Under COGSA, a plaintiff shipper establishes a prima facie case of loss by proving delivery of the cargo to the carrier in good condition, and either arrival of less cargo than was loaded or delivery of the goods in damaged condition. Spencer Kellogg, Div. of Textron, Inc. v. S.S. "Mormacsea," 703 F.2d 44, 46 (2d Cir. 1983); Westway Coffee Corp. v. M. V. Netuno, 675 F.2d 30, 32 (2d Cir. 1982). A plaintiff is not required to prove that the carrier was at fault, or to explain how the damage or loss might have occurred. Nissho-Iwai Co. v. M/T Stolt Lion, 617 F.2d 907, 912 (2d Cir. 1980). After plaintiff establishes a prima facie case, the burden shifts to the carrier to show that the loss or damage falls within one of the COGSA exceptions enumerated in 46 U.S.C. § 1304(2). Westway Coffee Corp., 675 F.2d at 32.
A clean bill of lading, representing that the carrier has no reasonable ground to suspect the listed weight is incorrect, and that it has reasonable' means of checking the weight, is prima facie evidence of receipt of the listed weight. Id. at 33. In this case, defendants contend that the cargo of liquid caustic soda was incorrectly measured. The loading document, issued by COMTROL, did not show the draft of the vessel, whether it was on an even keel, or lower in either the stern or bow, at the time of loading. (Healey Aff. Ex. 1) The absence of such information prevents a correct measurement of the cargo's volume. In response, plaintiff has produced an affidavit of Gary King, the COMTROL surveyor who measured the quantity loaded, and the relevant page from King's field book of records. (Jadhav Reply Aff. Ex. A) King states that he observed the draft of the vessel, that he applied the relevant trim corrections, and that 4,194.27 metric tons is the correct measurement. The King affidavit is conclusive as against the speculations of defendants as to possible drafts or absence of trim corrections.
Defendants have not produced any evidence beyond their bare allegations that the 46.29 metric ton shortage is attributable to an inherent vice of the cargo. King avers that the 2.1 metric ton difference between the amount in the number 8 tank upon arrival in Korea and the amount in the shore tank is due to the clinging of some of the caustic soda to the sides of the tank and along the piping through which it was transferred. However, this does not account for the difference between the measurement of the number 8 tank before and after arrival in Korea.
Finally, defendants argue that the shortage is de minimis. However, defendants concede that this Circuit does not recognize a 0.5% trade allowance. Moreover, the bills of lading make no reference to such an allowance. See Kerr-McGee Refining v. M/V La Libertad, 529 F. Supp. 78, 85 (S.D.N.Y. 1981); Esso Nederland v. M.T. Trade Fortitude, 1977 AMC 2144, 2148 (S.D.N.Y.), aff'd per curiam, 573 F.2d 1296 (2d Cir. 1977). Defendants have not set forth any persuasive reasons for this court to disregard the circuit's holding and to characterize the trade allowance as evidence of imprecise measuring. A trade allowance, in essence, is the tolerance of an imprecise measuring system.
For the reasons above, plaintiff's motion for summary judgment is granted. The case will be referred to Magistrate Judge Gershon for an inquest to determine the amount of damages to which plaintiff is entitled.
Plaintiff has moved also for sanctions pursuant to Fed. R. Civ. P. 11, or in the alternative, pursuant to Fed. R. Civ. P. 37. Rule 11 makes the signature of an attorney or party on a submission to the court,
a certificate by the signer that the signer has read the [submission]; that to the best of the signer's knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
The legal standard underlying Rule 11 is an objective one, Norris v. Grosvenor Marketing, Ltd., 803 F.2d 1281, 1288 (2d Cir. 1986), but "Rule 11 sanctions are not tied to the outcome of litigation; the relevant inquiry is whether a specific filing was, if not successful, at least well founded." Business Guides, Inc. v. Chromatic Communications Enters., Inc., 112 L. Ed. 2d 1140, 111 S. Ct. 922, 934 (1991). The Second Circuit has "stressed that [on a Rule 11 motion] 'any and all doubts must be resolved in favor of the signer [of a paper said to have been submitted in violation of the Rule].'" Stern v. Leucadia Nat'l Corp., 844 F.2d 997, 1005 (2d Cir.) (quoting Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir. 1985), cert. denied, 484 U.S. 918, 98 L. Ed. 2d 226, 108 S. Ct. 269 (1987)), cert. denied, 488 U.S. 852, 109 S. Ct. 137, 102 L. Ed. 2d 109 (1988).
In their memorandum in opposition to summary judgment, and their affidavits, defendants claimed that the suit was time-barred because it was brought more than one year after the claim arose. Defendants' contention that the suit is barred by the COGSA one-year statute of limitations, 46 U.S.C. § 1303(6), objectively appears to have been made in bad faith and, at the very least, was not well-grounded in fact. Plaintiff's written requests to CP Ships for extensions of the time to sue were granted by CP Tanker. (Jadhav Aff. Exs. 11 and 12) Later, CP Tanker advised plaintiff that CP Ships was purchased by another company, which also assented to an extension. (Jadhav Aff. Exs. 13 and 14) Further, defendants offered no basis in existing law or reason to modify existing law to support the conclusion, that CP Tanker did not act for CP Ships. However, because defendant never moved to dismiss the suit as time-barred, plaintiff need not have incurred any expense in connection with the statute of limitations issue, except perhaps the de minimis cost of describing the correspondence relating to the extensions. Therefore, Rule 11 sanctions, beyond the finding that defendants' position was groundless, are unwarranted in this case.
Fed. R. Civ. P. 37(d) provides for costs and fees for abuse of the discovery process. Plaintiff has not shown that it was hampered in any way by defendants' response to discovery requests, and the basis for the motion therefore seems obscure. As discussed above, the documents provided by defendants bolster plaintiff's case. Having succeeded on its summary judgment motion, plaintiff hardly can claim that there were any "costs [that] would not be necessary had defendants complied with discovery." (Plaintiff's Brief 9)
For the reasons above, plaintiff's motions for sanctions under Rule 11 and Rule 37 are denied.
Michael B. Mukasey,
U.S. District Judge
Dated: New York, New York
July 27, 1992