Petition for Writ of Certiorari — Ocean Bulk Ships, Inc. v. United States

01 421 sep 06 2001

No. OFFICE OF THE OLERK

In The

Supreme Court of the United States

e

OCEAN BULK SHIPS, INC. and

TRANSBULK CARRIERS, INC.,

Petitioners,

THE UNITED STATES OF AMERICA,

Respondent.

¢

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

e

PETITION FOR WRIT OF CERTIORARI

e

Wiiwiam A. DurRHAM

Counsel of Record

Lewis E. HENDERSON

‘ EASTHAM, Watson, DALE &

Forney, L.L.P.

The Niels Esperson Building

808 Travis, 20th Floor

Houston, Texas 77002-5769

(713) 225-0905

(713) 225-2907 (Fax)

Attorneys for Petitioners

COCKLE LAW BRIEF PRINTING CO. (800) 225-644

OR CALL COLLECT (402) 42-2831

QUESTION PRESENTED

Once a cargo claimant establishes a prima facie case

for liability under the Carriage of Goods by Sea Act

(“COGSA”), 46 U.S.C. app. §§ 1300-15, the burden shifts

to the carrier to rebut this prima facie case. The carrier can

do this by showing its entitlement to the benefit of one of

the exemptions listed in COGSA § 4(2), 46 U.S.C. app.

§ 1304(2).

What is the nature of a carrier’s rebuttal burden of

proof under COGSA § 4(2)(a)-(p), 46 U.S.C. app.

§ 1304(2)(a)-(p), and does it differ from the rebuttal bur-

den of proof under COGSA § 4(2)(q), 46 U.S.C. app.

§ 1304(2)(q)?

il

LIST OF PARTIES PURSUANT TO RULE 29.6

All parties to the proceeding in the United States

Court of Appeals for the Fifth Circuit appear in the

caption of the case.

Petitioners, Ocean Bulk Ships, Inc. and Transbulk

Carriers, Inc., are not publicly-traded corporations. Their

parent company is OSG Bulk Ships, Inc., a New York

corporation, which is wholly owned by Overseas Ship-

holding Group, Inc., a Delaware corporation whose

shares are publicly-traded. =

sae

TABLE OF CONTENTS

Page

EE Ee i

List of Parties Pursuant to Rule 29.6............... il

REE Oy eee Teer Ey rere ree iii

CC. 5.554 bach wesc sesesscaveeseees Vv

EE CU ob tncenenceeseseccveneeressesscess l

REE OE ee ge ene On SA l

Statute Involved in This Case. ..............es00s- 1

rr re sete ienade cs eekehenk ake 3

SS 5504 ch ece ce eendeissenssss ee’ 3

Se eee eas ood oa peart ar 4

eT sR EER Ra oy rte an re ea ne 4

i i ssc st cenhabanddhatvsaecnes se 5

Reasons for Granting the Petition.................. 6

I. The courts of appeals apply conflicting stan-

dards to the carrier’s rebuttal burden of proof

i Oe css caanbascacnascumases 6

ee CE 6 ob 06. 06.0'cd nan paeeeue ans 8

B. The Second and Third Circuits .......... 9

as wip a dé aecdeschw ene cies 10

ee ES OD ag bo 0d 64.0606 060ssc0een 10

ry) ee MONOD MOUOUIEE oa onc co dccacscescds 11

Takes 6d hehe eases dns eceaasewssy 13

1V

TABLE OF CONTENTS - Continued

Page

Il. This Court has never addressed the issue.... 14

Ill. Uniformity is particularly important in this con-

text because the need for a uniform law govern-

ing the carriage of goods by sea was the primary

justification for COGSA’s enactment ........... 16

IV. Resolving this conflict is important in both

international and domestic trade............. 19

ES haku canrenceiensekkaeetaenaans au keases 21

Appendix

POUT MONE MIL Sanden sdextavcupencepeeas App. A

Lonnee COME CHOIGEE 6 ois ccc ce nd sad ccsweness App. B

District Court Final Judgment.................. App. C

Fifth Circuit Order Denying Petition for Rehear-

UE Ee TE 6d a soso sce corres ceeravidonsekanes App. D

TABLE OF AUTHORITIES

Page

Cases

American Home Assurance Co. v. American President

LA, Sh Te FFG Ce Sis cdncsaxcus eke 10

Associated Metals & Minerals v. Etelae Suomin Laiva,

By Fog ew tie | ey mr ren are 12

Banana Services, Inc. v. M/V Fleetwood, 911 F.2d 519

Es SOP i viveskntkvckesev easel 7, 12

Braxton v. United States, 500 U.S. 344 (1991) .......... 6

Commercial Molasses Corp. v. New York Tank Barge

Core., 38 Vk Fe Creede sv ats osha ee 14, 15

EAC Timberlane v. Pisces, Ltd., 745 F.2d 715 (CA1

| Pe ry re Mra An ramon fg Le AMS «| 7,8

Hecht, Levis & Kahn, Inc. v. S.S. President Buchanan,

aoe Tae Ga? GARR Wl so b3500s0o200 9

In re Damodar Bulk Carriers, Ltd., 903 F.2d 675 (CA9

SOU + ks kcoNedervesdsssiseees cee eee 11

In re Intercontinental Properties Management, 604

fe to Sr ne. eran oun ee 19

In Re Marine Sulphur Queen, 460 F.2d 89 (CA2

1972), cert. denied, 409 U.S. 982 (1972)............. 14

In re Ta Chi Navigation (Panama) Corp., 677 F.2d 225

ee Re +: eer REA Mme Furr Lee mire re 5 7,9

Lekas & Drivas, Inc. v. Goulandris, 306 F.2d 426

cli PR ka kd de kde ee ae ee eee 9

Nichimen Co. v. M.V. Farland, 462 F.2d 319 (CA2

OTE cn cdvcav edn hota akc eG ede 9

Philip Morris v. American Shipping Co., 748 F.2d 563

| rere ern Preteen tn ho ree 12

vi

TABLE OF AUTHORITIES - Continued

Page

Robert C. Herd & Co. v. Krawill Machinery Corp., 359

US. BOF (UGG) 0 cc cccccasedhcasecarectasesdecssucs 16

Sony Magnetic Products, Inc. v. Merivienti O/Y, 863

R2d 1507 CCAD BOGOR. occ ccceccucsueceeeseuee 11, 12

Sun Oil Co. v. M/T Carisle, 771 F.2d 805 (CA3 1985) ...7, 9

Sunkist Growers, Inc. v. Adelaide Shipping Lines, 603

F.2d 1327 (CA9 1979), cert. denied, 444 U.S. 1012

(ESO « ccccccccctens basuae seeeepheeseaneeee eee 9, 11

Taisho Marine & Fire Ins. v. M/V Sea-Land

Endurance, 815 F.2d 1270 (CA9 1987)............... 7

Terman Foods, Inc. v. Omega Lines, 707 F.2d 1225

CCAR. BOG 0 0060k0000604000000s000 eee 12

Tokio Marine & Fire Ins. v. Vessel Sammi Aurora, 903

RIG £366 GAD Whee cx cused ausdueeesalenedeee ee 10

United States v. Ocean Bulk Ships, Inc., 248 F.3d 331

CCAS FEGE) aoc ccccnsesescsscceccsccesspenuaua’ passim

Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer,

515 U.S. 528 i FRR ey ee ee 16

Waterman S.S. Corp. v. United States Smelting,

Refining & Mining Co., 155 F.2d 687 (CA5 1946),

cevt. Genten, Fad Us FO Cees 6006 ccccensetesen 5, 10

STATUTES AND RULES

Sup. Ce. BR. Bla) GB Cpe. ccccccccecssccccccsuuannccnss 6

2B USA. & TRBRTED oc vncks dctavsdicccessscckuneessewe 1

2B USK. | TIGRE cs i ncntsccecedstacesasas conse 1

46 USA. Gp. § Woon cccccccacscccessvecdeetseuuuat 11

Vil

TABLE OF AUTHORITIES - Continued

Page

Carriage of Goods by Sea Act (“COGSA”), 46

ics GE. Tp EEE voc cn sev eesiecécvcaa 1, 4, 6

COGSA § 4(2), 46 U.S.C. app. § 1304(2)......... passim

COGSA § 4(2)(a)-(p), 46 U.S.C. app.

SD FRG winnasecedaccsuansassaasesianees passim

COGSA § 4(2)(b), 46 U.S.C. app. § 1304(2)(b)...... 9, 11

COGSA § 4(2)(g), 46 U.S.C. app. § 1304(2)(g)......... 9

COGSA § 4(2)(m), 46 U.S.C. app. § 1304(2)(m) ...... 10

COGSA § 4(2)(n), 46 U.S.C. app. § 1304(2)(n) ..... 4, 13

COGSA § 4(2)(p), 46 U.S.C. app. § 1304(2j(p) ....... 12

COGSA § 4(2)(q), 46 U.S.C. app. § 1304(2)(q).... passim

OTHER AUTHORITIES

2A Benedict on Admiralty (7th rev. ed. 2001) ......... 20

Fe CN, TGs Be GRE 6 ccc cececscncndusnéacesss 17

Grant Gilmore & Charles L. Black, Jr., The Law of

po PPT TIT TTT TT TTT ere 9

H.R. Rer. No. 2218, 74th Cong., 2d Sess. (1936)...... 17

S. Rep. No. 742, 74th Cong., Ist Sess. (1935)......... 17

Michael F. Sturley, Observations on the Supreme

Court's Certiorari Jurisdiction in Intercircuit Con-

flict Cases, 67 Texas L. Rev. 1251 (1989)............ 17

Vill

TABLE OF AUTHORITIES — Continued

Page

Michael F. Sturley, Uniformity in the Law Governing

the Carriage of Goods by Sea, 26 J. Mar. L. & Com.

EE MUU Cha cAddaa tocciveisrinaxenees can eeanne sa 18

Joseph C. Sweeney, The Prism of COGSA, 30 J.

ee ea ee PEED so boos kee ees eusauansaena 20

U.S. Maritime Administration, U.S. Foreign Water-

borne Transportation Statistics .................... 20

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the Fifth Circuit, set forth in Appendix A (“App. A”), is

reported at 248 F.3d 331 (CA5 2001). The order of the

court of appeals denying petitioners’ motion for rehear-

ing en banc is not reported. It is set forth in Appendix D>

(“App. D”). The decision and judgment of the United

States District Court for the Southern District of Texas are

also unreported. They are set forth in Appendix B (“App.

B”) and Appendix C (“App. C”), respectively.

a2

JURISDICTION

The judgment of the United States Court of Appeals

for the Fifth Circuit was entered on April 10, 2001. See

App. A at A-2. Petitioners’ timely Motion for Rehearing

En Banc, filed on May 24, 2001, was denied on June 8,

2001. See App. D. This petition was filed within ninety

days following the denial of the motion for rehearing,

and the jurisdiction of this Court is invoked pursuant to

28 U.S.C. § 1254(1). The district court’s jurisdiction was

based on the Carriage of Goods by Sea Act (“COGSA”),

46 U.S.C. app. §§ 1300-1315, the general maritime law of

the United States, and 28 U.S.C. § 1333(1).

¢

STATUTE INVOLVED IN THIS CASE

Section 4(2) of the Carriage of Goods by Sea Act

(“COGSA”), 46 U.S.C. app. § 1304(2), provides:

Neither the carrier nor the ship shall be respon-

sible for loss or damage arising or resulting

from —-

(a)

(j)

(k)

Act, neglect, or default of the master,

mariner, pilot, or the servants of the

carrier in the navigation or in the man-

agement of the ship;

Fire, unless caused by the actual fault

or privity of the carrier;

Perils, dangers, and accidents of the

sea or other navigable waters;

Act of God;

Act of war;

Act of public enemies;

Arrest or restraint of princes, rulers, or

people, or seizure under legal process;

Quarantine restrictions;

Act or omission of the shipper or

owner of the goods, his agent or repre-

sentative;

Strikes or lockouts or stoppage or

restraint of labor from whatever cause,

whether partial or general: Provided,

That nothing herein contained shall be

construed to relieve a carrier from

responsibility for the carrier’s own

acts;

Riots and civil commotions;

Saving or attempting to save life or

property at sea;

(m) Wastage in bulk or weight or any other

loss or damage arising from inherent

defect, quality, or vice of the goods;

(n) Insufficiency of packing;

(o) Insufficiency or inadequacy of marks;

(p) Latent defects not discoverable by due

diligence; and

(q) Any other cause arising without the

actual fault and privity of the carrier

and without the fault or neglect of the

agents or servants of the carrier, but

the burden of proof shall be on the

person claiming the benefit of this

exception to show that neither the

actual fault or privity of the carrier nor

the fault or neglect of the agents or

servants of the carrier contributed to

the loss or damage.

¢

STATEMENT OF THE CASE

I. Background Facts

Between April 1994 and January 1996, various pri-

vate relief agencies arranged for the M/V Overseas Har-

riette and the M/V Overseas Marilyn to carry famine

relief foodstuffs to various west African ports from ports

in Texas, Louisiana, and Florida. Both vessels were

owned and operated by petitioners and chartered to the

U.S. Agency for International Development (“USAID”),

an independent federal government agency. All cargoes

were loaded aboard the vessels in good condition, but

portions of the cargoes were either damaged, missing, or

al

pilfered at the discharge ports resulting in alleged aggre-

gate damages of $203,319.87. The parties’ agreements and

bills of lading incorporated the terms and provisions of

the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C.

app. §§ 1300-1315.

II. Proceedings

A. The Trial

During December 1998, the United States, as assignee

of the relief agencies’ cargo claims, filed four lawsuits

against petitioners in the United States District Court for

the Southern District of Texas seeking recovery under

COGSA for the alleged damage and non-delivery of the

cargo. The four lawsuits were consolidated and the peti-

tioners answered the consolidated complaint asserting,

among other defenses, the exemptions to liability codified

at COGSA § 4(2)(n) & (q), 46 U.S.C. app. § 1304(2)(n) &

(q).

A bench trial was held on September 28, 1999. Subject

to petitioners’ objections, the government put in evidence

as to the condition and quantity of the cargoes at the load

and discharge ports, causation, and the alleged values of

the damaged, missing, and pilfered cargoes. In its Find-

ings of Fact and Conclusions of Law, issued on December

17, 1999 (App. B), the district court found that “the con-

tents of surveys are insufficient to establish carrier’s lia-

bility for the non-delivered and damaged cargo.” The

court did award $7,300.08 for wetting damage that peti-

tioners admitted occurred prior to discharge.

B. The Appeals

The government appealed, and petitioners cross-

appealed, to the United States Court of Appeals for the

Fifth Circuit. The government argued that it had pro-

duced sufficient evidence to prove a prima facie case of

liability against petitioners under COGSA. Petitioners

responded that the district court properly viewed the

evidence produced by the government as unreliable and,

as a result, the district court correctly held that peti-

tioners were not liable beyond the admitted liability

($7,300.08) for wetting damage.

The court of appeals vacated the judgment of the

district court and rendered judgment in favor of the

government for $203,319.87. The court of appeals held

that the government had introduced sufficient evidence

to carry its initial burden of proof. It also held that

petitioners failed to rebut the government's prima facie

case and, as a result, they could not avoid liability under

the two COGSA exemptions to liability they had asserted.

In so holding, the panel concluded that it was compelled

to follow Waterman S.S. Corp. v. United States Smelting,

Refining & Mining Co., 155 F.2d 687 (CA5 1946), cert.

denied, 329 U.S. 761 (1946), the earliest Fifth Circuit deci-

sion on the issue. The court also noted that an inter-

circuit conflict exists as to whether the carrier’s rebuttal

burden of proof under COGSA § 4(2)(a)-(p) is one of

production or of persuasion.

The court of appeals denied petitioners’ Motion for

Rehearing En Banc. See App. D.

¢

REASONS FOR GRANTING THE PETITION

This Court should clarify the nature of the rebuttal

burden of proof in a case governed by the Carriage of

Goods by Sea Act (“COGSA”), 46 U.S.C. app. §§ 1300-15,

once a shipper makes out a prima facie case of liability.

The six courts of appeals that have addressed the issue

are divided on this question, and this Court has never

addressed it. Additionally, COGSA is a statute for which

uniformity of interpretation was a primary purpose for

enactment, and its uniform interpretation is especially

important in view of the significant amount of domestic

and international commerce governed by it. The need for

clarification and uniform application is illustrated in this

case, where a carrier was deprived of a COGSA defense

due to an erroneous interpretation and application of a

statutory exemption to liability.

/

This Court should grant certiorari because of the

conflict among the Circuits and because of the impor-

tance of the issue. Sup. Ct. R. 10(a) & (c). As this Court

has held, “a principal purpose for which we use our

certiorari jurisdiction . .. is to resolve conflicts among the

United States courts of appeals . . . concerning the mean-

ing of provisions of federal law.” Braxton v. United States,

500 U.S. 344, 347 (1991).

I. The courts of appeals apply conflicting standards to

the carrier’s rebuttal burden of proof under COGSA

§ 4(2).

The courts of appeals generally agree that COGSA

sets up an intricate burden-shifting scheme between the

EEO EE OOOO ae

cargo claimant and the carrier.! The burden is initially on

the claimant to establish a prima facie case. Once the

claimant has established a prima facie case, the burden

shifts to the carrier to rebut it. The carrier can do this by

showing its entitlement to the benefit of one of the

exemptions listed in COGSA § 4(2). However, there is no

uniform agreement regarding the nature of the carrier’s

burden of proof necessary under § 4(2)(a)-(p).

As noted below, § 4(2)(q) specifically requires a car-

rier claiming under that subsection to show its freedom

from fault, which has been variously described by the

circuits as a more demanding burden of proof. The Fifth

Circuit, in the decision below, has held that the same

demanding burden of proof applies under § 4(2)(a)-(p).

The First, Second, Third, and Ninth Circuits, in conflict

with the decision below, impose a lower burden on the

carrier under § 4(2)(a)-(p) than under § 4(2)(q). Only the

Eleventh Circuit appears to follow the Fifth Circuit on

this question.

The issue has been a source of confusion for the

lower courts (and for the commercial parties that must

apply their decisions) for a number of reasons. One prob-

lem has been the terminology that the courts have used

when discussing the issue. The key point in all of these

1 See, e.g., EAC Timberlane v. Pisces, Ltd., 745 F.2d 715, 719

(CA1 1984); In re Ta Chi Navigation (Panama) Corp., 677 F.2d 225,

229 (CA2 1982); Sun Oil Co. v. M/T Carisle, 771 F.2d 805, 810-11

(CA3 1985); United States v. Ocean Bulk Ships, Inc., App. A at

A-5-7, 248 F.3d 331, 335-36 (CA5 2001); Taisho Marine & Fire Ins.

v. M/V Sea-Land Endurance, 815 F.2d 1270, 1274-75 (CA9 1987);

Banana Services, Inc. v. M/V Fleetwood, 911 F.2d 519, 521 (CA11

1990).

cases has been whether the carrier must prove its own

treedom from fault in order to rely on the exemption in

question. Some courts have discussed the issue in these

terms, but some (including the court below) have used a

contusing shorthand. These latter courts have spoken of a

“burden of persuasion” when they mean that the carrier

must prove both the applicability of the § 4(2) exemption

and its own treedom from fault. They have spoken of a

“burden of production” when they mean that the carrier

must prove only the applicability of the § 4(2) exemption

(without proving its own freedom trom fault).

A. The First Circuit.

The First Circuit describes the carrier’s rebuttal bur-

den of proof under § 4(2)(q) as a “burden of persua-

sion... to show that it was not at fault in contributing to

the loss or damage.” EAC Timberlane v. Pisces, Ltd., 745

F.2d 715, 720 (CAI 1984). In contrast to subsection (q),

which imposes “the most demanding burden under mar-

itime law,” id., the carrier’s rebuttal burden under the

other § 4(2) exemptions is “less imposing.” Id. at 720 n.9.

The EAC Timberlane court further observed that sub-

section (q) requires an initial affirmative showing by the

defendant-carrier that it is free from fault, unlike the

usual case under the general maritime law in which the

plaintiff initially bears the burden of proving the defen-

dant’s negligence. It is only then that the “burden of

persuasion shift[s] to the defendant to rebut the plain-

tiff’s evidence.” Id. at 720.

B. The Second and Third Circuits.

The Second and Third Circuits describe the carrier's

rebuttal burden of proof under § 4(2)(q) as requiring

proof of freedom from fault or negligence, a burden not

required under the other § 4(2) exemptions.’ See, ¢.g., In re

Ta Chi Navigation (Panama) Corp., 677 F.2d 225, 229 (CA2

1982)* (distinguishing the burden of proof required under

§ 4(2)(q), the court stated that “[w]hen Congress wanted

to put the burden of proving freedom from fault on a

shipowner claiming the benefit of an exemption, it speci-

fically said so”);4 Sun Oil Co. v. M/T Cartsle, 771 F.2d 805,

2 In Nichimen Co. v. M.V. Farland, 462 F.2d 319 (CA2 1972),

the court said that “§ 4(2)(q) imposes on the carrier ‘no mere

burden of going forward with the evidence, but a real burden of

persuasion, with the attendant risk of non-persuasion.’ ” Id. at

329 n.9 (quoting Grant Gilmore & Charles L. Black, Jr., The Law

of Admiralty § 3-37, at 146 (Ist ed. 1957)).

* The Ta Chi Navigation court criticized the Ninth Circuit's

decision in Sunkist Growers, Inc. v. Adelaide Shipping Lines, 603

F.2d 1327 (CA9 1979), cert. denied, 444 U.S. 1012 (1980), as

enhancing the carrier’s rebuttal burden under the fire

exemption (§ 4(2)(b)) by requiring the carrier to prove freedom

from fault, thereby reading the language of subsection (q) into

subsection (b), “although Congress did not put it there,” 677

F.2d at 229 (quoting Lekas & Drivas, Inc. v. Goulandris, 306 F.2d

426, 432 (CA2 1962)).

4 Accord Lekas & Drivas, Inc. v. Goulandris, 306 F.2d at 432

(“To hold that when a carrier has shown that the loss arose as a

consequence of restraint of princes, § 4(2)(g), it still has the

burden of negating any other fault or neglect of its agents or

servants would be to read the qualification of (q) into (a)-(p),

although Congress did not put it there.”); Hecht, Levis & Kahn,

Inc. v. S.S. President Buchanan, 236 F.2d 627, 631 (CA2 1956)

(“The language relating to burden of proof in [§ 4(2)(q)]

10

811 (CA3 1985) (“Thus, if the carrier wants to escape

liability under COGSA without reference to a cause speci-

fied in [§ 4(2)(a)-(p)], it must prove that its negligence did

not contribute to the loss.”).-

C. The Fifth Circuit.

The decision below sets forth the Fifth Circuit posi-

tion that the carrier must satisfy the higher burden,

described as “a burden of persuasion,” as to all seventeen

exemptions. See App. A at A-12-13 & n.2, 248 F.3d at

339-40 & n.2 (citing Waterman S.S. Corp. v. United States

Smelting, Refining & Mining Co., 155 F.2d 687 (CA5 1946)).

D. The Ninth Circuit.°

As in the Second and Third Circuits, the Ninth Cir-

cuit has generally described the carrier’s rebuttal burden

of proof under § 4(2)(q) as requiring proof of freedom

from fault, which is not required under the other § 4(2)

exemptions. See, e.g., American Home Assurance Co. v.

... pretty clearly refers only to the carrier’s burden of proving

that damage comes within subsection (q) and does not relate to

the ‘inherent vice’ exception contained in [§ 4(2)(m)].”).

> The opinion below cites Tokio Marine & Fire Ins. v. Vessel

Sammi Aurora, 903 F.2d 1244 (CA9 1990), as an example of a

circuit decision that supports imposing a burden of persuasion

under all COGSA exceptions. See App. A at A-13-14, 248 F.3d at

339. However, without differentiating among the COGSA

exemptions to carrier liability, the court in Tokio Marine referred

to the “catch-all” exemption when it noted that a carrier is not

liable for damages arising without its actual fault, which it had

the burden of proving. Tokio Marine, 903 F.2d at 1246.

siti iaiatiaiaiaiidilliiiuaiaiaiiaiiiaiiel

11

American President Lines, 44 F.3d 774, 781 (CA9 1994)

(discussing the added burden under subsection (q) to

show freedom from fault); In re Damodar Bulk Carriers,

Ltd., 903 F.2d 675, 686 (CA9 1990) (discussing the legisla-

tive history and contrasting rebuttal burdens of proof

required under the fire exemption and subsection (q)).

In re Damodar Bulk Carriers, 903 F.2d at 683 & n.11,

also addressed the tension between the Ninth Circuit and

the Second Circuit over the Ninth Circuit’s decision in

Sunkist Growers, supra, regarding the carrier’s burden of

proof under the COGSA fire exemption, § 4(2)(b). See

note 3, supra. The court distinguished Sunkist Growers as

involving a fire loss arising from the ship’s unseaworthi-

ness, which barred the carrier from invoking the fire

exemption. The court explained that where unseaworthi-

ness was not proven, the carrier had no heightened bur-

den of proof. In that same discussion, the court

acknowledged the split that had developed among the

circuits over the burden of proof required under the

COGSA fire exemption due to its interrelationship with

the Fire Statute, 46 U.S.C. app. § 182.

E. The Eleventh Circuit.

The decision below cites Sony Magnetic Products, Inc.

v. Merivienti O/Y, 863 F.2d 1537 (CA11 1989), to suggest

that the Eleventh Circuit either imposes the higher bur-

den on the carrier under all the § 4(2) exemptions, or that

it has not differentiated the rebuttal burden among them.

App. A at A-13-14, 248 F.3d at 339-40. In Sony Magnetic

Products, the court did not discuss the precise nature of

the carrier’s rebuttal burden but held the carrier liable

CT

12

—

because it did not produce any credible evidence estab-

lishing a latent defect defense under § 4(2)(p). 863 F.2d

at 1540-41. The court affirmed the dis! rict court's rejection

of the carrier’s latent defect defense describing its evi-

dence as “inconclusive,” while the shipper’s evidence

offered “the more credible explanation.” Id. at 1540.

Although the Eleventh Circuit did not discuss the

nature of the burden of proof necessary to rebut the |

shipper’s prima facie case, in describing the COGSA

burden-shifting scheme it noted that the carrier’s negli-

gence was considered after the carrier successfully rebut-

ted the shipper’s prima facie case. Only then did the

shipper have the burden of showing that the carrier’s

negligence was a concurrent cause of the loss. Id. at 1539.

Other Eleventh Circuit cases similarly do not clearly

differentiate between the rebuttal burdens of proof

required under the various COGSA exemptions. See, ¢.g.,

Banana Services, Inc. v. M/V Fleetwood, 911 F.2d 519, 522

(CA11 1990) (carrier's proof of due care “coupled with

conclusive evidence regarding the delicate nature of this

particular cargo” was sufficient to establish a circumstan-

tial case of inherent defect and was the only explanation

for the loss); Associated Metals & Minerals v. Etelae Suomin

Laiva, 858 F.2d 674, 678 (CA11 1988) (carrier had burden

of proving that peril of sea “was unavoidable despite all

reasonable efforts to avoid it”); Philip Morris v. American

Shipping Co., 748 F.2d 563, 566 (CA11 1984) (once a prima

facie case is made, carrier must prove that the damaye

falls within one of the COGSA exemptions or that it

exercised due diligence); Terman Foods, Inc. v. Omega

Lines, 707 F.2d 1225, 1227-28 (CA11 1983) (carrier that

offered no exculpatory evidence and merely alleged that

————————————vo

13

it had used due diligence to make ship seaworthy was

liable under § 4(2)(q), which “imposes the burden of

persuasion on a defendant to show that it was not at fault

in contributing to the loss or damage”).

F. Summary.

The foregoing survey of circuit decisions reflects the

lack of uniformity among the circuits as to the nature of

the rebuttal burden of proof required under COGSA

§ 4(2)(a)-(p) to successfully rebut a shipper’s prima facie

case. Only the “catch-all” exemption in § 4(2)(q) speci-

tically sets forth the evidentiary burden imposed upon

the carrier asserting that defense. Accordingly, the cir-

cuits have consistently and uniformly held that a carrier

claiming under that exemption must bear a burden of

persuading the trier of fact that it is free from fault in

causing the loss. None of the other statutory exemptions

place such a burden on the carrier. However, in this case,

the Fifth Circuit clearly held petitioner to an unjustifiably

higher rebuttal standard, at least as to its defense under

the improper packaging exemption, § 4(2)(n).

Petitioner produced sufficient evidence at trial to

rebut a prima facie case under subsection (n), which

accounted for approximately 40% of the damages

awarded to the government. However, by imposing an

enhanced rebuttal burden under that subsection, the

appellate court rendered judgment without affording the

petitioner the benefit of that exemption as Congress

intended. Indeed, the district court never considered the

necessity or the sufficiency of petitioner’s rebuttal evi-

dence under § 4(2)(n).

14

COGSA was enacted in 1936, and since that time, the

nature of the carrier’s rebuttal burden of proof has never

been addressed by this Court (as discussed below). If this

Court does not clarify the nature of the carrier’s rebuttal

burden of proof under the COGSA § 4(2) exemptions, the

lower courts will continue to impose upon carriers dispa-

rate standards and, in the Fifth Circuit at least, greater

rebuttal burdens of proof than the statute imposes.

Il. This Court has never addressed the issue.

The decision below relies upon this Court’s opinion

in Commercial Molasses Corp. v. New York Tank Barge Corp.,

314 U.S. 104 (1941), as providing the framework for its

interpretation of the carrier’s rebuttal burden of proof

under COGSA. See App. A at A-12-13, 248 F.3d at 339.

However, Commercial Molasses did not involve COGSA.°®

Instead, the parties in that case had entered into a con-

tract of affreightment for private carriage. For that rea-

son, the Court was “not concerned with the rule that one

who has assumed the obligation of a common carrier can

relieve himself of liability for failing to carry safely only

by showing that the cause of loss was within one of the

narrowly restricted exceptions which the law itself

annexes to his undertaking ... .” 314 U.S. at 109

* Discussing the burden of proof for cargo loss in the

context of private carriage, the Second Circuit stated that the

“rule for private carriage of goods is explicated in [Commercial

Molasses], which applies here unless a statute or an agreement

between the parties changed the normal burden.” In Re Marine

Sulphur Queen, 460 F.2d 89, 103 (CA2 1972), cert. denied, 409 U.S.

982 (1972).

: 15

(emphasis added). In those cases, the Court explained

that to avoid liability, the carrier had the burden of show-

ing “that the loss was due to an excepted cause and that

he has exercised due care to avoid it... .” Id.

Notwithstanding the fact that Commercial Molasses

did not involve (or even mention) COGSA, the Fifth

Circuit concluded that “[t]he proposition that a carrier

bears both the burden of production and the burden of

persuasion with respect to the [COGSA] exceptions was

drawn from [the Commercial Molasses decision].” App. A

at A-12, 248 F.3d at 339. This conclusion was premised on

the Court’s comment in Commercial Molasses regarding a

common carrier’s burden of showing that a loss was due

to “a permitted exception to the obligation to carry

safely” rather than a breach of the duty to furnish a

seaworthy vessel, “since the burden is on the shipowner,

he does not sustain it, and the shipper must prevail if,

upon the whole evidence, it remains doubtful whether

the loss is within the exception.” Id. (citing Commercial

Molasses, 314 U.S. at 109).

This Court’s comments in Commercial Molasses

regarding the burden of proof required of a common

carrier were made to contrast the burden of proof at issue

in that case, where the private shipper (and not a com-

mon carrier) bore the burden of proof because “the bur-

den of proving the breach of duty or obligation rests

upon him who must assert it as the ground of the recov-

ery which he seeks... .” 314 U.S. at 110.

As Commercial Molasses did not involve COGSA, the

Court’s comments pertaining to a common carrier’s bur-

den of proving seaworthiness were simply illustrative

16

dicta. These comments do not offer authoritative insight

into congressional intent as to the nature of the burden of

proof a carrier must satisfy in order to avail itself of the

COGSA exemptions to liability.

III. Uniformity is particularly important in this con-

text because the need for a uniform law governing

the carriage of goods by sea was the primary justi-

fication for COGSA’s enactment.

In Robert C. Herd & Co. v. Krawill Machinery Corp., 359

U.S. 297 (1958), this Court implicitly recognized the value

of uniformity when deciding questions under COGSA.

The Herd Court noted that COGSA was “lifted almost

bodily from the Hague Rules,” 359 U.S. at 301, which

were designed to promote uniformity, see id., and it based

its conclusion in large part on foreign decisions address-

ing the same issues, see id. at 306-308. In Vimar Seguros y

Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528 (1995), the

Court was more explicit:

In light of the fact that COGSA is the culmina-

tion of a multilateral effort “to establish uniform

ocean bills of lading to govern the rights and

liabilities of carriers and shippers inter se in

international trade,” . . . we decline to interpret

our version of the Hague Rules in a manner

contrary to every other nation to have

addressed this issue. . . . [C]onflicts in the inter-

pretation of the Hague Rules not only destroy

esthetic symmetry in the international legal

order but impose real costs on the commercial

system the Rules govern{.]

515 U.S. at 537 (quoting Herd, 359 U.S. at 301).

17

This judicial recognition of the value of uniformity in

the interpretation of COGSA is fully justified. When Con-

gress enacted COGSA, its principal goal was to promote

uniformity in the law governing the carriage of goods by

sea. See, e.g., 79 CONG. Rec. 13341 (1935) (statement of Sen.

White, the bill’s sponsor) (“[t]he bill is designed to bring

about uniformity”); S. Rep. No. 742, 74th Cong., 1st Sess. 4

(1935) (the bill “will accomplish real uniformity”); H.R. —

Rep. No. 2218, 74th Cong., 2d Sess. 6 (1936) (“[t]he most

outstanding benefits are simplification and uniformity”).

In fact, COGSA has been described as “a rare example of

a federal statute that Congress passed with more concern

for its uniformity than for its content.” Michael F. Sturley,

Observations on the Supreme Court's Certiorari Jurisdiction in

Intercircuit Conflict Cases, 67 Texas L. Rev. 1251, 1271

(1989).

Commentators have explained in some detail why

conflicts in the interpretation of COGSA are particularly

harmful:

Cargo losses and damage at some level are an

inevitable result of transporting goods by sea.

The law must allocate financial responsibility

for these losses, and in the process it influences

the actions of those who participate in the enter-

prise. A carrier must decide the level of care that

is appropriate for each shipment, and this deci-

sion will be based in part on its potential lia-

bility. A shipper must also decide the

appropriate level of care on such matters as the

cargo’s preparation for shipment, and the extent

to which it will insure the goods. Each of these

decisions will be based in part on the extent to

which it may recover from someone else (such

as the carrier) for any losses. Insurers) must

18

decide what coverages they will offer and the

terms on which coverage will be available.

Potential buyers of the cargo must determine

what protections they require. Bankers financ-

ing a transaction must know whether they can

depend on a security interest in the goods in

transit. And all of these decisions will be based

in part on the liability regime that allocates the

risk of loss.

If the law is uniform, everyone involved in

a transaction will know that its liability (or

recovery) will be the same wherever a dispute is

resolved. Results will be more predictable, liti-

gation will be less necessary, and the parties will

be able to make their underiying business deci-

sions in confidence, knowing what law will be

applied if loss or damage occurs.

A lack of uniformity imposes real costs on

the commercial shipping system that the Hague

Rules govern.

Michael F. Sturley, Uniformity in the Law Governing the

—Carriage of Goods by Sea, 26 J. Mar. L. & Com. 553, 558-59

(1995) (footnotes omitted).

Unless this Court steps in to resolve the conflict here,

carriers will not know what burdens will be imposed on

them until they learn where they have been sued - or

bring a preemptive action for a declaration of nonliability.

Similarly, cargo owners will be unable to predict the

extent of their recoveries until they can obtain jurisdic-

tion over a carrier in a particular circuit. Insurers will

have greater difficulty calculating premiums, and bankers

will have less confidence in the value of their security.

19

Much of the judicial, legislative, and academic focus

has admittedly been on international uniformity, but the

rationale is just as strong in the domestic context. Just as

international traders need to know the governing law in

the countries in which they do business, so international

and domestic businesses need to know the law of the

entire United States. Indeed, domestic uniformity is a

precondition for achieving international uniformity. If the

courts of appeals cannot agree among themselves how to

interpret COGSA, how can the United States be part of a

uniform international consensus on the interpretation of

the Hague Rules? This Court’s intervention is required.

IV. Resolving this conflict is important in both inter-

national and domestic trade.

While maintaining a uniform interpretation of

COGSA is always important, in view of Congress’s

expressed goal of achieving uniformity in this field, the

need for uniformity on this question is particularly great.

Virtually every COGSA case involves the allocation of

burdens of proof. Even when burden of proof issues are

not raised explicitly in the litigation, the parties’ ability to

settle the case will be based on their predictions about

how the court will resolve burden of proof issues. As the

Fourth Circuit has noted, COGSA “imposes critical proof

problems for any shipper,” and COGSA’s “proof scheme”

is “of supreme importance in its application to particular

disputes.” In re Intercontinental Properties Management, 604

F.2d 254, 262 (CA4 1979).

The importance of COGSA itself is also well-recog-

nized. One commentator has described it as “the most

20

important and most frequently litigated statute in Ameri-

can international trade.” Joseph C. Sweeney, The Prism of

COGSA, 30 J. Mar. L. & Com. 543, 545 (1999). The

numbers bear out this description. Government statistics

suggest that well over half a trillion dollars worth of

cargo is carried to or from the United States each year

under the liability regime established by COGSA.” Know-

ing how that statute allocates liability is thus a matter of

”

* In 2000, approximately $485 billion worth of cargo was

carried to or from the United States on “liner” terms, which

would mean that bills of lading were issued to evidence the

contract of carriage. See U.S. Maritime Administration, U.S.

Foreign Waterborne Transportation Statistics. See the MARAD

website located at <http://www.marad.dot.gov/statistics /

usfwts/PR2000/prdec2000.htm> (“Foreign Waterborne

Transportation Statistics”). Virtually all of this would have been

subject to COGSA as a matter of law. See, e.g., 2A Benedict on

Admiralty § 41 (7th rev. ed. 2001) (COGSA applies as a matter of

law to shipments in foreign trade carried under bills of lading)

(“Benedict”). In addition, over $126 billion worth of cargo was

carried to or from the country on tankers (which inevitably

operate under charter parties), and almost as much on “tramps”

(which by definition operate under charter parties). See Foreign

Waterborne Transportation Statistics, supra. A very high

proportion of this would be subject to COGSA as a matter of

contract, see, e.g., 2A Benedict § 43 (discussing the contractual

application of COGSA to carriage under charter parties), just as

the cargo in this case was, see App. A at A-4-5, 248 F.3d at 335.

Moreover, most domestic cargo in the coastal trade and a high

proportion of the cargo carried on inland waterways is subject

to COGSA as a matter of contract. See, e.g., 2A Benedict § 42

(discussing the application of COGSA to domestic carriage).

The half a trillion dollar figure in the text is accordingly a very

conservative estimate. The true figure is probably more than

50% higher.

|

21

vital importance to all of those who are involved in

international trade.

CONCLUSION

The Petition for Writ of Certiorari should be granted

so that this Court can resolve the acknowledged conflict

involving six federal circuits.

Respectfully submitted,

Wittiam A. DurRHAM

Counsel of Record

Lewis E. HENDERSON

EASTHAM, Watson, Date &

Forney, L.L.P.

The Niels Esperson Building

808 Travis, 20th Floor

Houston, Texas 77002-5769

(713) 225-0905

(713) 225-2907 (Fax)

Attorneys for Petitioners

September 6, 2001

A-1

APPENDIX A

UNITED STATES COURT OF APPEALS

Fifth Circuit.

No. 00-20117

UNITED STATES OF AMERICA,

Plaintiff-Appellant-Cross-Appellee,

VERSUS

OCEAN BULK SHIPS, INC.; TRANSBULK CARRIERS,

Defendants-Appellees-Cross-Appellants,

M/V OVERSEAS HARRIETTE, its engines, tackle, etc.—

in rem; M/V OVERSEAS MARILYN,

Defendants-Appellees.

UNITED STATES OF AMERICA,

Plaintiff-Appellant-Cross-Appellee,

VERSUS

OCEAN BULK SHIPS, INC., in personam,

Defendant-Appellee-Cross-Appellant,

M/V OVERSEAS HARRIETTE, its engines,

tackle, etc., in rem,

Defendant-Appellee.

UNITED STATES OF AMERICA,

Plaintiff-Appellant-Cross-Appellee,

VERSUS

OCEAN BULK SHIPS, INC., in personam,

Defendant-Appellee-Cross-Appellant,

A-2

M/V OVERSEAS MARILYN, its engines,

tackle, etc., in rem,

Defendant-Appellee.

UNITED STATES OF AMERICA,

Plaintiff-Appellant-Cross-Appellee,

VERSUS

OCEAN BULK SHIPS, INC., in personam,

Defendant-Appellee-Cross-Appellant.

Appeals from the United States District Court

For the Southern District of Texas

(Filed Apr. 10, 2001)

Before KENNEDY,' JONES and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

This appeal involves loss and damage to five sepa-

rate famine relief shipments made by the United States of

America (the United States) to certain African ports.

Plaintiff-shipper, the United States appeals a final judg-

ment awarding only limited damages in the amount of

$7,300.08 on its claims for cargo-loss and damage in the

amount of $203,319.87 under the Carriage of Goods by

Sea Act (COGSA), 46 U.S.C. App. §§ 1300-1315. The

United States asks this Court to vacate the district court's

limited judgment and to render judgment in favor of the

United States for the full extent of its damages. Defen-

dants-carriers (defendants) cross-appeal, arguing that the

' Circuit Judge of the Sixth Circuit, sitting by designation.

A-3

United States failed to establish a prima facie case of loss

or damage and that the United States failed to submit

competent proof to support the damages claimed. Having

reviewed the record, the arguments of the parties, and

the relevant law, we vacate the district court’s judgment

awarding $7,300.08 and render judgment in favor of the

United States in the amount of $203,319.87 plus prejudg-

ment interest.

I.

Between 1994 and 1996, the United States, through its

Commodity Credit Corporation (CCC), and with the

assistance of several private relief organizations, shipped

cargoes to famine-stricken areas of Africa on behalf of the

Agency for International Development (AID). The car-

goes were shipped under various charter parties made

expressly subject to COGSA on the M/V OVERSEAS

HARRIETTE and the M/V OVERSEAS MARILYN, vessels

owned by the defendants, Ocean Bulk Ships, Inc., and

Transbulk Carriers, Inc. The shipments included a variety

of foodstuffs such as vegetable oil, corn, and bulgur

wheat, which were shipped to the African ports of Mom-

basa, Kenya; Beira and Maputo, Mozambique; Freetown,

Sierra Leone; and Tema, Ghana. Clean bills of lading were

issued for each shipment after the cargo was stowed,

indicating that the cargo was received by the carrier in

good condition. Unfortunately, the goods were not

received in the same quantity or quality when discharged

in Africa. Survey reports documenting the loss and dam-

age indicated several problems. Some parts of the cargo

were simply not received at all. Some parts of the cargo

were received in a damaged and unusable condition. For

A-4

example, bags were torn and spilled, and some of the

cargo was wetted and rotten. The total amount of docu-

mented loss and damage to the cargo was $203,319.87.

In December 1998, the United States filed the first of

five lawsuits, seeking damages for the lost and damaged

cargo under COGSA. In February 1999, these suits were

consolidated. In September 1999, the matter was tried to

the bench. In December 1999, the district court entered

judgment in favor of the United States for the limited

sum of $7,300.08, the amount of damage that the defen-

dants admit occurred prior to discharge. This appeal

ensued.

When COGSA was enacted in 1936, one of its express

purposes was to “redress the edge in bargaining power

enjoyed by carriers over shipper and cargo interests by

setting out certain duties and responsibilities of carriers

that cannot be avoided even by express contractual provi-

sion.” 2 Thomas J. Schoenbaum, Admiralty and Maritime

Law § 10-15 (3d ed.2001) (citing 46 U.S.C. App. § 1303(8)).

COGSA applies to “all contracts for carriage of goods by

sea to or from ports of the United States in foreign trade.”

46 U.S.C. App. § 1312. The provisions of COGSA are not

generally applicable to charter parties. Jd. § 1305. A ship-

per and carrier may agree, however, to a “Clause Para-

mount” by which the terms of COGSA are incorporated

into a charter party. Schoenbaum, supra, § 10-15, at 89 &

n.6. In this case, the charter agreements, shipping con-

tracts, and bills of lading contain clauses making the

A-5

shipments subject to the terms of COGSA. Thus, the

parties agree that COGSA governs the resolution of this

dispute.

COGSA sets up a “complex system of shifting bur-

dens and accompanying presumptions of liability.” Id.

§ 10-23, at 115. This use of presumptions and shifting

burdens of proof “predates the statutory schemes of lia-

bility” and is “thus rooted in strong policy consider-

ations” specific to the context of cargo loss. Most of these

rules developed to alleviate the perceived unfairness of

certain common law rules requiring a shipper to con-

clusively prove the cause of cargo loss or damage not-

withstanding the fact that the circumstances surrounding

the loss or damage were primarily accessible to the defen-

dant-carrier. Id. Those policy considerations are evident

in COGSA’s current statutory scheme, which shifts the

burden of proof “more frequently than the winds on a

stormy sea.” Id.; see also Tubacex, Inc. v. M/V Risan, 45 F.3d

951, 954 (Sth Cir. 1995) (characterizing COGSA’s statutory

scheme as a “ping-pong” game of burden shifting). The

first stage of COGSA’s statutory framework requires the

shipper to establish a prima facie case of loss or damage

by “proving that the cargo for which the bill of lading

was issued was loaded in an undamaged condition, and

discharged in a damaged condition.” Tubacex, 45 F.3d at

954; see also Quaker Oats Co. v. M/V Torvanger, 734 F.2d

238, 240 (Sth Cir. 1984). A clean bill of lading issued by

the carrier to the shipper is prima facie evidence that the

goods were received in an undamaged condition. Shell

Oil Co. v. M/T Gilda, 790 F.2d 1209, 1213 (5th Cir. 1986);

Blasser Bros., Inc. v. N. Pan-American Line, 628 F.2d 376, 381

(Sth Cir. 1980); see also 46 U.S.C. App. § 1303(4) (a bill of

A-6

lading is “prima facie evidence of the receipt by the

carrier of the goods as therein described.”). A COGSA

shipper must also demonstrate damage upon discharge.

S.T.S. Int'l, Ltd. v. Laurel Sea Transp., Ltd., 932 F.2d 437, 440

(Sth Cir. 1991). Damage upon discharge may be estab-

lished by the report of an independent cargo surveyor

attending the discharge. 46 U.S.C. App. § 1303(6); United

States v. Cent. Gulf Lines, Inc., 974 F.2d 621, 624-28 (5th Cir.

1992) (discussing the use of survey reports to establish

loss or damage upon discharge); see also 22 C.F.R.

§ 211.9(c)(1) (requiring that a cargo surveyor attend the

discharge of aid shipments made by the Agency for Inter-

national Development or a cooperating sponsor).

A shipper’s prima facie case creates a presumption of

liability. See Blasser, 628 F.2d at 382. At that point, the

burden of proof shifts to the defendant-carrier, which

must prove (1) that it exercised due diligence to prevent

the loss or damage to the cargo, 46 U.S.C. App. § 1304(1),

or (2) that the loss or damage was the result of one of the

Act’s enumerated “uncontrollable causes of loss,” id. at

§ 1304(2). See also Tubacex, 45 F.3d at 954; Blasser Bros., 628

F.2d at 381.

If the carrier successfully rebuts the shipper’s prima

facie case, then the presumption of liability vanishes and

the burden returns to the shipper to show that carrier

negligence was at least a concurrent cause of the loss or

damage to the cargo. Tenneco Resins, Inc. v. Davy Int'l, AG,

881 F.2d 211, 213 (5th Cir. 1989); Blasser Bros., 628 F.2d at

382. If the shipper successfully establishes that the car-

rier’s negligence is at least a concurrent cause of the loss

or damage, then the burden shifts once again to the

Fe a a

A-7

carrier, which must establish what portion of the loss was

caused by other factors. Tenneco Resins, 881 F.2d at 211;

Blasser Bros., 628 F.2d at 382. If the carrier is unable to

prove the appropriate apportionment of fault, then it

becomes fully liable for the full extent of the shipper’s

loss. Tenneco Resins, 881 F.2d at 211; Blasser Bros., 628 F.2d

at 382.

We review the district court’s application of this bur-

den shifting paradigm and other legal issues de novo. See

Mendes Jr. Int'l. Co. v. M/V Sokai Maru, 43 F.3d 153, 155

(5th Cir. 1995). The district court’s factual findings are

reviewed for clear error. Id.

III.

On appeal, the United States claims that it estab-

lished a prima facie case by producing clean bills of

lading as proof that the carriers received the goods in an

undamaged condition and survey reports showing that

the goods were either missing upon discharge or were

discharged in a damaged condition. Such a showing is

clearly sufficient under COGSA. See, e.g., Quaker Oats, 734

F.2d at 240.

The defendants seek to avoid that conclusion in this

case by arguing that the district court found the survey

reports offered by the United States as evidence of loss or

damage to be incredible. Thus, defendants maintain that

the district court did not find credible evidence establish-

ing the United States’ prima facie case.

We disagree. The district court accepted the clean

bills of lading as evidence that the cargo was delivered to

A-8

the defendants in good condition. The district court did

not question the reliability of the\survey reports as ten-

dered to establish loss or damage to the cargo upon dis-

charge. To the contrary, the district court accepted the

virtually undisputed fact that the cargo was either lost or

damaged upon discharge, and then held that the defen-

dants were not responsible for the losses, either (1)

because the damage occurring during discharge could

have been caused by third parties, such as the port

authority or its agents, see U.N./F.A.O. World Food Pro-

gramme v. M/V Tay, 138 F.3d 197 (5th Cir. 1998) (interpret-

ing the statutory exception codified at 46 U.S.C. App.

§ 1304(2)(q) to permit a carrier to avoid liability when it

can prove that the loss or damage was caused after the

carrier relinquished control of the cargo to a third party

that, likewise, was acting completely beyond the carrier’s

control), or (2) because the United States failed to

respond to the defendants’ suggestion that improper

packaging, an excepted cause under 46 U.S.C. App.

§ 1304(2)(n), played a role in the loss with evidence that

the loss or damage was caused, at least in part, by negli-

gence attributable to the carrier. Both of these holdings

presume the existence of a prima facie case, and thus

focus upon later stages of the COGSA burden shifting

paradigm.

To the extent that the district court raised any ques-

tion at all about the United States’ reliance upon the

survey reports, that question was limited to the issue of

whether the survey reports were probative on the issue of

causation, rather than damage. The district court referred

to language appearing in two of the five survey reports,

stating its opinion that the reports listed several possible

Fan seh Ci bk RON a cat aS Aan yy.

A-9

causes without settling upon a single cause as more prob-

able than another. Thus, the district court suggested that

those two reports standing alone did not tend to establish

what caused that portion of the loss and damage (about

35 percent) documented in those surveys. The issue of

causation, however, and the shipper’s burden to prove

concurrent causation in particular, is not a required ele-

ment of the shipper’s prima facie case and is, likewise,

limited to the later stages of COGSA’s burden shifting

framework. For the foregoing reasons, we reject the

defendants’ argument that the district court implicitly

rejected the United States’ evidence of damage upon dis-

charge and conclude that the United States satisfactorily

established a prima facie case of loss or damage under

COGSA by producing clean on board bills of lading for

each shipment, paired with records unambiguously docu-

menting that the cargo was either missing or damaged

when discharged at the destination port.

IV.

The United States claims that the carriers failed to

rebut its prima facie case. As set forth above, COGSA lets

carriers rebut the shipper’s prima facie case by showing

that the facts and circumstances surrounding the loss fall

within one of seventeen statutory exceptions denomi-

nated as “uncontrollable causes of loss” or, more directly,

by demonstrating that the carrier exercised due diligence

in its stowage, carriage, and discharge of the cargo. See 46

U.S.C. App. § 1304(2). There is considerable controversy,

and even an intra-circuit conflict, as to whether the car-

rier’s rebuttal burden with respect to most of those

exceptions is one of production or persuasion.

A-10

The first sixteen of the seventeen statutory exceptions

to carrier liability set out at 46 U.S.C. App. § 1304(2)

merely provide that the carrier is not liable for losses or

damages caused by one of the listed causes. In this group

are included losses attributable to such things as an act of

God, id. § 1304(2)(d), an act of war, id. § 1304(2)(e), and

the primary exception at issue in this case, a shipper’s

own improper packaging, id. § 1304(2)(n). The seven-

teenth exception, § 1304(2)(q), is a catch-all exception,

which states that the carrier is not liable for losses or

damages resulting from “any other cause arising without

the actual fault and privity of the carrier” or its agents.

That subsection goes on, however, to provide that, with

respect to § 1304(2)(q), “the burden of proof shall be on

the person claiming the benefit of this exception” to show

that the carrier’s fault or neglect did not contribute to the

loss or damage. Id. § 1304(2)(q). Thus, the exception cod-

ified at § 1304(2)(q) expressly requires that the carrier

prove the applicability of the exception, while the

remaining statutory exceptions are silent on the point.

Some Fifth Circuit panels have relied upon the addi-

tional statutory language in § 1304(2)(q) to implicitly -

place a heightened burden of proof on the carrier under

§ 1304(2)(q) and to permit a more lenient burden under

the remaining exceptions. Specifically, some panels of this

Court have required a carrier proceeding under

§ 1304(2)(q) to bear, not just the burden of going forward

with evidence, but the burden of persuasion with respect

to any defense premised upon that subsection. See

Tubacex, 45 F.3d at 954-55 (“The burden on the carrier

under” § 1304(2)(q) “is more than merely a burden of

going forward with evidence, but rather it is a burden of

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A-11

persuasion with the attendant risk of non-persuasion.”);

Quaker Oats, 734 F.2d at 241 (“The carrier’s burden of

establishing his own freedom from contributing fault”

under § 1304(2)(q) “is no mere burden of going forward

with evidence, but a real burden of persuasion, with the

attendant risk of nonpersuasion.”) (internal quotations

omitted); see also Westinghouse Elec. Corp. v. M/V Leslie

Lykes, 734 F.2d 199, 207 (5th Cir. 1984) (citing In re Ta Chi

Navigation (Panama) Corp., 677 F.2d 225, 229 (2d Cir. 1982),

for the proposition that “[w]hen Congress wanted to put

the-burden of proving freedom from fault on a shipowner

claiming the benefit of an exemption, it specifically said

so”). Other courts have, in similar fashion, placed a mere

burden of production on a carrier seeking to rebut the

shipper’s prima facie case when the catch-all provision in

§ 1304(2)(q) was not involved. See, e.g., Sun Oil Co. v. M/T

Carisle, 771 F.2d 805, 811 (3d Cir. 1985) (“Thus, if the

carrier wants to escape liability under COGSA without

reference to a cause specified in section [130]4(2)(a)-(p), it

must prove that its negligence did not contribute to ‘the

loss.”); EAC Timberlane v. Pisces, Ltd., 745 F.2d 715, 719-20

(1st Cir. 1984) (declaring that § 1304(2)(q) imposes upon

the carrier the “most demanding burden under maritime

law,” that is, the burden of persuasion, whereas other

COGSA exceptions carry “less imposing burdens”); In re

Ta Chi Navigation (Panama) Corp., 677 F.2d at 229 (opining

that Congress intended for shipowners to bear a height-

ened burden of proof when relying upon § 1304(2)(q) and

refusing to read that burden into § 1304(2)(b)); Lekas &

Drivas, Inc. v. Goulandris, 306 F.2d 426, 432 (2d Cir. 1962)

(refusing to “read the qualification of [§ 1304(2)](q) into

A-12

[§ 1304(2)](a)-(p),” because “Congress did not put it

there”); Hecht, Levis & Kahn, Inc.-v. S.S. President Buchanan,

236 F.2d 627, 631 (2d Cir. 1956) (“The language relating to

burden of proof in 46 U.S.C. App. § 1304(2)(q)

. . . pretty clearly refers only to the carrier’s burden of

proving that damage comes within subsection (q) and does

not relate to the ‘inherent vice’ exception contained in

§ 1304(2)(m).”). Under these authorities, it would seem

that once the shipper has proved his prima facie case, the

carrier claiming an exception under § 1304(2)(a)-(p) bears

merely a burden of production with respect to establishing

the applicability of one of those exceptions. When, how-

ever, the carrier relies upon § 1304(2)(q), the carrier must

bear the ultimate burden of persuasion with respect to the

applicability of that exception.

The earliest Fifth Circuit decision to address the

issue, however, at least implicitly reaches a different con-

clusion. In Waterman S.S. Corp. v. United States Smelting,

Refining & Mining Co., 155 F.2d 687, 691 (5th Cir. 1946),

this Court held that a carrier seeking to avoid liability on

the theory that the damages were caused by perils of the

sea, § 1304(2)(c), or latent defects in the cargo,

§ 1304(2)(p), bore both the “burden of going forward” to

demonstrate the applicability of the exceptions and “the

risk of non-persuasion.” Id. at 691. The proposition that a

carrier bears both the burden of production and the bur-

den of persuasion with respect to those exceptions was

drawn from Commercial Molasses Corp. v. New York Tank

Barge Corp., 314 U.S. 104 (1941). In Commercial Molasses,

the Supreme Court held that “the shipowner, in order to

bring himself within a permitted exception to the obliga-

tion to carry safely, whether imposed by statute or

A-13

because he is a common carrier or because he has

assumed it by contract, must show that the loss was due

to an excepted cause and not to breach of his duty to

furnish a seaworthy vessel.” Id. at 109. Furthermore,

“since the burden is on the shipowner, [if] he does not

sustain it, .. . the shipper must prevail if, upon the whole

evidence, it remains doubtful whether the loss is within

the exception.” Id. The Commercial Molasses court

explained that this burden rests upon the carrier “not in

consequence of his being an ordinary ‘bailee’ but because

he is a special type of bailee who has assumed the obliga-

tion of an insurer.” Id. In addition to Waterman, which has

never been overruled, there are decisions by this Court

and others, which either suggest that the carrier bears the

burden of persuasion for all § 1304(2) exceptions or fail to

delineate any difference between the applicable burden

for those exceptions codified at § 1304(2)(a)-(p) and the

catch-all exception codified at § 1304(2)(q). See Shell Oil

Co. v. M/T GILDA, 790 F.2d 1209, 1213 (5th Cir. 1986)

(“Section [130]4(2)(q) provides that the carrier has the

burden of proving it was not at fault if the cause of the

loss is not listed in § [130]4(2)(a)-(p). 46 U.S.C. App.

§ 1304(2)(q). Congress therefore could not have intended

the shipper to bear the burden of proving negligence in

every case. Most courts and commentators have con-

cluded from the structure of § [130]4(2) that Congress did

not intend to place such a burden on the shipper in any

case.”); see also Servicios-Expoarma, C.A.-v. Industrial Mar.

Carriers, Inc.; 135 F.3d 984 (5th Cir. 1998) (“[Tjhe burden

rests upon the carrier of goods by sea to bring himself

within any exception relieving him from the liability

which the law otherwise imposes on him.”); Tokio Marine

A-14

& Fire Ins. Co. Ltd. v. Vessel Sammi Aurora, 903 F.2d 1244,

1246 (9th Cir. 1990) (“The carrier is not liable for damages

arising without its actual fault, but the burden of proof to

show that it was without its fault rests with the carrier.” );

Sony Magnetic Prods., Inc. v. Marivienti O/Y, 863 F.2d 1537,

1540 & n. 3 (11th Cir. 1989) (noting that, although the

defendant produced evidence that the loss was caused by

a latent defect, an excepted cause under § 1304(p), such

evidence was “inconclusive,” which required the conclu-

sion that the defendant-carrier failed to sustain its burden

of proving the applicability of the exception).? In sum, at

this time there does not appear to be any consensus

among the circuits, or even in this circuit, concerning

which COGSA party bears the burden of persuasion (and

the risk of nonpersuasion) with respect to the appli-

cability of the statutory exceptions codified at

§ 1304(2)(a)-(p) once the shipper makes out a prima facie

case.

The defendants raised two of the seventeen statutory

exceptions in the district court. The defendants’ main

contention at trial was that a significant portion of the

2 We note that, to the extent that Waterman and similar Fifth

Circuit cases constitute a direct holding on the issue of a

defendant-carrier’s rebuttal burden under COGSA, those cases

are controlling under the “well-established prior panel

precedent rule of this Circuit,” which provides that “the holding

of the first panel to address an issue is the law of this Circuit,

thereby binding all subsequent panels unless and until the first

panel’s holding is overruled by the Court sitting en banc or by

the Supreme Court.” Smith v. GTE, 236 F.3d 1292, 1300 n. 8 (5th

Cir. 2001).

‘an . sa int snaaiint les

eae

A-15 -

damage was caused by the United States’ failure to pack-

age the goods in a manner sufficient to survive the voy-

age. See 46 U.S.C. App. § 1304(2)(n) (exonerating carrier

from liability for loss or damage caused by “insufficiency

of packaging”). Exception (n) is one of those exceptions

set out at § 1304(2)(a)-(p) as to which the precise scope of

the rebuttal burden is unclear. While we have noted the

apparent conflict or, alternatively, the incomplete resolu-

tion of this issue in our circuit precedent, we are not, in

this case, compelled to decide whether the defendants’

rebuttal burden with respect to their § 1304(2)(n) defense

was one of production or persuasion. This is so because

the defendants failed to produce competent evidence to

meet either standard with respect to their § 1304(2)(n)

defense.

Without regard to whether the carrier’s rebuttal bur-

den under § 1304(2)(n) is one of production or persua-

sion, the law is absolutely clear that the carrier must do

more than offer mere speculation as to the cause of lost or

damaged cargo. Pacific Employers Ins. Co. v. M/V Gloria,

767 F.2d 229, 241 (5th Cir. 1985); Harbert Int'l Establishment

v. Power Shipping, 635 F.2d 370, 375 (5th Cir. 1981) (noting

that mere speculation is not an adequate rebuttal).

Indeed, under “the policy of the law,” the carrier must

“explain what took place or suffer the consequences.”

Compagnie De Navigation v. Mondial United Corp., 316 F.2d

163, 170 (5th Cir. 1963); see also The Vallescura, 293 U.S.

296, 303 (1934) (“[T]he law casts upon [the carrier] the

burden of the loss which he cannot explain or, explaining,

bring within the exceptional case in which he is relieved

from liability.”); Pacific Employers Ins. Co., 767 F.2d at 242

(a shipper which has established a prima facie case is not

A-16

required to then prove how the damage or loss occurred;

rather, it is for the carrier to come forward with evidence

sufficient to exonerate itself). Even the lesser burden of

production, if applicable to the defendants’ § 1304(2)(n)

defense, requires that a COGSA defendant provide more

than mere “blanket assertions about mysterious possible

causes” in order to rebut a COGSA plaintiff’s prima facie

case. Transatlantic Marine Claims Agency, Inc. v. M/V OOCL

INSPIRATION, 137 F.3d 94, 101-02 (2d Cir. 1998); see also

Pacific Employers Ins. Co., 767 F.2d at 242 (when the “exact

cause of the damaged cargo remains a mystery,” the

carrier will be liable, because “any doubts as to the cause

of the loss must be resolved against the carrier”).

To satisfy this burden, defendants relied solely upon

survey reports prepared at discharge. While those reports

documented the quantity and compromised quality of

lost and damaged cargo with some precision, three of the

five survey reports failed to provide even a speculative

assessment with regard to the cause of the missing and

damaged cargo. Thus, defendants failed to offer any pro-

bative evidence whatsoever with respect to their

§ 1304(2)(n) defense as it relates to those three shipments.

The two remaining survey reports, both involving ship-

ments to Tema, Ghana, included a list of five causes

which may have contributed in some way to the loss,

including the use of bags with very thin liners to package

a portion of one shipment to Ghana and the entirety of a -

second shipment to Ghana. Together, the losses that can

even potentially be associated with the surveyor’s

remarks about the packaging of these shipments is

A-17

slightly less than one-third of the total loss claimed by the

United States.

With regard to the first shipment to Ghana, as to

which the surveyor’s remarks are limited to only one of

the commodities included in the shipment, the survey

does not in any way tend to establish that insufficient

packaging, rather than one of the other listed causes, was

the cause of the damage. Clearly, with regard to this

shipment, the surveyor’s speculation is insufficient tv

meet even a burden of production with respect to estab-

lishing their § 1304(2)(n) defense. See Pacific Employers,

767 F.2d at 241; Harbert Int’] Establishment, 635 F.2d at 375.

With regard to the second shipment, the survey

report also includes the surveyor’s remark that the por-

tion of the overall damage attributable to “excessive spill-

ing” during discharge “occurred due to poor packaging.”

This is clearly some evidence that poor packaging was at

least a concurrent cause of some of the loss and damage

arising from this second shipment. This evidence, how-

ever, is likewise insufficient to exonerate the defendants.

As an initial matter, the surveyor’s brief comment is not

the only record evidence concerning the sufficiency of the

packaging. The United States called Benjamin Myatt, a

well-credentialed packaging expert employed by the

Department of Agriculture, who is personally responsible

for the development and specification of packaging sys-

tems used for foreign food assistance programs. Myatt

testified that the cargos were packed in the standard

packaging used for these commodities and that the

United States had used the same type bags to ship

345,000 tons of food commodities the previous year.

A-18

Myatt testified that such packaging is subject to rigorous

field and laboratory testing for burst strength and other

qualities and that he had personally observed the dis-

charge of famine relief cargo packaged in the very same

bags without significant problems. In light of the record

evidence as a whole, we conclude that the brief comments

in the survey report for this second shipment to Tema,

Ghana, are insufficient to satisfy the defendants’ rebuttal

burden, without regard to whether that burden was one

of production or persuasion. Moreover, and even if the

survey report, standing alone, was sufficient to satisfy a

burden of production, we would still hold that the United

States is entitled to recover. The defendants conceded

that some of the damage was attributable to their own

negligence, a concession which determined the damages

awarded after bench trial. Even assuming the defendants

satisfied their burden of rebutting the United States’

prima facie case as to this single shipment, the record

establishes that carrier negligence was at least a concur-

rent cause of the loss, and the defendants therefore bore

the burden of establishing which portion of the loss was

not attributable to carrier negligence. Defendants did not

submit any evidence on the appropriate allocation of loss,

and the United States is therefore entitled to recovery of

the claimed damages for this shipment. See Tenneco

Resins, 881 F.2d at 211; Blasser Bros., 628 F.2d at 382.

The defendants also raised the applicability of the

catch-all exception to liability codified in § 1304(q). Speci-

fically, the defendants suggested that a portion of the loss

and damage to the five shipments was attributable to

pilferage, either from the vessel or from the docks and

environs during discharge. The district court stated that a

A-19

COGSA carrier is not responsible for careless discharge.

This is an incorrect statement of the law. COGSA extends

through discharge, and a COGSA carrier is subject to

Statutory obligations to “properly and carefully load,

handle, stow, carry, keep, care for, and discharge the

goods carried.” 46 U.S.C. App. § 1303(2). This Court has

recognized, however, that § 1304(2)(q) may shield a car-

rier from liability when the carrier has absolutely no

control with respect to the selection of port stevedores or

the rate they will be paid and, further, no control with

respect to how or when the cargo is discharged. See U.N./

F.A.O. World Food Programme v. M/V Tay, 138 F.3d 197,

200-02 (Sth Cir. 1998). But this interpretation of

§ 1304(2)(q) is not broad enough to shield the carrier from

liability for any and all stevedore negligence. To the

contrary, such “lack of practical control is ordinarily asso-

ciated with a breakdown of law and order so that the

carrier is powerless to prevent the unlawful or negligent

conduct of the stevedores.” Id. at 201. As to this excep-

tion, the defendants clearly bore, not only the burden of

production, but the burden of persuasion. See 46 U.S.C.

App. § 1304(2)(q).

To satisfy this burden, the defendants submitted sev-

eral exhibits tending to establish that pilferage occurred

from the vessel or from the docks during discharge at the

ports of destination or other ports. While these exhibits

are probative on the issue of whether some pilferage

occurred, they do not tend to establish that the defen-

dants had no control over either the stevedores or the

discharge process. To the contrary, several of the exhibits

demonstrate that the ship agents were in some circum-

stances able to exert influence to have certain vessels

A-20

docked at berths considered more efficient or less prone

to pilferage. The documents further reflect that defen-

dants intended to rely upon contractual provisions to

support a cause of action seeking recompense for any

losses that the defendants were required to bear as the

result of stevedore negligence. We further note that the

defendants neither developed any arguments or testi-

mony relating to these exhibits at trial nor raised the

applicability of this exception on appeal. In light of the

record as a whole, we conclude that the defendants did

not satisfy their burden of persuasion with respect to

their § 1304(2)(q) defense. Moreover, this defense suffers

from the same weakness as the defendants’ § 1304(2)(n)

defense. That is, even if we were to assume that the

defendants carried their rebuttal burden, the record

establishes that carrier negligence was at least a concur-

rent cause of the damages claimed, and the defendants

failed to make any attempt to apportion or separate the

losses attributable to their own negligence as compared

to the losses attributable to pilferage or some other cause.

See Tenneco Resins, 881 F.2d at 211; Blasser Bros., 628 F.2d

at 382.

For the foregoing reasons, we conclude that the

defendants failed to rebut the United States’ prima facie

case. Further, even if the defendants had carried such

burden, the United States established that at least some of

the loss and damage was attributable to the defendants’

negligence, and the defendants failed to respond with

evidence tending to establish precisely what portion of

the claimed loss and damage was attributable to another

concurrent cause.

ts we

A-21

V.

The United States asks us to render judgment in its

favor. The United States contends that the extent of lia-

bility is established by declarations in the bills of lading

covering the shipments. COGSA expressly allows a ship-

per to declare the value of its cargo as long as “the nature

and value of such goods have been declared by the ship-

per before shipment and inserted in the bill of lading.” 46

U.S.C. App. § 1304(5). “This declaration, if embodied in

the bill of lading, shall be prima facie evidence, but shall

not be conclusive on the carrier.” Id.

The district court found that the declarations of the

cargo’s value embodied in the bills of lading were suffi-

cient evidence of damages claimed in this case. We agree.

Id. The carriers’ only rebuttal to this proof of value is that

the bills of lading were inadmissible “double hearsay.”

The carriers state that “[t]he information for the value as

listed on the bills of lading is not based on personal

knowledge of the agents of defendants who issued the

bills of lading.” Regardless of whether this is true, it is

irrelevant. The statute allows the shipper to declare the

cargo’s value, and inclusion of this value on the bill of

lading evidences the carrier’s acquiescence to this decla-

ration. The United States’ declared value was prima facie

evidence of the cargo’s value and, absent any rebuttal

evidence from the carrier, is adequate to set the value of

the cargo for damage calculation purposes.

Moreover, we are comforted in this case by testi-

monial evidence from the government employee respon-

sible for setting the value of the cargo, who testified that

the very precise bill of lading values declared were

A-22

drawn from invoices reflecting the government's actual

purchase price for the commodity. We are not, therefore,

dealing with a potential differential between the value

declared for shipping purposes and the value as mea-

sured by the price paid for the commodity. In addition,

the record contains the government’s claim forms for the

various cargos. The damages detailed therein are based

upon a unit price for the commodities plus freight costs.

Testimonial evidence established that these documents

would likewise have been checked against and premised

upon the government’s actual purchase price for the

goods. Thus, the damages claimed are not premised upon

a unitary value taken directly from the bill of lading, but

are instead calculated using the actual costs to the gov-

ernment. We agree with and, therefore, affirm the district

court’s factual determination that the United States pro-

duced competent evidence of the damages claimed. We,

therefore, see no barrier to a decision rendering judgment

in favor of the United States.

VI.

The United States requests that this Court award

prejudgment interest running from the date of last dis-

charge through the time of judgment, calculated in accor-

dance with 31 U.S.C. § 3717. The United States preserved

error on this issue in the district court. In this Circuit,

there is a strong presumption in favor of awarding pre-

judgment interest. See Ryan Walsh Stevedoring Co., Inc. v.

James Marine Serv., Inc., 792 F.2d 489, 492 (5th Cir. 1986).

The defendants respond that the United States exercised

undue delay in bringing these actions and, therefore, that

it should be denied prejudgment interest. The United

Lihat Lat iat dlbts Hacks: hie ad Nae eateb mae A

dyes

A-23

States filed the five actions consolidated here in Decem-

ber 1998, less than three years after the last date of

discharge and well within the six year statute of limita-

tions set by Congress for claims filed by the CCC. 15

U.S.C. § 714b(c) (1994). This suit was timely filed. Finding

no other reason to deny prejudgment interest, we there-

fore render judgment for the United States in this case in

the amount of $203,319.87, plus pre-judgment interest

calculated in accordance with 31 U.S.C. § 3717.

CONCLUSION

For the reasons stated above, the judgment of the

district court is VACATED and judgment is RENDERED

in favor of the United States in the amount of $203,319. 87

- plus pre-judgment interest.

B-1

APPENDIX B

Unitep States District Court SOUTHERN District OF TEXAS

UnNiteD STATES OF AMERICA,

Plaintiff,

versus Civit Action H-98-4173

OcrAN BuLk Suips, INc.,

et al.,

MMmMmMmMmMmMmM

Defendants.

Findings of Fact and Conclusions of Law

1. Introduction.

A shipper sued two carriers for damages for short

delivery. The shipper will recover $7,300.08 for wetting

damage that the carrier admits occurred before discharge.

2. Background.

Between April of 1994 and January of 1996, Ocean

Bulk Ships, Inc., and Transbulk Carriers, delivered cargo

— carried on the Overseas Harriette and the Overseas Mar-

ilyn — to African ports. Relief agencies arranged for the

carriers to deliver food aid (sorghum, vegetable oil, yel-

low corn, bulgur wheat, corn-soy blend, and wheat-soy

blend), but the consignee did not receive all of it. The

government, as assignee of the relief agencies’ cargo

claims, says that Ocean Bulk and Transbulk delivered too

little, spilled it, and wet it. The carriers say that they are

not responsible for these deficiencies because the cargo

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B-2

was in good condition when the stevedore opened the

holds.

3. Law.

To or from ports of the United States federal law

applies to every contract for carriage of goods by sea. See

Carriage of Goods by Sea Act, 46 U.S.C. App.

§§ 1300-1315. Although the carrier is not an insurer, it

must use reasonable care to furnish a seaworthy vessel

and to deliver the cargo. A carrier is not responsible for

damages from deficient packaging or careless discharge.

4. Bilis of Lading.

The government offered the bills of lading to prove

its damages. Bills of lading are evidence of the cargo’s

value, but they are not conclusive. Normally, the carrier’s

liability is limited to $500 per package. The shipper may

declare a higher value and pay an adjusted freight rate.

This limit applies only if the shipper has notice of its

Opportunity to declare higher value of the cargo. Here,

the shipper declared a higher value on the bills of lading;

however, the declarations do not bind the carrier.

The government furnished no other readily available

evidence in its possession to establish the cargo’s value

like invoices, commodities prices, or its internal CCC-512

forms. Declaration of value is a unilateral assertion for

insurance purposes, but here, it is the only evidence of the

cargo’s worth. While it is weak, it is sufficient.

B-3

5. Surveys.

The government also relies on the surveys made at

the African ports. The reports specify the cargo’s condi-

tion on delivery. They also detail reasons for non-

delivery, including water damage, theft, and spillage

(bags damaged on board and during discharge); however,

the surveyor did not quantify the cargo not delivered by

category. The report’s reasons for non-delivery are

generic — they cover the litany of possibilities for damage

to cargo. Further, the shipper must address the known

thefts at port with it and its agents, not the carrier. No

shortage existed when the holds were opened.

The government relies heavily on the surveys to sup-

port its claims of short delivery; however, it ignores the

portions of the reports about poor-quality packaging:

“[T]he cause of the damage loss could be attributed

to... the use of light textured paper with very thin inter

lining for stuffing the cargo.” Government exh. 23. At

trial, the government tried to rebut the African sur-

veyors’s conclusions by calling a packaging specialist. He

testified that the three-ply paper bags were sufficient

merely because the government requires grain commodi-

ties to be shipped in them. He admitted that, not having

witnessed the unloading, he could not identify the reason

the bags failed.

The contents of the surveys are insufficient to estab-

lish the carrier’s liability for the non-delivered and dam-

aged cargo.

SYS an ik eH et FERRE aS

NL Me aire a

Se MOEA AIH Bids TAA RES

6. Conclusion.

The shipper will take $7,300.08 from the carrier.

Signed December 17 , 1999, at Houston, Texas.

/s/ Lynn N. Hughes

Lynn N. Hughes

United States District Judge

C-1

APPENDIX C

Unitep States District CouRT SOUTHERN District OF TEXAS

Unitep STATES OF AMERICA,

Plaintiff,

Civi. Action H-98-4173

versus

OcEAN BuLk Suips, INc.,

et al.,

MMMM IN I IPL

Defendants.

Final Judgment

The shipper takes $7,300.08 from the carrier.

Signed December 17, 1999, at Houston, Texas.

/s/ Lynn N. Hughes

Lynn N. Hughes

United States District Judge

D-1

APPENDIX D

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 00-20117

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:

UNITED STATES OF AMERICA

Plaintiff - Appellant-Cross-Appellee

V.

OCEAN BULK SHIPS INC; TRANSBULK CARRIERS

Defendants — Appellees-Cross-Appellants

M/V OVERSEAS HARRIETTE, its engines, tackle, etc.,

in rem; M/V OVERSEAS MARILYN

Defendants - Appellees

a ha i ae

UNITED STATES OF AMERICA

Plaintiff - Appellant-Cross-Appellee

Pane Sticks RAI Ne Ss A ANE aN MM Fa OES LID

v.

OCEAN BULK SHIPS INC, in personam

Defendant —- Appellee-Cross-Appellant

M/V OVERSEAS HARRIETTE, its engines, tackle, etc

in rem

Defendant — Appellee

D-2

UNITED STATES OF AMERICA

Plaintiff - Appellant-Cross-Appellee

v.

OCEAN BULK SHIPS INC, in personam

- Defendant - Appellee-Cross-Appellant

M/V OVERSEAS MARILYN, its engines tackle etc in rem

Defendant - Appellee

UNITED STATES OF AMERICA

Plaintiff - Appellant-Cross-Appellee

v.

OCEAN BULK SHIPS INC, In personam

Defendant - Appellee-Cross-Appellant

Appeals from the United States District Court

for the Southern District of Texas, Houston

ON PETITION FOR REHEARING EN BANC

(Filed Jun. 8, 2001)

(Opinion 04/10/01, 5 Cir, __, __ F.3d __)

Before KENNEDY*, JONES and DEMOSS, Circuit Judges.

PER CURIAM:

(X) Treating the Petition for Rehearing En Banc as a

Petition for Panel Rehearing, the Petition for Panel

*Circuit Judge of the Sixth Circuit, sitting by designation.

D-3

Rehearing is DENIED. No member of the panel nor judge

in regular active service of the court having requested

that the court be polled on Rehearing En Banc (Feo. R.

App. P. and 5tH Cir. R. 35), the Petition for Rehearing En

Banc is DENIED.

() Treating the Petition for Rehearing En Banc as a

Petition for Panel Rehearing, the Petition for Panel

Rehearing is DENIED. The court having been polled at

the request of one of the members of the court and a

majority of the judges who are in regular active service

not having voted in favor (Fev. R. App. P. and 5TH Cir. R.

35), the Petition for Rehearing En Banc is DENIED.

ENTERED FOR THE COURT:

/s/ Harold R. DeMoss, Jr.

United States Circuit Judge