FI L ED

U.S. COURT OF APPEAL S

EL EVENTH CI RCUI T AUGUST 23, 2010

J OHN L EY

CL ERK [PUBLIS H]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __

No. 0 9- 12 72 5

__ __ __ __ __ __ __ __ __ __ __ __

D.C. Dock et No. 0 6- 23 04 8 C V-KMM

ELI LILLY AND COMPANY, in di vi du al ly and

f.u.b .o. Elg o In su ran ce Co m pa ny Lim it ed , in di vi du al ly and

f.u.b .o. Ce rta in Lon do n M ark et Rei ns ur an ce Un de rwri te rs ,

Pl ai nt iff s- App el le es ,

ve rs us

AIR EXPRESS I NTERNATIONAL USA, INC.,

d.b .a. DHL Danzas Air & Oc ean , d.b .a. DHL Glob al Fo rward in g,

Defen da nt -Ap pe ll an t.

__ __ __ __ __ __ __ __ __ __ __ __

App eal fro m

th e Uni te d S ta te s Di st ric t Co ur t
fo r th e So ut he rn Dis tri ct of F lo rid a

__ __ __ __ __ __ __ __ __ __ __ __ (Au gu st 23 , 20 10 )

Befo re MAR CUS, WILSON an d C OX, Circ ui t J ud ge s.

COX, Cir cu it Ju dg e:The Co nv en ti on fo r th e Uni fic at io n of Cert ai n Ru le s fo r In te rn at io na l Carr ia ge

(“ Mo nt real Co nv en ti on ”) li m it s in te rn at io na l ai r carr ie r li ab il it y fo r da m ag e to carg o.

Thi s ca se in vo lv es a pu rp or te d c on tra ct ua l wai ve r of th os e li m it s.

Defen da nt Air Exp res s In te rn at io na l USA, In c. (“ DHL”) is a pr ovi de r of su pp ly

ch ai n lo gi st ic s. Pl ai nt iff El i Li ll y an d Co m pa ny an d DHL en te red in to a lo ng -te rm

se rv ic e a g r e em en t un de r whi ch DHL ag reed to pr ov id e lo gi st ic s se rv ic es rel at ed to

th e in te rn at io na l sh ip m en t of Eli Lil ly p ha rm aceu ti cal s. Am on g ot he r th in gs , DHL

arra ng ed fo r th ird -p art y ai r carg o carri ers to tra ns po rt ph arm aceu ti cal s fro m Euro pe

to th e Uni te d S ta te s. Thi s cas e ari se s ou t of th e sp ol ia ti on of te m pe rat ur e-s en si ti ve

in su li n pr od uc ts

, whi ch were sh ip pe d by ai r fro m Fran ce to In di an a an d were ex po se d

to su b- free zi ng te m

pe rat ur es en r o u t e

. Pu rs ua nt to it s se rv ic e ag reem en t wit h Eli

Lil ly, DHL arra ng ed fo r Luft ha ns a Carg o AG to tra ns po rt th e in su li n. Alt ho ug h th e

ex po su re to su b- free zi ng te m pe rat ur es was th e res ul t of hu m an erro r at tri bu ta bl e to

Luft ha ns a, DHL is l ia bl e as a co nt ract in g c arri er fo r an y da m ag e to th e car go

.

Seek in g to reco ve r fo r da m ag e to th e in su li n pr od uc ts

, Eli Lil ly an d it s in su rers

su ed DHL fo r br each of th e lo ng -te rm se rv ic e ag reem en t an d f o r b reac h of two ai r

way bi ll co nt ract s fo r carr ia ge of th e da m ag ed pr od uc ts

. The di st ric t co ur t di sm is se d

th e cl ai m fo r br each of th e se rv ic e ag reem en t be cau se it was pr eem pt ed by th e

Mo nt r e al Co nv en ti on

. In th e sa m e or de r, th e co ur t gr an te d Pl ai nt iff s su m m ary

2jud gm en t on th e is su e of li ab il it y f o r br each of th e ai r way

bi ll co nt ract s. And

, th e

co ur t he ld th at , u nd er a pr ov is io n in th e lo ng -te rm se rv ic e ag reem en t, DHL wa iv ed

th e li ab il it y li m it at io ns of th e Mo nt real Co nv en ti on

. DHL ap pe al s; it s pr im ary

co nt en ti on is th at it s li ab il it y sh ou ld be li m it ed pu rs ua nt to th e Mo nt real Co nv en ti on

.

DHL al so arg ue s th at Pl ai nt iff s are no t en ti tl ed to su m

m a r y ju d g ment be cau se th ey

fai le d t o s h o w t ha t th e carg o was da m ag ed in tra ns it an d be cau se cert ai n ev id en ce

of fere d to pr ov e it s da m ag e is in ad m is si bl e. DHL fu rth er arg ue s th at th e co ur t ab us ed

i t s d i s cret io n in de nyin g it s m ot io n fo r sa nc ti on s fo r sp ol ia ti on of ev id en ce. Aft e r

rev ie w, we affi rm th e gr an t of su m m ary jud gm en t to Pl ai nt iff s on th e is su e of li ab il it y

an d t he de ni al of DHL’s m ot io n fo r sp ol ia ti on san ct io ns

. Bu t we rev ers e th e ru li ng

th at DHL st ip ul at ed th at th e ai r way bi ll co nt ract s are s u b

je c t t o li m it s of li ab il it y

gr eat er t ha n t ho se pro vi de d fo r in th e Mo nt real Co nv en ti on

.

I. BACKGROUND

A. The Mo nt real Co nv en ti on

W e co ns id er in th is cas e cert ai n pr o v i s i o n s of th e Mo nt real Co nv en ti on , a

tre at y whi ch se ts fo rth un ifo rm ru le s fo r in te rn at io na l air carri ag e. W e be gi n with a

br ie f ov erv ie w of t he Co nv en ti on an d i ts rel ev an t p ro vi si on s.

In te rn at io na l ai r carr ie r li ab il it y fo r da m ag e to carg o an d in jury to pa ss en ge rs

ha s be en go ve rn ed by a se t of un ifo rm ru le s si nc e 19 33

, whe n th e W ars aw

3Co nv en ti on , ad op te d by de le ga te s of th irt y -th ree na ti on s in 19 29

, t o o k e f f ect

. The

W ars aw Co nv en ti on crea te d a li ab il it y sc he m e whi ch se rv ed as th e so le m ean s to

rem ed y in juri es su ffer ed in th e co ur se of in te rn at io na l ai r tr an sp or ta ti on of pe rs on s,

ba gg ag e, or go od s. Se e Ki n g v

. Am

. Ai rl in es

, In c. , 28 4 F.3 d 35 2, 35 6- 57 (2 d Ci r.

20 02 ) (s um m ari zi ng pr ov is io ns of th e Co nv en ti on fo r th e Uni fic at io n of Cert ai n

Ru le s R el at in g t o In te rn at io na l Trans po rta ti on by Air, Oct. 12

, 19 29

, 49 St at . 30 00

,

T.S. No. 87 6 (1 93 4)

, re pr in te d in 49 U.S.C. § 40 10 5 no te (1 99 7) (h e r e i n a f te r

“ W ars aw Co nv en ti on ”). To sh ie l d a i r carr ie rs fro m cat as tro ph ic li ab il it y , th e

Co nv en ti on se t li m it s on da m ag es , an d it res tri ct ed th e types of cl ai m s th at co ul d be

br ou gh t ag ai ns t carr ie rs

. Id

. To pr ot ect pa ss en ge rs an d sh ip pe rs , it req ui red carr ie rs

to is su e ai r way

bi ll s de ta il in g th e co nd it io ns of carr ia ge , an d it crea te d a pr es um pt io n

of li ab il it y ag ai ns t carr ie rs fo r in juri es to pa ss en ge rs or d a mag e to carg o. Id

. Ove r

th e y ears , su bs eq ue nt in te rn at io na l ag r e e ment s ch an ge d it s li ab il it y sc he m e, bu t

se ve ral feat ur es of th e W ars aw Co nv en ti on —ca ps on da m ag es for in juri es su ffer ed

in in te rn at io na l ai r tra ns po rta ti on , a pr es um pt io n of li ab il it y ag ai ns t carr ie rs , an d a

req ui rem en t t ha t ca rri ers is su e ai r way bi ll s— rem ai n i n e ffec t i n s om e fo rm to da y

.

I n 19 99

, fif

ty-two na ti on s in cl ud in g th e Uni te d St at es si gn ed th e Mo nt r e a l

Co nv en ti on , a tre at y to rep la ce th e W ars aw Co nv e n t i o n

. Co nv en ti on fo r th e

U n i f i cat io n of Cert ai n Ru le s fo r In te rn at io na l Carr ia ge by Air, ICAO Doc

. 97 40

,

4re

pr in te d in Treat y Doc

. No. 10 6- 45

, 19 99 W L 33 29 27 34 (2 00 0)

. The Uni te d St at es

Sen at e rat ifi ed th e Mo nt real Co nv en ti on in Sep te m be r 20 03

, an d it en te red in to fo rce

on Nov em

be r 4, 2 00 3, af

te r at lea st th irt y

na ti on s d id th e sa m e. Id

. Art. 5 3

The Mo nt real Co nv en ti on pr ov is io ns rel at ed to carr ie r li ab il it y fo r da m ag e to

ba gg ag e an d carg o are rel ev an t to th is cas e. Arti cl e 22 (3 ) of th e Co nv en ti on li m it s

po te nt ia l li ab il it y to se ve nt een “ Sp eci al Drawi ng Ri gh ts ” (“ SDRs ”) per kil og ram of

carg o sh ip pe d. An SDR is an art ifi ci al cu rren cy , pu bl is he d da il y by th e In te rn at io na l

Mo ne ta ry Fu nd

, whi ch flu ct ua te s ba se d on th e gl ob al cu rren cy m ark et

. So mpo Ja pa n

In s., In c. v. Ni

pp on Ca rg o Air li ne s Co

. , 52 2 F.3 d 77 6, 77 9 n.3 (7 th Ci r. 20 08 ). The se

li m it s m ay be in crea se d in on e of two way s. Fi rs t, Arti cl e 22 ( 3 ) p r o v i de s th at

da m ag es m ay

ex ceed 17 SDRs pe r ki lo gr am if “ th e co ns ig no r ha s m ad e, at th e ti m e

whe n th e pa ck ag e was ha nd ed ov er to th e carr ie r, a sp eci al de cl arat io n of in te res t in

de li ve ry at de st in at io n an d ha s p a i d a su pp le m en ta ry su m if th e cas e so req ui res .”

Thi s pro vi si on di d no t re pr es en t a c ha ng e in th e la w; i t i s nea rly id en ti cal to Arti cl e

22 (2 ) of th e or ig in al W ars aw Co nv en ti on

. Seco nd

, Arti c l e 2 5 of th e Mo nt real

Co nv en ti on , en ti tl ed “ St ip ul at io n on Lim it s,” st at es “ [a] carr ie r m ay st ip ul at e th at th e

co nt ract of carr ia ge sh al l be su bjec t t o h ig he r li m it s o f li ab il it y th an th os e pr ov id ed

fo r i n th is Co nv en ti on or to no li m it s of li ab il it y wha ts oe ve r.” Arti cl e 25 is ne w;

th ere is no pa ral le l pr ov is io n in th e Wa r s a w Co nv en ti on or it s su bs eq ue nt

5am en dm en ts

. So

, th e W ars aw Co nv en ti on as am en de d ex pr es sl y pr ov id ed th at li m it s

on li ab il it y

for da m ag e to carg o c ou ld be in crea se d if a sh ip pe r de cl ared a va lu e fo r

th e carg o an d pa id a su pp le m en ta ry su m if th e cas e so req ui red ; it is un cl ear whe th er

th is wa s th e so le m ean s to in crea se a carr ie r’s po te nt ia l li ab il it y

. Afte r Nov em be r 1

20 03

, whe n th e Mo nt real Co nv e n ti on en te red in to fo rce, li m it s on carr ie r li ab il it y

co ul d be in crea se d ei th er by th e sh ip pe r de cl ari ng a va l u e f o r th e carg o or by th e

carr ie r st ip ul at in g th at th e co nt ract of carr ia ge , i.e. th e ai r way bi ll

, sh al l be su bjec t to

hi gh er li m it s of li ab il it y

. Se e St

. Pau l In s. Co

. v. Ven ez ue la n In t’l Air wa ys

, In c. , 80 7

F.2 d 15 43

, 15 47 n.6 (1 1t h Ci r. 19 87 ) (n ot in g th at on e of th e f u n c t io ns of an ai r

way bi ll is to ser ve as t he co nt ract of c arri ag e o f go od s.)

B. Fact ua l Ba ck gr ou nd

Eli Lil ly is on e o f t h e w o rld ’s la rg es t ph arm aceu ti cal co m pa ni es

. It ha s

m an uf act ur in g pl an ts in th irt een co un tri es , co nd uc ts cl in ic al res earc h in m or e th an

fif ty co un tri es , an d m ark et s pr od u c t s in 14 3 co un tri es

. Eli Lil ly reg ul arl y sh ip s

The Warsaw Convention permitted a passeng er and car ri er to ag ree to a highe r limit of 1
liability for death or persona l injury “by specia l contra ct.” Warsaw Convention Ar t

. 2 2 (1 ). See generally Thomas J

. Whalen, Update on the IATA Intercarrier Agreem ent

, 13 A I R & S P A C E L A W 1 (1998) (desc ribing interca rrier ag ree ments invoking Article 22(1) of th e W ar s aw Convention to
incre ase limit s on liability for passeng er death or persona l injury). This “spec ial contra ct” provision

did not expressly apply to ba g g ag e or car g o. But, a specia l c ontrac t to waive limit s on liability for damag e to or loss of car g o may have been valid under Article 33 of the Warsaw Convention, which provides “[n] othing contained in this convention shall preve nt the car rier either from ref

using to

enter into any contra ct of transporta tion or from making reg

ulations which do not c onflict with the provisions of this Convention.”

6pr od uc ts aro un d th e wor ld

, an d du e to it s co m pl ex su pp ly ch ai n, it en ga ge s pr ov id ers

of in te rn at io na l lo gi st ic se rv ic es who as si st El i Lil ly in co or di na ti ng sh ip pi ng ,

wareh ou si ng , an d di st rib ut io n of it s pr od uc ts

. DHL is th e wor ld ’s la rg es t pr ov id er of

lo gi st ic s s erv ic es

. Am on g ot he r th in gs , it pr ov id es in te rn at io na l fr ei gh t fo rward in g

se rv ic es ; it arra ng es , th ro u g h v a rio us th ird -p art y carr ie rs , ai r an d oc ean frei gh t

se rv ic es , gro un d t ran sp or ta ti on , and wareh ou si ng

.

DHL an d Eli Lil ly en te red in to a lo ng -te rm se rv ic e ag reem en t co ve ring a pe riod

of fiv e-years be gi nn in g on Ja nu ary 1, 20 03

, el ev en m on th s be fo re th e Mo n t r e al

Co nv en ti on en te red in to fo rce. The ag reem en t st at es th at DHL wil l pr ov id e Eli Lil ly

th e fo ll owi ng se rv ic es rel at ed to th e tra ns po rt of ph arm aceu ti cal s to an d fro m Euro pe

an d th e Uni te d St at es : ai rfre ig ht

, oc ean frei gh t, m ult im oda l se rv ic e, cu sto m s cl earanc e

an d br ok erag e se rv ic es , la nd tra ns po rta ti on , wareh ou si ng an d d i s t rib ut io n, pr ojec t

m an ag em en t, an d cu st om er se rv ic e su pp or t. (R. 2- 93 Ex. C at 4.) It fu rth er st at es th at

DHL “ is to ut il iz e hi gh qu al it y ai rfre ig ht se rv ic e pr ov i d e r s o r if req ue st ed

, to us e a

c a r r i e r s e le ct ed by Lil ly.” ( Id

. at 5.) Arti cl e Fi ve of th e ag reem en t is en ti tl ed

“ In de m ni fic at io n.” The fir st pa rag rap h pr ov id es th at DHL ag rees to in de m n i f y Eli

Lil ly ag ai ns t th ird -p art y cl ai m s ari si ng fro m br each of th e se rv ic e ag reem en t. ( Id

. at

10 .) Th e s e c o nd pa rag rap h co nt ai ns a li m it at io n of li ab il it y st at in g, in pa rt, th at

da m ag es th at ei th er pa rty i s r e q u i red to pa y fo r wha te ve r reas on sh al l be li m it ed to

7two ti m es th e am ou nt of th e to ta l fees pa y ab le to DHL un de r th e se rv ic e ag reem en t.

( Id

. at 11 .) It al so st at es th at ne it he r pa rty sh al l be li ab le fo r lo ss of pr of it s ari si ng ou t

of ob li ga ti on s u nd er t he ag reem en t. ( Id

. )

El i Lil ly Fra nc e, S.A., a n Eli Lil ly aff il ia te , m an uf

act ur es ph arm aceu ti cal s a t

a pl an t in Feg ers he im

, Fran ce. Eli Lil ly Fran ce reg ul arl y sh ip s ph arm aceu ti cal s

be twee n Feg ers he im an d th e Uni te d St at es

. Luft ha ns a is Eli Lil ly’ s pr efer red carr ie r

fo r th es e sh ip m en ts

, an d Eli Lil ly pu rch as ed a sh ip pi ng se rv ic e fro m Luft ha ns a cal le d

“ Co ol /t d.” Thro ug h th is se rv i c e , Lu fth an sa sh ip s pr od uc ts in in su la te d co nt ai ne rs

de si gn ed to ke ep carg o co ol du rin g tra ns it

. The co nt ai ne rs do no t pr ot ect carg o fro m

free zi ng te m

pe rat ur es , bu t Eli Lil ly Fran ce pl aces te m pe rat ur e reco rd in g de vi ces in

th e co nt ai ne rs to m on it or th e ai r t e m pe rat ur e to whi ch th e co nt ai ne r an d carg o are

ex po se d du rin g tra ns it

. Und er th e Co ol /t d se rv ic e, Luft ha ns a pr ov id es tru ck in g fro m

th e Feg ers he im pl an t to th e ai rp or t of de pa rtu re, ai rp or t st or ag e of th e co nt ai ne rs ,

lo ad in g of th e co nt ai ne rs on to ai rp la ne s, ai r tra ns po rt to Ch ic ag o O’ Hare ai rp or t, an d

tru ck in g s erv ic e fro m

O’ Hare t o a n El i Li ll y

faci li ty in In di an a.

Eli Lil ly reg ul arl y di rect ed DHL, pu rs ua nt to th e lo ng -te rm se rv ic e ag reem en t,

to arra ng e fo r Luft ha ns a to sh ip co nt ai ne rs of ph arm aceu ti cal s by ai r fro m Feg ers he im

to th e Uni te d St at es

. In Decem be r 20 04

, Eli Lil ly Fran ce req ue st ed th at DHL arra ng e

a sh ip m en t from Feg ers he im to In di an a of ei gh t con ta in ers of co ld -s en si ti ve in su li n

8an d gr owt h ho rm on e ut il iz in g th e Co ol /t d se rv ic e. The ei gh t co nt ai ne rs were di vi de d

in to two sh ip m en ts

, an d DHL arra ng ed fo r th e s h i p ment s to de pa rt fro m Mu ni ch

,

Germ an y

. DHL th en is su ed two “ ho us e ai r way bi ll s,” whi ch are co nt ract s of carr ia ge

b e t w e e n Eli Lil ly an d DHL. It al so is su ed two “ m as te r ai r way bi ll s,” whi ch ar e

co nt ract s of carr ia ge be twee n DHL an d Luft ha ns a. All way bi ll s co n t a i n e d a bo x

la be le d “ Decl ared Valu e fo r Carr ia ge .” El i Li l l y’s pr act ic e wit h res pe ct to th e

sh ip m en ts ha nd le d by DHL an d Lu f t h a n s a was ne ve r to de cl are an y va lu e fo r th e

sh ip m en ts

. Co ns is te nt wit h th is pr act ic e, th e bo xe s were m ark ed “ NVD,” or no va lu e

de cl ared

. The wa y

bi ll s al so in st ru ct ed th e carr ie r to refr ig erat e th e carg o at ei gh t

de gr ees Cel si us an d t o a vo id free zi ng

.

The sh ip m en ts were tra ns po rte d fro m th e Feg ers he im pl an t to th e Mu ni ch

ai rp or t in he at ed tru ck s hi red by Luft ha ns a. Due to ad m it te d hu m an e r r o r by

Luft ha n s a p e r so nn el

, th e co nt ai ne rs were le ft ou ts id e in su b- free zi ng te m pe rat ur es

be fo re th ey were lo ad ed on to ai rp la ne s fo r sh ip m en t to th e Uni te d St at es

. W he n th e

sh ip m en ts arri ve d in In di a n a , t em pe rat ur e reco rd in g de vi ces in si de th e in su la te d

co nt ai ne rs sh owe d th at th e co n t e n t s o f s ev en of th e ei gh t co nt ai ne rs ha d be en

su bjec te d t o s ub -fre ezi ng tem pe rat ur es

.

A few da y s aft er th e sh ip m en ts arri ve d in In di an a, Eli Lil ly Fran ce ga ve no ti ces

of cl ai m to DHL fo r da m ag e to th e car g o , a n d DHL ga ve no ti ces of cl ai m to

9Luft ha ns a. A DHL a g e n t th en se nt an e-m ai l to Eli Lil ly’ s in su ran ce co m pa ny

rep res e n t a t i v es req ue st in g th at th e da m ag ed in su li n pr od uc ts no t be de st ro y ed

. Eli

Lil ly pe rm it te d DHL r e p r e se nt at iv es to ex am in e th e in su li n pr od uc ts

, bu t di d no t

al lo w th em to be rem ov ed fro m th e Eli Lil ly faci li ty. Eli Lil ly as se rts th at it de st ro y ed

the in su li n pr od uc ts sh ip pe d in th e co nt ai ne rs in whi ch te m pe rat ur e reco rd in g de vi ce s

r e gi st ered be lo w free zi ng te m pe rat ur es , bu t th at it sa lv ag ed so m e of th e g r o w t h

ho rm on e. It cl ai m s th at de st ro y in g th e in su li n was ne ces sa ry be cau se de te rm in in g

whe th er i t re m ai ne d v ia bl e aft er b ei ng ex po se d t o su b- free zi ng tem pe rat ur es wou ld

ha ve req ui red th at th e in su li n be su bjec te d to de st ru ct iv e te s ti ng

. Eli Lil ly ha s no t

pr o d u c e d reco rd s do cu m en ti ng th e de st ru ct io n of th e in su li n pr od uc ts

, an d DHL

co nt es ts whet he r th ey

were ac tu al ly des tro y ed

.

Eli Lil ly m ad e a cl ai m to it s i ns ur er, E lg o Ins ur an ce Com pa ny, in th e am ou nt

of $1 0,2 51 ,43 2.5 0, whi ch rep res en t e d t he “ tra ns fer pr ic e” of th e in su li n pr od uc ts

.

The tra ns fer p ric e is th e p ric e at whi ch an Eli Lil ly aff il ia te in th e su pp ly ch ai n t ha t

is in po ss es si on of a pr od uc t at a cert ai n po in t in ti m e se ll s th e pr od uc t to an ot he r Eli

Lil ly affi li at e or a th ird -p art y

. It en co m pa ss es al l of th e co st s in cu rred th ro ug ho ut th e

Eli Lil ly su pp ly c h a i n a n d a ll of th e pr of it th at is earn ed in each st ep of th e su pp ly

ch ai n by an Eli Li l l y a f

f i l i at e up to th at po in t in ti m e. The in su rer an d rei ns ur ers

ul ti m at el y

pa id Eli Lil ly $9,0 00 ,00 0 t o s at is fy th e cl ai m

.

10II. PROC EDURAL HISTORY

Eli Lil ly, in di vi du al ly an d fo r th e us e an d be ne fit of it s in su rer Elg o In su ran ce

Co m pa ny Lim it ed

, in di vi du al ly an d fo r th e us e an d be ne fit of Cert ai n Lon do n Mar ke t

Rei ns ur an ce Und erwri te rs , fil ed th is act io n ag ai ns t DHL an d Luft ha ns a in th e Uni te d

St at es Dis tri ct Co ur t fo r th e So ut he rn Dis tri ct of Fl or id a. The co m pl ai nt as se rts a 2

cl ai m a g a i n s t DHL fo r br each of th e lo ng -te rm se rv ic e ag reem en t. It al so as se rts

cl ai m s fo r br each of th e ai r way bi ll co nt ract s ag ai ns t Luft ha ns a an d DHL. Defen da nt s

an swe red th e co m

pl ai nt

, an d D H L fil ed a cro ss -cl ai m ag ai ns t Luft ha ns a fo r br each

of co nt ract an d i nd em

ni fic at io n o r co nt rib ut io n.

A ll pa rt ie s m ove d fo r su m

m ary jud gm en t an d m ov ed to st rik e certain af fi da vit s.

Defen da nt s al so so ug ht sa nc ti on s fo r sp ol ia ti on of ev id en ce. The di st ric t co ur t is su ed

an om ni bu s or de r in whi ch it (1 ) d i s mi s se d th e cl ai m fo r br each of th e se rv ic e

ag reem en t be cau se it is pr eem pt ed by th e Mo nt real Co nv en ti on , Eli Li ll y & Co

. v. Air

Exp re ss In t’l USA, In c. , 60 2 F. Su p p

. 2 d, 12 60

, 12 68 -6 9 (S.D. Fl a. 20 09 ); (2 ) he ld

th at DHL, as a co nt ract in g carr ie r, an d Luft ha ns a, as an act ua l carr ie r, are li ab le un de r

th e Mo nt real Co nv en ti on fo r br each of th e ai r way bi ll s, id

. at 12 69 -7 5; (3 ) he ld th at

Luft ha ns a’s li ab il it y fo r th e da m ag ed carg o is cap pe d at se ve nt een SDRs pe r ki lo gr am

The Complaint also named a s defe ndants Danzas Corporation, De utsche Post World Net, 2

and DHL Ex press (USA), I nc. These defe ndants wer e dismiss ed without prejudice at an ear ly stag e in the litigation.

11pu rs ua nt to Arti cl e 22 (3 ) of th e Mo nt real Co nv en ti on , id

. at 12 75 ; (4 ) he ld th at DHL’ s

li ab il it y is no t li m it ed b y t h e M on tre al Co nv en ti on an d is in st ead go ve rn ed by th e

te rm s of th e li ab il it y pr ov is io n co nt ai ne d in th e lo ng -te rm se rv ic e ag ree men t, id

. at

12 76 -7 8; (5 ) he ld th at da m ag es are to be cal cu la te d ba se d on th e tra ns fer pr ic e of th e

d a mag ed carg o, id

. at 12 78 -7 9; (6 ) he ld th at Eli Lil ly di d no t co m m it sp ol ia ti on o f

ev id en ce, id

. at 12 79 -8 0; an d (7 ) de ni ed a l l moti on s to st rik e, id

. at 12 80 -8 1.

The reaf te r, Pl ai nt iff

s se tt le d al l cl ai m s ag ai ns t Luft ha ns a an d al l pa rti es st ip ul at ed to

Luft ha ns a’s di sm is sa l fro m th e cas e. (R.5 -2 58 .) In ad di ti on , Pl ai nt i f f s a n d DHL

st ip ul at ed , wit ho ut waiv in g DHL’s rig ht s to co nt es t cert ai n rul in gs co nt ai ne d i n t he

om ni bu s or de r, th at jud gm en t m ay be en te red ag ai ns t DHL an d in fav or of Pl ai nt iff s

fo r th e su m of $1 0,2 16 ,95 8.1 2. (R.5 -2 59 .) The co ur t th en en te red a fin al jud gm en t

in fav or of P la in ti ffs ag ai ns t DHL (R.5 -2 60 ) an d di sm is se d al l cl ai m s ag ai ns t

Luft ha ns a wit h pr ejud ic e. DHL ap pe al s, ch al le ng in g: (1 ) t he gr an t of su m m ary

jud gm en t in fav or of Pl ai nt iff s on th e is su e of li ab il it y an d th e de ni al of it s m ot io n fo r

su m m ary jud gm en t on th at is su e; (2 ) th e ru li ng th at DHL’ s li ab i l i t y i s g ov ern ed by

th e li ab il it y pr ov is io n in th e lo ng -te rm se rv ic e ag reem en t; an d ( 3 ) th e de ni al of it s

m ot io n fo r sa nc ti on s fo r sp ol ia ti on of e vi de nc e.

12III. ISS UES ON APPEAL A ND CONTENT IONS OF THE PARTIES

The m ai n is su e on ap pe al is whe th er DHL’ s li ab il it y sh ou ld be li m it ed to

se ve nt een SDRs pe r ki lo gr am of th e da m ag ed carg o pu rs ua nt to Arti cl e 22 (3 ) of th e

Mo nt real Co nv en ti on , or whe th er th e lo ng -te rm se rv ic e ag reem en t be twee n DHL an d

Eli Lil ly co ns ti tu te s a st ip ul at io n to waiv e th os e li m it s. DHL arg ue s: (1 ) be cau se th e

co ur t di sm is se d Pl ai nt iff

s’ cl ai m fo r br each of th e se rv ic e ag reem en t as pr eem pt ed by

th e Mo nt real Co nv en ti on , it erre d in ap pl y in g th e te rm s of th at ag r e e men t to

P la in ti ffs ’ rem ai ni ng cl ai m s fo r br each of th e ai r way bi ll co nt ract s; (2 ) t h e c o u r t

im pr op erl y in co rp or at ed th e te rm s of th e se rv ic e ag reem en t in to th e se pa rat e ai r

way bi ll co nt ract s be cau se th e ai r way bi ll co nt ract s were m ark ed “ no va lu e de cl ared ”;

(3 ) DHL di d no t br each th e se rv ic e ag reem en t, an d th e li ab il it y li m it at io n co nt ai ne d

th erei n ap pl ie s on ly if Eli Lil ly so ug ht in de m ni ty fro m th ird -p art y cl ai m s ari si ng fro m

br each of th e ag reem en t; an d (4 ) th e li ab il it y li m it at io n in th e se rv ic e ag reem en t is

am bi gu ou s, and th e co ur t er red in in te rp ret in g t ha t p ro vi si on in fav or of th e dr aft er,

Eli Lil ly. Pl ai nt iff

s co un te r th at : (1 ) th e se rv ic e ag reem en t pr ov id es th at al l ai r

way bi ll co nt ract s be twee n th e pa rti es wou ld be su bjec t to li m it s of li ab il it y in ex ces s

of 17 SDRs pe r ki lo gr am ; (2) th e Mo nt real Co nv en ti on pe rm it s p art ie s t o e nt er int o

an ag reem en t co ll at eral to th e ai r way bi ll co nt ract s waiv in g th e Co nv en ti on ’s li m it s;

(3 ) th ere was no reas on fo r El i Li l l y t o de cl are a va lu e on th e ai r way bi ll s be cau se

13un de r th e se rv ic e ag reem en t th e pa rti es op te d ou t of th e Mo nt real Co nv en ti on li ab il it y

reg im e; ( 4 ) th e li ab il it y pr ov is io n ap pl ie d no t on ly to in de m ni ty cl ai m s bu t to al l

cl ai m s ar is in g fr om

th e ag reem en t; an d (5 ) it was n ot am bi gu ou s. 3

DHL al so co nt en ds th at in co nc lu di ng th at th e ph arm aceu ti cal s were da m ag ed

,

th e co ur t erre d in co ns id eri n g a n affi da vi t of Ren e Sch eer, an Eli Lil ly lo gi st ic s

m an ag er

. I t a rg ue s th at th e co nt en ts of th e affi da vi t were no t ba se d on Sch eer’s

pe rs on al kn owl ed ge , th at th ey were he ars ay , th at at ta ch ed do cu m en ts were no t

au th en ti cat ed

, an d th at th e do cu m en ts were tra ns la te d fro m Fren ch to En g l i s h by

Sch eer hi m se lf, who is no t a cert ifi ed tra ns la to r. Pl ai nt iff s co un te r th at th e di st ric t

co ur t di d no t rel y on th e ch al le ng ed po rti on s of th e affi da vi t, th at th e co nt en ts of th e

affi da vi t wer e dr awn fro m Sch eer’s pe rs on al kn owl ed ge ga in ed fro m hi s jo b d ut ie s

as a lo gi st ic s m an ag er, th at th e tra ns la ti on s co m po rt wit h t h e F e d e r al Ru le s of

DHL also contends that even if the court did not err in holding that the Montreal Convention 3

limit s wer e waived by the long- term service ag ree ment, it err ed in calc ulating damag es based upon the transfe r price of the damag ed insulin produc ts a s opposed to the cost of repla ceme nt. I t a rg ues that the transfe r price includes lost profits, which the liability provision pre cl u des Eli L illy from

rec overing . Plaintiffs c ounter that the transfe r price repr esents the rea l va lue of the car g o; w hile it

includes profits lost by Eli L illy aff iliates, it does not include any of the profits to which Eli L illy

itself would have been entitled in a sale of the pharma ceutica ls to third parties. Be cause we conclude

that the Montreal Convention limit s DHL ’s liability t o sevente en SDRs per kilogr am, we do not
addre ss whether the court err ed in calc ulating damag es based upon the transfe r price of the damag ed

insulin.

14Evi de nc e, an d th at th e at ta ch ed do cu m en ts fal l un de r th e bu si ne ss reco rd s ex cep ti on

to th e h ears ay

rul e.

DHL fu rth er co nt en ds th at su m m ary jud gm en t was in ap pr op ria te ly gr an te d on

th e is su e of whe th er th e ph arm aceu ti cal s were da m ag ed in tra ns it

. It po in ts ou t th at

Pl ai nt iff s di d no t pres en t p ro of

th at th e ph arm aceu ti cal s were in fact de st ro y ed

, an d

i t cl ai m s th at Eli Lil ly refu se d to pr od uc e th e ph arm aceu ti cal s fo r te st i n g a n d

in sp ect io n b y DHL. Pl ai nt iff s co un te r th at th ey pr es en te d ev id en ce t ha t t he in su li n

pr od uc ts were su bjec te d to su b- free zi ng te m pe ra tur es dur ing tr an sit

, an d thi s ex po su re

ren de red th em

wort hl es s wh et he r or no t ac tu al da m ag e o ccu rred

.

Fi na ll y , DHL con te nd s t ha t t he co ur t ab us ed it s di sc ret io n i n h ol di ng th at Eli

Lil ly di d no t co m

m it sp ol ia ti on of ev id en ce by refu si ng to pe rm it te st in g an d

in sp ect io n of th e ph arm aceu ti cal s. P l a in ti ffs co un te r th at a pa rty m ov in g fo r

sa nc ti on s fo r sp ol ia ti on of ev id en ce m us t pr ov e pr ejud ic e. And

, fed eral reg ul at io ns

m an da te de st ru ct io n of ph arm aceu ti cal pr od uc ts s u b je c te d to su b- free zi ng

te m pe rat ur es whe th er or no t th ey are in fact da m ag ed

. Giv en th at th e ph arm aceu ti cal s

were wor th le ss reg ard le ss of th ei r co nd it io n, Pl ai nt iff s arg ue th at DHL di d no t su ffer

pr ejud ic e fro m no t ha vi ng th e op po rtu ni ty to in sp ect th e ph arm aceu ti cal s be fo re th ey

were d es tro y ed

.

15IV. STANDARD OF REVIEW

W e co ns id er de no vo a g ran t or de ni al of su m m ary jud gm en t, ap pl y in g th e

sa m e le ga l st an da rd s as th e di st ric t co ur t. Bak er v. Bi r m i n g h am Bd. of Edu c. , 53 1

F.3 d 1 33 6, 1 33 7 (1 1t h C ir. 2 00 8)

.

A di st ric t co ur t’s e v i d e n ti ary ru li ng s are rev ie wed fo r ab us e of di sc ret io n.

Gen er al Elec . Co. v. J

oi ne r , 52 2 U.S. 1 36 , 14 1, 1 18 S. Ct. 5 12 , 51 7 (1 99 7)

.

A di st ric t co ur t’s de ci si on reg ard in g sp ol ia ti on sa nc ti on s is rev ie wed fo r ab us e

of di sc ret io n. Har ri s v. C

ha pma n , 97 F.3d 49 9, 5 06 (11 th Cir . 19 96 ).

V. DISCUSSION

A. Th e Mon tr ea l Con ven ti on li mit s DHL’s lia bi li ty to 17 SDRs pe r ki lo gr am

of th e d ama ge d p ha rma ceu ti ca ls

.

The Mo nt real Co nv en ti on li m it s on li ab il it y m ay be waiv ed un de r Arti cl e 22 (3 )

if th e sh ip pe r de cl ares a va lu e fo r th e carg o or un de r Arti cl e 25 if th e carr ie r st ip ul at es

t h at th e co nt ract of carr ia ge sh al l be su bjec t to hi gh er li m it s of li ab il it y

. It is

un di sp ut ed th at Eli Lil ly di d no t de cl are a va lu e fo r th e carg o. At is su e is whe th er a

pr ov is io n in th e lo ng -te r m se rv ic e ag reem en t co ns ti tu te s a st ip ul at io n to waiv e th e

Mo nt real Co nv en ti on li m it s.

T he di st ric t co ur t di sm is se d Pl ai nt iff s’ cl ai m fo r br each of th e lon g- te rm se rv ic e

ag reem en t beca us e it was pr eem pt ed by th e Mo nt real Co nv en ti on , an d th is ru li ng is

16no t co nt es te d on ap pe al

. Pl ai nt iff s’ rem ai ni ng cl ai m s al le ge br each of th e ai r way bi ll 4

co nt rac t s

. Th e co ur t no te d th at “ [t]he pa rti es di d no t st ip ul at e in an y of th e ai r

way bi ll s th at th e sh ip m en ts in qu es ti on wou ld be su bjec t to hi gh er lim it s of li ab il it y

th an th os e pr ov id ed fo r in th e Mo nt real Co nv en ti on .” Eli Li ll y , 60 2 F. Su pp

. 2d at

12 76

. Nev ert he le ss , it he ld th at DHL st ip ul at ed to waiv e t h e Co nv en ti on ’s li m it s

th ro ug h th e li ab il it y pr o v i s i o n i n th e lo ng -te rm se rv ic e ag reem en t. Id

. The co ur t

ex pl ai ne d th at “ th e Liab il it y Lim it at io n cl earl y a n d un am bi gu ou sl y es ta bl is he s th at

DHL’ s li ab il it y is li m it ed to two ti m es th e to ta l fees pa y ab le to DHL fo r th e du rat io n

of th e Serv ic e Agr eem en t.” I d

. Th e ai r way

bi ll s an d th e se rv ic e ag reem en t are

se pa rat e co nt rac t s , an d th ey were no t ex ecu te d co nt em po ran eo us ly. The refo re, in

co nc lu di ng th at a pr ov is io n in th e se rv ic e ag reem en t se rv es as a st ip ul at io n to su bjec t

th e way bi ll s to in crea se d li m it s on li ab il it y , th e co ur t im pl ic it ly he ld th at th e se rv ic e

ag reem en t i s i nc or

po rat ed in to th e ai r way

bi ll co nt ract s.

In ad dr es si ng whe th er th e li ab il it y pr ov is i o n o f th e se rv ic e ag reem en t

co ns ti tu te s a st ip ul at io n to waiv e th e Mo nt real Co nv en ti on li m it s, we fir st in te rp ret

th e te rm s of th e se rv ic e ag reem en t an d th e ai r way bi ll co nt ract s; we m

us t di sc ern th e

Article 29 of

the Convention pree mpts state law actions falling within its scope. I t rea ds, 4

in part, “[i] n the car

riag e of passeng ers, bag g ag e and ca rg o, any action for damag es, howeve r founded, whether

under this Convention or in contra ct or in tort or otherwise, can only be broug ht subject to the condi t i o n s and such limit s of liability as are set out in this Convention

. . . .” See Paradis v. Ghana Airways Ltd ., 348 F. Supp. 2d 106, 111 (S.D.N.Y. 2004)

.

17m ean in g of th e li ab il it y pr ov is io n an d di sc ern whe th er th e pa r t i e s in te nd ed to

in co rp or at e th at pr ov is io n in to th e ai r way bi ll co nt ract s. W e ge ne ral ly ap pl y st at e la w

to su ch qu es ti on s o f co nt ract in te rp ret at io n, an d t he pa rti es ass um e th at Flo rid a la w

co nt r o ls

. Se e e.g

. In re Ch ir a , 56 7 F.3 d 13 07

, 13 11 (1 1t h Ci r. 20 09 ) (“ The

5

in te rp ret at io n of pr iv at e co nt ract s is or di na ril y a qu es ti on of st at e la w.”) (q uo ta ti on s

an d ci ta ti on s om it te d)

. If we co nc lu de th at t h e pa rti es di d in te nd fo r th e li ab il it y

pr ov is io n to se rv e as su ch a st ip ul at io n, we wou ld ha ve to co ns id er whe th e r th at

st ip ul at io n is effe ct iv e. W e wou ld ex am in e Arti cl e 25 of th e Mo nt rea l C on ve nt io n

to de te rm in e wha t a carr ie r m us t do to effe ct iv el y st ip ul at e th at a co nt ract of carr ia ge

sh al l be su bjec t to li m it s of li ab il it y i n ex ces s of se ve nt een SDRs pe r ki lo gr am

.

Bec au se th is in vo l v e s in te rp ret at io n of an in te rn at io na l tre at y , it is a qu es ti on of

fed eral la w. Se e Mau gn ie v. Co mpa gn ie Na ti on al e Air Fra nc e , 54 9 F.2 d 12 56

, 12 58

(9 th Ci r. 19 77 ) (“ The sc op e of th e W ars aw Co nv en ti on is a m at te r of fed eral la w an d

fed eral tre at y in te rp ret at io n, an d m us t be de te rm in ed fro m an ex am in at io n of th e ‘fou r

co rn ers of t he tre at y .’ ”) (c it at io ns om it te d)

.

N e it h e r th e service ag ree ment nor the air way bill contra cts contain a choice of la w p r o v is io n

. 5

Eli L illy is an I ndiana corpor ation, and DHL i s a fo re i gn co rpora tion, but its headqua

rters is in

Florida

. The incidents g iving rise to this dispute occur red in Fr ance , Ger

many , and I n d i an a. I t i s unclea r what law g overns the interpre tation of the service ag ree ment and the air way bill contra cts.

We need not dwell on choice of law issues, howeve r, beca use we apply g ener al rules of contra ct interpre tation to discern the meaning of the contra cts. We w ould r eac h the same conclusions as to
these issues re g ardle ss of what law we a pplied.

18Befo re tu rn in g to whe th er th e pa rti e s i n t e nd ed to in co rp or at e th e li ab il it y

pr ov is io n of th e se rv ic e ag reem en t in to th e ai r way bi ll co nt ract s, we pa us e to no te th at

it is an op en qu es ti on whe th er Arti cl e 25 of th e Mo nt real Co nv en ti on pe rm it s pa rti es

to ag ree to waiv e th e Co nv en ti on ’s li m it s in a do cu m e n t se pa rat e fro m th e ai r

way bi ll s. DHL co nt en ds th at a st ip ul at io n un de r Arti cl e 25 is va li d on ly if co nt ai ne d

in th e co nt ract of carr ia ge , i.e. th e ai r w a y bi ll

, it se lf. W e are aware of no au th or it y

su pp or ti ng th is po si ti on

. And

, Arti cl e 25 do es no t s ta te th at th e st ip ul at io n m us t be

“ in ” th e co nt ract of carr ia ge

. Fu rth er, A rti cl e 27 pr ov id es th at “ [n ]oth in g co nt ai ne d

in th is Co nv en ti on sh al l pr ev en t th e carr ie r

. . . fro m waiv in g an y de fen ces av ai la bl e

un de r th e Co nv en ti on , or fro m la y in g do wn co nd it io ns whi ch do no t co nf li ct wit h th e

p r o v i s io ns of th is Co nv en ti on .” So

, it ap pe ars fro m th e la ng ua ge of th e Mo nt real

Co nv en ti on th at a st ip ul a t i o n to in crea se a carr ie r’s po te nt ia l li ab il it y m ay be va li d

ev en if it is no t set fo rth in th e way bi ll it se lf. Nev ert he le ss , we ne ed no t deci de th is

is su e. W e as su m e th at a carr ie r m ay st ip ul at e to waiv e th e Co nv en ti on ’s li m it s i n a

do cu m en t se pa rat e fro m th e ai r way bi ll

. Bu t, we co nc lu de th at t h e pa rti es di d no t

in te nd fo r th e li ab il it y pr ov is io n in Arti cl e 5 of th e lo ng -te rm se rv ic e ag reem en t to be

su ch a st ip ul at io n.

19The fir st pa rag rap h of Arti cl e 5 is a th ird -p art y in de m ni ty pr ov is io n. It read s:

Arti cl e 5 : In de m

ni fic at io n

Exc ep t fo r c l a i ms fo r pe rs on al in jury or pr op ert y da m ag e whi ch are

cau se d by th e fai lu re of Lil ly to ob se rv e an y of th e te rm s an d co nd it io ns of th is ag reem en t an d th os e cl ai m s fo r pe rs on al in jury or pr op ert y da m ag e whi ch ari se fro m th e gr os s ne gl ig en ce or wil lfu l m is co nd uc t of

Lil ly, Su pp li er he reb y ag rees to in de m ni fy an d ho ld Lil ly ha rm le ss

ag ai ns t an d fro m an y an d al l cl ai m s ar is in g fr om an y bre ach or de fau lt

in th e pe rfo rm an ce of an y ob li ga ti on on Su pp li er’s pa rt to be pe rfo rm ed

un de r th e te rm s of th e ag reem en t, or ari si ng fro m an y act

, ne gl ect

, fau lt

,

or om is si on of Su pp li er or of it s ag en ts

, em pl oyees, vi si to rs , in vi te es , or li cen se e an d fro m an d ag ai ns t al l co st s, at to rn ey ’s fe e s , e x p en se s, an d

li ab il it ie s in cu rred in or a b o u t a n y su ch cl ai m s or an y act io n ag ai ns t

cu st om er by reas on of su ch cl ai m

. Su pp li er, up on no ti ce of Lil ly, sh al l

de fen d s am e at Su pp li er’s ex pe ns e.

(R.2 -9 3 Ex. C. at 10 .) Thi s pr ov is io n ap pe ars to req ui re DHL to in de m ni fy Eli Lil ly

fro m th ird -p art y cl ai m s th at ari se fro m DHL’ s br each of th e se rv ic e ag reem en t. The

se co nd pa rag rap h o f Arti cl e 5 is en ti tl ed “ Liab il it y Lim it at io ns .” It re ad s:

Exc ep t fo r a pa rty’ s ob li ga ti on s of th is A g r e e m en t, an y da m ag es th at
ei th er pa rty is req ui red to pa y fo r an y reas on wha ts oe ve r an d reg ard le ss of th e fo rm of act io n, in th e ag gr eg at e, sh al l be li m it ed to two ti m es th e

am ou nt of th e to ta l fees pa y ab le to Su pp li er he reu nd er. Neit he r Su pp li er

no r Li l l y s ha ll be li ab le fo r an y sp eci al

, pu ni ti ve or co ns eq ue nt ia l

da m ag es , or lo ss of pr of it s ari si ng ou t of or in co nn e c t io n wit h th ei r

r e s pe ct iv e ob li ga ti on s un de r th is Agr eem en t. Not wit hs ta nd in g th e fo reg oi ng , if an y cl ai m ag ai ns t Su pp li er is a cl a i m c o v ered by an y in su ran ce po li c y mai nt ai ne d by Su pp li er, an y reco ve ry of pr oc eed s

un de r su ch po li cy sh al l be pa id to Lil ly t o th e ex te nt Lil ly’ s da m ag es

ex ceed th e fo reg oi ng li m it at io n o f li ab il it y

.

20(

Id

. at 11 .) Thi s pr ov is io n ap pe ars to cap ei th er pa rty’ s po te nt ia l li ab il it y to two ti m es

th e am ou nt of th e to ta l fees pa y ab le to DHL u n d er th e ag reem en t. Bec au se th e

li ab il it y pr ov is io n is co nt ai ne d in a se ct io n of th e ag reem en t ad dr es si ng

i n d e mn i fic at io n, th e pa rti es di sp ut e whe th er it ap pl ie s on ly whe re Eli Lil ly se ek s

in de m n i f i c a t i on fro m th ird pa rty cl ai m s ari si ng fro m DHL’ s br each of th e se rv ic e

a gr eem en t, or whe th er it ap pl ie s to an y an d al l cl ai m s ari si ng fro m th e s e r v i c e

ag r e e m en t. W e ne ed no t res ol ve th is di sp ut e. W ha te ve r th e sc op e of th e li ab il it y

pr ov is io n, we h av e no reas on to co nc lu de th at th e p art ie s i nt en de d fo r it to ap pl y to

th e se pa rat e ai r way

bi ll co nt ract s so as to su bjec t th os e co nt ract s to li m it s of li ab il it y

in ex ces s o f th os e im

po se d b y law.

The se rv ic e ag reem en t to ok effe ct Ja nu ary 1, 20 03

, el ev en m on th s befo re the

Mo nt real Co nv en ti on en te red in to fo rce. The go ve rn in g la w i n J a nu ary 20 03 (th e

W ars aw Co nv en ti on as am en de d by su bs eq u e n t in te rn at io na l ag reem en ts ) di d no t

in cl ud e a pr ov is io n pa ral le l to Arti cl e 25 of th e Mo nt real Co nv en ti on —o ne pr ov id in g

th at a carr ie r m ay

st ip ul at e th at a co nt ract of carr ia ge wou ld be su bjec t t o i nc reas ed

li m it s on li ab il it y

. Had th e pa rti es in te nd ed fo r th e se rv ic e ag reem en t to co ns ti tu te a

st ip ul at io n to waiv e li m it s on li ab il it y , th is wou ld no t ha ve be en ex pr es sl y pe rm it te d

21b y t he W ars aw Co nv en ti on , an d m ay ha ve be en in va li d. Thi s su gg es ts th at th e 6

pa rti es di d no t in te nd su c h a res ul t. In ad di ti on , th e se rv ic e ag reem en t m ak es no

m en ti on of th e Mo nt real Co nv en ti o n, th e W ars aw Co nv en ti on , th e co nc ep t of

de cl ared va lu e, or li m it s of li ab il it y im po se d by la w. Nor do es it co nt em pl at e th at th e

se rv ic e ag reem en t wou ld m od ify an y su bs eq ue nt ly ex ecu te d ai r way bi ll co nt ract s. In

su m , th ere is no in di cat io n th at th e pa r t i e s i nt en de d to op t ou t of th e Mo nt real

Co nv en ti on li ab il it y

reg im e th ro ug h Art ic le 5 o f th e se rv ic e ag reem en t.

The ai r way

bi ll co nt ract s at is su e were ex ecu te d aft er th e Mo nt real Co nv en ti on

to ok effe ct

. The pa rti es kn ew of th e li m it s on ai r carr ie r li ab il it y an d th e way s to

co nt ract aro un d th os e li m it s— de cl ari ng a va lu e fo r th e carg o or st ip ul at in g to waiv e

th e li m it s. The way

bi ll s sh ow t h a t t h e p a r ti es de cl in ed to do so

. The y no te th at

po te nt ia l li ab il it y is li m it ed to se ve nt een SDRs pe r ki lo gr am of carg o an d st at e, “ [t]he 7

sh ip pe r’s at te nt io n is dr awn to th e no ti ce co nc ern in g carr ie r’s li m it at io n of li ab il it y

.

Sh ip pe r m ay i n c r e a s e s uc h li m it at io n of li ab il it y by de cl ari ng a hi gh er va lu e fo r

carr ia ge an d pa y in g a su pp le m en ta l ch arg e if r e q u i r e d

. ” (R.1 -1 Ex’s A-D.)

But see supra note 1 (sug g esting that a stipulation to waive the Warsaw Convention limit s 6
on liability

may have be en valid under

Article 33 of

that convention).

T h e n otices of limit ed liability are printed on the reve rse side of the air way bills. Th e 7

repr oductions of these documents contained in the rec ord are illegible. (R.5-217 Ex

. A at 2.) Both parties acknow ledg e, howeve r, that the air way bill contra cts contain a clause limit ing liability to

sevente en SDRs per kilog ram. (A ppellee’ s Br . at 35; Appellant’s B r. at 24.)

22Fu rth erm or e, th e ai r way bi ll co nt ract s in di cat e no i nt en t to in co rp or at e th e se rv ic e

ag reem en t’s li ab il it y pr ov is io n. “ W he re a writ te n co nt ract refe rs to an d su ffi ci en tl y

de sc rib es an ot he r do cu m en t, th at o t h e r do cu m en t or so m uc h of it as is refe rred to

,

m ay be reg ard ed as pa rt of th e co nt ract an d th eref or e is p r o pe rly co ns id ered in it s

in te rp ret at io n.” Se e e.g

. H ur wi tz v. C.G.J. Co rp

. , 16 8 So

. 2d 84

, 86 (Fl a. 3d DCA

1 9 6 4) (in te rn al qu ot at io n an d ci ta ti on om it te d)

. The re is no m en ti on of th e s e r v i c e

ag r e em en t in th e ai r way bi ll co nt ract s. Had th e pa rti es ag reed to in co rp or at e th e

se rv ic e ag reem en t’s li ab il it y pr ov is i o n so as to waiv e th e Co nv en ti on ’s l im it s, th ey

co ul d h av e n ot ed th ei r in te nt to do so . But th ey di d n ot

.

The co nd uc t of an d co ur se of de al in gs be twee n th e pa rti es su pp or ts ou r

co nc lu si on

. Eli Lil ly pu rch as ed in su ran ce to fu ll y co ve r th e va lu e of th e carg o in th e

ev en t of it s da m ag e or lo ss in tra ns it (R.5 -2 18 at 89 ). Thi s su gg es ts th at Eli Lil ly

de cl in ed to op t ou t of th e Mo nt real Co n v e n t i on li ab il it y reg im e. Se e Gro up e

Ch eg ar ay /V. De Ch al us v

. P& O C on ta in er s , 2 51 F.3 d 13 59 , 1 36 3 (1 1t h Ci r. 20 01 )

(n ot in g th at sh ip pe rs , i n st ead of pa y in g in crea se d frei gh t by de cl ari ng th e va lu e of

wha t is sh ip pe d, ge ne ral ly bu y in su ran ce fro m carg o in su rers ). And

, in 20 02

, be fo re

th e se rv ic e ag reem en t to ok effe ct

, DHL arra ng ed fo r ai r carg o tra ns po rt of a nu m be r

of sh ip m en ts of Eli Lil ly ph arm aceu ti cal s. Eli Li ll y , 60 2 F. Su pp

. 2d at 12 65 (“ Si nc e

at le as t 20 02

, Lil ly Fran ce in st ru ct ed DHL to arra ng e bo ok in gs wit h Luft ha ns a fo r si x

23to ei gh t co nt ai ne rs to be sh ip pe d pe r week .”) Eli Lil ly de cl in ed to de cl are a va lu e fo r

th es e sh ip m en ts

. (R.5 -2 18 at 68 ) (ack no wled gi ng th at Eli Lil ly ne ve r de cl ared a va lu e

fo r carg o)

. Afte r th e se rv ic e ag reem en t be cam e effe ct iv e, DHL arra ng ed fo r

ad di ti on al sh ip m en ts

, in cl ud in g th e two th at ga ve ris e to th is cas e. Eli Lil ly de cl in ed

to de cl are a va lu e fo r th es e sh ip m en ts as well

. Thi s su gg es ts th at th e pa rti es di d no t

in te nd fo r th e lo ng -te rm se rv ic e ag reem e n t t o ha ve an y effe ct on DHL’ s po te nt ia l

li ab il it y un de r th e ai r way bi ll s ; it sh ows th at

, be fo re an d aft er th e ag reem en t

co m m en ced

, th ey in te nd ed fo r al l ai r way bi ll co nt ract s to be su bjec t t o l i mits of

li ab il it y im po se d b y th e Warsaw o r Mo nt real Co nv en ti on s.

Th e l on g- te rm se rv ic e ag reem en t m ak es no m en ti on of th e Mo nt real

Co nv en ti on , it s pr ed eces so r th e W ars aw Co nv en ti on , or to li m it s on ai r c a r r i er

li ab il it y im

po se d by la w. Nor do es th e face of th e ai r way bi ll co nt ract s sh ow th at th e

pa rti es in te nd ed to in co rp or at e th e te rm s of th e se rv ic e agre em en t int o tho se co ntracts

.

And

, th e co nd uc t an d co ur se of de al in gs be twee n th e pa rti es do es no t su gg es t

ot he rwis e. Fo r th es e reas on s, we co nc lu de th at th e pa rti es di d n o t in te nd fo r th e

li ab il it y pr ov is io n of th e lo ng -te rm se rv ic e ag reem en t to su bjec t th e ai r w a y bi ll

co nt ract s to in crea se d li m it s of li ab il it y

. W e ne ed no t reac h th e qu es ti on whe th er th at

pr ov is io n co ns ti tu te s an ef fe ct iv e st ip ul at i on un de r Arti cl e 25 of th e Mo nt real

Co nv en ti on

. Our co nc lu si on is dr awn so le ly fro m ou r in te rp ret at io n of th e co nt ract s,

24no t by co ns id eri ng whe th er Arti cl e 25 of th e Co nv en ti on wou ld ha ve pe rm it te d th e

pu rp or te d s ti pu la ti on

.

B. Th e di st ri ct co ur t di d no t ab us e it s di sc re ti on in co ns id er in g cer ta in

af fi da vi ts an d d ep os it io n t es ti mon y.

DHL ar g u es th at th e co ur t erre d in co ns id eri ng an affi da vi t of Ren e Sch eer,

lo gi st ic s m an ag er of Eli Lil ly Fran ce, in de te rm in in g whe th er th e carg o was de li ve red

t o D H L an d Luft ha ns a in go od co nd it io n. Acco rd in g to DHL, th e affi da vi t i s n o t 8

ba se d on Sch eer’s pe rs on al kn owl ed ge , is he ars ay , at ta ch ed do cu m en ts we r e no t

au th en ti cat ed

, an d th os e do cu m en ts were no t tra ns la te d fro m Fren ch to Eng li sh by a

cert ifi ed tra ns la to r. The se arg um en ts are wit ho ut m eri t. The co ur t “ on ly rel ie d o n

th at po rti on of Sc h e e r’s affi da vi t th at se ts fo rth an d at ta ch es th e bu si ne ss reco rd s

rel at in g to th e sh ip m en ts in qu es ti on : i.e., pa ck in g li st s fo r th e su bjec t carg o ge ne rat ed

by Lil ly Fran ce, pr ot oc ol s of m an uf act ur e, an al y si s, an d rel ea s e ; c e r ti fic at es of

an al y si s; an d ch eck li st s fo r t h e co nt ai ne rs .” Eli Li ll y , 6 02 F. Su pp . 2 d at 12 80

. W e

f i n d no erro r in th e di st ric t co ur t’s an al y si s in it s om ni bu s or de r co nc lu di ng th at

Sch eer is qu al ifi ed to te st ify co nc ern in g th e do cu m en ts at is su e, th at th os e do cu m en ts

fal l wit hi n th e bu si ne ss reco rd s ex cep ti on to th e h ears ay rul e, Fed . R. Evi d. 80 3( 6)

,

DHL also arg ues that the court err ed in considering deposition testimony of Michae l Mabe 8

and Wil liam C. Har

ris to conclude that the pharma ceutica ls wer e damag ed in transit. Upon revie w of the re cord, w e conc lude that these a rg uments are without merit.

25an d th at Sch eer’s tra ns la ti on s of th e do cu m en t s f r o m F r e nc h to Eng li sh co ul d be

co ns id ered . (

Id

. at 1 28 0- 81 .)

C. Su mmar

y ju dg men t wa s ap

pr op ri at el

y gr an te d on th e is su e of wh et he r th e

ca rg o wa s da mag ed in tr an si t, an d Pla in ti ff s di d no t co mmit sp ol ia ti on of evi de nc e.

DHL arg ue s th at be cau se Pl ai nt iff s fai le d to pr od uc e do cu m en ts sh owi ng th at

th e ph arm aceu ti cal s ha d be en de st ro y ed

, th ey fai le d to pr es en t ev id en ce su ffi ci en t to

sh ow th at th ey were da m ag ed in tra ns it

. DHL fu rth er argu es th at be cau se Pl ai nt iff s

de ni ed DHL an op po rtu ni ty to in sp ect an d te st th e ph arm aceu ti cal s, th ey co m m it te d

sp ol ia ti on of ev id en ce warra nt in g an ad ve rs e in fere nc e on th is is su e. Bu t, Pl ai nt iff s

pr odu ced reco rd s sh owi ng th at th e in su li n was su bjec te d to su b- free zi ng te m pe ratur es

an d ev id en ce sh owi ng th at th e de vi ces whi ch m eas ur ed th e te m pe rat ur es were te st ed

an d cert ifi ed fo r accu racy be fo re an d aft er us e. Fu rth er, feder al reg ul at io ns pr ov id e

th at ph arm aceu ti cal s su bjec te d to su b- free zi ng te m pe rat ur es m

us t be te st ed fo r sa fet y

an d pu rit y pr io r to be in g sa lv ag ed

. 21 C.F.R. § 21 1.2 08 . And , Pla in ti ffs pr es en te d

un co nt rad ic te d ex pe rt te st im on y th at an y te st in g of in su li n su bjec te d to su b- free zi ng

te m pe rat ur es wou ld res ul t in de st ru ct io n of th e in su li n. Bec au se Pl ai nt iff s pr es en te d

un di sp ut ed ev id en ce th at th e in su li n was su bjec te d to su b- free zi ng te m pe rat ur es an d

un di sp ut ed ev id en ce th at th e in su li n is un sa le ab le reg ard le ss whe th er act ua l da m ag e

26oc cu rred

, Pl ai n t i ffs are en ti tl ed to su m m ary jud gm en t on th e is su e of whe th er th e

in su li n p ro du ct s wer e d am ag ed in tra ns it

.

As to DHL ’s s p o l i at io n cl ai m , a pa rty m ov in g fo r sa nc ti on s m us t es ta bl is h,

a mon g ot he r th in gs , th at th e de st ro y ed ev id en ce was rel ev an t to a cl ai m or de fen se

su ch th at th e de st ru ct io n of th at ev id en ce res ul te d in pr ejud ic e. Se e Flu ry v. Dai mler

Ch ry sl er Co rp

. , 42 7 F.3 d 93 9

, 9 4 3 (1 1t h Ci r. 20 05 ) (ex pl ai ni ng th at sp ol ia ti on

an al y si s hi ng es up on th e si gn ifi can ce of th e ev id e n c e a n d t he pr ejud ic e su ffer ed as

a r e s ul t of it s de st ru ct io n.) The de st ru ct io n of th e in su li n pr od uc ts di d no t affe c t

DHL’ s ab il it y to m ak e a cl ai m or de fen se ; th e ex po su re to su b- free zi ng te m pe rat ur es

ren de red th e p ro du ct s wo rth le ss reg ard le ss of th e res ul ts of an y te st s th at DHL m ay

ha ve co nd uc te d. Bec au se DHL su ffer ed no pr ejud ic e, th e di st ric t co ur t di d no t ab us e

it s d is cret io n i n d en y in g i ts cla im for sp ol ia ti on of e vi de nc e.

VI. CONCLUSION

Fo r th e reas on s st at ed in th is op in io n, we affi rm th e gr an t of su m m ary jud gm en t

in fav or of Pl ai nt iff

s on th e is su e of li ab il it y , affi rm th e d en ia l o f DHL’ s m ot io n fo r

su m m ary jud gm en t, an d affi rm th e de ni al of DHL’ s m ot io n fo r sa nc ti on s fo r

sp ol ia ti on of ev id en ce. W e rev ers e th e ru li ng th at DHL’ s li ab il it y sh al l be go ve rn ed

by th e te rm s of th e lo ng -te rm se rv ic e ag r e em en t an d th eref or e va cat e th e fin al

jud gm en t e n t e r e d by th e di st ric t co ur t. W e rem an d to th e di st ric t co ur t fo r

27pr oc eed in gs no t in co ns is te nt wit h th is op in io n a n d wit h in st ru ct io ns th at DHL’ s

li ab il it y sh al l be capp ed at 17 SDRs pe r ki lo gr am of th e da m ag ed carg o p ur su an t t o

Arti cl e 2 2 o f th e Mo nt real Co nv en ti on

.

AFFIR MED IN P A RT; REVERSED IN PART; JUDGMENT VACATED;

AND REMANDED W ITH INSTRUCTIONS.

28