Royal Ins. Co. of America, et al. v. Orient Overseas Container Line, Ltd.
2005 AMC 2820 (E. D. Mi. 2005)
Plaintiffs were the owner and subrogated insurer of a shipment of automatic transmissions. The shipment, which was stowed in many containers, was tendered to Orient Overseas Container Line Ltd. [OOCL] for carriage from France to various U.S. cities via Montreal. OOCL's bills of lading specified Blanquefort, France as the place of receipt; LeHavre, France as the port of loading; Montreal, Canada as the port of discharge; and alternatively Louisville, KY, New Hope, MN; Hazlewood, MO, Westland, MI, Romulus, MI, Dearborn, MI and Montreal as the place of delivery. Numerous containers of transmissions were lost overboard during the voyage to Montreal and others arrived with damaged contents. Plaintiffs suffered damages in excess of $5.7 million and sued OOCL. OOCL moved for partial summary judgment that its liability would be limited to $500 per package under COGSA and that each container was the COGSA package.
OOCL argued that because the shipment's final destination was in the US, COGSA applied regardless of the country of the discharge port. Plaintiffs argued that because the shipment was discharged from the vessel in Canada, the higher Hague-Visby limitation amount should apply.
The District Court held that COGSA applied as a matter of law because the "ultimate destination" of the shipment was in the US. It reasoned that the cargo owner bargained with OOCL for delivery of its shipment in the US and it would make no sense for the carrier's liability limitation to turn on "the seemingly insignificant and unbargained for decision" of where to discharge the cargo while in route to the US. The District Court also noted that it would be "odd" that different shipments of the same commodity would be subject to different liability limitations depending on the discharge port.
Once COGSA was held to apply, the District Court then had to decide what "the package" was for purposes of the COGSA $500 per package limitation of liability. OOCL argued that the entire shipping container should be the COGSA package based upon language on the face of the bill of lading that indicated that the "total no. of containers/packages" was "5 container(s)/package(s)". Plaintiffs argued that each transmission should be considered a COGSA package. The District Court disagreed with both. Instead, it held that the racks that were used to transport multiple transmissions at a time were the COGSA packages.