Underwriters at Lloyds Subscribing to Cover Note B0753PC1308275000 v. Expeditors Korea Ltd.
882 F.3d 1033
| 11th Cir. | 2018Background
- TriQuint purchased a multi-crate silicon‑wafer coating machine from Cybortrack (South Korea); Expeditors issued an airport‑to‑airport waybill for carriage to Orlando and subcontracted land legs to Forward Air and others.
- The shipment arrived in Miami, was stored at Forward Air’s Miami facility, then moved by truck toward Orlando; by arrival at Forward Air’s Orlando facility one crate (containing the robotic arm) was severely damaged, rendering the entire machine inoperable.
- Lloyds (insurer) paid TriQuint $918,000 and sued Expeditors and Forward Air to recover that sum; transporters admitted liability but disputed the limit calculation method.
- Central legal question: whether liability is governed by the Montreal Convention (which caps liability at SDRs per kilogram and, when damage to some packages affects others, measures by whole‑shipment weight) or by the contractual waybill (which caps at the same SDR rate but uses ambiguous language about "package or packages concerned").
- District court held the Montreal Convention applied and calculated liability on the weight of the entire shipment; the Eleventh Circuit vacated and remanded, concluding the Convention did not apply on the court’s factual findings and that the waybill’s "package(s) concerned" phrase is ambiguous.
Issues
| Issue | Plaintiff's Argument (Lloyds) | Defendant's Argument (Transporters) | Held |
|---|---|---|---|
| Does the Montreal Convention govern the loss? | Convention applies because cargo was in carrier’s charge during the multimodal journey; rebuttable presumption favors Convention where both air and non‑air carriage occurred. | Convention does not apply because district findings show damage occurred while in carriage by land (warehouse or truck); exclusion in Art.18(4) applies. | Held: Convention does not apply. District court’s findings indicate damage occurred during carriage by land and the substitution exception does not apply. |
| Is warehouse storage near airport "carriage by air" or "carriage by land"? | Storage off airport but in carrier custody should remain carriage by air. | Storage incident to the land leg is part of carriage by land; whether storage counts depends on facts. | Held: No bright line; determine by facts. On these facts, storage was incident to land carriage and thus carriage by land. |
| Did transporters rebut Article 18(4)’s presumption that damage occurred during carriage by air? | Presumption stands absent precise proof of where damage occurred. | Circumstantial findings (damage occurred in Forward Air custody at warehouse or truck) rebut the presumption. | Held: Rebutted — district court’s factual findings sufficiently proved damage occurred during carriage by land. |
| If Montreal does not apply, how does waybill limit liability (weight of damaged crate(s) vs entire shipment)? | The damaged arm rendered the whole machine useless, so all ten crates are "concerned" and whole‑shipment weight governs. | "Package or packages concerned" means only the actually damaged package(s); limit by weight of damaged crate(s). | Held: Phrase is ambiguous; remanded for district court fact‑finding and consideration of extrinsic evidence (industry practice/custom). |
Key Cases Cited
- Eli Lilly & Co. v. Air Express Int’l USA, Inc., 615 F.3d 1305 (11th Cir.) (discussing Montreal Convention cargo limits and SDR explanation)
- Air France v. Saks, 470 U.S. 392 (U.S. 1985) (framework for treaty interpretation and considering drafting history)
- Zicherman v. Korean Air Lines Co., Ltd., 516 U.S. 217 (U.S. 1996) (treaty interpretation and use of travaux and postratification understanding)
- Read‑Rite Corp. v. Burlington Air Express, Ltd., 186 F.3d 1190 (9th Cir.) (interpreting identical waybill language as measuring damages by damaged packages)
- United States v. Duboc, 694 F.3d 1223 (11th Cir.) (de novo review of treaty interpretation)