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Transatlantic Marine Claims Agency, Inc. v. M/V "OOCL Inspiration"

February 1, 1997


Before: Newman, Altimari, and Calabresi, Circuit Judges.


Appeal from the grant of summary judgment in favor of plaintiff-appellee on action for damages to goods in maritime transport and from the denial of defendants' cross-motion for summary judgment on limitation of liability. Affirmed in part and reversed in part.

The opinion of the court was delivered by: Calabresi, Circuit Judge.

Nos. 766, 767

Argued: October 23, 1997

This action is an appeal by defendants-appellants Orient Overseas Container Line (UK) Ltd. ("OOCL") and Sea-Land Services, Inc. ("Sea-Land") from a summary judgment entered in favor of plaintiff-appellee Transatlantic Marine Claims Agency, Inc. ("TMCA"). With the exception of its decision that Sea-Land's tariff (rather than OOCL's tariff) should limit the plaintiff's recovery, we affirm the judgment of the district court.

The plaintiff is the agent for an insurer with a subrogation interest in the claims of the shipper, Sibille Dalle, Inc., for damages to goods shipped by sea aboard the M/V OOCL Inspiration. *fn1 (Despite her name, the Inspiration is part of Sea-Land's fleet, not OOCL's.) The action was brought under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. app. § 1300 et seq.

OOCL and the shipper executed a bill of lading to transport 367 rolls of printing paper from Stenay, France, to various points in the United States. *fn2 The paper was shipped by container method; in other words, the rolls were carried in 26 sealed containers. OOCL, pursuant to a Space Charter and Sailing Agreement (the "VSAO Agreement") with Sea-Land, arranged for ocean transport of the containers from Antwerp to Charleston aboard one of Sea-Land's vessels, specifically, the Inspiration.

On March 25, 1994, OOCL received from the shipper the sealed containers at Stenay and issued a clean bill of lading. *fn3 OOCL, either by itself or through a third party (the record is unclear), transported the containers from Stenay to the port at Antwerp, Belgium. In Antwerp, the containers were loaded onto the Inspiration. The Inspiration promptly sailed (apparently stopping in England on the way) to Charleston, South Carolina. At Charleston, the containers were off- loaded and stored at port from April 7 to May 17. They were then sent by truck and/or rail to various final destinations in Tennessee. Upon arrival, 43 rolls of paper were discovered to have suffered "wetting," which experts for both the shipper and OOCL concluded resulted from sea water. *fn4 The rolls were sold for salvage, and the cargo underwriter paid the shipper for the full loss. TMCA was then authorized to pursue the subrogation interest of the underwriter in this action.

The district court (Robert W. Sweet, Judge) concluded that TMCA had made out a prime facie case under COGSA that went unrebutted by either defendant. See Transatlantic Marine Claims Agency, Inc. v. M/V "OOCL Inspiration", 961 F. Supp. 55 (S.D.N.Y. 1997). It also held that Sea-Land's tariff applied to the transport. It therefore entered summary judgment against defendants and denied their cross motions for summary judgment. Defendants now appeal these rulings on various grounds.

The COGSA Prime Facie Case

Appellants' first claim is that the district court erred in ruling that the plaintiff made out a prima facie case under COGSA. In a COGSA cause of action, a shipper "who wishes to recover against the carrier for damage to goods bears the initial burden of proving both delivery of goods to the carrier . . . in good condition, and outturn by the carrier . . . in damaged condition." Vana Trading, 556 F.2d at 104; *fn5 see also COGSA, 46 U.S.C. app. §§ 1303-04. Once the plaintiff has made out a prima facie case, however, the burden shifts to the defendant(s) to show that one of the statutory COGSA exceptions to liability exists. See id. § 1304(2). COGSA's framework thus places the risk of non- explanation for mysterious maritime damage squarely on defendants: To rebut the presumption of fault when relying upon its own reasonable care, the carrier must further prove that the damage was caused by something other than its own negligence. Once the shipper establishes a prima facie case, under "the policy of the law" the carrier must "explain what took place or suffer the consequences." "he law casts upon [the carrier] the burden of the loss which he cannot explain or, explaining, bring within the exceptional case in which he is relieved from liability."

Associated Metals & Minerals Corp. v. M/V Arktis Sky, 978 F.2d 47, 51 (2d Cir. 1992) (quoting Quaker Oats Co. v. M/V Torvanger, 734 F.2d 238, 243 (5th Cir. 1984) (citations omitted)) (alterations in original). *fn6

In short, the statutory scheme, (1) clearly evinces an intent to hold carriers prima facially liable for damage to goods at sea, see id. at 52 ("There should be little dispute that the purpose of COGSA is to place primary responsibility for the safety of the cargo upon the vessel, its operators and owners."), but under it, (2) the initial burden of persuasion falls on the plaintiff to make out a prima facie case that the goods were, indeed, damaged while in the defendant's care. There are, moreover, two general ways a plaintiff can make out such a prima facie case under COGSA.

First, the plaintiff may present direct evidence relating to the healthy condition of the goods at delivery and their damaged condition at outturn. In this respect, our caselaw and the statute itself have outlined various presumptions that may be relied upon by both plaintiffs and defendants. For example, the issuance of a clean bill of lading creates a presumption of delivery in good condition favorable to the plaintiff. See (supra) note 3. Conversely, a consignee who does not give notice of damage within three days of receipt is burdened by a presumption of arrival in good condition. See 46 U.S.C. app. § 1303(6); Bally, Inc. v. M.V. Zim, 22 F.3d 65, 71 (2d Cir. 1994).

Within this structure, second-order evidentiary disputes may take place (for example, whether notice was received on the third or fourth day) concerning the various COGSA presumptions. While different burdens with respect to these intermediate disputes are varyingly placed on the plaintiff and the defendant, in the end, the risk of non-persuasion remains on the plaintiff. This is so because "he shipper has [the ultimate] burden on the issue whether the goods were ...

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