## Facts

- Shippers and their subrogated insurers sued the vessel, its owner, and its charterer under the Carriage of Goods by Sea Act (COGSA) for seawater damage to hot-rolled steel plates carried from Antwerp, Belgium, to multiple U.S. ports.
- The voyage encountered extremely severe weather, including very high winds and heavy seas.
- On discharge in the United States, significant portions of the steel were seawater damaged.
- Bills of lading included condition notations such as “rust stained,” “partly rust stained,” and “wet before shipment.”
- Plaintiffs presented evidence that these notations were standardized industry language in Antwerp describing non-damaging atmospheric surface rust on steel that did not reduce value.
- A pre-departure survey reported no depreciation from observed rust.
- After a bench trial, the district court found the cargo was in good order at loading, was damaged at outturn, and that seawater entered through defective (unseaworthy) hatch covers.
- The district court rejected a “peril of the sea” defense, awarded damages using a market-discount valuation, and applied COGSA’s $500 per package limitation.
- Defendants appealed liability and damages; the charterer also pursued an indemnity-related cross-appeal; the shipper cross-appealed seeking to apply the $500 limitation separately against each defendant.

## Issues

1. Whether plaintiffs proved a COGSA prima facie case of good order at loading and damage at outturn despite bills of lading noting rust staining and wetness.
2. Whether defendants established the COGSA “peril of the sea” exception where the voyage encountered extraordinary storms.
3. Whether the market-discount method was a permissible measure of cargo damages.
4. Whether COGSA’s $500 per package limitation applied, and whether the limitation could be collected separately from each defendant rather than as a single cap per package.
5. Whether the charterer was entitled to relief on its indemnity-related cross-appeal.

## Decision

- The court of appeals affirmed the judgment in all respects.
- The district court did not clearly err in finding the cargo was delivered in good condition; the rust/wet notations were supported as standardized descriptions of non-damaging atmospheric rust, consistent with survey evidence showing no depreciation.
- The “peril of the sea” defense failed because defendants did not carry their burden to show the loss was solely due to an excepted peril and to show due diligence to make the vessel seaworthy; seawater entry through unseaworthy hatch covers supported liability.
- The market-discount approach was upheld as a permissible way to measure diminution in market value from cargo damage.
- The $500 per package limitation applied per package and was not multiplied by the number of liable defendants; the shipper could not recover up to the limitation separately from each defendant.
- The charterer’s cross-appeal seeking additional indemnity-related relief was rejected.

## Legal Principles

- A shipper makes a COGSA prima facie case by showing cargo was delivered to the carrier in good order and was discharged in damaged condition; condition notations on bills of lading do not defeat the showing where credible evidence establishes the notations describe non-damaging, customary conditions.
- Once a prima facie case is shown, the carrier must prove an excepted cause and, where relevant, that it exercised due diligence to make the vessel seaworthy; unseaworthiness contributing to the loss defeats reliance on the peril-of-the-sea exception.
- Cargo damages under COGSA are generally measured by diminution in market value; valuation based on observed market discounts for damaged goods can be an acceptable proof method.
- COGSA’s $500 per package limitation caps liability per package (absent a declared higher value) and is not increased based on the number of defendants who are jointly and severally liable.

## Conclusion

The court upheld liability for seawater-damaged steel where standardized rust/wet bill-of-lading notations did not negate good order at loading, the storm defense failed because unseaworthy hatch covers allowed seawater ingress, damages were properly measured by market discount, and the COGSA $500 per package cap applied per package rather than per defendant.


Thyssen, Inc. v. S/S Eurounity, 21 F.3d 533 (2d Cir. 1994)