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Bits & Pieces

Starrag v. Maersk

United States Court of Appeals,Ninth Circuit.

STARRAG; Starrag-Heckert Inc., Plaintiffs-Appellants,

v.

MAERSK, INC., a New York Corporation; Maersk Pacific Ltd., a California Corporation, Defendants-Appellees.

 

Before JOHN R. GIBSON,FN*RAYMOND C. FISHER, and CONSUELO M. CALLAHAN, Circuit Judges.

 

OPINION

CALLAHAN, Circuit Judge.

 

INTRODUCTION

 

Starrag and Starrag-Heckert, Inc. (collectively”Starrag”) appeal from the district court’s order granting partial summary judgment and applying the $500 per package liability limitation under the Carriage of Goods by Sea Act (“COGSA”) to three machines shipped with Maersk, Inc. that were damaged while being transported across a container yard operated by Maersk Pacific Ltd., a terminal operator. Starrag argues that the package limitation cannot apply to damage that occurred after Maersk unloaded the machines from their ship, and that application of the limitation conflicts with the COGSA and a related statute, the Harter Act. In addition, Starrag claims that the term “delivery” in Maersk’s Combined Transport Bill of Lading (“CTBL”) is ambiguous, and therefore should be read to restrict the package limitation to damage occurring after the machines were loaded onto the ship and before the cargo was unloaded.

 

We affirm the district court, holding: (1) Maersk did not need to provide actual notice to Starrag that the CTBL contractually extended the terms of COGSA outside of the “tackle to tackle” period; (2) contractually extending the package limitation does not conflict with the COGSA or the Harter Act; and (3) the district court properly interpreted the term “delivery” in a manner consistent with both maritime law and the terms of the short form non-negotiable sea way-bill (“Short Form”) and the CTBL.

 

 

FACTUAL BACKGROUND

 

On or about August 31, 2000, Starrag and Maersk entered into a Contract of Affreightment that is embodied in a Non-Negotiable Seaway Bill. By the terms of the seaway bill, a flat rack with three crates containing aerospace machinery were carried from Rotterdam to Long Beach, California aboard the M/V McKinney Maersk. Maersk Inc. was acting as the U.S. Agent for the owners of the M/V McKinney Maersk, and Maersk Pacific Ltd., which operated the terminal at which the cargo was removed from the M/V McKinney Maersk. The flat rack was unloaded from the M/V McKinney Maersk at Maersk Pacific Ltd.’s terminal at Pier J in the Port of Long Beach. The flat rack was moved from the dock to Maersk Pacific Ltd.’s container yard. While the flat rack was being parked in Row M, it tipped over to its side causing damage to the cargo contained within the three crates.

 

 

PROCEDURAL HISTORY

 

The parties filed cross-motions for partial summary judgment on whether Maersk could enforce the package liability limit of $500 per package under the COGSA, capping defendants’ liability at $1,500. The district court granted Maersk’s motion for partial summary judgment, limiting Maersk’s total liability to $1,500. The district court found that the CTBL incorporated the package damage liability limit of the COGSA into the Short Form as expressly authorized by the COGSA. The district court rejected Starrag’s claim that Maersk was required to provide actual notice of the extension of COGSA to any damage after unloading of the cargo and before “delivery” of the goods. The district court also found that under the terms of the CTBL, there was no “delivery” of the machines. As a result, the district court found that under the terms of the Short Form and the CTBL, the package damage liability limit of $500 per package applied, and Maersk was not liable for more than $1,500 in damages. The parties stipulated to liability and damages, and the district court entered a final judgment.

 

 

STANDARD OF REVIEW

 

In an appeal from a summary judgment, the appellate court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law.  Olsen v. Idaho State Bd. of Medicine, 363 F.3d 916, 922 (9th Cir.2004). Appellate courts review a district court’s analysis of contractual language and application of principles of contract interpretation de novo. Miller v. Safeco Title Ins. Co., 758 F.2d 364, 367 (9th Cir.1985).

 

 

DISCUSSION

 

I.

 

 

The COGSA limits damages against a carrier for loss or damage to goods in transit to $500, stating:

Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.

By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained. COGSA §  4(5). Essentially, the package limitation presents the shipper with a choice to accept the liability limitation in exchange for a lower rate for shipping, or to declare a higher value and pay a higher rate. See Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 19, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004) (“[A]s is common in the industry, Kirby accepted a contractual liability limitation for ICC below the machinery’s true value, resulting, presumably, in lower shipping rates.”).

 

Ordinarily, the COGSA only applies “from the time when the goods are loaded on to the time when they are discharged from the ship.” COGSA §  1(e); see Mori Seiki USA, Inc. v. M.V. Alligator Triumph, 990 F.2d 444, 447 (9th Cir.1993) (“By its own terms, COGSA limits liability for cargo damage to $500, if the damage occurs between the time the cargo is loaded on to the ship and the time it is discharged from the ship (‘tackle to tackle’).”); Pan Am. World Airways, Inc. v. California Stevedore & Ballast Co., 559 F.2d 1173, 1177 n. 5 (9th Cir.1978) (noting COGSA applies “from the time the ship’s tackle is hooked onto the cargo at the port of loading until the time when cargo is released from the tackle at the port of discharge”). Section 7 of the COGSA explicitly states, however, that:Nothing contained in [COGSA] shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by sea.

 

COGSA §  7. Therefore, the COGSA expressly permits parties to a maritime shipping contract to provide for liability limitations beyond the “tackle to tackle” period for damage that occurs prior to loading or after unloading of the goods from the ship.

 

In this case, the Short Form begins by stating, “[t]he contract evidenced by this Waybill is subject to the exceptions, limitations, conditions and liberties (including those relating to pre-carriage and on-carriage) set out in Maersk Sealand’s current Combined Transport Bill of Lading.” The Short Form therefore incorporates by reference the CTBL’s language in paragraph 5.2 (also known as a “period of responsibility clause,” see Sompo Japan Ins. Co. of Am. v. Union Pac. R.R. Co., 456 F.3d 54, 56 (2d Cir.2006)), stating that Maersk’s liability shall be determined according to the COGSA “[w]here loss or damage has occurred between the time of receipt of the Goods by the Carrier at the port of loading and the time of delivery by the Carrier at the port of discharge, or during any prior or subsequent period of carriage by water….” As a matter of contract interpretation, this language extends COGSA’s liability limitation beyond its statutory terms to activities before and after the “tackle to tackle” period, including up to “the time of delivery.”

 

 

II.

 

Starrag’s main contention is that the failure of the Short Form (that was provided to Starrag) to explicitly state that the CTBL (that was merely made available to Starrag) contractually extends the COGSA package limitation through delivery of the goods causes it to conflict with the COGSA and therefore the package limitation cannot be enforced.

 

 

A.

 

A short form bill of lading may incorporate by reference the terms in a long form bill of lading without providing specific notice of those terms so long as the incorporated provisions are not special terms or exceptions that differ from the governing federal statutes. See Comsource Foodservice Indep. Foodservice Cos. v. Union Pac. R.R., 102 F.3d 438, 443-444 (9th Cir.1997) (citing Encyclopaedia Britannica, Inc. v. S.S.Hong Kong Producer, 422 F.2d 7, 14 (2d Cir.1969)). If a short form bill of lading fails to give notice of a term in a long form bill of lading that is inconsistent with a statute, a court may refuse to enforce the contract clause. See Encyclopaedia Britannica, 422 F.2d at 16 (refusing to enforce a clause that shifted the burden of proof from the carrier to the shipper); see also Comsource, 102 F.3d at 444 (holding under the Inter-state Commerce Act that absent “reasonable notice” of a one year statute of limitations provision that conflicted with the Act, the provision did not bind the shipper). The reason for refusing to enforce inconsistent contractual terms is that by “accepting the short form, the shipper relies upon the fact that the long form, which is incorporated by reference, contains only the usual provisions which closely follow COGSA, unless there is some warning on the face of the short form of special terms or exceptions which differ from the COGSA provisions.”  Encyclopaedia Brittanica, 422 F.2d at 14. In other words, shippers are entitled to additional notice of “provisions differing from federal statutes because the existence of the statute itself will not provide any constructive notice for such provisions.” Comsource, 102 F.3d at 443-444.

 

Comsource and Encyclopaedia Britannica are distinguishable from this case because extending COGSA’s liability limit is entirely consistent with COGSA and other statutes. See Sabah Shipyard Sdn. Bhd. v. M/V Harbel Tapper, 178 F.3d 400, 406-409 (5th Cir.1999) (holding that a period of responsibility clause is permitted by COGSA and does not conflict with the Harter Act). In Comsource, we noted that 49 U.S.C. §  11707 (“The Carmack Amendment”), part of the Interstate Commerce Act (“ICA”), prohibited carriers from providing for a statute of limitations shorter than the Act’s two year default.  Comsource, 102 F.3d at 442 & n. 11 (quoting 49 U.S.C. §  10505(e)). Another provision of the ICA, 49 U.S.C. §  10505(e) (“The Staggars Amendment”), however, allowed rail carriers to offer alternative terms, thus “free[ing] rail carriers from the strict application of the Carmack Amendment.” Id. at 442-43 (citing 49 U.S.C. §  10505(e)). In light of the tension between the two amendments, we held that the railroad could not enforce the one year statute of limitations contained in its tariff without providing reasonable notice of the term because it “conflicts with a federal statute-namely the Carmack Amendment of the Interstate Commerce Act which requires a two year limitations period.” Comsource, 102 F.3d at 444.

 

In this case, the extension of COGSA’s terms utilizes, rather than contradicts an express provision of the COGSA. Moreover, as the Supreme Court remarked in Norfolk Southern, a carrier’s use of a period of responsibility clause may both benefit the shipper and further the purposes of COGSA:

As COGSA permits, Hamburg Sud in its bill of lading chose to extend the [package limitation] to the entire period in which the machinery would be under its responsibility, including the period of inland transport. Hamburg Sud would not enjoy the efficiencies of the [package limitation] if the liability limitation it chose did not apply equally to all legs of the journey for which it undertook responsibility. And the apparent purpose of COGSA, to facilitate efficient contracting in contracts for carriage by sea, would be defeated.

 

543 U.S. at 29.

 

Comsource is also distinguishable because in that case, the bill of lading issued to the shipper contradicted the statute of limitations term in the carrier’s tariff. See Comsource, 102 F.3d at 441 fn. 7. Although the carrier sought to enforce a one year statute of limitations in its tariff, the underlying bill of lading incorporated a Uniform Domestic Straight Bill of Lading that provided for a two year statute of limitations, not the tariff.  Id . Thus, the tariff was inconsistent with the bill of lading as well as the applicable statute. Here, there is no conflict between the documents, and the Supreme Court has held that such an extension is consistent with the COGSA.

 

In the second case relied upon by Starrag, Encyclopaedia Britannica, the Second Circuit considered a clause in a long form bill of lading, not mentioned in the short form bill of lading, that required a shipper to notify the carrier if stowage of the goods below deck was required. 422 F.2d at 10. The clause also disclaimed any liability for damage to goods stored on deck. Id. at 10, 13-14. After characterizing this clause as a “substantial deviation from the standard provisions,” the Second Circuit noted that the clause shifted “the burden of proof from the carrier, as provided by COGSA, to the shipper.” Id. at 13, 16. The court concluded that the attempt to contractually shift the burden of proof regarding damages stated in COGSA violated the Act’s prohibition on exculpatory clauses. Id. at 16. Encyclopaedia Britannica is distinguishable because the contractual extension of the COGSA’s package limitation does not violate any of the provisions of the COGSA, and is expressly allowed by §  7 of the Act. Therefore, no additional notice was required.

 

As a practical matter, contractual extension of the COGSA is now routine in the shipping industry. See Michael E. Crowley, The Limited Scope of the Cargo Liability Regime Covering Carriage of Goods by Sea: The Multimodal Problem, 79 Tul. L.Rev. 1461, 1471 (2005); 8 Benedict on Admiralty, §  16.06 (7th rev. ed.2004). The clause at issue in this case, paragraph 5.2 of the CTBL, is a period of responsibility clause that is recognized as a “term and condition normally found on the reverse side of a bill of lading.” 1 Schoenbaum, Admiralty and Maritime Law, §  10-11 at 64-65. Unlike the burden shifting terms of the bill of lading in Encyclopaedia Britannica, or the shorter statute of limitations in Comsource, the existence of COGSA §  7, and industry practice makes contractual extension of the COGSA package limitation one of “the usual provisions which closely follow COGSA” and not a special term or exception that differs from the COGSA provisions. Encyclopaedia Britannica, 422 F.2d at 14. We conclude that Maersk’s Short Form and CTBL are in harmony with the relevant provisions of the COGSA, that the district court properly distinguished Comsource and Encyclopaedia Britannica, and that Maersk was not required to give additional notice to enforce the package liability limitation or to contractually extend the terms of the COGSA.

 

 

III.

 

Starrag also argues that the package limitation violates the Harter Act’s prohibition of clauses exculpating carriers from liability. This argument fails for two reasons. First, where the parties contractually extend the COGSA to cover the damage, the Harter Act does not apply. See Sea-Land Serv., Inc. v. Lozen Int’l, LLC, 285 F.3d 808, 816-17 (9th Cir.2002) (applying the COGSA to a bill of lading that contractually extended COGSA through a Clause Paramount and not the Carmack Amendment or the Harter Act). Therefore, because the CTBL properly states that it is governed by the COGSA, and extends the COGSA terms through delivery of the goods, the Harter Act does not apply.

 

[10] Second, even if the Harter Act applied, it does not prohibit clauses that limit liability. Starrag contends that the COGSA’s package limitation violates the Harter Act’s prohibition of exculpation of liability by limiting its recovery to $1,500 where its machines suffered approximately $600,000 in damage. The difference between the liability cap and the actual damages, however, is irrelevant. We have recognized that as long as the carrier does not avoid liability under the Harter Act, it can limit liability through the use of contract clauses. See Vision Air Flight Serv., 155 F.3d at 1171 n. 7 (citing 2A Benedict on Admiralty, §  12 at 2-5 (1988)). In Tessler Bros., we concluded that as long as there is some liability, a package limitation is not an exculpation from liability under either the COGSA or the Harter Act. 494 F.2d at 443 (discussing difference between a liability limit and a liability exclusion). Decisions from other circuits interpreting the Harter Act and enforcement of package liability limitations have also found contractual liability limitations enforceable. We conclude that the Harter Act does not prohibit enforcement of the COGSA’s package limitation or conflict with the package limitation.

 

 

IV.

 

[11] Starrag also argues that bills of lading in general are contracts of adhesion, requiring stricter construction against the carrier. Shippers may not avoid the package limitation, however, where the language and intent of the contract’s clauses are clear. See Mori Seiki, 990 F.2d at 448 (rejecting contract of adhesion argument regarding extension of the COGSA package limitation and a Himalaya Clause); Institute of London Underwriters, 881 F.2d at 767 (noting Himalaya Clauses are matters of common usage and refusal to cover agents and independent contractors would render Himalaya Clauses “extraordinarily empty”). Therefore, the district court acted properly by applying general contract principles in finding that the COGSA package limitation also protects Maersk Pacific Ltd., and that the joint liability of the Maersk defendants is limited to $1,500.

 

 

V.

 

[12] Finally, Starrag contends that the word “delivery” in the CTBL was ambiguous, and therefore should be interpreted as limiting the package limitation to the “tackle to tackle” period. Starrag reads the phrase “or during any prior or subsequent period of carriage by water” in the CTBL in conjunction with the word “delivery” so as to end the applicability of the COGSA once the machines were placed on the dock. We, however, agree with the district court that the word “delivery,” in the context of the CTBL, describes an act beyond the mere placement of goods to the dock.

 

[13][14][15][16] The courts interpret and resolve disputes concerning maritime contracts such as the CTBL according to federal law. See Norfolk Southern, 543 U.S. at 23 (stating “that federal law governs this contract dispute”). “Since the bill of lading is a contract of carriage between shipper and carrier, familiar principles of contract interpretation govern its construction.” Yang Ming Marine Transport Corp. v. Okamoto Freighters, Ltd., 259 F.3d 1086, 1092 (9th Cir.2001) (quoting Henley Drilling Co. v. McGee, 36 F.3d 143, 148 n. 11 (1st Cir.1994)). “Contract terms are to be given their ordinary meaning,” and “[w]henever possible, the plain language of the contract should be considered first.” Klamath Water Users Protective Ass’n v. Patterson, 204 F.3d 1206, 1210 (9th Cir.2000). “A basic principle of contract interpretation in admiralty law is to interpret, to the extent possible, all the terms in a contract without rendering any of them meaningless or superfluous.” Chembulk Trading LLC v. Chemex Ltd., 393 F.3d 550, 555 (5th Cir.2004).

 

The plain language of the CTBL states that the COGSA applies “between the time of receipt of the Goods by the Carrier at the port of loading and the time of delivery by the Carrier at the port of discharge.”  The phrase “or during any prior or subsequent period of carriage by water” is phrased in the alternative, and cannot reasonably be interpreted as limiting the applicability of the COGSA to the “tackle to tackle” period. See General Casualty Co. of Am. v. Azteca Films, Inc., 278 F.2d 161, 169 n. 3 (9th Cir.1960) (concluding that use of “or” in an insurance exclusion stated alternatives and that “[t]he disjunctive is used and cannot be ignored”).

 

[17] Moreover, the cases discussing “delivery” under the common law, the Harter Act, and the COGSA all require more than physical delivery of the goods onto the wharf. Under general maritime common law, “to constitute a valid delivery on the wharf, the carrier should give due and reasonable notice to the consignee, so as to afford him a fair opportunity of providing suitable means to remove the goods, or put them under proper care and custody.” Richardson v. Goddard, 64 U.S. 28, 39, 23 How. 28, 16 L.Ed. 412 (1859). The cases discussing the meaning of “delivery” under the COGSA have held that “delivery” occurs upon notification of the consignee that the goods arrived and after a reasonable opportunity for the consignee to obtain or inspect the goods. 0

 

[18] We conclude that “delivery” for the purposes of the Short Form and CTBL had not occurred when the goods were damaged in this case. Maersk had not given notice that the machines had arrived, or given Starrag or the Consignee an opportunity to inspect or take possession of the machines. Therefore, the language of the contract itself did not limit the application of the COGSA to the “tackle to tackle” period, and the district court properly found that the machines had not been “delivered” when the machines were damaged.

 

 

CONCLUSION

 

We affirm the district court’s determination that the COGSA’s $500 per package liability limitation applies in this case and limits the Maersk defendants’ liability to $1,500. We hold that (1) contractual extension of the terms of the COGSA, including the package limitation, beyond the “tackle to tackle” period does not conflict with COGSA; (2) the contractual extension of the COGSA does not require special notice in short form documents; and (3) the district court properly interpreted the term “delivery” in the CTBL to mean some point beyond delivery of the goods to the dock, and reasonably found that “delivery” had not occurred when the machines were damaged.

 

For the reasons stated above, the district court’s judgment is AFFIRMED.

 

 

 

FN* The Honorable John R. Gibson, Senior United States Circuit Judge for the Eighth Circuit, sitting by designation.

 

 

Congress recodified both COGSA and the Harter Act on October 6, 2006 at 46 U.S.C. §  30701 historical and statutory notes. Act of October 6, 2006, Pub.L. No. 109-304, 120 Stat. 1485.

 

The parties stipulated to the following facts, repeated here verbatim, for the purposes of the cross-motions for summary judgment.

 

The waybill is referred to in this opinion as the Short Form.

 

See 46 U.S.C. §  30701, note (2006) (Carriage of Goods by Sea Act).

 

Because the short form in this case is not “a bill of lading or any similar document of title,” COGSA §  1(b), COGSA does not apply to it by its own force. See 1 Thomas J. Schoenbaum, Admiralty & Maritime Law, §  10-11 (4th ed.2004). However, the Short Form on its face states that, “In the case of carriage to or from the United States of America, the provisions of the United States Carriage of Goods by Sea Act 1936 (COGSA) shall apply to the contract as if it were a Bill of Lading….” This is sufficient to incorporate the rules embodied in COGSA. See id.

 

Not only did the short form bill of lading fail to inform the shipper of this burden shifting, but the carrier did not even mention the clause in the long form bill of lading until it filed a post-trial motion.  Id. at 17.

 

The Harter Act’s prohibition on exculpation formerly stated:

It shall not be lawful for the manager, agent, master, or owner of any vessel transporting merchandise or property from or between ports of the United States and foreign ports to insert in any bill of lading or shipping document any clause, covenant, or agreement whereby it, he, or they shall be relieved from liability for loss or damage arising from negligence, fault, or failure in proper loading, stowage, custody, care, or proper delivery of any and all lawful merchandise or property committed to its or their charge. Any and all words or clauses of such import inserted in bills of lading or shipping receipts shall be null and void and of no effect.

46 U.S.C. app. §  190 (2000). The current version of the Harter Act similarly provides:

A carrier may not insert in a bill of lading or shipping document a provision avoiding its liability for loss or damage arising from negligence or fault in loading, stowage, custody, care, or proper delivery. Any such provision is void.

46 U.S.C. §  30704. The differences between the two versions are immaterial to our holding.

 

See Beaumont Export & Import Co. v. New York & Cuba Mail Steamiship Co., 286 F. 120, 121-22 (5th Cir.1923) (affirming enforcement of a $100 per package limitation); Hugetz v. Compania Transatlantica, 270 F. 90, 90-91 (2d Cir.1920) (affirming $5 per package limitation); Hohl v.Norddeutscher Lloyd, 175 F. 544, 545 (2d Cir.1910).

 

Clause 5.2 of the CTBL states:

Where loss or damage has occurred between the time of receipt of the Goods by the Carrier at the port of loading and the time of delivery by the Carrier at the port of discharge, or during any prior or subsequent period of carriage by water, the liability of the Carrier shall be determined in accordance with the ‘US Carriage of Goods by Sea Act 1936’ (COGSA).

 

0. See Servicios-Exporama v. Indus. Mar. Carriers, Inc., 135 F.3d 984, 992 (5th Cir.1998) (“ ‘Delivery’ occurs when the carrier places the cargo into the custody of whomever is legally entitled to receive it from the carrier.”); Metro. Wholesale Supply, Inc. v. M/V Royal Rainbow, 12 F.3d 58, 61 (5th Cir.1994) (deciding that “proper delivery” occurs when the consignee has notice of arrival and a reasonable opportunity to pick up the goods.); see also National Packaging Corp. v. Nippon Yusen Kaisha, 354 F.Supp. 986, 987 (N.D.Cal.1972) (“a reasonable opportunity to remove the goods or place them under proper care and custody.”); Capital Partners Int’l Ventures, Inc. v. Danzas Corp., 309 F.Supp.2d 1138, 1146 (N.D.Cal.2004) (discussing constructive delivery under both the Harter Act and COGSA, and concluding that “Goods are constructively delivered once they are placed upon a fit wharf and the consignee receives both due and reasonable notice that the goods have been discharged and a reasonable opportunity to remove them”).

 

Lamex v. Blakeman Transportation

United States District Court,S.D. Texas,Houston Division.

LAMEX FOODS, INC., Plaintiff,

v.

BLAKEMAN TRANSPORTATION, INC., and Morning Express, Inc., Defendants.

 

May 15, 2007.

 

 

 

MEMORANDUM AND ORDER

KEITH P. ELLISON, United States District Judge.

Before the Court is the Motion to Dismiss or Transfer filed by Defendant Blakeman Transportation, Inc. After considering the parties’ filings and the applicable law, the Court finds that the motion, Docket No. 9, should be and hereby is DENIED.

 

 

I. BACKGROUND

 

This case arises from the loss of a shipment of frozen pork loin ribs, which Plaintiff allegedly tendered to Defendants for intra-state carriage.

 

Plaintiff Lamex Foods is a Minnesota-based exporter and domestic supplier of meat, poultry, fruit, and vegetables. Defendant Blakeman Transportation is a Texas freight brokerage and logistics company, and Defendant Morning Express is an independent contract motor carrier also incorporated in Texas. According to Plaintiff, Lamex arranged in February 2005 for Defendants to transport 909 cases of frozen pork ribs over the road from Houston, Texas to Grand Prairie, Texas. Blakeman was to act as the transportation broker, and Morning Express would carry the cargo.

 

 

Morning Express does not join Blakeman’s motion to dismiss; indeed, it appears that service has not yet been effected upon Morning Express.

 

Plaintiff contends that its shipper delivered the ribs in good condition to Defendants on or about February 11, 2005. Neither Blakeman nor Morning Express provided a waybill, bill of lading, receipt, or any other shipping memorandum; rather, the shipment was to be performed under an oral contract. The ribs never reached their destination, however. According to Plaintiff, the trailer carrying the cargo was discovered empty in a Houston restaurant parking lot on March 4, 2005, and Defendants have neither located the ribs nor explained their disappearance.

 

 

Plaintiff’s response to the motion to dismiss states that Lamex and Blakeman were not new to one another in February 2005; by then, Blakeman had handled more than thirty shipments for Lamex. Pl.’s Resp. 3. Neither party indicates whether these previous shipments were also arranged under oral contracts, without bills of lading or other shipping receipts.

 

In the original Complaint, Plaintiff asserts claims for, inter alia, breach of contract and negligence. Plaintiff seeks to recover the actual value of the cargo, which it reports to be $129,587.04, as well as fees, costs, and interest. Defendant Blakeman Transportation now moves to dismiss or transfer the case, arguing that venue is improper in the Southern District of Texas.

 

 

II. ANALYSIS

 

A. Motion to Dismiss

 

 

Blakeman first moves to dismiss the case for improper venue under Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. §  1406(a), asserting two grounds for dismissal: first, that venue has been predetermined by a forum selection clause, and second, that venue is improper in the Southern District of Texas under 28 U.S.C. §  1391(a). District courts in this circuit are divided over which party bears the burden of proof with regard to venue after a Rule 12(b)(3) motion has been made. The issue need not be addressed in this case, however, because it is clear under either analysis that the motion to dismiss should be denied.

 

 

Compare Texas Marine & Brokerage, Inc. v. Euton, 120 F.Supp.2d 611 (E.D.Tex.2000), Sanders v. Seal Fleet, Inc., 998 F.Supp. 729 (E.D.Tex.1998), and Bounty-Full Entm’t, Inc. v. Forever Blue Entm’t Group, Inc., 923 F.Supp. 950 (S.D.Tex.1996) (all holding that a defendant moving to dismiss under Rule 12(b)(3) bears the burden of showing improper venue), with Norsworthy v. Mystik Transp., Inc., 430 F.Supp.2d 631 (E.D.Tex.2006), Langton v. Cbeyond Commc’n, L.L.C., 282 F.Supp.2d 504 (E.D.Tex.2003) (holding that the plaintiff bears the burden once a motion dismiss for improper venue has been made).

 

1. Forum selection clause

 

Blakeman first argues that a forum selection clause in its standard Terms and Conditions governs the transaction at issue. Blakeman attaches the purported set of “Terms and Conditions of Service” to its motion to dismiss, under which “[a]ny legal proceeding instituted against BTI relating to the services provided by BTI to the Customer must be instituted in Tarrant County, Texas.” Def.’s Mot. to Dismiss, Ex. B. Plaintiff counters that it never received, nor was it notified orally or in writing, of the referenced terms. Indeed, Blakeman does not claim that it ever actually provided Lamex with the Terms and Conditions, that Lamex ever signed a document incorporating them, or even that Lamex orally agreed to the Terms and Conditions. Rather, Blakeman states simply that “Blakeman’s services to Lamex were rendered subject to Blakeman’s Terms and Conditions of Service. All services rendered in Blakeman’s regular course of business are subject to Blakeman’s Terms and Conditions of Service.” Def.’s Mot. to Dismiss, Ex. A at 1 (Aff. of Steve Gold).

 

The Court agrees that forum selection clauses are presumed to be valid, and should generally be enforced. However, Blakeman has not demonstrated or even argued that Lamex bound itself contractually to any agreement incorporating a forum selection clause. It is insufficient to state, as Blakeman does, that the Terms and Conditions applied simply because Lamex was a customer, regardless of whether those terms were appended to any agreement between Lamex and Blakeman that was freely negotiated and binding on both parties. Where forum selection clauses “have been obtained through ‘freely negotiated’ agreements and are not ‘unreasonable and unjust,’ their enforcement does not offend due process.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n. 14, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (internal citation omitted) (emphasis added). Because Blakeman has not shown that Lamex agreed to and was contractually bound by the forum selection clause, the Court declines to enforce that clause by dismissing Lamex’s claims.

 

 

2. 28 U.S.C. §  1391(a)

 

Defendant Blakeman Transportation next argues that the case should be dismissed because venue in the Southern District of Texas is improper under 28 U.S.C. §  1391(a). Under Section 1391(a), a diversity action may be brought only in “(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.”

 

In the Court’s view, venue is proper in the Southern District under Section 1391(a)(2). A substantial part of the events giving rise to Lamex’s claims occurred in this district-namely, Lamex’s alleged delivery of the cargo to Defendants, and, most likely, the loss of that cargo. Blakeman insists that the case actually revolves around the failure of the cargo to appear in Grand Prairie, which is in the Northern District of Texas. The Court is unpersuaded by Defendant’s characterization of events. Therefore, Blakeman’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. §  1391 is denied.

 

 

B. Motion to Transfer

 

In the alternative, Blakeman asks the Court to transfer the case to the Northern District of the Texas under either 28 U.S.C. §  1406(a) or §  1404(a). Under Section 1406(a), a district court shall dismiss or transfer a case “laying venue in the wrong division or district.” Under Section 1404(a), a correctly filed case may nevertheless be transferred to another district “[f]or the convenience of parties and witnesses, in the interest of justice.” For the reasons discussed above, Plaintiff has not filed in the wrong district, either under 28 U.S.C. §  1391(a) or in contravention of a forum selection clause. Therefore, Section 1406(a) does not apply. The Court must now decide whether “the interest of justice” requires the case to be transferred.

 

The parties agree that Blakeman, as the movant under Section 1404(a), bears the burden of establishing the propriety of the transfer and the superiority of the transferee district. E.g., Zamora-Garcia v. Moore, No. M-05-331, 2006 WL 331034, at(S.D.Tex. Nov. 16, 2006) (citing cases). Further, in weighing alternate venues, the plaintiff’s choice of venue normally should not be disturbed, unless clearly outweighed by other factors. E.g., Vasquez v. Bridgestone/Firestone, Inc., 325 F.3d 665, 672 (5th Cir.2003); Peteet v. Dow Chem. Co., 868 F.2d 1428, 1436 (5th Cir.1989); Howell v. Tanner, 650 F.2d 610, 616 (5th Cir. Unit B July 1981). The Supreme Court set forth private and public factors to be weighed in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947), and reaffirmed them in Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). The private concerns include 1) the relative ease of access to sources of proof; 2) the availability of compulsory process to secure the attendance of witnesses; 3) the cost of attendance for willing witnesses; and 4) all other practical problems that make trial of a case easy, expeditious and inexpensive. The public concerns include: 1) the administrative difficulties flowing from court congestion; 2) the local interest in having localized interests decided at home; 3) the familiarity of the forum with the law that will govern the case; and 4) the avoidance of unnecessary problems of conflict of laws of the application of foreign law. Id. at 241 n. 6.

 

 

1. Private factors

 

The private Gulf Oil factors relate generally to the practical aspects of litigation-cost, location of evidence and witnesses, etc. Blakeman asserts that because both Defendants are headquartered in the Northern District, all of the relevant documents and witnesses are located there, including corporate officers and employees with knowledge of the disputed events. Further, the alleged theft of the ribs was reported to and investigated by the Arlington Police Department, also in the Northern District. Because Lamex is a Minnesota corporation, Blakeman argues, it will not be more burdensome for Lamex to litigate in the Northern District than in the Southern District. Lamex counters that Blakeman has not demonstrated that all witnesses are, in fact, in the Northern District, or that the relevant documents are so voluminous as to render trial in the Southern District unreasonably costly.

 

The Court acknowledges that in the event the case goes to trial or an evidentiary hearing must be conducted, litigation in the Southern District would be costlier and less convenient for corporate witnesses than the Northern District. In that respect, the private factors tilt in favor of transfer. However, given that the delivery of the cargo to Defendants occurred in the Southern District, as well as the discovery of the empty carrier and (most likely) the alleged theft, Blakeman has not persuaded the Court that all relevant witnesses are in the Northern District. As to the problem of transporting documents, the parties appear to agree that no written contract or shipping memorandum governed this particular shipment, but rather that it occurred pursuant to an oral understanding. While relevant documents may exist relating to prior business dealings between the parties, this case generally does not seem to revolve around large amounts of written material. Finally, the reality of modern litigation is that because of the telecommunications technology at our disposal, much can be accomplished electronically or over the phone, including interactions with the Court. Non-resident parties and counsel are by no means uncommon in the Southern District. For these reasons, the private factors do not clearly outweigh Plaintiff’s choice of forum.

 

 

2. Public factors

 

The public factors set forth in Gulf Oil and Piper are, again: 1) the administrative difficulties flowing from court congestion; 2) the local interest in having localized interests decided at home; 3) the familiarity of the forum with the law that will govern the case; and 4) the avoidance of unnecessary problems of conflict of laws of the application of foreign law.  Piper, 454 U.S. at 241 n. 6. Blakeman does not argue that the first, third, or fourth factors favor the Northern District, nor could it credibly do so. The Court has no reason to suspect that the Southern District is more congested than the Northern; that either forum has a superior ability to interpret the state law applicable in a diversity case; or that foreign law will play a role in this case. With regard to the second factor, Blakeman asserts that the Northern District has a greater interest in the litigation because both Defendants are residents, and that jurors in the Southern District should not be subjected to a case involving non-resident parties.

 

The Court agrees that the Northern District has an interest in a case involving these Defendants. However, given that the unexplained, troubling event-the loss of a sizable cargo shipment-most likely occurred in Harris County, the Southern District has some interest as well. Further, while Defendants are not residents of the Southern District, they appear to do business here. The Court finds that the public factors are evenly weighted between the parties, and do not tilt in favor of transfer. Therefore, the Court must respect Plaintiff’s choice of venue, and deny discretionary transfer to the Northern District.

 

 

III. CONCLUSION

 

Defendants’ Motion to Dismiss or Transfer is DENIED.

 

IT IS SO ORDERED.

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