Amicus Curiae Brief — S/S Salvador v. Berisford Metals Corp.

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ge No. 85-1750

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

>

S/S SALVADOR, her engines, boilers, etc.

and A/S IVARANS REDERI,

Petitioners,

—against—

BERISFORD METALS CORPORATION,

Respondent.

MOTION OF AMERICAN PRESIDENT LINES, LTD.

FOR LEAVE TO FILE BRIEF AMICUS CURIAE AND

BRIEF AMICUS CURIAE 1N SUPPORT OF PETI-

TION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

MICHAEL J. RYAN

Attorney for Amicus Curiae

American President Lines, Ltd.

One World Trade Center

Suite 5215

New York, New York 10004

(212) 839-7000

Christopher Raleigh

Hill, Betts & Nash

Of Counsel

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-1750

>_>

S/S SALVADOR, her engines, boilers, etc.

and A/S IVARANS REDERI,

Petitioners,

—against—

BERISFORD METALS CORPORATION,

Respondent.

>

MOTION OF AMERICAN PRESIDENT LINES, LTD.

FOR LEAVE TO FILE ANNEXED BRIEF AMICUS

CURIAE IN SUPPORT OF PETITION FOR A WRIT

OF CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE SECOND CIRCUIT |

To The Justices of the Supreme Court of the United States:

Pursuant to Rule 42 of the Rules of the Supreme Court,

American President Lines, Ltd. (hereinafter “APL”) respect-

fully moves this Honorable Court for leave to file the annexed

brief as Amicus Curiae in support of the Petition for a Writ of

Certiorari to the United States Court of Appeals for the

Second Circuit. Consent to the filing of the brief has been

given on behalf of Petitioners. Consent to the filing of the

brief was sought from, but not granted by Respondent Beris-

ford Metais Corporation.

ii

American President Lines, Ltd. is a United States corpora-

tion whose principal business is the operation of a container-

ized transportation system. As part of this system, APL owns

and operates some eighteen U.S. Flag vessels specifically de-

signed for the carriage of containers and containerized cargo,

the largest being capable of carrying 2,500 twenty-foot con-

tainers at one time.

APL’s principal service in which these vessels operate is

between the west coast of the United States and the Far East.

APL also services ports in south and west Asia by means of

feeder vessels. APL services some twenty-seven sea ports in the

Far East and south and west Asia ranging from Kuwait to

Yokohama. The principal sea ports serviced on the west coast

of the United States are Seattle, Oakland and San Pedro. It

also services Dutch Harbor and Guam.

It provides a comprehensive system of transportation which

includes service from and/or to some 461 cities in the United

States and 134 foreign cities. As part of the transportation

service offered, transportation of containerized cargo utilizes

not only ocean carriage, but also overland rail transportation

in the United States and localized transportation by rail or

truck.

In conjunction with its container service, APL owns or

leases approximately 35,700 containers and, in the course of its

operations in 1985, moved some 158,000 FEUs' from Far East

and Asian ports and some 123,000 FEUs to such ports.

In this case, the Court of Appeals for the Second Circuit

precluded the ocean carrier from limiting its liability pursuant

to the bill of lading contract which called for the appiication of

Section 4(5) of the United States Carriage of Goods By Sea

Act, 46 U.S.C. § 1304(5). The Court refused to limit the ocean

carrier’s liability on the basis that the bill of lading “erro-

neously” stated that certain goods had been loaded on board

the vessel.

l “Forty Foot Equivalent Unit”; essentially a forty foot container.

ili

‘The Second Circuit Court of Appeals stated the carrier,

having loaded bundles of ingots into containers, was:

“

. . thereafter responsible for verifying the contents

before loading the containers and issuing a clean on-

board bill of lading . . . Even if opening of the con-

tainers posed difficulties, at the very least the carrier owed

a duty to verify the weight of the containers at shipside

before they were placed aboard its ship .. .” (Peti-

tioner’s Appendix, pg. 16(a).)

APL receives and transports containerized cargo which is

submitted to it in various forms. It transports containers which

are loaded at in-land locations by shippers and delivered to it

in a loaded and sealed condition for ultimate delivery to

consignees overseas. It also receives shipments to be placed in

containers for carriage and delivery overseas. Frequently, it

receives loaded and sealed containers which have been consoli-

dated by “NVOCCs”.* Usually, the NVOCC issues its own bill

of lading for the individual shipments which it consolidates

and containerizes. APL will issue a bill of lading the

NVOCC who acts essentially as a shipper vis-a-vis APL.

The bills of lading are generally prepared by the shipper’s

freight forwarder and submitted to APL for execution. Like-

wise, this documentation is rarely accomplished, if ever, at

shipside. The execution of bills of lading are usually accom-

plished in an office far removed from the terminal where the

containers are loaded on board the vessel.

While the Court of Appeals for the Second Circuit pro-

nounced a minimal “duty” for the carrier to verify the weight

of a container at shipside, APL is not aware of any scales

available at shipside at the ports which it services. At its sea

terminals in the United States, Japan and Taiwan, scales are

available; however, these are located at the entrance gate to the

terminal, not at the loading berth. As to other ports, APL does

2 “NVOCC”; Non vessel operating common carrier.

iV

not control the use of any scales even available at the gate

entrance. The cost of purchase and installation of a scale from

which a certified weight could be taken is approximately

$50,000.00 per scale.

The time which would be involved to drop weigh’ a con-

tainer would usually require a minimum of 15/20 minutes with

two men involved.

APL expresses great concern as to the negative impact which

the decision of the Couit of Appeals for the Second Circuit

will have on the speedy, economic and efficient employment of

containers as a means of ocean/multimodal transportation

which has been the key and essential purpose in the develop-

ment of container vessels and containerized operations and

which brings advantages to both cargo interests and container

carrying operators.

It is respectfully submitted that the decision below did not

consider this impact, but viewed the facts involved essentially

under the practices of yesteryear when individual break-bulk

cases, casks or cartons were received at shipside, tallied and

documentation issued almost simultaneously with loading.

APL earnestly submits that it is most appropriate, indeed

essential, that this Court grant the Petition to enable consider-

ation of the overall aspects of the decision with respect to

containerized transportation and, in this regard, APL respect-

fully requests leave to file the annexed brief.

3 Placing the container and its carrying chassis on the scale, releasing

the prime mover and then ascertaining the tare value of the container

and chassis to obtain the net weight of czrgo.

Dated: New York, New York

May 22, 1986

CHRISTOPHER RALEIGH

HILL, BETTS & NASH

Of Counsel

Respectfully submitted,

MICHAEL J. RYAN

Attorney for Amicus Curiae

American President Lines, Ltd.

One World Trade Center

Suite 5215

New York, New York 10048

(212) 839-7000

vi

TABLE OF CONTENTS

PAGE

ET NOD oon. soa va va o4¥AKROAN aD Dee RK&aeen Vii

Brief of Amicus Curiae American President Lines, Ltd. l

Statement of Interest of American President

RT Ne a en oe ee ]

ET Sis en de whic bh EEC CREERER CLUS aE 2

POINT I

The Decision Below Overlooks and Disregards

the Practical Aspects of Container Operation 2

POINT II

The Decision Below Represents an Apparent

Conflict Between the Circuits and Wiihin the

SNe MMI WINES 6k. Kh G's <cauenwhakecveas 4

POINT III

International Commercial Regimes Recognize

the Viability of Defenses Save in Cases Where

the Carrier Acts With “Abandon” .......... 7

EEOC Te ee ee 8

Vii

TABLE OF AUTHORITIES

Cases:

Atlantic Mutual Insurance Co. v. Poseidon Schiffahrt,

ke ye Le ty fe | rere ere

A/S J. Ludwig Mowinckels Rederi v. Accinanto, Ltd.,

ROP Fe Gare ee BUD Haw edc en ncaccansnetans

B.M.A. Industries, Ltd. v. Nigerian Starline, Ltd., Nos.

85-7864, 7922, slip. op. (2d Cir., March 19, 1986) ...

Elgie & Co. v. S.S. S.A. Nederburg, 599 F.2d 1177 (2d

Cir. 1979), cert. denied, 444 U.S. 1072 (1980). ......

lligan Integrated Steel Mills, Inc. v. S.S. John Weyer-

meaner. SOT F.Oe Ge Coe Ga FFG as cia wanccaacens

Leigh Ellis & Co. v. Payne, 274 Fed. 443 (N.D. Ga.

EEE aC ie ran ree aee

Leigh Ellis & Co. v. Davis, 276 Fed. 400 (Sth Cir. 1921)

Leigh Ellis & Co. v. Davis, 260 U.S. 682 (1923).......

Olivier Straw Goods Corp. v. Osaka Shosen Kaisha, 27

F.2d 129 (2d Cir. 1928) aff’d after remand, 47 F.2d 878

(2d Cir. 1931), cert. denied, 28 U.S. 856 (193!)......

Steven-Scott Grain Co. v. Chicago, R.I. & PR Ry. Co.,

221 P. 1117 (Supreme Ct. of Kansas, 1924) .........

Treaties:

Protocol to Amend The International Convention For

the Unification of Certain Rules of Law Relating to

Bills of Lading, Feb. 23, 1968, 6 Benedict On Ad-

a a eg | PRP PeCeTeeTiTier eT Tee

United Nations Convention on International Miulti-

modal Transport of Goods, May 24, 1980, 6 Benedict

On Admiralty, Doc. 1-4, at 1-58-82 ................

PAGE

Vill

PAGE

Warsaw Convention, Oct. 12, 1929, 44 Stat. 3000, T.S.

i RS aE eer re OE me er eT ee ny ene 7

Statutes:

Carriage of Goods by Sea Act (COGSA) 46 U.S.C.

i... esas ane bawtedh haexa hance ke 4,6

Federal Bills of Lading at (Pomerene Act) 49 U.S.C.

er. eis gc abae en Wahab ab Ves 5, 6

Other Authorities:

International Chamber of Commerce Uniform Rules for

a Combined Transport Document, Doc. 298 ........ 7

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-1750

=>

S/S SALVADOR, her engines, boilers, etc.

and A/S IVARANS REDERI,

Petitioners,

—against—

BERISFORD METALS CORPORATION,

Respondent.

>_>

BRIEF OF AMICUS CURIAE

AMERICAN PRESIDENT LINES, LTD.

Statement of Interest of American President Lines, Ltd.

American President Lines, Ltd. is a United States Corpora-

tion whose principal business is the operation of a container-

ized transportation system. It owns and operates some eighteen

U.S. Flag vessels specifically designed for the carriage of

containers and containerized cargo and operates these vessels

principally between the west coast of the United States and the

Far East. In conjunction with this service, it services some

twenty-seven seaports in the Far East and south and west Asia

with three principal seaports serviced on the west coast of the

United States. Its transportation system includes service from

and/or to some 461 cities in the United States and some 134

cities in foreign countries.

2

American President Lines, Ltd. has a significant investment

in furnishing modern containerized equipment in an effort to

afford an efficient and economic system of transportation

involving the use of containers for the transportation of cargo.

It is greatly concerned as tu the negative impact which the

decision of the Court of Appeals for the Second Circuit will

have with respect to container transportation to the detriment

of its system of container transportation, the cargo interests

which it serves and container transportation as a whole.

ARGUMENT

Point I

The Decision Below Overlooks And Disregards The

Practical Aspects Of Container Operation

The advent of container transportation was generated by a

need for fast and efficient transportation of goods by means of

containers (usually twenty or forty foot in length) in which

cargo could be stowed and speedily handled and transported as

a unit. The use oi containers led to the design, building and

employment of vessels specifically designed and intended to

transport these containerized units, thus speeding the loading

and discharge of cargo, minimizing the handling of individual

packages or units and reducing the exposure to damage as a

result. In conjunction with this streamlining, carrying vessels

were more effectively utilized by virtue of faster turn-around

time in port. Containerized cargoes are efficiently transferred

from one mode of transportation to another which has gener-

ated the offering of a multimodal or comprehensive scheme of

transportation with the resulting benefits to both container

transportation operators and the cargo interests which utilize

them.

In the decision below, the Court of Appeals for the Second

Circuit disallowed the ocean carrier the benefit of its contrac-

tual limitation on the basis that the ocean carrier had erro-

neously stated the goods were on board the vessel, indicating

that the ocean carrier, if it could not open the containers to

count the cargo, at least had the duty to verify the weight of

the containers at the vessel’s side before they were ioaded on

board.

Aside from the fact that scales are not usually availavle

shipside, even the requirement to weigh each container would

destroy the effectiveness of container operation.

To weigh each individual container prior to loading of only

250 containers (20% of the forty foot carrying capacity of

APL’s largest container carrier) would involve some three and

a half days of straight through work plus the attendant cost of

labor which would necessarily be involved. It is not unusual for

container vessels to spend no more than a day or two, without

overtime, for turn-around time under present operations where

containers are not weighed prior to loading on board.

Aside from the limited, if non-existent, availability of scales

at shipside, to fasten such an obligation on a container opera-

tor in order for it to avoid the risk of being stripped of its

contractual or statutory defenses would involve investments of

astronomical proportion for the installation of scales, even if

such were physically possible.

It is respectfully submitted that the reasoning of the Court

below is neither commercially feasible nor practical. On the

contrary, the ramifications of the obligation which the Court

below would place upon container operators effectively would

destroy the accepted scheme and purpose of container trans-

portation.

To require the verification which the Court below speaks of

would do away with the prompt and cost-efficient scheme

which container transportation affords and can only have a

serious negative impact on the commerce of the United States,

which involves the importers and exporters who ship cargo as

well as the container operators who carry that cargo.

Point Il

The Decision Below Represents An Apparent Conflict

Between The Circuits And Within The Second Circuit Itself

The Court below relied heavily on its prior decision 11

Olivier Straw Goods Corp. v. Osaka Shosen Kaisha, 27 F.2d

129 (2d Cir. 1928) aff’d after remand, 47 F.2d 878 (2d Cir.),

cert. denied, 283 U.S. 856 (1931) which equated the facts

considered by it to deviation or “quasi-deviation”, regardless

of what terminology may have been used. The Court in that

case referred to deviation in the voyage or stowage of cargo on

deck. It also went on to refer to misdelivery of goods as

constituting essentially the same type of “breach”.

Contrast that holding with the most recent decision by the

Second Circuit in B.M.A. Industries, Ltd. v. Nigerian Starline,

Ltd., Nos. 85-7864, 7922, slip op. (2d Cir., March 19, 1986)

where the Court, while considering the misdelivery of an entire

cargo, allowed the ocean carrier the benefit of its package

limitation. See also, //igan Integrated Steel Mills, Inc. v. S.S.

John Weyerhauser, 507 F.2d 68 (2d Cir. 1974) where the same

Court allowed a package limitation, refusing to extend the

principle of “quasi-deviation” in a case where the ocean carrier

furnished an obviously unseaworthy ship.

In contrast to the approach by the Court of Appeals for the

Second Circuit that deviation or “quasi-deviation” precludes

the carrier from asserting its bill of lading defenses or the

package limitation defense of COGSA, the Seventh Circuit in

Atlantic Mutual Insurance Co. v. Poseidon Schiffahrt, 313

F.2d 872 (7th Cir. 1963) had no difficulty in applying the clear

meaning of the words of COGSA that “in any event” the

carrier would be entitied to the package limitation unless a

higher value was delcared, in spite of a deviation. See also the

case of, A/S J. Ludwig Mowinckels Rederi v. Accinanto, Litd.,

199 F.2d 134 (4th Cir. 1952) where the Fourth Circuit held a

carrier was not deprived of its right to exoneration under the

fire provision of the Carriage of Goods by Sea Act even

5

though the cargo in question had been stowed on deck under

clean bills of lading which the Court considered to be a

“deviation”.

The Court below also found support in its previous decision

of Elgie & Co. v. S.S. S.A. Nederburg, 599 F.2d 1177 (2d Cir.

1979), cert. denied, 444 U.S. 1072 (1980) which involved a

shipment outbound from the United States. Essentially, the

decision below is the obverse of Nederburg, supra.

‘While the Court below acknowledged that the shipment in

Nederburg, supra, was governed by the Pomerene Act, 49

U.S.C. § 81 et seq., which does not contain a limitation of

liability provision, and pointed out that the Court in Neder-

burg referred to “established doctrines of admiralty law”, the

Court apparently overlooked the holding of this Court in

Leigh Ellis & Co. v. Davis, 260 U.S. 682 (1923).

The suit in that case involved failure to deliver the full

amount of cotton covered by two bills of lading. The District

Court dismissed the matter on the ground that the suit was not

timely under the provisions of the contract, and also on the

merits, Leigh Ellis & Co. v. Payne, 274 Fed. 443 (N.D. Ga.

1921). The Circuit Court of Appeals affirmed the judgment,

adopting the opinion below as to time bar, Leigh Ellis & Co. v.

Davis, 276 Fed. 400 (Sth Cir. 1921). The Federal Bills of

Lading Act (the Pomerene Act) was applicable, Leigh Ellis &

Co. v. Payne, 274 Fed. at 445.

The plaintiff in error asserted to this Court:

“The suit here is not for a failure to deliver property

received by a carrier, but for the wrong of the carrier in

issuing a false bill of lading.” Leigh Ellis & Co. v. Davis,

supra, at page 685.

This Court upheld the contractual provision with respect to

the commencement of suit time stating:

“We find it unnecessary to consider other defenses besides

the contract limitation, as we agree with the Courts below

6

that that disposes of the case.” Leigh Ellis & Co. v. Davis,

supra, at page 688.

See also, Steven-Scott Grain Co. v. Chicago, R.I. & P Ry. Co.,

221 P. 1117 (Supreme Ct. of Kansas, 1924).

In Leigh Ellis & Co. v. Davis, supra, this Court enforced a

contractual provision in spite of the assertion that the carrier

had issued a false bill of lading. It is respectfully submitted

that the decision below stands as contrary to this reasoning.

It may be one thing to preclude an ocean carrier from

denying receipt or loading of cargo as stated in its bill of lading

as an evidentiary matter. It is quite another to disregard the

contract in its entirety.

With respect to the reservation in COGSA preserving the

Pomerene Act, see the statement of A. B. Barber before the

United States Senate Committee on Commerce, May i0, 1935,

Hearing on Carriage of Goods by Sea, at page 27:

“The Chairman: Is this bill in a sense substituted for

the Pomerene Bill?

“Mr. Barber: No, Sir it is not.

“The Chairman: It supplements it?

“Mr. Barber: Yes; it supplements it.

“The Chairman: This bill does not seek to repeal the

Pomerene Act?

“Mr. Barber: No; it does not. We have to preserve the

Pomerene Act in certain particulars, the most significant

one being that the signature of the carrier that he has the

goods is conclusive evidence of the receipt of the goods.

Our proposed amendment would preserve the Pomerene

Bills of Lading Act in that respect because very serious

abuses had arisen before the enactment of the Pomerene

Act, and those abuses would be permitted again, if that

feature of the Pomerene Act were eliminated. So it is the

purpose of our amendment to preserve the Pomerene Act

in that particular.” (Emphasis supplied.)

Point Ill

International Commercial Regimes Recognize The Viability

of Defenses, Save In Cases Where The Carrier

Acts With “Abandon”

“Neither the Carrier nor the ship shall be entitled to the

benefit of the limitation of liability provided for in this

paragraph if it is proved that the damage resulted from an

act or omission of the carrier done with intent to cause

damage, or recklessly and with knowledge that damage

would probably result.” Protocol to Amend the Interna-

tional Convention for the Unification of Certain Rules

Relating to Bills of Lading, Feb. 23, 1968, 6 Benedict on

Admiralty Doc. 1-2, 1-27.

Article 25 of the Warsaw Convention, Oct. 12, 1929, 49 Stat.

3000, T:S. No. 876, applicable to international air carriage,

contains a similar provision: “If the damage is caused by the

carrier’s willful misconduct” or by such default on his part as

would be considered equivalent to willful misconduct he would

not be entitled to the benefit of provisions excluding or limiting

his liability.

The United Nations Convention on International Multi-

modal Transport of Goods, May 24, 1980, 6 Benedict on

Admiralty, Doc. 1-4, at 1-58-82, contains a similar provision in

Article 21. See also, Rule 17 of the Uniform Rules for a

Combined Transport Document published by the International

Chamber of Commerce, Doc. 298.

It is respectfully submitted that this approach is one of

commercial practicality and reasonableness. Sanction is pro-

vided for only in the case of recklessness or willful misconduct,

while the decision below far exceeds such a realistic and

commerical approach.

CONCLUSION

The Petition for a Writ of Certiorari to the United States

Court of Appeals should be granted as prayed for.

Respectfully submitted,

MICHAEL J. RYAN

Attorney for Amicus Curiae

American President Lines, Ltd.

One World Trade Center

Suite 5215

New York, New York 10048

(212) 839-7000

CHRISTOPHER RALEIGH

HILL, BETTS & NASH

Of Counsel