Certain Underwriters at Lloyd's v. Expeditors Int'l of Wash., Inc.

• Citation: 584 F.Supp.3d 860
• Decision Date: 09 February 2022
• Docket Number: Case No. 8:20-cv-00809-JWH-PJWx
• Parties: CERTAIN UNDERWRITERS AT LLOYD'S Subscribing to Policy No. M-20304; and Kingston Technology Company, Inc., a corporation, Plaintiffs, v. EXPEDITORS INTERNATIONAL OF WASHINGTON, INC., a corporation; Landstar Express America LLC; Statewide Logistics LLC, a limited liability company; and Does One through Ten, Defendants.
• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California

584 F.Supp.3d 860

CERTAIN UNDERWRITERS AT LLOYD'S Subscribing to Policy No. M-20304; and Kingston Technology Company, Inc., a corporation, Plaintiffs,
v.
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC., a corporation; Landstar Express America LLC; Statewide Logistics LLC, a limited liability company; and Does One through Ten, Defendants.

Case No. 8:20-cv-00809-JWH-PJWx

United States District Court, C.D. California.

Signed February 9, 2022

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Ryan Hudson Hollister, Joshua E. Kirsch, Gibson Robb and Lindh LLP, Emeryville, CA, for Plaintiffs.

Andrew D. Kehagiaras, Roberts and Kehagiaras LLP, Long Beach, CA, for Defendant Expeditors International of Washington, Inc.

Gordon McAuley, Williams & Gumbiner LLP, San Rafael, CA, for Defendant Landstar Express America LLC.

MEMORANDUM OPINION AND ORDER ON MOTION OF DEFENDANT EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. FOR PARTIAL SUMMARY JUDGMENT

[ECF No. 60]

John W. Holcomb, UNITED STATES DISTRICT JUDGE

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This case involves highway robbery, missing cargo, and a question of who pays for the loss. In April 2019, Plaintiff Kingston Technology Company, Inc. contracted with Defendants Expeditors International of Washington, Inc.; Landstar Express America, Inc.; and Statewide Logistics LLC to truck 17 pallets of memory modules from Kingston's principal place of business in Fountain Valley, California, to its receiving department in El Paso, Texas.¹

On the evening May 2, 2019, drivers working for Statewide embarked on their journey with Kingston's cargo. Along the way, they stopped to refuel near Coachella, California. All of the sudden, thieves in a van pulled up behind the truck, cut the locks with bolt cutters, and—in less than 10 minutes—managed to abscond with two-and-a-half pallets of memory modules worth nearly $1,000,000.² This case involves Kingston's efforts to recoup its losses from Defendants.

Before the Court is Expeditors’ motion for partial summary judgment.³ The Court finds this matter appropriate for resolution without a hearing. See Fed. R. Civ. P. 78 ; L.R. 7-15. After considering the papers filed in support and in opposition,⁴ the Court orders that the Motion is GRANTED in part and DENIED in part , as set forth herein.

I. PROCEDURAL HISTORY

In April 2020, about a year after the parties entered into their contract, Kingston and its then-co-plaintiff, Certain Underwriters at Lloyd's Subscribing to Policy No. M-20304, filed their Complaint for Non-Delivery of Cargo in this Court.⁵ Expeditors subsequently filed crossclaims against its co-defendants, Landstar and Statewide, for equitable indemnification and contribution.⁶ Less than two weeks later, Statewide asserted the same two crossclaims against Expeditors.⁷ Landstar then followed suit and asserted four crossclaims against Expeditors for breach of contract, equitable indemnity, contribution, and declaratory relief.⁸

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In October 2020, Kingston filed an Amended Complaint,⁹ in which it asserted five claims for relief: (1) breach of bailment; (2) negligence; (3) breach of contract for failure to delivery cargo per their bill of lading no. HO70299344; (4) breach of contract for failing to provide security services; and (5) in the alternative, violation of 49 U.S.C. § 14706 (the "Carmack Amendment").¹⁰ The parties then attempted to mediate their dispute, but they could not reach a resolution.¹¹

In August 2021, Expeditors moved for partial summary judgment with respect to liability under Kingston's third claim for relief and for full summary judgment on Kingston's other four claims.¹² Kingston opposed a week later,¹³ and Expeditors filed a timely reply.¹⁴

In December 2021, the parties notified the Court that Kingston and Statewide had settled.¹⁵ As a result of that settlement, Expeditors and Statewide dismissed their respective crossclaims with prejudice.¹⁶ Expeditors and Landstar also stipulated to dismiss their respective crossclaims, albeit without prejudice.¹⁷

II. LEGAL STANDARD

Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). When deciding a motion for summary judgment, the court construes the evidence in the light most favorable to the non-moving party. Barlow v. Ground , 943 F.2d 1132, 1135 (9th Cir. 1991). However, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original). The substantive law determines the facts that are material. Id. at 248, 106 S.Ct. 2505. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. Factual disputes that are "irrelevant or unnecessary" are not counted. Id. A dispute about a material fact is "genuine" "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

Under that standard, the moving party has the initial burden of informing the court of the basis for its motion and identifying the portions of the pleadings and the record that it believes demonstrate the absence of an issue of material fact. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof at trial, the moving party need not produce evidence negating or disproving every essential element of the non-moving party's case. Id. at 325, 106 S.Ct. 2548. Instead, the moving party need only

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prove there is an absence of evidence to support the nonmoving party's case. Id. ; In re Oracle Corp. Sec. Litig. , 627 F.3d 376, 387 (9th Cir. 2010). The party seeking summary judgment must show that "under the governing law, there can be but one reasonable conclusion as to the verdict." Anderson , 477 U.S. at 250, 106 S.Ct. 2505.

If the moving party sustains its burden, the non-moving party must then show that there is a genuine issue of material fact that must be resolved at trial. Celotex , 477 U.S. at 324, 106 S.Ct. 2548. A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson , 477 U.S. at 248, 106 S.Ct. 2505. "This burden is not a light one. The non-moving party must show more than the mere existence of a scintilla of evidence." In re Oracle Corp. Sec. Litig. , 627 F.3d at 387 (citing Anderson , 477 U.S. at 252, 106 S.Ct. 2505 ). The non-moving party must make this showing on all matters placed at issue by the motion as to which it has the burden of proof at trial. Celotex , 477 U.S. at 322, 106 S.Ct. 2548 ; Anderson , 477 U.S. at 252, 106 S.Ct. 2505.

III. FACTS

Expeditors is a supply chain, transportation, customs, and warehousing and distribution provider based in Washington state.¹⁸ Expeditors has served as a customs broker for Kingston since at least March 2002 and has provided motor transportation services to Kingston between the Los Angeles area and El Paso, Texas, since about 2015.¹⁹ Expeditors also works with Landstar, a property broker, to arrange for the transportation of cargo. In this matter, Expeditors requested Landstar to arrange for such transportation subject to certain security requirements.²⁰

In April 2019, Kingston communicated with Expeditors regarding transporting high-value cargo from Fountain Valley, California, to El Paso, Texas.²¹ Kingston asked for heightened security measures, which included the following: (1) hiring a driving team (as opposed to a solo driver); (2) leveraging GPS fencing technology and monitoring; and (3) implementing a rule prohibiting any stops within 200 miles of the pick-up location or at any point for more than one hour.²² When Kingston made that inquiry, Expeditors replied to Kingston via email that "Landstar has capacity" to accomplish the transportation and quoted the price of $4,193, which is the amount that Expeditors later invoiced to Kingston.²³ Included in that price was $3,300 for the freight, $693 for a fuel surcharge, and $200 for the "Secure Service,"²⁴ which referred to the GPS fencing technology offered through Expeditors’

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subsidiary, non-party Cargo Signal Solutions, LLC (formerly known as "Secure Services").²⁵ Expeditors subsequently instructed Landstar to arrange the transportation using certain security requirements, which were documented in a writing that Expeditors calls a "trip form."²⁶ Landstar, in turn, arranged for motor carrier Statewide to transport the cargo.²⁷

After finalizing the transportation arrangements, Expeditors generated a two-page "Contract of Carriage" to serve as the bill of lading, which has been Expeditors’ custom and practice.²⁸ The front page of the Contract of Carriage refers to Expeditors’ "Service Conditions" with a link to its web address.²⁹ The Contract of Carriage also includes a line providing that Kingston could declare the value of the cargo prior to transportation, but Kingston wrote "N.V.D." on that line—which is undisputed to mean "No Value Declared."³⁰

At around 4:00 p.m. on May 2, 2019, Statewide's team of two drivers departed from Kingston's warehouse with the cargo stored in a sealed trailer. Although the Amended Complaint makes no mention of why some of the cargo vanished later that evening,³¹ an email from Kingston's Director of Finance supplies the details of the theft:

At approximately 8 pm on 5/2/19, during a refueling stop in Coachella, California, thieves in a van pulled up behind the truck, cut the locks with bolt cutters and proceeded to steal 2.5 of the 17 pallets. One of the drivers exited the truck to investigate. Once the driver was seen by the thieves they quickly departed the scene with $913,656 of memory modules.³²

Furthermore, it is evident...