Defendant carrier appealed from a judgment of the Alameda County Superior Court (California), which awarded compensatory and punitive damages to plaintiff shipper. The jury found that the carrier breached its contract with the shipper and also breached the duty of good faith and fair dealing it owed to the shipper by unreasonably denying the shipper's claim.
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Overview
The shipper used the carrier to ship a prototype piece of electronic equipment, which arrived badly damaged. The carrier did not pay the shipper's claim for repair costs until shortly before trial. The court held that the shipper's lawsuit was preempted by 49 U.S.C.S. § 41713(b)(1) of the Airline Deregulation Act of 1978 because it was clearly founded on the unsatisfactory manner in which the carrier performed the transportation of freight by air. Imposing liability for performance of a carrier's core function would clearly impact the economic ability of that carrier to compete. Neither Brandt damages nor punitive damages were part of the bargain struck by the parties. Although the shipper tried to reframe the issue, any judgment against the carrier was liability for the performance of its services. Even if the handling of claims could properly be characterized as "nonessential" to the carrier's operations, they were related to those services and had a connection with or reference to those operations. Moreover, the released value doctrine allowed an air carrier to limit liability for loss or destruction of baggage on a released valuation basis.
Outcome
The court reversed the judgment.