Hampton by Hampton v. Federal Exp. Corp.

• Decision Date: 29 October 1990
• Docket Number: No. 89-2369,89-2369
• Citation: 917 F.2d 1119
• Parties: Carl Gerome HAMPTON, by his next friend, Carl Jerry HAMPTON, and Carl Jerry Hampton, Appellants, v. FEDERAL EXPRESS CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1119

917 F.2d 1119

Carl Gerome HAMPTON, by his next friend, Carl Jerry HAMPTON and Carl Jerry Hampton, Appellants, v. FEDERAL EXPRESS CORPORATION, Appellee.

No. 89-2369.

United States Court of Appeals Eighth Circuit.

Submitted June 15, 1990.

Decided Oct. 29, 1990.

Jerold L. Drake, Grant City, Mo., for appellant.

William L. Rahner, Memphis, Tenn., for appellee.

Before McMILLIAN and BOWMAN, Circuit Judges, and RE, Chief Judge. ^*

RE, Chief Judge.

In this diversity action, plaintiffs-appellants, Carl Jerry Hampton, individually and on behalf of his deceased son, Carl Gerome Hampton (collectively, Hampton), Missouri residents, sued defendant-appellee, Federal Express Corporation, a Delaware corporation, in the United States District Court for the Western District of Missouri, seeking a total of $3,081,000, for personal injury, wrongful death, and loss of services.

Hampton alleged that Federal Express, a common carrier, negligently failed to deliver blood samples of Carl Gerome Hampton, a cancer patient in need of a bone marrow transplant, that had to be matched with a potential bone marrow donor. Hampton appeals from judgment of the district court which granted the partial summary judgment motion of the carrier, Federal Express, limiting Hampton's recovery to $100 in damages.

The question presented is whether the district court erred in determining that the carrier, Federal Express, is entitled to partial summary judgment under the released value doctrine, limiting its liability to $100, the amount stated in the contract of carriage between it and the shipper.

Since, on the facts presented, the nature and extent of damages suffered by plaintiff Hampton were not reasonably foreseeable to the carrier, Federal Express, we affirm the judgment of the district court granting Federal Express' motion for partial summary judgment.

I. BACKGROUND

In March, 1988, Carl Gerome Hampton, a 13-year old cancer patient at Children's Memorial Hospital in Omaha, Nebraska, was awaiting a bone marrow transplant. A transplant operation was scheduled at the University of Iowa Hospital in Iowa City, Iowa, where five potential bone marrow donors had been found.

On March 21, 1988, in order to match Carl with the most suitable donor, five samples of Carl's blood were sent by the shipper, the Children's Memorial Hospital in Omaha, to Dr. Nancy Goeken, at the Veterans Administration Medical Center in Iowa City. The shipper, the Children's Memorial Hospital, entered into a contract with the carrier, Federal Express, for the transport of the blood samples.

In a paragraph entitled "Damages or Loss," the contract of carriage, set forth in the airbill, stated:

We are liable for no more than $100 per package in the event of physical loss or damage, unless you fill in a higher Declared Value to the left and document higher actual loss in the event of a claim. We charge 30cents for each additional $100 of declared value up to the maximum shown in our Service Guide.

The reverse side of the airbill contains several paragraphs, entitled "Limitations On Our Liability," which state that:

Our liability for loss or damage to your package is limited to your actual damages or $100, whichever is less, unless you pay for and declare a higher authorized value. We do not provide cargo liability insurance, but you may pay thirty cents for each additional $100 of declared value. If you declare a higher value and pay the additional charge, our liability will be the lesser of your declared value or the actual value of your package.

It is not disputed that the blood samples were never received by Dr. Goeken, that Carl Hampton, the infant cancer patient, never obtained a bone marrow transplant, and that he died on May 19, 1988.

Alleging causes of action for personal injury, wrongful death, and loss of services, Carl Jerry Hampton, individually and on behalf of his deceased son, Carl Gerome Hampton, filed suit in the United States District Court for the Western District of Missouri, seeking $3,081,000 in damages. On the basis of the released value doctrine, the district court granted Federal Express' motion for partial summary judgment, and entered judgment in favor of Hampton for $100.

II. DISCUSSION

A. The "Released Value Doctrine"

We have held that, under federal common law, "[a] common carrier may not exempt itself from liability for its negligence; however, a carrier may limit its liability." Hopper Furs, Inc. v. Emery Air Freight Corp., 749 F.2d 1261, 1264 (8th Cir.1984). As stated by the Supreme Court in the leading case of Hart v. Pennsylvania R.R., 112 U.S. 331, 343, 5 S.Ct. 151, 157, 28 L.Ed. 717 (1884):

where a contract * * * signed by the shipper, is fairly made, agreeing on the valuation of the property carried, with the rate of freight based on the condition that the carrier assumes liability only to the extent of the agreed valuation, even in case of loss or damage by the negligence of the carrier, the contract will be upheld as a proper and lawful mode of securing a due proportion between the amount for which the carrier may be responsible and the freight he receives, and of protecting himself against extravagant and fanciful valuations.

See generally First Pa. Bank, N.A. v. Eastern Airlines, Inc., 731 F.2d 1113, 1115-16 (3d Cir.1984). This body of law, which has come to be known as the "released value doctrine" of federal common law, requires that in order to limit its liability "the carrier must present the shipper with a reasonable opportunity to declare a value for the shipment above the maximum value set by the carrier, pay an additional fee, and thereby be insured at a higher rate should the shipment go awry." Husman Constr. Co. v. Purolator Courier Corp., 832 F.2d 459, 461 (8th Cir.1987).

In this case, the contract entered into by the shipper, the Children's Memorial Hospital, with the carrier, Federal Express, clearly limited the liability of the carrier to $100, and provided the shipper with an opportunity to declare a higher value. Furthermore, it is not disputed that the shipper never declared a higher value for the blood samples. Hence, should the released value doctrine apply, the liability of the carrier, Federal Express, would be limited to $100.

There is a question, however, as to whether the released value doctrine applies in a suit brought by a plaintiff not a party to the contract of carriage. Hampton contends that his damages should not be limited by the released value doctrine since he was not the shipper of the blood samples, and, therefore, was not a party to the contract with the carrier, Federal Express. In support of his contention, Hampton cites the decision of this court in Arkwright-Boston Mfrs. Mut. Ins. Co. v. Great Western Airlines, Inc., 767 F.2d 425 (8th Cir.1985). It is clear, however, that Arkwright is distinguishable from the present case.

In Arkwright, TRW purchased electronic goods from a dealer in Cedar Rapids, Iowa. Pursuant to TRW's specific instructions, the goods were shipped from the dealer, to TRW, in four packages by the carrier, Federal Express. Upon tender of the goods to Federal Express, title passed from the dealer to TRW. The airbills with Federal Express contained a clause limiting Federal Express' liability to $100 per package, in the absence of a greater declared value. As in this case, the airbills did not declare a value greater than $100 for each package. See id. at 426.

In Arkwright, Federal Express entered into a subcontract, for the delivery of the packages, with the defendant, Great Western. Subsequently, the goods were destroyed in transit in the crash of the defendant's airplane. See id. The plaintiff, Arkwright, TRW's insurer and the subrogee of TRW's rights against the defendant, then sued the defendant for $99,000, the amount the plaintiff paid to TRW for the goods destroyed in the crash. See id. at 425. Although the opinion does not indicate whether the plaintiff proceeded under a tort or contract theory, the district court granted summary judgment for the defendant, and limited its liability for each package to $100, the limitation on liability contained in the airbills. See id. at 426.

On appeal, we reversed and remanded for a trial. Since the airbill did not expressly extend the liability limitation to a subcontractor of the carrier, such as the defendant, we held that, under federal common law, the defendant could not benefit from the limitation on liability contained in the airbill, which stated the contract between the parties. See id. at 428. In effect, the contract limitation did not inure to the benefit of the subcontractor, who also was not relieved of its liability in tort.

This case, however, differs from Arkwright since Hampton is suing the carrier, Federal Express, rather than a defendant who is not a party to the contract of carriage. In addition, in this case, unlike Arkwright, the contract between the shipper, the Children's Memorial Hospital, and the carrier, Federal Express, expressly limited the liability of the defendant, Federal Express, to $100. Hence, Arkwright does not support Hampton's assertion that the released value doctrine does not apply to this case.

In further support of his contention that the released value doctrine should not apply, Hampton cites two district court cases. In the first, a carrier was held liable to the consignee of the shipped goods, after the consignee brought an action for breach of contract. In the second, a carrier was held liable in tort to a plaintiff not a party to the contract of carriage. Neither case, however, is persuasive, since they are both factually distinguishable.

In the first case, New Dawn Natural Foods, Inc. v. Natural Nectar Corp., 655 F.Supp. 475 (E.D.Mo.1987), the plaintiff, the consignee of a shipment of ice cream, sued the defendants, including a carrier, on a breach of contract claim for damages caused by late delivery. The defendant carrier moved to dismiss for failure to...