Neal v. Republic Airlines, Inc.

• Decision Date: 27 March 1985
• Docket Number: No. 84 C 10034.,84 C 10034.
• Parties: Herman NEAL, et al., Plaintiffs, v. REPUBLIC AIRLINES, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

605 F. Supp. 1145

Herman NEAL, et al., Plaintiffs, v. REPUBLIC AIRLINES, INC., Defendant.

No. 84 C 10034.

United States District Court, N.D. Illinois, E.D.

March 27, 1985.

Stephen E. Smith, Gottlieb & Schwartz, Chicago, Ill., for plaintiffs.

N.F. Thompson, Lord, Bissell & Brook, Chicago, Ill., for defendant.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

All the children and heirs at law of Rozena Neal ("Mrs. Neal") filed this diversity action against Republic Airlines ("Republic") for damages arising from Republic's failure to deliver Mrs. Neal's remains to Columbus, Mississippi on November 24, 1982 as promised. Plaintiffs' six-count Complaint purports to state causes of action against Republic based on allegations of breach of contract, negligence, bailment, res ipsa loquitur, negligent infliction of emotional distress and gross negligence. Republic has now moved under Fed.R. Civ.P. ("Rule") 56 for summary judgment on all six counts. For the reasons stated in this memorandum opinion and order, Republic's motion is granted.

Facts¹

Mrs. Neal died in Chicago November 23, 1982, having previously expressed the wish to be buried in her birthplace, Sullijent, Alabama. Arrangements were immediately made with Inman Nationwide Shipping ("Inman") to ship Mrs. Neal's remains from Chicago to Alabama. Inman in turn contracted with Republic to transport Mrs. Neal's remains by air from Chicago to Columbus, Mississippi (the airport nearest to Sullijent). There Mrs. Neal's remains were to be delivered to Norwood Funeral Home ("Norwood"), which had agreed to carry them to Sullijent.

Upon receipt of Mrs. Neal's remains at O'Hare International Airport, Republic issued an airbill to Inman providing for shipment on November 24 via Republic's flight 480. Through some error, Mrs. Neal's remains were not transported on flight 480 but were instead shipped on other flights from Chicago to Memphis to Atlanta to Greenville, Mississippi and then back to Memphis again. They did not arrive in Columbus until the afternoon of November 25, approximately 24 hours later than expected. That delay, according to Complaint ¶ 31, "interfered with the timely and proper burial of their mother by plaintiffs."

Counts II-VI

Republic contends Counts II-VI (sounding in negligence, bailment, res ipsa loquitur, negligent infliction of emotional distress and gross negligence) fail to state claims upon which relief can be granted. That contention is grounded in doctrine well-settled in the case law well before 1979 (which, as will later be seen, plaintiffs urge is a watershed year). As Blair v. Delta Air Lines, Inc., 344 F.Supp. 360, 365 (S.D.Fla.1972) (citations omitted) said:

It is also clear that tariffs, if valid and accepted by the C.A.B. the Civil Aeronautics Board, "CAB", may contain exculpatory clauses for certain classes of freight and limitations of liability for loss or damage to specified property, regardless of fault.... The established rule is that the tariffs, if valid, constitute the contract of carriage between the parties and "conclusively and exclusively govern the rights and liabilities between the parties." Mao v. Eastern Air Lines, Inc., 310 F.Supp. 844, 846 (S.D.N.Y.1970).

That statement of the law reflects principles derived from the common law of common carriers. While the common law generally held a carrier should not be able to avoid liability for its own negligence, it distinguished the case where a carrier calculated the carriage rate on the declared value of the property shipped. In that instance (First Pennsylvania Bank v. Eastern Air Lines, Inc., 731 F.2d 1113, 1116 (3d Cir.1984)):

In a suit against the carrier in such a case, the carrier's negligence was assumed to exist, rather than avoided; the limitation of the shipper's damages to the agreed value was merely a consequence of the assumption that the agreed upon value was the true value of the property transported.... The agreed upon value merely constituted an estoppel against the unfairness of asserting a larger amount as the true value when the carrier was sued for damages in spite of the fact that a smaller value had been used to calculate the rate.

That rationale stands up, of course, only on the assumption that a shipper has had a fair opportunity to declare a value for the property shipped and to pay the corresponding rate. See Fireman's Fund Insurance Cos. v. Barnes Electric, Inc., 540 F.Supp. 640, 645 (N.D.Ind.1982). Once air carriers were required to file tariffs with the CAB, which in turn reviewed them and required publication of those it approved (see 49 U.S.C. § 1373 (1976)), shippers were presumed to have knowledge of the liability limits corresponding to the carriage rates they agreed to pay. Thus the federal law regulating air carrier tariffs arose in the context of and operated in conjunction with the existing common-law doctrine of declared or released value rates. See First Pennsylvania Bank, 731 F.2d at 1116-17.²

Under the regime just outlined, then, a shipper seeking damages from a carrier for delay in delivery or loss of property is bound by the terms of the carriage contract. Consequently the shipper may not, by recasting the form of action, escape the effect of a valid stipulation restricting liability to the declared valuation. See Young v. Delta Air Lines, Inc., 78 A.D.2d 616, 432 N.Y.S.2d 390 (1980) and cases there cited. Where (as here) it is clear plaintiffs seek damages for breach of the carriage contract with Republic, they may not avoid that contract's liability limits by framing their complaint in terms of bailment and tort. They must proceed, if at all, on a breach of contract theory.

In a misguided effort to avoid dismissal of Counts II-VI, plaintiffs argue the reasoning of the pre-1979 cases no longer represents good law because in late 1978 the CAB, acting under the authority of the Airline Deregulation Act of 1978, 49 U.S.C. § 1551, issued regulations exempting air carriers from tariff filing requirements. See Regulation ER-1080, Operating Rules for All-Cargo Carriers and Domestic Cargo Transportation by Section 401 and 418 Carriers, reissuing part 291 of General Rules for All Cargo Carriers, 14 C.F.R. Part 291 (1979). Plaintiffs' Mem. 1 contends the lifting of the filing requirements for air carriers "voided their ability to hide behind limitations of liability in the tariffs that they had previously filed."

But as the discussion earlier in this opinion suggests, the common-law doctrine of declared value rates predated the tariff filing scheme. All the pre-1979 CAB-filed tariffs did in that respect was to create a system of constructive notice to shippers (somewhat akin to the recording system for documents affecting real estate—or aircraft —titles). While Regulation ER-1080 —whose aim was to leave the setting of air carriage tariffs to market forces—meant air carriers could no longer presume a shipper's notice of CAB-approved tariffs, it did not bar the carriers themselves from providing shippers with the requisite notice of declared value rates. As First Pennsylvania Bank, 731 F.2d at 1120 put it:

With respect to rates, a succinct statement of the effect of the deregulation would be that the CAB was shorn of its powers to pass upon the reasonableness of rates for interstate air transportation of property, and to prescribe future rates to replace those found to be unreasonable. Abolition of these powers of the CAB simply abrogated pro tanto the doctrine of "primary jurisdiction" with respect to such rates. The courts were thus left free to proceed without circuity to apply directly the familiar federal common law rules relating to the subject matter of released value rates.

Here there can be no doubt Inman, as shipper, did have actual notice of Republic's tariffs and an adequate opportunity to declare a higher value for the shipment. Republic's airbill to Inman (Complaint Ex. 1) states twice on its face (once at the top and once in the space provided for the shipper's signature) that it is subject to the "Conditions of Contract" set out on the reverse. Those include specific liability limitations:

Carriage is subject to the Carrier's governing rules, rates, and classifications, stated in the most recent Official Airline Freight Rate Tariff. Such rules, rates, and classifications are incorporated into this Contract and are available for inspection by the parties hereto at all points where Carrier's air freight transportation is sold or shipments are accepted by the Carrier.

* * * * * *

A shipment shall have a declared value of $0.50 per lb. (but not less than $50.00) unless a higher value is declared on the airbill at the time of receipt of the shipment from the shipper, and if a higher value is so declared, an additional transportation charge of $0.40 shall be required for reach $100.00 (or fraction thereof) by which such higher value exceeds $0.50 per lb. or $50.00, whichever is higher.

Carrier shall not be liable for special or consequential damages unless, at the time of receipt of the shipment, Carrier is given notice in writing on the airbill of the circumstances which could result in such damages. Carrier's liability for such damages shall not exceed the declared value of the shipment.

* * * * * *

By tendering the shipment to the carrier for transportation, the shipper, for himself and all other parties having an interest in the shipment, agrees to the limitations set forth in these rules and affirms the description of the shipment as recited on the airbill and the fact that the shipment is not of a nature unsuitable for the carriage by air or hazardous thereto.

Those conditions provide...