Liability for Losses Caused By InherentlyDangerous Goods Shipped By Sea

BYJUSTIN DuCLOS*

I. T HE SETTIN G ...................................................................................... 62II. A LAUN CH POINT .............................................................................. 65III. THE IRRELEVANCE OF A SHIPPER'S KNOWLEDGE: STRICT

L IAB ILITY ...................................................................................... 66IV. CARRIER KNOWLEDGE INTERRUPTS STRICT LIABILITY:

CONSTRUCTIVE KNOWLEDGE AND REVERSION TO THEFAILURE TO WARN THEORY ......................................................... 68

A. Constructive Knowledge ............................................................. 68B. Reversion to the Failure to Warn Theory .................................... 70

1. Balancing Knowledge .......................................................... 702. C ausation ............................................................................... 73

V. KNOWLEDGE, STRICT LIABILITY AND THE FAILURE TO WARN INSU M .............................................................................................. 73

The author thanks BENEDICT'S MARITIME BULLETIN, its editor John A. Edginton, and, inparticular, the efforts of George F. Chandler, of Hill Rivkins & Hayden LLP, Houston, Texas, forthe editorial attention each has given to this article.

I. THE SETTING

The Carriage of Goods By Sea Act ("COGSA"),1 which applies toall bills of lading for the shipment of goods by sea to and from ports of theUnited States,2 provides at section 1304(6)3 for the allocation of liabilitiesto the shipper4 and carrier5 when inherently dangerous cargo causes a loss.Section 1304(6) states:

Goods of an inflammable, explosive, or dangerous nature tothe shipment whereof the carrier, master or agent of thecarrier, has not consented with knowledge of their nature andcharacter, may at any time before discharge be landed at anyplace or destroyed or rendered innocuous by the carrierwithout compensation, and the shipper of such goods shall beliable for all damages and expenses directly or indirectlyarising out of or resulting from such shipment. If any suchgoods shipped with such knowledge and consent shallbecome a danger to the ship or cargo, they may in likemanner be landed at any place, or destroyed or renderedinnocuous by the carrier without liability on the part of thecarrier except to general average, if any.Naturally, the application of this provision has required development

beyond its textual clarity under the manifold factual circumstances thatwarrant its invocation. Absent a contractual allocation,6 courts have made

1. Due to the recodification of Title 46 of the United States Code, the Carriage of Goods bySea Act may now be found in the note following 46 U.S.C. § 30701. Accordingly, it should nowbe cited as the Carriage of Goods by Sea Act Sec. 1-16, Ch. 229, 49 Stat. 1207 (1936), however,for convenience it and its subparts are referred to herein by their prior designations, 46 U.S.C. §§1300-15 (2000).

2. Senator Linie GMBH & Co. KG v. Sunway Line, Inc., 291 F.3d 145, 153 (2d Cir. 2002)(quoting Nippon Fire & Marine Ins. Co. v. M.V. TOURCOING, 167 F.3d 99, 100 (2d Cir. 1999),and citing 46 U.S.C.App. §§ 1300, 1312).

3. This provision is now codified at Carriage of Goods by Sea Act Sec. 4(6), Ch. 229, 49Stat. 1207 (1936), see note 1.

4. Convoluted facts can sometimes cloud the identification of a "shipper." See Yang MingMarine Transp. Corp. v. Okamoto Freighters Ltd., 259 F.3d 1086 (9th Cir. 2001) (to identify theshipper, the court looked first to the bill of lading); APL Co. Pte. v. UK Aerosols Ltd., 2007AMC 368, 369 (N.D. Cal. 2007) (defining "shipper" in context).

5. "Carrier" is only partly defined in COGSA itself, at 46 U.S.C. § 1301(a), as "the owner orthe charterer who enters into a contract of carriage with a shipper." This provision is nowcodified at Carriage of Goods by Sea Act Sec. l(a), Ch. 229, 49 Stat. 1207 (1936), see note 1.

6. See APL, 2007 AMC at 370 (discussing the allocation of liability provided for in a bill of

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liability under the dangerous and hazardous goods provision of COGSA todepend on a knowledge balancing scheme.7 The scheme starts with strictliability for the shipper as a default rule. If the carrier has some degree ofknowledge that makes it aware of the dangerous nature of goods, then thegoverning principle of fault shifts away from strict liability to one of twodifferent liability theories,8 either a negligence theory under the generalmaritime law (Contship9 is an example), or a theory common to productsliability (HARMONY IlO is an example). Both of these approachesgenerally result in the application of a failure to warn theory.

Strict liability is liability imposed on an actor for preconceivedpolicy reasons. When imposed, it applies regardless of an actor's intent tointerfere with a legally protected interest without a legal justification, and itdoes not take into account whether the actor breached a duty to exercisereasonable care."' The Senator Linie12 case is one of several that highlightsthe default application of strict liability to the shipper under COGSA.

The failure to warn theory, as made manifest through negligence andproducts liability, is brought into play by the application of the generalmaritime law instead of strict liability under COGSA. Negligence can beunderstood as failing to do something that a reasonable person would do, or

lading); International Ore & Fertilizer Corp. v. SGS Control Servs., Inc., 38 F.3d 1279, 1284,

1995 AMC 944 (2d Cir. 1994) (if a contract controls the duties owed between parties thereto, nocause of action sounding in tort is available to them).

7. See, e.g., APL Co. Pte. v. UK Aerosols Ltd., Inc., 2006 AMC 2418, 2429 (N.D. Cal.2006) ("Liability for the damage... will depend upon 'the particulars of what [the carrier] and

the shipper knew and their respective duties."' (quoting Contship Containerlines, Ltd. v. PPGIndus., Inc., 442 F.3d 74, 75, 2006 AMC 686 (2d Cir. 2006), cert. denied, 127 S.Ct. 565 (2006))).

8. The circumstances under which either is applied to the exclusion of the other is beyondthe scope of this article. Note that In Re MIV DG HARMONY, 394 F. Supp. 2d 649, 672-73,2005 AMC 2528 (S.D.N.Y. 2005) ("HARMONY I") (on appeal to the United States Court ofAppeals, Second Circuit, as of publication), treats the issues together as if one and the same.

9. Contship, 442 F.3d at 78.

10. In Re M/VDG HARMONY, 394 F. Supp. 2d at 673.

11. See Chotin Transp., Inc. v. United States, 819 F.2d 1342, 1352, 1988 AMC 2375 (6thCir. 1987) (Milburn, J., concurring in part and dissenting in part) (quoting W. Prosser & W.Keeton, The Law of Torts § 75, at 534 (5th ed. 1984)). The dissent in Chotin really untanglessome of the tort liability relationships as applied under a federal statutory scheme informed by the

general maritime law, including whether, how, and why a shift from strict liability to comparativeliability should be accomplished. Summarily stated, the dissent posits that strict liability relievesone party from proving negligence, but does not negate the other party's right to counter withevidence of comparative fault-any limitation on the latter would convert the regime to one ofabsolute liability.

12. 291 F.3d 145.

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doing something that a reasonable person would not do. 13 The elements ofa products liability action are (1) that the defendant sold or manufactured aproduct, (2) the product was unreasonably dangerous or was in a defectivecondition when it left the defendant's control, and (3) the defect causedinjury to the plaintiff. 4 A "product is deemed defective and unreasonablydangerous even if there is no manufacturing or design defect if the seller ormanufacturer fails to give an adequate warning as to foreseeable risks."' 5

Furthermore, because the duty to warn is so often cited once the issueswitches away from strict liability, it is important to note that "[u]ndergeneral maritime law a shipper has a duty to warn the stevedore and theship owner of the foreseeable hazards inherent in the cargo of which thestevedore and the ship's master could not reasonably have been expected tobe aware."

16

Under the failure to warn regime, the knowledge attributable to thecarrier is compared to that attributable to the shipper, and the failure to actupon knowledge determines the ultimate liability. Constructiveknowledge-the equitable imputation of knowledge upon a party who hasfailed to become familiar with or act upon readily ascertainable conditions,despite having the duty to do so-is sufficient to animate the duty towarn. 7 While the shipper is expected to know more about what it shipsthan the carrier, which explains why the default rule imposes strict liabilityon the shipper, the carrier may be saddled with knowledge of the dangerousnature of goods in any number of ways.

Also, as known to both the elements of products liability andtraditional negligence, the failure to act upon knowledge must have beenthe cause of the loss.1 8 In other words, the loss must not have beeninevitable, meaning that it must not have had the possibility of occurring

13. See United States v. Waterman S.S. Corp., 190 F.2d 499, 503, 1951 AMC 1291 (5th Cir.1951) (quoting The Nitro-Glycerine Case, Parrot v. Wells, Fargo & Co., 82 U.S. 524 (1872),which in turn quotes Blyth v. Birmington Water Works, 11 Exchequer 784).

14. See In Re M/VDG HARMONY, 394 F. Supp. 2d at 673.

15. Id.

16. Ente Nazionale Per L'Energia Electtrica v. Baliwag Navigation, Inc., 774 F.2d 648, 655,1986 AMC 1184 (4th Cir. 1985).

17. See The PEGEEN, 14 F. Supp. 748, 753, 1936 AMC 667 (S.D. Cal. 1936) (discussingthe imputation of knowledge under the Limited Liability Act).

18. See Ente Nazionale, 774 F.2d at 655 ("'Generally, "proximate cause" in the admiraltycontext is defined as "that cause which in a direct, unbroken sequence produces the injurycomplained of and without which such injury would not have happened"') (quoting OlympicTowing Corp. v. Nebel Towing Co., 419 F.2d 230, 233 (5th Cir. 1969)).

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even if action had been taken in light of knowledge exposing the cargo'sdangerous condition.

This article considers the interrelationship of these concepts, asillustrated by several recent cases, when losses are caused by shipment ofinherently dangerous goods under COGSA. It will also show how a carriercan end up bearing the burden of such a loss, despite the default rule that ashipper is strictly liable for losses caused by its inherently dangerous cargo.Different types of knowledge, with which the shipper and carrier might becharged in differing degrees, can dictate the allocation of liability betweensuch parties.

II. A LAUNCH POINT

In Contship, the court sorted through the major theories andelements of liability used to allocate responsibility for losses caused by theshipment of inherently dangerous cargo, namely strict liability, the balanceof knowledge, and causation.19 In 1997, PPG Industries, Inc. ("PPG"),shipped 512 drums of the volatile chemical compound calciumhypochlorite ("Cal Hypo") on the M/V CONTSHIP FRANCE,2° whichConti Zweite Cristallo Schiffarhrts GMBH & Co. ("Conti") owned, andwhich Contship Conainerlines, Ltd. ("Contship") chartered.21 Late in 1997,a fierce explosion ripped through a hold of the CONTSHIP FRANCE whileit was docked in Tahiti.22 This event set several lawsuits into motion.23

Conti and Contship filed claims against each other to resolve theirrespective losses and eventually fixed their respective liabilities througharbitration. 4 Conti, Contship, and other parties in interest continued withconsolidated suits against the shipper, PPG, as defendant, claiming strictliability and negligence theories of recovery.25

After several rulings concerning the proper forum and theadministration of discovery, the case proceeded to a bench trial in the

19. Contship, 442 F.3d at 77-79.

20. Id. at 75.

21. Contship Containerlines, Ltd. v. PPG Indus., Inc., No. 00 Civ. 0194 RCCHBP, 2003 WL1948807, at *1 (S.D.N.Y. Apr. 23, 2003).

22. Contship, 442 F.3d at 75.

23. Contship, 2003 WL 1948807, at *1.

24. Id.

25. Conti Zweite Cristallo Schiffarhrts GmbH & Co. KG v. PPG Indus., Inc., No. 99 Civ.10545(RCC), 00 Civ. 0194(RCC), 2001 WL 1154690, at *1 (S.D.N.Y. Sept. 28, 2001).

Southern District of New York 26 and up on appeal to the Second Circuit.27

The district court placed all fault on the carrier, Contship, because it foundthat the crew committed two errors that caused the fire: first, stowing thecargo directly above a heat generating fuel tank, and second, heating thefuel to abnormally high temperatures.28

Citing Ente Nazionale, and O'Connell Machinery Company, Inc. v.M. V. AMERICANA, 29 the Second Circuit reduced the case to two issues.First, the carrier's knowledge, specifically, whether it was reasonable toexpect Contship to have been aware of the dangers inherent in the cargo.Second, causation, namely whether a warning from PPG would haveimpacted Contship's stowage method.3"

The Second Circuit first held that "a carrier cannot invoke strictliability [where it knew the cargo] pose[d] a danger ... and neverthelessexpose[d] the cargo to the general condition that triggers the... danger."" l

Second, the court found that a carrier cannot prevail on a negligent failureto warn theory where it is reasonable to expect the carrier to have knownthat the cargo was inherently dangerous and where any failure to warnwould not have impacted the carrier's stowage plan.3 2 This resultdemonstrates both a move away from shipper strict liability because of thecarrier's knowledge, and a lack of the causation element in the failure towarn theory. Thus, liability was fully shifted to the carrier.

Because of the way in which the issues in Contship were resolved,the case provides a good launch point for a more in-depth analysis.

III. THE IRRELEVANCE OF A SHIPPER'S KNOWLEDGE: STRICT

LIABILITY

The application of strict liability under COGSA's inherentlydangerous cargo provision bears no relation to the shipper's knowledge ofdangerousness, as it is an exception to the statute's general requirement thatshipper liability must be premised on fault or negligence.33 In Senator

26. Id. at *1; Contship, 2003 WL 1948807.

27. Contship, 442 F.3d 74.

28. Id. at 76.

29. 797 F.2d 1130, 1134 (2d Cir. 1986).

30. Contship, 442 F.3d at 78.

31. Id. at77.

32. Id. at 78-79.

33. "The shipper shall not be responsible for loss or damage sustained by the carrier or theship arising or resulting from any cause without the act, fault, or neglect of the shipper, his

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Linie, the court found that COGSA did not codify the principles of generalmaritime law in the United States, but rather was a wholesale adoption ofthe pre-existing international regime governing the transoceanic carriage ofgoods commonly known as the Hague Rules.34 Thus, the court ruled that ashipper's actual or constructive35 knowledge of the dangerous nature ofgoods is of no consequence when determining the applicability of section1304(6).36

In Senator Linie, the vessel owner sued the shipper for aspontaneous combustion that occurred aboard its ship during transit.37 Thevessel owner, pressing for the shipper's strict liability under section1304(6), argued that where the shipper knew nothing of the nature of thegoods it was shipping, it was no less liable because of that fact.38 Theshipper contested that the imposition of liability under section 1304(6)required a negligence-type rule based on actual or constructive knowledgeof the inherently dangerous nature of the cargo. 39 The court held thatsection 1304(6) is a risk-allocating rule that imposes strict liability on ashipper only where neither the shipper nor the carrier knew or should haveknown that the goods were inherently dangerous.40

The policy behind a default application of strict liability to theshipper in that circumstance is that the shipper is in a better position thanthe carrier to know the nature and character of the goods it ships.4 '

agents, or his servants." Carriage of Goods by Sea Act Sec. 4(3), Ch. 229, 49 Stat. 1207 (1936),see note I. See also Senator Linie, 291 F.3d at 153-57.

34. See, e.g., Compania Sudamericana de Vapores S.A. v. Sinochem Tianjin Co., 2007AMC 1467, 1469 (S.D.N.Y. 2007) (COGSA "'represents the codification of the United States'obligations under the International Convention for the Unification of Certain Rules of LawRelating to Bills of Lading' (the 'Hague Rules').") (quoting J.C.B. Sales Ltd. v. Wallenius Lines,124 F.3d 132, 134 (2d Cir. 1997)) (citing Robert C. Herd & Co. v. Krawill Mach. Corp., 359 U.S.297, 301 (1959); Sonito Shipping Co. v. Sun United Mar. Ltd., 2007 WL 806612, at *5 n.3(S.D.N.Y. Mar. 16, 2007)).

35. A concise definition of constructive is: not being, but being so considered under theguise of equity. BLACK'S LAW DICTIONARY 333 (8th ed. 2004) defines "constructive" as"legally imputed; having an effect in law though not necessarily in fact. Courts usu. givesomething a constructive effect for equitable reasons."

36. Senator Linie, 291 F.3d at 153.

37. Id. at 148.

38. Id.

39. Id.

40. Id.

41. Id. at 169. See also Compania Sudamericana, 2007 AMC at 1470 ("[Tlhe shipper[] wasbetter positioned to ascertain the true nature of the shipped goods and explain to the carrier orvessel owner how the goods should be stored."). But see Borgships Inc. v. Olin Chems. Group,

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HARMONY I addressed this issue, and there the court relied on theconclusions of Senator Linie to impose liability on the shipper undersection 1304(6).42 The court found that as shipper and manufacturer, theshipper "was in a better position to ascertain ahead of time the true natureof the shipped goods."43

Thus, rather than premising liability on the shipper's knowledge,courts have somewhat ironically shifted the focus to the carrier'sknowledge because a shipper is by default strictly liable absent somemitigating knowledge attributable to the carrier.

IV. CARRIER KNOWLEDGE INTERRUPTS STRICT LIABILITY:

CONSTRUCTIVE KNOWLEDGE AND REVERSION TO THE FAILURE

TO WARN THEORY

The Senator Linie court noted that it was only the carrier'sknowledge that could negate the application of section 1304(6), stating that"it is the carrier's knowledge of the goods' dangerous nature, not theshipper's, that conditions shipper liability."" Thus, when a carrier is in theknow, it generally cannot employ a strict liability theory against a shipperunder section 1304(6). 4" Other courts have either implicitly or expresslyemployed the same rubric.

A. Constructive Knowledge

An issue that has surfaced more than once in this context is whethera carrier's constructive knowledge can interrupt a shipper's strict liability.Because it is reasonable to assume carriers will act on actual knowledge of

1997 WL 124127, at *3 n.2 (S.D.N.Y. Mar. 19, 1997) (The court in this case stated that the"obligation does not extend so far, however, as to charge the carrier with knowledge of which itcould not reasonably have been aware." However, this case appears to be overruled by SenatorLinie in so far as it mistakes COGSA's true pedigree for the general maritime law).

42. In Re M/VDG HARMONY, 394 F. Supp. 2d at 671.

43. Id. See also In re MV DG HARMONY, No. 98 Civ. 8394(DC), 2007 WL 895251(S.D.N.Y. Mar. 16, 2007) (clarifying HARMONY I and ruling that the allocation of fault wasindeed 100% shipper's); In re MN DG HARMONY ("HARMONY II"), 436 F. Supp. 2d 660(S.D.N.Y. 2006) (HARMONY II discusses the proportionate share approach to divvying up tortliability amongst settling and non-settling parties to admiralty actions); In re M/V DGHARMONY ("HARMONY III"), 2007 AMC 181 (S.D.N.Y. 2006) (HARMONY III clarifies thepossibility of indemnification from the shipper for losses that the carrier may incur under SouthAmerican law with respect to South American interests).

44. Senator Linie, 291 F.3d at 154. See also APL, 2007 AMC at 375-76 (discussing theinterplay of the Senator Linie and Contship cases).

45. Senator Linie, 291 F.3d at 154.

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inherent dangerousness, the more appropriate inquiry may be into whatkind or degree of constructive knowledge would be necessary to cause aninterruption in a shipper's otherwise strict liability.

For example, in HARMONY I, the shipper and the carrier were eachignorant of the specific dangers inherent in Cal Hypo when it is stowed ingreater quantities than the governing regulations account for.46 Thus, thedefault allocation of liability fell with the shipper. 47 The shipperunsuccessfully argued that the carrier consented to shipment withknowledge of the inherent risks because the carrier knew it was stowingCal Hypo and it was also aware of published specifications for stowage.48

But again, because in this case the Cal Hypo was packed in drums of muchgreater weight than the printed governing regulations and specificationsaccount for, the court held that the carrier's consent to carriage was notinformed because it was not in a position to know the likely effects of suchan untested packing method.49 This case implicitly recognizes that acarrier's constructive knowledge based on publications at hand caninterrupt the shipper's strict liability.50 However, it expressly and sensiblyholds that for this kind of constructive knowledge to apply the actualsituation must match those contemplated by the relevant regulations ofrecord.5

Contship considered a similar constructive knowledge argument, butruled differently because Contship could not claim PPG owed it a duty toinform it of something it conceded knowing from guidelines published inthe International Maritime Dangerous Goods Code ("IMDG"), 52 namely

46. In Re M/VDG HARMONY, 394 F. Supp. 2d at 671.

47. Id.

48. Id. at 671-72.

49. Id. at 672 (furthermore, the Cal Hypo was loaded while still hot, a precondition likelynot contemplated by the carrier and better known by the shipper).

50. See Compania Sudamericana, 2007 AMC at 1470, which missed this critical distinctionwhen it stated that "[IMDG] reference numbers are arguably inadequate notice to avoid liabilityunder COGSA § 1304(6)."

51. Id.

52. See International Maritime Organization, International Maritime Dangerous GoodsCode, IMO Pub. No. IF200E (2006). A description of the IMDG Code is available athttp://www.imo.org/Safety/mainframe.asptopic-id=158#4. At the time of the explosion, CalHypo was listed in the IMDG as a hazardous material that required stowage according to detailedspecifications. The IMDG was adopted by the United Nations as the uniform internationalregime for the classification and regulation of hazardous sea cargoes, and relevant Department ofTransportation regulations in force at the time of the explosion incorporated the IMDG.

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that Cal Hypo is at least heat sensitive to some degree.53 The IMDGrequired Cal Hypo to be stowed in transit at or below forty-five degreescelcius,54 its control temperature, which is ten degrees lower than thetemperature at which sustained exposure would lead to self-acceleratingdecomposition and an inevitable explosion.5 Contship at least knew thatCal Hypo was heat sensitive, and the court reasoned that it therefore couldnot claim that the shipper, PPG, owed it a duty to inform it of as muchwhere Contship totally disregarded the compound's heat sensitivity in theface of that knowledge.56

B. Reversion to the Failure to Warn Theory

When the carrier has met a threshold degree of knowledge of theinherent dangerousness of cargo, it, again, cannot invoke the strict liabilityof section 1304(6), but it can look to theories under the general maritimelaw based on the failure to warn.57 The extent of the carrier's knowledge,along with ordinary causational inquiries, are the fulcrums on whichoutcomes often turn.5 8

1. Balancing KnowledgeAlthough the carrier can revert to a failure to warn theory despite

possessing some pertinent information about the cargo's dangerousness, thecarrier's actual or constructive knowledge is not then a nullity because thefailure to warn inquiry considers the balance of knowledge between theshipper and the carrier.59 Any type of actual or constructive knowledge can

53. Contship, 442 F.3d at 78.

54. In Re M/VDG HARMONY, 394 F. Supp. 2d at 657-59.

55. Id. at 656-59.

56. Contship, 442 F.3d at 78. This point runs right into the causation analysis.

57. See In Re M/V DG HARMONY, 394 F. Supp. 2d at 672-73 ("Even assuming the strictliability claim fails, plaintiffs may still prevail by establishing their claims for failure to warn andnegligence by showing fault on the part of [the shipper]."); Ionmar Compania Naviera, S.A. v.Olin Corp., 666 F.2d 897, 904, 1982 AMC 1489 (5th Cir. 1982) (concluding that the liability of ashipper would depend on shipper's failure to warn and the respective negligence of the carrier andshipper). At least one duty to warn set in the general maritime law context extends from therealm of products liability. See East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S.858, 865, 1986 AMC 2027 (1986) (seminal case recognizing products liability in generalmaritime law).

58. See In Re M/VDG HARMONY, 394 F. Supp. 2d at 672 (carrier knowledge did not rise toa level that defeated its claim).

59. In fact, an apportionment of comparative fault is possible. See Boykin v. Bergesen D.Y.A/S, 835 F. Supp. 274, 281, 1994 AMC 715 (E.D. Va. 1993) ("In maritime tort cases, when more

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be imputed to either party to alter the balance of knowledge between them.Carriers have successfully employed a failure to wam theory using a

shipper's constructive knowledge. In one such case, Boykin, the courtrested a negligence judgment against a shipper on its constructiveknowledge of the inherently vicious quality of the goods it shipped,including published regulations and its own historical shippingexperiences." In Narcissus Shipping Corp. v. Armada Reefers Ltd., thecourt also imposed a negligence judgment against shippers because of theirconstructive knowledge, including their own historical shippingexperiences.61

Similarly, the court in HARMONY I employed more of a productsliability theory to balance degrees of knowledge between the shipper andthe carrier.62 In doing so, the court found that where both parties were notin possession of relevant knowledge, the shipper was in a better position toknow more about the dangerous nature of the cargo and particular stowagemethods for several reasons, not the least of which was its involvement in aprior shipping disaster that involved the same kind of cargo, a similarmethod of packing, and a similar method of stowage.63 The loading ofPPG's Cal Hypo at issue in HARMONY I took place in 1998, although theopinion was written in 2005.64 The Contship case concerned PPG and an

than one party is alleged to be responsible for the incident, liability for damages is allocatedamong the parties proportionately according to their degree of fault.").

60. Boykin, 835 F. Supp. at 280.61. 950 F. Supp. 1129, 1139-40 (M.D. Fla. 1997).62. In Re M/VDG HARMONY, 394 F. Supp. 2d at 671. Note here that the court entertained

this argument only after finding that strict liability applied to the shipper where neither theshipper nor the carrier had sufficient knowledge to shift the analysis to a failure to warn theory.The court apparently went further just to shore up its strict liability analysis. Although, there is aslight inconsistency in the court's treatment of the shipper's (PPG) constructive knowledge acrossboth strict liability and failure to warn. The court stated first in its application of strict liabilitythat "[t]he vessel and cargo interests.., did not have actual or constructive pre-shipmentknowledge of the true nature of the cargo or the full extent of the danger presented. Nor,apparently, did PPG have actual such knowledge." Id. The court then stated later in itsapplication of a failure to warn theory that

[a]lthough I have concluded that PPG was not actually aware of the full risks ofshipping cal-hypo in 300-pound drums in the manner in which it was shipped here, Iconclude also that the hazard was foreseeable, as there were sufficient red flags tohave caused PPG, in the exercise of reasonable care, to have investigated further thedangers presented.

Id. at 674. This latter acknowledgement reads much like finding PPG did in fact haveconstructive knowledge.

63. In Re M/VDG HARMONY, 394 F. Supp. 2d at 673-75.

64. Id. at 654.

incident that took place in 1997, but the opinion in that case was written in2006.65 Consequently, the HARMONY I opinion imposed the specifichindsight of the CONTSHIP FRANCE incident on PPG even though theopinion concerning that vessel had not yet been written. 66

If the shipper does know of the cargo's dangerousness, courts willthen consider what action the party took based upon such knowledge,especially whether and to what extent it gave a warning: "[t]he adequacyof a warning depends on its reasonableness in view of the dangercreated. 67 Moreover, the "shipper [has] an obligation to inform the carrierof special requirements regarding stowage location, and to make suchspecial arrangements in advance of stowage." 6t On the other hand, "theshipper has no duty to warn the stevedore and the ship owner of hazards ofwhich they were aware or could reasonably have been expected to havebeen aware."169 In such a case "[t]he manufacturer must show that theinjured party 'had knowledge of the specific hazard and of the extent ofharm that could follow, so that his choice to brave it was an informedone."' 70 While this last statement is truly just a part of the knowledgebalancing scheme, the statement in isolation appears as something of an"assumption of the risk" defense hidden within the general maritime law.7'

Carriers beware, however, because if the balance of knowledgefavors the shipper, the balance may do more than just shield the shipper-itmay cut through to the carrier. Thus, a rule that accents the completeknowledge-based reversals of fortune possible in this setting holds thatwhere the carrier knew the cargo possessed abnormal characteristics and"the carrier thereby recognized or should have recognized as a matter ofcustom or usage consequential special stowage needs. . . the shipper mightrecover for damage caused by the carrier's negligence. 72

65. Contship, 442 F.3d at 75.

66. In Re M/VDG HARMONY, 394 F. Supp. 2d at 662-66.

67. Id. at 673. The court also noted that "'[i]n assessing what hazards are foreseeable, a

manufacturer is held to the status of an expert."' (Quoting Pavlides v. Galveston Yacht Basin,Inc., 727 F.2d 330, 338, 1985 AMC 202 (5th Cir. 1984)).

68. O'Connell, 797 F.2d at 1134.

69. Ente Nazionale, 774 F.2d at 655.

70. In Re M/VDG HARMONY, 394 F. Supp. 2d at 673 (quoting Pavlides, 727 F.2d at 340).

71. See generally 2 C.J.S. Admiralty § 116 (2003) (citing to cases recognizing that the

"assumption of the risk" defense has no place in the admiralty law because it has been replacedwith a pure comparative negligence regime).

72. O'Connell, 797 F.2d at 1135.

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2. CausationFor liability to shift to the party who possessed knowledge but failed

to warn, the resulting absence of knowledge borne by the other party mustbe the cause in fact of the loss event.7 3 For example, in Ente Nazionale thecourt found that a shipper's negligent failure to warn a carrier of thedangerous peculiarities of a boatload of coal was not a loss-shifting causeof the ensuing casualty. 74 This was because the ship's captain negligentlyventilated the coal in the face of preexisting knowledge, such that awarning from the shipper would have added nothing different to affect theoutcome.75

In Contship, the court blended the knowledge, warning, andcausation issues to sever the causation of any failure to warn from theresulting loss. It found that Contship completely ignored even the mostbasic sensitivities of Cal Hypo, of which it was at least constructivelyaware, and that therefore a warning would not have caused Contship to actany differently.76 Thus, a carrier's attempt to pin liability on a shipper whofailed to warn of the cargo's dangerous nature will not succeed if the failureto warn did not actually cause the loss, or in other words, if the loss wouldhave occurred even if a warning had been given.

V. KNOWLEDGE, STRICT LIABILITY AND THE FAILURE TO

WARN IN SUM

Where the shipper and carrier have no imputable actual orconstructive knowledge, or where the shipper is the only party with suchknowledge, liability for losses occurring during the shipment of inherentlydangerous goods will often fall strictly on the shipper because it is in abetter position to know the nature of its goods. Where the carrier has somedegree of imputable actual or constructive knowledge, it cannot rely on theshipper's strict liability for recovery. Rather, in that event, the carrier orthe shipper can employ a brand of failure to warn theory which balancesthe degrees of actual or constructive knowledge at play to allocate liabilityto either the shipper or the carrier, subject always to a causation analysis.The cited cases demonstrate that there are creative ways to imputeconstructive knowledge on both the shipper or the carrier to tilt the balance

73. Ente Nazionale, 774 F.2d at 655 (cited as the "but for" rule).

74. Id. at 656.

75. Id. at 656-57.

76. Contship, 442 F.3d at 79.

74 U.S.F. MARITIME LAW JOURNAL [Vol. 20 No. I

of liability one way or the other, including the existence of publishedregulations and a party's history of involvement in losses caused byinherently dangerous goods.