Indemnity Insurance Company of North America v. Expeditors International of Washington, Inc. et al
Filing
62
OPINION AND ORDER: re: 40 MOTION for Summary Judgment filed by China Airlines, Ltd., 35 MOTION for Summary Judgment filed by Expeditors International of Washington, Inc., 30 MOTION for Summary Judgment filed by Indemnity Insurance Company of North America. For the foregoing reasons, Indemnity's motion for summary judgment is DENIED, Expeditor's motion for summary judgment is DENIED, and China Airlines' motion for summary judgment is DENIED. In light of the Court's co nclusion that the Montreal Convention does not govern this dispute, the parties may file new motions for summary judgment based on the applicable substantive law. Any new motions should follow a sequential briefing schedule: first, Indemnity should f ile a motion and supporting brief by April 3, 2019; followed by Defendants' motions and briefs jointly supporting their motions and opposing Indemnity's motion; followed by Indemnity's opposition and reply brief; followed by Defendants ' reply briefs.The parties are directed to confer and submit a joint letter by March 13, 2019 regarding whether there will be additional motions for summary judgment, and if so the full briefing schedule thereof; if no such motions are anticipat ed, the letter should estimate the length of trial and propose trial dates. The Clerk of Court is directed to close the motions at Docket Numbers 30, 35, and 40. SO ORDERED., ( Motions due by 4/3/2019.) (Signed by Judge J. Paul Oetken on 2/19/2019) (ama)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
INDEMNITY INSURANCE COMPANY
OF NORTH AMERICA as subrogor of
GE AVIATION MATERIALS, L.P.,
17-CV-2575 (JPO)
Plaintiff,
OPINION AND ORDER
-vEXPEDITORS INTERNATIONAL OF
WASHINGTON, INC., et al.,
Defendants.
J. PAUL OETKEN, District Judge:
Plaintiff Indemnity Insurance Company of North America (“Indemnity”) brings this
action against Defendants Expeditors International of Washington, Inc. (“Expeditors”) and China
Airlines, Inc. (“China Airlines”), in connection with damage allegedly sustained by cargo during
international transport. Invoking the Convention for the Unification of Certain Rules for
International Carriage by Air, S. Treaty Doc. No. 106-45 (May 28, 1999) (“Montreal
Convention”), Indemnity asserts claims for breach of contract, breach of bailment obligations,
and negligence. (Dkt. No. 1 (“Compl.”) at 3–5.) Following the close of discovery, each party
moved for summary judgment under Federal Rule of Civil Procedure 56. (Dkt. Nos. 30, 35, 40.)
For the reasons that follow, the motions are denied.
I.
Background
The following facts are drawn from the Complaint and the parties’ Rule 56.1 statements
and are not subject to genuine dispute unless otherwise noted.
This case involves an insurance company’s attempt to recover for damage allegedly
sustained by a commercial jet engine as it was transported by air from Florida to Taiwan. GE
Aviation Materials, L.P. (“GE”) is an aviation company that assembles, sells, and overhauls
1
aircraft engines. (Dkt. No. 36 ¶ 5.) GE owned the jet engine at issue at the time of transport.
Plaintiff Indemnity is an insurance company that insures GE and issued a policy covering the
engine. (Dkt. No. 36 ¶ 4.)
Defendant Expeditors is an “international transportation service provider” which
“operates as an intermediary in all modes of transportation.” (Dkt. No. 36 ¶ 2.) As relevant
here, Expeditors’ services include functioning as an “indirect air carrier,” also known as an “air
freight forwarder.” (Dkt. No. 36 ¶ 1.) In that capacity, Expeditors is party to a framework
agreement called the Global Air Freight Transportation Contract (“Global Contract”), which
governs the air shipment of cargo that Expeditors undertakes for certain shippers. (Dkt. No. 51
¶ 6; Dkt. No. 39-1.) 1 Expeditors also maintains a “Conditions of Contract” for “International Air
Transportation.” (Dkt. No. 52-2.)
Defendant China Airlines is a “foreign air carrier,” which operates as a “direct air
carrier.” (Dkt. No. 36 ¶ 3.) As a direct carrier, China Airlines is hired by shippers and indirect
carriers to transport cargo internationally.
In March 2015, GE reached out to Expeditors to arrange transport of a commercial jet
engine from Tamarac, Florida, to Taipei, Taiwan, to be delivered to Evergreen Aviation
Technologies (“Evergreen”). (Dkt. No. 34-2 at 8–9.) In approving Expeditors’ proposed price
for the transport, GE’s Material Control and Logistics Manager, Jerry Yen, instructed that “[i]t’s
very important to make sure the engine is under correct tie-down throughout the entire trip.”
1
Expeditors contends that the GE and Expeditors are parties to the Global
Contract. (Dkt. No. 51 ¶ 6; Dkt. No. 39 ¶ 3.) GE disputes this allegation, contending that “GE
Aviation Materials, L.P. is not a party to that agreement.” (Dkt. No. 51 ¶ 6.) In her deposition,
when asked about any “any written agreements between Expeditors and GE,” Expeditors’
regional account manager for GE, Jennifer Schmitt, referenced Expeditors’ “air contract,” but
did not clarify whether she meant the Global Contract, the Conditions of Contract, or something
else. (Dkt. No. 34-3 at 9:8–10:2.)
2
(Dkt. No. 34-2 at 6; see Dkt. No. 32 ¶ 1.) Expeditors’ regional account manager for GE, Jennifer
Schmitt, responded “well noted on the tie down.” (Dkt. No. 34-2 at 5; Dkt. No. 34-3 at 6.)
Schmitt did not ask Yen for any clarification regarding the proper tie-down procedures, and Yen
offered no specific instructions. (Dkt. No. 34-3 at 20:19–20:21.)
Expeditors issued an air waybill to GE in connection with the arrangement, and the
waybill did not specify any special transit requirements for the engine. (Dkt. No. 36 ¶ 15; Dkt.
No. 34-7.) On April 8, 2015, Expeditors arranged to have China Airlines transport the jet engine
cargo (Dkt. No. 36 ¶ 15; Dkt. No. 40-1 ¶ 2), but in doing so did not provide “any specific loading
and stowage instructions” to China Airlines (Dkt. No. 39 ¶ 5). An air waybill was issued
between China Airlines and Expeditors in connection with this agreement. (Dkt. No. 31 ¶ 11;
Dkt. No. 34-8.)
The parties agree that the engine at issue was used and was being sent to Evergreen for an
overhaul. (Dkt. No. 36 ¶¶ 10–11; Dkt. No. 38-1 at 27:4–10.) But they dispute the precise
condition of the engine at the time China Airlines picked it up for transport, specifically whether
the engine was certified airworthy. 2
Between April 8 and April 11, 2015, China Airlines transported the engine from Florida
to Taiwan. (Dkt. No. 40-1 ¶¶ 3–4.) The second air waybill was stamped, acknowledging
2
Indemnity relies on an “airworthiness approval tag” for the engine dated
December 26, 2014, and a letter from the entity storing the engine for GE in Florida regarding
the engine’s “preservation state” to conclude that the engine was certified airworthy at the time
of shipment. (Dkt. No. 51 ¶¶ 12, 14; Dkt. No. 31 ¶¶ 1, 9; Dkt. No. 34-6.) Expeditors contends
that those documents are unauthenticated hearsay and do not demonstrate the airworthiness of
the engine. (Dkt. No. 41-1 ¶¶ 1, 9.) Instead, Expeditors relies on the testimony of Scott Wallace,
GE’s Rule 30(b)(6) deponent, who agreed that the fact “that GE shipped this engine to Evergreen
Technologies to be overhauled demonstrates that the engine had not yet been certified and
needed work before it could be used by an airline.” (Dkt. No. 52-4 at 36:20–37:1; Dkt. No. 51
¶ 14.)
3
delivery of the engine, on April 11, 2015. (Dkt. No. 36 ¶ 32; Dkt. No. 39-4.) Upon receipt of
the engine, Evergreen created a shop finding report documenting that it “found inappropriate tie
down on the cradle” of the engine. (Dkt. No. 34-9 at 2; see also Dkt. No. 31 ¶ 12.) Evergreen
sent GE a shop finding report to this effect, 3 and told GE that it proposed to perform repairs.
(Dkt. No. 34-11 at 3.) Evergreen inspected the engine and performed repairs, including
replacing bearings. (Dkt. No. 51 ¶ 20; Dkt. No. 38-1 at 92:15–21.) 4
Evergreen sent GE an invoice for service to the engine in the amount of $176,066.57.
(Dkt. No. 31 ¶ 16; Dkt. No. 34-12.) 5 GE paid the invoice, and Indemnity compensated GE for
the payment. (Dkt. No. 31 ¶ 17; Dkt. No. 41-1 ¶ 17; Dkt. No. 34-13.)
On April 16, 2015, Jerry Yen from GE forwarded Evergreen’s shop finding report to
Jennifer Schmitt and another Expeditors employee, informing them of the “inappropriate tie
down” and that GE would “hold Expeditors response [sic] for” the cost of repairs. (Dkt. No. 31
¶¶ 12–13; Dkt. No. 34-11 at 2.) On April 17, Schmitt responded to Yen, “We will handle via the
cargo claims group. Please let me know if you need information on how to handle.” (Dkt. No.
34-11 at 2; see also Dkt. No. 31 ¶ 15.) On June 14, 2015, Yen emailed Schmitt with an invoice
for the repairs to the engine. (Dkt. No. 34-11 at 1.) Schmitt forwarded the invoice to GE’s Scott
3
Expeditors disputes that Evergreen found the engine to have been improperly tied
down, and contends that the shop finding report from Evergreen is “hearsay and otherwise
unsupported by cognizable evidence.” (Dkt. No. 41-1 ¶ 12.)
4
The parties dispute whether the engine suffered damage during transit, and
whether bearings were replaced because they were damaged, or as a preventative measure. (Dkt.
No. 51 ¶¶ 18–20.)
5
The parties dispute whether the total amount of this invoice pertains to the work
required to fix damage suffered during shipment, or whether it covers only the work Evergreen
was “hired and shipped [the engine] to undertake in the first place.” (Dkt. No. 51 ¶ 19; see Dkt.
No. 31 ¶ 18; Dkt. No. 41-1 ¶ 18.)
4
Wallace on July 9, 2015, stating that she did not “think a claim has been filed” for this engine.
(Dkt. No. 34-11 at 1.)
In April 2016, a third-party claims consultant contacted Expeditors’ claims department on
behalf of GE and Indemnity, seeking to recover for the damage to the engine. (Dkt. No. 43-1 at
1–2.) Expeditors ultimately rejected GE’s attempts to recover through its internal claims
process. (Dkt. No. 52-1.)
On April 10, 2017, acting as the subrogee for GE, Indemnity initiated this action against
Expeditors and China Airlines. (Dkt. No. 1.) In its Answer to the Complaint, Expeditors
asserted a crossclaim against China Airlines seeking contribution or indemnification to the extent
of Expeditors’ liability. (Dkt. No. 9 at 5.) On March 23, 2018, Indemnity filed a motion for
summary judgment under Rule 56. (Dkt. No. 30.) The following day, Expeditors and China
Airlines moved for summary judgment as well. (Dkt. Nos. 35 & 40.)
II.
Legal Standard
Summary judgment under Rule 56 is appropriate where “there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). A fact is material if it “might affect the outcome of the suit under the governing law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if, considering
the record as a whole, a rational jury could find in favor of the non-moving party. See Ricci v.
DeStefano, 557 U.S. 557, 586 (2009).
“On summary judgment, the party bearing the burden of proof at trial must provide
evidence on each element of its claim or defense.” Cohen Lans LLP v. Naseman, No. 14 Civ.
4045, 2017 WL 477775, at *3 (S.D.N.Y. Feb. 3, 2017) (citing Celotex Corp. v. Catrett, 477 U.S.
317, 322–23 (1986)). “If the party with the burden of proof makes the requisite initial showing,
the burden shifts to the opposing party to identify specific facts demonstrating a genuine issue
5
for trial, i.e., that reasonable jurors could differ about the evidence.” Clopay Plastic Prods. Co.
v. Excelsior Packaging Grp., Inc., No. 12 Civ. 5262, 2014 WL 4652548, at *3 (S.D.N.Y. Sept.
18, 2014). The court views all “evidence in the light most favorable to the non-moving party,”
and summary judgment may be granted only if “no reasonable trier of fact could find in favor of
the nonmoving party.” Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995) (second quoting Lunds,
Inc. v. Chem. Bank, 870 F.2d 840, 844 (2d Cir. 1989)) (internal quotation marks omitted).
III.
Discussion
A.
Jurisdiction
“Federal courts have a duty to inquire into their subject matter jurisdiction sua sponte,
even when the parties do not contest the issue.” D’Amico Dry Ltd. v. Primera Maritime (Hellas)
Ltd., 756 F.3d 151, 161 (2d Cir. 2014). If a court determines that it lacks subject matter
jurisdiction, it must dismiss the action under Federal Rule of Civil Procedure 12(h)(3). Inquiring
into its jurisdiction here, the Court concludes that the Montreal Convention does not govern this
dispute, and thus Indemnity cannot establish federal question jurisdiction as alleged in the
Complaint. However, because the action satisfies the requirements for diversity jurisdiction,
dismissal under Rule 12(h)(3) is not warranted.
1.
Applicability of the Montreal Convention
Indemnity asserts in the Complaint that jurisdiction exists under 28 U.S.C. § 1331,
because the claims arise under the Montreal Convention, 6 a multilateral treaty governing
international air transport, to which the United States is a party. (Compl. ¶ 8.) China Airlines
6
Convention for the Unification of Certain Rules for International Carriage by Air,
May 28, 1999, S. Treaty Doc. No. 106-45, ICAO Doc. No. 9740 (entered into force Nov. 4,
2003).
6
disagrees, contending that the Montreal Convention does not govern this dispute. (Dkt. No. 46 at
3–4; Dkt. No. 40-2 at 3–4.) 7
The Montreal Convention “applies to all international carriage of persons, baggage or
cargo performed by aircraft.” Montreal Convention, art. 1 ¶ 1. “International carriage” is
defined as “any carriage in which . . . the place of departure and the place of destination, whether
or not there be a break in the carriage or a transhipment, are situated either within the territories
of two States Parties, or within the territory of a single State Party if there is an agreed stopping
place within the territory of another State.” Id. art. 1 ¶ 2.
The United States is a party to the Montreal Convention, as is China. (See Dkt. No. 526.) 8 But Taiwan is not itself a signatory. Indemnity contends that Taiwan is nonetheless a party
to the Montreal Convention, however, because the People’s Republic of China constitutes the
recognized government of all of China—including Taiwan—and China’s ratification of the
treaty means that the treaty also binds Taiwan. (Dkt. No. 54 at 2–4; Dkt. No. 55 at 8–10.) The
Court disagrees.
The Ninth Circuit considered a nearly identical question in Mingtai Fire & Marine
Insurance Co. v. United Parcel Service, 177 F.3d 1142 (9th Cir. 1999): whether China’s status
as a signatory to the Warsaw Convention meant that international shipments to and from Taiwan
are governed by the treaty, even though Taiwan itself was not a signatory. Id. at 1144. 9 The
7
Expeditors agrees with Indemnity that this action is governed by the Montreal
Convention (Dkt. No. 37 at 14), but asserts that its arguments apply regardless of the
Convention’s applicability (Dkt. No. 41 at 2 n.1).
8
Also available at ICAO, Current List of Parties to Multilateral Air Law Treaties,
Convention for the Unification of Certain Rules for International Carriage by Air, Doc. 9740,
https://www.icao.int/secretariat/legal/List%20of%20Parties/Mtl99_EN.pdf.
9
The Warsaw Convention, Convention for the Unification of Certain Rules
Relating to International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000, T.S. No. 876
7
Ninth Circuit reasoned that “the question of Taiwan’s status . . . is a question for the political
branches, rather than the judiciary.” Id. The court’s task was thus to determine and apply the
position of the political branches.
To do so, the Ninth Circuit looked to the President’s memorandum regarding the
termination of diplomatic relations with Taiwan, and Congress’s enactment of the Taiwan
Relations Act, 22 U.S.C. § 3301 et seq., which “strongly imply that, despite the absence of
official relations, the United States continues to deal separately with Taiwan.” Id. at 1145–46.
The court also relied on the State Department’s Treaties in Force, which includes “separate
sections listing the bilateral treaties” that the United States has with China and Taiwan,
respectively. Id. at 1146. And significantly, the Executive filed an amicus brief in that case
making “plain its position that China’s adherence to the Convention does not bind Taiwan.” Id.
Ultimately, the Ninth Circuit “defer[red] to the political departments’ position that Taiwan is not
bound by China’s adherence to the Warsaw Convention.” Id. at 1147.
A court in the Eastern District of New York recently addressed the same question raised
in Mingtai Fire, and found “persuasive the Ninth Circuit’s thorough discussion and explanation
of why Taiwan is not bound by the Warsaw Convention.” Allianz Glob. Risks US Ins. Co. v.
Latam Cargo USA, LLC, No. 16 Civ. 6217, 2018 WL 1701941, at *5 (E.D.N.Y. Mar. 31, 2018).
Noting “no reason to believe that the Executive Branch has changed its position that Taiwan is
not bound by China’s accession to the Warsaw Convention,” the court held that “Taiwan is not
bound by the Warsaw Convention.” Id.
(entered into force in 1934), is the predecessor to the Montreal Convention, with “many of the
provisions of the Montreal Convention [having been] taken directly from the Warsaw
Convention and the many amendments thereto,” Indem. Ins. Co. of N. Am. v. Agility Logistics
Corp., 324 F. Supp. 3d 400, 403 (S.D.N.Y. 2018) (citation omitted).
8
This Court also considers the Ninth Circuit’s reasoning in Mingtai Fire to be thorough
and persuasive. But Indemnity opposes the application of Mingtai Fire here, contending that the
Ninth Circuit issued that decision “19 years ago” about “a different treaty,” whereas the
“different times and circumstances” of this case require a different result. (Dkt. No. 54 at 2–3.)
Indemnity asserts that since Mingtai Fire was decided, the State Department “has
expressly recognized that Taiwan is part of China.” (Dkt. No. 54 at 2.) But Indemnity cites no
authority for the proposition that the Executive has changed its position vis-à-vis China, Taiwan,
and their treaty obligations, since 1999. 10 Indeed, the court in Allianz observed “no reason to
believe that the Executive Branch has changed its position” from 1999 to 2018. See Allianz,
2018 WL 1701941, at *5. This Court agrees that the age of the Mingtai Fire decision does not
undermine its persuasiveness.
Indemnity also points out that the Montreal Convention is a different treaty, which China
signed after the Mingtai Fire decision. (Dkt. No. 54 at 3.) This distinction is inapposite,
however, because the Ninth Circuit’s reasoning applies equally to any treaty in which China is a
signatory but Taiwan is not, where the political branches have provided no treaty-specific
guidance requiring a different result. Moreover, Indemnity cites only one case as having reached
the result it urges under the Montreal Convention. (Dkt. No. 54 at 1.) But there, the court merely
adopted the parties’ framing of their dispute without addressing the question of whether the
Montreal Convention applies to Taiwan. See Bland v. EVA Airways Corp., No. 11 Civ. 5200,
2014 WL 1224466, at *1 (S.D.N.Y. Mar. 24, 2014).
10
To the extent Indemnity attempts to rely on the newest version of Treaties in
Force to imply that the Executive’s position has changed since its amicus brief in Mingtai (Dkt.
No. 54 at 2–3), China Airlines is correct that Treaties in Force used the same language to
describe the treatment of Taiwan in the publication’s 1993 edition, before Mingtai was decided.
(Dkt. No. 58 at 3; see Dkt. No. 57-1 at 3.)
9
Ultimately, the Court is unconvinced by Indemnity’s efforts to distinguish Mingtai Fire.
Applying the Ninth Circuit’s reasoning in that case, the Court concludes that Taiwan is not
bound by the Montreal Convention. Because this case involves transport of cargo to Taiwan—a
non-party state—the shipment does not qualify as “international carriage” under Article 1,
paragraph 2 of the Montreal Convention. Therefore, the Montreal Convention does not govern
this dispute, and the Court does not have subject matter jurisdiction over this action as “arising
under the . . . treaties of the United States.” 18 U.S.C. § 1331.
2.
Diversity Jurisdiction
Noting the possibility that this case did not arise under a treaty, the Court directed the
parties to file supplemental submissions addressing a potential alternative basis for subject matter
jurisdiction. (Dkt. No. 60.) On January 22, 2019, the parties filed a joint response, indicating
their agreement “that federal diversity jurisdiction is a basis for jurisdiction in this Court under
28 U.S.C. § 1332,” because “[t]he parties do not have any citizenship in common, and the
amount in controversy exceeds $75,000.” (Dkt. No. 61.)
As alleged in the Complaint, Indemnity is a corporation organized under the laws of
Pennsylvania with a principal place of business in Philadelphia, Pennsylvania. (Compl. ¶ 2.)
Expeditors is a corporation organized under the laws of Washington with a principal place of
business in Seattle, Washington. (Compl. ¶ 4.) China Airlines is a foreign corporation organized
under the laws of Taiwan, with a principal place of business in Taoyuan, Taiwan. (Compl. ¶ 6.)
And the amount in controversy exceeds $75,000. (Compl. at 6.)
The Court thus concludes that the parties are completely diverse and the amount in
controversy requirement is satisfied. As such, the Court possesses subject matter jurisdiction
over this action under 28 U.S.C. § 1332.
10
B.
Indemnity’s Motion for Summary Judgment
Indemnity asserts three claims against the Defendants: (1) breach of contract of carriage,
(2) breach of bailment obligations, and (3) negligence. (Compl. ¶¶ 9–23.) In arguing in favor of
summary judgment on these claims, Indemnity relies on the provisions of, and case law
developed under, the Montreal Convention. (Dkt. No. 33 at 5–7; Dkt. No. 55 at 2, 10–12.) As
the Court has explained, however, the Montreal Convention does not govern this dispute.
Accordingly, the Court will deny Indemnity’s motion for summary judgment without prejudice,
should Indemnity choose to seek summary judgment again under the applicable substantive law.
C.
Expeditors’ Motion for Summary Judgment
In moving for summary judgment, Expeditors argued that: (1) GE did not comply with
contractual notice requirements for its claim against Expeditors; (2) Indemnity has not
established a prima facie case of cargo damage; and (3) GE’s own wrongdoing and inherent
flaws in its cargo caused the damage. (Dkt. No. 37 at 14–20; Dkt. No. 41 at 2–14; Dkt. No. 56 at
1–10.) The second and third of these arguments are based on substantive law furnished by the
Montreal Convention, which the Court has determined does not govern this dispute. Therefore,
Expeditors’ motion for summary judgment is denied to the extent it relies on those arguments,
again without prejudice to refiling under the applicable substantive law.
By contrast, Expeditors’ first argument relies on contracts between the parties,
independent of the substantive law underlying Indemnity’s claims. Therefore, the Court will
address this basis for summary judgment.
In asserting that Indemnity is contractually barred from recovery in this action,
Expeditors relies on the Global Air Freight Transportation Contract (“Global Contract”). The
Global Contract provides in relevant part:
11
Forwarder will not be liable for any act, omission or default in connection with
the Services unless a preliminary notice of claim is presented within fourteen (14)
days from date of Service and a formal claim is presented within two hundred
seventy (270) days from the date of Service. Claims must be written, with a sworn
proof of claim attached and received at Forwarder’s corporate office.
(Dkt. No. 39-1 ¶ 7.B.) Expeditors contends that GE failed to file a timely formal claim in
accordance with the Global Contract, and thus any recovery from damage to the shipment at
issue is barred. (Dkt. No. 37 at 16.)
Indemnity’s main response to this argument is that the Global Contract is not “part of the
contracts of carriage for the shipment at issue.” (Dkt. No. 53 at 5.) 11 According to Indemnity,
the specific subrogor here—GE Aviation Materials—did not sign the Global Contract. (Dkt. No.
53 at 7 n.10; Dkt. No. 51 ¶ 6 (response).) Indeed, nowhere in the limited excerpts that are before
the Court does the Global Contract name GE Aviation Materials as a party to the agreement.
(See Dkt. Nos. 39-1 & 52-3.)
Indemnity also points to the course of prior dealings between Expeditors and GE to
support its position that the Global Contract does not apply, because the parties never adhered to
the Global Contract’s formal claim requirements. (Dkt. No. 53 at 9.) GE’s Scott Wallace
testified that over four years he handled approximately thirty to thirty-five claims for GE against
Expeditors, which under certain circumstances he handled by sending a preliminary notice of
claim to Jennifer Schmitt. (Dkt. No. 52-4 at 139:2–140:7; see also Dkt. No. 38-1 at 127:5–9,
11
Indemnity also briefly contends that (1) the Montreal Convention does not permit
carriers to impose additional contractual restrictions like the notice and claim requirements in the
Global Contract, and (2) even if the Global Contract applies, GE has satisfied its requirements.
(Dkt. No. 53 at 8–9.) Because the Montreal Convention does not apply to this dispute, and
questions regarding the applicability of the Global Contract require denying Expeditors’ motion
for summary judgment, the Court need not address these arguments.
12
134:10–16.) 12 He further testified that he had “never had a claim where anybody did any sworn
statements.” (Dkt. No. 38-1 at 127:10–16; see Dkt. No. 34-10 (examples of emails initiating
claims without sworn statement).)
Expeditors responds by purporting to quote from sections 1.A and 2.C of the Global
Contract to demonstrate that General Electric Company and its affiliates are parties to the
contract, and to show that the Global Contract applies to all General Electric shipments handled
by Expeditors. (Dkt. No. 56 at 3 n.3.) In doing so, however, Expeditors relies on portions of the
Global Contract that were not filed with the Court. Expeditors also contends that Indemnity, in
arguing that the Global Contract does not apply, is taking a position inconsistent with its position
prior to this litigation and during discovery. (Dkt. No. 56 at 3.) Again, however, the documents
Expeditors cites—initial disclosures, responses to interrogatories, page 121 of Scott Wallace’s
deposition, and section 21.A of the Global Contract—are not in the record. (See Dkt. Nos. 38-1
42-1, 52-4 (excerpts from Wallace Dep.).)
The Court concludes that there is a genuine dispute regarding whether the subrogor—GE
Aviation Materials—was a party to the Global Contract, and whether the Global Contract
independently applies to all shipments undertaken by Expeditors on behalf of GE Aviation
Materials. The Court has been given only three pages of the thirty-three-page Global Contract in
the record. (Dkt. Nos. 39-1 & 52-3.) In this position, it is not possible to properly evaluate
Expeditors’ arguments, which rely on contractual provisions the Court is not able to review. 13
12
In her deposition, Schmitt denied that she handled claims filed by customers for
damage to cargo. (Dkt. No. 34-3 at 8:19–8:21, 15:8–15:14; see also Dkt. No. 39 ¶ 12.)
13
In its reply brief, Expeditors acknowledges that the Court did not have the entire
contract before it, and offered to file it under seal if necessary. (Dkt. No. 56 at 3.) However, the
opportunity to adduce the entire contract as evidence—and have the Court consider the contract
in its entirety in determining whether to grant the motion for summary judgment—has passed.
13
Even if GE Aviation Materials was not a party to the Global Contract, however, it could
still be bound by terms of that agreement if they were incorporated into the air waybill or
Expeditors’ Conditions of Contract. See Sotheby’s v. Fed. Exp. Corp., 97 F. Supp. 2d 491, 500
(S.D.N.Y. 2000). Indemnity contends that it cannot be bound under this theory because the
Global Contract was not incorporated into the applicable contracts of carriage: the air waybill
and Expeditors’ Conditions of Contract. (Dkt. No. 53 at 8–9.) 14 “A contract must clearly and
accurately identify a document to effectively incorporate it by reference.” Sotheby’s, 97 F Supp.
at 500. Here, neither the air waybill nor the Conditions of Contract refer to the Global Contract
and its terms. (See Dkt. Nos. 34-7 & 52-2.) 15 Therefore, the Global Contract cannot be deemed
to apply to the shipment at issue by incorporation.
Because there remains a genuine dispute regarding whether the Global Contract applies
to the shipment at issue, Expeditors’ motion for summary judgment on the ground that the
Global Contract’s claim requirements bar recovery is denied. 16
The Court will evaluate the motions sub judice based on the record materials that have been filed
in a timely manner and that the Court has before it.
14
This argument relies on cases decided under the Montreal Convention. But those
cases applied general principles of contract law in determining whether additional conditions of
service were adequately incorporated by reference into an air waybill, and so the inapplicability
of the Montreal Convention does not diminish the relevance of this argument. See Meteor AG v.
Fed. Exp. Corp., No. 08 Civ. 3773, 2009 WL 222329, at *6 (S.D.N.Y. Jan. 30, 2009), vacated,
2009 WL 3853802 (S.D.N.Y. Nov. 18, 2009); Sotheby’s, 97 F. Supp. 2d at 500.
15
The air waybill at issue states that “the goods described herein are accepted . . .
for carriage SUBJECT TO THE CONDITIONS OF CONTRACT ON THE REVERSE
HEREOF.” (Dkt. No. 34-7.) This presumably refers to Expeditors’ Conditions of Contract
document. (Dkt. No. 52-2.) However, none of the versions of the air waybill filed by the parties
includes a copy of the reverse side of the air waybill. (See Dkt. Nos. 34-7, 39-2, 40-6.)
16
If Expeditors elects to move for summary judgment again, as discussed above, it
should base its motion on the change in applicable substantive law. Any new motion should not
reargue contract-based issues on which the Court has denied summary judgment, except to the
extent that those arguments are affected by the applicable substantive law.
14
D.
China Airlines’ Motion for Summary Judgment
In the absence of the Montreal Convention, China Airlines contends that its Conditions of
Carriage govern the dispute, and that summary judgment in its favor is warranted because the
Conditions of Carriage required that it receive written notice of the claim within 14 days of
receipt of cargo. (Dkt. No. 40-2 at 3–5.) All parties agree that China Airlines was not given
notice of a claim of damage to the shipment at issue by Indemnity or Expeditors within the
requisite time period. (Dkt. No. 40-4 at 2–3; Dkt. No. 44-1 ¶ 5.) As a result of its not having
received a timely notice of claim directly, China Airlines contends, “no recovery can be obtained
against [it] pursuant to the Conditions of Carriage.” (Dkt. No. 40-2 at 5.)
Indemnity does not directly respond to this argument, instead maintaining that the
Montreal Convention applies and contending that the Montreal Convention enables notice to the
indirect carrier to suffice for the direct carrier. (Dkt. No. 54 at 4–6.) Although this contractbased argument in China Airlines’ “motion for summary judgment is unopposed, the district
court is not relieved of its duty to decide whether the movant is entitled to judgment as a matter
of law.” Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 242 (2d Cir. 2004).
China Airlines’ Contract of Carriage provides in relevant part that:
10.
Receipt by the person entitled to delivery of the cargo without complaint
shall be prima facie evidence that the cargo has been delivered in good condition
and in accordance with the contract of carriage.
10.1 In the case of loss of, damage or delay to cargo a written complaint must
be made to Carrier by the person entitled to delivery. Such complaint must be
made:
10.1.1 in the case of damage to the cargo, immediately after discov-ery [sic] of
the damage and at the latest within 14 days from the date of receipt of the cargo[.]
(Dkt. No. 40-8 ¶¶ 10–10.1.1.) The Court observes, however, that the copies of China Airlines’
Contract of Carriage before the Court appear to omit some of the provisions between paragraphs
10.1.1 and 10.5. (See Dkt No. 40-8 at 3–4; Dkt. No. 48-1 at 3–4.) This is a crucial section of the
15
contract, because it discusses the claim requirements that China Airlines seeks to rely on to bar
recovery. Indeed, China Airlines cites a missing paragraph from the contract—¶ 10.2—for
support in its briefs. (Dkt. No. 40-2 at 5; Dkt. No. 46 at 4; Dkt. No. 58 at 4.)
The omission is troubling in light of the significance of what language might be missing.
The Contract of Carriage filed by China Airlines appears to consist of printouts from a webpage
where the contract is published. (Dkt. Nos. 40-8 & 48-1.) Following the web address listed on
those documents produces a webpage containing China Airlines’ Contract of Carriage. 17 The
Court will take judicial notice of this webpage sua sponte under Federal Rule of Evidence
201(b)(2) as containing China Airlines’ Contract of Carriage as of January 2019. The nature of
this document can be “accurately and readily determined,” Fed. R. Evid. 201(b)(2), in light of its
presence on China Airlines’ official website, its existence at the web address listed on the
Contract of Carriage filed by China Airlines in this action, and its similarity in appearance and
content to those documents. See Wells Fargo Bank, N.A. v. Wrights Mill Holdings, LLC, 127 F.
Supp. 3d 156, 167 (S.D.N.Y. 2015) (“[A] court may take judicial notice of information publicly
announced on a party’s website, as long as the website’s authenticity is not in dispute and it is
capable of accurate and ready determination.” (internal quotation marks omitted)).
Based on an examination of the current version of China Airlines’ Contract of Carriage,
several of the provisions omitted from the contracts in the record appear to be highly relevant.
They provide in part:
10.2 Such complaint may be made to the Carrier whose air waybill was used, or
to the first Carrier or to the last Carrier or to the Carrier, which performed the
carriage during which the loss, damage or delay took place.
17
China Airlines Cargo, Contract of Carriage, https://cargo.chinaairlines.com/ccnetv2/content/services/ContractOfCarriage.aspx (visited Jan. 13, 2019) (“January
2019 Contract of Carriage”). This webpage is reproduced as Appendix A to this opinion.
16
10.3 Unless a written complaint is made within the time limits specified in 10.1
no action may be brought against Carrier.
January 2019 Contract of Carriage at ¶¶ 10.2–10.3. Paragraph 10.3, which contains the
provision of the contract that operates to bar actions against China Airlines in the event of an
untimely claim, does not appear in the versions of the Contract of Carriage that China Airlines
filed. (See Dkt. Nos. 40-8 & 48-1.) Without a similar contractual provision in the record
indicating that an untimely notice of claim is an absolute bar to recovery, China Airlines has not
established that the untimely notice of claim here entitles it to judgment as a matter of law.
Additionally, paragraph 10.2 specifies to whom a complaint may be made—the subject of
the dispute between China Airlines and Indemnity in this case. But this crucial provision is also
not in the versions of the Contract of Carriage that China Airlines filed. (See id.) If the Contract
of Carriage in force in April 2015 contains such a provision that applies to this dispute, it would
appear that the timeliness requirement for a notice of claim was satisfied. Complaints “may be
made to the Carrier whose air waybill was used,” January 2019 Contract of Carriage ¶ 10.2, and
here the parties used air waybills issued by the indirect carrier: Expeditor (Dkt. Nos. 34-8 &
40-7). And Expeditors received written notice of the claim on April 16, 2015—approximately a
week after delivery—via Jerry Yen’s email. (Dkt. No. 31 ¶¶ 12–13; Dkt. No. 34-11 at 2.)
The Court is aware that the version of the Contract of Carriage of which it has taken
judicial notice—that in force on January 13, 2019—may differ from the version in force in April
2015, which governs the shipment at issue. But the provisions in the current contract that
correspond to the provisions omitted from the contracts in the record throw into relief the
potential significance of the missing language.
Without the ability to review the entirety of China Airlines’ Contract of Carriage in force
at the time of the shipment, the Court cannot conclude that China Airlines is entitled to judgment
17
as a matter of law. As such, China Airlines’ motion for summary judgment is denied. However,
because the other parties may file new motions for summary judgment, and Indemnity did not
properly respond to China Airlines’ contract-based arguments in this first round of briefing,
China Airlines may also file a new motion for summary judgment.
IV.
Conclusion
For the foregoing reasons, Indemnity’s motion for summary judgment is DENIED,
Expeditor’s motion for summary judgment is DENIED, and China Airlines’ motion for summary
judgment is DENIED.
In light of the Court’s conclusion that the Montreal Convention does not govern this
dispute, the parties may file new motions for summary judgment based on the applicable
substantive law. Any new motions should follow a sequential briefing schedule: first, Indemnity
should file a motion and supporting brief by April 3, 2019; followed by Defendants’ motions and
briefs jointly supporting their motions and opposing Indemnity’s motion; followed by
Indemnity’s opposition and reply brief; followed by Defendants’ reply briefs.
The parties are directed to confer and submit a joint letter by March 13, 2019 regarding
whether there will be additional motions for summary judgment, and if so the full briefing
schedule thereof; if no such motions are anticipated, the letter should estimate the length of trial
and propose trial dates.
The Clerk of Court is directed to close the motions at Docket Numbers 30, 35, and 40.
SO ORDERED.
Dated: February 19, 2019
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge
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Appendix A
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