Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc.
Filing
222
Order by Hon. Samuel Conti granting 199 Defendants Seamaster Logistics, Inc. and Summit Logistics International, Inc.'s Motion for Attorney Fees.(sclc2, COURT STAFF) (Filed on 6/7/2013)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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United States District Court
For the Northern District of California
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MITSUI O.S.K. LINES, LTD.,
)
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Plaintiff,
)
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v.
)
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SEAMASTER LOGISTICS, INC., SUMMIT )
LOGISTICS INTERNATIONAL, INC.,
)
KESCO CONTRAINER LINE, INC.; KESCO )
SHIPPING, INC., and DOES 1 through )
20,
)
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Defendants.
)
)
Case Nos. 11-cv-02861-SC
10-cv-05591-SC
ORDER GRANTING PLAINTIFFS'
AND DEFENDANTS SEAMASTER
AND SUMMIT'S MOTIONS FOR
ATTORNEYS' FEES
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I.
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INTRODUCTION
Now before the Court are Plaintiff Mitsui O.S.K. Lines, Ltd.
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("MOL") and Defendants Seamaster Logistics, Inc. and Summit
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Logistics International, Inc.'s ("Defendants") cross-motions for
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attorneys' fees.
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(the "trucking case" or "'61 Case").
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Mot.").
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(the "freight re-rating case" or "'91 Case").
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("Defs.' Mot.").
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///
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///
MOL moves for fees in Case Number 11-cv-02861-SC
'61 Case ECF No. 264 ("MOL
Defendants move for fees in Case Number 10-cv-05591-SC
'91 Case ECF No. 199
Both motions are fully briefed,1 and both are suitable for
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decision without oral argument per Civil Local Rule 7-1(b).
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As
explained below, the Court GRANTS both parties' motions.
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5 II.
BACKGROUND
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MOL is an ocean carrier and common carrier of goods between
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the United States and foreign ports.
Defendants are non-vessel
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operating common carriers ("NVOCC").
MOL contracted with
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Defendants to carry goods to the United States and foreign ports.
United States District Court
For the Northern District of California
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All of these agreements were governed by a complicated array of
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bills of lading, tariffs, and service contracts.
After internal audits and a tip from another NVOCC led MOL to
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believe that Defendants were defrauding it in various ways, MOL
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sued Defendants.
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Defendants obtained ocean carriage from MOL at rates less than
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those established in MOL's published tariffs and federally filed
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service contracts.
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Defendants for violation of the Shipping Act of 1984 (the "Shipping
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Act"), 46 U.S.C. § 40101 et seq., breach of maritime contract, and
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accounting.
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conspired to induce MOL to pay for fake trucking shipments between
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inland factories and ports.
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Defendants under the federal Racketeer Influenced and Corrupt
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Organizations Act ("RICO"), 18 U.S.C. § 1962.
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claims for intentional and negligent misrepresentation and civil
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conspiracy.
In the freight re-rating case, MOL asserted that
Based on those undercharges, MOL sued
In the trucking case, MOL asserted that Defendants
Based on those allegations, MOL sued
MOL also asserted
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'61 Case ECF Nos. 278 ("Opp'n to MOL Mot."), 289 ("Reply ISO MOL
Mot."); '91 Case ECF Nos. 211 ("Opp'n to Defs.' Mot."), 216 ("Reply
ISO Defs.' Mot.").
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After a three-week trial, the Court found for MOL in the
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trucking case and against it in the freight re-rating case.
'91
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Case ECF No. 194 (Findings of Fact & Conclusions of Law ("FFCL")).
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Now MOL moves for attorneys' fees in the trucking case, and
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Defendants move for fees in the freight re-rating case.
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7 III.
ANALYSIS
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A.
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MOL requests fees based on the following provision of MOL's
MOL'S Motion for Fees
United States District Court
For the Northern District of California
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Tariff No. 138, which sets forth the terms and conditions of MOL's
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bill of lading and is incorporated into all Service Contracts
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between MOL and Defendants:
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The Merchant [Defendants] shall be liable to
the Carrier [MOL] for the payment of all
Freight and/or expenses including but not
limited to court costs, legal fee [sic] and
expenses incurred in collecting monies due
to the Carrier.
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MOL Mot. Ex. A ("Tariff") ¶ 11(5).
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include arbitration clauses that grant MOL several exceptions to
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otherwise-mandatory arbitration in disputes under the Service
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Contracts, though only the following exception is relevant to this
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case:
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MOL's Service Contracts also
. . . MOL may bring an action for unpaid
freight or charges due for transportation
services performed for Shipper in any court
of competent jurisdiction.
For purposes of
the
foregoing
exceptions,
the
Parties
consent to personal jurisdiction and venue
in
any
California
Court.
The
party
obligated to pay such sums shall be liable
to the Party owed such sums for interest on
the principal sum on and after the due date
plus reasonable attorney's fees and costs.
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Opp'n to MOL Mot. Ex. B ("Service Contract(s)") Clause 19(d).2
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Service Contracts further specify that they control in any
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conflicts with the incorporated Tariff.
The
Id. Clause 2.
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MOL argues that it is entitled to fees under the Tariff
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because it incurred expenses while attempting to collect the money
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Defendants tricked it into paying as part of their false trucking
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scheme.
Defendants respond that MOL is not entitled to fees in the
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MOL Mot. at 3-4.
trucking case because the Court cannot grant fees in a fraud case
United States District Court
For the Northern District of California
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absent a contract providing for fees, an equitable grant of fees in
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the interest of justice, or a statute or rule providing for fee-
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shifting.
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the Tariff is a contract providing for fees in this case,
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Defendants claim that the fee provision in the Tariff is restricted
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to the recovery of money due under the contract itself, which
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Defendants say excludes tort actions for fraud.
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Further, Defendants argue that the Service Contracts conflict with
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the Tariff's fee provision, such that the Service Contracts'
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narrower provision for fees under the arbitration clause restrict
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MOL's access to fees.
See Opp'n to MOL Mot. at 2.
As to MOL's argument that
Id. at 5-6.
Id.
As to how these agreements should be interpreted, the Service
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Contracts incorporate the Tariff and contain no surplusage, but the
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presence of two clauses that each contain a fee provision does not
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mean that the narrower provision in the Service Contracts cancels
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the broader one in the Tariff.
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provision is available to MOL in an action under the Service
The Service Contracts' fee
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Two particular Service Contracts were at issue in this case, but
since their relevant parts are identical, the Court cites them
generally as "Service Contracts" for purposes of this discussion.
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Contracts, as part of Clause 19(d)'s exception to the Service
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Contracts' otherwise-mandatory arbitration provision.
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finds that the Tariff's fee provision is separate from the Service
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Contracts' arbitration clause exception and not in conflict with
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it.
The Court
Further, the Court finds that that the expansive language of
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the clause allows the fee provision in the Tariff to apply
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generally to MOL's actions to collect monies due, since the Tariff
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renders Defendants liable to MOL for payment of all "Freight and/or
United States District Court
For the Northern District of California
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expenses . . . incurred in collecting monies due [to MOL]."
Tariff
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¶ 15(d).
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in the trucking case were actions undertaken to collect monies due.
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MOL was entitled to take back the money Defendants had tricked it
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into paying, and it incurred expenses doing so.
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clear that MOL's causes of action arose "out of or in connection
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with" the Tariff, since that document embodied the parties'
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relationship that gave rise to Defendants' fraud.
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v. Walt Disney Co., 185 F.3d 932, 939 (9th Cir. 1999).
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the Court finds that MOL is entitled to attorneys' fees in the
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trucking case.
The Court also finds that MOL's claims against Defendants
Further, it is
See Marsu, B.V.
Therefore
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Finally, after reviewing MOL's briefs and documentation, as
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well as Defendants' responses, the Court finds MOL's request for
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fees reasonable.
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fees.
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bases for or calculations of its requested fees, since MOL's main
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argument prevailed.
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///
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///
The Court awards MOL $703,403.50 in attorneys'
The Court declines to consider any of MOL's alternative
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B.
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MOL requested a total of $110,528.22 in costs.
MOL's Costs
'61 Case ECF
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No. 263 ("Bill of Costs").
Defendants timely filed an objection to
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MOL's Bill of Costs, requesting that MOL's recoverable costs be
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reduced to $18,893.81.
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MOL filed a brief in support of its Bill of Costs, requesting that
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the Court award MOL all costs not otherwise withdrawn.
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ECF No. 290.
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$75,543.81.
'61 Case ECF No. 281 ("Obj'n to Costs").
'61 Case
The Clerk of Court ultimately taxed a total of
'61 Case ECF No. 292 ("Taxation of Costs").
United States District Court
For the Northern District of California
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Defendants thereafter requested that the Court reduce the Clerk's
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Taxation of Costs by $20,490.66, because MOL had agreed to withdraw
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those costs but the Clerk did not account for MOL's withdrawal.
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'61 Case ECF No. 295 (Suppl. Decl. of Essick ISO Obj'n to Costs
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("Essick Supp. Decl.")); Essick Suppl. Decl. Ex. B ("MOL's
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Withdrawals").
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Aside from the withdrawn costs, which relate to printing fees
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and "other costs," Defendants object to five categories of costs:
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(1) fees of the clerk; (2) fees for service of summons and
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subpoena, and for private process servers; (3) fees for printed or
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electronically recorded transcripts necessarily obtained for use in
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the case; (4) fees for exemplification and copying; and (5)
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compensation of interpreters.
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Defendants claim that these costs should be disallowed, halved, or
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allocated to other defendants.
See Obj'n to Costs at 2-4.
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An award of costs to a prevailing party is routine under
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Federal Rule of Civil Procedure 54(d)(1) and 28 U.S.C. § 1920. In
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considering objections to a party's bill of costs, it is the
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district court's responsibility to exercise its discretion.
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See
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Assoc. Of Mexican–Am. Educators of Cal., 231 F.3d 572, 591–93 (9th
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Cir. 2000).
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The Court has reviewed MOL's Bill of Costs, Defendants'
supplemental statements.
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challenging the Clerk's Taxation of Costs, but their supplemental
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filings (filed after the Taxation of Costs) serve essentially the
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same purpose at this point.
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length why some of MOL's requested costs were disallowed, the Clerk
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United States District Court
Objections, the Clerk's Taxation of Costs, and Defendants'
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For the Northern District of California
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specified which Local Rules rendered some of MOL's requested costs
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unrecoverable.
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reviewed the Rules in relation to the requested costs, finds the
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Clerk's decision appropriate, except where the Clerk taxed costs
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that MOL had specifically withdrawn.
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to costs related to cases in which it did not prevail, for costs
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that the Local Rules do not permit, or for costs it withdrew.
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Defendants have not filed a formal motion
Though the Clerk did not state at
See Taxation of Costs at 2.
The Court, having
In short, MOL is not entitled
As for Defendants' arguments about why MOL's costs should be
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reduced further, the Court declines to halve costs (like certain
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depositions) that Defendants claim are applicable to both the
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freight re-rating case and the trucking case, since it is
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impossible to partition them without accounting for relevance or
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sunk costs.
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certain costs to Defendants' co-defendant Kesco Container.
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Finally, the Court declines to disallow costs that are taxable
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under the Local Rules, like graphic design or printing services
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that were reasonably necessary for trial.
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For the same reason the Court declines to allocate
Accordingly, the Court OVERRULES all of Defendants' objections
except those related to the withdrawn costs.
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The Clerk should
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disallow MOL's costs for fees and disbursements for printing
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($4,149.08) and for "other costs" ($16,341.58).
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Decl.; MOL's Withdrawals at 1-4.
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costs of $55,053.15 for MOL, as opposed to $75,543.81.
See Essick Supp.
The Clerk should accordingly tax
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C.
Seamaster and Summit's Motion for Fees
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Defendants move for fees in the freight re-rating case.
They
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argue that California Civil Code section 1717 entitles them to fees
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in this case because they were the "prevailing parties."
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Def.'s Mot. at 2-4.
See
Now the Court must decide whether to grant
United States District Court
For the Northern District of California
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Defendants fees under California Civil Code section 1717(a), which
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provides as follows:
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In any action on a contract, where the
contract
specifically
provides
that
attorney's
fees
and
costs,
which
are
incurred to enforce that contract, shall be
awarded either to one of the parties or to
the prevailing party, then the party who is
determined to be the party prevailing on the
contract, whether he or she is the party
specified in the contract or not, shall be
entitled to reasonable attorney's fees in
addition to other costs.
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Actions "on a contract" are not just breach of contract
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actions.
"On a contract" extends to any action involving a
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contract under which one of the parties could recover fees after
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prevailing in a lawsuit.
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4th 1591, 1601 (Cal. Ct. App. 2011).
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which a defendant claims to be the prevailing party in an action on
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a contract, the California Supreme Court has stated that "when a
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defendant defeats recovery by the plaintiff on the only contract
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claim in the action, the defendant is the party prevailing on the
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contract under section 1717 as a matter of law."
See In re Tobacco Cases I, 124 Cal. App.
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For cases like this one, in
Hsu v. Abbara, 9
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Cal. 4th 863, 876 (Cal. 1995).
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prevailed, the Court must consider the extent to which each party
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succeeded and failed in its contentions on the contract claims.
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Id.
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purpose of section 1717: to establish a mutuality of remedies when
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a contractual provision makes recovery of fees available for only
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one party to an action.
All of these considerations are meant to serve the legislative
Id. at 870.
Defendants argue that the Court should apply California law on
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In determining which party
the attorneys' fees issue because the Service Contracts (the
United States District Court
For the Northern District of California
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underlying contracts in the freight re-rating case) include the
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following choice of law provision: "This Contract is subject to the
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U.S. Shipping Act of 1984, as amended by the Ocean Shipping Reform
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Act of 1998, and shall otherwise be construed and governed by the
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laws of the State of California, except for its choice of law
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rules."
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Accordingly, Defendants assert that under California law, they are
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the "prevailing parties" in the freight re-rating action because
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they successfully defended against all of MOL's claims based on the
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Service Contracts.
Service Contracts Cl. 19(d) (emphasis added).
MOL argues that a Ninth Circuit case, Roy Allen Slurry Seal v.
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Laborers International Union, 241 F.3d 1142, 1146 (9th Cir. 2001),
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does not allow the Court to apply California law because the basis
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of jurisdiction in this case is maritime or federal question
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jurisdiction, not diversity jurisdiction.
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at 2.
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Contracts is reciprocal, not unilateral, obviating section 1717
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because it only applies to unilateral fee provisions.
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See Opp'n to Defs.' Mot.
MOL also argues that the fee provision in the Service
MOL is wrong on both points.
Id. at 3.
First, California law applies to
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this Clause even though the Court is not exercising diversity
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jurisdiction over this case.
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and the contract is indisputably governed by California law, not
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any statutory provision or federal common law.
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Cl. 19(a).
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Labor Management Relations Act, which the Ninth Circuit held
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preempts California Civil Code section 1717 because section 1717
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would otherwise disrupt the federal government's interest in the
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uniformity of federal labor law and the interpretation of
This is an action "on the contract,"
Service Contracts
MOL's authority, Roy Allen, primarily concerned the
United States District Court
For the Northern District of California
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collective bargaining agreements.
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Circuit in Roy Allen did not indicate that it meant to preclude
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federal courts from applying California law in an action on a
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contract explicitly governed by California law.
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Roy Allen Court did not address Resolution Trust Corporation v.
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Midwest Federal Savings Bank, 36 F.3d 785 (9th Cir. 1993), which
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specifically directs district courts to apply state law in cases
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like this one unless the claim for fees arose under a federal
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statute.
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to that rule for cases in which "issues peculiar to . . . federal
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law" were litigated, but the Supreme Court overruled the case that
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was the basis for that exception.
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Am. v. Pac. Gas & Elec. Co., 549 U.S. 443, 451-52 (2007)
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(abrogating In re Fobian, 951 F.2d 1149 (9th Cir. 1991)).
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Therefore the Court finds that the fee provision in this case is
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governed by California law, and no federal issue explicitly or
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implicitly preempts the application of California Civil Code
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section 1717 in this case.
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36 F.3d at 799.
241 F.3d at 1146.
The Ninth
Significantly, the
Resolution Trust included an exception
Travelers Cas. and Sur. Co. of
The Court finds that the freight re-rating case was an action
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on a contract.
All of MOL's causes of action were based on the
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Service Contracts, and under those contracts, MOL was entitled to
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fees.
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parties in the freight re-rating case.
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freight re-rating case as much as Defendants "won" it, but the
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decision was "purely good news" for Defendants, since they were not
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liable for any cause of action on the contract, and "purely bad
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news" for MOL, which lost on every claim.
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876 ("[W]hen the decision on the litigated contract claims is
The Court also finds that Defendants were the prevailing
In one sense, MOL lost the
See Hsu, 9 Cal. 4th at
United States District Court
For the Northern District of California
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purely good news for one party and bad news for the other[,] the
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Courts of Appeal have recognized that a trial court has no
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discretion to deny attorney fees to the successful litigant.").
Accordingly, the Court finds that the balance of good and bad
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news favors Defendants, whose definition of a critical contract
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term was a central part of the Court's holding in the freight re-
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rating case.
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mooted counterclaims in this analysis, Defendants would still be
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the prevailing party, since all of their counterclaims were
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contingent on their being found liable to MOL in the freight re-
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rating case, which they were not.
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Defendants are entitled to reasonable attorneys' fees under
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California Civil Code section 1717.3
Even if the Court considered Defendants' abandoned or
The Court therefore finds that
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MOL's attempt to claim that the fee provision of the Service
Contracts is not unilateral relies on an out-of-context quotation
from the contract. MOL quotes the part of the Service Contracts
that states only "[t]he party obligated to pay such sums shall be
liable to the party owed such sums." However, the preceding
sentences of the Service Contracts indicate that only MOL is
permitted to sue for "such sums" (i.e., attorneys' fees). No other
party to the contract can do the same. The Court therefore finds
that the fee provision is unilateral.
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Further, the Court finds Defendants' requested fees reasonable
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and well documented.
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The Court awards Defendants $580,426.11 in
attorneys' fees.
Separately, MOL claims that awarding fees when Defendants have
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been found liable for fraud in the trucking case would be
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fundamentally unjust and inequitable.
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Court to deny Defendants' motion for fees.
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do so.
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rating case, not the trucking case.
Therefore MOL urges the
The Court declines to
Defendants request fees in relation to the freight reMOL lost the freight re-rating
United States District Court
For the Northern District of California
10
case, and Defendants prevailed.
Under the applicable law, they are
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therefore entitled to what they paid to defend themselves against
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MOL.
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defending against MOL's meritless action on the contract.
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///
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///
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///
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///
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///
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///
It is not unjust or inequitable to award Defendants fees for
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1 IV.
CONCLUSION
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Per above, the Court GRANTS Plaintiff Mitsui O.S.K. Lines,
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Ltd. and Defendants Seamaster Logistics, Inc. and Summit Logistics
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International, Inc.'s motions for attorneys' fees.
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AWARDS Plaintiff $703,403.50 and Defendants $580,426.11 in
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attorneys' fees.
The Court
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As for Plaintiff's Bill of Costs, Defendants' objections to
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portions of Plaintiff's requested costs that Plaintiff agreed to
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withdraw -- fees and disbursements for printing, and "other costs"
United States District Court
For the Northern District of California
10
-- are SUSTAINED.
All of Defendants' other objections are
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OVERRULED.
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Defendants for fees and disbursements for printing ($4,149.08) and
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for "other costs" ($16,341.58).
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tax costs totaling $55,053.15 for MOL and against Defendants, in
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accordance with this Order.
The Clerk should disallow the amounts it taxed against
The Court requests that the Clerk
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IT IS SO ORDERED.
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Dated: June ___, 2013
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UNITED STATES DISTRICT JUDGE
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