King Ocean Central America SA (King Ocean) contracted with Precision Cutting Services Inc (Precision) in May 1993 to transport Precision's goods from Costa Rica to Miami, Florida, and then overland from Miami to Little Rock, Arkansas, via motor carrier.

By King Ocean's through bill of lading (King Ocean–Precision bill), King Ocean agreed to be vicariously liable for any loss or damage to Precision's goods while the goods were in the custody of Paradise Freightway Inc (Paradise), the inland carrier. COGSA was expressly incorporated and cited throughout the King Ocean-Precision bill as the controlling law. The clause paramount provided that '[t]his Bill of Lading shall have effect subject to the provisions of the "Carriage of Goods by Sea Act 1936" (COGSA)'. Claims were to be filed against King Ocean within one year. Paragraph 7 of the King Ocean-Precision bill, titled 'NOTICE OF LOSS, TIME BAR', stated:

Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the Carrier [King Ocean] or his agents at the port of discharge or the place of delivery as the case may be before or at the time of removal of the goods into the custody of the merchant[,] such removal shall be prima facie evidence of the delivery by the Carrier of the Goods as described in this Bill of Lading. If the loss or damage is not apparent, then notice must be given within three days of the delivery. In any event, the Carrier shall be discharged from any liability unless suit is brought within one year after delivery of the Goods or the date when the Goods should have been delivered. Suit shall not be deemed brought until jurisdiction shall have been obtained over the Carrier and/or the ship by service of process.

A separate bill of lading covered the inland portion of the transport by Paradise.

Precision's goods were allegedly stolen during the inland portion while the goods were at Paradise's Miami freightyard.

More than a year later, Precision filed an action against King Ocean seeking damages. At first instance, summary judgment was given in favour of King Ocean. The suit was found to be time-barred under COGSA: specifically 46 USC § 1303(6).

This decision was reversed on appeal by a majority of the Florida's District Court of Appeals for the Third District (the DCA). Given that the domestic inland portion of the transport from a foreign country was covered by a separate bill of lading, the majority of the DCA held that a separate federal law, the Carmack Amendment to the Interstate Commerce Act (Carmack Amendment), ie 49 USC § 11707, applied rather than COGSA. COGSA's one-year limitation period was inapplicable. The majority relied on an earlier decision of the DCA in Harvest International Inc v Tropical Shipping & Construction Co 644 So 2d 112 (Fla 3d DCA 1994).

The minority of the DCA, Judge Cope, thought Harvest International to be a binding precedent but wrongly decided. Judge Cope, while concurring specially, disagreed with the majority's result and reasoning. In Harvest International, the DCA, relying on two federal decisions, had held that an ocean carrier was liable under the Carmack Amendment for damage to a shipper's goods during the inland portion of the transport, because a second, separate bill of lading was issued for the inland portion of the transport. Judge Cope contended that those two federal decisions were misconstrued in the Harvest International decision as they provided no support for applying the Carmack Amendment to an ocean carrier. The liability of the ocean carriers was not at issue in those federal decisions.

Thereafter, the Supreme Court of Florida accepted jurisdiction to answer a question certified to be of great public importance by the DCA. The question was as follows:

Where an ocean carrier issues a through bill of lading which includes inland transportation in the United States by motor carrier, and which provides that the ocean carrier will be vicariously liable for any loss while the goods are in the custody of the inland motor carrier, and the goods are lost while in the custody of the inland motor carrier who has issued a separate bill of lading, is the ocean carrier as a matter of law subject to the Carmack Amendment and the Carmack two-year statute of limitations for the inland leg of the journey, or is the ocean carrier's liability governed by the Carriage of Goods by Sea Act (COGSA), the terms of the bill of lading, and the COGSA one-year statute of limitations?

Held: DCA’s decision quashed.

The Supreme Court of Florida adopted the analysis of Judge Cope as its own, and held that the ocean carrier's liability is governed by COGSA, the specific provisions of the parties' through bill of lading, and the one-year statute of limitations found in COGSA and the bill of lading. In contrast, inland carriers remain subject to Carmack Amendment liability when a separate, domestic bill of lading is issued, even though a through bill of lading was issued abroad covering the same transport. The Supreme Court of Florida concluded that the decision of Harvest International was in error and predicated upon a misreading of the federal case law.

The Carmack Amendment governs the liability of United States inland common carriers for lost or damaged goods. Its purpose was to 'relieve shippers of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods'. It imposes a form of strict liability on domestic common carriers. Applicable carriers 'are liable to the person entitled to recover under the receipt or bill of lading' and '[f]ailure to issue a receipt or bill of lading does not the affect […] liability' (49 USC § 11707(a)(1)). It codified the common law liability rule 'that a common carrier is liable without proof of negligence for loss or damage to cargo unless it can establish one of the common law defenses, i.e., act of God, enemies of the King, inherent vice of the goods, etc'.

An ocean carrier's liability was not contemplated or covered under the Carmack Amendment. By its own terms, the Carmack Amendment appears to apply only to inland carriers subject to the jurisdiction of the Interstate Commerce Commission.

In contrast, COGSA is the domestic enactment of the Hague Rules. Both the Hague Rules and COGSA were intended to bring more balance to the merchant/shipper-carrier relationship and overcome some of the overly advantageous contract clauses in the bills of lading, which were traditionally drafted by the carriers. One of COGSA's specific purposes was 'to obviate the necessity for a shipper to make a detailed study of the fine print clauses of a carrier's regular bill of lading on each occasion before shipping a package'. Nevertheless, COGSA's one-year time bar (46 USC § 1303(6)) and limitation of liability of USD 500 per package (46 USC § 1304(5)) clearly benefit carriers.

The Supreme Court of Florida turned to the contract between the parties and found that, based on the clause paramount and para 7 of the bill of lading, the parties intended that the one-year limitation period of COGSA would control the agreement. The Carmack Amendment was never mentioned in the King Ocean-Precision bill. The contract thus did not subject King Ocean to liability under the Carmack Amendment.