Court Opinion

ID: 8934284
Source: CourtListenerOpinion
Date Created: 2022-11-27 07:22:29.68147+00
Date Added: 2024-06-11T17:09:35.245355
License: Public Domain

JAMES HUNTER, III, Circuit Judge,
dissenting:
Despite my admiration for the majority opinion’s excellent and thoughtful discussion of the history and policies of COGSA, I am compelled to dissent because I believe that COGSA has nothing to do with the 0.5% trade allowance at issue in this case.
The majority characterizes the trade allowance as exonerating carriers from liability carriers for “unexplained losses” of less than 0.5% of cargoes of crude oil, unless the shipper is able to show that the “loss was due to some specific, known cause____” I do not doubt that the majority is correct in concluding that implying such an allowance into charter parties as a custom of the industry would run afoul of COGSA’s procedural and substantive provisions. I do, however, disagree with the majority’s characterization of the trade allowance as a “loss” allowance.
As the district court found, the primary purpose of the trade allowance is to recognize that measurement of crude oil in bulk “is better characterized as an art than as an exact science.” Sun Oil Co. v. Mercedes Maria, 1983 A.M.C. 718, 720 (E.D.Pa.1982). Because of the rather protean qualities of crude oil, measurement by the customary technique of taking ullages is likely to be accurate only to within plus or minus O. 5%. Id. This finding is amply supported by the record. Thus, although the allowance may also take account of “inevitable” problems such as “clingage” of some oil to the insides of tankers, id., it is inaccurate to characterize it as a “loss allowance.” It is, rather, an allowance for imprecision of measurement.1 For this reason, the allowanee does not run afoul of COGSA’s substantive prohibition against disclaimers of carriers’ liability for lost or damaged cargo resulting from negligence or other fault. See 46 U.S.C. § 1303(8).
Nor does the allowance offend COGSA’s allocations of burdens of proof between shippers and carriers. As the majority opinion correctly notes, a shipper must show short delivery to make out a prima facie case for lost cargo against a carrier. See Quaker Oats Co. v. M/V Torvanger, 734 F.2d 238, 240 (5th Cir.1984), cert. denied, — U.S. ---, 105 S.Ct. 959, 83 L.Ed.2d 965 (1985). The burden of proof then shifts to the carrier to show its due diligence, or that the loss was due to one of the causes for which COGSA exempts carriers from liability. See 46 U.S.C. § 1304(1). As the district court found, however, measurement of a cargo of crude oil at point of delivery may deviate by as much as 0.5% from the measurement at point of departure, even where no loss has occurred. A shipper of crude oil would not, therefore, be able to show short delivery if the measurement differential was less than 0.5%, unless the shipper could show that there was actual loss due to some specific cause. The trade allowance’s requirement that shippers make such a showing does not, as the majority concludes, alter the statutory allocation of burdens of proof by relieving carriers of the burden of proving that they were without fault. It merely recognizes that unless a shipper of crude oil can show a shortfall of more than 0.5% of its cargo, or that a measurement differential of less than 0.5% is due to actual loss from a specific cause, it cannot make out a prima facie case against the carrier.
Because I believe that the trade allowance in no way implicates any provision of COGSA, I dissent from the majority opin*818ion’s holding that the allowance is unlawful. The only other issue in this case— whether the allowance is a custom of the industry implied into charter parties for crude oil — depends upon findings of fact by the district court which, I believe, are not clearly erroneous. I would, therefore, affirm the judgment of the district court.

. The majority correctly characterizes the district court judges as attributing the 0.5% allowance to both problems of measurement and "inevitable loss.” We disagree, however, that this "loss” is the kind of fault-based loss addressed by COGSA. On the contrary, "inevitable loss,” like problems of measurement, follows from the inherent characteristics of the oil and the nature of the carriage.