Opinion
NO. CIV. S:06-1356 FCD EFB.
January 25, 2008
MEMORANDUM AND ORDER
This matter is before the court on motions for summary judgment brought by third-party defendant/fourth-party plaintiff Shipco Transport, Inc. ("Shipco") and third-and fourth-party defendant Maersk Sealand, Inc. ("Maersk"). For the reasons set forth below, Shipco's and Maersk's motions for summary judgment are DENIED.
Because oral argument will not be of material assistance, the court orders these matters submitted on the briefs. E.D. Cal. L.R. 78-230(h).
BACKGROUND
Unless otherwise noted, the facts herein are undisputed. (See Pl.'s Response to Maersk's Stmt. Of Undisp. Facts ("RMUF"), filed Jan. 2, 2008; Pl.'s Response to Shipco's Stmt. Of Undisp. Facts ("RSUF"), filed Jan. 2, 2008.) Where the facts are in dispute, the court recounts plaintiff's version of the facts. (See Pl.'s Stmt. Of Add'l Disp. Facts ("ADF"), filed Jan. 2, 2008 [Plaintiff refers to these facts as "undisputed" facts, but they are properly treated as additional disputed facts.].)
A. The Mbacke and Transcon Contracts
Plaintiff Mamemor Mbacke ("Mbacke") entered into two written contracts with Transcon Cargo, Inc. ("Transcon"), a freight forwarder, to arrange for the shipment of two ocean containers, one traveling from California to Dakar, Senegal (the "Senagal shipment") and another traveling from Oakland, California to Kampala, Uganda (the "Uganda shipment"). (RMUF ¶ 1.) The Uganda shipment, the only shipment at issue on the motions, consisted of a 40-foot container carrying used computers, monitors, servers, and x-ray equipment. (RMUF ¶ 2.) The shipment was to be delivered to Shell Mulaugo, the consignee of the cargo. (RMUF ¶ 5.) Merian Zakye ("Zakye") was the owner of Shell Mulaugo. (RMUF ¶ 5.) B. The Subcontracts
The court notes that Maersk filed objections to evidence, in which Shipco joined, on January 16, 2008, objecting to various aspects of Mbacke's evidence submitted in opposition to the motions. Except where otherwise noted below, the court finds Maersk's objections irrelevant to the motion, as the court does not rely upon the subject evidence in rendering its decision. As such, Maersk's objections are overruled as moot.
Trascon, acting as Mbacke's forwarding agent, hired Shipco, a Non-Vessel Operating Carrier ("NVOCC"), to transport the Uganda shipment. (RMUF ¶¶ 3-4; RSUF ¶ 5.) Shipco, in turn, hired Maersk as the underlying carrier for the Uganda shipment. (RMUF ¶ 4.)
An NOVCC is statutorily defined as "a common carrier that does not operate the vessels by which the ocean transportation is provided, and is a shipper in its relationship with an ocean common carreir." 46 U.S.C. § 1702(17)(B).
C. The Shipment Leaves Oakland
Maersk loaded the container onto its vessel in Oakland on or about December 27, 2004. (RMUF ¶ 9.) Mbacke claims he expected the shipment to arrive in Kampala within 35 days. (RMUF ¶ 15.) Zakye also asserts that she expected the cargo to arrive in January 2005. (RMUF ¶ 17.) In any event, Mbacke expected the cargo would arrive in Kampala no later than March 2005. (RMUF ¶ 16.)
Mbacke had individually shrink-wrapped each piece of cargo, loaded them into the container, and sealed the container before Maersk received it. (RMUF ¶ 9.) Mbacke had stored the cargo in an enclosed warehouse prior to loading the container, and the container was not damaged. (ADF ¶ 5.) (ADF ¶ 5.) Both Shipco and Maersk issued bills of lading for the Uganda shipment. (RMUF ¶¶ 6, 10.)
1. The Shipco Bill of Lading
Shipco issued a bill of lading for the Uganda shipment on December 30, 2004. (RMUF ¶ 6.) The bill of lading consisted of two pages, a front page and a back page. (RMUF ¶ 6; Shipco's Ex. 1, filed Nov. 29, 2007.) Mbacke claims he never received the back page of the bill of lading. (ADF ¶ 12.)
Mbacke also claims the front page bill of lading produced by Shipco and Maersk is not the bill of lading front page he received. The court notes that the faxed copy of the bill of lading produced by Mbacke is missing the freight and charges information contained in Shipco's proffered copy of the bill of lading. (Compare Pl.'s Ex. B, filed Jan. 2, 2008, with Shipco's Ex. 1, filed Nov. 29, 2008.)
a. Front page
The front page of the bill of lading contained information about the Uganda shipment. The bill of lading named African American Import/Export Group, the name under which Mbacke was doing business, as the shipper. (RMUF ¶ 6.) The consignee was identified as Shell Mulaugo, and Transcon was named as the forwarding agent. (RMUF ¶ 6.) The carrying vessel was listed as Dirch Maersk, and Maersk Uganda Limited was identified as the person to apply to for delivery in Uganda. (RMUF ¶ 6.) The bill of lading listed Mombasa, Kenya as the port of discharge for the Uganda shipment. (RMUF ¶ 13.)
Uganda is a landlocked country. (RSUF ¶ 16.) Mombasa, Kenya is the closest ocean port to Kampala, Uganda. (RSUF ¶ 17.)
The front page of the bill of lading also contained information regarding the cargo. The bill of lading designated the number of packages as "1." (RSUF ¶ 11.) In the section labeled "Description of Packages or Goods," the bill of lading listed "1559 pieces." (RSUF ¶ 13.) The bill of lading also contained a designated space to declare an excess value for the cargo, which was not filled in. (RSUF ¶¶ 14-15.) Shipco charged $7,967 in freight for the shipment. (RMUF ¶ 8.)
b. Back page
The back page of the bill of lading contained several terms and conditions regarding Shipco's liability. First, a "Clause Paramount" stated that the liability of the carrier would be exclusively determined pursuant to the Carriage of Goods by Sea Act ("COGSA"). (RMUF ¶ 32.) The application of COGSA extended to the entire time the goods were in the custody of the carrier or participating carrier. (RMUF ¶ 32.)
A Clause Paramount is a statement required by federal law to be in a bill of lading for transportation of goods by sea from the United States to a foreign port. Carriage of Goods by Sea Act ("COGSA") § 13 (codified at 46 U.S.C. § 30701 note (2007)). The clause specifies that COGSA governs the bill of lading. Id.
A "carrier" is defined by the bill of lading as "the Company stated on the front of this Bill of Lading as being the Carrier on whose behalf this Bill of Lading has been signed." (RMUF ¶ 27.)
The bill of lading defined "participating carrier" as "the ocean carrier and any other water, land or air carrier involved in the Carriage of the Goods whether it be a Port to Port or a Combined Transport movement." (RMUF ¶ 28.)
The bill of lading also limited the carrier's liability to $500 per package or shipping unit in the event of loss or damage. (RMUF ¶ 33.) This provision could be avoided by declaring the value of the cargo, on the front page of the bill of lading, and paying a correspondingly higher freight rate. (RMUF ¶ 34.) Similarly, the bill of lading provided that the carrier would not under any circumstance be liable for any consequential loss or damage as a result of delay. (RMUF ¶ 35.)
Lastly, the bill of lading contained a "Himalaya Clause" that extended its terms and conditions to Shipco's agents and independent contractors, including participating carriers. (RMUF ¶ 31.) The bill of lading also required all suits to be brought within one year of the date of delivery of the cargo or the date the cargo should have been delivered. (RMUF ¶ 30.)
A Himalaya Clause is a contractual provision for the benefit of a third-party that is not a party to the contract. The term originates from the English Court of Appeal decision in Adler v. Dickson, (1954) 2 Lloyd's Rep. 267 (A.C.), in which a passenger on the S.S. Himalaya was injured while crossing the gangway. The passenger's ticket contained a no-liability clause exempting the carrier, so the passenger sued the ship master and boatswain. The ship master and boatswain argued they too were exempt from suit pursuant to the no-liability clause. The court ultimately disagreed with the ship master and boatswain, finding the ticket did not expressly or impliedly benefit servants or agents. Following the decision, however, so-called "Himalaya" clauses expressly benefitting stevedores and others began to be included in bills of lading.
2. The Maersk Waybill
Maersk issued a non-negotiable waybill ("waybill") for the Uganda shipment on January 6, 2005. (RMUF ¶ 10.) The waybill consisted of a single page, but expressly incorporated the terms and limitations of Maersk's long form bill of lading. (RMUF ¶ 22.) Plaintiff claims he never received a copy of the waybill. (UF ¶ 13.)
a. Single page waybill
The waybill contained information about the Uganda shipment. The shipper on the waybill was identified as Shipco, and Shell Mulaugo was listed as the consignee. (RMUF ¶ 10.) The waybill identified Mombasa, Kenya as the port of discharge for the Uganda shipment. (RMUF ¶ 14.)
The waybill also contained information regarding the cargo. In the space designated for the description of the goods or packages, the waybill listed "1 × 40 container said to contain 1559 pieces." (RMUF ¶ 11.) The waybill designated the number of packages as "1." (RMUF ¶ 11.) The waybill also provided a space for declaring the value of the cargo, which was not filled in. (RMUF ¶ 12.) Maersk charged $7,911 in freight for the shipment. (RMUF ¶ 12.)
b. Long form bill of lading
Maersk's long form bill of lading, incorporated by reference in the waybill, contained numerous terms and conditions on Maersk's liability. Many of these terms and limitations are the same as those contained in Shipco's bill of lading. For example, Maersk's liability for loss or damage to cargo was limited to $500 unless a higher value for the cargo was declared. (RMUF ¶¶ 23-24.) There was one difference, however, between the Shipco bill of lading and Maersk's long form bill of lading. While Shipco's bill of lading stated Shipco would not in any circumstances be liable for consequential loss or damage, Maersk's long form bill of lading limited Maersk's liability for consequential loss or damages to the amount of the freight charges. (RMUF ¶ 25.)
D. The Shipment Arrives in Mombasa
The container arrived at the port of Mombasa on or about March 7, 2005. (RMUF ¶ 19.) The parties dispute the next sequence of events.
Maersk asserts that sometime before March 6, 2005, it sent an arrival notice to the consignee stating that the container was due to arrive on or about March 6, 2005, and was expected to be available for delivery to the consignee on or about March 31, 2005. (RMUF ¶ 18.) Zakye denies receiving such notice. (Pl.'s Ex. D ¶ 7, filed Jan. 2, 2008.)
Zakye maintains that sometime in March 2005 Maersk informed her that a revised invoice, showing the dollar value of the individual goods, was required by Mombasa customs to release the container. (UF ¶ 10.) Zakye asserts that she provided this documentation in April 2005. (UF ¶ 10; Pl.'s Ex. D ¶ 5, filed Jan. 2, 2008.) According to a letter produced by Shipco, however, Maersk requested the revised invoice in April 2005. (Shipco's Ex. 3, filed Nov. 29, 2007.)
Mbacke and Zakye assert they made repeated inquiries into the status and location of the container after it failed to be delivered in January 2005. (UF ¶¶ 8, 14.) They further claim Maersk continually represented the cause of delay as "backlog." (UF ¶¶ 8, 11.) Shipco asserts that any delay regarding the shipment was due to Zakye's failure to submit the revised invoice. (RSUF ¶ 19.) However, an internal email from a Shipco employee faults Maersk as the source of the delay and failure to locate the container:
This is unacceptable . . .how come you just found out about it?? These had been requested since February and you are sending them now??? Thi a totally lack of professionalism, Am I supposed to tell my customer Maersk was supposed to send docs their agent in February and you sti haven't?? What about the container . . .where is it?? You still have not answered question . . .where is the container right now?? Did you call yr agent this morning as you promised?? Mindy, Can you pls help?? It seems that your customer service and documentat dept are not able give us the answer we are looking for.
Shipco and Maersk object to the court's admission of this evidence as hearsay. Because it is an email from one of Shipco's employees to Maersk, it falls within the hearsay exception for an admission by a party-opponent. Fed.R.Evid. 801(d)(2) ("A statement is not hearsay if . . . offered against a party and . . . [a statement] by a party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship[.]") Relating to this email, Mbacke filed a declaration on January 16, 2008; said declaration was untimely filed. However, the court has consideration the declaration, in some respects relevant to the motion, since there is no prejudice to Shipco or Maersk in that they filed formal objections to the email, as well as other objections to evidence, which addressed the matters contained in Mbacke's declaration.
(UF ¶ 19; Pl.'s Ex. C p. 6, filed Jan. 2, 2008.)
The parties also disagree as to when the container left Mombasa and arrived in Kampala. Maersk asserts the container left Mombasa on July 9, 2005, and arrived in Kampala on July 13, 2005. (RMUF ¶ 20.) Zakye, however, maintains that Maersk notified her of the container's arrival in August 2005. (UF ¶ 15; Pl.'s Ex. D ¶ 7, filed Jan. 2, 2008.) Neither party disputes that Zakye rejected the cargo in August 2005, allegedly because of water contamination. (RMUF ¶ 21.)
E. The Instant Action
On April 21, 2006, Mbacke filed a complaint in Sacramento Superior Court against Transcon alleging four causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) intentional and negligent misrepresentation; and (4) conversion. Mbacke claims the value of the cargo was $88,000 and that he suffered consequential damages of $340,000. (UF ¶¶ 23-24.)
On June 16, 2006, Trancon removed the complaint to this court and filed a third-party complaint against Shipco. Shipco, in turn, filed a fourth-party complaint against Maersk on November 17, 2006. Transcon amended its third-party complaint on May 8, 2007, to name Maersk as a third-party defendant.
On December 26, 2007, Mbacke stipulated to the dismissal of Transcon. Transcon thereafter stipulated to dismiss its third-party complaint against Shipco and Maersk on January 2, 2008. Thus, this matter proceeds presently on Shipco's fourth-party complaint against Maersk.
Said stipulation of dismissal was entered after the filing of the instant motions for summary judgement. Thus, to the extent the motions are directed at Transcon, they are now moot and those issues are not considered by the court herein.
STANDARD
The Federal Rules of Civil Procedure provide for summary judgment where "the pleading, 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. Fed.R.Civ.P. 56(c); see California v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998). The evidence must be viewed in the light most favorable to the nonmoving party. See Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en banc).
The moving party bears the initial burden of demonstrating the absence of a genuine issue of fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving party fails to meet this burden, "the nonmoving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion at trial. Nissan Fire Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir. 2000). However, if the nonmoving party has the burden of proof at trial, the moving party only needs to show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp., 477 U.S. at 325.
Once the moving party has met its burden of proof, the nonmoving party must produce evidence on which a reasonable trier of fact could find in its favor viewing the record as a whole in light of the evidentiary burden the law places on that party. See Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995). The nonmoving party cannot simply rest on its allegations without any significant probative evidence tending to support the complaint. See Nissan Fire Marine, 210 F.3d at 1107. Instead, through admissible evidence the nonmoving party "must set for specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).
ANALYSIS
Section 4(5) of COGSA limits a carrier's liability for loss of damage of goods to $500 per package. 46 U.S.C. App. § 1304(5). The shipper may, however, increase the carrier's liability by declaring on the bill of lading a higher value for the goods shipped, and paying an accordingly higher freight charge. Under the law of the Ninth Circuit, a carrier can take advantage of COGSA's liability limit "only if the shipper is given a `fair opportunity' to opt for a higher liability by paying a correspondingly greater charge." Nemeth v. General S.S. Corp., 694 F.2d 609, 611 (9th Cir. 1982). The fair opportunity requirement is meant to give the shipper notice of the legal consequences of failing to opt for a higher freight rate. Id.
COGSA applies to any contract for carriage of goods between a port in the continental United States and a foreign port. COGSA § 13 (codified at 46 U.S.C. § 30701 note (2007)). The Uganda shipment of goods from Oakland, California to Mombasa, Kenya satisfies this requirement.
The carrier bears the initial burden of proving "fair opportunity." Id. The carrier can meet this initial burden by showing that the language of COGSA Section 4(5) is contained in the bill of lading. Id. Such an express recitation is prima facie evidence that the shipper was given a fair opportunity to choose a higher liability. Id. The burden of disproving fair opportunity is then shifted to the shipper.
A. Unreasonable Deviation
As a threshold matter, Mbacke argues that any contractual limitations on Shipco's or Maersk's liability are unenforceable because a triable issue of fact exists as to application of the doctrine of unreasonable deviation, whereby a deviation from the contract of carriage deprives a carrier of Section 4(5)'s liability limitations. Mbacke thus argues that the court need not reach the merits of Shipco's and Maersk's motions for summary judgment. The court disagrees.
A deviation is defined as a "voluntary departure without necessity, or any reasonable cause, from the regular and usual course of the voyage." Vision Air Flight Serv., Inc. v. M/V Nat'l Pride, 155 F.3d 1165, 1175-76 n. 12 (9th Cir. 1998) (internal quotation and citation omitted).
At common law, a geographic deviation from a scheduled route of voyage stripped a carrier of its defense to liability based on exculpatory provisions of a bill of lading. Vision Air Flight Servs. v. M/V Nat'l Pride, 155 F.3d 1165, 1170 (9th Cir. 1998). The deviation was regarded as exposing the goods to such unreasonable risks not anticipated by the parties as to constitute a breach of the contract for carriage. Id. at 1171. Although the doctrine was initially limited to geographic deviations alone, its underlying rationale applied to other contexts in which a carrier exposed goods to unreasonable risks not contemplated by the parties. Id. The doctrine therefore expanded to include serious breaches of the contract for carriage, which became known as "quasi-deviations." Id. The most common example of quasi-deviation was stowage of cargo on deck.Id.
Although the doctrine was traditionally applied broadly, the Ninth Circuit in Vision Air Flight Servs. v. M/V Nat'l Pride, 155 F.3d 1165 (9th Cir. 1998), held the enactment of COGSA "limited the circumstances under which it applies." Id. at 1172. Only intentional destruction of the goods a carrier contracts to transport constitutes an unreasonable deviation; it is not enough to show the carrier was negligent, grossly negligent, or even reckless. Id. at 1175.
Thus, under the current law in the Ninth Circuit, in order for Mbacke to withstand summary judgment, he must present admissible evidence supporting an inference of intent on the part of Shipco and/or Maersk to damage the cargo. The court finds Mbacke has not satisfied this burden.
Mbacke admits the cargo was properly routed through Mombasa. However, he argues the continued delay on the part of Shipco and Maersk evince an intent to damage the cargo. With respect to Shipco, there is no evidence in the record from which to infer an intent to damage the cargo. The email correspondence between Shipco and Maersk indicates Shipco was just as dissatisfied with the situation as Mbacke and made repeated attempts to locate the container. In regards to Maersk, although the email correspondence provided some notice to Maersk that the delay was unacceptable, at most, the subsequent delay of five months amounts to gross negligence or recklessness on the part of Maersk.
Mbacke relies on Sea-Land, Inc. v. Lozen Intern LLC, 285 F.3d 808 (9th Cir. 2002), to support his assertion that Maersk's continued apathy following the email exchange raises a triable issue of fact as to unreasonable deviation. While there are some factual similarities between this case and Sea-Land, the court ultimately finds important factual distinctions between the two which require a different result in this case.
In Sea-Land, a cargo owner sued a carrier for delay in the shipment of grapes from Mexico to England. 285 F.3d at 813. The grapes were to be transported by truck to California, and then transported by rail to New Jersey, where they would be loaded onto the carrier's vessel sailing to England. Id. The carrier's railroad agent, however, mistakenly placed the cargo on the wrong train. Id. After the error was discovered, the carrier attempted to take possession of the cargo and transport it by truck to New Jersey so that it would arrive at the ship on time. Id. at 818. The railroad, however, refused to comply with the carrier's repeated requests. Id. In an internal company email, one of Sea-Land's employees admitted that the railroad was aware of the damage that would result from delay and still refused to comply with the carrier's request to transport the cargo by truck:
I got with [the railroad] to see if we could get containers taken from the train . . . I kept telling [the railroad] that these units were vessel protected loads, and they had to make the vessel. There was no ambiguity in my needs, with regards these units. It comes down to me wanting to truck these units . . . but [the railroad], in their infinite wisdom, decided not to allow us to do this.Id. The court subsequently held this evidence, coupled with a letter from Sea-Land to plaintiff expressing the same, raised a triable issue of fact as to whether the railroad had intentionally caused damage to the cargo by refusing to transport the shipment by truck. Id. at 818-19.
Unlike Sea-Land, in the present case, there is no evidence to raise an issue of fact as to whether Maersk intentionally caused damage to the cargo. Maersk, unlike the railroad in Sea-Land, had no reason to believe that a delay in shipment would damage the contents of the cargo. The equipment was not perishable and, according to Mbacke, each piece of equipment had been individually shrink-wrapped, "carefully" loaded, and sealed in the container prior to the container being loaded on Maersk's vessel. (ADF ¶ 5.) Further, Mbacke never requested Maersk to ship the cargo by other, faster means like the carrier in Sea-land. Such request, if refused, might have raised a triable issue as to whether Maersk intentionally delayed transport to cause damage to the goods. Instead, the only evidence in the record is an email from Shipco to Maersk notifying Maersk that the delay was upsetting and unacceptable. The delay of five months subsequent to this email, at most, constitutes gross negligence or recklessness on the part of Maersk. To hold otherwise and find the delay in transport of the Uganda shipment an unreasonable deviation would inappropriately expand the doctrine. This circuit and others have expressly cautioned against such expansions. See, e.g., Vision Air Flight Services, Inc. v. M/V Nat'l Pride, 155 F.3d 1165, 1174 (9th Cir. 1999) ("[C]ourts and commentators agree that the doctrine should be sharply limited and have displayed a certain hostility toward expansion of the deviation doctrine, especially in the context of quasi-deviation."); Rockwell Internat'l Corp. v. M/V Incotrans Spirit, 998 F.2d 316, 319 (5th Cir. 1993) ("We decline to expand the doctrine to [negligent off-loading]."); Universal Leaf Tobacco Co. v. Campanhia De Navegacao Maritima Netumar, 993 F.2d 414, 417 (4th Cir. 1993) (refusing to "extend the unreasonable deviation doctrine beyond its current boundaries") (internal quotations omitted); SPM Corp. v. M/V Ming Moon, 965 F.2d 1297, 1304 (3d Cir. 1992) ("We agree with our sister circuits that the doctrine of quasi-deviation is not to be viewed expansively in the post-COGSA era."); B.M.A. Industries, Ltd. V. Nigerian Star Line, Ltd., 786 F.2d 90, 92 (2d Cir. 1986) ("The principle of quasi-deviation is arguably inconsistent with COGSA, and is not one to be extended.") (internal quotations omitted).
Even viewing the evidence in the light most favorable to Mbacke, the court finds there is no genuine issue of material fact as to the doctrine of unreasonable deviation. The court will thus consider whether Shipco and Maersk are entitled to summary judgment based on the liability limitations in the bill of lading.
B. Fair Opportunity
Shipco and Maersk claim they have met their evidentiary burden of showing "fair opportunity" by reciting Section 4(5) in their respective bills of lading. Indeed, Clause 8(3) of Shipco's bill of lading and Clause 7.3 of Maersk's bill of lading provide the shipper with the option of declaring a higher value in exchange for paying additional freight. It is also undisputed that Shipco's bill of lading and Maersk's waybill contained a designated space for declaring a higher value, which was not filled in. Mbacke, however, argues he never received either the back page of Shipco's bill of lading, which contains Clause 8(3), or a copy of Maersk's waybill, which incorporates Clause 7.3.
The court finds there is a factual dispute over whether Mbacke received notice on the bill of lading of the limited liability provision in Section 4(5). Such factual dispute precludes the granting of Shipco's and Maersk's motions for summary judgment.Nemeth v. Gen. Steamship Corp., Ltd., 694 F.2d 609, 612 (9th Cir. 1982) (reversing grant of summary judgment in carrier's favor because triable issues of fact remained as to whether shipper was given fair opportunity to choose a higher liability); Komatsu v. States Steamship Co., 674 F.2d 806, (9th Cir. 1982) (affirming partial grant of summary judgment in shipper's favor where incorporation by reference of Section 4(5) in the bill of lading was insufficient to give shipper notice of opportunity to declare a higher value for the goods).
The Ninth Circuit in similar cases has held that a carrier cannot meet his initial burden of showing fair opportunity where the bill of lading is difficult to read or does not fully recite Section 4(5) of COGSA. For instance, in Nemeth v. Gen. Steamship Corp., the owner and shipper of household goods sought to recover from an ocean carrier and his agent $22,000 in damages to the goods during transport from Buenos Aires to Los Angeles. 694 F.2d at 610-11. The carrier and his agent contended that their liability was limited to $500 per package based on a provision reciting Section 4(5)'s liability limitations in the bill of lading. Id. at 611. The court reversed the district court's grant of summary judgment in favor of the carrier and his agent because the recitation of Section 4(5) in the bill of lading was "microscopic and blurry." Id. at 611-12. The court reasoned that such an "illegible recitation" of Section 4(5) could not provide notice to the shipper of the choice of liabilities and, therefore, was not prima facie evidence of fair opportunity. Id.
Similarly, in Komatsu, Ltd. v. States Steamship Co., a shipper filed suit against a carrier for damage to a tractor during transport from Kobe, Japan to Seattle, Washington. 674 F.2d at 808. The carrier argued his liability was limited to $500 based on both a Clause Paramount in the bill of lading that provided COGSA's provisions governed the parties' contractual relations and a separate clause of the bill of lading that provided: "[r]eference is hereby made specifically to value limitations (46 U.S. Code 1304(5)) and time limitations for filing claim and bringing claim (46 U.S. Code 1303(6))[.]" Id. at 809-10. The court affirmed a partial grant of summary judgment in the shipper's favor because "merely incorporating COGSA's provisions into a Paramount Clause was not prima facie evidence that a carrier gave the shipper the opportunity to declare a higher value." Id. at 809 (citing Pan Am. World Airways, Inc. v. Cal. Stevedor Ballast Co., 559 F.2d 1173 (9th Cir. 1977) (per curiam)). The court reasoned that the clauses in the bill of lading contained only "oblique reference" to the contents of Section 4(5) and the shipper could not be charged with constructive notice of the minute details of COGSA. Id. at 810.
Here, the reference is neither "blurry" or "oblique." Plaintiff contends there can be no showing of fair opportunity to declare a higher value because he never received the page which contains Clause 8(3) or incorporates Clause 7.3. Like the defendants inNemeth and Komatsu, Shipco and Maersk are alleging their respective bills of lading are prima facie evidence of "fair opportunity." However, just as in Nemeth and Komatsu, plaintiff Mbacke argues the bill of lading he received did not provide sufficient notice of Section 4(5)'s limitations.
In Nemeth, the plaintiff argued that an illegible recitation of Section 4(5) was not sufficient to provide notice of an opportunity to declare a higher value for the goods, and thereby was not prima facie evidence of "fair opportunity." In Komatsu, the plaintiff claimed the mere incorporation of Section 4(5) into the bill of lading was similarly insufficient to constitute prima facie evidence of "fair opportunity." Here, Mbacke asserts that neither the Shipco bill of lading nor the Maersk waybill were delivered to him. These allegations of non-delivery of the "fair opportunity" provisions clearly support a finding of genuine issues of material fact.
Shipco and Mbacke cite Carman Tool Abrasives, Inc. v. Evergreen Lines, 871 F.2d 897 (9th Cir. 1989), and Royal Ins. Co. v. Sea-Land Servs., 50 F.3d 723 (9th Cir. 1995), as supporting their assertions. Those cases, however, are inapposite because they dealt with the delayed issuance or receipt of a bill of lading, not whether the bill of lading delivered to the plaintiff contained notice of Section 4(5). See Carman Tool, 871 F.2d at 899-900 ("[Plaintiff] concedes that [defendant's] bill of lading satisfies ["fair opportunity"]. . . . It argues, nonetheless, that it was denied a fair opportunity to opt for the higher liability limits because it did not see a copy of the bill of lading until long after the goods were shipped."); Royal Ins., 50 F.3d at 728-29 ("[Plaintiff] argues that because the bill of lading was issued [after the goods were loaded onto the vessel], its liability limitations do not apply, even though the bill of lading complies in every respect with COGSA."). Thus, Carman Tool and Royal Ins. do not provide a basis for determining the adequacy of the notice on Shipco's bill of lading or Maersk's waybill.
Viewing the evidence in the light most favorable to Mbacke, a reasonable fact finder could conclude that neither Shipco's bill of lading nor Maersk's waybill is prima facie evidence of "fair opportunity." Accordingly, summary judgment of Mbacke's damages claim is DENIED.
C. Agency
Shipco argues, in the alternative, that even if Mbacke never received a copy of the bill of lading or waybill, he can nonetheless be held to its terms. Shipco argues that because an NOVCC, like Trascon, generally acts as the agent of the cargo shipper when it contracts with the ocean carrier, acceptance of the bill of lading by Transcon imputes knowledge of its terms to Mbacke.
The use of general agency principles to hold shippers to the terms of a bill of lading has been called into question in recent years. The Ninth Circuit in Kukje Hwajae Ins. Co., Ltd. v. M/V Hyundai Liberty, 294 F.3d 1171 (9th Cir. 2002), held that an NOVCC acted as a cargo owner's agent when negotiating a bill of lading with a downstream carrier. Id. at 1175. That holding, however, was vacated by the Supreme Court in light of Norfolk Southern Railway v. Kirby, 543 U.S. 14 (2004). Green Fire Marine Ins. Co., Ltd. v. M/V Hyundai, 125 S. Ct. 494 (2004),vacating 294 F.3d 1171. In Norfolk, the Court considered whether an intermediary can bind a cargo owner to the terms of a carrier's bill of lading based on principles of agency law.Norfolk, 543 U.S. at 30. The Court stated that "reliance on agency law is misplaced" because the traditional indicia of agency, a fiduciary relationship and control by the principal, are generally lacking in relationships between cargo owners and freight forwarders. Id. at 34. Nonetheless, the Court held that "an intermediary binds a cargo owner to the liability limitations it negotiates with downstream carriers." Id. In reaching this conclusion, the court relied heavily on the fact that the intermediary in question was in actual possession of the goods when negotiating the bill of lading with the downstream carrier.Id. ("[W]e hold that intermediaries, entrusted with goods, are `agents' only in their ability to contract for liability limitations with carriers downstream.") (emphasis added). Thus, there is some question whether an intermediary can bind a cargo owner to the terms of a bill of lading where, as here, the NOVCC was not entrusted with the goods.
Nevertheless, even assuming agency law can be used to bind a cargo owner to the terms of a bill of lading, the court finds Shipco has not established prima facie evidence of "fair opportunity." The only evidence in the record of Transcon's receipt of Shipco's bill of lading is the declaration of a Shipco employee, stating she sent a copy of the bill of lading to Transcon. Putting aside the fact it is uncorroborated and self-serving, the declaration does not establish that Transcon received a copy of Shipco's bill of lading. The declaration merely provides that a copy of the bill of lading was "sent" to Transcon. Further, a reasonable factfinder could infer that Transcon never received a copy of the relevant portions of Shipco's bill of lading based on Mbacke's assertion that he never received a copy of the bill of lading's back page.
By the same token, the court cannot grant summary judgment to Maersk on a related claim that Shipco accepted the waybill as an agent of Mbacke. Even though Shipco received a copy of Maersk's waybill, and putting aside the question of whether Shipco was acting as Mbacke's agent at the time, a reasonable factfinder could still deem the waybill insufficient to establish prima facie evidence of "fair opportunity."
The court in Komatsu, supra, expressly rejected an argument by a carrier that incorporation of Section 4(5) by reference was sufficient to provide notice of an opportunity to declare a higher liability, despite the fact the plaintiff was an experienced shipper. 674 F.2d at 810. The court held that the "opportunity to declare a higher value must present itself on the face of the bill of lading to constitute prima facie evidence."Id. (internal quotations omitted). Incorporation by reference of Section 4(5), therefore, was not sufficient because "shippers are not to be charged with constructive notice of the minute details of COGSA." Id.
By analogy, Maersk cannot rely on the incorporation of its long form bill of lading to show prima facie evidence of "fair opportunity." The Maersk waybill suffers from the same defect as the bill of lading in Komatsu — it does not recite the opportunity to declare a higher liability "on its face." Instead, just as in Komatsu, the waybill merely incorporates a separate document that recites Section 4(5)'s liability limitations. Accordingly, Maersk's waybill does not establish prima facie evidence of "fair opportunity."
Maersk's cites the recent decision of Starrag v. Maersk, Inc., 486 F.3d 607 (9th Cir. 2007), as supporting the proposition that incorporating by reference a long form bill of lading satisfies fair opportunity. However, the issue in Staragg was whether a long form bill of lading extending liability limitations beyond the term in Section 7 of COGSA conflicts with COGSA such that the package limitations cannot be enforced. Starrag is therefore not a case about "fair opportunity."
Finally, Shipco asserts that summary judgment is appropriate because it had done business with Transcon on numerous occasions; thus, Transcon should have been aware of the terms and conditions in Shipco's bill of lading through their course of dealing. The case cited by Shipco in support, Travelers Indem. Co. v. Vessel Sam Houston, 26 F.3d 895 (9th Cir. 1994), however, dealt with a situation in which an intermediary was entrusted with goods to negotiate transportation with a downstream carrier. Further, the intermediary received a bill of lading that satisfied "fair opportunity." Aside from the question of whether an intermediary never entrusted with goods, like Transcon, can be considered Mbacke's agent for purposes of liability, the court has already noted that the proffered evidence in support of Shipco's assertion does not provide prima facie evidence of Transcon's "fair opportunity" to declare a higher liability. Accordingly, summary judgment is DENIED as to these theories.
D. Tariff
Shipco claims that even if Mbacke, or Transcon acting as Mbacke's agent, never received a copy of the bill of lading, Mbacke is nevertheless on notice of its terms because of Shipco's published tariff. As support, Shipco cites Komatsu, Ltd. V. States Steamship Co., supra, 674 F.2d 806 (9th Cir. 1982).
Shipco also cites Port of Tacoma v. S.S. Duval, 364 F.2d 615 (9th Cir. 1966), for the proposition that a tariff gives constructive notice to a shipper of a bill of lading's terms.Port of Tacoma, however, addressed whether a published tariff that purported to give the port a lien on vessels for failure to pay wharfage and cargo handling services gave carriers constructive notice of its terms. Id. at 617. Port of Tacoma is therefore distinguishable from the present action.
However, Komatsu assumed, without deciding, that a tariff gives a shipper constructive notice. 674 F.2d at 811. The court never addressed the constructive notice issue because it found the tariff at issue provided inadequate notice of Section 4(5). Id. In Komatsu, the tariff stated that damage liability would be governed by the bill of lading. Id. The bill of lading, in turn, incorporated by reference Section 4(5). Id. The court held it would be "anomalous to conclude a tariff rule provides [constructive] notice if that rule's operation depends upon the shipper having constructive notice of the same COGSA provision."Id.
If the court in Komatsu had addressed the constructive notice issue, it is not entirely clear it would have accepted the tariff argument as a viable theory of "fair opportunity." In Komatsu, the court rejected an argument by a carrier that incorporation of Section 4(5) by reference was sufficient to provide constructive notice of an opportunity to declare a higher liability, despite the fact the plaintiff was an experienced shipper. 674 F.2d at 810. The court reasoned that "[t]he bill of lading is usually a boilerplate form drafted by the carrier, and presented for acceptance as a matter of routine business practice to a relatively low-level shipping employee." Id. at 810. "[I]mputing such knowledge of COGSA applicability and provisions," the court concluded, "is an assumption that may go beyond the bounds of commercial realism." Id. If the Ninth Circuit was unwilling to recognize constructive notice through a provision in a bill of lading incorporating COGSA's Section 4(5), it is doubtful the Ninth Circuit would hold a recitation of Section 4(5) in a carrier's published tariff provides constructive notice of "fair opportunity."
However, even assuming constructive notice through a tariff is a viable legal theory (which is not entirely clear from the caselaw and which issue the court does not decide herein), the court finds there is insufficient evidence to hold Mbacke on constructive notice of Shipco's tariff. Shipco has not provided the court with the copy of its tariff. Rather, the Supplemental Declaration of Carol Ann Burch, filed by Shipco on January 11, 2008, states that a copy of Shipco's tariff can be accessed online through Dart Maritime's website. The court has visited said website and learned it could only obtain a copy after registering with Dart Maritime for a fee of $50. It is Shipco's burden to proffer this evidence in admissible form. It is not incumbent on the court to obtain it by registering on behalf of Shipco with Dart Maritime. Therefore, because there is insufficient evidence of the tariff itself, the court cannot determine whether the contents of Shipco's purported tariff are sufficient to provide constructive notice. Based on the foregoing, summary judgment as to this theory is DENIED. E. Indemnity
In a final effort to succeed, Shipco argues Mbacke is bound by the terms of the bill of lading because he was a party to the bill of lading under the definition of "Merchant." See All Pacific Trading, Inc. v. Vessel M/V Hanjin Yosu, 7 F.3d 1427 (9th Cir. 1993) (holding shipper to terms of bill of lading where he fell within the bill of lading's definition of a "Merchant"). Like all contracts, however, bills of lading require some form of acceptance, such as filing suit on the bill of lading. Id. at 1432. No such acceptance exists in this case because Mbacke contends he never received a copy of the back page of the bill of lading, which defines Merchant, and he is not suing on the basis of the bill of lading.
Maersk argues that in the event it is found liable to Shipco for damages, such damages are limited to $500 under the terms of the waybill and incorporated long form bill of lading.
There is no Ninth Circuit case addressing the issue of whether a freight forwarder can demand full indemnification when the carrier waybill's terms limit the carrier's liability. However, the issue was addressed by the Northern District inSeagate Tech. LLC v. Dalian China Express Internat'l Corp. Ltd., 169 F. Supp. 2d 1137 (N.D. Cal. 2001). In Seagate, a freight forwarder demanded full indemnification plus the cost of defending the shipper's original suit from a carrier. Id. at 1144. The carrier's air waybill limited its liability to $20 per kilogram of goods lost unless a higher value for the cargo was declared and an additional charge paid. Id. at 1139. The freight forwarder urged the court to adopt the Second Circuit's holding in Victoria Sales Corp. v. Emery Air Freight, Inc., 917 F.2d 705 (2d Cir. 1990) (holding waybill liability limitations do not extend to a claim for indemnity). Seagate, 169 F. Supp. 2d at 1143. Like the district court in Seagate, this court also findsVictoria Sales' analysis of the issue persuasive. Id. at 1145.
In Victoria Sales, a freight forwarder agreed to ship pharmaceuticals from Germany to New York. 917 F.2d at 706. The freight forwarder hired a carrier to handle the transport, who in turn hired another carrier to transport the shipment. Id. When the consignee of the shipment arrived in New York, the shipment could not be found. Id.
The issue for the Second Circuit in Victoria Sales was whether the carrier that actually handled the shipment was required to indemnify the freight forwarder when provisions of the carrier's waybill limited its liability to $20 per kilogram of goods unless a higher liability was declared. Id. at 708. The court held the waybill's liability limitation applied only to claims for loss or damage to cargo; "[i]t [did] not address the right and liabilities between [the carrier] and a party in [the freight forwarder's] status." Id. The court reasoned that to hold otherwise would abrogate the common law principle that a primary wrongdoer must indemnify a party whose liability is secondary.Id. Thus, "[a]bsent an explicit contractual provision to the contrary," the Second Circuit saw "no reason to extend the waybill's liability limitations to [the freight forwarder's] indemnity claim." Id.
Applying these principles, this court holds that Shipco can seek full indemnification from Maersk. Neither COGSA Section 4(5) nor the liability limitations clause of the Maersk long form bill of lading purport to include all types of claims in the $500-per-package limitation. The statute and the bill of lading are concerned with protecting carriers against exposure to liability for the loss of cargo when the shipper has not declared the value and paid additional freight for it. Further, the common law permits a party, vicariously liable for injury, to seek indemnity from a party primarily liable for injury. See United Air Lines v. Wiener, 335 F.2d 379, 399 (9th Cir. 1964) ("There is general agreement that indemnity is permitted where the indemnitee has only an imputed or vicarious liability because of a special relationship with the actual wrongdoer but is not personally at fault."). Here, because Shipco hired Maersk to handle the cargo, it is arguably responsible for Maersk's acts. It is further clear from the record that the damage to the cargo occurred while in Maersk's custody and control. Thus, Shipco may have a claim for indemnity in the event it is found liable to Mbacke for damages to the cargo.
Maersk urges the court to follow E.M.S. Industrie S.A. v. Polskie Towarzystwo Okretowe, 608 F. Supp. 1133 (E.D.N.Y. 1985) (holding contribution claim is subject to $500-per-package limitation in bill of lading). In E.M.S., a carrier moved for summary judgment limiting its liability in indemnity to $500 based on a provision of its bill of lading reciting Section 4(5). 608 F. Supp. 2d at 1134. The court held the limitation applied because the language of the bill of lading indicated the carrier would not "in any event" be liable for any damages to the goods exceeding $500. Id. at 1135. The court reasoned that "any event" included holding the carrier liable in indemnity for the full amount of loss. The court thus refused to "frustrate the statutory scheme of liability" and limited the indemnity claim to the $500-per-package limitation in the bill of lading Id. at 1135-36.
Maersk also cites Caterpillar Overseas v. Farrell Lines, Inc., 1988 A.M.C. 2894 (E.D. Va. 1988), aff'd 900 F.2d 714 (4th Cir. 1991). The court in Caterpillar, however, did not explain its reasoning for applying Section 4(5)'s liability limitations to indemnity actions. 1988 A.M.C. at 2901-02.
The reasoning of E.M.S., however, is not persuasive. As previously noted, Section 4(5) does not purport to cover all types of claims and such an expansive reading of the statute would abrogate several common law doctrines, including indemnity, in COGSA actions. Cf. Ins. Co. of N. Am. v. M/V Ocean Lynx, 901 F.2d 934, 942 (2d Cir. 1991) (allowing attorney's fees recovery in COGSA indemnity action); Noritake Co. v. M/V Hellenic Champion, 627 F.2d 724, 730 (5th Cir. 1980) (allowing recovery of pre-judgment interest in COGSA action); Seagate Technology LLC v. Dalian China Express Internat'l Corp. Ltd, 169 F. Supp. 2d 1137, 1144 (N.D. Cal. 2001) (holding claim for indemnity is not limited by the terms of the bill of lading in COGSA action). Absent an express contractual provision in the bill of lading to the contrary, the court will not hold that an action for indemnity is limited to the terms of Maersk's bill of lading. Maersk's motion for summary judgment as to this claim is therefore DENIED.
CONCLUSION
For the foregoing reasons, third-party defendant/fourth-party plaintiff Shipco's motion for summary judgment is DENIED. Fourth-party defendant Maersk's motion for summary judgment is also DENIED.
IT IS SO ORDERED