Sea-Land Service v. Atlantic Pacific Intern.

• Decision Date: 12 July 1999
• Docket Number: No. 98-00369 DAE.,98-00369 DAE.
• Citation: 61 F.Supp.2d 1092
• Court: U.S. District Court — District of Hawaii
• Parties: SEA-LAND SERVICE, INC., Plaintiff, v. ATLANTIC PACIFIC INTERNATIONAL, INC.; A & A Consolidators, Inc. Fleming Companies, Inc.; John Does 1-25, Defendants. and Fleming Companies, Inc., Defendant/Third-Party Plaintiff, v. Jack Borja and Heidi L. Borja, Third-Party Defendants, and Atlantic Pacific International, Inc., Defendant/Third-Party Plaintiff, v. Matson Navigation Services, Inc., a Hawaii corporation; Costco Wholesale Corporation, a Washington corporation; Wal-Mart Stores, Inc. dba Sam's Club, a Delaware corporation; TAG/ ICIB Services, Inc., a Delaware corporation, Third-Party Defendants, and Sea-Land Service, Inc., Plaintiff/Fourth-Party Plaintiff, v. Jack Borja and Heidi L. Borja, Fourth-Party Defendants.

Page 1092

61 F.Supp.2d 1092

SEA-LAND SERVICE, INC., Plaintiff, v. ATLANTIC PACIFIC INTERNATIONAL, INC.; A & A Consolidators, Inc. Fleming Companies, Inc.; John Does 1-25, Defendants. and Fleming Companies, Inc., Defendant/Third-Party Plaintiff, v. Jack Borja and Heidi L. Borja, Third-Party Defendants, and Atlantic Pacific International, Inc., Defendant/Third-Party Plaintiff, v. Matson Navigation Services, Inc., a Hawaii corporation; Costco Wholesale Corporation, a Washington corporation; Wal-Mart Stores, Inc. dba Sam's Club, a Delaware corporation; TAG/ ICIB Services, Inc., a Delaware corporation, Third-Party Defendants, and Sea-Land Service, Inc., Plaintiff/Fourth-Party Plaintiff, v. Jack Borja and Heidi L. Borja, Fourth-Party Defendants.

No. 98-00369 DAE.

United States District Court, D. Hawaii.

July 12, 1999.

Gregory W. Kugle, Damon Key Bocken Leong & Kupchak, Honolulu, HI, Deborah E. Barack, Carlsmith Ball Wichman Case & Ichiki, Honolulu, HI, for Sea-Land Service, Inc., plaintiff.

Timothy J. Hogan, Lynch Ichida Thompson & Kim, Honolulu, Hi, for Atlantic Pacific International Inc., A & A Consolidators, Inc., defendants.

Craig K. Shikuma, Kobayashi Sugita & Goda, Honolulu, HI, for Fleming Companies, Inc., defendant.

David C. Farmer, Ashford & Wriston, Honolulu, Hi, for Jack Borja, Heidi L. Borja, third-party defendants.

Lisa W. Munger, Lindalee K. Farm, Goodsill Anderson Quinn & Stifel, Honolulu, HI, for Costco Wholesale Corporation a Washington Corporation, third-party defendant.

Bruce C. Bigelow, Case Bigelow & Lombardi, Honolulu, HI, for Wal-Mart Stores, Inc., dba Sam's Club, third-party defendant.

Kenneth A. Remson, Jones Day Reavis & Pogue, Los Angeles, CA, Jeffrey S. Portnoy, Cades Schutte Fleming & Wright, Honolulu, HI, for TAG/ICIB Services, Inc., a Delaware Corporation third-party defendant.

ORDER GRANTING IN PART AND DENYING IN PART SEA-LAND SERVICE, INC.'S MOTION TO DISMISS AND/OR FOR SUMMARY JUDGMENT ON FLEMING COMPANIES, INC.'S COUNTERCLAIM

DAVID ALAN EZRA, Chief Judge.

The court heard Sea-Land's motion on May 18, 1999. Gary G. Grimmer, Esq., and Deborah E. Barack, Esq., appeared at the hearing on behalf of Sea-Land Service, Inc.; Bert T. Kobayashi, Jr., Esq., and Craig K. Shikuma, Esq., appeared at the hearing on behalf of Defendant Fleming Companies, Inc. After reviewing the motion and the supporting and opposing memoranda, the court GRANTS in part and DENIES in part Sea-Land Service, Inc.'s Motion to Dismiss and/or for Summary Judgment on Fleming Companies, Inc.'s Counterclaim.

BACKGROUND

On May 7, 1998, Plaintiff Sea-Land Service, Inc. ("Sea-Land") filed a Complaint against Defendants Atlantic Pacific International, Inc. ("API"), A & A Consolidators, Inc. ("A & A"), and Fleming Companies, Inc. ("Fleming") (collectively "Defendants"), seeking to recover unpaid ocean freight charges. In response, Fleming asserted a counterclaim against Sea-Land, alleging state and federal antitrust violations.

API, a freight consolidator, arranged with Sea-Land, a common carrier, to ship cargo from the West Coast to Hawaii on behalf of Fleming, a wholesale food marketer and distributor. Sea-Land provides transportation services based on rates contained in tariffs. These tariffs are published and filed with the Surface Transportation Board ("STB"). Although Sea-Land does not assess a separate charge for the use of its cargo containers during transportation, the cost of the containers is included in the cost of shipping. Once the cargo reaches its destination, Sea-Land charges a detention fee for continued use of the containers after the period of time ("free time") allowed by the tariff. Essentially, customers have a specified period of time in which to unload their cargo and return the containers to Sea-Land before Sea-Land will impose the detention fee.

Rule 884 of Freight Tariff No. 486 allows shippers to transport goods on Sea-Land's vessels in shipper-owned or leased containers, provided that such containers meet Sea-Land's construction and size specifications. At least two of Sea-Land's customers use shipper-owned containers. Sea-Land charges the same shipping rates regardless of whether a customer employs shipper-owned containers or uses Sea-Land's containers.

TAG/ICIB Services, Inc. ("TAG") is an independent contractor which inspects cargo on behalf of carriers to ensure tariff compliance. TAG obtains information from the carriers that customers furnish regarding their cargo. TAG may open and examine the contents of shipments to verify the accuracy of that information. If TAG determines that the cargo has been misdeclared by the customer, TAG will rebill the customer the difference, if any, between the freight charges for the actual type, origin and quantity of the commodity shipped, and the freight charges for the type, origin and quantity declared by the customer. TAG may also bill the customer a misdeclaration charge provided by the tariff. If the customer owes any charges, TAG will impound the shipment until the charges are paid. When cargo containers are detained by the customer beyond the free time authorized by Sea-Land's tariff, TAG will bill and collect the detention charges according to the tariff.

On January 20, 1999, Sea-Land filed the instant Motion to Dismiss and/or for Summary Judgment on Fleming's Counterclaim. Because matters outside the pleadings were relied upon and cited to the court, pursuant to Federal Rule of Civil Procedure 12(b), Sea-Land's motion will be treated as one for summary judgment.

STANDARD OF REVIEW

Pursuant to Federal Rule of Civil Procedure 56, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). All facts and inferences drawn must be viewed in the light most favorable to the responding party when determining whether a genuine issue of material fact exists for summary judgment purposes. Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1050 (9th Cir.1995). A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the differing versions of the truth. S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1305-06 (9th Cir.1982). The substantive law defines which facts are material. Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact requires more than some "metaphysical doubt" as to the material facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Only disputes over outcome determinative facts under the applicable substantive law will preclude the entry of summary judgment. Id. If the factual context makes the respondent's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The party moving for summary judgment has the initial burden of showing the absence of a genuine issue of material fact. Metro Indus., Inc. v. Sammi Corp., 82 F.3d 839, 847 (9th Cir.), cert. denied, 519 U.S. 868, 117 S.Ct. 181, 136 L.Ed.2d 120 (1996). Once the movant's burden is met by presenting evidence which, if uncontroverted, would entitle the movant to a directed verdict at trial, the burden shifts to the respondent to set forth specific facts demonstrating that there is a genuine issue for trial. Liberty Lobby, 477 U.S. at 250, 106 S.Ct. 2505. In meeting this burden, parties seeking to defeat summary judgment cannot stand on their pleadings once the movant has submitted affidavits or other similar materials. Affidavits that do not affirmatively demonstrate personal knowledge are insufficient. Keenan v. Allan, 91 F.3d 1275, 1278 (9th Cir.1996).

The Supreme Court cases cited above establish that the "[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp., 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed. R.Civ.P. 1).

DISCUSSION

Fleming's counterclaim alleges that:

1. Sea-Land engaged in an illegal tying arrangement in violation of the Sherman Act, 15 U.S.C. § 1;

2. Sea-Land contracted, conspired and combined with others for the purpose of restraining competition in the marketplace for shipping container-related services, in violation of the Sherman Act, 15 U.S.C. § 1;

3. Sea-Land engaged in unfair competition, in violation of Hawaii Revised Statute ("H.R.S.") § 480-2; and

4. Sea-Land violated H.R.S. § 480-4.

Sea-Land argues that each of Fleming's allegations either fails to state a claim upon which relief may be granted or fails to raise a genuine issue of material fact. The court addresses each in turn.

I. Federal Antitrust Claims

Because API's and Fleming's counterclaims alleging antitrust violations are duplicative, Sea-Land argues that the "direct purchaser" rule precludes Fleming, as an indirect purchaser, from pursuing these claims. The undisputed facts show that during the relevant period of time, API purchased transportation services from Sea-Land and resold them to Fleming.¹ Fleming has not alleged that it purchased transportation directly from Sea-Land after 1994.

The United States Supreme Court described the "direct purchaser" doctrine:

In Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), ... [t]he State of Illinois sued Illinois Brick and other concrete block manufacturers for conspiring to raise the cost of concrete blocks in violation of § 1 of the Sherman Act, as amended, 15 U.S.C. § 1. We ruled that the State had...