Second Circuit Reaffirms the Preemptive Effect of the Montreal Convention

As frequent readers of this blog will recall, the Montreal Convention exclusively governs lawsuits against air carriers for damage arising from delay of or damage to cargo during international air transportation among signatory nations.  A recent decision by the United States Court of Appeals for the Second Circuit illustrates that litigants cannot use artful pleading to avoid application of the Montreal Convention.1

In New Fortune Inc. v. Apex & Aeroflot, plaintiff NFI purchased one million face masks from a Chinese company and hired defendant Apex, a freight forwarder, to transport the masks from China to the U.S.2  Apex was instructed to ship the masks directly from China to New York and complete delivery within two days.  Although half of the masks were shipped in the requested manner and timeframe, NFI alleged that the other half was not.  Instead of flying directly from China to New York, the second batch of masks was flown on another carrier’s flight (Aeroflot, a Russian carrier) from China to Moscow, where they remained at the airport for over twenty days before being flown to their final destination in New York.  NFI alleged that its buyer refused to accept late delivery of the second batch of masks, and further that some of the crates were damaged.

NFI filed a complaint against Apex and Aeroflot alleging state law claims for breach of contract, negligence, and breach of bailment.  The defendants moved to dismiss on the ground that NFI’s claims were within the substantive scope of the Montreal Convention – i.e., delay of and damage to cargo during international air transportation – and therefore were preempted by the Montreal Convention.  The District Court agreed and granted the motion to dismiss the complaint with prejudice.

The Second Circuit affirmed.  The court explained that the Montreal Convention, like its predecessor the Warsaw Convention, “‘created a comprehensive liability system to serve as the exclusive mechanism for remedying injuries suffered in the course of the international transportation of persons, baggage, or goods performed by aircraft.’”  Thus, the Montreal Convention governs all claims arising within the scope of the Convention, even those styled as state law claims.

The Court then reviewed “the Convention’s liability provisions” to determine whether the activity in question was within the substantive scope of the Convention – that is, whether it was “‘part of the carriage of passengers and baggage’ and goods.” The Court first held that NFI’s claims fell within the scope of Article 19 of the Montreal Convention, which governs claims for damages caused by delay in cargo.  The Court rejected the argument that NFI’s claim was actually for “nonperformance” – which is not governed by the Montreal Convention – because the cargo ultimately was delivered.3

Next, the court held that NFI’s claim for physical damage to the consignment was governed by Article 18 of the Montreal Convention, reasoning Article 18 renders a carrier liable for damage to cargo that took place during “carriage by air.”  “Carriage by air” is defined as “the period during which the cargo is in the charge of the carrier,” and includes carriage on land that “takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or transshipment.”

Because NFI had not alleged claims under Articles 18 and 19 of the Montreal Convention, the Second Circuit concluded that the District Court properly dismissed the complaint with prejudice.

Finally, NFI challenged the District Court’s failure to sua sponte grant it leave to amend its complaint.  The Second Circuit rejected that argument as well, holding that because NFI had pled jurisdiction under the Montreal Convention in its complaint, and did not request leave to amend when briefing the motion to dismiss before the District Court, that court had no obligation to confer that right to NFI on its own initiative.

This case confirms that the Montreal Convention governs claims for damages arising from the delay of or damage to cargo during international transportation, even if those claims are styled as state law tort or contract claims.

1 New Fortune Inc. v. Apex Logistics Int’l (CN) Ltd., No. 21-262-cv, 2021 WL 5499464 (2d Cir. Nov. 24, 2021).

2 New Fortune Inc. v. Apex Logistical Int’l (CN) Ltd. & Aeroflot Airlines, No. 20-cv-4883, 2021 WL 309850 (S.D.N.Y. Jan. 29, 2021).

3 Courts hold that a claim for breach of contract sounds in nonperformance, as opposed to delay, only when the carrier ultimately does not provide the transportation.  See, e.g., Vumbaca v. Terminal One Group Ass’n, L.P., 859 F. Supp. 343, 366 (E.D.N.Y. 2012).

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