In Re: M/V MSC Flaminia ( 2023 )

18-2974(L)
In re: M/V MSC Flaminia
In the
United States Court of Appeals
For the Second Circuit
______________
August Term, 2019
(Argued: May 15, 2020 Decided: June 30, 2023)
Docket Nos. 18-2974-cv(L), 18-3083-cv(CON)
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IN RE: M/V MSC FLAMINIA
_______________
Stolt Tank Containers B.V., Stolt-Nielsen USA, Inc., Deltech Corporation,
Plaintiffs-Claimants-Appellants,
ArcelorMittal, SNF Holdings, Flomin, Inc., SNF Saint Avold, SNF SAS, Roam
Global Logistics LLC, Tetra Technologies Norge, Milliken & Company, Ahlers EDC,
Steinweg Handelsveem, CISC Liggett-Ducat, British American Tobacco PLC, LLC,
Petroresurs, United Transport Tankcontainers BV, General Mills UK, Ayecue
Internacional S.L.U., C.H. Robinson International Inc., C.H. Robinson Poland S.P ZO.O,
Line X Acquisition LLC, Clariant Corporation, Panalpina, Inc., Potter Group, Ltd.,
Clariant Production, UK Ltd., Panalpina World Transport Ltd., Ecolab Inc., Nalco
Company, Eastman Chemical Company, Rauan Nalco LLC, Mexpack International
Movers S.A. deC., NSB Niederelbe Schiffahrtsgesellschaft MBH & Co KG, as operator,
of the vessel MSC FLAMINIA, Mueller Water Products, Inc., Rim Logistics, Ltd., VCK
Rotterdam BV, Protim Solignum Ltd., GP Cellulose GMBH, GP Harmon Recycling LLC,
Eagle Paper International, Inc., Trouw Nutrition USA, LLC, Cheng Loong Corporation,
Indemnity Insurance Company of North America, Ace European Group Ltd., Ace
Seguros S.A., Alcan Automotive LLC, RLI Insurance Company, Senator International
Ocean LLC, Plastic Omnium Automotive Exterior, Borbet, IAC Spartanburg, Behr
Industries, Mubeca Inc., Carcoustics USA Inc., Lear Corporation, Magna Exteriors and
Interiors, Proper Polymers, Excell USA Inc., TI Automotive, Draexlmaier Automotive
America, BMW Group Plan 2.7, BMW AG Werk 2.7, Gulbrandsen Chemicals Inc.,
Novozymes, Newport Tank Containers Inc., Huntsman Petrochemical LLC, Graftech
Switzerland S.A., Network America Lines, Graftech Mexico, Brokmak OU, Graftech
France SNC, Huntsman Holland B.V., Deltech Corporation, Deltech Europe Ltd., Nuco
Logistics, Inc., ARR-MAZ Custom Chemicals Inc., Triple F. Logistics B.V., Cray Valley
USA Inc., CJ Hendricks B.V., The Lubrizoil Corporation, Lubrizoil France SA, Bercen
Inc., Selluken AB, Hellas S.A., Bulkhaul (USA) Inc., ADPO NV, Bulkhaul Limited,
National Union Fire Insurance Company of Pittsburgh, PA., Chartis Seguros Mexico,
S.A. de C.V., AMI Trading (USA), Inc., Jewometaal Stainless Processing, Arubis AG,
Shandong Jinsheng NonFerrous Group Co., Ltd., Armstrong World Industries Inc.,
Expeditors MCO, Expeditors International (UK) Ltd., Atlas Van Lines International,
Oceanic Container Line, Inc., Oceanic Shipping & Transport GMBH, Lager, Cooper Tire
& Rubber Company, Cooper Tire & Rubber Company Europe Ltd., Coty Geneva S.A.,
Coty US LLC, Cray Valley USA LLC, Kintetsu World Express (USA) Inc.,
Environmental Express Inc., Metlab Supplies Ltd., DHL Global Forwarding, Firestone
Building Products Co., Wiehag GMBH, Bridgewell Resources LLC, Nippon Denko
Company Ltd., Quiborax S.A., Special Metals Welding Products Company, Precision
Castparts, Equipos Nucleares SA, Magnelec S.A. De C.V., Veitsch Radex GMBH & Co.
OG, Viscofan USA Inc., OOO Procasing, Taminco, Inc., United Transport Tank
Containers, 3M Belgium N.V., Interbulk (Tank Containers) Ltd., Nufarm UK Ltd.,
Butachimie, SKF De Mexico, S.A. De C.V., SKF GMBH, UAB Neo Group, Productora De
Tereftalatos De Altamira S.A. De C.V., EPU Service Center, NEK, Schlumberger
Technology Corporation, Terza S.A. De C.V., Galleon International Freight Service,
Groupement Ivoirien D'Industrie ET, Total Petrochemicals & Refining USA, Inc., AGCS
Marine Insurance Company, Rockwood Holdings, Inc., Rockwood Lithium, Inc.,
Bulkhaul UK Ltd., Chemtall GMBH, Volkswagen Group of America, Inc., Zenda
Dienstleistungen GMBH, Rudolph Logistik Gruppe, GMBH, Volswagenwerk AG,
Baillie Lumber Sales Co, Baillie Lumber Co., Trinseo Materials Operating S.C.A., Styron,
LLC, Styron Europe GMBH, Industrias John Deere SA De C.V., Wayand GMBH, John
Deere International GMBH, DOSECC Exploration Services, LLC, Global Logistics
Shipping Inc., Hydrobiological Institute-Ohrid, Rayonier, Inc., SE Tylose GMBH & Co.
KG, Vopak Agencies Rotterdam B.V., Dow Chemical Company, DOW Europe Gmbh,
BDP International NV, Angus Chemie GMBH, Amerchol Corporation, Estee Lauder,
Inoac Polytec De Mexico, Suttons International, Centre Point JB Nagar, Unicharm
Corporation, Procter & Gamble Company, Westerlund, Societe Industrielle De
Papeterie, Farmeko, Liberty International Underwriters, Huntsman Corporation,
Johann Haltermann Ltd., Monument Chemical BVBA, Copperweld Bimetallics LLC,
Red Electrica De Espana, Continental Insurance Company, Toyo Cotton Co., Fiber
Source International Corp., Asya Kagit Matbaa Gida Ve, Tekstil Santic AS, Stemaco
USA Inc., SB Enterprises, JA Lacour Company, Giorgio Gori USA Inc., Danzer UK Ltd.,
2
CNA Metals Limited, Thai Nguyen Iron and Steel Joint Stock Corporation, Oceanic
Logistics Inc., Exxonmobil Chemical Company, Advanced Elastomer Systems Ltd.,
Exxonmobil Specialty Elastomers, Exxonmobil Petroleum & Chemical Holdings Inc.,
Mobil Chemical Products International, Esso Societe Anonyme Francaise, Exxonmobil
Chemical Films, Exxonmobil Chemical Films Europe, Emeraude International SAS, XL
Specialty Insurance Company, Cabot Corporation, Kansai Nerolac Ltd. Bilakhia House,
Tokio Marine & Nichido Fire Insurance Co. Ltd., Shintech, Inc., Klockner Pentaplast,
Mitsubishi Corporation, Agrinorte S.A., Itochu Plastics PTE Ltd., Unitcargo Container
Line, Holzextroplast OOO, Aspen American Insurance Company, Inter-Trans
Insurance, Raif Coskun Caglar, Rainier Overseas Movers Inc., Vinmar International
Limited, Tricon Dry Chemicals LLC, MTS Logistics Inc., MTS Lojistik Ve tasimacilik
Hizmetleri Tic A.S., Elite House LLP, Taloox Group LLC, Ocean World Lines Inc.,
Trinity Industries Inc., Allseas Global Logistics, Hill & Smith Ltd., Formosa Plastics
Corporation, TCR Plastics, Apiexport S.A. De CV, Lamex Foods UK, Multienlaces De
Transportes Internacionales SA De CV, Banks And Lloyd (Shipping) Ltd., Great
American Insurance Company, Al Ahlia Insurance, Nipponkoa Insurance (Europe),
Prosight Specialty Insurance, Classic American Hardwoods, Carolina Ocean Lines,
Timber Connection, Palmer Timber, Naddi Motors, Link Lines Logistics, Inc., Golink
Ltd., Hanna Motors, Society A-N Auto Import Export, JF Hillebrand Mexico SA,
Bahrain Maritime & Mercantile International, Wisco Espanola SA, Ivan Luna Segura,
Carolinas Cotton Growers Corp., Starr Indemnity & Liability Company, American
Hardwood Industries, LLC. Tradelanes, Inc., Caterpillar Inc., Caterpillar SARL, Eneria
S.A.S., Zeppelin Power System GMBH, Zeppelin Baumaschinen GMBH, Pon Power AS,
Finning (UK) Ltd., Cargo Partner AG, Vinmar International Ltd., Caterpillar Marine
Power (UK) Ltd., Esco Corporation, Kamin LLC, OMYA AB, Schuite & Schuite
Druckfarben GMBH, OMYA GMBH, Kansai Altan Boya Sanayi Ve Ticaret AS, Prochem
AG, OOO OMYA URAL, Blagden Specialty Chemicals Ltd., Stanley Black & Decker,
Inc., Stanley Logistics Centre, Black & Decker Limited SARL, Expeditors International,
DSV Air & Sea Inc., DSV Air & Sea Ltd., Weatherford International Inc., Sabic
Innovative US, Sabic Innovative Plastics BV, Sabic Innovative Plastics India PVT Ltd.,
Sabic Innovative Plastics Mexico, Cummins Inc., Ceva Freight Management (Mexico),
CWL Mexico S De RL, Ceva Freight (UK) LTD., Crane Worldwide (UK) Ltd., Whitman
Laboratories Ltd., Unitrans P.R.A. Company, Inc., Grand Medical Group, Dart
Containers FCA Bahamas, Polymers International Limited, Surrey Europe SARL, Red
Square Corporation, Unitrans P.R.A. Company, Inc., FTT Consulting, Grand Medical
Group, Dart Containers FCA Bahamas, Polymers International Limited, Nomad Brands,
Inc. LLC TLC, NCR Nederland, NCR SDC, NCR Global Solutions, Gaylord Chemical
Co. LLC, IMCD Benelux N.V., ICC Chemical Corporation, Fleur De Lis Worldwide,
LLC, MTS Logistics, Inc., OOO Pioneer Trade, Pioneer Polyleathers PVT Ltd., Parmar
3
International PVT, Ltd., International Commodities, Arubis Belgium NVSA, Tyco
International Ltd., Ocean World Lines Inc., OWL Belgium, Honeywell International
Inc., E Rigas SA, Anheuser-Busch International Inc., Arkema Inc., Pfauth Logistiek
Diensyverl, Arkema Vlissingen BV, PJ Lumber Company, Lathams Limited, Ramsay
Timber, Junkers Industrier A/S, Danzer IK Ltd., Hardwood Dimensions Ltd., Timber
Connections Ltd., Tzeng Long USA, Inc., Rocktenn CP, LLC, Helvetia Insurance S.A.,
Chevron Oronite Company LLC, Chevron Oronite SAS, Turk Ekonomi Bakasi, UAB
"Jurvista", Stolt Tank Containers Germany GMBH,
Stolt Tank Containers France SAS,
Plaintiffs,
–v.–
NSB Niederelbe Schiffahrtsgesellschaft MBH & Co. KG, as operator, of the vessel MSC
FLAMINIA, Conti 11 Container Schiffahrts-GmbH & Co. KG MS MSC Flaminia, MSC
Mediterranean Shipping Company S.A., BDP International, Inc.,
Defendants-Appellees,
Rubicon LLC,
Third-Party-Defendant–
Appellee,
Chemtura Europe GmbH, Chemtura Corporation, Chemtura Italy S.R.L.,
Defendants–Counter-
Claimants–Appellees. ∗
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B e f o r e:
CHIN, CARNEY, and MENASHI, Circuit Judges.
______________
Deltech Corp. (“Deltech”), a chemical manufacturer, joins here with Stolt-Nielsen
USA, Inc., and Stolt Tank Containers B.V. (together, “Stolt”), a shipping concern, to
challenge the district court’s determination that they alone bear liability for damages
∗
The Clerk of the Court is directed to amend the caption to conform to the above.
4
caused by an explosion and fire that took place in June 2012 aboard the ocean-going
vessel M/V MSC Flaminia. Two weeks into the Flaminia’s trip from New Orleans
Terminal across the Atlantic, three tanks of 80% grade divinylbenzene (DVB-80)
manufactured by Deltech and shipped by Stolt exploded, and a fire then ignited, killing
several members of the ship’s crew, injuring others, and damaging the ship and its
cargo.
In the first phase of a three-part proceeding in the United States District Court for
the Southern District of New York (Forrest, J.), the district court addressed the causes of
the explosion. It determined that the decision to ship DVB-80 from New Orleans
Terminal rather than a northeastern port, the early filling of the DVB-80 containers and
their early transport to New Orleans Terminal, the conditions in which the tanks of
DVB-80 were kept at New Orleans Terminal, and their placement and stowage onboard
the Flaminia were the primary causes of the explosion. These conditions resulted in the
chemical undergoing runaway auto-polymerization, emitting a cloud of vapor that was
ultimately ignited when the crew’s firefighting efforts generated a spark. See In re M/V
MSC FLAMINIA, No. 12-cv-8892 (KBF), 2018 WL 526549, at *30-31 (S.D.N.Y. Jan. 23,
2018) (“Phase I”). In the second phase, the district court addressed liability for cargo loss
and damage. (Separately, claims for death and bodily injury had largely been settled.) It
found Deltech and Stolt together wholly responsible for those losses: Deltech, at a 55%
level, and Stolt, at 45%. See In re M/V MSC FLAMINIA, 339 F. Supp. 3d 185, 229–30
(S.D.N.Y. 2018) (“Phase II”). It exculpated other parties to the shipping transaction from
legal liability. It is this decision that Deltech and Stolt challenge now in an interlocutory
appeal. (In further proceedings, the court will make and apportion a damages award
among those parties still pursuing claims. Id. at 191.)
On review, we affirm in part and reverse in part. We REVERSE the district
court’s determination that Deltech and Stolt are strictly liable under Section 4(6) of the
Carriage of Goods at Sea Act (“COGSA”), 46 U.S.C. § 30701 (note), but we AFFIRM its
ruling that Deltech and Stolt are liable under a failure-to-warn theory pursuant to
Section 4(3) of COGSA. As to the other defendants, we AFFIRM the district court’s
conclusion that the carrier and related shipowner interests—MSC Mediterranean
Shipping Company S.A. (“MSC”), Conti 11 Container Schiffahrts-GMBH & Co. KG
MSC “FLAMINIA” (“Conti”), and NSB Niederelbe Schiffahrtsgesellschaft MBH & Co.
KG (“NSB”)—were not negligent in their treatment of the shipment, and that New
Orleans Terminal too was not negligent. We also AFFIRM the district court’s
determination that Stolt has not stated a claim against its subcontractor, the
documentation provider BDP International, Inc. ("BDP"), because we agree that Stolt
failed to show that BDP’s breach in processing the shipment’s waybill was a
contributing cause of the damages. Finally, we AFFIRM the district court’s
5
determination that MSC, Conti, and NSB are entitled to indemnification for their losses
by Stolt and Deltech.
Judge Menashi concurs in part and dissents in part in a separate opinion.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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NICHOLAS D. STELLAKIS (Lawrence K. DeMeo, Brian J.
Bosworth, on the brief), Hunton Andrews Kurth LLP,
Boston, MA; Timothy J. McDonnell, Joseph J. Perrone
(on the brief), Giuliano McDonnell & Perrone LLP,
New York, NY, for Claimant-Appellant Deltech
Corporation.
JOHN A.V. NICOLETTI (James F. Sweeney, Robert A. Novak,
Richard W. Stone II, on the brief), Nicoletti Horning &
Sweeney, New York, NY; Stephen V. Rible (on the
brief), Mendes & Mount LLP, New York, NY, for
Claimants-Appellants Stolt-Nielsen USA, Inc. and Stolt
Tank Containers B.V.
JAMES W. JOHNSON, Ricci Tyrrell Johnson & Grey,
Philadelphia, PA, for Defendant-Appellee BDP
International, Inc.
PETER R. KNIGHT (Joseph L. Clasen, Trevor L. Bradley, on the
brief), Robinson & Cole LLP, New York, NY, for
Defendants-Appellees Chemtura Europe GmbH, Chemtura
Corporation, Chemtura Italy S.R.L., and Rubicon LLC.
EUGENE J. O’CONNOR (Timothy Semenoro, on the brief),
Montgomery McCracken Walker & Rhoads LLP, New
York, NY, for Defendants-Appellees Conti 11 Container
Schiffahrts-GmbH & Co. KG MS MSC “Flaminia” and
NSB Niederelbe Schiffahrtsgesellschaft mbH & Co. KG.
6
EDWARD P. FLOOD (Jon Werner, Martin R. West II, on the
brief), Lyons & Flood, LLP, New York, NY, for
Defendant-Appellee MSC Mediterranean Shipping
Company S.A.
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CARNEY, Circuit Judge:
Deltech Corp. (“Deltech”), a chemical manufacturer, joins here with Stolt-Nielsen
USA, Inc., and Stolt Tank Containers B.V. (together, “Stolt”), a shipping concern, to
challenge the district court’s determination that they alone bear liability for damages
caused by an explosion and fire that took place in June 2012 aboard the ocean-going
vessel M/V MSC Flaminia. Two weeks into the Flaminia’s trip from New Orleans
Terminal across the Atlantic, toward Belgium, three tanks of 80% grade of the chemical
divinylbenzene (DVB-80)—manufactured by Deltech and shipped by Stolt—exploded.
The explosion and ensuing fire killed several members of the ship’s crew, injured
others, and damaged the ship and its cargo.
In the first phase of a three-part proceeding in the United States District Court for
the Southern District of New York (Forrest, J.), the district court addressed the causes of
the explosion. It determined that the conditions in which the tanks of DVB-80 were kept
at New Orleans Terminal and then stowed onboard were two of the primary causes of
the explosion. Together, these conditions resulted in the chemical undergoing a process
known as auto-polymerization; this in turn caused the tanks to emit a cloud of vapor
that ultimately ignited and exploded when the crew’s firefighting efforts generated a
fateful spark. See In re M/V MSC FLAMINIA, No. 12-cv-8892, 2018 WL 526549 (KBF), at
*30-31 (S.D.N.Y. Jan. 23, 2018) (“Phase I”).
In the second phase, the district court addressed the parties’ respective liability
for cargo loss and damage. (Separately, claims for death and bodily injury had largely
been settled.) The district court found Deltech and Stolt, together, wholly responsible
7
for the cargo losses: Deltech, at a 55% level, and Stolt, at 45%. In re M/V MSC
FLAMINIA, 339 F. Supp. 3d 185, 229–30 (S.D.N.Y. 2018) (“Phase II”). As detailed below,
it exonerated other parties to the shipping transaction. It is the latter rulings that
Deltech and Stolt challenge in this interlocutory appeal. 1 In a third phase and final
phase, the court will award damages. Id. at 191.
On review, we affirm in part and reverse in part. We AFFIRM the district court’s
ruling that Deltech and Stolt are liable for the explosion’s resulting damages under a
failure-to-warn theory pursuant to Section 4(3) of the Carriage of Goods by Sea Act
(“COGSA”), 46 U.S.C. § 30701 (note); we REVERSE, however, the district court’s
determination that Deltech and Stolt are strictly liable for the damages under Section
4(6) of COGSA. We also AFFIRM the district court’s conclusion that the carrier and
related shipowner interests—MSC Mediterranean Shipping Company S.A. (“MSC”),
Container Schiffahrts-GMBH & Co., KG MSC “FLAMINIA” (“Conti”), and NSB
Niederelbe Schiffahrtsgesellschaft MBH & Co. KG (“NSB”)—were not negligent in
relation to the shipment, and that New Orleans Terminal too was not negligent. We also
AFFIRM the district court’s determination that Stolt has not stated a claim against its
subcontractor, the documentation provider BDP International, Inc. ("BDP"): we agree
that Stolt failed to show that BDP’s breach in processing the shipment’s waybill was a
contributing cause of the damages. Finally, we AFFIRM the district court’s
determination that MSC, Conti, and NSB are entitled to indemnification for their losses
by Stolt and Deltech.
1The courts of appeals generally have jurisdiction over appeals from “[i]nterlocutory decrees of
such district courts or the judges thereof determining the rights and liabilities of the parties to
admiralty cases in which appeals from final decrees are allowed.” 28 U.S.C. § 1292(a)(3).
8
BACKGROUND 2
On July 1, 2012, the Flaminia departed New Orleans Terminal, loaded with cargo
and bound for Antwerp, Belgium. Fourteen days into its journey across the Atlantic, a
major explosion occurred in one of its holds, causing the tragic deaths of several crew
members, serious bodily injury to others, and substantial damage to both the ship and
the cargo of numerous shippers.
Phase I of the court proceedings regarding the resulting losses examined the
conditions in which Deltech’s DVB-80 was manufactured and shipped and considered
the physical cause or causes of the explosion. After an extensive bench trial, the district
court, by a preponderance of the evidence, concluded that a spark that ignited a cloud
of vapor rising from three tanks of DVB-80 stored in one of the Flaminia’s holds—Hold
4—caused the explosion. The spark was generated by the crew in their efforts to fight
what they perceived to be a fire in that hold. The cloud of vapor, in turn, was the result
of DVB-80 undergoing a chemical process called auto-polymerization and reaching
thermal runaway. When DVB-80 auto-polymerizes, it can be dangerous because the
reaction generates heat and is self-perpetuating.
In Phase II, the district court considered liability for the explosion, fire, and
physical damage. The district court explained that the DVB-80 onboard the Flaminia
was manufactured by Deltech in its Baton Rouge, Louisiana, plant. Stolt—Deltech’s
regular non-vessel operating common carrier (“NVOCC”) 3—made shipping
2Unless otherwise noted, the facts set forth in this background section are drawn from the
district court’s two thorough opinions. We note any relevant disagreements among the parties.
3As the district court explained, “Stolt played two roles with regard to the DVB cargo at issue
here. First, it acted as an NVOCC, and in that capacity was Deltech’s shipping agent and
arranged for transport aboard the Flaminia. Stolt also arranged for truck transport . . . from
Deltech to [New Orleans Terminal].” Phase II, 339 F. Supp. 3d at 205. NVOCCs “typically assist
9
arrangements for the DVB-80 on behalf of Deltech. To enable the shipment, it provided
three large shipping tanks (also known as “ISO containers”), 4 which were filled with the
DVB-80 at the Baton Rouge plant. Stolt also procured space for the shipment aboard an
ocean-going vessel; arranged for a trucker to transport the tanks to a suitable shipping
terminal; and was responsible for certain aspects of documenting the shipment.
Applying a preponderance of the evidence standard, the district court found Deltech
and Stolt together exclusively liable for the damages that resulted when the shipped
DVB-80 exploded both under a strict-liability theory (in the COGSA regime) and under
a failure-to-warn theory (also in the COGSA regime), with damages for the lost and
damaged cargo to be apportioned in the projected Phase III. See Phase II, 339 F. Supp. 3d
at 194–95.
In contrast, the district court found appellees not liable for the losses. Appellees
are primarily other parties who had a role in delivering the DVB-80 shipment to Deltech
customers in Antwerp. Key among them are:
• MSC Mediterranean Shipping Company S.A. (“MSC”): the charterer of
the Flaminia;
• Conti 11 Container Schiffahrts-GMBH & Co., KG MSC “FLAMINIA”
(“Conti”): the owner of the Flaminia;
• NSB Niederelbe Schiffahrtsgesellschaft MBH & Co. KG (“NSB”): the
operator of the Flaminia;
a cargo shipper with making necessary arrangements for the booking of any pre-carriage (such
as transport by truck to an ocean terminal), as well as the booking for ocean carriage. Ocean
carriage is provided by a ‘vessel operating common carrier’ who either owns a vessel outright
or charters space on vessels for the transportation of cargo. NVOCCs are middlemen acting
between the shipper and the ocean carrier.” Id. at 205 n.31.
4“ISO containers” are large shipping containers meeting standards set by the International
Organization for Standardization (“ISO”). See https://www.iso.org/home.html (last visited June
29, 2023).
10
• Chemtura Corp. (“Chemtura”): the owner and shipper of the chemical,
diphenylamine (“DPA”), which was stored at high temperatures on the
Flaminia in tanks next to the DVB-80 containers; 5
• BDP International, Inc. (“BDP”): a Stolt subcontractor that prepared
shipping documents for the three DVB-80 tanks and was the subject of a
contract claim by Stolt;
• New Orleans Terminal (“the Terminal” or “NOT”): where a trucker
retained by Stolt delivered Deltech’s DVB-80 to await loading onto the
Flaminia.
In the Phase I and II proceedings, the parties asserted many claims and
counterclaims, as the district court ably described, discussed, and resolved in its
comprehensive prior opinions. Only the following five are before us now:
(1) Strict liability: Was the district court correct in concluding that
both Deltech and Stolt are strictly liable to Conti and NSB under COGSA?
(2) Failure-to-warn negligence: Did the district court err in
concluding that both Deltech and Stolt are liable to Conti and NSB under a
failure-to-warn negligence theory pursuant to COGSA?
(3) Non-negligence of carrier interests: Did the district court err in
finding that MSC, Conti, and NSB (these three together, the “carrier”
interests) did not act negligently and therefore do not bear partial
responsibility for the losses?
5In a Nondispositive Stipulation dated April 27, 2020, Stolt and Deltech withdrew their
respective appeals insofar as they renewed claims against defendants-counter-claimants-
appellees Chemtura Corporation, Chemtura Italy S.R.L., and Chemtura Europe GmbH, and
third-party defendant-appellee Rubicon, LLC (collectively, the “Chemtura Appellees”). See
Order, Dkt. 376, In re M/V MSC Flaminia, No. 18-2974 (2d Cir. Apr. 28, 2020).
11
(4) Breach of contract claim: Did the district court err in ruling that
Stolt’s breach of contract claim against BDP is not actionable?
(5) Indemnification: Did the district court err in concluding that
Stolt and Deltech breached the Sea Waybills and must indemnify MSC,
Conti, and NSB for their losses?
In answering these questions, we adopt the district court’s uncontested
description of the setting for the applicable legal regimes:
This action concerns claims based on contracts for the carriage of goods
by sea and torts that occurred at sea. As such, the contracts at issue are
maritime contracts and the torts are maritime torts within the admiralty
jurisdiction of the Court pursuant to 28 U.S.C. § 1333(1). And with
admiralty jurisdiction comes the application of substantive admiralty
law. Absent a relevant statute, the general maritime law, as developed
by the judiciary, applies.
Phase II, 339 F. Supp. 3d at 229 n.91 (alterations, citations, and internal quotation marks
omitted). Various additional statutory and international regulatory regimes also bear on
the parties’ claims. We discuss those below as they become relevant.
To enable us to address the liability arguments, we turn first to a more in-
depth review of the accident’s causation as determined by the district court.
I. The Properties of DVB-80
DVB-80 is a chemical compound that is used in water purification. When
exposed to heat, DVB-80 molecules can become unstable, causing them to react, link
together, and form a polymer chain. This bonding of two or more simple molecules to
form larger molecules with repeating structural units is called polymerization. When
DVB-80 polymerizes, it releases heat. The polymerization process can thus become self-
sustaining and can even accelerate without the addition of any more heat. That
phenomenon is called auto-polymerization.
12
When the heat generated by DVB-80’s polymerization exceeds the heat that the
reaction loses to the environment, the rate of polymerization increases exponentially,
and the reaction is said to have reached “thermal runaway.” Phase I, 2018 WL 526549 at
*8. At that stage, the temperature increases rapidly, building pressure in any tank in
which it is stored. Eventually, any pressure-release valve found on the tank starts to
vent a white vapor resembling the smoke that is generated by an ordinary fire. Unlike
ordinary smoke, however, the cloud resulting from DVB-80 in thermal runaway can
explode in certain conditions if exposed to an ignition source and a specific amount of
oxygen.
When it stores DVB-80, Deltech uses an additive called p-tert-butylcatechol
(commonly known as “TBC”) to inhibit polymerization. See Phase II, 339 F. Supp. 3d at
196. TBC, combined with the oxygen that is dissolved in the liquid DVB-80 and that is
inside empty storage tanks, impedes polymerization, making DVB-80 relatively safe for
transport in tanks, at least under ordinary conditions. Even TBC-treated DVB-80 is heat-
sensitive, however. A storage tank’s exposure to heat causes its contents to consume
oxygen more quickly and reduces TBC’s effectiveness. Like untreated DVB-80, then,
TBC-treated DVB-80 requires careful “handling and storage” at each step of transport
and delivery. Id. at 200. Deltech developed its shipment protocols accordingly, and then
in 2006, not long after it had begun shipping its DVB-80 overseas, it refined its protocols
after a few of its shipments underwent auto-polymerization. Id. at 197. 6
6 Deltech experienced two auto-polymerization incidents involving overseas shipments of DVB-
80 in 2006. Phase II, 339 F. Supp. 3d at 197. It also had five other shipments with “polymerization
issues” that year, but the district court found that those incidents were not analogous to the
incident aboard the Flaminia. See Phase I, 2018 WL 526549, at *16 (finding only the “Chauncy”
and “Grangemouth” incidents “useful” and “support[ing] the view that the Flaminia DVB80
cargo would have completed the voyage safely under normal conditions”).
13
In 2012, when it engaged Stolt to handle the Antwerp-bound shipment, Deltech
protocols included: (1) generally shipping from the Port of New York (Newark) during
the summer months, when temperatures at New Orleans Terminal, which is nearest to
the Deltech plant, are especially high; and (2) avoiding exposure of tanks filled with
DVB-80 to more than 15 to 20 days of average external temperatures between 75 to 85
degrees Fahrenheit. One Deltech employee explained that shipping from Newark in the
summer months offered three important safety advantages: “(1) a cooler port of
departure, (2) therefore cooler temperatures preceding vessel loading (e.g., at the
terminal), and (3) a shorter ocean voyage.” Id. at 201. Confirming that statement, data
cited by the district court showed that “the maximum number of days in transit from
[New Orleans Terminal] to Antwerp is 31 days, with a median of 16; from Newark, the
maximum days in transit is 13 days with a median of 9.5.” Id. at 197.
II. The DVB-80 Shipment Loaded onto the Flaminia
In March or April 2012, Deltech made what the district court called the “fateful
decision” to make at least one shipment of its DVB-80 to customers in Europe from New
Orleans Terminal, contrary to its protocols. Id. at 201–02. Either intentionally, or (as
alleged by Deltech) because of an internal “miscommunication,” Deltech slated the
Antwerp shipment at issue here to be sent from New Orleans Terminal in June. Id. at
210.
On June 8, 2012, Deltech requested that Stolt make the arrangements for the
shipment, and Stolt duly began to do so. On June 11, Stolt sent Deltech its booking
confirmation and contacted MSC to reserve space aboard a suitable vessel.
On June 21, Stolt supplied Deltech with three ISO tanks for the shipment, and
Deltech personnel filled the tanks with Deltech’s TBC-treated DVB-80 later that day.
Under Stolt’s direction, the tanks were then trucked to New Orleans Terminal that same
14
day. 7 And there, for about ten days, they sat on the dock, in direct sunlight and in
average ambient temperatures of 85 degrees Fahrenheit and a high of 96–98 degrees.
Finally, on July 1, they were loaded onto the Flaminia along with the ship’s other
cargo. The Deltech tanks were stored below deck in Hold 4, which was flanked by the
ship’s wing tanks holding heated fuel oil. The tanks also sat alongside three heat-
producing containers of the chemical DPA, manufactured and shipped by Chemtura.
The Flaminia departed New Orleans at 10:00 a.m. on July 1. Two weeks later, on
July 14, while the vessel was at sea, the three DVB-80 tanks exploded and a firestorm
erupted. By then, Deltech’s DVB-80 shipment had been in transit from the Baton Rouge
factory for a total 23 days, many of them—if not all—in hot conditions.
III. Warnings About Handling DVB-80
In preparation for the shipment, Deltech, Stolt, and BDP created several different
documents that served as contracts among the parties to the shipment, guidance for the
treatment of the shipment, or sometimes both. The documents were also used to
arrange and track the tanks’ transport and manage their safety. Each contained some
kind of warning and instructions related to the safe handling of DVB-80.
June 8 Booking Request: Deltech’s June 8 booking request to Stolt included the
following brief specifications: (1) “Please secure a booking with temperature monitoring
to load DVB 80%”; (2) “Container to be stowed ‘in stack’ or below deck to avoid
exposure to direct sunlight. Do not stow near heat sources[]”; and (3) “If container is
7The record suggests that the tanks were filled and left Baton Rouge for New Orleans Terminal
earlier than expected because of some unforeseen circumstances, including an emergency
medical need of a Deltech employee. See Phase II, 339 F. Supp. 3d at 215–16.
15
greater than 27 C, the Iso-Container cannot be shipped.” Phase II, 339 F. Supp. 3d at 202
n.17.
Straight Bill of Lading & Material Safety Data Sheet: Deltech developed and used
a Straight Bill of Lading, which it gave to Boasso, the trucking concern Stolt engaged to
transport the filled tanks to New Orleans Terminal. The Straight Bill of Lading advised:
“SEE ATTACHED MATERIAL SAFETY DATA SHEET FOR EMERGENCY RESPONSE
INFORMATION. PRODUCT IS HEAT SENSITIVE! DO NOT APPLY HEAT TO
CONVEYANCE DURING TRANSIT. IF PRODUCT TEMPERATURE EXCEEDS 100°F,
CONTACT DELTECH IMMEDIATELY.” Id. at 203 n.22.
With the Straight Bills of Lading, Deltech gave Boasso a Material Safety Data
Sheet. Of all of the Deltech shipping documents, this contained the most detailed and
explicit instructions and warnings about DVB-80. It provided: “Closed containers of
DVB (80%) may build up explosive pressures when exposed to the heat of fires. Closed
containers of DVB (80%) exposed to heat may begin to polymerize in an exothermic
manner leading to auto acceleration and rapid pressure increase and explosion
potential.” Id. The Material Safety Data Sheet also directed stowage in a “cool area or
refrigerated tank away from high temperatures, hot pipes or direct sunlight” and
cautioned the shipper to “[a]void excessive heat and keep away from open flames or
ignition sources.” Id. It further instructed the shipper to “[m]aintain temperature below
80°F (27°C).” Id. Stolt also received the Material Safety Data Sheet but, the district court
found, Stolt did not enter the warnings it contained into Stolt’s internal information
systems. 8
8See Phase II, 339 F. Supp. 3d at 208 ("A significant gap in Stolt's internal procedures, and
causally linked to the incident here, was its failure to populate the AS/400 database with
sufficient information regarding handling DVB80 during transport as to product characteristics.
16
Boasso provided the Straight Bills of Lading and Material Safety Data Sheet to
the management of New Orleans Terminal. Terminal management testified that it did
not transmit the documents to MSC, 9 however, and that it had “filed [them] away” by
the time the DVB-80 tanks were loaded onto the Flaminia. Id. at 220. 10 This, however,
was not a departure from any ordinary protocol: the district court found that the
Terminal stores cargo simply according to the information associated with the cargo’s
internationally recognized UN number and class. 11 All “Class 9” cargo, 12 such as the
DVB and DPA, “are treated similarly and interchangeably for storage in the yard.” Id. at
221.
. . . Information from the [Material Safety Data Sheet] was thus rendered irrelevant, and that
irrelevancy was carried forward into future cargo shipments.").
9MSC is a partial owner of New Orleans Terminal, but the entities’ roles here are separate. See
Phase II, 339 F. Supp. 3d at 220-21 (explaining that New Orleans Terminal is responsible for
processing and storage at the Terminal, whereas MSC is responsible for stowage aboard the
vessel).
Thus, neither the Straight Bills of Lading nor the Material Safety Data Sheet ever reached
10
MSC.
11 The UN number is part of an international tracking convention overseen by the United
Nations and in widespread use. UN numbers convey categorical information about the nature
of a shipment. Phase II, 339 F. Supp. 3d at 199. Similarly, the International Maritime Dangerous
Goods (“IMDG”) Code categorizes dangerous goods into classes based on the type of risk
presented by the goods. The Convention for the Safety of Life at Sea (“SOLAS”), which has been
ratified by the United States, incorporates the IMDG Code by amendment. See In re M/V DG
Harmony, 533 F.3d 83, 88 (2d Cir. 2008). SOLAS provides that the “carriage of dangerous goods
in packaged form shall be in compliance with the relevant provisions of the IMDG Code.” Phase
II, 339 F. Supp. 3d at 199 (quoting SOLAS, Ch. VII, Reg. 3 (5th ed. 2009)).
12 Class 9 is used to identify “miscellaneous and environmentally hazardous” substances. Phase
II, 339 F. Supp. 3d at 199. DVB-80 is a Class 9 substance; its UN number is UN 3082. The IMDG
Code does not require UN 3082 items to be stowed at a distance from any other substances or
from the vessel structure, nor does it require ventilation when the cargo is stowed below deck.
Id. at 233.
17
Express Bill of Lading Instructions, Master Bill of Lading Instructions & Sea
Waybills: Deltech provided “Express Bill of Lading Instructions” to its freight
forwarder, Panalpina, 13 as well as to BDP. BDP was charged with using the Express Bill
of Lading Instructions to create “Master Bill of Lading Instructions” ("MBLI") for the
vessel charterer (MSC). MSC, in turn, was expected to use the MBLI to draft Sea
Waybills, 14 which would govern the relationship between Stolt, Deltech, MSC, and
MSC’s subcontractors, Conti and NSB.
Deltech’s Express Bill of Lading Instructions called for the following warnings to
be included on the MBLI: “DO NOT STOW NEAR HEAT SOURCES. STOW ABOVE
DECK FOR TEMPERATURE MONITORING.” Id. at 203-04 n.23. 15 The MBLI that BDP
sent to MSC included the heat warning, and BDP was expected to ensure that MSC
reproduced the warning on its Sea Waybills. The draft Sea Waybills then created by
MSC, however, and ostensibly based on the MBLI, omitted this warning.
Dangerous Goods Declarations: Finally, Stolt prepared and sent draft and final
versions of Dangerous Goods Declarations (”DGDs”) to MSC, disclosing certain safety
information regarding DVB-80’s dangerous characteristics. The DGDs contained the
UN code and class number for DVB-80—UN 3082, class 9—which identified the cargo
13A freight forwarder facilitates the movement of cargo and assists in processing a client’s
export and import documentation related to shipments being transported under arrangements
made by a common carrier, either a non-vessel operating common carrier ("NVOCC") or a
vessel-operating common carrier. See 46 U.S.C. § 40102(19); Prima U.S. Inc. v. Panalpina, Inc., 223
F.3d 126, 129 (2d Cir. 2000).
A sea waybill is a nonnegotiable contract of carriage. See Royal & Sun All. Ins., PLC v. Ocean
14
World Lines, Inc., 612 F.3d 138, 141 n.3 & n.5 (2d Cir. 2010); see also 1 T. Schoenbaum, 1 Admiralty
& Mar. Law § 10:11 (6th ed. 2022).
15This of course was in tension with the booking request instructions from Deltech to Stolt,
requesting temperature monitoring but asking for either in-stack or below-deck stowage to
avoid direct sunlight. See Phase II, 339 F. Supp. 3d at 202 n.17.
18
as an environmentally hazardous substance and implied a general need for care. The
DGDs gave no additional warnings or instructions. Id. at 214–15.
IV. The Explosion
At approximately 5:42 am on July 14, 2012, the smoke alarm sounded on the
Flaminia. Hold 4 was identified as the trigger for the alarm. The ship’s Chief Officer
deployed a system designed to suppress a fire by releasing CO2 into the hold. At three
times between 6:42 am and 8:06 am, the crew released CO2 into Hold 4, where Deltech’s
DVB-80 tanks were stored. A few minutes after the third release, a small explosion
occurred. A “large amount of dense black smoke” and flames were then seen billowing
from the direction of Hold 4, according to one witness. Phase I, 2018 WL 526549, at *28.
The district court determined by a preponderance of evidence that one of the crew’s
actions—either opening the man-lid entrance to Hold 4 or inserting firehoses to send
water into the hold—created a spark that ignited the vapor in Hold 4 and triggered the
primary, deadly explosion.
V. The District Court’s Findings
A. Phase I: Conclusions on Causation
Based on evidence presented at the Phase I trial, the district court reached several
conclusions. Preliminarily, it found no deficiencies in Deltech’s manufacturing process
or the process of loading the tanks of DVB-80 aboard the Flaminia. It determined that
the DVB-80 was adequately oxygenated while the three tanks were being filled, and
that the DVB-80 contained more than enough TBC to “ensure complete inhibition” of
polymerization on a typical voyage. Id. at *8 n.13. Because the chemical was
“sufficiently oxygenated and chilled,” the district court estimated that “under normal
transit time and temperature conditions,” it would have arrived safely in Antwerp. Id.
at *12.
19
It then concluded that each of the following was a “substantial contributing
factor” to the DVB-80’s auto-polymerization and the subsequent explosion:
[1] The decision to ship the DVB-80 out of NOT, which necessitated
a longer voyage than would have a more northeastern port and exposed
it to undesirable conditions;
[2] The fact that the DVB-80 was left still on the dock at NOT for 10
days in the sun, in hot weather, and next to a number of tanks of heated
DPA;
[3] The placement of the DVB-80 in Hold 4, where it was stored next
to containers of heated DPA and near the ship’s heated fuel tanks; and
[4] The lack of proper ventilation, leading to hotter-than-typical
ambient temperatures in Hold 4.
Id. at *30–31 (footnote omitted).
B. Phase II: Conclusions on Responsibility
In its Phase II decision, the district court determined that Deltech bore the
greatest responsibility for the explosion. See Phase II, 339 F. Supp. 3d at 194. It pointed to
two critical decisions made by Deltech in conflict with its preexisting safety protocols.
First, Deltech authorized shipment of DVB-80 to be made from New Orleans in late
June. Id. Second, it authorized filling the ISO containers several days earlier than
necessary for the expected embarkation date of June 30 or July 1, “resulting in the
containers sitting stagnant in the hot New Orleans sun.” Id. In the district court’s
estimation, these two decisions “were by far the most critical.” Id. On this basis, it
assigned Deltech 55% liability on both strict liability and failure-to-warn theories.
The district court additionally found that Stolt, as Deltech’s NVOCC dealing
with the many parties to the shipment, was liable for the losses under a strict liability
theory, for failure-to-warn, for general negligence, and because it breached its
contractual obligations to several parties. Id. at 194–95. Stolt possessed “extensive
information regarding the heat-sensitive nature of [DVB-80],” the court found, but it
20
failed to share that information with MSC, the vessel charterer. Id. at 195. It also failed to
share with MSC the information that the ISO containers of DVB-80 had been filled early
and then sat in the sun for days in advance of loading. The district court found that Stolt
bore responsibility for the early loading of the DVB-80 into the tanks, for arranging for
early transport to New Orleans Terminal, and for leaving the tanks to sit in the open air
at NOT. Id.
The district court found that BDP, Stolt’s documentation agent, bore no liability
for damages. Although it found that BDP failed to meet its contractual obligation to
Stolt to “ensure certain information was contained on the Master Bill of Lading
Instructions,” the district court determined that the breach did not lead to any loss
because “no participant in the chain of events would have acted on the information
BDP failed to include.” Id.
MSC (the vessel’s time charterer) was also not liable, the district court ruled,
because MSC lacked sufficient information about the conditions that the tanks of DVB
had been exposed to pre-shipment. Rather, MSC acted in accordance with “industry
practice, its [own] prior practices, and the reasonable (versus unreasonable)
expectations of the parties,” the district court decided. Id. Further, “MSC’s [on-board]
stowage plan was consistent with industry practice and reasonable under normal
circumstances.” Id. Absent more specific warnings—and none were provided by Stolt—
MSC acted reasonably.
The district court found that Conti (the ship owner) and NSB (the ship operator)
bore no legal responsibility for the disaster. Conti provided a seaworthy vessel, the
court ruled, and NSB’s crew was properly trained. The crew’s reaction to the smoke in
Hold 4—speedily mounting efforts to fight what they understood to be a fire in the
hold—was reasonable even if in doing so the crew inadvertently sparked the main
explosion. Id. at 195–96. Additionally, Chemtura—the shipper of the DPA cargo that
21
was stored next to Deltech’s DVB-80 tanks—bore no responsibility for any losses, the
court ruled. Id. at 196. Chemtura managed its shipment according to protocol.
Finally, the district court determined that MSC, Conti, and NSB were entitled to
full indemnification from Stolt and Deltech. Id. at 245. Under the Sea Waybills’
“dangerous goods clause” (Clause 15), Stolt and Deltech had an obligation to “fully
inform the Carrier”—MSC—“in writing of the precise and accurate details” of
dangerous goods as well as any “special precautions or handling required” for their
transport. Id. Stolt and Deltech breached that obligation, the court found, and therefore
were required under the Sea Waybills’ dangerous goods clause to indemnify MSC and
its subcontractors—Conti, and NSB—for their damages arising from the transport of
DVB. Id. at 245–46.
This appeal followed.
DISCUSSION
After a bench trial, we review the district court’s findings of fact for clear error
and conclusions of law de novo. Vasquez v. GMD Shipyard Corp., 582 F.3d 293, 297 (2d Cir.
2009). Because rulings on negligence are ultimately conclusions of law, the rule in this
circuit has long been to consider them de novo. See Ching Sheng Fishery Co. v. United
States, 124 F.3d 152, 157 (2d Cir. 1997) (“[U]nder the decisions of this circuit, a district
court’s finding on the issue of negligence—as distinguished from the evidentiary facts
on which the finding is based—is not entitled to the benefit of the ‘unless clearly
erroneous’ rule, but instead is reviewed de novo.”); see also Payne v. United States, 359
F.3d 132, 135 (2d Cir. 2004) (describing this circuit’s “long-held” rule of de novo review
for negligence determinations). While this rule has been met with “nearly unanimous
disagreement by the other circuits and commentators,” in practice it is “not so
different” from the other circuits’ more deferential standard of review. In re City of New
22
York, 522 F.3d 279, 282 (2d Cir. 2008); cf. Payne, 359 F.3d at 137 (remarking that we have
“severely undercut our rule over the years”). Indeed, because the determination of
negligence is “so bound up with the specific and complex facts of each individual case,”
we will not disturb a district court’s negligence finding unless it “manifests an incorrect
conception of the applicable law.” In re City of New York, 522 F.3d at 282 (internal
quotation marks omitted). Even in this circuit, “the question of the existence of
negligence . . . has become primarily one for the factfinder to determine.” Payne, 359
F.3d at 137. We have explained that this is because “the issue today is only very rarely
whether the trial court has applied the correct legal standard. For, under present law,
such standards are . . . unlikely to be determinative.” Id. Instead, the issue is typically
whether the defendant exercised appropriate conduct and behaved how a “reasonable
person” ought to have behaved given the specific facts and circumstances of the
individual case. Id. Thus, even where the question involves a legal judgment about
what a party reasonably ought to have known, “a fact-sensitive, ‘calibrated’ analysis” is
appropriate. DG Harmony, 533 F.3d at 95. These principles hold when we exercise our
maritime jurisdiction as well. See id.While negligence is ultimately a legal determination, “[a]ttributions of fault
among the various parties are considered factual determinations and therefore are
reviewed under the clearly erroneous standard.” Contship Containerlines, Ltd. v. PPG
Indus., Inc., 442 F.3d 74, 77 (2d Cir. 2006) (citing Ching Sheng Fishery, 124 F.3d at 157 (“A
district court’s finding on issues of causation and on its allocation of fault among
negligent parties continues to be subject only to clearly erroneous review.”)).
I. No Strict Liability Recovery Against Stolt and Deltech
The district court held that Stolt and Deltech were strictly liable for the loss
arising from the explosion aboard the Flaminia. The district court took great care with
its factual rulings in this difficult case; this legal determination, however, was error.
23
The Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. § 30701 (note), applies
to all contracts for carriage of goods by sea. 16 It thus governs the relationships of at least
some of the parties before us.
As most relevant here, COGSA provides that a “shipper” of “inflammable,
explosive, or dangerous” goods “shall be liable for all damages and expenses directly or
indirectly arising out of or resulting from such shipment” when the “carrier” does not
have knowledge of the “nature and character” of the goods. COGSA § 4(6); see DG
Harmony, 533 F.3d at 92–94 (applying COGSA’s strict liability provision); Senator Linie
Gmbh & Co. KG v. Sunway Line, Inc., 291 F.3d 145, 168–70 (2d Cir. 2002) (same). 17 Strict
liability will not attach to the shipper, however, when the carrier knows that a
particular type of cargo in its charge is dangerous. See DG Harmony, 553 F.3d at 93
(holding that “notice of any aspect of the cargo’s dangerousness” is sufficient to defeat
the carrier’s ability to recover in strict liability (emphasis added)). 18 There is no dispute
16COGSA was published at 46 U.S.C. app. §§ 1300–1315 until 2006, when it was recodified at 46
U.S.C. § 30701 (note). For clarity, we refer to COGSA’s sections as they appear in the
recodification, which mirrors the section numbering used in the original statute. See An Act of
Apr. 16, 1936, ch. 229, §§ 1-16, 49 Stat. 1207.
17 Section 4(6) is an exception to COGSA’s general rule requiring proof of negligence for shipper
liability. See 46 U.S.C. § 30701 (note) § 4(3) (“The shipper shall not be responsible for loss or
damage sustained by the carrier or the ship arising or resulting from any cause without the act,
fault, or neglect of the shipper, his agents, or his servants.”); see also Contship Containerlines, 442
F.3d at 78.
18 This principle does not convey that no liability will attach to the shipper, of course; it is only to
highlight that the special rules of strict liability will not apply when the carrier has sufficient
notice of the nature of the cargo. See Contship Containerlines, 442 F.3d at 77 (explaining that a
carrier with general knowledge of a cargo’s dangerousness may “ultimately prevail []
depending on the particulars of what it and the shipper knew and their respective duties” even
if it is prevented from prevailing on strict liability).
24
here that MSC, as the charterer of the vessel, is a “carrier” under COGSA. The question
is whether Stolt and Deltech are strictly liable.
The district court reasoned that “generalized knowledge regarding a type of
cargo” and its dangerousness is insufficient to warn of its “particular contents and
chemical sensitivities.” Phase II, 339 F. Supp. 3d at 240 (emphasis added). Because MSC
could not have known that the DVB-80 stored in the tanks it loaded onto the Flaminia
had been exposed to the specific dangerous conditions that we have described, the
court ruled that Deltech and Stolt both were strictly liable to MSC for the loss.
As we held in Contship Containerlines, however, a carrier’s entitlement to recovery
in strict liability requires overcoming a very high hurdle: “[A] carrier cannot invoke
strict liability if it knows that a cargo poses a danger and requires gingerly handling or
stowage, and nevertheless exposes the cargo to the general condition that triggers the
known danger, regardless of whether the carrier is aware of the precise characteristics of
the cargo.” 442 F.3d at 77 (emphasis added). Thus, recovery on a strict liability theory is
unavailable to a party with “notice of the general dangerousness” of the cargo it agreed
to transport. DG Harmony, 533 F.3d at 93. The strict liability analysis is “binary,”
Contship Containerlines, 442 F.3d at 77, and the notice threshold is relatively modest: the
carrier’s knowledge can be “incomplete” or reflect an “underestimation of the danger”
and yet still preclude recovery in strict liability, DG Harmony, 533 F.3d at 94.
Here, MSC did not have specific knowledge of the conditions to which the DVB-
80 tanks were exposed at New Orleans Terminal. It did, however, have prior experience
shipping DVB-80, and MSC was aware, at least at the corporate level, that DVB-80
generally was heat sensitive. In particular, the record showed that MSC had shipped
DVB-80 cargo many times before June 2012 and had received transport documents,
including other DGDs and Straight Bills of Lading, that warned of the chemical’s heat
sensitivity. The manager of MSC’s Dangerous Cargo Department conceded that he,
25
“and therefore MSC,” had previously “reviewed information that DVB should not be
loaded onto a vessel if [its] temperature was above 27 [degrees Celsius].” Phase II, 339 F.
Supp. 3d at 219 (internal quotation marks omitted). 19
On this record, in our view it was incorrect to conclude broadly that MSC was
not on notice as to “any aspect of the cargo’s dangerousness.” MSC’s experience with
DVB-80 and its management’s general knowledge of the chemical’s heat sensitivity
surpasses the low threshold that precludes a recovery in strict liability. Our holding
closely aligns with our conclusion in DG Harmony that recovery in strict liability was
not available where the ship-owning interests did not know “the precise characteristics
of the cargo, but they knew that [the cargo] was an unstable substance that became
vulnerable to combustion when heated . . . [and] exposed [the cargo] to the general
condition—heat—that induces such combustion.” 533 F.3d at 93 (internal quotation
marks omitted).
For reasons explained below, however, the district court correctly concluded that
MSC’s high-level knowledge of DVB-80’s dangerousness was not sufficient to establish
that the carrier was negligent in its stowage and handling of the specific tanks of DVB-
80 aboard the Flaminia. We turn to that issue in Part III.
19At oral argument, counsel for MSC acknowledged that MSC had knowledge of the general
characteristics of DVB—including that the chemical “can polymerize if exposed to heat over
time.” Oral Argument at 21:53–22:12. Counsel advised that it was instead “the degree of danger
that MSC didn’t know about.” Id. This is not enough to create an entitlement to strict liability
recovery.
26
II. Negligent Failure to Warn by Stolt and Deltech
The district court determined that Stolt and Deltech were liable to Conti and NSB
for losses caused by the explosion under a negligent failure-to-warn theory in the
COGSA regime. 20 We agree.
Under COGSA’s general rule of shipper liability, a “shipper shall not be
responsible for loss or damage sustained by the carrier or the ship arising or resulting
from any cause without the act, fault, or neglect of the shipper, his agents, or his
servants.” 46 U.S.C. § 30701 (note) § 4(3). We have recognized that “[a] shipper's failure
to adequately inform a carrier of the foreseeable dangers posed by cargo can constitute”
such “fault[] or neglect” and may give rise to a negligent failure-to-warn claim. Contship
Containerlines, 442 F.3d at 78. To prevail on this type of claim, a “plaintiff must show
that the shipper had a duty to warn because the cargo presented dangers about which
the carrier could not reasonably be expected to know.” DG Harmony, 533 F.3d at 94; see
also Contship Containerlines, 442 F.3d at 78. That showing, in turn, depends on whether it
“would have been reasonable to expect the carrier to know of the specific type and degree
of danger posed by the cargo at issue.” DG Harmony, 533 F.3d at 95 (emphasis in
original). Generally, the shipper is in the best position to know of the relevant dangers
and to provide an effective warning; absent prior or independent knowledge of the
20The district court also determined that Chemtura was not negligent in its shipping of DPA
and therefore not liable for damages here because it did not have a duty to warn that its
containers of DPA had been heated as part of its fill and loading process. Chemtura labeled the
DPA according to the IMDG Code, and it was not reasonably foreseeable to Chemtura that the
DPA would be stored next to containers of DVB-80 that, as here, had been exposed to unusual
conditions making those containers particularly sensitive to heat. See Phase II, 339 F. Supp. 3d at
236-37. For the reasons stated by the district court, id. at 223-24, we too conclude that Chemtura
was not negligent in its labelling of the containers of DPA. After withdrawing their appeals
with respect to claims against Chemtura, however, neither Deltech nor Stolt presses for
contribution from Chemtura. See supra n.5.
27
nature of the cargo or the particular shipment, the carrier is entitled to rely on the
warnings given by the shipper without conducting further inquiries. See DG Harmony,
533 F.3d at 95 (explaining that when the dangerousness of cargo is not readily apparent,
“a carrier may rely on the shipper’s attestations as to the cargo’s characteristics”
because carriers and their agents “often must make quick and complex stowage
decisions about diverse containerized cargoes” and therefore should not be expected to
have “encyclopedic knowledge beyond” those attestations (citation omitted)).
Consistent with the principles enunciated in DG Harmony, the district court
correctly concluded that Stolt and Deltech bore a duty to warn of the “particular heat
sensitivities of the DVB[-80]” in the tanks loaded onto the Flaminia. Phase II, 339 F.
Supp. 3d at 239. Under the circumstances presented here, it would have been
unreasonable to expect MSC, Conti, and NSB either together or individually to know of
the specific type and degree of danger posed by this cargo of DVB-80. The risk-
producing circumstances—the early filling of the tanks and the long period outside in
the heat at NOT, in particular—were neither apparent on visual inspection nor
described in the tanks’ accompanying documentation.
Further, Stolt and Deltech each had material information about the DVB-80 tanks
that neither communicated to MSC. In particular, Deltech informed Stolt of the
dangerous nature of generic DVB-80 but failed to ensure that the information was
shared with each party in the shipping process chain. Deltech also “failed to effectively
ensure that the necessary monitoring, including checking the temperature prior to
loading, would occur.” Id. at 237. As for Stolt, the district court concluded that Stolt did
not warn other players of the dangers of a generic DVB-80 cargo or of this shipment in
particular: Stolt gave no hint to MSC that the tanks of DVB-80 onboard the Flaminia had
been delivered early to New Orleans Terminal and sat there day after day, exposed to
the sun.
28
Deltech and Stolt failed to notify MSC, Conti, and NSB that originating the
shipment at New Orleans in June ran contrary to Deltech’s safety protocols and risked
DVB-80's stability by lengthening the summertime voyage. They also failed to arrange
for the necessary temperature monitoring before loading. Stolt further breached its duty
to warn by omitting heat warnings from the DGDs that it delivered to the carrier
entities and failing to highlight or even note in the DGDs that the tanks had been filled
early and sat outside at NOT. MSC could not be expected to know that the three tanks
had been exposed to such conditions, and therefore presented a higher risk of danger,
without an express warning from Deltech or Stolt. The tanks thus posed a “specific type
and degree of danger” that was not adequately reflected in Stolt’s and Deltech’s
warnings. See DG Harmony, 533 F.3d at 95; see also Phase II, 339 F. Supp. 3d at 195
(describing the conditions to which the DVB-80 was exposed as creating “ticking time
bombs”). We therefore find no error in the district court’s ruling that Stolt and Deltech
breached their respective duties to the later participants in the shipment chain.
None of Stolt and Deltech’s arguments to the contrary is persuasive. First,
striving to fend off this conclusion, Stolt and Deltech contend that MSC’s substantial
prior experience with the chemical DVB-80 excused them from providing MSC with
any further warning. MSC was adequately aware of the chemical’s characteristics, they
urge, to appreciate the risk presented by these tanks and their shipment in the summer
months. We are not persuaded. It is true that a carrier’s general knowledge of the nature
of a cargo can be sufficient to defeat its claim for the shipper’s strict liability, but a
failure-to-warn claim turns on whether “it would have been reasonable to expect the
carrier to know of the specific type and degree of danger posed by the cargo at issue.” DG
Harmony, 533 F.3d at 95. Conducting the “reasonable awareness inquiry”—in contrast to
the “binary” strict liability assessment—“requires a fact-sensitive, ‘calibrated’ analysis
29
of the cargo’s dangerousness and the extent to which that risk was different from risks
commonly encountered by carriers.” Id.We are convinced that Stolt and Deltech bore a duty to warn other participants in
the transportation chain of the particular characteristics of the tanks of DVB-80 that
were left outside at New Orleans Terminal and later stowed aboard the Flaminia. We
see no reasonable basis to expect the carrier, MSC (and through MSC, the other ship
owning interests), to know of the specific degree of danger posed by the cargo as a
result of its early loading and careless storage ashore. In Senator Linie Gmbh, we
explained that “[i]n contrast to a carrier, which typically is in the position of taking
aboard its vessel a large quantity and variety of cargoes, a shipper can be expected to
have greater access to and familiarity with goods and their manufacturers before those
goods are placed in maritime commerce.” 291 F.3d at 169. The shipper, therefore, is
often the party “in a better position to ascertain ahead of time the dangerous nature of
shipped goods.” Id.Such is the case here. MSC had experience with DVB-80 and general information
about DVB-80 was available in its databases, it is true. But to require MSC to
“associate[e] the chemical properties it may know somewhere within its organization
with a shipment of three discrete tanks,” Phase II, 339 F. Supp. 3d at 238, would
unreasonably allocate risk and burden among the parties—particularly when critical
characteristics of those specific tanks were out of the ordinary. Stolt and Deltech, on the
other hand, knew of not only the general dangerousness and heat sensitivity of DVB-80,
but also the specific handling and stowage conditions that made the DVB-80 in the
tanks aboard the Flaminia particularly hazardous.
Second, Stolt and Deltech resist the conclusion that they were negligent under
Section 4(3) of COGSA by arguing that MSC failed in its “duty to listen” to those
warnings that Deltech did provide. We decide that, even if MSC had such a duty, it
30
committed no breach: it “listened” to the information conveyed in the DGDs. Section
5.1.1.3.1 of the IMDG Code, which the parties here had an obligation to follow, 21
requires a carrier to “receive[] a shipping paper” from the offeror of the dangerous good
that contains certain information about the cargo before carrying it. 49 C.F.R.
§ 176.24(a); see also id. § 172.200(a) (imposing on “each person who offers a hazardous
material for transportation” the requirement to properly “describe the hazardous
material on the shipping paper”). The district court reasonably found that in 2012, the
“shipping paper” that the cargo shipping industry used “as the central repository of
information relating to safe handling and transport of dangerous cargo” was the DGD.
Phase II, 339 F. Supp. 3d at 214. By regulation, a carrier is entitled generally to “rely on
information provided by the offeror of the hazardous material . . . unless the carrier
knows . . . that the information provided by the offeror . . . is incorrect.” 49 C.F.R. §
171.2(f). Here, Stolt provided DGDs to MSC showing the UN number and class for
DVB-80—and nothing more. Phase II, 339 F. Supp. 3d at 214. The DGDs did not warn
MSC that DVB-80 could auto-polymerize when exposed to high temperatures, and they
did not inform MSC that these tanks of DVB-80 in particular had been exposed to
conditions that put the DVB-80 at a higher risk of auto-polymerization. The district
court determined based on the trial record that it was industry custom for a carrier to rely
on the shipper’s DGDs to create a stowage plan. Stolt and Deltech have not shown that
this factual finding was clearly erroneous, and there is no basis for finding that MSC
21The U.S. Department of Transportation has promulgated regulations that incorporate the
IMDG Code by reference. See 49 C.F.R. § 171.7. These regulations impose obligations on
shippers and carriers of dangerous goods. See id. § 171.2(e) (“No person may offer or accept a
hazardous material for transportation in commerce unless the hazardous material is properly
classed, described, packaged, marked, labeled, and in condition for shipment as required by or
authorized by applicable requirements of this subchapter[.]” (emphasis added)). SOLAS, which
the United States has ratified, also requires compliance with the IMDG Code. See Phase II, 339 F.
Supp. 3d at 198–99.
31
unreasonably relied on the DGDs here with respect to the tanks of DVB it stowed aboard
the Flaminia.
Stolt and Deltech argue that MSC ignored—that it failed to “listen” to—the heat
warning on the Master Bill of Lading Instructions. The district court concluded based
on the evidence at trial that the MBLI was a “transport document,” i.e., not the type of
document used “to convey necessary and critical safety information about a dangerous
good,” and therefore that Stolt and Deltech could not rely on it to escape liability. Id. at
238. We agree that the warning contained in the MBLI was insufficient to put MSC on
notice of the specific type and degree of danger posed by DVB-80 once loaded onto the
Flaminia. The MBLI’s warning called for above-deck temperature monitoring because
of heat sensitivity, certainly, but it did not disclose the temperature at which DVB-80
becomes unstable (27 degrees Celsius) or alert MSC to any of the natural consequences
of overheating, including the auto-polymerization and explosion that happened here.
Apart from those basic inadequacies, it also did not disclose that the tanks of DVB-80
had been filled early and had already been exposed to long days of heat. The general
heat warning presented in the MBLI was insufficient to place MSC on reasonable notice
of the dangerousness of the cargo that it agreed to carry for Stolt and Deltech. MSC did
not breach any obligation to “listen” or by its actions relieve Stolt and Deltech of liability
under a failure-to-warn theory. 22
22We additionally find no merit in Stolt’s argument that the district court’s order should be
reversed because it failed to make a legal determination as to causation, the second element of
the failure-to-warn claim. To prevail on a failure-to-warn claim, a plaintiff must show that the
“absent warning, if given, would have impacted stowage.” DG Harmony, 533 F.3d at 94 (quoting
Contship Containerlines, 442 F.3d at 78). Stolt argues on appeal that the district court “made no
finding as to whether an adequate warning, if given, would have impacted MSC’s stowage
decision and averted the loss.” Stolt Br. at 45. But the district court did, in fact, make factual
findings to support the legal determination that had MSC properly been warned about the
temperature risks, the need for temperature monitoring, and the DVB-80’s early arrival at the
32
III. MSC’s Lack of Negligence
The district court concluded that MSC was not negligent in its stowage and
handling of the DVB-80. Deltech and Stolt challenge that conclusion. While the question
is closer than the two we have just discussed, on de novo review, we are persuaded by
the district court’s analysis. We reiterate that while our review is de novo, we remain
mindful of the ”specific and complex facts” that form the basis of the district court’s
negligence determination, In re City of New York, 522 F.3d at 282, and therefore apply a
“fact-sensitive, ‘calibrated’ analysis” on review, DG Harmony, 533 F.3d at 95.
MSC’s rights and obligations as the carrier are governed by COGSA. 23 COGSA
provides that “[t]he carrier shall properly and carefully load, handle, stow, carry, keep,
care for, and discharge the goods carried.” 46 U.S.C. § 30701 (note) § 3(2). Under the
COGSA regime, a carrier is not liable for failing to store or stow cargo as suited for
special conditions of which it was not aware. See, e.g., DG Harmony, 533 F.3d at 95(“[T]he shipper had an obligation to inform the carrier of special requirements
terminal, MSC would not have loaded the DVB-80 onto the Flaminia. The court expressly held
that “Stolt's failure to effectively inform MSC resulted in the DVB cargo being stowed aboard the
Flaminia, and the crew being blind to that fact.” Phase II, 339 F. Supp. 3d at 239 (emphasis
added). The court also found that “[h]ad the temperature been checked on June 30 or July 1
when the product was loaded, [it] is persuaded that the DVB cargo would have been pulled
from the Flaminia.” Id. at 237. We are convinced that these findings by the district court
adequately establish causation.
23“By its terms, COGSA governs bills of lading for the carriage of goods ‘from the time when
the goods are loaded on to the time when they are discharged from the ship.’” Norfolk S. Ry. Co.
v. Kirby, 543 U.S. 14, 29 (2004) (quoting COGSA § 1(e)); see also Herod’s Stone Design v.
Mediterranean Shipping Co., S.A., 846 F. App’x 37, 39 (2d Cir. 2021) (summary order) (same).
COGSA also gives shippers and carriers the option to extend by contract COGSA’s coverage to
include periods of handling on land. See Kirby, 543 U.S. at 29 (citing COGSA § 7). Deltech, Stolt,
and MSC have done so here. Clause 6.1 of the Sea Waybills makes COGSA the applicable legal
regime as a matter of contract “throughout the entire time the [DVB-80 tanks] are in [MSC’s]
custody, including before loading and after discharge.” Exs. at 3635, 3640; see also Phase II, 339 F.
Supp. 3d at 240 n.97.
33
regarding stowage location, and to make such special arrangements in advance of
stowage[.]”); O’Connell Mach. Co. v. M.V. Americana, 797 F.2d 1130, 1134 (2d Cir. 1986)
(same); Tenneco Resins, Inc. v. Davy Int'l AG, 881 F.2d 211, 213–14 (5th Cir. 1989) (holding
that a carrier was not required to protect cargo from rain absent special instructions).
The district court correctly determined that MSC did not breach its duty of care
in its stowage or general handling of the DVB-80 tanks because MSC's handling of the
cargo was proper assuming “normal voyage conditions” and because Stolt and MSC
never provided any special instruction or warning regarding the heightened
dangerousness of this cargo. Phase II, 339 F. Supp. 3d at 235. Stolt gave MSC three sets of
documents regarding the July 1 shipment: on June 20, the preliminary DGDs; on June
25, the MBLI; and on June 26, the final DGDs. Of these three, only the MBLI contained
any heat warning at all.
The district court concluded that, consistent with industry practice, the DGDs—
not the MBLI or any combination of documents—were the “central repository of
information relating to the safe handling and transport” of the ship’s cargo, and that it
was reasonable for MSC to rely on the DGDs for accurate information regarding the
type of hazard posed by the DVB-80. 24 Phase II, 339 F. Supp. 3d at 214. It further found
that “MSC’s practice, and industry practice, was to use DGDs as the primary source of
safe handling information for dangerous goods.” Id. The only special instructions
provided—to stow the DVB-80 “above deck for temperature monitoring”—were in the
MBLI, which MSC did not receive until June 25, far too late for MSC to use in creating
24While “COGSA does not require a shipper to use any particular method . . . to inform a carrier
of the dangerous properties of its cargo” in order to defeat a strict liability claim, Chem One, Ltd.
v. M/V RICKMERS GENOA, 502 F. App’x 66, 71 (2d Cir. 2012) (summary order), a district court
may properly consider the method used to convey safety information when determining
whether a shipper or carrier acted negligently in carrying out its respective duties, see id. at 73.
34
its stowage plan. Additionally, the district court found that the MBLI “is neither
designed nor used in the industry to provide a vessel with special handling instructions
for dangerous goods.” Id. at 213. While an alleged tortfeasor cannot “rely solely upon its
adherence to industry standards, customs, or practices as a per se defense to a
negligence claim,” Berretta v. Tug Vivian Roehrig, LLC, 259 F. App’x 343, 344–45 (2d Cir.
2007) (summary order), a court may properly consider custom or standard practice in
the industry as a “useful measure in assessing the standard of care,” In re City of New
York, 522 F.3d at 285 (citation omitted). Indeed, “[c]ourts will not lightly presume an
entire industry negligent.” Id. (citing Spancrete Ne. Inc. v. Occupational Safety & Health
Rev. Comm’n, 905 F.2d 589, 594 (2d Cir. 1990)). Here, the district court’s factual findings
regarding MSC’s practice and industry custom were well supported by the record and
not clearly erroneous.
In any case, even if MSC should have relied on the MBLI, MSC did not receive it
until after the DVB-80 was loaded into tanks and after the tanks had already sat
stagnant in the sun at New Orleans Terminal for four days, at which point it was far too
late to alter existing stowage plans. At trial, MSC offered testimony that providing
instructions for stowage on June 25 through the MBLI was too close to the July 1
loading date for MSC to make alternative loading arrangements. See Phase II, 339 F.
Supp. 3d at 213 (finding that special handling instructions must be received “further in
advance of the cargo so that proper arrangements can be made”). This circumstance
made the temperature monitoring instruction on the MBLI functionally useless absent
concurrent instructions forbidding shipment when the carrier could not adhere to the
instructions. Apart from the general heat warning on the MBLI—which did not reveal
the temperature at which DVB-80 became unstable or advise that the chemical could
auto-polymerize above such a temperature—Stolt never requested, either at the time of
booking or at any point thereafter, special stowage, segregation, or handling of the DVB
35
cargo. Id. And of course, the MBLI did not inform MSC that the tanks had been filled
early, had sat in the sun at the Terminal, or that these conditions increased the risk that
the DVB-80 inside the tanks would auto-polymerize and cause an explosion.
Based on these factual findings, we decide that a carrier in 2012 could exercise
reasonable care by relying on the information it received from a shipper at the time of
booking and that it was provided by the cargo’s DGDs to plan safe stowage. As the
district court observed, “[i]t would have been impractical for carriers to have had
multiple pieces of paper relating to handling dangerous goods, the primary use of
which was different . . . and then to have had to compare them to each other and/or to a
DGD.” Phase II, 339 F. Supp. 3d at 214. We therefore find no error in the district court’s
determination that MSC met its standard of care with respect to its stowage of the
DVB-80 cargo aboard the Flaminia. Stolt had the requisite knowledge and authority but
made no arrangements for special stowage and gave MSC no precise temperature
instructions, either at the time of booking or in the DGDs. Employees from both Stolt
and Deltech testified that to provide such special instructions would be standard
practice for certain cargos. See, e.g., Joint App’x at 8231–32 (testimony of Deltech
employee); id. at 4556–60 (testimony of Stolt employee); see also id. at 3108 (“MSC . . .
expect[s] that any special requests will be made by the customer before or at the time of
booking . . . .”). In this setting, it was reasonable for MSC to stow the DVB-80 tanks
below deck in Hold 4, next to Chemtura’s heated DPA tanks and near the ship’s heated
bunker tanks. 25
25We agree with the district court that MSC’s stowage of the DVB-80 tanks next to the heated
DPA containers and near the ship’s fuel tanks did not breach its duty to properly stow the cargo
under COGSA. Even assuming that the MBLI’s vague heat warning was sufficient to put MSC
on notice of this particular cargo’s heat sensitivity, MSC’s handling of the tanks was adequate.
The district court found that MSC’s policy called for stowing all dangerous goods as if they
36
The evidence presented at trial also supports the conclusion that neither Stolt nor
Deltech expected the DVB-80 to be stored above-deck or that MSC (or the ship’s crew)
would monitor the chemical’s temperature during the voyage. See Phase II, 339 F. Supp.
3d at 208 n.36 (finding that “Stolt did not charge Deltech extra” for obtaining
temperature monitoring and did not request temperature monitoring when booking the
cargo with MSC); id. at 211 n.40 (concluding that “above deck stowage was not a
Deltech requirement” based on testimony from Deltech’s president, Robert Elefante,
that “whether the [DVB-80] was stored above or below deck ultimately did not matter
so long as the ISO containers were kept away from a heat source”); id. at 223 n.76
(finding that above-deck stowage was not included in Deltech’s operative shipping
protocols at the time of the incident and noting the testimony of Zachary Levine,
Deltech’s VP of Commercial Operations, that “storage of the DVB ISO containers below
deck was acceptable to Deltech” (emphasis added)). In other words, the DVB-80’s
stowage below deck in Hold 4 was entirely foreseeable to Stolt and Deltech.
Stolt and Deltech’s expectation that the DVB might be stowed either below or
above deck was consistent with the IMDG Code, as well. 26 Deltech and Stolt properly
identified DVB-80 as an “Environmentally Hazardous Substance[], Liquid, NOS [Not
were heat sensitive, which meant stowing this cargo away from bunker tanks and motors. Hold
4, while adjacent to the ship’s wing tanks containing heated fuel oil, had been approved for
dangerous goods by the vessel’s classification society. With respect to stowage next to the
heated DPA containers, Chemtura never informed MSC that its containers could radiate heat
and MSC had no reason to know of this fact. Indeed, DPA, like DVB-80, was Class 9 cargo and
the IMDG Code does not have any separation requirements for cargo within this class.
Additionally, the IMDG Code does not treat cargo itself as a heat source. See Joint App’x at 3337
(quoting IMDG Code § 7.1.1.15). While the district court found that the DPA containers and the
ship’s fuel tanks increased the temperature in Hold 4, see Phase I, 2018 WL 526549, at *26, this
fact is insufficient to find that MSC breached its duty of care in the stowage of the DVB-80
tanks, which it reasonably assumed were safe for transport under normal conditions.
26As discussed, supra n.21, carriage of dangerous goods must conform to the IMDG Code’s
requirements for stowage.
37
Otherwise Specified] UN 3082, Class 9.” Phase II, 339 F. Supp. 3d at 214. Cargo with this
classification is considered to be vessel stowage category A. See Joint App’x at 3335.
“Stowage category A means the material may be stowed ‘on deck’ or ‘under deck’ on a
cargo vessel or on a passenger vessel.” 49 C.F.R. § 172.101(k)(1). The IMDG Code does
not require that UN 3082 cargo, if placed below deck, be stowed in a ventilated area. We
therefore identify no error in the district court’s finding that MSC treated the tanks
exactly as specified by the IMDG Code.
Absent a booking request for on-deck stowage and temperature monitoring,
MSC’s stowage of the three DVB-80 tanks below deck in Hold 4 was both reasonable
and foreseeable to Stolt and Deltech. Therefore, the district court’s determination that
MSC did not breach its duty of care by stowing the DVB-80 below deck does not
“manifest[] an incorrect conception of the applicable law.” In re City of New York, 522
F.3d at 282 (quoting Esso Standard Oil S.A. v. S.S. Gasbras Sul, 387 F.2d 573, 580 (2d Cir.
1967)). 27
27The district court also held that the COGSA fire exception protected MSC. That exception
protects the carrier from responsibility for damage caused by fire, unless the fire is the “actual
fault” of the carrier. COGSA § 4(2)(b). As a general matter, a shipper can recover against a
carrier “merely by showing that the carrier received the [shipper’s] goods in sound condition
and delivered them damaged.” Asbestos Corp. Ltd. v. Compagnie De Navigation Fraissinet et
Cyprien Fabre, 480 F.2d 669, 672 (2d Cir. 1973). The carrier thus normally bears the burden of
proof to show that it exercised due diligence. Id. COGSA’s fire exception shifts the burden of
proof to the shipper, requiring it to “prove that the carrier’s negligence caused the fire or
prevented its extinguishment.” In re Ta Chi Nav. Corp., S.A., 677 F.2d 225, 229 (2d Cir. 1982); see
also Asbestos Corp., 480 F.2d at 672–73. Because Stolt and Deltech have not proved that MSC
stowed the DVB-80 negligently, the district court correctly concluded that the explosion aboard
the Flaminia was not the “actual fault” of MSC. Ta Chi, 677 F.2d at 229. The facts here are unlike
those at issue in In re Liberty Shipping Corp., Motor Ship Don Jose Figueras, 509 F.2d 1249, 1252 (9th
Cir. 1975), where the Ninth Circuit held that the fire was the “actual fault” of the carrier because
the carrier “permitt[ed] the vessel to put to sea without having properly trained the master and
crew in the use of fire-fighting equipment.” Id. In that case, there was evidence of “owner
38
IV. Conti and NSB’s Lack of Negligence
The district court concluded that NSB and Conti were not negligent in hiring or
training the crew on the Flaminia and that the crew acted reasonably when confronted
with the vapor generated under-deck by Deltech’s DVB-80. Stolt and Deltech challenge
this conclusion, arguing that the crew should have known that the vapor was not smoke
caused by a fire and that moving the manhole covers could generate a potentially
catastrophic spark. On review, we agree with the district court.
When the district court’s findings of fact are “premised upon credibility
determinations, we grant particularly strong deference to those findings.” United States
v. Mendez, 315 F.3d 132, 135 (2d Cir. 2002); see also Phoenix Global Ventures, LLC v. Phoenix
Hotel Assocs., Ltd., 422 F.3d 72, 76 (2d Cir. 2005) (deferring to district court’s factual
findings, “particularly those involving credibility determinations”). Here, the district
court’s concluded that Conti and NSB were not negligent in their firefighting conduct
because they responded appropriately based on their belief that a fire had broken out in
Hold 4. This determination rested largely on the testimony of Captain Brian Hall, an
expert in shipboard firefighting, with over 20 years of relevant experience. See Phase II,
339 F. Supp. 3d at 226 n.83. The district court found Captain Hall’s testimony
persuasive, calling the Captain “knowledgeable, consistent, and logical”; it “relie[d]
heavily on his opinions.” Id. We accordingly afford strong deference to those of the
district court’s findings that were premised on Captain Hall’s testimony.
Captain Hall testified that the captain, officers, and crew aboard the Flaminia
were “appropriately trained and drilled in firefighting procedures and equipment, and
were in compliance with applicable regulations.” Id. at 227. He gave his view that it was
neglect and actual fault constituting failure to exercise the due diligence required by COGSA.”
Id. Not so here.
39
reasonable for the crew to believe that opening the man-lid when confronted with an
already-oxygenated fire would not have caused an explosion. Relying on this
testimony, the district court found that, under the circumstances as the crew reasonably
perceived, opening the man-lid would not initiate oxygenation because, “the presence
of the smoky cloud indicated that any fire was already oxygenated.” Id. at 235. Thus,
“there was reason to assume that opening a man[-]lid and placing a hose into the Hold
could assist in addressing what was believed to be a fire,” according to the district
court. Id. We identify no error in the district court’s finding on the basis of Captain
Hall’s testimony that the crew aboard the Flaminia was not negligent in opening the
man-lid. We reject Stolt and Deltech’s contentions to the contrary.
The district court also determined that Conti and NSB did not act negligently by
failing to release more carbon dioxide (“CO2”) into Hold 4. The district court found that,
“while the [carbon dioxide] system was not perfectly designed or installed, it worked
appropriately.” Id. at 228. It also concluded that it was not unreasonable for the crew to
believe that they were dealing with a fire, rather than a DVB-80 vapor cloud. 28 Neither
Stolt nor Deltech have demonstrated persuasively that these conclusions are erroneous.
We therefore affirm the district court’s determination that the crew’s conduct did not
make Conti and NSB liable for the loss.
28Separately, the district court concluded that NSB and Conti, like MSC, are entitled to the
protections of the “fire exemptions” in COGSA and the Limitation of Shipowner’s Liability Act
(the “Limitation Act”). Because the fire did not result from the “actual fault” or negligence of
MSC, NSB, or Conti, the district court was correct that these defenses are available to these three
parties. See 46 U.S.C. § 30701 (note) §§ 4(2)(b),(q) (COGSA “fire exemptions”); 46 U.S.C. § 30522(Limitation Act “loss by fire” provision, earlier codified at 46 U.S.C. § 30504). See n.27, supra.
40
V. New Orleans Terminal’s Lack of Negligence
The district court concluded that the Terminal was not negligent under federal
maritime law because its actions—permitting stowage of the DVB-80 tanks in the open
air in the terminal yard—was “consistent with its own prior practice as well as industry
practice.” Id. at 195. We find no error in this determination and the parties identify none
persuasively.
The district court found that “[n]one of [New Orleans Terminal’s] processes or
procedures are confidential” and its storage handling is conducted “literally out in the
open—if a shipper is sending cargo out of New Orleans, he can expect that at some
point it will arrive at [New Orleans Terminal’s] yard; if the shipper has not made other
arrangements, it is entirely foreseeable that the cargo will sit in that yard, stagnant,
under the New Orleans sun.” Id. at 221. Deltech and Stolt did not instruct or even imply
in the booking with New Orleans Terminal that the cargo should be stored in any other
manner. Id. Further, they failed to ensure that the external temperature gauge on each
tank of DVB-80 was checked prior to its loading onto the Flaminia. Id.
Stolt and Deltech insist nonetheless that the Terminal was negligent in its
handling and storage of the DVB-80. They argue primarily that New Orleans Terminal
fell below the applicable standard of care when it failed to heed the warnings that
appeared on the Straight Bills of Lading and Materials Safety Data Sheet, to the effect
that the DVB-80 cargo was heat sensitive and should not be stored in direct sunlight.
The evidence showed that New Orleans Terminal’s longstanding practice is to
recognize only those handling and storage instructions that it receives at the time of
booking from the carrier (here, MSC), and not the delivery agent (here, Boasso). For this
reason, New Orleans Terminal neither noted nor followed the warnings contained in
the Straight Bills of Lading and Material Safety Data Sheet, which were delivered to it
41
by Boasso. Rather, those documents were “filed away,” id. at 220, and used just to
identify the source of the shipment and the UN cargo type.
It was established at trial that New Orleans Terminal provides information to the
general public about how it processes cargo. It was incumbent on Stolt and Deltech,
arranging for the dangerous shipment—especially when the shipment was contrary to
Deltech’s protocols insofar as it was slated for a summer loading in New Orleans rather
than Newark—to inform themselves about how the Terminal operated and align the
safety measures they took accordingly. They, not the Terminal, were in the best position
to identify the risks and take steps to secure appropriate storage at the Terminal. Absent
such measures, it was entirely foreseeable to both Deltech and Stolt that the tanks
would sit “in the open sun at [New Orleans Terminal], adjacent to other UN number
3082, Class 9 cargo.” Id. at 221. Having failed to inform themselves of NOT’s procedures
and to take direct measures for special handling of the DVB-80 cargo, Stolt and Deltech
cannot transform New Orleans Terminal’s handling of the cargo in accordance with its
published practices into the Terminal’s negligence merely by delivering otherwise
ordinary transit documents. Accordingly, we find no error in the district court’s
determination that the Terminal was not negligent.
VI. No Recovery Against BDP
In addition to the tort claims discussed above, Stolt sued its subcontractor BDP
for breach of contract to obtain indemnification and/or contribution for Stolt’s damage
liability. Below, Stolt argued that BDP’s handling of the shipment documentation was a
cause of the accident and, at the very least, deprived Stolt of a defense to the tort and
contract claims brought by the other parties to this action. On appeal, Stolt presses only
the second theory.
42
It was BDP’s role to process documents related to the shipment for Stolt: the
district court referred to BDP as Stolt’s “Documentation Department.” Phase II, 339 F.
Supp. 3d at 195. It is undisputed that BDP failed to obtain from MSC a Sea Waybill that
included the correct stowage instructions and that, in this way, BDP breached its
contractual obligations to Stolt. The district court nevertheless determined that BDP’s
breach is not actionable because it was not this breach that caused harm resulting in
Stolt’s liability, nor did this breach deprive Stolt of any real defense. We are persuaded
that this conclusion is correct.
When BDP transmitted the draft of Stolt’s multipage Sea Waybill to MSC in the
form of the MBLI, it included the following instruction: “DO NOT STOW NEAR HEAT
SOURCES. STOW ABOVE DECK FOR TEMPERATURE MONITORING.” Id. at 204
n.25. But when MSC prepared a proof copy of the Sea Waybill based on the MBLI and
sent it back to BDP, the document omitted the heat warning. BDP failed to notice this
omission. As a result, the final Sea Waybills between Deltech, Stolt, and MSC did not
include the MBLI’s instruction regarding DVB-80’s heat sensitivity or the direction to
store the cargo above deck. Id. at 217. On the face of it, this could have been a crucial
omission. The instruction, while somewhat vague, was the only explicit warning of
DVB-80’s heat sensitivity received by MSC.
The evidence at trial indicated, however, that none of the parties—including
MSC, Stolt, and Deltech—would have considered this stowage instruction to be
operative, and that MSC would not (and arguably could not) have acted on it even if it
had been included in the Sea Waybills. See id. at 243 (“[There] is insufficient evidence
that had that language been preserved, MSC here would have acted differently or had
different legal responsibilities to do so.”). The evidence presented at trial demonstrated
that MSC’s Sea Waybills did not “play any operational function in the stowage plan”
for the Flaminia, as that task had “been completed by the time these documents [were]
43
issue[d],” Phase II, 339 F. Supp. 3d at 223, but were used only as contract of carriage (i.e.,
maritime contracts that formalized the relationships among the parties), see id. at 241.
Instead, special requests for stowage were expected to be communicated to MSC prior
to or at the time of booking. Joint App’x at 3108. Deltech’s booking requests to Stolt
called for stowage either “in stack” or “below deck,” since either would “avoid exposure
to direct sunlight.” Phase II, 339 F. Supp. 3d at 202 n.17. MSC followed this instruction
by storing the DVB-80 in Hold 4. 29
On appeal, Stolt maintains that had BDP ensured that MSC had included the
instructions on the Sea Waybills, Stolt could at least have raised MSC’s breach as a
defense to its own breach and thereby averted or diminished its own liability. Stolt
asserts that in a scenario in which BDP had ensured that the Sea Waybills included this
explicit language directing temperature monitoring and stowage above decks, “Stolt
would not have been liable to MSC and NSB/Conti under the Master contracts, and
Stolt would have had valid contractual bases to assert claims against MSC.” Stolt Reply
Br. 56.
This argument has some force. Even were we to assume that Stolt could have
asserted a breach of contract action against MSC for failing to adhere to the Sea
Waybills, however, Stolt does not explain how MSC’s subsequent hypothetical breach
would have excused, prevented, or superseded its own. In other words, Stolt does not
explain how the inclusion of the heat warning on the Sea Waybills would have
adequately warned MSC of the specific degree of danger posed by the DVB-80 cargo
29The evidence presented at trial was consistent with the district court’s earlier determination
that BDP was entitled to summary judgment on Stolt’s claim that BDP’s breach was a proximate
cause of the loss aboard the Flaminia. See In re M/V MSC Flaminia, No. 12-cv-8892, 2017 WL
3738726, at *6 (S.D.N.Y. Aug. 30, 2017). Even though BDP’s omission of the heat warning
amounts to a breach of contract, the district court concluded that its relationship to the
explosion was too attenuated to be considered a proximate cause of the loss.
44
aboard the Flaminia such that it could have defended against the carrier interests’
failure-to-warn claim.
Stolt bore an affirmative obligation, independent of the documentation
responsibilities it delegated to BDP, to warn MSC of the dangerousness of the DVB-80—
an obligation placed squarely on Stolt by both COGSA and the Sea Waybills. The
district court ruled that Stolt breached Clause 15.1 30 of the Sea Waybills by failing to
warn MSC of three important and interrelated facts: (1) the three tanks were loaded
with DVB-80 early at the Deltech plant; (2) it delivered tanks filled with DVB-80 that
would auto-polymerize in hot conditions; and (3) it deposited those tanks outside in the
terminal yard in New Orleans to sit stagnant and heat up for the many days until vessel
departure. Phase II, 339 F. Supp. 3d at 246. The heat warning that was omitted from the
Sea Waybills—the same warning that MSC did receive on the MBLI—would not have
adequately warned MSC of any of these three conditions.
The district court also decided that Stolt breached its obligation under Clause
15.1 to “fully inform” MSC by failing in the DGDs to warn of the risk that DVB-80
would auto-polymerize under certain conditions. Id. at 247. This was crucial, the court
found, because it was the DGDs on which carriers in general and MSC in particular
rely, rather than the Material Safety Data Sheet or MBLI. Id. Acting on behalf of Deltech,
Stolt therefore breached its fundamental duty to warn when at booking it failed to
request special handling and sent MSC DGDs in which no heat warning was provided.
Even a heat warning in the Sea Waybills, then, would not have excused Stolt’s separate
30Clause 15.1 provides that when the “merchant” (Stolt and Deltech) “delivers Goods of a
dangerous or hazardous nature to the Carrier” (MSC), Stolt and Deltech “shall fully inform
[MSC] in writing of the precise and accurate details of the Goods, and special precautions or
handling required for the Goods.” Phase II, 339 F. Supp. 3d at 245. The operative Sea Waybills
identify MSC as the carrier, Stolt “on behalf of” Deltech as the shipper, and Stolt as the
consignee. Id. at 241.
45
material breach in the deficient DGDs. 31 Stolt’s failure to explain this deficiency only
heightens our conviction that any failure by MSC that Stolt may now hypothesize—a
speculative failure to heed the Sea Waybill’s hypothetical instructions to stow the DVB-
80 above deck and to monitor temperature—would not excuse Stolt’s more profound
breach. Therefore, BDP’s failure to include the instructions on the Sea Waybill did not
deprive Stolt of any real defense and warrants no practical effect in the allocation of
liability between those two parties.
VII. MSC, Conti, and NSB’s Entitlement to Indemnification by Stolt and Deltech
The district court held that the terms of the Sea Waybills require Stolt and
Deltech to indemnify MSC, as well as its subcontractors Conti, and NSB, for their losses.
Under Clause 15.2 of the Sea Waybills, the “Merchant” (here, Stolt and Deltech) agrees
to indemnify the “carrier” (MSC) and its “subcontractors” (Conti and NSB) for “all loss,
damage, delay, personal injury, death or expenses . . . arising from such [dangerous or
hazardous] Goods and/or from the breach of clause 15.1.” Phase II, 339 F. Supp. 3d at
245–46 (quoting Sea Waybills Cl. 15.2) Because we agree with the district court’s rulings
that Stolt and Deltech breached Clause 15.1 and that MSC, Conti, and NSB were not
negligent, we find no error in the district court’s further holding that MSC and its
31Stolt arranged the booking with MSC on June 11, the date when (according to the district
court) it would have been appropriate for Stolt to request special stowage. On June 20, Stolt sent
the draft DGDs to MSC. MSC did not develop its stowage plan for the Flaminia until June 28.
See Phase II, 339 F. Supp. 3d at 202–04. Therefore, MSC’s hypothetical breach (developing a
stowage plan that ignored the Sea Waybill) would not provide Stolt with a valid excuse for its
failure to perform adequately under the contract, nor would it have provided Stolt with a valid
contractual claim against MSC, since Stolt’s own breach occurred prior to MSC’s hypothetical
one. See Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996) (requiring adequate performance of
the contract by the claimant for a successful breach of contract claim).
46
subcontractors are entitled to be indemnified by Stolt and Deltech: the loss or damage to
MSC, Conti, and NSB indisputably arose at least in part from that breach.
As discussed above, we determine that the district court did not err in
concluding that Stolt and Deltech violated Clause 15.1 of the Sea Waybills. 32 Clause 15.1
required them each to “fully inform [MSC] in writing of the precise and accurate details
of the [DVB-80], and the special precautions or handling required for the [DVB-80].” Id.
at 245. Deltech and Stolt failed to inform MSC that the temperature of the DVB-80
should be checked and monitored before loading onboard and that the chemical should
not be loaded if its temperature exceeded 27 degrees Celsius. Deltech and Stolt also did
not fully inform MSC of the hazardous or potentially dangerous characteristics of this
particular shipment of DVB-80—the now-familiar, troubling facts that the tanks were
filled early, sat stagnant in steamy New Orleans for ten days, and thus were
significantly more susceptible to auto-polymerization during the voyage. Id. at 246–47.
Because Stolt and Deltech breached Clause 15.1, we agree with the district court
that they must indemnify MSC and its subcontractors, Conti and NSB, pursuant to
Clause 15.2 of the Sea Waybills. 33
32Based on the information in the MBLI, MSC prepared the three Sea Waybills—one for each
tank—and provided them to BDP. The Sea Waybills, alongside a 2011 service contract between
Stolt and MSC (the terms of which are not at issue here) governed the contractual relationship
between Deltech, Stolt, and MSC. See Phase II, 339 F. Supp. 3d at 209.
33Because we also agree with the district court that MSC, Conti, and NSB were not negligent, see
above Parts III–IV, we do not reach the question addressed by our dissenting colleague with
regard to the enforceability of Clause 15.2 of the Sea Waybills in light of the Harter Act, 46
U.S.C. § 30701, et seq. See Diss. Op. at 6–9.
47
CONCLUSION
We have considered the parties’ remaining arguments and find in them no basis
for any additional reversal. Accordingly, the district court’s order is REVERSED in
part, to the extent that the district court determined that Deltech and Stolt were strictly
liable under Section 4(6) of the Carriage of Goods at Sea Act. The district court’s order is
otherwise AFFIRMED in part, insofar as it ruled as follows:
(1) Stolt and Deltech were liable under a failure-to-warn theory.
(2) MSC was not negligent in its stowage and handling of the DVB-80 shipment.
(3) NSB and Conti were not negligent in hiring or training the crew on the
Flaminia, and the crew acted reasonably.
(4) New Orleans Terminal was not negligent in its handling of the shipment.
(5) BDP’s breach is not actionable by Stolt because the breach did not
proximately cause the resulting harm and did not deprive Stolt of a defense.
(6) The Sea Waybills require Stolt and Deltech to indemnify MSC, Conti, and
NSB for their losses.
The case is REMANDED for further proceedings consistent with this Opinion.
48
18-2974(L)
In re: M/V MSC Flaminia
MENASHI, Circuit Judge, concurring in part and dissenting in part:
I join Parts I, II, IV, and V of the court’s opinion. For the reasons
the court states, the district court erred when it decided that Deltech
and Stolt could be held strictly liable under the Carriage of Goods by
Sea Act (“COGSA”), 46 U.S.C. § 30701 note. 1 But the district court did
not err when it held that Deltech and Stolt were negligent under
COGSA on a failure-to-warn theory or when it held that Conti, NSB,
and NOT were not negligent for those entities’ respective actions.
I disagree with the court about three issues. First, the district
court erred in holding that MSC was not negligent. Second, the
district court erred when it concluded that Stolt’s breach-of-contract
claim against BDP is not actionable because BDP did not cause any
harm to Stolt. Third, MSC is not entitled to full indemnification from
Deltech and Stolt.
I
The district court concluded that MSC was not negligent at all.
That was erroneous. Even if Deltech and Stolt had duties to provide
additional warnings and failed to discharge those duties, MSC
received information concerning the stowage of DVB-80 but failed to
heed those warnings. The instructions for the Master Bill of Lading
(“MBLI”) explained that the DVB-80 was to be stowed away from heat
sources. In re M/V MSC Flaminia, 339 F. Supp. 3d 185, 204 n.25
(S.D.N.Y. 2018) (“The Master Bill of Lading Instructions provided the
following heat warning: ‘DO NOT STOW NEAR HEAT SOURCES. STOW
ABOVE DECK FOR TEMPERATURE MONITORING.’”) There is no doubt that
1 Unless otherwise noted, I use the same abbreviations as the opinion of the
court.
MSC received those instructions; it relied on the instructions to
generate the Sea Waybills. Had MSC complied with the instructions,
the DVB-80 might not have autopolymerized and exploded. That is
because, in addition to the early filling of the tanks and the tanks’
stowage at the NOT dock, the district court identified two factors that
“substantially contributed” to the autopolymerization: “[t]he
placement of [the tanks] in Hold 4, where it was stored next to the
containers of heated DPA and near the ship’s heated fuel tanks” and
the “hotter-than-typical ambient temperatures in Hold 4.” Id. at 192
(quoting In re M/V MSC Flaminia, No. 12-CV-8892, 2018 WL 526549, at
*30-31 (S.D.N.Y. Jan. 23, 2018)). The DVB-80 would not have been
exposed to those conditions had MSC heeded the warnings provided
in the MBLI.
In concluding that MSC’s failure to heed the warnings
contained in the MBLI was not negligent, the district court focused
almost entirely on the method by which Stolt communicated
information about the proper stowage of DVB-80. The district court
identified “the DGD as the locus of critical information and warnings
about the dangers of goods” and concluded that “Stolt’s DGDs were
defective.” Id. at 238. It is correct that the DGDs were defective, but
the district court’s emphasis on those documents was misplaced.
“COGSA does not require a shipper to use any particular method …
to inform a carrier of the dangerous properties of its cargo.” Chem
One, Ltd. v. M/V Rickmers Genoa, 502 F. App’x 66, 71 (2d Cir. 2012). The
district court even acknowledged that “other shippers and NVOCCs
had included handling instructions on bills of lading or other non-
DGD documents,” Flaminia, 339 F. Supp. 3d at 219, indicating that
maritime custom does not make it reasonable to rely solely on the
DGDs. See The Innocenta, 13 F. Cas. 64, 65 (S.D.N.Y. 1879) (“[T]o make
a custom of the port, the rule must be so generally known and
2
acknowledged and acted upon, as virtually to be applied by the whole
of that part of the business community which it would affect.”).
Because neither COGSA nor maritime custom permits a carrier to
ignore information other than that contained in the DGDs, MSC was
not entitled to disregard the warning because it was not presented on
a particular form. I would reverse the district court’s decision that
MSC was not negligent.
The court responds that, “even if MSC should have relied on
the MBLI, MSC did not receive it until after the DVB-80 was loaded
into tanks and after the tanks had already sat stagnant in the sun at
New Orleans Terminal for four days, at which point it was far too late
to alter existing stowage plans.” Ante at 35. The court concludes that
the MBLI’s warnings were “functionally useless absent concurrent
instructions forbidding shipment when the carrier could not adhere
to the instructions.” Id. But MSC received the MBLI on June 25—days
before “MSC develop[ed] its stowage plan for the cargo aboard the
Flaminia” on June 28 and well before the Flaminia even arrived at
NOT to receive the cargo on June 30. Flaminia, 339 F. Supp. 3d at 204.
The loading was not complete until July 1. Id.
In another part of its opinion, the court holds that Stolt failed to
provide MSC with “material information about the DVB-80 tanks,”
specifically that “the tanks of DVB-80 onboard the Flaminia had been
delivered early to New Orleans Terminal and sat there day after day,
exposed to the sun.” Ante at 28. If that holding is correct—and I
believe it is—then it means that MSC could have acted to prevent risks
even after the DVB-80 was loaded into tanks and sat out in the sun.
MSC could have, for example, monitored the temperature of the
DVB-80 or stowed it away from heat sources—as the MBLI directed.
3
Even if MSC could not have changed its stowage plan in
response to the MBLI—despite the fact that the stowage plan had not
yet been developed—MSC could have contacted Stolt or Deltech to
determine the risks of failing to follow the heat warning. Because
MSC did not do anything to heed the heat warning it received from
the shipper, I would hold that it was negligent.
On remand, the district court would need to determine whether
and to what extent MSC’s breach of its duty of care gives rise to
liability. Assuming the resultant damage flowed directly from MSC’s
breach and was within the scope of the risk of MSC’s negligent act,
see In re Kinsman Transit Co., 338 F.2d 708, 724 (2d Cir. 1964) (Friendly,
J.) (“The weight of authority in this country rejects the limitation of
damages to consequences foreseeable at the time of the negligent
conduct when the consequences are ‘direct,’ and the damages,
although other and greater than expectable, is of the same general sort
that was risked.”), the district court would need to apportion fault
between Deltech, Stolt, and MSC in the first instance. See Derdiarian v.
Felix Contracting Corp., 51 N.Y.2d 308, 315 (1980) (noting that
“[b]ecause questions concerning what is foreseeable and what is
normal may be the subject of varying inferences, as is the question of
negligence itself, these issues generally are for the fact finder to
resolve” except “where only one conclusion may be drawn from the
established facts”). I would remand for the district court to make that
determination.
II
The district court erred when it concluded that Stolt’s breach-
of-contract claim against BDP was not actionable because the breach
did not cause harm. BDP’s breach did in fact harm Stolt because, had
the Sea Waybills contained terms requiring the stowage of DVB-80
4
away from heat sources, MSC’s conduct in this case—its stowing of
the DVB-80 near heat and its lack of temperature monitoring—would
have constituted a contractual breach of the Sea Waybills. MSC’s
contractual breach would render it liable to Stolt for its lack of proper
stowage, and the other terms of the Sea Waybills—including the
indemnity provision—could not be invoked against Stolt and Deltech
after MSC’s breach. See U.W. Marx, Inc. v. Koko Contracting, Inc., 124
A.D.3d 1121, 1122 (N.Y. App. Div. 3d Dep’t 2015) (explaining that one
party’s “prior material breach” relieves the other party of its duty to
“perform[] its remaining obligations under the contract”).
BDP argues that MSC would never have agreed to include such
a provision in the Sea Waybills. That argument fails for several
reasons. First, there is evidence that MSC had previously permitted
stowage instructions to be included in sea waybills. In early June 2012
Deltech shipped a container of DVB-80 on the MSC Marianna. The sea
waybill issued for that shipment contained the exact warning at issue
in this case: “DO NOT STOW NEAR HEAT SOURCES. STOW ABOVE DECK FOR
TEMPERATURE MONITORING.” Exs. 5346-47. The same warning
appeared on a sea waybill issued by MSC to Deltech in February 2012
for a shipment of DVB-63. See Ex. 5351. Second, the relevant
comparator for causation-of-damages purposes is the state of affairs
in which BDP had performed its duties; it was BDP’s obligation to
secure Sea Waybills with the appropriate stowage instructions, and
doing so would have altered MSC’s legal obligations. Third, even if
BDP’s obligation was solely to seek—rather than to secure—the
inclusion of Deltech’s stowage instructions in the Sea Waybills, the
proper and adequate performance of BDP’s duties required it to
inform Stolt of MSC’s refusal to accept the stowage conditions. See
Flaminia, 339 F. Supp. 3d at 242 (noting that “[p]roper and adequate
performance” of BDP’s “document processing duties” was “implicit
5
in [its] agreement” with Stolt). Such notice could have either
prevented the voyage altogether or prompted renewed negotiation
between MSC and Stolt regarding the conditions of stowage.
In any event, the district court’s conclusion was based on the
premise that MSC would not have “had different legal
responsibilities” if the stowage instructions had been contained in the
Sea Waybills. Id. at 243. Because that premise is incorrect, I would
reverse on this issue.
III
The district court concluded that the terms of the Sea Waybills
required Deltech and Stolt to indemnify MSC, Conti, and NSB for the
losses those entities sustained. That was erroneous because the Sea
Waybills’ indemnification provision is partially unenforceable under
the Harter Act, 46 U.S.C. § 30704.
Clause 15.1 of the Sea Waybills provides that when Deltech or
Stolt deliver “Goods of a dangerous or hazardous nature” to MSC,
Deltech and Stolt need to “fully inform [MSC] in writing of the precise
and accurate details of the Goods, and special precautions or handling
required for the Goods.” Flaminia, 339 F. Supp. 3d at 245 (quoting Sea
Waybills cl. 15.1). In turn, Clause 15.2 provides that Deltech and Stolt
“shall be fully liable for and shall indemnify, hold harmless and
defend [MSC] … for all loss, damage, delay, personal injury, death or
expenses including fines and penalties, and all reasonable legal
expenses and costs caused to [MSC] … arising from such Goods
and/or from the breach of clause 15.1, whether or not [MSC] was
aware of the nature of such goods.” Id. at 245-46 (quoting Sea Waybills
cl. 15.2). The district court held that, because Deltech and Stolt
breached Clause 15.1, the breach triggered the obligation to
indemnify MSC, Conti, and NSB under Clause 15.2.
6
The Harter Act provides, in relevant part, that “[a] carrier may
not insert into any bill of lading or shipping document a provision
avoiding its liability for loss or damage arising from negligence or
fault in loading, stowage, custody, care, or proper delivery.” 46 U.S.C.
§ 30704. Clause 15.2 provides MSC with an indemnity against its own
negligence and is therefore a “provision avoiding liability for loss or
damage arising from negligence.” See Flaminia, 339 F. Supp. 3d at 245.
In reaching that conclusion, this court’s decision in Gibbs v.
United States, 599 F.2d 36 (2d Cir. 1979), is instructive. In that case, we
construed a contractual provision that provided as follows:
The Contractor shall save harmless and indemnify the
Postal Service and its officers, agents, representatives,
and employees from all claims, loss, damage, actions,
causes of action, expense and/or liability resulting from,
brought for, or on account of any personal injury or
property damage received or sustained by any person,
persons, or property growing out of, occurring, or
attributable to any work performed under or related to
this contract, regardless of whether such claims, loss,
damage, actions, cause[s] of action[], expense and/or
liability may be attributable to the fault, failure, or
negligence of the Contractor.
Id. at 40.
In concluding that this language provided the Postal Service
with an indemnity against its own negligence, this court emphasized
three textual points that resemble the terms of Clause 15.2. First, the
contract required that the contractor “save harmless and indemnify”
the Postal Service. That language, this court said, “show[s] an intent
to encompass indemnification for the indemnitee’s negligence.” Id.7
Clause 15.2 similarly provides that Deltech “shall indemnify” MSC
and hold it harmless.
Second, the contract in Gibbs referred to “all claims” that might
arise out of the work performed under the contract. This court
observed that this language “on its face” covered claims arising out
of the government’s negligence. Id. Clause 15.2’s language is similarly
comprehensive, requiring Deltech to indemnify MSC for “all loss,
damage, delay, personal injury, death or expenses including fines and
penalties, and all reasonable legal expenses and costs caused to” MSC
arising from the dangerous goods. Flaminia, 339 F. Supp. 3d at 245
(quoting Sea Waybills cl. 15.2).
Third, the contract in Gibbs provided for indemnification
“regardless of whether” the damage to the government “may be
attributable to the fault, failure, or negligence of the Contractor.”
Gibbs, 599 F.2d at 40. While this court did not explain why that
language implied that the indemnity extended even to liability arising
out of the government’s own negligence, the most likely reason is
that, by untethering liability from the contractor’s fault, the language
evinced an intent to provide as broad an indemnity as possible.
Clause 15.2 works similarly because it states that MSC is entitled to
indemnification regardless of “whether or not the Merchant was
aware of the nature” of the dangerous goods. Flaminia, 339
F. Supp. 3d at 245-46 (quoting Sea Waybills cl. 15.2). For that reason,
Clause 15.2 evinces an intent to give a very broad indemnity that
encompasses damages arising from MSC’s own negligence.
MSC argues that the Harter Act cannot apply because COGSA
is incorporated into the Sea Waybills—a contract—and so displaces
the Harter Act. That argument cannot succeed because COGSA
applies here only as a matter of contract. Because a contract cannot
8
displace a statute, the Harter Act would govern even if there were a
conflict between the two statutes. But there is no conflict: As COGSA
itself makes clear, it “shall [not] be construed as superseding … any
other law[s] which would be applicable in the absence of this Act,
insofar as they relate to the duties, responsibilities, and liabilities of
the ship or carrier prior to the time when the goods are loaded on or
after the time they are discharged from the ship.” 46 U.S.C. § 30701note. Because the Harter Act “relate[s] to the duties, responsibilities,
and liabilities of the … carrier prior to the time when the goods are
loaded on … the ship,” COGSA would not displace the Harter Act to
the extent it would have governed prior to loading. 46 U.S.C. § 30704;
see also English Elec. Valve Co., Ltd. v. M/V Hoegh Mallard, 814 F.2d 84,
87 (2d Cir. 1987) (stating that “while COGSA defines a carrier’s
liability ‘from the time when the goods are loaded on to the time when
they are discharged from the ship,’” the Harter Act applies before
loading and after discharge).
Because the contract’s language allows MSC to avoid its
“liability for loss or damage arising from negligence or fault in
loading, stowage, custody, care, or proper delivery,” it is void under
the Harter Act to the extent that the indemnity extends to pre-loading
and post-discharge conduct. 46 U.S.C. § 30704. Because MSC’s
principal negligence occurred prior to the loading of the vessel, I
would remand for the district court to revisit the allocation of fault.
As the district court found, MSC developed its stowage plan on June
28, 2012, days before the ship was loaded. See Flaminia, 339 F. Supp. 3d
at 204. The stowage plan disregarded the warnings provided in the
MBLI. See id. at 213. Because the development of the stowage plan
occurred prior to loading, the Harter Act prohibits MSC from being
indemnified from the consequences to the extent that act was
negligent.
9
* * *
I agree with the court that the district court erred when it
concluded that Deltech and Stolt were liable under a strict liability
theory, and I agree that the district court did not err when it
concluded (1) that those parties were liable on a negligent-failure-to-
warn theory and (2) that Conti, NSB, and NOT were not negligent.
However, the district court did err when it concluded that MSC
was not negligent even though it disregarded the instructions on the
MBLI. It erred when it held that Stolt could not recover from BDP for
breach of contract. And it erred when it concluded that Deltech and
Stolt were required to indemnify MSC, Conti, and NSB under Clause
15.2 of the Sea Waybills for MSC’s negligent actions performed prior
to loading. For those reasons, I dissent in part.
10