Regal-Beloit Corp. v. Kawasaki Kisen Kaisha, Ltd.

• Decision Date: 13 November 2006
• Docket Number: No. CV06-3016DSF.,CV06-3016DSF.
• Parties: REGAL-BELOIT CORPORATION, Plaintiff, v. KAWASAKI KISEN KAISHA, LTD., et al. Defendant.
• Court: U.S. District Court — Central District of California

462 F.Supp.2d 1098

REGAL-BELOIT CORPORATION, Plaintiff, v. KAWASAKI KISEN KAISHA, LTD., et al. Defendant.

No. CV06-3016DSF.

United States District Court, C.D. California.

November 13, 2006.

Dennis A. Cammarano, Dennis A. Cammarano Law Offices, Long Beach, CA, for Plaintiff.

Alan Nakazawa, Dena S. Aghabeg, Cogswell Nakazawa & Chang, Long Beach, CA, Leslie G. McMurray, Leslie G. McMurray Law Offices, Valley Village, CA, for Defendant.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PURSUANT TO THE TOKYO, DISTRICT COURT FORUM SELECTION CLAUSE IN THE BILL OF LADING

FISCHER, District Judge.

I. INTRODUCTION

By this motion Defendants seek to dismiss this action pursuant to the Tokyo District Court forum selection clause in the K-Line Sills of Lading.

II. FACTS

During March and April of 2005, Defendants Kawasaki Kisen Kaisha, Ltd. ("Kawasaki") and "K" Line America, Inc. ("K-Line") accepted cargo shipments from Plaintiffs,¹ to be carried from Shanghai, China to various delivery points within the United States via the Port of Long Beach.² (See Declaration of Jian Jia Ying ("`Wing Decl.") ¶¶ 4, 8; Declaration of Thomas Kwok ("Kwok Decl.") ¶ 5; Declaration of Hua Gui Xing ("Xing Decl.") ¶ 4, 5.) The shipments were undertaken pursuant to contractual agreements between Defendants and each of the Plaintiffs, which were memorialized in Bills of Lading.

The Bills of Lading include the following relevant provisions:

Clause 1 (Definitions & Tariff)

(1)(b) "Carrier" means KAWASAKI KISEN KAISHA, LTD., Vessel, her owners, operators and charterers whether acting as carrier or bailee ...

(d) "Connecting Carrier" means carriers (other than Carrier), contracted by or acting on behalf of Carrier, participating in Carriage of Goods by land, water or air under this Bill of Lading ...

(h) "Merchant" includes the shipper, consignor, consignee, owner and receiver of Goods....

Clause 2 (Governing Law and Jurisdiction)

The contract evidenced by or contained in this Bill of Lading shall be governed by Japanese law except as may be otherwise provided for herein, and any action thereunder or in connection with Carriage of Goods shall be brought before the Tokyo District Court in Japan, to whose jurisdiction Merchant irrevocably consent [sic].

Clause 5 (Sub-Contracting: Exemptions, Immunities, Limitations, etc. of Participant(s)) (1) Carrier shall be entitled to subcontract on any terms whatsoever Carriage, including without limitation, the loading, unloading, storing, warehousing, handling and any and all duties whatsoever undertaken by Carrier in relation to Goods by any of the following: (I) any Connecting Carrier ... (III) sub-contractors, ... agents and independent contractors ...

(2) Merchant undertakes that ... [w]ithout prejudice to the foregoing, every such vessel and Such Participant(s) shall have the benefit of all provisions herein benefitting Carrier as if such provisions were expressly for their benefit; and in entering into this contract, Carrier, to the extent of those provisions, does so not only on its own behalf, but also as agent and trustee of such vessel and Participant(s).

(Declaration of Alan Nakazawa ("Nakazawa Decl."), Ex. A at A-5.)

Plaintiffs and Defendant Kawasaki also entered into service contracts whereby Plaintiffs agreed to ship a minimum quantity of containers and Kawasaki agreed to transport the cargo at a specified rate. (Declaration of Dennis A. Cammarano ("Cammarano Decl."), Exs. 2-5.)

The cargo was loaded on board Kawasaki's ocean carriers in Shanghai and Hong Kong, and was carried across the Pacific Ocean to Long Beach where it was turned over to K-Line. K-Line subsequently delivered the cargo to Union Pacific Railroad Company ("UP"), with whom it had subcontracted to carry the cargo by rail to its final destination.

The contract between K-Line and UP was made pursuant to the Exempt Rail Transportation Agreement and the Master Intermodal Transportation Agreement ("MITA"). (Declaration of Sherry Johnson ("Johnson Decl."), Exs. A, B.) Section 1, Item 1.1D of MITA provides that MITA and the agreements and contracts referencing MITA are made pursuant to 49 U.S.C. § 10709. (Johnson Decl. Ex. B at B-49.)

The cargo was allegedly damaged or destroyed during a train derailment in Tyrone, Oklahoma on April 21, 2005. (Regal Compl. ¶ 9.) Plaintiffs brought suit in Los Angeles Superior Court, alleging that Defendants failed to carry, handle, monitor, and deliver the cargo so that it would be maintained in the same condition as when it was received. (Regal Compl. ¶ 9.) Defendant UP separately removed each Plaintiff's action to federal court in May of 2006.

III. LEGAL STANDARD

A motion to dismiss premised on the enforcement of a forum selection clause is treated in the same manner as a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3). R.A. Argueta v. Banco Mexican S.A., 87 F.3d 320, 324 (9th Cir.1996). The Court is therefore permitted to "consider facts outside the pleadings." Id.

Interpretation and enforcement of contractual forum selection clauses are procedural issues to be decided under federal law. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir.1988). Forum selection clauses are presumptively valid under federal law, and should not be set aside unless the party challenging the clause demonstrates that enforcement would be unreasonable and unjust. See M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972).

A forum selection clause is "unreasonable" if (1) it was incorporated into the contract as a result of fraud, undue influence, or overweening bargaining power, id. at 12-13, 92 S.Ct. 1907, (2) the selected forum is so "gravely difficult and inconvenient" that the complaining party will "for all practical purposes be deprived of its day in court," id. at 18, 92 S.Ct. 1907, or (3) enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought. Id. at 15, 92 S.Ct. 1907. In order to establish that a forum selection clause is unreasonable, the non-moving party has the "heavy burden of showing that trial in the chosen forum would be so difficult and inconvenient that the party would effectively be denied a meaningful day in court." Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 281 (9th Cir.1984) (citing Bremen, 407 U.S. at 18, 92 S.Ct. 1907).

IV. ANALYSIS

Kawasaki, K-Line, and `UP's motion to dismiss is GRANTED because (1) the forum selection clause is prima facie enforceable, (2) the Carmack Amendment's venue provision does not apply, and (3) Defendants did not contractually agree to venue in New York. "

A. The Forum Selection Clause in the K-Line Bill of Lading is Enforceable and Applies to Plaintiff's Claims

The Court finds none of the benchmarks necessary for invalidating a forum selection clause: (1) there is no evidence of fraud, etc.; (2) Plaintiffs would not suffer any undue inconvenience, other than the expense of litigating in Tokyo, if the forum selection clause is enforced (see Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 535-36, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995)) (holding that increased cost and inconvenience are insufficient reasons to invalidate foreign forum selection clauses); Fireman's Fund Ins. Co. v. M.V. DSR Atl., 131 F.3d 1336, 1339 (9th Cir.1997) (same); and (3) there is no public policy favoring litigation in the Central Distract of California. Indeed, the Supreme Court and Ninth Circuit have both held comparable clauses to be valid. See Sky Reefer, 515 U.S. at 540-41, 115 S.Ct. 2322 (holding that a Tokyo arbitration Clause was prima facie valid)³; Kukje Hwajae Ins. Co. v. M/V Hyundai Liberty, 408 F.3d 1250, 1255 (9th Cir.2005) (holding that the district court abused its discretion when it failed to enforce a Korean forum selection clause). Nor have Plaintiffs argued that enforcing the forum selection clause would be unreasonable. Plaintiffs have consequently failed to satisfy their "heavy burden of showing that trial in the chosen forum would be so difficult and inconvenient" that they "effectively [would] be denied a meaningful day in court." Pelleport Investors, Inc., 741 F.2d at 281.

Additionally, the forum selection clause applies to Plaintiffs' claims. Plaintiffs are "Merchants" under the terms of the Bills of Lading and are thus subject to their terms. By alleging that the cargo was carried under the K-Line Bills of Lading and that Defendants breached the Bills of Lading when the cargo was damaged (see Compl. ¶ ¶ 7, 16), Plaintiffs accepted the terms of the Bills of Lading and became bound by them. See All Pac. Trading Corp. v. Vessel M/V Hanjin Yosu, 7 F.3d 1427, 1432 (9th Cir.1993). The Court therefore concludes that the Tokyo District forum selection clause in the K-Line Bills of Lading is valid and enforceable.

B. K-Line and UP are Entitled to the Benefit of the Bills of Lading Under the Himalaya Clauses⁴ a Contained Therein

Although the forum selection clause is included only in Kawasaki's Bills of Lading both K-Line and UP are nevertheless entitled to its benefits. Clause 5 extends the benefits of those contracts to sub-contractors and agents. Himalaya Clauses of this type are valid and enforceable. See, e.g., Norfolk S. Icy. Co. v. James N. Kirby, Pty Ltd., 543 U.S. 14, 31-32, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004); Inst. of London Underwriters v. Sea-Land Serv., Inc., 881 F.2d 761, 766-67 (9th Cir.1989). K-Line is Kawasaki's general agent in the United States (Johnson Decl. ¶ 5) and UP is a carrier with whom Kawasaki sub-contracted to provide overland transportation of the cargo (see Johnson Decl., Exs. A, B). Both K-Line and UP are consequently express beneficiaries of the K-Line Bills of Lading and therefore entitled to the benefit of the forum selection clause.

C. The Carmack Amendment Does Not Apply to Kawasaki, K-Line, or UP

Plaintiff contends that the present action...