DOT enforces consumer-friendly interpretation of Montreal Convention baggage liability provisions

January 4, 2011

As previously reported, on March 26, 2009 DOT issued a “Guidance on Airline Baggage Liability and Responsibilities of Code-Share Partners Involving International Itineraries” that states in part as follows:  “Although carriers may wish to have tariff terms that prohibit passengers from including certain items in checked baggage, once a carrier accepts checked baggage, whatever is contained in the checked baggage is protected, subject to the terms of the [Montreal] Convention, up to the limit of 1000 SDRs (Convention, Article 22, para. 2).”  (On December 30, 2009, the 1,000 SDR limit was increased to 1,131 SDRs, which is currently equivalent to about $1,750.)

Upon receiving a consumer complaint after the 90-day grace period for compliance with the Guidance, DOT initiated an enforcement action regarding Air France’s policies and practices with respect to items of checked baggage lost or damaged in transit to or from the United States.  DOT’s specific concern was over the airline’s General Conditions of Carriage, which disclaimed liability for “valuable, fragile or perishable items” in checked baggage and the reliance of the airline’s Customer Relations Department on such disclaimer to deny liability for the loss or damage of jewelry, electronic equipment and similar items.

By a Consent Order issued on December 23, 2010 (Order 2010-12-26), DOT announced that it and Air France had reached a settlement.  Under the settlement, Air France agreed to modify its policies and practices in order to comply with the Guidance and to pay a compromise assessment of $50,000 (and an additional $50,000 should it violate the Order within a year).

Note:  In a November 18, 2010 ruling, the Canadian Transportation Agency struck down an airline’s tariff rule, as well as a proposed revised version of such rule, that purported to preclude an airline’s liability for fragile and valuable items in baggage checked in connection with carriage subject to the Montreal Convention.  See Lukács v. WestJet (Decision No. 477-C-A-2010).  On February 1, 2011, the Federal Court of Appeal denied WestJet’s application for leave to appeal the agency’s decision.


Airline prevails on summary judgment by proving it took all reasonable measures to avoid delaying passengers

December 2, 2010

Cohen v. Delta Air Lines, Inc. (S.D.N.Y. Nov. 8, 2010).  The plaintiffs had tickets for travel from New York (JFK) to Buenos Aires, Argentina, connecting in Atlanta.  Due to an air traffic control mandate, the flight to Atlanta was delayed, and, as a result, the plaintiffs missed the flight to Buenos Aires.  Delta booked the plaintiffs on a flight to Buenos Aires the next day and provided them with hotel accommodations, meal vouchers and transportation to and from the hotel.

The plaintiffs sued Delta in state court, alleging that the airline had engaged in multiple acts of “willful misconduct” by failing to provide a gate crew in Atlanta quickly enough, failing to hold the Buenos Aires flight for them and failing to rebook them on a later flight to Santiago, Chile.  The plaintiffs demanded damages of $10,000 as compensation for one lost vacation day in Buenos Aires, the “great discomfort” they suffered due to the “low 30’s” temperature in Atlanta and “the great stress and anguish” they suffered from “being told to run for [the Buenos Aires] flight that the Delta representative knew or should have known was a wasted effort.”

Delta removed the case to federal court, and, after discovery, moved for summary judgment, relying primarily on Article 19 of the Montreal Convention.  Article 19 imposes liability (limited by Article 22(1)) on an airline for delay in the carriage of passengers, but it also provides that “the carrier shall not be liable for damage occasioned by delay if it proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or that it was impossible for it or them to take such measures.”

The court granted Delta’s motion, holding that no reasonable juror could conclude, based on the evidence in the record, that Delta “willfully caused” the delay at issue or that the airline “did not take all measures that could reasonably be necessary to avoid the delay.”  The court reasoned that no reasonable juror could conclude that it was possible for Delta to disobey the ATC mandate, to dispatch a gate crew in Atlanta to handle the plaintiffs’ flight before all the flights that had landed earlier, to delay the departure of the flight to Buenos Aires or to rebook the plaintiffs on the Santiago flight, given the insufficient time available to do so.

Note:  For carriage subject to the Montreal Convention, if an airline cannot prove that it took all reasonable measures to avoid the damage caused by the delay or that it was impossible to take such measures, then the passenger can – without having to prove that the airline engaged in “willful misconduct” – recover under Article 19, subject to the liability limit of 4,694 Special Drawing Rights (currently about US$7,200) set forth in Article 22(1).  However, pursuant to Article 22(5), if the passenger can prove that the delay damage resulted from airline conduct “done with intent to cause damage or recklessly and with knowledge that damage would probably result,” the liability limit does not apply.  The term “willful misconduct” does not appear in the Montreal Convention; it does appear (as “wilful misconduct”) in the Warsaw Convention.


Airline’s liability for injury caused by fellow passenger limited by Montreal Convention

February 28, 2010

Wright v. American Airlines, Inc. (N.D. Tex. Feb. 8, 2010).  Article 21 of the Montreal Convention governs the compensation owed by an airline for a passenger’s bodily injury or death.  Where an “accident” within the meaning of Article 17(1) has occurred, Article 21(1) provides that the airline is strictly liable for provable damages not exceeding 100,000 Special Drawing Rights (“SDRs”), or about US$153,000 at the current conversion rate.  Under Article 21(2), an airline can avoid liability for damages exceeding 100,000 SDRs only if it can prove that (i) such damages were not due to its “negligence or other wrongful act or omission,” or (ii) such damages were “solely due to the negligence or other wrongful act or omission of a third party.”

In Wright, during the aircraft’s climb to cruising altitude, and while the “fasten seat belt” light was still on, a passenger stood up and attempted to remove an item from an overhead compartment.  An object fell from the compartment and struck another passenger on his head, injuring him.

The injured passenger sued American under the Montreal Convention, alleging that the airline was liable for damages “exceeding 100,000 Special Drawing Rights as provided in Article 21.”  American moved for partial summary judgment, contending that, under Article 21(2), it should not be held liable for any damages in excess of 100,000 SDRs because the plaintiff’s injuries had not been caused by the airline’s negligence and had been solely caused by a third party, the passenger who had opened the overhead compartment.  Oddly, the plaintiff did not respond to the motion, even though it appears that he was represented by two attorneys.

American prevailed on its unopposed motion.  The court found that American had presented sufficient evidence to prove that the “plaintiff’s injuries were not caused by any negligence, omission, or other wrongful act on its part or on the part of its flight crew.”  Specifically, the court found that the airline had done all that it could do to prevent the other passenger from leaving his seat by making a preflight announcement that the “fasten seat belt” sign had been turned on and that passengers should be careful when opening an overhead compartment.  The court also found that the flight attendant seated closest to the other passenger could not see him stand up because she was seated during the aircraft’s climb and her view was obscured by a wall.  Accordingly, the court held that the plaintiff could not recover damages from American in excess of 100,000 SDRs.


Passenger’s second visit to Fifth Circuit yields additional baggage damages but no attorneys’ fees

May 31, 2009

Muoneke v. Compagnie Nationale Air France (5th Cir. Tex. May 12, 2009).  In 2004, the passenger traveled from Texas to Nigeria on Air France’s flights.  During a change of aircraft in Paris, Air France personnel required that the passenger check the baggage she had carried onto the prior flight.  The passenger claimed that when she arrived in Nigeria, cash and a camera were missing from her baggage.

The passenger sued Air France in a Texas state court.  Air France removed the case and successfully moved for summary judgment.   As previously reported, the Fifth Circuit reversed and remanded the case in 2007 because a factual issue precluded summary judgment.

On remand, the district court determined that the passenger’s actual loss totaled $1,242 but that the Warsaw Convention limited her recovery to $134.  The passenger then applied for an award of attorneys’ fees and costs but the district court held that fees are not recoverable under the Warsaw Convention.

In its opinion, the Fifth Circuit held that because the Montreal Convention had entered into force on November 4, 2003 and the events at issue had taken place in 2004, the Montreal Convention, not the Warsaw Convention, applied to the case.

Next, the appeals court rejected Air France’s argument that it had no liability to the passenger because its contract of carriage disclaimed liability for cash and cameras (and other valuable items) in checked baggage.  The court reasoned that the contract of carriage provision was inconsistent with Article 17 of the Montreal Convention, which subjected the airline to strict liability for baggage loss and damage (up to Article 22(2)’s limit of 1,000 Special Drawing Rights (“SDR”) per passenger).

The Fifth Circuit then held that Air France’s liability was capped at $1,580 under Article 22(2) of the Montreal Convention, which limits an airline’s liability for baggage loss, damage or delay to 1,000 SDRs per passenger (one SDR was equivalent to $1.58 at the time of the district court trial).  The appeals court then reversed the district court’s judgment and entered judgment for the passenger for $1,242, the amount of actual damages that the district court had determined that she had incurred.

Finally, the Fifth Circuit held that the passenger was not entitled to an award of attorneys’ fees but was entitled to recover her costs.  The court reasoned that, although the Montreal Convention does not prohibit the recovery of fees or costs, it does not provide an independent basis on which a court may award such amounts.  As to fees, the court held that they were not recoverable because the passenger had not identified any independent basis, such as a federal or state statute, for a fee award.  As to costs, the court held that they were recoverable under Federal Rule of Civil Procedure 54(d) and remanded the case to the district court for the sole purpose of calculating such costs (remarking that “[i]t is long past time for this litigation over $1,242.79 to end”).

Note:  The Fifth Circuit’s holding that the airline was liable for the loss of the cash and camera even though its contract of carriage purported to disclaim liability for these items is consistent with the “Guidance on Airline Baggage Liability and Responsibilities of Code-Share Partners Involving International Itineraries” that DOT issued on March 26, 2009.  The Guidance (which the Fifth Circuit did not cite) states as follows:  “Although carriers may wish to have tariff terms that prohibit passengers from including certain items in checked baggage, once a carrier accepts checked baggage, whatever is contained in the checked baggage is protected, subject to the terms of the [Montreal] Convention, up to the limit of 1000 SDRs (Convention, Article 22, para. 2).”  See 74 F.R. 14837-38 (Apr. 1, 2009).  In a ruling issued on November 18, 2010, the Canadian Transportation Agency reached the same conclusion, striking down an airline’s tariff rule, as well as a proposed revised version of such rule, that purported to preclude the airline’s liability for fragile and valuable items in baggage checked in connection with carriage subject to the Montreal Convention.  See Lukács v. WestJet (Decision No. 477-C-A-2010).  On February 1, 2011, the Federal Court of Appeal denied WestJet’s application for leave to appeal the agency’s decision.

Note:  On June 30, 2009, ICAO adjusted the liability limits set forth in Articles 21 and 22 of the Montreal Convention due to inflation.  Accordingly, effective December 30, 2009, the liability limit set forth in Article 22(2) was increased from 1,000 SDRs to 1,131 SDRs.  See U.S. Department of Transportation, Inflation Adjustments to Liability Limits Governed by the Montreal Convention Effective December 30, 2009, 74 F.R. 59017-18 (Nov. 16, 2009).


Passenger unable to break Montreal Convention baggage liability limit

July 27, 2008

Bassam v. American Airlines (5th Cir. (La.) July 14, 2008).  Four months after her international flight, American Airlines delivered the passenger’s missing baggage to her.  The passenger claimed that items were missing from the baggage, and she sued the airline in state court for over $5,000 for the value of the missing items.  The airline removed the case to federal court, where the passenger amended her complaint to add a claim for $15,000 for the “embarrassment and upset of not being able to dress and appear in public as was her prior practice.”

American moved for summary judgment on the grounds that (i) the passenger’s recovery for her baggage loss was limited to 1,000 Special Drawing Rights (approximately $1,540 at that time) under Article 22(2) of the Montreal Convention, and (ii) the passenger could not recover anything for her “embarrassment” claim because damages for emotional distress not caused by a physical injury are not recoverable under the Convention.

As to the liability limit issue, the passenger argued that the limit did not apply under Article 22(5) of the Convention; that provision removes the Article 22(2) limit “if it is proved that the damage resulted from an act or omission of the carrier, its servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result” and “it is also proved that such servant or agent was acting within the scope of its employment.”  The passenger contended that “[t]he four (4) month delay in recovery of the luggage, allowing [her] personal belongings to be ransacked and stolen, compounded with [American’s] refusal to take any meaningful steps to help [her] in an obvious time of need, makes [American’s] actions much more egregious, certainly rising to the level of what any impartial traveler would consider ‘willful misconduct’.”  In essence, the passenger argued that, by themselves, the delay in delivery and the losses she incurred eliminated any need for her to prove that the airline actually engaged in the type of conduct described in Article 22(5) that would result in the lifting of the liability limit set forth in Article 22(2).

The trial court rejected the passenger’s arguments and was affirmed by the Fifth Circuit.  On the liability limit issue, the appeals court held that, to break the limit under Article 22(5), a passenger must prove facts showing that airline personnel either (i) intended to cause damage, or (ii) acted recklessly with the subjective knowledge that damage would probably result from their conduct.  The Fifth Circuit held that the passenger had failed to meet this “heavy” burden by merely resting on the allegations in her pleadings regarding the delay in delivery of her baggage and the losses she incurred.  It also affirmed the trial court’s ruling with respect to the passenger’s emotional distress claim.

Note:  Before the trial court, the passenger had also argued that the Article 22(2) limit did not apply because she had not been notified of the limit before her flight.  She cited Article 3(4), which provides that “[t]he passenger shall be given written notice to the effect that where this Convention is applicable it governs and may limit the liability of carriers in respect of death or injury and for destruction or loss of, or damage to, baggage, and for delay.”  The trial court cited the plain language of Article 3(5) in rejecting her argument; that provision states that “[n]on-compliance with the provisions of the foregoing paragraphs shall not affect the existence or the validity of the contract of carriage, which shall, nonetheless, be subject to the rules of this Convention including those relating to limitation of liability.”  The passenger did not raise this issue on appeal.

Note:  On June 30, 2009, ICAO adjusted the liability limits set forth in Articles 21 and 22 of the Montreal Convention due to inflation.  Accordingly, effective December 30, 2009, the liability limit set forth in Article 22(2) was increased from 1,000 SDRs to 1,131 SDRs.  See U.S. Department of Transportation, Inflation Adjustments to Liability Limits Governed by the Montreal Convention Effective December 30, 2009, 74 F.R. 59017-18 (Nov. 16, 2009).


Court rules on summary judgment motions in charter flights class action

April 28, 2008

In re Nigeria Charter Flights Contract Litigation (E.D.N.Y. Oct. 25, 2007).  In 2002, World Airways, Inc. and Ritetime Aviation and Travel Services, Inc. entered into a charter aircraft services agreement under which World agreed to supply Ritetime with round-trip flights between points in the U.S. and Lagos, Nigeria.  The charter flights began but, by the end of 2003, Ritetime owed World over $2 million, leading World to discontinue its U.S.-Nigeria operations.  World’s action stranded hundreds of passengers who had traveled on outbound flights and left others who had bought tickets for 2004 unable to travel at all.

After the passengers sued World, Ritetime and its CEO in courts throughout the U.S., the federal cases were consolidated in the Eastern District of New York, which certified a class of plaintiffs in 2006.  The plaintiffs alleged that World is liable under the Montreal Convention for its failure to transport them, and they also alleged state law claims for breach of contract, negligence and fraud.

World moved for summary judgment, contending that (i) the Montreal Convention preempts the plaintiffs’ state law claims, (ii) even if the plaintiffs’ state law contract claims are not preempted, they should be dismissed because there is no privity of contract between World and the plaintiffs, and (iii) even if the Convention does not preempt the plaintiffs’ negligence and fraud claims, the federal Airline Deregulation Act preempts those claims.  The plaintiffs filed a cross-motion for summary judgment.

The court granted World’s motion as to the plaintiffs’ delay claims under the Convention but denied it as to their breach of contract and tort claims.  The court also denied the plaintiffs’ cross-motion.  The court’s specific rulings are as follows.

Montreal Convention preemption.  Delay in international air transportation is governed by Article 19 of the Convention, and whenever the Convention applies, it preempts all state law claims for matters that fall within the scope of its application.  Article 22(1) limits an airline’s liability for a passenger’s delay claim to 4,150 Special Drawing Rights, or about $6,750.  The Convention does not govern nonperformance of a contract of carriage.  The court held that the Convention did not preempt the plaintiffs’ state law claims, ruling that their claims were for nonperformance, not for delay.  The court reasoned that World had “simply refused to transport” the plaintiffs, without offering them alternate transportation, “rather than merely delaying them.”  Of course, this ruling meant that the plaintiffs could not maintain their delay claims under the Convention, and the court granted World’s motion with respect to such claims.

Privity/agency.  The court held that while the tickets themselves did not establish contracts between the plaintiffs and World, factual issues prevented it from granting summary judgment to either side on the issue of World’s liability for Ritetime’s conduct.  The court ruled that the evidence presented was insufficient for it to decide whether the plaintiffs had bought their tickets directly from World; the plaintiffs presented evidence that they had done so, while World presented contradictory evidence.  Similarly, the court held that the existence of disputed facts prevented it from determining whether, as the plaintiffs alleged, Ritetime was World’s agent under theories of actual or apparent authority or that World had ratified Ritetime’s ticket sales.

ADA preemption.  The court rejected World’s contention that the federal Airline Deregulation Act preempted the plaintiffs’ fraud and negligence claims.  The ADA preempts certain state tort (and other) claims “related to a price, route, or service” of an airline.  However, some New York federal courts will refuse to rule that a tort claim is preempted where an airline has engaged in “outrageous” conduct that went “beyond the scope of normal aircraft operations.”  The court held that the ADA did not preempt the tort claims in this case because World’s refusal to transport the plaintiffs constituted “outrageous” conduct.


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

May 26, 2007

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.

Update.  On January 13, 2009, the Second Circuit affirmed the trial court’s judgment via a brief opinion.  One of the appeals court’s rulings was that the airline’s alleged failure to give the passenger notice of the effect of the Montreal Convention’s baggage liability limit did not affect the validity of such limit.\

Note:  On June 30, 2009, ICAO adjusted the liability limits set forth in Articles 21 and 22 of the Montreal Convention due to inflation.  Accordingly, effective December 30, 2009, the liability limit set forth in Article 22(2) was increased from 1,000 SDRs to 1,131 SDRs.  See U.S. Department of Transportation, Inflation Adjustments to Liability Limits Governed by the Montreal Convention Effective December 30, 2009, 74 F.R. 59017-18 (Nov. 16, 2009).


Lost baggage damages limited by Montreal Convention

January 30, 2007

Nunez v. American Airlines (N.Y. App. Jan. 26, 2007).  In a brief opinion, the appeals court upheld the trial court’s decision applying Article 22(2) of the Montreal Convention to limit the two passengers’ damages for loss of their baggage.  The trial court had entered a judgment against the airline for $2,990 (apparently $1,495 per passenger), from which the passengers had appealed.  The appeals court opinion does not explain how the judgment amount had been determined, but I can make a guess.

Article 22(2) provides that “[i]n the carriage of baggage, the liability of the carrier in the case of destruction, loss, damage or delay is limited to 1,000 Special Drawing Rights for each passenger unless the passenger has made, at the time when the checked baggage was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires.”  Article 23(1) provides that “[t]he sums mentioned in terms of Special Drawing Rights in this Convention shall be deemed to refer to the Special Drawing Right as defined by the International Monetary Fund.  Conversion of the sums into national currencies shall, in case of judicial proceedings, be made according to the value of such currencies in terms of the Special Drawing Right at the date of the judgement.”  The “Special Drawing Right” is an artificial currency used by the International Monetary Fund for internal accounting purposes.  As of today’s date (January 30, 2007), one SDR is valued at US$1.49164, which means that an airline’s liability to a passenger for lost baggage under the Convention is currently limited to $1,491.64.  The IMF maintains a web page – imf.org/external/np/fin/rates/rms_sdrv.cfm – where the value of the SDR is updated daily.

Since each of the two passengers in Nunez recovered damages of $1,495, one SDR was apparently valued at US$1.495 on April 25, 2006, the date the trial court entered its judgment.

Note:  On June 30, 2009, ICAO adjusted the liability limits set forth in Articles 21 and 22 of the Montreal Convention due to inflation.  Accordingly, effective December 30, 2009, the liability limit set forth in Article 22(2) was increased from 1,000 SDRs to 1,131 SDRs.  See U.S. Department of Transportation, Inflation Adjustments to Liability Limits Governed by the Montreal Convention Effective December 30, 2009, 74 F.R. 59017-18 (Nov. 16, 2009).


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