Global Oil Tools, Inc. v. Expeditors International of Washington, Inc. et al

REPLY to Response to Motion

E.D. La.January 23, 2019

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA GLOBAL OIL TOOLS, INC. Plaintiff VS EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. et al Defendants CIVIL ACTION NO. 16-cv-16372 SECTION “M” Honorable Barry W. Ashe MAGISTRATE (1) Honorable Janis van Meerveld ORAL ARGUMENT REQUESTED EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.’ AND ZURICH AMERICAN INSURANCE COMPANY’ REPLY MEMORANDUM IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT This reply memorandum is submitted by Expeditors and Zurich (collectively “Expeditors”), in support of Expeditors’ motion for partial summary judgment [Doc. 120].1 1. Global had notice of the COGSA package limitation, and an opportunity to declare a higher value for the cargo and pay a correspondingly higher freight rate, to avoid the limitation Global’s argument that it was not notified of Expeditors’ limited liability and given an opportunity to avoid the limitation should be rejected for three primary reasons. First, the very face of the bill of lading, in two places, states that Expeditors’ liability is limited, and describes how the limitation can be avoided. In one of these places the Bill of Lading refers to the limitation of $500 per container, package or customary freight unit. The face of the bill of lading states: “Shipper [Global] … understands that Carrier’s [Expeditors’] liability will be limited as set forth in Article 22, unless the Shipper declares ad valorum valuation in excess of $500 per container, per package, or in case of Goods not shipped in packages, per customary freight unit, and pays extra freight as required by the Carrier’s published tariff.” Expeditors’ Bill of Lading, Doc. 120-4, p. 4.2 1 References to the district court record are by record document and page number, abbreviated “Doc. __, p. __”. 2 The references to the reverse of the bill of lading and Article 22, date to the days of paper (not electronic) bills of lading. The electronic form bill of lading in use at the time of Global’s shipment did not have terms on the reverse Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 1 of 11 -2- The face of the Bill of Lading also has a box containing the following language: “SHIPPERS DECLARED VALUE: $________ IF MERCHANT ENTERS A VALUE, CARRIER’S LIMITATION OF LIABILITY SHALL NOT APPLY AND THE AD VALOREM RATE WILL BE CHARGED. Notice of the limitation and the method by which Global could avoid it, were also included in the Bill of Lading Terms and Conditions (hereafter, “Terms”) that governed the carriage of Global’s tools. Global states there is no evidence the Terms were incorporated in the Bill of Lading. Global’s statement is simply not correct; the Bill of Lading was expressly subject to the Terms. Whether you look at the Draft Bill of Lading referenced by Global’s Susan Fielding (Doc. 159-1, p.60), or the final version referenced by Expeditors’ Kristin Adkins (Doc. 120-4, p.4), both documents on their face state in large capital letters, “ELECTRONIC IMAGE SUBJECT TO TERMS AND CONDITIONS”. Therefore, the Expeditors’ Bill of Lading Terms clearly applied to and governed the ocean carriage of Global’s tools. The Terms were published to the worldwide shipping community, and were easily available to, and accessible by, Global or any other shipper, on Expeditors’ website at https://www.expeditors.com/. The Terms could be accessed by Global with only two clicks of a computer mouse. From the Home Page of Expeditors’ website, one must only scroll down to the bottom of the page, and at the right-hand side, click the link to “Forms and Downloads”. On that page, there is a link to the “Ocean Bill Terms and Conditions”. A click on that link brings the shipper to the Bill of Lading Terms. Screenshots of the Home Page and the Forms and Downloads Page from the Expeditors’ website, are attached, en globo as Exhibit “1”. side, but as explained in this reply, the terms and conditions applicable to the ocean carriage were set forth in the Long Form Ocean Bill of Lading referred to by Expeditors’ Kristin Adkins at Doc. 120-4, p.6. Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 2 of 11 -3- Section 6 of the Terms, entitled “CARRIER RESPONSIBILITY–LIMITATIONS”, provides greater details of the notice of Expeditors’ limited liability and the method available to avoid the limitation and increase the carrier’s liability. See the Terms, Doc. 120-4, pps. 9-11. Subsections 6(a)(i) to (iii) notified Global of the $500 limit. Subsection 6(b) detailed how Expeditors’ freight is calculated based on the $500 limit, and how Global could increase that liability by declaring a value and paying a correspondingly higher freight. See Terms, Doc. 120-4, p.10. In virtually every case of ocean transportation of goods the Bill of Lading is not issued until after the cargo is loaded aboard the vessel. Judge Vance recognized this industry norm in an earlier ruling. Cf. Doc. 113, at p. 9, enforcing the Bill of Lading despite being issued after the vessel sailed from New Orleans. This case followed this normal and customary practice. As the cases cited by Global reflect, a properly worded Bill of Lading, even though issued after the goods are delivered to the ship, is sufficient to provide notice of the limitation and a fair opportunity to avoid it. Therefore, by virtue of the Expeditors’ Bill of Lading Terms alone, Expeditors has met its burden and shown that it gave Global notice of the limitation and a fair opportunity to avoid it. Even though the applicable legal precedent enables the Court to base its decision, and limit Expeditors’ liability, solely based on the Bill of Lading and its Terms, Expeditors’ position is even more compelling. On February 29, 2016, approximately one week before trucks were to pick up the loaded containers from Global’s facility, Expeditors’ Export Supervisor, Kristin Adkins, sent Global’s Susan Fielding its form Shipper’s Letter of Instructions (“SLI”). This form is required to be filled out by the shipper of the goods, in this case Global. The SLI is intended to provide Expeditors with details of the shipment and the shipper’s [Global’s] instructions that Expeditors was to follow for the shipment. It also gave Global notice of Expeditors’ limited liability and Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 3 of 11 -4- described the means by which Global could avoid the limitation by declaring a higher value for the cargo and paying a higher freight rate. See Supp. Decl. of K. Adkins, attached as Exhibit “2”. Page 1 of the SLI that Adkins sent to Fielding provided the following information to Global: NOTIFICATION OF TERMS & LIMITATION OF LEGAL LIABILITY Please note that shipments are accepted subject to the terms and conditions set forth in the contract of carriage and any applicable tariff. These terms include industry standard limitations on legal liability for loss, damage or delay. A summary of these terms, including the applicable limitations on liability, are included with the SLI. Unless we are acting as the carrier, the sole responsibility of the Company hereunder is to use reasonable care in the selection of third party carriers, forwarders, agents and others to whom it may entrust this shipment. *** DECLARING VALUE TO INCREASE LEGAL LIABILITY If you do not wish to accept the limits on the carrier’s legal liability, you have the opportunity to set a higher value by entering this amount in the box labeled Declared Value for Carriage and thereby agreeing to pay the applicable additional cost of transportation. Declaring a higher value is not the same as purchasing all risk insurance. If you wish to have the ability to be made financially whole, please purchase “all-risk” insurance coverage for your shipment. [emphasis added]. See Exhibit 2 C, the SLI document, p.1. The third page of the SLI document provided: NOTICE CONCERNING CARRIER’S LIMITATION OF LIABILITY This notice includes some important terms and conditions for carriage. Additional terms and conditions, including Definitions, Advances of Funds, Notice of Arrival of Goods, Notice of Claim and other provisions are included herein by reference to the transport document, copies of which are available on request. IF THE CARRIAGE INVOLVES AN ULTIMATE DESTINATION OR STOP IN A COUNTRY OTHER THAN THE COUNTRY OF DEPARTURE, THE WARSAW CONVENTION [AIR] OR THE CARRIAGE OF GOODS BY SEA ACT [SEA] MAY BE APPLICABLE AND WILL GOVERN AND IN MOST CASES LIMIT THE LIABILITY OF THE CARRIER IN RESPECT OF LOSS, DAMAGE OR DELAY TO CARGO, UNLESS A HIGHER VALUE IS DECLARED IN ADVANCE BY THE SHIPPER AND A SUPPLEMENTARY CHARGE PAID IF REQUIRED. *** OCEAN BILLS OF LADING (11) APPLICABLE LAW: The ocean bill of lading issued to you by the Carrier transporting your cargo will contain, or refer to, Laws, Acts and/or Conventions that limit the carrier’s liability for loss of or damage to your cargo incurred while the cargo is in its custody. Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 4 of 11 -5- (12) LIMITATION OF LIABILITY: In most cases in which the carrier is liable for loss or damage to your goods, the carrier’s liability is limited to U.S. $500.00 per package or, for goods not shipped in packages, per customary freight unit. Higher compensation will be paid only when the shipper declares a higher value for the goods shipped and so states in the ocean bill of lading and additional freight is paid. In that case, the amount of the declared value shall be substituted for that limit. See Exhibit 2 C, the SLI document, p.3. In addition to the detailed notice and fair opportunity language found in the SLI document itself, Expeditors also published on its website a detailed guide to assist shippers in completing the SLI. With respect to Expeditors’ limited liability and Global’s opportunity to avoid the same, the guide provides at Section 9, p.7: “[i]f you do not wish to accept the limits on the carrier’s legal liability, you also have the opportunity to set a higher declared value for carriage. *** Declared Value for Carriage If you do not wish to accept the limits on the carrier’s legal liability, you have the opportunity to set a higher value for carriage and thereby agreeing to pay the applicable additional cost of transportation. Declaring a higher value is not the same as purchasing all risk insurance. If you wish to have the ability to be made financially whole, please purchase “all-risk” insurance coverage for your shipment. See Exhibit 2 D, the Expeditors’ SLI Completion Guide, p.7. At the time Fielding and Adkins were discussing Global’s shipment, the complete SLI document and the SLI Completion Guide were published on Expeditors website and available to Global. Aside from small formatting changes to the SLI form, the content of both documents as it appears on the Expeditors website today, including the notices and explanations for avoiding the carrier’s limited liability, is the same as it existed at the time Global booked its cargo with Expeditors. Adkins Supp. Decl., Exhibit “2”, pps. 2-3. On March 7, 2016, trucks were scheduled to pick up the loaded containers from Global. However, as of that date Fielding had not yet sent the completed SLI to Expeditors. This failure prompted Adkins to send the SLI to Global a second time. Adkins Supp. Decl., Exhibit “2”, p.2. Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 5 of 11 -6- This time Fielding returned the completed and signed form. See Doc. 159-1, p.11. Despite detailed instructions to Global that it must insert a declared value for the cargo in Section 9 of the SLI, to avoid Expeditors limiting its liability, Global did not declare a value or pay a higher freight for the shipment. Instead, Global left the “Declared Value for Carriage” portion of the SLI blank, Doc. 159-1, p.11, indicating that it did not intend to pay additional freight to avoid Expeditors’ limited liability. Global’s freight forwarder, Andrea Merzario SA (also a defendant), sent Fielding the freight quote for the transit from Houma to Romania on January 26, 2016. See the pre- shipment emails between Fielding, Adkins and Merzario, attached as Exhibit “3”, at p.49. These records show that Merzario/Expeditors calculated the freight at least five to six weeks before receiving any information about the alleged value of Global’s tools on about March 7, 2016. The timing of the freight quote prior to receiving any information about cargo value shows in compelling terms that the freight was based on the carrier’s limited liability. Although there were numerous emails exchanged between Global, Expeditors and Merzario after providing the freight quote, not once did Global express an interest in declaring a value for the tools and paying a higher freight. See Exhibit “3”. Global avers it told Expeditors the value of the tools on March 7, 2016, by inserting the tools’ “Export Value” in Section 7 of the SLI, and that such advice constituted a “declaration” of value. This notion should be rejected. The fact there are two different places in the SLI to provide the carrier valuations of the cargo, can only mean that each value, the “Export Value” and the “Declared Value for Carriage”, have different meanings and purposes that are material. Section 7 of the form references customs schedules and commodity categories and is clearly for customs and duty purposes. Alternatively, the Section 9 “Declared Value for Carriage”, clearly is applicable to the issue of the carrier’s limited liability. If one were to accept Global’s argument, it would make Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 6 of 11 -7- the entire Section 9 “Declared Value for Carriage” meaningless. Hornbook contract law requires that all provisions of a contract be interpreted such to give all terms meaning. To treat Global’s “Export Value” as a declared value for carrier liability purposes, would disregard and render moot the “Declared Value for Carriage” requirement if the shipper intended to avoid limited liability. In addition, any acceptance of Global’s position on this point would be unjust. Expeditors and Merzario quoted a freight rate based on the carrier’s limited liability of $500 per package. On information and belief, Global still has not paid Merzario’s freight invoice, but even if it did, it would not be just for the carrier to be exposed for damages greater than the package limit where the freight was calculated based on that limited liability and the shipper did not declare a higher value and pay higher freight. Global received clear notice of Expeditors’ limited liability and had a fair opportunity to avoid the limitation by declaring a value for its tools and paying higher freight. It opted not to do so, and therefore, the uncontestable facts show that Expeditors has carried any burden to show that notice of the carrier’s limited liability was given to Global, and that Global in fact had a fair opportunity to avoid the limitation. Accordingly, Expeditors’ liability should be limited to $500 per container. 2. No aspect of the Expeditors’ Bill of Lading is untruthful, inaccurate or a misrepresentation of the facts pertaining to the shipment, and therefore, estoppel is inappropriate The basis of Global’s estoppel argument is that it told Expeditors the value of the tools but that Expeditors failed to insert that value into the “Shippers Declared Value” box on the face of the Bill of Lading. Although not entirely clear, Global also seems to argue that Expeditors should have included the entire list of tools, part by part, in the Bill of Lading, and that the abbreviated description of “Drilling Equipment”, constitutes a material misrepresentation. These failures, alleges Global, are material misrepresentations that should estop Expeditors from relying on the Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 7 of 11 -8- terms of the Bill of Lading. As discussed at length supra, Expeditors sent Global the SLI for the purposes of obtaining the specifics of, and special instructions for, the shipment, and to provide notice of Expeditors’ limited liability and an opportunity for Global to avoid that limitation. In returning the SLI to Expeditors, Global described the commodity to be shipped as “wireline and slickline oil tools”, and despite clear notice of the carrier’s limited liability and the means to avoid same, Global did not declare a value for the cargo in Section 9 of the SLI. In preparing the Bill of Lading Expeditors pulled the information for the bill from the information provided by Global in the SLI. Expeditors called the commodity “Drilling Equipment” instead of “wireline and slickline oil tools”. Expeditors’ description is hardly a misrepresentation of the goods being shipped. Similarly, Global did not state a declared value for the goods in the SLI and for that reason, Expeditors did not include a declared value on the Bill of Lading. Expeditors put on the face of the Bill of Lading the same information that Global provided in the SLI. Moreover, Expeditors sent Fielding a draft of the Bill of Lading prior to finalizing it, and she did not request any changes regarding the description of the cargo or the absence of a declared value. See Email from Adkins at Doc. 159-1, p.59. Even more compelling is the fact that Judge Vance enforced Expeditors’ Bill of Lading in her Order at Doc. 113, pps. 7-9. In these circumstances it is extremely difficult to conceive how Expeditors should be estopped from relying on the Bill of Lading terms. Accordingly, Global’s defense should be rejected and the Bill of Lading deemed valid. 3. The early departure of Global’s tools did not increase the risk that the tools could be damaged, and therefore, there was no deviation sufficient to invalidate Expeditors’ defenses Global alleges the early shipment prevented it from re-opening the containers to inspect the tools’ packaging and if necessary, to repackage the tools for the ocean voyage. In making this argument Fielding states in her declaration that Global merely sent the containers to New Orleans for storage pending a later decision as to their destination. She also states she told Expeditors that Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 8 of 11 -9- Global wanted to inspect the container contents before shipment. These statements are directly refuted by Fielding’s contemporaneous emails, and therefore, should be rejected out of hand. From the very beginning of the parties’ discussions, Global intended to send the containers to Romania. See Fielding email to Merzario dated October 19, 2015 (five months before the actual shipment), Exhibit “3”, p.19. Moreover, a reading of the pre-shipment emails contained in Exhibit “3”, leaves no doubt Global always intended to ship the containers to Romania. In fact, Global was obligated to send the tools to Romania pursuant to an agreement with a joint venture partner. See the Writ of Summons issued out of the Bihor County Court in Romania by Global Oil Solutions against Global for failing to timely ship the tools to Romania, attached as Exhibit “4”. Therefore, Global knew the tools would undergo an ocean voyage from the time it stuffed the containers in Houma. Global itself packaged the tools and loaded them into containers they purchased for the voyage to Romania. Fielding Decl., Doc. 159-1, p. 2, ¶6. Because Global knew the overseas destination for the tools and Global itself packaged them and stuffed the containers, there is no logical reason to incur substantial expense to stage the containers at New Orleans, re-open them and remove the tools for inspection and possible repackaging. It simply makes no sense. Moreover, Global’s SLI to Expeditors does not include a request to make such an inspection, and despite voluminous email traffic on many topics related to the shipment, not one of the pre-shipment emails or quotes for rates contain any mention whatsoever, of inspecting the contents of the containers before they departed New Orleans. See Doc. 159-1, p.11 and Exhibit “3”. Fielding’s statement that Global intended to store the containers in New Orleans is directly refuted by her email to Merzario on October 20, 2015, in which she stated, “The storage should be at your [Merzario’s] facility not in Louisiana.” [emphasis added]. Exhibit “3”, p. 21. Numerous times Fielding told Expeditors to ship the containers to Romania, and several times asked for a minor delay to the next vessel. The Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 9 of 11 -10- Romanian destination never changed and at no point in time was inspection of the tools at New Orleans requested. See Exhibit “3”. After the early shipment was discovered, Global instructed the carrier to take the containers to Romania. Doc. 112-2, p. 1. The fact that the containers were always intended to go to Romania, that the tools were packaged and stuffed into the containers by Global knowing they were going to Romania, and that they went to Romania, albeit early, did not increase the risk of loss or damage. Therefore, the early shipment should not be considered a deviation. 4. Conclusion Because Global was notified of Expeditors’ limited liability and was given a fair opportunity to declare a value for the tools and to pay a higher freight, Expeditors’ liability should be limited. Additionally, there was no misrepresentation warranting the application of estoppel principles, nor any evidence supporting the claim that the tools were exposed to any incremental risk because of the early shipment. Accordingly, Global’s arguments should be rejected and Expeditors’ motion for partial summary judgment granted. Respectfully submitted, /s/ John F. Fay, Jr. John F. Fay, Jr. (La. Bar #1870), T.A. jfay@faynelsonfay.com FAY, NELSON & FAY, LLC Energy Centre 1100 Poydras St., Suite 2900 New Orleans, Louisiana 70163 Tel: (504) 799-2252 Fax: (504) 383-8920 Attorneys for EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. and ZURICH AMERICAN INSURANCE COMPANY Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 10 of 11 -11- CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 22nd day of January, 2019, I electronically filed the foregoing pleading with the Clerk of Court utilizing the Court’s CM/ECF system, which will send a notice of electronic filing to those counsels of record who are identified to receive e-mail notices of filing in this case, who have enrolled in this Court's CM/ECF program, or who otherwise consented to receive notice and service via CM/ECF. I further certify that I mailed the foregoing document and the notice of electronic filing by first-class mail to all non-CM/ECF participants. /s/ John F. Fay, Jr. Case 2:16-cv-16372-BWA-JVM Document 169 Filed 01/23/19 Page 11 of 11