Airline’s liability limited even for baggage checked against passenger’s will

Booker v. BWIA West Indies Airways Limited (E.D.N.Y. May 8, 2007).  After the passenger had boarded the aircraft for a flight from JFK to Guyana in 2004, the airline required that she check, “against her will,” two bags she was carrying.  When the passenger arrived in Guyana both bags were missing.  The bags did reappear four days later, but, according to the passenger, $5,000 in cash, jewelry worth $6,400 and other items had been stolen from the bags.

In her lawsuit against BWIA, the passenger alleged state law causes of action for stolen and damaged baggage, intentional and negligent infliction of emotional distress, deceptive business practices, conversion and negligence.  BWIA moved for partial summary judgment on the grounds that the passenger’s state law causes of action were preempted by the Montreal Convention, which also limited the airline’s liability.  The passenger argued that the Convention did not apply at all because the airline had engaged in “wilful misconduct” and that even if it did apply, the airline’s wilful misconduct lifted the baggage liability limit set forth in Article 22(2).

The court granted the airline’s motion.  The court ruled that the passenger’s claims were “clearly” within the scope of the Montreal Convention and that the airline’s wilful misconduct, if proved, would only lift the Article 22(2) limit, not cause the entire Convention to become inapplicable.  The court rejected the passenger’s argument that the Article 22(2) limit was inapplicable because airline personnel had stolen the missing items; the court explained that because employee theft is outside the scope of employment such conduct could not remove the limit.  Accordingly, the court ruled that BWIA’s liability for the passenger’s missing property was limited to 1,000 Special Drawing Rights pursuant to Article 22(2).  (Per the IMF’s site, 1,000 SDRs was equivalent to US$1,513.23 as of May 25, 2007.)  The court also ruled that because the Convention does not allow recovery for emotional injuries, the passenger’s emotional distress claims were preempted.

Note:  If the passenger’s bags did contain cash and other valuable items, airline personnel probably had to pry them out of her hands to check them.  The opinion only states that the bags were checked “against her will.”  Nonetheless, the court did not hesitate to apply the Article 22(2) liability limit.  Thus, this case can be cited for the proposition that even baggage checked over a passenger’s protest is subject to such limit.

Court rules that shipper waited too long before raising stink about spoiled fish

O’gray Import & Export v. British Airways PLC (D. Md. May 4, 2007).  The shipper engaged British Airways to transport smoked fish from Ghana to BWI.  On September 8, 2005, the U.S. Food and Drug Administration released the cargo to the shipper but also placed a hold on the fish due to a suspicion of mold; the FDA subsequently denied entry of the shipment.  Despite being on “clear notice of potential problems” with the cargo, the shipper did not note any complaint when it signed the air waybill on September 8.  On October 19, the shipper mailed a claim for damages to British Airways.  British Airways denied the claim because it did not comply with the air waybill’s requirement that any claim for cargo damage be made in writing to the airline within 14 days “from receipt of the goods.”

The shipper filed a lawsuit against British Airways seeking as damages the value of the cargo.  British Airways moved for summary judgment on the grounds that the shipper had failed to comply with the notice requirements of Article 26 of the Warsaw Convention, which had been adopted by the air waybill.  (Ghana is a party to the Warsaw Convention but not to the Montreal Convention, which succeeded the Warsaw Convention in 2003.)  The shipper, knowing that the Warsaw Convention’s notice requirements do not apply to “destroyed” cargo, argued in response that the cargo was “destroyed” as of September 8 rather than “damaged” as of that date.

The court granted British Airways’s motion.  The court explained that for cargo to be considered “destroyed,” the destruction must be “total and obvious.”  The court found that it was not “obvious” on September 8 that the fish were spoiled, reasoning that if the spoilage had been “obvious” that day, the FDA would have denied the cargo’s entry rather than holding the fish for further testing.  Thus, the court held that Article 26 of the Warsaw Convention and the air waybill imposed a duty on the shipper to provide notice of its claim with 14 days of September 8 and that the shipper had failed to meet this deadline.

Note:  Article 26(2) of the Warsaw Convention provides as follows:  “In the 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 seven days from the date of receipt in the case of baggage and fourteen days from the date of receipt in the case of cargo.  In the case of delay the complaint must be made at the latest within twenty-one days from the date on which the baggage or cargo have been placed at his disposal.”

Canadian company files lawsuit against 1st-Air.Net

On May 9, 2007, Ticketmaster Canada Ltd. filed a lawsuit against 1st-Air.Net, Inc. and another defendant in the Supreme Court of British Columbia seeking damages of US$91,315.  According to its Statement of Claim, Ticketmaster had entered into an agreement allowing the defendants to use Ticketmaster’s system to process credit card transactions and defendants breached such agreement by failing to pay for credit card chargebacks totaling the amount of damages sought.  Ticketmaster alleges that both 1st-Air.Net and the other defendant, MAR-RAM Associates, Inc., do business in Canada under the name “Livingston Travel” and that 1st-Air.Net’s principal office in the U.S. is located in Rochester, New York.

ARC files lawsuit seeking damages for unreported sales

Airlines Reporting Corporation v. PVO Travel Corp. and Pete Victor Obuljen (E.D. Va. Apr. 18, 2007).  ARC has filed a lawsuit against PVO Travel Corp., which does business as Globetrotter Travel, and Obuljen seeking damages of $286,605 for unreported sales and dishonored drafts.  ARC alleges in its complaint that the defendants, a terminated agent and its president and sole owner, are liable under causes of action for breach of contract, breach of fiduciary duty, conversion and fraud.  According to the complaint, the defendants are located in San Pedro, California.

Court rules that airline must eat asparagus loss

Wea Farms v. American Airlines, Inc. (S.D. Fla. Apr. 18, 2007).  A Peruvian farmer delivered asparagus to American in Lima for shipment to Miami International Airport.  American did not notify the consignee of the asparagus’ arrival in Miami until more than 18 hours had elapsed.  During that time, the asparagus was exposed to the summer heat in Miami and not placed in any type of refrigerated storage.  Not surprisingly, the asparagus suffered severe heat damage and was a total loss.

The shipper sued American for the fair market value of the asparagus at the time it was delivered to the airline.  At the trial, American argued that it was absolved from liability under its tariffs and Article 18.2 of the Montreal Convention because the asparagus had been delivered to it by the shipper in “defective packaging.”

The court found that American or its cargo agent, not the shipper, had been responsible for the packaging.  The court also found that even the shipper had been responsible for the packaging, the proximate cause of the damage to the asparagus was American’s negligence in waiting over 18 hours to contact the consignee while the asparagus sat in the hot summer weather.  Accordingly, the court held American liable to the shipper for the fair market value of the asparagus at the time of delivery.

Passenger “bill of rights” legislation is now pending before Congress

In the wake of the highly publicized on-board delays that occurred in December 2006 and February 2007, the “Airline Passenger Bill of Rights Act of 2007” was introduced in the Senate on February 17, 2007 and in the House of Representatives on March 1, 2007.  If enacted, the more extensive House bill would require that domestic airlines:

• “Provide customers at an airport and on board an aircraft, in a timely, reasonable, and truthful manner, the best information available to the air carrier regarding a delay, cancellation, or diversion affecting the customers’ flight, including the cause of the delay, cancellation, or diversion; and for a delayed flight, the air carrier’s best estimate of departure time [by using] airport overhead announcements, on aircraft announcements, and postings on airport television monitors.”
• “Establish and implement procedures to allow passengers to exit the aircraft in the case of a departure or arrival delay which would otherwise require passengers to remain on the aircraft on the ground prior to departure or arrival for a period exceeding 3 hours” except “if the pilot of such flight reasonabl[y] determines that such flight will depart or arrive not later than 30 minutes after the 3-hour delay; or if the pilot of such flight reasonabl[y] determines that permitting a passenger to deplane would jeopardize passenger safety or security.  A pilot may extend the 30-minute period referred to [above] by not more than an additional 30 minutes in the case of an unanticipated extension of the delay.”
• “Provide for the essential needs of passengers at all times during which the aircraft is on the ground in the event of a departure or arrival delay, including the needs of passengers for food, water meeting the standards of the Safe Drinking Water Act or the Federal Food, Drug, and Cosmetic Act, as appropriate, sanitary facilities, medical access, adequate ventilation, and comfortable cabin temperatures.”
• “Publish and update monthly on the Internet website of the air carrier a list of chronically delayed flights operated by the air carrier.”
• “Disclose, without being requested, the on-time performance for a chronically delayed flight of the air carrier whenever a customer makes a reservation or purchases a ticket on such a flight.  The term ‘chronically delayed flight’ means a regularly scheduled flight in air transportation that has failed to arrive within 30 minutes of the scheduled arrival time of the flight at least 40 percent of the time during the most recent 3-month period for which data is available.”
• “Publish lowest fare information, and information on schedules and itineraries, with respect to regularly scheduled flights of the air carrier in air transportation.  Information to be published . . . shall be updated in a timely manner and shall be made available to the public on the Internet website of the air carrier.”
• “Make every reasonable effort to return [lost] baggage to the passenger within 24 hours.”

If enacted, the House bill would require that the Department of Transportation:

• “Work in coordination with air carriers to ensure that a pilot operating an aircraft in a flight in air transportation that is affected by a long departure delay is permitted to return the aircraft to the airport terminal to allow passengers to exit the aircraft without losing the position of the flight in the departure sequence.”
• “Review the emergency contingency plans of air carriers and airports to ensure that the plans will effectively address weather emergencies in a coordinated manner.  In carrying out this subsection, the Secretary shall convene a meeting of representatives of air carriers, airports, and the Federal Aviation Administration to develop procedures to better respond to weather emergencies resulting in long departure delays.”

My guess is that a scaled-down version of H.R. 1303 will be enacted unless the airlines can persuade Congress that they have implemented very specific and effective systems for preventing extremely long on-board delays and for making moderately long delays more tolerable.

Any effort to legislate airline customer service changes is invariably accompanied by a push to impose new economic regulations on airlines, such as the H.R. 1303 requirement that airlines “publish lowest fare information” on their websites.  What does that requirement have to do with on-board delays?  In the words of Alfred E. Kahn, chairman of the Civil Aeronautics Board in 1977 and 1978 and the chief architect of the Airline Deregulation Act of 1978:  “Airline deregulation has worked.  It would be ironic if, by misdiagnosing our present discontents, we were to return to policies of protectionism and centralized planning.”