Al Good v. Kaisha
| Decision Date | 11 June 2013 |
| Docket Number | 1:12-CV-01882-AWI- MJS |
| Parties | AL GOOD dba CASTLE ROCK VINEYARDS, Plaintiff, v. NIPPON YUSEN KAISHA; NYK LINE (NORTH AMERICA) INC., Defendants. |
| Court | U.S. District Court — Eastern District of California |
[Documents # 21, 23, 28]
On November 15, 2012, Plaintiff Al Good dba Castle Rock Vineyards filed a complaint for damages. The first cause of action alleges a claim for relief based on the United States Carriage of Goods By Sea Act (COGSA) for Defendants' (Nippon Yusen Kaisha and NYL Line (North America) Inc.) improper stowage and handling of grapes during international shipping, leading to damaged cargo that was significantly reduced in commercial value and unfit for its intended use. The second cause of action alleges that Defendants breached the standard of care of common carriers under California Civil Code §2168 and 48 U.C.S.C. Appx. §1702 of The Shipping Act of 1984 by failing to use the utmost care and skill called for in transporting cargo without loss or damage and avoiding harm to the cargo and Plaintiff's economic interest. Thethird cause of action alleges breach of contract by Defendants for failing to keep Plaintiff's refrigerated cargo properly stowed and adequately cooled as Plaintiff alleges Defendants were bound to do under the sea waybills' terms and the shipping agreement's bill of lading.
On January 3, 2013, Defendants filed an answer to the complaint asserting 14 affirmative defenses, including improper venue.
On February 20, 2013, Plaintiff filed an amended complaint. On April 1, 2013, Defendants filed an answer to the amended complaint, again asserting 14 affirmative defenses including improper venue.
On April 22, 2013, Defendants filed a motion to dismiss the complaint. Defendants contend that venue is improper in this court because a forum selection clause in the sea waybills mandates that any action against the Carrier, Nippon Yusen Kaisha or any entity who performs or undertakes the carriage, must be brought in the Tokyo District Court of Japan under Japanese law.
On May 6, 2013, Plaintiff filed an opposition to the April 22, 2013 motion to dismiss. Plaintiff contends that the April 22, 2013 motion to dismiss based on improper venue should be denied because Defendants waived the forum selection and choice of laws clause in the sea waybills by failing to comply with Japanese civil procedure requirements. Plaintiff also contends that the forum selection clause is unenforceable under U.S. law on grounds of public policy, unreasonableness, overreaching, and the lack of applicability of the Himalaya clause in the sea waybill to Defendant NYK Lines (North America) Inc.
On May 13, 2013, Defendants filed a reply to Plaintiff's opposition to the April 22, 2013 motion to dismiss. Defendants contend that they did not waive their improper venue defense because they asserted it in their answer to the amended complaint. Defendants also contend that the forum selection clause at issue here is not unreasonable because litigation in Japan would not violate public policy, the Tokyo District Court is not a gravely inconvenient or difficult forum, and Defendants did not engage in overreaching. Further, Defendants contend that DefendantNYK Lines (North America) Inc. is entitled to invoke the forum selection clause under the sea waybills' Himalaya clause.
Rule 12(b)(3) of the Federal Rules of Civil Procedure governs a motion to dismiss premised on enforcement of a forum selection clause. Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). Dismissal based on a forum selection clause is treated like a dismissal for improper venue under Rule 12(b)(3). See Offshore Sportswear, Inc. v. Vuarnet Int'l, B.V., 114 F.3d 848, 851 (9th Cir.1997). As this motion to enforce a forum selection clause is made pursuant to Rule 12(b)(3), this court does not need to accept the pleadings as true and may consider facts outside of the pleadings. Argueta, 87 F. 3d 324; see also Richards v. Lloyd's of London, 135 F.3d 1289, 1292 (9th Cir. 1998).
The complaint alleges that in 2011, Plaintiff Al Good dba Castle Rock Vineyards entered into a contract of affreightment with Defendant Nippon Yusen Kaisha for the carriage of Plaintiff's grapes to overseas markets. Defendant Nippon Yusen Kaisha is an international shipping company with a principal place of business in Tokyo, Japan. Defendant NYK Line (North America), Inc., a corporation with a principal place of business in Seacaucus, New Jersey and facilities in California, was also involved in the freight contracts.
The shipping contract between Plaintiff and Defendants, recorded in several sea waybills, included the carriage of grapes to overseas markets. This included the transport of several varieties of table grapes to Vietnam. The complaint alleges that Defendants agreed to provide container transportation of the grapes and vessel space on its ships to destinations at rates specified in the non-negotiable sea waybills that Defendants issued.
The complaint alleges that in November 2011, Defendants undertook the transport of Plaintiff's grapes to Vietnam. Approximately 14 containers were shipped in total. Thecomplaint alleges that six containers were shipped on or about November 15, 2011. These containers were estimated to arrive in Vietnam on December 10, 2011, but they did not arrive until December 27, 2011. Eight containers were to be shipped on November 21, 2011 with an estimated arrival date of December 17, 2011. The eight containers arrived in Vietnam on December 23, 2011.
The complaint alleges that upon arrival in Vietnam, grapes in at least 12 of the 14 containers suffered from dehydration, decay and rot development, stem browning, mold, and other deteriorated conditions. The complaint alleges that these conditions were caused or exacerbated by one or a combination of the following; improper stowage on the vessels; excessive temperatures in transit; lengthy delays that caused Plaintiff's goods to be in transit longer than expected; transport of the grapes in a commercially unacceptable manner. The complaint alleges that the damages to the grapes noted on arrival confirms such improper transportation.
Defendants contend that this action must be dismissed because the claims asserted in this action are subject to a valid and enforceable forum selection clause that selects a different forum (the District Court of Tokyo, Japan). Plaintiff contends dismissal is not appropriate because Defendants waived the forum selection clause and because the forum selection clause at issue is unenforceable under U.S. law due to public policy issues, unreasonableness, overreaching, and lack of applicability of the Himalaya clause in the sea waybill to Defendant NYK Lines (North America) Inc.
Parties may use forum selection clauses to designate the forum in which any litigation is to take place, and litigation commenced elsewhere may be subject to dismissal for improper venue. See Carnival Cruise Lines v. Shute, 499 U.S. 585 (1991); see also TAAG Linhas Aereas de Angola v. Transamerica Airlines, 915 F.2d 1351 (9th Cir.1990). The validity and effect of aforum selection clause is controlled by federal standards. See Argueta, 87 F.3d at 324; Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 513 (9th Cir.1988).
A forum selection clause is "prima facie valid" and should not be set aside unless the party challenging enforcement demonstrates that the clause is "invalid" or that its enforcement would be "unreasonable" under the circumstances. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 15 (1972); see also Carnival Cruise Lines, 499 U.S. at 589; Argueta, 87 F.3d at 324-25. Foreign forum selection clauses in international agreements have often been upheld in shipping contracts. See Bremen, 407 U.S. at 13-14; see also Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 130 S. Ct. 2433, 2440 (2010); Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 537(1995) (); Kelso Enterprises, Ltd. v. M/V Wisida Frost, 8 F. Supp. 2d 1197, 1203-04 (C.D. Cal. 1998). A forum selection clause should be upheld unless it is found to be unjust or unreasonable.
In evaluating whether enforcement of a forum selection clause would be unjust or unreasonable, the court must consider the following three factors: (1) was the clause included in the agreement as the result of fraud or overreaching; (2) would the party wishing to repudiate the clause be effectively deprived of its day in court if the clause is enforced; and (3) does enforcement of the clause contravene a strong public policy of the state in which suit is brought.
Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1140 (9th Cir.2004) (citing Bremen, 407 U.S. at 12-13).
The forum selection clause at issue is found in the third clause of the terms and conditions of the sea waybill. The terms and conditions can be found on Nippon Yusen Kaisha's website in PDF form. The clause states:
The contract evidences by or contained in the Bill shall be governed by Japanese law except as may be otherwise provided herein. Notwithstanding anything else contained in this Bill or in any other contract, any and all actions against the Carrier in respect of the Goods or arising out of the Carriage shall be brought before the Tokyo District Court in Japan to the exclusion of the jurisdiction of any other courts.
See Exhibit E, Declaration of Daniel Sheehy in Support of the Motion to Dismiss Pursuant to Contractual Forum Selection Clause.
A forum selection clause will be enforced where venue is specified with mandatory language. See Docksider, Ltd. v. Sea Technology, Ltd., 875 F.2d 762, 764 (9th Cir.1989). However, if a forum selection clause's language is not mandatory, the forum selection clause...
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