Underwood Cotton Co Inc (Underwood) sued Hyundai Merchant Marine (America) Inc, and Hyundai Merchant Marine Co Ltd (collectively, Hyundai). Underwood claimed that it had sold cotton to Cosan USA Supply Co Inc (Cosan). Thereafter, Underwood delivered the cotton to Hyundai. Hyundai was to ship the cotton from Texas, USA, to Taiwan. Hyundai agreed that it would issue bills of lading for the cargo. Cosan was to pay for the cotton when Underwood presented those bills of lading. However, after Underwood delivered the goods to Hyundai on 7 January 1998, Hyundai gave receipts to Underwood, but then issued the bills of lading to Cosan. Underwood protested, notified Hyundai that it was the true owner of the cotton, and demanded that Hyundai refrain from delivering the cotton to Cosan. Hyundai ignored those protestations, carried the cargo over the sea to Taiwan, and on 28 February 1998, delivered the cotton to Cosan's consignee. Cosan never paid.

Underwood did not bring its action until 25 February 2000. Hyundai moved for judgment on the pleadings, arguing that the action was time-barred. At first instance, the District Court agreed with Hyundai, granted Hyundai judgment on the pleadings, and dismissed the action. This was because the US Carriage of Goods by Sea Act, 46 USC ss 1300 ff (COGSA) applied. COGSA barred Underwood's action based upon the Federal Bill of Lading Act (49 USC ss 80101 ff) (the Pomerene Act) because the action was not commenced 'within one year after delivery of the goods or the date when the goods should have been delivered' (COGSA s 1303(6)). The Pomerene Act is a recodification (without substantive change) of the old Pomerene Act (albeit with a different name), which formerly appeared at 49 USC ss 81 ff and to which COGSA itself still refers (46 USC s 1303(4)). The Pomerene Act contains no time bar. COGSA's time bar provision (COGSA s 1303(6)) states, in pertinent part, that:

… In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered …

The question on appeal was whether COGSA's time bar applied to Underwood's claim that Hyundai improperly issued a bill of lading and then delivered the goods to the holder of that document. A related issue was the reconciliation of two provisions in COGSA. Under 46 USC s 1300, COGSA states:

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, shall have effect subject to the provisions of this chapter.

Meanwhile, 46 USC s 1303(4) states:

Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraphs (3)(a), (b), and (c), of this section: Provided, That nothing in this chapter shall be construed as repealing or limiting the application of any part of sections 81 to 124 of Title 49 [ie the Pomerene Act].

(emphasis in original).

Underwood argued that 46 USC s 1303(4) was to be read broadly. Meanwhile, Hyundai argued that the COGSA time bar is a statute of repose as opposed to a mere statute of limitations.

Underwood argued alternatively that it should not be bound by COGSA because it did not receive a bill of lading in the first place.

Held: Judgment affirmed.

The COGSA time bar applies to claims under the Pomerene Act when those claims are with regard to a bill of lading issued for the carriage of goods by sea. COGSA's time bar sets forth a time within which an action against the ocean carrier must be commenced, if those provisions are to be enforced, and limits the time available to assert the Pomerene Act in court. No part of the Pomerene Act is repealed, and application of its terms is not limited. The proviso in 46 USC s 1303(4) simply seeks to give the Pomerene Act priority in case there is some direct conflict that might tend to dilute its provisions. But there is no risk of that in this instant case. Thus 46 USC s 1303(4) must be construed narrowly. It does not limit the application of COGSA's time bar to a claim, even if that claim is brought solely under the Pomerene Act.

Logic alone is not the only way to resolve conflicts between COGSA and the Pomerene Act. Logic can be complemented by history, good sense, and the need for a workable commercial answer. It would be odd if COGSA did not affect rights flowing from or connected to a bill of lading on outgoing shipments, with all rights and duties depending on only the Pomerene Act because a transaction covered by a bill of lading could not be subjected to COGSA. Congress did not intend that result. COGSA does apply to bills of lading involving ocean transport to or from United States ports: Sea-Land Service Inc v Lozen International LLC 285 F 3d 808, 816-17 (9th Cir 2002) (CMI1825). Further, each of the COGSA defences at 46 USC s 1304 can limit the rights that a holder of a bill of lading might otherwise have. By applying the COGSA time bar, Congressional intent is implemented in the most reasonable way.

There is no need to resolve the question of whether COGSA s 1303(6) is a statute of limitations or a statute of repose because the distinctions between the two make no difference in this case. If COGSA s 1303(6) is a mere statute of limitations, it would seem more clear that it does not repeal or limit any part of the Pomerene Act because, in theory, a statute of limitations does not take away rights, as such. Rather, it merely precludes the plaintiff from proceeding if the statute of limitations defence is raised. It can be said that, although the plaintiff was not diligent enough, the right (moral or legal) goes on, but the plaintiff simply cannot go to court to enforce it. See eg Chase Securities Corp v Donaldson 325 US 304, 313-16 (1945); Classic Auto Refinishing Inc v Marino (In re Marino) 181 F 3d 1142, 1145-46 (9th Cir 1999). In contrast, a statute of repose has a more substantive effect, because it can bar a suit even before the cause of action could have accrued, or, for that matter, retroactively after the cause of action has accrued. See Lyon v Agusta SPA 252 F 3d 1078, 1084-85 (9th Cir 2001). In proper circumstances, it can be said to destroy the right itself: see William Danzer & Co v Gulf & SIR Co 268 US 633, 637 (1925). It is not concerned with the plaintiff's diligence; it is concerned with the defendant's peace: Lyon 1084. A statute of repose can be said to have a greater theoretical effect upon rights affected by it.

The COGSA time bar has been called 'substantive', although perhaps in a different sense: see Vimar Seguros y Reaseguros SA v M/V Sky Reefer 515 US 528, 535 (1995) (CMI1767). Moreover, it has been said to resemble a statute of repose. See Servicios-Expoarma CA v Industrial Maritime Carriers Inc 135 F 3d 984, 988-89 (5th Cir 1998). In some ways the COGSA time bar provision does read like a statute of repose because it speaks of discharge of liability of the carrier rather than as a restriction on the commencement of an action to recover. However, it has a very short time bar, and one typically expects to see a longer period in true statutes of repose. Moreover, in some sense COGSA, like a statute of limitations, appears to focus on the date when the harm in question was inflicted (the delivery of damaged goods or the failure to deliver goods) as opposed to a more neutral date, like the date of sale of a manufactured item, which could have occurred long before any cause of action could even possibly have accrued.

Like any other statutes of limitation or repose, COGSA's time bar would have the effect of limiting a party's rights under the Pomerene Act in the sense that after the passage of time they will be unenforceable. Still, it is difficult to believe that Congress wished to leave the enforcement of rights under the Pomerene Act subject to no time limits whatsoever. That is especially difficult to accept in the fast moving area of international trade, where certainty and finality have a very high priority. Beyond that, the Pomerene Act contains no specific provision that COGSA's time bar can be said to repeal, or even conflict with, and Congress did not suggest that limitation of the time during which an action touching the Pomerene Act could be brought was its concern when it enacted the proviso. On the contrary, legislative history touching on the proviso shows that Congress's real concern was to assure that COGSA would not, somehow, dilute a carrier's liability for what it placed on the bill of lading when issuing it. The Pomerene Act was at great pains to eliminate the wrongs that could be perpetrated if carriers were not bound to the terms of the bills of lading they issued, and Congress did not wish to see holes picked in the shield that Act had created: see Portland Fish Co v States SS Co 510 F 2d 628, 632 nn 8-9 (9th Cir 1974). COGSA's time bar picks no such hole.

Moreover, there is very little virtue in a system wherein many claims against carriers and related to ocean bills of lading would be subject to COGSA's time bar, while some undefined group of other claims would be subject to some as yet unknown statute of limitations. The more harmonious reading is one that would apply COGSA's time bar to the Pomerene Act in accordance with the declaration in 46 USC s 1300. This reading also has the advantage of simplicity and certainty.

In Western Gear Corp v States Marine Lines Inc 362 F 2d 328 (9th Cir 1966), goods were shipped from Seattle, Washington, USA, under an ocean bill of lading, but were not delivered pursuant to that bill because the goods had been washed overboard in transit. They were recovered, repaired, and delivered by a different vessel under a later bill of lading. The action against the first shipper was held to be barred by the COGSA time bar: Western 329, 331. That was true, even though the Pomerene Act requires the carrier to deliver goods covered by a bill of lading upon demand by the holder thereof: see 49 USC s 80110; Servicios-Expoarma 986-87. Many cases have applied COGSA's time bar to bill of lading cases involving shipments from foreign ports. See eg Barretto Peat Inc v Luis Ayala Colon Sucrs Inc 896 F 2d 656, 659-61 (1st Cir 1990) (goods delivered without obtaining bill of lading from recipient, cf 49 USC ss 80110-80111); Instituto Cubano de Estabilizacion del Azucar v T/V Golden W 246 F 2d 802, 803-04 (2d Cir 1957) (goods short of listing on bill of lading, cf 49 USC s 80113(a)). It would be odd if COGSA's time bar applied in all of these situations, but not to outgoing bills of lading. Thus, the decision in this instant case reconciles 46 USC ss 1300 and 1303(4), while properly dovetailing COGSA with the Pomerene Act.

Finally, there is nothing about this reconciliation of COGSA's provisions that will impair the negotiability of bills of lading themselves, or otherwise undermine the Pomerene Act's central concerns. Nothing will tend to undercut the requirement that the carrier is responsible for what it puts on the bill of lading. Rather, there is simply a requirement that an action to enforce whatever rights the shipper might have against the carrier be brought within a certain time. All parties can look to a single filing period as far as a claim against an ocean carrier is concerned. Such simplicity and certainty helps to assure the smooth trade relations that both COGSA and the Pomerene Act were designed to foster.

Underwood's argument that it should not be bound by COGSA because it did not receive the bill of lading in the first place (although it should have) makes little difference here. This is an insignificant argument because Underwood does assert rights pursuant to the law that surrounds bills of lading, and where ocean carriage and an action against the carrier are concerned, that includes the effect of COGSA. Surely Underwood was not misled in that respect. It was well aware of the nature of the transaction in question, and cannot use the misissuance of the bill of lading (if it was misissued) and the misdelivery of the goods (if they were misdelivered) as a way of evading the effect of COGSA: see Stolt Tank Containers Inc v Evergreen Marine Corp 962 F 2d 276, 277, 279 (2d Cir 1992) (CMI1866). Because Underwood is undeniably suing pursuant to the Pomerene Act itself, it cannot simultaneously argue that COGSA's filing period should not apply in this instance.

Separately, the Court rejected Underwood's attempt to raise two new issues on appeal: a so-called tackle-to-tackle issue and an intentional misdelivery issue.

Reed DJ wrote a concurring opinion expressing the view that by simply applying canons of statutory construction, the following conclusion can be reached: COGSA's proviso against 'repealing' or 'limiting' the Pomerene Act does not preclude application of COGSA's time bar to Underwood's claims. Reed DJ indicated that the analysis begins and ends with application of general rules of statutory construction, and that there is no need to go any further. While Reed DJ agreed with the ultimate conclusion of this instant case, Reed DJ was unconvinced that interpreting 46 USC s 1303(4) broadly to say that the Pomerene Act stands not in the shadow of COGSA, but on equal footing beside it, would create the disharmony in the shipping trade that the majority fears. First, it is common practice for carriers to expressly incorporate all of COGSA's strictures (including its restrictions and defences) in bills of lading. It is unlikely that carriers will face uncertainty as to what statutory limitations will be applicable to a claim for damages: Sea-Land Service Inc 817. Second, Congress can easily rectify any situation that would undermine COGSA's force. Third, the requirements for bringing a Pomerene Act claim are well-settled: 49 USC ss 80101-80116. The class of claims subject to the danger of being free from COGSA's numerous restrictions and defences would not be 'undefined'.

Reed DJ stated that statutory construction begins with 'the language of the statute', and when interpreting the statutory text, the court is to 'consider not only the bare meaning of the word but also its placement and purpose in the statutory scheme': Bailey v United States 516 US 137, 144, 145 (1995). Where the plain language of a statute is ambiguous, a court may go beyond the words of the statute and examine the legislative history that may explain or elucidate it. In examining the legislative history of a statute, however, the court is to determine the intent of the legislature, 'not to rewrite the statute based on our notions of appropriate policy': United States v Davidson 246 F 3d 1240, 1246 (9th Cir 2001). Reed DJ then made the following three points. First, by looking at the language of 46 USC s 1303(4) alone, the one-year statute of limitations under COGSA would limit a claim under the Pomerene Act, because under the Pomerene Act no such limit exists. Secondly, however, the scope of the proviso becomes less clear when the reader looks further to the purpose and placement of the text. 46 USC s 1303(4) is entitled 'bill as prima facie evidence' and is part of 46 USC s 1303, where the responsibilities of the carrier are spelled out. Thus, on the one hand, the proviso states that COGSA is not meant to affect the application of any section of the Pomerene Act. On the other hand, that it appears as a clause qualifying a specific COGSA provision regarding the evidentiary value of a bill of lading, casts doubt as to whether Congress intended it to uniformly except a Pomerene Act claim from any and all of COGSA's limitations or whether it was meant to merely preserve the Pomerene Act with respect to the clause under which it was placed in s 1303(4). Thirdly, to resolve this ambiguity, the reader turns to the second stage of statutory analysis, that is, whether legislative history can clarify the intended meaning of the text. Although legislative history on COGSA is scant, it is useful to reconcile the contradictions faced here. The limitation in s 1303(4) regarding the Pomerene Act was offered as an amendment to COGSA. The Senate Committee Report accompanying the bill (reprinted in Michael F Sturley (ed), The Legislative History of the Carriage of Goods by Sea Act and the Travaux Preparatoires of the Hague Rules, vol 1 (FB Rothman 1990) 531, 532) states:

The foregoing amendment is intended to preserve in effect the provisions of the Pomerene Act which hold a carrier liable for receipt of goods signed for by its representatives even though they may not actually have been received, this provision of the Pomerene Act having been found necessary to prevent abuses that were being practiced with damage resulting due to the negotiable character of the bill of lading.

...

Prior to the enactment of the Pomerene Act a number of cases had arisen in which shippers had induced representatives of common carriers to sign bills of lading receipting for illustration for a certain number of bales of cotton, on the shipper's assurance that the cotton would later be delivered to the carrier. The shipper would then dispose of the bill of lading through the usual discounting procedure.... The courts held the fact that the goods had not actually been received to be an adequate defense to relieve the common carrier of liability. This loophole led to frauds on a large scale until the Pomerene Act finally made them impossible.... All interests concerned appear to agree upon the importance of preserving this effect of the Pomerene Act.

Thus when Congress added the proviso regarding the Pomerene Act, Congress meant to preserve a specific provision of the Act that makes a carrier liable for damages caused by 'nonreceipt by the carrier of any part of the goods by the date shown in the bill or by failure of the goods to correspond with the description contained in the bill' (49 USC s 80113(a)). This mandate has remained a strong component of the law to determine a carrier's liability for damaged goods, even when the carrier claims that it never received the goods reflected in the bill of lading, or where it claims that the bill of lading misdescribed the goods: Portland Fish Co v States Steamship Co 510 F 2d 628, 632 n 8 (9th Cir 1974). The legislative history adequately resolves the conflict between the two statutes. What was on Congress' mind was the preservation of the validity of the terms contained in a bill of lading, regardless of their accuracy. There is no mention of keeping the Pomerene Act free of COGSA's statute of limitations or any of the other defences for which COGSA provides: see eg 46 USC ss 1304(2)(a)-(q).