United States: Court Dismisses Claims Against Airline For Missing Jewelry From Checked Baggage On Domestic Flight

Steven Raffaele and Judith Nemsick are Partners and Stosh Silivos is an Associate in the New York office

In Hekmat v. U.S. Transp. Sec. Admin.,1 the court granted JetBlue Airways' motion to dismiss plaintiffs' claims for bailment, negligence, failure to supervise, and breach of contract arising from the alleged theft of approximately $100,000 worth of jewelry from checked baggage during a New York to Los Angeles flight.  The court held that the Airline Deregulation Act (ADA)2 preempted the tort claims and that the breach of contract claim failed as well because the airline's contract of carriage expressly excluded liability for the carriage of jewelry.3

ADA Preemption of Tort Claims

In finding ADA preemption of the tort claims, the court applied the three-part test from Rombom v. United Air Lines, Inc.4 Specifically, the court determined that (1) JetBlue's handling of plaintiff's baggage "constitute[d] a 'service' for purposes of ADA preemption;" (2) plaintiffs' tort claims "affect[ed] the airline service directly;" and (3) JetBlue's baggage handling procedures were "'reasonably necessary' to the provision of the service."  The court notably found that although theft is not necessarily reasonably related to proper baggage handling services, plaintiffs had only alleged negligence by the airline in providing such services.5

The court also rejected plaintiffs' argument that jewelry falls within a "household goods" exemption under the ADA, finding that the exemption applies to an entirely different preemption provision relating to the transportation of property, not passengers.6

Contract of Carriage Excluded Liability for Jewelry

In dismissing the breach of contract claim, the court rejected plaintiffs' argument that they reasonably believed the property would be delivered safely from JFK to LAX based on the terms of their contract of carriage with JetBlue.  Plaintiffs could not identify any contract language that would give rise to this purported "reasonable belief." 

Plaintiffs did not dispute that they, like every customer who purchases an online ticket, enters into an agreement that incorporates the airline's Contract of Carriage by reference.7 Instead, they argued that they did not receive a copy of the Contract of Carriage because there was no link to it on the electronic tickets.  The court rejected this excuse, finding that plaintiffs were on constructive notice of the terms and could not "escape them" by failing to read them.  JetBlue's electronic tickets advised, inter alia, that passengers could inspect the Contract of Carriage at its airport customer service counters, request a copy by mail, or obtain a copy from its website or at any location where its transportation is sold.  Such notices of incorporation were sufficient to bind plaintiffs, regardless of whether they read the Contract of Carriage and its liability exclusion for jewelry. 

The court found immaterial Plaintiffs' argument that the Contract of Carriage's liability limitation did not apply because their jewelry was "deliberately taken" rather than "lost, damaged, or delayed."  As held by the court: "In focusing on the phrase 'lost, damaged, or delayed,' plaintiffs ignore the provision's broader language stating that JetBlue 'will not accept for carriage . . . jewelry.'  That language absolves JetBlue from all liability resulting from carriage of the jewelry, regardless of whether 'lost' or 'deliberately taken.'"

Because the court dismissed the contract claim, it did not consider the applicability of the $3,400 limitation of liability set forth in the Contract of Carriage.

Enforcement of the Contract of Carriage

The Hekmat decision, which has not been appealed, demonstrates the effectiveness of incorporating the terms and conditions in an airline's contract of carriage through various notices to the passenger in an electronic ticket confirmation.  A passenger cannot claim ignorance and assert a right to recovery after failing to read or request a copy of such terms.  By placing a passenger on constructive notice of the contract terms, an airline may invoke the exclusions and/or limitations of liability for carriage of specific items, including jewelry, on domestic flights.  This decision will serve as strong support for future pre-answer motions to dismiss that rely on the terms and conditions in an airline's contract of carriage.

Footnotes

1 __ F. Supp. 3d __, 2017 WL 1322204 (S.D.N.Y. Mar. 29, 2017).  The court also granted the TSA's motion to dismiss, finding plaintiffs' claims were barred by the "discretionary function exception" to the Federal Tort Claims Act, 28 U.S.C. § 2671, et seq. Claims based on TSA's oversight of its agents and other security-related decisions are discretionary and thus precluded by the FTCA.  Plaintiffs' bailment claim also failed because TSA did not have exclusive control over the property and, in any event, the bailment allegations were identical to the claims barred by the FTCA.

2 49 U.S.C. § 41713(b)(1).

3 In contrast, for international transportation governed by the Montreal Convention, airlines cannot exclude liability for carriage of specific items nor fix a lower limit of liability. See MC, Arts. 17 and 26; see also DOT Guidance, 74 Fed. Reg. 14837-14838 (Apr. 1, 2009) at https://cms.dot.gov/sites/dot.gov/files/docs/webnotice_04012009_rg_0.pdf

4 867 F. Supp. 214, 221-22 (S.D.N.Y. 1994).

5 See, e.g., Bary v. Delta Airlines, Inc., No. Civ. A. CV025202 (DGT), 2009 WL 3260499 at *12 (E.D.N.Y. Oct. 9, 2009) (finding baggage handling qualified as a service for ADA purposes and no evidence presented that it was unreasonably performed).

6 See § 41713(b)(4)(B)(ii)). 

7 Federal regulations expressly provide that a ticket or other written instrument that embodies the contract of carriage may incorporate contract terms by reference, as long as notice is provided.  See 14 C.F.R §§ 253.4; 253.5(a).

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