Ingram Micro, Inc. v. Airoute Cargo Exp., Inc., 99 Civ. 12480(SAS).

• Decision Date: 03 August 2001
• Docket Number: No. 99 Civ. 12480(SAS).,99 Civ. 12480(SAS).
• Citation: 154 F.Supp.2d 834
• Parties: INGRAM MICRO, INC., and Ingram Micro, Inc. a/s/o Chubb Insurance Company of Europe, S.A., Plaintiffs, v. AIROUTE CARGO EXPRESS, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

154 F.Supp.2d 834

INGRAM MICRO, INC., and Ingram Micro, Inc. a/s/o Chubb Insurance Company of Europe, S.A., Plaintiffs, v. AIROUTE CARGO EXPRESS, INC., Defendant.

No. 99 Civ. 12480(SAS).

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

August 3, 2001.

COPYRIGHT MATERIAL OMITTED

Peter D. Fenzel, Fenzel & Associates, L.L.C., New York City, for Plaintiffs.

Frederic P. Schneider, Gilman & Schneider, New York City, for Defendant.

OPINION AND ORDER

SCHEINDLIN, District Judge.

On December 29, 1999, Ingram Micro, Inc. ("Ingram Micro"), on behalf of itself and as subrogee of Chubb Insurance Company of Europe, S.A. ("Chubb"), filed suit against Airoute Cargo Express, Inc. ("Airoute") to recover damages in the sum of $434,894¹ plus interest for alleged breach of contract. Specifically, Ingram Micro alleged that Airoute breached its duties and obligations as a common carrier and bailee of goods by failing to deliver those goods. After the close of discovery, Ingram Micro and Airoute agreed to try the case on stipulated facts. The parties have submitted thirty-six stipulated facts and one trial exhibit, the bill of lading between Ingram Micro and Airoute. Both parties have also submitted post-trial memoranda briefing their respective positions as to whether federal common law or Canadian law applies to this action and whether Airoute's liability is limited under the applicable law. For the reasons stated below, the Court finds that federal common law applies to this action and that, under federal common law, the limitation of liability on Airoute's bill of lading is enforceable.

I. BACKGROUND

Ingram Micro is a Delaware corporation with its principal place of business in Santa Ana, California. See Stipulated Facts and Trial Exhibit ("St.Facts") ¶ 1. Chubb, a Belgian corporation, has its principal place of business in London, England. See id. ¶ 2. Airoute is a Canadian corporation with its principal place of business in Dorval, Quebec. See id. ¶ 3.

In November 1997, Ingram Micro hired Airoute to transport an order of 549 boxes of "Corel Draw 8" ("Corel") software and 2550 boxes of Corel upgrade software from Saturn Corporation's warehouse in St. Laurent, Quebec, Canada to Ingram Micro's warehouse in Harrisburg, Pennsylvania. See id. ¶ 4. Airoute transmitted its terms for the contract of carriage from its offices in Quebec to Ingram Micro's offices in California. See id. ¶ 5. Ingram Micro then transmitted its acceptance of Airoute's terms from California to Quebec. See id. ¶ 8. During the negotiations, Airoute did not offer Ingram Micro an ad valorem freight rate with no limitation of liability. See id. ¶ 6. Instead, Airoute quoted only one freight rate to Ingram Micro, which contained a limitation of liability and was not subject to negotiation. See id. ¶ 7.

On or about November 13, 1997, Airoute took possession of the shipment in apparent good order and condition from the Saturn Corporation warehouse in St. Laurent, Quebec. See id. ¶¶ 9, 16. At this time, Airoute issued a bill of lading covering the shipment from St. Laurent, Quebec to Harrisburg, Pennsylvania. See Airoute's Bill of Lading for Ingram Micro Delivery ("Airoute's BOL"), Trial Exhibit, ¶ A. Ingram Micro did not declare a value for the shipment on this bill of lading. See id. If a value had been declared, Ingram Micro would have been required to pay a higher freight rate for a higher recovery in case of loss to the shipment. See id. Without a declared value, the maximum default coverage for shipments, as stipulated by the bill of lading, is the "lesser of $100.00 or $2.00 per pound." See id.

After receiving the goods in St. Laurent, Airoute brought the shipment to its facility in Dorval, Quebec and, on the same day, tendered the shipment to its subcontractor, Paquin, Inc. ("Paquin"), also located in Quebec. See St. Facts ¶¶ 9, 17. Airoute had hired Paquin, a Canadian transport company, to truck the shipment from Quebec to Pennsylvania. See id. ¶ 17.

Before delivery to Pennsylvania, Airoute expected Paquin to store the shipment inside Paquin's warehouse over the weekend.² See id. ¶ 18. However, on the weekend of November 15-16, 1997, Paquin did not store Ingram Micro's shipment inside its warehouse, but instead, kept the shipment in a trailor outside its warehouse. See id. ¶¶ 22, 23. At some time during this weekend, the shipment disappeared from Paquin's facility. See id. ¶ 24. Other than a guard shack at the entrance to Paquin's facility, there was no apparent security system in place outside of Paquin's warehouse. See id. ¶ 25.

Thereafter, Canadian law enforcement personnel recovered 205 boxes of the 549 boxes of Corel software, and recovered 1033 boxes of the 2550 boxes of the Corel upgrade software. See id. ¶ 26. In 1998, Paquin, acting as Airoute's subcontractor, delivered the recovered boxes in good order and condition to Ingram Micro's warehouse in Harrisburg, Pennsylvania. See id. ¶ 27. The remaining 344 boxes of Corel software and 1,517 boxes of Corel upgrade software were never recovered and never delivered to Ingram Micro in Harrisburg, Pennsylvania. See id. ¶ 28.

Ingram Micro's damages for the loss to the shipment amount to $434,894.00.³ See id. ¶ 31. The shipment was insured by Chubb under an ocean marine cargo insurance policy. See id. ¶ 32. Ingram Micro made a claim upon the cargo policy, and Chubb paid Ingram Micro $384,894.00 for the loss to the shipment. See id. ¶ 33. The entire shipment weighed 26,651.41 pounds. See id. ¶ 34. The non-delivered portion of the shipment weighed 17,739.32 pounds. See id.

II. DISCUSSION

A. Federal Common Law

Ingram Micro claims that United States federal common law governs its claim against Airoute. See Plaintiff's Post-Trial Memorandum of Law ("Pl.Mem.") at 9. Airoute claims that Canadian law should apply. See Airoute's Trial Memorandum of Law ("Def.Mem.") at 3. Before addressing the choice of law question, the threshold question is whether federal common law may be applied to this action at all. While Ingram Micro argues in favor of applying federal common law rather than Canadian law, it does not explain why federal common law should apply rather than the laws of New York, California or Pennsylvania.⁴

Within constitutional limits, federal preemption of state law is found where Congress has explicitly expressed its intent to preempt, or where the nature and object of the federal laws and regulatory scheme show Congress' intent to occupy the entire field. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983); Campbell v. Hussey, 368 U.S. 297, 303, 82 S.Ct. 327, 7 L.Ed.2d 299 (1961). In cases involving common carriers, where the Interstate Commerce Commission ("I.C.C.") has exercised its authority to regulate, state statutes, regulations, and common law are preempted insofar as they conflict with the federal regulation. See Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 318, 101 S.Ct. 1124, 67 L.Ed.2d 258 (1981).

The instant case involves a transport of goods from an adjacent foreign country to the United States by ground, an area not regulated by the I.C.C. Plaintiffs in other cases have tried to bring such cases under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 11707. That Amendment governs cases where: "the actual loss or injury to the property [is] caused by (1) the receiving carrier, (2) the delivery carrier, or (3) another carrier over whose line or route the property is transported in the United States or from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading." 49 U.S.C. § 11706 (emphasis added). Here, the goods were transported from an adjacent foreign country, namely Canada, into the United States. Because the Carmack Amendment is limited to transport of goods by ground between states and from the United States into a foreign country, by its terms, the Amendment does not apply to this action. See Whaling v. Atlas Van Lines, Inc., 919 F.Supp. 168, 170 (E.D.Pa.1996); Kenny's Auto Parts, Inc. v. Baker, 478 F.Supp. 461, 464 (E.D.Pa.1979) ("The cases interpreting the Carmack Amendment have uniformly held that the Carmack Amendment has no application to goods received for shipment at a point outside the United States.").

Clearly, the Warsaw Convention, 49 U.S.C. § 40105, which governs the international transport of goods by air, and the Carriage of Goods by Sea Act, 46 U.S.C. § 1304(5), which governs the transport of goods by sea, also do not apply here as this was a shipment by truck, not by air.

The weight of authority reveals that federal common law applies to the interstate transport of goods by air. See, e.g., Williams Dental Co. v. Air Express Int'l, 824 F.Supp. 435, 441 (S.D.N.Y.1993), aff'd mem., 17 F.3d 392 (2d Cir.1993); Welliver v. Federal Express Corp., 737 F.Supp. 205, 207 (S.D.N.Y.1990); United States Gold Corp. v. Federal Express Corp., 719 F.Supp. 1217, 1224-25 (S.D.N.Y. 1989). The question remains as to whether federal common law can also be applied to a shipment from an adjacent foreign country to the United States by ground.

As the preceding discussion reveals, most forms of interstate transportation are governed by federal law that has entirely preempted state regulation of common carriers. See Adams Express Co. v. Croninger, 226 U.S. 491, 505, 33 S.Ct. 148, 57 L.Ed. 314 (1913). Federal common law has also been held to cover contracts for air carriage that fall within the gap left between the Warsaw Convention and interstate carriage. See Zicherman v. Korean Air Lines Co., 516 U.S. 217, 229, 116 S.Ct. 629, 133 L.Ed.2d 596 (1996) (holding that federal common law is "the law that would govern in the absence of the Warsaw Convention"); see also Hitachi Data Sys. Corp. v. Nippon Cargo Airlines Co., No. C-93-2456, 1995 WL 16923, at *3 (N.D.Cal. Jan. 6, 1995) (same). Moreover, courts have held that federal common law is properly...