Underwriters at Lloyds Subscribing to Cover Note B0753PC1308275000 v. Expeditors Korea Ltd. , 882 F.3d 1033 ( 2018 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-10985
________________________
D.C. Docket No. 1:14-cv-20708-DPG
UNDERWRITERS AT LLOYDS SUBSCRIBING TO
COVER NOTE B0753PC1308275000,
Plaintiff - Appellee,
versus
EXPEDITORS KOREA LTD.,
FORWARD AIR, INC.,
Defendants - Appellants.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(February 16, 2018)
Before JORDAN and JILL PRYOR, Circuit Judges, and PROCTOR, * District
Judge.
*
Honorable R. David Proctor, United States District Judge for the Northern District of
Alabama, sitting by designation.
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JILL PRYOR, Circuit Judge:
Expeditors Korea Ltd. and Forward Air, Inc. (together, the “transporters”)
damaged cargo that they were responsible for transporting internationally. In this
case, the Underwriters at Lloyds (“Lloyds”), having compensated its insured—the
cargo’s owner—for the damage to the cargo, seeks to recover from the
transporters. The transporters admit their liability; the only question is how much
they owe. Lloyds and the transporters disagree over the rules that govern the
amount the transporters must pay. There are two possibilities: (1) the Montreal
Convention,1 a multinational treaty that provides uniform rules for liability in
international air carriage, or (2) the waybill, the contract between the transporters
and the company that shipped the cargo. The Convention and the waybill establish
nearly identical limitations of liability, in each case capping damages based on the
weight of the damaged shipment. The only potential difference, for our purposes,
is that when damage to one part of a shipment renders the rest of the shipment less
valuable, the Montreal Convention calculates liability based on the weight of the
entire shipment, while the waybill is ambiguous about whether the weight of the
damaged part alone should be used. Because the transporters damaged one part of
a machine that could not operate without the damaged part, the extent of the
transporters’ liability may depend on whether the Montreal Convention or the
1
Convention for the Unification of Certain Rules for International Carriage by Air, May
28, 1999, T.I.A.S. No. 13038.
2
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waybill controls. We therefore must address whether the Montreal Convention
applies under the circumstances present here: After the cargo had been flown from
South Korea to Miami, Florida, en route to Orlando, Florida, it was damaged either
at a trucking company’s warehouse outside Miami International Airport or while
aboard a truck bound for Orlando.
We hold that the district court erred in ruling that the Montreal Convention
governs the transporters’ liability. The Convention does not apply based on the
district court’s factual findings regarding where the cargo was damaged. By
default, then, the waybill governs the transporters’ liability. Because the waybill is
ambiguous about the weight that should be used to calculate liability, we remand
the case for the district court to address the issue in the first instance.
I. BACKGROUND
A. The Montreal Convention
We begin with a brief overview of the relevant provisions of the Montreal
Convention. The Convention, which was ratified by both the United States and
South Korea, caps a carrier’s liability for cargo damaged during international air
transport. See Eli Lilly & Co. v. Air Express Int’l USA, Inc., 615 F.3d 1305, 1308
(11th Cir. 2010). The Convention’s Article 22 limits a carrier’s potential liability
3
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to 19 Special Drawing Rights (SDRs) per kilogram of cargo shipped.2 See
Montreal Convention art. 22(3). “An SDR is an artificial currency, published daily
by the International Monetary Fund, which fluctuates based on the global currency
market.” Eli Lilly, 615 F.3d at 1308. Central to the dispute in this case, Article 22
provides that if only part of the cargo is damaged, then only the weight of the
damaged package or packages is used to calculate liability, but if damage to some
packages affects the value of other, undamaged packages, then the weight of the
undamaged packages will also be included in the calculation. See Montreal
Convention art. 22(4).
The Convention, and thus Article 22’s limitation of liability, applies only to
cargo damaged during “carriage by air.” Id. art. 18(1). Article 18 defines carriage
by air as “the period during which the cargo is in the charge of the carrier.” Id. art.
18(3). The fourth paragraph of Article 18 expressly excludes from that definition
“any carriage by land, by sea or by inland waterway performed outside an airport.”
But there are two exceptions to this exclusion that extend the reach of “carriage by
air.” First, the Montreal Convention establishes a rebuttable presumption that
cargo damaged at an unknown point during a journey that includes at least some
carriage by air will be governed by the Convention. See id. art. 18(4). Second, if a
2
Article 22 specifies 17 SDRs as the limit, Montreal Convention art. 22(3), but the
Convention allows for periodic reassessment of the limit. See id. art. 24. After reassessment, the
current limit for cargo is 19 SDRs. See 74 Fed. Reg. 59017-03 (Nov. 16, 2009).
4
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carrier substitutes non-air carriage for air carriage without the permission of the
sender, the Convention deems the non-air carriage to have been carriage by air.
See id. It is plain, then, that the Convention reaches further than literal air transit,
but how much further depends on the interplay between paragraphs three and four
of Article 18. We examine Article 18 in greater detail below.
B. The Waybill
In this case, if the Montreal Convention does not apply, then the waybill
under which the cargo was shipped governs the transporters’ liability. A waybill is
“[a] document acknowledging the receipt of goods by a carrier . . . and the contract
for the transportation of those goods.” Waybill, Black’s Law Dictionary (10th ed.
2014). Here, the waybill Expeditors issued provided for airport-to-airport
transportation of the cargo from Incheon, South Korea, to Orlando, Florida. 3
The waybill capped the carrier’s liability for damage to cargo at the same
amount as the Montreal Convention, 19 SDRs per kilogram. Like the Convention,
the waybill also provided that the weight used to calculate damages was to be the
same weight that was used to calculate the shipping charges. The waybill
described what would happen if only part of the shipment was damaged:
In any case of loss, damage, to, or delay to part of the cargo, the
weight to be taken into account in determining Expeditors’ limit of
3
Expeditors was hired to transport the cargo from airport to airport. It in turn hired
Forward Air to complete one leg of the journey.
5
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liability shall be only the weight of the package or packages
concerned.
Air Waybill ¶ 6 (Doc. 78-3).4 The parties disagree about whether the waybill’s
reference to “package or packages concerned” indicates that only the weight of
packages actually lost, damaged, or delayed may be considered or whether the
weight of packages that diminished in value due to the loss, damage, or delay of
related packages may also be included in calculating the carrier’s liability.
The waybill contained one other term that is relevant here. The waybill gave
Expeditors the right to substitute non-air carriage for air carriage, absent specific
instructions to the contrary.
C. The Shipment
TriQuint Semiconductor, Inc., a manufacturer of components used in
electronics, purchased a machine for coating silicon wafers from Cybortrack
Solutions Inc., a South Korean company. The machine consisted of various
process stations where the wafers were prepared and a robotic arm that moved the
wafers among these process stations. Cybortrack hired Expeditors to transport the
machine to TriQuint in ten separate shipping crates from Incheon, South Korea to
Orlando, Florida.
Even though the waybill provided for airport-to-airport transportation
between the two cities, Expeditors did not fly the ten crates directly from Incheon
4
Citations to “Doc. #” refer to docket entries in the district court record in this case.
6
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to Orlando. Instead, it flew them to Miami and then arranged for a multi-step
journey by land to Orlando. After the crates arrived in Miami, a cargo handling
company delivered them from Miami International Airport to Expeditors’
warehouse near the airport. Expeditors then hired Forward Air to drive the crates
by truck to Forward Air’s Orlando facility. Along the way, Forward Air stored the
crates for a short period of time in its Miami warehouse. Finally, Expeditors hired
Crazy Joe’s Airfreight to transport the crates by truck from Forward Air’s Orlando
facility to TriQuint’s delivery agent.
Unfortunately, the machine was damaged somewhere between Miami and
Orlando. Forward Air employees noted no damage to the crates when they arrived
at Forward Air’s Miami warehouse. And the company’s policy was to decline
shipments of damaged items. When the crates arrived at Forward Air’s Orlando
facility, a Forward Air employee reported that two of the crates were damaged, one
of them severely. The severely damaged crate contained the silicon coating
machine’s robotic arm. The Forward Air employee testified that the crate
containing the robotic arm had been crushed either while it was being loaded onto
the truck at Forward Air’s Miami facility or while traveling in the truck from
Miami to Orlando, as a result of improper loading. Upon picking the crates up
from Forward Air’s Orlando facility, a driver for Crazy Joe’s observed that one
crate had a hole in it and two crates were missing legs. A Forward Air supervisor
7
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also observed the damage when the crates were picked up by the Crazy Joe’s
driver.5
By the time it reached TriQuint, the robotic arm was damaged beyond use.6
TriQuint received no replacement arm for approximately five months, and the rest
of the machine was inoperable without the arm. The company filed a claim with
its insurer, Lloyds, which paid it $918,000 in compensation for the damage.
D. Procedural History
Lloyds then filed this action against Expeditors and Forward Air in federal
district court, alleging that in damaging the cargo Expeditors breached its duties
under the Montreal Convention, Forward Air was negligent, and both defendants
breached the waybill. Lloyds sought $920,000 in damages. 7 After discovery, the
transporters moved for partial summary judgment, arguing that the Montreal
Convention did not apply and that the waybill capped their liability. The district
court denied the motion and then held a bench trial.
After trial, the court entered findings of fact and conclusions of law,
determining that the Montreal Convention governed the transporters’ liability. The
court found that TriQuint’s machine was damaged either while in the custody of
5
Thus, it is clear that, notwithstanding its name, Crazy Joe’s could not have been
responsible for the damage to the cargo.
6
The contents of the other damaged crate apparently suffered no harm.
7
This amount represented the full cost of replacing the damaged unit, along with freight,
set up, and other related costs, minus credit for the sale of the damaged unit.
8
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Forward Air at its warehouse facility in Miami or in transit to its Orlando facility.
The court also found that Forward Air was acting as an agent of Expeditors while
the cargo was in its custody. After examining the text of the Montreal Convention,
the court concluded that the damage occurred during carriage by air, and so the
Convention applied. Applying the Convention’s limitation of liability, the court
entered judgment in favor of Lloyds against the transporters in the amount of
$195,882 (plus interest).8 The court calculated the transporters’ liability based on
the weight of the entire shipment, not merely the crate containing the damaged
robotic arm.
The transporters filed a motion to alter judgment and for additional findings
under Federal Rules of Civil Procedure 59 and 52, respectively, arguing that the
district court had misapplied the Montreal Convention. The district court denied
the motion. This appeal—from both the judgment and the denial of the post-trial
motion—followed. The transporters do not contest their liability to Lloyds or the
amount that Lloyds paid to TriQuint; this appeal concerns only the limitation of
liability that governs the calculation of damages.
8
Expeditors also filed third-party claims for indemnity and contribution against All-
American Crating, Inc., which had acted as TriQuint’s delivery agent. The district court entered
judgment in All-American’s favor, and Expeditors does not challenge that judgment on appeal.
9
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II. STANDARD OF REVIEW
Following a bench trial, we review a district court’s conclusions of law de
novo and its findings of fact for clear error. Wexler v. Anderson, 452 F.3d 1226,
1230 (11th Cir. 2006). With regard to the Montreal Convention, the interpretation
of a treaty is a question of law we review de novo. United States v. Duboc,
694 F.3d 1223, 1229 n.7 (11th Cir. 2012). “The goal of treaty interpretation is to
determine the actual intention of the parties ‘because it is our responsibility to give
the specific words of the treaty a meaning consistent with the shared expectations
of the contracting parties.’” In re Comm’rs Subpoenas, 325 F.3d 1287, 1294 (11th
Cir. 2003) (quoting Air France v. Saks, 470 U.S. 392, 399 (1985)), abrogated in
part by In re Clerici, 481 F.3d 1324, 1333 n.12 (11th Cir. 2007).
With regard to the waybill, “[c]ontract interpretation is generally a question
of law.” Lawyers Title Ins. Corp. v. JDC (Am.) Corp., 52 F.3d 1575, 1580 (11th
Cir. 1995). The question of whether a contract is ambiguous is a question of law
that we review de novo. Carneiro Da Cunha v. Standard Fire Ins. Co./Aetna
Flood Ins. Program, 129 F.3d 581, 584-85 (11th Cir. 1997). But “[q]uestions of
fact arise . . . when an ambiguous contract term forces the court to turn to extrinsic
evidence of the parties’ intent . . . to interpret the disputed term.” Lawyers Title,
52 F.3d at 1580.
10
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III. DISCUSSION
We now turn to the question that brings the parties before us: how much of
the money that Lloyds paid TriQuint for the damaged machine can be recovered
from the transporters? The amount of the transporters’ liability may depend on
whether the Montreal Convention or the waybill controls. Both the Convention
and the waybill cap the transporters’ liability at 19 SDRs multiplied by the weight
of the damaged cargo, but they may differ as to whether the weight of the
undamaged parts of the shipment rendered less valuable by the damage to the
robotic arm should be included as cargo.
The district court applied the Montreal Convention, but we conclude, based
on the district court’s own factual findings, that it should have looked to the
waybill instead. Below, we interpret the provisions of the Montreal Convention
dealing with damage to cargo and apply them to the facts as found by the district
court. Because the Convention is inapplicable under these facts, the waybill
governs the transporters’ liability. We conclude that the waybill is ambiguous
about whether damages must be calculated using only the weight of the one crate
containing the robotic arm or using the weight of all the cargo that diminished in
value due to the damage to the arm. We thus remand to the district court for
further findings of fact to resolve this ambiguity.
11
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A. The Montreal Convention Does Not Govern the Damages at Issue.
The issue is whether, under the facts of this case, the cargo was damaged in
such a way that the Montreal Convention applies. This issue turns on our
interpretation of Article 18, which defines when the terms of the Montreal
Convention govern. In construing Article 18, our “analysis must begin . . . with
the text of the treaty and the context in which the written words are used.” Air
France, 470 U.S. at 397. If the treaty contains “difficult or ambiguous passages,”
we may go beyond the text of the treaty to consider general rules of construction as
well as “the history of the treaty, the negotiations, and the practical construction
adopted by the parties.” E. Airlines, Inc. v. Floyd, 499 U.S. 530, 535 (1991)
(internal quotation marks omitted); see Zicherman v. Korean Air Lines Co., Ltd.,
516 U.S. 217, 226 (1996) (explaining that “a treaty ratified by the United States is
not only the law of this land but also an agreement among sovereign powers” and
thus “we have traditionally considered as aids to its interpretation the negotiating
and drafting history (travaux préparatoires) and postratification understanding of
the contracting parties”). Applying this framework, we conclude that the Montreal
Convention does not apply in this case because the district court’s findings tell us
that the cargo was damaged during carriage by land rather than during carriage by
air.
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Article 18 establishes the conditions under which the Montreal Convention
will govern liability for damaged cargo. Three of its four paragraphs are relevant
here. The first paragraph limits the Convention’s reach to damage that takes place
during carriage by air:
1. The carrier is liable for damage sustained in the event of the
destruction or loss of, or damage to, cargo upon condition only that
the event which caused the damage so sustained took place during
carriage by air.
Montreal Convention art. 18(1).
The third and fourth paragraphs then set forth when carriage by air occurs.
The third paragraph broadly defines “carriage by air” by creating a default rule that
any time when the cargo is in the carrier’s control qualifies as carriage by air:
3. The carriage by air within the meaning of paragraph 1 of this
Article comprises the period during which the cargo is in the charge of
the carrier.
Id. art. 18(3). Importantly, this paragraph neither restricts carriage by air to the
time when the cargo is actually aboard an airplane nor limits it geographically,
such as confining it to within an airport. We note that if the Convention was
intended to apply only when the damage occurred aboard an aircraft, this
paragraph would be wholly unnecessary.
The fourth paragraph of Article 18 refines the definition of carriage by air by
excluding certain periods when the cargo is control of the carrier. Initially, it
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carves out from the definition of carriage by air most non-air transportation
performed outside an airport:
4. The period of the carriage by air does not extend to any carriage
by land, by sea or by inland waterway performed outside an airport.
Id. art. 18(4). We will refer to this first sentence as “the exclusion.” Under the
exclusion, no period of a journey can qualify as both carriage by air and carriage
by land. Beyond drawing this distinction, Article 18 does not define “carriage by
land.”
After the exclusion, the fourth paragraph establishes two exceptions to the
exclusion. If the conditions of either exception are satisfied, the carriage is deemed
to have been carriage by air notwithstanding the exclusion. The first exception
applies when damage occurs at an unknown point during a journey consisting of
both air carriage and non-air carriage that falls within the exclusion. This
exception establishes a rebuttable presumption that the cargo was damaged during
carriage by air unless there is proof that the damage occurred during carriage by
land:
If, however, such carriage9 takes place in the performance of a
contract for carriage by air, for the purpose of loading, delivery or
transshipment, any damage is presumed, subject to proof to the
contrary, to have been the result of an event which took place during
the carriage by air.
9
This sentence immediately follows the exclusion. “Such carriage” therefore refers to
“carriage by land, by sea or by inland waterway performed outside an airport.” Montreal
Convention art. 18(4).
14
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Id. When it is proven that the damage did not occur during carriage by air, the
Convention will not apply. Id.; see Danner v. Int’l Freight Sys. of Wash., LLC, No.
ELH–09–3139, 2013 WL 78101, at *21 (D. Md. Jan. 4, 2013) (reading paragraph
four as “establish[ing] a rebuttable presumption”); see also Read-Rite Corp. v.
Burlington Air Express, Ltd., 186 F.3d 1190, 1194 n.2 (9th Cir. 1999) (same in the
Warsaw Convention context); 10 UPS Pty. Ltd. v Gountounas and Another (2001)
80 SASR 288, 292 (S. Ct. S. Austl.) (same). 11
The second exception to the exclusion applies when a carrier substitutes
carriage by another mode of transportation for carriage by air without the consent
of the customer (the “consignor”)12:
10
The Montreal Convention was modeled on and replaced the Warsaw Convention. To
the extent that the terms of Article 18 are similar to the terms of the Warsaw Convention, we
may look to the extensive body of Warsaw Convention case law as persuasive authority in
interpreting the Montreal Convention. See Narayanan v. British Airways, 747 F.3d 1125, 1127
n.2 (9th Cir. 2014); see also Campbell v. Air Jamaica Ltd., 760 F.3d 1165, 1176–77 (11th Cir.
2014) (looking to the Warsaw Convention’s drafting history for guidance in interpreting the
Montreal Convention).
11
Treatises on the Montreal Convention and on international transportation law are in
agreement that this sentence of Article 18(4) creates a rebuttable presumption that damage to
cargo occurred during carriage by air. See Montreal Convention ch. III, art. 18, para. 92 (Elmar
Giemulla & Ronald Schmid, eds., 2006) (explaining that the “presumption is rebuttable and does
not apply if proof exists that the damage was caused during surface transportation outside the
airport”).
12
The consignor is “[t]he person named in a bill as the person from whom goods have
been received for shipment.” Consignor, Black’s Law Dictionary (10th ed. 2014). In other
words, the consignor is the person who shipped the cargo. Here, the waybill specified that the
“Shipper” was “CYBORTRACK SOLUTION INC,” the company that sold TriQuint the silicon
coating machine. Air Waybill (Doc. 78-3).
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If a carrier, without the consent of the consignor, substitutes carriage
by another mode of transport for the whole or part of a carriage
intended by the agreement between the parties to be carriage by air,
such carriage by another mode of transport is deemed to be within the
period of carriage by air.
Id. We will refer to this as second exception as “the substitution exception.”
Article 18’s definition, exclusion, and exceptions can be represented by the
following decision tree: 13
13
Paragraph two in Article 18 enumerates four other exceptions that we do not include in
the decision tree because they are not relevant to this case. See Montreal Convention art. 18(2).
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Montreal Convention Article 18
To summarize, the Convention creates a default rule that when cargo is
damaged during a journey that involves both carriage by air and carriage by land,
the Convention’s limitations of liability will apply unless it is proven that the
damage to the cargo occurred during a period of carriage by land. And even if it is
shown that the damage occurred during carriage by land, the Convention will still
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govern if the carrier substituted land transport for air transport without the
customer’s consent.
1. We Assume for Purposes of Our Analysis That the Robotic Arm Was
Damaged in the “Charge of the Carrier.”
In analyzing whether the Montreal Convention governs liability, we assume
(but need not decide) that TriQuint’s machine was damaged while in the charge of
the carrier, Expeditors. As explained above, the Montreal Convention applies only
when cargo is damaged during “carriage by air,” Montreal Convention art. 18(1),
which is defined as “the period during which the cargo is in the charge of the
carrier.” Id. art. 18(3). The transporters argue on appeal that the cargo was in the
charge of Forward Air, not Expeditors, the carrier, when the cargo was damaged.
The district court determined, however, that Forward Air was an agent of
Expeditors acting pursuant to Expeditors’ contract of carriage. The transporters
challenge the district court’s agency finding, arguing that Forward Air was an
independent contractor. We doubt that the agent/independent contractor
distinction is a salient one under the Convention.14 But we need not resolve this
14
Numerous Warsaw Convention cases extended a carrier’s liability to independent
contractors acting in furtherance of the contract of carriage. See, e.g., McCaskey v. Cont’l
Airlines, Inc., 159 F. Supp. 2d 562, 580 (S.D. Tex. 2001) (extending Warsaw Convention’s
liability protections to independent contractor medical care provider contacted during in-flight
emergency because its services were “given in furtherance of the contract of carriage”); see also
Croucher v. Worldwide Flight Servs., Inc., 111 F. Supp. 2d 501, 505 (D.N.J. 2000) (collecting
cases). In doing so, these courts have looked to the Convention’s purpose. See, e.g., Reed v.
Wiser, 555 F.2d 1079, 1090 (2d Cir. 1977). In Reed, the Second Circuit extended the Warsaw
Convention’s liability protection to airline employees, describing the “desire to establish a
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issue because we conclude below that the Convention is inapplicable for other
reasons, even if the cargo was in Expeditors’s charge.
2. The Cargo Was Damaged During Carriage by Land.
Having assumed that the cargo was in the charge of the carrier, we next
consider whether the exclusion applies. Paragraph four of Article 18 excludes
from the definition of carriage by air all carriage by land, sea, or inland waterway
outside an airport. The district court found that TriQuint’s cargo was damaged
outside Miami International Airport, either in Forward Air’s Miami warehouse or
on Forward Air’s truck while traveling between Miami and Orlando.15 To
determine whether the exclusion applies, we must decide whether these periods
qualify as carriage by land.
We readily conclude that the cargo was in carriage by land when it was on
Forward Air’s truck traveling from Miami to Orlando—an intercity, multi-hour
journey over land. Although Article 18 does not define “carriage by land,” we
uniform body of world-wide liability rules to govern international aviation” as a fundamental
purpose of the Warsaw Convention. Reed explained that this purpose would be subverted if
plaintiffs could “circumvent the Convention’s limitation by bringing suit against the pilot or
some other employee of the airline involved .” Id. at 1092. By the same token, if the Montreal
Convention did not extend to independent contractors, then carriers could subvert its same goal
of uniformity by hiring such contractors in any situation where local laws would provide for less
generous recovery than the Convention. Cf. Archer v. Trans/Am. Servs., Ltd., 834 F.2d 1570,
1573 (11th Cir. 1988) (holding independent food and beverage contractor aboard cruise ship to
be agent because otherwise “the ship owner or operator could contract for its entire operation”
and thereby “escape all accountability for the ship’s condition and the conduct of those working
aboard”).
15
The parties do not challenge this finding on appeal.
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conclude that it unambiguously applies to such a journey. Indeed, if an intercity,
multi-hour journey over land does not qualify as carriage by land, the term
essentially would be meaningless.
The more difficult question is whether the cargo was in carriage by land
when it was stored at Forward Air’s Miami warehouse before the journey to
Orlando. We can discern from the text and structure of Article 18—with its broad
definition of carriage by air, its exclusion, and its exceptions—as well as from our
own experience, that a single contract for international transport may involve both
carriage by air and carriage by land. So the fact that the cargo later was in carriage
by land does not necessarily tell us that the cargo was in carriage by land when it
was stored in the warehouse. Lacking a definition of the term, the plain text of the
treaty does not tell us whether “carriage by land” includes the time when the cargo
is in storage before or after being loaded on the truck—that is, when the cargo is
not literally being carried over land. We therefore conclude that the treaty is
ambiguous with respect to this question.
To resolve this ambiguity, we begin by considering the parties’ arguments
about whether the period of storage qualifies as carriage by land or carriage by air.
Each party urges us to construe the Montreal Convention as establishing a bright
line rule governing the storage of cargo in a warehouse. The transporters urge us
to read carriage by air as ceasing at the airport’s boundary, meaning that any time
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the cargo is stored at a warehouse outside an airport’s border qualifies as carriage
by land. And Lloyds interprets carriage by land literally to refer only to the
movement of the cargo over land, meaning that any time when the cargo is stored
in a warehouse qualifies as carriage by air.
We are unpersuaded by the parties’ approaches. After considering the
negotiating history of the Convention, the conduct of the parties to the Convention,
and the weight of precedent in foreign and American courts, see Air France,
470 U.S. at 400, we conclude that to determine whether a period of storage in a
warehouse qualifies as carriage by land we must consider the specific facts and
circumstances of the storage to determine whether it was more closely related to
the cargo’s transportation by air or by truck. Here, the facts and circumstances of
Forward Air’s storage of the cargo in Miami reflect that the storage was incident to
the cargo’s transportation by truck. Thus, the robotic arm was damaged during
carriage by land, and the Convention does not apply.
a. We Reject the Transporters’ Approach, Which Ends Carriage
by Air at an Airport’s Boundary.
The simplest reading of the exclusion ends carriage by air at the airport’s
boundary. Under this interpretation, favored by the transporters, carriage by air is
restricted to when the cargo is on board an aircraft or being transported under the
contract of carriage within the confines of an airport. This essentially geographical
approach was the dominant interpretation of the analogous Article 18 in the
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Warsaw Convention, and several courts and commentators have continued to apply
it to the Montreal Convention. See Batteries “R” Us Co. v. Fega Express Corp.,
No. 15-21507-Civ, 2015 WL 4549497, at *2 (S.D. Fla. July 27, 2015) (concluding
that “the carriage by air period does not extend to ground transportation of cargo
that occurs off the airport premises”); Masudi v. Brady Cargo Servs., Inc., No. 12-
CV-2391, 2014 WL 4416502, at *5 (E.D.N.Y. Sept. 8, 2014) (“For purposes of
Article 18, the period of carriage by air does not extend to transport outside an
airport.”); Montreal Convention ch. III, art. 18, para. 86 (Elmar Giemulla &
Ronald Schmid, eds., 2006) (“Paragraph 4 sentence 1 provides that cargo ceases to
be transported during carriage by air and the period of liability ends once cargo is
taken beyond the airport perimeter by land, sea or inland waterway.”).
This interpretation suffers from two serious flaws, however. First, it ignores
the Montreal Convention’s drafting history. Article 18’s definition of carriage by
air—“the period during which the cargo is in charge of the carrier,” Montreal
Convention art. 18(3)—is different from the Warsaw Convention’s definition in
one important respect: the Montreal Convention omitted the Warsaw
Convention’s final phrase, “whether in an airport or on board an aircraft, or, in the
case of a landing outside an airport, in any place whatsoever.” Warsaw
Convention art. 18(2). Setting aside an out-of-airport landing, that phrase limited
the Warsaw Convention’s reach to cargo “in an airport or on board an aircraft.” Id.22
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By deleting the phrase, the drafters of the Montreal Convention evinced the intent
to expand carriage by air beyond the strict geographic boundaries of the airport.
The State Department Explanatory Note that accompanied the Montreal
Convention to the United States Senate for ratification explained that the
Convention’s drafters intentionally omitted this phrase “to make clear that the
Convention applies whenever and wherever the cargo is in the possession custody
or charge of the carrier, whether on or off airport premises.”16 See S. Treaty Doc.
No. 106-45 art. 18(3) (internal quotation marks omitted) (emphasis added).
Defining carriage by land in strictly geographical terms (on versus off airport
premises) thus requires us to ignore the Montreal Convention’s drafting history.
And we should not do so lightly. As the Senate Committee on Foreign Relations
report recommending the treaty for ratification noted, the drafters of the Montreal
Convention sought to retain as much of the existing language of the Warsaw
16
At least one American court has taken this State Department note literally and applied
the Montreal Convention “whenever and wherever” cargo was damaged while in the charge of a
carrier. See AIG Prop. & Cas., Co. v. Fed. Express Corp., No. 15-cv-6316, 2016 WL 305053, at
*6 (S.D.N.Y. Jan. 25, 2016) (“Unlike the prior language used in Article 18 of the Warsaw
Convention, the Montreal Convention does not limit the scope of coverage of paragraph 3 to the
period during which the carrier is in possession of the cargo at an airport or on board an
aircraft.”). But, as the transporters point out, this broad interpretation renders the exclusion
meaningless, violating the canon of construction that “[i]f possible, every word and every
provision is to be given effect . . . . None should needlessly be given an interpretation that causes
it to duplicate another provision or to have no consequence.” In re Appling, 848 F.3d 953, 959
(11th Cir. 2017) (internal quotation marks omitted). If the Convention applies “whenever and
wherever” cargo is in the charge of the carrier, then it must necessarily apply during “carriage by
land, by sea or by inland waterway . . . outside an airport” if such carriage occurs. Montreal
Convention art. 18(4). Because it effectively nullifies the exclusion, we reject this interpretation.
23
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Convention as possible so as to preserve the substantial body of existing precedent
and avoid uncertainty:
While the Montreal Convention provides essential improvements
upon the Warsaw Convention and its related protocols, efforts were
made in the negotiations and drafting to retain existing language and
substance of other provisions to preserve judicial precedent relating to
other aspects of the Warsaw Convention, in order to avoid
unnecessary litigation over issues already decided by the courts under
the Warsaw Convention and its related protocols.
S. Exec. Rpt. No. 108-8, at 3 (2003) (internal quotation marks omitted). Given the
importance the drafters placed on retaining language that did not need to be
changed, we must resist ignoring the revisions they felt it necessary to make.
The second problem with interpreting carriage by land in strictly
geographical terms is that it ignores the reality of modern air cargo transit. The
State Department Explanatory Note advised that courts applying Article 18 “are
expected to take into consideration the facts associated with modern methods of
cargo air transport.” S. Treaty Doc. No. 106-45 art. 18(4). Taking such facts into
account, the dissent to an American case interpreting the Warsaw Convention
explained why a focus on the airport’s boundary is misplaced.17 In Victoria Sales
17
On a related note, it may not be entirely clear where the boundaries of an airport lie.
Compare 49 U.S.C. § 40102 (“‘[A]irport’ means a landing area used regularly by aircraft for
receiving or discharging passengers or cargo.”) and Edwards v. F.A.A., 367 F.3d 764, 768 (8th
Cir. 2004) (“[T]he ALJ reasonably determined this heliport was an airport . . . . The plain
language of the aviation regulation does not require that the airport comply with any licensing
requirements. Rather, the language is straightforward and functional: if land is used for, or is
intended to be used for, the landing and taking off of aircraft, then that area of land is an
airport.”) with 14 C.F.R. 1.1 (“Airport means an area of land or water that is used or intended to
24
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Corp. v. Emery Freight, Inc., the Second Circuit, viewing the definition of carriage
by air as “draw[ing] the line at the airport’s border,” declined to apply the Warsaw
Convention to a loss that occurred at a carrier’s warehouse “near but nonetheless
outside the boundaries” of the airport. 917 F.2d 705, 707 (2d Cir. 1990). The
dissent argued that airports should be viewed as “functional rather than ‘metes and
bounds’ entities . . . . [b]ecause of the tremendous growth in air cargo
transportation and the virtual impossibility of crowding all the unloading and
delivery facilities of every carrier into the geographical confines of busy airports.”
Id. at 710 (Van Graafeiland, J., concurring in part and dissenting in part). We find
the dissent’s reasoning especially persuasive as applied to the Montreal
Convention, which lacks the restrictive “whether in an airport or on board an
aircraft” language of the Warsaw Convention. See 917 F.2d at 707. We believe
that interpreting Article 18 such that carriage by air always ceases at the airport’s
border ignores persuasive evidence of the Convention signatories’ intent.
b. We Reject Lloyds’s Approach, Which Limits Carriage by Land
to When the Cargo Is on a Truck.
A second interpretation, proposed by Lloyds, seems faithful to the text of the
Convention but cuts against the purposes animating it. Under this interpretation,
cargo is covered by the Montreal Convention off airport grounds whenever it is in
be used for the landing and takeoff of aircraft, and includes its buildings and facilities, if any.”
(emphasis added)).
25
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the “charge of the carrier,” except during movement over land or sea. Put
differently, Lloyds proposes that whenever cargo is in the charge of the carrier and
not on a truck, the Montreal Convention applies, but once the cargo is placed on a
truck, the Convention ceases to apply until the cargo is unloaded.
Lloyds points to two international cases that appear to have adopted this
interpretation. 18 In the first case, the Austrian Supreme Court considered an
insurer’s claim that its insured’s cargo was damaged by improper storage in
Philadelphia on the way from Austria to a customer in the United States. Oberster
Gerichtshof [OGH] [Supreme Court] Jan. 19, 2011, 7 Ob 147/10h, TranspR 2011,
264, 265 (Austria) [https://perma.cc/64R9-5X4Q]. The cargo was driven by truck
to Germany, flown from an airport there to Philadelphia, and then transported by
truck to a warehouse outside the Philadelphia airport where it was to clear customs
before being delivered to the recipient. Id. The cargo suffered damage while in
that warehouse. Id. Reversing a lower court decision, the Austrian Supreme Court
determined that the Montreal Convention applied to the stored cargo “even if it is
situated outside the airport” because such storage was still part of carriage by air
“when the air carrier was ‘in charge’ of the transported goods” under paragraph
three of Article 18. Id. at 267. The court conceded, however, that in light of the
exclusion for carriage by land, its own interpretation of Article 18 “leads to a
18
Lloyds provided certified translations of these two cases. The transporters challenge
Lloyds’ interpretation of these cases but not the accuracy of the translations.
26
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contradiction” because “it seems meaningless to subject transport to the
warehouses of the air freight carrier which are outside the airport to a different
liability regulation than the storage [in the warehouse] governed by the” Montreal
Convention. Id. at 268.
In the second case, a transporter flew cargo from Germany to Miami,
Florida. When the cargo arrived in Miami, it was stored in a warehouse near the
airport before being delivered by land to its final destination in Miami. The cargo
was lost either during storage in the Miami warehouse or while on the truck for
delivery. A German court held that the Montreal Convention applied because the
cargo remained in the charge of the carrier. See Bundesgerichtshof [BGH]
[Federal Court of Justice] Feb. 24, 2011, I ZR 91/10, TranspR 2011, 436, 436
(Ger.) [https://perma.cc/8WNB-JB99].
To reach its conclusion, the German court considered whether the periods
when the cargo was being stored in the warehouse and loaded on the truck
qualified as carriage by air or carriage by land and then applied the rebuttable
presumption. The court determined that the period when the cargo was stored in
the warehouse qualified as carriage by air because the cargo remained in the
custody or control of the air carrier. Id. at 438. But the court failed to consider
whether the exclusion applied, that is, whether the period of storage nonetheless
qualified as carriage by land. It appears the court implicitly assumed that because
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the cargo was not on a truck, the period of storage could not be carriage by land.
Next, the court considered the period when the cargo was on the truck, easily
concluding that this period qualified as carriage by land. Id. at 438-39. The court
then applied the rebuttable presumption: because the transportation involved both
carriage by land and carriage by air, the court presumed that the damage occurred
during carriage by air. Id. at 439. Finally, the German court concluded that the
presumption was not overcome under the facts of the case. The evidence showed
that the cargo was either damaged at the warehouse—that is, in carriage by air—or
on the truck— in carriage by land. Because the injured party failed to prove that
the cargo was damaged in carriage by land, the court held, the presumption was not
overcome.
We are no more persuaded by Lloyds’s interpretation (and that of the
German and Austrian courts) limiting the period of carriage by land to the cargo’s
travel on a truck than we are by the transporters’ interpretation limiting carriage by
air to the time when the cargo is on an airport’s premises. Based on our earlier
observation that the Montreal Convention’s drafters accepted that the period of
carriage by air includes more than actual transport on an airplane, it seems likely
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that the period of carriage by land similarly may extend beyond when the cargo is
actually onboard a truck. 19
Indeed, strictly limiting carriage by land to the period when cargo is actually
aboard a truck seems inconsistent with the realities of modern cargo transport,
which may require that cargo be stored in a warehouse as part and parcel of transit
over land. It is not hard to imagine that if a lengthy journey by truck is needed to
transport the cargo to its final destination, a trucking company may need to drive
the cargo part of the way, store it in a warehouse, and load it onto another truck to
be taken to another city for its final destination. We see no good reason why
storage between two legs of such a journey by truck should be treated as carriage
by air. Lloyds’s interpretation seems to fly in the face of the Montreal
Convention’s preamble recognizing “the need to modernize and consolidate the
Warsaw Convention” to reflect the realities of modern cargo air transport. See
Montreal Convention pmbl. Honoring this purpose, we decline to adopt a view of
the interplay of paragraphs three and four of Article 18 that one commentator—
19
We acknowledge that we must give “considerable weight” to the opinions of courts of
other signatories interpreting Article 18, El Al Israel Airlines, Ltd. v. Tsui Yuan Tseng, 525 U.S.
155, 176 (1999) (internal quotation marks omitted). But after careful consideration, we are
unpersuaded by the decisions of the German and Austrian courts because after concluding that
the cargo was in the charge of the carrier, these courts failed to consider whether the exclusion
applied and the period of warehouse storage qualified as carriage by land. We do not agree with
the premise underlying these decisions, that carriage by land is limited to periods when cargo is
loaded on a truck.
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focusing on the same contradiction highlighted by the Austrian court—has dubbed
“a commercial paradox.”20
c. We Conclude That Carriage by Land May Include Periods of
Storage and That the Storage at Forward Air’s Miami
Warehouse Qualifies as Carriage by Land.
As we explained above, given the realities of modern air transport of cargo,
when a shipment of cargo involves transportation both by air and by truck, it is
likely that the cargo will need to be stored after being unloaded from the airplane
but before being loaded onto the truck. Whether that period of storage constitutes
carriage by air or carriage by land will depend on the facts of each case. Adopting
a bright line test like the parties urge us to do would be inconsistent with the intent
and purpose of the Convention.
We hold today that the cargo at issue, which was flown internationally on an
airplane, offloaded from the airplane, transported to a carrier’s off-airport
warehouse, delivered to a trucking company, and stored by the trucking company
in a separate warehouse before being loaded onto a truck for a multi-hour journey
to its final destination, was in carriage by land when it was stored at the trucking
company’s warehouse. These facts establish that the warehouse storage at issue
occurred as part and parcel of the last step of the cargo’s journey, which was
plainly carriage by land.
20
See 1 Shawcross & Beaumont, Air Law (LexisNexis Butterworths) No. 150, at para.
973 (Sept. 26, 2016).
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This conclusion is consistent with Article 18’s drafting history. After all, by
deleting language restricting carriage by air to on-airport premises, the drafters of
the Convention recognized that carriage by air could include periods when the
cargo was off an airport’s premises. See S. Treaty Doc. No. 106-45 art. 18(3).
And the rebuttable presumption indicates that although the drafters recognized that
the periods when cargo was off airport premises could qualify as carriage by air,
such periods were not necessarily carriage by air. Montreal Convention art. 18(4).
And by considering the practical characteristics of each stage of the cargo’s
journey, including the time when it was in storage, we give effect to the drafters’
intent that the Convention be interpreted in light of the realities of modern air
transport. See S. Treaty No. 106-45 art 18(4). Accordingly, the Montreal
Convention’s exclusion applies because the periods when the cargo was at Forward
Air’s warehouse and on the journey from Miami to Orlando qualify as “carriage by
land.”
3. The Presumption that the Damage Occurred During Carriage by Air Is
Rebutted Based on the District Court’s Factual Findings about When
the Damage Occurred.
Because the cargo here moved in both carriage by air and carriage by land in
the performance of a contract for air transport, we must decide whether the
presumption applies. The Convention instructs that we must presume that the
damage occurred during carriage by air unless it was proven that the damaged
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occurred during carriage by land. See Montreal Convention art. 18(4) (“If,
however, such carriage takes place in the performance of a contract for carriage by
air. . . any damage is presumed, subject to proof to the contrary, to have been the
result of an event which took place during the carriage by air.”). The district court
determined that because the transporters failed to prove that the damage occurred
during carriage by land, it must presume that the damage occurring during carriage
by air, meaning the Montreal Convention governed the transporters’ liability for
damages.
We disagree with the district court’s analysis. Under the district court’s
findings of fact, the cargo was damaged in either in Forward Air’s Miami
warehouse or on its truck while traveling between Miami and Orlando, both of
which we have determined qualify as carriage by land. To review, Expeditors
hired Forward Air to move the cargo by truck from Miami to Orlando. Forward
Air took custody of the cargo at Expeditors’ warehouse near Miami International
Airport and transported it to Forward Air’s Miami warehouse. The cargo was
undamaged when it arrived at Forward Air’s warehouse. Forward Air then
transported the cargo by truck between its facilities in Miami and Orlando. The
cargo had been damaged by the time it arrived in Orlando. The district court’s
finding that the cargo was damaged in Forward Air’s custody—either in Miami or
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during the journey to Orlando—rebutted the presumption that the damage occurred
during carriage by air.
Because the transporters proved that the cargo was damaged during carriage
by land, the presumption does not dictate the outcome of this case. To be sure, the
court did not pinpoint the precise location where the cargo was damaged. But it
limited the occurrence of that damage to two possible locations: Forward Air’s
Miami warehouse or Forward Air’s truck traveling between Miami and Orlando.
The district court’s unchallenged findings established “proof to the contrary” that
the machine was damaged during carriage by air as that term is defined in Article
18.
Lloyds does not dispute that paragraph four creates a presumption that
damage occurred during carriage by air absent proof to the contrary, but it argues
that the district court found no such proof in this case. The insurer contends that
the district court’s analysis of where the damage occurred demonstrates that the
court lacked proof sufficient to rebut the presumption. The court acknowledged
that it lacked “direct evidence of how exactly the damage occurred,” but it
nevertheless determined that “the logical conclusion, based on the circumstantial
evidence, is that the damage occurred while in the custody of Forward Air in
Miami or in transit to Forward Air’s Orlando facility.” Am. Final J. 6 (Doc. 143).
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Lloyds suggests that a party must offer direct evidence of precisely where
damage to cargo occurred to rebut the presumption. But this argument finds no
support in the text of the Convention, which merely requires “proof to the
contrary” that damage “was the result of an event that took place during the
carriage by air.” Montreal Convention art. 18(4). That is, the Convention does not
require proof of precisely where the damage occurred but rather proof that the
damage did not occur during carriage by air. Moreover, a requirement of “proof”
generally does not demand that the evidence be direct rather than circumstantial.
See, e.g., A.I.G. Uruguay Compania de Seguros, S.A. v. AAA Cooper Transp., 334
F.3d 997, 1005 n.2 (11th Cir. 2003) (hypothesizing in a shipping case that this
Court would “accept[] circumstantial evidence for the requisite proof” of cargo
damage even under the heightened standard applied in sealed container cases); Sun
Underwriters Ins. Co. of N.Y. v. Loyola Univ., 196 F.2d 169, 170 (5th Cir. 1952)
(allowing proof that damages fell within an insurance contract’s coverage “by
direct and circumstantial evidence”). 21
Here, the transporters proved that the damage occurred during carriage by
land. We thus conclude that the presumption is rebutted.
21
See Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc)
(adopting as binding precedent all decisions of the former Fifth Circuit handed down prior to the
close of business on September 30, 1981).
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4. The Substitution Exception Does Not Apply Because the Consignor
Consented to an Alternative Mode of Transportation.
The district court did not consider the substitution exception, though in
denying a post-trial motion filed by the transporters, the court reached a conclusion
that arguably supports the application of the exception. 22 On appeal, Lloyds urges
us to rely on the substitution exception as an alternative basis for upholding the
district court’s ruling that the Montreal Convention applies. We decline to do so
because under the waybill the substitute carriage was consensual.
As we explained above, the substitution exception, contained in the third
sentence of paragraph 4, extends the Montreal Convention’s coverage to carriage
by land substituted for carriage by air without the consent of the sender. See
Montreal Convention art. 18(4). Put differently, damage occurring during non-
consensual substitute carriage will be deemed to have occurred during carriage by
22
The district court explained:
It is undisputed that the parties contracted, pursuant to the Air Waybill, for
airport-to-airport trans-shipment of the machine from South Korea to Orlando,
Florida. In fact, the air waybill lists “Air Waybill” under the heading “Non
Negotiable.” Even though the Air Waybill also provides that “ALL GOODS
MAY BE CARRIED BY ANY OTHER MEANS INCLUDING ROAD OR
OTHER CARRIER UNLESS SPECIFIC CONTRARY INSTRUCTIONS ARE
GIVEN HEREON BY SHIPPER . . .,” the Defendants have not established that
they could unilaterally, and without notice to the shipper, modify the contracted
airport-to-airport method of shipment.
Order at 1 (citations omitted) (Doc. 151).
35
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air, bringing it within the scope of the Montreal Convention.23 The key to
determining whether the substitution exception applies when cargo was transported
by both air and non-air carriage is consent. Specifically, did the consignor consent
to substitute carriage?
To answer this question, we turn to the waybill and interpret it like any other
contract.24 Under general principles of contract interpretation,25 “[t]he plain
meaning of a contract’s language governs its interpretation.” In re FFS Data, Inc.,
776 F.3d 1299, 1305 (11th Cir. 2015) (internal quotation marks omitted). “[A]
document should be read to give effect to all its provisions and to render them
consistent with each other.” Id. (internal quotation marks omitted) (citing
Restatement (Second) of Contracts § 203(a) (Am. Law. Inst. 1981)).
23
See Montreal Convention ch. III, art. 18, para. 114 (Elmar Giemulla & Ronald Schmid,
eds., 2006) (“The substitution of carriage by air by surface transportation constitutes a breach of
contract if the consignor has not consented to its substitution . . . .”).
24
Because the district court concluded that the Montreal Convention controlled, it did not
interpret the waybill. But because the waybill unambiguously permitted the transporters to
substitute carriage, we may interpret it in the first instance. See Feaz v. Wells Fargo Bank, N.A.,
745 F.3d 1098, 1104 (11th Cir. 2014).
25
The parties agree that federal common law governs our interpretation of the waybill.
Given this agreement, we assume without deciding that federal common law governs. See
Garwood v. Int’l Paper Co., 666 F.2d 217 (5th Cir. Unit B 1982). Federal common law directs
us to look to “general common law on contracts.” Belize Telecom, Ltd. v. Gov’t of Belize, 528
F.3d 1298, 1307 n.11 (11th Cir. 2008).
In Stein v. Reynolds Securities, Inc., we adopted as binding precedent all post-September
30, 1981 decisions of Unit B of the former Fifth Circuit. 667 F.2d 33, 34 (11th Cir. 1982).
36
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Here, the plain language of the waybill unambiguously established that the
consignor (here, termed the “shipper”) consented to substitute carriage. The front
of the waybill included the following language:
ALL GOODS MAY BE CARRIED BY ANY OTHER MEANS
INCLUDING ROAD OR ANY OTHER CARRIER UNLESS
SPECIFIC CONTRARY INSTRUCTIONS ARE GIVEN HEREON
BY THE SHIPPER . . . .
Air Waybill (Doc. 78-3). “ANY OTHER MEANS INCLUDING ROAD”
expressly allowed Expeditors to substitute carriage by truck. Any other
interpretation would render this term meaningless.26
In its order denying the transporters’ post-trial motion, the district court
suggested that substituting carriage by truck for the journey’s final leg amounted to
a unilateral modification of the airport-to-airport waybill done without notice to the
shipper. We disagree because in the waybill Expeditors expressly reserved the
right to substitute carriage by other means. Because the shipper consented to
substitute carriage in the waybill, and there was no evidence of “contrary
instructions,” Air Waybill (Doc. 78-3), the substitution exception does not affect
our conclusion that the Montreal Convention does not apply.
***
26
Lloyds offers the strained argument that to comply with this term of the waybill,
Expeditors would have had to notify the shipper of its intent to substitute carriage by truck, at
which time the shipper could have given the “specific contrary instructions” contemplated by the
term. But the waybill contains no notice requirement and, to the contrary, puts the onus on the
shipper, reserving to Expeditors the right to substitute carriage unless the shipper gave contrary
instructions.
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In summary, we conclude that the Montreal Convention does not govern.
We assume the cargo was damaged in the charge of the carrier. Although the
journey involved both carriage by air and carriage by land, the presumption that
the damage occurred during carriage by air is overcome because the district court’s
unchallenged findings of fact establish the cargo was in carriage by land when
damaged. Because the damage occurred during carriage by land and the
substitution exception does not apply, the Montreal Convention’s cap on liability
does not apply either.
B. The Waybill’s Damages Provision Is Ambiguous as to How to Calculate
Liability.
Because the Montreal Convention does not apply, the waybill governs the
calculation of damages in this case. The waybill limits damages to 19 SDRs
multiplied by the weight (in kilograms) of the damaged shipment:
4. Except as otherwise provided in Expeditors’ tariffs or
conditions of carriage, in carriage to which the Montreal Convention
does not apply Expeditors’ liability limitations for cargo lost,
damaged or delayed shall be 19 SDRs per kilogram . . . .
Air Waybill (Doc. 78-3). The waybill specifies that the weight used to calculate
damages is the weight that was used to determine shipping charges:
6. In any case of loss of, damage to, or delay to a shipment, the
weight to be used in determining Expeditors’ limit of liability shall be
the weight that is used to determine the charge for carriage of such
shipment.
38
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Id. The waybill then describes what happens if only “part of the cargo” was
damaged:
In any case of loss of, damage to, or delay to part of the cargo, the
weight to be taken into account in determining Expeditors’ limit of
liability shall be only the weight of the package or packages
concerned.
Id. The scope of the transporters’ liability under the waybill turns on whether
“package or packages concerned” refers only to packages actually lost, damaged,
or delayed or includes packages that diminished in value due to the loss, damage,
or delay of related packages.
Lloyds argues that the weight of all the packages should be used to calculate
damages because the district court found that the entire machine was useless
without the damaged robotic arm. 27 Lloyds contends that the damage to the arm
unambiguously “concerned” the contents of all ten packages. The transporters
argue that the weight of only the damaged packages should be used because the
term “package or packages concerned” unambiguously refers only to the package
that was actually lost, damaged, or delayed.
We conclude that the phrase “package or packages concerned” is ambiguous
because it “is susceptible to two or more reasonable interpretations that can fairly
be made.” Dahl-Eimers v. Mut. of Omaha Life Ins. Co., 986 F.2d 1379, 1381 (11th
27
The district court found that the damage to the robotic arm affected the functionality
and value of the pieces contained in the other nine crates because the other pieces of the machine
could only be used in conjunction with the arm. The transporters do not challenge this finding.
39
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Cir. 1993). The core phrase in the waybill’s liability provision caps the
transporters’ liability based upon the weight of cargo “concerned,” so the issue
necessarily turns on the definition of “concern.” One dictionary defines the term
“concern” as follows: “To have to do with or relate to.” Concern, American
Heritage College Dictionary 296 (4th ed. 2002). With this broad definition,
“concerned” reasonably could have the meaning Lloyds ascribes it. We recognize,
of course, that the packages actually lost, damaged, or delayed relate to the act of
losing, damaging, or delaying the cargo. But, packages that diminish in value due
to the loss, damage, or delay of related packages can also be said to relate to the
carrier’s act that led to the claim. Thus, the term “concern” does not, on its face,
foreclose calculating the transporters’ liability based upon the weight of any (or
all) packages that diminished in value due to the damage.
The waybill’s liability limitation is borrowed from the Warsaw and Montreal
Conventions, and the history of the Warsaw Convention highlights the ambiguity
of the phrase “package or packages concerned.” 28 Indeed, when the 1955 Hague
Protocol amended the Warsaw Convention to add the “affected weight standard”
sentence (a sentence which was omitted from Expeditors’ waybill), the
28
We recognize that treaty interpretation is distinct from contract interpretation. We are
not saying that the fact that language in a treaty is ambiguous necessarily means that the same
language in a contract is ambiguous. But we nevertheless conclude in this specific circumstance
that the fact that identical language in the Warsaw Convention was viewed as ambiguous
supports our conclusion that the waybill’s identical liability limitation is ambiguous.
40
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International Air Traffic Association explained that it “had reached the conclusion
that there was ambiguity in the present Convention as to problems of settlement for
partial loss.” Motorola, Inc. v. Fed. Express Corp., 308 F.3d 995, 999-1000 (9th
Cir. 2002) (citing International Conference on Private Air Law: Vol. I, Minutes of
Twentieth Meeting, Sept. 19, 1995 at p. 252). To illustrate the ambiguity, at least
one delegation to the 1955 Hague Convention interpreted the Warsaw
Convention’s original liability limitation—which referred to the “package or
packages concerned”—to allow a shipper to recover based on the total weight of
the shipment when a carrier lost “one of a number of articles being carried.” Id. at
1000 (internal quotation marks omitted). For these reasons, we conclude that the
waybill’s limitation of damages to the weight of the “package or packages
concerned” may be interpreted in two ways: (1) as limiting the carrier’s liability to
the weight of packages that were actually damaged, or (2) to the weight of
packages that were significantly diminished in value.
We acknowledge that the Ninth Circuit analyzed an identical waybill
provision in Read-Rite Corp. v. Burlington Air Express, Ltd., 186 F.3d 1190 (9th
Cir 1999), and held that it was unambiguous. The Ninth Circuit offered only this
brief analysis of the phrase at issue: “By referring to the ‘package or packages
concerned,’ the [carrier’s] contract clearly contemplates that shipments may
consist of multiple packages, and that only the damaged individual packages are
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the measure of damages.” Id. at 1199. We agree that the liability limitation
contemplates the commercial reality that shipments often are placed in multiple
packages. But we disagree that the waybill’s liability limitation provides a clear
answer to the problem presented here. We are unpersuaded by the Ninth Circuit’s
analysis, which failed to explain why under the waybill “only the [actually]
damaged individual packages are the measure of damages.” Id.Given the ambiguity in the waybill, under federal common law, extrinsic
evidence, such as industry custom or usage, may be examined to help shed light on
its meaning. See United States ex rel. E. Gulf, Inc. v. Metzger Towing, Inc.,
910 F.2d 775, 779 (11th Cir. 1990). And because the meaning of a contractual
provision in light of extrinsic evidence presents a question of fact, rather than one
of law, we remand for the district court to address this issue in the first instance.
See In Re Stratford of Tex., Inc., 635 F.2d 365, 368 (5th Cir. 1981). Although we
acknowledge that we may “in our discretion resolve questions not addressed by the
district court,” Clark v. Coats & Clark, Inc., 929 F.2d 604, 609 (11th Cir. 1991),
we conclude that it would be inappropriate for us to exercise such discretion here
because of the need for the taking of evidence and fact finding.29
29
Lloyds argues that if the waybill is ambiguous, we must construe it against the
transporters because Expeditors drafted the agreement. But we apply the rule of construction
that an ambiguous contract provision should be construed against the drafter only after applying
other rules of construction and considering extrinsic evidence, including about industry custom
and practice. See Royal Ins. Co. of Am. v. Orient Overseas Container Line Ltd., 525 F.3d 409,
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IV. CONCLUSION
In interpreting the Montreal Convention, we sympathize with the late Justice
Scalia’s remarks about the Warsaw Convention: “How many smart people from
how many countries came up with this— with this formulation? You think they
. . . could have said it more clearly.” Tr. of Oral Argument at 21, El Al Israel
Airlines, Ltd. v. Tseng, 525 U.S. 155 (1999) (No. 97-475), 1998 WL 801059, at
*21 (Scalia, J.) (referring to Articles 17 and 24 of the Warsaw Convention). The
provisions of the Montreal Convention we interpret in this opinion are as abstruse
as they are important. We conclude that the Convention assuredly does not apply,
meaning the waybill sets the limitation of the transporters’ liability. Because the
waybill’s limitation of liability provision is ambiguous as to whether the weight of
only the packages actually lost, damaged, or delayed may be considered or whether
the weight of packages that are diminished in value due to the loss, damage, or
delay of related packages also may be considered, we remand to the district court
for further fact finding and interpretation of this provision.
VACATED AND REMANDED.
423-24 (6th Cir. 2008) (explaining how this rule should be applied under federal common law
when construing bill of lading agreement governing ocean carrier’s shipment of cargo);
Restatement (Second) of Contracts § 206 cmt. a (explaining that contract should be construed
against drafter only “so long as other factors are not decisive”). Thus, we cannot agree with
Lloyds that we must construe the waybill against the transporters before the district court
considers extrinsic evidence. We leave the application of this rule of construction to the sound
discretion of the district court.
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JORDAN, Circuit Judge, concurring in part and concurring in the judgment.
I am thankful for Judge Pryor’s thoughtful and insightful analysis, and
concur in Parts I, II, and III.B of the majority opinion. As to Part III.A, I concur
only in the judgment because my approach with respect to the applicability of the
Montreal Convention is a bit different (and, some might say, a bit too simplistic).
As the court correctly notes, Article 18(3) of the Montreal Convention
(“carriage by air . . . comprises the period during which the cargo is in charge of
the carrier”) extends “carriage by air” beyond the time in which cargo is actually
on board an airplane. The question for us is how far beyond actual air
transportation the term “carriage by air” extends given the exclusion in Article
18(4) (“[t]he period of the carriage by air does not extend to any carriage by land,
by sea or by inland waterway performed outside an airport”) and the first exception
to that exclusion, the bedeviling rebuttable presumption (“[i]f, however, such
carriage takes place in the performance of a contract for carriage by air, for the
purpose of loading, delivery, or transshipment, any damage is presumed, subject to
proof to the contrary, to have been the result of an event which took place during
the carriage by air”). Article 18(4), in my view, is not a model of clear
draftsmanship. What the exclusion attempts to take away the exception tries to
give back.
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The district court found that the damage to the cargo took place outside
Miami International Airport either in Forward Air’s Miami warehouse or on
Forward Air’s truck en route from that warehouse to Orlando. Because no one
challenges this finding on appeal, I think it makes sense to first apply that finding
to each of the relevant provisions of the Montreal Convention, rather than
beginning with treaty interpretation in the abstract.
Starting with Article 18(3), the damage occurred while the cargo was in the
custody of the carrier—Expeditors Korea—or its agent, Forward Air. So, insofar
as Article 18(3) is concerned, it is possible that the damage occurred during
“carriage by air,” and that the Montreal Convention applies. At this step, Lloyds
is looking pretty good.
But the exclusion in Article 18(4), which narrows the broad definition of
“carriage by air” set out in Article 18(3), indicates that the Montreal Convention
does not apply. The damage took place while or after the cargo was driven by
truck from locations outside Miami International Airport, and the exclusion states
that “carriage by air does not extend to any carriage by land . . . performed outside
an airport.” I do not believe that the term “carriage by land” is ambiguous as
applied in this case given the district court’s factual findings. So now Expeditors
and Forward Air seem to be in the driver’s seat.
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That leaves the first exception in Article 18(4). Some of the language in this
exception seems to favor Lloyds (“[i]f . . . such carriage takes place in the
performance of a contract for carriage by air, for the purpose of loading, delivery
or transhipment, any damage is presumed . . . to have been the result of an event
which took place during the carriage by air”). But this language is qualified by the
“subject to proof to the contrary” clause, and it seems to me that the district court’s
factual finding—that the damage occurred after or during transportation by truck to
locations well outside the airport—sufficiently rebuts any claim that the damage
took place during “carriage by air.”
To recap, the term “carriage by air,” despite the broad definition in Article
18(3), is limited by Article 18(4), and cannot extend indefinitely to any and all land
transportation of cargo outside of an airport following a flight. Here the cargo was
driven by two different trucks to two different warehouses, both outside Miami
International Airport, before being taken by another truck to Orlando. Because the
district court found that the damage occurred at the second warehouse or en route
to Orlando, there is “adequate proof” that the damage occurred during “carriage by
land.” That means the presumption in the first exception of Article 18(4) has been
adequately rebutted and that the exclusion applies. See Marian Hoeks, Multimodal
Transport Law: The Law Applicable to the Multimodal Contract for the Carriage
of Goods 240 (2010) (“if it is proven that the damage occurred elsewhere, the
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presumption [in Article 18(4)] does not come into effect”); Montreal Convention
ch. III, art. 18, para. 92 (Elmar Giemulla & Ronald Schmid, eds., 2006) (“The
presumption is rebuttable and does not apply if proof exists that the damage was
caused during surface transportation outside the airport.”). I therefore agree with
the court that, on this record, the Montreal Convention does not govern the issue of
damages.
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