Brink's Ltd. v. South African Airways

• Court: U.S. Court of Appeals — Second Circuit
• Writing for the Court: MESKILL
• Citation: Brink's Ltd. v. South African Airways, 93 F.3d 1022 (2nd Cir. 1996)
• Decision Date: 08 August 1996
• Docket Number: No. 1172,D,1172
• Parties: BRINK'S LIMITED, Plaintiff-Appellant, v. SOUTH AFRICAN AIRWAYS, Defendant-Appellee. ocket 95-7872.

Page 1022

93 F.3d 1022

BRINK'S LIMITED, Plaintiff-Appellant, v. SOUTH AFRICAN AIRWAYS, Defendant-Appellee.

No. 1172, Docket 95-7872.

United States Court of Appeals Second Circuit.

Argued May 15, 1996.

Decided Aug. 8, 1996.

Craig S. English, New York City (Thomas C. Murphy, Kennedy Lillis Schmidt & English,

New York City, of counsel), for Appellant.

Michael I. Verde, New York City (Franklin F. Bass, Kathleen E. Schaaf, Rosenman & Colin, New York City, of counsel), for Appellee.

Stephen J. Fearon, Michael J. Holland, Katherine B. Posner, Robert J. Saville, Condon & Forsyth, New York City, for Amicus Curiae Qantas Airways Limited and Finnair OY.

Before: LUMBARD, MESKILL and MINER, Circuit Judges.

MESKILL, Circuit Judge:

Plaintiff-appellant Brink's Limited (Brink's) appeals from a decision of the United States District Court for the Southern District of New York, Baer, J., granting defendant-appellee South African Airways' motion for partial summary judgment and entering judgment against South African Airways (SAA) in the amount of $1,522. We conclude that the district court erred in applying New York law under Article 25 of the Convention for Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000, T.S. 876 (1934), reprinted in note following 49 U.S.C.A. § 1502 (the "Warsaw Convention" or the "Convention"). We also conclude that the district court erred in its application of Articles 8 and 9 of the Warsaw Convention, but nevertheless reached the proper conclusion as to liability under those articles. Therefore, the judgment of the district court is affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion.

BACKGROUND

Extensive discovery produced the following background information. Defendant-appellee SAA is a division of Transnet Limited, which is wholly owned by the government of the Republic of South Africa. Rustenberg Platinum Mines Limited (Rustenberg) contracted for SAA to transport certain precious metals by air from Johannesburg to New York under an air waybill ¹ dated September 10, 1992. Rustenberg also contracted for plaintiff-appellant Brink's to provide security for the shipment and to indemnify Rustenberg for any losses. As consignee under the SAA-Rustenberg air waybill, Brink's commenced this action against SAA, contending that six boxes of the shipment were stolen while in the custody of SAA. ²

On September 10, 1992, Rustenberg loaded an armored car with the shipment of precious metals bound for New York, London and another refinery within South Africa. At approximately 1:10 p.m., the armored car arrived at the high value cargo vault located within the SAA cargo facility at Jan Smuts Airport in Johannesburg. There, an SAA employee unloaded the shipment under the watch of the armored car driver and the South African Police (SAP), which acted as security for SAA.

Thirty-four boxes were counted by the courier for the shipment (General Malan), the SAP officer assigned to the vault (Sergeant Engelbrecht), the vault foreman, another SAP officer and an employee of the freight forwarding company. Thereafter, the boxes were marked with air waybill labels and placed in an all-metal container, designated AVE 1617, bound for New York.

After padlocks were affixed to the container, Sergeant Engelbrecht, who had previously complained to SAA regarding poor locking mechanisms on the containers used for high value shipments, noticed that despite the padlock, the door to AVE 1617 still could be opened. He informed General Malan of the problem and requested the vault foreman to provide a container that could be locked. The vault foreman advised him that no other containers were available. Thereafter, SAP and SAA personnel closed and locked the high value cargo vault.

At approximately 6:15 that evening, SAA personnel opened the vault, removed container AVE 1617, loaded it on a dolly and transported it from the cargo facility to SAA Flight 201, destined for New York. An armed SAP escort, including General Malan, accompanied the container. After arrival at the aircraft, General Malan, allegedly in contravention of SAA procedures, returned to the passenger lounge. After General Malan's departure, only one security officer, Constable Ramoroka, remained planeside to guard the shipment.

Constable Ramoroka had been guarding a gate at the airport when he was directed to act as the armed guard at the aircraft. He had never guarded a high value shipment on the ramp or at planeside, and was not at all familiar with the contents or appearance of this shipment.

SAA cargo loaders Jose Rheeder and Richard Capkey loaded the shipment on board. Except for a two-to-three minute interval, SAA loadmaster Scholtz Potgeiter supervised the loading process. After container AVE 1617 was loaded into the hold, Constable Ramoroka positioned himself under the wing of the aircraft where he allegedly could not see the stowage location of the container. It took 20 to 60 minutes to load the remaining cargo into the hold. Then container AVE 1617 was "buried" in the hold.

The aircraft departed Jan Smuts Airport at 8:08 p.m. It stopped for a regularly scheduled refueling at Ilha Do Sal in the Cape Verde Islands. ³ Although cargo was removed from the front holds in Ilha Do Sal, no cargo was removed from the hold containing AVE 1617. Except for a two-to-three minute period, General Malan continuously observed the hatch to that hold and verified that it was not opened.

The aircraft arrived at John F. Kennedy International Airport at approximately 6:30 the following morning. SAA security personnel met the aircraft, obtained the padlock keys from General Malan, and proceeded rampside, where the hold containing AVE 1617 had been opened but not off-loaded. The SAA personnel observed the off-loading of AVE 1617 and confirmed that the locks and seals were intact. Both the SAA personnel and Port Authority police escorted the container to a cargo facility, where Brink's personnel opened the container and immediately determined that six boxes of the precious metals, worth $1,789,012.67, were missing from the shipment.

The Port Authority police, SAA and the Gold and Diamond Branch of the SAP have investigated the disappearance of the five boxes. Despite an apparently thorough investigation, there have been no arrests or convictions and the boxes have not been recovered. Although SAP bulletins posted an award to refiners handling similar materials, no sale or attempted sale was ever reported. Under its agreement with Rustenberg, Brink's indemnified Rustenberg for the entire loss.

In the proceedings below, Brink's sought to impose liability for the entire loss on SAA. SAA admitted only limited liability, and moved for partial summary judgment to the extent that Brink's sought damages above the liability limitation imposed by Article 22(2) of the Warsaw Convention. The district court granted partial summary judgment to SAA and entered a final judgment against SAA for $1,522, the limited liability amount. This appeal followed.

DISCUSSION

This case is governed by the Warsaw Convention and the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. §§ 1602-1611 (FSIA). ⁴ The Warsaw Convention provides the cause of action, see Warsaw Convention, Arts. 13(3) & 18, but the FSIA provides the sole basis of federal court jurisdiction, Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 443, 109 S.Ct. 683, 693, 102 L.Ed.2d 818 (1989). We apply the Warsaw Convention and the FSIA concurrently. Harris v. Polskie Linie Lotnicze, 820 F.2d 1000, 1002 (9th Cir.1987). We have appellate jurisdiction under 28 U.S.C. § 1291.

Brink's contends that SAA is liable for the full value of the missing cargo under three theories of liability. First, Brink's contends that the wilful misconduct of SAA employees, in stealing the boxes, deprives SAA of limited liability under Article 25 of the Convention. Second, Brink's contends that even absent theft, the conduct of SAA employees constitutes wilful misconduct under the totality of the circumstances and deprives SAA of limited liability under Article 25 of the Convention. Third, Brink's contends that SAA's failure to comply with the requirements of Article 8 of the Convention regarding air waybills also deprives SAA of limited liability under Article 9 of the Convention.

SAA's response is threefold. First, SAA contends that the evidence is insufficient to support the allegation of theft by SAA employees and that even if theft could be proven, employee theft is not wilful misconduct within the meaning of Article 25. Second, SAA contends that Brink's' "totality of the circumstances" claim is not sufficient to create an inference of wilful misconduct. Finally, SAA contends that its incorporation of certain information by reference to documents outside the air waybill satisfied the requirements of Article 8 of the Convention.

Our interpretation of the Warsaw Convention must begin "with the literal language." Buonocore v. Trans World Airlines, 900 F.2d 8, 9 (2d Cir.1990). If the language is "reasonably susceptible of only one interpretation," our task of interpretation ends there. Id. at 9-10; see also Victoria Sales Corp. v. Emery Air Freight, 917 F.2d 705, 707 (2d Cir.1990) (stating that "when the text of a treaty is clear, a court shall not, through interpretation, alter or amend the treaty" (citing Chan v. Korean Air Lines, Ltd., 490 U.S. 122, 134, 109 S.Ct. 1676, 1683-84, 104 L.Ed.2d 113 (1989))). We may apply secondary tools of interpretation only when the treaty text is ambiguous. Chan, 490 U.S. at 134, 109 S.Ct. at 1683-84.

I. Wilful Misconduct

This appeal requires us to determine whether Article 25 of the Warsaw Convention--which deprives a carrier of limited liability for damage caused by its "dol," as the original French text provides, or by its "wilful misconduct," as the English translation provides--embraces...