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

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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

25
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.

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