COURT RELIES ON MONTREAL CONVENTION’S “ACT OF PUBLIC AUTHORITY” LIABILITY EXCLUSION IN CARGO SPOILAGE CASE
March 28, 2017
In Best Value Kosher Foods, Inc. v. American Airlines, Inc. (E.D.N.Y. Dec. 12, 2016), plaintiff Best Value arranged for cheese it had purchased in France to be shipped by American Airlines from Paris to New York. Upon arrival the cargo was stored by American at its JFK cargo facility but, due to delays in the U.S. Food and Drug Administration (FDA) and U.S. Customs and Border Protection (CBP) FDA inspection and clearance processes, was not picked up by Best Value for six days. The product was rendered unusable by this delay.
Best Value sued American in state court, alleging that American had an affirmative duty to properly store (i.e. refrigerate) the cargo upon its arrival at JFK but had failed to do so. The case was removed to Federal Court and ultimately dismissed. In granting summary judgment for American, the Court relied primarily on the Montreal Convention, finding that American was exempt from liability under Article 18(2), which provides that a carrier is not liable for cargo destruction, loss or damage due to “an act of public authority carried out in connection with the entry, exit or transit of the cargo.”
This is significant because the court determined that FDA and CBP inspections constitute “acts of public authority carried out in connection with the entry, exit or transit of the cargo” within the meaning of Article 18(2) of the Convention and that damage to the cargo at issue fell within the “act of public authority” liability exclusion. Moreover, the Court also found that, even if American had “some duty” to keep the cargo refrigerated, it was only obligated to use “reasonable care” to perform that duty and that six days was “too long to have expected American to keep the cheese at a low temperature.”
This finding is an issue of first impression and should serve as strong precedent for the industry in future cargo claims against shippers.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).
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