Underwriters at Lloyds Subscribing to Cover Note B0753PC1308275000 v. Expeditors Korea Ltd.

882 F.3d 1033
CourtCourt of Appeals for the Eleventh Circuit
DecidedFebruary 16, 2018
Docket16-10985
StatusPublished
Cited by17 cases

This text of 882 F.3d 1033 (Underwriters at Lloyds Subscribing to Cover Note B0753PC1308275000 v. Expeditors Korea Ltd.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Underwriters at Lloyds Subscribing to Cover Note B0753PC1308275000 v. Expeditors Korea Ltd., 882 F.3d 1033 (11th Cir. 2018).

Opinion

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 *1036 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 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 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 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 *1037 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 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.

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Bluebook (online)
882 F.3d 1033, Counsel Stack Legal Research, https://law.counselstack.com/opinion/underwriters-at-lloyds-subscribing-to-cover-note-b0753pc1308275000-v-ca11-2018.