This claim arose from the loss of a cargo of grapes, being transported from Hermosillo, Mexico, to Felixstowe, England. Lozen International LLC (Lozen) contracted with Sea-Land Service Inc (Sea-Land) for the transportation. The containers were taken by truck from Hermosillo to Long Beach, California, where they were to be loaded on a train to Elizabeth, New Jersey, and from there they were to be loaded on the Mathilde Maersk to be taken to Felixstowe. Instead, Sea-Land's railroad agent placed the containers on the wrong train in California. As a result of the delay, Lozen elected to dispose of the grapes locally in the United States. Sea-Land claimed for the full amount under its bill of lading terms. Lozen counter-claimed for loss and damages due to Sea-Land's failure to timely deliver. Sea-Land's claim was mutually settled and Lozen's claim was summarily adjudged in favour of Sea-Land. Lozen appealed.

Held: The District Court’s judgment is reversed and the case is remanded for further investigation.

Lozen argued that the District Court was wrong in applying the Carriage of Goods by Sea Act (COGSA), 46 USC ss 1300 ff. Instead, the Court should have applied either the Carmack Amendment or the Harter Act, 46 USC ss 190 ff. COGSA applied to 'every 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'. The evidence justified a conclusion that the terms printed on Sea-Land's bills of lading controlled the relationship of the parties. Lozen argued that because Sea-Land was hired to transport the containers of grapes from Hermosillo, Mexico, to Felixstowe, England, the District Court erred in holding that COGSA applied to the shipment: see People’s Ins Co of China v MV Damodar Tanabe 903 F 2d 675 (9th Cir 1990), which held COGSA inapplicable to a shipment from Chile to China, despite the fact that the ocean carrier made a scheduled stop in Hawaii. Lozen's point was correct but, in the circumstances, it was incomplete. Even though COGSA did not apply by its own force to the shipment, Sea-Land's bills of lading contained a clause paramount which explicitly incorporated COGSA into the contract. Such clauses were upheld in earlier cases: see Institute of London Underwriters v Sea-Land Serv Inc 881 F 2d 761 (9th Cir 1989) (CMI1437). Accordingly, the District Court did not err in holding that COGSA applied as a matter of contract.

The District Court properly concluded that no other statute applied. The Carmack Amendment is inapplicable because that statute determines carrier liability only for transportation in the United States. Lozen's containers were to be shipped from Mexico to England. Lozen's reliance on Neptune Orient Lines Ltd v Burlington Northern & Santa Fe Railway Co 213 F 3d 1118 (9th Cir 2000) was inapposite because the goods, in that case, were shipped from Jakarta, Indonesia, to Memphis, Tennessee in the United States. For a similar reason, the Harter Act did not apply to the shipment at issue. To the extent that the Harter Act governed international shipments leaving from, or entering US ports, it was superseded in 1936 by COGSA. The Harter Act therefore only governed domestic trade: see N River Ins Co v Fed Sea/Fed Pac Line 647 F 2d 985 (9th Cir 1981) (CMI1793); Sunkist Growers Inc v Adelaide Shipping Lines Ltd 603 F 2d 1327 (9th Cir 1979). It is well recognised that the Hague Rules, through COGSA, have superseded the Harter Act with respect to foreign trade: see N River Ins Co 987.

Lozen argued that the delay caused by Sea-Land's railroad agent constituted an unreasonable deviation as it was intentional. This debarred Sea-Land or its agent from claiming package limitation by using the liberty given in cls 3 and 4 of the bills of lading.

Clause 3 stated:

Carrier shall have the right, without notice, to substitute or employ a vessel, watercraft, or other means rather than the vessel named herein to perform all or part of the carriage.

Clause 4 stated:

Goods shut out or not loaded on a vessel for any reason can be forwarded on a subsequent vessel or by feederships, lighters, aircraft, trucks, trains or other means in addition to the ocean vessel, or its substitute, to accomplish the carriage herein.

'A deviation is defined, under admiralty law, as a voluntary departure without necessity, or any reasonable cause, from the regular and usual course of the voyage. In order for a deviation to be unreasonable, the carrier must have caused the damage intentionally. Even when a carrier's behaviour can be termed as constituting gross negligence or recklessness, it would not constitute unreasonable deviation': see Vision Air Flight Serv Inc v MV National Pride 155 F 3d 1165 (9th Cir 1998) (CMI1577), quoting Constable v National SS Co 154 US 51 S Ct 1062 (1894). Even after Sea-Land informed its railroad agent of the delay caused by the misrouting error, the agent refused to co-operate for return of the containers. Thus, it was clear from the evidence that the agent intentionally caused the damage that Lozen suffered. There was, therefore, a genuine issue of fact as to whether the agent committed an unreasonable deviation. The liberty clauses in Sea-Land's bills of lading did not unequivocally insulate it from liability. Although these provisions were generally enforceable, a liability limitation in a bill of lading is unenforceable to the extent that it authorises the carrier to engage in an unreasonable deviation: see Yang Mach Tool Co v Sea-Land Serv Inc 58 F 3d 1350 (9th Cir 1995).