Opinion
01 Civ. 7475 (DAB) (JCF)
February 27, 2002
REPORT AND RECOMMENDATION
The plaintiff, Sun Alliance London Insurance, PLC ("Sun Alliance"), brings this action as subrogee of Corning (HK) Ltd. ("Corning") against Emery Worldwide and Emery Air Freight Corporation (collectively, "Emery"). The plaintiff asserts claims on the basis of the Warsaw Convention, formally known as the Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000, 137 L.N.T.S. 11, reprinted in 49 U.S.C.A. § 40105, alleging loss and damage to shipments of optical glass fiber. Emery filed a third-party action against United Parcel Service, Inc. ("UPS"), February 27, 2002 and UPS now moves to dismiss the Third-Party Complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, I recommend that the motion be denied.
Background
Sun Alliance is the subrogated insurer of goods shipped by Corning. (Plaintiff's Complaint ("Compl."), ¶ 1). On or about August 18 and 26, 1999, Corning hired Emery to transport optical glass fiber from North Carolina to Hong Kong. (Memorandum of Law in Opposition to UPS's Motion to Dismiss the Third-Party Complaint ("Emery Memo."), at 2; Compl. ¶ 7). Emery, in turn, entered into contracts of carriage with UPS to transport the cargo from Atlanta to Hong Kong. (Third-Party Complaint ("Third-Party Compl."), attached as Exh. A to Defendants' Notice of Motion ("Def. Notice") dated Nov. 30, 2001, ¶ 3). The goods were allegedly damaged or lost and the plaintiff commenced this action against Emery. (Third-Party Compl., ¶ 5). Emery then filed its Third-Party Complaint against UPS alleging that the goods were under UPS's control when the loss was incurred and that UPS is therefore responsible for the payment of any damages. (Third-Party Compl., ¶¶ 6-9). UPS now moves to dismiss the Third-Party Complaint on the ground that Emery failed to provide timely written notice of the loss.
Discussion
A. Motion to Dismiss
On a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court's function is to rule on the legal sufficiency of the claim as stated in the complaint. See De Jesus v. Sears, Roebuck and Co., 87 F.3d 65, 69 (2d Cir. 1996); Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). A court should not grant the motion unless it appears that the plaintiff can prove no set of facts that support the claim. Boddie v. Schnieder, 105 F.3d 857, 860 (2d Cir. 1997); United States Environmental Protection Agency ex rel. McKeown v. Port Authority of New York and New Jersey, 162 F. Supp.2d 173, 182 (S.D.N.Y.), aff'd sub nom. McKeown v. Delaware Bridge Authority, No. 01-7487, 2002 WL 4591 (2d Cir. Dec. 21, 2001); see also Conley v. Gibson, 355 U.S. 41, 45-46 (1957). In deciding the motion, the court must accept the factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Harris v. City of New York, 186 F.3d 243, 247 (2d Cir. 1999); Bolt Electric, Inc. v. City of New York, 53 F.3d 465, 469 (2d Cir. 1995).
Generally, in deciding a motion to dismiss, the court is limited to considering the facts alleged in the complaint, documents attached to the complaint or incorporated in it by reference, and matters of which the court may take judicial notice. Hirsch v. Arthur Andersen Co., 72 F.3d 1085, 1092 (2d Cir. 1995); Cosmas v. Hassett, 886 F.2d 8, 13 (2d Cir. 1989) (complaint deemed to include documents attached or incorporated by reference). If the court considers matters outside the pleadings, it must convert the motion into one for summary judgment, and the parties must be given a reasonable opportunity to present additional materials. Fed.R.Civ.P. 12(b); Carter v. Stanton, 405 U.S. 669, 671 (1972) (per curiam).
B. Warsaw Convention
The parties agree that the Warsaw Convention governs this case. (Emery Memo at 6-7; Memorandum of Law in Support of United Parcel Service, Inc.'s Motion to Dismiss the Third-Party Complaint ("UPS Memo.") at 4). The Warsaw Convention is an international treaty governing the carriage of passengers, baggage, and goods between signatory nations. Warsaw Convention, Article I(1). Generally, an air carrier is liable for loss under Article 18 of the Warsaw Convention, while Article 22(2) limits that liability. However, Article 26(2) of the Warsaw Convention requires that,
[i]n case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and at the latest, within 3 days from the date of receipt in the case of baggage and 7 days from the date of receipt in the case of goods.
Furthermore, Article 26(3) requires that complaints for damage must be made in writing.
The time limits for notification under the Warsaw Convention can be extended by a carrier. Warsaw Convention, Art. 33, 49; see also Lokken v. Federal Express Corp., No. 99 Civ. 0585, 2000 WL 193121, at *5 (S.D.N.Y. Feb. 16, 2000). UPS has extended the deadline for submitting a claim from seven days, as provided in the Warsaw Convention, to six months. (Guide to UPS Services ("UPS Guide"), attached as Exh. D to Def. Notice). However, UPS has retained the requirement that the complaint be in writing. (UPS Guide).
UPS argues that Emery fails to state a claim for which relief can be granted because it did not file a written complaint with UPS within six months. (UPS Memo. at 6). UPS cites Hitachi Data Systems Corp. v. United Parcel Service, Inc., 76 F.3d 276 (9th Cir. 1996), and Chandra Corp. v. Val-Ex, Inc., Nos. 99 Civ. 9061, 99 Civ. 9063, 2001 WL 669252 (S.D.N Y June 14, 2001), to support the proposition that a Warsaw Convention claim must be dismissed when the plaintiff failed to provide timely written notice.
Emery argues that it should be allowed to engage in discovery to determine whether UPS, in fact, is in possession of written notice. Emery further contends that in accordance with Rule 8 of the Federal Rules of Civil Procedure it is only required to provide a plain statement showing entitlement to relief, and at this stage it is not required to submit evidence that would be presented at trial. See Kittay v. Kornstein, 230 F.3d 531, 542 (2d Cir. 2000); Bennett v. Schmidt, 153 F.3d 516, 518 (7th Cir. 1998).
It is likely that if Emery did notify UPS of damage or loss, it would have maintained a record of that notice in its own files. Nevertheless, taking the facts alleged in the Third-Party Complaint as true, and drawing all reasonable inferences in Emery's favor, the pleadings state a cognizable claim under Article 18 of the Warsaw Convention. There is no requirement that a shipper plead notice in order to state a claim. Therefore, Emery should be permitted to take discovery on the notice issue. If no notice of claim comes to light, UPS may then recast its application as a motion for summary judgment.
Conclusion
For the reasons stated above, UPS's motion to dismiss should be denied without prejudice to being refiled as a motion for summary judgment once discovery has been taken on the issue of notice. Pursuant to Rule 72 of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from this date to file written objections to this Report and Recommendation. Such objections shall be filed with the Clerk of the Court, with extra copies delivered to the chambers of the Honorable Deborah A. Batts, Room 2510, and to the undersigned, Room 1960, 500 Pearl Street, New York, New York 10007.