FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

OAK HARBOR FREIGHT LINES, INC., 

a Washington corporation,

Plaintiff-Appellee,

v.

SEARS ROEBUCK & CO., dba Sears No. 06-35460

Contract Sales, a foreign D.C. No. corporation,  CV-05-00284-TSZ Defendant-cross-claimantAppellant, OPINION

and

NATIONAL LOGISTICS CORPORATION,

a foreign corporation,

Defendant-cross-defendant. 

Appeal from the United States District Court

for the Western District of Washington

Thomas S. Zilly, District Judge, Presiding

Argued and Submitted

November 5, 2007—Seattle, Washington

Filed January 18, 2008

Before: William C. Canby, Jr., Susan P. Graber, and

Ronald M. Gould, Circuit Judges.

Opinion by Judge Graber

667
COUNSEL

Paula E. Litt and William B. Berndt, Schopf & Weiss LLP,

Chicago, Illinois, for the defendant-appellant. 

Kenneth W. Hart, Larson Hart & Shepherd PLLC, Seattle,

Washington, for the plaintiff-appellee. 

670 OAK HARBOR FREIGHT v. SEARS ROEBUCK
OPINION

GRABER, Circuit Judge: 

Plaintiff Oak Harbor Freight Lines, Inc. (“Oak Harbor”),

brought suit against Defendants Sears Roebuck & Co.

(“Sears”) and National Logistics Corporation (“NLC”) to

recover nearly half a million dollars for transportation of

Sears’ freight. NLC arranged the transportation, which Oak

Harbor provided. Following cross-motions for summary judgment, the district court held NLC and Sears jointly and severally liable for the charges under Washington law. In a later

order, the district court held that Oak Harbor was entitled to

both prejudgment and post-judgment interest, with the rate of

prejudgment interest set according to Washington law. Sears

timely appealed.1 We now affirm.

FACTUAL AND PROCEDURAL HISTORY

The district court’s opinion recites the facts in detail. Oak

Harbor Freight Lines, Inc. v. Sears Roebuck & Co., 420 F.

Supp. 2d 1138, 1140-45 (W.D. Wash. 2006). Because the

facts are uncontested, we rely on the district court’s findings.

Oak Harbor, a Washington corporation and licensed “motor

carrier” under the Federal Motor Carrier Safety Act, 49

U.S.C. § 13102(14), provides intrastate and interstate freight

transportation. Sears is a New York corporation that, among

other things, sells tools and appliances at wholesale and retail.

NLC, an Illinois corporation, is a licensed and registered

property “broker” that arranges transportation by motor carrier under the authority of the Federal Motor Carrier Safety

Act. Id. § 13102(2). 

NLC provided both brokerage and non-brokerage services

for Sears. As a part of its brokerage services, NLC arranged

1NLC also appealed, but later abandoned its appeal. 

OAK HARBOR FREIGHT v. SEARS ROEBUCK 671
for Oak Harbor to move Sears’ freight. See 49 C.F.R.

§ 371.2(c) (“ ‘Brokerage’ or ‘brokerage service’ is the arranging of transportation or the physical movement of a motor

vehicle or of property. It can be performed on behalf of a

motor carrier, consignor, or consignee.”). As a part of its nonbrokerage services, NLC reviewed and audited Oak Harbor’s

freight bills and collected funds from Sears to pay those

freight bills. See id. § 371.2(d) (“ ‘Non-brokerage service’ is

all other service performed by a broker on behalf of a motor

carrier, consignor, or consignee.”). 

Oak Harbor hauled Sears’ freight for a number of years

without the use of an intermediary. In 1989, Sears hired NLC

to perform brokerage services. At first, NLC was hired only

to perform brokerage services for “inbound” or “return” shipments, which involved identifying carriers to move freight

from Sears’ vendors to Sears’ warehouses. By early 1992,

Sears expanded the scope of NLC’s responsibilities to include

broker services for “outbound” shipments. The outbound brokerage services required NLC to identify carriers to move

Sears’ freight from Sears’ warehouses to various freight transportation and delivery companies. 

On January 8, 1992, Oak Harbor and NLC signed a

National Logistics Corporation Carrier Contract (“Carrier

Contract”) to govern their relationship. The Carrier Contract

provided, in pertinent part: 

This AGREEMENT between NATIONAL

LOGISTICS CORPORATION (BROKER/

SHIPPER), operating under ICC Broker No.

MC205436 and Oak Harbor Freight Lines, Inc.

(CARRIER), MC # 139763 engaged in the business

of conducting the transportation of regulated commodities in Interstate Commerce over public highways, provides that NATIONAL LOGISTICS

CORPORATION will offer a series of shipments to

the CARRIER, which the CARRIER agrees to trans672 OAK HARBOR FREIGHT v. SEARS ROEBUCK
port. . . . BROKER/SHIPPER and CARRIER agree

rates governing shipments will be established to

meet the schedules verbally agreed upon and verbal

agreement will be reduced to writing by CARRIER

submitting its invoice to BROKER/SHIPPER. SHIPPER agrees to pay CARRIER within a predetermined time from date of receipt regardless whether

or not BROKER/SHIPPER has been paid for movement. . . . This AGREEMENT shall be effective on

the date it is signed and will remain in full force and

effect from signing date for twelve (12) months.

AGREEMENT shall be automatically extended for

successive twelve (12) month terms or until canceled

by either party by giving written notice to the other

party at least thirty (30) days prior to the date of termination. 

(Emphasis added.) In accordance with the terms of the Carrier

Contract, Oak Harbor and NLC negotiated the rates governing

the shipments on a roughly annual basis. Other than with

respect to rates, they never updated or replaced the Carrier

Contract. 

Bills of lading were used for all of Sears’ freight carried by

Oak Harbor.2 For return shipments, Oak Harbor generated the

bills of lading (“return bills of lading” or “Oak Harborgenerated bills of lading”) using its standard, uniform straight

bill of lading form. Oak Harbor designed its bills of lading to

comply with industry standards. The return bills of lading designated Sears as the “consignee” and were marked “collect.”

2

“The bill of lading is the basic transportation contract between the

shipper-consignor and the carrier; its terms and conditions bind the shipper

and all connecting carriers.” S. Pac. Transp. Co. v. Commercial Metals

Co., 456 U.S. 336, 342 (1982) (addressing default liability terms for rail

bills of lading); see also C.A.R. Transp. Brokerage Co. v. Darden Rests.,

Inc., 213 F.3d 474, 478-79 (9th Cir. 2000) (applying S. Pac. Transp. to

motor freight bills of lading). A bill of lading also can serve as a receipt

for goods and as evidence of title. C.A.R. Transp., 213 F.3d at 479 n.5. 

OAK HARBOR FREIGHT v. SEARS ROEBUCK 673
In the “Bill To” section of the return bills of lading, “Third

Party Billing” was written. 

Sears generated the bills of lading for outbound shipments

(“outbound bills of lading” or “Sears-generated bills of lading”). As with the Oak Harbor-generated bills of lading, Sears

designed its outbound bills of lading to comply with industry

standards. On the bottom of the outbound bills of lading the

following text appeared: “This document is tendered as an

individual Bill of Lading. All terms and conditions of the

straight Bill of Lading and applicable tariff and classifications

in effect as of the date hereon apply.” The outbound bills of

lading read “Freight Terms: PREPAID” and instructed the

carrier to send freight bills to NLC. These bills of lading did

not identify the “Shipper” or “Consignor,” but they did contain entries under the categories “Ship From,” “Consign to,”

and “Carrier.” The “Ship From” category identified a Sears

warehouse. The “Consign to” category identified the destination of the shipment. The “Carrier” category identified Oak

Harbor. 

In accordance with the terms of the bills of lading, billing

and payment between the parties generally followed this pattern: (1) Oak Harbor sent NLC a billing invoice at least three

days after Oak Harbor delivered the freight, and Oak Harbor

expected to be paid by NLC within 30 days of the date shown

on the invoice; (2) after auditing the invoices, NLC billed

Sears weekly for the freight charges that had accumulated

since the last billing date; (3) Sears paid NLC about five days

after receiving the bill from NLC; and (4) NLC paid Oak Harbor, with the funds received from Sears, about 25 days after

NLC received Oak Harbor’s billing invoice. 

In mid-2004, Oak Harbor learned that Sears would no longer use NLC as its broker as of January 2005. In fact, Sears

terminated NLC’s services earlier, on November 12, 2004. By

the end of November 2004, Oak Harbor was owed more than

$400,000 for shipments of Sears’ freight. On December 12,

674 OAK HARBOR FREIGHT v. SEARS ROEBUCK
2004, NLC sent Oak Harbor a letter recommending that Oak

Harbor seek payment directly from Sears. In response to

inquiries by Oak Harbor concerning payment, Sears denied

liability and informed Oak Harbor that NLC was responsible

for the freight charges. By the time Oak Harbor sought collection from Sears, Sears had paid $227,202.50 to NLC for

freight charges invoiced by Oak Harbor.3

In early 2005, Oak Harbor sued both NLC and Sears in

Washington state court for “monies due.” Sears timely

removed the proceeding to federal district court pursuant to

28 U.S.C. §§ 1332, 1441, and 1446. 

Following cross-motions for summary judgment, the district court held “NLC and Sears jointly and severally liable to

Oak Harbor for $426,417.94 in freight charges that were

incurred in connection with [the] shipments arranged by

NLC.” Oak Harbor, 420 F. Supp. 2d at 1152. The district

court also held that Sears was “entitled to recover in indemnity against NLC any portion of the $227,202.50 that Sears

directly pays Oak Harbor.” Id.

In reaching its holdings, the district court explained that

NLC was liable to Oak Harbor under the Carrier Contract. Id.

at 1146-47. The district court did not premise Sears’ liability,

however, on the Carrier Contract. Rather, the district court

interpreted the bills of lading generated by Sears and Oak

Harbor as imposing liability on Sears, which the Carrier Contract did not limit. Id. at 1147-50. In an issue of first impression within the Ninth Circuit, the district court followed the

Fourth, Fifth, and Eleventh Circuits and adopted a rule that

equitable estoppel does not bar Sears’ liability for the

$227,202.50 already paid to NLC for freight shipments. Id. at

1151. 

3Sears initially claimed to have paid about $278,000 of Oak Harbor’s

freight bills, but later conceded that about $50,000 of that amount represented NLC’s service charges and markup on the freight bills. 

OAK HARBOR FREIGHT v. SEARS ROEBUCK 675
After the district court entered judgment, Oak Harbor

moved for an award of prejudgment and post-judgment interest. The district court held Sears liable for prejudgment interest at the rate set by Washington state law and for postjudgment interest at the rate set by federal law. 

Sears timely appealed.

STANDARDS OF REVIEW

We review de novo a district court’s grant of summary

judgment. Universal Health Servs. Inc. v. Thompson, 363

F.3d 1013, 1019 (9th Cir. 2004). Viewing the evidence in the

light most favorable to the nonmoving party, we must determine whether there are genuine issues of material fact and

whether the district court correctly applied the relevant substantive law. Id. When, as here, the facts are not in dispute,

the only question is whether the district court correctly

applied the law. Id.

We review for abuse of discretion an award of prejudgment

interest, Hayes v. Palm Seedlings Partners-A (In re Agric.

Research & Tech. Group, Inc.), 916 F.2d 528, 533 (9th Cir.

1990), but review de novo whether state or federal law applies

to determine the amount and availability of prejudgment interest, McCalla v. Royal MacCabees Life Ins. Co., 369 F.3d

1128, 1129 (9th Cir. 2004). 

DISCUSSION

A. The district court correctly held Sears liable for the

charges incurred by Oak Harbor in shipping Sears’

freight. 

[1] As we have noted, a bill of lading is the basic transportation contract between the shipper/consignor and the carrier,

the terms and conditions of which bind the shipper and all

connecting carriers. S. Pac. Transp. Co. v. Commercial Met676 OAK HARBOR FREIGHT v. SEARS ROEBUCK
als Co., 456 U.S. 336, 342 (1982). In the absence of a statement to the contrary, when a bill of lading is intended to

conform to the industry standard, by default “the consignor

remains primarily liable.” Id. at 343. In C.A.R. Transportation

Brokerage Co. v. Darden Restaurants, Inc., we explained the

default terms and conditions of a standard bill of lading: 

The bill of lading provides that the owner or consignee shall pay the freight and all other lawful

charges upon the transported property and that the

consignor remains liable to the carrier for all lawful

charges. The bill of lading, however, also contains

“nonrecourse” and “prepaid” provisions that, if

marked by the parties, release the consignor and consignee from liability for the freight charges. If the

nonrecourse clause is signed by the consignor and no

provision is made for the payment of freight, delivery of the shipment to the consignee relieves the

consignor of liability. Similarly, when the prepaid

provision on the bill of lading has been marked and

the consignee has already paid its bill to the consignor, the consignee is not liable to the carrier for

payment of the freight charges. 

213 F.3d 474, 478-79 (9th Cir. 2000) (citations and footnotes

omitted). 

[2] Those default liability provisions can be modified by

contract so as to make “the liability allocation presumptions

on the bill of lading . . . unnecessary.” Id. at 479. For example, if parties enter into a contract before preparing a bill of

lading, and there is “an irreconcilable repugnancy between the

prior written contract and the bills of lading, that conflict

would have to be resolved in favor of the former.” Toyo Kisen

Kaisha v. W.R. Grace & Co., 53 F.2d 740, 742 (9th Cir.

1931). “It is only where the parties fail to agree or where discriminatory practices are present that the [bill of lading’s]

default terms bind the parties.” C.A.R. Transp., 213 F.3d at

OAK HARBOR FREIGHT v. SEARS ROEBUCK 677
479. In C.A.R. Transportation, we held that a carrier had

modified the default provisions of certain bills of lading and

had waived shipper/consignor liability when its employees

signed a document, separate from the bills of lading, stating

that the carrier would not seek payment from the shipper/

consignor. Id. at 476-79. 

[3] Here, the bills of lading used by the parties to ship

Sears’ freight—both the Sears-generated bills of lading for the

outbound shipments and the Oak Harbor-generated bills of

lading for the return shipments—were designed to comply

with industry standards. Accordingly, they adopted the default

terms of the uniform straight bill of lading.4 Under those

default terms, the shipper/consignor is liable for freight

charges unless the bill of lading is marked “nonrecourse.” Id.

at 478-79. Sears was the shipper/consignor on the outbound

bills of lading. Its bills of lading did not include a “nonrecourse” clause. As a consequence, in the absence of a separate

agreement, Sears is liable for the freight charges on the outbound bills of lading. 

[4] Similarly, under the default terms, a consignee is liable

for freight charges unless the bill of lading is marked “prepaid.” Id. Sears was the consignee on the return bills of lading. Because the bills of lading were marked “collect”—not

“prepaid”—in the absence of a separate agreement, Sears is

liable for the freight charges on the return shipment bills of

lading. In sum, in the absence of a separate agreement, Sears

4The outbound bills of lading provided: “All terms and conditions of the

straight Bill of Lading and applicable tariff and classifications in effect as

of the date hereon apply,” thereby expressly adopting the rules for the

Uniform Straight Bill of Lading. See, e.g., American Trucking Associations, Inc., National Motor Freight Classification, STB NMF 100-AD,

Uniform Bill of Lading Terms and Conditions (2003). Similarly, Oak Harbor acknowledged that the bills of lading for return shipments were based

on the industry standards: the Uniform Straight Bill of Lading form. See

id.

678 OAK HARBOR FREIGHT v. SEARS ROEBUCK
is liable for Oak Harbor’s freight charges because of the

default liability provisions that are part of the bills of lading.

Although Sears agrees with these general principles, it nevertheless contends that, for three reasons, it should not be

required to pay the freight charges. First, Sears argues that the

Carrier Contract waives the default liability provisions of the

bills of lading. Second, Sears argues that, if not a waiver, the

Carrier Contract was the sole lawful contract governing the

shipments, thereby rendering the bills of lading mere receipts.

Third, even if the Carrier Contract does not modify the default

liability provision, Sears argues that Oak Harbor is equitably

estopped from collecting the freight charges from Sears. We

address each argument in turn. 

1. Carrier Contract—Waiver

[5] The parties to a freight shipment generally are free to

assign liability for the payment of freight charges through a

contract separate from the bill of lading. Louisville & Nashville R.R. Co. v. Cent. Iron & Coal Co., 265 U.S. 59, 66-67

(1924). Such a contract may provide that “the shipper agrees

absolutely to pay the charges, or . . . merely that he shall pay

if the consignee does not pay . . . , or . . . that only the [consignee] shall be liable for the freight charges, or [that] both

the shipper and the consignee may be made liable.” Id. “It is

only where the parties fail to agree or where discriminatory

practices are present that the [bill of lading] default terms bind

the parties.” C.A.R. Transp., 213 F.3d at 479 (emphases

added). 

[6] Sears contends that the Carrier Contract between Oak

Harbor and NLC waived Oak Harbor’s recourse against Sears

under the otherwise-applicable default liability provisions of

the bills of lading. Although it is well established that a contract between the parties to a bill of lading—the shipper, the

carrier, and the consignee—can allocate liability for payment

of freight charges, there is no support for the proposition that

OAK HARBOR FREIGHT v. SEARS ROEBUCK 679
a contract with a broker, who is not a party to the bill of lading, can do the same. See Louisville, 265 U.S. at 67 (looking

to the promises, if any, made by the shipper to determine liability for payment of freight charges); S. Pac. Transp., 456

U.S. at 342 (“The bill of lading is the basic transportation

contract between the shipper-consignor and the carrier.”);

C.A.R. Transp., 213 F.3d at 478-79 (“The bill of lading provides that the owner or consignee shall pay the freight . . . and

that the consignor remains liable to the carrier . . . .”). 

Sears cites no authority to support its proposition that a

contract between a carrier and a broker can modify the default

liability provisions of a bill of lading. In each of the two cases

on which Sears primarily relies, Toyo Kisen, 53 F.2d 740, and

Roll Form Products, Inc. v. All State Trucking Co. (In re Roll

Form Products, Inc.), 662 F.2d 150 (2d Cir. 1981), the contracts at issue were entered into between a carrier and the

direct parties to the bill of lading—the shipper, consignor, or

consignee. Neither case involved a contract with a broker. 

[7] Only Oak Harbor and NLC executed the Carrier Contract. Sears was neither named in, nor a signatory to, that

agreement. The Carrier Contract never mentions or refers to

Sears by name or description. The Carrier Contract makes no

express or implied statements that Sears will not pay Oak

Harbor for the shipments, nor does the contract make any

express or implied statements that Oak Harbor will not seek

payment from Sears. The Carrier Contract merely provides

that NLC will be liable for freight charges regardless whether

or not NLC is paid.5 This agreement by NLC to be liable for

5The Carrier Contract states that “SHIPPER agrees to pay CARRIER

within a predetermined time . . . regardless whether or not BROKER/

SHIPPER has been paid.” The district court found that the term “SHIPPER” means NLC, because Sears “could not have ‘agreed’ to anything

given that it was not a party to, and did not sign, the contract . . . [and]

NLC, not Sears, was receiving Oak Harbor’s freight bills and was

expected to pay them within thirty days.” Oak Harbor, 420 F. Supp. 2d

at 1146. As the district court found, and Sears does not challenge, the Carrier Contract can be understood as follows: “NLC agrees to pay Oak Harbor within a predetermined time . . . regardless whether or not NLC has

been paid.” 

680 OAK HARBOR FREIGHT v. SEARS ROEBUCK
the freight charges does not imply that Sears is not liable. To

hold as Sears wishes would permit a shipper to insulate itself

from liability for the payment of freight charges by the simple

act of using a broker. We hold that the Carrier Contract did

not alter Sears’ liability for the freight charges under the bills

of lading.6

2. Carrier Contract—Sole Lawful Contract

In the alternative, Sears argues that the Carrier Contract

was the sole lawful contract for the freight shipments and that

the bills of lading were merely receipts. Sears first notes that,

in 1992, when Oak Harbor and NLC executed the Carrier

Contract, federal law required that Oak Harbor enter into a

written agreement to charge below-tariff rates. 49 C.F.R.

§ 1053.1 (1991) (repealed June 20, 1992). Oak Harbor concedes that it intended the Carrier Contract to comply with that

regulation. As a result, Sears reasons, Oak Harbor and NLC

intended that the Carrier Contract be the sole legal contract

for shipments, thereby foreclosing the possibility that the bills

of lading had any effect other than as receipts. 

[8] The former regulation that Sears cites did not presume

to control all aspects of a carriage agreement. Rather, the regulation provided only that such agreements “shall be in writing, shall provide for transportation for a particular shipper or

shippers, shall be bilateral and impose specific obligations

upon both carrier and shipper or shippers, [and] shall cover a

series of shipments during a stated period of time.” Id. Critically, the regulation did not require that the agreement be the

exclusive contract for the carriage of goods. Consequently,

6Sears’ further argument—that the district court created a “superwaiver” requirement by holding that the Carrier Contract did not constitute

an “unequivocal waiver of Oak Harbor’s rights to collect freight charges,”

Oak Harbor, 420 F. Supp. 2d at 1149—is equally unavailing on de novo

review. The Carrier Contract contains no waivers—express or implied—of

the default liability provisions in the bills of lading. 

OAK HARBOR FREIGHT v. SEARS ROEBUCK 681
the regulation does not displace the default liability provisions

for bills of lading, which we have discussed above. 

[9] Sears also argues that the bills of lading could not function as contracts, because the Carrier Contract contains the

price term for the shipments. In support, Sears cites Toyo

Kisen, in which we explained that, when there is “irreconcilable repugnancy between the prior written contract and the

bills of lading, that conflict would have to be resolved in favor

of the former.” Toyo Kisen Kaisha, 53 F.2d at 742. We found

an “irreconcilable repugnancy” in Toyo Kisen because the oral

and written agreements at issue provided that payment for disputed freight charges would occur only after delivery of the

goods to Hawaii, while the bill of lading provided that payment for the freight charges would occur whether or not the

goods were delivered. Id. at 741. 

[10] There is no such irreconcilable repugnancy between

the Carrier Contract and the bills of lading in this case. They

operate concurrently and in harmony to provide the key terms

for Sears’ freight shipments. The bills of lading contain no

price terms, while the Carrier Contract determines the price

for the shipments. The Carrier Contract does not address

Sears’ liability for payment of freight charges, while the

default provisions in the bills of lading make Sears liable. The

bills of lading identify the shipper, consignor, and consignee;

describe where the goods are to be picked up and where they

are to be delivered; and contain the payment liability terms of

“prepaid” or “collect” to the bills of lading, none of which the

Carrier Contract provides. 

[11] In summary, the regulations under which Oak Harbor

and NLC entered into the Carrier Contract did not require that

the Carrier Contract constitute the sole agreement for the

shipment of freight. In addition, the terms of the Carrier Contract and the terms of the bills of lading work in harmony to

supply different aspects of the parties’ relationship; we can

give effect to both the Carrier Contract and the bills of lading

682 OAK HARBOR FREIGHT v. SEARS ROEBUCK
as concurrent contracts for the carriage of Sears’ freight.

Accordingly, we hold that the Carrier Contract did not constitute the sole legal agreement for the carriage of Sears’ freight.

3. Equitable Estoppel

[12] Sears further argues that it “paid NLC for the majority

of the freight charges at issue” and that, as “an innocent

party,” it “should not be required to pay twice.”

7

 In other

words, Sears contends that equitable estoppel should bar Oak

Harbor’s collection of the freight charges from it. Whether the

shipper or the carrier bears the risk if a freight forwarder, broker, or consolidator fails to forward a freight payment, or if

a consignee fails to forward a freight payment, is a question

of first impression for this circuit. 

In support of its position, Sears relies primarily on the Sixth

Circuit’s decision in Olson Distributing Systems, Inc. v. Glasurit America, Inc., 850 F.2d 295 (6th Cir. 1988). In that case,

a motor carrier sought payment from a shipper for freight bills

that the carrier had submitted to a freight forwarder. Id. at

295. The shipper paid the freight forwarder, but the freight

forwarder absconded with the money and never paid the carrier. Id. Although the bills of lading were marked “prepaid,”

and the shipper did not sign the “nonrecourse” clause on the

bills of lading, the Sixth Circuit held that the risk of loss

should rest with the carrier. Id. at 295-96. 

The Sixth Circuit pointed to four critical facts in reaching

its holding. First, the carrier provided the shipper with freight

bills stating that the freight charges were to be paid to the

freight forwarder, not the carrier. Id. at 297. In other words,

7Sears’ argument ignores that it paid only $227,202.50 of the

$426,417.94 in charges incurred by Oak Harbor in shipping Sears’ freight.

Nearly $200,000 in freight charges never has been paid by Sears to NLC

or Oak Harbor, even though Sears received the full benefit of both of their

services. 

OAK HARBOR FREIGHT v. SEARS ROEBUCK 683
the carrier’s own bills indicated that the carrier should not

expect payment from the shipper. Id. Second, the carrier did

not diligently bill the freight forwarder for shipments, waiting

until “two to three months after the last delivery” before sending any freight bills to the freight forwarder. Id. at 295. Third,

the carrier violated then-current credit regulations established

by the Interstate Commerce Commission which, had the carrier followed, would have allowed the carrier to identify that

the freight forwarder was absconding with the money. Id. at

297. Finally, had the carrier notified the shipper sooner, the

carrier could have limited its losses. Id. The court concluded:

“Here[,] the doctrine of equitable estoppel requires that the

loss fall on the carrier because its actions had the effect of

lulling the shipper into believing that it was expecting and

receiving payment from the freight forwarder.” Id. at 296. 

[13] We agree with the district court that Olson is an “outlier,” the extreme facts of which bear little resemblance to what

happened here.8 Oak Harbor, 420 F. Supp. 2d at 1151. Three

of our sister circuits—the Fourth, Fifth, and Eleventh Circuits

—have reached a conclusion at odds with Olson on facts

much closer to those before us. Those courts have held that

a shipper should bear the risk when it chooses to pay for

freight charges through a broker rather than directly to the

carrier. Hawkspere Shipping Co. v. Intamex, S.A., 330 F.3d

225, 237-38 (4th Cir. 2003); Strachan Shipping Co. v.

Dresser Indus., Inc., 701 F.2d 483, 489-90 (5th Cir. 1983);

Nat’l Shipping Co. of Saudi Arabia v. Omni Lines, Inc., 106

8Citing out-of-circuit authority, Sears takes exception to the “outlier”

characterization. That authority is not availing. In two of the cited cases,

the courts held that equitable estoppel is available when an innocent consignee paid a shipper/consignor and received a bill of lading from the carrier marked “prepaid.” See EF Operating Corp. v. Am. Bldgs., 993 F.2d

1046, 1052 (3d Cir. 1993); Consol. Freightways Corp. v. Admiral Corp.,

442 F.2d 56, 59-60 (7th Cir. 1971). The third cited case is even further

from the point, because it addressed a misapplication of mandatory tariff

rates where no double payment had occurred. Inman Freight Sys., Inc. v.

Olin Corp., 807 F.2d 117, 121 (8th Cir. 1986). 

684 OAK HARBOR FREIGHT v. SEARS ROEBUCK
F.3d 1544, 1546-47 (11th Cir. 1997). As noted by the district

court, Oak Harbor, 420 F. Supp. 2d at 1151, the policy reasons for this result are persuasive. The Fifth Circuit wrote:

[W]e think that our result comports with economic

reality. A freight forwarder provides a service. He

sells his expertise and experience in booking and

preparing cargo for shipment. He depends upon the

fees paid by both shipper and carrier. He has few

assets, and he books amounts of cargo far exceeding

his net worth. Carriers must expect payment will

come from the shipper, although it may pass through

the forwarder’s hands. While the carrier may extend

credit to the forwarder, there is no economically

rational motive for the carrier to release the shipper.

The more parties that are liable, the greater the assurance for the carrier that he will be paid. 

Strachan, 701 F.2d at 490. Furthermore, as those courts have

explained, the shipper, and not the carrier, is in the best position to avoid liability for double payment by dealing with a

reputable freight forwarder, by contracting with the carrier to

eliminate the shipper’s liability, or by simply paying the carrier directly. See Nat’l Shipping, 106 F.3d at 1547 (recommending using reputable freight forwarders or contracting to

eliminate liability); Hawkspere, 330 F.3d at 237 (recommending paying the carrier directly). 

Sears contends that Southern Pacific Transportation supports its position. In Southern Pacific Transportation, the

Court stated that “double payment cases constitute their own

category and stand against the placement of duplication of liability upon an innocent party.” 456 U.S. at 351. Sears’ reliance is misplaced. In Southern Pacific Transportation, the

Court refused to grant an estoppel defense to a shipper/

consignor because, among other reasons, (a) the shipper/

consignor was paid for the goods but the carrier was not paid

for its services; and (b) the shipper/consignor, having failed

OAK HARBOR FREIGHT v. SEARS ROEBUCK 685
to mark the bill of lading as “nonrecourse,” remained primarily liable for the freight charges. 456 U.S. at 351-52. The

Court acknowledged that some cases applied equitable estoppel to bar recovery of freight charges by a carrier. Id. at 351.

But the Court noted that those cases applied estoppel only in

limited circumstances: “Each and all of them involved a carrier’s misrepresentation, such as a false assertion of prepayment

on the bill of lading, upon which a consignee detrimentally

relied only to find itself later sued by the carrier for the same

freight charges.” Id. Carriers involved in misrepresentation

“constitute their own category and stand against the placement of duplication of liability upon an innocent party.” Id.

With respect to the outbound shipments as to which Sears

was shipper/consignor, we agree with the district court that

the Hawkspere, Strachan, and National Shipping line of

authority best applies to the facts of this case. Sears generated

the bills of lading and failed to protect itself with a “nonrecourse” designation. In addition, Sears selected NLC and

directed Oak Harbor to submit its bills through NLC. 

With respect to the return shipments, Sears was not an “innocent consignee.” The bills of lading clearly were marked

“collect,” which put Sears on notice that payment was due.9

In addition, Sears undertook no actions to limits its liability.

In particular, Sears could have elected to pay Oak Harbor

directly, but did not, and thereby assumed the risk that NLC

would fail to forward payment. Furthermore, unlike in Olson,

Oak Harbor did not extend credit to NLC in violation of federal regulations, and it immediately sought payment from

Sears when NLC abrogated its responsibility to forward

Sears’ freight payments. 

[14] Thus, we hold that equitable estoppel does not bar Oak

9Had the bills of lading been marked “prepaid,” Sears could have

argued that it relied detrimentally on a representation by Oak Harbor. But

they were not so marked. 

686 OAK HARBOR FREIGHT v. SEARS ROEBUCK
Harbor’s recovery of freight charges from Sears, notwithstanding Sears’ payment of a portion of those freight charges

to NLC. 

B. The district court correctly awarded prejudgment

interest to Oak Harbor under Washington law. 

On motion by Oak Harbor, the district court awarded prejudgment interest beginning December 15, 2004, at the rate

specified by Washington state law. Sears challenges the district court’s award of prejudgment interest on two grounds.

First, Sears contends that prejudgment interest was improper

because Oak Harbor failed to present evidence of the date on

which Sears’ payments to Oak Harbor were due. Second,

Sears contends that, assuming an award of prejudgment interest was proper, the court should apply the federal rate established by 28 U.S.C. § 1961, because the judgment against

Sears was premised on federal law. 

1. Award of Prejudgment Interest

The district court calculated prejudgment interest using a

single “due” date of December 14, 2004, for all 3,386 shipments made by Sears during the approximately four-month

period at issue. Oak Harbor proposed that date in its motion

for prejudgment interest, as follows: 

Each of the freight charges at issue here was billed

at a different date during a time span of about 3-1/2

months, beginning in August and ending in November 2004. Therefore, Oak Harbor would be entitled

to prejudgment interest on each such invoice running

from the separate date that each became due and

payable. However, because there were so many

invoices and each was for a relatively small amount,

for the sake of simplicity, Oak Harbor will assume

for the purposes of this motion that: (1) all 3,386

shipments occurred on the same day; (2) that they

OAK HARBOR FREIGHT v. SEARS ROEBUCK 687
were all then billed in due course on the same day;

and, (3) therefore, became due and payable on the

same day. 

For the purposes of this motion, therefore, Oak

Harbor will assume that all 3,386 shipments

occurred on November 11, 2004. This was the day

before Sears terminated NLC and instructed Oak

Harbor to begin as of November 12 to send its

freight bills to Menlo Logistics for processing and

payment. Consequently, it is [the] last shipment date

for which freight invoices would have gone to NLC

for payment. It will further be assumed, therefore,

that in the normal course of business, by 3 days later

on November 14, 2004, NLC had received all 3,386

freight bills from Oak Harbor, for which payment

was then due no later than 30 day[s] later on December 14, 2004. 

Sears contends that the district court’s grant of prejudgment

interest was improper because the court held Sears liable for

the cost of the shipments under the bills of lading, and those

bills of lading did not specify a date on which payments to

Oak Harbor were due. But, the assumptions that the district

court adopted for purposes of the motion (the ordinary course

of billing between the parties and the date of termination of

NLC) were consistent with the undisputed evidence in the

case. The district court found that, in the ordinary course of

their business dealings, NLC billed Sears weekly for the

freight shipments, and Sears paid NLC approximately five

days after receiving a bill. Oak Harbor, 420 F. Supp. 2d at

1144-45. As noted above, Sears terminated NLC’s services on

November 12, 2004. Applying those assumptions, Sears

would have paid NLC well before December 14, 2004. 

[15] The only authority that Sears cites to argue against the

award of the prejudgment interest actually supports the proposition that a district court can use certain shortcuts to achieve

688 OAK HARBOR FREIGHT v. SEARS ROEBUCK
a “fair figure for the interest” to avoid numerous calculations.

See Chandler v. Bombardier Capital, Inc., 44 F.3d 80, 84 (2d

Cir. 1994) (holding that the district court did not abuse its discretion in applying, over a longer period of time, a much

lower interest rate than it otherwise might have applied

because the interest was fair and the court avoided “establishing a separate interest figure for each lost monthly payment”).

We agree with the Second Circuit’s practical approach. Consequently, we hold that the district court did not abuse its discretion in adopting December 14, 2004, as the date from

which prejudgment interest should accrue. 

2. Application of Washington Law to Prejudgment

Interest

“Prejudgment interest is a substantive aspect of a plaintiff’s

claim, rather than a merely procedural mechanism.” Sea

Hawk Seafoods, Inc. v. Exxon Corp. (In re the Exxon Valdez),

484 F.3d 1098, 1101 (9th Cir. 2007). State law generally governs awards of prejudgment interest in diversity actions, but

federal law may apply to the calculation of prejudgment interest when a substantive claim derives from federal law alone.

See id. at 1100-02 (“In cases tried under admiralty principles

only, principles of federal law govern a plaintiff’s entitlement

to prejudgment interest even though the plaintiff may have

invoked diversity jurisdiction . . . .” (internal quotation marks

omitted)). 

[16] Sears argues that, because the district court relied on

federal law for its decision, federal law should apply to the

award of prejudgment interest if one is to be made.10 That

argument ignores the fact that the action was brought, and

judgment was entered, on a state law claim for “monies due.”

Oak Harbor, 420 F. Supp. 2d at 1146. That the district court

cited federal precedents in reasoning to its holding does not

10Sears’ only appellate challenge to the rate of prejudgment interest is

the application of state, rather than federal, law. 

OAK HARBOR FREIGHT v. SEARS ROEBUCK 689
convert the case into one premised on federal substantive law.

We hold that the district court did not err in applying Washington state law to the award of prejudgment interest. 

AFFIRMED. 

690 OAK HARBOR FREIGHT v. SEARS ROEBUCK