The plaintiff brought this lawsuit under the US Carriage of Goods by Sea Act (COGSA), 46 USC § 30701 ff, against Zim Integrated Shipping Services Ltd (Zim) and Orient Star Transport International Ltd (OST) (the defendants). The plaintiff alleged that it had purchased goods which were shipped by the defendants, and that the defendants were responsible for the water damage that the goods sustained while in the defendants' custody.

The plaintiff moved for a partial summary judgment on the grounds that: (i) it had established its prima facie case under COGSA to recover damages; (ii) the COGSA package for purposes of Zim's limitation of liability must be based on the number of cartons and not pallets shipped; and (iii) the OST bill of lading limitation of liability was unenforceable under COGSA.

Held: The motion is granted in part and denied in part.

The parties agree that COGSA governs their duties and responsibilities 'from receipt of the cargo at the terminal at the port of loading in Shanghai, China to the delivery of the goods off the terminal at the port of discharge in Savannah, Georgia.' The parties do not dispute that the plaintiff purchased the cargo from a supplier in China, which packaged the cargo into 1,336 cartons that were then, in line with the plaintiff's standard procedure, grouped into 22 shrink-wrapped pallets. Zim released an empty 40-foot container to the plaintiff and OST for loading. The pallets were loaded into the container, which was then closed, and a security seal number was placed on its door handle. The parties agree that Zim had nothing to do with the loading of the cargo into the container. The container was returned to Zim's possession at the Shanghai port. The parties dispute what happened to the cargo and its condition before Zim took possession of the container. The plaintiff has produced a packing list from its supplier for the shipment, but points to no other documents or reports regarding the cargo before its delivery to Zim. Zim cites a public weather report to suggest that there was heavy rain in at least parts of Shanghai on the day that the container was brought to the pier.

On 12 June 2021, Zim loaded the container onto one of its container ships in Shanghai. The parties dispute whether the container, while in Zim's custody, was ever in contact with the ground or a ship's deck where water could potentially accumulate. They agree, however, that during this time, Zim could not see the cargo inside or otherwise verify its condition. They also agree that all receipts that Zim received for the container in China and at the Savannah port were 'clean' of any notations or exceptions for apparent or obvious damage, such as water leaking out from under the container doors or a tidemark on the outside of the container walls.

The container arrived at the Port of Savannah on 29 July 2021. On or about 31 July, the container was picked up by TXN Intermodal (TXN), a trucking company that the plaintiff had engaged to transport the container by truck from the pier in Savannah to the plaintiff's warehouse in Tallassee, Alabama. Although containers are 'usually brought straight to' the plaintiff's warehouse, TXN stored the container at a depot for at least two days. On or about 2 August, TXN delivered the container to the plaintiff's warehouse.

Upon breaking the container's security seal and opening its doors, the plaintiff noted water damage to each of the cargo's 22 pallets. The parties agree that the cargo was wet, but dispute when and where it was wetted. On 4 August 4, a cargo surveyor inspected the cargo on Zim's behalf at the plaintiff's warehouse and concluded that its wetting came from freshwater, not seawater.

Under COGSA, a plaintiff seeking recovery for damaged goods shipped pursuant to a bill of lading must first establish a prima facie case by 'proving both delivery of goods to the carrier ... in good condition, and outturn by the carrier ... in damaged condition': Atl Mut Ins Co v CSX Lines LLC 432 F 3d 428, 433 (2d Cir 2005) (CMI1614). Once the plaintiff establishes a prima facie case, the burden shifts to the defendant to prove that one of the statutory COGSA exceptions to liability exists: see 46 USC § 1304(2) (listing the statutory exceptions).

The plaintiff has not prima facie shown that the cargo was in good condition when it arrived at the Shanghai port. The absence of information as to the condition of the cargo prior to delivery precludes the Court from finding at the summary judgment stage that the cargo was in good condition when Zim received it. The defendants have cast enough doubt on the plaintiff's evidence to raise a genuine issue of material fact precluding summary judgment.

The Court turns next to the plaintiff's motion for summary judgment as to the limitations of liability in the Zim and OST bills of lading. Under § 1304(5) of COGSA, a carrier shall not be 'liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading', or the parties agree to a higher limit. COGSA also provides that any bill of lading must show '[e]ither the number of packages or pieces, or the quantity or weight, as the case may be, as furnished in writing by the shipper': § 1303(3)(b). Thus, if a shipper wishes 'to protect its interest in the cargo beyond the package limitation amount, it ought to have contracted for that right': Thyssen Inc v S/S Eurounity 21 F 3d 533, 541 (2d Cir 1994) (CMI1885).

The Second Circuit has defined a 'package' as 'a class of cargo, irrespective of size, shape or weight, to which some packaging preparation for transportation has been made which facilitates handling, but which does not necessarily conceal or completely enclose the goods': Allied Int'l Am Eagle Trading Corp v SS Yang Ming 672 F 2d 1055, 1057-58 (2d Cir 1982). This definition is 'broad enough to include a wide range' of items: Binladen BSB Landscaping v MV Nedlloyd Rotterdam 759 F 2d 1006, 1012 (2d Cir 1985) (CMI1621). But that definition does not clarify on its own, in the context of this shipment, which 'package' constitutes the relevant package for assessing potential liability under COGSA.

The parties agree that the cargo was shipped in some type of applicable 'package', but dispute whether COGSA's USD 500 per package limitation applies to the cartons holding the cargo or the pallets in which the cartons were loaded.

To the extent that the parties 'unambiguously identif[y]' the relevant 'package' in the bill of lading, the Court 'will adopt [that] unit of packaging': Seguros Illimani SA v M/V Popi P 929 F 2d 89, 94 (2d Cir 1991) (CMI1828).

The Court finds that the plaintiff is not entitled to summary judgment that the 1,336 cartons constitute the packages here because it is clear from the Zim bill of lading that the COGSA 'package' is instead each of the cargo's 22 pallets. The front side of the Zim bill of lading has no heading for 'NO. OF PKGS'. Absent any number under that heading - or any such heading at all - the only relevant numbers on the front side are those in the 'attached list' that refer to 1,336 cartons. However, the terms and conditions included on the reverse side of the Zim bill of lading expressly account for this absence, stating that, '[f]or limitation purposes under the Hague-Visby Rules or U.S. COGSA, it is agreed that the meaning of the word ‘package’ shall be any palletized and/or unitized assemblage of cartons which has been palletized and/or unitized for the convenience of the Merchant, regardless of whether said pallet or unit is disclosed on the front hereof'. That package, the 'palletized ... assemblage of cartons' plainly refers to the 22 shrink-wrapped pallets on which the cargo was loaded.

Even if the language of the Zim bill of lading were not clear and unambiguous, other evidence supports the conclusion that pallets constitute the COGSA packages under this bill of lading. The Court finds significant, for example, that the plaintiff, not Zim, used pallets to load the cargo into the container.

As for the OST bill of lading, the Court cannot conclude that pallets are the relevant COGSA unit for purposes of OST's limitation on liability. The OST bill of lading differs from the Zim bill of lading in several respects. Most importantly, it contains no clause defining 'package' for COGSA limitation of liability purposes. Here, because the number of cartons is described on the OST bill of lading, the container is not the COGSA package. The OST bill of lading discloses, in at least two places, the 1,336 cartons of which the cargo consists. The level of detail provided is sufficient to trigger the presumption that the container is not the COGSA package. OST does not challenge this presumption, or otherwise argue that COGSA liability should be limited to the one container.

OST's argument that the freight rate supports a finding that pallets are the proper COGSA unit is unavailing. To the extent that the Court can consider this evidence in light of an otherwise unambiguous bill of lading, OST does not explain why the freight rate charged is significant. Absent additional language in the OST bill of lading's terms and conditions, as was present in Zim, the COGSA packages for the OST bill of lading are the 1,336 cartons, the units that are set forth on the front of the bill of lading under 'DESCRIPTION OF PACKAGES AND GOODS'.

Having concluded that the cartons are the COGSA package under the OST bill of lading, the Court agrees with the plaintiff that OST's limitation of liability clause is void. Under COGSA, any 'clause ... or agreement in a contract of carriage ... lessening such liability otherwise than as provided in this chapter, shall be null and void and of no effect': 46 USC § 1303(8). The parties agree that, under the OST bill of lading, pursuant to its cap on liability of 2 SDR per kilo, the plaintiff's maximum recovery is USD 31,893.80. However, applying COGSA's USD 500 per package limit to each of the cargo's 1,336 cartons, the plaintiff can recover a greater amount under COGSA. Because OST's limitation of liability clause would lessen OST's liability under COGSA, it is not enforceable.