Circuit Zone Ltd (Circuit Zone) contracted with FEI Logistics Inc (FEI), a freight forwarding company, to move cargo from the United States to Trinidad. FEI leased space for the cargo in a warehouse in Florida owned by Millenium Logistics (Millenium) and contracted the services of SeaTruck Inc (SeaTruck) to transport the container to its final destination. On 19 November 2009, a truck driver, claiming to be a SeaTruck representative, arrived at the warehouse and provided the booking number to identify the container. Millenium proceeded to load the container onto the driver's truck, who then departed with the cargo. Shortly after, SeaTruck provided a second booking number for the same container, informing Millenium to request this second number for delivery. SeaTruck had discovered a security breach that compromised the original number. When the actual SeaTruck driver arrived to receive the cargo, Millenium could not deliver it as the cargo was no longer there. The underwriters of the relevant insurance policy paid Circuit Zone for the cargo loss and subrogated in all its rights.

The underwriters filed a lawsuit against SeaTruck in a state court, raising a single claim for negligence. The defendant removed the case to the District Court, alleging that the plaintiff's claim was pre-empted by the Carriage of Goods by Sea Act 46 USC § 30701 (COGSA), and that the District Court had original jurisdiction over any civil action arising over an act of Congress regulating commerce, such as COGSA. The underwriters then applied to remand the action back to the state court for lack of subject-matter jurisdiction, alleging that COGSA could not apply to tort claims arising before the carrier receives cargo.

Held: The District Court granted the underwriters' motion for remand.

COGSA governs all foreign trade contracts for the carriage of goods by sea to or from the United States. This Act requires the carrier to issue a bill of lading containing certain terms: COGSA § 3, 46 USC 30701; Kawasaki Kisen Kaisha Ltd v Regal–Beloit Corp 130 S Ct 2433, 2440, 177 L Ed 2d 424 (2010) (CMI1455). 'The purpose of COGSA was to achieve international uniformity and to redress the edge in bargaining power enjoyed by carriers over shipper and cargo interests by setting out certain duties and responsibilities of carriers that cannot be avoided even by express contractual provision': Polo Ralph Lauren LP v Tropical Shipping Const Co Ltd 215 F3d 1217, 1220 (11th Cir 2000) (CMI1536). When COGSA applies to an action, it provides the exclusive remedy and completely pre-empts the state law cause of action. By default, COGSA only applies from the time the cargo is loaded onto a carrier's vessel until it is discharged: 46 USC § 30701(e); Crowley Am Transp Inc v Richard Sewing Mach Co 172 F 3d 781, 785 n 6 (11th Cir 1999). However, the parties may agree in the bill of lading to extend its application to cover the pre-loading and post-discharge period.

The prima facie evidence of a contract governed by COGSA is the bill of lading. In this case, no bill of lading was issued. However, the parties agreed that in some circumstances, a bill of lading that would have been issued, such as a standard bill of lading, may still bind the parties: Baker Oil Tools v Delta Steamship Lines Inc 562 F2d 938, 940 n 3 (5th Cir 1977). SeaTruck's standard bill of lading contains a clause paramount providing an extended application of COGSA to the time before the goods are loaded on and after they are discharged from the vessel. The theft of the cargo occurred outside the default loading-to-discharge period of the COGSA application. It was undisputed that COGSA did not apply to the theft by its own terms. SeaTruck relied on the paramount clause contained in the bill of lading providing for the application of COGSA as extending its application to the time of the theft. However, the bills of lading found by courts to extend COGSA to the pre-loading or post-delivery periods have generally found such extension where it was limited to the time when the carrier has actual physical custody of or responsibility for the cargo: Norfolk S Rwy Co v Kirby 543 US 14, 29, 125 S Ct 385, 160 L Ed 2d 283 (2004) (CMI1454); Schramm Inc v Shipco Transp Inc 364 F3d 560, 566 (4th Cir 2004) (CMI1541); Groupe Chegaray/ V De Chalus v P&O Containers 251 F3d 1359, 1364 (11th Cir 2001) (CMI1487); Mannesman Demag Corp v M/V Concert Express 225 F3d 587, 589 (5th Cir 2000); Ins Co of N Am v PR Marine Mgmt Inc 768 F2d 470, 475 (1st Cir 1985).

The emphasis on the carrier's responsibility during the custody of the cargo is appropriate as it provides a practical limit to the contractual extension of COGSA beyond the scope of the carriage relationship which COGSA is meant to protect. Extending the application of COGSA beyond any physical custody of the cargo by the carrier would effectively mean that the claims under this act might arise out of indefinitely earlier factual scenarios, and even when the cargo is clearly within the custody, control, and responsibility of other parties. Even assuming that the parties had contractually extended the application of COGSA beyond the scope of the carriage, the express terms of the bill of lading do not actually extend its application to such a pre-custody period. Federal courts have stated that to extend any application beyond the scope of COGSA is a matter of contract, and, therefore, as a rule adopted by and in a contract, it is modifiable by other terms on the bill of lading: Foster Wheeler Energy Corp v An Ning Jiang MV 383 F 3d 349, 355-56 (5th Cir 2004) (CMI1428).

The clause paramount in the bill of lading also states that COGSA 'shall be extended to apply to Goods moved on deck before the Goods are loaded on and after they are discharged from the Vessel, and throughout the entire time during which the Carrier is responsible for the Goods under the transportation agreement'. This clause contains the temporal scope of the COGSA extension to 'the transportation agreement'. The previous clause defines transportation agreement as 'the receipt, carriage, and delivery of the Goods ... governed by the provisions of the transportation agreement evidenced hereby'. Therefore, while COGSA may apply to any contingency whatsoever, that temporal scope is only extended to pre-loading under the transportation agreement. The pre-loading period covers the 'receipt, carriage, and delivery of the cargo', which implies custody of the cargo. The underwriters have provided at least a significant degree of uncertainty as to the meaning of the terms of the bill of lading. Considering the long-standing principle of contract interpretation that in case of ambiguity, the interpretation should be against the party that drafted the contract, the bill of lading does not extend the application of COGSA to the pre-loading, pre-custody period (assuming that it could even do so).