UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
decided: April 8, 1983.
IN RE AIR CRASH DISASTER AT WARSAW, POLAND, ON MARCH 14, 1980, MDL 441, POLSKIE LINIE LOTNICZE (LOT POLISH AIRLINES), A CORPORATION. ANGELA Y. ROBLES, MARGARET OJEDA, HENRYKA SMIEGEL, JOSE PIMENTAL, EMILY BLAND, RAYMOND E. WESSON, PATRICIA ANN CHAVIS, SUSAN JANICE RADISON, JOHN LINDSAY, APPELLEES,
LOT POLISH AIRLINES, APPELLANT
Appeal pursuant to 28 U.S.C. § 1292(b) from an order of the United States District Court for the Eastern District of New York, Charles P. Sifton, Judge, granting partial summary judgment for plaintiffs and holding that the defendant air carrier was not entitled to invoke a liability limitation or a defense in an action brought for deaths resulting from an air crash.
Oakes, Kearse, and Sloviter,*fn* Circuit Judges.
OAKES, Circuit Judge.
The Warsaw Convention*fn1 limits the liability of air carriers for the injury or death of international passengers. The Convention was modified in certain respects by the Montreal Agreement, which specifies that passengers must be advised of the carrier's liability limitations in 10-point type. The United States District Court for the Eastern District of New York, Charles P. Sifton, Judge, held that the use of 8.5-point rather than 10-point type to inform passengers of liability limitations stripped the appellant air carrier in this case of the protection of such limitations and prevented it from raising defenses under Article 20(1) of the Warsaw Convention. See In re Air Crash Disaster at Warsaw, Poland, on March 14, 1980, 535 F. Supp. 833 (E.D.N.Y. 1982). We affirm.
On March 14, 1980 an Ilyushin 62-M aircraft owned and operated by the appellant Polskie Linie Lotnicze (LOT Polish Airlines) (hereinafter LOT) crashed while on its final landing approach in Warsaw, Poland. The appellees are survivors of American passengers who, with one exception, boarded the flight in New York.*fn2 Eight of the nine decedents were affiliated with the United States Amateur Athletic Union Boxing Team and were en route to Warsaw for a tournament; the ninth decedent was the wife of the team physician. LOT concedes that the 8.5-point type "Advice to International Air Passengers on Limitations of Liability" (Advice) printed on the decedents' tickets violated the Montreal Agreement, as well as a Federal Aviation Regulation (FAR) predating the Agreement, 14 C.F.R. § 221.175(a).*fn3 Both the Agreement and the FAR require the use of at least 10-point type; the difference between 8.5 and 10-point type, we are told by LOT, is 15/270ths of an inch, based on 72 type points to the inch. However minimal a 1.5-point difference in type size might seem, we conclude that it is enough to justify Judge Sifton's holding that the appellees in this case are not subject to the liability limitation established by the Montreal Agreement. Nevertheless, LOT is bound by its waiver under the Agreement of a defense that would otherwise be available to it under the Warsaw Convention. A brief review of the history surrounding the Convention and the Montreal Agreement is necessary to understand both LOT's arguments on appeal and our reasons for rejecting those arguments.
The Convention was drafted in Warsaw, Poland, in 1929 and became effective in February of 1933. The United States was not one of the original parties to the Convention, but it announced its intention to adhere to it in late 1934. After Senate approval and Presidential proclamation, the Convention assumed the status of a treaty, "equal in stature and force to the domestic laws of the United States." Smith v. Canadian Pacific Airways, Ltd., 452 F.2d 798, 801 (2d Cir. 1971). Article 17 of the Convention*fn4 established a presumption of carrier liability for injuries or death sustained on the aircraft but Article 22(1) limited that liability to 125,000 francs.*fn5 Although a carrier could avoid liability by showing that it took "all necessary measures to avoid the damage, or that it was impossible . . . to take such measures" -- the so-called "all necessary measures" defense of Article 20(1)*fn6 -- the practical effect of Article 17 was to shift the burden of proof from the passenger to the carrier. Article 17 and Article 22(1) are thus complementary, framing the trade-off embodied in the Convention. Article 3 rounds out the scheme by requiring carriers to furnish passengers with tickets stating that the transportation is subject to rules relating to liability established by the Convention.*fn7
Not surprisingly, consensus as to the need for a uniform law governing air carrier liability and a passenger-carrier compromise along the lines of that effected by Article 17 and Article 22(1) did not extend to the specific monetary limitations of Article 22. Almost immediately after the Convention went into effect, several of its provisions were criticized; the "underlying and recurring theme of all the discussions was whether the limit of liability had been set at the right level." See Lowenfeld & Mendelsohn, The United States and the Warsaw Convention, 80 Harv. L. Rev. 497, 504 (1967) [hereinafter cited as 80 Harv. L. Rev.]. In 1955, at an international conference at The Hague, Netherlands, the liability limitation was doubled to 250,000 francs and what came to be known as the Hague Protocol was drafted. Id. at 509. American delegates, however, were not satisfied with either the principle of limited liability or the notice provided by the standard form used by the airlines, id. at 512-514, and sought to have the warning made both more specific and more conspicuous. The Hague Protocol's amendment of the Convention's Article 3 notice provision arguably allowed each country to establish its own notice requirements, id. at 514, and in fact in 1963 the Civil Aeronautics Board (CAB) issued a regulation requiring foreign and domestic air carriers to furnish a clear statement of liability limitations with each ticket in at least 10-point type. See note 2 supra.
The Hague Protocol was never approved by the United States, largely because of dissatisfaction with the liability limitation. Over time, opposition to the Convention and the Hague Protocol developed into a pressure for formal denunciation of the Convention by the United States. On November 15, 1965, the United States filed a Notice of Denunciation. 80 Harv. L. Rev. at 551. But the State Department indicated its willingness to withdraw the Notice before it would become effective six months later, if it appeared likely that an international agreement addressing American concerns could be reached. Id. at 551-52. Despite the threat of denunciation, delegates to the Montreal Conference held in February of 1966 failed to agree on a proposal satisfactory to the United States. Just prior to the effective date of the Denunciation, however, members of the International Air Transport Association agreed to an interim arrangement called the Montreal Agreement. The Denunciation Notice was withdrawn two days before it was to become effective, and the CAB simultaneously announced its approval of the Agreement. Id. at 586-96.
The Montreal Agreement is by its very terms a "special contract" under Article 22(1) of the Convention, which provides that a carrier and passenger "may agree to a higher limit of liability."*fn8 Thus, although it is actually a private agreement among carriers, it effectively modifies the Convention, at least with respect to flights departing from, arriving, or stopping over in the United States. Carriers participating in the Agreement waive the Article 20(1) "all necessary measures" defense that would otherwise be available under the Warsaw Convention, and so the Agreement imposes essentially strict liability. Carriers signing the Agreement stipulated that they would
at time of delivery of the tickets, furnish to each passenger governed by the Convention or the Protocol and by the special contract described above [the Montreal Agreement], a notice in 10 point type advising international passengers of the limitations of liability.*fn9
In return for waiving the Article 20(1) defense and complying with the notice requirement set forth above, carriers receive the benefit of a liability limitation of $75,000 in most cases.
Appellant LOT's contentions may now be understood. LOT's primary argument is that the use of 8.5- rather than 10-point type was merely a "technical and wholly insubstantial" violation of the Montreal Agreement. LOT argues that, as printed, the tickets in this case complied with the intent and purpose of the Agreement because they provided adequate notice to the decedents. In spite of the fact that the Montreal Agreement was an eleventh-hour affair that narrowly averted American denunciation of the Warsaw Convention, and in spite of the CAB regulation that preceded and surely served as the model for the 10-point requirement in the Agreement, LOT maintains that the specification of 10-point type is of no "particular significance." Brief at 22. Thus LOT maintains that the district court erred in concluding that the effect of failing to comply with the Montreal Agreement's type size requirement subjected LOT to unlimited liability, which is the lot of a carrier who "accepts a passenger without a passenger ticket having been delivered." Article 3(2). LOT's second contention is that if it is deprived of the liability limitation established under the Montreal Agreement, the entire Agreement is somehow inapplicable. Under this argument, LOT's waiver of the Article 20(1) defense under the Agreement would be deemed void, and the appellees would be entitled, at most, to the presumption of carrier liability established by Article 17 of the Convention. We reject both of these arguments.
A. Adequacy of notice. LOT of course concedes that the 8.5-point type size it used violated the Montreal Agreement as well as the CAB regulation. Nevertheless, it relies on a line of cases decided by this and other circuits construing the ticket delivery requirement of Article 3(2) of the Warsaw Convention, see note 7 supra, to support its argument that if the type size provided "adequate notice," it is still entitled to limited liability. In Mertens v. Flying Tiger Line, Inc., 341 F.2d 851, 856 (2d Cir.), cert. denied, 382 U.S. 816, 15 L. Ed. 2d 64, 86 S. Ct. 38 (1965), we held that the Convention contemplated delivery "in such a manner as to afford [passengers] a reasonable opportunity to take measures to protect . . . against the limitation of liability." See also Warren v. Flying Tiger Line, Inc., 352 F.2d 494, 498 (9th Cir. 1965) (following Mertens). One year after Mertens was decided, in Lisi v. Alitalia-Linee Aeree Italiane, S.p.A., 370 F.2d 508, 514 (2d Cir. 1966), aff'd by an equally divided court, 390 U.S. 455, 88 S. Ct. 1193, 20 L. Ed. 2d 27, reh'g denied, 391 U.S. 929, 88 S. Ct. 1801, 20 L. Ed. 2d 671 (1968), we held that in order to satisfy Article 3(2)'s delivery requirement a carrier had to provide passengers with tickets containing a notice of liability limitation in a print size that was readable because otherwise the purpose of the delivery requirement of Mertens and Warren would be defeated. Lisi held a 4-point notice inadequate as a matter of law; LOT points to decisions subsequent to Lisi holding that notices printed in type sizes smaller than that at issue here provide adequate notice for Article 3(2) purposes. See, e.g., Ludecke v. Canadian Pacific Airlines, Ltd., 12 Av. Cas. 17,191 (Que. C.S. 1971) (4.5-point type), aff'd in part on other grounds and rev'd in part, 53 D.L.R.3d 636 (Que. C.A. 1974), aff'd on other grounds, 98 D.L.R.3d 52 (Can. 1979); Millikin Trust Co. v. Iberia Lineas Aereas De Espana, S.A., 11 Av. Cas. 17,331 (N.Y. Sup. Ct. 1969) (8-point type), aff'd without opinion, 36 A.D.2d 582, 317 N.Y.S.2d 734 (N.Y.App.Div. 1971).
Whatever merit LOT's argument might have were we considering the adequacy of notice solely under the Warsaw Convention, the fact remains that we are not. Under the Convention, the carrier must deliver a ticket containing, inter alia, a statement referring to the liability rules. Article 3(1)(e). Under the modifying terms of the Montreal Agreement, however, that statement must be in 10-point type. Compare Husserl v. Swiss Air Transport Co., 351 F. Supp. 702, 706-07 (S.D.N.Y. 1972), aff'd, 485 F.2d 1240 (2d Cir. 1973) (per curiam) (looking to Montreal Agreement to determine whether hijacking was within Convention's definition of "accident"). It is simply not persuasive to argue, as LOT does, that the 10-point type requirement can be read out of the Agreement as long as 8.5-point type provides what seems to this court to be "adequate notice"; equally unavailing is the argument that 10-point type would have made little or no practical difference. It is enough that the adequacy of notice was one of the concerns that led to the filing of the Notice of Denunciation, see 80 Harv. L. Rev. at 512-14, and that the Montreal Agreement specifically addressed this concern by requiring "notice to each passenger in large type." Id. at 594. Withdrawal of the Denunciation and the CAB's acceptance of the Montreal Agreement indicates a judgment by at least the executive branch that 10-point type was necessary to provide sufficient notice, and we see no reason to dispute that determination.*fn10
We also note that acceptance of the Agreement is a condition precedent to the issuance of a Foreign Air Carrier Permit under § 402 of the Federal Aviation Act, 49 U.S.C. § 1372 (1976 & Supp. IV 1980); 14 C.F.R. Part 211 app. 10(h) (1982). LOT acceded to the Agreement and was issued a permit accordingly. Surely it cannot now be heard to say that it should not be bound by the 10-point type size requirement. The specification of type size is as important as the requirement of delivery for Article 3(2) purposes, and LOT's failure to comply with this requirement prevents it from taking advantage of any liability limitation that it would otherwise enjoy.
LOT argues at some length in its reply brief that violation of the Montreal Agreement should not result in what it characterizes as a "treaty sanction," but this ignores the historical and functional relationship of the Agreement to the Convention. The Agreement supplements the Convention in particular respects, but Article 3(2) still imposes on carriers the duty to inform passengers of liability limitations. Failure to do so, as measured either by the terms of Article 3 or the Montreal Agreement, results in forfeiture of the limitation.*fn11
Another variation on the theme that the Montreal Agreement and the Convention should be construed without reference to each other is LOT's argument that the Agreement was merely an intercarrier agreement with respect to which passengers were not intended third party beneficiaries or that, even if they were, they cannot seek a remedy not available to a contracting party.*fn12 This argument is sophistic. Surely the United States, when it induced the air carriers to enter the Montreal Agreement by filing the Notice of Denunciation, was not acting on its own behalf. Surely the CAB's own 10-point type size requirement and its approval of the Montreal Agreement were aimed only at the public interest. Just as certainly the purpose of the 10-point type size requirement was to give passengers "'adequate notice' of the applicable liability limits in legible form and in understandable terms," as LOT's own brief somewhat inconsistently concedes. Brief at 22. Passengers were clearly the intended beneficiaries of a contract which specified, inter alia, the notice carriers had to provide if they were to receive the benefit of a limitation of liability. On this point we adopt Judge Sifton's discussion of the authorities and his conclusion. See 535 F. Supp. at 836.
B. Waiver of Article 20(1) defense. We also reject LOT's argument that if it is to be subject to unlimited liability under Article 3(2) of the Convention by dint of its failure to comply with the notice requirements of the Montreal Agreement, the appellees should be deprived of LOT's waiver of the Convention's Article 20(1) defense under the Agreement. LOT contends that it is "clearly inappropriate to render ineffective the limitation of liability for a technical . . . defect . . . and still subject the carrier to absolute liability without fault." Brief at 36.
LOT's argument is essentially one of symmetry. We are not convinced, however, that whatever burden LOT must shoulder as a result of violating the Montreal Agreement should be "balanced" by requiring the appellees to surrender some advantage they enjoy under the Agreement. We question whether, as a practical matter, LOT's position would be much improved if it were allowed to assert the Article 20(1) defense given the presumption of carrier liability under Article 17, but we would in any event resolve doubts on this score against LOT. We do so primarily because LOT alone is responsible for its failure to comply with the clear requirements of the Montreal Agreement and the CAB regulation regarding type size. Allowing LOT to shirk its duty under the Agreement and end up in no worse a position than it would be in if it had merely violated the Convention would be to ignore the fact that if the Agreement had never been drafted there would in all probability be no Convention today. See discussion supra.
Additionally, it is not clear to us that depriving LOT of liability limitations while affording the appellees the advantage of the liability rule established under the Agreement is as disruptive of the Agreement's scheme as LOT claims. To be sure, it deprives LOT of the primary benefit of the Montreal Agreement bargain, but it is not as if the appellees are receiving something for nothing. They were, after all, still subject to the other provisions of the Convention, whether or not those provisions happened to redound to LOT's benefit in this case. The history surrounding the Montreal Agreement suggests that liability without fault was the price carriers had to pay for continued international adherence to the Convention. There is no apparent reason that passengers should be deprived of this advantage because a carrier, through its failure to comply with the notice provisions, deprives itself of the benefits of limited liability.
LOT may not invoke the liability limitation of the Montreal Agreement nor the Article 20(1) defense of the Warsaw Convention.
The order for partial summary judgment is hereby affirmed.