Delta Air Lines, Inc. v. Barnard

Citations: 799 So. 2d 208; 2001 Ala. Civ. App. LEXIS 185; 2001 WL 470219Docket: 2981082

Court: Court of Civil Appeals of Alabama; May 4, 2001; Alabama; State Appellate Court

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Dr. Henry H. Barnard II filed a lawsuit against Delta Air Lines, Inc. on August 21, 1997, in Mobile County for breach of contract, conversion, theft, and negligent supervision, seeking compensatory and punitive damages due to the loss of his golf clubs during air travel. Delta moved for summary judgment on December 24, 1997, asserting that its liability was limited to $1,250 based on its contract of carriage. Barnard amended his complaint to include Atlantic Southeast Airlines, Inc. (ASA) as a defendant, but later dismissed ASA voluntarily during trial. 

The court granted Delta's summary judgment, limiting its liability, and awarded Barnard $1,250 on July 2, 1998. Barnard appealed for a trial de novo, leading to a jury trial on March 2, 1999. At trial, Delta sought judgment as a matter of law (JML), which was granted on most claims except for breach of contract and conversion. The jury ultimately awarded Barnard $30,000, which was reduced to $10,000 by the court due to jurisdictional limits. Delta appealed this decision, but the appellate court affirmed the trial court’s judgment on July 21, 2000, without an opinion.

During the appeal process, the Alabama Supreme Court released an opinion relevant to the case. The Barnards had purchased round-trip tickets for a flight that required them to travel through Atlanta, with the return leg operated by ASA. On the day of travel, Barnard checked two luggage pieces, including a hard case containing his golf clubs, which were properly labeled. The case highlights the legal proceedings surrounding the loss of property during air travel and the implications of airline liability.

Dr. Barnard observed the ASA representative seal his baggage and watched the ticket agent place the hard case into the luggage chute at Brunswick airport. After flying to Atlanta and then to Mobile, he retrieved his suitcase but not the carrying case with his golf clubs. He filed a 'Lost Bag Claim' with Delta, who informed him that the case would not arrive that night. The next day, Delta confirmed the case was missing and provided a toll-free number for follow-up. Two days later, Delta indicated they likely would not find the case, offering $1,250 in compensation, while Dr. Barnard stated his clubs were worth $3,292.50. He returned the check. Delta's customer-service agent, Beau Goss, testified about Delta's sophisticated baggage-tracking system and the restricted access to the baggage handling area. Despite this, he could not explain how Dr. Barnard's case went missing. ASA representative Ronnie Edwards corroborated that only ASA and Delta employees had access to the baggage areas and also had no explanation for the loss. Delta contended that its baggage liability limitation of $1,250 was enforceable as part of the contract of carriage with Dr. Barnard. In a related case, Delta was found liable for negligence and breach of contract, resulting in a $6,327 judgment against them after a bench trial.

Delta's appeal was affirmed by the court on December 3, 1999, without an opinion. Following this, Delta sought certiorari review from the supreme court, which was granted. The court analyzed the preemption clause of the Airline Deregulation Act of 1978 (A.D.A.) and referenced two significant Supreme Court cases: American Airlines, Inc. v. Wolens and Morales v. Trans World Airlines, Inc. The supreme court reversed the lower judgment, determining that the A.D.A.'s preemption clause applied and preempted the plaintiff's state-law negligence claim if related to airline rates, routes, or services and if enforcing it in state court constituted enforcing state law. However, the court clarified that state-law breach-of-contract claims were not preempted, allowing them to be resolved by state courts.

The court also cited its earlier decision in Eastern Air Lines v. Williamson, which concluded that claims arising from the destruction of luggage were subject to federal law. In Williamson, the court upheld a tariff limiting the airline's liability for lost luggage to $250 unless a higher value was declared by the passenger. The rules for baggage liability in air transportation are outlined in 14 C.F.R. § 254, which sets minimum liability limits and mandates airlines to notify passengers of any limitations on liability. Specifically, regulations require a minimum liability of $1,250 for lost or delayed baggage on large aircraft flights and require conspicuous notice of any monetary limitations.

The notice requirement for incorporating terms by reference into contracts of carriage is established under 14 C.F.R. § 253. Section 253.1 mandates uniform disclosure standards that override state requirements for scheduled interstate and overseas air transportation. Section 253.4 allows tickets to incorporate contract terms by reference but requires accompanying notice to passengers. Air carriers cannot enforce terms against passengers if proper notice is not given. Carriers must make the full text of incorporated terms publicly available at ticket offices and provide copies upon passenger request, free of charge.

Section 253.5 stipulates that tickets must include a conspicuous notice informing passengers that incorporated terms are part of the contract and can be inspected at ticket offices. Passengers are also entitled to receive, at no cost, the full text of these terms upon request at ticket sales locations. Additionally, these terms may detail limitations on the carrier's liability for passenger injuries and baggage issues. 

In the case of Dr. Barnard, his airline ticket, issued by All Seasons Travel, included a statement indicating that air transportation is subject to the individual contract terms of the transporting carriers, which are incorporated by reference. The ticket also advised passengers to ensure they received important legal notices regarding contract conditions and liability limitations, directing them to contact the issuing company for copies if needed.

Dr. Barnard did not read the ticket's back or the accompanying legal notices. Lattime confirmed a two-page insert was included with his ticket, detailing baggage liability limitations and incorporated terms of the airline's contract. The first page outlined that baggage liability is limited unless a higher value is declared, with a minimum federal limit of $1,250 for domestic travel. The second page stated that the incorporated terms govern in case of inconsistencies with the ticket's terms, including limits on liability for fragile or perishable items. Lattime asserted she included this insert in Dr. Barnard's ticket packet, though he did not recall seeing it. Dr. Barnard acknowledged some awareness of airlines limiting baggage liability from his prior flights.

Based on precedent, Dr. Barnard's conversion claim is governed by federal law relating to airline services. Delta acknowledged a contract of carriage existed and admitted to breaching it, but argued that its liability was capped at $1,250 due to proper notice as required by federal regulations. The trial court instructed the jury that if Delta properly notified Dr. Barnard, compensatory damages for both the conversion and breach-of-contract claims would be limited to $1,250. The evidence demonstrated Delta met the notice requirements, justifying enforcement of the liability cap. Consequently, the trial court's judgment was reversed, directing entry of a $1,250 judgment in favor of Dr. Barnard. The court granted a second rehearing, substituting the opinion issued on January 12, 2001.