Law, Business and Society 11th Edition by Tony McAdams

Exercise 43

Judge Guilford
BACKGROUND
Plaintiff David Hanson ("Plaintiff") has lost his head. More specifically, Plaintiff has lost an artistically and scientifically valuable robotic head modeled after famous science fiction author Philip K. Dick ("Head"). Dick's well-known body of work has resulted in movies-such as Total Recall, Blade Runner, Minority Report, and A Scanner Darkly, and a large group of admirers has grown following his death in Orange County, California, in 1982. His stories have questioned whether robots can be human so it seems appropriate that Plaintiff reincarnated Dick as a robot which included the Head, valued at around $750,000.
Plaintiff lost his Head on one of Defendant's planes when flying from Texas to San Francisco with a connection in Las Vegas. Plaintiff brought the Head onto the plane in a carry-on duffel bag and stored it in the overhead bin. Plaintiff fell asleep during the flight from Texas to Las Vegas, and woke up when the plane arrived in Las Vegas. On waking, Plaintiff immediately left the plane to catch his connecting flight to San Francisco. Perhaps because he had just woken up, Plaintiff lacked the total recall to remember to retrieve the Head from the overhead bin.
According to Plaintiff, as soon as he got to San Francisco, he went to the baggage counter, spoke to Defendant's employee, Leanne Miller ("Miller"), and informed her of the problem. Miller told him that the airplane with his Head was in flight, and could not be checked until it landed in Southern California. Plaintiff offered to fly to Southern California to regain his Head, but Miller told him not to do that. According to Plaintiff, he informed Miller of the importance and value of the Head, and she replied that all efforts would be made to recover the Head and that it would receive "special treatment."
Plaintiff asserts that about 45 minutes later. Miller called him with the good news that the Head had been found in Orange County. Plaintiff "remained willing" to go retrieve his Head, but Miller replied that it would be sent to San Francisco. According to Plaintiff, Miller then informed him of the special security procedures that would be taken to protect and deliver the Head. Plaintiff told Miller that Plaintiff's friend Craig Grossman would be at the airport to pick up the Head. Grossman waited for the Head at the San Francisco airport, but it never arrived and has not been found since. While hearts may be left in San Francisco, heads apparently are left in Orange County, or are simply lost or stolen.
Plaintiff sued Defendant in California state court for conversion, negligence, and involuntary bailment. Defendant removed the case to federal court, and here moves for summary judgment.
ANALYSIS
1. Contractual Liability Limitations
Defendant argues that it contractually limited its liability for loss of Plaintiff's goods.…
Federal common law allows a carrier to limit its liability for lost or damaged goods if the contract limiting liability offers the shipper (1) reasonable notice of the limited liability, and (2) a fair opportunity to buy higher liability.
*****
If the contract states the limited liability provision and a means to avoid it, the contract is considered prima facie valid. Defendant has satisfied the elements of an enforceable limited liability provision under federal common law. The Contract of Carriage provides that "liability of loss, delay, or damage to baggage is limited as follows unless a higher value is declared in advance and additional charges are paid." The contract later provides that the monetary limit is "USD 2,800.00 per ticketed passenger for checked baggage." More specifically for this case, the Contract of Carriage provides that Defendant "assumes no responsibility or liability for baggage, or other items, carried in the passenger compartment of the aircraft." Plaintiff admits that he was aware of the limited liability provision. Thus, Defendant provided Plaintiff with reasonable notice of limited liability and a fair opportunity to buy higher liability.
2. Plaintiff's Arguments
Plaintiff argues that Defendant is liable for the lost head because (1) there was a material deviation from the Contract of Carriage and (2) Plaintiff's discussion with Miller altered the terms of the original Contract of Carriage or created a new contract.
2.1 Material Deviation Doctrine
*****
[T]he material deviation doctrine states that where a carrier effects a fundamental breach of a contract by materially devi­ating from the contract's terms, the carrier is liable for damage to or loss of the shipped goods. Cases have further defined the boundaries of this doctrine. For example, in Nipponkoa Ins. Co., Ltd., v. Watkins Motor Lines, Inc., 431 F.Supp.2d 411 (S.D.N.Y. 2006), a carrier promised to take special measures to protect a shipment of laptop computers, including using high security locks and video surveillance. The court found that the carrier breached that promise by failing to use either high se­curity locks or video surveillance. The court held that the carrier was responsible for the loss of the computers under the material deviation doctrine. The court explained that the doctrine applies when a carrier breaches a "separate, risk-related promise" about the shipment of goods. The court emphasized that the agreement was specific and that the carrier deviated from the expressly agreed-upon security measures.
*****
The Ninth Circuit has limited the material deviation doctrine. In Vision Air, for example, a carrier destroyed two trucks by using an inadequate pulley system to transport them. Vision Air, 155 F.3d at 1167 68. The Ninth Circuit held that even if that behavior constituted gross negligence or recklessness, it did not constitute a material deviation. "[W]e reject the notion that mere negligence may constitute an unreasonable deviation... we reject the notion that gross negligence or recklessness may constitute an unreasonable deviation." The court emphasized that only "more culpable misconduct" could be considered a deviation.
In the cases just discussed, the courts focused on the actual express terms of the agreement, showing that the material deviation doctrine applies only when the shipper makes a "separate, risk-related promise," and then breaches that promise.
With these boundaries, Plaintiff's argument that Defendant materially deviated from the original Contract of Carriage fails. There were no provisions in the original Contract of Carriage directly concerning transporting the Head. Indeed, the original Contract of Carriage declaimed any responsibility for carry-on baggage. Further, nothing in the original Contract of Carriage made provisions for travelers leaving baggage on the airplane. Thus, Defendant did not breach a "separate, risk-related promise" in the original Contract of Carriage, and is not liable under this theory.
2.2 Altered or New Contractual Terms and Agency Law
Plaintiff also argues that Miller either altered the terms of the original Contract of Carriage or created a new contract with Plaintiff, and that Defendant is liable under the new or altered contract.
Agents can bind their principals only if they have actual or apparent authority to do so. Actual authority may be either express or implied. If a principal specifically authorizes an agent to act, the agent has express authority to take that action. If a principle "merely states the general nature of what the agent is to do, the agent is said to have implied authority to do acts consistent with the direction."
Miller did not have express authority to contract with Plaintiff. The original Contract of Carriage provided that:
No employee of U.S. Airways has the authority to waive, modify, or alter any provisions of these terms of transportation or any applicable fares/charges unless authorized by a corporate officer of U.S. Airways. U.S. Airways-appointed agents and representatives are only authorized to sell tickets for air transportation on U.S. Airways pursuant to the terms of transportation and applicable fares/charges of U.S. Airways.
There is no evidence that Miller was either a corporate officer of Defendant or that she was authorized by such an officer to modify the terms of transportation. Thus, under the Contract of Carriage, Miller had no express authority either to change the terms of the contract or to create a new contract. Indeed, Miller had express authority only to "sell tickets for air transportation." Likewise, there is no evidence that Miller had implied authority.
The Contract of Carriage also leads to the conclusion that Miller had no apparent authority to change the terms of the contract or to create a new contract. "Apparent authority results when the principal does something or permits the agent to do something which reasonably leads another to believe that the agent had the authority he purported to have." Hawaiian Paradise Park Corp., 414 F.2d at 756 (9th Cir. 1969). Only the acts of the principal, not of the agent, give rise to apparent authority. Plaintiff argues that Miller's station behind a desk near the baggage claim area led Plaintiff to reasonably believe that Miller had the authority to make contracts for the delivery of lost baggage. The Court disagrees.
Plaintiff is a frequent flyer and was aware of the applicable tariffs. Thus, before he lost his Head and spoke with Miller, he was aware of the tariff limiting Miller's authority. Aware of that tariff, he could not reasonably conclude, based on Miller's position behind a desk, that she suddenly had authority to contract with him.
*****
Plaintiff cannot rely on representations altering the contract or creating a new contract when those representations were made by someone whose authority had been expressly limited by contract. The Court must find that Miller had neither actual nor apparent authority to either alter the Contract of Carriage or create a new contract.
2.3 Even Under the New Terms Alleged, Liability Has Not Been Established
Even if Miller had authority to alter the Contract of Carriage or create a new contract, Defendant would still not be liable for the lost Head because there is no evidence that Defendant breached the contract even under the new terms alleged. Plaintiff alleges new terms that provided for tagging and boxing the Head, informing everyone of the value, and scheduling the Head on the next flight. But Plaintiff presents no evidence that such terms were breached. Instead, Plaintiff offers theories of Defendant's potential conduct, such as, "potentially informing the wrong crew of the value of the HEAD" and "potentially informing the thief of the high value of the HEAD." These theories, while heady, are insufficient.
At best, Plaintiff's theory is that, since the Head did not arrive at its destination, Defendants must have done something wrong. This is not evidence of a breach or material deviation. Defendant may have done everything as promised, only to fall victim to a head hunting thief or other skullduggery. Alternatively, Defendant could have been negligent, and still not have committed a funda­mental breach. The possibility of such negligence is "considered an inherent risk of shipping." Information Control, 73 Cal. App. 3d at 641. Thus, even if Plaintiff's discussion with Miller altered or created a new contract, there is no evidence establishing Defendant's liability based on breach or material deviation.
CONCLUSION
Philip K. Dick and other science fiction luminaries have often explored whether robots might eventually evolve to exercise freedom of choice. But there is no doubt that humans have the freedom of choice to bind themselves in mutually advantageous contractual relationships. When Plaintiff chose to enter the Contract of Carriage with Defendant he agreed, among other things, to limit Defendant's liability for lost baggage. Failing to show that he is entitled to relief from that agreement, Plaintiff is bound by the terms of that contract, which bars his state law claims.
The Court must GRANT Defendant's Motion. But it does so hoping that the android head of Mr. Dick is someday found, perhaps in an Elysian field of Orange County, Dick's homeland, choosing to dream of electric sheep.
As a matter of law, why did America West win this case