Sotheby’s v. Federal Express Corp.

Sotheby’s (plaintiff) hired Federal Express Corporation (FedEx) (defendant) to transport three pieces of art from London to Newark. Sotheby’s did not declare any special value for the shipment or pay fees to FedEx for additional liability coverage. Sotheby’s did specifically choose a nonstop flight, and the airbill listed only that flight number and identified only Newark as the flight’s destination. The paintings arrived safely in Newark, but FedEx was short-staffed at that location. Because FedEx lacked sufficient personnel to unload the individual cargo pieces from the crate in Newark that day, it loaded the crate onto an airplane going to Memphis. In Memphis, the crate was unloaded, stored in a secure facility overnight, and then flown back to Newark the next morning. However, while the artworks were in Memphis, a forklift damaged one of the pieces, a painting worth approximately $1 million. Sotheby’s sued FedEx for the loss, and both parties moved for partial summary judgment. FedEx claimed that its liability for the damaged painting was limited to the $20 per kilogram allowed under the Warsaw Convention for shipments with no special declared value. Sotheby’s argued that FedEx could not rely on this limitation provision because the Memphis stop was not listed on the airbill. FedEx responded that its airbill’s terms allowed it to make stops not listed on the airbill.