Warner Lambert Co. v. Lep Profit Intern., Inc.

• Court: U.S. Court of Appeals — Third Circuit
• Writing for the Court: Rendell
• Citation: Warner Lambert Co. v. Lep Profit Intern., Inc., 517 F.3d 679 (3rd Cir. 2008)
• Decision Date: 27 February 2008
• Docket Number: No. 06-3341.,No. 06-3244.,No. 06-3340.,06-3244.,06-3340.,06-3341.
• Parties: WARNER LAMBERT COMPANY v. LEP PROFIT INTERNATIONAL, INC.; LEP International (Japan) Ltd,; Federal Express Corporation; Boeing Company; John Does 1 Through 5, LEP Profit International, Inc., Appellant No. 06-3244. Warner Lambert Company, Appellant No. 06-3340 v. LEP Profit International, Inc.; LEP International (Japan) Ltd,; Federal Express Corporation; Boeing Company; John Does 1 Through 5. Warner Lambert Company v. LEP Profit International, Inc.; LEP International (Japan) Ltd,; Federal Express Corporation; Boeing Company; John Does 1 Through 5, LEP International (Japan) Ltd., Appellant No. 06-3341.

517 F.3d 679

WARNER LAMBERT COMPANY v. LEP PROFIT INTERNATIONAL, INC.; LEP International (Japan) Ltd,; Federal Express Corporation; Boeing Company; John Does 1 Through 5, LEP Profit International, Inc., Appellant No. 06-3244.

Warner Lambert Company, Appellant No. 06-3340 v. LEP Profit International, Inc.; LEP International (Japan) Ltd,; Federal Express Corporation; Boeing Company; John Does 1 Through 5.

Warner Lambert Company v. LEP Profit International, Inc.; LEP International (Japan) Ltd,; Federal Express Corporation; Boeing Company; John Does 1 Through 5, LEP International (Japan) Ltd., Appellant No. 06-3341.

No. 06-3244.

No. 06-3340.

No. 06-3341.

United States Court of Appeals, Third Circuit.

Argued September 12, 2007.

Filed February 27, 2008.

James F. Campise, Cozen & O'Connor, New York, NY, Andrew R. Spector, [Argued], Hyman Spector & Mars, Miami, FL, for Appellant LEP Profit International, Inc.

Robert C. von Ohlen Jr., Kaplan, von Ohlen & Massamillo, Chicago, IL, for Appellee Federal Express Corporation.

James A. Saville Jr., Hill, Rivkins & Hayden, South Amboy, NJ, Keith B. Dalen, [Argued], Hill, Rivkins & Hayden, New York, NY, for Appellant LEP International (Japan) Ltd.

Robert G. Rose, [Argued], Day Pitney, Morristown, NJ, John P. Scordo, [Argued], Day Pitney, Florham Park, NJ, for Appellee Warner Lambert Company.

Before: RENDELL, FUENTES, and CHAGARES, Circuit Judges.

OPINION OF THE COURT

RENDELL, Circuit Judge.

Warner-Lambert Company ("Warner-Lambert") appeals from the District Court's entry of final judgment limiting the liability of Federal Express Corporation ("FedEx"), LEP Profit International Inc. ("LEP Profit"), and LEP International (Japan), Ltd. ("LEP Japan") to $9.07 per pound, pursuant to Article 22(2) of the Warsaw Convention, for pharmaceutical cargo destroyed when a FedEx plane crashed on July 31, 1997, while attempting to land at Newark International Airport. The shipment had left Japan on July 30, 1997, destined, ultimately, for Puerto Rico. LEP Profit and LEP Japan individually performed various functions in connection with the transport of the troglitazone shipment at issue, such as arranging and coordinating transportation, engaging outside contractors (including FedEx), and preparing necessary documentation and air waybills. The District Court held that LEP Profit and LEP Japan acted as "indirect carriers" with respect to the shipment at issue, subjecting them to common carrier liability under the Warsaw Convention, as opposed to liability as "freight forwarders." Warner-Lambert, LEP Profit, and LEP Japan filed appeals. For the reasons stated below, we will affirm the District Court's classification of LEP Profit and LEP Japan as indirect carriers, but reverse the District Court's entry of final judgment limiting the liability of FedEx, LEP Profit, and LEP Japan, and remand for further proceedings consistent with this opinion.

DISCUSSION

This Court exercises plenary review over a grant of summary judgment, Onyeanusi v. Pan Am. World Airways, Inc., 952 F.2d 788, 790 (3d Cir.1992), and reviews de novo pure questions of law and the application of law to uncontested facts, Ilchuk v. Att'y Gen. of U.S., 434 F.3d 618, 621 (3d Cir.2006).

This case is fact-intensive and the relevant facts were well catalogued by the District Court. We repeat them herein below as necessary to our discussion. Our resolution of the issues was aided not only by a review of the record, briefs, and case law, but also by oral argument.

I. Classification of LEP Profit and LEP Japan

The characterization of LEP Profit and LEP Japan as either "indirect carriers" or "freight forwarders" turns on the specific involvement of each in the arrangement and oversight of the troglitazone shipment at issue. It presents a close question in the instant factual setting. There is no dispute as to the parties' respective roles in the shipment and the terms of the documents that they drafted, filled in, or were governed by. The challenge lies in fitting what they did neatly within the category of "indirect carrier" or "freight forwarder" under the four-factor analysis that is customarily used. See Zima Corp. v. M.V. Roman Pazinski, 493 F.Supp. 268, 273 (S.D.N.Y.1980).

Both LEP Profit and LEP Japan urged that they were freight forwarders in connection with this shipment.¹ The District Court examined the functions performed by each and, after a thorough and well-reasoned analysis, concluded that they had instead acted as indirect carriers. We have reviewed the relevant case law distinguishing between freight forwarders and indirect carriers, and agree with this conclusion. Accordingly we will affirm this aspect of the District Court's order.

II. Limitation of Liability

The extent of FedEx's liability (and consequently of LEP Profit and LEP Japan) depends entirely on how we read Article 8(c) of the Warsaw Convention, which — together with Article 9 — excepts from the limitation of liability carriers who fail to list "agreed stopping places" on the air waybill. Here, the relevant transportation of goods was from Japan to Puerto Rico, with stops in Anchorage, Alaska, and Newark, New Jersey. The FedEx flight from Anchorage crashed while landing on the Newark runway, and the entire shipment of pharmaceuticals was destroyed. None of the air waybills prepared in connection with the shipment listed Anchorage, nor did they indicate that once Flight 78 (the FedEx flight from Tokyo to Anchorage) terminated in Anchorage, the cargo would be transferred onto Flight 14, which in turn would terminate at Newark Airport, where the cargo was to be transferred by truck to JFK. Warner-Lambert seized upon this omission as its basis for imposing liability on FedEx, LEP Profit, and LEP Japan for the full value of the goods rather than the $9.07 per pound limitation under the Warsaw Convention.

Our ruling in this regard has limited significance because the Hague Protocol, which became effective in 1999, changed the relevant provision so as to require listing of only those stopping places that give international character to an otherwise domestic or single-country flight.² Nevertheless, it is of obvious significance to the parties involved in this mishap, which occurred in 1997, and parties to any other cases currently in litigation involving pre-1999 incidents subject to the Warsaw Convention.³

The District Court concluded that the "agreed stopping places" requirement should be read as limited only to flights that had both their place of origin and destination within the territory of a single High Contracting Party, but had an interim stop outside the territory of the Party (e.g., a flight from Los Angeles to New York, with an interim stop in Toronto). The District Court reasoned that "the driving force of 8(c) as a whole is to ensure notice and acknowledgment, not as to every stop, but as to stops [that] pertain to and indicate the international character of the shipment of the flight." Dist. Ct. Op. at 22. "Consequently," the District Court continued, "8(c)'s requirement to list `agreed stopping places' is inextricably related to making sure the parties are aware of the international character of the flight, and not a very general (and overly burdensome) notice requirement that requires every stop to be listed." Dist. Ct. Op. at 22-23. It reasoned that, here, because the origin of the shipment and the destination were in different countries, no stopping places needed to be listed, and the exception to limited liability did not apply. Thus, the District Court granted FedEx's motion for partial summary judgment and held that FedEx was entitled to limited liability under the Convention.

We respectfully disagree with the District Court's conclusion that the strictures of Article 8(c) are satisfied as long as the air waybill gives the shipper notice of the international nature of the shipment. Based on the Convention's plain text, the drafting history of Article 8, and its overall structure, we do not find its application to be so limited. Rather, we find the jurisprudence of the Court of Appeals for the Second Circuit, which requires the listing of all stopping places contemplated by the carrier and which represents the "prevailing view" in this area, see Fireman's Fund Ins. Co. v. Panalpina, Inc., No. 00 C 2595, 2001 WL 969032, at *2 (N.D.Ill. Aug. 24, 2001), to be both persuasive and on point.⁴ The meaning the District Court gave to the language of 8(c) requires an additional caveat that simply does not appear in the text. Moreover, the later change effectuated by the Hague Protocol could just as easily be viewed as changing and restricting, rather than clarifying, the exceptions for limited liability. In addition, the drafting history of the Convention reveals another animating purpose for the need to list "agreed stopping places," namely the desire of shippers to know precisely where their goods would be landing so as to anticipate the applicability of other laws, potential risks, customs regulations, and the like.⁵

Finally, we find that the mere listing of Flight 78 (as "FX078/30" and "FX78/30") on the air waybills at issue was not sufficient to satisfy the requirements of Article 8(c), as the record indicates that the information relayed was not complete.⁶ Thus, having failed to satisfy the requirement that Anchorage be listed as an "agreed stopping place," we conclude, pursuant to Article 9, that no carrier involved in this case — whether direct or indirect — may avail itself of the limited liability provisions of the Warsaw Convention.⁷ Accordingly we will reverse the District Court's grant of summary judgment in favor of FedEx.

CONCLUSION

For the reasons set forth above, we will AFFIRM the District Court's classification of LEP Profit and LEP Japan as indirect carriers; REVERSE the District Court's June 13, 2006 Amended Order of Final Judgment, which limited the liability of Fed Ex, LEP Profit, and LEP Japan pursuant to ...