and inserted in this bill of lading ..., [w]here U.S. COGSA applies, the Carrier shall in no event
be or become liable for any loss of damage to ... the Goods in an amount exceeding U.S. dollars
500 per package ....” Id, 16. The Hanjin bill of lading defined “package” as “the single largest
unit of Goods (e.g., container, pallét, box, bale) delivered by Merchant to Carrier for carriage
pursuant to the terms of this Bill of Lading.” Jd, | 1(g). The Hanjin waybill listed “8,424
CTNS” in the column identifying the “No. of Pkgs. or Containers,” though on a different section
of the waybill it stated “NINE (9) CONTAINERS ONLY” in a section listing the “Total No. of
Packages or Containers (in works)” Hanjin Summ. Judg. Mot., Ex. B.

COGSA, like both bills of lading in this case, imposes a $500 per-package limitation on
the liability of a carrier. See id. § 1304(5). But under COGSA, if, as in this case, a bill of lading
discloses on its face the number of units or packages inside the container, and those units or
packages reasonably may be considered COGSA packages, then the packages inside the
container are considered to be the packages for purposes of the $500 per-package limitation. See,
e.g., Monica Textile Corp. v. S.S. Tana, 952 F.2d 636, 639 (2d Cir. 1991); Hayes-Leger Assocs.,
Inc. y. M/V Oriental Knight, 765 F.2d 1076, 1080 (11th Cir. 1985); nt’ Adjusters, Inc. v.
Korean Wonis-Son, 682 F. Supp. 383, 386 (N.D. Ill. 1988). This “clear rule” applies even if the
carrier’s bill of lading purports to define the package as the container itself, unless the bill of
lading contains “explicit and unequivocal” terms making it clear the parties agreed to that
definition. Monica Textile, 952 F.2d at 642. But that exception to the rule “is more apparent
than real.” Jd. When a bill of lading refers to both containers and other units susceptible of
being considered as packages, it is “inherently ambiguous,” and the ambiguity found in what

Monica Textile characterizes as “unbargained-for boilerplate” is resolved against the carrier (that


it was subject to COGSA, and like Nippon’s bill of lading it identified both the number of
cartons (8,424) and the number of containers (9) under the heading “package.” It therefore had
the type of ambiguity that, under Monica Textile, calls for application of the general rule that the
container is not the COGSA package when the shipping document discloses on its face a larger
number of packages.' The fact that Hanjin had set forth a different definition in a separate

document that was not even provided in connection with the shipment is insufficient to give rise

we

to an exception to the general rule; “‘[a]llowing the carrier ... to insert an essentially unbargained-
for definition of ‘package’ in the bill of lading would effectively eliminate the protection
COGSA was meant to afford shippers.’” Monica Textile, 952 F.2d at 643 (quoting St. Paul Fire
& Marine Ins. Co. v. SeaLand Sery,, Inc., 735 F, Supp. 129, 132 (S.D.N.Y. 1990)). See also Int’l
Adjusters, 682 F. Supp. at 386 (“international uniformity is best achieved by the approach ... that
generally a container supplied by the carrier is not a COGSA package if its contents and the
number of packages or units is disclosed”; quoting Mitsui & Co. v. American Expert Lines, Inc.,
636 F.2d 807, 821 (2d Cir. 1981) (Friendly, J.)).
Conclusion

For the reasons stated above, the Court denies the motions of Nippon Express U.S.A.
(Illinois) Inc. and Hanjin Shipping Co., Ltd. for partial summary judgment [docket # 34-1, 40-1].
Hanjin’s motion for protective order and to strike certain points from Nippon’s memorandum
[docket # 48-1 & 2] is terminated as moot. The Court previously granted Hanjin’s motion to
supplement its argument [docket # 39-1], so that motion is also terminated. The case is set for a

status hearing on August 16, 2004 at 9:30 a.m. for the purpose of setting a trial date and

‘ As noted earlier, the waybill’s terms made it clear that COGSA applied to the shipment.

7


Except as aforesaid such article of transport shall be considered the package or unit.” Id, ]
8.2(b).

The first page of Nippon’s bill of lading contained spaces to fill in, among other things,
the “No. of Pkgs. or Containers.” The bill of lading was completed in such a way that the
information did not line up directly within the space provided, but the following information is
contained at least partly in that particular space:

9 CONTAINERS

8424 CARTONS

OAR Fo RACK

(40' H/C x 9 CONTAINERS)

‘FREIGHT COLLECT AS ARRANGED’
SAY : NINE (9) CONTAINERS ONLY.
See id, p. 1.

Hanjin issued Nippon a waybill covering Hanjin’s portion of the shipment. The waybill
stated that it was subject to the terms of Hanjin’s standard bill of lading, a copy of which could
be obtained from Hanjin’s office. See Hanjin Summ. Judg. Mot., Ex. B, “Conditions of
Carriage,” | 1. The waybill went on to state that it was subject to the “Hague Rules” unless the
country of shipment had enacted no such rules and there was “corresponding legislation” in the
country of destination, in which case that legislation would apply. Jd.

Hanjin’s bill of lading provided that “the applicable Hague / Visby / COGSA legislation
shall govern throughout the time when the Goods are in the actual or constructive custody of the
Carrier.” Hanjin Summ. Judg. Mot., Ex. C, §2. It stated that “[d]amage shall, in all events, be

limited in accordance with the applicable Hague / Visby / COGSA legislation,” and that “[u]niess

the nature and value of the Goods have been declared in writing by the Merchant before shipment


is, against considering the container as the COGSA package). /d. at 642, 643. In Monica

Textile, the Second Circuit held that a definition of “package” that is effectively indistinguishable
from the one found in Nippon’s bill of lading was insufficient to make the container the package
for purposes of COGSA. Jd. at 642-43. In short, if COGSA applied by its own terms in this
case, the relevant number of packages for purposes of the $500 per-package limitation in
Nippon’s bill of lading would be 8,424 packages, rather than one package as Nippon argues.

But COGSA does not apply by its own terms in this case. The statute governs the period
between the loading of the goods onto the ocean vessel and the discharge of the goods from the
vessel. 46 U.S.C. App. § 1301(e). In this case, the loss occurred after the goods were discharged
from Hanjin’s ship. The Court must determine whether this renders the Monica Textile analysis
inapplicable.

When a bill of lading contains an express statement that it is subject to COGSA, it is
subject to COGSA’s terms “as if subject hereto by the express provisions” of COGSA. Id. §
1312. Mitsui argues that this means that the COGSA-supplied definition of “package,” as
discussed above, applies in this case. The Eleventh Circuit has so held. In Groupe Chegaray/V.
de Chalus v. P&O Containers, 251 F.3d 1359, 1364 (11th Cir. 2001), the court held that when a
bill of lading incorporates COGSA as “paramount throughout” the time the goods are in the
shipper’s custody (as is the case here), COGSA’s definition of “package” applies. By contrast,
Nippon and Hanjin argue that when COGSA is incorporated by reference into a contract, it is
merely another contract term that is subject to modification or alteration by other contract terms.
That, is appears, is the view of the Fourth and Second Circuits. See Commonwealth

Petrochemicals, Inc. v. S/S Puerto Rico, 607 F.2d 322, 325-27 (4th Cir. 1979); Pannell v. United


discussing the possibility of settlement. Trial counsel are directed to appear.

VU oka

MATTHEW F. KENNELLY
United States District Judge
Date: August 9, 2004


Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge
or Magistrate Judge

Matthew F. Kennelly

Sitting Judge if Other
than Assigned Judge

CASE NUMBER 03 C 2524 DATE 8/9/2004
CASE Nippon vs. Mitsui
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

MOTION: of the motion being presented.)

DOCKET ENTRY:

(1) oO Filed motion of [ use listing in “Motion” box above.]

(2) o Brief in support of motion due ___

(3) oO Answer brief to motion due, Reply to answer brief due

(4) im Ruling/Hearing on set for at

(5) oO Status hearing[held/continued to] (set for/re-set for] on set for at

(6) oO Pretrial conference[held/continued to] (set for/re-set for] on set for at

(7) im Trial[set for/re-set for] on at

(8) Oo [Bench/Jury trial] [Hearing] held/continued to at

(9) im This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

COFRCP4(m) OLocal Rule 41.1 CHFRCP41(a)(1) © FRCP41(a)(2).

(do) «of [Other docket entry] For the reasons set forth on the attached Memorandum Opinion and Order,
the Court denies the motions of Nippon Express U.S.A. and Hanjin Shipping Co., Ltd. for partial
summary judgment (34-1, 40-1). Motion for protective order and to strike certain points is terminated
as moot (48-1,2). The Court previously granted Hanjin’s motion to supplement its argument, so that
motion is also terminated (39-1). Status hearing set to 8/16/04 at 9:30 a.m. for the purpose of setting a
trial date and discussing the possibility of settlement. Trial counsel are directed to appear.

(il) @ (For further detail see order attached to the original minute order.]

No notices required, advised in open court. Document
No notices required. Number
number of notices
Notices mailed by judge's staff. AUG 1 0
Notified counsel by telephone. date 2004
Y | Docketing to mail notices
Mail AO 450 form. 4 5 \
l Copy to judge/magistrate judge.

C2 HY date mailed pte

courtroom WY

deputy's
initials

O1 SAW O02

labeler
central Clerk's Office

OR

mailing deputy initials



States Lines Co., 263 F.2d 497, 498 (2d Cir. 1959) (discussed in Commonwealth
Petrochemicals).

The Court does not find Commonwealth Petrochemicals persuasive. COGSA says that
where parties agree that they will be governed by COGSA’s terms before loading or after
discharge, their bill of lading is “subjected [to COGSA] as fully as if subject [t]hereto by the
express provisions” of the statute. 46 U.S.C. App. § 1312. The plain meaning of this statutory
provision is that COGSA applies the same way irrespective of whether it applies by its own
terms or by private agreement. This construction of the statute “foster[s] predictability in this
nettlesome area of the law.” See Monica Textile, 952 F.2d at 643. In the Court’s view, it would
not make a great deal of sense to have COGSA apply one way when the goods are first turned
over to the carrier before loading on the ship, a different way under the same bill of lading while
the ship is at sea, and then back to the first way once the ship arrives at its destination and the
goods are unloaded. The Court therefore agrees with the Eleventh Circuit that COGSA’s
definition of “package” applies to Nippon’s bill of lading. Because the bill of lading specifically
disclosed that the container contained a larger number of items that reasonably could be
considered packages, the $500 per-package limitation stated on Nippon’s bill of lading applies to
that larger number of packages, not to the container as a whole.

The Court reaches the same conclusion regarding Hanjin’s bill of lading. The attempt to
define the package as the container was clearer in Hanjin’s bill of lading than it was on Nippon’s.
But Hanjin did not actually issue a bill of lading in this case; rather it issued only a waybill that
said it was subject to its standard bill of lading, which though available elsewhere was apparently

not provided to Nippon and certainly not to Sony. The waybill provided, without limitation, that


IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS Doo
EASTERN DIVISION Opie,
Aug 7 ’ . &a
NIPPON EXPRESS U.S.A. (ILLINOIS), INC., “004

Plaintiff,

Vs. Case No. 03 C 2524

LTD.; HANJIN SHIPPING CO., LTD.;
NORFOLK SOUTHERN RAILWAY CO.;
OMNI RAIL INTERNATIONAL, INC.;
and JAM TRUCKING, INC.,

)

)

)

)
MITSUI SUMITOMO INSURANCE CO., )

} AUG 4 2op4

)

)

)

)

Defendants.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

In September 2002, Sony Computer Entertainment, Inc. contracted with Nippon Express
U.S.A. (Illinois), Inc., a non-vessel-owning common carrier, to transport a quantity of Sony
PlayStation games from Tokyo, Japan to Bolingbrook, Illinois. The PlayStation games were
contained in 8,424 cartons which in turn were placed into nine forty-foot long containers for
shipping. Nippon contracted with defendant Hanjin Shipping Co., a vessel-owning common
carrier, to transport the goods to a container yard in Chicago, Illinois. Hanjin transported the
containers by seagoing vessel to Tacoma, Washington, and from there, they were carried by the
Burlington Northern Santa Fe Railroad to Chicago, where they were placed in a yard owned by
defendant Norfolk and Southern Railway Company. One of the containers was later discovered
to be missing from the yard, the gate to which allegedly was controlled by defendant Omni Rail — \

Intermodal, Inc. The container was later found, but the PlayStation games it had contained were


not recovered.

Sony had contracted with defendant Mitsui Sumitomo Insurance Co. to insure the goods
during shipment. Mitsui paid Sony’s claim and demanded that Nippon pay $478,348, said to be
the value of the lost PlayStation games. Nippon then commenced this action, seeking a
declaration of non-liability or in the alternative indemnity or contribution, naming as defendants
the other entities involved in the shipment as well as Mitsui. Hanjin and Nippon have both
moved for partial summary judgment, arguing that their liability is limited to $500 based on the
terms of the bills of lading that each issued. Both motions require consideration of the terms and
effect of the Carriage of Goods at Sea Act (COGSA), 46 U.S.C. App. § 1301 ef seg. For the
reasons stated below, the Court denies both motions.

Discussion

Nippon’s bill of lading stated that “[e]xcept as otherwise provided herein, ... this Bill of
Lading shall have effect subject to ‘the provisions of ... [COGSA], which is incorporated herein
and made a part hereof ....” Nippon Summ. Judg. Mot., Ex. B, 73.1. It stated that Nippon would
be liable for loss of or damage to the goods occurring between the time it received them and the
time it delivered them at the place of delivery, namely Bolingbrook. Jd, | 7.1. The bill of lading
also stated, however, that “[c]ompensation shall not ... exceed US $500.00 per container, package
or unit unless with the consent of [Nippon], [Sony] has declared a higher value for the goods ...,”
id., { 8.2(a), which Sony did not do. The bill of lading defined “container, package or unit” as
follows: “[w]here a container, pallet or similar article of transport is used to consolidate goods,
the number of packages or units enumerated in this Bill of Lading as packed in such article of

transport shall be deemed the number of packages or units for the purpose of this package or unit.