The congestion at port terminals on the West Coast that developed in 2014-2015 during contract negotiations between the International Longshore and Warehouse Union and employers created many shipper-carrier conflicts.
Case in point: a dispute between Ponte Vedra Gifts & Accessories (PVGA), a company headquartered just outside Jacksonville, Fla., and non-vessel-operating common carrier APL Logistics (APLL).
(Note: APLL, once a subsidiary of Neptune Orient Lines in Singapore, was sold last year to Japan’s Kintetsu World Express. NOL and its remaining business, liner company APL, is in the process of being acquired by CMA CGM.)
According to a complaint filed in the U.S. District Court in the Middle District of Florida last July, PVGA entered into an NVOCC Service Arrangement (NSA) with APLL in May 2014 for the transport of 284 containers of merchandise from China to one of PVGA’s three warehouses in California.
NSAs are confidential ocean transportation agreements, similar to the service contracts offered by ocean container carriers.
PVGA said the contract included drayage charges that ranged from $216 to $271, depending on which warehouses the container was sent to.
APLL contracted with NYK to carry the containers from China to Long Beach, Calif., and then contracted with a number of trucking companies to dray the containers to the warehouses.
During the 2014 work slowdown, drayage carriers “demanded that APLL pay them additional money to deliver cargo in excess of what APLL anticipated they would charge. APLL failed to have other drayage carriers in place to transport the cargo, and APLL declined to pay those drayage companies the additional fees and premiums they demanded,” PVGA said.
As a result it said its cargo sat in the NYK Terminal in Long Beach past the free-time permitted under APLL’s contract with NYK.
“The fact that APLL was going to have to pay more to its carriers does not alter its obligations to PVGA,” the shipper said. “The obligation of APLL to PVGA to transport the cargo at the agreed upon price continued until the goods were delivered at the consignees’ warehouse and not before. Just because APLL had to pay more and might lose money in fulfilling its obligations to PVGA did not affect the liability to APLL.”
APLL “deviated from the contracts of carriage by stopping the cargo in its transit and abandoning it in the NYK yard,” PVGA said. It said containers stayed in the NYK yard in Long Beach for months, and constituted an unreasonable deviation.
PVGA said it had to locate truckers and pay them freight and premiums to recover the cargo from NYK.
It alleged APLL “fraudulently induced” PVGA to ship cargo with it from China to Long Beach and “express assurances were made by APLL that APLL could complete deliveries of shipments when it knew or should have that it could not.”
PVGA also said some cargo was rejected by ultimate consignees, “as they were delivered after the commencement of the holiday shopping season and could no longer be sold as holiday gift merchandise, resulting in lost profits on the sale of goods, which were sold as salvage.” And it said this led to “a loss of goodwill and a reputation” for PVGA.
APLL moved to dismiss the suit, stating it was “filed in the wrong court” under the terms and conditions of the bill of lading, which contained a forum selection term for Singapore or the U.S. District Court for the Southern District of New York (SDNY).
It also said the PVGA fraud allegations were “too general and conclusory to meet the minimum pleading requirements” under the Federal Rules of Civil Procedure.
APLL said the complaint never alleged a specific statement by any APLL representative, included no reference to fraud in any APLL document, and never alleged how APLL stood to gain from any alleged fraud. Instead, APLL said “The allegations are entirely based on inferences and conjecture.”
APLL said even if its actions were exactly as the complaint alleged, they were related to its performance of obligations under the NSA and pursuant to the terms and conditions of the bill of lading.
“Therefore, the count for fraud must be dismissed,” it added.
PVGA had pointed to a section of the NSA which said “Any and all disputes arising out of or in connection with this NSA, including any failure by the merchant to pay, or by the carrier to perform, as required hereunder, may be referred by either party to litigation before any court of competent jurisdiction…”
In an order (Ponte Vedra Gifts & Accessories Co. v. APL Logistics. US District Court Middle District Florida. 3:15-cd-887-J. May 16) the Jacksonville court agreed to transfer the case to the SDNY, saying “the bill of lading contains the specific contractual terms for carriage and delivery of the shipments.”
PVGA “has not shown, although it has vaguely alleged, that the agreement was induced by fraud, or that dismissing this case pursuant to the valid and enforceable forum selection clause in the bill of lading contravenes public policy,” the district court in Florida said. Nor was this an “exceptional situation” that justified retaining the case in Florida.
APLL’s motion to dismiss the lawsuit was denied, but without prejudice to the NVO reasserting that argument at the SDNY.
Shippers’ Law: West Coast dispute moves to New York
