Court Opinion

ID: 9488976
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:01:15.75966+00
Date Added: 2024-06-11T17:53:13.438606
License: Public Domain

Opinion for the Court filed by Circuit Judge SILBERMAN.
Dissenting opinion filed by Circuit Judge WALD.
SILBERMAN, Circuit Judge:
Air France appeals the district court’s determination that it engaged in “willful misconduct” and was accordingly not entitled to limit its liability, under Article 22 of the Warsaw Convention, for damage to carpets owned by Mohammad Ali Saba and transported by Air France. We disagree with the district court’s formulation of the standard for willful misconduct, and believe that the evidence presented does not, as a matter of *666law under the appropriate standard, amount to willful misconduct. We reverse.
I.
Appellee Saba arranged in 1990 to have Air France ship 575 carpets from Salzburg, Austria to Dulles Airport in Virginia. Air France accepted the carpets in 191 bales— each containing a bundle of two to five rolled carpets separated with plastic and wrapped in burlap — from Saba’s freight forwarder on September 19, 1990. The carpets were shipped by truck from Salzburg to Linz, Austria. At Air France’s station in’ Linz, Air France employees loaded the bales in roughly even amounts onto metal pallets and into cargo containers. The carpets were then flown to Kennedy International Airport in New York City, and subsequently transported by truck to the cargo facility of Dynair, Air France’s cargo agent, at Dulles Airport.
Dynair stored the carpets outside, in accordance with its usual practice when its warehouse was full, and they remained outside for five days. Dynair employees placed additional, heavy-gauge plastic over the cargo on the pallets and added similar plastic to the top of the cargo inside at least one of the containers. The day before Saba’s son arrived to retrieve the carpets, .34 inches of rain fell at Dulles. It was discovered that despite the packaging supplied by Air France and despite the extra plastic, the carpets were damp, particularly at the bottoms of the pallets and containers. Further inspection revealed that 86 of the carpets (in 73 bales) had sustained water damage.
Saba sued Air France for the loss. Air France’s liability for the damaged cargo is limited by the Warsaw Convention, which provides that “[i]n the transportation of cheeked baggage and of goods, the liability of the carrier shall be limited to a sum of 250 francs per kilogram.” Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, Art. 22(2), reprinted in 49 U.S.C. app. § 1502, Historical Note (1988). Saba contended, however, that Air France and its agent, Dynair, had engaged in willful misconduct, so the Convention’s liability limitation did not apply. Warsaw Convention, Art. 25(1) (“The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court to which the ease is submitted, is considered to be equivalent to willful misconduct.”). Saba alleged that Air France’s packing the carpets in violation of its cargo-handling regulations and Dynair’s leaving the carpets outside constituted willful misconduct.
After a bench trial, the district court agreed and awarded Saba damages well in excess of Air France’s liability had the Convention been held to apply. The district court opinion, finding willful misconduct, documented a variety of flaws in the packing of the carpets: Air France stacked 40% of the carpets on metal pallets, rather than in enclosed containers as suggested by its own regulations; failed to provide double plastic covers (i.e., cover over and under the cargo) on the palleted carpets as required by its regulations; failed to provide reinforcement to prevent the pallets from deforming under the weight of the carpets as required by its regulations; used containers fitted with net doors, which were doubly inadequate — they were not rigid as required by Air France regulations, and they did not close properly; and used one container that had a three-inch gash in the top. The district court also pointed to the fact that Air France’s agent, Dynair, left the badly packaged carpets outside despite publicly forecasted rain and did not bring the carpets inside once it started to rain.
In describing the standard for willful misconduct in this circuit, the district court referred to In re Korean Air Lines Disaster of Sept. 1, 1983, 932 F.2d 1475, 1479 (D.C.Cir.), cert. denied sub nom. Dooley v. Korean Air Lines, Ltd., 502 U.S. 994, 112 S.Ct. 616, 116 L.Ed.2d 638 (1991), in which we upheld the district court’s jury instruction that “[wjillful misconduct is the intentional performance of an act with knowledge that the act will probably result in an injury or damage, or in some manner as to imply reckless disregard of the consequences of its performance.” Saba v. Compagnie Nationale Air France, *667866 F.Supp. 588, 593 (D.D.C.1994). The judge interpreted that formulation to mean that “a combination of factors can, taken together, amount to willful misconduct, and that merely the act itself needs to be intended, not the resulting injury or the wrongfulness of the act.” Id. (citation omitted). He thought, moreover, that “a finding of willful misconduct is appropriate when the act or omission constitutes a violation of a rule or regulation of the defendant carrier itself.” Id. After reviewing the evidence of Air France’s “lack of judgment,” id. at 594, and “disregard of its own cargo-handling regulations as well as of plain common sense,” id. at 593, the district court concluded that “through a series of acts, the performance of which were intentional, Air France has demonstrated a reckless disregard of the consequences of its performance.” Id. at 594.1 The Warsaw Convention’s liability limitations were therefore inapplicable.
II.
Air France’s fundamental argument is that the district judge ignored the difference between misconduct and willful misconduct. He treated the case, according to appellant, as if the standard for recovery were negligence, or at most gross negligence, which is all the evidence amounted to. What is missing — and what is essential to recovery under the Warsaw Convention — is any evidence that appellant, or its agent, Dynair, acted with a conscious awareness that its acts or omissions were wrongful. Air France contends that willfulness implies a subjective test, a showing that the defendant knew that its behavior would likely have injurious consequences. The district judge erred, according to appellant, by simply cumulating the mistakes made by Air France and its agent without any evidence that either was aware that its actions would lead, or likely lead, to Saba’s injury.
Saba emphasizes that the Convention lifts liability limits if willful misconduct is shown or if the actions of the carrier are considered “equivalent to willful misconduct.” Under our cases interpreting willful misconduct, we have recognized reckless disregard as an equivalent and therefore appropriate measure. This case, according to appellee, meets that standard, or at least the district judge’s conclusion that it did was not clearly erroneous. In that regard, a court may, when determining whether a defendant acted in reckless disregard of consequences, consider a pattern of conduct even if no one action or omission by itself would meet that standard.-
To be sure, from our earliest cases under the Warsaw Convention, we have treated reckless disregard as equivalent to willful misconduct. See, e.g., American Airlines, Inc. v. Ulen, 186 F.2d 529, 533 (D.C.Cir.1949) (approving jury instruction to effect that “if the carrier, or its employees or agents, willfully performed any act with the knowledge that the performance of that act was likely to result in injury to a passenger, or performed that act with reckless and wanton disregard of its probable consequences, then that would constitute willful misconduct”); see also In re Korean Air Lines, 932 F.2d at 1479; KLM Royal Dutch Airlines Holland v. Tuller, 292 F.2d 775, 778-79 (D.C.Cir.), cert. denied, 368 U.S. 921, 82 S.Ct. 243, 7 L.Ed.2d 136 (1961). But we have never been very clear as to what we meant by reckless disregard. In some of these cases it is not apparent that the conduct involved was beyond negligence, see, e.g., Tuller, but we have never held that negligence — gross or otherwise — would suffice to make out willful misconduct.. Bearing in mind that under the Warsaw Convention a carrier is subject to unlimited liability only if it engages in willful misconduct or its “equivalent,” we think it is clear that we have meant — and only could have meant — reckless disregard to serve a limited function: providing a proxy for willful misconduct’s scienter requirement. Our use of that term therefore should be taken, not as creating a separate, less onerous exception to limited liability, but *668as an effort to alleviate problems of proof of willful misconduct.
Former Chief Judge Robinson of the district court, reviewing our Warsaw Convention cases, recognized as much. Noting the various ways in which we had formulated the standard, Chief Judge Robinson stated that “there are several factors that are constant.” In re Korean Air Lines Disaster of Sept. 1, 1988, 704 F.Supp. 1135, 1136 (D.D.C.1988). Among these was that “the wrongdoer must .consciously be aware of his wrongdoing, i.e., the actor must not only intend to do the act found to be wrongful but also must know that his conduct is wrongful.” Id. (emphasis added). He then put his finger on what we think is the crucial point: “As is apparent, however, both by the nature of the problem of proving an actor’s intent and by the formulation equating a ‘reckless disregard of the consequences’ with intentional wrongdoing, the actor’s intent may be inferred from indirect evidence and the reckless nature of his acts.” Id. In other words, besides showing that the defendant intends the act which ultimately causes the harm, a plaintiff must prove that the defendant was subjectively aware of the consequences of his act — not necessarily that it would cause the exact injury, but at least that it was certainly likely to cause an injury to plaintiff.2 It was in that sense reckless.3
There is a continuum that runs from simple negligence through gross negligence to intentional misconduct. Recklessness, or reckless disregard, lies between gross negligence and intentional harm. The critical analytical division between the tort that can be made out through presentation of merely objective evidence — without regard to defendant’s state of mind — and one that requires a showing of a subjective state of mind cuts recklessness in half. One meaning of recklessness, then, is simply a linear extension of gross negligence, a palpable failure to meet the appropriate standard of care. See Farmer v. Brennan, — U.S. -, - & n. 4, 114 S.Ct. 1970, 1978 & n. 4, 128 L.Ed.2d 811 (1994). The second, as we have recognized in other contexts, is a legitimate substitution for intent to do the proscribed act because, if shown, it is a proxy for that forbidden intent. If it were not used as a proxy, it might be all too easy for the wrongdoer to deliberately blind himself to the consequences of his tortious action. See, e.g., United States v. Hoffman, 918 F.2d 44, 46 (6th Cir.1990). Violations of securities laws, for example, require proof of an “intent to deceive, manipulate, or defraud,” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 & n. 12, 96 S.Ct. 1375, 1381 & n. 12, 47 L.Ed.2d 668 (1976), and “we have determined, along with a number of other circuits, that extreme recklessness may also satisfy th[e] intent requirement,” SEC v. Steadman, 967 F.2d 636, 641 (D.C.Cir.1992) (emphasis added). “The kind of recklessness required [for a violation of the securities laws], however, is not merely a heightened form of ordinary negligence; it is an ‘extreme departure from the standards of ordinary care, ... which presents a danger of misleading buyers or sellers that is either known to the defendant or is so obvi*669ous that the actor must have been aware of it.’ In other words, it is a ‘lesser form of intent.’” Id. at 641-42 (citations omitted). See also Sanders v. John Nuveen & Co, Inc., 554 F.2d 790, 792 (7th Cir.1977). Similarly, reckless disregard, in the Warsaw Convention context, requires a showing that the defendant engaged in an act that is known to cause or to be likely to cause an injury.
Our dissenting colleague points to cases that demonstrate the different meanings reckless disregard can have. Dissent at 674. She would choose the one that is merely an extension of gross negligence, which can be satisfied without regard to a defendant’s subjective bad purpose. She too looks for analogy to other areas of the law, relying on, inter alia, Farmer v. Brennan, — U.S. at -- -, 114 S.Ct. at 1978-79, for the proposition that “[t]he civil law generally calls a person reckless who acts ... in the face of an unjustifiably high risk of harm that is either known or so obvious that it should be known.” But we think that opinion better supports our position. The Court equated “deliberate indifference” in the Eighth Amendment setting with reckless disregard. It noted that in civil law, the definition of recklessness means only that the disregarded risks should have been known — an objective test — whereas, in criminal law, where intent is typically required, recklessness means a subjective knowledge of the risks. The Supreme Court concluded that the use of the “criminal law” measure was more appropriate to measure deliberate indifference because it better comported with the prohibition on “punishment.” Id. at -, 114 S.Ct. at 1979; see also Archie v. City of Racine, 847 F.2d 1211, 1219 (7th Cir.1988), cert. denied, 489 U.S. 1065, 109 S.Ct. 1338, 103 L.Ed.2d 809 (1989) (“An act is reckless in the pertinent sense when it reflects complete indifference to risk — when the actor does not care whether the other person lives or dies, despite knowing that there is a significant risk of death.”) (emphasis added). The Supreme Court’s reasoning makes quite clear that the key divide is not between nominally “civil” and “criminal” recklessness, but between a means of imposing liability that requires a showing of intent and one that does not.4
We think our dissenting colleague both misreads precedent — particularly Stead-man — and our opinion to conclude that the concept of reckless disregard which meets the subjective standard is satisfied by merely showing an extreme departure from standards of ordinary care. Dissent at 672-673. That would be nothing more than gross negligence. Steadman, instead, required that the actor also know of the danger to buyers or sellers or that the danger was so obvious “the actor must have been aware of it.” In other words, if it can be shown that a defendant gazed upon a specific and obvious danger, a court can infer that the defendant was cognitively aware of the danger and therefore had the requisite subjective intent. Intent can, of course, always be proved through circumstantial evidence. That is by no means the same thing as saying the defendant should have known about the danger which is the essential difference between the district court and the dissent’s analysis and our own. In this regard, the dissent is exactly correct that we read the Warsaw Convention to limit liability in “situations where a *670reasonable employee should have but did not understand that her actions posed a substantial risk of harm to a shipper’s goods.” Dissent at 674.
III.
There was no evidence presented in this ease that could meet the test of willful misconduct or its equivalent, reckless disregard. There was no showing that either Air France or Dynair employees were subjectively aware of serious risks attending packaging the carpets inadequately in violation of regulations or leaving the carpets outside. Saba did show that Air France’s packers in Linz failed to pack the carpets according to Air France’s regulations. But he offered no evidence that the packers knew that the cargo was likely to be left outside in inclement weather and that the packaging provided would not adequately protect it.5 And no evidence was presented that Dynair employees actually expected rain, or knew that if it rained, the packaging provided by Air France, in combination with the heavy-gauge plastic added by Dynair employees (and overlooked by the district court and mentioned only in passing by our colleague), created a grave risk of water damage. Without any such evidence, the inference that Air France or Dynair intended (or recklessly disregarded the high risk of) bad consequences is entirely unwarranted, and willful misconduct, as a matter of law, is not established. However, the district judge, believing it not necessary for Saba to prove that either Air France or Dynair actually apprehended any risks — so long as a reasonable person would have — found that Air France’s failure to abide by packaging regulations, its persistent “lack of judgment,” and its lapses of common sense constituted willful misconduct. That is simply inadequate.
We rather doubt that the evidence satisfies even Judge Wald’s formulation of reckless disregard. She implicitly recognizes the analytical difficulty caused by the district court’s bunching together of the actions of two separate corporations, Air France and Dynair, by focusing instead on the behavior of the latter.6 But Judge Wald does not explain why Dynair’s acts — which appear to be at most negligent, see United States v. Carroll Towing Co., 159 F.2d 169, 173 (2d Cir.1947); Johnson v. Phelan, 69 F.3d 144, 150 (7th Cir.1995) (“An incorrect assessment of recognized costs and benefits is just negligence____”) (citation omitted) — constitute “grievous malfeasance,” Dissent at 673, or achieve the Restatement’s standards upon which she relies, which require a “high degree of risk,” “aggravated risk,” or conduct of a “highly dangerous character.” Of course, if Judge Wald were correct as to the appropriate standard, the district judge’s findings would be entitled to wide latitude under the clearly erroneous standard of review, but it does not seem that he made a significant effort to demonstrate why the evidence passed beyond negligence standards. It is not necessary, however, to evaluate the judge’s findings under an objective test; reckless disregard as the equivalent of willful misconduct requires more. Saba did not present such evidence.
* * * * * *
If federal courts have not always focused in Warsaw Convention eases on the distinction between negligence and willful miscon*671duet, it may well be because judges (as well as juries) are tempted to view eases before them ex post rather than ex ante, see Easterbrook, The Supreme Court, 1983 Term— Foreword: The Court and the Economic System, 98 Harv.L.Rev. 4, 10-12 (1984), which is probably the real reason for tort liability creep throughout this century. The district court’s opinion strikes us as a subset of that phenomenon, or a variation on that theme. It is not all that easy to avoid the Convention’s limitations by establishing willful misconduct (or reckless disregard). But the signatories obviously thought the economics of air travel, and therefore the overall welfare of passengers, dictated those limitations. It simply will not do for courts to chip away at that liability limit, out of a natural desire to remedy the negligence that can be all too apparent in any individual case.
We reverse the district court’s judgment and remand with instructions to enter judgment against Air France based on its conceded negligence and limited by the Warsaw Convention.7

. The judge also observed that Air France failed, after the fact, to prepare a damage report, despite the unprecedented amount of damage. The court recognized that this was not causally connected to the damage, but nevertheless stated that it “emphasized” Air France’s disregard and ”reveal[ed] much about Air France’s regard or lack thereof for its own procedures and its customers' requirements.” Saba, 866 F.Supp. at 594 & n. 10.

. The dissent states that an awareness of the wrongfnlness of one's conduct is not the same as an awareness of the bad consequences of one’s conduct. Dissent at 671-672, n. 2. In the tort context, we cannot imagine how an action's wrongfulness could be determined other than by reference to its expected consequences (unless the action is independently illegal).

. In Korean Air Lines, Chief Judge Robinson carefully reviewed the evidence proffered by both the carrier and the plaintiffs. The plaintiffs’ primary theory on which he concentrated was that "the crew of KE 007 knew early on that, because of crew error prior to take-off, they were operating without a reliable Inertia Navigation System ..., the primary means of navigating the flight.” 704 F.Supp. at 1137 (emphasis added, footnote omitted). He did, however, refer to plaintiffs' "alternative” theory, which he described variously as "essentially a gross failure of the crew to monitor their course direction,” id. at 1137 n. 6, as “a reckless failure to monitor and cross-check the [INS],” id. at 1147-48, and as an "intention-all] fail[ure] to do the mandated cross-checks,” id. at 1142. The judge did not discuss this theory at any length and did not apparently rely on it in determining that the plaintiffs had produced enough evidence of willful misconduct to withstand summary judgment. His focus on the primary theory that the flight crew knew they were off course obviated any need to dwell on the alternative theory, however phrased, and any need to decide whether that theory, standing alone, would permit a finding of willful misconduct.

. Although language in some of the other cases cited in the dissent seems consistent with an objective test, that establishes nothing more than that the term reckless disregard can include a variety of concepts. Judge Wald also relies on two quotations from the Restatement (Second) of Torts for the proposition that the test is not what a carrier knew but what a carrier should have known. Dissent at 674 n. 6. She might have included a third, stating that reckless disregard may be found when an individual “knows or has reason to know ... of facts which create a high degree of risk of physical harm to another, and deliberately proceeds to act, or to fail to act, in conscious disregard of, or indifference to, that risk.” Restatement (Second) of Torts § 500, comment. a (1965) (emphasis added). In any event, the cases cited do not support the proposition that, under the Warsaw Convention, the test for reckless disregard is an objective one. In United States v. Wallace, 964 F.2d 1214, 1220 (D.C.Cir. 1992), for example, we determined that the actions of a sanctioned attorney amounted to nothing more than negligence, which is insufficient for sanctions, and accordingly had no occasion to decide whether and what kind of recklessness was an adequate proxy for "vexatiousness or bad faith.” Id. And, in In re Holloway, 995 F.2d 1080, 1082 (D.C.Cir.1993), unlike here, we dealt with a statute without an express intent requirement.

. We are not entirely certain as to the relevance of the packaging regulations in a willful misconduct case. Without a great deal more, violation of a safety standard (which we very much doubt these packaging standards could be called) is at best negligence per se. See, e.g., Jeffries v. Potomac Development Corp., 822 F.2d 87, 93 (D.C.Cir.1987).

. Within either corporation, of course, the negligent acts of employees can be fairly imputed to the corporation. Individual acts of negligence on the part of employees — without more — cannot, however, be combined to create a wrongful corporate intent. In United States v. Bank of New England, 821 F.2d 844 (1st Cir.), cert. denied, 484 U.S. 943, 108 S.Ct. 328, 98 L.Ed.2d 356 (1987), for example, corporate knowledge of certain facts was accumulated from the knowledge of various individuals, but the proscribed intent (willfulness) depended on the wrongful intent of specific employees. See id. at 855-56 (upholding jury instructions that “[t]he bank is deemed to have acted willfully if one of its employees in the scope of his employment acted willfully.''). Similarly, the acts of an agent (here, Dynair) can be attributed to its principal (Air France). But the agency relationship cannot transform negligence into willfulness.

. We agree with the district court’s interpretation of the Convention as to the appropriate measure for determining the amount of damages that Saba may recover. Saba, 866 F.Supp. at 594 n. 11.