Oak Harbor Freight Lines, Inc. v. Sears Roebuck & Co. etc.

Plaintiff Oak Harbor Freight Lines, Inc. ("Oak Harbor"),
brought suit against Defendants Sears Roebuck & Co.
("Sears") and National Logistics Corporation ("NLC") to
recover nearly half a million dollars for transportation of
Sears' freight. NLC arranged the transportation, which Oak
Harbor provided. Following cross-motions for summary judgment,
the district court held NLC and Sears jointly and severally
liable for the charges under Washington law. In a later
order, the district court held that Oak Harbor was entitled to
both prejudgment and post-judgment interest, with the rate of
prejudgment interest set according to Washington law. Sears
timely appealed.1 We now affirm.

FACTUAL AND PROCEDURAL HISTORY

The district court's opinion recites the facts in detail. Oak
Harbor Freight Lines, Inc. v. Sears Roebuck & Co., 420 F.
Supp. 2d 1138, 1140-45 (W.D. Wash. 2006). Because the
facts are uncontested, we rely on the district court's findings.
Oak Harbor, a Washington corporation and licensed "motor
carrier" under the Federal Motor Carrier Safety Act, 49
U.S.C. § 13102(14), provides intrastate and interstate freight
transportation. Sears is a New York corporation that, among
other things, sells tools and appliances at wholesale and retail.
NLC, an Illinois corporation, is a licensed and registered
property "broker" that arranges transportation by motor carrier
under the authority of the Federal Motor Carrier Safety
Act. Id. § 13102(2).

NLC provided both brokerage and non-brokerage services
for Sears. As a part of its brokerage services, NLC arranged
for Oak Harbor to move Sears' freight. See 49 C.F.R.
§ 371.2(c) (" ‘Brokerage' or ‘brokerage service' is the arranging
of transportation or the physical movement of a motor
vehicle or of property. It can be performed on behalf of a
motor carrier, consignor, or consignee."). As a part of its nonbrokerage
services, NLC reviewed and audited Oak Harbor's
freight bills and collected funds from Sears to pay those
freight bills. See id. § 371.2(d) (" ‘Non-brokerage service' is
all other service performed by a broker on behalf of a motor
carrier, consignor, or consignee.").

Oak Harbor hauled Sears' freight for a number of years
without the use of an intermediary. In 1989, Sears hired NLC
to perform brokerage services. At first, NLC was hired only
to perform brokerage services for "inbound" or "return" shipments,
which involved identifying carriers to move freight
from Sears' vendors to Sears' warehouses. By early 1992,
Sears expanded the scope of NLC's responsibilities to include
broker services for "outbound" shipments. The outbound brokerage
services required NLC to identify carriers to move
Sears' freight from Sears' warehouses to various freight transportation
and delivery companies.
On January 8, 1992, Oak Harbor and NLC signed a
National Logistics Corporation Carrier Contract ("Carrier
Contract") to govern their relationship. The Carrier Contract
provided, in pertinent part:

This AGREEMENT between NATIONAL
LOGISTICS CORPORATION (BROKER/
SHIPPER), operating under ICC Broker No.
MC205436 and Oak Harbor Freight Lines, Inc.
(CARRIER), MC # 139763 engaged in the business
of conducting the transportation of regulated commodities
in Interstate Commerce over public highways,
provides that NATIONAL LOGISTICS
CORPORATION will offer a series of shipments to
the CARRIER, which the CARRIER agrees to transport. . . . BROKER/SHIPPER and CARRIER agree
rates governing shipments will be established to
meet the schedules verbally agreed upon and verbal
agreement will be reduced to writing by CARRIER
submitting its invoice to BROKER/SHIPPER. SHIPPER
agrees to pay CARRIER within a predetermined
time from date of receipt regardless whether
or not BROKER/SHIPPER has been paid for movement.

. . . This AGREEMENT shall be effective on
the date it is signed and will remain in full force and
effect from signing date for twelve (12) months.

AGREEMENT shall be automatically extended for
successive twelve (12) month terms or until canceled
by either party by giving written notice to the other
party at least thirty (30) days prior to the date of termination.
(Emphasis added.) In accordance with the terms of the Carrier
Contract, Oak Harbor and NLC negotiated the rates governing
the shipments on a roughly annual basis. Other than with
respect to rates, they never updated or replaced the Carrier
Contract.

Bills of lading were used for all of Sears' freight carried by
Oak Harbor.2 For return shipments, Oak Harbor generated the
bills of lading ("return bills of lading" or "Oak Harborgenerated
bills of lading") using its standard, uniform straight
bill of lading form. Oak Harbor designed its bills of lading to
comply with industry standards. The return bills of lading designated
Sears as the "consignee" and were marked "collect."

In the "Bill To" section of the return bills of lading, "Third
Party Billing" was written.

Sears generated the bills of lading for outbound shipments
("outbound bills of lading" or "Sears-generated bills of lading").
As with the Oak Harbor-generated bills of lading, Sears
designed its outbound bills of lading to comply with industry
standards. On the bottom of the outbound bills of lading the
following text appeared: "This document is tendered as an
individual Bill of Lading. All terms and conditions of the
straight Bill of Lading and applicable tariff and classifications
in effect as of the date hereon apply." The outbound bills of
lading read "Freight Terms: PREPAID" and instructed the
carrier to send freight bills to NLC. These bills of lading did
not identify the "Shipper" or "Consignor," but they did contain
entries under the categories "Ship From," "Consign to,"
and "Carrier." The "Ship From" category identified a Sears
warehouse. The "Consign to" category identified the destination
of the shipment. The "Carrier" category identified Oak
Harbor.

In accordance with the terms of the bills of lading, billing
and payment between the parties generally followed this pattern:
(1) Oak Harbor sent NLC a billing invoice at least three
days after Oak Harbor delivered the freight, and Oak Harbor
expected to be paid by NLC within 30 days of the date shown
on the invoice; (2) after auditing the invoices, NLC billed
Sears weekly for the freight charges that had accumulated
since the last billing date; (3) Sears paid NLC about five days
after receiving the bill from NLC; and (4) NLC paid Oak Harbor,
with the funds received from Sears, about 25 days after
NLC received Oak Harbor's billing invoice.

In mid-2004, Oak Harbor learned that Sears would no longer
use NLC as its broker as of January 2005. In fact, Sears
terminated NLC's services earlier, on November 12, 2004. By
the end of November 2004, Oak Harbor was owed more than
$400,000 for shipments of Sears' freight. On December 12,
2004, NLC sent Oak Harbor a letter recommending that Oak
Harbor seek payment directly from Sears. In response to
inquiries by Oak Harbor concerning payment, Sears denied
liability and informed Oak Harbor that NLC was responsible
for the freight charges. By the time Oak Harbor sought collection
from Sears, Sears had paid $227,202.50 to NLC for
freight charges invoiced by Oak Harbor.3

In early 2005, Oak Harbor sued both NLC and Sears in
Washington state court for "monies due." Sears timely
removed the proceeding to federal district court pursuant to
28 U.S.C. §§ 1332, 1441, and 1446.

Following cross-motions for summary judgment, the district
court held "NLC and Sears jointly and severally liable to
Oak Harbor for $426,417.94 in freight charges that were
incurred in connection with [the] shipments arranged by
NLC." Oak Harbor, 420 F. Supp. 2d at 1152. The district
court also held that Sears was "entitled to recover in indemnity
against NLC any portion of the $227,202.50 that Sears
directly pays Oak Harbor." Id.

In reaching its holdings, the district court explained that
NLC was liable to Oak Harbor under the Carrier Contract. Id.
at 1146-47. The district court did not premise Sears' liability,
however, on the Carrier Contract. Rather, the district court
interpreted the bills of lading generated by Sears and Oak
Harbor as imposing liability on Sears, which the Carrier Contract
did not limit. Id. at 1147-50. In an issue of first impression
within the Ninth Circuit, the district court followed the
Fourth, Fifth, and Eleventh Circuits and adopted a rule that
equitable estoppel does not bar Sears' liability for the
$227,202.50 already paid to NLC for freight shipments. Id. at
1151.

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

STANDARDS OF REVIEW

We review de novo a district court's grant of summary
judgment. Universal Health Servs. Inc. v. Thompson, 363
F.3d 1013, 1019 (9th Cir. 2004). Viewing the evidence in the
light most favorable to the nonmoving party, we must determine
whether there are genuine issues of material fact and
whether the district court correctly applied the relevant substantive
law. Id. When, as here, the facts are not in dispute,
the only question is whether the district court correctly
applied the law. Id.

We review for abuse of discretion an award of prejudgment
interest, Hayes v. Palm Seedlings Partners-A (In re Agric.
Research & Tech. Group, Inc.), 916 F.2d 528, 533 (9th Cir.
1990), but review de novo whether state or federal law applies
to determine the amount and availability of prejudgment interest,
McCalla v. Royal MacCabees Life Ins. Co., 369 F.3d
1128, 1129 (9th Cir. 2004).

DISCUSSION

A. The district court correctly held Sears liable for the
charges incurred by Oak Harbor in shipping Sears'
freight.

[1] As we have noted, a bill of lading is the basic transportation
contract between the shipper/consignor and the carrier,
the terms and conditions of which bind the shipper and all
connecting carriers. S. Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. 336, 342 (1982). In the absence of a statement
to the contrary, when a bill of lading is intended to
conform to the industry standard, by default "the consignor
remains primarily liable." Id. at 343. In C.A.R. Transportation
Brokerage Co. v. Darden Restaurants, Inc., we explained the
default terms and conditions of a standard bill of lading:
The bill of lading provides that the owner or consignee
shall pay the freight and all other lawful
charges upon the transported property and that the
consignor remains liable to the carrier for all lawful
charges. The bill of lading, however, also contains
"nonrecourse" and "prepaid" provisions that, if
marked by the parties, release the consignor and consignee
from liability for the freight charges. If the
nonrecourse clause is signed by the consignor and no
provision is made for the payment of freight, delivery
of the shipment to the consignee relieves the
consignor of liability. Similarly, when the prepaid
provision on the bill of lading has been marked and
the consignee has already paid its bill to the consignor,
the consignee is not liable to the carrier for
payment of the freight charges.
213 F.3d 474, 478-79 (9th Cir. 2000) (citations and footnotes
omitted).

[2] Those default liability provisions can be modified by
contract so as to make "the liability allocation presumptions
on the bill of lading . . . unnecessary." Id. at 479. For example,
if parties enter into a contract before preparing a bill of
lading, and there is "an irreconcilable repugnancy between the
prior written contract and the bills of lading, that conflict
would have to be resolved in favor of the former." Toyo Kisen
Kaisha v. W.R. Grace & Co., 53 F.2d 740, 742 (9th Cir.
1931). "It is only where the parties fail to agree or where discriminatory
practices are present that the [bill of lading's]
default terms bind the parties." C.A.R. Transp., 213 F.3d at
479. In C.A.R. Transportation, we held that a carrier had
modified the default provisions of certain bills of lading and
had waived shipper/consignor liability when its employees
signed a document, separate from the bills of lading, stating
that the carrier would not seek payment from the shipper/
consignor. Id. at 476-79.

[3] Here, the bills of lading used by the parties to ship
Sears' freight - both the Sears-generated bills of lading for the
outbound shipments and the Oak Harbor-generated bills of
lading for the return shipments - were designed to comply
with industry standards. Accordingly, they adopted the default
terms of the uniform straight bill of lading.4 Under those
default terms, the shipper/consignor is liable for freight
charges unless the bill of lading is marked "nonrecourse." Id.
at 478-79. Sears was the shipper/consignor on the outbound
bills of lading. Its bills of lading did not include a "nonrecourse"
clause. As a consequence, in the absence of a separate
agreement, Sears is liable for the freight charges on the outbound
bills of lading.

[4] Similarly, under the default terms, a consignee is liable
for freight charges unless the bill of lading is marked "prepaid."
Id. Sears was the consignee on the return bills of lading.
Because the bills of lading were marked "collect" - not
"prepaid" - in the absence of a separate agreement, Sears is
liable for the freight charges on the return shipment bills of
lading. In sum, in the absence of a separate agreement, Sears
is liable for Oak Harbor's freight charges because of the
default liability provisions that are part of the bills of lading.
Although Sears agrees with these general principles, it nevertheless
contends that, for three reasons, it should not be
required to pay the freight charges. First, Sears argues that the
Carrier Contract waives the default liability provisions of the
bills of lading. Second, Sears argues that, if not a waiver, the
Carrier Contract was the sole lawful contract governing the
shipments, thereby rendering the bills of lading mere receipts.
Third, even if the Carrier Contract does not modify the default
liability provision, Sears argues that Oak Harbor is equitably
estopped from collecting the freight charges from Sears. We
address each argument in turn.

1. Carrier Contract - Waiver

[5] The parties to a freight shipment generally are free to
assign liability for the payment of freight charges through a
contract separate from the bill of lading. Louisville & Nashville
R.R. Co. v. Cent. Iron & Coal Co., 265 U.S. 59, 66-67
(1924). Such a contract may provide that "the shipper agrees
absolutely to pay the charges, or . . . merely that he shall pay
if the consignee does not pay . . . , or . . . that only the [consignee]
shall be liable for the freight charges, or [that] both
the shipper and the consignee may be made liable." Id. "It is
only where the parties fail to agree or where discriminatory
practices are present that the [bill of lading] default terms bind
the parties." C.A.R. Transp., 213 F.3d at 479 (emphases
added).

[6] Sears contends that the Carrier Contract between Oak
Harbor and NLC waived Oak Harbor's recourse against Sears
under the otherwise-applicable default liability provisions of
the bills of lading. Although it is well established that a contract
between the parties to a bill of lading - the shipper, the
carrier, and the consignee - can allocate liability for payment
of freight charges, there is no support for the proposition that
a contract with a broker, who is not a party to the bill of lading,
can do the same. See Louisville, 265 U.S. at 67 (looking
to the promises, if any, made by the shipper to determine liability
for payment of freight charges); S. Pac. Transp., 456
U.S. at 342 ("The bill of lading is the basic transportation
contract between the shipper-consignor and the carrier.");
C.A.R. Transp., 213 F.3d at 478-79 ("The bill of lading provides
that the owner or consignee shall pay the freight . . . and
that the consignor remains liable to the carrier . . . .").
Sears cites no authority to support its proposition that a
contract between a carrier and a broker can modify the default
liability provisions of a bill of lading. In each of the two cases
on which Sears primarily relies, Toyo Kisen, 53 F.2d 740, and
Roll Form Products, Inc. v. All State Trucking Co. (In re Roll
Form Products, Inc.), 662 F.2d 150 (2d Cir. 1981), the contracts
at issue were entered into between a carrier and the
direct parties to the bill of lading - the shipper, consignor, or
consignee. Neither case involved a contract with a broker.

[7] Only Oak Harbor and NLC executed the Carrier Contract.
Sears was neither named in, nor a signatory to, that
agreement. The Carrier Contract never mentions or refers to
Sears by name or description. The Carrier Contract makes no
express or implied statements that Sears will not pay Oak
Harbor for the shipments, nor does the contract make any
express or implied statements that Oak Harbor will not seek
payment from Sears. The Carrier Contract merely provides
that NLC will be liable for freight charges regardless whether
or not NLC is paid.5 This agreement by NLC to be liable for
the freight charges does not imply that Sears is not liable. To
hold as Sears wishes would permit a shipper to insulate itself
from liability for the payment of freight charges by the simple
act of using a broker. We hold that the Carrier Contract did
not alter Sears' liability for the freight charges under the bills
of lading.6

2. Carrier Contract - Sole Lawful Contract

In the alternative, Sears argues that the Carrier Contract
was the sole lawful contract for the freight shipments and that
the bills of lading were merely receipts. Sears first notes that,
in 1992, when Oak Harbor and NLC executed the Carrier
Contract, federal law required that Oak Harbor enter into a
written agreement to charge below-tariff rates. 49 C.F.R.
§ 1053.1 (1991) (repealed June 20, 1992). Oak Harbor concedes
that it intended the Carrier Contract to comply with that
regulation. As a result, Sears reasons, Oak Harbor and NLC
intended that the Carrier Contract be the sole legal contract
for shipments, thereby foreclosing the possibility that the bills
of lading had any effect other than as receipts.

[8] The former regulation that Sears cites did not presume
to control all aspects of a carriage agreement. Rather, the regulation
provided only that such agreements "shall be in writing,
shall provide for transportation for a particular shipper or
shippers, shall be bilateral and impose specific obligations
upon both carrier and shipper or shippers, [and] shall cover a
series of shipments during a stated period of time." Id. Critically,
the regulation did not require that the agreement be the
exclusive contract for the carriage of goods. Consequently,
the regulation does not displace the default liability provisions
for bills of lading, which we have discussed above.
[9] Sears also argues that the bills of lading could not function
as contracts, because the Carrier Contract contains the
price term for the shipments. In support, Sears cites Toyo
Kisen, in which we explained that, when there is "irreconcilable
repugnancy between the prior written contract and the
bills of lading, that conflict would have to be resolved in favor
of the former." Toyo Kisen Kaisha, 53 F.2d at 742. We found
an "irreconcilable repugnancy" in Toyo Kisen because the oral
and written agreements at issue provided that payment for disputed
freight charges would occur only after delivery of the
goods to Hawaii, while the bill of lading provided that payment
for the freight charges would occur whether or not the
goods were delivered. Id. at 741.

[10] There is no such irreconcilable repugnancy between
the Carrier Contract and the bills of lading in this case. They
operate concurrently and in harmony to provide the key terms
for Sears' freight shipments. The bills of lading contain no
price terms, while the Carrier Contract determines the price
for the shipments. The Carrier Contract does not address
Sears' liability for payment of freight charges, while the
default provisions in the bills of lading make Sears liable. The
bills of lading identify the shipper, consignor, and consignee;
describe where the goods are to be picked up and where they
are to be delivered; and contain the payment liability terms of
"prepaid" or "collect" to the bills of lading, none of which the
Carrier Contract provides.

[11] In summary, the regulations under which Oak Harbor
and NLC entered into the Carrier Contract did not require that
the Carrier Contract constitute the sole agreement for the
shipment of freight. In addition, the terms of the Carrier Contract
and the terms of the bills of lading work in harmony to
supply different aspects of the parties' relationship; we can
give effect to both the Carrier Contract and the bills of lading
as concurrent contracts for the carriage of Sears' freight.
Accordingly, we hold that the Carrier Contract did not constitute
the sole legal agreement for the carriage of Sears' freight.

3. Equitable Estoppel

[12] Sears further argues that it "paid NLC for the majority
of the freight charges at issue" and that, as "an innocent
party," it "should not be required to pay twice."7 In other
words, Sears contends that equitable estoppel should bar Oak
Harbor's collection of the freight charges from it. Whether the
shipper or the carrier bears the risk if a freight forwarder, broker,
or consolidator fails to forward a freight payment, or if
a consignee fails to forward a freight payment, is a question
of first impression for this circuit.

In support of its position, Sears relies primarily on the Sixth
Circuit's decision in Olson Distributing Systems, Inc. v. Glasurit
America, Inc., 850 F.2d 295 (6th Cir. 1988). In that case,
a motor carrier sought payment from a shipper for freight bills
that the carrier had submitted to a freight forwarder. Id. at
295. The shipper paid the freight forwarder, but the freight
forwarder absconded with the money and never paid the carrier.
Id. Although the bills of lading were marked "prepaid,"
and the shipper did not sign the "nonrecourse" clause on the
bills of lading, the Sixth Circuit held that the risk of loss
should rest with the carrier. Id. at 295-96.

The Sixth Circuit pointed to four critical facts in reaching
its holding. First, the carrier provided the shipper with freight
bills stating that the freight charges were to be paid to the
freight forwarder, not the carrier. Id. at 297. In other words,
7Sears' argument ignores that it paid only $227,202.50 of the
$426,417.94 in charges incurred by Oak Harbor in shipping Sears' freight.
Nearly $200,000 in freight charges never has been paid by Sears to NLC
or Oak Harbor, even though Sears received the full benefit of both of their
services.

the carrier's own bills indicated that the carrier should not
expect payment from the shipper. Id. Second, the carrier did
not diligently bill the freight forwarder for shipments, waiting
until "two to three months after the last delivery" before sending
any freight bills to the freight forwarder. Id. at 295. Third,
the carrier violated then-current credit regulations established
by the Interstate Commerce Commission which, had the carrier
followed, would have allowed the carrier to identify that
the freight forwarder was absconding with the money. Id. at
297. Finally, had the carrier notified the shipper sooner, the
carrier could have limited its losses. Id. The court concluded:
"Here[,] the doctrine of equitable estoppel requires that the
loss fall on the carrier because its actions had the effect of
lulling the shipper into believing that it was expecting and
receiving payment from the freight forwarder." Id. at 296.

[13] We agree with the district court that Olson is an "outlier,"
the extreme facts of which bear little resemblance to what
happened here.8 Oak Harbor, 420 F. Supp. 2d at 1151. Three
of our sister circuits - the Fourth, Fifth, and Eleventh Circuits
- have reached a conclusion at odds with Olson on facts
much closer to those before us. Those courts have held that
a shipper should bear the risk when it chooses to pay for
freight charges through a broker rather than directly to the
carrier. Hawkspere Shipping Co. v. Intamex, S.A., 330 F.3d
225, 237-38 (4th Cir. 2003); Strachan Shipping Co. v.
Dresser Indus., Inc., 701 F.2d 483, 489-90 (5th Cir. 1983);
Nat'l Shipping Co. of Saudi Arabia v. Omni Lines, Inc., 106
8Citing out-of-circuit authority, Sears takes exception to the "outlier"
characterization. That authority is not availing. In two of the cited cases,
the courts held that equitable estoppel is available when an innocent consignee
paid a shipper/consignor and received a bill of lading from the carrier
marked "prepaid." See EF Operating Corp. v. Am. Bldgs., 993 F.2d
1046, 1052 (3d Cir. 1993); Consol. Freightways Corp. v. Admiral Corp.,
442 F.2d 56, 59-60 (7th Cir. 1971). The third cited case is even further
from the point, because it addressed a misapplication of mandatory tariff
rates where no double payment had occurred. Inman Freight Sys., Inc. v.
Olin Corp., 807 F.2d 117, 121 (8th Cir. 1986).

F.3d 1544, 1546-47 (11th Cir. 1997). As noted by the district
court, Oak Harbor, 420 F. Supp. 2d at 1151, the policy reasons
for this result are persuasive. The Fifth Circuit wrote:
[W]e think that our result comports with economic
reality. A freight forwarder provides a service. He
sells his expertise and experience in booking and
preparing cargo for shipment. He depends upon the
fees paid by both shipper and carrier. He has few
assets, and he books amounts of cargo far exceeding
his net worth. Carriers must expect payment will
come from the shipper, although it may pass through
the forwarder's hands. While the carrier may extend
credit to the forwarder, there is no economically
rational motive for the carrier to release the shipper.
The more parties that are liable, the greater the assurance
for the carrier that he will be paid.

Strachan, 701 F.2d at 490. Furthermore, as those courts have
explained, the shipper, and not the carrier, is in the best position
to avoid liability for double payment by dealing with a
reputable freight forwarder, by contracting with the carrier to
eliminate the shipper's liability, or by simply paying the carrier
directly. See Nat'l Shipping, 106 F.3d at 1547 (recommending
using reputable freight forwarders or contracting to
eliminate liability); Hawkspere, 330 F.3d at 237 (recommending
paying the carrier directly).

Sears contends that Southern Pacific Transportation supports
its position. In Southern Pacific Transportation, the
Court stated that "double payment cases constitute their own
category and stand against the placement of duplication of liability
upon an innocent party." 456 U.S. at 351. Sears' reliance
is misplaced. In Southern Pacific Transportation, the
Court refused to grant an estoppel defense to a shipper/
consignor because, among other reasons, (a) the shipper/
consignor was paid for the goods but the carrier was not paid
for its services; and (b) the shipper/consignor, having failed
to mark the bill of lading as "nonrecourse," remained primarily
liable for the freight charges. 456 U.S. at 351-52. The
Court acknowledged that some cases applied equitable estoppel
to bar recovery of freight charges by a carrier. Id. at 351.
But the Court noted that those cases applied estoppel only in
limited circumstances: "Each and all of them involved a carrier's
misrepresentation, such as a false assertion of prepayment
on the bill of lading, upon which a consignee detrimentally
relied only to find itself later sued by the carrier for the same
freight charges." Id. Carriers involved in misrepresentation
"constitute their own category and stand against the placement
of duplication of liability upon an innocent party." Id.

With respect to the outbound shipments as to which Sears
was shipper/consignor, we agree with the district court that
the Hawkspere, Strachan, and National Shipping line of
authority best applies to the facts of this case. Sears generated
the bills of lading and failed to protect itself with a "nonrecourse"
designation. In addition, Sears selected NLC and
directed Oak Harbor to submit its bills through NLC.
With respect to the return shipments, Sears was not an "innocent
consignee." The bills of lading clearly were marked
"collect," which put Sears on notice that payment was due.9

In addition, Sears undertook no actions to limits its liability.
In particular, Sears could have elected to pay Oak Harbor
directly, but did not, and thereby assumed the risk that NLC
would fail to forward payment. Furthermore, unlike in Olson,
Oak Harbor did not extend credit to NLC in violation of federal
regulations, and it immediately sought payment from
Sears when NLC abrogated its responsibility to forward
Sears' freight payments.

[14] Thus, we hold that equitable estoppel does not bar Oak
Harbor's recovery of freight charges from Sears, notwithstanding
Sears' payment of a portion of those freight charges
to NLC.

B. The district court correctly awarded prejudgment
interest to Oak Harbor under Washington law.
On motion by Oak Harbor, the district court awarded prejudgment
interest beginning December 15, 2004, at the rate
specified by Washington state law. Sears challenges the district
court's award of prejudgment interest on two grounds.

First, Sears contends that prejudgment interest was improper
because Oak Harbor failed to present evidence of the date on
which Sears' payments to Oak Harbor were due. Second,
Sears contends that, assuming an award of prejudgment interest
was proper, the court should apply the federal rate established
by 28 U.S.C. § 1961, because the judgment against
Sears was premised on federal law.

1. Award of Prejudgment Interest

The district court calculated prejudgment interest using a
single "due" date of December 14, 2004, for all 3,386 shipments
made by Sears during the approximately four-month
period at issue. Oak Harbor proposed that date in its motion
for prejudgment interest, as follows:

Each of the freight charges at issue here was billed
at a different date during a time span of about 3-1/2
months, beginning in August and ending in November
2004. Therefore, Oak Harbor would be entitled
to prejudgment interest on each such invoice running
from the separate date that each became due and
payable. However, because there were so many
invoices and each was for a relatively small amount,
for the sake of simplicity, Oak Harbor will assume
for the purposes of this motion that: (1) all 3,386
shipments occurred on the same day; (2) that they
were all then billed in due course on the same day;
and, (3) therefore, became due and payable on the
same day.

For the purposes of this motion, therefore, Oak
Harbor will assume that all 3,386 shipments
occurred on November 11, 2004. This was the day
before Sears terminated NLC and instructed Oak
Harbor to begin as of November 12 to send its
freight bills to Menlo Logistics for processing and
payment. Consequently, it is [the] last shipment date
for which freight invoices would have gone to NLC
for payment. It will further be assumed, therefore,
that in the normal course of business, by 3 days later
on November 14, 2004, NLC had received all 3,386
freight bills from Oak Harbor, for which payment
was then due no later than 30 day[s] later on December
14, 2004.

Sears contends that the district court's grant of prejudgment
interest was improper because the court held Sears liable for
the cost of the shipments under the bills of lading, and those
bills of lading did not specify a date on which payments to
Oak Harbor were due. But, the assumptions that the district
court adopted for purposes of the motion (the ordinary course
of billing between the parties and the date of termination of
NLC) were consistent with the undisputed evidence in the
case. The district court found that, in the ordinary course of
their business dealings, NLC billed Sears weekly for the
freight shipments, and Sears paid NLC approximately five
days after receiving a bill. Oak Harbor, 420 F. Supp. 2d at
1144-45. As noted above, Sears terminated NLC's services on
November 12, 2004. Applying those assumptions, Sears
would have paid NLC well before December 14, 2004.

[15] The only authority that Sears cites to argue against the
award of the prejudgment interest actually supports the proposition
that a district court can use certain shortcuts to achieve
a "fair figure for the interest" to avoid numerous calculations.
See Chandler v. Bombardier Capital, Inc., 44 F.3d 80, 84 (2d
Cir. 1994) (holding that the district court did not abuse its discretion
in applying, over a longer period of time, a much
lower interest rate than it otherwise might have applied
because the interest was fair and the court avoided "establishing
a separate interest figure for each lost monthly payment").
We agree with the Second Circuit's practical approach. Consequently,
we hold that the district court did not abuse its discretion
in adopting December 14, 2004, as the date from
which prejudgment interest should accrue.

2. Application of Washington Law to Prejudgment
Interest

"Prejudgment interest is a substantive aspect of a plaintiff's
claim, rather than a merely procedural mechanism." Sea
Hawk Seafoods, Inc. v. Exxon Corp. (In re the Exxon Valdez),
484 F.3d 1098, 1101 (9th Cir. 2007). State law generally governs
awards of prejudgment interest in diversity actions, but
federal law may apply to the calculation of prejudgment interest
when a substantive claim derives from federal law alone.
See id. at 1100-02 ("In cases tried under admiralty principles
only, principles of federal law govern a plaintiff's entitlement
to prejudgment interest even though the plaintiff may have
invoked diversity jurisdiction . . . ." (internal quotation marks
omitted)).

[16] Sears argues that, because the district court relied on
federal law for its decision, federal law should apply to the
award of prejudgment interest if one is to be made.10 That
argument ignores the fact that the action was brought, and
judgment was entered, on a state law claim for "monies due."
Oak Harbor, 420 F. Supp. 2d at 1146. That the district court
cited federal precedents in reasoning to its holding does not
10Sears' only appellate challenge to the rate of prejudgment interest is
the application of state, rather than federal, law.
convert the case into one premised on federal substantive law.
We hold that the district court did not err in applying Washington
state law to the award of prejudgment interest.