Opinion ID: 773252
Heading Depth: 2
Heading Rank: 2

Heading: Project Hope's Cross-Appeal

Text: 36 In its cross-appeal, Project Hope makes three arguments. First, it challenges the district court's use of the replacement cost, rather than the fair market value, to measure the value of the destroyed humulin. Second, Project Hope argues that even if the replacement value is the correct measure of damages, the district court erred in calculating the humulin's actual replacement cost. Third, Project Hope argues that the district court erred in dismissing the claims against United Arab because, it contends, United Arab had a non-delegable duty to provide a vehicle suitable for the intended transportation. 37 We consider each of these contentions in turn.
38 We review the district court's choice of a measure of damages for an abuse of discretion. Cf. Thyssen, Inc. v. S/S EUROUNITY, 21 F.3d 533, 540 (2d Cir. 1994) (analyzing damages under COGSA). Having done so, we conclude that the district court did not exceed its discretion in relying on the replacement cost to calculate Project Hope's damages for the spoiled humulin. 39 Contrary to Project Hope's argument on appeal, the fair market value is not the exclusive measure of damages under the Carmack Amendment. See id.; Oak Hill Cap & Gown Co. v. Old Dominion Freight Line, Inc., 899 F.2d 291, 296 (4th Cir. 1990). While it is true that damages under the Carmack Amendment should generally be based on the fair market value, see Contempo Metal Furniture Co. v. East Tex. Motor Freight Lines Inc., 661 F.2d 761, 764 (9th Cir. 1981), we have held that it need not be applied if circumstances suggest a more appropriate alternative. Thyssen, 21 F.3d at 540 (internal citation omitted). 40 Here, no open market existed to provide a fair market value of humulin, thus warranting reliance on the replacement cost. While Project Hope attempted to construct various market values from, among other considerations, the value Eli Lilly established in its `gift in kind' inventory report when it donated the original shipment of humulin, see Project Hope, 96 F. Supp. 2d at 291, the district court acted within its discretion in rejecting these constructed values because it reasonably believed they provided less reliable measures of Project Hope's loss. See id. at 297 (reasoning that a greater award of damages [above the actual replacement cost] based on an artificial estimation of market value would only result in a windfall to Project Hope).
41 Project Hope next argues that even if the replacement cost for the humulin is appropriate for measuring damages, the district court's actual calculation was too low. Project Hope bases this argument on the fact that the portion of the district court's damage award going to the replacement of the humulin--$343,708 8 --covers the replacement of only 85,297 vials of humulin, which is 9,547 vials fewer than was actually lost due to the negligence of Mill and Blue Ocean. Compare Project Hope, 96 F. Supp. 2d at 297 (Thus, Project Hope is entitled to recover $343,708 against Blue Ocean and Mill for the cost of securing the replacement shipment of humulin.), with id. at 291 (With the insurance proceeds from Kemper, Project Hope secured a replacement shipment of 85,927 vials of humulin--somewhat less than the 95,474 vials contained in the original shipment--at a price of $343,708.). 42 A plaintiff suing under the Carmack Amendment is entitled to the actual loss or injury to the property caused by . . . the carrier. 49 U.S.C. § 14706; see, e.g., Cleveland v. Beltman N. Am. Co., 30 F.3d 373, 377 (2d Cir. 1994); Oak Hall Cap & Gown Co., 899 F.2d at 296; see also Fredette v. Allied Van Lines, Inc., 66 F.3d 369, 372 (1st Cir. 1995). The $343,708 that was intended to cover the replacement cost of the humulin plainly did not compensate Project Hope fully for its actual loss since Project Hope was unable to replace all of the spoiled vials. 43 Mill nonetheless argues that the deficiency Project Hope suffered was one of its own making and that, as a result, Mill should not be made to cover the deficiency. Specifically, Mill argues that if Project Hope had purchased replacement humulin on December 20, 1996, the day it received the insurance proceeds from its insurer, Kemper, the $343,708 would have fully replaced the humulin that spoiled. Mill contends that, instead, Project Hope delayed ordering the replacement humulin until January 17, 1997, by which time Eli Lilly had increased the price per vial from $3.60 to $4.00, which precluded the $343,708 from fully replacing the original shipment of humulin. 44 Under the Carmack Amendment, Mill has the burden to prove that the plaintiff did not exercise reasonable diligence in mitigating its damages. See Frosty Land Foods Int'l v. Refrigerated Transport, 613 F.2d 1344, 1349 (5th Cir. 1980). We believe that Mill has failed to carry that burden. Eli Lilly's price increase occurred on January 1, 1997. Therefore, to accept Mill's argument, we would have to conclude that Project Hope acted unreasonably in delaying its replacement of the humulin for eleven days--that is, from its receipt of the insurance proceeds on December 20, 1996 until Eli Lilly's January 1, 1997 price increase. This we cannot do; under the circumstances, Project Hope did not act unreasonably.
45 Finally, Project Hope contends that the district court erred in dismissing the claims against United Arab because, according to Project Hope, United Arab owed it a non-delegable duty to provide a [reefer] suitable for the intended transportation. We are unpersuaded by this argument. 46 Even if United Arab owed a non-delegable duty to Project Hope to provide a suitable reefer, the dismissal of the claims against United Arab would remain appropriate. The fact remains that neither United Arab nor anyone to whom it delegated its duty of care to ensure the reefer's suitability acted negligently to proximately cause the humulin's spoilation. 9 See Project Hope, 96 F. Supp. 2d at 293 ([T]he Court finds that . . . the loss of the humulin was caused by something other than [United Arab's] own negligence.); id. at 294 (In sum, United Arab was not negligent. Among the defendants, fault for the incorrect temperature setting lies with Mill and Blue Ocean.).