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UPS Supply Chain Solutions, Inc. v. American Airlines

August 14, 2009


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge


Plaintiff UPS Supply Chain Solutions, Inc. has sued American Airlines, Inc., alleging breach of a shipment contract, negligence, and breach of duty as a bailee. Both parties have moved for summary judgment on UPS's breach of contract claim. For the reasons stated below, the Court denies both motions.


In April 2007, Abbott Laboratories contracted with UPS to transport eighty drums of fish oil from Tokyo, Japan to South Bend, Indiana. UPS subsequently entered into an agreement with American Airlines pursuant to which American Airlines agreed to transport the fish oil from Tokyo to Chicago, Illinois. UPS issued an air waybill to American Airlines that stated, "KEEP COOL// MUST BE PUT IN COOLER UPON ARRIVAL AT AA/ORD." Pl. Ex. 7. The shipment was tendered to American Airlines at Tokyo's Narita Airport on April 7, 2006. A representative of American Airlines at Narita stamped the air waybill with the following language: "CUSTOMER AGREES THAT REFRIGERATION IS NOT GUARANTEED." Id.

The shipment arrived at O'Hare Airport in Chicago, Illinois on April 7, 2006. It was not refrigerated upon arrival. Rather, it was mistakenly placed on American Airlines' bypass system, which is meant mainly for customer loaded containers (CLCs). Loose freight-cargo that is not packaged as a CLC-is handled and stored in other areas, including the cooler. The shipment at issue was loose freight, not a CLC. American Airlines contends, however, that the shipment was loose freight that had been wrapped and packaged to look like a CLC.

On April 18, 2006, UPS's nominated trucker attempted to pick up the shipment from American Airlines' facilities at O'Hare. It failed to do so. American Airlines contends that this failure was a result of the trucker's inability to load the shipment onto its truck. UPS contends that the trucker refused to pick up the shipment because Abbott rejected it once it learned that it had not been refrigerated and was therefore spoiled.

On May 1, 2006, UPS employee Toni DeStefano sent a letter to an American Airlines representative stating:

This is to inform you that our customer is refusing this shipment due to the fact that is [sic] was left in a ULD and not kept cool. From what I understand the freight was left outside in a container during days reaching 80 degree's [sic] and the product spoiled. The product was valued well over $80,000 USD. Please advise what the airline plans to do with this product. All your help is deeply appreciated.

Pl. Ex. 13. Another UPS employee, Jean Cernosek, testified during her deposition that she faxed to American Airlines a notice of intent to file claim, but no fax was produced in discovery. In a letter addressed to Cernosek dated May 29, 2006, American Airlines informed UPS that it had investigated the incident and that it was declining responsibility for the loss.


Summary judgment is appropriate if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). To determine whether a genuine issue of material fact exists, the Court must view the record in the light most favorable to the nonmoving party and draw reasonable inferences in that party's favor. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986); Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002). A genuine issue of triable fact exists only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. Because the parties have filed cross-motions for summary judgment, the Court "construe[s] the evidence and all reasonable inferences in favor of the party against whom the motion under consideration is made." Crews v. City of Mt. Vernon, 567 F.3d 860, 864 (7th Cir. 2009) (citing Calvin v. Home Loan Ctr. Inc., 531 F.3d 526, 528 (7th Cir. 2008)).

The parties agree that the Montreal Convention, a treaty concerning international air shipments, governs this case.

A. UPS's Prima Facie Case

Montreal Convention, Article 18, provides that "[t]he carrier is liable for damage sustained in the event of the destruction or loss of, or damage to, cargo upon condition only that the event which caused the damage so sustained took place during the carriage by air." Convention for the Unification of Certain Rules for International Carriage by Air, May 28, 1999, ICAO Doc. 9740, reprinted in S. TREATY DOC. NO. 106-45, 1999 WL 33292734 (2000). Under the Montreal Convention, a prima facie case of liability "is established upon a showing that the goods were delivered to the carrier in good condition, were delivered to the consignee at destination in damaged condition, and resulted in a specified amount of damage." Eli Lilly and Co. v. Air Express Int'l USA, Inc., 602 F. Supp. 2d 1260, 1271-72 (S.D. ...

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