Court Opinion

ID: 3050903
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:33:10.925144+00
Date Added: 2024-06-11T11:49:24.668131
License: Public Domain

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
corporation,                                   D.C. No.
                                            CV-05-00284-TSZ
         Defendant-cross-claimant-
                           Appellant,          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
670        OAK HARBOR FREIGHT v. SEARS ROEBUCK

                      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.
             OAK HARBOR FREIGHT v. SEARS ROEBUCK             671
                             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 judg-
ment, the district court held NLC and Sears jointly and sever-
ally 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 car-
rier 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
  1
   NLC also appealed, but later abandoned its appeal.
672          OAK HARBOR FREIGHT v. SEARS ROEBUCK
for Oak Harbor to move Sears’ freight. See 49 C.F.R.
§ 371.2(c) (“ ‘Brokerage’ or ‘brokerage service’ is the arrang-
ing 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 non-
brokerage 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” ship-
ments, 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 bro-
kerage services required NLC to identify carriers to move
Sears’ freight from Sears’ warehouses to various freight trans-
portation 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 com-
      modities in Interstate Commerce over public high-
      ways, provides that NATIONAL LOGISTICS
      CORPORATION will offer a series of shipments to
      the CARRIER, which the CARRIER agrees to trans-
              OAK HARBOR FREIGHT v. SEARS ROEBUCK                      673
      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. SHIP-
      PER agrees to pay CARRIER within a predeter-
      mined time from date of receipt regardless whether
      or not BROKER/SHIPPER has been paid for move-
      ment. . . . 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 ter-
      mination.

(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 Harbor-
generated 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 des-
ignated 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.
674         OAK HARBOR FREIGHT v. SEARS ROEBUCK
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 lad-
ing”). 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 con-
tain entries under the categories “Ship From,” “Consign to,”
and “Carrier.” The “Ship From” category identified a Sears
warehouse. The “Consign to” category identified the destina-
tion 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 pat-
tern: (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 Har-
bor, 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 lon-
ger 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,
              OAK HARBOR FREIGHT v. SEARS ROEBUCK                    675
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 collec-
tion 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 dis-
trict 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 indem-
nity 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 Con-
tract did not limit. Id. at 1147-50. In an issue of first impres-
sion 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.
  3
    Sears initially claimed to have paid about $278,000 of Oak Harbor’s
freight bills, but later conceded that about $50,000 of that amount repre-
sented NLC’s service charges and markup on the freight bills.
676           OAK HARBOR FREIGHT v. SEARS ROEBUCK
   After the district court entered judgment, Oak Harbor
moved for an award of prejudgment and post-judgment inter-
est. The district court held Sears liable for prejudgment inter-
est at the rate set by Washington state law and for post-
judgment 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 deter-
mine whether there are genuine issues of material fact and
whether the district court correctly applied the relevant sub-
stantive 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 inter-
est, 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 transpor-
tation 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 Met-
            OAK HARBOR FREIGHT v. SEARS ROEBUCK              677
als Co., 456 U.S. 336, 342 (1982). In the absence of a state-
ment 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 con-
    signee 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 con-
    signee 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, deliv-
    ery 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 con-
    signor, 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 exam-
ple, 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 dis-
criminatory practices are present that the [bill of lading’s]
default terms bind the parties.” C.A.R. Transp., 213 F.3d at
678            OAK HARBOR FREIGHT v. SEARS ROEBUCK
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 “nonre-
course” clause. As a consequence, in the absence of a separate
agreement, Sears is liable for the freight charges on the out-
bound bills of lading.

   [4] Similarly, under the default terms, a consignee is liable
for freight charges unless the bill of lading is marked “pre-
paid.” Id. Sears was the consignee on the return bills of lad-
ing. 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
  4
    The 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 Associa-
tions, Inc., National Motor Freight Classification, STB NMF 100-AD,
Uniform Bill of Lading Terms and Conditions (2003). Similarly, Oak Har-
bor acknowledged that the bills of lading for return shipments were based
on the industry standards: the Uniform Straight Bill of Lading form. See
id.
             OAK HARBOR FREIGHT v. SEARS ROEBUCK              679
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 nev-
ertheless 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 & Nash-
ville 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 [con-
signee] 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 con-
tract 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
680           OAK HARBOR FREIGHT v. SEARS ROEBUCK
a contract with a broker, who is not a party to the bill of lad-
ing, can do the same. See Louisville, 265 U.S. at 67 (looking
to the promises, if any, made by the shipper to determine lia-
bility 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 pro-
vides 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 con-
tracts 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 Con-
tract. 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
  5
    The 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 “SHIP-
PER” 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 Car-
rier Contract can be understood as follows: “NLC agrees to pay Oak Har-
bor within a predetermined time . . . regardless whether or not NLC has
been paid.”
              OAK HARBOR FREIGHT v. SEARS ROEBUCK                     681
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 con-
cedes 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 reg-
ulation provided only that such agreements “shall be in writ-
ing, 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. Criti-
cally, the regulation did not require that the agreement be the
exclusive contract for the carriage of goods. Consequently,
  6
   Sears’ further argument—that the district court created a “super-
waiver” 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.
682         OAK HARBOR FREIGHT v. SEARS ROEBUCK
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 func-
tion 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 “irreconcil-
able 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 dis-
puted freight charges would occur only after delivery of the
goods to Hawaii, while the bill of lading provided that pay-
ment 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 Con-
tract 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
              OAK HARBOR FREIGHT v. SEARS ROEBUCK                     683
as concurrent contracts for the carriage of Sears’ freight.
Accordingly, we hold that the Carrier Contract did not consti-
tute 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, bro-
ker, 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. Gla-
surit 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 car-
rier. 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,
  7
   Sears’ 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.
684           OAK HARBOR FREIGHT v. SEARS ROEBUCK
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 send-
ing 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 car-
rier 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 “outli-
er,” 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
  8
    Citing 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 con-
signee paid a shipper/consignor and received a bill of lading from the car-
rier 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).
            OAK HARBOR FREIGHT v. SEARS ROEBUCK                685
F.3d 1544, 1546-47 (11th Cir. 1997). As noted by the district
court, Oak Harbor, 420 F. Supp. 2d at 1151, the policy rea-
sons 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 assur-
    ance 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 posi-
tion 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 car-
rier directly. See Nat’l Shipping, 106 F.3d at 1547 (recom-
mending using reputable freight forwarders or contracting to
eliminate liability); Hawkspere, 330 F.3d at 237 (recommend-
ing paying the carrier directly).

   Sears contends that Southern Pacific Transportation sup-
ports 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 lia-
bility upon an innocent party.” 456 U.S. at 351. Sears’ reli-
ance 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
686           OAK HARBOR FREIGHT v. SEARS ROEBUCK
to mark the bill of lading as “nonrecourse,” remained primar-
ily liable for the freight charges. 456 U.S. at 351-52. The
Court acknowledged that some cases applied equitable estop-
pel 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 carri-
er’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 place-
ment 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 “nonre-
course” 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 “in-
nocent 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 fed-
eral 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
  9
   Had 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.
              OAK HARBOR FREIGHT v. SEARS ROEBUCK                687
Harbor’s recovery of freight charges from Sears, notwith-
standing 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 pre-
judgment interest beginning December 15, 2004, at the rate
specified by Washington state law. Sears challenges the dis-
trict 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 inter-
est was proper, the court should apply the federal rate estab-
lished 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 ship-
ments 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 Novem-
       ber 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
688          OAK HARBOR FREIGHT v. SEARS ROEBUCK
      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 Decem-
      ber 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 propo-
sition that a district court can use certain shortcuts to achieve
              OAK HARBOR FREIGHT v. SEARS ROEBUCK                    689
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 dis-
cretion 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 “establish-
ing a separate interest figure for each lost monthly payment”).
We agree with the Second Circuit’s practical approach. Con-
sequently, we hold that the district court did not abuse its dis-
cretion 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 gov-
erns awards of prejudgment interest in diversity actions, but
federal law may apply to the calculation of prejudgment inter-
est 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
  10
    Sears’ only appellate challenge to the rate of prejudgment interest is
the application of state, rather than federal, law.
690         OAK HARBOR FREIGHT v. SEARS ROEBUCK
convert the case into one premised on federal substantive law.
We hold that the district court did not err in applying Wash-
ington state law to the award of prejudgment interest.

  AFFIRMED.