Consolidation Transportation Services Inc (Saipan) (CTS), a freight consolidator, contracted with Seabridge Micronesia Inc (Seabridge), a commercial marine carrier, to carry the goods of CTS's customers from Guam to Saipan, Northern Mariana Islands. Seabridge had a contract with the Saipan Stevedore Co Inc (SSC), a stevedore, to unload the cargo at Saipan. While SSC was unloading CTS's container from Seabridge's barge, the container broke and some of the cargo fell into the lagoon.

Under Seabridge's bill of lading, the Carriage of Goods by Sea Act 46 USC §§ 1300 ff (COGSA) governed the parties' relationship and allowed Seabridge and SSC to limit their liability for damage to cargo to USD 500 per package. The bill of lading stated that there was one container being shipped, and that the shipper had the option of paying a higher rate in order to avoid the limitation. The District Court held that:

1. CTS had been given a fair opportunity to opt out of the liability limitation and had not done so;
2. SSC had not committed an unreasonable deviation from the contract of carriage which would deprive it of the package limitation; and
3. the bill of lading was unambiguous.

CTS appealed. CTS argued that the package limitation did not apply because:

1. The clause was invalid because it was either ambiguous or defective;
2. even if the clause was valid, SSC's unreasonable deviation from the contract of carriage deprived it of the limitation; and, in the alternative
3. SSC's liability should be USD 500 for each of the 69 packages inside the container.

Held: Appeal dismissed. The judgment of the District Court is affirmed.

Under COGSA, a carrier may limit its liability to USD 500 per package if the shipper is given a fair opportunity to opt out of the limitation by declaring an excess value and paying a higher rate. An express legible declaration of the limitation and the opportunity to opt out, as was found in the Seabridge bill of lading, constitutes prima facie evidence that CTS was given a fair opportunity to avoid the limitation, shifting the burden to CTS to prove that it was denied such an opportunity. CTS has failed to present any evidence that it was denied an opportunity to opt out of the limitation.

A bill of lading is an adhesion contract whose ambiguities must be construed against the carrier. However, there are no ambiguities to be construed against SSC. The bill of lading clearly stated that COGSA applied; that liability was limited to USD 500 per package unless CTS paid a higher rate; this limitation applied to the stevedore; and there was only one container being shipped, with no indication of the number of packages within the container. The bill of lading does not merely incorporate COGSA, but expressly recites the liability limitation and the opportunity to opt out. It is legible; it does not attempt to limit liability below the amount permitted by COGSA; and it does not contain any declaration about the number of packages inside the container. Therefore the limitation clause, being neither ambiguous nor defective, validly limits SSC's liability to USD 500 for the single declared container.

If a carrier commits an unreasonable deviation from the contract of carriage, it is deprived of the USD 500 liability limitation. An unreasonable deviation is a serious departure from the contract of carriage, and not mere negligence in the handling of cargo. CTS presented evidence that SSC's use of a sling device to lift the container from the ship breached industry custom, but it failed to show how this could lead to a finding of anything other than mere negligence which does not constitute an unreasonable deviation. The bill of lading did not specify the method of unloading. Since the contract contained no terms governing the method of unloading, SSC's use of a sling device was not a deviation from the contract. The District Court properly concluded that SSC's method of unloading was not an unreasonable deviation which would deprive SSC of the COGSA limitation.

CTS argued that the District Court erred in limiting SSC's liability to USD 500 because the container actually contained 69 separate packages. There is no evidence that CTS informed either Seabridge or SSC of the number of packages within the container. Nor is there evidence that CTS disputed the designation of one container on the bill of lading or that it attempted in any way to increase the amount of Seabridge or SSC's liability. The description of the cargo as 'freight all kinds' did not put SSC on notice that one container contained numerous packages. The District Court did not err in limiting SSC's liability to one package.