Jackets were damaged after stowaways hid in a container while on a ship owned by Tropical Shipping & Construction Co (the appellee). MacClenny Products Inc and Bayer Clothing Group (the appellants) filed a complaint for breach of contract seeking as damages the value of each destroyed jacket. The appellee asserted limitation of liability of USD 500 per package and that the 40-foot container was the package for purposes of limitation under the United States Carriage of Goods by Sea Act (COGSA).

The appellee had shipped the appellants' materials and merchandise between Florida and the Dominican Republic for approximately ten years on a weekly basis as follows. Materials would be shipped to X-Cell Fashions (X-Cell) in Santiago, Dominican Republic, for assembly. X-Cell would return seven to 12 containers of assembled jackets to the appellants in Florida. X-Cell would place each assembled jacket on a hanger, wrap the jacket in plastic, and hang the jacket in a 40-foot shipping container that appellee had supplied to X-Cell. One 40-foot container can carry between 4,500 and 5,000 jackets. The loaded container would be transported from X-Cell's factory to the port in Puerta Plata where it would be loaded on the appellee's vessel and shipped to Florida. When the appellee received the loaded container, X-Cell would provide the appellee with its shipping documents from which the appellee would complete a bill of lading. X-Cell usually did not receive a copy of the bill of lading until after the jackets have been shipped.

The parties agreed that COGSA, 46 USC § 1300, governs the resolution of the extent of the appellee's liability. The pertinent section of COGSA regarding a carrier's liability (46 USC § 1304(5) (1997)) provides:

Neither 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, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.

However, as COGSA does not define 'package', the issue was whether individually wrapped jackets or containers in which the jackets were packed constituted a package for the purposes of COGSA.

The trial Court granted summary judgment and determined that the container was the COGSA package and not the individual jackets. Dissatisfied, the appellants appealed to the District Court of Appeal of Florida, Fourth District.

Held: Summary judgment reversed. Action remanded for further proceedings.

The issue of whether individually wrapped jackets or containers in which the jackets were packed constituted a COGSA package was an issue of material fact precluding summary judgment.

Referring to decisions of the Court of Appeals for the Eleventh Circuit, the Court stated that a COGSA package is defined as 'a class of cargo, irrespective of size, shape or weight, to which some packaging preparation for transportation has been made which facilitates handling, which does not necessarily conceal or completely enclose the goods'. The Court looks first to parties' intent as evidenced in the bills of lading, particularly the section that provides the number of packages being shipped. If a shipper places packages of goods in a container furnished by the carrier and discloses the number of packages in the container to the carrier in the bill of lading or otherwise, each package or unit within the container constitutes one COGSA package. However, if either the bills of lading or the shipper's invoice fails to place the carrier on notice of the number of packages the shipper intends to ship, then the following two rules apply to determine the applicable COGSA package:

(1) when a bill of lading discloses the number of COGSA packages in a container, the liability limitation of section 4(5) applies to those packages; but (2) when a bill of lading lists the number of containers as the number of packages, and fails to disclose the number of COGSA packages within each container, the liability limitation of section 4(5) applies to the containers themselves.

The number of packages declared must be clearly indicated in the number/quantity column in the bill of lading. If the bill of lading refers to both the container and 'other units susceptible of being COGSA packages', it is 'inherently ambiguous'. Any ambiguities in the bill of lading are construed against the carrier, requiring the court to consider the shipper's documents where they are 'the next most reliable source of information [and] should give some clear indication that more than one package is being shipped in order to claim multiple losses'.

On the facts, there was no clear indication on the appellant's part that the container was considered the package. Substantial evidence indicated that the container was not the COGSA package. The bill of lading referred both to the container and the number of jackets shipped. The appellee admitted that the bill of lading was completed based upon the information contained the appellant's shipped invoices, which clearly indicated each jacket as a package. Knowing that the appellant considered each jacket a package from the appellant's shipping invoices, the appellee's use of the term 'units' in the bills of lading rather than 'packages' could be considered a self-serving description. 46 USC § 1303(3) (1997) requires the carrier, after receiving a shipper's goods and upon the shipper's demand, to issue to the shipper a bill of lading indicating, among other things, the number of packages or pieces as 'furnished in writing by the shipper'. Finally, the appellants offered other evidence of their ten-year relationship and course of dealing with the appellee that would support the appellants' contention that the individually wrapped jackets were COGSA packages.