Mark J. Fisher, Inc. v. M/V DG Harmony

518 F.3d 106, 2008 A.M.C. 1848, 2008 U.S. App. LEXIS 4483
CourtCourt of Appeals for the Second Circuit
DecidedMarch 3, 2008
DocketDocket No. 05-6116-cv
StatusPublished

This text of 518 F.3d 106 (Mark J. Fisher, Inc. v. M/V DG Harmony) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mark J. Fisher, Inc. v. M/V DG Harmony, 518 F.3d 106, 2008 A.M.C. 1848, 2008 U.S. App. LEXIS 4483 (2d Cir. 2008).

Opinion

HALL, Circuit Judge:

Defendant-Appellant PPG Industries, Inc. (“PPG”) appeals from an interlocutory order of the United States District Court for the Southern District of New York (Chin, J.) finding PPG solely liable for the explosion and resultant constructive total loss of the M/V DG Harmony and its cargo. See 28 U.S.C. § 1292(a)(3). We reverse the district court’s determination that PPG was strictly liable under § 4(6) of the Carriage of Goods by Sea Act, 46 U.S.C. § 30701 note (“COGSA”). We also reverse the district court insofar as it held PPG liable under a general negligence theory. Finally, with regard to failure-to-warn negligence under COGSA § 4(3), we affirm the district court’s ruling that PPG had a duty to warn and that PPG breached that duty, as well as the district court’s factual finding that PPG’s dangerous cargo caused the explosion. We vacate the judg[109]*109ment, however, because the district court failed to address whether a warning, if given, would have prevented the harm, and we remand for further proceedings on that issue.

AffiRMed in part, Reversed in part, Va-oated in part, and Remanded.

BACKGROUND

I. The Loss of the M/V DG Harmony

The MTV DG Harmony (“Harmony”) was a 176.57 meters-long container ship registered in the Isle of Man and owned by Navigator Shipping Ltd. (“Navigator”), a subsidiary of Safmarine and CMBT Lines N.V. (“SCL”). Capable of carrying approximately 1800 standard containers, the Harmony was equipped with three separate holds, each of which was designed to carry dangerous goods. At the time of its destruction the Harmony was on charter to, inter alia, Di Gregorio Navegacao, Ltda., Cho Yang Shipping Co., and DSR-Senator Lines GmbH. Together, these owners and charterers (“the ship-owning interests”) are the Consolidated-Defendants-Appellees in this action.

The Harmony’s final voyage began in New York in late October 1998. Bound for points in South America, the Harmony made stops in Newport News, Savannah, and Miami. At these ports, the Harmony took on containers immuring cargo owned by various entities which, with one important exception, together comprise the Consolidated-Plaintiffs-Appellees in this action (“the cargo owners”). Although most of these cargoes proved innocuous, one did not; at Newport News, Virginia, the Harmony received and stowed, through its charterer Cho Yang Shipping Co., ten containers, each of which contained approximately 16,000 kilograms of calcium hypochlorite (hydrated) (“calhy-po”). The parties agree that this substance, manufactured and shipped by Defendant-Appellant PPG Industries, Inc. (“PPG”), precipitated the subsequent explosion and fire on the Harmony.1

On November 9, ten days after leaving Miami, the Harmony reached a point off the northern coast of Brazil. At approximately 7:20 a.m., an explosion ripped through the third hold. The Captain and crew of the Harmony, realizing that the third hold had caught fire, mobilized to fight the blaze. For nearly twelve hours, the full crew battled the flames, but their efforts were to no avail. Most of the crew abandoned ship at 6:00 p.m. that evening, and they were followed by the Captain and the remainder of the crew at 2:00 a.m. the next day. Although there were no casualties, the Harmony burned for three weeks. The fire resulted in a constructive total loss of both the vessel and its cargo.

II. The Properties of PPG’s Calhypo

A. The Properties of Calhypo

In divining the cause of the fire, the parties focused on PPG’s calhypo, an industrial bactericide sometimes identified as “UN 2880,” its designation under the International Maritime Dangerous Goods Code (“IMDG Code”). Calhypo is an un[110]*110stable substance that continually decomposes at room temperature. It is an oxidizer, which means that it releases oxygen in most reactions.

Most importantly, however, calhypo is prone to “thermal runaway,” a phenomenon in which the heat naturally produced by the calhypo serves to heat the calhypo further, thus causing it, in turn, to generate even more heat. Thermal runaway operates like a feedback loop. As one expert witness explained, “[t]he higher the temperature, the faster the reaction, and the reaction becomes circular inasmuch as it generates the heat, [and the heat] causes [the reaction] to go faster.” This snowballing reaction “runs away, goes critical, and [it] get[s] to the point where it just goes so fast that the material explodes, it deflagrates, decomposes and reaches the point where we have a fire ensuing.” A number of extrinsic factors can exacerbate this phenomenon. For example, if calhypo is tightly enclosed in a container from which heat cannot easily escape, it might more easily succumb to thermal runaway. Likewise, calhypo might more readily exhibit thermal runaway if exposed to an external or “radiant” source of heat.

The most important factor in predicting the decomposition and eventual combustion of calhypo is its “critical ambient temperature” or “CAT.” As PPG correctly notes, “CAT is the minimum temperature at which a heat-sensitive product will begin to retain more heat than it dissipates.” The CAT of a given amount of calhypo “depends inversely upon the size of the sample; as the mass increases, the critical temperature decreases.” Standard Commercial Tobacco Co. v. M/V “Recife” 827 F.Supp. 990, 993 (S.D.N.Y.1993). For example, in Recife, the district court found that the CAT “of a single pellet of [calhy-po] is approximately 180 degrees C.” Id. In the instant case, which involves a much larger amount of calhypo, the district court found the CAT to be considerably lower. The exact CAT is elusive. One expert in this case “testified that he did not find any data from which he could ascertain the ... CAT of the ‘specific material’ carried on the Harmony.” In re M/V DG Harmony, 394 F.Supp.2d 649, 669 n. 28 (S.D.N.Y. 2005). Nevertheless, the district court believed it could make a rough estimate of the CAT of the calhypo onboard the Harmony, judging it to be below 41°C. Id. at 669.

B. PPG’s Packaging Method

PPG manufactures its calhypo at a plant in Natrium, West Virginia. To package the calhypo stowed on the Harmony, PPG used thick cardboard drums that weighed 136 kilograms (about 300 pounds) each when full. PPG loaded the drums on wooden pallets, four drums to a pallet, and immediately shrinkwrapped each four-drum bundle. Thirty pallets were then packed into each container, stacked up in three layers of ten pallets each. Each layer of pallets was divided into two rows of five pallets. For its shipment on the Harmony, PPG prepared ten containers in this manner. The district court found that this packaging method was likely to have lowered the CAT of the calhypo; stacking the drums made it “harder for the heat to dissipate” while “the container walls inhibit[ed] the ventilation of the drums.” Id. at 657. The calhypo was approximately 34°C when it was packaged, “36 hours after [manufacturing], under circumstances that did not permit it to cool down.” Id. at 660. After packaging the calhypo, PPG trucked the containers to Baltimore, where agents for Cho Yang Shipping Co. arranged transport to Norfolk, Virginia.

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518 F.3d 106, 2008 A.M.C. 1848, 2008 U.S. App. LEXIS 4483, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mark-j-fisher-inc-v-mv-dg-harmony-ca2-2008.