The plaintiff contracted through a series of intermediaries with the defendant to ship marble tiles from China to New York via Long Beach. The defendant issued a sea waybill that incorporated the terms of the US Carriage of Goods by Sea Act (COGSA). The defendant handled the carriage across the Pacific Ocean, then subcontracted with a railway company to bring the tiles across the United States. When the plaintiff received the tiles, they were allegedly damaged beyond repair. After going through the defendant's claims process and being denied, the plaintiff sued the defendant in the New Jersey State Court. The case was later transferred to the District Court. The defendant brought a motion to dismiss the complaint for failure to state a claim, or in the alternative for summary judgment.

Held: The defendant's motion for summary judgment is granted.

The defendant's sea waybill incorporates, and many of its terms mirror, the terms of COGSA. 'The purposes behind ... COGSA were to achieve a fair balancing of the interests of the carrier, on the one hand, and the shipper, on the other, and also to effectuate a standard and uniform set of provisions for ocean bills of lading': Encyclopaedia Britannica, Inc v SS Hong Kong Producer 422 F 2d 7, 11 (2d Cir 1969) (CMI1649). To that end, COGSA sets out the responsibilities of carriers and limits their liability in various ways. It provides that carriers 'shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered'. And it limits carriers' liability by providing that '[n]either the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading'.

Although by its terms COGSA applies to '[e]very bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade', it also provides that '[n]othing contained in this chapter [this note] shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by sea'.

The defendant seeks to apply two provisions of COGSA incorporated into the sea waybill as a defence to the plaintiff's state law claims: (1) the one-year statute of limitations; and (2) the limitation of liability to USD 500 per package. Courts in this district have recognised that where parties have validly agreed that COGSA will govern inland carriage of goods, COGSA's limitations apply to any claim arising out of the journey, regardless of the source of plaintiffs' causes of action. That conclusion is strongly supported by the Supreme Court's opinion in Norfolk Southern Railway Co v Kirby, 543 US 14, 29 (2004) (CMI1454), which held that shippers must be allowed to extend COGSA's limitation on liability inland, because otherwise shippers 'would not enjoy the efficiencies of the default rule ... . And the apparent purpose of COGSA, to facilitate efficient contracting in contracts for carriage by sea, would be defeated.' If plaintiffs could simply plead around COGSA's limitations by bringing state tort or consumer protection claims, the efficiency and uniformity provided by COGSA would be destroyed.

The plaintiff does not dispute that the sea waybill incorporates the COGSA statute of limitations and limitation on liability, but argues that they are unconscionable as a matter of New Jersey law. The plaintiff contends that COGSA's terms apply here only as a matter of contract, not by the statute's own force, and consequently provisions that would be deemed unconscionable under state law are unenforceable. It points to the Second Circuit's opinion in Colgate Palmolive Co v S/S Dart Canada, 724 F 2d 313, 315-16 (2d Cir 1983), which held where 'state law governs, provisions of COGSA incorporated by contract can be valid only insofar as they do not conflict with applicable state law'.

The plaintiff’s argument does not hold water for two reasons. First, admiralty law, and not New Jersey law, governs the contract. Second, the Second Circuit has held that Colgate Palmolive is no longer good law. In Sompo Japan Insurance Co of America v Union Pacific Railway Co, 456 F 3d 54, 71 n17 (2d Cir 2006), the Second Circuit recognised that 'Kirby would appear to effectively overrule those cases, like Colgate Palmolive, that hold that contracts extending COGSA’s terms beyond the tackles must yield to conflicting state law ... to the extent that the bills of lading in those cases consist of a sea component that is "substantial".' This sea waybill had a substantial sea component. As a consequence, New Jersey law cannot invalidate the incorporation of COGSA's provisions into the sea waybill.

The defendant further argues that the plaintiff's claims are barred by the sea waybill's incorporation of the COGSA statute of limitations, because they were filed more than a year after the cargo was delivered. It is undisputed that the delivery was completed, at the latest, by 6 July 2016. The plaintiff filed suit on 12 March 2018. The plaintiff's claims are, therefore, barred by the one-year limitation period unless the defendant agreed to extend the time to sue or is equitably estopped from asserting the statute of limitations as a defence. The evidence adduced by the plaintiff fails to give rise to a genuine question of fact as to whether the defendant lulled the plaintiff into a false sense of security. The email exchanges and declarations produced by the defendant are consistent with a claims process conducted in good faith, albeit slowly, in which the plaintiff failed to assert its rights in time because it never provided the defendant with the required formal statement of claim.

Because the statute of limitations bars the plaintiff's claims, there is no need for the Court to consider the defendant's alternative argument that the sea waybill’s incorporation of COGSA's limitation on liability to USD 500 per package applies to the plaintiff's claims.

[For the unsuccessful appeal to the Second Circuit, see Herod's Stone Design v Mediterranean Shipping Co SA, United States Court of Appeals, Second Circuit, No 20-637, 16 February 2021 (CMI1215).]