Plaintiff Failed to Prove Deprivation of a "Fair Opportunity" Under COGSA

Plaintiff Failed to Prove Deprivation of a "Fair Opportunity" Under COGSA

By: Jamie Johnson

On February 5, 2013, the Second Circuit considered OOO "Garant-S" v. Empire United Lines Co., Inc., 13-1685-cv (2nd Cir. 2013), which involved an appeal concerning the Carriage of Goods by Sea Act, (COGSA). Plaintiff, Garant-S, appealed the court’s grant of defendant’s motion for summary judgment. The dispute involved the theft of two automobiles, which prompted plaintiff’s breach of contract and tort claims against defendant. On appeal, plaintiff contended that defendant could not take advantage of COGSA’s $500.00 dollar per package limitation on damages.

The court reiterated the COGSA default rule, which limits the liability of a carrier to $500.00 dollars per package, unless the shipper declares a higher value on the bill of lading. At any point either party may opt of this default provision by demanding a higher limit.First, plaintiff argued that COGSA could not apply because no bill of lading had ever been issued at the time when the automobiles were stolen, The court dismissed this argument based on its finding that the parties in the dispute had contractually extended the jurisdictional limits of COGSA to include “…any place of receipt if named herein…” The court noted that the plaintiff and defendant had shipped hundreds of items in the past along the same route. Because the theft occurred at a place both parties considered to be a customary point of receipt, COGSA applied by virtue of the contract.Next, plaintiff alleged that the defendant had been involved in the theft itself. Plaintiff argued that the defendant’s participation in the theft constituted an “unreasonable deviation,” which functioned to nullify any limitation under COGSA. The court explained that the “unreasonable deviation” doctrine had been narrowly limited to a few specific scenarios in which the carrier had unjustifiably deviated from its normal, geographic route. The court stated that even if Empire had taken part in the theft, this fact would not have justified extending the doctrine to include this particular scenario.Finally, plaintiffargued that the COGSA limitation did not apply because the Bill of Lading did not offer the plaintiff enough room on the face of the contract to declare a higher value for the cargo. Under the “fair opportunity” doctrine, if the shipper is not given a ‘fair opportunity’ to declare a higher value for additional protection, the carrier waives its right to take advantage of COGSA protections.While the court conceded that it was best practice to leave available space on the contract to allow the shipper to declare a higher price, the fact that the Bill of Lading in this case explicitly invoked thedamage limitation was enough for the court to conclude that the plaintiff was fully aware of the limitation, and therefore, had a fair opportunity to declare a higher price.Thus, the court affirmed the district court’s ruling that defendant was entitled to assert the COGSA’s package limitation.