wooden crates) from the moment they were
packed in China until the Union Pacific train derailed in Ok-
lahoma. Both World and K-Line issued bills of lading cover-
ing the shipment of the molds. K-Line handled the ocean
1Plano contends that it was actually CMT that retained World’s services.
For the purposes of this appeal, however, this dispute is irrelevant.
2 As their name suggests, non-vessel operating common carriers do not
own or operate ships or other means of freight transportation. Rather,
they act primarily as coordinators of shipping logistics, and contract with
carriers to actually move goods. They do, however, assume common car-
rier responsibility, 46 U.S.C. § 40102(6), (16), and often issue their own
bills of lading. See, e.g., Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co.,
762 F.3d 165, 168–69 (2d Cir. 2014).
4 Nos. 14-1171 & 14-1189
part of the voyage, but subcontracted the overland move-
ment of the molds within the United States to Union Pacific.
Once the shipping container carrying Plano’s molds arrived
in the U.S., it was transferred from K-Line to Union Pacific,
which began transporting the container by train from Cali-
fornia to Illinois. During the voyage, the molds somehow
broke through the floor of the shipping container, causing
the train to derail in Oklahoma. The accident caused approx-
imately $2 million in damage to the cargo of K-Line’s cus-
tomers and $2 million in costs to Union Pacific.
Appellants sued in federal court, attempting to hold Pla-
no liable for certain damages caused by the derailment and
seeking indemnification for claims made against appellants
by third parties who suffered damages in the accident. The
district court initially granted summary judgment in Plano’s
favor on all of appellants’ claims, but this court reversed on
one claim—a breach of contract claim based on a warranty in
the bill of lading issued by World. Kawasaki Kisen Kaisha, Ltd.
v. Plano Molding Co., 696 F.3d 647, 657–58 (7th Cir. 2012). We
remanded to the district court to determine whether Plano
was subject to the terms of the World Bill of Lading. After a
one-day trial, the district court held that Plano was bound by
the World Bill of Lading and could be held liable to appel-
lants if it violated the terms of that agreement. Kawasaki
Kisen Kaisha, Ltd. v. Plano Molding Co., No. 07 C 5675, 2013
WL 3791609, at *8 (N.D. Ill. July 19, 2013) (“Kawasaki I”). Pla-
no does not appeal that ruling.
The district court then held a three-day trial to determine
whether Plano breached Clause 10(2) of the World Bill of
Lading, which states:
Nos. 14-1171 & 14-1189 5
If Carrier receives the goods already packed in-
to containers:
…
(2) Merchant warrants that the stowage and
seals of the containers are safe and proper and
suitable for handling and carriage and indem-
nifies Carrier for any injury, loss, or damage
caused by the breach of this warranty
Plano, the parties agree, was a “Merchant” as defined in
Clause 2(3) of the World Bill of Lading. The World Bill of
Lading defined World as the “Carrier,” but Clause 3 pro-
vides that World’s contractors and subcontractors—
including all of the appellants—are entitled to all of the Car-
rier’s rights under the Bill of Lading.
The trial consisted largely of expert testimony. Appellants
sought to prove that Plano breached Clause 10(2) by im-
properly stowing and securing the molds in the shipping
container. 3 There was no direct evidence of how the molds
were packed into the container, and neither party presented
witnesses who were involved in the loading of the container.
That is in part because the container was packed in China,
making it difficult to obtain this information.
3 As stated above, Plano itself did not actually pack its molds into the
shipping containers; rather, Haixing did, and its work was checked by
Shanghai Ocean Tally. However, assuming, as the district court did, that
these companies were hired by Plano to pack the molds, Plano would be
liable for those companies’ breach of Clause 10(2) just as if Plano itself
had packed the container. Therefore, to avoid unnecessary complexity,
we will conduct our analysis as if Plano itself packed the molds.
6 Nos. 14-1171 & 14-1189
The derailment itself also made it very difficult to deter-
mine after the fact how the container had been loaded. Much
of what was inside of the container before the crash ended
up outside of it, spread over the miles-long crash site. About
60% of the floor of the container was missing after the acci-
dent, allowing much to fall out during the derailment. There
was, however, some physical evidence about the stowage of
the molds. Together, the two molds weighed 25,000 pounds,
and each was packed into its own wooden crate. One mold
was much larger than the other—it weighed 18,900 pounds,
while other weighed 6,100 pounds. When packing shipping
containers, packers use wooden pallets, wooden beams, and
other types of dunnage (all types of inexpensive waste mate-
rials) to support and distribute the weight of cargo. After the
derailment, all that was found in the shipping container was
one 43-inch long wooden pallet, which presumably support-
ed, at least in part, the weight of one of the crates. There
were remnants of wooden pallets found at the accident site,
as well as a wide variety of other debris that could have
served as dunnage. Exhibit 281, a photograph taken at the
derailment scene, appears to show two pallets that survived
the accident, as well as several long wooden boards. It is not
clear, however, which shipping container the pallets and
wood came from, as the derailment caused multiple contain-
ers to break open and spill their contents.
Appellants’ theory of the case was that the molds were
packed in a way that did not sufficiently distribute their
weight in the container. They based this contention on the
guidelines set forth in Circular 43-D, a publication of the As-
sociation of American Railroads, an industry trade group.
Appellants argued that the guidelines in Circular 43-D,
which was entered into evidence, should serve as the stand-
Nos. 14-1171 & 14-1189 7
ard of care in this case. Appellants did not claim that the to-
tal weight of the molds violated the Circular 43-D guide-
lines, but rather that the weight was too concentrated. Re-
garding the concentration of weight in a shipping container,
Circular 43-D states that “not more than 25,000 lbs. uniform-
ly distributed in any 10 linear feet can be loaded.”
Appellants’ argument was presented largely through its
expert witness, Dr. Robert Vecchio. Vecchio theorized that
the pallet found in the shipping container following the ac-
cident was one of two identical 43-inch pallets that were
originally used to support the molds, with each pallet sup-
porting one crate. The larger of the two crates weighed
18,900 pounds; spread out over 43 inches, that translates to
over 5,000 pounds per linear foot, which is double the
amount allowed for in Circular 43-D. Vecchio admitted,
however, that a 43-inch pallet would have been sufficient to
disburse the weight of the smaller crate.
Vecchio also argued that the crates were not properly se-
cured (“lashed”) within the shipping container, which al-
lowed the crates to exert “dynamic amplification”—in other
words, bouncing—on the floor of the container. His theory
was that the combination of a failure to secure the crates and
a failure to distribute the crates’ weight properly led to over-
stressing of the container floor, eventually causing the floor
to break. To support his theory, Vecchio noted that no lash-
ing material was found inside of the container or around the
train following the derailment. Additionally, he referred to a
number of “significant dents” in the wood floor of the con-
tainer that were found after the derailment. According to
Vecchio, these dents were caused by dynamic amplification
8 Nos. 14-1171 & 14-1189
of the crates, which only could have occurred if the crates
were not properly lashed.
The parties’ experts referred to numerous investigative
reports about the derailment at trial. The most important re-
port, on which both appellants and Plano relied heavily and
which was introduced into evidence, was produced by a
company called Intertek Caleb Brett. Appellants focused on
the Intertek report’s statement that the crates were placed in
the center of the container, arguing that this implied that the
weight of the crates was not properly distributed. On the
other hand, the Intertek report stated that the crates were se-
cured and lashed, contrary to Vecchio’s theory. Another im-
portant piece of evidence was a “Testification” produced by
the Shanghai Ocean Shipping Tally Company, the company
that supervised the loading of Plano’s molds into the ship-
ping container. The Testification, like the Intertek report,
stated that the cargo was loaded in the middle of the con-
tainer. However, it also stated that the crates were “packed
sound,” which could imply that the crates’ weight was
properly distributed and that the cargo was properly lashed.
Finally, a post-derailment email from Joana Feng of the THI
Group to World’s John Wember stated that “wooden brack-
ets” had been used “to fix the case[s] in order not to move
when transmitting.” On cross-examination, Vecchio stated
that he had not previously seen the Testification or Feng’s
email, and therefore did not take either into account when
formulating his report.
The district court found that appellants had not provided
sufficient evidence to prove that the weight of Plano’s crates
was not distributed properly. Without any direct evidence as
to how the container was packed, the court said that it was
Nos. 14-1171 & 14-1189 9
pure speculation for Vecchio to assume that the crates were
supported by two 43-inch pallets. Although only one pallet
was found in the container after the derailment, the district
court noted that a second pallet—which even Vecchio as-
sumed had been present—could have been large enough to
support the larger crate. Moreover, the crates may have been
supported by other pieces of dunnage. According to the dis-
trict court, any of these scenarios was equally plausible given
that more than enough wood to adequately support the
crates was found at the site of the accident.
The district court also found that there was not enough
evidence to support appellants’ claim that the crates had not
been properly lashed. The court criticized Vecchio for disre-
garding the Intertek report’s finding that the crates had been
properly secured and lashed, when Vecchio otherwise relied
heavily on the report and had said that it “provided the best
available information” and that he “had no reason not to be-
lieve it.” The district court also stated that Vecchio’s conclu-
sion was belied by the email from Feng to Wember stating
that the crates had been fixed to prevent movement. The dis-
trict court downplayed the fact that no lashing material had
been found at the accident site, stating that it could have
been lost or destroyed during the accident, or that investiga-
tors may have not even searched for it. The court also reject-
ed Vecchio’s theory that the dents in the container’s floor
were caused by dynamic amplification of the crates. The
dents, the court noted, could have preexisted the loading of
the crates into the container or could have been created
when the crates were loaded or during the violent derail-
ment.
10 Nos. 14-1171 & 14-1189
Both appellants and Plano also presented a great deal of
evidence regarding the cause of the derailment, most of
which focused on the condition of the shipping container.
Because we ultimately agree with the district court’s conclu-
sion that appellants failed to prove that Plano breached
Clause 10(2), and therefore do not reach the issue of causa-
tion, we provide only a brief summary of this evidence here.
In essence, Plano and its experts argued that the container
was defective, mostly due to the condition of its welds. Pla-
no’s position was that the molds fell through the floor of the
shipping container not because they were packed improper-
ly, but rather because the floor of the container was defective
and gave way. Appellants, conversely, argued that the welds,
and the container as a whole, were sound. The district court
agreed with Plano, finding that the shipping container was
defective and that “defective welds in the shipping container
caused the molds to fall through the bottom of the container
and cause the derailment.” Kawasaki Kisen Kaisha, Ltd. v. Pla-
no Molding Co., No. 07 C 5675, slip op. at 23 (N.D. Ill. Mar. 6,
2014) (“Kawasaki II”).
II. Discussion
Appellants’ central argument is that the district court
clearly erred by finding that appellants failed to meet their
burden of proving that Plano breached Clause 10(2), and
that this breach caused the Union Pacific derailment. Before
turning to this general issue, we address appellants’ argu-
ments regarding more specific aspects of the district court’s
opinion. We apply federal maritime law because jurisdiction
exists under 28 U.S.C. § 1333. See Norfolk S. Ry. Co. v. Kirby,
543 U.S. 14, 24–25 (2004) (finding bills of lading involving
Nos. 14-1171 & 14-1189 11
overseas shipment of goods to be maritime contracts even
where the last leg of the journey was by rail).
First, appellants argue that the district court ignored the
guidance of Daubert v. Merrell Dow Pharmaceuticals, 509 U.S.
579 (1993), when it assessed the testimony of their expert,
Vecchio. Specifically, they claim that it was improper for the
district court to find Vecchio’s theory less “credible” than the
theories presented by Plano’s experts. Daubert, they argue,
precludes a judge acting as a trier of fact from questioning
an expert witness’s conclusions. Appellants misunderstand a
court’s role in assessing expert testimony. It is true, as appel-
lants point out, that the Daubert Court said a judge’s focus
when assessing expert testimony “must be solely on princi-
ples and methodology, not on the conclusions that they gen-
erate.” Id. at 595. The Court, though, was referring to a
judge’s analysis, under Federal Rule of Evidence 702, of
whether to admit expert testimony 4 at all. Id. at 594–95. In
making this determination, a judge acts as a “gatekeeper” to
ensure that expert testimony is not admitted into evidence
unless it is sufficiently reliable. Dhillon v. Crown Controls
Corp., 269 F.3d 865, 869 (7th Cir. 2001). The district court here
performed this gatekeeping analysis for each expert. In fact,
the court did so both before the trial and in its final opinion,
after both appellants and Plano once again asked the court to
exclude the other side’s expert testimony under Daubert. Nei-
ther party contends that the judge performed these analyses
incorrectly.
4 More precisely, Daubert dealt with the standard for admitting expert
scientific testimony. Daubert, 509 U.S. at 582. The Daubert standard was
later extended to apply to all expert testimony in Kumho Tire Co., Ltd. v.
Carmichael, 526 U.S. 137, 141 (1999).
12 Nos. 14-1171 & 14-1189
Once an expert’s testimony is admitted, it is treated no
differently than lay testimony. See United States v. Christian,
673 F.3d 702, 712 (7th Cir. 2012) (citing Federal Criminal Pat-
tern Jury Instructions of the Seventh Circuit 3.07); United
States v. Mansoori, 304 F.3d 635, 654 (7th Cir. 2002) (endorsing
a jury instruction stating that “the fact that an expert has
given an opinion does not mean that it is binding upon you
or that you are obligated to accept the expert’s opinion as to
the facts.”). When expert testimony has been admitted under
Daubert, the “soundness of the factual underpinnings of the
expert’s analysis and the correctness of the expert’s conclu-
sions based on that analysis are factual matters to be deter-
mined by the trier of fact.” Stollings v. Ryobi Tech., Inc., 725
F.3d 753, 765 (7th Cir. 2013) (quoting Smith v. Ford Motor Co.,
215 F.3d 713, 718 (7th Cir. 2000)). In a bench trial, once the
court has fulfilled its gatekeeping function, it becomes a trier
of fact that needs to assess the evidence itself—not just the
methodology underlying that evidence. The judge, as trier of
fact, was required to play his “essential role as the arbiter of
the weight and credibility of expert testimony.” Id. In con-
cluding that Plano’s experts were more credible than Vec-
chio, the judge properly scrutinized each expert’s assump-
tions, reasoning, and conclusions, as is the duty of the trier
of fact.
Next, appellants argue that the district court was wrong
to believe that they had made an argument regarding the
proper securing and lashing of the molds within the ship-
ping container. Appellants claim that they never made such
an argument; rather, they only argued that the weight of the
molds was not sufficiently dispersed. Appellants also claim
that the district court was incorrect when it stated that “Dr.
Vecchio’s theory of the accident hinges on the idea that the
Nos. 14-1171 & 14-1189 13
Molds were not lashed down properly in the Container.”
Kawasaki II, No. 07 C 5675, slip op. at 17. If appellants are
correct, it is possible that the district court’s mistake caused it
to wrongly discredit Vecchio’s testimony.
But appellants are wrong about their own argument. In
their Post-Trial Closing Statement, appellants devoted more
than a page to this argument, stating that “the post-
derailment investigation did not unearth any evidence” that
the molds were secured and that the “‘dents’ Vecchio found
in the plywood floor, however, show the steel molds were
not properly secured against vertical movement.” To sup-
port their lashing argument, they then quoted from Vecchio’s
testimony, demonstrating that Vecchio’s theory indeed as-
sumed that the crates were not lashed. Appellants’ com-
plaints about the district court, therefore, are not credible.
Even more disturbing is appellants’ criticism of the district
court for using the word “bouncing” to refer to Vecchio’s tes-
timony about “dynamic amplification.” In their closing ar-
gument, appellants thrice referred to dynamic amplification
as bouncing; in fact, they did not use the correct term, “dy-
namic amplification,” at all. 5
5 Appellants also take issue with the district court’s statement that it was
“assum[ing], without finding, that Plano is subject to Clause 10.2.” Kawa-
saki II, No. 07 C 5675, slip op. at 28. Appellants argue that this was a set-
tled issue, and therefore that no assumption was necessary. Though this
assumption was in the appellants’ favor, and therefore did not impact
the outcome below, we think it is worthwhile to provide some clarifica-
tion on this matter. The appellants contend that, by questioning whether
Plano was “subject to” Clause 10(2), the district court contradicted its
July 19, 2013 ruling that Plano was bound to the World Bill of Lading.
We appreciate the appellants’ point, as we think that the district court’s
discussion here was imprecise. Clause 10(2) has a condition precedent; it
14 Nos. 14-1171 & 14-1189
We now turn to the heart of this appeal: whether the dis-
trict court clearly erred by finding that appellants failed to
prove that Plano breached Clause 10(2) of the World Bill of
Lading. Appellants challenge both the district court’s alloca-
tion of the burden of proof and its determination that appel-
lants did not meet their burden. We review de novo a district
court’s allocation of the burden of proof. Chi. Prime Packers,
Inc. v. Northam Food Trading Co., 408 F.3d 894, 898 (7th Cir.
2005). We review a district court’s findings of fact under the
clearly erroneous standard. Fed. R. Civ. P. 52(a)(6); United
States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948) (“A finding
is ‘clearly erroneous’ when although there is evidence to
support it, the reviewing court on the entire evidence is left
with the definite and firm conviction that a mistake has been
committed.”).
Normally, the party claiming breach of a warranty under
a maritime contract—here, appellants—bears the burden of
proof. See, e.g., Cent. Oil Co. v. M/V Lamma-Forest, 821 F.2d 48,
49 (1st Cir. 1987). Appellants argue, however, that in this
only applies if the “Carrier receives the goods already packed into con-
tainers.” At trial, the parties disputed whether this condition had been
satisfied. The district court, though, did not decide the issue because it
concluded that, even if Clause 10(2) was triggered, Plano had not
breached the warranty found in that Clause. As we explain below, this
conclusion was sound. At that point in the litigation, it was settled that
Plano was subject to Clause 10(2) because it was bound as a party to the
terms of the World Bill of Lading. Rather, the question was whether the
Clause was applicable in this case— that is, whether Plano’s duty to safely
and properly stow the molds was triggered. This is clearly what the dis-
trict court meant to say. Regardless, neither the misstatement nor the
district court’s decision not to definitively rule on the matter caused ap-
pellants any prejudice.
Nos. 14-1171 & 14-1189 15
case the burden should fall on Plano to prove that the molds
were packed properly because Plano has readier access to
knowledge about the facts in question—how the shipping
container was actually packed in China. Specifically, appel-
lants point to Plano’s contractual relationships with World
and THI, either of which could have inquired with its
agents—Haixing and Shanghai Ocean Tally—about how the
containers were loaded. They also argue that Plano’s engi-
neering vice-president has a home in China, and that he
should have investigated how the container was actually
loaded.
Appellants’ argument is based on John Henry Wigmore’s
rule that “the burden of proving a fact is said to be put on
the party who presumably has peculiar means of knowledge
enabling him to prove its falsity if it is false.” 9 Wigmore, Ev-
idence § 2486, at 275 (3d ed. 1940). The Supreme Court has
also endorsed this rule: “the ordinary rule, based on consid-
erations of fairness, does not place the burden upon a liti-
gant of establishing facts peculiarly within the knowledge of
his adversary.” Campbell v. United States, 365 U.S. 85, 96
(1961). Wigmore’s “rule” is not mandatory; rather, it is a
“policy consideration” to be “applied in certain cases” as “a
rule of fairness.” Erving Paper Mills v. Hudson-Sharp Machine
Co., 332 F.2d 674, 678 (7th Cir. 1964); see also Wigmore, supra,
at 275 (“The truth is that there is not and cannot be any one
general solvent for all cases. It is merely a question of policy
and fairness based on experience in the different situa-
tions.”).
Appellants point to two cases in which this maxim was
employed. In Erving Paper Mills, a products liability case, we
said that the manufacturer of a product should bear the bur-
16 Nos. 14-1171 & 14-1189
den of proving that the product was suitable for sale to oth-
ers in the ordinary course of its business. 332 F.2d at 678.
And in Shanghai Automation Instrument Co., Ltd. v. Kuei, 194 F.
Supp. 2d 995, 1004 (N.D. Cal. 2001), a district court in Cali-
fornia held that the burden of proof should shift to the de-
fendants where the plaintiff alleged that certain funds re-
ceived by the defendants were improperly converted for
personal use. The defendants, the court noted, had sole pos-
session of information regarding how the funds were spent.
We found a number of other cases in which this rule was
employed. For example, in Shatterproof Glass Corp. v. Libbey-
Owens-Ford Co., the Sixth Circuit shifted the burden of proof
to the defendant, which had peculiar knowledge of the roy-
alty rates it had paid to various patent holders. 482 F.2d 317,
324 (6th Cir. 1973). And in PepsiCo, Inc. v. Redmond, a trade
secrets case brought by Pepsi against a former employee
who had joined a rival corporation, the district court granted
Pepsi’s requested injunction barring Redmond from divulg-
ing trade secrets. 1996 WL 3965, at *1 (N.D. Ill. Jan. 2, 1996).
The court forgave Pepsi’s inability to prove what job duties
Redmond would have at his new job, shifting the burden to
Redmond on this issue because the details of his job duties
were peculiarly within his and his new employer’s
knowledge. Id. at *21. These cases are representative of the
others that we examined.
For a number of reasons, we decline to apply this type of
burden shifting in this case. First, the information at issue is
not “peculiarly within the knowledge” of Plano. Campbell,
365 U.S. at 96. In each of the above-cited cases where the
burden of proof was shifted, the adversary itself had peculi-
ar knowledge of the information at issue. Here, in contrast,
not only does Plano lack “peculiar” (i.e., “exclusive”)
Nos. 14-1171 & 14-1189 17
knowledge of the information at issue, it lacks any
knowledge whatsoever—Plano simply has no information
about how the shipping container was actually loaded. Ap-
pellants argue that Plano has a closer relationship with the
foreign companies that possess this knowledge, and there-
fore that Plano has easier access to that information. Even if
that is true, those companies are separate entities from Pla-
no, and the mere fact that Plano may have a closer relation-
ship with them does not bring this information peculiarly
within Plano’s knowledge. Moreover, appellants have not
demonstrated that Plano would actually be able to acquire
the information at issue. The mere fact that Plano has, in the
past, had contractual relationships with the foreign compa-
nies that possess the relevant information does not mean
that Plano currently has unfettered access to that infor-
mation. It is similarly irrelevant that a Plano vice-president
has a personal home in the country where those companies
are based. China is vast (over 9.5 million square kilometers)
and has the largest population on earth; appellants fails to
explain how Plano’s vice-president would have easy access
to the information at issue. See Central Intelligence Agency,
The World Factbook: China (2014), available at
https://www.cia.gov/library/publications/the-world-
factbook/geos/ch.html (last visited Mar. 3, 2015). In sum,
fairness does not dictate that the burden of proof on this is-
sue be shifted to a party with no actual knowledge of the
relevant information and, it seems, no ready way to acquire
it.
The district court, therefore, properly held appellants to
the burden of proving by a preponderance of the evidence
that Plano breached the warranty in Clause 10(2). That bur-
den required appellants to prove it was more likely than not
18 Nos. 14-1171 & 14-1189
that Plano breached the warranty. See Bunge Corp. v. Carlisle,
227 F.3d 934, 937 (7th Cir. 2000). The district court did not
clearly err by finding that appellants failed to meet this bur-
den. 6
Appellants presented no evidence of how the molds were
actually packed into the shipping container. The fact that only
one relatively small pallet was found in the container after
the crash means little—most of the container’s contents like-
ly fell out during the derailment. As the district court noted,
large amounts of wood—and even some complete pallets—
were found near the derailment site, any of which could
have come from the container in question. Appellants argue
that it was “wild speculation” for the district court to sug-
gest that the wood found at the crash site may have support-
ed Plano’s molds. But appellants overlook the fact that they
had the burden of proving that the crates were improperly
supported. Because they had no direct evidence of how the
container was loaded, appellants had to resort to circumstan-
tial evidence—the fact that only one small pallet was found
in the container post-derailment. Appellants argued that an
inference should be made from this discovery that the pallet
in the container was the only one used to support the molds,
or that there were at most two pallets of identical size. That
inference was weakened by the fact that there was ample
wood found at the crash site that could have served as sup-
port for the molds. The district court did not find that these
scraps had supported the molds. Rather, it found that the
6 Appellants do not appeal the district court’s finding regarding how the
molds were lashed and secured within the container; rather, they claim
that they never made an argument about lashing in the first place. There-
fore, we not need review that aspect of the district court’s opinion.
Nos. 14-1171 & 14-1189 19
existence of the wood undermined appellants’ argument that
the molds had been improperly supported. Moreover, Vec-
chio’s assumption that the molds were supported by two
identical and insufficiently supportive pallets was based on
pure speculation. The missing pallet (or pallets) could just as
easily have been much larger, or, conversely, nonexistent;
there was simply no way to know based on what was found
in the container post-derailment. Appellants repeatedly
complain that Plano presented no evidence to suggest that
the molds were properly packed. As the defendant, though,
Plano did not have to prove anything.
Appellants have not produced enough evidence to prove
that Plano breached the warranty found in Clause 10(2).
Their final argument, however, is that they should not have
to affirmatively prove breach, but rather that breach should
be presumed based on the circumstances of this case. They
argue, “[c]arriers receiving a sealed container cannot possi-
bly [prove how the container was loaded]—it is a ridiculous
burden to carry, hence the warranty. When ‘K’ Line proved
there was no evidence anywhere of proper weight dispers-
ing material for the larger crate, and without proper disper-
sal the stress was excessive, its prima facie case was made.”
Reply Br. 17. Appellants are wrong about the purpose of the
warranty—it exists to create a contractual duty, not to shift
the burden of proof. Their general contention, though, is that
the nature of an accident should provide a presumption of
breach because, absent the presumption, carriers will rarely
be able to provide direct evidence of breach, rendering the
warranty a nullity. This argument is underdeveloped, and
appellants provide no case law to support this approach, but
we interpret it to be an attempt to import the doctrine of res
ipsa loquitur into the realm of contract law.
20 Nos. 14-1171 & 14-1189
Aside from whether the res ipsa loquitur doctrine can ev-
er apply in a breach of contract case, it is clear that the doc-
trine should not apply in this case. We are sympathetic to
appellants’ argument that it will often be exceedingly diffi-
cult for a carrier to affirmatively prove that a shipping con-
tainer was improperly packed when a derailment—precisely
the type of injury a warranty of proper stowage is intended
to prevent—has led to the destruction of the most probative
evidence. This problem, however, was known to the parties
when they agreed to be bound by the World Bill of Lading.
With that problem in mind, appellants could have insisted
upon a provision in the Bill of Lading stating that, in a case
such as this, where a derailment is caused by a merchant’s
goods breaking through the floor of a shipping container,
there would be a presumption that the container was mis-
packed. 7 As the Bill of Lading was actually written, however,
there is no such presumption, and a carrier must affirmative-
ly prove breach and causation. We decline to effectively re-
write the terms of the Bill of Lading by presuming breach.
7 Clause 10(5) of the World Bill states: “Merchant shall inspect containers
before stuffing them and the use of the containers shall be prima facie ev-
idence of their being sound and suitable for use.” Therefore, it is evident
that the parties knew how to incorporate evidentiary presumptions into
the Bill of Lading. The failure to do so explicitly in Clause 10(2) demon-
strates that the parties did not wish to create such a presumption.
The presumption included in Clause 10(5), we note, does not impact
our analysis of whether Plano breached its duty under Clause 10(2). As
the district court correctly stated, “[t]he question of whether the stowage
and seals were safe and proper is a different question than whether the
container was sound and suitable.” Kawasaki II, No. 07 C 5675, slip op. at
27–28.
Nos. 14-1171 & 14-1189 21
Because we agree with the district court’s conclusion that
appellants did not meet their burden of proving that Plano
breached Clause 10(2), we do not need to review its findings
that the shipping container was defective and that those de-
fects caused the molds to fall through the container floor, ul-
timately causing the derailment. Plano had no obligation to
explain why the accident occurred. Once the district court
found that appellants had not met their burden of proving
that Plano had breached Clause 10(2), the actual cause of the
accident became legally irrelevant. 8 Therefore, we agree with
the district court that Plano is not liable to appellants for
damages stemming from the derailment.
III. Conclusion
We AFFIRM the judgment of the district court.
8 The district court’s finding regarding the cause of the accident, we note,
was not in itself sufficient to relieve Plano of liability. To prevail, appel-
lants had to prove, in addition to breach, that Plano’s breach caused the
derailment. The district court found that the defective state of the ship-
ping container was a but-for cause of the accident. However, the fact that
a container’s defective state was a but-for cause of a derailment does not
mean that a merchant’s improper stowage of goods was not also a but-for
cause. Under those circumstances, the merchant could conceivably be
liable because its breach was a cause (though not the only cause) of dam-
age.