United States v. Ocean Bulk Ships, Inc.

Revised May 3, 2001
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 00-20117
UNITED STATES OF AMERICA,
Plaintiff - Appellant-Cross-Appellee,
VERSUS
OCEAN BULK SHIPS, INC.; TRANSBULK CARRIERS,
Defendants - Appellees-Cross-Appellants.
M/V OVERSEAS HARRIETTE, its engines, tackle, etc.,
in rem; M/V OVERSEAS MARILYN,
Defendants - Appellees.
----------------------------------------
UNITED STATES OF AMERICA,
Plaintiff - Appellant-Cross-Appellee,
VERSUS
OCEAN BULK SHIPS, INC., in personam,
Defendant - Appellee-Cross-Appellant,
M/V OVERSEAS HARRIETTE, its engines, tackle, etc., in rem,
Defendant - Appellee.
--------------------------------------
UNITED STATES OF AMERICA,
Plaintiff - Appellant-Cross-Appellee,
VERSUS
OCEAN BULK SHIPS, INC., in personam,
Defendant - Appellee-Cross-Appellant,
M/V OVERSEAS MARILYN, its engines, tackle, etc., in rem,
Defendant - Appellee.
-------------------------------------
UNITED STATES OF AMERICA,
Plaintiff - Appellant-Cross-Appellee,
VERSUS
OCEAN BULK SHIPS, INC., in personam,
Defendant - Appellee-Cross-Appellant.
Appeals from the United States District Court
For the Southern District of Texas
April 10, 2001
Before KENNEDY,1 JONES and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
1
Circuit Judge of the Sixth Circuit, sitting by designation.
2
This appeal involves loss and damage to five separate famine
relief shipments made by the United States of America (the United
States) to certain African ports. Plaintiff-shipper, the United
States appeals a final judgment awarding only limited damages in
the amount of $7,300.08 on its claims for cargo loss and damage in
the amount of $203,319.87 under the Carriage of Goods by Sea Act
(COGSA), 46 U.S.C. §§ 1300-1315. The United States asks this Court
to vacate the district court's limited judgment and to render
judgment in favor of the United States for the full extent of its
damages. Defendants-carriers (defendants) cross-appeal, arguing
that the United States failed to establish a prima facie case of
loss or damage and that the United States failed to submit
competent proof to support the damages claimed. Having reviewed
the record, the arguments of the parties, and the relevant law, we
vacate the district court's judgment awarding $7,300.08 and render
judgment in favor of the United States in the amount of $203,319.87
plus prejudgment interest.
I.
Between 1994 and 1996, the United States, through its
Commodity Credit Corporation (CCC), and with the assistance of
several private relief organizations, shipped cargoes to famine-
stricken areas of Africa on behalf of the Agency for International
Development (AID). The cargoes were shipped under various charter
parties made expressly subject to COGSA on the M/V OVERSEAS
3
HARRIETTE and the M/V OVERSEAS MARILYN, vessels owned by the
defendants, Ocean Bulk Ships, Inc., and Transbulk Carriers, Inc.
The shipments included a variety of foodstuffs such as vegetable
oil, corn, and bulgur wheat, which were shipped to the African
ports of Mombasa, Kenya; Beira and Maputo, Mozambique; Freetown,
Sierra Leone; and Tema, Ghana. Clean bills of lading were issued
for each shipment after the cargo was stowed, indicating that the
cargo was received by the carrier in good condition.
Unfortunately, the goods were not received in the same quantity or
quality when discharged in Africa. Survey reports documenting the
loss and damage indicated several problems. Some parts of the
cargo were simply not received at all. Some parts of the cargo
were received in a damaged and unusable condition. For example,
bags were torn and spilled, and some of the cargo was wetted and
rotten. The total amount of documented loss and damage to the
cargo was $203,319.87.
In December 1998, the United States filed the first of five
lawsuits, seeking damages for the lost and damaged cargo under
COGSA. In February 1999, these suits were consolidated. In
September 1999, the matter was tried to the bench. In December
1999, the district court entered judgment in favor of the United
States for the limited sum of $7,300.08, the amount of damage that
the defendants admit occurred prior to discharge. This appeal
ensued.
4
II.
When COGSA was enacted in 1936, one of its express purposes
was 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.” 2 Thomas J. Schoenbaum, Admiralty and
Maritime Law § 10-15 (3d ed. 2001) (citing 46 U.S.C. § 1303(8)).
COGSA applies to “all contracts for carriage of goods by sea to or
from ports of the United States in foreign trade.” 46 U.S.C.
§ 1312. The provisions of COGSA are not generally applicable to
charter parties. Id. § 1305. A shipper and carrier may agree,
however, to a “Clause Paramount” by which the terms of COGSA are
incorporated into a charter party. Schoenbaum, supra, § 10-15, at
89 & n.6. In this case, the charter agreements, shipping
contracts, and bills of lading contain clauses making the shipments
subject to the terms of COGSA. Thus, the parties agree that COGSA
governs the resolution of this dispute.
COGSA sets up a “complex system of shifting burdens and
accompanying presumptions of liability.” Id. § 10-23, at 115.
This use of presumptions and shifting burdens of proof “predates
the statutory schemes of liability” and is “thus rooted in strong
policy considerations” specific to the context of cargo loss. Most
of these rules developed to alleviate the perceived unfairness of
certain common law rules requiring a shipper to conclusively prove
5
the cause of cargo loss or damage notwithstanding the fact that the
circumstances surrounding the loss or damage were primarily
accessible to the defendant-carrier. Id. Those policy
considerations are evident in COGSA's current statutory scheme,
which shifts the burden of proof “more frequently than the winds on
a stormy sea.” Id.; see also Tubacex, Inc. v. M/V Risan, 45 F.3d
951, 954 (5th Cir. 1995) (characterizing COGSA's statutory scheme
as a “ping-pong” game of burden shifting). The first stage of
COGSA's statutory framework requires the shipper to establish a
prima facie case of loss or damage 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.” Tubacex, 45
F.3d at 954; see also Quaker Oats Co. v. M/V Torvanger, 734 F.2d
238, 240 (5th Cir. 1984). A clean bill of lading issued by the
carrier to the shipper is prima facie evidence that the goods were
received in an undamaged condition. Shell Oil Co. v. M/T Gilda,
790 F.2d 1209, 1213 (5th Cir. 1986); Blasser Bros., Inc. v. N. Pan-
American Line, 628 F.2d 376, 381 (5th Cir. 1980); see also 46
U.S.C. § 1303(4) (a bill of lading is “prima facie evidence of the
receipt by the carrier of the goods as therein described.”). A
COGSA shipper must also demonstrate damage upon discharge. S.T.S.
Int’l, Ltd. v. Laurel Sea Transp., Ltd., 932 F.2d 437, 440 (5th
Cir. 1991). Damage upon discharge may be established by the report
of an independent cargo surveyor attending the discharge. 46
6
U.S.C. § 1303(6); United States v. Cent. Gulf Lines, Inc., 974 F.2d
621, 624-28 (5th Cir. 1992) (discussing the use of survey reports
to establish loss or damage upon discharge); see also 22 C.F.R.
§ 211.9(c)(1) (requiring that a cargo surveyor attend the discharge
of aid shipments made by the Agency for International Development
or a cooperating sponsor).
A shipper's prima facie case creates a presumption of
liability. See Blasser, 628 F.2d at 382. At that point, the
burden of proof shifts to the defendant-carrier, which must prove
(1) that it exercised due diligence to prevent the loss or damage
to the cargo, 46 U.S.C. § 1304(1), or (2) that the loss or damage
was the result of one of the Act’s enumerated “uncontrollable
causes of loss,” id. at § 1304(2). See also Tubacex, 45 F.3d at
954; Blasser Bros., 628 F.2d at 381.
If the carrier successfully rebuts the shipper’s prima facie
case, then the presumption of liability vanishes and the burden
returns to the shipper to show that carrier negligence was at least
a concurrent cause of the loss or damage to the cargo. Tenneco
Resins, Inc. v. Davy Int’l, AG, 881 F.2d 211, 213 (5th Cir. 1989);
Blasser Bros., 628 F.2d at 382. If the shipper successfully
establishes that the carrier's negligence is at least a concurrent
cause of the loss or damage, then the burden shifts once again to
the carrier, which must establish what portion of the loss was
caused by other factors. Tenneco Resins, 811 F.2d at 211; Blasser
7
Bros., 628 F.2d at 382. If the carrier is unable to prove the
appropriate apportionment of fault, then it becomes fully liable
for the full extent of the shipper's loss. Tenneco Resins, 811
F.2d at 211; Blasser Bros., 628 F.2d at 382.
We review the district court's application of this burden
shifting paradigm and other legal issues de novo. See Mendes Jr.
Int’l. Co. v. M/V Sokai Maru, 43 F.3d 153, 155 (5th Cir. 1995).
The district court's factual findings are reviewed for clear error.
Id.III.
On appeal, the United States claims that it established a
prima facie case by producing clean bills of lading as proof that
the carriers received the goods in an undamaged condition and
survey reports showing that the goods were either missing upon
discharge or were discharged in a damaged condition. Such a
showing is clearly sufficient under COGSA. See, e.g., Quaker Oats,
734 F.2d at 240.
The defendants seek to avoid that conclusion in this case by
arguing that the district court found the survey reports offered by
the United States as evidence of loss or damage to be incredible.
Thus, defendants maintain that the district court did not find
credible evidence establishing the United States' prima facie case.
We disagree. The district court accepted the clean bills of
lading as evidence that the cargo was delivered to the defendants
8
in good condition. The district court did not question the
reliability of the survey reports as tendered to establish loss or
damage to the cargo upon discharge. To the contrary, the district
court accepted the virtually undisputed fact that the cargo was
either lost or damaged upon discharge, and then held that the
defendants were not responsible for the losses, either (1) because
the damage occurring during discharge could have been caused by
third parties, such as the port authority or its agents, see
U.N./F.A.O. World Food Programme v. M/V Tay, 138 F.3d 197 (5th Cir.
1998) (interpreting the statutory exception codified at 46 U.S.C.
§ 1304(2)(q) to permit a carrier to avoid liability when it can
prove that the loss or damage was caused after the carrier
relinquished control of the cargo to a third party that, likewise,
was acting completely beyond the carrier's control), or (2) because
the United States failed to respond to the defendants' suggestion
that improper packaging, an excepted cause under 46 U.S.C.
§ 1304(2)(n), played a role in the loss with evidence that the loss
or damage was caused, at least in part, by negligence attributable
to the carrier. Both of these holdings presume the existence of a
prima facie case, and thus focus upon later stages of the COGSA
burden shifting paradigm.
To the extent that the district court raised any question at
all about the United States' reliance upon the survey reports, that
question was limited to the issue of whether the survey reports
9
were probative on the issue of causation, rather than damage. The
district court referred to language appearing in two of the five
survey reports, stating its opinion that the reports listed several
possible causes without settling upon a single cause as more
probable than another. Thus, the district court suggested that
those two reports standing alone did not tend to establish what
caused that portion of the loss and damage (about 35 percent)
documented in those surveys. The issue of causation, however, and
the shipper's burden to prove concurrent causation in particular,
is not a required element of the shipper's prima facie case and is,
likewise, limited to the later stages of COGSA's burden shifting
framework. For the foregoing reasons, we reject the defendants'
argument that the district court implicitly rejected the United
States' evidence of damage upon discharge and conclude that the
United States satisfactorily established a prima facie case of loss
or damage under COGSA by producing clean on board bills of lading
for each shipment, paired with records unambiguously documenting
that the cargo was either missing or damaged when discharged at the
destination port.
IV.
The United States claims that the carriers failed to rebut its
prima facie case. As set forth above, COGSA lets carriers rebut
the shipper's prima facie case by showing that the facts and
circumstances surrounding the loss fall within one of seventeen
10
statutory exceptions denominated as “uncontrollable causes of loss”
or, more directly, by demonstrating that the carrier exercised due
diligence in its stowage, carriage, and discharge of the cargo.
See 46 U.S.C. § 1304(2). There is considerable controversy, and
even an intra-circuit conflict, as to whether the carrier's
rebuttal burden with respect to most of those exceptions is one of
production or persuasion.
The first sixteen of the seventeen statutory exceptions to
carrier liability set out at 46 U.S.C. § 1304(2) merely provide
that the carrier is not liable for losses or damages caused by one
of the listed causes. In this group are included losses
attributable to such things as an act of God, id. § 1304(2)(d), an
act of war, id. § 1304(2)(e), and the primary exception at issue in
this case, a shipper’s own improper packaging, id. § 1304(2)(n).
The seventeenth exception, § 1304(2)(q), is a catch-all exception,
which states that the carrier is not liable for losses or damages
resulting from “any other cause arising without the actual fault
and privity of the carrier” or its agents. That subsection goes
on, however, to provide that, with respect to § 1304(2)(q), “the
burden of proof shall be on the person claiming the benefit of this
exception” to show that the carrier’s fault or neglect did not
contribute to the loss or damage. Id. § 1304(2)(q). Thus, the
exception codified at § 1304(2)(q) expressly requires that the
11
carrier prove the applicability of the exception, while the
remaining statutory exceptions are silent on the point.
Some Fifth Circuit panels have relied upon the additional
statutory language in § 1304(2)(q) to implicitly place a heightened
burden of proof on the carrier under § 1304(2)(q) and to permit a
more lenient burden under the remaining exceptions. Specifically,
some panels of this Court have required a carrier proceeding under
§ 1304(2)(q) to bear, not just the burden of going forward with
evidence, but the burden of persuasion with respect to any defense
premised upon that subsection. See Tubacex, 45 F.3d at 954-55(“The burden on the carrier under” § 1304(2)(q) “is more than
merely a burden of going forward with evidence, but rather it is a
burden of persuasion with the attendant risk of non-persuasion.”);
Quaker Oats, 734 F.2d at 241 (“The carrier's burden of establishing
his own freedom from contributing fault” under § 1304(2)(q) “is no
mere burden of going forward with evidence, but a real burden of
persuasion, with the attendant risk of nonpersuasion.”) (internal
quotations omitted); see also Westinghouse Elec. Corp. v. M/V
Leslie Lykes, 734 F.2d 199, 207 (5th Cir 1984) (citing In re Ta Chi
Navigation (Panama) Corp., 677 F.2d 225, 229 (2d Cir. 1982), for
the proposition that “[w]hen Congress wanted to put the burden of
proving freedom from fault on a shipowner claiming the benefit of
an exemption, it specifically said so”). Other courts have, in
similar fashion, placed a mere burden of production on a carrier
12
seeking to rebut the shipper’s prima facie case when the catch-all
provision in § 1304(2)(q) was not involved. See, e.g., Sun Oil Co.
v. M/T Carisle, 771 F.2d 805, 811 (3d Cir. 1985) (“Thus, if the
carrier wants to escape liability under COGSA without reference to
a cause specified in section [130]4(2)(a)-(p), it must prove that
its negligence did not contribute to the loss.”); EAC Timberlane v.
Pisces, Ltd., 745 F.2d 715, 719-20 (1st Cir. 1984) (declaring that
§ 1304(2)(q) imposes upon the carrier the “most demanding burden
under maritime law,” that is, the burden of persuasion, whereas
other COGSA exceptions carry “less imposing burdens”); In re Ta Chi
Navigation (Panama) Corp., 677 F.2d at 229 (opining that Congress
intended for shipowners to bear a heightened burden of proof when
relying upon § 1304(2)(q) and refusing to read that burden into
§ 1304(2)(b)); Lekas & Drivas, Inc. v. Goulandris, 306 F.2d 426,
432 (2d Cir. 1962) (refusing to “read the qualification of
[§ 1304(2)](q) into [§ 1304(2)](a)-(p),” because “Congress did not
put it there”); Hecht, Levis & Kahn, Inc. v. S.S. President
Buchanan, 236 F.2d 627, 631 (2d Cir. 1956) (“The language relating
to burden of proof in 46 U.S.C.A. § 1304(2)(q) . . . pretty clearly
refers only to the carrier’s burden of proving that damage comes
within subsection (q) and does not relate to the ‘inherent vice’
exception contained in § 1304(2)(m).”). Under these authorities,
it would seem that once the shipper has proved his prima facie
case, the carrier claiming an exception under § 1304(2)(a)-(p)
13
bears merely a burden of production with respect to establishing
the applicability of one of those exceptions. When, however, the
carrier relies upon § 1304(2)(q), the carrier must bear the
ultimate burden of persuasion with respect to the applicability of
that exception.
The earliest Fifth Circuit decision to address the issue,
however, at least implicitly reaches a different conclusion. In
Waterman S. S. Corp. v. United States Smelting, Refining & Mining
Co., 155 F.2d 687, 691 (5th Cir. 1946), this Court held that a
carrier seeking to avoid liability on the theory that the damages
were caused by perils of the sea, § 1304(2)(c), or latent defects
in the cargo, § 1304(2)(p), bore both the “burden of going forward”
to demonstrate the applicability of the exceptions and “the risk of
non-persuasion.” Id. at 691. The proposition that a carrier bears
both the burden of production and the burden of persuasion with
respect to those exceptions was drawn from Commercial Molasses
Corp. v. New York Tank Barge Corp., 62 S. Ct. 156 (1941). In
Commercial Molasses, the Supreme Court held that “the shipowner, in
order to bring himself within a permitted exception to the
obligation to carry safely, whether imposed by statute or because
he is a common carrier or because he has assumed it by contract,
must show that the loss was due to an excepted cause and not to
breach of his duty to furnish a seaworthy vessel.” Id. at 109.
Furthermore, “since the burden is on the shipowner, [if] he does
14
not sustain it, . . . the shipper must prevail if, upon the whole
evidence, it remains doubtful whether the loss is within the
exception.” Id. The Commercial Molasses court explained that this
burden rests upon the carrier “not in consequence of his being an
ordinary ‘bailee’ but because he is a special type of bailee who
has assumed the obligation of an insurer.” Id. In addition to
Waterman, which has never been overruled, there are decisions by
this Court and others, which either suggest that the carrier bears
the burden of persuasion for all § 1304(2) exceptions or fail to
delineate any difference between the applicable burden for those
exceptions codified at § 1304(2)(a)-(p) and the catch-all exception
codified at § 1304(2)(q). See Shell Oil Co. v. M/T Gilda, 790 F.2d
1209, 1213 (5th Cir. 1986) (“Section [130]4(2)(q) provides that the
carrier has the burden of proving it was not at fault if the cause
of the loss is not listed in § [130]4(2)(a)-(p). 46 U.S.C.
§ 1304(2)(q). Congress therefore could not have intended the
shipper to bear the burden of proving negligence in every case.
Most courts and commentators have concluded from the structure of
§ [130]4(2) that Congress did not intend to place such a burden on
the shipper in any case.”); see also Servicios-Expoarma, C.A. v.
Industrial Mar. Carriers, Inc., 135 F.3d 984 (5th Cir. 1998)
(“[T]he burden rests upon the carrier of goods by sea to bring
himself within any exception relieving him from the liability which
the law otherwise imposes on him.”); Tokio Marine & Fire Ins. Co.
15
Ltd. v. Vessel Sammi Aurora, 903 F.2d 1244, 1246 (9th Cir. 1990)
(“The carrier is not liable for damages arising without its actual
fault, but the burden of proof to show that it was without its
fault rests with the carrier.”); Sony Magnetic Prods., Inc. v.
Marivienti O/Y, 863 F.2d 1537, 1540 & n. 3 (11th Cir. 1989) (noting
that, although the defendant produced evidence that the loss was
caused by a latent defect, an excepted cause under § 1304(p), such
evidence was “inconclusive,” which required the conclusion that the
defendant-carrier failed to sustain its burden of proving the
applicability of the exception).2 In sum, at this time there does
not appear to be any consensus among the circuits, or even in this
circuit, concerning which COGSA party bears the burden of
persuasion (and the risk of nonpersuasion) with respect to the
applicability of the statutory exceptions codified at § 1304(2)(a)-
(p) once the shipper makes out a prima facie case.
The defendants raised two of the seventeen statutory
exceptions in the district court. The defendants' main contention
at trial was that a significant portion of the damage was caused by
the United States' failure to package the goods in a manner
2
We note that, to the extent that Waterman and similar Fifth
Circuit cases constitute a direct holding on the issue of a
defendant-carrier's rebuttal burden under COGSA, those cases are
controlling under the “well-established prior panel precedent rule
of this Circuit,” which provides that “the holding of the first
panel to address an issue is the law of this Circuit, thereby
binding all subsequent panels unless and until the first panel's
holding is overruled by the Court sitting en banc or by the Supreme
Court.” Smith v. GTE, 236 F.3d 1292, 1300 n.8 (5th Cir. 2001).
16
sufficient to survive the voyage. See 46 U.S.C. § 1304(2)(n)
(exonerating carrier from liability for loss or damage caused by
“insufficiency of packaging”). Exception (n) is one of those
exceptions set out at § 1304(2)(a)-(p) as to which the precise
scope of the rebuttal burden is unclear. While we have noted the
apparent conflict or, alternatively, the incomplete resolution of
this issue in our circuit precedent, we are not, in this case,
compelled to decide whether the defendants’ rebuttal burden with
respect to their § 1304(2)(n) defense was one of production or
persuasion. This is so because the defendants failed to produce
competent evidence to meet either standard with respect to their
§ 1304(2)(n) defense.
Without regard to whether the carrier's rebuttal burden under
§ 1304(2)(n) is one of production or persuasion, the law is
absolutely clear that the carrier must do more than offer mere
speculation as to the cause of lost or damaged cargo. Pacific
Employers Ins. Co. v. M/V Gloria, 767 F.2d 229, 241 (5th Cir.
1985); Harbert Int’l Establishment v. Power Shipping, 635 F.2d 370,
375 (5th Cir. 1981) (noting that mere speculation is not an
adequate rebuttal). Indeed, under “the policy of the law,” the
carrier must “explain what took place or suffer the consequences.”
Compagnie de Navigation v. Mondial United Corp., 316 F.2d 163, 170
(5th Cir. 1963); see also The Vallescura, 293 U.S. 296, 303 (1934)
(“[T]he law casts upon [the carrier] the burden of the loss which
17
he cannot explain or, explaining, bring within the exceptional case
in which he is relieved from liability.”); Pacific Employers Ins.
Co., 767 F.2d at 242 (a shipper which has established a prima facie
case is not required to then prove how the damage or loss occurred;
rather, it is for the carrier to come forward with evidence
sufficient to exonerate itself). Even the lesser burden of
production, if applicable to the defendants' § 1304(2)(n) defense,
requires that a COGSA defendant provide more than mere “blanket
assertions about mysterious possible causes” in order to rebut a
COGSA plaintiff's prima facie case. Transatlantic Marine Claims
Agency, Inc. v. M/V OOCL INSPIRATION, 137 F.3d 94, 101-02 (2d Cir.
1998); see also Pacific Employers Ins. Co., 767 F.2d at 242 (when
the “exact cause of the damaged cargo remains a mystery,” the
carrier will be liable, because “any doubts as to the cause of the
loss must be resolved against the carrier”).
To satisfy this burden, defendants relied solely upon survey
reports prepared at discharge. While those reports documented the
quantity and compromised quality of lost and damaged cargo with
some precision, three of the five survey reports failed to provide
even a speculative assessment with regard to the cause of the
missing and damaged cargo. Thus, defendants failed to offer any
probative evidence whatsoever with respect to their § 1304(2)(n)
defense as it relates to those three shipments. The two remaining
survey reports, both involving shipments to Tema, Ghana, included
18
a list of five causes which may have contributed in some way to the
loss, including the use of bags with very thin liners to package a
portion of one shipment to Ghana and the entirety of a second
shipment to Ghana. Together, the losses that can even potentially
be associated with the surveyor's remarks about the packaging of
these shipments is slightly less than one-third of the total loss
claimed by the United States.
With regard to the first shipment to Ghana, as to which the
surveyor's remarks are limited to only one of the commodities
included in the shipment, the survey does not in any way tend to
establish that insufficient packaging, rather than one of the other
listed causes, was the cause of the damage. Clearly, with regard
to this shipment, the surveyor's speculation is insufficient to
meet even a burden of production with respect to establishing their
§ 1304(2)(n) defense. See Pacific Employers, 767 F.2d at 241;
Harbert Int’l Establishment, 635 F.2d at 375.
With regard to the second shipment, the survey report also
includes the surveyor's remark that the portion of the overall
damage attributable to “excessive spilling” during discharge
“occurred due to poor packaging.” This is clearly some evidence
that poor packaging was at least a concurrent cause of some of the
loss and damage arising from this second shipment. This evidence,
however, is likewise insufficient to exonerate the defendants. As
an initial matter, the surveyor's brief comment is not the only
19
record evidence concerning the sufficiency of the packaging. The
United States called Benjamin Myatt, a well-credentialed packaging
expert employed by the Department of Agriculture, who is personally
responsible for the development and specification of packaging
systems used for foreign food assistance programs. Myatt testified
that the cargos were packed in the standard packaging used for
these commodities and that the United States had used the same type
bags to ship 345,000 tons of food commodities the previous year.
Myatt testified that such packaging is subject to rigorous field
and laboratory testing for burst strength and other qualities and
that he had personally observed the discharge of famine relief
cargo packaged in the very same bags without significant problems.
In light of the record evidence as a whole, we conclude that the
brief comments in the survey report for this second shipment to
Tema, Ghana, are insufficient to satisfy the defendants' rebuttal
burden, without regard to whether that burden was one of production
or persuasion. Moreover, and even if the survey report, standing
alone, was sufficient to satisfy a burden of production, we would
still hold that the United States is entitled to recover. The
defendants conceded that some of the damage was attributable to
their own negligence, a concession which determined the damages
awarded after bench trial. Even assuming the defendants satisfied
their burden of rebutting the United States' prima facie case as to
this single shipment, the record establishes that carrier
negligence was at least a concurrent cause of the loss, and the
20
defendants therefore bore the burden of establishing which portion
of the loss was not attributable to carrier negligence. Defendants
did not submit any evidence on the appropriate allocation of loss,
and the United States is therefore entitled to recovery of the
claimed damages for this shipment. See Tenneco Resins, 811 F.2d at
211; Blasser Bros., 628 F.2d at 382.
The defendants also raised the applicability of the catch-all
exception to liability codified in § 1304(q). Specifically, the
defendants suggested that a portion of the loss and damage to the
five shipments was attributable to pilferage, either from the
vessel or from the docks and environs during discharge. The
district court stated that a COGSA carrier is not responsible for
careless discharge. This is an incorrect statement of the law.
COGSA extends through discharge, and a COGSA carrier is subject to
statutory obligations to “properly and carefully load, handle,
stow, carry, keep, care for, and discharge the goods carried.” 46
U.S.C. § 1303(2). This Court has recognized, however, that
§ 1304(2)(q) may shield a carrier from liability when the carrier
has absolutely no control with respect to the selection of port
stevedores or the rate they will be paid and, further, no control
with respect to how or when the cargo is discharged. See
U.N./F.A.O. World Food Programme v. M/V Tay, 138 F.3d 197, 200-02
(5th Cir. 1998). But this interpretation of § 1304(2)(q) is not
broad enough to shield the carrier from liability for any and all
21
stevedore negligence. To the contrary, such “lack of practical
control is ordinarily associated with a breakdown of law and order
so that the carrier is powerless to prevent the unlawful or
negligent conduct of the stevedores.” Id. at 201. As to this
exception, the defendants clearly bore, not only the burden of
production, but the burden of persuasion. See 46 U.S.C.
§ 1304(2)(q).
To satisfy this burden, the defendants submitted several
exhibits tending to establish that pilferage occurred from the
vessel or from the docks during discharge at the ports of
destination or other ports. While these exhibits are probative on
the issue of whether some pilferage occurred, they do not tend to
establish that the defendants had no control over either the
stevedores or the discharge process. To the contrary, several of
the exhibits demonstrate that the ship agents were in some
circumstances able to exert influence to have certain vessels
docked at berths considered more efficient or less prone to
pilferage. The documents further reflect that defendants intended
to rely upon contractual provisions to support a cause of action
seeking recompense for any losses that the defendants were required
to bear as the result of stevedore negligence. We further note
that the defendants neither developed any arguments or testimony
relating to these exhibits at trial nor raised the applicability of
this exception on appeal. In light of the record as a whole, we
22
conclude that the defendants did not satisfy their burden of
persuasion with respect to their § 1304(2)(q) defense. Moreover,
this defense suffers from the same weakness as the defendants'
§ 1304(2)(n) defense. That is, even if we were to assume that the
defendants carried their rebuttal burden, the record establishes
that carrier negligence was at least a concurrent cause of the
damages claimed, and the defendants failed to make any attempt to
apportion or separate the losses attributable to their own
negligence as compared to the losses attributable to pilferage or
some other cause. See Tenneco Resins, 811 F.2d at 211; Blasser
Bros., 628 F.2d at 382.
For the foregoing reasons, we conclude that the defendants
failed to rebut the United States' prima facie case. Further, even
if the defendants had carried such burden, the United States
established that at least some of the loss and damage was
attributable to the defendants' negligence, and the defendants
failed to respond with evidence tending to establish precisely what
portion of the claimed loss and damage was attributable to another
concurrent cause.
VI.
The United States asks us to render judgment in its favor.
The United States contends that the extent of liability is
established by declarations in the bills of lading covering the
shipments. COGSA expressly allows a shipper to declare the value
23
of its cargo as long as “the nature and value of such goods have
been declared by the shipper before shipment and inserted in the
bill of lading.” 46 U.S.C. § 1304(5). “This declaration, if
embodied in the bill of lading, shall be prima facie evidence, but
shall not be conclusive on the carrier.” Id.The district court found that the declarations of the cargo’s
value embodied in the bills of lading were sufficient evidence of
damages claimed in this case. We agree. Id. The carriers’ only
rebuttal to this proof of value is that the bills of lading were
inadmissible “double hearsay.” The carriers state that “[t]he
information for the value as listed on the bills of lading is not
based on personal knowledge of the agents of defendants who issued
the bills of lading.” Regardless of whether this is true, it is
irrelevant. The statute allows the shipper to declare the cargo’s
value, and inclusion of this value on the bill of lading evidences
the carrier’s acquiescence to this declaration. The United States'
declared value was prima facie evidence of the cargo’s value and,
absent any rebuttal evidence from the carrier, is adequate to set
the value of the cargo for damage calculation purposes.
Moreover, we are comforted in this case by testimonial
evidence from the government employee responsible for setting the
value of the cargo, who testified that the very precise bill of
lading values declared were drawn from invoices reflecting the
government's actual purchase price for the commodity. We are not,
24
therefore, dealing with a potential differential between the value
declared for shipping purposes and the value as measured by the
price paid for the commodity. In addition, the record contains the
government's claim forms for the various cargos. The damages
detailed therein are based upon a unit price for the commodities
plus freight costs. Testimonial evidence established that these
documents would likewise have been checked against and premised
upon the government's actual purchase price for the goods. Thus,
the damages claimed are not premised upon a unitary value taken
directly from the bill of lading, but are instead calculated using
the actual costs to the government. We agree with and, therefore,
affirm the district court's factual determination that the United
States produced competent evidence of the damages claimed. We,
therefore, see no barrier to a decision rendering judgment in favor
of the United States.
V.
The United States requests that this Court award prejudgment
interest running from the date of last discharge through the time
of judgment, calculated in accordance with 31 U.S.C. § 3717. The
United States preserved error on this issue in the district court.
In this Circuit, there is a strong presumption in favor of awarding
pre-judgment interest. See Ryan Walsh Stevedoring Co., Inc. v.
James Marine Serv., Inc., 792 F.2d 489, 492 (5th Cir. 1986). The
defendants respond that the United States exercised undue delay in
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bringing these actions and, therefore, that it should be denied
prejudgment interest. The United States filed the five actions
consolidated here in December 1998, less than three years after the
last date of discharge and well within the six year statute of
limitations set by Congress for claims filed by the CCC. 15 U.S.C.
§ 714b(c)(1994). This suit was timely filed. Finding no other
reason to deny prejudgment interest, we therefore render judgment
for the United States in this case in the amount of $203,319.87,
plus pre-judgment interest calculated in accordance with 31 U.S.C.
§ 3717.
CONCLUSION
For the reasons stated above, the judgment of the district
court is VACATED and judgment is RENDERED in favor of the United
States in the amount of $203,319.87 plus pre-judgment interest.
g:\00-20117.opn 26