This case arose from a claim for damage to a cargo of milling machines being carried from Taiwan to Los Angeles. After the cargo was removed from the vessel, but before it was delivered to the plaintiff, the milling machines were damaged. The plaintiff, who was the buyer and the bill of lading holder, sued the carrier and stevedores. The carrier and stevedores took the position that their liability, if any, was limited to the extent of the package limitation in the Carriage of Goods by Sea Act 46 USC § 1304(5) (COGSA). 

Clause 7(2) of the bill of lading specifically incorporated the language of this section. All parties moved this issue for partial summary judgment. The District Court gave a summary judgment in favour of the carrier and stevedores.

The plaintiff appealed, arguing that, according to precedent, a carrier may take advantage of COGSA's package limitation 'only if the shipper is given a "fair opportunity" to opt for a higher liability by paying a correspondingly greater charge': see Nemeth v General SS Corp 694 F 2d 609 (9th Cir 1982); Komatsu Ltd v States SS Co 674 F 2d 806 (9th Cir 1982); Pan Am World Airways Inc v California Stevedore & Ballast Co 559 F 2d 1173 (9th Cir 1977); Tessler Bros (BC) Ltd v Italpacific Line 494 F 2d 438 (9th Cir 1974). The plaintiff alleged that it was denied a fair opportunity to opt for the higher liability limits because it did not see a copy of the bill of lading until long after the goods were shipped. According to the plaintiff, the carrier was (or should have been) aware that the shipper/named consignee was only a 'nominal shipper'. The plaintiff contended that since it was the party who would bear the risk of any damage to the shipped goods, the carrier had a responsibility to give it actual notice of the package limitation. It argued that this was embodied in the concept of fair opportunity as established by the above precedent.

Held: Appeal dismissed. 

The carrier does not need to give actual notice of the package limitation to the plaintiff to satisfy the ‘fair opportunity’ requirement. As long as the bill of lading, on its face, provides adequate notice of the liability limit and an opportunity to declare a higher value, the carrier has discharged its responsibility. Tessler, Pan Am, Komatsu and Nemeth all dealt with the adequacy of the notice on the bill of lading. If the plaintiff's argument were accepted, a carrier would not only be required to bring the package limitation to the attention of the party it actually dealt with, but also to other parties that it knows, or should know, or anyone having an economic interest in the goods being shipped. This would place far too heavy a burden on the carrier. 

The Court also rejected the plaintiff’s narrower argument that the bill of lading requires the carrier to give notice of the limitation to every party listed under its definition of ‘Merchant’, not merely to the shipper. The bill of lading defined 'Merchant' as the 'shipper, holder, consignee, the receiver of the goods, any person owning or entitled to the possession of the goods or this bill of lading and anyone acting on behalf of any such persons'.