Opinion
No. C 00-3741 SI
January 16, 2002
JUDGMENT
By order dated January 16, 2002, defendants' motion for summary judgment was granted. Judgment is accordingly entered in favor of defendants and against plaintiff.
IT IS SO ORDERED AND ADJUDGED.
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
On January 11, 2002, the Court heard argument on defendants' motion for summary judgment. Having carefully considered the arguments of counsel and the papers submitted, including the transcript of Sergei Belik's deposition filed by plaintiff on January 14, 2002, the Court hereby GRANTS the motion for the reasons set forth below.
BACKGROUND
Plaintiff Mark Kesel ("Kesel") traveled to Russia and the Ukraine in 1999 and, while there, obtained seven paintings that were to be displayed, and possibly sold, at an exhibition in San Francisco. Kesel Decl., ¶¶ 2-3. Kesel's agent, Sergei Belik ("Belik"), later arranged for shipment of the paintings through the Odessa office of defendant United Parcel Service, Inc. ("UPS"). According to Kesel, Belik presented the paintings to UPS on September 12, 1999, and, as instructed by Kesel, informed UPS that the cost of the paintings was $13,500 and requested that UPS insure the works of art for $60,000. FAC, ¶ 6. Kesel claims that the UPS agent in Odessa told Belik that he could not declare the paintings for an amount greater than the valuation set by Ukranian customs officials. Customs officials assigned the value of $558 to the paintings. Id. at ¶ 7.
Although Kesel alleges in his first amended complaint that UPS limited the declared value of the paintings despite Belik's request, it is undisputed that Belik agreed to ship the paintings at the $558 valuation. The "Declared Value for Insurance" on the UPS waybill, which is signed by Belik, is set at $558. Bradley Decl., Ex. A. ("UPS Waybill"). An invoice was submitted with the shipment which lists seven picture titles in English. The value of each of the paintings is listed next to its title, and the total value of the shipment is listed as $558. Bradley Decl., Ex. D. ("Invoice").
The paintings, Kesel alleges, arrived in the United States on September 15, 1999, were then housed at a Louisville, Kentucky warehouse facility, and a tracking order subsequently affirmed the shipment's location at that facility. FAC, ¶¶ 9-11. According to Kesel, UPS informed him in October 1999 that the package was "broken or missing," but later told him that the shipment simply was missing. Is. at ¶ 11. Kesel claims to have contacted UPS' claims department and local office and provided them with documentation relating to the shipment on several occasions spanning late 1999 to early 2000, which communications, he asserts, UPS failed to address. Id. at ¶ 12. Kesel asserts that on May 2, 2000, he received a claim acknowledgment from UPS which stated that UPS was attempting to locate the package and that his claim had been paid. Id. at ¶ 13. Kesel, however, maintains that he has not received any payment from UPS and is at a loss as to the status of his package. Id.
On July 7, 2000, Kesel filed a complaint in the Alameda County Superior Court against defendants United Parcel Service, Inc., UPS Airlines, Inc., and UPS Customshouse Brokerage, Inc. alleging the following causes of action: (1) willful breach of contract/interference with contract, (2) breach of contract, (3) common carrier liability for loss of shipment, (4) negligence, and (5) conversion. UPS filed an answer to Kesel's complaint on October 10, 2000, in Alameda County, asserting multiple affirmative defenses. UPS subsequently removed this action from the Alameda County Superior Court to the Northern District of California, on the basis that the suit presented a federal question and diversity jurisdiction.
On July 27, 2001, this Court heard defendants' motion for judgment on the pleadings. The Court found that Kesel's claims are not controlled by the Warsaw Convention because it appears that Kesel's shipment was lost not during international air transportation, but after international air transportation. Further, the Court found that Kesel's state law claims are preempted by the Federal Aviation Administration Authorization Act of 1994 and the Airline Deregulation Act and are governed by federal common law. See Read-Rite Corp. v. Burlington Air Express, Ltd., 186 F.3d 1190 (9th Cir. 1999). Kesel was granted leave to amend his complaint in order to frame his cause of action properly under federal common law. Kesel filed a first amended complaint on August 7, 2001, alleging (1) breach of contract against defendant UPS; (2) breach of contract against defendant UPS Customhouse Brokerage, Inc.; and (3) negligence against all defendants. FAC. Currently before the Court is UPS' motion for summary judgment.
UPS made the same argument at that stage that it does in this motion — namely that any recovery available to Kesel is limited to the $558 declared value on the waybill. The Court did not entertain the argument at that time because it was not then proper to consider documents not referred to in the complaint.
LEGAL STANDARD
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party, however, has no burden to negate or disprove matters on which the non-moving party will have the burden of proof at trial. The moving party need only point out to the Court that there is an absence of evidence to support the non-moving party's case. Id. at 325.
The burden then shifts to the non-moving party to "designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324 (quoting Fed.R.Civ.P. 56(e)). To carry this burden, the nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "The mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party]." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 252 (1986).
In deciding a motion for summary judgment, the evidence is viewed in the light most favorable to the non-moving party, and all justifiable inferences are to be drawn in its favor. Id. at 255. "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge [when] ruling on a motion for summary judgment." Id.
EVIDENTIARY RULINGS
As an initial matter, the Court will address the evidentiary objections raised by the parties.
1. Defendants' Objections
Defendants object to portions of three declarations submitted by plaintiff along with his opposition pleadings.
a. Declaration of Mark Kesel
The objection to the third and fourth sentences of paragraph six is SUSTAINED. Kesel's report about what his agent, Belik, told him is inadmissible hearsay. The objection to the fourth sentence of paragraph seven is SUSTAINED. Kesel's description of conversations with other carriers is both hearsay and irrelevant.
b. Declaration of Sergei Belik
Defendants object to the declaration of Sergei Belik because it is a translation that has not been properly authenticated. Witness testimony translated from a foreign language must be properly authenticated and any interpretation must be shown to be an accurate translation done by a competent translator. Fed.R.Evid. 604, 901. Belik's declaration provides no explanation about how the document was translated, who the translator was, or the expertise of that translator. Plaintiff has failed to lay a proper foundation for the admission of the translated declaration. See Jack v. Trans World Airlines, 854 F. Supp. 654, 659 (N.D. Cal. 1994). The declaration of Sergei Belik is therefore STRICKEN from the record.
c. Declaration of Paul McCarthy
Defendants' objection to the second and fourth sentence of paragraph two is SUSTAINED for lack of personal knowledge.
2. Plaintiffs Objections
Kesel objects to the exhibits attached to the declaration of Dean C. Bradley ("Bradley"), claiming that no proper foundation has been laid to authenticate them. See Fed.R.Evid. 901. Bradley is the East Bay District Security Manager for UPS. Bradley Decl., ¶ 1. Bradley's first declaration states that he is "familiar with UPS's business records, including its shipping records, tariffs, and service guide," that he is responsible for supervising the investigation of claims made for lost or damaged packages in the East Bay District, that he is aware of Kesel's claim, and that he has personal knowledge of the facts set forth in his declaration. His declaration then simply lists the three attached documents — the UPS waybill for Kesel's shipment, the UPS General Tariff, and the Guide to UPS Services. More is required to authenticate evidence before it can be admitted. See Fed.R.Evid. 901 (a) (foundation must be laid "by evidence sufficient to support a finding that the matter in question is what its proponent claims").
Defendants submitted a reply declaration from Bradley providing further information about his knowledge of the attached documents. That declaration explains, for example, that he works "on nearly a daily basis with UPS's shipping records and systems that document UPS's shipping operations." Bradley Reply Decl., ¶ 2. He explains further that he has reviewed "hundreds of UPS waybills," which are standardized forms, and that he frequently refers to the UPS Tariff and Guide to UPS Services, which are "reproduced widely throughout UPS's operations and are distributed to shippers." Id. at ¶ 3. Further, Bradley explains the chain of custody of the waybill and invoice attached to his original declaration. The UPS Tariff and Guide to UPS Services are widely distributed, unsigned documents. These additional facts are sufficient to lay a proper foundation for admission of the attached documents.
Bradley also acknowledged that the copy of the UPS Tariff attached to his initial declaration was missing three pages. A complete copy of the document is attached to his reply declaration. Although Kesel argues that the Guide to UPS Services attached to Bradley's initial declaration is incomplete, it appears that a full copy was, in fact, provided. The pages Kesel claims to be missing are included in the copy of the Guide to UPS Services attached to Bradley's declaration.
Kesel also claims that because he is in possession of the original "Shipper's Copy" of the UPS waybill attached to Bradley's declaration, Bradley could not have personal knowledge that the document attached his declaration is a true copy of the original. Kesel has not raised a genuine issue as to the authenticity of the original, so duplicates of that original are admissible. See Fed.R.Evid. 1003, 1004(3). The Court notes that a copy of the waybill including the reverse side has been submitted by Kesel in a separate declaration. The objections raised by Kesel are therefore OVERRULED.
DISCUSSION
UPS argues that because Kesel's agent declared a value of $558 for the paintings, Kesel's recovery is limited to a maximum of $558 by the contractual limitation of liability clause. Kesel contends that UPS's limitation of liability clause does not bar him from receiving the full value of the lost paintings.
The contractual limitation of liability clause governs each of plaintiffs claims, including the negligence claim. See, e.g., Deiro v. American Airlines. Inc., 816 F.2d 1360 (9th Cir. 1987) (applying limited liability provision to claims of breach of contract, negligence, and willful and wanton behavior).
When a shipper contests the validity of a contractual clause that limits a carrier's liability, federal common law applies. See Deiro, 816 F.2d at 1365-66. Under federal common law, common carriers and shippers like UPS may "limit their liability for injury, loss, or destruction of baggage on a `released valuation basis,'" whereby, "in exchange for a low carriage rate, the passenger-shipper is deemed to have released the carrier from liability beyond a stated amount." Id. at 1365 (citing Klicker v. Northwest Airlines. Inc., 563 F.2d 1310, 1315 (9th Cir. 1977)). Under the released value doctrine, "if a carrier wishes to enforce a limited liability provision, its contract must offer the shipper (1) reasonable notice of limited liability, and (2) a fair opportunity to purchase higher liability." Read-Rite Corp., 186 F.3d at 1198 (citing Deiro, 816 F.2d at 1364). Thus, "the shipper is bound only if (1) he has reasonable notice of the rate structure and (2) is given a fair opportunity to pay the higher rate in order to obtain greater protection." Deiro, 816 F.2d at 1365 (citations omitted). Applying these standards to the case at bar, it is clear that the UPS limitation of liability is valid and enforceable as a matter of law.
1. Reasonable Notice of Limited Liability
UPS argues that the shipping contract expressly sets forth the limits of its liability and offers shippers an opportunity to declare a value higher than UPS's $100 limit. The reverse side of the UPS waybill provides that "any liability of UPS shall be . . . limited to proven damages up to a maximum per shipment of the local currency equivalent to USD 100 per shipment, unless a higher value has been declared . . ." Kesel Decl., Ex. A ("UPS Waybill"). Customers are directed to this language in two places on the front of the waybill. A paragraph under the space set aside for the shipper's signature reads, in part: "The shipper agrees to the UPS Terms and Conditions set out on the reverse side of the Shipper's Copy of the Waybill." That paragraph further provides: "Unless a greater value for Insurance is declared on the Waybill, the Warsaw Convention or the CMR Convention may apply and limit UPS liability." The top of the form also advises shippers to "See Instructions On Back." Id.
Courts have upheld notices referring shippers to the back of waybills for the terms of liability. See, e.g., Read-Rite Corp., 186 F.3d at 1193, 1198-99; King Jewelry. Inc. v. Fed. Express Corp., 166 F. Supp.2d 1280, 1285 (C.D. Cal. 2001).
An airbill may incorporate by reference outside materials in limiting liability. See, e.g., Deiro, 816 F.2d 1360 (recognizing enforceable limitation on liability through combination of statements on air ticket and incorporated service guide). Here, the waybill incorporates by reference the UPS tariff, which provides, inpart:
Whenever property is lost or damaged by UPS in the course of transportation, UPS, on its behalf and as applicable on behalf of the insurance company, will pay at its option either for the damaged or lost goods not to exceed the actual cost or declared value of the property, whichever is lower . . .
Bradley Decl., Ex. B ("UPS Tariff").
Kesel raises a number of arguments about the adequacy of notice provided here. Relying upon the "reasonable communicativeness" test established in Deiro, 816 F.2d at 1364, Kesel argues that the physical characteristics of the waybill do not adequately warn shippers of UPS's limited liability based in large part upon the placement and legibility of the relevant warnings. As to the surrounding circumstances, Kesel notes that Belik did not speak English, making it impossible for him to read any limitations contained in the waybill.
Although he argues otherwise, it is clear that plaintiff and his agent had actual notice of the limited liability provision. Kesel himself was undoubtedly aware of UPS's limited liability because, as noted earlier, he advised Belik to declare a specific value for the paintings. Kesel's company "had shipped a very substantial amount of electronic equipment with UPS in the past (some shipments insured for up to a million dollars) . . ." Kesel Decl., 2:21-23. Moreover, there is no support for a finding of lack of adequate notice based on a failure to translate the contract at issue into the language of the country in which it is being signed. Here, Belik signed the contract despite acknowledging the fact that he was unable to understand it. Belik Depo., 26:17-24. Furthermore, whether or not he could read the waybill, Belik discussed the value of the paintings with UPS officials in Ukraine and acknowledges having been aware that the $558 listed value was the amount the paintings were insured for. Belik Depo., 67:11-14. The language of the shipping contract, taken in combination with the fact that Kesel frequently shipped packages through UPS and sought to insure the paintings being sent here, provides clear evidence that Kesel had reasonable notice of UPS's limitation of liability.
2. Fair Opportunity to Purchase Higher Liability
Having found that there was reasonable notice of the limited liability provision, "[t]he burden then shifts to the shipper to prove that it did not have a fair opportunity to purchase greater liability coverage." Read-Rite, 186 F.3d at 1198.
Kesel argues that, because Belik was forbidden from insuring the paintings for any more than the local customs valuation of the paintings, he was not provided a fair opportunity to purchase higher liability coverage. Assuming his allegations to be true, Kesel may not use the conduct of UPS officials to avoid the terms of the contract. Kesel's agent does not maintain that he was forced to sign the waybill with the valuation of $558. Indeed, Belik acknowledges that he was aware that he was agreeing to limit UPS's liability to $558 in the event that the paintings were lost or damaged. Belik Depo. 67:11-14. If this was unsatisfactory, he had available to him other means to ship the paintings. Moreover, separate insurance for the paintings could have been obtained. Instead, Kesel's agent signed the waybill with a declared value of $558 and shipped the paintings.
The Court notes that, because Belik's declaration has been stricken, as have portions of Kesel's declaration reporting what Belik told him, the only evidence of the negotiations between Belik and the UPS officials in Odessa comes from Belik's deposition testimony. At oral argument, counsel for Kesel asked that the Court review the deposition in its entirety. Having done so, the Court finds little support for Kesel's position. Moreover, this Court's conclusion would be the same were it to consider the Belik declaration or the full Kesel declaration.
Kesel has not cited, and this Court has not been able to locate, any case in which a court invalidated a contract in which the shipper was offered an opportunity to pay for an alternative liability limit. There is no requirement that carriers allow a shipper to declare the full value for goods. In the absence of any applicable authority offered by Kesel, this Court is persuaded by the reasoning of a recent First Circuit decision holding that a shipper was not denied a fair opportunity to obtain greater coverage where he had only been allowed to declare a value up to $500 for valuable jewelry. See Kemper Ins. Co. v. Fed. Express Corp., 252 F.3d 509, 513-14 (1st Cir. 2001), cert. denied, 122 S.Ct. 545 (2001). Noting that the carrier solicited the carriage of items worth more than the $500 contractual limit, the court explained that this fact "does not mean that the $500 limit did not provide shippers with a fair opportunity to increase their coverage by paying a higher rate; it only meant that they could not necessarily insure their packages at a full value through the carrier." Id. at 513. See also King Jewelry, 166 F. Supp. at 1285-86 (upholding limitation of liability clause in which plaintiff declared value of $37,000, but clause limited declaration of value to $500). Here, Kesel's agent opted to send the paintings via UPS at a declared value of $558; Kesel is bound by his agent's declaration of value.
3. Availability of Consequential Damages
In his first amended complaint, Kesel claims that, had the paintings been delivered and exhibited in a gallery, they would have sold for more than $13,500. FAC, ¶ 14. The shipping contract in this case does not provide for recovery of consequential damages. Specifically, the UPS Tariff reads: "UPS shall not be liable for any special, incidental or consequential damages." UPS Tariff, p. 8. Therefore, Kesel is not entitled to recover the amount of money he contends the paintings would have sold for in the United States. See e.g., Apartment Specialists, Inc. v. Purolator Courier Corp., 628 F. Supp. 55, 58-59 (D.D.C. 1986).
CONCLUSION
Defendants' motion for summary judgment is GRANTED. [Docket No. 38] Kesel is contractually bound to the $558 declared value in the shipping contract.
IT IS SO ORDERED.