Montreal Convention doesn't apply to transit shipment dispute, Pa. federal judge says

By Nicholas Malfitano | Jan 17, 2017

PHILADELPHIA – A federal judge says the Montreal Convention hasn’t been proven to govern a dispute centered on a shipment of human growth hormone that was damaged in transit.

On Jan. 12, U.S. District Court for the Eastern District of Pennsylvania Judge Gene E.K. Pratter ruled not to dismiss a dispute between plaintiffs Baloise Insurance Ltd. and AXA Versicherung AG and defendant Philadelphia Truck Lines, Inc. (PTL), based upon the tenets of the Montreal Convention.

The plaintiffs filed this action following PTL’s alleged failure to refrigerate a shipment of human growth hormone during transit, which damaged the product. PTL moved to dismiss plaintiffs’ amended complaint under Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim where relief could be granted.

This dispute revolves around the second leg of a shipment arranged by Spedition F.R.E.I.T.A.N. GmbH (FREITAN), specifically transportation of the product from Philadelphia International Airport to Mechanicsburg by PTL. The product was delivered by British Airways to Philadelphia International Airport under an air waybill on or about Friday, Aug. 15, 2014. The plaintiffs alleged the air waybill did not cover inland movement.

PTL then delivered the product to Mechanicsburg on or about Aug. 19, 2014. Plaintiffs allege that the second leg of the trip was subject to a separate agreement – handled by PDA International Logistics – between FREITAN and PTL.

The plaintiffs alleged that on Aug. 20, 2014, shortly after delivery of the damaged product, PDA International Logistics complained in writing to PTL on behalf of Sandoz/FREITAN and that following an investigation, PTL admitted that it failed to maintain the human growth hormone at a proper temperature.

The plaintiffs alleged the defendants committed breach of contract, breach of Bailment, negligence/gross negligence and alternative causes of action for breach of contract and/or duties under the Montreal Convention, while AXA separately alleged indemnity.

PTL moved to have the case dismissed, based upon the plaintiffs allegedly failing to state a claim upon which relief could be granted. In its motion to dismiss, PTL believed the plaintiffs’ state law claims are wholly pre-empted by the Montreal Convention, something which the plaintiffs categorically denied.

The Montreal Convention is an international treaty which governs the rights and responsibilities of international air carriers.

“The amended complaint alleges that FREITAN was hired ‘to arrange air and land transportation of a shipment of temperature sensitive biopharmaceuticals from Austria to Mechanicsburg, Pennsylvania.’ Use of multiple carriers does not necessarily remove a shipment from the Montreal Convention’s purview. On this basis, PTL urges that even if the shipment at issue in this case involved multiple contracts, it comprised a single, undivided operation under the air waybill facilitated by FREITAN and is therefore subject to the Convention,” Pratter said.

Pratter explained the plaintiffs argue the air waybill is not the governing contract and rather, the separate ground transport bill of lading issued by PDA International to PTL governs the portion of transport at issue.

While the plaintiffs allege the cargo was damaged when in control of PTL, not British Airways, it did not occur when it was in charge of the air carrier and is not subject to the Convention – however, PTL believes damage done to cargo during trans-shipment while in the performance of a contract by air is presumed to have taken place during the carriage by air.

“It is clear from the briefing and oral argument that the parties disagree over the applicability of, and relationship among, the various contracts at play in this action. PTL urges this Court to find the air waybill determinative,” Pratter said.

“However, the plaintiff has alleged that a separate contract outside the air waybill governs this dispute. The Court will not, at this stage of the proceedings, dismiss this action on the basis of the Montreal Convention when its applicability is not clearly established,” Pratter concluded.

The plaintiffs are represented by George R. Zacharkow of Deasey Mahoney & Valentini in Philadelphia, plus David T. Maloof and Thomas M. Eagan of Maloof Browne & Eagan in Rye, N.Y.

The defendant is represented by Robert G. Rothstein of Seaton & Husk, in Vienna, Va.

U.S. District Court for the Eastern District of Pennsylvania case 2:16-cv-03813

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

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