The current Esoteric USA warranty states clearly that the unit owner "must pay any shipping charges if it is necessary to ship the product for service. However, if the necessary repairs are covered by the warranty we will pay the return shipping charges to any destination within the country in which the product was originally purchased."
http://www.esoteric-usa.com/warranty.php
So Esoteric was within its legal rights to require the OP to pay to ship his K1 to the repair center. But given the special nature of the product involved, the part failure in question and the length of time it took Esoteric to turn the repair around, I still think Esoteric should have offered to reimburse the OP for reasonable shipping charges (I have no idea if $400 was reasonable in this circumstance).