Contship Containerlines, Ltd., Conti Zweite Cristallo Schiffarhrts Gmbh & Co. Kg Ms Contship France, Nsb Niederelbe Schiffahrtsges Mbh & Co Kg, Sveriges Angfartygs Assurans Forening, Also Known as the Swedish Club, Stewart Arthur Holmes, as Underwriter for and on Behalf of Lloyds Syndicates 724 & 2724, Christine E. Danbridge, Independent Insurance Co., Ltd., Liverpool and London Steamship Protection and Indemnity Association Limited, Bergens Skibsassuranseforening and Deutsch Versicherungs-Und Ruckversicherungs A.G. v. Ppg Industries, Inc., Docket No. 05-0267-Cv
Docket: 74
Court: Court of Appeals for the Second Circuit; March 20, 2006; Federal Appellate Court
The case involves Contship Containerlines, Ltd. (plaintiff-appellant) and PPG Industries, Inc. (defendant-appellee), stemming from a fire aboard the Contship France, which was attributed to the overheating of calcium hypochlorite (Cal Hypo) cargo shipped by PPG. Contship acknowledged that it was aware of the flammability risks associated with Cal Hypo, specifically that it could ignite at temperatures exceeding 55°C. The district court determined that the fire's proximate cause was Contship's negligence in stowing the cargo in a location subject to temperatures reaching at least 47°C, which is critical for self-accelerated decomposition of Cal Hypo. On appeal, Contship challenged the dismissal of its claims for strict liability and failure to warn. The appellate court upheld the district court's decision, examining whether a carrier can recover under strict liability when the cargo is known to be hazardous and if a shipper’s general warnings about such hazards fulfill their duty to inform. The court noted the specifics of the incident, including the flammable nature of the shipped Cal Hypo, the improper stowage above the fuel tank, and the heating of the ship's fuel to excessive temperatures, which collectively led to the dangerous conditions that ignited the cargo after 18 days of exposure.
Contship asserts that industry guidelines indicate a maximum safe storage temperature of 55°C for Cal Hypo, claiming it acted reasonably by storing the chemical below this threshold. Contship contends PPG should be held liable for failing to warn about the need for special care regarding the shipment of potentially unstable Cal Hypo. Relevant Department of Transportation regulations, which include the IMDG Code, mandate that Cal Hypo be stored away from heat sources if temperatures above 55°C are expected for extended periods. Contship believes this regulation supports its position that stowing Cal Hypo below 55°C is safe unless the shipper provides contrary advice.
PPG acknowledges it knew the critical temperature for its 425-pound Cal Hypo drums was lower than 55°C and argues it had a duty to warn Contship, which it failed to do, claiming that this constitutes strict liability for shipping a dangerous cargo. However, PPG contends that the regulations do not guarantee safety below 55°C as the critical temperature may vary with container size. The district court found Contship's stowage inappropriate because it disregarded heat factors, determining that PPG complied with its obligations and did not contribute to the fire that occurred.
The district court placed full responsibility for the fire on Contship, stating that its stowage practices were the main cause, not PPG's actions. Contship is appealing both the district court's attribution of fault and the dismissal of its strict liability claim. The appellate court will review the district court's factual findings for clear error and legal conclusions de novo, particularly focusing on causation and fault allocation. Contship’s strict liability claim is based on the Carriage of Goods by Sea Act (COGSA), which delineates liability between shippers and carriers concerning dangerous goods.
Strict liability is not available to a carrier aware that cargo is flammable and requires careful handling if it exposes the cargo to conditions that trigger its known dangers. Under COGSA, the dangerous nature of cargo is a key consideration, with shippers strictly liable for losses from inherently dangerous shipments, regardless of their awareness. In the case of *Senator Linie*, it was determined that a carrier cannot claim strict liability if it knows the cargo poses a danger, even if it lacks detailed knowledge of the cargo's characteristics.
In this context, the "nature and character" of calcium hypochlorite (Cal Hypo) is that it is flammable at elevated temperatures. Contship, aware of this property, improperly stowed Cal Hypo in a superheated location, thus negating its claim for strict liability as it created the danger it knew existed.
Contship also claims that PPG, the shipper, had superior knowledge regarding the specific dangers of Cal Hypo at temperatures below 55°C, which imposed a duty to warn under COGSA's negligence standards. Shippers must inform carriers of foreseeable hazards that they might not reasonably anticipate. However, liability for negligence requires proof that the absence of a warning would have changed the carrier's actions. Contship's claim necessitates demonstrating that PPG failed to warn about inherent dangers and that such a warning would have influenced the stowage decision.
Contship was expected to recognize the dangers associated with PPG's Cal Hypo cargo, particularly regarding its flammability at high temperatures. While Contship argued that Cal Hypo remains stable below 55°C, this claim is weakened by the IMDG Code, which indicates that carriers should be cautious with materials having critical temperatures above 35°C, advising stowage at least 10°C cooler. The Code also warns against stowage at temperatures exceeding 45°C. Despite this, the appeal's outcome does not hinge on interpreting these dangers, as the district court's findings on causation were not clearly erroneous.
The district court determined that Contship showed a lack of concern regarding heat effects on Cal Hypo, concluding that additional warnings would not have prevented the incident. It noted that Contship's stowage practices disregarded heat considerations, with a stowage planner focused only on deck placement, improperly stowing Cal Hypo near a heated fuel tank. Given that no one involved in the stowage paid attention to the IMDG Code’s warnings, the court found that Contship would not have heeded warnings regarding lower critical temperatures. This led to the dismissal of Contship's negligent failure to warn claim under COGSA. The court affirmed its judgment after considering the parties' other arguments, which were deemed without merit.
