New Fortune Inc. v. Apex Logistics International Ltd.

Background

New Fortune, Inc. bought one million face masks from a Chinese company and paid Apex Logistics International (CN) Ltd. to transport them by air from China to the United States. One batch arrived on time. The second batch was sent through Moscow, remained there for more than twenty days, and arrived at JFK Airport on an Aeroflot flight on May 19, 2020. New Fortune alleged that six crates were damaged, that its buyer refused to accept the late delivery, and that Apex withheld the masks until New Fortune paid all freight charges.

New Fortune asserted claims for breach of contract, breach of bailment, negligence, and estoppel. The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim.

Legal Standard and Analysis

The defendants argued that the Montreal Convention preempted New Fortune’s state-law claims. The Convention governs international air transportation of cargo and provides rules for damages caused by delay and physical damage occurring during air carriage. It also covers certain related land transportation performed as part of an air-carriage contract.

The court held that the claims concerned international air transportation because the masks were shipped by air from China to the United States. Claims based on delayed delivery and damage during that transportation had to be brought under the Montreal Convention rather than under state law. The court relied in part on decisions holding that the substantially similar Warsaw Convention preempts state-law claims when it applies.

The court rejected New Fortune’s argument that its delay claims involved nonperformance rather than delay. The amended complaint expressly sought damages for delayed delivery and physical damage to delivered goods. The court also rejected the argument that the masks might have been damaged outside an airport, explaining that any damage attributable to Apex or Aeroflot arose from their roles in transporting the masks for shipment by air.

Disposition

Judge Denise Cote granted the defendants’ October 23, 2020 motion to dismiss. The Clerk of Court was directed to enter judgment for the defendants and close the case. The opinion does not state that the dismissal was with or without prejudice.