In September 2006, plums were shipped under four separate bills of lading from Oakland, California, to Hong Kong. The plums were allegedly spoiled by the time of their delivery in Hong Kong. The four bills of lading were issued by or on behalf of Kawasaki Kisen Kaisha Ltd and K Line America Inc (the defendants). Kingsburg Orchards (the insured) took out a cargo insurance policy with Continental Insurance Co (the plaintiff) to cover the shipment of plums.

The plaintiff commenced proceedings in a United States state court and asserted four causes of action under state law: breach of contract, bailment, negligence, and breach of § 2194 of the California Civil Code. The plaintiff alleged that the defendants received the plums in Oakland in good order and condition but delivered the plums in Hong Kong damaged due to exposure to improper temperature.

In December 2007, the defendants removed the case from the state court to the federal court under 28 USC § 1441(b). The defendants asserted that the dispute was governed by the United States Carriage of Goods by Sea Act (COGSA). Desiring to have the case remanded back to the state court, the plaintiff filed a motion to remand.

Held: Motion to remand denied.

COGSA provides an exclusive remedy and therefore completely pre-empts state law. The Court reasoned as follows.

First, the text of COGSA implies that it was to supersede other laws. The Court highlighted that COGSA imposes specific duties on the carrier between the 'tackles': ie from the time 'when the goods are loaded on to the time when they are discharged from the ship'. In contrast, COGSA explicitly preserves laws that apply before or after this 'tackle-to-tackle' period. By expressly stating that COGSA does not supersede laws outside the 'tackle-to-tackle' period, Congress evidenced an assumption that COGSA does supersede laws during the 'tackle-to-tackle' period. Also, the decision of the Supreme Court in Norfolk Southern Railway Co v Kirby 543 US 14, 28-29, 125 S Ct 385, 160 L Ed 2d 283 (2004) (CMI1454) makes it clear that state law must yield to COGSA where COGSA applies. Although some older cases had found that Congress did not intend for COGSA to completely pre-empt state law, these cases are either distinguishable or did not provide a full analysis.

Second, COGSA sets out a comprehensive regulation scheme which provides an exclusive remedy and leaves no state remedy in its wake. COGSA applies to '[e]very bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade...'. COGSA imposes affirmative duties on carriers and carves out immunities for 'uncontrollable losses' (eg acts of god, war, strikes, etc). COGSA protects shippers by providing a default liability limitation of USD 500 per package. Any agreement limiting liability below that sum is void, but parties are allowed to negotiate higher liability limitations. Claims for damages must be brought within one year of delivery of the cargo. Under COGSA, a shipper can establish a prima facie case by producing a valid bill of lading showing that the cargo was damaged. The burden then shifts to the carrier to prove that the damage resulted from a cause for which it is not liable. In short, COGSA is a comprehensive system of regulations that covers the entire subject and leaves no room for state law.

On the facts, the plaintiff's allegations against the defendants contain the elements of a prima facie COGSA claim. Therefore, federal maritime law and COGSA apply to this dispute, which should be decided by a federal court.