The shipper contracted with the carrier to ship a load of seamless rolled steel tubes from Bilbao, Spain, to the US. The cargo was loaded onto the carrier's lash barge and the carrier issued clean bills of lading. This barge was to be loaded onto the next available carrier's parent vessel to call at Bilbao. The shipper was notified that the parent vessel would call at Bilbao later than the shipper expected. Facing deadlines for the cargo, the shipper decided to make other arrangements.

A stevedore chosen and hired by the shipper unloaded the cargo from the lash barge. The unloading process took place during inclement weather and the cargo was stored in the open air, while wet, for several days until it was loaded onto the vessel M/V Risan. The bills of lading issued at that time noted some damage to the cargo.

Subsequently, the shipper brought this action against the carrier for the damage caused to the cargo. The carrier argued that the damage was caused by the shipper's agents and that there was no evidence to show that the carrier in any way caused the damage. Thus, the carrier was exempt from liability under ss 1304(2)(i) and (q) of the US Carriage of Goods by Sea Act (46 USC §§ 1300 ff) (COGSA) [equivalent to arts 4.2.i and 4.2.q of the Hague Rules].

The shipper contended that these s 1304(2) defences are unavailable to the carrier because the damage to the goods arose out of the unloading of the pipe. Section 1303(2) of COGSA (representing art 3.2 of the Hague Rules) states that 'the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried'. These duties are non-delegable because s 1303(8) of COGSA (representing art 3.8 of the Hague Rules) provides that 'any clause, covenant, or agreement in a contract of carriage' which seeks to relieve the carrier of liability for the duties provided in this section will not be valid.

The District Court found that the carrier had successfully made out a defence under s 1304(2)(q) of the COGSA that the damage was caused by the actions of the shipper's agents and without the fault or negligence of the carrier. The shipper appealed.

Held: The District Court judgment is affirmed.

Both parties agree that this dispute is governed by COGSA, which regulates the rights and liabilities arising out of the carrier's issuance of a bill of lading regarding cargo damage or loss. To enforce their respective rights under COGSA, litigants must engage in the ping-pong game of burden-shifting mandated by ss 1303 and 1304 of the COGSA. Initially, a shipper plaintiff establishes a prima facie case by proving that the cargo for which the bill of lading was issued was loaded in an undamaged condition, and discharged in a damaged condition. For the purpose of determining the condition of the goods at the time of receipt by the carrier, the bill of lading serves as prima facie evidence that the goods were loaded in the condition therein described.

Once the shipper has presented a prima facie case, the burden shifts to the carrier to prove that it either exercised due diligence to prevent the damage or that the loss was caused by one of the exceptions set out in s 1304(2) of COGSA. If the carrier rebuts the shipper's prima facie case with proof of an excepted cause listed in s 1304(2)(a)-(p), the burden returns to the shipper to establish that the carrier's negligence contributed to the damage or loss. Then, if the shipper is able to establish that the carrier's negligence was a contributory cause of the damage, the burden switches back to the carrier to segregate the portion of the damage due to the excepted cause from that portion resulting from the carrier's own negligence.

In addition to the excepted causes listed in s 1304(2)(a)-(p), a carrier may rebut a shipowner's prima facie case by relying on the catchall exception in s 1304(2)(q). This section provides that the carrier may exonerate itself from loss from any cause other than those listed in s 1304(2)(a)-(p) by proving that the loss or damage occurred 'without the actual fault and privity of the carrier'. The burden on the carrier under this section, however, is more than merely a burden of going forward with evidence; rather, it is a burden of persuasion with the attendant risk of non-persuasion. Hence, under this section, the burden of proof does not switch back to the shipper, but rather judgment must hinge upon the adequacy of the carrier's proof that it was free from any fault whatsoever contributing to the damage of the goods entrusted to its carriage.

COGSA was designed to void overreaching clauses inserted by carriers in bills of lading unreasonably limiting the carrier’s liability. Section 1303(8) embodies this purpose by invalidating 'any clause, covenant or agreement in a contract of carriage' which seeks to relieve the carrier of liability for the duties assigned to the carrier under the statute. However, in this case, there was no overreaching contract provision in the bill of lading that the carrier was resorting to in order to exonerate itself.

Instead, the carrier was relying on two defences, ss 1304(2)(i) and (q), specifically extended to carriers under the Act itself. There was no conflict in the Statute with applying these two defences even to the nondelegable duties of the carrier. Other federal courts have done so without comment.

The carrier could escape liability under the defence provided in s 1304(2)(i) by carrying its burden of proof that the damage did not occur because of its own acts: Associated Metals & Minerals Corp v MV Arktis Sky 978 F2d 47 (2d Cir 1992) (CMI1603). Proving that the loss herein did not occur because of its own acts was exactly what the carrier attempted to do. While s 1303(8) would bar a provision in the bill of lading shifting liability for the duties set out in s 1303(2), it does not bar a defence under s 1304(2)(i) or (q) that attempts to prove that the damage did not occur through any act of the carrier or its agents.

There was no evidence to conflict with the carrier’s affidavit that the damage was caused by the actions of the stevedores hired by the shipper. Therefore, the shipper had failed to designate specific facts demonstrating the existence of a genuine issue of material fact on this issue.