Opinion
Case No. C-2-00-859
February 1, 2001
OPINION AND ORDER
This matter is before the Court on Plaintiff's motion for a declaratory judgment and Defendant's motion for partial summary judgment. For the reasons that follow, the Court GRANTS Plaintiff's motion for a declaratory judgment and DENIES Defendant's motion for partial summary judgment.
I. BACKGROUND A. Underlying Facts
Plaintiff, Running Bear Farms, Inc. ("Running Bear") is an Ohio Corporation that provides equipment for endurance horse racing events. Compl. at ¶ 1. Defendant, Expeditors International of Washington, Inc. ("Defendant") is a corporation licensed to transact business in Ohio that operates as a freight forwarder. (Doc. 4 6 at 2.) As such, Defendant contracts with various individuals and businesses to arrange for the transportation of their goods aboard airlines and air freight companies. (Id.) Defendant is considered an indirect carrier, and the airline or air freight company with which it contracts to ship its client's goods is considered the direct carrier. (Id.)
Endurance horse racing differs from traditional horse racing in that endurance horse racing involves marathon-length horse races as opposed to traditional horse races which only cover a mile and a half.See Plaintiff's motion for declaratory judgment at 2.
In November of 1998, Plaintiff contacted Defendant in order to receive a quote for the shipment of horseback riding equipment and supplies from Columbus, Ohio to Dubai, United Arab Emirates. Compl. at ¶ 4. Plaintiff wanted the equipment and supplies shipped to Dubai so that it could market its goods at an international convention and trade show for the endurance horseback riding industry. Id. Plaintiff alleges in its Complaint that it informed Defendant that the event in Dubai "presented Plaintiff with a once in a lifetime opportunity to market its product internationally." Id. at ¶ 6. Plaintiff informed Defendant that it was scheduled to have a booth at the trade show on December 7, 8 and 9, 1998. Id. According to Plaintiff, Defendant said that the shipment would arrive in Dubai on either December 5 or 6, 1998. Id. at 7. Plaintiff contends that it relied upon these representations as a condition of entering into the contract with Defendant. Id.
Defendant picked up Plaintiff's goods and issued Plaintiff, the shipper, an air waybill for the transportation of the horse supplies from Columbus, Ohio to Dubai. Thereafter, Plaintiff arrived in Dubai on December 5, 1998 to await the arrival of the supplies. Compl. at ¶ 10. However, Plaintiff contends that the supplies did not arrive in time for the Convention. On December 10, 1998, Plaintiff returned to the United States. Id. at 17.
An air waybill "is a written document describing the shipping arrangement between the air carrier and the shipper. It includes, inter alia, the point of origin and destination and a description of the goods included in the shipment." Tai Ping Insurance Co., LTD. v. Northwest Airlines, Inc., 94 F.3d 29, 31 (2d Cir. 1996).
B. Procedural Posture
On June 16, 2000, Plaintiff filed a three-count Complaint and a motion for a Declaratory Judgment in the Franklin County Court of Common Pleas. Defendant removed the case to this Court on August 1, 2000.
In Count I of the Complaint, Plaintiff asserts that Defendant's air waybill is insufficient to provide Defendant with the limitations on liability provided by the Unification of Certain Rules Relating to International Carriage by Air, 49 U.S.C. § 40105 (the "Warsaw Convention"). With respect to this claim, Plaintiff filed a motion of a Declaratory Judgment seeking an Order from this Court declaring the rights and obligations of the parties, including a declaration that the limitations on liability imposed by the Warsaw Convention are of no force and effect. In Count II of the Complaint, Plaintiff alleges that Defendant breached the terms of the contract by failing to timely deliver the goods to Dubai. Finally, in Count III of the Compliant, Plaintiff contends that Defendant had a duty to timely and competently provide the services that are the subject of this litigation.
On October 31, 2000, Defendant filed a First Amended Answer and Counterclaim asserting two separate causes of action for breach of contract. On that same date, Defendant filed a motion for partial summary judgment with respect to Count I of the Complaint. (Doc. # 9.) Defendant seeks an Order determining that it complied with the provisions of the Warsaw Convention and that its maximum liability in this case is $8,680.00 as a matter of law. Defendant's motion for partial summary judgment and Plaintiff's motion for a declaratory judgment are currently before the Court for consideration. Both motions concern only Count I of the Complaint.
II. SUMMARY JUDGMENT DECLARATORY JUDGMENT STANDARDS
Summary judgment is appropriate only in a limited number of circumstances. Rule 56(c) of the Federal Rules of Civil Procedure provides, in pertinent part, that summary judgment shall be granted only:
if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(c). The moving party bears the burden of establishing the absence of a genuine issue as to any material fact. See Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970). The Supreme Court held that the standard of summary judgment mirrors the standard for a directed verdict under Federal Rules of Civil Procedure 50(a), which is that the trial judge must direct a verdict if, under the governing law, there can be but one reasonable conclusion as to the verdict." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). This is true where, for instance, the dispute turns only on a legal question and the moving party must prevail as a matter of law even if the court were to resolve all factual disputes in favor of the nonmoving party. See Ross v. Franzen, 777 F.2d 1216, 1222 (7th Cir. 1985).
In addition, a summary judgment motion requires special treatment of the record. The Court "must view the evidence presented through the prism of the substantive evidentiary burden" and determine "whether reasonable jurors could find by a preponderance of the evidence that the Plaintiff is entitled to a verdict. . . ." Anderson, 477 U.S. at 252; see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Nonetheless, in making this determination the Court may not impinge upon the proper function of the jury. Therefore, all of "[t]he evidence of the non-movant party is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255. The nonmoving party does have the burden, however, after completion of sufficient discovery, to submit evidence in support of any material element of a claim or defense on which that party would bear the burden of proof at trial, even if the moving party has not submitted evidence to negate the existence of that material fact. See Celotex Corp., 477 U.S. at 322.
The Declaratory Judgment Act, 28 U.S.C. § 2201, governs declaratory judgments. The Act gives a federal court the power to enter a declaratory judgment only in a case of actual controversy that is otherwise within its subject matter jurisdiction. See 28 U.S.C. § 2201. The Act provides, in pertinent part:
. . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.28 U.S.C. § 2201 (A). This section is an enabling act which confers discretion on the courts rather than an absolute right upon the litigant. See Zemel v. Rusk, 381 U.S. 1, 18 (1965). It is with these standards in mind that the Court considers the instant motions for partial summary judgment and declaratory judgment.
III. ANALYSIS A. The Warsaw Convention
The Warsaw Convention applies to "all international transportation of persons, baggage, or goods performed by aircraft for hire." Warsaw Convention, Art. 1(1). The Convention is designed to create a uniform system of documentation in international air travel and to limit the potential liability of air carriers. See Al Marine Adjusters, Inc. v. Forwarding Sys. Int'l., No. 97-1015, 1999 WL 199588, at * 2, (N.D. Ill. Mar. 31, 1999) (citing Onyeanusi v. Pan American World Airways, Inc., 952 F.2d 788, 792 (3d Cir. 1992)).
In general, Article 18 of the Warsaw Convention presumes an air carrier liable for the loss or damage to and the delay of goods in transit. See id. However, Article 22(2) of the Convention limits the air carrier's liability to 250 French francs per kilogram, or approximately $9.07 per pound, unless the shipper opts to declare a higher value and to pay a higher shipping fee for the cargo. See Warsaw Convention, Arts. 18, 22 (2). In order to avail itself of the Convention's limited liability protection, the air carrier must include on the air waybill certain "essential particulars" enumerated in Article 8. See Tai Ping Ins. Co. v. Northwest Airlines, Inc., 94 F.3d 29, 31 (2d Cir. 1996) (citing Art. 9 of the Convention. If the air waybill does not contain the essential particulars, Article 9 of the Convention automatically deprives the air carrier of its limited liability protection. See id.
More specifically, Article 8 of the Convention provides that the air waybill "shall contain" seventeen separate particulars. However, only ten of those particulars are relevant to the issue of limited liability. That is, Article 9 of the Convention makes only ten of the seventeen particulars set forth in Article 8 "essential" and their omission automatically deprives the air carrier of limited liability protection. In particular, Article 9 provides that the carrier is not entitled to limited liability protection "if the air waybill does not contain all the particulars set out in article 8(a) to (i), inclusive, and (q)." Id., Art. 9.
B. The Instant Dispute
In the instant matter, Plaintiff claims that Defendant is not entitled to limited liability protection because the air waybill failed to set out the particulars required by subsections (c) and (in) through (p) of Article 8. However, as stated above, only the particulars set forth in subsections (a) through (i) and (q) are deemed "essential" and require the automatic deprivation of limited liability protection if omitted. As such, the inclusion or exclusion of subsections (in) through (p) — which are optional particulars — is not determinative of whether Defendant is entitled to limited liability protection. Therefore, the Court will confine its analysis to a determination of whether the air waybill in the instant matter omits the information required by subsection (c) of Article 8.
Article 8(c) requires that the air waybill include all of the "agreed stopping places." Specifically, Article 8 provides, in pertinent part:
The air waybill shall contain the following particulars:
. . .
(c) The agreed stopping places, provided that the carrier may reserve the right to alter the stopping places in case of necessity, and if he exercises that right the alteration shall not have the effect of depriving the transportation of its international character.
Warsaw Convention, Art. 8(c).
Ira this case, Plaintiff has repeatedly, and without explanation, failed to properly file with the Court a copy of the December 2, 1998 air waybill that it received from Defendant. However, Defendant has provided the Court with the language that appeared on the air waybill and does not dispute that the air waybill failed to list Paris as an agreed stopping place. (Doc. # 6 at 3.) According to Defendant, the air waybill provides as follows:
It is agreed that the goods described herein are accepted in apparent good order and condition (except as noted) for carriage SUBJECT TO THE CONDITIONS OF CONTRACT ON THE REVERSE HEREOF. . . . SHIPPER AGREES THAT THE SHIPMENT MAY BE CARRIED VIA INTERMEDIATE STOPPING PLACES WHICH THE CARRIER DEEMS APPROPRIATE. THE SHIPPER'S ATTENTION IS DRAWN TO THE NOTICE CONCERNING CARRIER'S LIMITATION OF LIABILITY
(Id.)
Plaintiff contends that the above language is insufficient to satisfy Article 8(c)'s requirement that the air waybill list the "agreed stopping places." Specifically, Plaintiff contends that "the air waybill does not include the specific route of shipment to be used to transport the goods." (Doc. # 1, Ex. A at 7.) Defendant, on the other hand, contends that the air waybill complies with Article 8(c). In support of this position, Defendant makes three separate arguments. First, Defendant contends that Plaintiff is confusing the requirement of Article 8(c) with the requirements of Article 8(p), an optional particular. (Doc. # 6 at 6.) Second, Defendant contends that the language of Article 8(c) "only requires the listing of stopping places if those stopping places are agreed to between the shipper and carrier." (Id. at 7.) Finally, Defendant argues that this Court should look to the purpose behind Article 8(c) in order to determine whether it needed to list the "agreed stopping places" in this particular case. The Court will now address each of Defendant's arguments in turn.
1. Article 8(c) v. Article 8(p)
Defendant first contends that Plaintiff does not understand the distinction between Article 8(c), which requires the listing of agreed stopping places, and Article 8(p), which addresses the route that the shipment will follow. This Court agrees.
Under the Warsaw Convention, "routing" and "stopping places" are distinct concepts addressed in separate subsections. Article 8(p) of the Warsaw Convention explicitly addresses routing and is not included among the "essential" particulars required by Article 9. In contrast, Article 8 (c) explicitly addresses stopping places and is a required particular under Article 9. The Convention does not define either term.
There are very few cases in the Sixth Circuit interpreting the provisions of the Warsaw Convention. The courts within the Second Circuit, however, have addressed many cases involving the Convention, and more specifically, the Convention's limitation of liability provision. Therefore, this Court turns to the Second Circuit for guidance in this case.
In Sotheby's v. Federal Express Corporation, 97 F. Supp.2d 491, 499 (S.D.N.Y. 2000), the Southern District of New York specifically addressed the distinction between routing and stopping places. The court inSotheby's noted that undefined terms in a statute or treaty "are to be given their `ordinary or natural meaning[s].'" Id. at 499 (citing National Broadcasting Co., Inc. v. Bear Stearns Co., Inc., 165 F.3d 184, 188 (2d Cir. 1999)). Moreover, "a statute should be construed so that all of its parts are given effect, and a construction ascribing to two separate statutory provisions the same meaning and scope is [therefore] disfavored." Id. (citing United States v. Stephenson, 183 F.3d 110, 121 (2d Cir.)). Giving the "routing" and "stopping places" terms their ordinary and natural meanings, the court in Sotheby's found that the terms are separate and distinct concepts under the Convention. The court explained the distinction as follows:
FedEx argues that interpreting stopping place to mean any place where the transportation stops renders the term `route to be followed' meaningless. This argument is clearly incorrect. A carrier remains free to choose the route to be followed in going from point A to point B without disclosing a stopping place; for example the carrier may choose to travel a longer distance in reaching its destination to avoid flying over water or certain countries' airspace. If a carrier chooses to stop at a particular location, however, and not just to pass over or through it, it must disclose that location as a stopping place on the air waybill in accordance with Article 8(c)Id. at 500.
This Court finds the above distinction persuasive. Accordingly, Plaintiff's statement that Defendant did not comply with the requirements of Article 8(c) because "the air waybill does not include the specific route of shipment to be used to transport the goods" is a misstatement of the law. With this distinction drawn, the Court will now consider the remainder of Defendant's arguments in order to determine whether the air waybill lists the "agreed stopping places" without regard to whether it lists the exact route to be followed.
2. "Agreed Stopping Places" Defined
Defendant next contends that the plain language of Article 8(c) only requires it to list stopping places on an air waybill if those stopping places have been explicitly agreed to by the parties. Thus, Defendant focuses on the Convention's use of the word "agreed" to modify "stopping places" in the text of Article 8(c). Although Defendant failed to cite the Court to Insurance Company of North America v. Federal Express Corporation, 189 F.3d 914 (9th Cir. 1999), the Ninth Circuit in that case specifically considered and adopted Defendant's position.
a. The Ninth Circuit's Approach
In Insurance Company of North America, the Ninth Circuit faced a situation in which the air waybill issued by the air carrier provided that "this shipment may be carried via intermediate stopping places that [the carrier] deem[s] appropriate" and that "[t]here are no stopping places which are agreed to at the time of tender of the shipment." Id. at 917. The Ninth Circuit found this language sufficient to satisfy the mandate of Article 8(c) of the Convention. In reaching this decision, the Ninth Circuit noted that its analysis must begin with the text of the Convention and that where the text is clear "we have no power to insert an amendment." Id. at 918 (citing Chan v. Korean Air Lines, Ltd., 490 U.S. 122, 134 (1989))
After analyzing the language of Article 8(c), the Ninth Circuit found that the Convention only requires that the air waybill contain "agreed" stopping places. The Ninth Circuit went on to note as follows:
Here, the parties did not agree that the shipment of computer modules would stop in Memphis. Rather, the air waybill made it perfectly clear that there were no agreed stopping places. Federal Express explicitly reserved the right to route the shipment as it saw fit. Accordingly, Federal Express was under no obligation to disclose the intermediate stop in Memphis.Id. at 918-819. Accordingly, in the Ninth Circuit, an air carrier may rely on a preprinted disclaimer that there are no stopping places "agreed" to by the parties in order to comply with Article 8(c)
b. The Southern District of New York's Approach
Although the Ninth Circuit has adopted the position that stopping places need not be included in the air waybill unless they are expressly "agreed" to by the parties, the Southern District of New York has declined to follow the Ninth Circuit's lead. In Sotheby's v. Federal Express Corporation, 97 F. Supp.2d 491 (S.D.N.Y. 2000), Sotheby's engaged FedEx to ship artwork from London, England to Newark, New Jersey. Id. at 494. Due to staffing shortages when the artwork arrived in Newark, FedEx decided to fly the cargo to Memphis, Tennessee and then back to Newark the following day. Id. at 494-95. The court held that FedEx's failure to list Memphis on the air waybill as an agreed stopping place deprived it of its right to limit its liability under the Warsaw Convention. Id. at 501.
In refusing to interpret "agreed stopping places" as only those places to which the shipper and carrier have expressly agreed, the court noted as follows:
FedEx's interpretation also makes no sense because it completely undermines the provision. Under FedEx's reading, a carrier could unilaterally decide to send cargo anywhere in the world but because the shipper had not "agreed" that these places were stopping places, the carrier would not be required to list them on the waybill and the carrier would not lose the limitation of liability. Such a result is nonsensical.Id. at 498-99. In reaching this conclusion, the court read the term "agreed stopping places" in conjunction with the second part of Article 8 (c), which provides that a carrier may at times, out of necessity, have to stop at places beyond its contemplation at the time of shipment. Specifically, Article 8(c) provides that the air waybill shall contain "[t]he agreed stopping places, provided that the carrier may reserve the right to alter the stopping places in case of necessity. . . ." Warsaw Convention, Art. 8(c). The court found that the necessity language would be rendered "superfluous" if it adopted FedEx's interpretation of Article 8(c). According to the court, the drafters of the Convention would not have included the necessity provision if the air carrier was not required to list all of its contemplated stops regardless of whether the shipper had expressly "agreed" to them. Accordingly, the court interpreted "agreed stopping places" to mean the stopping places contemplated by the carrier so as to give meaning to the provision allowing the carrier to reserve the right to alter the stopping places in case of necessity.
In addition, the court noted that FedEx could not comply with Article 8 (c) by using language on the air waybill stating that "there are no stopping places which are agreed at the time of tender of the shipment." According to the court, FedEx could not employ a generic disclaimer to relieve itself of its obligation under the Convention to specifically list the stopping places on the air waybill. Because the disclaimer "has the effect of relieving the carrier of the full liability that would ordinarily be imposed upon it by the Warsaw Convention" for failing to list the stops, the court held that the disclaimer must be declared "null and void." Id. at 501 (citing Article 23 of the Convention which provides that any contractual provision "tending to relieve the carrier of liability . . . shall be null and void").
c. This Court's Conclusion
Because there is no law in the Sixth Circuit interpreting the meaning of "agreed stopping places," this Court must determine whether it will follow the lead of the Ninth Circuit or the Southern District of New York. If the Court follows the Ninth Circuit, it must conclude that Defendant satisfied the requirements of Article 8(c) because the air waybill in this case specifically states that "SHIPPER AGREES THAT THE SHIPMENT MAY BE CARRIED VIA INTERMEDIATE STOPPING PLACES WHICH THE CARRIER DEEMS APPROPRIATE." (Doc. # 6 at 3.) From this language, the Court would conclude that the parties did not agree" to any stopping places because like the defendant in Insurance Company of North America, Defendant in this case explicitly reserved the right to stop at any location that it deemed an appropriate stopping place.
However, after considering the two positions, the Court finds the position of the Southern District of New York to be more persuasive. Accordingly, the Court finds that the term agreed stopping places" must be interpreted to mean more than those places expressly agreed to by the carrier and the shipper when it is read in conjunction with the necessity language of Article 8(c). When read together, it is apparent that a carrier may only reserve the right to stop at places not listed on the air waybill when necessity requires such a stop. Therefore, in this Court's view, a more logical interpretation of Article 8(c) is that it requires the carrier to include on the air waybill all stopping places contemplated by the carrier. The shipper then "agrees" to those stopping places, explicitly or implicitly, by accepting shipment under the waybill. Applying this conclusion to the facts of this case, the Court finds that the air waybill should have listed any contemplated stops between Columbus, Ohio and Dubai. Defendant's failure to do so requires this Court to conclude that it is not entitled to the limited liability protection of the Warsaw Convention.
In addition, the Court rejects Defendant's attempt to limit its liability under the Convention by stating on the air waybill that "SHIPPER AGREES THAT THE SHIPMENT MAY BE CARRIED VIA INTERMEDIATE STOPPING PLACES WHICH THE CARRIER DEEMS APPROPRIATE." As the Southern District of New York noted, any contractual provision that tends to relieve a carrier of the liability that would be imposed by the Convention must be declared null and void. See Sotheby's, 97 F. Supp. 2d at 501.
3. The Purpose of Article 8(c)
Finally, Defendant argues, in essence, that even if it did not comply with the requirements of Article 8(c), the purpose underlying that provision is satisfied in this case and its noncompliance should be excused. Specifically. Defendant contends that the purpose of Article 8 (c) is to notify shippers of the international character of the transaction and the applicability of the Warsaw Convention. (Doc. # 6 at 8.) Defendant argues that the air waybill "clearly conveyed the international nature of the transportation of the horse supplies by indicating that carriage was between Columbus, Ohio and Dubai, U.A.E." (Id.). According to Defendant, "[w]here the points of departure and destination are clear, obvious, and indicate the international character of the flight, as in this case, a listing of stopping places is not necessary or required." (Id. at 8-9) Defendant urges the Court to adopt the position that "[o]nly where the points of departure and destination are within one sovereign, but the stopover is in another, does Article 8 (c) require the listing of a stopping point to effect notice of the international character of the transportation." (Id.) This Court disagrees.
The Second Circuit has held that the purpose of Article 8(c) extends beyond simply putting shippers on notice of the international character of the transportation. See Intercargo Ins. Co. v. China Airlines, Ltd., 208 F.3d 64, 68 *2d Cir. 2000). In that case, the Second Circuit held that an air waybill must still contain the agreed stopping places in order for the carrier to enjoy limited liability protection even when the international character of the transportation is already clear from the air waybill. Id. In reaching this conclusion, the Second Circuit recognized that an important purpose of Article 8(c) is to provide notice to the shipper of the places where its goods will be stopped. Id. at 69; see also Sotheby's, 97 F. Supp. 2d at 501 (finding that its decision to hold the carrier liable for failing to list a stopping place "furthers Article 8(c)'s goal of providing accurate information to the shipper").
The Court agrees with the Second Circuit's decision. Even if the international character of the transportation is apparent from the face of the air waybill, the air waybill must still contain the agreed stopping places under the terms of Article 8(c). In this case, Plaintiff was entitled to know that its goods would be stopped in Paris, France prior to arriving in Dubai. Therefore, the Court finds that where, as here, the air waybill omits the required information with respect to stopping places, Article 9 deprives the carrier of the Convention's limited liability protection.
IV. CONCLUSION
Therefore, upon consideration and being duly advised, the Court finds that the air waybill did not conform with the requirements of Article 8 (c) of the Warsaw Convention. Accordingly, the Court GRANTS Plaintiff's motion for a declaratory judgment and DENIES Defendant's motion for partial summary judgment with respect to Count I of the Complaint. The Court hereby finds that the limitations on liability imposed by the Warsaw Convention are of no force and effect in this case.
IT IS SO ORDERED.