Cincinnati Milacron, Ltd. v. M/v American Legend, Her Engines, Boilers, Etc., and United States Lines, Inc.

784 F.2d 1161, 1986 A.M.C. 2153, 1986 U.S. App. LEXIS 22478
Court of Appeals for the Fourth Circuit·Decided February 25, 1986·No. 85-1183·Published·Cited by 25 cases

Opinions

ERVIN, Circuit Judge:

In this admiralty case, Cincinnati Milacron, Ltd., appeals the ruling of the district court which limited the liability of United States Lines, Inc. (U.S. Lines), for cargo damage to $1,000 under § 4(5) of the Carriage of Goods by Sea Act (COGSA)1, codified at 46 U.S.C. § 1304(5) (1982). Because U.S. Lines failed to carry its burden of proving that it afforded Cincinnati Milacron a fair opportunity to avoid the § 1304(5) liability limitation, we reverse and remand for a determination of actual damages.

I.

In February 1982 Cincinnati Milacron shipped two milling machines from Felixstowe, England, to Baltimore, Maryland, on board the M/V AMERICAN LEGEND, a vessel owned by U.S. Lines. The machines were damaged in transit. Cincinnati Milacron claimed that U.S. Lines was liable for approximately $80,000 damages. U.S. Lines claimed that its liability was limited to $1,000 by the $500 per package limitation of § 1304(5).2

When the machines were loaded, U.S. Lines issued its short form bill of lading to Cincinnati Milacron. The short form incorporated by reference COGSA3 and U.S. Lines’ long form bill of lading.4 COGSA, of course, contained the liability limitation of § 1304(5). U.S. Lines’ long form bill of lading also contained language substantially similar to § 1304(5).5 U.S. Lines’ tariff, [1163] on file with the Federal Maritime Commission, incorporated by reference the long form bill of lading and contained language similar to § 1304(5). The short form bill of lading, the only document received by Cincinnati Milacron, did not contain any language similar to § 1304(5).

In June 1983 Cincinnati Milacron sued U.S. Lines for damages in the U.S. District Court for the District of Maryland. The parties filed motions for partial summary judgment, based on the documents described above, on the issues of whether the limitation of § 1304(5) was' applicable and whether the machines constituted packages under COGSA. After an initial ruling to the contrary, the district judge granted partial summary judgment for U.S. Lines and ruled that the § 1304(5) limitation applied. On both occasions, the district judge determined that the machines were packages.6 Accordingly, he ordered that in the event U.S. Lines was found liable, its liability would be limited to $1,000, $500 for each machine. U.S. Lines agreed to the entry of a consent judgment against it; Cincinnati Milacron appealed.

II.

Under COGSA,7 a carrier's liability for damage to cargo is limited to $500 per package “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). While the language of § 1304(5) could be interpreted to make the operation of the limitation rest solely on the conduct of the shipper, it has not. Before the limitation is effective, “the carrier must give the shipper ‘a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge.’ ” Tessler Brothers (B.C.) Ltd. v. Italpacific Line, 494 F.2d 438, 443 (9th Cir.1974) (emphasis added), quoting New York, New Haven & Hartford Railroad Co. v. Nothnagle, 346 U.S. 128, 135, 73 S.Ct. 986, 990, 97 L.Ed. 1500 (1953). Accord Wuerttembergische v. M/V STUTTGART EXPRESS, 711 F.2d 621, 622 (5th Cir.1983); D.B. Trade International, Inc. v. Astromar, 592 F.Supp. 1215, 1218 (N.D.Ill.1984); Chester v. MARITIMA del LITORAL, S.A., 586 F.Supp. 192, 195 (E.D.Wisc.1983); Vegas v. Delta Steamship Lines, Inc., 1982 AMC 595, 597 (S.D.Fla.1980); General Electric Company v. M.V. LADY SOPHIE, 458 F.Supp. 620, 622 (S.D.N.Y.1978); Bumble Bee Seafoods v. S.S. KIKU MARU, 1978 AMC 1586, 1588 (D.Md.1978).

The carrier bears the initial burden of proving fair opportunity. If a fair opportunity can be gleaned from the language of the bill of lading, then the bill of lading is prima facie evidence of fair opportunity and the carrier has met his burden of proof. The burden of proving that a fair opportunity did not exist then is shifted to the shipper. See Komatsu, Ltd. v. States Steamship Company, 674 F.2d 806, 809 (9th Cir.1982). Accord D.B. Trade International, 592 F.Supp. at 1218; Bumble Bee Seafoods, 1978 AMC at 1588.

[1164] All jurisdictions that have considered the question appear to agree that a recitation in the bill of lading of the limited liability language of § 1304(5) is prima facie evidence of fair opportunity. See Komatsu, 674 F.2d at 809; Wuerttembergische, 711 F.2d at 622; D.B. Trade International, 592 F.Supp. at 1219; Vegas, 1982 AMC at 596; General Electric Company, 458 F.Supp. at 622; Bumble Bee Seafoods, 1978 AMC at 1588-89. It is not settled, however, whether the carrier may satisfy its burden of proof by incorporating the language of § 1304(5) into the bill of lading by reference, for example, to COGSA generally. If the carrier could so satisfy his burden, an incorporation by reference of COGSA in the bill of lading would be constructive notice to the shipper of the language of § 1304(5) and thus effect a fair opportunity. This case presents an analogous question: whether a short form bill of lading, which incorporates a long form bill of lading containing § 1304(5) language, would be constructive notice and effect a fair opportunity. This circuit has not addressed such questions. The circuits which have addressed them are in conflict.

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Cincinnati Milacron, Ltd. v. M/v American Legend, Her Engines, Boilers, Etc., and United States Lines, Inc., 784 F.2d 1161, 1986 A.M.C. 2153, 1986 U.S. App. LEXIS 22478 (4th Cir. 1986).

784 F.2d 1161 (Cincinnati Milacron, Ltd. v. M/v American Legend, Her Engines, Boilers, Etc., and United States Lines, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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