REGAL-BELOIT CORP. v. KAWASAKI Kisen Kaish ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
REGAL-BELOIT CORPORATION; 
VICTORY FIREWORKS, INC.; PICC
PROPERTY & CASUALTY COMPANY
LIMITED SHANGHAI BRANCH; ROYAL
No. 06-56831
SUN ALLIANCE INSURANCE CO. LTD.,
Plaintiffs-Appellants,
 D.C. No.
CV-06-03016-DSF
v.
OPINION
KAWASAKI KISEN KAISHA LTD.;
K-LINE AMERICA, INC.; UNION
PACIFIC RAILROAD COMPANY,
Defendants-Appellees.

Appeal from the United States District Court
for the Central District of California
Dale S. Fischer, District Judge, Presiding
Argued and Submitted
June 10, 2008—Pasadena, California
Filed February 4, 2009
Before: Stephen Trott, Sidney R. Thomas and
Raymond C. Fisher, Circuit Judges.
Opinion by Judge Fisher
1257
1260 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
COUNSEL
Alan Nakazawa, Cogswell Nakazawa & Chang, LLP, Long
Beach, California, for defendants-appellees Kawasaki Kisen
Kaisha, Ltd. and K-Line America, Inc.
Leslie G. McMurray, Valley Village, California, for
defendant-appellee Union Pacific Railroad Company.
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1261
Dennis Cammarano, Long Beach, California, for the
plaintiffs-appellants.
OPINION
FISHER, Circuit Judge:
This case requires us to determine which federal statute
governs “a maritime case about a train wreck,” where the par-
ties’ agreement for carriage of goods from China into the
United States by sea and then by rail included a Tokyo forum
selection clause that would violate one federal law, but would
be enforceable under another. See Norfolk S. Ry. Co. v. Kirby,
543 U.S.14, 18 (2004). Regal-Beloit and several other named
plaintiffs contracted with defendant Kawasaki Kisen Kaisha,
Ltd. (“K-line”) to ship their goods from China to various
American Midwestern destinations via the Port of Long
Beach in California.1 K-line issued a through bill of lading to
each shipper to cover the shipment from China all the way to
the inland destinations, choosing the Carriage of Goods by
Sea Act as the law to govern the carriers’ responsibility dur-
ing shipment. Although K-line’s own ocean liner carried the
1
Plaintiffs in this case include the following parties: Regal-Beloit is a
non-California corporation with an office in Beloit, Wisconsin that pur-
chased a cargo of electric motors to be shipped from Shanghai, China to
Indianapolis, Indiana; Victory is a corporation authorized to do business
in California with an office in Ellsworth, Wisconsin that purchased a cargo
of fireworks to be shipped from Beihai, China to Minneapolis, Minnesota;
PICC is a foreign insurance corporation with an office in Shanghai that
was the subrogated insurer of a cargo of electric motor parts to be shipped
from Shanghai, China to Milwaukee, Wisconsin; and Royal & Sun was
the subrogated insurer of a cargo of retainer nail castings to be shipped
from Zhangjiagang, China to Chicago, Illinois. The actions were consoli-
dated under Regal-Beloit’s named complaint on August 7, 2006. All ship-
ments entered the United States via the Port of Long Beach. We generally
refer to the plaintiffs collectively as “Plaintiffs.” We also generally refer
to defendants Kawasaki Kisen Kaisha, K-line America and Union Pacific
Railroad Company as “Defendants.”
1262 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
goods from China to Long Beach, its United States agent, K-
line America (“KAM”), subcontracted with United Pacific
Railroad Company (“UPRR”) to transport these goods from
Long Beach to the inland destinations. K-line is KAM’s cor-
porate parent, handling its domestic business dealings through
KAM, including dispatching and receiving vessels and negoti-
ating its inland shipping with domestic carriers like UPRR.
Plaintiffs’ cargo was allegedly damaged when UPRR’s train
derailed in Oklahoma. Plaintiffs filed a breach of contract suit
against Defendants in California Superior Court. After UPRR
removed the case to the district court, K-line and KAM
moved to dismiss under the Tokyo forum selection clause in
K-line’s initial agreement with Plaintiffs. The district court
granted the motion to dismiss, determining that the parties
successfully avoided the strict venue limitations that apply by
default to the rail portions of these shipments as a matter of
federal law under the Carmack Amendment. The dismissal
provides us jurisdiction under 28 U.S.C. § 1291.
The outcome of this case turns on the answers to two ques-
tions, the first being which statutory framework should apply:
the Carmack Amendment (“Carmack”), which provides the
default rules governing the inland rail leg of a shipment
between a foreign country and a point in the United States, or
the Carriage of Goods by Sea Act (“COGSA”), which is what
the parties contractually agreed would govern?2 A reasonable
forum selection clause typically is enforceable under COGSA,
2
Both Carmack and COGSA have been codified at several different sec-
tions of Title 49 since their enactments. “Originally codified at 49 U.S.C.
§ 20(11), Carmack was recodified in 1978 at 49 U.S.C. § 11707 and then
recodified again in 1996 at 49 U.S.C. § 14706. The current version of Car-
mack is codified at 49 U.S.C. § 11706.” Sompo Japan Ins. Co. v. Norfolk
S. Ry. Co., 540 F. Supp. 2d 486, 492 n.4 (S.D.N.Y. 2008) [hereinafter
Sompo II] (internal citations omitted). COGSA was originally codified at
46 U.S.C. §§ 1301-1315, which is how the statute is cited in most of the
relevant case law. Congress recodified portions of Title 46 of the United
States Code as positive law in October 2006, and in so doing, moved
COGSA to the notes section of 46 U.S.C. § 30701.
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1263
but such a clause is valid under Carmack only if the parties
fulfill one of Carmack’s two statutory methods for contracting
out of the statute’s venue restrictions. Applying this circuit’s
precedent dictates that contractually extending COGSA to the
inland rail leg cannot trump the statutory force of Carmack’s
default responsibility regime unless the parties properly agree
to opt out of Carmack and thereby remove the statutory bar-
rier to choosing COGSA as the governing law. We therefore
reach a second question: which of Carmack’s two statutory
opt out provisions applies to a contract for rail service that,
like the contract here, has been exempted from regulation by
the Surface Transportation Board? Unlike the district court,
we conclude that the applicable requirements for opting out of
Carmack are found in 49 U.S.C. § 10502, instead of § 10709.
We thus reverse and remand to the district court to determine
whether the parties contracted out of Carmack’s venue restric-
tions under § 10502 so as to make the Tokyo forum selection
clause valid and enforceable.
BACKGROUND
To ship their goods, Plaintiffs each entered into an intermo-
dal through bill of lading with K-line that covered the entire
transport from China to the Midwest.3 In pertinent part, the
bills of lading included the following provisions:
1. (Definitions & Tariff) . . . (b) ‘Carrier’ means
[K-line], her owners, operators and charterers
whether acting as carrier or bailee. . . . (d) ‘Connect-
ing Carrier’ means carriers (other than Carrier), con-
tracted by or acting on behalf of Carrier,
3
A bill of lading is a contract that “records that a carrier has received
goods from the party that wishes to ship them, states the terms of carriage,
and serves as evidence of the contract for carriage.” Kirby, 543 U.S. at 18-
19. “Through” bills of lading specifically cover both oceanic and inland
legs of a journey in a single document. See id. at 25-26. “Intermodal”
refers to the use of more than one method of transport during a single ship-
ment. See id. at 25.
1264 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
participating in Carriage of Goods by land, water or
air under this Bill of Lading. . . . (j) ‘Vessel’ includes
the vessel named on the face hereof, any vessel,
lighter, barge, ship, watercraft or any other means of
water transport and any other vessel owned, oper-
ated, chartered or employed (in whole or in part) by
Carrier or any Connecting Carrier and used in whole
or in part for carriage of Goods under this Bill of
Lading.
2. (Governing Law and Jurisdiction) The contract
evidenced by or contained in this Bill of Lading shall
be governed by Japanese law except as may be oth-
erwise provided for herein, and any action thereun-
der or in connection with Carriage of Goods shall be
brought before the Tokyo District court in Japan, to
whose jurisdiction Merchant irrevocably consents.
....
4. (Responsibility for Shipments To, From, or
Through US Territories) (1) With respect to Goods
shipped to, from, or through US Territories, Carrier’s
responsibilities during the entire period (and not just
during Water Carriage) from the time of receipt of
Goods to the time of delivery of Goods shall be gov-
erned by [COGSA], and [COGSA] shall be deemed
incorporated herein during the entire aforesaid
period . . . .4
5. (Sub-Contracting: Exemptions, Immunities,
Limitations, etc. of Participant(s)) (1) Carrier shall
be entitled to sub-contract on any terms whatsoever
4
A clause such as this, “which identifies the law that will govern the
rights and liabilities of all parties to the bill of lading,” is often referred
to as a “clause paramount.” Sompo Japan Ins. Co. of Am. v. Union Pac.
R.R. Co., 456 F.3d 54, 56 (2nd Cir. 2006) [hereinafter Sompo I].
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1265
Carriage, including without limitations, the loading,
unloading, storing, warehousing, handling and any
and all duties whatsoever undertaken by Carrier in
relation to Goods by any of the following (I) any
Connecting Carrier . . . . (2) . . . [E]very such vessel
and Such Participant(s) shall have the benefit of all
provisions herein benefiting [sic] Carrier as if such
provisions were expressly for their benefit; and, in
entering into this contract, Carrier, to the extent of
those provisions, does so not only on its own behalf,
but also as agent and trustee for such vessel and Partici-
pant(s).5
K-line’s ocean carriers shipped the cargo from China to
Long Beach. From there, the cargo was transferred to UPRR,
with whom KAM had contracted to transport the cargo from
the Port of Long Beach to the various inland destinations.
This agreement was memorialized in the Exempt Rail Trans-
portation Agreement (“ERTA”), which explicitly stated that
“[l]iability for freight loss and damage to lading while under
the control of [UPRR] shall be governed by MITA [the Mas-
ter Intermodal Transportation Agreement].” The MITA pro-
vided that the MITA plus any bills of lading constituted the
entire contract between the parties, and included its own
forum selection clause that stated that “[a]ll lawsuits for
freight loss or damage must be filed in a court of competent
jurisdiction in Omaha, Douglas County, Nebraska.” The
MITA also (1) prohibited the interpretation of its terms under
foreign law; (2) explicitly provided that “[t]his MITA and any
agreements, price documents or contracts that reference this
MITA have been made under 49 U.S.C. § 10709”; and (3)
expressly established that “Carmack liability coverage is not
available for any Shipments that originate outside the borders
of the United States of America.”
5
A clause such as this, which extends a bill of lading’s defenses and
limitations to downstream parties who have subcontracted with the Car-
rier, is often referred to as a “Himalaya clause.” See Kirby, 543 U.S. at 20
& n.2.
1266 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
Unfortunately, the UPRR train carrying the aforementioned
cargo derailed in Tyrone, Oklahoma. Based on the alleged
damage to the cargo, Plaintiffs filed suits against Defendants
in Los Angeles County Superior Court. UPRR removed the
cases to the Federal District Court for the Central District of
California. Once the cases were removed, Defendants moved
to dismiss the actions, relying on the Tokyo forum selection
clause in the bills of lading. The district court granted their
motion. See Regal-Beloit Corp. v. Kawasaki Kisen Kaisha,
Ltd., 462 F. Supp. 2d 1098, 1105 (C.D. Cal. 2006).
The district court concluded that the Tokyo forum selection
clause was reasonable, and that KAM and UPRR could enjoy
its benefits under the Himalaya Clause. See id. at 1102-03. It
went on to determine that Carmack’s venue restrictions
applied neither to the overseas leg of the cargo shipment,
which were instead governed by COGSA, nor to the inland
leg of the cargo shipment. See id. at 1103-04. With respect to
the inland leg, the district court explained that although this
transport would typically be subject to Carmack’s restrictions,
here the parties entered into the bills of lading under 49
U.S.C. § 10709, thereby enabling the parties to contract out of
the Carmack Amendment’s terms. See id.We disagree. Under our case law, Carmack — not COGSA
— must govern Defendants’ liability for the inland rail trans-
port here. Therefore, Tokyo is an acceptable forum under the
provisions of Carmack only if the parties satisfied the applica-
ble requirements under either § 10709 or § 10502 for con-
tracting out of Carmack’s default venue restrictions. As we
explain below, a careful reading of Carmack reveals that
§ 10709 does not govern the kind of carriage at issue in this
case and the district court therefore erred by applying that sec-
tion instead of § 10502. Accordingly, we reverse and remand
so the district court can determine in the first instance whether
the parties complied with § 10502.
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1267
STANDARD OF REVIEW
We reject Defendants’ argument in favor of the abuse of
discretion standard of review, which applies only to a district
court’s factual finding regarding a forum selection clause’s
reasonableness. See Kukje Hwajae Ins. Co., v. The “M/V
Hyundai Liberty,” 408 F.3d 1250, 1254 (9th Cir. 2005). Here,
the parties concede that the forum selection clause is reason-
able. Instead, the dispute turns on which statutory law applies
and whether this body of law voids the forum selection clause
regardless of its reasonableness. We review these issues of
statutory interpretation de novo. See Chateau Des Charmes
Wines, Ltd. v. Sabate USA Inc., 328 F.3d 528, 530 (9th Cir.
2003); Richards v. Lloyd’s of London, 135 F.3d 1289, 1292
(9th Cir. 1998) (en banc).
DISCUSSION
I. Statutory Provisions
Because of their centrality to our analysis, we summarize
the relevant provisions of Carmack and COGSA before turn-
ing to the question of which statute applies here.
Congress added the Carmack Amendment to the Interstate
Commerce Act in 1906. Carmack, which governs rail and
motor carriers that are under the jurisdiction of the Surface
Transportation Board (“the Board,” previously referred to as
the Interstate Commerce Committee, or “the ICC”), narrowly
limits the venues in which a claim may be brought. Carmack
dictates that:
[a] civil action under this section may only be
brought (i) against the originating rail carrier, in the
judicial district in which the point of origin is
located; (ii) against the delivering rail carrier, in the
judicial district in which the principal place of busi-
ness of the person bringing the action is located if
1268 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
the delivering carrier operates a railroad or a route
through such judicial district, or in the judicial dis-
trict in which the point of destination is located; and
(iii) against the carrier alleged to have caused the
loss or damage, in the judicial district in which such
loss or damage is alleged to have occurred.
49 U.S.C. § 11706(d)(2)(A). A “judicial district” is defined as
“a judicial district of the United States” or “the applicable
geographic area over which [a state] court exercises jurisdic-
tion.” 49 U.S.C. § 11706(d)(2)(B). Given these restrictions,
forum selection clauses are generally forbidden under Car-
mack. Notably, however, Congress has since added a series of
provisions designed to deregulate aspects of the railroad
industry. See Tokio Marine & Fire Ins. Co. v. Amato Motors,
Inc., 996 F.2d 874, 877 (7th Cir. 1993). Collectively referred
to as the Staggers Rail Act, these provisions establish two
mechanisms by which rail and motor carriers can contract out
of Carmack’s restrictions if they satisfy the applicable statu-
tory requirements. See 49 U.S.C. §§ 10502(a), 10502(e),
10709(a), 10709(c)(1).
By its terms, COGSA covers transport only between a for-
eign and American port “from the time when the goods are
loaded on to the time when they are discharged from the ship”
— commonly referred to as “tackle-to-tackle.” 46 U.S.C.
§ 30701 Notes Sec. 1(e). COGSA does, however, explicitly
authorize sea carriers and shippers to extend its rules contrac-
tually to cover inland transportation or transportation between
two American ports. See 46 U.S.C. § 30701 Notes Sec. 7, 13.
Unlike Carmack, COGSA does not include any venue restric-
tions that would prohibit the enforcement of a forum selection
clause.
II. The Carmack Amendment vs. COGSA
It is undisputed that the responsibility clauses in the bills of
lading purport to extend the application of COGSA to the
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1269
entire period of transport, and that the Himalaya Clause
extends the full benefits of the bills of lading to all of the car-
rier’s subcontractors “as if such provisions were expressly for
their benefit.” Nevertheless, Plaintiffs argue that Carmack’s
venue restrictions should still govern because Carmack’s stat-
utory force “trumps” the parties’ attempt to contractually
extend COGSA.6 Defendants respond that Carmack cannot
apply to the inland rail carriage because the entire shipment
was governed by through bills of lading, whereas a separate
domestic bill of lading is necessary for Carmack to apply to
inland transport. In the alternative, Defendants assert that
even if the Carmack Amendment could apply in the absence
of a separate bill of lading for the domestic carriage, in this
case COGSA should govern in light of the parties’ express
agreement to extend COGSA’s provisions to all subcontrac-
tors, as reflected in the bills of lading. Defendants fairly argue
that policies recently endorsed by the Supreme Court — such
as uniformity in the law of maritime contracts and contractual
autonomy for sophisticated shippers and carriers — recom-
mend applying COGSA here. See Kirby, 543 U.S. at 29.
These policies notwithstanding, according to the statutory lan-
guage and our holding in Neptune Orient Lines, Ltd. v. Bur-
lington N. & Santa Fe Ry. Co., 213 F.3d 1118 (9th Cir. 2000),
6
We reject Plaintiffs’ claim that Carmack should automatically apply
under the law of the case doctrine because the district court originally
denied UPRR’s motion to transfer venue by applying Carmack. The dis-
trict court clarified in a later order that Carmack’s venue limiting provi-
sion did not apply. Even if it had not, the district court’s earlier decision
would not bind our reasoning under the law of the case doctrine, which
generally precludes courts “from reconsidering an issue that has already
been decided by the same court, or a higher court in the identical case.”
United States v. Alexander, 106 F.3d 874, 876 (9th Cir. 1997) (emphasis
added). We also reject Plaintiffs’ assertion that UPRR conceded Car-
mack’s applicability in its motion to remove the proceedings to federal
court. The motion’s statement that “[t]he first cause of action in the [com-
plaint] . . . contains the elements required to plead a claim against UPRR
under the Carmack Amendment,” was not a concession that Carmack
applies, but instead simply an argument that federal question jurisdiction
was appropriate.
1270 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
Carmack supplies the default regime governing the inland rail
shipment here. We therefore hold that COGSA applies only
if the parties properly opted out of Carmack.
A.
[1] Before we turn to Defendants’ joint arguments, we
reject the K-line defendants’ threshold assertion that Carmack
cannot apply to ocean carriers and their agents. To support
their argument, however, K-line and KAM quote selectively
from Carmack. By its terms, Carmack applies to “[a] rail car-
rier providing transportation or service subject to the jurisdic-
tion of the Board under this part,” 49 U.S.C. § 11706(a),
where a “rail carrier” is “a person providing common carrier
railroad transportation for compensation.” 49 U.S.C.
§ 10102(5). Critically, the statute goes on to define “railroad”
as including “a bridge, car float, lighter, ferry, and intermodal
equipment used by or in connection with a railroad.” 49
U.S.C. 10102(6)(A) (emphasis added). Moreover, the Board’s
jurisdiction, which is coextensive with Carmack’s coverage,
includes “transportation that is by railroad and water, when
the transportation is under common control, management, or
arrangement for a continuous carriage or shipment.” 49
U.S.C. § 10501(a)(1)(B) (emphasis added). Here, K-line
shipped the cargo from China to the Port of Long Beach on
K-line’s ocean liner, issued bills of lading that covered the
cargo from its place of origin to the final destinations in the
United States and contracted with UPRR to ship the cargo
from the Port of Long Beach to the Midwest through its agent
KAM, who acted on K-line’s behalf in receiving its vessel
and providing for the inland transport. The K-line defendants
therefore provided “continuous carriage or shipment” that was
“by railroad and water” via “intermodal equipment used by or
in connection with a railroad.” As a result, Carmack applies
to K-line and its agent.
Applying Carmack to K-line is also consistent with the pur-
pose of Carmack’s liability regime, which is “to relieve ship-
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1271
pers of the burden of searching out a particular negligent
carrier from among the often numerous carriers handling . . .
goods.” Reider v. Thompson, 339 U.S. 113, 119 (1950).
Because Plaintiffs dealt directly with K-line to arrange a ship-
ment that included domestic rail carriage, we uphold Car-
mack’s objectives by applying the statute to K-line and its
agent.
[2] Few opinions have squarely addressed the potential
application of Carmack to ocean carriers and their agents and
no Supreme Court or Ninth Circuit precedent appears to
address this issue. Nevertheless, most of the limited federal
jurisprudence on this question either states that Carmack
applies to an ocean carrier and its agent or implicitly suggests
that it could. See United States v. Miss. Valley Barge Line
Co., 285 F.2d 381, 391-94 (8th Cir. 1960) (Blackmun, J.)
(holding that Carmack applied to a water carrier that was the
contracting carrier when there was a common arrangement as
indicated by a through bill of lading); Kyodo USA Inc. v
Cosco N. Am. Inc., No. 01-CV-499, 2001 WL 1835158, at *3-
5 (C.D. Cal. July 23, 2001) (holding that Carmack could
apply to an ocean carrier); Canon USA Inc. v. Nippon Liner
System, Ltd., No. 90 C 7350, 1992 WL 82509, at *5-8 (N.D.
Ill. April 17, 1992) (applying Carmack to an ocean carrier);
Nelson v. Agwilines, 70 F.Supp. 497, 500 (S.D.N.Y. 1946)
(noting that although “[o]rdinarily a carrier that is wholly a
carrier by water is not subject to regulation by [the Board,]
[m]any carriers by water have through bill of lading arrange-
ments with railroads, which make the carriers by water sub-
ject to regulation by [the Board]”). Until recently, only two
authorities, neither of which we find persuasive, explicitly
held that Carmack does not apply to an ocean carrier: a deci-
sion from the Florida Supreme Court and a subsequent deci-
sion from the Federal District Court for the Southern District
of Florida that relied on the previous state court decision. See
King Ocean Cent. Am., S.A. v. Precision Cutting Servs., Inc.,
717 So. 2d 507, 513 (Fla. 1998) (holding that “an ocean carri-
er’s liability was not contemplated or covered under the Car-
1272 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
mack Amendment”); PT Indonesia Epson Indus. v. Orient
Overseas Container Line, Inc., 219 F. Supp. 2d 1265, 1269
(S.D. Fla. 2002) (following King Ocean’s analysis and deter-
mining that “the Carmack Amendment does not necessarily
apply to the through bill of lading issued by [the ocean carri-
er]”); contra, Kyodo, 2001 WL 1835158 at *4 (unpublished
district court opinion in this circuit explicitly refusing to
endorse King Ocean’s analysis).
Since this case was argued, however, the Second Circuit
has construed Carmack’s definition of a “rail carrier” not to
reach two categories of common carriers: (1) an entity “that
merely arranges” for goods to be transported by sea and then
transferred to a railroad for inland transport, but never itself
actually moves the goods; and (2) a common carrier, such as
an ocean carrier, that does not conduct rail services nor
“ ‘hold out’ that service to the public.” Rexroth Hydraudyne
B.V. v. Ocean World Lines, Inc., 547 F.3d 351, 362, 364 (2d
Cir. 2008). K-line and KAM urge us to follow Rexroth and
exempt them as well. We do not read Rexroth so broadly, and
in any event decline to apply its limitation of Carmack to the
intermodal transport arrangement here.
In Rexroth, the plaintiff shippers contracted with a non-
vessel-operating common carrier (“NVOCC”) that acted as a
middleman, arranging for ocean and inland rail carriage “from
receipt to delivery.” Id. at 356. As the term implies, the
NVOCC provided no services on any vessel it owned nor did
it otherwise physically handle the shipment itself. See id. at
361-62. Instead the NVOCC subcontracted with “an ocean
carrier that provide[d] the ocean passage,” who in turn sub-
contracted through its American agent to “arrange[ ] rail car-
riage for the inland leg.” Id. at 356. Nearly all the Second
Circuit’s reasoning addressed this middleman, emphasizing
that an entity without “any contact with the shipped goods or
any performance in the carrying of those goods” merely
arranges for railroad transportation and therefore does not
provide transportation as required for Carmack liability. Id. at
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1273
361-62. Even if we were to accept this reasoning, it would not
apply to K-line’s arrangement because there was no middle-
man between K-line and Plaintiffs. Rather, Plaintiffs dealt
directly with K-line, who actually transported the cargo on its
ocean liner and had sustained contact with the shipped goods.
Rexroth also summarily excluded the ocean carrier defen-
dant whose services were most analogous to those K-line pro-
vided here, saying that the ocean carrier did “not own or
operate rail lines or other equipment used in connection with
a railroad.” Id. at 363 (emphasis added). The Second Circuit
did not address the statutory definition of railroad transporta-
tion we have discussed above, but instead simply concluded
without factual explanation that the ocean carrier neither con-
ducted nor held itself out as conducting railroad transporta-
tion. See id. at 364. Thus we do not know the nature or
substance of the ocean carrier’s direct interactions, if any,
with the shipper. We do know that here, K-line held itself out
to the public and contracted with Plaintiffs to transport their
goods all the way from China to their inland destinations —
by sea utilizing K-line’s vessel and by rail utilizing UPRR. In
so doing, K-line and its agent, KAM, engaged in railroad
transportation subject to the Board’s jurisdiction by providing
Plaintiffs with continuous carriage by water and rail, utilizing
intermodal equipment in connection with a railroad. See 49
U.S.C. §§ 10102(6)(A), 10501(a)(1)(B).
[3] In sum, we do not read Rexroth to categorically exclude
ocean carriers from Carmack liability. The plain language of
the statute and a careful application of the Second Circuit’s
reasoning support our conclusion that K-line and KAM pro-
vided railroad transportation covered by Carmack.7 We there-
7
The Second Circuit also seemed to suggest that because ocean carriers
fall under the jurisdiction of the Federal Maritime Commission (“FMC”),
they cannot also be regulated by the Board. See Rexroth, 547 F.3d at 357.
The FMC has jurisdiction to “regulate ocean shipping lines operating
between the United States and foreign countries,” “monitor[ ] agreements
1274 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
fore hold that Carmack applies to ocean carriers and their
agents under the circumstances here.
B.
[4] Defendants jointly argue that Carmack cannot apply to
a shipment from a foreign country into the United States
under a through bill of lading, and therefore the parties’ con-
tractual extension of COGSA, with its more liberal rules
regarding venue, should control here. In support of their argu-
ment, Defendants highlight that four circuits have held that
“the Carmack Amendment does not apply to a shipment from
a foreign country to the United States (including an ocean leg
and overland leg to the final destination in the United States)
unless the domestic overland leg is covered by a separate bill
of lading.” Altadis USA, Inc. ex. rel. Fireman’s Fund Ins. Co.
v. Star Line, LLC, 458 F.3d 1288, 1291 (11th Cir. 2006)
(emphasis added); see Am. Road Serv. Co. v. Consol. Rail
Corp., 348 F.3d 565, 569 (6th Cir. 2003); Shao v. Link Cargo
(Taiwan) Ltd., 986 F.2d 700, 703 (4th Cir. 1993); Capital
Converting Equip., Inc. v. LEP Transport, Inc., 965 F.2d 391,
394 (7th Cir. 1992); but see Sompo I, 456 F.3d at 57, 60-69(holding that Carmack applies to the domestic rail portion of
a continuous intermodal shipment originating in a foreign
country even where the transport was under a single through
bill of lading that incorporated COGSA beyond the tackle-to-
tackle phase). Despite this weight of authority, our own prece-
dent expressly forecloses Defendants’ argument in this circuit.
In Neptune Orient Lines, Ltd. v. Burlington N. & Santa Fe Ry.
Co., 213 F.3d 1118, 1119 (9th Cir. 2000), we held that “the
language of [Carmack] also encompasses the inland leg of an
between ocean common carriers” and “enforc[e] a number of prohibitions
against discriminatory and unreasonable rates and practices.” Transpacific
Westbound Rate Agreement v. Fed. Maritime Comm’n, 951 F.2d 950, 951
(9th Cir. 1991). Nothing in the FMC’s jurisdictional statute makes its
jurisdiction exclusive. See 46 U.S.C. § 40301.
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1275
overseas shipment conducted under a single ‘through’ bill of
lading . . . .” See Nippon Yusen Kaisha v. Burlington & N.
Santa Fe Ry. Co., 367 F. Supp. 2d 1292, 1298 n.4 (C.D. Cal.
2005); Chubb Group of Ins. Companies v. H.A. Transp. Sys-
tems, Inc., 243 F. Supp. 2d 1064, 1068 n.3 (C.D. Cal. 2002).8
Contrary holdings in the Fourth, Sixth, Seventh and Elev-
enth Circuits rest on the notion that the Board lacks jurisdic-
tion over intermodal shipments into the United States from a
point in a foreign country under a through bill of lading. See,
e.g., Am. Road Servs. Co., 348 F.3d at 568 (“The [Board]’s
jurisdiction does not extend to a shipment under a through bill
of lading unless a domestic segment of the shipment is cov-
ered by a separate bill of lading.”). The Second Circuit has
disagreed, holding that a plain reading of the Board’s jurisdic-
tional statute applies Carmack to any rail transportation in the
United States, even if it originated in a foreign country under
a through bill of lading. See Sompo I, 456 F.3d at 64. As we
noted above, Carmack’s reach is coextensive with the Board’s
jurisdiction, see 49 U.S.C. § 11706(a); therefore our conclu-
sions regarding the extent of the Board’s jurisdiction,
expressed in Neptune, determine Carmack’s reach as well.
Crucially, Neptune interpreted our precedent and Carmack’s
language to apply to “shipments to or from overseas ports”
without any requirement for a separate domestic bill of lading
for the inland carriage. Neptune, 213 F.3d at 1119 (citing F.J.
McCarty Co. v. S. Pac. Co., 428 F.2d 690, 692 (9th Cir.
1970)).
[5] Defendants’ attempt to relegate Neptune’s interpretation
of Carmack to the status of dictum is unavailing. There is no
indication that Neptune “did not make a deliberate decision to
8
Although some district courts within the Ninth Circuit have held that
the Carmack Amendment did not apply when the cargo at issue was
shipped pursuant to a single through bill of lading, these opinions predate
Neptune. See, e.g., Tokio Marine & Fire Ins. Co., Ltd. v. Kaisha, 25 F.
Supp. 2d 1071, 1081 (C.D. Cal. 1997).
1276 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
adopt the rule of law it announced.” United States v. Johnson,
256 F.3d 895, 915 (9th Cir. 2001). Consequently, the absence
of a separate bill of lading does not remove this shipment
from Carmack’s venue restrictions.
C.
Defendants next argue that even if the Carmack Amend-
ment could apply to the inland leg of an international trans-
port conducted under a single through bill of lading, here the
parties’ explicit contractual extension of COGSA inland
should take precedence. Given COGSA’s statutory language,
Neptune’s holding is fatal to this argument. Neptune’s import
becomes clear when analyzed in light of the distinctions and
interactions between three sections of COGSA, currently cod-
ified at 46 U.S.C. § 30701 Notes Sec. 7, 12 & 13.9 In relevant
part, the text of these sections is as follows:
• Section 7: Nothing contained in this chapter [this
note] shall prevent a carrier or a shipper from
entering into any agreement, stipulation, condi-
tion, reservation, or exemption as to the responsi-
bility and liability of the carrier or the ship for the
loss or damage to or in connection with the cus-
tody and care and handling of goods prior to the
loading on and subsequent to the discharge from
the ship on which the goods are carried by sea. 46
U.S.C. § 30701 Notes Sec. 7.
• Section 12: Nothing in this chapter [this note]
shall be construed as superseding any part of [the
Harter Act] or of any other law which would be
applicable in the absence of this chapter [this
note], insofar as they relate to the duties, respon-
sibilities, and liabilities of the ship or carrier prior
to the time when the goods are loaded on or after
9
Previously §§ 1307, 1311 and 1312, respectively.
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1277
the time they are discharged from the ship. 46
U.S.C. § 30701 Notes Sec. 12 (emphasis added).
• Section 13: This chapter [this note] shall apply to
all contract for carriage of goods by sea to or
from ports of the United States in foreign trade
. . . . The term ‘foreign trade’ means the transpor-
tation of goods between the ports of the United
States and ports of foreign countries. Nothing in
this chapter [this note] shall be held to apply to
contracts for carriage of goods by sea between
any port of the United States or its possessions,
and any other port of the United States or its pos-
session: Provided, however, That any bill of lad-
ing or similar document of title which is evidence
of a contract for the carriage of goods by sea
between such ports, containing an express state-
ment that it shall be subject to the provisions of
this chapter [this note], shall be subjected hereto
as fully as if subject hereto by the express provi-
sions of this chapter [this note]. 46 U.S.C.
§ 30701 Notes Sec. 13.
Reading these three sections together reveals two interrelated
reasons why the contractual extension of COGSA to the
inland leg of an intermodal, international transport cannot
supersede the requirements imposed by Carmack.
[6] First, although Section 7 “confirms that nothing in
COGSA constrains the parties” from contractually extending
COGSA’s protections beyond the tackle-to-tackle period, it
“leav[es] open the possibility that something else might con-
strain them.” Michael F. Sturley, Freedom of Contract and
the Ironic Story of Section 7 of the Carriage of Goods by Sea
Act, 4 BENEDICT’S MARITIME BULL. 201, 203 (Third/Fourth
Quarter 2006) (emphasis added) [hereinafter Freedom of Con-
tract]. Section 12 “completes the story that Section 7 merely
begins,” by explicitly confirming that this contractual auton-
1278 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
omy is constrained by the presence of any other law that
would govern the parties before loading or after discharge. Id.
at 203. In light of Neptune, the Carmack Amendment is just
such an “other law” to which Section 12 mandates that the
contractual inland extension of COGSA must yield. See
Sompo I, 456 F.3d at 72-73 (relying in part on Section 12 to
“hold that the contractual provision extending COGSA’s
terms inland must yield to Carmack”).10
[7] Second, Section 13’s language has an important nega-
tive implication for our interpretation of the legal force of a
contractual extension of COGSA under Section 7. See id. at
70. Through Section 13, “Congress explicitly provided that
contracts extending [COGSA’s] reach in ways other than over
land — in particular, contractual extensions covering trade
between United States ports (or ‘coastwide trade’) — do have
statutory force” and can “supersede prevailing federal stat-
utes.” Id. at 69-70.11 Congress did not include any comparable
language with respect to a contractual extension of COGSA
to inland transport under Section 7, simply stating that noth-
ing within COGSA prevents parties from doing so. “ ‘[W]here
Congress includes particular language in one section of a stat-
ute but omits it in another section of the same Act, it is gener-
ally presumed that Congress acts intentionally and purposely
in the disparate inclusion or exclusion.’ ” Camacho v. Bridge-
port Fin. Inc., 430 F.3d 1078, 1081 (9th Cir. 2005) (quoting
Russello v. United States, 464 U.S. 16, 23 (1983)). “There-
10
The congressional debates about COGSA reflect a similar understand-
ing. As Senator White explained, “[t]he legislation supersedes the so-
called ‘Harter Act’ from the time the goods are loaded on the ship to the
time they are discharged from the ship. Otherwise our law remains pre-
cisely as it is, unaffected and unimpaired by the proposed legislation.” 1
THE LEGISLATIVE HISTORY OF THE CARRIAGE OF GOODS BY SEA ACT AND THE
TRAVAUX PREPARATOIRES OF THE HAGUE RULES 589 (Michael F. Sturley ed.
1990) (emphasis added).
11
In the absence of such an extension, another federal statute, the Harter
Act, applies to shipments between domestic ports. See Sompo I, 456 F.3d
at 69 n.15.
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1279
fore, that Congress, in enacting [Section 7], omitted language
similar to the language in [Section 13] is persuasive evidence
that Congress did not wish for period of responsibility clauses
[adopted under Section 7] to have the force of statute with the
capability to supersede federal law.” Sompo I, 456 F.3d at 71;
see Freedom of Contract at 204 (noting this textual distinction
“is compelling evidence that indirectly confirms what Section
12 says directly — that Section 7 was not intended to permit
a private contract to override otherwise applicable law”).12
[8] Read together, these provisions make clear that “con-
tracts extending COGSA beyond the tackles must give way to
conflicting law.” Sompo I, 456 F.3d at 71.13 Per Neptune, Car-
12
The Second Circuit recently reaffirmed this core holding of Sompo I.
See Rexroth, 2008 WL 4810069, at *3 (“It is clear from Sompo that a
‘contractual provision extending COGSA’s terms inland must yield to
Carmack’ if Carmack is applicable.”) (quoting Sompo I, 456 F.3d at 73).
13
We briefly distinguish earlier decisions containing general statements
that the contractual extension of COGSA could supersede other statutes.
See Starrag v. Maersk, Inc., 486 F.3d 607, 615 (9th Cir. 2007); Sea-Land
Serv., Inc. v. Lozen Int’l, L.L.C., 285 F.3d 808, 817 (9th Cir. 2002); N.
River Ins. Co. v. Fed Sea/Fed Pac Line, 647 F.2d 985, 987 (9th Cir. 1981).
First, none of these cases addressed a potential conflict between COGSA
and Carmack. Second, the original source for all of these statements is Pan
Am. World Airways, Inc. v. Cal. Stevedores & Ballast Co., 559 F.2d 1173(9th Cir. 1977). See N. River, 647 F.2d at 987 (citing Pan Am.); Sea-Land,
285 F.3d at 817 (citing N. River); Starrag, 486 F.3d at 615 (citing Sea-
Land). Importantly, Pan American addressed “a contract for carriage
between a port in the continental United States and a port in a United
States possession.” 559 F.2d at 1175 n.3. In other words, Pan American
dealt with an extension of COGSA over coastwide trade, and therefore
triggered Section 13’s explicit mandate that such extensions should apply
“as fully as if subject [hereto] by the express provisions of [COGSA].” Id.(quoting 46 U.S.C. § 1312). Its holding therefore has no bearing on the
legal weight that should be afforded to inland contractual extensions of
COGSA under Section 7. See N. River, 647 F.2d at 988-89 (noting this
distinction). Finally, none of these opinions ultimately relied on their state-
ments that the contractual extension of COGSA could supersede a federal
statute in order to reach their holding. See Starrag, 486 F.3d at 615 (noting
that “where the parties contractually extend the COGSA to cover the dam-
1280 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
mack is a conflicting law here. Although, as we have dis-
cussed, the Eleventh Circuit has allowed the contractual
extension of COGSA inland, that court disagrees with ours
about the reach of Carmack where the parties have used a
through bill of lading. Compare Neptune, 213 F.3d at 1119(“The language of [Carmack] also encompasses the inland leg
of an overseas shipment conducted under a single ‘through’
bill of lading . . . .”) with Altadis, 458 F.3d at 1291 (“The case
law has established that the Carmack Amendment does not
apply to a shipment from a foreign country to the United
States . . . unless the domestic, overland leg is covered by a
separate bill of lading.”). Because here Carmack is federal
law conflicting with the parties’ contractual extension of
COGSA, we cannot follow the Eleventh Circuit by validating
COGSA’s inland reach.
Defendants argue that policy considerations of contractual
autonomy, efficiency and uniformity of maritime liability
rules weigh in favor of allowing shippers and carriers to
extend COGSA inland. The Supreme Court recently endorsed
these policy objectives by emphasizing that “[c]onfusion and
inefficiency will inevitably result if more than one body of
law governs a given contract’s meaning.” Kirby, 543 U.S. at
29. The unanimous Court in Kirby further observed that an
age, the Harter Act does not apply,” but ultimately concluding that “even
if the Harter Act applied,” it would not prohibit the challenged limited lia-
bility clause); Sea-Land, 285 F.3d at 817 (noting that “because COGSA
is incorporated by contract into Sea-Land’s bills of lading, ‘it, rather than
the Harter Act, controls,’ ” but only after it had already concluded that the
Harter Act did not apply to the case at bar in the first place); N. River, 647
F.2d at 987, 989 (noting that “[w]hen COGSA is incorporated by contract,
it, rather than the Harter Act, controls” within the context of a case that
ultimately turned on the interaction between the contractual extension of
COGSA and another contractual term). “[W]e are not bound by a holding
. . . ‘where it is merely a prelude to another legal issue that commands the
panel’s full attention . . . .’ ” V.S. ex rel. A.O. v. Los Gatos-Saratoga Joint
Union High Sch. Dist., 484 F.3d 1230, 1232 n.1 (9th Cir. 2007) (quoting
United States v. Johnson, 256 F.3d 895, 915 (9th Cir. 2001)).
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1281
inability to extend COGSA’s default rules to inland transport,
so that entire shipments could be governed by the same liabil-
ity regime, would defeat “the apparent purpose of COGSA[ ]
to facilitate efficient contracting in contracts for carriage by
sea.” Id.; see Royal Ins. Co. of Am. v. Orient Overseas Con-
tainer Line Ltd., 525 F.3d 409, 419 (6th Cir. 2008) (“Kirby’s
reasoning affirms the broader principle that courts should
evaluate maritime contracts in their entirety rather than treat-
ing each of the multiple stages in multimodal transportation
as subject to separate legal regimes, which would be an obsta-
cle to uniform and efficient liability rules.”). Ignoring a con-
tractual provision incorporating COGSA seems particularly
inappropriate where, as here, “the parties to the bill of lading
were sophisticated business entities that should rarely be
released from contractual obligations.” Raymond T. Waid,
Comment, Piloting in Post-Kirby Waters: Navigating the Cir-
cuit Split Over Whether the Carmack Amendment Applies to
the Land Leg of an Intermodal Carriage of Goods on a
Through Bill of Lading, 34 TRANSP. L.J. 113, 143 (Summer
2007).
[9] Nonetheless, and mindful of these policy consider-
ations, Kirby does not control here. There, the Court held that
state law did not apply to a bill of lading that extended
COGSA inland, where COGSA and the state law conflicted.
Kirby, 543 U.S. at 28-29. Focusing as it did on the need for
state law to yield to federal law in the maritime context, the
Court did not have occasion to consider which of two con-
flicting federal laws should govern a maritime shipment with
an inland leg. See Sompo I, 456 F.3d at 75 (“We cannot inter-
pret the Kirby Court’s language concerning the policy under-
lying COGSA . . . as implying that a contract extending
COGSA inland should supersede an otherwise applicable fed-
eral law.”). The policy of uniformity in maritime shipping,
however compelling, must give way to controlling statutes
and precedent. Given Neptune’s holding that Carmack applies
and the conspicuous absence in COGSA of language allowing
parties to give superseding statutory force to their contractual
1282 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
extensions of COGSA inland under Section 7, we hold that a
mere contractual extension of COGSA is not alone sufficient
to overcome Carmack.
Nevertheless, Carmack — including its restrictive venue
provisions — is merely a set of default rules. To the extent
Carmack sanctions alternative provisions, a properly adopted
alternative forum selection clause would eliminate Carmack
as a conflicting “other law” superseding the parties’ contrac-
tual extension of COGSA. Neptune did not reach this issue
and does not hold otherwise. Such a contractual alteration
cannot come from COGSA’s Section 7, as explained above,
because Section 7 does not give such contracts statutory force.
But Carmack itself does contain two provisions for avoiding
the statutory defaults: 49 U.S.C. §§ 10502 & 10709. We next
turn to these two possible Carmack opt-outs.
III. Contracting for Alternative Terms under Carmack
As discussed, whereas COGSA would allow a reasonable
alternative forum selection clause, Carmack strictly limits the
venues in which a party can bring a claim. See 49 U.S.C.
§ 11706(d)(2)(A). In this case, Tokyo does not fit into any of
the categories to qualify as an acceptable forum under Car-
mack. See Regal-Beloit, 462 F. Supp. 2d at 1103.14 Accord-
ingly, the Tokyo forum selection clause’s enforceability turns
on whether the parties complied with the applicable require-
ments for opting out of Carmack.
Congress created two different mechanisms — § 10502 and
§ 10709 — by which some rail services may be exempted
from certain requirements usually imposed by Carmack.
These dual provisions require us to resolve whether the par-
ties entered into a § 10502 or a § 10709 contract and, relat-
14
We agree with the district court’s conclusion that “[i]f applicable, the
Carmack Amendment would limit venue in this case to California, Okla-
homa, or Wisconsin.” Regal-Beloit, 462 F. Supp. 2d at 1103.
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1283
edly, what each provision requires for avoiding Carmack. We
conclude that § 10502 is the only proviso the parties here
could have followed to contract out of Carmack’s venue
restrictions. Because the district court instead analyzed the
contracts under § 10709, we remand for an application of
§ 10502, whose requirements we clarify below.
A.
[10] Once again, we preface our analysis by looking to the
relevant statutory language. Section 10502(f) authorizes the
Board to exempt from Carmack “transportation that is pro-
vided by a rail carrier as part of a continuous intermodal
movement.” Here, “rail carrier” is subject to the same “Defi-
nitions” section we applied above to conclude that even an
ocean carrier like K-line is a rail carrier when contracting to
provide inland rail transportation. See 49 U.S.C. § 10102(providing definitions for “this part”).15 Thus, K-line is a rail
carrier for purposes of determining whether it provides trans-
portation that is exempt under the Board’s § 10502 authority.
It is undisputed that the Board has exempted the transporta-
tion at issue here. See 49 C.F.R. § 1090.2 (“[R]ail TOFC/
COFC service and highway TOFC/COFC service provided by
a rail carrier either itself or jointly with a motor carrier as part
of a continuous intermodal freight movement is exempt from
the requirements of 49 U.S.C. subtitle IV . . . .”).16
The Board’s action relieves carriers providing such exempt
transportation from certain regulatory burdens, such as rate
regulation. See, e.g., 49 U.S.C. § 10701. Carmack’s liability
and venue rules are not so plainly waived, however. The stat-
ute mandates that “[n]o exemption order issued pursuant to
this section shall operate to relieve any rail carrier from an
15
Specifically, “ ‘[t]his part’ refers to 49 U.S.C. Subtitle IV, Part A,
which includes Carmack.” Sompo II, 540 F. Supp. 2d at 494.
16
These acronyms respectively refer to “trailer on flatcar” and “con-
tainer on flatcar” service.
1284 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
obligation to provide contractual terms for liability and claims
which are consistent with the provisions of section 11706 of
this title.” 49 U.S.C. § 10502(e). Nonetheless, § 10502(e) also
provides that carriers and shippers thus exempted are not
unalterably bound by the liability and venue restrictions in
Carmack’s § 11706, because “[n]othing in this subsection or
section 11706 of this title shall prevent rail carriers from
offering alternative terms. . . .” Id. These two clauses of
§ 10502(e) are not inconsistent: carriers providing exempt
transportation are obliged to provide terms consistent with
Carmack’s venue and liability protections to their shipper cus-
tomers, but are ultimately free to contract under terms differ-
ent from those in § 11706. Courts have concluded that the
“combined effect” of § 10502 and § 11706 is to permit carri-
ers providing exempt transportation to contract for terms that
are different from Carmack’s defaults so long as they first
offer the shipper the option of full Carmack protections, pre-
sumably at a higher rate. See Sompo I, 456 F.3d at 60 (collect-
ing authority). If the carrier fails to make this initial offer,
however, “then the shipper may sue the carrier under Car-
mack.” Id.17
On the other hand, avoiding Carmack’s default rules under
§ 10709 is simpler: “[o]ne or more rail carriers providing
transportation subject to the jurisdiction of the Board . . . may
enter into a contract with one or more purchasers of rail ser-
vices to provide specified services under specified rates and
conditions.” 49 U.S.C. § 10709(a) (emphasis added). Under
such an agreement for nonexempt transportation, carriers
“have no duty in connection with services provided under
such contract other than those duties specified by the terms of
the contract.” 49 U.S.C. § 10709(b). Moreover, “[a] contract
that is authorized by this section, and transportation under
such contract, shall not be subject to this part, and may not
17
The Second Circuit’s recent limitation of Sompo I in Rexroth, 2008
WL 4810069, at n.15, discussed Sompo I’s interpretation of § 10502 with
approval.
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1285
be subsequently challenged before the Board or in any court
on the grounds that such contract violates a provision of this
part,” 49 U.S.C. § 10709(c)(1) (emphasis added) — “this
part” encompassing the Carmack Amendment.
[11] The terms of these two different provisions evidence
a clear distinction between § 10502 contracts and § 10709
contracts. The distinction is based on whether the transporta-
tion at issue in the contract is exempt from Board regulation.
Whereas § 10502 requires carriers providing exempt transpor-
tation to offer Carmack protections before they can success-
fully contract for alternative terms, § 10709 contains no such
language — indeed, it explicitly contemplates that nonexempt
carriers’ contracts alone control. Defendants argued success-
fully before the district court that they entered into a § 10709
contract with Plaintiffs, and thus were not required to offer
Carmack protections as a prerequisite for their extension of
COGSA to the inland segment of the transport. Defendants
point to the MITA, which was incorporated by the ERTA and
explicitly states “[t]his MITA and any agreements, price doc-
uments or contracts that reference this MITA have been made
under 49 U.S.C. § 10709.” Plaintiffs argue on appeal that
Defendants could not have entered into even a legitimate
§ 10709 contract without first offering full Carmack protec-
tions.18 We disagree with both parties’ reasoning. Plaintiffs
18
Although Plaintiffs did not explicitly raise this argument in their
opposition to the motion to dismiss, we exercise our discretion to address
it here. See Self-Realization Fellowship Church v. Ananda Church of Self-
Realization, 59 F.3d 902, 912 (9th Cir. 1995). Plaintiffs had no reason to
address the potential inapplicability of § 10709 below because this was not
raised by Defendants in their motions to dismiss, which instead were lim-
ited to the assertion that COGSA, rather than Carmack, should govern.
Defendants only added that they were exempt from the Carmack’s require-
ments under § 10709 in their reply briefs. It is unreasonable to require
Plaintiffs to argue that a particular provision did not apply before Defen-
dants even suggested that this provision authorized their contracts. Reach-
ing the argument is appropriate because this issue presents a purely legal
question, see id., and Defendants will not be prejudiced, as they have fully
briefed this issue on the merits, see United States v. Fonseca-Caro, 114
F.3d 906, 907 n.2 (9th Cir. 1997) (per curiam).
1286 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
are incorrect that § 10709 requires offering Carmack protec-
tions. See Sompo II, 540 F. Supp. 2d at 494 (collecting district
court cases); but see id. at 495-98 (discussing cases that “have
varied wildly” on this issue). In any event, Defendants are
mistaken that simply asserting in a contract that it was made
under § 10709 makes it so. The contract here had to be a
§ 10502 contract because it concerned exempt transportation,
and must therefore be analyzed on remand under the require-
ments of that section.
B.
The parties’ confusion is understandable given the “mud-
dled state of the law.” Sompo II, 540 F. Supp. 2d at 498 & n.8
(citing “[s]everal courts [that] have noted that this issue has
not been adequately addressed”). Congress has not provided
any guidance regarding how to read § 10502 and § 10709 in
tandem, and very few courts have squarely confronted the ques-
tion.19
We cannot adopt either of the parties’ arguments, however,
as each would render one of the statutory provisions practi-
cally meaningless. Plaintiffs’ argument that a carrier can form
a § 10709 contract only if it first offers the shipper full Car-
mack protections essentially converts all § 10709 contracts
into § 10502 contracts. Cf. Sompo II, 540 F. Supp. 2d at 494(“Most courts have concluded that [the statutory] language
indicates that § 10709 contracts are not subject to Carmack,
and need not offer a full Carmack liability option before prop-
erly limiting carrier liability.”). Defendants’ argument, how-
ever, effectively nullifies § 10502 because it would allow any
19
The parties have therefore been forced to rely on unpublished district
court decisions to support their respective arguments. See Tamini Trans-
formatori S.R.L. v. Union Pac. R.R., No. 02 Civ. 129, 2003 WL 135722(S.D.N.Y. Jan. 17, 2003) (supporting Plaintiffs’ argument); Tokio Marine
& Fire Ins. Co. v. Mitsui O.S.K. Lines, Ltd., No. CV 02-3617, 2003 WL
23181013 (C.D. Cal. June 27, 2003) (supporting Defendants’ argument).
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1287
carrier — even those exempted under § 10502 — to avoid
§ 10502’s prerequisites simply by stating that its contract was
pursuant to § 10709.20 It would be “nonsensical for . . .
§ 10502 to permit a certain category of rail contracts to offer
specific rates and terms but require an initial offer of full Car-
mack liability and . . . § 10709 to permit the same category
of rail contracts to offer specific rates and terms with no such
requirement of an initial offer of full Carmack liability.” Id.
at 499 (emphasis in original); see also id. (“Section 10709
simply cannot be used as a tool to extract contracts governing
exempted rail carriers that operate one leg of a continuous
intermodal movement from the regulatory demands of
§ 10502 and Carmack.”). When the Board exempted the cate-
gory of transportation at issue here, the providers of that
transportation, including Defendants, gained the benefits of
deregulated rates. The Board’s exemption removed this trans-
portation “from the requirements of 49 U.S.C. subtitle IV,” 49
C.F.R. § 1090.2, which includes the provision setting stan-
dards for rates, see 49 U.S.C. § 10701. But Subtitle IV also
includes § 10709. Consequently, carriers providing exempt
transportation gain the benefits of deregulation, but lose the
opportunity to contract for preferable terms under § 10709
without first offering Carmack terms.
[12] In keeping with Congress’ specification of two distinct
methods for carriers to avoid the requirements imposed by
Carmack, we therefore hold that a carrier providing nonex-
empt transportation may contract under § 10709 without
offering Carmack protections, but a carrier providing exempt
transportation must proceed under § 10502, which does
20
We are particularly troubled by the potential for such an outcome
where, as here, the statement that the agreement is governed by § 10709
is buried within several layers of incorporated text, of which the shipper
had no direct knowledge. See Sompo II, 540 F. Supp. 2d at 500 (“First, it
is not clear that the shippers . . . are on actual notice of either the ITAs
or the rail carrier circulars or have the opportunity to review them and,
second, there are too many steps incorporated by reference to properly
charge the shippers with notice of their terms.”).
1288 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
require such an offer. See Sompo II, 540 F. Supp. 2d at 499.
Accordingly, Defendants here could not have entered into a
§ 10709 contract notwithstanding the MITA’s clause declar-
ing otherwise. Defendants accept that § 10502 covers exempt
transportation, but argue that carriers providing exempt trans-
portation could nevertheless still choose to contract under
§ 10709. Our interpretation of the relationship between
§ 10502 and § 10709 forecloses this argument.21
C.
In sum, § 10502 provides the only method through which
these parties might have agreed to the Tokyo forum selection
clause. To comply with § 10502, K-line needed to offer Car-
mack’s protections when contracting with Plaintiffs. K-line
argues that it did so, pointing to a clause in the MITA that
reads, “[o]n domestic shipments that originate in the United
States, Shippers may, at their option, select the liability provi-
sions set forth in 49 U.S.C. § 11706.” We are skeptical that
reference to Carmack in connection with shipments originat-
ing in the United States, appearing in the MITA instead of in
the bills of lading, could fulfill § 10502’s requirement that
Carmack protections be offered. Perhaps more compellingly,
K-line points to Clause 5(1) of the bills of lading, which
21
During oral argument, Defendants attempted to elude § 10502’s
requirements, asserting that: (1) § 10502 applies only to “common carrier”
contracts, (2) § 10709 applies only to “private” contracts and (3) the
instant contract falls into the latter category. We reject this argument.
First, the argument was waived. See United States v. Kimble, 107 F.3d
712, 715 n.2 (9th Cir. 1997) (noting that arguments which are “not coher-
ently developed in [the] briefs” are abandoned); Acosta-Huerta v. Estelle,
7 F.3d 139, 144 (9th Cir. 1992) (noting that “issues raised in a brief which
are not supported by argument are deemed abandoned”). Second, this
argument appears to have no basis in our case law or statutes. We did not
find any authority that distinguishes between § 10709 and § 10502 con-
tracts in the manner Defendants suggest, neither § 10709 nor § 10502 uses
the terms “private contract” or “common carrier contract” and neither of
these phrases is included in the statute’s “definitions.” See 49 U.S.C.
§ 10102.
REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1289
allows K-line to subcontract with rail carriers “on any terms
whatsoever.” From this, it might be inferred that by making
the choice to allow K-line to do all the subcontracting on “any
terms whatsoever,” Plaintiffs implicitly considered and
rejected Carmack terms. Plaintiffs counter that no evidence of
an offer of these terms exists and that another part of the
MITA seems to preclude Carmack from applying.22
It is improper for us, on this record, to decide in the first
instance whether the parties’ negotiation and acceptance of
their numerous, cross-referenced agreements included an
offer of Carmack terms or an understanding that Carmack
terms were available but were rejected. Section 10502(a) says
only that the Carmack terms must be offered, not necessarily
that they appear in the written agreement. Thus, on remand,
the district court may develop the record with respect to the
parties’ understanding of whether Carmack terms were on the
table when they executed the bills of lading.
22
The parties’ disagreement about what was offered in the bills of lading
by way of the later provisions of the MITA is unsurprising because the
interactions among the bills of lading, the MITA and ERTA are far from
clear. Although the MITA purports that “all Shipments are subject to this
MITA” regardless of their billing method (including a bill of lading), it
also establishes that “this MITA . . . as well as the terms and condition of
. . . ocean or rail carrier’s Bills of Lading . . . shall constitute the entire
contract for transportation between the parties.” The terms of the MITA
do not make clear, then, whether the MITA’s or the bills of lading’s terms
take precedence in the case of a conflict. This becomes increasingly com-
plex because the ERTA never explicitly incorporated the MITA’s venue
provisions, and it is unclear whether its more general incorporation lan-
guage would encompass these restrictions. Finally, the MITA establishes
that changes can be made to its terms if they are “approved in writing prior
to the issuance of any shipping document,” or “through a document signed
by a duly authorized manager of UPRR.” The record does not indicate
whether any such authorization occurred. This factual morass may benefit
from further development before the district court on remand.
1290 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
Conclusion
[13] As a matter of policy, it may be that sophisticated
commercial entities should be able to freely decide by con-
tract the liability regime that is to govern the shipment of
goods from a foreign country to their ultimate destination in
the United States, and do so utilizing a single bill of lading.
Nonetheless, given the language of the relevant statutes and
our own precedent, we hold that COGSA cannot govern the
inland transport at issue here unless the parties opted out of
Carmack in accordance with the requirements of 49 U.S.C.
§ 10502. We further hold that § 10709 cannot apply here
given the exempt status of the transportation involved.
Because the district court did not consider whether the parties
opted out of Carmack’s default rules under § 10502, thereby
clearing the way for COGSA to apply by contractual exten-
sion, we remand for that determination.
REVERSED and REMANDED.