Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_02-cv-04952/USCOURTS-cand-3_02-cv-04952-1/pdf.json

Parties Involved:
Air Canada
Defendant
Continental Airlines, Inc.
Defendant
Lori Learmont
Plaintiff
Andrew Wysotski
Plaintiff

Document Text:

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States District C

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For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ANDREW WYSOTSKI and LORI

LEARMONT,

Plaintiffs,

 v.

AIR CANADA, et al.,

Defendants.

 /

No. C 02-04952 CRB

ORDER OF DISMISSAL

Plaintiffs filed this lawsuit approximately four years ago seeking to recover damages

for the loss of FU, their pet cat, in transport by air from Toronto to San Francisco. Now

before the Court is defendant Air Canada’s motion to dismiss for lack of jurisdiction. After

carefully considering the parties’ briefing papers, as well as the record in this case, and with

the benefit of oral argument, this action on behalf of FU appears to have reached its ninth

life. For the following reasons, defendant’s motion is hereby GRANTED.

BACKGROUND

I. Case History

On August 23, 2001, plaintiffs flew on Air Canada from Toronto to San Francisco

with their five pet cats. Three of the cats, including 14-year-old FU (apparently pronounced

“EFF-YOU”), were housed in individual, airline-approved cat crates; the remaining two cats

shared a fourth crate. According to plaintiffs’ amended complaint, defendant Air Canada

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assured plaintiffs that their cats would be handled with care, and that the crates would be

hand-carried on and off the airplane. Am. Compl. ¶ 12.

When the plane landed at San Francisco International Airport, ramp personnel from

defendant Continental Airlines were allegedly responsible for unloading baggage, including

plaintiffs’ cats. Plaintiffs claim that when they went to baggage claim to retrieve the cats,

they discovered that the crate that had contained FU was damaged and that FU was missing. 

On information and belief, plaintiffs allege that the damage resulted because “[t]he crates

were placed on a steep ramp that led down from the airplane and the crates accelerated down

the ramp, smashing into the ground.” Am. Compl. ¶ 17. Although Air Canada permitted

plaintiffs to search for FU in the area around the airplane for twenty minutes, FU was never

located. 

Plaintiffs filed suit against Air Canada and Continental Airlines, asserting a claim

under the Warsaw Convention as well as state law claims for negligence, negligent infliction

of emotional distress, fraud, false advertising, and violation of California Civil Code section

3340. The action against Air Canada was stayed pending the company’s bankruptcy

reorganization. During that time, Court issued orders denying Continental Airlines’ motions

to dismiss and partial summary judgment before Continental was dismissed from the case

after it reached a settlement with plaintiffs.

II. Current Motion 

Plaintiffs have sought to lift the stay now that Air Canada’s reorganization is complete

and pursue their claims in this Court against “insurance proceeds only.” Defendants contend

that, as a result of the discharge of all claims against Air Canada and the satisfaction of

plaintiffs’ claim during the bankruptcy proceeding, plaintiffs have no valid claims remaining

for the Court to adjudicate. 

The bankruptcy proceeding took place in Canada with an ancillary proceeding in the

Southern District of New York. As part of that proceeding, plaintiffs submitted an unsecured

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1Defendant has requested, and plaintiffs have not opposed, that the Court take judicial

notice of the relevant documents pertaining to the bankruptcy proceedings in Canada and the

United States. Pursuant to Federal Rule of Evidence 201(d), the Court grants the request.

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claim. See Declaration of Jeri Rouse Looney, Ex. 1.1 The proof of claim form included an

explanation for “Excluded Claims,” which noted that “that portion of a claim arising from a

cause of action for which the Applicants [Air Canada] are fully insured.” Id. at 5. 

The Monitor appointed by the Ontario Superior Court awarded plaintiffs CAD$333.91

(US$226.75) for a violation of the Warsaw Convention. See Looney Decl., Ex. 2. The

Monitor limited the award to the damage calculation called for under Article 22(2) of the

Warsaw Convention, which assigns an award of US$9.07 per pound. Id. The Monitor

estimated that FU and its crate weighed 25 pounds and calculated the award accordingly. Id.

The Monitor noted that the Warsaw Convention exclude punitive and emotional damages,

and noted that Air Canada would only be liable for up to CAD$1,500, which corresponded to

the deductible payable by Air Canada under its insurance policy covering the claim. In

addition, the Notice of Revision (Monitor’s decision) included the following caveat:

If you intend to dispute a Notice of Revision or Disallowance, you must, within 10

calendar days of the date of this Notice of Revision or Disallowance, deliver a Dispute

Notice.... If you do not deliver a Dispute Notice, the value of your Claim shall be

deemed to be as set out in this Notice of Revision or Disallowance.

Id. Plaintiffs did not dispute the award and accepted two shares of stock as satisfaction. 

On September 28, 2004, the Bankruptcy Court gave full force and effect in the United

States to the Canadian Court order sanctioning and approving of the Plan of Arrangement. In

its order pursuant to section 304, the Bankruptcy Court entered a permanent injunction that

ordered: 

each Affected Unsecured Claim shall be settled, compromised and released in

accordance with the Plan of Arrangement, and the ability of an Affected Unsecured

Creditor to proceed against the Foreign Debtors in respect of an Affected Unsecured

Claim shall be forever discharged and restrained, and all proceedings with respect to,

in connection with or relating to such Affected Unsecured Claims are hereby

permanently stayed...

See Bankruptcy Order, Looney Decl., Ex. 3 (emphasis added). 

Defendant contends that the resolution of plaintiffs claim under the Plan of

Arrangement and the subsequent permanent injunction by the bankruptcy court have resolved

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plaintiffs’ claims. Plaintiffs contend that (1) its claims were not fully satisfied by the

bankruptcy proceeding; (2) defendant has not proven that its insurance deductible is $1,500;

and (3) regardless, FU’s value exceeds CAD$1,500 so they may still pursue an “Excluded

Claim” against defendant. The Court heard oral argument on March 3, 2006, and resolves

these issues as follows.

DISCUSSION

I. Application of the Warsaw Convention

Despite the fact that the Amended Complaint includes a claim against both defendants

under the Warsaw Convention, plaintiffs’ counsel represented to the Court that it is not clear

whether the Warsaw Convention applies in this instance. Moreover, in previous motions,

plaintiffs have acknowledged that the Warsaw Convention applies to this case and the Court

has held that it does, as well. See generally Order Denying Defendant Continental Airlines’

Motion to Dismiss (Docket #47). In addition, the bankruptcy proceeding also involved the

application of the Warsaw Convention. 

II. State Law Claims

The Warsaw Convention preempts all state-law claims relating to “international

transportation of persons, baggage, or goods performed by aircraft for hire.” Convention art.

1(1). An air carrier is liable for damage to checked baggage or goods provided that the

“occurrence which caused the damage so sustained took place during the transportation by

air.” Id. art. 18(1). The term “air transportation” includes not only the flight itself, but rather

every component of “the period during which the baggage or goods are in charge of the

carrier, whether in an airport or on board an aircraft.” Id. art. 18(2).

As interpreted by the courts, the Warsaw Convention preempts not only state-law

claims that could be asserted under the Convention, but all causes of action for damage to

persons or cargo suffered during international air transportation. See El Al Israel Airlines,

Ltd. v. Tseng, 525 U.S. 155, 174-76 (1999). In other words, the Convention is the exclusive

source of any remedy that can be obtained in connection with an injury arising out of

international air transport; if a claim cannot be asserted under the Convention, it cannot be

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asserted at all. See King v. American Airlines, Inc., 284 F.3d 352, 356-59 (2d Cir. 2002)

(discrimination claims preempted); Carey v. United Airlines, 255 F.3d 1044, 1048-51 (9th

Cir. 2001) (claim for intentional infliction of emotional distress preempted by Warsaw

Convention); Brandt v. American Airlines, 2000 WL 288393, at *4 (N.D. Cal. 2000) (Illston,

J.) (all state-law claims preempted); Peralta v. Continental Airlines, Inc., 1999 WL 193393,

at *2 (N.D. Cal. 1999) (Jenkins, J.) (all state-law claims preempted). 

When a plaintiff whose injuries flow from international air transportation asserts statelaw claims that are “so closely related to the loss of the luggage itself as to be, in a sense,

indistinguishable from it,” those claims are preempted even though they may be ancillary to

the event that proximately caused the damage. See Cruz v. American Airlines, 193 F.3d 526

(D.C. Cir. 1999). In Cruz, plaintiffs who alleged that an airline lost their luggage were not

permitted to plead a separate claim alleging that the airline wrongfully denied their lostluggage claim. See id. at 531. Similarly, in Fishman v. Delta Air Lines, Inc., 132 F.3d 138

(2d Cir. 1998), the Second Circuit rejected a plaintiff’s attempt to plead around the Warsaw

Convention by asserting a claim for tortious denial of medical care in connection with a

scalding that occurred in-flight. See id. at 141-42. In both cases, the courts’ primary concern

was to avoid “tear[ing] an obvious hole in the Convention’s exclusivity” as the font of all

claims arising out of international air transport. Cruz, 193 F.3d at 531-32.

Here, there is no dispute that FU’s disappearance occurred during “international air

transportation” as that term is defined by the Convention. Plaintiffs argue, however, that Air

Canada’s misrepresentations concerning the care that would be taken with their cats occurred

prior to the air transportation and hence is not preempted by the Convention. Similarly,

plaintiffs contend that the airline’s refusal to permit adequate searching for FU after his crate

was discovered empty occurred subsequent to air transportation and hence is actionable

under state law.

The Warsaw Convention, however, would cease to be an exclusive remedy–and the

Supreme Court’s opinion in El Al would be gutted–if plaintiffs who could not assert statelaw claims for the act itself were nonetheless permitted to sue under state law for ex ante

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representations that the act would not occur or ex post failure to redress the harm. That is the

thrust of Cruz and Fishman, and the Court finds this logic persuasive. If plaintiff’s argument

is valid, airlines could still be liable for every representation they make regardless of the

protections of the Warsaw Convention. That was not the intention of the Convention.

Accordingly, all of plaintiff’s causes of action collapse into its claim for breach of the

Warsaw Convention. 

III. Bankruptcy Court Order

Plaintiffs contend that they have returned to this Court following the bankruptcy

proceeding to pursue an “Excluded Claim” against Air Canada’s insurer. Yet the only claim

before the Court is the same claim under the Warsaw Convention against Air Canada that

was adjudicated during the bankruptcy reorganization proceeding and adopted by the

bankruptcy court in the Southern District of New York. Plaintiffs vehemently assert that the

true, or peculiar, value of FU exceeded the deductible for which Air Canada would have

been liable, thereby giving rise to a claim against Air Canada’s insurer for the value of FU

that exceeds CAD$1,500. In effect, however, plaintiffs argument amounts to a challenge to 

the damages calculation of the Monitor.

Plaintiffs submitted a claim to the Monitor as part of Air Canada’s bankruptcy

reorganization proceeding, received an award, were offered an opportunity to challenge the

award, and declined to do so. That award was then incorporated into the Plan of

Arrangement in Canada and sanctioned and confirmed by bankruptcy courts in both Canada

and the United States. “A confirmed reorganization plan operates as a final judgment with

res judicata effect.” See In re Robert L. Helms Construction and Development Co., Inc., 139

F.3d 702, 704 (9th Cir. 1998). Plaintiffs do not present a different claim here against an

insurer; rather, they argue that the same claim adjudicated by the bankruptcy court should

have received a different damages determination. That argument, however, is more

appropriately filed in a bankruptcy court that sanctioned the damages determination. It is not

within this Court’s jurisdiction or authority to second guess another court’s valuation of FU

the Flying Feline; in fact, the principles and purpose of res judicata preclude the Court from

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doing so. If plaintiffs want to proceed with their arguments concerning FU’s damages

calculation, they must do so in the bankruptcy court that originally adjudicated the claim, to

the extent they still can. 

CONCLUSION

For the foregoing reasons, the Court hereby DISMISSES with prejudice the state law

claims as preempted by the Warsaw Convention. In addition, the Court hereby DISMISSES

plaintiffs’ only remaining claim under the Warsaw Convention without prejudice to pursuing

this action in the appropriate bankruptcy court. 

IT IS SO ORDERED.

Dated: March 6, 2006 

CHARLES R. BREYER

UNITED STATES DISTRICT JUDGE

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