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