Tradearbed Inc claimed for damage to a cargo of cold-rolled steel coils carried on the M/V Medi Trader from Bourgas, Bulgaria, to New Orleans, the United States, under a charterparty with Western Bulk Carriers K/S (WBC). The bills of lading noted tears, dents, and minor rust on some of the coils' wrapping. Part of the cargo was found rusted at the destination and was sold at a depreciated value. The existence of condensation in the holds, which can cause rust on moisture-sensitive cold-rolled coils, was proven. The plaintiff filed an action in rem against the vessel, Seafarers Shipping Inc, the owner, Victoria Ship Management Inc, the manager, and Western Bulk Carriers K/S, the time charterer.

The District Court held WBC liable as the sole carrier and ordered it to pay compensation. WBC appealed, alleging that: 1) the plaintiff had failed to prove a prima facie case for damage to cargo; 2) the District Court had erred in calculating the damages, and, in the alternative, had failed to apply the USD 500 limitation per package in the Carriage of Goods by Sea Act 46 USC § 30701 (COGSA); and 3) that it was common, not private carriage, so WBC was not the only party liable.

Held: The Court of Appeals affirmed the decision.

WBC argued that the plaintiff had failed to prove both the receipt of the cargo in good condition and its delivery in a damaged condition. It did not have clean bills of lading, and did not prove the condition of the goods inside the wrappings by other means. The Court stated that clean bills of lading are prima facie evidence of good condition on receipt, and when they are not clean, the Court must look to other evidence to determine their condition: see Steel Coils Inc v M/V Lake Marion 331 F 3d 422, 426, 427 (5th Cir 2003). The District Court noted the defects stated in the bills of lading, but the examination of photographic material showed that those defects were in the hot-rolled coils, rather than the cold-rolled coils. Hence, the plaintiff was not required to do more. As to the evidence of damage at the destination, WBC stated that the plaintiff had not proven the damaged condition of the goods because the coils were not unwrapped in New Orleans, but rather remained packaged until they reached their upriver destination one month later. The Court found that the survey evidence predominantly showed that the coils were already damaged when unloaded in New Orleans.

The appellant's second argument was that the plaintiff failed to prove the cargo's sound market value at discharge, in both its damaged and undamaged states. The amount determined by the District Court was the result of the subtraction of the discounted price from the original price; or the value after mitigation of damages through acceptance of reasonable mitigation. The Court agreed with this criterion, stating that COGSA does not mandate one method of calculating damages, but instead provides the general rules that 'in no event shall the carrier be liable for more than the amount of damage actually sustained': COGSA, § 4(5). Courts typically apply the traditional 'market value rule' to calculate COGSA damages: see BP N Am Petroleum v Solar ST 250 F 3d 307, 312 (5th Cir 2001). The Supreme Court, however, has recognised that there are occasions when it is necessary to use other methods: see Ill Cent RR Co v Crail 281 US 57, 64–65, 50 S Ct 180, 74 L Ed 699 (1930). When the carrier is responsible for damage, it is in no position to complain that the damaged party cannot establish precisely the loss that it caused. The primary object of awarding damages is to indemnify the claimant for damage caused by the carrier's fault, so the inability to prove exact damages is not fatal to the shipper's case. Uncertainty does not preclude recovery: FJ Walker Ltd v M/V Lemoncore 561 F 2d 1138, 1146-47 (5th Cir 1977). The plaintiff submitted invoices and sale confirmations corresponding with the sale contracts, and also evidence of the price that the coils were sold at salvage. An expert opinion stated that the salvage price was fair and reasonable. Hence, the District Court did not err in its calculation of damages.

On the issue of the USD 500 limitation of liability, WBC argued that COGSA applied, either as incorporated in the charterparty, or under the bill of lading. As the charterparty was negotiated between the parties, WBC gave notice and opportunity to the plaintiff to declare the value of the cargo. Moreover, it alleged that the plaintiff was a sophisticated shipper, and was not the type of party that the fair opportunity doctrine was designed to protect. The Court agreed with the Court below that neither the charterparty nor the bills of lading evidenced a fair opportunity to declare a higher value to invoke the limitation of liability. It is necessary to provide further evidence beyond the incorporation of COGSA into the contract of carriage, such as the carrier's giving the shipper a choice of rates and valuation: see Cargill Ferrous Int’l v M/V Medi Trader 513 F Supp 2d 609, 625 (ED La 2007); Couthino Caro Co v M/V Sava 849 F 2d 166, 168, 171 n 6 (5th Cir 1988) (CMI1401). The carrier bears an initial burden of showing that it offered the shipper a fair opportunity to avoid the limitation. This can be made by introducing evidence of a published tariff that 'very carefully gave Shipper a choice of valuations by a choice of precisely definable freight rates': Brown & Root Inc v M/V Peisander 648 F 2d 415, 424 (5th Cir 1981) (CMI1469); Wuerttembergische & Badische Versicherungs-Aktiengesellschaft v M/V Stuttgart Express 711 F 2d 621, 622 (5th Cir 1983).

WB's final argument was that the Court should have treated the carriage as common, not private, and that the bills of lading, not the charterparty, constituted the applicable contract, so that the shipowner would be jointly liable, as its agent had signed the bills of lading. Furthermore, the vessel was engaged in common carriage, because it carried more than one ship’s cargo. The Court held that the charterparty, not the bills of lading, was the relevant contract. The ship carried other cargo on behalf of other shippers; however, the bills of lading specifically incorporated the charterparty. Multiple shipments do not defeat any indication of private carriage that a bill of lading incorporating the terms of a voyage charter may connote: Thyssen Inc v Nobility MV 421 F 3d 295, 297, 305 (5th Cir 2005). The precedents 'require privity of contract of carriage before liability under COGSA arises': Thyssen Steel Co v M/V Kavo Yerakas 50 F 3d 1349, 1353 (5th Cir 1995). WBC was the only charterer signing this contract, and the only party in privity with the plaintiff.