The plaintiff, a US-based seller, contracted with a South Korea-based purchaser for the sale of an order of potato flour. Under the FOB terms of the sale, the purchaser was obliged to arrange transportation of the cargo. The purchaser hired the defendant, a US-based transportation intermediary, and it issued a ‘through’ bill of lading covering both the sea and land legs of the transit from Idaho to South Korea. The plaintiff was not a party to that bill of lading.

After arrival in South Korea, the purchaser performed inspections of the cargo and subsequently sought to return a portion of it. The plaintiff agreed that the buyer could return a portion of the cargo and offered to pay the transportation costs back to Idaho. The buyer arranged for the transportation using the same intermediary it had used for the original shipment. The defendant issued a bill of lading for the return shipment.  Again the plaintiff was not a party to that bill of lading.

After arrival in the United States, the United States Food and Drug Administration placed the cargo on hold for testing. The defendant arranged for warehousing while awaiting the test results. After the test results were received, the defendant refused to release the cargo for rail transport to Idaho until the plaintiff paid all transportation and warehousing costs. A dispute arose regarding the amount the plaintiff owed the defendant.

The bill of lading at issue contained a clause applying COGSA / Hague Rules ‘throughout the time the Goods are in the custody of the Carrier and/or Actual Carrier and until the Goods are delivered to Merchant'. The bill of lading also contained a forum selection clause assigned the United States District Court for the Central District of California as the designated forum.

The plaintiff filed suit in Idaho and the defendant filed a motion to transfer the venue to California pursuant to the forum selection. The plaintiff argued that it had never agreed to the bill of lading and that the Carmack Amendment and not COGSA / Hague Rules should govern the enforceability of the forum selection clause.

The issues before the court were:

(1) Whether COGSA / Hague Rules applied to the domestic land leg of an intercontinental ‘through’ shipment covering both sea and land;

(2) Whether the forum selection clause contained in the ‘through’ bill of lading issued by the transport intermediary was enforceable against the non-party consignee.

Held: COGSA / Hague Rules and not the Carmack Amendment applied to the shipment because COGSA / Hague Rules art 7 allows parties to extend its application to the rail leg of transit beyond the mandatory scope identified defined by art 1.e. Furthermore, since the bill of lading was designed to cover ‘the entire journey of the shipment’ and was not ‘piecemealed out into separate bills of lading for each segment of transportation’ the court found that COGSA / Hague Rules forum selection rules should govern.

Since COGSA / Hague Rules does not limit the application of forum selection clauses, the court determined that it would be enforced 'unless exceptional circumstances weight in favor of non-enforcement'. Applying this standard, the court held that the forum selection clause was unenforceable because the plaintiff had not agreed to be bound by the bill of lading and therefore a ‘lack of bargaining power’ amounted to an ‘exceptional circumstance’ warranting non-enforcement.