United States District Court, Southern District of New York
January 23, 1990
HOFFMAN-LAROCHE, INC., PLAINTIFF,
M/V TFL JEFFERSON, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Robert L. Carter, District Judge.
Plaintiff Hoffmann-LaRoche brought this action against
defendants Panalpina, Ltd. and Panalpina A.G. (collectively
"Panalpina")*fn1 seeking damages for, inter alia, the loss of
a shipment of pharmaceuticals during a voyage of the S/S TFL
Jefferson from Bremerhaven, Switzerland to New York in December
of 1985. Panalpina contracted with plaintiff to ship
plaintiff's cargo on the voyage in question but failed to pass
on to the ocean carrier plaintiff's instructions requiring
under deck stowage. The cargo was stowed on the weather deck of
the vessel and was lost at sea during the voyage.
Currently before the court is a motion by Panalpina for
summary judgment pursuant to Rule 56, F.R.Civ.P. Panalpina
seeks a judgment dismissing plaintiff's action pursuant to a
forum-selection clause contained in a "shipping advice" issued
by Panalpina to plaintiff. Such documents were issued in
connection with both the shipment at issue and other shipments
over an extended period. These documents place jurisdiction in
Panalpina also seeks dismissal on the merits, arguing that
plaintiff was on notice that its cargo could not be stowed as
it had requested due to an applicable tariff restriction.
Alternatively, Panalpina seeks to limit plaintiff's potential
recovery to 26,000 Swiss francs pursuant to the shipping advice
and the General Conditions of the Swiss Forwarders' Association
which that document incorporates by reference.
Plaintiff responds that Panalpina acted as a "common carrier"
under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C.
App. § 1300 et seq. (1975 & Supp. 1989), regarding the shipment
at issue and that, under that statute, any forum-selection
provision is unenforceable. Plaintiff also challenges the
forum-selection clause on the ground of laches. As to the
merits of its claim, plaintiff asserts that it was unaware of
the purported tariff provisions and that Panalpina may
therefore not rely upon them to escape liability. Finally,
plaintiff asserts that Panalpina's failure to forward
plaintiff's instructions regarding stowage of its cargo to the
vessel operators invalidates any limitation of liability.
The central inquiry in the disposition of this motion is
whether the agreement
in issue is governed by COGSA. If the statute is applicable,
then the forum-selection clause upon which Panalpina seeks to
rely is unenforceable. Indussa Corp. v. S.S. Ranborg,
377 F.2d 200, 204 (2d Cir. 1967). Otherwise, the court must determine
the validity of the clause under the principles articulated by
the Supreme Court in M/S Bremen v. Zapata Off-Shore Co.,
407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), and the doctrine
of laches raised by plaintiff. The applicability of COGSA
hinges in turn upon whether Panalpina may properly be
characterized as a "common carrier" under the statute, 46
U.S.C.App. § 1303(8), or merely as a freight forwarder. Only
the former status would bring the parties' contract under the
purview of COGSA. Id.*fn2
In determining whether a party acted as a forwarder or as a
carrier in a given transaction, a court must consider such
(1) the way the party's obligation is expressed in
documents pertaining to the agreement, although
the party's self-description is not always
controlling; (2) the history of dealings between
the parties; (3) issuance of a bill of lading,
although the fact that a party issues a document
entitled "bill of lading" is not in itself
determinative; (4) how the party made its profit,
in particular, whether the party acted as "agent
of the shipper . . . procuring the transportation
by carrier and handling the details of shipment"
for fees "which the shipper paid in addition to
the freight charges of the carrier utilized for
the actual transportation."
Zima Corp. v. M.V. Roman Pazinski, 493 F. Supp. 268
(S.D.N.Y. 1980) (Connor, J.) (quoting Chicago, Milwaukee, St.
Paul & Pacific R.R. Co. v. Acme Fast Freight, Inc.,
336 U.S. 465
, 484, 69 S.Ct. 692, 701, 93 L.Ed. 817 (1949)) (other
citations omitted) (ellipses in original).*fn3
Regarding the manner in which Panalpina made its profit on
this shipment, plaintiff is correct that the evidence points
more strongly toward carrier status. It is undisputed that
Panalpina accepted plaintiff's less than container load (LCL)
cargo and consolidated it with other LCL cargo to constitute a
complete container load. Further, according to the facts
stipulated in the Pretrial order, "Panalpina was not
compensated for the Hoffmann-LaRoche shipment in question by
means of a freight forwarder's commission but rather earned its
profit by the difference between the rate charged to the
shippers of the various consignments it consolidated and the
amounts paid by Panalpina for transportation and other costs to
carriers and handlers." Pretrial Order ¶ 7. In addition,
Panalpina A.G.'s Assistant Director has indicated that the
projected profit on the shipment in question was to be derived
in part "[b]y filling the container." Deposition of Dieter
Stegmann at 74-76. In this regard, the transaction is
characteristic of a shipper/carrier relationship. See, e.g.,
Chicago, Milwaukee, St. Paul & Pacific Railroad Co. v. Acme
Fast Freight, supra, 336 U.S. at 484, 69 S.Ct. at 701
(forwarder-carrier made profit from exploiting the spread
between container load and LCL rates); Zima, supra, 493 F. Supp.
at 273 (same).
Resolution of the other three criteria, however, militates
toward forwarder status. It is uncontroverted that the shipping
advice and transport confirmations that Panalpina issued to
plaintiff stated that the former's activity was exclusively
based on the "General Conditions (1980)" of the Swiss
Forwarders' Association. Articles 28 and 29 of the General
which plaintiff concedes familiarity, provide that Panalpina
would assume carrier liability only if it executed a transport
by its own means or issued to a shipper a "House Through Bill
of Lading." As Panalpina took neither of these actions, the
implication from the "documents pertaining to the agreement,"
Zima, supra, 493 F. Supp. at 273, is that it acted as a
forwarder. Further, reference to the General Conditions was
included in each shipping advice statement rendered to
plaintiff during a twenty year course of dealing with
Panalpina, although bills of lading were issued by Panalpina on
some occasions during that period.
Considering the totality of the circumstances, the court
determines that Panalpina acted as a forwarder rather than a
carrier in the transaction at issue. In addition to the
considerations discussed above, this conclusion is supported by
the fact that plaintiff was aware of the vessel that would be
used, as evidenced by the relevant shipping advice. Defendants'
Memorandum of Law, Exhibit A. See Chicago, Milwaukee, St. Paul
& Pacific R.R. Co. v. Acme Fast Freight, supra, 336 U.S. at
484, 69 S.Ct. at 701 (finding such knowledge to be
characteristic of shipper/forwarder relationship). Essentially,
Panalpina undertook to arrange for transportation of the cargo,
not to effect it. Aquascutum of London, Inc. v. S.S. American
Champion, 426 F.2d 205, 210 (2d Cir. 1970).*fn4
Having ascertained that the contract at issue is not governed
by COGSA, the court must now determine the effect of the
forum-selection clause. As plaintiff makes no allegations of
fraud or undue influence, and there are no implications of
overweening bargaining power on the part of Panalpina or other
injustice, the court finds the clause to be valid. M/S Bremen
v. Zapata Off-Shore Co., supra, 407 U.S. at 10, 92 S.Ct. at
1913 (forum-selection clauses should be enforced "unless
enforcement is shown by the resisting party to be
'unreasonable' under the circumstances"); Hollander v. K-Lines
Hellenic Cruises, S.A., 670 F. Supp. 563, 565 (S.D.N.Y. 1987)
(Griesa, J.) (looking to reasonableness, justice, fraud,
overreaching and public policy considerations).
Plaintiff contends that even if the forum-selection clause is
found to be valid, its enforcement should be barred under the
doctrine of laches because Panalpina did not raise this issue
until after substantial discovery had been conducted by the
parties. As Panalpina points out, however, delay alone is not
sufficient to justify such a result. Essex Crane Rental v. Vic
Kirsch Construction, 486 F. Supp. 529, 535 (S.D.N.Y. 1980)
(Haight, J.) (quoting Farmer Brothers Co. v. Coca Cola Co.,
Inc., 366 F. Supp. 725, 727 (S.D.Tex. 1973)). Plaintiff must
demonstrate prejudice to itself resulting from the delay.
General State Authority v. Aetna Casualty & Surety Co.,
314 F. Supp. 422 (S.D.N.Y. 1970) (Edelstein, J.).
In this regard, plaintiff argues that extensive discovery has
been conducted by the parties in anticipation of litigation in
this forum. It does not explain, however, in what way this
actuality is prejudicial. In addition, Panalpina has
demonstrated that the interim discovery was necessary in order
for it to raise the forum-selection clause issue at all.
Specifically, testimony was needed from one of plaintiff's
witnesses to demonstrate the prior course of dealing between
the litigants and that the shipping advices had in fact been
employed by the parties. The court's disposition on this issue
confirms that this information was necessary to the
establishment of Panalpina's status as a forwarder. In short,
interim discovery facilitated assertion of the forum-selection
clause issue and cannot properly be viewed as unduly
prejudicial to plaintiff.
Plaintiff also argues that the Swiss courts may not give
res judicata effect to a Stipulation of Partial Dismissal in
favor of the vessel owner in this litigation signed by
Panalpina, thus providing Panalpina with a potential "peril of
the sea" defense. This objection speaks, however, to the
prejudice which litigation under Swiss law might visit upon
plaintiff, not to any detriment due to Panalpina's delay in
raising the forum-selection clause issue, and is therefore
irrelevant to the court's inquiry.
As the forum-selection clause in Panalpina's shipping advice
is valid and not barred by laches, plaintiff's suit is
dismissed as to Panalpina without prejudice pursuant to that
IT IS SO ORDERED.