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.
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
TEMPERATURE MUST BE 42° F PLUS OR MINUS 5° .
. . .DO NOT FREEZE. . . . VENTS MUST BE CLOSED
(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
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 ...