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March 21, 2000


The opinion of the court was delivered by: Pauley, District Judge.


This action involves a shipment of humulin, which is a form of insulin, that was declared a total loss after it was loaded and transported in a refrigerated container whose ambient temperature was mistakenly set too low. Having conducted a one-day bench trial, this Court now enters the following findings of fact and conclusions of law.

Factual Background

A. The Shipment*fn1

The shipper in this action, plaintiff Project Hope, is a private, non-profit organization that is in the business of making charitable donations of medicine and pharmaceutical supplies throughout the United States and overseas. In August 1996, Project Hope contacted a freight forwarder, Global Transportation Systems, Inc. ("Global"), to obtain a price quote for carriage of a refrigerated shipment of medical supplies from Winchester, Virginia to Cairo, Egypt. The medical supplies consisted of cartons containing vials of humulin, a type of insulin manufactured exclusively by Eli Lilly and Company ("Eli Lilly"), together with assorted laboratory and video equipment. To preserve the integrity of humulin, it must be maintained in a cool environment under refrigeration, but not frozen. The cartons containing Project Hope's humulin had printed warnings to that effect.

Global selected defendant Blue Ocean Lines ("Blue Ocean"), a non-vessel owning common carrier ("NVOCC"), to arrange for the intermodal carriage (by water and land) of the shipment. Blue Ocean, in turn, contracted with defendant United Arab Shipping Co., S.A.G. ("United Arab"),*fn2 an ocean common carrier of merchandise. United Arab's role was to provide a refrigerated ("reefer") container for the shipment and to transport that container on the ocean leg of the carriage.

Blue Ocean also contracted with third party defendant Mill Transportation, Inc. ("Mill"), a common carrier of merchandise by motor truck. As the land carrier, it was Mill's responsibility to transport the empty reefer container provided by United Arab to Project Hope's warehouse in Winchester, Virginia, known as the Hope Distribution Center ("HDC"). After the container was loaded and sealed by Project Hope at HDC, Mill would then transport the container to the Virginia International Terminal in Norfolk, Virginia (the "Norfolk terminal") to await loading aboard United Arab's vessel.*fn3

On October 11, 1996, Project Hope received 957 cartons said to contain 95,474 vials of humulin from Eli Lilly. Project Hope then divided the cartons onto nine pallets, shrink-wrapped each load with plastic and secured them to the pallets with steel bands. The laboratory and video equipment were similarly fitted onto three additional pallets.

On October 13, 1996, Blue Ocean confirmed with Global the following information: (1) one 20-foot reefer container was booked aboard M/V IBN SINA, Voyage 319 the ("vesse"); (2) the vessel was scheduled to sail from Norfolk on October 23, 1996 with an estimated arrival in Alexandria, Egypt on November 17, 1996; (3) Blue Ocean had instructed Mill to deliver the empty container to HDC; and (4) the temperature of the container's reefer unit was to be set at 42° Fahrenheit.

On or about October 23, 1996, Blue Ocean prepared a dock receipt that was faxed to Mill? but not to United Arab. The dock receipt stated in relevant part:


(Pl.'s Ex. 11) The dock receipt, and an accompanying telefax, were the only documents sent to Mill by Blue Ocean. The dock receipt contains no reference to the inland transportation of the shipment.

On October 15, 1996 at 4:06 p.m., Natalie Wood ("Wood") at United Arab's office in Norfolk Virginia, faxed a "UASC Work Order" ("Work Order") to Gibson Engineering, Inc., the reefer mechanics used by United Arab at the Norfolk terminal. (United Arab Ex. 13) The Work Order contained information concerning various reefer containers, including Projest Hope's container. However, the requested temperature setting for Project Hope's container was not indicated on the Work Order when it was sent to Gibson Engineering.

Shortly after sending that fax transmission, Wood received a telephone call from Gibson inquiring as to the correct temperature setting for Project Hope's container. In response Wood immediately phoned United Arab's New Jersey office, since it had received the initial booking from Blue Ocean, and spoke with Nana Somuah ("Somuah"). Somuah, in turn, placed Wood on hold and phoned Blue Ocean to get the correct temperature setting. The parties disagree as to what Blue Ocean represented was the correct temperature setting for the container. In any event, it is undisputed that after Blue Ocean responded to Somuah's inquiry, Somuah took Wood off hold and told her that the container temperature should be set to 24°. Wood, in turn, relayed this instruction to Gibson Engineering, whose personnel then recorded this figure on its copy of the Work Order. (United Arab Ex. 14)

On October 16, 1996, the temperature on the container's reefer unit, was pre-set to 24° by Gibson Engineering. Later that day, Mill's driver, Gardner Coyle ("Coyle"), drove a tractor to the Norfolk terminal and coupled it to a chassis on which the reefer container had already been placed. See Joint Pretrial Order ¶¶ 42-43. Refrigeration units on such containers are self-contained; no special connections are needed between a reefer container and the tractor. See Tr/Morgan/71.

Coyle initially drove the empty container to the Mill container yard where he left it overnight. The next, morning, he drove the container to HDC.

Once Coyle arrived at HDC with the empty container, Project Hope personnel loaded the pallets of humulin and equipment inside. Project Hope personnel did not check the temperature setting of the container, nor did they ask Coyle about it. Coyle remained in the truck's cab while the container was loaded. Chuck Clark, a distribution manager at HDC, was responsible for the loading of the container.

Although the reefer unit was pre-set for 24° by Gibson Engineering, there is testimony in the record that the unit was not actually turned on until some time later. Clark, Project Hope's distribution manager, testified in deposition that the reefer unit was activated after Coyle arrived in HDC's parking lot on October 17, 1996. However, the "partlow chart" (i.e., the temperature recording device) on the reefer unit indicated that the unit was started on October 16, 1996 during the afternoon, which would suggest that Coyle turned the unit on at the Norfolk terminal when he picked up the empty container. The partlow chart further indicated that the temperature in the container was maintained between 26° and 28° from the afternoon of October 16, 1996 to October 24, 1996. Thus, the parties have stipulated that the reefer unit was operating continuously during this time period and maintained an interior temperature of 24°. See Joint Pretrial Order ¶ 68.

After the container was loaded and sealed, Project Hope gave Coyle an original, straight bill of lading which it had prepared. (Pl.'s Ex. 14) Coyle signed the document. The straight bill of lading only concerned the inland transportation of the container, and it made no reference to the correct temperature setting for the reefer unit. In the area of the bill of lading titled "Basic Description", the document read: "Medical Supplies." (Pl.'s Ex. 14)

Coyle drove away from HDC and delivered the container to the Norfolk terminal at 2:25 p.m. on October 17, 1996. While the container was in his physical custody, Coyle never checked its temperature setting. When he arrived at the Norfolk terminal, the terminal issued a Truck Interchange Receipt ("TIR") which noted that the container's temperature was -2(C) (between 26° and 28° Fahrenheit). (Mill Ex. 2) At that point, Coyle delivered certain paperwork to the terminal, including the straight bill of lading issued by Project Hope.

The Norfolk terminal is a "non-dock receipt" port, i.e., it does not require a dock receipt to be submitted when a container is picked up or delivered. Nor is a dock ...

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