Fishman & Tobin Inc (Fishman) and MacClenny Products Inc (MacClenny) were two clothing manufacturers who had their clothing assembled in Santiago, Dominican Republic, and shipped to the United States. Fishman imported children's clothing and shipped their products in a unit referred to as a 'big pack'. This was akin to a pallet, slotted at the bottom to be picked up by a forklift and partially enclosed in corrugated cardboard with a base and cover made of plastic. The clothes were bundled inside, wrapped in paper and sorted by style. MacClenny imported men's suits and jackets. These were shipped in extra-tall containers to which structural beams were attached to place the 'garment-on-hanger' packages. Each garment-on-hanger container could hold between 4,500 and 5,500 hangers.

Both shippers regularly dealt with Tropical Shipping & Construction Co Ltd (Tropical) to transport their clothing. A truck owned by Tropical would collect the clothing along with a cargo manifest at the shippers' respective warehouses and drive it to the port. Once the cargo arrived at the port, it would be transferred to the ships' containers and a bill of lading would be prepared and sent back to the warehouses. Typically the bills of lading would arrive after the ships set sail.

During one routine voyage, Tropical lost a number of containers overboard due to improper stowage. Tropical admitted liability and asserted that s 1304(5) of the US Carriage of Goods By Sea Act (COGSA) (art 4.5 of the Hague Rules) limited its liability to USD 500. The shipper disagreed and brought an action before the District Court. After reviewing the facts, the District Court decided in favour of Tropical, concluding that the Fishman package was a big pack, and fair recovery was USD 19,500, or 39 packages at USD 500 per package. MacClenny’s recovery was limited to USD 500 for the loss of one container. Both Fishman and MacClenny appealed.

Held: Appeal dismissed. The judgment of the District Court is affirmed.

The main point of contention is how to apply the COGSA definition of package to the units shipped. A package is a class of cargo irrespective of size, shape or weight, to which some packaging preparation for transportation has been made which facilitates handling, but which does not necessarily conceal or completely enclose the goods. There are four basic principles identified in Hayes-Leger Assocs Inc v MV Oriental Knight 765 F 2d 1076, 1082 (11th Cir 1985) for applying COGSA's s 1304(5) to containerised shipments:

1. The contractual agreement between the parties as set forth in the bill of lading;
2. the term 'package' means the result of some preparation for transportation 'which facilitates handling but which does not necessarily conceal or completely enclose the goods';
3. a container cannot be a COGSA package absent 'a clear agreement between the parties to that effect, [and] at least so long as its contents and the number of packages or units are disclosed'; and
4. 'absent an agreement in the bill of lading as to packaging of the cargo, goods placed in containers and described as not separately packaged will be classified as goods not shipped in packages'.

Fishman

Fishman suggested that the smaller bundles of its pants, referred to as 'dozens', should be considered packages rather than the 'big packs' used to store the dozens before they went into the container. Any grouping demonstrating some preparation may be considered a package. Yet, it is clear that the number of packages should be fully and accurately disclosed and easily discernable by the carrier, otherwise carriers will suffer unforeseen liability. As a result, the touchstone of analysis is the contractual agreement between the parties as set forth in the bill of lading. The bill of lading made out by Tropical does not refer to the number of dozens being shipped, but does state the number of big packs. Where a bill of lading and shipping documents do not conform, the bill is construed as having reflected the number of packages designated in the shipping invoices. In this case the reembarque (customs declaration in Spanish) states that 2,325.08 dozens of pants are inside the relevant big packs. As both Tropical’s interpretation of the bill of lading and the reembarque agree as to the type and number of packages shipped, there is no need to look further. Recovery will be based on the 39 big packs indicated. Further, the 'dozen' referred to is not a relevant unit of measurement. Fishman acknowledged that it could refer to any number of pants from one to 12. Therefore it is not only an inaccurate unit of measurement, it is one not clearly denoted on the cargo manifest, customs declaration, or bill of lading. As such, the 'Fishman dozen' cannot be used as the measurement of packaging referred to by COGSA.

MacClenny

MacClenny argued that a single jacket packaged on a hanger and enclosed in a plastic bag is understood in the industry to be the unit of packaging. US Customs compels parties to specify the jackets as units. The cargo manifest given to Tropical indicated that 5,000 units or packages were being shipped, for a total value of USD 23,750. The bill of lading also corroborated this description. The number of packages column on the bill of lading indicated 1 x 40' container and the description stated that ‘5000 units men’s suits’ were inside the container.

The world of cargo shipping has changed substantially since the implementation of COGSA in 1936. At the time of the law's enactment, Congress did not, and could not, foresee the advent of containerised shipping. While the practice of shipping goods in containers has prevented the exposure of products to the elements, it has created difficulties in applying COGSA to shipments that are lost at sea. Indeed a container, rather than being a package, could be more accurately considered a modern substitute for the hold of the vessel.

Where a bill of lading refers to both containers and other units susceptible of being COGSA packages, it is inherently ambiguous. Such ambiguity is normally resolved against the carrier, absent evidence that both the shipper and carrier clearly and explicitly agreed to treat the container as a package. This Court has also stated that the limitation on recovery will not be followed where the carrier description is self-serving.

Despite the ambiguities and conflicts among the evidence presented at the District Court, a review of both the customs declaration form and reembarque indicate that MacClenny of their own will stipulated under the number of packages column only one. Precedent has clearly required that the number of packages that are declared must be indicated in the number/quantity of packages column on the bill of lading.

After more than 10 years in the shipping business, MacClenny is hard pressed to argue that it did not understand the significance of correctly completing all the declaration forms and bills to COGSA recovery. In light of the fact that neither the bill of lading nor the reembarque form offer any clear indication that each garment-on-hanger was the relevant unit of packaging being shipped, and precedent holding that such information must be provided, the District Court's award of USD 500 for a single container shipped is affirmed.