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June 16, 1982

M. T. GRANHEIM, Antilles Shipping Co., Ltd., P. R. Granheim, Defendants, v. P. R. GRANHEIM, Defendant and Third-Party Plaintiff, v. GATX TERMINALS, Third-Party Defendant

The opinion of the court was delivered by: CONNER


Plaintiff United States Steel International, Inc. ("USS") seeks to recover damages arising from the discoloration of a cargo of alpha methyl styrene ("AMS") during a voyage from Houston to Rotterdam. USS shipped 1,299.48 metric tons of AMS pursuant to a tanker voyage charter party with defendant Antilles Shipping Co., Ltd. ("Antilles"). Antilles was the time charterer of the chemical tanker M. T. Granheim, which is owned by defendant P. R. Granheim ("Granheim"). The case was tried by the Court without a jury; this opinion constitutes the Court's findings of fact and conclusions of law. Rule 52, F.R.Civ.P. *fn1"


 AMS is a colorless liquid that is produced as a by-product of the manufacture of other chemicals. *fn2" AMS requires the presence of an inhibitor, which in this case was tertiary-butyl catechol ("TBC"). The manufacturing specification for the level of TBC that should be present in AMS is 10-20 parts per million ("ppm").

 AMS has a color specification of 10 APHA, based on the American Society for Testing and Materials Standard ("ASTM"). An APHA rating of 10 or less is required for AMS because it otherwise imparts color to the final product. *fn3" The APHA scale ranges from 0 or colorless, to 50, or yellow, in five-unit steps. To determine the APHA color, a sample of the AMS is visually compared to liquid color standards, superimposed on a light background.

 USS produced the subject AMS in Haverhill, Ohio. When manufactured, the APHA color of AMS is usually less than five. In this case, the AMS was shipped in barges from the Haverhill plant to the GATX Terminal in Galena Park, Texas. When the first load of AMS was shipped to Texas on April 14, 1978, it had a color of less than 5, *fn4" and the TBC was measured at 20 ppm. The shipment was stored in tank 12-6 at the GATX Terminal. On August 1, 1978, the contents of tank 12-6 were sampled and showed a color of less than 10 and an inhibitor level of 33 ppm. The tank's contents were again tested on August 8 to measure the inhibitor level, which was determined to be 33 ppm. On September 29, 1978, USS loaded another barge with AMS in Haverhill and sent the shipment to GATX, where it was added to the AMS previously stored in tank 12-6. At the time it was loaded in Haverhill, the second shipment of AMS had a color of less than 10 and an inhibitor level of 23.3 ppm. After discharge of the second shipment in late October of 1978, tests of the AMS in tank 12-6 showed a color of less than 10 and an inhibitor level of 22 ppm.

 On November 12, 1978, preparations began for loading of the AMS aboard the M. T. Granheim. Superintendence Company, Inc. ("Superintendence"), which was retained by USS to inspect the AMS and supervise the loading procedures, inspected the vessel's tanks and issued a tank clean certificate indicating that the tanks were in good order and condition for receiving the cargo. After samples of the product in both the shoreline and the ship tanks were found satisfactory, loading was completed. Superintendence then conducted a composite analysis of the three ship tanks containing the AMS *fn5" and found a color rating of less than 10 and an inhibitor concentration of 18.5 ppm. An ullage of several feet was left between the top of the cargo and the top of the tank.

 A bill of lading dated November 12, 1978 was issued covering 1299.48 metric tons. The bill of lading incorporates by reference the terms and conditions of the October 28, 1978 charter party between USS and Antilles. The charter party specifically incorporates the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. ┬ž 1300, et seq. Moreover, the charter party entered into between Antilles and Granheim includes a clause paramount requiring the charterer to issue bills of lading that incorporate COGSA.

 The M. T. Granheim arrived in Rotterdam on December 14, 1978. Prior to discharge, a composite sample of the three tanks was taken and tested by Chemisch Technisch Expertise-bureau ("CTE"), which was hired by USS to perform the discharge analysis. The composite sample had a color of 15 and, seemingly inexplicably, a TBC level of 20 ppm. After these tests, prepumpings were conducted to test the vessel's discharge system. Because prepumpings serve to clean the ship's pump and lines, the prepumped AMS was stored in small mobile tank units commonly used for this purpose. The first three prepumpings were markedly off specification, showing color levels of 50-60, 50 and 30-40, respectively. At this time, it was decided that a fourth prepumping would be conducted, this time into a larger container so that greater force could be used to clear the line. A one-foot sample was pumped into shore tank 1419, after which the AMS being discharged appeared to be clear. Thereafter, the discharge was continued in tank 1420. The sample in tank 1419 showed a color of 20-35, but the decision was made to resume discharging AMS into tank 1419, thereby blending the prepumped material with the main stock. Tank 1419 showed a final color of 20; tank 1420 had a final color of 15-20. *fn6" Tests run on the AMS after discharge failed to establish a conclusive reason for the discoloration. USS ultimately sold the AMS as off-specification material at a reduced price.


 The major task before the Court in deciding this dispute is to determine the cause of discoloration of the AMS. Given the conflicting evidence in this case, this is not an easy task. USS contends that the cargo was contaminated by foreign substances either in the M. T. Granheim's tanks or its pipelines. Granheim and Antilles argue that the discoloration, if any, was caused by an inherent vice of the cargo.

 Under COGSA, *fn7" a plaintiff has the burden of proving that the goods were damaged while in the custody of the carrier. See Caemint Food, Inc. v. Brasileiro, 647 F.2d 347 (2d Cir. 1981). If the plaintiff satisfies this burden, it establishes a prima facie case for recovery and will recover for the damage unless the carrier proves one of the exceptions of Section 1304. Id. at 352. A shipper may establish its prima facie case by proving (1) delivery of the goods to the carrier in good condition and (2) outturn by the carrier in damaged condition. Id.

 In the present case, USS introduced evidence showing that the AMS had a color of less than 10 after loading and a color of 15 before unloading in Rotterdam. *fn8" Plaintiff contends that this evidence alone establishes its prima facie case. Defendants hotly dispute this point, arguing (1) that ASTM reporting methods were not followed in rating the color and (2) that the color ratings of 10 and 15 are within the 7-unit range of reproducibility for the test and therefore no actual change in color was proved.

 Defendants are correct that the ASTM reporting standards were not followed in rating the color of the AMS. The ASTM method provides that if the color of the sample lies in between two standards, as for example 5 and 10, the darker of the two standards should be reported. Thus in the present case, a rating of more than 5 but less than 10 should have been reported as 10. Even viewing the evidence in this light, however, there was still a five-unit change in color from the time the AMS was loaded in Houston to the time it reached Rotterdam. Defendants seek to diminish this evidence by arguing that such a variation is inconclusive since it falls within the reproducibility range for the APHA color test. The ASTM standard test method states that "two results, each the mean of duplicates, obtained by operators in different laboratories should be considered suspect if they differ by more than seven platinum-cobalt units." Granheim Exhibit A-G. I do not read the standard as applying to samples taken one month apart on different sides of the ocean but rather to varying results obtained on samples of the same material, that is, samples taken at times so nearly ...

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