Plaintiff Golden Hawk Metallurgical, Inc. ("Golden Hawk") sought recovery from Federal Express Corporation ("FedEx") for the loss of two shipments containing precious metals and gems, alleging (1) breach of contract, (2) breach of duty as a bailee, and (3) conversion.
FedEx argued for dismissal of Golden Hawk's breach of duty and conversion claims as being preempted by the Airline Deregulation Act of 1978 ("ADA"), which states: "[A] State, a political subdivision of a state... may not enact or enforce a law regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier..." The US Supreme Court has held that this provision should be construed broadly to preclude all claims "having a connection with, or reference to, airline rates, routes, or services", and that the ADA preempts claims alleging a "violation of state-imposed obligations," but not claims alleging a breach of "self-imposed undertakings." In Northwest v. Ginsberg, 134 S.Ct. 1422, 1431 (2014), the Supreme Court also held that ADA preemption depends on whether the claim "is based on a state-imposed obligation or simply one that the parties voluntarily undertook."
The Court granted FedEx's motion to dismiss Golden Hawk's breach of duty and conversion claims, finding that those theories were "'state-imposed obligations' that apply universally, similarly to claims for tortious interference or breach of the covenant of good faith."
With respect to Golden Hawk's breach of contract claims, the Court found FedEx's liability to be limited to $100 per shipment because of unambiguous limitations of liability noted on FedEx airbills. Golden Hawk Metallurgical, Inc. v. Federal Express Corporation, 2016 WL 5791198 (E.D. Mich. Oct. 4, 2016).
Federal Court Finds Claims Against Shipper To Be Preempted By Airline Deregulation Act
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.