Dover Farms v. American Air Lines

American Air Lines, Inc. (American) (defendant) was an air carrier that transported cargo. American filed a tariff with the federal Civil Aeronautics Board setting out American’s rules and regulations for transporting air cargo. This tariff stated that (1) American’s liability for cargo shipments was limited to 50 cents per pound unless the shipper declared a higher value and (2) American was not required to pay a cargo-loss claim until the shipper had paid all applicable shipping charges. American’s airbill forms contained language incorporating the tariff rules. Dover Farms, Inc. (Dover) (plaintiff) delivered 8,000 live chicks to American to transport from Newark to Los Angeles. The shipment weighed 950 pounds. American’s employees filled out the airbill for Dover. Although Dover asked to insure the chicks for $2,240, American’s employees did not declare any special value on the airbill or charge Dover the rates for increased liability coverage. The chicks arrived in Los Angeles dead or mostly dead. American did not contest that it had caused the loss. However, American claimed that its liability was limited to the default amount in its tariff of 50 cents per pound, $475 total, because (1) the airbill did not list a higher value and (2) Dover had not paid the higher shipping charges for increased coverage. Dover sued American. The trial court found that an American employee’s mistake had caused the airbill to list the lower value and that Dover was entitled to $2,240 in damages. American appealed.