Merhi v. Bullion Exchanges, LLC et al

Filing 59

OPINION AND ORDER re: 37 MOTION for Summary Judgment filed by FedEx Corporation. For the foregoing reasons, FedEx's motion for summary judgment is GRANTED in part and DENIED in part. Plaintiff Merhi's state-law tort clai ms are dismissed, and FedEx's liability as to Merhi's federal common-law tort claims and breach-of-contract claim is limited to $1,000. Cross claimant Bullion's state-law tort and indemnification claims, and its contractual i ndemnification claim, are dismissed. FedEx's liability as to Bullion's breach-of-contract claim is limited to $1,000. The Clerk of Court is directed to close the motion at Docket Number 37. SO ORDERED. (Signed by Judge J. Paul Oetken on 9/23/2024) (vfr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ZAHER MERHI,
23-CV-4577 (JPO)

Plaintiff,

OPINION AND ORDER

-vBULLION EXCHANGES, LLC, et al.,
Defendants.
BULLION EXCHANGES, LLC, et al.,
Cross-Claimants,
-vFEDEX CORPORATION,
Cross-Claim Defendant.

J. PAUL OETKEN, District Judge:
Plaintiff Zaher Merhi brings this action against Defendants Bullion Exchanges, LLC and
Bullion Exchange, LLC (collectively “Bullion”), FedEx Corporation (“FedEx”), and John Doe
(an unnamed employee and delivery driver for defendants). Bullion Exchange, in turn, asserts
cross-claims against FedEx. Before the Court is FedEx’s motion for partial summary judgment
(ECF No. 37) as to the preemption of certain claims by federal law, the viability of Mr. Merhi’s
conversion claim, the viability of Bullion’s indemnification cross-claims, and the enforceability
of the limitation-of-liability clauses in FedEx’s contract with Bullion.

1

I.

Background
A.

Factual Background

The following facts are drawn from the parties’ Local Rule 56.1 statements and
responses. (ECF Nos. 48 (“Merhi SOMF”), 50 (“Bull. SOMF”), 51 (“FedEx SOMF”).) 1
Defendant FedEx is an “all-cargo air carrier operating under a certificate of authority”
provided by the United States Department of Transportation. (FedEx SOMF ¶ 1.) On August 4,
2021, FedEx entered into an ongoing shipment agreement with Bullion titled the “FedEx
Transportation Services Agreement.” (Id. ¶ 6.) That agreement incorporated by reference the
“FedEx Service Guide” for U.S. shipments. (Id. ¶¶ 7-8.) 2 The Service Guide contains the
following provision, titled “Declared value and limits of liability (not insurance coverage)”:
The declared value of any package represents our maximum liability in
connection with a shipment of that package, including, but not limited to, any
loss, damage, delay, misdelivery, nondelivery, misinformation, any failure to
provide information, or misdelivery of information relating to the shipment.
Exposure to and risk of any loss in excess of the declared value is assumed by the
shipper. You may transfer this risk to an insurance carrier of your choice through
the purchase of an insurance policy. Contact an insurance agent or broker if you
desire insurance coverage. WE DO NOT PROVIDE INSURANCE COVERAGE
OF ANY KIND.
(Id. ¶ 11.) The provision also states that “[w]ith respect to U.S. express package services,
unless a higher value is declared and paid for, our liability for each package is limited to
US$100.” (Id. ¶ 12.) Finally, the provision limits the “maximum declared value” of

1

In lieu of a conventional Rule 56.1 statement, Plaintiff Merhi’s counsel submitted
something more akin to an answer, purporting to either “admit” or “deny” the statements in
FedEx’s Rule 56.1 statement. (Merhi SOMF.) Where Mehri either admits or fails to address
facts in FedEx’s Rule 56.1 statement, the Court accepts them as true.
2

Mr. Merhi protests that these paragraphs are, respectively, “a question of law” and “a
question of credibility.” (Merhi SOMF ¶¶ 7-8.) The Court is unsure what he means, as these are
direct quotes from the agreements. Mr. Merhi does not challenge the authenticity of these
documents, nor does he provide an alternative statement of facts.
2

“[p]recious metals, including, but not limited to, gold and silver bullion,” to “US$1,000.”
(Id. ¶ 13.) 3
At some point before October 4, 2022, Plaintiff Merhi purchased $86,563.20 in gold
coins from Defendant Bullion Exchange, LLC. (Bull. SOMF ¶¶ 1, 7.) Although Bullion’s terms
and conditions state that it “normally ships with the United States Postal Service,” it “may at its
discretion choose to use a different shipping provider.” (Bull. SOMF ¶ 3.) In Mr. Merhi’s case,
Bullion chose to ship his package using FedEx. Bullion created a shipping label for the package
“using a website called Ship Station.” (FedEx SOMF ¶ 23.) According to FedEx’s SOMF,
Bullion’s Co-CEO, Eric Gozenput, testified that Bullion is a high-volume shipper, selling
“hundreds of millions of dollars of gold and silver bullion each year,” and “ship[ping] from five
hundred to over a thousand shipments of bullion to its customers each day.” (Id. ¶¶ 16-18.) Mr.
Gozenput also testified that he is “familiar with ‘declared value’,” and that he “knew and
understood that FedEx limits ‘declared value’ to $1,000.00 for shipments containing ‘precious
metals’” including gold. (Id. ¶¶ 19-20.) Before shipping Mr. Merhi’s package, Bullion
“purchased third-party insurance . . . to cover losses beyond” FedEx’s $1,000 limit. (Id. ¶ 21.)
The shipment was picked up by FedEx from Bullion’s office in Manhattan on October 4,
2022, and arrived at Mr. Merhi’s address at 43 Island Point in The Bronx on October 5. (Id. ¶ 3.)

3

Mr. Merhi objects that these paragraphs are “question[s] of law.” (Merhi SOMF ¶¶ 1012.) The Court is again unsure what Mr. Merhi means, and in any event, such objections are an
inadequate response to a Rule 56.1 statement. Mr. Merhi also objects in a separate affidavit that
the Court should disregard the Declaration of Donna Moore filed by FedEx (ECF No. 38-1)
because “I have never interacted with this paralegal or anyone else at FedEx” and “there is no
basis for us to know that the paralegal has access to shipping and records.” (ECF No. 49 ¶¶ 4-5.)
There is no rule that only lawyers may file declarations or submit exhibits to the Court, and here,
Ms. Moore identifies herself as “custodian of records for FedEx,” and states that she has “access
to shipping and other records[] and can testify about the contents of those records.” (ECF No 381 ¶ 1.) Mr. Merhi’s objections are thus immaterial.
3

According to FedEx, “the shipment was delivered and the courier, Dallas Jaquez, obtained a
signature upon delivery.” (Id. ¶ 24.) FedEx’s Global Positioning System (“GPS”) records
“indicate that the courier stopped at 43 Island Point” on the day of the delivery, and that “a
delivery scan was entered [on that day] around the corner from 43 Island Point.” (Id. ¶ 27, 25.) 4
Mr. Merhi, in his Rule 56.1 statement, states that the signature obtained is of an unknown source
and denies FedEx’s statements about its GPS data. (Merhi SOMF ¶ 23-25.) However, Mr.
Merhi does not, as S.D.N.Y. Local Rule 56.1(d) requires, include “citation[s] to evidence which
would be admissible” alongside his denials. FedEx’s statements about the signature and GPS
data are therefore deemed admitted for purposes of this opinion. See Gubitosi v. Kapica, 154
F.3d 30, 31 n.1 (2d Cir. 1998). Mr. Merhi contends “that no one was at home at the delivery
time on October 5,” and that “he did not receive the gold bullion.” (FedEx SOMF ¶¶ 26-27.)
B.

Procedural Background

Mr. Merhi commenced this action against Bullion and FedEx in New York Supreme
Court, Bronx County, on April 24, 2023. FedEx filed a notice of removal to this court on May
31, 2023. (ECF No. 1.) FedEx then filed an answer on June 5, 2023 (ECF No. 5), and Bullion
filed an answer with cross-claims against FedEx on July 14, 2023 (ECF No. 7). FedEx filed an
amended answer addressing Bullion’s cross-claims on July 26, 2023. (ECF No. 10.) Discovery
was completed by February 15, 2024 (see ECF No. 33), and FedEx moved for partial summary
judgment as to both Mr. Merhi’s claims and Bullion’s cross-claims on February 29, 2024. (ECF
No. 37.) Bullion opposed summary judgment on June 18, 2024. (ECF Nos. 47, 50.) Mr. Merhi
opposed summary judgment with a Rule 56.1 statement of material facts (Merhi SOMF), and an

4

FedEx’s Statement of Material Facts skips paragraph 10. This opinion refers to the
paragraphs as numbered in the SOMF, even when misaligned with the other parties’ briefing.
4

“affidavit” signed by Mr. Merhi (ECF No. 49), but did not file a memorandum of law. Mr.
Merhi’s counsel explained in a letter appended to his 56.1 statement that “Plaintiff intends to file
only the necessary documents as required under the Federal Rules of Procedure at this time.”
(ECF 48-1.) FedEx filed a reply in further support of partial summary judgment on June 25,
2024. (ECF No. 53.)
II.

Legal Standard
Summary judgment is appropriate when “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. Ricci v. DeStefano, 557
U.S. 557, 586 (2009). In deciding a motion for summary judgment, a court must consider the
evidence “in the light most favorable to the non-moving party and draw all reasonable inferences
in its favor.” Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995).
III.

Discussion
A.

Compliance with Rule 7.1

As an initial observation, Mr. Merhi failed to comply with S.D.N.Y. Local Civil Rule 7.1,
which requires that “all motions . . . must include . . . [a] memorandum of law, setting forth the
cases and other authorities relied on in support of the motion.” In opposition to FedEx’s motion
for summary judgment, Mr. Merhi’s attorney filed a Rule 56.1 statement of material facts (ECF
No. 48) and Mr. Merhi himself filed an “affidavit” (ECF No. 49) purporting to oppose FedEx’s
“Declaration of Donna Moore” (ECF No. 38-1). Neither filing cites relevant case law, and
neither Mr. Merhi nor his counsel filed anything else that the Court can construe as a
memorandum of law. Mr. Merhi’s counsel appears to have done this intentionally, writing in a
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separate letter to the Court that “Plaintiff intends to file only the necessary documents as required
under the Federal Rules of Procedure at this time.” (ECF No 48-1 at 1.) “Failure to file a
memorandum of law in opposition to the opposing party’s motion is, by itself, a sufficient basis
to grant the motion.” See Healthfirst, Inc. v. Medco Health Sols., Inc., No. 03-CV-5164, 2006
WL 3711567, at *3 (S.D.N.Y. Dec. 15, 2006) (quoting Kamara v. United States, No. 04-CV626, 2005 WL 2298176, at *1 (S.D.N.Y.Sep.20, 2005)). “[I]n the interest of thoroughness,” the
Court will address Mr. Merhi’s opposition on its merits. 5 Id. The Court will not, however,
impute arguments on Mr. Merhi’s behalf where they have not been made by Mr. Merhi or his
counsel in the first instance.
B.

Mr. Merhi’s Claims

Mr. Merhi’s Complaint appears to assert six distinct causes of action as to FedEx. First,
Merhi alleges that FedEx “negligently hired and retained” the employee who lost his package
(Compl. ¶ 32), and that FedEx “negligently hired and employed” the driver who delivered the
package (id. ¶ 33). Second, Merhi alleges that FedEx “negligently lost and misplaced” his
package. 6 (Id. ¶ 42.) 7 Third, Merhi alleges that FedEx acted in a manner “contrary to the
agreement between defendants.” (Id.) 8 Fourth, Merhi asserts a conversion claim, alleging that a

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The Court also notes that FedEx itself failed to timely file its Rule 56.1 statement on the
docket. (ECF No. 52.) Given that FedEx did timely communicate the statement to opposing
parties and no party has objected, the Court will treat the statement as timely filed for purposes
of this opinion. The Court is not, though, inclined to enter summary judgment against Mr. Merhi
based solely on his technical failure to comply with Local Rule 7.1.
6

Merhi repeats certain claims in multiple of his causes of action. For example, Merhi
includes a negligent hiring claim against FedEx in both the first and the second causes of action.
7

Merhi’s sixth cause of action merely restates the elements of his negligence claim and
gestures at putative damage calculations. (Compl. ¶¶ 62-77.) The Court does not view it as
asserting an independent cause of action.
8

This is formally included in the second cause of action (negligence), but the Court
construes it as raising an independent contract claim.
6

FedEx employee intentionally signed for and stole his package. (Id. ¶¶ 47, 51.) Fifth, Merhi
alleges that Defendants, including FedEx, acted with “reckless disregard” and therefore
committed “gross negligence.” (Id. ¶ 54-55.) Sixth, Merhi asserts unspecified statutory claims,
alleging that Defendants’ conduct “violat[ed] those statutes, ordinances, rules and
regulations . . . of which this Court will take Judicial Notice at the time of the trial.” (Id. ¶ 60.)
1.

Negligence

Mr. Merhi does not specify the sources of law pursuant to which he asserts any of his
claims. In its memorandum of law, FedEx argues that Merhi’s negligent hiring and retention,
negligence, and gross negligence claims are based on “state common law” 9 and that his
conversion claim is based on “[f]ederal common law.” (ECF No. 38 (“Mem.”) at 10.) FedEx
then argues that Mr. Mehri’s state-law tort claims must be dismissed because they are preempted
by the federal Airline Deregulation Act, 49 U.S.C. §41713 (“ADA”). (Mem. at 11.)
To the extent that Mr. Merhi’s claims are based on state common law, FedEx is correct
that they are preempted. The ADA “bars state-imposed regulation of air carriers,” Am. Airlines,
Inc. v. Wolens, 513 U.S. 219, 222 (1995), which extends to state tort law, Nw., Inc. v. Ginsberg,
572 U.S. 273, 281 (2014). ADA preemption applies to an air freight company like FedEx when
a plaintiff’s claims are based on the company’s shipping services. N. Am. Phillips Corp. v.
Emery Air Freight Corp., 579 F.2d 229, 234 (2d Cir. 1978).
However, “a shipper whose state-law tort claims are preempted by the ADA may still be
able to pursue federal common law tort claims.” Gemnet Exp., Inc. v. Fed. Exp. Corp., No. 06-

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Perhaps out of caution, FedEx also identifies a “second claim for negligence” and a
claim for the “breach of duty of reasonable care” in the Complaint. (Mem. at 10.) The Court
understands both as subsets of Merhi’s primary negligence claim and does not address them
separately.
7

CV-2648, 2009 WL 928299, at *5 (S.D.N.Y. Mar. 30, 2009) (Freeman, Mag. J.); see also
Nippon Fire & Marine Ins. Co. v. Skyway Freight Sys., Inc., 235 F.3d 53, 59 (2d Cir. 2000)
(“[F]ederal common law continues to control the issue of liability of air carriers for lost or
damaged shipments even after deregulation.”); Sam L. Majors Jewelers v. ABX, Inc., 117 F.3d
929 n.16 (5th Cir. 1997) (“[A] cause of action against an interstate air carrier for claim for
property lost or damaged in shipping arises under federal common law.”). The Court
accordingly “read[s] a federal-law negligence claim into [Mr. Merhi’s] complaint based on his
allegation about the loss of his property.” Feldman v. United Parcel Serv., Inc., No. 06-CV2490, 2008 WL 800989, at *10 (S.D.N.Y. Mar. 24, 2008) (Dolinger, Mag. J.), opinion modified
on reconsideration on other grounds, No. 06-CV-2490, 2008 WL 2540814 (S.D.N.Y. June 25,
2008) (Dolinger, Mag. J.). Such claims are not preempted, and the Court declines to grant
summary judgment dismissing them.
FedEx also argues that “any claims that survive preemption are governed by [its contracts
with Bullion Exchange].” (Mem. at 16 (capitalization altered).) Those contracts contain a
“declared value” clause limiting FedEx’s liability to $1,000. (Id. at 18.) FedEx is correct that, if
the limitation of liability is enforceable against Bullion Exchange, it is also enforceable against
Mr. Merhi: “[w]hen an intermediary contracts with a carrier to transport goods, the cargo
owner’s recovery against the carrier is limited by the liability limitation to which the
intermediary and carrier agreed.” Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 33 (2004). This is
because the carrier has “‘the right to assume that the [shipper] could agree upon the terms of the
shipment’; it could not be expected to know if the [shipper] had any outstanding, conflicting
obligation to another party.” Id. (quoting Great Northern Ry. Co. v. O’Connor, 232 U.S. 508,
514 (1914)). If enforceable, the limited liability clause would also apply to Mr. Mehri’s “gross

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negligence” claim, as “nothing short of intentional destruction or conduct in the nature of theft of
the property will permit a shipper to circumvent the liability limitations in a released value
provision.” Am. Cyanamid Co. v. New Penn Motor Exp., Inc., 979 F.2d 310, 315-16 (3d Cir.
1992). Because the Court concludes that the limited liability clause is enforceable, see infra
Section III.C.2, Mr. Merhi’s recovery on his three negligence claims is limited to $1,000.
2.

Conversion

FedEx also requests summary judgment applying the limited liability clause to Mr.
Merhi’s conversion claim. (Mem. ¶¶ 17-19.) Because the ADA preempts state-law conversion
claims, the Court applies federal common law. See Baloise Ins. Co. v. United Airlines, Inc., 723
F. Supp. 195, 198 (S.D.N.Y. 1989) (“It is clear that [the conversion claim in] this case is
governed by the federal rule. Federal common law governs a carrier’s liability for the loss of
goods during interstate shipment.”).
Under federal common law, a limited liability clause does apply to ordinary conversion
claims. See Nippon Fire, 235 F.3d at 60 (“Such clauses, therefore, limit recovery not only for
breach of contract, but also . . . conversion.”); Owens-Corning Fiberglas Corp. v. U.S. Air, 853
F. Supp. 656, 665 (E.D.N.Y. 1994) (“A valid limitation of liability clause also applies to claims
sounding in tort, and is enforceable against a claim of conversion.”). However, intentional or
willful conversion claims may not be so limited. See Baloise Ins. Co., 723 F. Supp. at 198
(“When a bailee commits the intentional tort of conversion, courts will not enforce limitation of
liability provisions on grounds of public policy.”); see also Nippon Fire & Marine Ins. Co. v.
Skyway Freight Sys., Inc., 45 F. Supp. 2d 288, 292 & n.2 (S.D.N.Y. 1999) (“[A]n enforceable
limitation of liability clause precludes recovery . . . [on] conversion theories,” meaning that “[t]o
assert a claim for conversion successfully, a plaintiff must plead willful or intentional
misconduct of the common carrier.”); Owens-Corning, 853 F. Supp. at 665-66 (“[A] plaintiff
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alleging conversion against a common carrier must plead and prove willful or intentional
misconduct.” (quotation marks omitted)). To prevail on an intentional or willful conversion
claim, a plaintiff must set forth “some affirmative proof”—otherwise, “courts applying federal
common law will enforce a contractual limitation of liability provision.” Baloise Ins. Co., 723 F.
Supp. at 198. FedEx is thus correct that, for Mr. Merhi’s conversion claim to avoid the liability
limitation clause, he must prove that FedEx intentionally or willfully stole his shipment for its
own use.
Assuming without deciding that Mr. Merhi has stated a prima facie claim for commonlaw conversion, he has provided no facts nor evidence from which a reasonable jury could
determine that an intentional or willful conversion occurred. Mr. Merhi does not claim that
FedEx intended to take the package for its own use. While he does assert that an agent or
employee of FedEx “sign[ed] for the package in an attempt to” take it from Mr. Merhi, he points
to no facts or evidence supporting this allegation. (Compl. ¶ 47.) Nor could he, as he separately
alleges that he “does not know” the identity of the person who signed for the package. (Compl.
¶ 27.) When a “[p]laintiff alleges conversion based solely upon defendant’s lack of explanation
for the loss” but “does not plead willful or intentional misconduct by the defendant” or provide
“facts supporting the existence of any such conduct,” such a “conclusory conversion
claim . . . cannot withstand defendant’s motion for summary judgment.” U.S. Gold Corp. v. Fed.
Exp. Corp., 719 F. Supp. 1217, 1226 (S.D.N.Y. 1989). Mr. Merhi can therefore only recover a
maximum of $1,000 on his conversion claim.
3.

Breach of Contract

FedEx acknowledges that the ADA does not preempt Mr. Merhi’s contract claim, and
that Mr. Merhi can “recover against FedEx as a third-party beneficiary.” FedEx argues,

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however, that Mr. Merhi can recover “only as much as the shipper Bullion could recover”—that
is, $1,000. (Mem. at 10.)
FedEx is correct that “[a] third-party beneficiary of a contract has no greater rights than
the promisee.” Aretakis v. Fed. Exp. Corp., No. 10-CV-1696, 2011 WL 1226278, at *6
(S.D.N.Y. Feb. 28, 2011) (Fox, Mag. J.), report and recommendation adopted, No. 10-CV-1696,
2011 WL 1197596 (S.D.N.Y. Mar. 25, 2011). Because the $1,000 liability limitation clause is
enforceable against Bullion Exchange, see infra Section III.C.2, it is also enforceable against Mr.
Merhi, limiting Mr. Merhi’s maximum recovery to $1,000 should he prevail on his breach-ofcontract claim.
4.

Statutory Claims

Finally, Mr. Merhi appears to assert statutory claims in his complaint. Because the Court
is unaware of any federal statutes under which such claims may be brought, it construes Mr.
Merhi’s sole sentence about statutory causes of action as referring to state statutes. However, as
with state tort law, state statutes regulating air shipping are preempted by the ADA. See Wolens,
513 U.S. 219, 228. The Court therefore grants summary judgment on such claims, to the extent
that Mr. Merhi intends to assert them.
C.

Bullion’s Cross-Claims

Bullion asserts four cross-claims in its Answer. (ECF No. 7 (“Bull. Ans.”) at 1.) For two
such claims—the first and fourth—Bullion specifies no source of law. For the second crossclaim, Bullion states that it is “pursuant to Article 14 of the CPLR.” (Id. at 11.) For its third
cross-claim, Bullion states that it is “pursuant to common law.” (Id.)
FedEx characterizes Bullion’s claims as based on “state common law” and argues they
must be dismissed on preemption grounds, except insofar as they are based on breach of contract
(Mem. at 14.) In its opposition, Bullion accepts this characterization, explaining that “Bullion’s
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crossclaims do not seek to enlarge the contractual obligations that the parties entered. Rather,
Bullion’s crossclaims seek to enforce those contractual obligations.” (ECF No. 47 (“Bull.
Opp.”) at 3.) Specifically, Bullion states that it intends to assert only causes of action for “breach
of contract and breach of duty of care that Fed. Ex. agreed to in its contract.” (Id. (emphasis
added).) The Court therefore grants summary judgment for FedEx on all of Bullion’s crossclaims except insofar as they assert contractual indemnification or breach of contract.
1.

Contractual Indemnification

Bullion’s fourth cause of action states that “pursuant to the aforesaid contracts and/or
agreements, the Co-Defendants are obligated to defend, indemnify and hold harmless the Defendant
pursuant to the terms thereof.” (Bull. Ans. at 12.) FedEx responds that there is no such
indemnification or hold harmless clause in any of the contracts it signed with Bullion. (Mem. at 14;
ECF No. 38-4; ECF No. 38-5; ECF No. 38-6). Bullion does not contest this, and the Court is unable
to find any such provision in the agreements that FedEx submitted along with its summary judgment
papers. The Court therefore dismisses Bullion’s contractual indemnification cross-claim.

2.

Conventional Breach of Contract

Bullion contends that FedEx breached the terms and conditions agreement with Bullion
when its delivery agent personally signed for the package and failed to verify the recipient’s age
with any identification. (Bull. Opp. at 4; ECF No. 50 (“Bull. SOMF”) ¶¶ 12-13.) FedEx does
not contest this, but rather seeks to limit its liability to $1,000. (Mem. at 16.) Bullion responds
that “there is a genuine dispute of material fact with regard to this issue of whether the
limitation-of-liability provision is unenforceable due to a lack of reasonable notice.” (Bull. Opp.
at 5.)
While, under federal common law, “contractual provisions that purport to relieve carriers
from liability for loss or damage to cargo altogether are invalid and unenforceable as against

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public policy,” “contractual provisions that merely limit carrier liability for lost or damaged
cargo—such as those incorporated into the air waybills in this case—ordinarily are valid and
enforceable so long as they (1) are set forth in a ‘reasonably communicative’ form, so as to result
in a ‘fair, open, just and reasonable agreement’ between carrier and shipper; and (2) offer the
shipper a possibility of higher recovery by paying the carrier a higher rate.” Nippon Fire, 235
F.3d at 59–60 (quoting Hill Constr. Corp. v. Am. Airlines, Inc., 996 F.2d 1315, 1317 (1st Cir.
1993)) (emphasis added). This is known as the “released value” doctrine. Id. “The released
value doctrine does not require that the alternative liability limit offered by a carrier be the full
value rate.” Polesuk v. CBR Sys., Inc., No. 05-CV-8324, 2006 WL 2796789, at *13 (S.D.N.Y.
Sept. 29, 2006); accord Kemper Ins. Cos. v. Fed. Exp. Corp., 252 F.3d 509, 513 (1st Cir. 2001)
(“[The plaintiff] has not cited, nor have we discovered, any case in which a court invalidated a
contract providing two discrete levels of coverage. We are loath to police this line when other
courts have chosen not to do so.”).
Bullion argues that there was a “lack of reasonable notice” regarding the declared value
clause contained in FedEx’s Service Guide, as incorporated into FedEx’s Transportation Services
Agreement. (Bull. Opp. at 5.) The Court disagrees. First, Bullion does not dispute that it in fact
took advantage of the option to secure a higher recovery by paying the carrier a higher rate—that
is, it paid an extra $12.50 to increase FedEx’s liability from $100 to $1,000. (FedEx SOMF
¶ 15.) Second, Bullion’s co-CEO testified in his deposition that he is “familiar with ‘declared
value’” and that he “knew and understood that FedEx limits ‘declared value’ to $1,000.00 for
shipments containing ‘precious metals . . . .’” (Id. ¶¶ 19-20.) Third, Bullion purchased thirdparty insurance “to cover losses beyond the $1,000.00 declared value limit.” (Id. ¶ 21.) Fourth,

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Bullion is a sophisticated shipper that “ships from five hundred to over a thousand shipments of
bullion to its customers each day.” (Id. ¶ 18.)
Together, this paints an unambiguous picture of a “fair, open, just and reasonable
agreement.” Nippon Fire, 235 F.3d at 59. The terms are apparent from FedEx’s contract
language; Bullion was in fact aware of the terms; Bullion actually accepted FedEx’s offer to pay
for a higher level of protection; and Bullion then purchased third-party insurance to provide extra
protection that it knew was not available from FedEx.
Bullion’s only response is that it separately purchased FedEx’s “adult signature option,”
which is an “additional service . . . at a higher cost that Bullion agreed to pay.” (Bull. Opp. at 4.)
This is irrelevant, however, to the matter of FedEx’s limited liability. Bullion entered into a contract
requiring FedEx to provide certain services, including the signature requirement. It separately
contracted with FedEx to limit FedEx’s liability for failure to adequately provide those services.
Even if “Bullion was under the impression that it was obtaining additional services and protection on
its shipments” (Bull. Opp. at 5), there is no reasonable argument that it believed that it was paying for
additional liability on the part of FedEx. The fact that Bullion paid for signature protection is what
allows it to potentially recover up to $1,000 for FedEx’s alleged breach of that obligation. It does not
increase FedEx’s maximum liability above that $1,000 limit, and no reasonable factfinder could
interpret the signature requirement in that way. Accordingly, the Court grants FedEx’s request for
summary judgment limiting its contractual liability to Bullion to $1,000.

IV.

Conclusion
For the foregoing reasons, FedEx’s motion for summary judgment is GRANTED in part

and DENIED in part.
Plaintiff Merhi’s state-law tort claims are dismissed, and FedEx’s liability as to Merhi’s
federal common-law tort claims and breach-of-contract claim is limited to $1,000. Cross-

14

claimant Bullion’s state-law tort and indemnification claims, and its contractual indemnification
claim, are dismissed. FedEx’s liability as to Bullion’s breach-of-contract claim is limited to
$1,000.
The Clerk of Court is directed to close the motion at Docket Number 37.
SO ORDERED.
Dated: September 23, 2024
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge

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