Opposition Brief — Burlington Air Express, Inc. v. Lite-On Peripherals, Inc.

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No. 01-768

IN THE

Supreme Court of the Unit

BURLINGTON AIR EXPRESS, INC..

Petitioner.

Vv.

LITE-ON PERIPHERALS, INC..,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

MARK J. ANDREWS *

STRASBURGER & PRICE, LLP

1101 Pennsylvania Avenue, NW

Seventh Floor

Washington, DC 20004-2514

(202) 756-3629

* Counsel of Record Attorneys for Respondent

WILSON-EPES PRINTING CO , INC. — (202) 789-0096 -— WasHiNGTON,D C 20001

QUESTIONS PRESENTED

1. Having issued a “Negotiable Combined Transport Bill

of Lading” which encompassed both maritime and inland

transportation of a shipment moving in the foreign commerce

of the United States, how can petitioner possibly disclaim the

federal subject-matter jurisdiction that was expressly admitted

in its answer below?

2. May a carrier resort to state laws governing title to

goods as a means of avoiding its self-assumed, self-drafted,

_contractual obligation to deliver an international shipment

only upon surrender of a duly endorsed bill of lading?

3. When a carrier drafts its own bill of lading so as to

designate the consignor of goods as a “Merchant” and a party

to the bill, may the carrier resort to a pricing agreement with

another party as a means of disavowing its contractual

obligations to the consignor?

4. Did the Court of Appeals do anything more remarkable

or adventuresome than merely holding a carrier to its own

contractual obligation with respect to maritime and inland

transportation of an international shipment, thus applying

settled law in an unquestioned zone of federal supremacy?

(i)

STATEMENT PURSUANT TO RULE 29.6

Respondent Lite-On Peripherals, Inc. is a wholly-owned

subsidiary of Silitek Corporation, which is a publicly

traded company organized under the laws of the Republic of

China (Taiwan).

Il.

III.

TABLE OF CONTENTS

THE DECISION BELOW REFLECTS

A PERFECTLY ORDINARY EXERCISE

OF FEDERAL JURISDICTION OVER

FOREIGN COMMERCE...........ccccsccssssessssessesees

TITLE TO THE GOODS WAS IRRELE-

VANT TO _ PETITIONER’S OBLIGA-

TION UNDER THE SURRENDER-ON-

THE RATE AND SERVICE AGREEMENT

BETWEEN PETITIONER AND’ THE

BANKRUPT CONSIGNEE WAS IRREL-

EVANT TO PETITIONER’S OBLIGATION

UNDER THE SURRENDER-ON-DELIVERY

i ig EEE CERES AS NO

STE IUEIIY ocenecechscosiserevoeneeneeser sosencensensensecsaseneeseneces

APPENDICES

Bill of Lading (actual-size reproduction of

“front” and “back” on pp. la-2a, respectively;

enlargement of “back” on p. 38) ........cececccsesecesseeees

Rate and Service Agreement .0.............cccccccssesoseesees

(iii)

TABLE OF AUTHORITIES

FEDERAL CASES Page

All Pacific Trading, Inc. v. Vessel M/V Hanjin

Yosu, 7 F.3d 1427 (9th Cir. 1993) cert. denied

ek ee ee 8, 9, 13

Allied Chemical International Corp. v. Com-

panhia de Navegacao Lloyd Brasileiro, 775

F.2d 476 (2d Cir. 1985), cert. denied 475 U.S.

Pe rccniinninaiibiimatisincanaitaiciatiiaiahaiaeat sito 8, 10, 11

American Airlines, Inc. v. Wolens, 513 U.S. 219

SEER er CNS aD ae ET RE RE ki 10

C-ART, Ltd. v. Hong Kong Islands Line America,

S.A., 940 F.2d 530 (9th Cir. 1991), cert. denied

Fe i. DE ilechinncencchensiibitilinciitasinseniodees 10, 11

Datas Indus. Ltd. v. OEC Freight (HK) Litd.,

2000 U.S. Dist. LEXIS 15589 (S.D.N.Y.

le Me UIE ateiceieeipsihalieadeitaieiaenimnsscinieerdinarinetetcn ie 11

David Crystal, Inc. v. Cunard S.S. Co., 339 F.2d

295 (2d Cir. 1964), cert. denied, 380 U.S. 976

Epi isenidaseiishicetiibanumiaiidioedt iistularmdesta eae ee 8

E. Gerli & Co. v. Cunard S.S. Co., 48 F.2d 115

rp ap. | | BEES LIN SORT OEE FORE TN 11

Genetics Int'l v. Cormorant Bulk Carriers, Inc.,

877 F.2d 806 (Sth Cir. 1989) ..........ccccccccccccsseeee 8

Hellenic Lines, Ltd. v. Director General of India

Supply Mission, 452 F.2d 810 (2d Cir. 1971)... 15

Hellenic Lines, Ltd. v. Embassy of Pakistan, 467

oe fin f+ (oe . . +, CROMER emeD 14

Hellenic Lines, Ltd. v. United States, 512 F.2d

fe S.A Sees. Sree 14

International Drilling Co. v. The M/V Doriefs

291 F. Supp. 479 (S.D. Tex. 1968)..............0000 15

International Knitwear Co. v. M/V Zim Canada,

1994 U.S. Dist. LEXIS 14180, 1997 A.M.C.

Se TG He. Sie itrsecetecntiantiaiciienstimiiatiiaies 11

TABLE OF AUTHORITIES—Continued

Page

Interocean Shipping Co. v. National Shipping &

Trading Corp., 523 F.2d 527 (2d Cir. 1975),

cert. denied 423 U.S. 1054 (1976)........ceccccesesee. 15

Iowa Beef Processors, Inc. v. Grand Trunk

Western R. Co., 493 F.2d 665 (6th Cir. 1974)... 10

J.B. Effenson Co. v. Three Bays Corp., 238 F.2d

ES COG ee So cisscrtinincncshsineteecrac ek! = ~ 8

Leather’s Best, Inc. v. S.S. Mormaclynx, 451 F.2d

seth ce Hck | Se ED TS SANT WEA 8

M. Prusman Ltd. v. M/V Nathanel, 670 F. Supp.

BOGE Gis is BO secclecitclcssnchpiacsdessccin 5, 9

Mitsui & Co. v. Export Lines, Inc., 636 F.2d 807

ee | RRNA ARO ys cE NS ad 11

National Customs Brokers and Forwarders Ass’n

v. United States, 883 F.2d 93 (D.C. Cir. 1989). 9

NLRB v. International Longshoremen’s Associa-

cea hieindh bin ic ig | LRT 9

Oliver Straw Goods Corp. v. Osaka Shosen

Kaisha, 47 F.2d 878 (2d Cir.), cert. denied,

| AE aA 13

Pere Marquette Railway Co. v. J.F. French &

Co., 254 U.S. 538 (E921) -scrovecesscesencosessscoseesseesse 10

Ralli v. Troop, 157 U.S. 386 (1895) ....c.ceccccessesssees 12

The Caledonia, 157 U.S. 124 (1895) .......cccessessesses 11, 14

West India Indus. Inc. v. Tradex, 664 F.2d 946

Re WE ee Se 11

CONSTITUTIONAL PROVISIONS

ee ee iis 2

U.S.CONST. art. TIT, § 2, C11 .......cccccscecesesecessecees- 2

FEDERAL STATUTES

piles ge ge NAOT RACER TA LEME TT 2

FF iach ctasistiiihbchistichlecshibibiideidancciccesis 2,8

vi :

TABLE OF AUTHORITIES—Continued

Page

SOU. 6 Ba i aceliisciierciccieninuiitttitviiihinnnitctelnwtnaiai 2,7

46 U.S.C. app. §§ 1300-13 15.0... ccccceeseseseeseenees 7

46 U.S.C. app. § 1702(17)(B).........csccccessecseesseenes 8

GB UBL. B SEO sthctasinsabiteicnintinitscrniiaerceeneitinin 9

GD BA, GOT TEI teiciivenitstavicrsivecstestcitinntebuitin 9

MISCELLANEOUS

1 Benedict on Admiralty (7th ed. 1989)................ 8

J. Fletcher, Situation Ethics: The New Morality

(Philadelphia: Westminster Press, 1966).......... 16

G. Gilmore & C. Black, The Law of Admiralty

G0 0, BF stilivctncittiiecnsinniivinnsinctensillinibeibiendaiition 10

2 T.G. Carver, Carriage by Sea (R. Colinvaux

SSG, CERIN Wintictiiccentinnsinscsnincsenntsininstededbientien 11

4 Witkin, Cal. Procedure (9th ed. 1997) .............04. 8

IN THE

Supreme Court of the United States

No. 01-768 ’

BURLINGTON AIR EXPRESS, INC.,

Petitioner,

Vv.

LITE-ON PERIPHERALS, INC.,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

For the reasons stated in this brief, respondent Lite-On

Peripherals, Inc. respectfully submits that+he petition should

be denied.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Because the Court of Appeals correctly characterized this

as a “straightforward contract case,” see Appendix A to

petition, Pet.App. 5, this Court may disregard most of the

multitude of constitutional and statutory provisions cited and

reproduced in the petition. Of all those provisions, only four

have any pertinence here. All of these are reprinted in

Appendix F to the petition, Pet.App. 26-27. The first is the

Commerce Clause, under which “[t]he Congress shall have

power . . . to regulate Commerce with foreign Nations. . .”

———

U.S.Const, art. I, § 8. The second is the Admiralty Grant,

under which “[t]he judicial Power shall extend . . . to all

Cases of admiralty and maritime Jurisdiction.” U.S.CONST.

art. III, § 2, cl. 1. The third and fourth are 28 U.S.C. §§ 1331

and 1337, which respectively give the federal district courts

original jurisdiction of “all civil actions arising under the

Constitution, laws, or treaties of the United States” and of

“any civil action or proceeding arising under any Act of

Congress regulating commerce [subject to certain juris-

dictional threshold amounts not at issue here].” For reasons

to be stated in this brief, the California statutory provisions

quoted at length in the petition are irrelevant to this case.

Petitioner’s answer to the complaint in the district court

admitted federal jurisdiction under 28 U.S.C. § 1337.

Although not discussed by either party below, 28 U.S.C.

§ 1333 (relating to maritime and admiralty cases) appears to

provide a further basis for federal subject-matter jurisdic-

tion, in view of petitioner’s admitted status as an ocean

transportation intermediary (Pet. 2) and in view of the fact

that the shipment at issue moved primarily on an oceangoing

vessel. See Part 1 of Argument infra.

STATEMENT OF THE CASE

1. The Statement of the Case by Petitioner Burlington Air

Express, Inc. (renamed BAX Global Inc. during the pendency

of this litigation) is replete with incorrect Statements and

characterizations of the facts, issues, pleadings and judicial

decisions in this case. Contrary to petitioner’s assertion

(Pet. 2), this case is not about “whether respondent had title”

to certain computer keyboards shipped from Taiwan to

California. Instead, as the Court of Appeals recognized, this

is a “straightforward contract case” arising from petitioner’s

failure to comply with a surrender-on-delivery clause in the

bill of lading drafted by petitioner itself (Pet.App. 5). Under

that clause, petitioner had agreed that “the keyboards would

not be turned over to the named consignee . . . unless the

consignee produced an endorsed bill of lading” (Pet.App. 5).

2. Respondent initiated the civil action below as assignee

of the rights of its Taiwanese parent company, Silitek

Corporation (“Silitek”), which was the consignor named in

the bill of lading for the keyboards. Respondent sued

petitioner in the United States District Court for the Central

District of California, invoking federal subject-matter juris-

diction over this shipment of goods in foreign commerce.

The complaint alleged breach of contract, misdelivery of

goods, negligence and conversion. It further stated that

petitioner’s failure to abide by the surrender-on-delivery

clause in its own bill of lading had resulted in a loss of over

$100,000 because the consignee failed to pay Silitek for the

keyboards improperly delivered by petitioner. While peti-

tioner’s answer denied liability, it expressly admitted the

existence of subject-matter Jurisdiction in federal court

brief) showed that the shipment consisted of 1,000 cartons

containing 5,000 keyboards consigned from Silitek in

Keelung, Taiwan and consigned to Reveal Computer

Products (“Reveal”) in Chatsworth, California. According to

information typed on the front of the bill, the shipment moved

On an Oceangoing vessel known as the Ming Plenty from

Taiwan to the Port of Los Angeles. Final delivery pre-

sumably was accomplished by truck to Chatsworth, an inland

section of the city of Los Angeles some 40 freeway miles

northwest of the port.

4. The plain words of the surrender-on-delivery clause on

the front of petitioner’s bill of lading read as follows:

One of these Combined Transport Bills of Lading must

be surrendered duly endorsed in exchange for the goods.

Despite the presence of this language on the face of its own

bill, petitioner admittedly delivered the entire shipment of

keyboards to Reveal in February 1996 without obtaining a

copy of the bill, endorsed or otherwise. See paragraph 7,

infra and Pet.App. 4.

5. As recounted by the Court of Appeals, Reveal failed to

pay Silitek or respondent for the keyboards. Respondent

eventually was able to recover approximately half of the

5,000 keyboards. The value of the keyboards that could not

be recovered came to $101,602.80. With Reveal ultimately

having sought protection under the bankruptcy laws, this

amount stands as Silitek’s and respondent’s loss resulting

from petitioner’s misdelivery. Pet.App. 4.

6. Based on the foregoing facts and circumstances, and

after full briefing on cross-motions for summary judgment,

the district court granted summary judgment in favor of

respondent for $101,620.80 plus interest and costs. The

Court of Appeals affirmed in a published opinion reproduced

at Pet.App. 1-13. Petitioner sought certiorari after its peti-

tions for rehearing and rehearing en banc were denied by the

Court of Appeals. Pet.App. 24-25.

7. At no time has petitioner denied that it failed to comply

with the surrender-on-delivery clause of its own bill of lading.

In fact, petitioner expressly admitted its non-compliance in its

Statement of Genuine Issues in Opposition to Plaintiff's

Motion for Summary Judgment filed with the district court.

In that document, petitioner was required to respond to each

of the statements of fact in respondent’s motion, including

numbered items 5, 7 and 8 (asserting respectively that

petitioner issued a bill of lading, that the bill contained a

NIN pt 8 OE RR INIT en FETS RO me DET” A

surrender-on-delivery clause, and that petitioner nonetheless

delivered to Reveal without obtaining the bill). As to each of

these numbered items, petitioner’s response was “Admitted.”

8. Petitioner has tried to excuse its admitted noncom-

pliance with the surrender-on-delivery clause on grounds that

title to the goods passed to Reveal at origin (Pet. 8-26), and

that petitioner’s only contractual obligations were to Reveal

under a separate “Rate and Service Agreement” with that

entity (Pet. 5). Most recently, petitioner has even tried to

back away from its threshold admission that the district court

had subject-matter jurisdiction (Pet. 2, 26-29). Each of these

diversionary arguments must be rejected.

9. Contrary to petitioner’s repeated assertions before this

Court and below, this case does not in any way concern a

claim or issue of title. At no time during the pendency of this

action did respondent ever assert title to the goods on behalf

of itself or Silitek, nor claim that the goods should be

delivered to respondent or redelivered to Silitek, nor even

claim that respondent was a party to the bill of lading. To the

contrary, all that respondent ever sought to do was to prevent

the goods from being turned over to Reveal in violation of the

surrender-on-delivery clause. Moreover, respondent at all

times made clear that it takes its right of recovery not under

any title theory, but through an assignment of a chose in

action from Silitek, the consignor named on the bill of lading.

10. Nor is there any substance to petitioner’s argument

(apparently pressed with more vigor before the Court of

Appeals than here, see Pet.App.6-10) that its only pertinent

contractual relationship was with Reveal under a Rate and

Service Agreement executed in May 1995. While that agree-

ment contains no surrender-on-delivery clause, the record

resoundingly refutes any claim that this was the sole or

paramount contractual relationship with regard to the shipment

at issue. This is true for at least the following three reasons:

First, as the Court of Appeals observed (Pet.App. 7-

8), petitioner cannot deny the contractual nature of its

own bill of lading, which does contain the surrender-on-

delivery-clause. The text of the bill clearly imposes a

detailed series of contractual obligations on both

petitioner and a group of parties collectively labeled as

the “Merchant,” and also defines the latter term to

include the consignor. Although the record below

contains only imperfect reproductions of the bill of

lading, the copy reproduced and enlarged in Appendix A

to this brief will permit the Court to satisfy itself as to

the correctness of the Court of Appeals’ observations.

See, e.g., “DEFINITIONS” section and obligations

assumed by “Merchant” under clauses 3.1, 4.1, 5.2, 13,

14.4 and 14.5 of the “CONDITIONS.”

Second, Petitioner has identified no clause in its bill

of lading that would incorporate an extraneous Rate and

Service Agreement into the bill, much less subordinate

the bill to such an agreement. Nor has petitioner

suggested that Silitek or respondent had actual

knowledge of the existence or terms of any agreement

between petitioner and Reveal, much less that they

consented to be bound by such an agreement.

Third, the text of the Rate and Service Agreement

itself refutes petitioner’s claim that this instrument was

paramount. The record below contains an excellent

copy of the Rate and Service Agreement, which is

reproduced for the Court’s convenience in Appendix B

to this brief. The Court’s attention is invited to the

dispositive language of paragraph 10 in Appendix B

(emphasis supplied):

For other points not contained herein in tendering

freight to Burlington Air Express, Reveal Computer

Products agrees to be bound to the terms and

conditions in Burlington’s airbill, ocean bill of lading,

tariffs and service guide.

Because the Rate and Service Agreement self-evidently con-

tains no language addressing the delivery obligations of any

party, resort must be had to the bill of lading which does

contain such language. The bill of lading takes precedence as

to delivery obligations; it does contain a surrender-on-

delivery clause; and it is binding on and enforceable by all

parties to the shipment, not just petitioner and Reveal.

11. Finally, petitioner’s latter-day challenge to federal

subject-matter jurisdiction over this case is incomprehensible.

The case patently turns on the interpretation of a contract for

maritime and inland transportation in the foreign commerce

of the United States. As the Argument in this brief will

demonstrate, it is beyond doubt that such matters are within

the purview of federal courts.

ARGUMENT

I. THE DECISION BELOW REFLECTS A PER-

FECTLY ORDINARY EXERCISE OF FEDERAL

JURISDICTION OVER FOREIGN COMMERCE

As pointed out supra, petitioner admitted in its answer

below that federal subject-matter jurisdiction existed under

28 U.S.C. § 1337, relating to actions arising under “any Act

of Congress regulating commerce.” Furthermore, petitioner

apparently admits that the Carriage of Goods By Sea Act,

46 U.S.C. app. §§ 1300-1315 (““COGSA”) applied to at least

the maritime portion of the transportation involved here

(Pet. 8-9). Petitioner thus should not be heard to make an

eleventh-hour suggestion, as it does at Pet. 26-29, that there is

no federal subject-matter jurisdiction over this case.

Wholly aside from the applicability of 28 U.S.C. §§ 1331

and 1337, it is apparent that subject-matter jurisdiction exists

under the “admiralty or maritime” provisions of 28 U.S.C.

§ 1333. A suit “lies within [the federal courts’] admiralty

jurisdiction” and “is governed by federal maritime law” when

it “involves claims by a shipper against an ocean carrier

arising from an alleged breach of a contract of carriage.”

Allied Chemical International Corp. v. Companhia de

Navegacao Lloyd Brasileiro, 775 F.2d 476, 481 (2d Cir.

1985), cert. denied 475 U.S. 1099 (1986) (citing Leather’s

Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 807 (2d Cir.

1971) and David Crystal, Inc. v. Cunard S.S. Co., 339 F.2d

295, 298 (2d Cir. 1964), cert. denied, 380 U.S. 976 (1965)).

In other words, a “shipment of goods by sea” is precisely “the

sort of traditional maritime activity which falls squarely

within the district court’s admiralty jurisdiction.” Genetics

Int’l v. Cormorant Bulk Carriers, Inc., 877 F.2d 806, 808

(9th Cir. 1989) (citing | Benedict on Admiralty, §§ 181, 182

p. 12-4 (7th ed. 1989)). See also J.B. Effenson Co. v. Three

Bays Corp., 238 F.2d 611, 615 (Sth Cir. 1956).

In this case, respondent’s assignor is a shipper (Silitek)

claiming breach of a contract of carriage involving shipment

of goods by sea.' It is immaterial that petitioner did not

directly operate the oceangoing vessel which carried the

computer keyboards (Pet. 2). As an “ocean transportation

intermediary” (Pet. 2) which issued a bill of lading for the

keyboards, petitioner acted in the capacity of a non-vessel-

operating common carrier or NVOCC within the meaning of

46 U.S.C. app. § 1702(17)(B). “Generally, an NVOCC com-

bines the goods of various shippers into a single shipment,

contracts with the vessel for the transportation of the goods,

and delivers the goods to the vessel, usually in a sealed

container.” All Pacific Trading, Inc. v. Vessel M/V Hanjin

Yosu, 7 F.3d 1427, 1429 (9th Cir. 1993) cert. denied 510 U.S.

' As the assignee of an assignable chose in action, respondent took

legal title and was permitted to sue in its own name even without a

beneficial interest. 4 Witkin, Cal. Procedure (9th ed. 1997) Pleadings,

§§ 108-09, pp. 168-69.

1194 (1994) (citing NLRB v. International Longshoremen’s

Ass'n, 447 U.S. 490, 496 n.8 (1980)). An NVOCC “is

considered a carrier in its relationship with the shipper of the

goods.” All Pacific Trading, 7 F.3d at 1430 (citing National

Customs Brokers & Forwarders Ass’n v. United States, 883

F.2d 93, 101 (D.C. Cir. 1989)). See also M. Prusman Ltd. v.

M/V Nathanel, 670 F.Supp. 1141, 1143 (S.D.N.Y. 1987)

(NVOCC is a “carrier” for purposes of the cargo liability

provisions of COGSA).

Given petitioner’s obvious involvement in “traditional

maritime activity which falls squarely within the district

court’s admiralty jurisdiction,” petitioner’s claim that the

lower courts somehow usurped State authority in this case is

puzzling in the extreme. While it is self-evident that com-

pleting the delivery to Reveal required a few miles of inland

transportation as well as thousands of miles of maritime

transportation, it does not follow (as suggested at Pet. 9) that

State law suddenly became paramount the minute this

shipment of keyboards in foreign commerce was “discharged

from the ship.” Because the bill of lading defined petitioner’s

service obligations for “combined transport” on a door-to-

door basis, i.e., for a continuous international journey from

Taiwan to Chatsworth, the surrender-on-delivery clause

continued to apply after offloading from the vessel.

Moreover, resort to inland transportation law would not

aid petitioner’s efforts to deploy State title-to-goods statutes

as a shield against its obligations under the bill of lading.

Assuming final delivery by truck, the preemption provisions

of 49 U.S.C. § 14501(c) would preclude enforcement of any

State law “related to a price, route or service” of the motor

carrier. In construing virtually identical preemption lan-

guage applicable to airlines, see 49 U.S.C. § 41713(b), this

Court has held that States are precluded from “enlargement

or enhancement” of price, route or service contracts between

carriers and their customers through imposition of “state

laws or policies external to the agreement.” American Air-

lines, Inc. v. Wolens, 513 U.S. 219, 233 (1995). The result

sought by petitioner here would enlarge the rights of Reveal,

and diminish those of Silitek and respondent, through

imposition of State policies that are not only external to, but

repugnant to, the “privately ordered obligations,” Wolens at

228, appearing in the surrender-on-delivery clause of the

bill of lading.

Ii. TITLE TO THE GOODS WAS IRRELEVANT

TO PETITIONER’S OBLIGATION UNDER THE

SURRENDER-ON-DELIVERY CLAUSE

It is simply beyond question that a maritime or inland

carrier is liable for misdelivery or conversion when it delivers

goods in violation of a surrender-on-delivery clause in the bill

of lading, and such delivery results in loss to the shipper as it

did here. Pere Marquette Ry. Co. v. J.F. French & Co., 254

U.S. 538, 546 (1921); lowa Beef Processors, Inc. v. Grand

Trunk Western R. Co., 493 F.2d 665 (6th Cir. 1974); Allied

Chemical International Corp., 775 F.2d at 478-79, 481-82;

C-ART, Ltd. v. Hong Kong Islands Line America, S.A., 940

F.2d 530, 533 (9th Cir. 1991), cert. denied 503 U.S. 1005

(1992). The Second Circuit in Allied Chemical compellingly

explained the reason for this rule (775 F.2d at 481-482):

The liability question in this case inextricably involves

the critical importance of the documentary transaction in

overseas trade. See generally G. Gilmore & C. Black,

The Law of Admiralty 110-12 (2d ed. 1975). The docu-

mentary sale enables the distant seller to protect himself

from an insolvent or fraudulent foreign buyer by

ensuring that the buyer ordinarily cannot take possession

of the goods until he has paid for them. It accomplishes

this rather simply. The seller tenders shipping docu-

ments, including a negotiable bill of lading, rather than

goods to the buyer. By paying for the documents, the

buyer gets possession of the original bill of lading. * * *

Absent a valid agreement to the contrary, the carrier, the

issuer of the bill of lading, is responsible for releasing

the cargo only to the party who presents the original bill

of lading. “Delivery to the consignee named in the bill

of lading does not suffice to discharge the [carrier]

where the consignee does not hold the bill of lading.” 2

T.G. Carver, Carriage by Sea para. 1593 (R. Colinvaux

13th ed. 1982). * * *

The dispute herein involved precisely the consequence

that the documentary transaction is intended to avert:

[a consignee], which turned out to be an insolvent buyer,

was given possession of goods for which it had not paid.

Petitioner makes much of the fact that the terms of sale of

the computer keyboards in this case apparently called for title

to pass at origin. Here, however, just as in C-ART, “[t)his

argument is inimical to the express provisions of the bill of

lading, as well as contrary to the applicable authorities.”

940 F.2d at 533. See also International Knitwear Co. v. M/V

Zim Canada, 1994 U.S. Dist. LEXIS 14180, 1997 A.M.C.

1290 (S.D.N.Y. 1994) and Datas Indus. Ltd. v. OEC Freight

(HK) Ltd., 2000 U.S. Dist. LEXIS 15589 (S.D.N.Y. Oct. 20,

2000), both of which enforced surrender-on-delivery clauses

despite contentions that some or all of the involved bills of

lading were straight bills, i.e. non-negotiable documents

incapable of conveying title.

As drafted by petitioner in its own bill of lading, the

surrender-on-delivery clause is unqualified by any conditions

addressing sales terms for, or title to, the goods being

transported. It is well-established that “ocean bills of lading

are contracts of adhesion and, as such, are strictly construed

against the carrier.” Allied Chemical International, 775 F.2d

at 482 (citing The Caledonia, 157 U.S. 124, 137 (1895);

E. Gerli & Co. v. Cunard S.S. Co., 48 F.2d 115, 116 (2d Cir.

1931) (L. Hand, J.); Mitsui & Co. v. American Export Lines,

Inc., 636 F.2d 807, 822-23 (2d Cir. 1981), and West India

Indus, Inc. v. Tradex, 664 F.2d 946, 951 n.9 (Sth Cir. 1981)).

Moreover, there is no sound reason in law or policy for

reading title-to-goods provisos into the plain language of the

surrender-on-delivery clause. While the record does not

indicate why Silitek entered into such risky sales terms with

Reveal, the existence of such terms obviously makes enforce-

ment of the surrender-on-delivery clause more important than

ever as a last line of defense for a shipper who wants to be

paid for the goods. While the surrender-on-delivery clause

may have the effect of delaying or even preventing delivery

to a party claiming title to the goods, this is not an unus-

ual situation in the realm of transportation law. Common

examples include general average (the doctrine allowing

sacrifice of a portion of a ship’s cargo in order to save the rest

under emergency circumstances, see Ralli v. Troop, 157 U.S.

386 (1895)) and a carrier’s common-law, contractual or

statutory lien on goods to secure payment of its freight

charges (see, e.g., clause 15 of the bill of lading here, as

reproduced in Appendix A). If petitioner had not been paid

for its transportation services here, presumably it would have

exercised its lien without ostentatious agonizing over who

had title to the goods.

It bears repeating that neither respondent nor Silitek ever

asked petitioner to deliver the goods to them. They asked

only that petitioner honor the surrender-on-delivery clause by

not delivering to Reveal unless and until that entity could

produce the bill of lading as evidence that it had paid for the

goods. Petitioner has inundated this Court with historical

exegesis about the importance of uniformity in commercial

law (as if the federal maritime and commerce jurisdiction did

not already promote such uniformity), and has furnished

statistics showing generally that a whole lot of containerized

cargo moves through East Coast and West Coast ports

(Pet. 15-19). The Court should give no credence, however, to

petitioner’s implication that adherence by carriers to sur-

render-on-delivery clauses would reduce the Nation’s com-

merce to a chaotic shambles. As a familiar fact of com-

mercial life, delivery problems commonly ave = :ticipated and

dealt with in the bill of lading itself. Under clause 12 of

the bill of lading here, for example, petitioner could and

should have notified respondent or Silitek to request further

instructions when Reveal could not produce the bill. The

provision making the “Merchant” (including the consignor)

liable for storage charges upon failure of delivery would have

given Silitek and respondent every incentive to press Reveal

for payment or otherwise to resolve the situation. See

Appendix A.

Contrary to petitioner’s contention, the outcome of this case

would be commercially intolerable only if carriers could take it

upon themselves to sit as kangaroo courts of title, choosing to

enforce or disregard surrender-on-delivery clauses depending

on their own notions as to what the sales and credit terms

might be for the goods being transported. Consequently, the

strict enforcement of the surrender-on-delivery clause by the

district court and the Court of Appeals in this case represents

sound policy as well as good law.

In a further effort to avoid enforcement of the surrender-

on-delivery clause, petitioner claims that “[oJnly the ‘holder’

of a negotiable bill may enforce the bill as a contract” (Pet.

11 n.1). The decision it cites, however, stands only for the

proposition that holders are among the parties who may seek

such enforcement, and contains no language that would

preclude other parties to the bill from enforcing it. See Oliver

Straw Goods Corp. v. Osaka Shosen Kaisha, 47 F.2d 878,

879 (2d Cir.), cert. denied, 283 U.S. 856 (1931). By the plain

words of the bill of lading here (Appendix A), the parties

entitled to enforce it included all entities encompassed by the

term “Merchant,” and one such entity was Silitek (the

consignor and respondent’s assignor). See All Pacific Trad-

ing, 7 F.3d at 1432 (according party status to all entities

included in similar bill-of-lading definition of “Merchant”).

Il. THE RATE AND SERVICE AGREEMENT

BETWEEN PETITIONER AND THE BANK-

RUPT CONSIGNEE WAS IRRELEVANT TO

PETITIONER’S OBLIGATION UNDER THE

SURRENDER-ON-DELIVERY CLAUSE

Petitioner continues to insist that the sole or primary

contract under which it transported the keyboards was not the

bill of lading, but rather its “long-term rate and service

agreement with Reveal” (Pet. 2-3). That position is untenable

in view of three points already demonstrated by this brief.

First, the Rate and Service Agreement (see Appendix B) ran

only between petitioner and Reveal, whereas the bill of lading

accorded party status to all entities with an interest in the

shipment. Second, the Rate and Service Agreement was

silent as to the delivery responsibilities of petitioner, whereas

the bill of lading included a surrender-on-delivery clause.

Third, as to all issues not covered in the Rate and Service

Agreement (including delivery responsibilities), paragraph

10 of that instrument expressly made it subordinate to

petitioner’s bill of lading.

An early decision of this Court suggests that “the bill of

lading alone can be considered as the contract” for an ocean

shipment. See The Caledonia, 157 U.S. at 139. Today’s

Court, however, need not go so far in order to recognize that

the bill of lading defines petitioner’s obligations insofar as

delivery is concerned. In particular, petitioner cannot bring

itself within the circumstances under which lower courts in

recent years have allowed maritime bills of lading to be

modified or supplemented by other documents. The case

presented here is precisely the opposite of Hellenic Lines,

Ltd. v. United States, 512 F.2d 1196 (2d Cir. 1975), in which

the bill of lading was silent on the pertinent issue and other

documents filled the gap. 512 F.2d at 1207-08. Similarly

inapposite are cases such as Hellenic Lines, Ltd. v. Embassy

of Pakistan, 467 F.2d 1150 (2d Cir. 1972), in which the bill of

lading contained language subordinating it to other docu-

ments, 467 F.2d at 1155, and Hellenic Lines, Ltd. v. Direc-

tor General of India Supply Mission, 452 F.2d 810 (2d

Cir. 1971), in which the other document (a contract of

affreightment) contained explicit language relegating bills of

lading to a subordinate position, 452 F.2d at 814.

Rather, this case is more like Jnternational Drilling Co. v.

The M/V Doriefs, 291 F.Supp. 479 (S.D. Tex. 1968). There,

the contract of affreightment (like the rate and service

agreement here) contained language subordinating it to the

bill of lading. Jnternational Drilling, 291 F.Supp. at 482.

Consequently, the affreightment contract was enforceable

only between the parties who executed it (which did not

include the ship). /d. at 483-484. To similar effect is /nter-

ocean Shipping Co. v. National Shipping & Trading Corp.,

523 F.2d 527 (2d Cir. 1975), cert. denied 423 U.S. 1054

(1976). There an arbitration clause appeared in the charter

party, but not in the “fixture telex” which was held to be the

paramount agreement on the facts of that case. Because the

guarantor was not a party to the inferior document which

contained the arbitration clause, the Second Circuit held that

the guarantor must be excluded from the order compelling

arbitration. Interocean Shipping, 523 F.2d at 534, 537-539.

So it is here, where the inferior document is the Rate and

Service Agreement. While petitioner may be able to enforce

that agreement as against Reveal (depending on the course

and outcome of Reveal’s bankruptcy case), this does not

affect the status of the bill of lading as the paramount

document binding all the parties to the shipment here. Thus,

the surrender-on-delivery clause in the bill of lading was

enforceable against petitioner by respondent (as assignee of

consignor Silitek) regardless of the rights of petitioner and

Reveal under their Rate and Service Agreement. The district

court properly so found, and properly was affirmed by the

Court of Appeals. There is no discernible reason for this

Court to disturb the outcome below.

CONCLUSION

Reduced to its essence, the petition amounts to a facile but

failed effort to dilute petitioner’s plain and simple legal

obligations under the surrender-on-delivery clause by resort

to “situation ethics.”* For all the reasons set forth in this

brief, the petition for a writ of certiorari should be denied.

Respectfully submitted,