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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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 MITSUI O.S.K. LINES, LTD., ) ) Plaintiff, ) ) v. ) ) SEAMASTER LOGISTICS, INC., SUMMIT ) LOGISTICS INTERNATIONAL, INC., ) KESCO CONTRAINER LINE, INC.; KESCO ) SHIPPING, INC., and DOES 1 through ) 20, ) ) Defendants. ) ) Case Nos. 11-cv-02861-SC 10-cv-05591-SC ORDER GRANTING PLAINTIFFS' AND DEFENDANTS SEAMASTER AND SUMMIT'S MOTIONS FOR ATTORNEYS' FEES 17 18 I. 19 INTRODUCTION Now before the Court are Plaintiff Mitsui O.S.K. Lines, Ltd. 20 ("MOL") and Defendants Seamaster Logistics, Inc. and Summit 21 Logistics International, Inc.'s ("Defendants") cross-motions for 22 attorneys' fees. 23 (the "trucking case" or "'61 Case"). 24 Mot."). 25 (the "freight re-rating case" or "'91 Case"). 26 ("Defs.' Mot."). 27 /// 28 /// 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 1 2 decision without oral argument per Civil Local Rule 7-1(b). 3 As explained below, the Court GRANTS both parties' motions. 4 5 II. BACKGROUND 6 MOL is an ocean carrier and common carrier of goods between 7 the United States and foreign ports. Defendants are non-vessel 8 operating common carriers ("NVOCC"). MOL contracted with 9 Defendants to carry goods to the United States and foreign ports. United States District Court For the Northern District of California 10 All of these agreements were governed by a complicated array of 11 bills of lading, tariffs, and service contracts. After internal audits and a tip from another NVOCC led MOL to 12 13 believe that Defendants were defrauding it in various ways, MOL 14 sued Defendants. 15 Defendants obtained ocean carriage from MOL at rates less than 16 those established in MOL's published tariffs and federally filed 17 service contracts. 18 Defendants for violation of the Shipping Act of 1984 (the "Shipping 19 Act"), 46 U.S.C. § 40101 et seq., breach of maritime contract, and 20 accounting. 21 conspired to induce MOL to pay for fake trucking shipments between 22 inland factories and ports. 23 Defendants under the federal Racketeer Influenced and Corrupt 24 Organizations Act ("RICO"), 18 U.S.C. § 1962. 25 claims for intentional and negligent misrepresentation and civil 26 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 27 28 1 '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."). 2 After a three-week trial, the Court found for MOL in the 1 2 trucking case and against it in the freight re-rating case. '91 3 Case ECF No. 194 (Findings of Fact & Conclusions of Law ("FFCL")). 4 Now MOL moves for attorneys' fees in the trucking case, and 5 Defendants move for fees in the freight re-rating case. 6 7 III. ANALYSIS 8 A. 9 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 10 Tariff No. 138, which sets forth the terms and conditions of MOL's 11 bill of lading and is incorporated into all Service Contracts 12 between MOL and Defendants: 13 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. 14 15 16 17 MOL Mot. Ex. A ("Tariff") ¶ 11(5). 18 include arbitration clauses that grant MOL several exceptions to 19 otherwise-mandatory arbitration in disputes under the Service 20 Contracts, though only the following exception is relevant to this 21 case: 22 23 24 25 26 27 28 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. 3 1 Opp'n to MOL Mot. Ex. B ("Service Contract(s)") Clause 19(d).2 2 Service Contracts further specify that they control in any 3 conflicts with the incorporated Tariff. The Id. Clause 2. 4 MOL argues that it is entitled to fees under the Tariff 5 because it incurred expenses while attempting to collect the money 6 Defendants tricked it into paying as part of their false trucking 7 scheme. Defendants respond that MOL is not entitled to fees in the 8 9 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 10 absent a contract providing for fees, an equitable grant of fees in 11 the interest of justice, or a statute or rule providing for fee- 12 shifting. 13 the Tariff is a contract providing for fees in this case, 14 Defendants claim that the fee provision in the Tariff is restricted 15 to the recovery of money due under the contract itself, which 16 Defendants say excludes tort actions for fraud. 17 Further, Defendants argue that the Service Contracts conflict with 18 the Tariff's fee provision, such that the Service Contracts' 19 narrower provision for fees under the arbitration clause restrict 20 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 21 22 Contracts incorporate the Tariff and contain no surplusage, but the 23 presence of two clauses that each contain a fee provision does not 24 mean that the narrower provision in the Service Contracts cancels 25 the broader one in the Tariff. 26 provision is available to MOL in an action under the Service The Service Contracts' fee 27 28 2 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. 4 1 Contracts, as part of Clause 19(d)'s exception to the Service 2 Contracts' otherwise-mandatory arbitration provision. 3 finds that the Tariff's fee provision is separate from the Service 4 Contracts' arbitration clause exception and not in conflict with 5 it. The Court Further, the Court finds that that the expansive language of 6 7 the clause allows the fee provision in the Tariff to apply 8 generally to MOL's actions to collect monies due, since the Tariff 9 renders Defendants liable to MOL for payment of all "Freight and/or United States District Court For the Northern District of California 10 expenses . . . incurred in collecting monies due [to MOL]." Tariff 11 ¶ 15(d). 12 in the trucking case were actions undertaken to collect monies due. 13 MOL was entitled to take back the money Defendants had tricked it 14 into paying, and it incurred expenses doing so. 15 clear that MOL's causes of action arose "out of or in connection 16 with" the Tariff, since that document embodied the parties' 17 relationship that gave rise to Defendants' fraud. 18 v. Walt Disney Co., 185 F.3d 932, 939 (9th Cir. 1999). 19 the Court finds that MOL is entitled to attorneys' fees in the 20 trucking case. The Court also finds that MOL's claims against Defendants Further, it is See Marsu, B.V. Therefore 21 Finally, after reviewing MOL's briefs and documentation, as 22 well as Defendants' responses, the Court finds MOL's request for 23 fees reasonable. 24 fees. 25 bases for or calculations of its requested fees, since MOL's main 26 argument prevailed. 27 /// 28 /// The Court awards MOL $703,403.50 in attorneys' The Court declines to consider any of MOL's alternative 5 1 B. 2 MOL requested a total of $110,528.22 in costs. MOL's Costs '61 Case ECF 3 No. 263 ("Bill of Costs"). Defendants timely filed an objection to 4 MOL's Bill of Costs, requesting that MOL's recoverable costs be 5 reduced to $18,893.81. 6 MOL filed a brief in support of its Bill of Costs, requesting that 7 the Court award MOL all costs not otherwise withdrawn. 8 ECF No. 290. 9 $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 10 Defendants thereafter requested that the Court reduce the Clerk's 11 Taxation of Costs by $20,490.66, because MOL had agreed to withdraw 12 those costs but the Clerk did not account for MOL's withdrawal. 13 '61 Case ECF No. 295 (Suppl. Decl. of Essick ISO Obj'n to Costs 14 ("Essick Supp. Decl.")); Essick Suppl. Decl. Ex. B ("MOL's 15 Withdrawals"). 16 Aside from the withdrawn costs, which relate to printing fees 17 and "other costs," Defendants object to five categories of costs: 18 (1) fees of the clerk; (2) fees for service of summons and 19 subpoena, and for private process servers; (3) fees for printed or 20 electronically recorded transcripts necessarily obtained for use in 21 the case; (4) fees for exemplification and copying; and (5) 22 compensation of interpreters. 23 Defendants claim that these costs should be disallowed, halved, or 24 allocated to other defendants. See Obj'n to Costs at 2-4. 25 An award of costs to a prevailing party is routine under 26 Federal Rule of Civil Procedure 54(d)(1) and 28 U.S.C. § 1920. In 27 considering objections to a party's bill of costs, it is the 28 district court's responsibility to exercise its discretion. 6 See 1 Assoc. Of Mexican–Am. Educators of Cal., 231 F.3d 572, 591–93 (9th 2 Cir. 2000). 3 The Court has reviewed MOL's Bill of Costs, Defendants' supplemental statements. 6 challenging the Clerk's Taxation of Costs, but their supplemental 7 filings (filed after the Taxation of Costs) serve essentially the 8 same purpose at this point. 9 length why some of MOL's requested costs were disallowed, the Clerk 10 United States District Court Objections, the Clerk's Taxation of Costs, and Defendants' 5 For the Northern District of California 4 specified which Local Rules rendered some of MOL's requested costs 11 unrecoverable. 12 reviewed the Rules in relation to the requested costs, finds the 13 Clerk's decision appropriate, except where the Clerk taxed costs 14 that MOL had specifically withdrawn. 15 to costs related to cases in which it did not prevail, for costs 16 that the Local Rules do not permit, or for costs it withdrew. 17 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 18 reduced further, the Court declines to halve costs (like certain 19 depositions) that Defendants claim are applicable to both the 20 freight re-rating case and the trucking case, since it is 21 impossible to partition them without accounting for relevance or 22 sunk costs. 23 certain costs to Defendants' co-defendant Kesco Container. 24 Finally, the Court declines to disallow costs that are taxable 25 under the Local Rules, like graphic design or printing services 26 that were reasonably necessary for trial. 27 28 For the same reason the Court declines to allocate Accordingly, the Court OVERRULES all of Defendants' objections except those related to the withdrawn costs. 7 The Clerk should 1 disallow MOL's costs for fees and disbursements for printing 2 ($4,149.08) and for "other costs" ($16,341.58). 3 Decl.; MOL's Withdrawals at 1-4. 4 costs of $55,053.15 for MOL, as opposed to $75,543.81. See Essick Supp. The Clerk should accordingly tax 5 C. Seamaster and Summit's Motion for Fees 6 Defendants move for fees in the freight re-rating case. They 7 argue that California Civil Code section 1717 entitles them to fees 8 in this case because they were the "prevailing parties." 9 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 10 Defendants fees under California Civil Code section 1717(a), which 11 provides as follows: 12 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. 13 14 15 16 17 18 19 Actions "on a contract" are not just breach of contract 20 actions. "On a contract" extends to any action involving a 21 contract under which one of the parties could recover fees after 22 prevailing in a lawsuit. 23 4th 1591, 1601 (Cal. Ct. App. 2011). 24 which a defendant claims to be the prevailing party in an action on 25 a contract, the California Supreme Court has stated that "when a 26 defendant defeats recovery by the plaintiff on the only contract 27 claim in the action, the defendant is the party prevailing on the 28 contract under section 1717 as a matter of law." See In re Tobacco Cases I, 124 Cal. App. 8 For cases like this one, in Hsu v. Abbara, 9 1 Cal. 4th 863, 876 (Cal. 1995). 2 prevailed, the Court must consider the extent to which each party 3 succeeded and failed in its contentions on the contract claims. 4 Id. 5 purpose of section 1717: to establish a mutuality of remedies when 6 a contractual provision makes recovery of fees available for only 7 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 8 9 In determining which party the attorneys' fees issue because the Service Contracts (the United States District Court For the Northern District of California 10 underlying contracts in the freight re-rating case) include the 11 following choice of law provision: "This Contract is subject to the 12 U.S. Shipping Act of 1984, as amended by the Ocean Shipping Reform 13 Act of 1998, and shall otherwise be construed and governed by the 14 laws of the State of California, except for its choice of law 15 rules." 16 Accordingly, Defendants assert that under California law, they are 17 the "prevailing parties" in the freight re-rating action because 18 they successfully defended against all of MOL's claims based on the 19 Service Contracts. Service Contracts Cl. 19(d) (emphasis added). MOL argues that a Ninth Circuit case, Roy Allen Slurry Seal v. 20 21 Laborers International Union, 241 F.3d 1142, 1146 (9th Cir. 2001), 22 does not allow the Court to apply California law because the basis 23 of jurisdiction in this case is maritime or federal question 24 jurisdiction, not diversity jurisdiction. 25 at 2. 26 Contracts is reciprocal, not unilateral, obviating section 1717 27 because it only applies to unilateral fee provisions. 28 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 9 1 this Clause even though the Court is not exercising diversity 2 jurisdiction over this case. 3 and the contract is indisputably governed by California law, not 4 any statutory provision or federal common law. 5 Cl. 19(a). 6 Labor Management Relations Act, which the Ninth Circuit held 7 preempts California Civil Code section 1717 because section 1717 8 would otherwise disrupt the federal government's interest in the 9 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 10 collective bargaining agreements. 11 Circuit in Roy Allen did not indicate that it meant to preclude 12 federal courts from applying California law in an action on a 13 contract explicitly governed by California law. 14 Roy Allen Court did not address Resolution Trust Corporation v. 15 Midwest Federal Savings Bank, 36 F.3d 785 (9th Cir. 1993), which 16 specifically directs district courts to apply state law in cases 17 like this one unless the claim for fees arose under a federal 18 statute. 19 to that rule for cases in which "issues peculiar to . . . federal 20 law" were litigated, but the Supreme Court overruled the case that 21 was the basis for that exception. 22 Am. v. Pac. Gas & Elec. Co., 549 U.S. 443, 451-52 (2007) 23 (abrogating In re Fobian, 951 F.2d 1149 (9th Cir. 1991)). 24 Therefore the Court finds that the fee provision in this case is 25 governed by California law, and no federal issue explicitly or 26 implicitly preempts the application of California Civil Code 27 section 1717 in this case. 28 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 10 1 on a contract. All of MOL's causes of action were based on the 2 Service Contracts, and under those contracts, MOL was entitled to 3 fees. 4 parties in the freight re-rating case. 5 freight re-rating case as much as Defendants "won" it, but the 6 decision was "purely good news" for Defendants, since they were not 7 liable for any cause of action on the contract, and "purely bad 8 news" for MOL, which lost on every claim. 9 876 ("[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 10 purely good news for one party and bad news for the other[,] the 11 Courts of Appeal have recognized that a trial court has no 12 discretion to deny attorney fees to the successful litigant."). Accordingly, the Court finds that the balance of good and bad 13 14 news favors Defendants, whose definition of a critical contract 15 term was a central part of the Court's holding in the freight re- 16 rating case. 17 mooted counterclaims in this analysis, Defendants would still be 18 the prevailing party, since all of their counterclaims were 19 contingent on their being found liable to MOL in the freight re- 20 rating case, which they were not. 21 Defendants are entitled to reasonable attorneys' fees under 22 California Civil Code section 1717.3 Even if the Court considered Defendants' abandoned or The Court therefore finds that 23 24 25 26 27 28 3 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. 11 Further, the Court finds Defendants' requested fees reasonable 1 2 and well documented. 3 The Court awards Defendants $580,426.11 in attorneys' fees. Separately, MOL claims that awarding fees when Defendants have 4 5 been found liable for fraud in the trucking case would be 6 fundamentally unjust and inequitable. 7 Court to deny Defendants' motion for fees. 8 do so. 9 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 11 therefore entitled to what they paid to defend themselves against 12 MOL. 13 defending against MOL's meritless action on the contract. 14 /// 15 /// 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// It is not unjust or inequitable to award Defendants fees for 12 1 IV. CONCLUSION 2 Per above, the Court GRANTS Plaintiff Mitsui O.S.K. Lines, 3 Ltd. and Defendants Seamaster Logistics, Inc. and Summit Logistics 4 International, Inc.'s motions for attorneys' fees. 5 AWARDS Plaintiff $703,403.50 and Defendants $580,426.11 in 6 attorneys' fees. The Court 7 As for Plaintiff's Bill of Costs, Defendants' objections to 8 portions of Plaintiff's requested costs that Plaintiff agreed to 9 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 11 OVERRULED. 12 Defendants for fees and disbursements for printing ($4,149.08) and 13 for "other costs" ($16,341.58). 14 tax costs totaling $55,053.15 for MOL and against Defendants, in 15 accordance with this Order. The Clerk should disallow the amounts it taxed against The Court requests that the Clerk 16 17 IT IS SO ORDERED. 18 19 7 Dated: June ___, 2013 20 UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 13

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