Floyd Zadkovich Success:
U.S. District Court Issues Judgment in Favor of Kuehne + Nagel, Inc. on the Definition of a COGSA Package

Floyd Zadkovich, led by Edward Floyd and Eva-Maria Mayer secured a win in favor of Kuehne + Nagel, Inc. (“K+N”) in the Second Circuit Court of Appeals – the Second Circuit affirming the U.S. District Court for the Southern District of New York’s judgment in a major Carriage of Goods by Sea Act (“COGSA”) limitation decision.

The case centred on the definition of “package” for purposes of liability under COGSA. COGSA allows carriers, including non-vessel-operating common carriers such as K+N, to limit liability to USD 500 per “package”. The relevant sea waybills incorporated COGSA. Further, while COGSA does not define the word “package”, the terms and conditions of the sea waybills did, including express language that:

For limitation purposes under COGSA, it is agreed that the meaning of the word “package” shall be any palletised . . . assemblage of cartons which has been palletised . . . for the convenience of the Merchant, [including the shipper and consignee,] regardless of whether said pallet . . . is disclosed on the front hereof.

Here, plaintiff HDI Global Insurance Co. (“HDI”)’s insured Mahle Behr Charleston, Inc. (“Mahle”) ordered a supply of 24 pallets of electrical wire harnesses (the “Cargo”), which were to be transported pursuant to four sea waybills issued by K+N, from non-party, Electrical Components International (“ECI”). The 19,800 electrical wire harnesses were packed into 480 cartons and then packed onto 24 pallets, which were placed in the container. While being loaded onto a vessel, the container, which held the Cargo, purportedly fell into the water, damaging the Cargo.

The lower court applied the Second Circuit’s decision in Seguros “Illimani” S.A. v. V Popi P, 929 F.2d 89 (2d Cir. 1989), which provides that the number in the number of package column on the front of the bill of lading is the starting and ending point as to the number of packages for limitation purposes, unless “plainly contradicted by contrary evidence of the parties’ intent.” The lower court found that the language in the sea waybill, which demonstrated the parties’ intent to define a package under the COGSA as the pallets, and not the individual cartons, contradicted the number of packages listed on the front of the sea waybill. As such, the lower court found that the pallets should be deemed the “package” for limitation of liability purposes under the COGSA.

The Second Circuit affirmed the lower court’s finding, agreeing with the lower court’s finding that the language contained on the sea waybills “plainly contradicts and therefore displaces the number listed on the front of the Sea Waybills” and holding that “the parties unambiguously agreed that pallets, not cartons, are the relevant ‘package’ for COGSA limitation of liability purposes.”