Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc.

913 F.Supp.2d 780

MITSUI O.S.K. LINES, LTD., Plaintiff,

v.SEAMASTER LOGISTICS, INC., Summit Logistics International, Inc., American Global Logistics, LLC, Kesco Container Line, Inc., Kesco Shipping, Inc., and Does 1 through 20, Defendants.

Case Nos. 10–cv–5591–SC, 11–cv–2861–SC.

United States District Court, N.D. California.

Dec. 19, 2012.

Conte C. Cicala, James Barton Nebel, Flynn, Delich & Wise, San Francisco, CA, Erich Paul Wise, Flynn, Delich & Wise, Long Beach, CA, for Plaintiff.

Katharine Essick, Eric Danoff, Kirk B. Freeman, Matthew Alan Mallet, Law Offices of Kirk B. Freeman, San Francisco, CA, Benjamin I. Fink, Neal F. Weinrich, Berman, Fink, Van Horn, P.C., Atlanta, GA, for Defendants.

ORDER RE: MOTION FOR PARTIAL SUMMARY JUDGMENT

SAMUEL CONTI, District Judge.

I. INTRODUCTION

Now pending before the Court is the motion of Defendant American Global Logistics, LLC (“Defendant” or “AGL”) for partial summary judgment against Plaintiff Mitsui O.S.K. Lines, Ltd. (“Plaintiff” or “MOL”). ECF No. 123 (“Mot.”).¹ The motion is fully briefed and, pursuant to Civil Local Rule 7–1(b), suitable for decision without oral argument. ECF Nos. 133 (“Opp'n”), 144 (“Reply”). As set forth below, AGL's motion is GRANTED IN PART and DENIED IN PART.

II. BACKGROUND

The following background facts are undisputed. The Shipping Act of 1984, 46 U.S.C. §§ 40101 et seq. (“Shipping Act”), regulates both vessel-operating common carriers (“VOCC”) and non-vessel-operating common carriers (“NVOCC”). VOCCs operate ships that carry cargo over water between the United States and foreign countries for pay. See46 U.S.C. § 40102(6), (17). NVOCCs hold themselves out as common carriers but do not themselves operate vessels; they use VOCCs to carry cargo over water and hence are shippers in their relationships to VOCCs. See id. § 40102(16). VOCCs and NVOCCs may enter into service contracts whereby the NVOCC, as shipper, commits to shipping a certain amount of cargo over a period of time and the VOCC, as carrier, commits to giving the shipper a certain rate and service level. See id. § 40102(20). NVOCCs can also enter into service-contract-style arrangements between themselves. See46 C.F.R. §§ 531.1 et seq.

In addition to ocean shipping, both VOCCs and NVOCCs sometimes contract to carry cargo overland. Carriage by truck or other means either to or from a port—that is, for the non-ocean portion of the carriage—is referred to as “inland carriage” or “drayage.” Carriage that includes both an inland and an ocean move is called “through carriage” or “through transport.” See46 U.S.C. § 40102(25). Because VOCCs and NVOCCs can carry cargo over both land and water, they may offer carriage from port to port, from “door to door” (that is, from a shipment's inland point of origin to its inland destination), or in combinations thereof.

Plaintiff MOL is a VOCC. All the named Defendants are NVOCCs. The claims and allegations pertinent to the motion at bar relate to shipments MOL undertook from southern China to the United States on behalf of AGL, as well as Defendants SeaMaster Logistics, Inc. (“SeaMaster”) and Summit Logistics International, Inc. (“Summit”). See generally SAC ¶¶ 20–44.² MOL alleges that Defendants, individually and in conspiracy with each other, misrepresented the points of origin and/or delivery for thousands of shipments, that MOL was obliged to pay for the inland carriage for these shipments, and that the inaccurate representations caused MOL to overpay for trucking moves that either never occurred or were shorter than represented. See id. ¶¶ 24–25.

MOL alleges wrongdoing in both China and the United States. In China, numerous shipments allegedly were represented to have originated in Shenzhen when they actually originated, for contractual purposes, at the port of egress. ³Id. ¶ 24. The parties refer to this as the “Shenzhen trucking” scheme or arrangement, as will the Court. In the United States, numerous shipments allegedly were represented to require delivery further away than the actual delivery address. Id. ¶ 25. MOL alleges that AGL used a company called Expedited to make these deliveries. Id. ¶ 27. AGL denies wrongdoing.

It is undisputed that, for at least 600 of the challenged shipments, AGL was the consignee or “notify party,” while SeaMaster was the shipper with respect to MOL. Minck Decl. ¶ 5.⁴ For these shipments, a U.S. buyer would hire AGL to move goods (for example, furniture) from their place of manufacture in China to the buyer's facility in the United States. See Briles Dep. 23:10–23. AGL, in turn, had a Sales Agency and Destination Agent Agreement with SeaMaster, under which AGL, as “sales” or “destination agent,” would secure shipments for SeaMaster and SeaMaster would arrange carriage for those shipments from China to the United States under its (that is, SeaMaster's) service contract with MOL or another VOCC. See Briles Dep. 30:2–4; Rosenberg Dep. 65:10–16; Pl.'s Ex. 143 (Sales Agency and Destination Agent Agreement (“Agr.”)). SeaMaster and AGL's Agreement identifies SeaMaster as the principal in their relationship, see Agr., but the parties sometimes refer to SeaMaster as the “overseas agent,” see, e.g., Briles Dep. 44:13–24, apparently in contrast to AGL's role as destination (that is, domestic) agent. Nearly all of AGL's customers—99 percent—ordered “FOB port” service, meaning that the Chinese seller was responsible for delivery of the goods to the Chinese port, and AGL's customer (hence, AGL) only took possession of the goods once they were loaded on the ship in China. See Briles Dep. 23:10–11; Rosenberg Dep. 32:12–14.

AGL's booking of a shipment under the foregoing arrangement would commence when the Chinese seller notified SeaMaster—not AGL—that goods ordered by AGL's customer, the U.S. buyer, were ready for shipment. See Briles Dep. 44:13–45:20. Every day, SeaMaster's offices in China would prepare and send to AGL via email a spreadsheet showing new bookings, called the “daily routing guide.” Id. The daily routing guide contained information pertaining to the shipment's contents, destination, and port of departure, as well as a recommended routing method and, usually, applicable rates. Id. 43:15–18, 44:13–24, 46:11–47:7. However, with one exception not relevant here, it did not contain information about the shipment's inland point of origin, i.e., the location of the Chinese manufacturer. Id. 47:8–20, 65:20–66:–8.

Inland origin information was contained, however, in bills of lading for the shipments. Two sets of bills of lading were created for each shipment. As VOCC, MOL issued a “master” bill of lading which would be provided to MOL's customers, the NVOCCs—that is, SeaMaster and AGL. See Rosenberg Dep. 102:3–103:5. SeaMaster issued a “house” bill of lading which MOL would not receive. See id.; Minck Decl. ¶ 8. Both sets of bills of lading refer to the shipment's point of origin as the “place of receipt” and the shipment's final destination as the “place of delivery.” E.g., Pl.'s Ex. 145. For the shipments involved in the alleged Shenzhen trucking arrangement, the master bill of lading would indicate a place of receipt of “Shenzhen—Door,” while the house bill of lading would show the place of receipt to be the Chinese port (for instance, Yantian). See Briles Dep. 67:1–7, 68:16–69:17; Rosenberg Dep. 102:3–103:5; see also, e.g., Pl.'s Exs. 145–48 (examples of MOL's master and SeaMaster's house bills of lading). As stated above, MOL declares that its records list AGL as consignee on at least 600 such shipments. Minck Decl. ¶ 5. AGL received copies of both sets of bills of lading by Federal Express or a similar delivery service. Briles Dep. 53:11–54:4.

The SAC asserts the following five claims against AGL (as well as SeaMaster and Summit): (1) intentional misrepresentation and (2) conspiracy to intentionally misrepresent, or, in the alternative, (3) negligent misrepresentation; and civil RICO violations under (4) 18 U.S.C. § 1962(c) and (5)18 U.S.C. § 1962(d). AGL's motion for partial summary judgment seeks judgment in its favor on three different grounds. First, AGL seeks dismissal of all claims to the extent they are premised on AGL's alleged misrepresentations made in the course of the alleged Shenzhen trucking scheme. Second, AGL seeks dismissal of all claims premised on AGL's alleged participation in a conspiracy. Third, AGL seeks dismissal of Plaintiff's RICO claims. See Mot. at 3. AGL does not move for summary judgment with respect to allegedly misrouted U.S. inland carriage.

III. LEGAL STANDARD

Entry of summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Summary judgment should be granted if the evidence would require a directed verdict for the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “A moving party without the ultimate burden of persuasionat trial—usually, but not always, a defendant—has both the initial burden of production and the ultimate burden of persuasion on a motion for summary judgment.” Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir.2000). “In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” Id. “In order to carry its ultimate burden of persuasion on the motion, the moving party must persuade the court that there is no genuine issue of material fact.” Id. Summary judgment, however, is inappropriate “for resolving claims that depend on credibility determinations.” Earp v. Ornoski, 431 F.3d 1158, 1170 (9th Cir.2005).

IV. DISCUSSIONA. Misrepresentation

1. Intentional Misrepresentation

Under California...