FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REGAL-BELOIT CORPORATION; 

VICTORY FIREWORKS, INC.; PICC

PROPERTY & CASUALTY COMPANY

LIMITED SHANGHAI BRANCH; ROYAL No. 06-56831 SUN ALLIANCE INSURANCE CO. LTD.,

Plaintiffs-Appellants, D.C. No.  CV-06-03016-DSF

v.

OPINION KAWASAKI KISEN KAISHA LTD.;

K-LINE AMERICA, INC.; UNION

PACIFIC RAILROAD COMPANY,

Defendants-Appellees. 

Appeal from the United States District Court

for the Central District of California

Dale S. Fischer, District Judge, Presiding

Argued and Submitted

June 10, 2008—Pasadena, California

Filed February 4, 2009

Before: Stephen Trott, Sidney R. Thomas and

Raymond C. Fisher, Circuit Judges.

Opinion by Judge Fisher

1257
COUNSEL

Alan Nakazawa, Cogswell Nakazawa & Chang, LLP, Long

Beach, California, for defendants-appellees Kawasaki Kisen

Kaisha, Ltd. and K-Line America, Inc. 

Leslie G. McMurray, Valley Village, California, for

defendant-appellee Union Pacific Railroad Company. 

1260 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
Dennis Cammarano, Long Beach, California, for the

plaintiffs-appellants. 

OPINION

FISHER, Circuit Judge: 

This case requires us to determine which federal statute

governs “a maritime case about a train wreck,” where the parties’ agreement for carriage of goods from China into the

United States by sea and then by rail included a Tokyo forum

selection clause that would violate one federal law, but would

be enforceable under another. See Norfolk S. Ry. Co. v. Kirby,

543 U.S.14, 18 (2004). Regal-Beloit and several other named

plaintiffs contracted with defendant Kawasaki Kisen Kaisha,

Ltd. (“K-line”) to ship their goods from China to various

American Midwestern destinations via the Port of Long

Beach in California.1 K-line issued a through bill of lading to

each shipper to cover the shipment from China all the way to

the inland destinations, choosing the Carriage of Goods by

Sea Act as the law to govern the carriers’ responsibility during shipment. Although K-line’s own ocean liner carried the

1Plaintiffs in this case include the following parties: Regal-Beloit is a

non-California corporation with an office in Beloit, Wisconsin that purchased a cargo of electric motors to be shipped from Shanghai, China to

Indianapolis, Indiana; Victory is a corporation authorized to do business

in California with an office in Ellsworth, Wisconsin that purchased a cargo

of fireworks to be shipped from Beihai, China to Minneapolis, Minnesota;

PICC is a foreign insurance corporation with an office in Shanghai that

was the subrogated insurer of a cargo of electric motor parts to be shipped

from Shanghai, China to Milwaukee, Wisconsin; and Royal & Sun was

the subrogated insurer of a cargo of retainer nail castings to be shipped

from Zhangjiagang, China to Chicago, Illinois. The actions were consolidated under Regal-Beloit’s named complaint on August 7, 2006. All shipments entered the United States via the Port of Long Beach. We generally

refer to the plaintiffs collectively as “Plaintiffs.” We also generally refer

to defendants Kawasaki Kisen Kaisha, K-line America and Union Pacific

Railroad Company as “Defendants.” 

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1261
goods from China to Long Beach, its United States agent, Kline America (“KAM”), subcontracted with United Pacific

Railroad Company (“UPRR”) to transport these goods from

Long Beach to the inland destinations. K-line is KAM’s corporate parent, handling its domestic business dealings through

KAM, including dispatching and receiving vessels and negotiating its inland shipping with domestic carriers like UPRR.

Plaintiffs’ cargo was allegedly damaged when UPRR’s train

derailed in Oklahoma. Plaintiffs filed a breach of contract suit

against Defendants in California Superior Court. After UPRR

removed the case to the district court, K-line and KAM

moved to dismiss under the Tokyo forum selection clause in

K-line’s initial agreement with Plaintiffs. The district court

granted the motion to dismiss, determining that the parties

successfully avoided the strict venue limitations that apply by

default to the rail portions of these shipments as a matter of

federal law under the Carmack Amendment. The dismissal

provides us jurisdiction under 28 U.S.C. § 1291. 

The outcome of this case turns on the answers to two questions, the first being which statutory framework should apply:

the Carmack Amendment (“Carmack”), which provides the

default rules governing the inland rail leg of a shipment

between a foreign country and a point in the United States, or

the Carriage of Goods by Sea Act (“COGSA”), which is what

the parties contractually agreed would govern?2 A reasonable

forum selection clause typically is enforceable under COGSA,

2Both Carmack and COGSA have been codified at several different sections of Title 49 since their enactments. “Originally codified at 49 U.S.C.

§ 20(11), Carmack was recodified in 1978 at 49 U.S.C. § 11707 and then

recodified again in 1996 at 49 U.S.C. § 14706. The current version of Carmack is codified at 49 U.S.C. § 11706.” Sompo Japan Ins. Co. v. Norfolk

S. Ry. Co., 540 F. Supp. 2d 486, 492 n.4 (S.D.N.Y. 2008) [hereinafter

Sompo II] (internal citations omitted). COGSA was originally codified at

46 U.S.C. §§ 1301-1315, which is how the statute is cited in most of the

relevant case law. Congress recodified portions of Title 46 of the United

States Code as positive law in October 2006, and in so doing, moved

COGSA to the notes section of 46 U.S.C. § 30701. 

1262 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
but such a clause is valid under Carmack only if the parties

fulfill one of Carmack’s two statutory methods for contracting

out of the statute’s venue restrictions. Applying this circuit’s

precedent dictates that contractually extending COGSA to the

inland rail leg cannot trump the statutory force of Carmack’s

default responsibility regime unless the parties properly agree

to opt out of Carmack and thereby remove the statutory barrier to choosing COGSA as the governing law. We therefore

reach a second question: which of Carmack’s two statutory

opt out provisions applies to a contract for rail service that,

like the contract here, has been exempted from regulation by

the Surface Transportation Board? Unlike the district court,

we conclude that the applicable requirements for opting out of

Carmack are found in 49 U.S.C. § 10502, instead of § 10709.

We thus reverse and remand to the district court to determine

whether the parties contracted out of Carmack’s venue restrictions under § 10502 so as to make the Tokyo forum selection

clause valid and enforceable. 

BACKGROUND

To ship their goods, Plaintiffs each entered into an intermodal through bill of lading with K-line that covered the entire

transport from China to the Midwest.3 In pertinent part, the

bills of lading included the following provisions:

1. (Definitions & Tariff) . . . (b) ‘Carrier’ means

[K-line], her owners, operators and charterers

whether acting as carrier or bailee. . . . (d) ‘Connecting Carrier’ means carriers (other than Carrier), contracted by or acting on behalf of Carrier,

3A bill of lading is a contract that “records that a carrier has received

goods from the party that wishes to ship them, states the terms of carriage,

and serves as evidence of the contract for carriage.” Kirby, 543 U.S. at 18-

19. “Through” bills of lading specifically cover both oceanic and inland

legs of a journey in a single document. See id. at 25-26. “Intermodal”

refers to the use of more than one method of transport during a single shipment. See id. at 25. 

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1263
participating in Carriage of Goods by land, water or

air under this Bill of Lading. . . . (j) ‘Vessel’ includes

the vessel named on the face hereof, any vessel,

lighter, barge, ship, watercraft or any other means of

water transport and any other vessel owned, operated, chartered or employed (in whole or in part) by

Carrier or any Connecting Carrier and used in whole

or in part for carriage of Goods under this Bill of

Lading. 

2. (Governing Law and Jurisdiction) The contract

evidenced by or contained in this Bill of Lading shall

be governed by Japanese law except as may be otherwise provided for herein, and any action thereunder or in connection with Carriage of Goods shall be

brought before the Tokyo District court in Japan, to

whose jurisdiction Merchant irrevocably consents. 

. . . . 

4. (Responsibility for Shipments To, From, or

Through US Territories) (1) With respect to Goods

shipped to, from, or through US Territories, Carrier’s

responsibilities during the entire period (and not just

during Water Carriage) from the time of receipt of

Goods to the time of delivery of Goods shall be governed by [COGSA], and [COGSA] shall be deemed

incorporated herein during the entire aforesaid

period . . . .4

5. (Sub-Contracting: Exemptions, Immunities,

Limitations, etc. of Participant(s)) (1) Carrier shall

be entitled to sub-contract on any terms whatsoever

4A clause such as this, “which identifies the law that will govern the

rights and liabilities of all parties to the bill of lading,” is often referred

to as a “clause paramount.” Sompo Japan Ins. Co. of Am. v. Union Pac.

R.R. Co., 456 F.3d 54, 56 (2nd Cir. 2006) [hereinafter Sompo I]. 

1264 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
Carriage, including without limitations, the loading,

unloading, storing, warehousing, handling and any

and all duties whatsoever undertaken by Carrier in

relation to Goods by any of the following (I) any

Connecting Carrier . . . . (2) . . . [E]very such vessel

and Such Participant(s) shall have the benefit of all

provisions herein benefiting [sic] Carrier as if such

provisions were expressly for their benefit; and, in

entering into this contract, Carrier, to the extent of

those provisions, does so not only on its own behalf,

but also as agent and trustee for such vessel and Participant(s).5

K-line’s ocean carriers shipped the cargo from China to

Long Beach. From there, the cargo was transferred to UPRR,

with whom KAM had contracted to transport the cargo from

the Port of Long Beach to the various inland destinations.

This agreement was memorialized in the Exempt Rail Transportation Agreement (“ERTA”), which explicitly stated that

“[l]iability for freight loss and damage to lading while under

the control of [UPRR] shall be governed by MITA [the Master Intermodal Transportation Agreement].” The MITA provided that the MITA plus any bills of lading constituted the

entire contract between the parties, and included its own

forum selection clause that stated that “[a]ll lawsuits for

freight loss or damage must be filed in a court of competent

jurisdiction in Omaha, Douglas County, Nebraska.” The

MITA also (1) prohibited the interpretation of its terms under

foreign law; (2) explicitly provided that “[t]his MITA and any

agreements, price documents or contracts that reference this

MITA have been made under 49 U.S.C. § 10709”; and (3)

expressly established that “Carmack liability coverage is not

available for any Shipments that originate outside the borders

of the United States of America.” 

5A clause such as this, which extends a bill of lading’s defenses and

limitations to downstream parties who have subcontracted with the Carrier, is often referred to as a “Himalaya clause.” See Kirby, 543 U.S. at 20

& n.2. 

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1265
Unfortunately, the UPRR train carrying the aforementioned

cargo derailed in Tyrone, Oklahoma. Based on the alleged

damage to the cargo, Plaintiffs filed suits against Defendants

in Los Angeles County Superior Court. UPRR removed the

cases to the Federal District Court for the Central District of

California. Once the cases were removed, Defendants moved

to dismiss the actions, relying on the Tokyo forum selection

clause in the bills of lading. The district court granted their

motion. See Regal-Beloit Corp. v. Kawasaki Kisen Kaisha,

Ltd., 462 F. Supp. 2d 1098, 1105 (C.D. Cal. 2006). 

The district court concluded that the Tokyo forum selection

clause was reasonable, and that KAM and UPRR could enjoy

its benefits under the Himalaya Clause. See id. at 1102-03. It

went on to determine that Carmack’s venue restrictions

applied neither to the overseas leg of the cargo shipment,

which were instead governed by COGSA, nor to the inland

leg of the cargo shipment. See id. at 1103-04. With respect to

the inland leg, the district court explained that although this

transport would typically be subject to Carmack’s restrictions,

here the parties entered into the bills of lading under 49

U.S.C. § 10709, thereby enabling the parties to contract out of

the Carmack Amendment’s terms. See id. 

We disagree. Under our case law, Carmack — not COGSA

— must govern Defendants’ liability for the inland rail transport here. Therefore, Tokyo is an acceptable forum under the

provisions of Carmack only if the parties satisfied the applicable requirements under either § 10709 or § 10502 for contracting out of Carmack’s default venue restrictions. As we

explain below, a careful reading of Carmack reveals that

§ 10709 does not govern the kind of carriage at issue in this

case and the district court therefore erred by applying that section instead of § 10502. Accordingly, we reverse and remand

so the district court can determine in the first instance whether

the parties complied with § 10502. 

1266 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
STANDARD OF REVIEW

We reject Defendants’ argument in favor of the abuse of

discretion standard of review, which applies only to a district

court’s factual finding regarding a forum selection clause’s

reasonableness. See Kukje Hwajae Ins. Co., v. The “M/V

Hyundai Liberty,” 408 F.3d 1250, 1254 (9th Cir. 2005). Here,

the parties concede that the forum selection clause is reasonable. Instead, the dispute turns on which statutory law applies

and whether this body of law voids the forum selection clause

regardless of its reasonableness. We review these issues of

statutory interpretation de novo. See Chateau Des Charmes

Wines, Ltd. v. Sabate USA Inc., 328 F.3d 528, 530 (9th Cir.

2003); Richards v. Lloyd’s of London, 135 F.3d 1289, 1292

(9th Cir. 1998) (en banc).

DISCUSSION

I. Statutory Provisions

Because of their centrality to our analysis, we summarize

the relevant provisions of Carmack and COGSA before turning to the question of which statute applies here. 

Congress added the Carmack Amendment to the Interstate

Commerce Act in 1906. Carmack, which governs rail and

motor carriers that are under the jurisdiction of the Surface

Transportation Board (“the Board,” previously referred to as

the Interstate Commerce Committee, or “the ICC”), narrowly

limits the venues in which a claim may be brought. Carmack

dictates that: 

[a] civil action under this section may only be

brought (i) against the originating rail carrier, in the

judicial district in which the point of origin is

located; (ii) against the delivering rail carrier, in the

judicial district in which the principal place of business of the person bringing the action is located if

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1267
the delivering carrier operates a railroad or a route

through such judicial district, or in the judicial district in which the point of destination is located; and

(iii) against the carrier alleged to have caused the

loss or damage, in the judicial district in which such

loss or damage is alleged to have occurred. 

49 U.S.C. § 11706(d)(2)(A). A “judicial district” is defined as

“a judicial district of the United States” or “the applicable

geographic area over which [a state] court exercises jurisdiction.” 49 U.S.C. § 11706(d)(2)(B). Given these restrictions,

forum selection clauses are generally forbidden under Carmack. Notably, however, Congress has since added a series of

provisions designed to deregulate aspects of the railroad

industry. See Tokio Marine & Fire Ins. Co. v. Amato Motors,

Inc., 996 F.2d 874, 877 (7th Cir. 1993). Collectively referred

to as the Staggers Rail Act, these provisions establish two

mechanisms by which rail and motor carriers can contract out

of Carmack’s restrictions if they satisfy the applicable statutory requirements. See 49 U.S.C. §§ 10502(a), 10502(e),

10709(a), 10709(c)(1). 

By its terms, COGSA covers transport only between a foreign and American port “from the time when the goods are

loaded on to the time when they are discharged from the ship”

— commonly referred to as “tackle-to-tackle.” 46 U.S.C.

§ 30701 Notes Sec. 1(e). COGSA does, however, explicitly

authorize sea carriers and shippers to extend its rules contractually to cover inland transportation or transportation between

two American ports. See 46 U.S.C. § 30701 Notes Sec. 7, 13.

Unlike Carmack, COGSA does not include any venue restrictions that would prohibit the enforcement of a forum selection

clause. 

II. The Carmack Amendment vs. COGSA

It is undisputed that the responsibility clauses in the bills of

lading purport to extend the application of COGSA to the

1268 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
entire period of transport, and that the Himalaya Clause

extends the full benefits of the bills of lading to all of the carrier’s subcontractors “as if such provisions were expressly for

their benefit.” Nevertheless, Plaintiffs argue that Carmack’s

venue restrictions should still govern because Carmack’s statutory force “trumps” the parties’ attempt to contractually

extend COGSA.6 Defendants respond that Carmack cannot

apply to the inland rail carriage because the entire shipment

was governed by through bills of lading, whereas a separate

domestic bill of lading is necessary for Carmack to apply to

inland transport. In the alternative, Defendants assert that

even if the Carmack Amendment could apply in the absence

of a separate bill of lading for the domestic carriage, in this

case COGSA should govern in light of the parties’ express

agreement to extend COGSA’s provisions to all subcontractors, as reflected in the bills of lading. Defendants fairly argue

that policies recently endorsed by the Supreme Court — such

as uniformity in the law of maritime contracts and contractual

autonomy for sophisticated shippers and carriers — recommend applying COGSA here. See Kirby, 543 U.S. at 29.

These policies notwithstanding, according to the statutory language and our holding in Neptune Orient Lines, Ltd. v. Burlington N. & Santa Fe Ry. Co., 213 F.3d 1118 (9th Cir. 2000),

6We reject Plaintiffs’ claim that Carmack should automatically apply

under the law of the case doctrine because the district court originally

denied UPRR’s motion to transfer venue by applying Carmack. The district court clarified in a later order that Carmack’s venue limiting provision did not apply. Even if it had not, the district court’s earlier decision

would not bind our reasoning under the law of the case doctrine, which

generally precludes courts “from reconsidering an issue that has already

been decided by the same court, or a higher court in the identical case.”

United States v. Alexander, 106 F.3d 874, 876 (9th Cir. 1997) (emphasis

added). We also reject Plaintiffs’ assertion that UPRR conceded Carmack’s applicability in its motion to remove the proceedings to federal

court. The motion’s statement that “[t]he first cause of action in the [complaint] . . . contains the elements required to plead a claim against UPRR

under the Carmack Amendment,” was not a concession that Carmack

applies, but instead simply an argument that federal question jurisdiction

was appropriate. 

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1269
Carmack supplies the default regime governing the inland rail

shipment here. We therefore hold that COGSA applies only

if the parties properly opted out of Carmack. 

A.

[1] Before we turn to Defendants’ joint arguments, we

reject the K-line defendants’ threshold assertion that Carmack

cannot apply to ocean carriers and their agents. To support

their argument, however, K-line and KAM quote selectively

from Carmack. By its terms, Carmack applies to “[a] rail carrier providing transportation or service subject to the jurisdiction of the Board under this part,” 49 U.S.C. § 11706(a),

where a “rail carrier” is “a person providing common carrier

railroad transportation for compensation.” 49 U.S.C.

§ 10102(5). Critically, the statute goes on to define “railroad”

as including “a bridge, car float, lighter, ferry, and intermodal

equipment used by or in connection with a railroad.” 49

U.S.C. 10102(6)(A) (emphasis added). Moreover, the Board’s

jurisdiction, which is coextensive with Carmack’s coverage,

includes “transportation that is by railroad and water, when

the transportation is under common control, management, or

arrangement for a continuous carriage or shipment.” 49

U.S.C. § 10501(a)(1)(B) (emphasis added). Here, K-line

shipped the cargo from China to the Port of Long Beach on

K-line’s ocean liner, issued bills of lading that covered the

cargo from its place of origin to the final destinations in the

United States and contracted with UPRR to ship the cargo

from the Port of Long Beach to the Midwest through its agent

KAM, who acted on K-line’s behalf in receiving its vessel

and providing for the inland transport. The K-line defendants

therefore provided “continuous carriage or shipment” that was

“by railroad and water” via “intermodal equipment used by or

in connection with a railroad.” As a result, Carmack applies

to K-line and its agent. 

Applying Carmack to K-line is also consistent with the purpose of Carmack’s liability regime, which is “to relieve ship1270 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
pers of the burden of searching out a particular negligent

carrier from among the often numerous carriers handling . . .

goods.” Reider v. Thompson, 339 U.S. 113, 119 (1950).

Because Plaintiffs dealt directly with K-line to arrange a shipment that included domestic rail carriage, we uphold Carmack’s objectives by applying the statute to K-line and its

agent. 

[2] Few opinions have squarely addressed the potential

application of Carmack to ocean carriers and their agents and

no Supreme Court or Ninth Circuit precedent appears to

address this issue. Nevertheless, most of the limited federal

jurisprudence on this question either states that Carmack

applies to an ocean carrier and its agent or implicitly suggests

that it could. See United States v. Miss. Valley Barge Line

Co., 285 F.2d 381, 391-94 (8th Cir. 1960) (Blackmun, J.)

(holding that Carmack applied to a water carrier that was the

contracting carrier when there was a common arrangement as

indicated by a through bill of lading); Kyodo USA Inc. v

Cosco N. Am. Inc., No. 01-CV-499, 2001 WL 1835158, at *3-

5 (C.D. Cal. July 23, 2001) (holding that Carmack could

apply to an ocean carrier); Canon USA Inc. v. Nippon Liner

System, Ltd., No. 90 C 7350, 1992 WL 82509, at *5-8 (N.D.

Ill. April 17, 1992) (applying Carmack to an ocean carrier);

Nelson v. Agwilines, 70 F.Supp. 497, 500 (S.D.N.Y. 1946)

(noting that although “[o]rdinarily a carrier that is wholly a

carrier by water is not subject to regulation by [the Board,]

[m]any carriers by water have through bill of lading arrangements with railroads, which make the carriers by water subject to regulation by [the Board]”). Until recently, only two

authorities, neither of which we find persuasive, explicitly

held that Carmack does not apply to an ocean carrier: a decision from the Florida Supreme Court and a subsequent decision from the Federal District Court for the Southern District

of Florida that relied on the previous state court decision. See

King Ocean Cent. Am., S.A. v. Precision Cutting Servs., Inc.,

717 So. 2d 507, 513 (Fla. 1998) (holding that “an ocean carrier’s liability was not contemplated or covered under the CarREGAL-BELOIT v. KAWASAKI KISEN KAISHA 1271
mack Amendment”); PT Indonesia Epson Indus. v. Orient

Overseas Container Line, Inc., 219 F. Supp. 2d 1265, 1269

(S.D. Fla. 2002) (following King Ocean’s analysis and determining that “the Carmack Amendment does not necessarily

apply to the through bill of lading issued by [the ocean carrier]”); contra, Kyodo, 2001 WL 1835158 at *4 (unpublished

district court opinion in this circuit explicitly refusing to

endorse King Ocean’s analysis). 

Since this case was argued, however, the Second Circuit

has construed Carmack’s definition of a “rail carrier” not to

reach two categories of common carriers: (1) an entity “that

merely arranges” for goods to be transported by sea and then

transferred to a railroad for inland transport, but never itself

actually moves the goods; and (2) a common carrier, such as

an ocean carrier, that does not conduct rail services nor

“ ‘hold out’ that service to the public.” Rexroth Hydraudyne

B.V. v. Ocean World Lines, Inc., 547 F.3d 351, 362, 364 (2d

Cir. 2008). K-line and KAM urge us to follow Rexroth and

exempt them as well. We do not read Rexroth so broadly, and

in any event decline to apply its limitation of Carmack to the

intermodal transport arrangement here. 

In Rexroth, the plaintiff shippers contracted with a nonvessel-operating common carrier (“NVOCC”) that acted as a

middleman, arranging for ocean and inland rail carriage “from

receipt to delivery.” Id. at 356. As the term implies, the

NVOCC provided no services on any vessel it owned nor did

it otherwise physically handle the shipment itself. See id. at

361-62. Instead the NVOCC subcontracted with “an ocean

carrier that provide[d] the ocean passage,” who in turn subcontracted through its American agent to “arrange[ ] rail carriage for the inland leg.” Id. at 356. Nearly all the Second

Circuit’s reasoning addressed this middleman, emphasizing

that an entity without “any contact with the shipped goods or

any performance in the carrying of those goods” merely

arranges for railroad transportation and therefore does not

provide transportation as required for Carmack liability. Id. at

1272 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
361-62. Even if we were to accept this reasoning, it would not

apply to K-line’s arrangement because there was no middleman between K-line and Plaintiffs. Rather, Plaintiffs dealt

directly with K-line, who actually transported the cargo on its

ocean liner and had sustained contact with the shipped goods.

Rexroth also summarily excluded the ocean carrier defendant whose services were most analogous to those K-line provided here, saying that the ocean carrier did “not own or

operate rail lines or other equipment used in connection with

a railroad.” Id. at 363 (emphasis added). The Second Circuit

did not address the statutory definition of railroad transportation we have discussed above, but instead simply concluded

without factual explanation that the ocean carrier neither conducted nor held itself out as conducting railroad transportation. See id. at 364. Thus we do not know the nature or

substance of the ocean carrier’s direct interactions, if any,

with the shipper. We do know that here, K-line held itself out

to the public and contracted with Plaintiffs to transport their

goods all the way from China to their inland destinations —

by sea utilizing K-line’s vessel and by rail utilizing UPRR. In

so doing, K-line and its agent, KAM, engaged in railroad

transportation subject to the Board’s jurisdiction by providing

Plaintiffs with continuous carriage by water and rail, utilizing

intermodal equipment in connection with a railroad. See 49

U.S.C. §§ 10102(6)(A), 10501(a)(1)(B). 

[3] In sum, we do not read Rexroth to categorically exclude

ocean carriers from Carmack liability. The plain language of

the statute and a careful application of the Second Circuit’s

reasoning support our conclusion that K-line and KAM provided railroad transportation covered by Carmack.7

 We there7The Second Circuit also seemed to suggest that because ocean carriers

fall under the jurisdiction of the Federal Maritime Commission (“FMC”),

they cannot also be regulated by the Board. See Rexroth, 547 F.3d at 357.

The FMC has jurisdiction to “regulate ocean shipping lines operating

between the United States and foreign countries,” “monitor[ ] agreements

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1273
fore hold that Carmack applies to ocean carriers and their

agents under the circumstances here.

B.

[4] Defendants jointly argue that Carmack cannot apply to

a shipment from a foreign country into the United States

under a through bill of lading, and therefore the parties’ contractual extension of COGSA, with its more liberal rules

regarding venue, should control here. In support of their argument, Defendants highlight that four circuits have held that

“the Carmack Amendment does not apply to a shipment from

a foreign country to the United States (including an ocean leg

and overland leg to the final destination in the United States)

unless the domestic overland leg is covered by a separate bill

of lading.” Altadis USA, Inc. ex. rel. Fireman’s Fund Ins. Co.

v. Star Line, LLC, 458 F.3d 1288, 1291 (11th Cir. 2006)

(emphasis added); see Am. Road Serv. Co. v. Consol. Rail

Corp., 348 F.3d 565, 569 (6th Cir. 2003); Shao v. Link Cargo

(Taiwan) Ltd., 986 F.2d 700, 703 (4th Cir. 1993); Capital

Converting Equip., Inc. v. LEP Transport, Inc., 965 F.2d 391,

394 (7th Cir. 1992); but see Sompo I, 456 F.3d at 57, 60-69

(holding that Carmack applies to the domestic rail portion of

a continuous intermodal shipment originating in a foreign

country even where the transport was under a single through

bill of lading that incorporated COGSA beyond the tackle-totackle phase). Despite this weight of authority, our own precedent expressly forecloses Defendants’ argument in this circuit.

In Neptune Orient Lines, Ltd. v. Burlington N. & Santa Fe Ry.

Co., 213 F.3d 1118, 1119 (9th Cir. 2000), we held that “the

language of [Carmack] also encompasses the inland leg of an

between ocean common carriers” and “enforc[e] a number of prohibitions

against discriminatory and unreasonable rates and practices.” Transpacific

Westbound Rate Agreement v. Fed. Maritime Comm’n, 951 F.2d 950, 951

(9th Cir. 1991). Nothing in the FMC’s jurisdictional statute makes its

jurisdiction exclusive. See 46 U.S.C. § 40301. 

1274 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
overseas shipment conducted under a single ‘through’ bill of

lading . . . .” See Nippon Yusen Kaisha v. Burlington & N.

Santa Fe Ry. Co., 367 F. Supp. 2d 1292, 1298 n.4 (C.D. Cal.

2005); Chubb Group of Ins. Companies v. H.A. Transp. Systems, Inc., 243 F. Supp. 2d 1064, 1068 n.3 (C.D. Cal. 2002).8

Contrary holdings in the Fourth, Sixth, Seventh and Eleventh Circuits rest on the notion that the Board lacks jurisdiction over intermodal shipments into the United States from a

point in a foreign country under a through bill of lading. See,

e.g., Am. Road Servs. Co., 348 F.3d at 568 (“The [Board]’s

jurisdiction does not extend to a shipment under a through bill

of lading unless a domestic segment of the shipment is covered by a separate bill of lading.”). The Second Circuit has

disagreed, holding that a plain reading of the Board’s jurisdictional statute applies Carmack to any rail transportation in the

United States, even if it originated in a foreign country under

a through bill of lading. See Sompo I, 456 F.3d at 64. As we

noted above, Carmack’s reach is coextensive with the Board’s

jurisdiction, see 49 U.S.C. § 11706(a); therefore our conclusions regarding the extent of the Board’s jurisdiction,

expressed in Neptune, determine Carmack’s reach as well.

Crucially, Neptune interpreted our precedent and Carmack’s

language to apply to “shipments to or from overseas ports”

without any requirement for a separate domestic bill of lading

for the inland carriage. Neptune, 213 F.3d at 1119 (citing F.J.

McCarty Co. v. S. Pac. Co., 428 F.2d 690, 692 (9th Cir.

1970)). 

[5] Defendants’ attempt to relegate Neptune’s interpretation

of Carmack to the status of dictum is unavailing. There is no

indication that Neptune “did not make a deliberate decision to

8Although some district courts within the Ninth Circuit have held that

the Carmack Amendment did not apply when the cargo at issue was

shipped pursuant to a single through bill of lading, these opinions predate

Neptune. See, e.g., Tokio Marine & Fire Ins. Co., Ltd. v. Kaisha, 25 F.

Supp. 2d 1071, 1081 (C.D. Cal. 1997). 

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1275
adopt the rule of law it announced.” United States v. Johnson,

256 F.3d 895, 915 (9th Cir. 2001). Consequently, the absence

of a separate bill of lading does not remove this shipment

from Carmack’s venue restrictions. 

C.

Defendants next argue that even if the Carmack Amendment could apply to the inland leg of an international transport conducted under a single through bill of lading, here the

parties’ explicit contractual extension of COGSA inland

should take precedence. Given COGSA’s statutory language,

Neptune’s holding is fatal to this argument. Neptune’s import

becomes clear when analyzed in light of the distinctions and

interactions between three sections of COGSA, currently codified at 46 U.S.C. § 30701 Notes Sec. 7, 12 & 13.9

 In relevant

part, the text of these sections is as follows: 

• Section 7: Nothing contained in this chapter [this

note] shall prevent a carrier or a shipper from

entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the

loss or damage to or in connection with the custody and care and handling of goods prior to the

loading on and subsequent to the discharge from

the ship on which the goods are carried by sea. 46

U.S.C. § 30701 Notes Sec. 7. 

• Section 12: Nothing in this chapter [this note]

shall be construed as superseding any part of [the

Harter Act] or of any other law which would be

applicable in the absence of this chapter [this

note], insofar as they relate to the duties, responsibilities, and liabilities of the ship or carrier prior

to the time when the goods are loaded on or after

9Previously §§ 1307, 1311 and 1312, respectively. 

1276 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
the time they are discharged from the ship. 46

U.S.C. § 30701 Notes Sec. 12 (emphasis added).

• Section 13: This chapter [this note] shall apply to

all contract for carriage of goods by sea to or

from ports of the United States in foreign trade

. . . . The term ‘foreign trade’ means the transportation of goods between the ports of the United

States and ports of foreign countries. Nothing in

this chapter [this note] shall be held to apply to

contracts for carriage of goods by sea between

any port of the United States or its possessions,

and any other port of the United States or its possession: Provided, however, That any bill of lading or similar document of title which is evidence

of a contract for the carriage of goods by sea

between such ports, containing an express statement that it shall be subject to the provisions of

this chapter [this note], shall be subjected hereto

as fully as if subject hereto by the express provisions of this chapter [this note]. 46 U.S.C.

§ 30701 Notes Sec. 13. 

Reading these three sections together reveals two interrelated

reasons why the contractual extension of COGSA to the

inland leg of an intermodal, international transport cannot

supersede the requirements imposed by Carmack. 

[6] First, although Section 7 “confirms that nothing in

COGSA constrains the parties” from contractually extending

COGSA’s protections beyond the tackle-to-tackle period, it

“leav[es] open the possibility that something else might constrain them.” Michael F. Sturley, Freedom of Contract and

the Ironic Story of Section 7 of the Carriage of Goods by Sea

Act, 4 BENEDICT’S MARITIME BULL. 201, 203 (Third/Fourth

Quarter 2006) (emphasis added) [hereinafter Freedom of Contract]. Section 12 “completes the story that Section 7 merely

begins,” by explicitly confirming that this contractual autonREGAL-BELOIT v. KAWASAKI KISEN KAISHA 1277
omy is constrained by the presence of any other law that

would govern the parties before loading or after discharge. Id.

at 203. In light of Neptune, the Carmack Amendment is just

such an “other law” to which Section 12 mandates that the

contractual inland extension of COGSA must yield. See

Sompo I, 456 F.3d at 72-73 (relying in part on Section 12 to

“hold that the contractual provision extending COGSA’s

terms inland must yield to Carmack”).10

[7] Second, Section 13’s language has an important negative implication for our interpretation of the legal force of a

contractual extension of COGSA under Section 7. See id. at

70. Through Section 13, “Congress explicitly provided that

contracts extending [COGSA’s] reach in ways other than over

land — in particular, contractual extensions covering trade

between United States ports (or ‘coastwide trade’) — do have

statutory force” and can “supersede prevailing federal statutes.” Id. at 69-70.11 Congress did not include any comparable

language with respect to a contractual extension of COGSA

to inland transport under Section 7, simply stating that nothing within COGSA prevents parties from doing so. “ ‘[W]here

Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely

in the disparate inclusion or exclusion.’ ” Camacho v. Bridgeport Fin. Inc., 430 F.3d 1078, 1081 (9th Cir. 2005) (quoting

Russello v. United States, 464 U.S. 16, 23 (1983)). “There10The congressional debates about COGSA reflect a similar understanding. As Senator White explained, “[t]he legislation supersedes the socalled ‘Harter Act’ from the time the goods are loaded on the ship to the

time they are discharged from the ship. Otherwise our law remains precisely as it is, unaffected and unimpaired by the proposed legislation.” 1

THE LEGISLATIVE HISTORY OF THE CARRIAGE OF GOODS BY SEA ACT AND THE

TRAVAUX PREPARATOIRES OF THE HAGUE RULES 589 (Michael F. Sturley ed.

1990) (emphasis added). 

11In the absence of such an extension, another federal statute, the Harter

Act, applies to shipments between domestic ports. See Sompo I, 456 F.3d

at 69 n.15. 

1278 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
fore, that Congress, in enacting [Section 7], omitted language

similar to the language in [Section 13] is persuasive evidence

that Congress did not wish for period of responsibility clauses

[adopted under Section 7] to have the force of statute with the

capability to supersede federal law.” Sompo I, 456 F.3d at 71;

see Freedom of Contract at 204 (noting this textual distinction

“is compelling evidence that indirectly confirms what Section

12 says directly — that Section 7 was not intended to permit

a private contract to override otherwise applicable law”).12

[8] Read together, these provisions make clear that “contracts extending COGSA beyond the tackles must give way to

conflicting law.” Sompo I, 456 F.3d at 71.13 Per Neptune, Car12The Second Circuit recently reaffirmed this core holding of Sompo I.

See Rexroth, 2008 WL 4810069, at *3 (“It is clear from Sompo that a

‘contractual provision extending COGSA’s terms inland must yield to

Carmack’ if Carmack is applicable.”) (quoting Sompo I, 456 F.3d at 73).

13We briefly distinguish earlier decisions containing general statements

that the contractual extension of COGSA could supersede other statutes.

See Starrag v. Maersk, Inc., 486 F.3d 607, 615 (9th Cir. 2007); Sea-Land

Serv., Inc. v. Lozen Int’l, L.L.C., 285 F.3d 808, 817 (9th Cir. 2002); N.

River Ins. Co. v. Fed Sea/Fed Pac Line, 647 F.2d 985, 987 (9th Cir. 1981).

First, none of these cases addressed a potential conflict between COGSA

and Carmack. Second, the original source for all of these statements is Pan

Am. World Airways, Inc. v. Cal. Stevedores & Ballast Co., 559 F.2d 1173

(9th Cir. 1977). See N. River, 647 F.2d at 987 (citing Pan Am.); Sea-Land,

285 F.3d at 817 (citing N. River); Starrag, 486 F.3d at 615 (citing SeaLand). Importantly, Pan American addressed “a contract for carriage

between a port in the continental United States and a port in a United

States possession.” 559 F.2d at 1175 n.3. In other words, Pan American

dealt with an extension of COGSA over coastwide trade, and therefore

triggered Section 13’s explicit mandate that such extensions should apply

“as fully as if subject [hereto] by the express provisions of [COGSA].” Id.

(quoting 46 U.S.C. § 1312). Its holding therefore has no bearing on the

legal weight that should be afforded to inland contractual extensions of

COGSA under Section 7. See N. River, 647 F.2d at 988-89 (noting this

distinction). Finally, none of these opinions ultimately relied on their statements that the contractual extension of COGSA could supersede a federal

statute in order to reach their holding. See Starrag, 486 F.3d at 615 (noting

that “where the parties contractually extend the COGSA to cover the damREGAL-BELOIT v. KAWASAKI KISEN KAISHA 1279
mack is a conflicting law here. Although, as we have discussed, the Eleventh Circuit has allowed the contractual

extension of COGSA inland, that court disagrees with ours

about the reach of Carmack where the parties have used a

through bill of lading. Compare Neptune, 213 F.3d at 1119

(“The language of [Carmack] also encompasses the inland leg

of an overseas shipment conducted under a single ‘through’

bill of lading . . . .”) with Altadis, 458 F.3d at 1291 (“The case

law has established that the Carmack Amendment does not

apply to a shipment from a foreign country to the United

States . . . unless the domestic, overland leg is covered by a

separate bill of lading.”). Because here Carmack is federal

law conflicting with the parties’ contractual extension of

COGSA, we cannot follow the Eleventh Circuit by validating

COGSA’s inland reach. 

Defendants argue that policy considerations of contractual

autonomy, efficiency and uniformity of maritime liability

rules weigh in favor of allowing shippers and carriers to

extend COGSA inland. The Supreme Court recently endorsed

these policy objectives by emphasizing that “[c]onfusion and

inefficiency will inevitably result if more than one body of

law governs a given contract’s meaning.” Kirby, 543 U.S. at

29. The unanimous Court in Kirby further observed that an

age, the Harter Act does not apply,” but ultimately concluding that “even

if the Harter Act applied,” it would not prohibit the challenged limited liability clause); Sea-Land, 285 F.3d at 817 (noting that “because COGSA

is incorporated by contract into Sea-Land’s bills of lading, ‘it, rather than

the Harter Act, controls,’ ” but only after it had already concluded that the

Harter Act did not apply to the case at bar in the first place); N. River, 647

F.2d at 987, 989 (noting that “[w]hen COGSA is incorporated by contract,

it, rather than the Harter Act, controls” within the context of a case that

ultimately turned on the interaction between the contractual extension of

COGSA and another contractual term). “[W]e are not bound by a holding

. . . ‘where it is merely a prelude to another legal issue that commands the

panel’s full attention . . . .’ ” V.S. ex rel. A.O. v. Los Gatos-Saratoga Joint

Union High Sch. Dist., 484 F.3d 1230, 1232 n.1 (9th Cir. 2007) (quoting

United States v. Johnson, 256 F.3d 895, 915 (9th Cir. 2001)). 

1280 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
inability to extend COGSA’s default rules to inland transport,

so that entire shipments could be governed by the same liability regime, would defeat “the apparent purpose of COGSA[ ]

to facilitate efficient contracting in contracts for carriage by

sea.” Id.; see Royal Ins. Co. of Am. v. Orient Overseas Container Line Ltd., 525 F.3d 409, 419 (6th Cir. 2008) (“Kirby’s

reasoning affirms the broader principle that courts should

evaluate maritime contracts in their entirety rather than treating each of the multiple stages in multimodal transportation

as subject to separate legal regimes, which would be an obstacle to uniform and efficient liability rules.”). Ignoring a contractual provision incorporating COGSA seems particularly

inappropriate where, as here, “the parties to the bill of lading

were sophisticated business entities that should rarely be

released from contractual obligations.” Raymond T. Waid,

Comment, Piloting in Post-Kirby Waters: Navigating the Circuit Split Over Whether the Carmack Amendment Applies to

the Land Leg of an Intermodal Carriage of Goods on a

Through Bill of Lading, 34 TRANSP. L.J. 113, 143 (Summer

2007). 

[9] Nonetheless, and mindful of these policy considerations, Kirby does not control here. There, the Court held that

state law did not apply to a bill of lading that extended

COGSA inland, where COGSA and the state law conflicted.

Kirby, 543 U.S. at 28-29. Focusing as it did on the need for

state law to yield to federal law in the maritime context, the

Court did not have occasion to consider which of two conflicting federal laws should govern a maritime shipment with

an inland leg. See Sompo I, 456 F.3d at 75 (“We cannot interpret the Kirby Court’s language concerning the policy underlying COGSA . . . as implying that a contract extending

COGSA inland should supersede an otherwise applicable federal law.”). The policy of uniformity in maritime shipping,

however compelling, must give way to controlling statutes

and precedent. Given Neptune’s holding that Carmack applies

and the conspicuous absence in COGSA of language allowing

parties to give superseding statutory force to their contractual

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1281
extensions of COGSA inland under Section 7, we hold that a

mere contractual extension of COGSA is not alone sufficient

to overcome Carmack. 

Nevertheless, Carmack — including its restrictive venue

provisions — is merely a set of default rules. To the extent

Carmack sanctions alternative provisions, a properly adopted

alternative forum selection clause would eliminate Carmack

as a conflicting “other law” superseding the parties’ contractual extension of COGSA. Neptune did not reach this issue

and does not hold otherwise. Such a contractual alteration

cannot come from COGSA’s Section 7, as explained above,

because Section 7 does not give such contracts statutory force.

But Carmack itself does contain two provisions for avoiding

the statutory defaults: 49 U.S.C. §§ 10502 & 10709. We next

turn to these two possible Carmack opt-outs.

III. Contracting for Alternative Terms under Carmack

As discussed, whereas COGSA would allow a reasonable

alternative forum selection clause, Carmack strictly limits the

venues in which a party can bring a claim. See 49 U.S.C.

§ 11706(d)(2)(A). In this case, Tokyo does not fit into any of

the categories to qualify as an acceptable forum under Carmack. See Regal-Beloit, 462 F. Supp. 2d at 1103.14 Accordingly, the Tokyo forum selection clause’s enforceability turns

on whether the parties complied with the applicable requirements for opting out of Carmack. 

Congress created two different mechanisms — § 10502 and

§ 10709 — by which some rail services may be exempted

from certain requirements usually imposed by Carmack.

These dual provisions require us to resolve whether the parties entered into a § 10502 or a § 10709 contract and, relat14We agree with the district court’s conclusion that “[i]f applicable, the

Carmack Amendment would limit venue in this case to California, Oklahoma, or Wisconsin.” Regal-Beloit, 462 F. Supp. 2d at 1103. 

1282 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
edly, what each provision requires for avoiding Carmack. We

conclude that § 10502 is the only proviso the parties here

could have followed to contract out of Carmack’s venue

restrictions. Because the district court instead analyzed the

contracts under § 10709, we remand for an application of

§ 10502, whose requirements we clarify below.

A.

[10] Once again, we preface our analysis by looking to the

relevant statutory language. Section 10502(f) authorizes the

Board to exempt from Carmack “transportation that is provided by a rail carrier as part of a continuous intermodal

movement.” Here, “rail carrier” is subject to the same “Definitions” section we applied above to conclude that even an

ocean carrier like K-line is a rail carrier when contracting to

provide inland rail transportation. See 49 U.S.C. § 10102

(providing definitions for “this part”).15 Thus, K-line is a rail

carrier for purposes of determining whether it provides transportation that is exempt under the Board’s § 10502 authority.

It is undisputed that the Board has exempted the transportation at issue here. See 49 C.F.R. § 1090.2 (“[R]ail TOFC/

COFC service and highway TOFC/COFC service provided by

a rail carrier either itself or jointly with a motor carrier as part

of a continuous intermodal freight movement is exempt from

the requirements of 49 U.S.C. subtitle IV . . . .”).16

The Board’s action relieves carriers providing such exempt

transportation from certain regulatory burdens, such as rate

regulation. See, e.g., 49 U.S.C. § 10701. Carmack’s liability

and venue rules are not so plainly waived, however. The statute mandates that “[n]o exemption order issued pursuant to

this section shall operate to relieve any rail carrier from an

15Specifically, “ ‘[t]his part’ refers to 49 U.S.C. Subtitle IV, Part A,

which includes Carmack.” Sompo II, 540 F. Supp. 2d at 494. 

16These acronyms respectively refer to “trailer on flatcar” and “container on flatcar” service. 

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1283
obligation to provide contractual terms for liability and claims

which are consistent with the provisions of section 11706 of

this title.” 49 U.S.C. § 10502(e). Nonetheless, § 10502(e) also

provides that carriers and shippers thus exempted are not

unalterably bound by the liability and venue restrictions in

Carmack’s § 11706, because “[n]othing in this subsection or

section 11706 of this title shall prevent rail carriers from

offering alternative terms. . . .” Id. These two clauses of

§ 10502(e) are not inconsistent: carriers providing exempt

transportation are obliged to provide terms consistent with

Carmack’s venue and liability protections to their shipper customers, but are ultimately free to contract under terms different from those in § 11706. Courts have concluded that the

“combined effect” of § 10502 and § 11706 is to permit carriers providing exempt transportation to contract for terms that

are different from Carmack’s defaults so long as they first

offer the shipper the option of full Carmack protections, presumably at a higher rate. See Sompo I, 456 F.3d at 60 (collecting authority). If the carrier fails to make this initial offer,

however, “then the shipper may sue the carrier under Carmack.” Id.17

On the other hand, avoiding Carmack’s default rules under

§ 10709 is simpler: “[o]ne or more rail carriers providing

transportation subject to the jurisdiction of the Board . . . may

enter into a contract with one or more purchasers of rail services to provide specified services under specified rates and

conditions.” 49 U.S.C. § 10709(a) (emphasis added). Under

such an agreement for nonexempt transportation, carriers

“have no duty in connection with services provided under

such contract other than those duties specified by the terms of

the contract.” 49 U.S.C. § 10709(b). Moreover, “[a] contract

that is authorized by this section, and transportation under

such contract, shall not be subject to this part, and may not

17The Second Circuit’s recent limitation of Sompo I in Rexroth, 2008

WL 4810069, at n.15, discussed Sompo I’s interpretation of § 10502 with

approval. 

1284 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
be subsequently challenged before the Board or in any court

on the grounds that such contract violates a provision of this

part,” 49 U.S.C. § 10709(c)(1) (emphasis added) — “this

part” encompassing the Carmack Amendment. 

[11] The terms of these two different provisions evidence

a clear distinction between § 10502 contracts and § 10709

contracts. The distinction is based on whether the transportation at issue in the contract is exempt from Board regulation.

Whereas § 10502 requires carriers providing exempt transportation to offer Carmack protections before they can successfully contract for alternative terms, § 10709 contains no such

language — indeed, it explicitly contemplates that nonexempt

carriers’ contracts alone control. Defendants argued successfully before the district court that they entered into a § 10709

contract with Plaintiffs, and thus were not required to offer

Carmack protections as a prerequisite for their extension of

COGSA to the inland segment of the transport. Defendants

point to the MITA, which was incorporated by the ERTA and

explicitly states “[t]his MITA and any agreements, price documents or contracts that reference this MITA have been made

under 49 U.S.C. § 10709.” Plaintiffs argue on appeal that

Defendants could not have entered into even a legitimate

§ 10709 contract without first offering full Carmack protections.18 We disagree with both parties’ reasoning. Plaintiffs

18Although Plaintiffs did not explicitly raise this argument in their

opposition to the motion to dismiss, we exercise our discretion to address

it here. See Self-Realization Fellowship Church v. Ananda Church of SelfRealization, 59 F.3d 902, 912 (9th Cir. 1995). Plaintiffs had no reason to

address the potential inapplicability of § 10709 below because this was not

raised by Defendants in their motions to dismiss, which instead were limited to the assertion that COGSA, rather than Carmack, should govern.

Defendants only added that they were exempt from the Carmack’s requirements under § 10709 in their reply briefs. It is unreasonable to require

Plaintiffs to argue that a particular provision did not apply before Defendants even suggested that this provision authorized their contracts. Reaching the argument is appropriate because this issue presents a purely legal

question, see id., and Defendants will not be prejudiced, as they have fully

briefed this issue on the merits, see United States v. Fonseca-Caro, 114

F.3d 906, 907 n.2 (9th Cir. 1997) (per curiam). 

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1285
are incorrect that § 10709 requires offering Carmack protections. See Sompo II, 540 F. Supp. 2d at 494 (collecting district

court cases); but see id. at 495-98 (discussing cases that “have

varied wildly” on this issue). In any event, Defendants are

mistaken that simply asserting in a contract that it was made

under § 10709 makes it so. The contract here had to be a

§ 10502 contract because it concerned exempt transportation,

and must therefore be analyzed on remand under the requirements of that section.

B.

The parties’ confusion is understandable given the “muddled state of the law.” Sompo II, 540 F. Supp. 2d at 498 & n.8

(citing “[s]everal courts [that] have noted that this issue has

not been adequately addressed”). Congress has not provided

any guidance regarding how to read § 10502 and § 10709 in

tandem, and very few courts have squarely confronted the question.19

We cannot adopt either of the parties’ arguments, however,

as each would render one of the statutory provisions practically meaningless. Plaintiffs’ argument that a carrier can form

a § 10709 contract only if it first offers the shipper full Carmack protections essentially converts all § 10709 contracts

into § 10502 contracts. Cf. Sompo II, 540 F. Supp. 2d at 494

(“Most courts have concluded that [the statutory] language

indicates that § 10709 contracts are not subject to Carmack,

and need not offer a full Carmack liability option before properly limiting carrier liability.”). Defendants’ argument, however, effectively nullifies § 10502 because it would allow any

19The parties have therefore been forced to rely on unpublished district

court decisions to support their respective arguments. See Tamini Transformatori S.R.L. v. Union Pac. R.R., No. 02 Civ. 129, 2003 WL 135722

(S.D.N.Y. Jan. 17, 2003) (supporting Plaintiffs’ argument); Tokio Marine

& Fire Ins. Co. v. Mitsui O.S.K. Lines, Ltd., No. CV 02-3617, 2003 WL

23181013 (C.D. Cal. June 27, 2003) (supporting Defendants’ argument).

1286 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
carrier — even those exempted under § 10502 — to avoid

§ 10502’s prerequisites simply by stating that its contract was

pursuant to § 10709.20 It would be “nonsensical for . . .

§ 10502 to permit a certain category of rail contracts to offer

specific rates and terms but require an initial offer of full Carmack liability and . . . § 10709 to permit the same category

of rail contracts to offer specific rates and terms with no such

requirement of an initial offer of full Carmack liability.” Id.

at 499 (emphasis in original); see also id. (“Section 10709

simply cannot be used as a tool to extract contracts governing

exempted rail carriers that operate one leg of a continuous

intermodal movement from the regulatory demands of

§ 10502 and Carmack.”). When the Board exempted the category of transportation at issue here, the providers of that

transportation, including Defendants, gained the benefits of

deregulated rates. The Board’s exemption removed this transportation “from the requirements of 49 U.S.C. subtitle IV,” 49

C.F.R. § 1090.2, which includes the provision setting standards for rates, see 49 U.S.C. § 10701. But Subtitle IV also

includes § 10709. Consequently, carriers providing exempt

transportation gain the benefits of deregulation, but lose the

opportunity to contract for preferable terms under § 10709

without first offering Carmack terms. 

[12] In keeping with Congress’ specification of two distinct

methods for carriers to avoid the requirements imposed by

Carmack, we therefore hold that a carrier providing nonexempt transportation may contract under § 10709 without

offering Carmack protections, but a carrier providing exempt

transportation must proceed under § 10502, which does

20We are particularly troubled by the potential for such an outcome

where, as here, the statement that the agreement is governed by § 10709

is buried within several layers of incorporated text, of which the shipper

had no direct knowledge. See Sompo II, 540 F. Supp. 2d at 500 (“First, it

is not clear that the shippers . . . are on actual notice of either the ITAs

or the rail carrier circulars or have the opportunity to review them and,

second, there are too many steps incorporated by reference to properly

charge the shippers with notice of their terms.”). 

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1287
require such an offer. See Sompo II, 540 F. Supp. 2d at 499.

Accordingly, Defendants here could not have entered into a

§ 10709 contract notwithstanding the MITA’s clause declaring otherwise. Defendants accept that § 10502 covers exempt

transportation, but argue that carriers providing exempt transportation could nevertheless still choose to contract under

§ 10709. Our interpretation of the relationship between

§ 10502 and § 10709 forecloses this argument.21

C.

In sum, § 10502 provides the only method through which

these parties might have agreed to the Tokyo forum selection

clause. To comply with § 10502, K-line needed to offer Carmack’s protections when contracting with Plaintiffs. K-line

argues that it did so, pointing to a clause in the MITA that

reads, “[o]n domestic shipments that originate in the United

States, Shippers may, at their option, select the liability provisions set forth in 49 U.S.C. § 11706.” We are skeptical that

reference to Carmack in connection with shipments originating in the United States, appearing in the MITA instead of in

the bills of lading, could fulfill § 10502’s requirement that

Carmack protections be offered. Perhaps more compellingly,

K-line points to Clause 5(1) of the bills of lading, which

21During oral argument, Defendants attempted to elude § 10502’s

requirements, asserting that: (1) § 10502 applies only to “common carrier”

contracts, (2) § 10709 applies only to “private” contracts and (3) the

instant contract falls into the latter category. We reject this argument.

First, the argument was waived. See United States v. Kimble, 107 F.3d

712, 715 n.2 (9th Cir. 1997) (noting that arguments which are “not coherently developed in [the] briefs” are abandoned); Acosta-Huerta v. Estelle,

7 F.3d 139, 144 (9th Cir. 1992) (noting that “issues raised in a brief which

are not supported by argument are deemed abandoned”). Second, this

argument appears to have no basis in our case law or statutes. We did not

find any authority that distinguishes between § 10709 and § 10502 contracts in the manner Defendants suggest, neither § 10709 nor § 10502 uses

the terms “private contract” or “common carrier contract” and neither of

these phrases is included in the statute’s “definitions.” See 49 U.S.C.

§ 10102. 

1288 REGAL-BELOIT v. KAWASAKI KISEN KAISHA
allows K-line to subcontract with rail carriers “on any terms

whatsoever.” From this, it might be inferred that by making

the choice to allow K-line to do all the subcontracting on “any

terms whatsoever,” Plaintiffs implicitly considered and

rejected Carmack terms. Plaintiffs counter that no evidence of

an offer of these terms exists and that another part of the

MITA seems to preclude Carmack from applying.22

It is improper for us, on this record, to decide in the first

instance whether the parties’ negotiation and acceptance of

their numerous, cross-referenced agreements included an

offer of Carmack terms or an understanding that Carmack

terms were available but were rejected. Section 10502(a) says

only that the Carmack terms must be offered, not necessarily

that they appear in the written agreement. Thus, on remand,

the district court may develop the record with respect to the

parties’ understanding of whether Carmack terms were on the

table when they executed the bills of lading.

22The parties’ disagreement about what was offered in the bills of lading

by way of the later provisions of the MITA is unsurprising because the

interactions among the bills of lading, the MITA and ERTA are far from

clear. Although the MITA purports that “all Shipments are subject to this

MITA” regardless of their billing method (including a bill of lading), it

also establishes that “this MITA . . . as well as the terms and condition of

. . . ocean or rail carrier’s Bills of Lading . . . shall constitute the entire

contract for transportation between the parties.” The terms of the MITA

do not make clear, then, whether the MITA’s or the bills of lading’s terms

take precedence in the case of a conflict. This becomes increasingly complex because the ERTA never explicitly incorporated the MITA’s venue

provisions, and it is unclear whether its more general incorporation language would encompass these restrictions. Finally, the MITA establishes

that changes can be made to its terms if they are “approved in writing prior

to the issuance of any shipping document,” or “through a document signed

by a duly authorized manager of UPRR.” The record does not indicate

whether any such authorization occurred. This factual morass may benefit

from further development before the district court on remand. 

REGAL-BELOIT v. KAWASAKI KISEN KAISHA 1289
Conclusion

[13] As a matter of policy, it may be that sophisticated

commercial entities should be able to freely decide by contract the liability regime that is to govern the shipment of

goods from a foreign country to their ultimate destination in

the United States, and do so utilizing a single bill of lading.

Nonetheless, given the language of the relevant statutes and

our own precedent, we hold that COGSA cannot govern the

inland transport at issue here unless the parties opted out of

Carmack in accordance with the requirements of 49 U.S.C.

§ 10502. We further hold that § 10709 cannot apply here

given the exempt status of the transportation involved.

Because the district court did not consider whether the parties

opted out of Carmack’s default rules under § 10502, thereby

clearing the way for COGSA to apply by contractual extension, we remand for that determination. 

REVERSED and REMANDED. 

1290 REGAL-BELOIT v. KAWASAKI KISEN KAISHA