In February 2021, Fluence Energy LLC (Fluence) contracted with Schenker Deutschland AG (Schenker), a Non-Vessel Operating Common Carrier (NVOCC), to transport lithium batteries from Hai Phong, Vietnam, to San Diego, California. On 1 March 2021, Schenker entered into a booking note with BBC Chartering Carriers GmbH & Co KG (BBC) to secure the BBC Finland to carry Fluence's cargo. On 15 March 2021, BBC entered into a time charter with Briese Schiffahrts GmbH & Co KG MS Filsum (Briese), the shipowner, requiring Briese to supply the vessel and crew, while BBC would handle the cargo loading. On 14 April 2021, BBC issued a bill of lading between it and Schenker. No cargo value was declared on the relevant sea waybills, the booking note, or the BBC bills of lading. Schenker never asked Fluence to provide a declared value for the cargo, and Fluence never asked Schenker to include a declared value. The sea waybills incorporated by reference the SCHENKERocean bill of lading. The booking note, the SCHENKERocean bill of lading, and the BBC bills of lading all contained a clause incorporating the language of § 4(5) of the Carriage of Goods by Sea Act of 1936 (COGSA), 46 USC §§ 1300-1315, which provides for a USD 500 per package liability limitation if no cargo value is declared.

En route from Vietnam, the vessel encountered tropical depression Surigae. The vessel diverted to Amori, Japan, where the cargo holds were opened, and damage to the cargo was apparent.

The parties brought various motions for summary judgment, motions to strike, a motion for adverse inference, and numerous objections. The defendants sought partial summary judgment, asking the Court to hold that Fluence was bound by COGSA's USD 500 package limitation. Fluence argued that it was not bound by the package limitation, in addition to seeking summary judgment on its claims for negligence and breach of contract against Schenker, the vessel's in rem liability, and breach of bailment as to all defendants.

Held: The motions for summary judgment with respect to whether the contract of carriage is private or common are denied. Summary judgment is granted in favour of all the defendants, holding that COGSA's USD 500 package limitation applies by force of contract.

Fluence argues that its contract is private carriage. The defendants argue that it is common carriage. This threshold question is important because if the contract is for common carriage, COGSA, including its package liability limitation, will apply. If the contract is for private carriage, the package liability limitation will only apply if properly incorporated into the contracts. None of the parties cite authority that binds the Court in distinguishing common and private carriage, and Ninth Circuit precedent is limited. Having considered the parties' arguments, the Court finds a dispute of fact as to whether the contract of carriage should be categorised as common or private carriage.

COGSA 'generally governs the responsibilities of carriers involved in the shipment of goods into the United States from ports outside the United States': Man Ferrostaal Inc v M/V Akili 763 F Supp 2d 599, 609 (SD NY 2011), affd on other grounds, 704 F 3d 77 (2d Cir 2012) (CMI299). COGSA does not apply, however, when the carrier has acted as a private carrier, rather than as a common carrier. The essential attribute distinguishing common carriage from private (contract) carriage has been the presence, or lack, of an offer of holding out to serve the public generally. Even so, courts have looked to other factors in distinguishing common carriage from private carriage. Accordingly, although the Court is interpreting a contract of carriage, the determination involves certain questions of fact specific to the relationships between, and conduct of, the parties.

Although Fluence hired a NVOCC, it argues that because the BBC Finland carried only Fluence's cargo, the contract was for private carriage. This Court agrees with United States v Ultramar Shipping Co 685 F Supp 887, 901 (SD NY 1987) that a vessel carrying only the cargo of one shipper does not alone make the arrangement one of private carriage. The defendants argue that common carriage was intended, and that the only reason that Fluence's cargo was the sole cargo is because Fluence increased its cargo load, making it very difficult for BBC to find additional cargo that would fit within those spaces not already occupied by Fluence. BBC points out that the booking note contains the term 'Last in/first out', making the case analogous to Ultramar. The Court agrees that the term supports the defendants' theory, because it implies that when the booking note was issued, the parties expected other shippers to load cargo on the BBC Finland. If Fluence's cargo was to be the only cargo, it would be unnecessary. Because competing evidence cannot be weighed at the summary judgment stage, the Court finds a dispute of material fact as to whether the contract constitutes private or common carriage. Accordingly, summary judgment is denied to all parties respecting the categorisation of the contract as common or private carriage.

The Court must next determine whether COGSA's USD 500 package limitation applies, and to which defendants. The Court's conclusion on the threshold issue of common versus private carriage complicates the analysis. If the contract is common carriage, the COGSA package limitation will apply, making much of the discussion below irrelevant. However, if the arrangement is private carriage, the Court must analyse whether COGSA's limitation was properly incorporated into the contract. Therefore, the Court must look to the terms of the contracts to determine if the defendants successfully incorporated COGSA's package limitation by providing proper notice to Fluence. Fluence argues that it was not given proper notice as required by the fair opportunity doctrine, because it was not provided copies of the contracts.

After reviewing the SCHENKERocean bill of lading, the Court finds that Schenker - identified as the carrier therein - satisfies its initial burden. The SCHENKERocean bill of lading contains sufficient language outlining the consequences of not declaring a higher value. Although Fluence claims that it was not provided the SCHENKERocean bill of lading, on the face (and first page) of the sea waybills - with which Fluence was provided - there is a box to declare the value of the cargo. Fluence cannot argue that it was not given notice to declare value, when the documents it concedes to receiving leaves an obvious space for this, and points to the terms associated with declaring value in the SCHENKERocean bill of lading. Nor can Fluence argue that it was not on notice of the SCHENKERocean bill of lading, given that the sea waybills clearly referenced and incorporated its terms.

Fluence points to the paramount clause on the last page of the sea waybills, which states:

The contract evidenced by this Waybill is deemed to be a contract of carriage as defined in Article 1(b) of the Hague Rules, Hague Visby Rules and the US COGSA. However, this Waybill is a non-negotiable document. It is not a bill of lading and no bill of lading will be issued. However, it is agreed that the Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment which would have been applicable in this Waybill if it were a bill of lading shall apply to this Waybill. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of the shipments to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply exactly the same way.

Fluence argues that this clause is a 'convoluted morass of ambiguities' and as such, the COGSA limitation does not apply here. If the Court were looking at only the sea waybills, it would agree with Fluence that the paramount clause attempting to incorporate COGSA would be insufficient to provide notice of the package limitation: see Pan American World Airways Inc v California Stevedore & Ballast Co 559 F 2d 1173, 1177 (9th Cir 1977) (CMI1798) (rejecting the argument that a paramount clause in the bills of lading could incorporate COGSA absent the required language). The paramount clause Fluence points to does not effectively incorporate the USD 500 package limit. This is irrelevant. As explained above, the sea waybills incorporate the long-form SCHENKERocean bill of lading, which does provide the necessary language for declaring value and sets forth the USD 500 package limitation: see Carman Tool & Abrasives Inc v Evergreen Lines 871 F 2d 897, 901 (9th Cir 1989) (CMI1625) 'The underlying premise has always been that, so long as the bill of lading, on its face, provides adequate notice of the liability limit and an opportunity to declare a higher value, the carrier has discharged its responsibility.' The paramount clause leaves open the possibility for a bill of lading to be issued, and the first page of the sea waybills points to the precise portions of the SCHENKERocean bill of lading providing COGSA's § 4(5) required language.

Finally, the Court finds that the protections of the USD 500 package limitation in the SCHENKERocean bill of lading also extend to the vessel per the language in cl 7(2), stating that 'such amount of the Carrier or the Vessel according to COGSA is US $500 per package or customary freight unit unless a declared value has been noted in accordance with Clause 7(3) below'. This is a Himalaya clause, which extends liability limitations to downstream parties: see Norfolk Southern Railway Co v Kirby 543 US 14, 20 n 2 (2004) (CMI1454).

The sea waybills and SCHENKERocean bill of lading extend COGSA's limitation to Schenker and the vessel, but not BBC. Nevertheless, BBC argues it is protected by COGSA's limitation in both the booking note and BBC bills of lading, because these protections cover downstream carriers under the law. Fluence argues that it is not bound by the booking note or BBC bills of lading because it was not a party to these agreements and never received them. BBC has the better argument. Both Fluence's and Schenker's evidence invoke the booking note, undermining Fluence's argument that it was not on notice of the booking note. The only real evidence that Fluence is not bound by the booking note is the fact that Fluence was not a party to it. But Fluence has essentially waived this argument by relying on the booking note in its arguments during this litigation. Accordingly, Fluence is judicially estopped from arguing that it is not bound by the terms of the booking note.

Although the analysis above is sufficient to bind Fluence to COGSA's USD 500 package limitation with respect to BBC, in the interest of justice, the Court also finds that Fluence is bound under the Supreme Court's holdings in Norfolk Southern Railway Co v Kirby. The Supreme Court held (at 34) that 'an intermediary binds a cargo owner to the liability limitations it negotiates with downstream carriers'. The Court finds that the holdings in Kirby extend COGSA's protections - as contracted for - to BBC.

Fluence attempts to distinguish Kirby as a case involving common carriage, arguing that the holdings do not apply to a situation involving private carriage. The Court disagrees. Although the Kirby holdings are derived from common carriage precedent, the Supreme Court did not limit its reach to common carriage. If this were a situation where Fluence had contracted directly with the vessel/Briese, which happens often in private carriage, there would be no downstream carriers or limited agency relationship between Schenker and Fluence, making Kirby less applicable. However, a determination of whether, and to what extent, Kirby applies will depend on the facts of each case. Here, because the parties' relationships mirror those in Kirby - and certain undisputed facts show the agreement between the parties share aspects of a common carriage arrangement - the Court finds Kirby applicable. This is especially true, given that Kirby's holding that a different rule would undermine COGSA's regime, and that the parties in this case incorporated COGSA into multiple contracts. Accordingly, despite Fluence not being a party to the BBC bills of lading, the protections of the USD 500 package limitation negotiated by Schenker in arranging for the carriage of Fluence's cargo extend to BBC.