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IN RE AIR DISASTER

October 30, 1991

IN RE AIR DISASTER AT LOCKERBIE, SCOTLAND ON DECEMBER 21, 1988.


The opinion of the court was delivered by: Platt, Chief Judge.

Defendants move for partial summary judgment dismissing all non-Warsaw Convention claims on the ground that any claim brought against defendants in this action must lie, if at all, under the Warsaw Convention*fn1. For the reasons set forth below, defendants' motion is granted.

BACKGROUND

On December 21, 1988, Pan Am Flight 103 crashed near Lockerbie, Scotland; all 243 passengers and 16 crew members died. Family members of the victims of the crash filed complaints in various federal district courts against Pan Am Airways, Inc. ("Pan Am"), Pan Am World Services, Inc. ("PAWS"), Alert Management Systems, Inc. ("Alert") and Pan Am Corp. ("Pan Am Corp.") (collectively "defendants").*fn2 On April 4, 1989, the Judicial Panel on Multi-district Litigation transferred the suits against the defendants to this Court for consolidated pretrial proceedings. See 709 F. Supp. 231 (Jud.Pan.Mult.Lit. 1989).

In a previous motion for partial summary judgment, defendants moved to dismiss all punitive damage claims against defendants. This Court granted defendants' motion, holding that punitive damages claims are barred by the Warsaw Convention. See In re Air Disaster at Lockerbie, Scotland on December 21, 1988, 733 F. Supp. 547 (E.D.N.Y. 1990), aff'd, 928 F.2d 1267 (2nd Cir. 1991), cert. denied sub nom., Rein v. Pan American World Airways, ___ U.S. ___, 112 S.Ct. 331, 116 L.Ed.2d 272 (1991). In our punitive damages decision, we declined to reach the issue whether defendants Alert and PAWS are governed by the Warsaw Convention in order to allow discovery by plaintiffs on this issue. Discovery has now been completed and the issue has been fully briefed by the parties. We now hold that all defendants in this case, including Alert and PAWS, are governed by the Warsaw Convention.

DISCUSSION

In pertinent part, Article 17 of the Warsaw Convention states that "[t]he carrier shall be liable for damage sustained in the event of the death . . . of a passenger . . . if the accident which caused the damage so sustained took place on board the aircraft." Article 24(2) provides that "in the cases covered by Article 17, the provisions of the preceding paragraph shall also apply." The preceding paragraph referred to is Article 24(1), which states that "any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention." The key limitation at issue here is the limitation on maximum liability in Article 22, which states "[i]n the transportation of passengers the liability of the carrier for each passenger shall be limited to the sum of 125,000 francs." Under the Montreal Agreement,*fn3 this limit was raised to $75,000.

In practical terms, the issue for the parties is whether Alert and PAWS are entitled to this maximum limit on liability as provided by Articles 24 and 22 of the Warsaw Convention, as modified by the Montreal Agreement. The legal issue before the Court is whether Alert and PAWS fall within the meaning of the term "carrier," as that term was envisioned by the signatory parties to the Warsaw Convention and as that term has been interpreted by the courts in the United States.

Our discussion must begin with Second Circuit's opinion in Reed v. Wiser, 555 F.2d 1079 (2d Cir. 1977). In Reed, the Second Circuit was faced with the question of "whether airline employees are entitled to assert as a defense the liability limitations of the Warsaw Convention." Id. at 1081. The Court held that employees of a "carrier" are governed by the Warsaw Convention and thus protected by the liability limitations of Article 22. The Court reasoned, in part, that to allow a suit for unlimited damages against an air carrier's employees would undermine the purpose of the Warsaw Convention "because in most instances carriers are bound to provide their employees with indemnity protection." Id. at 1089-90. The Court was concerned with the risk that "plaintiffs would seek to circumvent the Convention's limitation by bringing suit against the pilot or some other employee of the airline involved." Id. at 1092.*fn4

Although Reed employed language suggesting a broader scope — for example, in framing the issue, the Court asked whether the term carrier was "limited to the corporate entity [i.e., the airline], or was intended to embrace the group or community of persons actually performing the corporate entity's function," id. at 1083 (emphasis added) — its holding was limited to employees. The question now before this Court, whether non-employee agents of a carrier are likewise protected by the liability limitations of the Warsaw Convention, was left open.

Since the Second Circuit decided Reed, other courts have considered the question and there appears to be considerable authority for the proposition that Reed should be extended to include agents. In Julius Young Jewelry Manufacturing Co. v. Delta Air Lines, 67 A.D.2d 148, 414 N.Y.S.2d 528 (1st Dep't 1979), plaintiff sued the airline and an independent contractor hired by the airline to perform inter-line baggage transfer services. The issue before the Court was "whether agents of air carriers are entitled to assert as a defense the liability limitations of the Warsaw Convention." Id. 414 N.Y.S.2d at 529. The Court found that the agent was protected by the liability limitations, reasoning that "[t]o allow an agent . . . which is performing services in furtherance of the contract of carriage, and in place of the carriers themselves, to be liable without limit would circumvent the Convention's purposes of providing uniform worldwide liability rules and definite limits to the carrier's obligations." Id. at 530.

In Baker v. Lansdell, 590 F.S0upp. 165 (S.D.N.Y. 1984), plaintiff sued the airline's security agent alleging that the agent was responsible for the loss of jewelry that plaintiff claimed was stolen from her handbag. The issue before the Court was whether the agent "may be permitted to take advantage of the Convention's limitations on liability, which by their terms apply only to air carriers." Id. at 170. Citing Reed and Julius Young, the Court held that the Warsaw Convention applied to claims against the airline's security agent.

  In addition, the Court noted that 49 U.S.C. § 1356
  requires that security checks, such as the one
  during which the alleged loss purportedly occurred
  in the instant case, be performed by employees or
  agents of the air carrier. Therefore, unless
  British Airways and Lansdell are violating the law,
  Lansdell [the agent] is entitled to invoke the
  liability limitations of the Convention.
  The uncontroverted fact that Lansdell had an
  agreement with British Airways to perform a
  service, falling within the scope of the
  Convention, that British Airways would otherwise
  be required by ...

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