In re Nigeria Charter Flights Contract Litigation

• Decision Date: 25 October 2007
• Docket Number: No. 04 MD 1613(RJD)(MDG).,No. 04 CV 0304(RJD)(MDG).,04 MD 1613(RJD)(MDG).,04 CV 0304(RJD)(MDG).
• Citation: 520 F.Supp.2d 447
• Parties: In re NIGERIA CHARTER FLIGHTS CONTRACT LITIGATION. In re World Airways Litigation.
• Court: U.S. District Court — Eastern District of New York

Page 447

520 F.Supp.2d 447

In re NIGERIA CHARTER FLIGHTS CONTRACT LITIGATION.

In re World Airways Litigation.

No. 04 MD 1613(RJD)(MDG).

No. 04 CV 0304(RJD)(MDG).

United States District Court, E.D. New York.

October 25, 2007.

COPYRIGHT MATERIAL OMITTED

Ike Obinna Echeruo, Echeruo Attorneys at Law, LLP, New York, NY, John Edozie, Madu, Edozie & Madu PC, New York, NY, Brendan E. Zahner, John. Patrick Doherty, Thacher Proffitt & Wood, LLP, New York, NY, for Dr. Obiora Anyoku, Dr. Azuka Anyoku, Faith Adepoju, Uche Ukwuoma, Newman Nkwor, Plaintiffs.

Ike Obinna Echeruo, Echeruo Attorneys at Law, LLP, New York, NY, John Edozie, Madu, Edozie & Madu PC, New York, NY, John Patrick Doherty, Thacher Proffitt & Wood, LLP, New York, NY, for McLord Obioha, Plaintiff.

Brendan E. Zahner, Thacher Proffitt & Wood, LLP, New York, NY, Daniel Robert Lapinski, Lee Squitieri, Maria J. Ciccia, Squitieri & Fearon LLP, New York, NY, John Patrick Doherty, Thacher Proffitt & Wood, LLP, New York, NY, for Anthonia James, Plaintiff.

Frank J. Costello, Malcolm L. Benge, Zuckert, Scoutt & Rasenberger, LLP, Washington, DC, Patrick J. Bonner, Freehill, Hogan & Mahar, New York, NY, for World Airways, Inc., Defendant.

Peter Obafemi, Defendant, Pro se, Babalakin & Co., Lafiaji, Lagos.

David M. Goldhaber, Sedgwick, Detert, Moran & Arnold LLP, Chicago, IL, Colleen Anne DeNoto, Sedgwick Detert Moran & Arnold LLP, New York, NY, for Capital Indem. Ins. Co., Defendant.

MEMORANDUM & ORDER

DEARIE, Chief Judge.

Plaintiffs allege violations of the Warsaw and Montreal Conventions, as well as breach of contract, fraud, and negligence, arising from the failure of World Airways, Inc. ("World") to operate international flights for which plaintiffs had purchased tickets. On January 30, 2006, this Court certified a class of plaintiffs who purchased tickets prior to January 31, 2004, for travel between Nigeria and the United States, and whom World failed to transport as scheduled due to its discontinuation of flight operations. Both World and plaintiffs have moved for summary judgment. For the reasons explained below, World's motion is granted in part and denied in part, and plaintiffs' motion is denied.

BACKGROUND

In December 2002, World entered into an agreement with Ritetime Aviation and Travel Services, Inc. ("Ritetime") under which it agreed to supply Ritetime with charter air transportation between New York, Atlanta, and Lagos, Nigeria for sale to the public. See Costello Aff. Ex. 10 (World Airways Charter Aircraft Services Agreement) [hereinafter Charter Agreement]. The Charter Agreement obligated World to provide aircraft and flight support for eighty-three round-trip flights between February 28 and December 30, 2003, for which Ritetime was to pay World approximately $300,000 per flight. Id. Annex A. Forty-two of these flights were to operate between Atlanta and Lagos, and the remaining forty-one between New York and Lagos.¹ In a separate agreement, World granted Ritetime limited use of its trademarks for the purpose of marketing the flight program. See id. Ex. 11 (Trademark License Agreement).

Although the Charter Agreement provided only for flights in 2003, both parties contemplated that the Nigeria flight program would continue beyond the end of that year. See id. Ex. 46 (October 20, 2003 email from World executive to Ritetime consultant describing proposed schedule and pricing for the period January 1, 2003 to May 31, 2004); Monroe Aff. Ex. 55 (December 2, 2003 email from World ordering 10,000 blank tickets to be delivered to Ritetime Aviation). Ritetime sold tickets for travel in 2004, including those purchased by plaintiffs. At the same time, however, Ritetime fell behind in its payments to World, and by December 31, 2003, it owed World more than $2 million. Def.'s Rule 56.1 Stat't ¶ 38.

In late 2003, World warned Ritetime that it would not continue to participate in the Nigeria flight program unless Ritetime paid its debt, see Costello Aff. Ex. 44 (December 5, 2003 letter from World vice president to Ritetime C.E.O.), and declined to sign an amendment to the Charter Agreement extending the program, id. Ex. 43 (amendment). On or about December 28, 2003, World canceled a round-trip flight between New York and Lagos. Then, after operating a final flight on a triangular New York-Lagos-Atlanta route on December 30-31, 2003, Costello Aff. Ex. 38 (list of flights operated), World ceased operations between Nigeria and the United States, effectively terminating the flight program. As a result, hundreds of passengers who had purchased tickets for flights in 2004 were unable to travel. Some passengers, having flown the outbound legs of their round trips already, were stranded in airports far from home.²

On January 19, 2004, after "considerable discussion" with the DOT's Enforcement Office, World flew 318 passengers who had been stranded in Lagos back to New York. Costello Aff. Ex. 53 (DOT consent order) [hereinafter Consent Order] 3. World claims that it also paid for 20 passengers who were stranded in the United States to return to Lagos, Def.'s Rule 56.1 Stat't ¶ 58, and there is evidence that Ritetime paid to return some stranded passengers, as well, Costello Aff. Ex. 50 (Ritetime letter to DOT, Feb. 25, 2004). Named class representatives, however, had to arrange their own alternative transportation after being stranded.³ Other plaintiffs were never flown on the first legs of their round-trip flights. Ultimately, World was assessed civil penalties of $350,000 for stranding passengers in violation of numerous federal statutes and regulations. Consent Order 6.

Passengers sued World, Ritetime, and Peter Obafemi, Ritetime's C.E.O., in state and federal courts throughout the country. The Panel on Multidistrict Litigation transferred the cases pending in other federal courts to the Eastern District of New York, where they were consolidated in this Court. Motions for default were granted against Ritetime and Obafemi on January 28 and October 13, 2005, respectively. This Court certified a class of plaintiffs on January 30, 2006. These motions for summary judgment ensued.

DISCUSSION

Plaintiffs allege that World is liable for its failure to transport them under the Warsaw Convention or its successor, the Montreal Convention;⁴ they also allege breach of contract, negligence, and fraud. World argues that it is entitled to summary judgment because (1) the Montreal Convention preempts plaintiffs' state law claims, and plaintiffs have not shown liability under the Convention itself; (2) even if plaintiffs' contract claims are not preempted, they should be dismissed since plaintiffs are not in privity with World; (3) even if the Montreal Convention does not preempt plaintiffs', negligence and fraud claims, those claims are preempted by the Airline Deregulation Act; and (4) to the extent that plaintiffs' claims under the Montreal Convention are dismissed, the Court should decline to exercise supplemental jurisdiction over any remaining state law claims. Plaintiffs cross-move for summary judgment on their state law claims or, alternatively, on their claims under the Montreal Convention.

A. Standard of Review

Summary judgment is appropriate only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits ... show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "Only when no reasonable trier of fact could find in favor of the nonmoving party should summary judgment be granted." White v. ABCO Eng'g Corp., 221 F.3d 293, 300 (2d Cir. 2000) (quoting Taggart v. Time Inc., 924 F.2d 43, 46 (2d Cir.1991)). Moreover, "[t]he inferences to be drawn from the underlying affidavits, exhibits, interrogatory answers, and depositions must be viewed in the light most favorable to the party opposing the motion." Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 202 (2d Cir.1995). However, the nonmoving party "may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible, or upon the mere allegations or denials of the adverse party's pleading," Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir.1995) (internal quotation marks and citation omitted). Rather, the party opposing summary judgment must "set forth specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e). If, after drawing all inferences, the court finds that an issue of material fact remains, the motion for summary judgment must be denied.

B. The Montreal Convention

World argues that the Montreal Convention preempts plaintiffs' state law claims, and that plaintiffs have failed to prove liability under the Convention itself For the reasons explained below, the Court grants World's motion for summary judgment with respect to plaintiffs' claims under the Montreal Convention, but finds that the Convention does not preempt plaintiffs' state law claims.

The Montreal Convention⁵ entered into force in the United States on November 4, 2003, updating and replacing the uniform system of liability for international air carriers previously established by the Warsaw Convention. Ehrlich v. Am. Airlines. Inc., 360 F.3d 366, 371 n. 4 (2d Cir.2004). Whereas the Warsaw Convention sought to encourage the development of commercial aviation by limiting liability, the Montreal Convention reflects an additional consideration: "the importance of ensuring protection of the interests of consumers in international carriage by air and the need for equitable compensation based on the principle of restitution." Id. (quoting Montreal Convention, pmbl.).

Article 19 of the Montreal Convention governs claims arising from delay in international air transportation:

The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo. Nevertheless, the...