United States District Court,
S.D. New York.
In re M/V DG HARMONY and Consolidated Cases.
No. 98 Civ. 8394(DC).
Sept. 30, 2009.
MEMORANDUM DECISION
CHIN, District Judge.
This case arises from an explosion and fire aboard the M/V DG HARMONY on November 9, 1998, while it was off the coast of Brazil. Following a bench trial, I held that the explosion and fire originated in cargo hold 3 when a shipment of calcium hypochlorite hydrated (“cal-hypo”) self-heated and went into thermal runaway. In re M/V DG Harmony, 394 F.Supp.2d 649 (S.D.N.Y.2005) (“Harmony I” ). I held that PPG Industries, Inc. (“PPG”), the manufacturer and shipper of the cal-hypo, was liable to the owner and time charterer of the HARMONY and the owners and shippers of other cargo aboard the HARMONY (respectively, the “Vessel Owners” and the “ Cargo Interests”), for strict liability, negligence, and failure to warn.
On appeal, the Second Circuit reversed in part, affirmed in part, and remanded for further proceedings. In re M/V DG Harmony, 533 F.3d 83 (2d Cir.2008) ( “Harmony V” ). The Second Circuit reversed my determinations that PPG was liable on strict liability and negligence theories. It affirmed my conclusions that (i) the explosion and fire were caused by PPG’s shipment of cal-hypo, (ii) PPG had a duty to warn plaintiffs of the risks, and (iii) PPG breached that duty. Nonetheless, it vacated and remanded for further proceedings on the sole issue of whether “the absent warning, if given, would have affected the carrier’s stowage decision and thus prevented the explosion.” Harmony V, 533 F.3d at 97.
Before the Second Circuit decided the appeal, I issued three other decisions in this case. See In re M/V DG Harmony, 436 F.Supp.2d 660 (S.D.N.Y.2006) (granting summary judgment in favor of PPG dismissing claims of carrier defendants for indemnification) (“Harmony II” ); In re M/V DG Harmony, No. 98 Civ. 8394(DC), 2006 WL 3821851 (S.D.N.Y. Dec. 29, 2006) (granting motion for reconsideration, holding that summary judgment should not have been granted with respect to South American indemnity claims and permitting carrier defendants to proceed with those claims) (“Harmony III” ); In re M/V DG Harmony, No. 98 Civ. 8394(DC), 2007 WL 895251 (S.D.N.Y. Mar. 16, 2007) (clarifying that carrier defendants were 0% at fault for loss of HARMONY) (“Harmony IV” ).
On remand, the parties submitted additional papers and arguments. The findings of fact and conclusions of law set forth in Harmony I, to the extent they were affirmed by the Second Circuit in Harmony V, are hereby incorporated. The following constitute my additional findings of fact and conclusions of law, with some of the prior findings and conclusions repeated for context.
DISCUSSION
1. The Cal-Hypo on the HARMONY
Cal-hypo is an unstable substance that decomposes at room temperature. The higher the temperature to which it is exposed, the greater the rate of decomposition. When cal-hypo decomposes, it generates heat and will self-heat. Harmony V, 533 F.3d at 87; Harmony I, 394 F.Supp.2d at 656. When the decomposition process generates heat faster than the heat can dissipate, cal-hypo goes into thermal runaway, an escalating reaction that continues until the material explodes and a fire ensues. The critical ambient temperature (“CAT”) is the temperature at which the product will retain more heat than it dissipates, leading to thermal runaway. Harmony V, 533 F.3d at 87; Harmony I, 394 F.Supp.2d at 656.
In August 1998, just a few months prior to the voyage in question, PPG began shipping-for the first time-cal-hypo in cardboard fiber drums that weighed 136 kilograms (300 pounds) when full. Harmony I, 394 F.Supp.2d at 659, 663, 674. (See Kuhn Tr. 60-61 (300-pound drums first used in 1998); Fast Tr. 121-25 (136-kilogram drums first used in shipment sent August 1998)). PPG shipped the cal-hypo on the HARMONY in these cardboard fiber drums. Four drums were loaded on each wooden pallet. Each pallet, with its four drums, was then shrink-wrapped in plastic. Thirty pallets were then packed into an unrefrigerated, metal container, stacked three-high, so that there were three layers of ten pallets each, for a total of 120 drums in each container. The cal-hypo was placed into the drums by PPG when it was still hot (34°C) and under circumstances that did not permit it to cool down. PPG prepared ten containers in this manner. Harmony V, 533 F.3d at 88; Harmony I, 394 F.Supp.2d at 659-60.
This packaging method, with this particular configuration, lowered the CAT of the cal-hypo to below 41°C. Harmony V, 533 F .3d at 95-96; Harmony I, 394 F.Supp.2d at 669. The cal-hypo, packaged in this manner, was less stable than anyone realized. Harmony V, 533 F.3d at 96; Harmony I, 394 F.Supp.2d at 669. The cal-hypo, packaged in this manner, presented dangers about which the carrier and crew could not have reasonably been expected to know and PPG, therefore, had a duty to warn about the risks. Harmony V, 533 F.3d at 83, 95; Harmony I, 394 F.Supp.2d at 673.
2. The Warning and Instructions Provided by PPG
The transportation of hazardous goods by sea is governed by a complex set of international rules and regulations, which are detailed in Harmony I, 394 F.Supp.2d at 657. See also Harmony V, 533 F.3d at 88-89. The International Maritime Organization (the “IMO”), which is affiliated with the United Nations (the “UN”), has developed a code, the International Maritime Dangerous Goods Code (the “IMDG Code” or the “Code”), to govern the carriage of dangerous goods aboard ships. There is an International Convention for the Safety of Life at Sea (“SOLAS”), to which the United States and other member nations of the UN are signatories. The members of the IMO and the signatories to the SOLAS convention have adopted the IMDG Code. The Code is relied on by shippers, manufacturers, tonnage centers, stowage planners, and ships’ crews to make decisions on the carriage and stowage of dangerous goods. Harmony I, 394 F.Supp.2d at 657.
PPG booked the shipment of ten containers with Cho Yang, a member of the Independent Carriers Alliance (the “ICA”). Harmony I, 394 F.Supp.2d at 653. PPG sent a letter of instruction to its agent and freight forwarder, Footner & Co. (“Footner”). (Gutierrez Tr. 46, 68; Shifflet Tr. 9). The letter gave instructions regarding the booking of PPG’s hazardous cargo. (Gutierrez Tr. 43-45, 85; Shifflet Tr. 9-14). PPG provided information about the cargo, including the cargo’s UN designation number (UN 2880), the IMDG Code Class (5.1), and the page of the Code on which stowage instructions could be found (5138). (JX 5; Kennedy Tr. 127-33). The IMDG Code’s stowage instructions for UN 2880 specified only that the cargo be stowed away from sources of heat in excess of 55°C for periods of 24 hours or more. Harmony I, 394 F.Supp.2d at 657, 675.
From the information provided by PPG, Cho Yang prepared a hazardous cargo request form that contained the information provided by PPG. (JX 5; Kennedy Tr. 127-30). Cho Yang eventually sent the hazardous cargo request form to the Tonnage Center of the ICA. (Kennedy Tr. 26-31, 44-45, 69-71; Afonin Tr. 181-83, 196-98). The Tonnage Center reviewed the form to ensure the cargo was a permitted cargo, and then it prepared a pre-stow plan for the vessel. (Kennedy Tr. 69-71; Shacham Tr. 151-53, 260; Afonin Tr. 181-83, 196-98). Once the Tonnage Center approved the hazardous cargo request, Cho Yang approved the booking of the cargo, updated the booking information in its system, and relayed the information to PPG. (Miller Tr. 26-31, 43-45; Kennedy Tr. 100-06, 128-35).
PPG loaded the containers with its cal-hypo and prepared a dock receipt for each container. (JX 6; Rogers Trial Tr. 699-701; Gutierrez Tr. 55; Shifflett Tr. 8-14; Kennedy Tr. 139-44). The dock receipts included all the hazardous cargo information, including IMDG Code class, UN number, packing group, the page number for the specific entry in the IMDG Code, and the container numbers. (JX 6). PPG signed the dock receipts, certifying that the containers had been packed in accordance with the regulations and that the materials were in proper condition for transportation. Harmony I, 394 F.Supp.2d at 660, 674. PPG then forwarded (through Footner) the receipts to Cho Yang. (Shifflet Tr. 8-14; Kennedy Tr. 139-44).
The containers were also accompanied by a Material Safety Data Sheet prepared by PPG. The sheet warned that the product was a “Strong Oxidizing Agent” that could cause fire or explosion with contamination. The sheet also stated that “[p]roduct decomposes at 180 C releasing oxygen gas.” It also stated that the product was to be stored “in a cool, dry, well-ventilated place …, away from heat, sparks, flames, direct sunlight, and other sources of heat.” With respect to stability, it stated that the product was “[u]nstable above 117 C.” It also stated, with respect to transportation information, that the product was a 5.1 oxidizer, UN 2880. Harmony I, 394 F.Supp.2d at 660.
Cho Yang prepared, from the information provided by PPG, a load list to be sent to the Tonnage Center. (Schacham 7/11/00 Tr. 155-56, 285-93; Afonin Tr. 172-77; Isenberg Tr. 44-46; Wingfield Tr. 137-42; Carlo Tr. 135-37). The Tonnage Center received load lists from each of the ICA members. (Afonin Tr. 172-74). The Tonnage Center used the load lists and hazardous cargo request forms to prepare the pre-stow plan for the vessel. The Tonnage Center would review the information to determine whether there were any stowage restrictions, and it would select a stowage location for individual containers. (Afonin Tr. 181-83, 193-97; Shacham 7/12/00 Tr. 155-59).
In selecting stowage locations, the Tonnage Center was guided by concerns about hazardous cargo. If a cargo could only be stored on deck, for example, then it would provide that the cargo would be stowed on deck only. (Shacham 7/11/00 Tr. 158-59). Once the Tonnage Center prepared the pre-stow plan, it forwarded the plan to the stevedores who actually loaded the containers. (Shacham 7/12/00 Tr. 335-40).
The stevedores received a stowage plan for all cargo to be loaded onto the vessel, including hazardous and non-hazardous, and a separate “mini” pre-stow plan showing only the stowage locations for hazardous or other special cargo. (Wingfield Tr. 175-78; Carlo Tr. 153-57). The stevedores received load lists from other ICA members as well. (Isenberg Tr. 44-46, 55; Wingfield Tr. 137-41; Carlo Tr. 135-37). The stevedores would then create a loading plan for the containers (the “load-out stow plan”), using the Tonnage Center stow plan as well as the load lists and other information provided by other ICA members. (Isenberg Tr. 55; Moye Tr. 66-69; Wingfield Tr. 277-78). For hazardous cargo, the stevedores did not deviate from the slots selected by the Tonnage Center unless the Tonnage Center or the vessel’s chief mate was consulted about moving a particular container of hazardous cargo. (Isenberg Tr. 73-74, 138-39; Wingfield Tr. 77, 278-79).
Cho Yang also prepared a “Dangerous Goods Summary,” a hazardous or dangerous cargo manifest. (JX 57). The Dangerous Goods Summary here included the information provided by PPG concerning the containers of cal-hypo. (JX 57). The Dangerous Goods Summary was provided to the vessel before the hazardous cargos were loaded in the particular port, and the captain would receive the manifests, sign for them, and then pass them along to the chief mate, who was the head cargo officer. The Summary also contained a column for “stowage” and a column for “remarks.” Harmony I, 394 F.Supp.2d at 650. (Balitzki Trial Tr. 243, 249-50).
PPG specifically advised that the cargo was properly designated UN 2880 and could be safely stowed in accordance with the instructions at page 5138 of the IMDG Code for UN 2880. (JX 5; Afonin Tr. 181-83, 190-98). Without any information to the contrary, the Tonnage Center selected a below-deck location for PPG’s containers in bays 25 and 27. (Wingfield Tr. 180-84; Afonin Tr. 190-98, 203; PPG Exh. 386). The stevedores received the pre-stow plan and the load list from Cho Yang, which listed the ten PPG containers by container number and specified the UN number, IMDG Code Class, and page in the IMDG Code for stowage information. (Carlo Tr. 135-44, 153-60; Wingfield Tr. 137-42, 152-53). In accordance with the information provided by PPG and the Tonnage Center, the stevedores created their load-out plan and provided for PPG’s ten containers of cal-hypo to be stowed below deck in hold 3. (Wingfield Tr. 179-81, 237-40).
3. The HARMONY Followed Instructions
In general, when the HARMONY arrived in a port, the vessel would receive a general loading plan covering all cargo that was going onto or off the vessel in that particular port. When dangerous goods were loaded on board, Balitzki, the captain, would receive dangerous goods manifests. He would sign for them and then pass them on to the chief mate, who was the cargo officer. The chief mate would check the ship’s documents of compliance to ensure the proper stowage of dangerous goods. Once the chief mate determined that the cargo was permitted by the Document of Compliance, he would then check the IMDG Code to determine whether there were any specific stowage restrictions. The captain and the chief mate would also consult the Storck Guide, which set forth guidelines on segregation. Harmony I, 394 F.Supp.2d at 660.
The chief mate would also check the location of the dangerous cargo containers by reviewing the load-out stow plan, the Dangerous Cargo Summary provided by each shipping line, and the IMDG Code to ensure stowage location was proper. (Kovshel Tr. 119-21, 127-28, 163, 176-77, 324; Balitzki Trial Tr. 249-50, 254). If the chief mate felt that a stowage location selected for a hazardous cargo was not proper, he could direct the stevedores to change the storage location. (Kovshel Tr. 170, 451-53).
The vessel received the stevedore’s load-out plan as well as the Dangerous Goods Summary for PPG’s containers of cal-hypo as well as the dock receipts prepared by PPG. Harmony I, 394 F.Supp.2d at 660. (JXs 57, 84; Balitzki Trial Tr. 244, 249-55; Wingfield Tr. 237-41; Kovshel Tr. 119-28, 176-77, 441-45). The vessel’s chief mate, Yuri Kovshel, used the Dangerous Goods Summary to check and record the stowage location of the PPG cal-hypo containers (as well as other hazardous cargo) to ensure that the location indicated on the pre-stow plan was proper. (Kovshel Tr. 176-77, 398-400; JX 105; Balitzki Trial Tr. 255). If PPG had advised that the cal-hypo could not be stowed below deck, the chief mate would have complied with that instruction. (Kovshel Tr. 240-41, 522-23). In fact, the chief mate asked the stevedores to change the location of certain other non-hazardous containers because he was not comfortable with the stowage location. (Wingfield Tr. 220-23, 283-84).
The ten containers of cal-hypo were stowed below deck in hold 3, in bays 25 and 27, in slots 270802, 270602, 270402, 250802, 250602, 250402, 250804, 250604, 250404, and 250406. Both the captain and the chief mate were aware of, and approved, the stowage positions of the cal-hypo near bunker tank 5. The captain explained that he was comfortable with this stowage plan because it was not prohibited. Likewise, the chief mate approved of the location. The HARMONY’S Document of Compliance showed that cargo designated class 5.1 could be stored in hold 3. Harmony I, 394 F.Supp.2d at 661-62. The chief mate and master approved of the stowage location of container 250404 based on the UN number and IMDG Code information provided by PPG and anticipated hold temperatures. (Balitzki Trial Tr. 250-57, 260, 262). The vessel personnel approved the below-deck stowage location of the cal-hypo containers based on the information provided to them. Harmony I, 394 F.Supp.2d at 661-62.
The HARMONY had a list of all the dangerous goods containers on board when the vessel departed Miami on October 30, 1998. The vessel also had a bay plan showing the stowage positions of all the dangerous cargo containers. There was no other hazardous material stowed in hold 3. There were some additional hazardous materials stored under deck in holds 1 and 2. Harmony I, 394 F.Supp.2d at 662. Some other hazardous cargo was stowed on deck. (Kovshel Tr. 391-93; JX 28).
4. PPG’s Warning Was Inadequate
PPG did not adequately warn of the risks associated with shipping the cal-hypo in 300-pound drums, packed when still warm, onto pallets of four drums each, which were then shrink-wrapped and stacked three-high in unrefrigerated, unventilated metal containers, with 120 drums in each container, to be stored in temperatures typically found in the hold of a container ship. Harmony I, 394 F.Supp.2d at 661-62, 674-75.
If PPG had given special instructions regarding the containers in question, including any instructions concerning the use of special equipment or the stowage of the containers on deck or below deck, Cho Yang would have relayed those instructions. (Kennedy Tr. 87-88, 132-35, 212-14; Gruelle Tr. 236-37, 244, 248; Swenson Tr. 195). PPG did not advise that its cal-hypo was packed under conditions that had not allowed it to cool properly, or that the ten containers were not safe to be loaded in accordance with the stowage instructions in the IMDG Code for UN 2880, or that the containers should not be loaded under deck, or that the containers should not be exposed to temperatures near 41°C. PPG did not specify that refrigerated containers should be used, and in fact, PPG, itself, had loaded the cal-hypo into unrefrigerated containers. (JX 6; JX 57; Kovshel Tr. 445-49). PPG did not give any warning that the CAT of its cal-hypo, packed in this configuration, was below 41°C. There was no warning on any of the documentation prepared by PPG or from information provided by PPG that the vessel should not follow the IMDG Code or that the ten containers should be stored only in a refrigerated hold or that the containers should only be stowed on deck. (Kovshel Tr. 445-49). To the contrary, PPG only warned that the cal-hypo would be unstable at temperatures above 117°C, and the IMDG Code instructed only that the cargo should be kept away from sources of heat where temperatures greater than 55°C would be encountered for more than 24 hours. Harmony V, 533 F.3d at 95-96; Harmony I, 394 F.Supp.2d at 675.
PPG should have warned that the IMDG Code for UN 2880 was not proper for cal-hypo shipped in the manner it was shipped here. By designating the cal-hypo as UN 2880, PPG was representing that the cargo was safe to be loaded below deck. (Gardiner Trial Tr. 997). As the Second Circuit has now agreed, PPG breached its duty to warn by giving warnings that were “ ‘inadequate and misleading,’ “ and by failing to warn the carrier of “the dangers posed by the calhypo it was shipping in this particular configuration.” Harmony V, 533 F.3d at 95-96.
5. If PPG Had Given A Proper Warning, The Explosion Would Have Been Averted
If PPG had given a proper warning, the carrier would have changed its stowage decision, and the explosion would have been averted. See Harmony V, 533 F.3d at 97; Contship Containerlines, Ltd. v. PPG Indus., Inc., 442 F.3d 74, 78 (2d Cir.), cert. denied, 549 U.S. 1020 (2006). As the Second Circuit held, “PPG’s attestations and the IMDG Code shaped the carrier’s reasonable expectations about the dangers of its calhypo.” Harmony V, 533 F.3d at 95. The stowage decisions here flowed directly from the information provided by PPG. As discussed above, the vessel personnel and stow planners relied on the information provided by PPG. They believed that it was safe to stow the cal-hypo below deck, in temperatures one would ordinarily expect to find in cargo hold 3. See id. 533 F.3d at 95 (“when receiving a cargo like calhypo, the dangerousness of which is not open and obvious, a carrier may rely on a shipper’s attestations as to the cargo’s characteristics”).
If PPG had advised Cho Yang that the cal-hypo in this configuration could only be stored above-deck or otherwise required special handling or that it could not be stored in temperatures one would ordinarily find in a cargo hold, that information would have been passed on to the Tonnage Center, the stow planners, and eventually the vessel personnel. If PPG had advised that the cal-hypo could not be stowed below deck or in temperatures in excess of 41°C, the vessel personnel would have complied with those instructions, or rejected the cargo. (See Balitzki Trial Tr. 249-60, 281-83; see also Gardiner Trial Tr. 1005-06). Captain Balitzki, an experienced mariner who was safety-conscious, would not have ignored a proper warning from PPG. If PPG had given adequate, proper warnings, the stow planners and vessel personnel would have acted on those warnings and the explosion would have been avoided.
6. PPG’s Arguments Fail
PPG argues that the absent warning, if given, would have been ignored, relying principally on the argument that the P & I Club Circular, which gave some warning of the risks presenting by cal-hypo, was ignored by the vessel. As I have already held, the Circular was preliminary in nature and extremely vague, and it did not address the configuration at issue in this case. Harmony I, 374 F.Supp.2d at 670 n. 30. Moreover, the issue presented is not whether an industry informational circular provided sufficient warnings but whether PPG did so, for it is the shipper’s instructions that control. Indeed, PPG surely was aware of the Circular, or its contents, and yet it permitted the cal-hypo to be shipped on the HARMONY in the configuration in question. Id.
PPG also argues that the cargo interests and vessel interests have offered only circumstantial evidence to prove that the absent warning would have made a difference if it had been given. Even assuming that is true, there is no reason that circumstantial evidence would not suffice, as long as the circumstantial evidence proved the causal link by a preponderance of the evidence. Here, I find, by a preponderance of the evidence, that if PPG had given a proper warning, the stow planners and vessel personnel would have taken the necessary precautions and the casualty would have been averted.
I have considered PPG’s remaining arguments and I reject them.
CONCLUSION
For the reasons set forth above, judgment will be entered in favor of the Vessel Owners and the Cargo Interests against PPG for the stipulated loss amounts.
SO ORDERED.
S.D.N.Y.,2009.
In re M/V DG HARMONY
Slip Copy, 2009 WL 3170301 (S.D.N.Y.)
END OF DOCUMENT
