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

RESPONSE/MEMORANDUM in Opposition

E.D. La.March 25, 2019

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA GLOBAL OIL TOOLS, INC. § C.A. No. 2:16-cv-16372-BWA-JVM § VS. § SECTION: “M” (1) § EXPEDITORS INTERNATIONAL OF § JUDGE BARRY W. ASHE WASHINGTON, INC., ET AL § MAG. JUDGE VANMEERVELD GOT’S MEMORANDUM IN OPPOSITION TO MOTION FOR ALTERNATIVE RELIEF NOW INTO COURT, through undersigned counsel, comes Plaintiff Global Oil Tools, Inc. (“Plaintiff” or “GOT”), and, for its Memorandum in Opposition to the Motion for Alternative Relief, To Dismiss Claims of Global Oil Tools, Inc. filed by Defendants Expeditors International of Washington, Inc. and Zurich American Insurance Co. (collectively “Expeditors”) (Rec. Doc. 195, “Motion”), would respectfully show: I. INTRODUCTION AND SUMMARY Hapag and Expeditors are both attempting to assert forum selections contained within their respective bills of lading. However, both Hapag and Expeditors have waived any rights to do so, as judged by the twin standards stated by the Fifth Circuit in Hampton v. Equity Trust Co., 736 F.App’x 430, 435 (5 Cir. May 31, 2018) (unpublished). Expeditors’ Motion must be deniedth because: 1) As Expeditors has previously advocated in Rec. Doc. 184 at 4–9, Hapag waived any rights that it may have under the forum selection clause contained within Hapag’s own bill of lading. These arguments and authorities apply equally to GOT and to any arguments that the Hapag bill of lading applies to GOT through agency. GOT hereby adopts Expeditors’ arguments regarding Hapag’s waiver that are made at pages 4–9 of Rec. Doc. 184, but no other portions thereof Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 1 of 13 2) However, in the event the Court is inclined to grant Hapag’s pending motion to dismiss the crossclaims (Rec. Doc. 171), GOT is not bound by the forum- selection terms contained within Expeditors’ bill of lading which allegedly provides for litigation in Washington State. Like Hapag, Expeditors also waived any rights that it may have under the forum selection clause contained within its own bill of lading. II. FACTUAL BACKGROUND GOT filed this lawsuit against defendants Expeditors International of Washington, Inc. and Zurich American Insurance Co. on November 15, 2016, to recover for damages associated with the mishandling of, and damage to, a cargo of drilling equipment erroneously shipped in containers from New Orleans to Constanta, Romania, in early 2016. GOT added Hapag-Lloyd (America), LLC1 (“Hapag”) and Andrea Merzario, S.A. (“Merzario”) as defendants on March 13, 2017. The instant2 Motion raises issues about the effect of two forum selection clauses– one contained in Hapag’s bill of lading and one contained in Expeditors’ bill. The effect of Hapag’s clause has already been challenged by Expeditors. GOT joins that challenge. To recap, after considerable pretrial proceedings, Hapag filed for, and obtained summary3 judgment that a Himalaya clause contained in its bill of lading forecloses its liability to GOT. 4 Hapag remains in the lawsuit by virtue of crossclaims Expeditors and Merzario filed against it. Hapag has been involved in this litigation in these roles for nearly two years, during which time it engaged in substantial discovery and filed a successful motion for summary judgment which was Rec. Doc. 1 (GOT’s Orig. Complaint), filed Nov. 15, 2016. 1 Rec. Doc. 16 (GOT’s 1 Am. Complaint), filed March 13, 2017.st2 Rec. Doc. 54 (Hapag’s Motion for Summary Judgment), filed Nov. 9, 2017.3 Rec. Doc. 113 (Order granting Hapag’s Motion for Summary Judgment), April 2, 2018.4 2 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 2 of 13 granted. Notwithstanding this substantial invocation of the judicial process, Hapag only very5 recently moved on January 30, 2019, to dismiss the crossclaims citing a forum selection clause6 contained in its own bill of lading. Hapag had long been aware of the existence of Expeditors’ crossclaim (and, of course, aware its own forum selection clause) yet it apparently made a deliberate choice not to invoke the clause. In so doing, Hapag waived any rights it had to use the clause because it substantially invoked the judicial process in derogation of the clause and caused detriment or prejudice to the other party through its eleventh-hour actions. With respect to the alternative relief requested by Expeditors , it too waived any right to7 assert its own forum selection clause. Expeditors and Zurich have each been involved in this litigation as a direct defendant to GOT from the very beginning of this lawsuit in mid-November 2016. During this time, Expeditors moved for summary judgment, Zurich moved for summary8 judgment, and the two joined and adopted Hapag’s motion to strike Global’s experts. 9 10 Nevertheless, in its claim for alternative relief filed just three weeks prior to the pretrial conference, Expeditors now alleges that its own bill of lading contains a forum selection clause which provides that GOT consented to jurisdiction and venue for all proceedings and disputes arising under the bill of lading, in Washington State. As was true with Hapag, however, Expeditors and Zurich were Rec. Doc. 113 (Order granting Hapag’s MSJ), signed April 2, 2018. 5 Rec. Docs 171 (Hapag’s motion to dismiss crossclaims), filed January 30, 2019.6 Expeditors asserted these same arguments in its response to Hapag’s motion to dismiss. Rec. Doc. 184 at7 9–14. Expeditors repeats these arguments as a stand-alone motion, which is the subject Motion. Rec. Doc. 120 (Expeditors’ Motion for Partial Summary Judgment), filed Aug. 3, 2018.8 Rec. Doc. 172 (Zurich’s Motion for Summary Judgment), filed Jan. 30, 2019.9 Rec. Doc. 170 (Hapag’s Motion to Strike Global’s Experts), filed Jan. 30, 2019.10 3 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 3 of 13 aware of both the pending litigation and the existence of the forum selection clause, yet made a deliberate choice not to assert it. By filing motions for summary judgment on the merits and joining in motions to strike experts, Expeditors substantially invoked the judicial process in derogation of the clause and caused prejudice to the other party by asserting the clause at the eleventh hour. For the reasons stated herein, Expeditors’ instant Motion should be denied. III. ARGUMENT AND AUTHORITIES A. The forum selection clause contained in Hapag’s bill of lading (Sea Waybill) is not binding on Expeditors or GOT because Hapag waived any right to enforce it. See Hampton, 736 F.App’x at 434–37. The forum selection clause contained in the Hapag bill of lading (a/k/a Sea Waybill) is not binding on anyone in this litigation because Hapag waived any right to assert it by waiting far too long to assert it, and only finally doing so after it had substantially invoked the judicial process. To this end, Plaintiff joins and adopts the arguments and authorities regarding Hapag’s waiver contained in Expeditors and Zurich’s Response in Opposition to Hapag’s Motion to Dismiss,” Rec. Doc. 184 at 4–9, only. See FED. R. CIV. P. 10(c). In addition to those arguments, Hampton v. Equity Trust Co., 736 F.App’x at 434–37 (5th Cir. May 31, 2018), supports denial of Expeditors’ Motion. In Hampton, the Fifth Circuit held that a defendant who had substantially invoked the judicial process in a lawsuit in state court and who had delayed in asserting the clause so as to cause a detriment to the plaintiff, had waived its ability to use its forum-selection clause. The legal standards stated by Hampton govern this situation, and confirm Expeditors has waived any rights under its forum selection clause under any application of the law. Hampton set forth the standards for waiver of such clauses as follows: 4 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 4 of 13 [W]e have articulated waiver determinations in this context in two different ways. See SGIC Strategic [Global Investment Capital, Inc. v. Burger King Europe], 839 F.3d at 426–27, 426 n.13 [(5 Cir. 2016)] (discussing two waiver approaches andth holding that appellants failed to show waiver under either approach); Wellogix [v. SAP Am. Inc.], 648 Fed.Appx. at 401–02 [5 Cir. 2016] (same). The first approachth is a traditional inquiry that asks whether a party “intentionally or voluntarily relinquished its rights under the clause.” Wellogix, 648 Fed.Appx. at 401. The cases articulating this approach hold that waiver of a forum-selection clause requires: “(1) an existing right, benefit, or advantage; (2) actual or constructive knowledge of its existence; and (3) actual intent to relinquish that right.” SGIC Strategic, 839 F.3d at 426 (quoting GP Plastics Corp. v. Interboro Packaging Corp., 108 Fed.Appx. 832, 836 (5 Cir. 2004) ). “Waiver can also occur if a party engages in ‘conduct soth inconsistent with the intent to enforce the right as to induce a reasonable belief that it has been relinquished.’ ” Id. (quoting N. Am. Specialty Ins. Co. v. Debis Fin. Servs. Inc., 513 F.3d 466, 470 (5 Cir. 2007) ). Under the second approach, “the party toth the forum selection clause waives its right if it (1) substantially invokes the judicial process in derogation of the forum selection clause and (2) thereby causes detriment or prejudice to the other party.” Id. at 426–27 (quoting Wellogix, 648 Fed.Appx. at 402); accord In re ADM Inv’r Servs., Inc., 304 S.W.3d 371, 374 (Tex. 2010). “To invoke the judicial process, a ‘party must, at the very least, engage in some overt act in court that evinces a desire to resolve the ... dispute through litigation . . . ’ ” [In re:] Mirant, 613 F.3d at 589 [(5 Cir. 2010)] (quoting Subway Equip. Leasing Corp.th v. Forte, 169 F.3d 324, 329 (5th Cir. 1999) ). Litigation on the merits can substantially invoke the judicial process. See id. (“By seeking to prove its own allegations to the district court, [appellant] invoked the judicial process to a greater degree than it would have by filing a mere ‘perfunctory motion to dismiss.’ ” (quoting Williams v. Cigna Fin. Advisors, Inc., 56 F.3d 656, 661 (5 Cir. 1995) ) ).th “In addition to invocation of the judicial process, the party opposing arbitration must demonstrate prejudice before we will find a waiver of the right to arbitrate.” Id. at 591 (quoting Nicholas v. KBR, Inc., 565 F.3d 904, 910 (5 Cir. 2009) ). “Prejudiceth in the context of arbitration waiver refers to delay, expense, and damage to a party’s legal position.” Id. (quoting Nicholas, 565 F.3d at 910). An untimely assertion of the right bears on the question of prejudice. Nicholas, 565 F.3d at 910; see also Mirant, 613 F.3d at 591 (holding that appellant failed to make a timely demand for arbitration where it “waited eighteen months before moving to compel arbitration while it attempted to obtain a dismissal with prejudice from the district court”). In Mirant, we determined that “listing the right to compel arbitration as an affirmative defense in [appellant’s] answer and reserving that right in its motions to dismiss” was insufficient to show a timely assertion of a right to arbitrate where appellant also delayed in asserting that right. 613 F.3d at 591. 5 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 5 of 13 Both waiver approaches are easily satisfied here. Equity Trust substantially invoked the judicial process to Hampton’s detriment. Equity Trust was on notice as of July 2013 that Hampton was pursuing claims in her individual capacity in Texas state court. Equity Trust delayed almost two years before filing special exceptions arguing that Hampton’s claims were proper only in Ohio based on a forum-selection clause. ***** This substantial invocation of the judicial process caused detriment to Hampton. “A party cannot keep its right to demand arbitration in reserve indefinitely while it pursues a decision on the merits before the district court.” Id. at 591. Nor could Equity Trust indefinitely reserve the right to seek enforcement of a forum-selection clause while it sought a merits determination in state court . . . In addition to the significant delay, allowing Equity Trust to invoke the forum-selection clause at the eleventh hour—after Hampton has survived summary judgment and is ready for a jury trial—would obviously damage Hampton’s legal position. See id. at 592 (an eighteen-month delay “wasted judicial resources and disadvantaged [appellee]”). Thus, Equity Trust has substantially invoked the judicial process to Hampton’s detriment. Moreover, Equity Trust has intentionally and voluntarily relinquished its rights under the forum-selection clause through “conduct so inconsistent with the intent to enforce the right as to induce a reasonable belief that it has been relinquished.” SGIC Strategic, 839 F.3d at 426 (quoting N. Am. Specialty, 513 F.3d at 470). Hampton, 736 F.App’x at 434–37 (emphasis added). Expeditors’ actions easily satisfy both tests for waiver. In terms of the first test, Expeditors clearly “intentionally or voluntarily relinquished its rights under the clause.” Wellogix, 648 Fed.App’x at 401. The cases articulating this approach hold that waiver of a forum-selection clause requires: “(1) an existing right, benefit, or advantage; (2) actual or constructive knowledge of its existence; and (3) actual intent to relinquish that right.” SGIC Strategic, 839 F.3d at 426. Here, Expeditors was in possession of a potential right, benefit or advantage (i.e., the forum selection clause contained within its own bill of lading), (2) had actual knowledge of it, and (3) evidenced an actual intent to relinquish the right by not using it, when it filed for summary judgment on the merits of the package limitation after engaging in considerable 6 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 6 of 13 pretrial proceedings and discovery. Expeditors’ was of course aware of Global’s claims, yet clearly made a deliberate choice not to assert the clause. All three elements of the first test used to judge waiver are easily satisfied. In terms of the second test, it is equally clear that Expeditors substantially invoked the judicial process in derogation of its forum selection clause, and in doing so, caused detriment or prejudice to the other party. Wellogix, 648 Fed.App’x at 402. Expeditors did not file its Motion until after Hapag did, and, at the time, was approximately three weeks from trial. The same prejudice to GOT and arguments regarding waiver apply equally even though trial has now been continued. Expeditors chose to enforce its forum selection clause long after challenging the substance of its liability to GOT. This demonstrates Expeditors’ intent to waive any rights under its forum selection clause. It would be unreasonable and inequitable allow Expeditors to withhold seeking enforcement of its forum selection clause for this length of time. Finally, granting Hapag’s motion also raises the specter of parallel proceedings with potentially inconsistent judgments in a US and a German court, which would further prejudice GOT and be wasteful of judicial resources. Additionally, dismissing the cross-claims against Hapag would lead to potentially inconsistent judgments. If the Court grants Hapag’s motion, Hapag will seek relief in a German court. Expeditors has pending a similar motion to limit its liability to Global (Rec. Doc. 120), and a finding by this Court that Expeditors is not entitled to the COGSA package limit, combined with a German court finding that Hapag is entitled to such a limit, would create an unfair potential exposure to Expeditors. The same potential for inconsistent outcomes can be said of this and the German courts’ potential liability findings generally. The potential for such inconsistent judicial findings seriously prejudices GOT. 7 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 7 of 13 In conclusion, the Court should deny Expeditors’ Motion to Dismiss. GOT has shown that Expeditors’ delay and actions vis a via its forum selection clause easily satisfy both tests for waiver that employed by the Fifth Circuit. See Hampton. B. In the event the Court is inclined to enforce Hapag’s forum selection clause and grant Hapag’s Motion to Dismiss the cross-claims, GOT is not bound by the forum-selection terms contained in Hapag’s or Expeditors’ bill of lading, because, like Hapag, Expeditors waived any right to enforce them. Expeditors claims that should this Court be inclined to enforce Hapag’s forum selection clause and grant Hapag’s pending motion to dismiss, GOT should be governed by the forum- selection terms that are contained in Expeditors’ bill of lading. This alternative argument was first asserted in Expeditors’ opposition to Hapag’s motion (Rec. Doc. 184 at 9–14) and now made in the instant Motion (Rec. Doc. 195). This is an alternative request for affirmative relief and is pleaded solely in the event this Court rejects Expeditors’ argument that Hapag waived its right to enforce the forum selection clause in Hapag’s Sea Waybill. Expeditors’ alternative arguments maintain that GOT is bound by a foreign forum by virtue of the Hapag bill of lading, and/or the Expeditors’ bill. 1. Hapag’s clause is not enforceable against GOT because there is no underlying agency GOT reiterates all of the arguments that it made above as to why Hapag waived any rights given by its clause. If the Court finds that Hapag inordinately delayed in filing its motion, and did so after obtaining affirmative relief, then this finding will also bar Hapag from asserting this clause against GOT as well as Expeditors. Expeditors argues that: . . . established caselaw holds that when a NVOCC (non-vessel operating common carrier) like Expeditors, enters into a freight booking with a vessel operating common carrier like Hapag, the NVOCC is acting as the agent of the cargo owner, in this 8 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 8 of 13 case Global, as the principal. As such, the principal (Global in this case) is bound by the vessel-operating carrier’s bill of lading. Rec. Doc. 195-1 at 6 (emphasis added). Expeditors cites Jockey Int’l, Inc. v. M/V Leverkusen Express, 217 F.Supp.2d 447 (S.D.N.Y. 2002) and a following case, on page 7 of its motion, to support the proposition that a NVOCC, as agent for the cargo owner, binds that owner to the bill of lading that was issued by the actual carrier (in this case, Hapag). However, none of these authorities or arguments is relevant or applicable because there is no agency relationship between GOT and Expeditors with respect to these actions. Here, the shipment of the tools was never authorized or ratified by GOT, which had requested Expeditors to hold them for a few weeks longer. Expeditors was plainly acting without authority from GOT, and hence was acting outside the scope of any alleged agency relationship that might otherwise appear to exist. For this reason, Expeditors’ arguments that it “acted as Global’s agent in booking the cargo with Hapag” and that “Global is bound by the terms of the Hapag Sea Waybill that Expeditors entered into as Global’s agent” (see Rec. Doc. 195-1 at 8) are not pertinent. Put simply, there is no agency, and the Hapag forum selection clause cannot be enforced against Global using agency as a predicate ground. The putative principal (Global in this case) cannot be bound by the vessel-operating carrier’s (Hapag’s) bill of lading. 2. Expeditors’ clause is not enforceable against GOT because Expeditors waived any such right Expeditors next argues that a forum selection clause which is contained within Section 27 of its own bill of lading allegedly requires that GOT’s claims be brought in Washington State 9 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 9 of 13 courts. Expeditors has waived any right to assert such a claim. Expeditors and Zurich have been11 each involved in this litigation as a direct defendant from the very beginning of this lawsuit (mid- November 2016) during which time considerable discovery has occurred, Expeditors has moved for summary judgment, Zurich has moved for summary judgment, and the two have each joined in12 13 and fully adopted Zurich’s motion to strike Global’s expert witnesses. Its claim for alternative14 15 relief was filed on March 11, 2019, just three weeks prior to the pretrial conference. Even though16 trial has been reset, Expeditors was similarly aware of its own forum selection clause, yet made a deliberate choice not to assert it until the eve of the trial setting at the time, thus waiving any possible benefits that clause may give. By moving for summary judgment on the merits and joining motions to strike experts, Expeditors “substantially invoke[d] the judicial process in derogation of the forum selection clause” and thereby “caused detriment or prejudice to the other party.” Hampton, 736 F.App’x at 435. Like Hapag, Expeditors has waived any right it may have to assert the benefits of the forum selection clause contained within its own bill of lading. Expeditors’ actions easily satisfy both tests for waiver discussed in Hampton. With respect to the first test, Expeditors “intentionally or voluntarily relinquished its rights under the clause.” See Rec. Doc. 195–1 at 9. Section 27 of the Expeditors bill of lading is entitled ““27. LAW;11 DISPUTES; VENUE; SEVERABILITY; ETC. ” Rec. Doc. 120 (Expeditors Motion for Partial Summary Judgment), filed August 3, 2018.12 Rec. Doc. 172 (Zurich’s Motion for Summary Judgment), filed January 30, 2019.13 Rec. Doc. 173 (Expeditors/Zurich’s Response to and Adopting Motion of Hapag Lloyd to Strike 14 Plaintiff’s Expert Witness Designation), filed January 30, 2019. Rec. Doc. 170 (Hapag’s Motion to Strike Global’s Designated Expert Witnesses), filed January 30,15 2019. Rec. Doc. 195 (Expeditors’ Motion for Alternative Relief), filed March 13, 2019. 16 10 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 10 of 13 Wellogix, 648 Fed.App’x at 401. The cases articulating this approach hold that waiver of a forum-selection clause requires: “(1) an existing right, benefit, or advantage; (2) actual or constructive knowledge of its existence; and (3) actual intent to relinquish that right.” SGIC Strategic, 839 F.3d at 426. Here, Expeditors was in possession of a potential right, benefit or advantage (i.e., the clause contained within its own bill of lading), (2) had actual knowledge of it, and (3) evidenced an actual intent to relinquish the right by not using it, when it filed and joined in motions for relief against GOT after engaging in considerable pretrial proceedings and discovery.17 It is abundantly clear that Expeditors was aware of Plaintiff’s lawsuit, yet clearly made a deliberate choice not to assert the clause. All three elements of the first test for waiver are easily and obviously satisfied. With respect to the second test, it is equally clear that Expeditors substantially invoked the judicial process in derogation of the forum selection clause and in doing so, caused detriment or prejudice to the other party. Wellogix, 648 Fed.App’x at 402). Expeditors has been involved in this litigation as a direct defendant to GOT fro the beginning and yet only recently made this motion, on the eve of the April 2019 trial setting at the time. Regardless that a new scheduling order as18 entered, Expeditors’ eleventh-hour filing of its motion will waste judicial resources. Like Hapag, Expeditors should not be rewarded after “laying behind the log” for so long. Finally, granting the motion raises the specter of potentially inconsistent judgments in a German court and one in Washington state, which would greatly prejudice GOT. Expeditors has moved for partial summary judgment (Rec. Doc. 120); Zurich has moved for summary17 judgment, (Rec. Doc. 172), and the two have each joined in and adopted Zurich’s motion to strike Global’s expert witnesses (Rec. Doc. 173). Rec. Doc. 195 (Expeditors’ Motion for Alternative relief), filed March 13, 2019; Rec. Doc. 12918 (Scheduling Order). 11 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 11 of 13 IV. CONCLUSION As set forth above, both Hapag and Expeditors have waived any rights to assert forum selection clauses using the standards set forth by the Fifth Circuit Court of Appeals in Hampton, 736 F.App’x 430. In the event the Court is inclined to grant Hapag’s pending motion to dismiss the crossclaims (Rec. Doc. 171), GOT is not bound by the forum-selection terms contained within Expeditors’ bill of lading which allegedly provides for litigation in Washington State, because like Hapag, Expeditors waived any such rights. Expeditors’ motion for alternative relief must be denied, if it is ever reached. WHEREFORE, Plaintiff prays that Expeditors’ Motion for Alternative Relief be denied, and for all other relief to which it may be justly entitled. Respectfully submitted, /s/ David S. Toy David S. Toy Texas Bar No. 24048029 (admitted PHV) dtoy@spaglaw.com David S. Toy PLLC 401 Louisiana Street, 8 Floorth Houston, Texas 77002 Telephone: 713.289.4930 Facsimile: 713.583.0451 david.toy@dstpllc.com Pete T. Patterson Texas Bar No. 15603580 (admitted PHV) pete@pyllp.com 4309 Yoakum, Suite 2000 Houston, Texas 77006 Telephone: 713.874.6444 Facsimile: 713.874.6445 12 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 12 of 13 R. Joshua Koch, Jr. (Bar Roll 7767) JKoch@kochschmidt.com Koch & Schmidt, LLC 650 Poydras Street, Ste 2660 New Orleans, Louisiana 70130 Telephone: 504.208.9040 Facsimile: 504.208.9041 Attorneys for Global Oil Tools, Inc. CERTIFICATE OF SERVICE I HEREBY CERTIFY that service of the foregoing was on this 25 day of March, 2019,th automatically accomplished on all counsel of record through CM/ECF Notice of Electronic Filing, in accordance with the Federal Rules of Civil Procedure. /s/ David S. Toy David S. Toy 13 Case 2:16-cv-16372-BWA-JVM Document 203 Filed 03/25/19 Page 13 of 13