Teledex Corp (Teledex) purchased 963 cartons of telephone equipment from a seller. The transportation of the equipment from Malaysia to Oakland, California, was provided by Circle International Inc (Circle) and its subsidiary CLX Services (CLX). Circle issued a bill of lading. After the equipment was discharged in Oakland, it was transported by Arrow Trucking Co of California Inc (Arrow), a trucking company with whom Circle had entered into a subcontract, to the Arrow yard in Fremont, where the equipment was stolen. Continental Insurance Co (Continental) paid Teledex for its loss and filed a subrogation action. Circle and Arrow filed a motion for summary adjudication and argued that their liability was limited to a total of USD 500 under COGSA/the Hague Rules.

Section 5(2)(B)(i) of the bill of lading under the heading 'Package, Customary Freight Unit Or Shipping Unit Limitation' provided that: 'Where COGSA applies to this bill of lading (whether by its own force or by agreement), Carrier shall not be liable for loss or damage in an amount exceeding USD 500 per package ... unless the nature and value of the Goods higher than this amount has been declared in writing by Merchant before Carrier's receipt of the Goods and inserted in this bill of lading and any extra freight has been paid as required'. In addition, on the front of the bill of lading, the 'Number of Packages' column listed '963'. Moreover, the 'Description of Commodities' stated that the shipper was carrying a container said to contain cartons of telephone equipment. Thus, the Court was asked to decide whether the provisions on the back of the bill of lading applied so as to limit Circle and Arrow's liability to USD 500 on the basis that there was one container and therefore one package, or whether there were 963 packages.

Held: Motion granted.

The number appearing under the heading 'Number of Packages' is the number of packages for purposes of COGSA/the Hague Rules package limitation 'unless the significance of that number is plainly contradicted by contrary evidence of the parties' intent'.

Teledex was a sophisticated entity, which extensively negotiated its shipping contract with Circle. There was no question that Teledex was given a fair opportunity to opt for a higher liability.

In addition, Teledex always shipped containers, not individual packages of telephone equipment; Teledex negotiated freight charges on a per-container basis; and Teledex paid Circle for the ocean shipments on a per-container basis.

Furthermore, as part of Teledex's shipping protocol, the seller was responsible for stuffing Teledex's container with telephone equipment and then sealing the container, and was required to review the details of each bill of lading and make any amendments necessary before the container was picked up for shipment.

Moreover, Teledex expressly declined insurance from the carrier and obtained its own cargo insurance on the equipment, which manifested a conscious decision not to opt out of the liability limitation of COGSA/the Hague Rules.

Therefore, the abovementioned evidence plainly contradicted the significance of the '963' in the packages column in the bill of lading.