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November 30, 1983

MARCRAFT CLOTHES, INC., Plaintiff, against M/V "KUROBE MARU", her engines, boilers, etc., and against MITSUI O.S.K. LINES, LTD. and NIPPON YUSEN KAISHA (NYK LINE), Defendants.

The opinion of the court was delivered by: SOFAER



 The Second Circuit has often interpreted the term "package" in section 4(5) of the Carriage of Goods by Sea Act of 1936 (COGSA), 46 U.S.C. § 1304(5), by which "Congress intended to foster certainty and security in the shipping business." Allied International American Eagle v. S.S. Yang Ming, 672 F.2d 1055, 1057 (2d Cir. 1982). But "pockets of legitimate disagreement" persist. Id.; Cameco, Inc. v. S.S. American Legion, 514 F.2d 1291, 1297 (2d Cir. 1974). The maximum amount of statutory liability is measured by the number of "packages" carried. Because the statute fails to define the term "package," however, the statutory language is inadequate "when measured against the dramatic changes in shipping and transportation since the statute was originally enacted." Yang Ming, 672 F.2d at 1064; see Mitsui & Co. v. American Export Lines, Inc., 636 F.2d 807, 820 (2d Cir. 1981); Cameco, 514 F.2d at 1297-1300; Leather's Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 814-15 & n.18 (2d Cir. 1971). This 1936 statute must now be applied in a universe of shipping technology significantly altered by the advent of containerization. The risk of commercially unreasonable results has become substantial. In this case, for example, depending on the meaning given to the term "package," the defendant might face maximum liability as low as $500 or as high as $2.2 million.

 Plaintiff Marcraft Clothes ("Marcraft"), a commercial buyer of men's suits, brought this action against defendants Mitsui O.S.K. Lines, Ltd. ("Mitsui") and Nippon Yusen Kaisha ("NYK Line") as carrier, for damages allegedly sustained when 4,400 suits arrived in New York in damaged condition. Defendants have moved pursuant to Fed. R. Civ. P. 56 for partial summary judgment contending that their liability should be limited to $500 as a natter of law.

 Section 4(5) of COGSA provides in pertinent part:

 Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, . . . unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.

 46 U.S.C. § 1304(5) (emphasis added).

 Defendants contend that the one shipping container furnished by the carrier is a single "package" within the meaning of section 4(5), which thus limits their total liability to $500.Alternatively, defendants suggest that, were the container found not a "package", then damages should be calculated per customary freight unit. Marcraft, on the other hand, argues that a deviation occurred from the voyage contracted with was so unreasonable as to justify displacing the COGSA limitation of $500 per package. Alternatively, plaintiff reasons, if the COGSA limitation is applicable, then each of the 4,400 suits is a "package" within the meaning of section 4(5), making defendants' potential liability as high as $2.2 million.

 I. Unreasonable Deviation

 Marcraft suggests that an unreasonable deviation from the voyage prescribed in the bill of lading may have caused the damage to the goods.Because unreasonable deviation is treated as a breach of COGSA and the contract of carriage, it strips the carrier of the protection of the liability limitation, see DuPont de Nemours International S.A. v. S.S. Mormacvega, 493 F.2d 97, 100 n. 9 (2d Cir. 1974); Nemeth v. S.S. General Corp., 694 F.2d 609, 613 (9th Cir. 1982); but see Atlantic Mutual Insurance Co. v. Poseidon Schiffahrt, 313 F.2d 872, 875 (7th Cir.), cert. denied, 375 U.S. 819, 84 S. Ct. 56, 11 L. Ed. 2d 53 (1963), though several authorities indicate that the carrier may avoid this result by demonstrating that the deviation did not cause the damage, see World Wide S.S. Co. v. India Supply Mission, 316 F. Supp. 190, 1971 A.M.C. 498 (S.D.N.Y. 1970); Gilmore & Black, The Law of Admiralty, § 3-41 (2d ed. 1975) (hereinafter Gilmore & Black); see also Hellenic Lines, Ltd. v. United States, 512 F.2d 1196, 1209-10 & n.26 (2d Cir. 1975) (placing on deviator burden of establishing lack of causation, without deciding whether it constitutes defense); Swindell-Dressler International Co. v. M/V Hellenic Ideal, 500 F. Supp. 649, 651 n.* (S.D.N.Y. 1980).

 In this case, however, Marcraft has failed to raise a material issue of fact as to the conformity of the voyage with the bill of lading. Marcraft objects that the bill of lading does not make clear that the shipment was to be transported initially by a vessel other than the Kurobe Maru and to be trans-shipped at Kobe, Japan. But the notations in a series of boxes placed prominently at the top of the bill of lading indicate that pre-carriage was to be undertaken by "KOREAN EXPRESS V/124," that the ocean vessel was to be the "KUROBE MARU 0061A OR SUB,." and that the port of loading was to be "BUSAN, KOREA FOR T/S AT KOBE." Thus, the bill of lading named both vessels and the points of both initial loading and trans-shipment. Because Marcraft fails entirely to explain how the information so set forth might have engendered confusion, and because it does not contend that the vessel deviated from the Busan-Kobe-New York route, it has failed to raise a triable issue of deviation. The COGSA per package limitation of liability applies.

 II. Section 4(5) -- What is the "package"?

 Any proposed construction of section 4(5) that would reduce a carrier's liability below a reasonable limit must be examined critically. Mitsui, 636 F.2d at 815.The term "package" must be interpreted in light of the dual purposes of § 4(5), which not only limits liability by fixing an irreducible minimum of immunity, but also voids any agreement designed to reduce the carrier's liability below that level. Id. at 814.

 Carriers have attempted to capitalize on the technological advance of containerization by arguing that each container is a "package" for which the shipper can recover at most $500. The Second Circuit has repeatedly rejected this ...

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