New Fortune Inc. v. Apex Logistics International (CN) Ltd.
21-262-cv
| 2d Cir. | Nov 24, 2021Background
- New Fortune Inc. sued Apex Logistics (CN) Ltd. and Aeroflot in the S.D.N.Y. over an international cargo shipment, pleading common-law claims (breach/negligence) related to delivery/delay.
- The district court (Cote, J.) dismissed the complaint, holding the claims were preempted by the Montreal Convention; New Fortune appealed.
- The Montreal Convention governs international carriage by air (U.S. and China are signatories) and is interpreted in light of Warsaw Convention precedent.
- New Fortune argued its pleading alleged nonperformance (outside the Convention) rather than delay/damage (within the Convention); defendants argued the claims fall within the Convention’s substantive scope.
- The district court found the complaint failed to plausibly allege nonperformance, denied sua sponte leave to amend to add Montreal-Convention claims, and the Second Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Montreal Convention preempts New Fortune’s state-law claims | Montreal does not eliminate state-law claims; at most provides an affirmative defense | The Convention preempts state-law claims that fall within its substantive scope | Court: Convention preempts claims that fall within its substantive scope; affirmed dismissal |
| Whether New Fortune pleaded nonperformance (outside Convention) vs delay/damage (within Convention) | Complaint alleges nonperformance, not delay, so claims are outside the Convention | Claims arise from carriage/delay/damage while cargo was in carrier’s charge and thus fall under the Convention | Court: Complaint fails to plead nonperformance adequately; claims are within Convention and preempted |
| Whether New Fortune’s reliance on cases suggesting "preemptive" effect creates federal jurisdiction (complete preemption) | Cites district decisions suggesting Montreal can supply exclusive federal jurisdiction | Defendants: distinguish complete preemption (jurisdictional) from ordinary preemption (defense); no removal issue here | Court: Plaintiff conflates doctrines; complete preemption not implicated; ordinary preemption is a defense |
| Whether the district court abused its discretion by not sua sponte allowing amendment to add Montreal-Convention claims | Court should have granted leave to amend to plead Convention-based claims | District court acted within discretion; plaintiff already pled Montreal jurisdiction and did not timely seek amendment | Court: No abuse of discretion; denial affirmed |
Key Cases Cited
- Cohen v. Am. Airlines, Inc., 13 F.4th 240 (2d Cir. 2021) (Montreal Convention interpreted in accordance with Warsaw precedent)
- El Al Israel Airlines, Inc. v. Tsui Yuan Tseng, 525 U.S. 155 (1999) (Warsaw Convention precludes local-law actions when treaty remedies cover the injury)
- King v. Am. Airlines, Inc., 284 F.3d 352 (2d Cir. 2002) (Warsaw created exclusive liability system for international air carriage)
- Underwriters at Lloyds Subscribing to Cover Note B0753PC1308275000 v. Expeditors Korea Ltd., 882 F.3d 1033 (11th Cir. 2018) (Montreal drafters retained Warsaw language to preserve precedent)
- Wolgel v. Mexicana Airlines, 821 F.2d 442 (7th Cir. 1987) (claims alleging nonperformance may fall outside the Convention)
- Sullivan v. Am. Airlines, Inc., 424 F.3d 267 (2d Cir. 2005) (distinguishes complete preemption from ordinary federal preemption)