John Bee Corp (the plaintiff) filed its complaint in the Los Angeles Superior Court on 22 October 2012, alleging claims for breach of contract and negligence against CFR Rinkens LLC (doing business as Rinkens International), and CFR Line, erroneously sued as Rinkens International (also known as CFR Lines/Rinkens (CFR)), and Christopher Lemire (collectively, the defendants).

The plaintiff alleged that the defendants held themselves out as experts in the shipment of automobiles from the United States to foreign destinations. On 1 March 2012, the parties entered into an oral contract. The defendants agreed to ship for USD 4,800 the plaintiff's three antique cars, plus assorted machinery and equipment, from Los Angeles, California, to Barranquilla, Colombia. The plaintiff alleged breach of the contract by the defendants by failing to timely and correctly ship the goods. According to the plaintiff, the defendants demanded an additional fee before shipment and were not familiar with the laws, rules, regulations, and procedures for shipping older used vehicles to Colombia.

A bill of lading was issued for the shipment of the plaintiff's cars. The clause paramount on the bill of lading provided that '[t]he provisions stated in COGSA ... shall govern before the goods are loaded on and after they are discharged from the ship and throughout the entire time the goods are in the custody of the carrier'.

On 5 December 2012, the defendants removed the action to the federal court system, asserting jurisdiction under the United States Carriage of Goods by Sea Act (COGSA); the Harter Act; and/or federal general maritime law. On 16 January 2013, the plaintiff filed a motion to remand this action back to the state court, which the defendants opposed. The defendants argued that the plaintiff's claims arise under federal law, because COGSA completely pre-empts state law claims.

The issues were therefore: (1) whether COGSA completely pre-empts state law; and (2) whether COGSA applies to the plaintiff's claims.

Held: Motion denied.

While observing that case law had differing conclusions on the issue of whether COGSA completely pre-empts state law, and that the Supreme Court and the Ninth Circuit had no direct answer to this issue, the court found that COGSA completely pre-empts state law and reasoned as follows.

First, COGSA's text implied that Congress intended for COGSA to supersede other laws and provide an exclusive remedy. COGSA explicitly preserves laws that apply to conduct outside the 'tackle-to-tackle' period (in the absence of a contractual extension of COGSA to those periods), stating:

Nothing in this chapter shall be construed as superseding any part of sections 190 to 196 of this title, or of any other law which would be applicable in the absence of this chapter, insofar as they relate to the duties, responsibilities, and liabilities of the ship or carrier prior to the time when the goods are loaded on or after the time they are discharged from the ship.

Second, COGSA provides the kind of comprehensive regulatory scheme that the Supreme Court in Beneficial National Bank v Anderson 539 US 1 (2003) found to be completely pre-emptive. COGSA 'governs the terms of bills of lading issued by ocean carriers engaged in foreign trade': Kawasaki Kisen Kaisha Ltd v Regal-Beloit Corp 561 US 89 (2010) (CMI1455). COGSA applies to every bill of lading or similar document that is evidence of a contract for the carriage of goods by sea to or from ports of the United States in foreign trade: COGSA § 1(b). 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' COGSA normally only applies during the tackle-to-tackle time period: COGSA § 1(e). This duration may be extended by contract: COGSA § 7. COGSA sets forth substantive responsibilities and liabilities of the carrier and shipper. It provides immunities. It sets a minimum limitation of liability of USD 500 per package: COGSA § 4(5). It provides for a one-year statute of limitations: COGSA § 3(6). COGSA's regulations cover the entire subject. There is no room for state law.

Third, the case of Norfolk Southern Railway Co v Kirby 543 US 14 (2004) (Kirby) (CMI1454) clarified that 'state law must yield to federal maritime law in general and to COGSA where it applies'. In Kirby, a shipper contracted with a carrier to transport its goods from Australia to Alabama. After arriving in Georgia from Australia following the sea-leg of the journey, the goods were loaded onto a train to travel from Georgia to Alabama, but the train derailed en route, causing damage to the goods. The shipper brought tort and contract claims. The Supreme Court held that federal maritime law, not state law, controlled the action, stating that '[w]hen a contract is a maritime one, and the dispute is not inherently local, federal law controls the contract interpretation'. It reasoned that applying federal law would protect the 'uniformity of general maritime law' because '[c]onfusion and inefficiency will inevitably result if more than one body of law governs a given contract's meaning'. Further, because the parties had extended COGSA by contract to cover the entire period that the goods were in the carrier's control, COGSA's liability limitation applied even though the goods were damaged during the land leg. The Supreme Court noted that '[i]n protecting the uniformity of federal maritime law, we also reinforce the liability regime Congress established in COGSA'. Thus, Kirby suggests that where COGSA applies, its remedy is exclusive and it should pre-empt state-law claims.

The Court noted that some decisions contradict this conclusion by holding that COGSA is not completely pre-emptive. Nevertheless, Hemphill v Transfresh Corp 1998 WL 320840, 1998 US Dist LEXIS 8889 was distinguished by the Court as it was a pre-Kirby decision and did not provide a full analysis of the pre-emption issue. Two other post-Kirby district court cases were distinguished due to limited analysis. Both failed to properly discuss the key decisions like Kirby and Polo Ralph Lauren LP v Tropical Shipping & Construction Co Ltd 215 F 3d 1217 (11th Cir 2000) (CMI1536). In any event, the Court noted that there were many persuasive decisions, both before and after Kirby, holding that COGSA was pre-emptive.

The Court then turned to the plaintiff's claims and found that COGSA applied to these claims and pre-empted them.

The plaintiff's claims are only pre-empted if COGSA applies to the facts at hand. By its own terms, COGSA applies to every bill of lading or similar document 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 § 1(b). In this case, the clause paramount on the bill of lading indicates that the parties have contractually extended COGSA's application to the entire time in which the vehicles were in the defendants' control: COGSA § 7.

The plaintiff alleged a loss caused by delay in shipment; ie that the defendants failed to 'timely and correctly ship the subject vehicles'. The Court stated that COGSA applied in the event of such a delay. The court referred to Mitsui Marine Fire & Insurance Co Ltd v Direct Container Line Inc 119 F Supp 2d 412, 414 (SDNY 2000) which stated that '[t]he concept of 'loss or damage' in COGSA Section 4 includes both physical damage and loss or damage caused by delay. Therefore, a carrier can be liable under COGSA for financial loss caused by delayed delivery'.