Sea-Land Service v. Atlantic Pacific Intern.

Decision Date12 July 1999
Docket NumberNo. 98-00369 DAE.,98-00369 DAE.
Citation61 F.Supp.2d 1102
PartiesSEA-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.
CourtU.S. District Court — District of Hawaii

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, Paul B. Shimomoto, 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, Matson Navigation Services, Inc., third-party defendants.

Bruce C. Bigelow, Case Bigelow & Lombardi, Honolulu, HI, for Wal-Mart Stores, Inc., a Delaware Corporation 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 ATLANTIC PACIFIC INTERNATIONAL, INC. AND A & A CONSOLIDATORS, INC.'S FIRST AMENDED 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.; Timothy J. Hogan, Esq., appeared at the hearing on behalf of Defendants Atlantic Pacific International, Inc. and A & A Consolidators, 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 Atlantic Pacific International, Inc. and A & A Consolidators, Inc.'s First Amended 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, API and A & A (hereinafter "API") asserted a counterclaim against Sea-Land, alleging (1) federal antitrust violations; (2) violation of the federal racketeering statute ("RICO"); (3) the existence of maritime liens on Sea-Land's vessels; (4) conversion of API's property; and (5) breach of contract.

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"). While Sea-Land does not assess a separate charge for the use of its cargo containers during transportation, the cost of the containers is reflected in the shipping rates. Once the cargo reaches its destination, Sea-Land charges an additional 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 regularly 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 API's First Amended Counterclaim. Because both Sea-Land and API ask the court to consider materials outside the pleadings, the court addresses this motion as one for summary judgment, pursuant to Federal Rule of Civil Procedure 12(b).

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

Although, as noted above, API's First Amended Counterclaim (hereinafter "counterclaim") asserts five causes of action, Sea-Land's summary judgment motion addresses only three: antitrust, RICO, and maritime liens. The court examines each in turn.1

I. Antitrust Claims

API purports to state claims against Sea-Land under Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2), the Clayton Act (alleged as 15 U.S.C. § 15), and Section 5 of the Federal Trade Commission Act ("FTCA") (15 U.S.C. § 45). This last claim fails from the start, as there is no private cause of action for violations of the FTCA. Carlson v. Coca-Cola Co., 483 F.2d 279 (9th Cir.1973); Morrison v. Back Yard Burgers, Inc., 91 F.3d 1184, 1187 (8th Cir.1996); Fulton v. Hecht, 580 F.2d 1243, 1248 n. 2 (5th Cir. 1978).

Specifically, API alleges that Sea-Land and Matson Navigation Services, Inc. ("Matson"), another common carrier, conspired and created an unlawful cartel which controlled the ocean transportation of goods between Hawaii and the Mainland.2 This cartel allegedly:

(1) Tied the provision of its transportation services to the ...

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