Ingram Micro argues that the limitation of liability should not
limit its recovery against Airoute because Airoute has failed to
satisfy the two prerequisites for an enforceable limitation of
liability. See Pl. Mem. at 21. Specifically, as to the first
prerequisite, Ingram Micro claims that the limitation of
liability was not obtained by Airoute or agreed to by Ingram
Micro as the result of a "fair, open, just and reasonable
agreement[.]" Id. (quoting Shippers, 712 F.2d at 746).
The policy behind requiring a fair and open agreement as to
limitations of liability is to ensure that the shipper has notice
of the limitation prior to contracting with the carrier and that
the carrier is aware of the extent of its liability. See
Shippers, 712 F.2d at 746; Read-Rite Corp. v. Burlington Air
Express, Ltd., 186 F.3d 1190, 1198 (9th Cir. 1999). There is
little doubt that Ingram Micro was aware of Airoute's limitation
of liability, even though it did not expressly agree to the
limitation. Ingram Micro had contracted with Airoute for similar
shipments of Corel software to the United States for
approximately two years prior to the November 12, 1997 incident.
See St. Facts ¶ 36; see also United States Gold, 719 F. Supp.
at 1225 (finding that plaintiff's prior course of dealing with
Federal Express demonstrated that plaintiff had adequate notice
of Federal Express's limitation of liability). In addition,
Airoute's bill of lading appears to be a standard form used to
cover all of its contracts of carriage. See Hitachi Data Sys.
Corp. v. Nippon Cargo Airlines Co., No. C-93-2456, 1995 WL
16923, at *4 (N.D.Cal. Jan. 6, 1995) (finding an implicit
agreement to a limitation of liability where the parties had an
established business relationship and there was no evidence of an
Moreover, Ingram Micro's purchase of separate insurance from
Chubb demonstrates that Ingram Micro was on notice and understood
the limitation of liability. See St. Facts ¶ 32. Under federal
common law, "the function served by notice of limited liability
is accomplished if the shipper in fact purchases separate
insurance, whether or not such notice is actually given."
Read-Rite, 186 F.3d at 1198; see also Vision Air Flight Serv.
v. M/V Nat'l Pride, 155 F.3d 1165, 1169 (9th Cir. 1998) (finding
that the decision to insure separately "in and of itself
demonstrates . . . a conscious decision not to opt out of the
liability limitation"). In failing to declare a value for its
shipment, Ingram Micro made a deliberate choice to forego the
additional cost it would have incurred to increase Airoute's
liability. As recently explained by the Ninth Circuit, "[w]hy
would [the shipper] increase its costs by insuring the same cargo
twice?" Travelers Indem. Co. v. The Vessel Sam Houston,
26 F.3d 895, 900 (9th Cir. 1994).
As to the second prerequisite, Ingram Micro contends that
Airoute insisted on a non-negotiable limited liability freight
rate as a result of which it was not permitted to declare the
value of the shipment and pay a premium for increased liability
by Airoute. See Pl. Mem. at 21; see also St. Facts ¶¶ 6,7.
Ingram Micro's assertion is not credible given its status as a
sophisticated shipper of goods. The more likely scenario is that
Ingram Micro chose not to declare a value for its shipment, and
in doing so relinquished the opportunity to obtain greater
coverage from Airoute. If Ingram Micro had desired greater
coverage from Airoute, it could have contracted for it. See
United States Gold, 719 F. Supp. at 1225 (holding that a court
may consider the economic stature and commercial sophistication
of the parties in determining the enforceability of a limitation
of liability). Indeed, Airoute asserts that if Ingram Micro
had declared a value for its shipment, Airoute would have secured
insurance and included the premium in its charge to Ingram Micro.
See Reply Mem. at 2.
In sum, Airoute's limitation of liability on its bill of lading
is enforceable. Ingram Micro was on notice and implicitly agreed
to Airoute's limitation of liability. Because Ingram Micro had
equal if not more bargaining power than Airoute, it could have
declared a higher value and paid the premium for increased
protection. "Public policy considerations of fair dealing and
predictability in commerce" favor enforcing the limitation of
liability between Ingram Micro and Airoute. Hitachi, 1995 WL
16923, at *4.
Accordingly, Ingram Micro is entitled to the "lesser of $100.00
or $2.00 per pound." See Airoute's BOL ¶ A. The non-delivered
portion of the shipment weighed 17,739.32 pounds. See id. ¶ 34.
Thus, Ingram Micro is entitled to Canadian $100.00.
III. CONCLUSIONS OF LAW
1. The law applicable to this action is federal common law.
2. Under federal common law, Airoute is liable for the loss to
Ingram Micro's shipment.
3. The limitation of liability on Airoute's bill of lading is
4. Ingram Micro is entitled to judgment against Airoute in the
sum of Canadian $100.00 plus interest from November 20, 1997.
The Clerk of the Court is directed to prepare a judgment in
accordance with this Opinion and close this case.