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SEAGATE TECHNOLOGY v. DALIAN CHINA EXPRESS INTERN.

August 13, 2001

SEAGATE TECHNOLOGY LLC,[FN1] PLAINTIFF,
v.
DALIAN CHINA EXPRESS INTERNATIONAL CORP. LTD., D.B.A. CHINA EXPRESS; U-FREIGHT AMERICA INC.; GATEWAY CARGO SERVICE CENTER; AND DOES ONE THROUGH TEN, DEFENDANTS.



The opinion of the court was delivered by: Patel, Chief Judge.

MEMORANDUM AND ORDER

Plaintiff Seagate Technology LLC commenced this action following the loss of its international cargo in South San Francisco in November 1998. Now before the court are China Express and U-Freight's motion for summary judgment or partial summary judgment and Seagate's countermotions for summary judgment. Having considered the parties' arguments and submissions, and for the reasons set forth below, the court enters the following memorandum and order.

BACKGROUND

Seagate is a manufacturer of computer disc drives with offices in Scotta Valley, California and the People's Republic of China. Defendants U-Freight America, Inc. ("U-Freight") and Dalian China Express International Corporation, Ltd.*fn2 ("China Express") are freight forwarding companies hired by Seagate to ship a cargo of disc drives from Shanghai, China to San Francisco in November 1998. Defendant Gateway Cargo Services America ("Gateway") is a ground cargo handling agent in South San Francisco, California. China Eastern Airlines ("China Eastern") is an airline that flies between Shanghai, China and San Francisco, but has its principal place of business in the People's Republic of China.

Per Seagate's instructions, U-Freight arranged for the shipment of 4,480 disc drives from Shanghai, China to San Francisco in November 1998. Seagate alleges that on November 11, 1998, China Express received the cargo, weighing 3027 kilograms, in Shanghai and issued air waybill number USH 00450778 for shipment to San Francisco. Declaration of John Fitch filed January 29, 2001 ("1 Fitch Dec."), Exh. A; Declaration of Conte Cicala, Exh. A ("China Express agreed to carry the subject shipment from Wuxi to San Francisco, California. China Express issued an airway bill to that effect.") (emphasis added). The waybill was issued to the shipper, Seagate Technology International (Wuxi) Co., Ltd. See 1 Fitch Dec. ¶ 2. The consignee copy was issued to Seagate Technology Scotts Valley on or about the same day. Id. Defendants claim the "Standard Trading Conditions" were on the back of copies issued to both the shipper and the consignee. Id. ¶ 3. Seagate alleges that the copy of the waybill it received was blank on the back.

The terms of the waybill declare a shipping rate of $2.50 per kilogram. See 1 Fitch Dec., Exh. A. The shipment weighed 3027 kilograms for a total cost of $7567.50. Id. In the top right corner of the waybill is the phrase:

It is agreed that the goods herein are accepted in apparent good order and condition (except as noted) for carriage SUBJECT TO THE CONDITIONS OF CONTRACT ON THE REVERSE HEREOF. THE SHIPPER'S ATTENTION IS DRAWN TO THE NOTICE CONCERNING CARRIERS' LIMITATION OF LIABILITY. Shipper may increase such limitation of liability by declaring a higher value for carriage and paying a supplemental charge if required.

Id. (emphasis in original).

Among the conditions of contract found on the reverse of the waybill is the following language, located at paragraph 1(a):

All and any business undertaken, except all and any advice, information or services provided gratuitously by the Company is transacted subject to the conditions hereinafter set out and each of the Conditions shall be deemed to be incorporated in and to be a condition of any agreement between the Company and the Customer. All other terms and conditions are hereby excluded. Should the customers wish to contract with the Company otherwise than subject to these Conditions, special arrangements can be made and revised prices quoted, provided that such arrangements shall only apply if reduced to writing and signed by an authorized officer of the Customer and by an authorized officer of the Company.

Id. (emphasis added).

The waybill also limits China Express's liability in paragraph 21: "In no case whatsoever shall any liability of the Company howsoever arising and notwithstanding any lack of explanation exceed the value of the relevant goods or a sum of US$30 per package or US$2 per kilogram whichever is the least." Id. Finally, the waybill contains a notice provision under paragraph 23(a), which relieves China Express from liability unless "notice of any claim is received in writing by the Company or its agent within 14 days after the date [the goods should have been delivered and] suit is brought in the proper forum and written notice thereof received by the Company within 9 months after the date [the goods should have been delivered]." Id.

In the two-year period leading up to the shipment, Seagate. and defendants U-Freight and China Express communicated at least two times concerning the conditions under which the cargo would be shipped from Seagate's Wind facility to San Francisco. In a letter dated August 5, 1997, U-Freight representative Fitch wrote to C.S. Ng of Seagate to confirm a quoted rate proposal for transportation of cargo from Shanghai to San Francisco. Declaration of C.S. Ng, Exh. 1. The proposed rate was $2.90 per kilogram for door-to-airport transportation from Shanghai to San Francisco and $2.35 per kilogram for airport-to-door transportation from San Francisco to Shanghai. Id. The letter also states that the quoted rate "includes providing Seagate with full replacement cost of the finished goods for lost or stolen shipments handled by China Express/U-Freight," and promises to provide a liability limitation cap.*fn3 Id.

The second communication was a letter dated March 27, 1998 — after the August 5, 1997 letter but before the issuance of the air waybill — in which China Express quotes Seagate a rate of $2.50 per kilogram for cargo transport from Wind to San Francisco. 1 Fitch Dec., Exh. C. This was the rate eventually charged under waybill USH-00450778. At the bottom of the letter is pre-printed language stating "[a]ll transactions are subject to our Company Trading Terms and Conditions which are available upon request." Id. According to Fitch, these are the same standard conditions that appear on the back of the China Express air waybill. See 1 Fitch Dec. ¶ 6. The letter does not otherwise mention China Express or U-Freight's liability for loss or damage. See 1 Fitch Dec., Exh. C.

The cargo was flown on China Eastern Airlines on November 11, 1998. 1 Fitch. Dec., Exh. B. When it arrived at San Francisco International Airport ("SFO"), China Eastern deposited it with Gateway, its ground handler, to await customs clearance. Gateway is located in South San Francisco, near, but not on the grounds of, SFO. On November 12, 1998, the day the shipment was due to be collected, Gateway could not locate it. The suspected cause of loss is theft.*fn4

Seagate submitted a claim to U-Freight on November 17, 1998, informing it of its intent to file a claim. 1 Fitch Dec., Exh. B. This letter referred not to the air waybill, but to the August 5, 1997 letter in which U-Freight had agreed to be liable for up to $1 million for loss or damage. Id. Enclosed with the letter was a copy of air waybill number USH-00450778. Id. Seagate sent a follow-up email to U-Freight on December 30, 1998. See Declaration of Stanley L. Gibson, Exh. 3. On May 24, 1999,*fn5 U-Freight informed Seagate that its liability was limited to $60,540 ($20 per kilogram) "according to the tariff regulations and our contract of carriage" and offered to settle, for that amount.*fn6 Fitch Dec., Exh. D. This letter did not mention any time limit for filing suit. On July 31, 1999, Seagate rejected this offer. See 1 Fitch Dec., Exh. E. This lawsuit ensued.

Seagate originally filed this action in San Mateo County Superior Court on September 27, 1999, against U-Freight, China Express, Gateway and Does One through Ten. Seagate demands a judgment of $515,200 plus prejudgment interest and costs, and any other relief as the law requires. The requested judgment represents the total value of the lost disc drives.*fn7 On November 12, 1999, Defendants U-Freight and China Express removed the action to this court pursuant to 28 U.S.C. § 1441 (b), claiming federal question jurisdiction under the Warsaw Convention or, in the alternative, federal common law. See 28 U.S.C. § 1331.

Defendants U-Freight and China Express cross-claimed against Gateway for equitable indemnity or comparative indemnity and contribution. They also filed a third-party claim against China Eastern for equitable indemnity and contribution and for comparative indemnity and contribution. Gateway answered the original complaint on March 2, 2000. On November 6, 2000, Gateway in turn filed a cross-claim against China Eastern Airlines for contractual indemnity and declaratory relief. In its cross-claim, Gateway alleges that it entered into a ground-handling agreement with China Eastern Airlines in which China Eastern agreed to defend and indemnify Gateway for losses such as those claimed by Seagate.

China Eastern disputes the terms of the ground-handling agreement and, on November 27, 2000, filed its own counter-claim against Gateway, requesting, among other things, declaratory judgment that it is not required to indemnify Gateway for intentional or recklessly-caused losses.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 56, summary judgment shall be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial . . . since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see also T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).

The moving party bears the initial burden of identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. The burden then shifts to the nonmoving party to "go beyond the pleadings, and by [its] own affidavits, or by the `depositions, answers to interrogatories, or admissions on file,' designate "specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (citations omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (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"). The moving party discharges its burden by showing that the nonmoving party has not disclosed the existence of any "significant probative evidence tending to support the complaint." First Nat'l. Bank v. Cities Serv. Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968).

The court's function on a motion for summary judgment is not to make credibility determinations. See Anderson, 477 U.S. at 249, 106 S.Ct. 2505. The inferences to be drawn from the facts must be viewed in a light most favorable to the ...


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