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CRUZ v. AMERICAN AIRLINES

July 3, 2001

MARIA
V.
CRUZ, ET AL., PLAINTIFFS, V. AMERICAN AIRLINES, DEFENDANT.



The opinion of the court was delivered by: Kollar-kotelly, District Judge.

      MEMORANDUM OPINION

In this prospective class action, several airline passengers allege that Defendant American Airlines ("American") is liable for the full value of bags lost on international flights and that American acted unlawfully in refusing to process lost baggage claims accordingly. Presently before the Court are the parties' cross motions for summary judgment and Plaintiffs' motion for class certification. Upon consideration of the pleadings*fn1 and the applicable law, the Court shall grant American's motion for summary judgment in part and deny it in part, grant Plaintiffs' cross motion for summary judgment in part and deny it in part, and deny Plaintiffs' motion for class certification without prejudice.

I. BACKGROUND

Plaintiffs in this suit fall into two separate camps that pursue separate counts against American. While the root is the same for each claim — American lost bags that Plaintiffs checked onto international flights — the precise factual predicates for the two separate counts differ, as do the corresponding requests for relief. Therefore, the Court' recitation of the facts is bifurcated between the two plaintiff groups.

A. Cruz Plaintiffs

Under American's internal "30-Day Rule" in effect at that time, the airline generally refused to settle claims that were not filed within thirty days of a loss. In accordance with this Rule, American originally refused to voluntarily compensate the Cruz Plaintiffs for their lost bags because they had failed to submit their OP-124 forms within thirty days. See id. ¶ 4. Plaintiffs subsequently commenced this litigation asserting that American is liable for the fair value of the lost bags under the Warsaw Convention.*fn3

In a Memorandum Opinion issued on October 24, 1997, the Court determined that the Article 22(2) of the Warsaw Convention limited American's liability for the lost bags. See Oct. 24, 1997, Mem. Op. at 16. While Plaintiffs argued that American's failure to record the weight of the bags at check-in precluded the airline from benefitting from the limitation, the Court found that the liability caps still applied, and it entered judgment in favor of American. See id. On subsequent appeal, the United States Court of Appeals for the District of Columbia Circuit addressed the availability of liability caps in these circumstances and considered whether Montreal Protocol 4,*fn4 ratified after this Court's October 1997 opinion, impacted the analysis. See Cruz v. Am. Airlines, Inc., 193 F.3d 526 (D.C.Cir. 1999). Concluding that the Warsaw Convention offers no protection for such carriers and that Montreal Protocol 4 does not have retroactive effect, the circuit court vacated this Court's earlier entry of judgment and remanded the case. See id. at 530, 532.

Following the issuance of the circuit court's opinion, the Plaintiffs prepared a Second Amended Complaint. In Count One, the Cruz Plaintiffs seek (1) a declaration that American's 30-Day Rule is unlawful, (2) an injunction barring American from "publishing, applying or enforcing" the Rule, (3) a declaration that the Cruz Plaintiffs are entitled to compensation for their lost bags, (4) a declaration of "the lawful measure of [American's liability to the class members as compensation," and (5) compensatory damages in an amount equal to the fair value of the lost baggage or, when appropriate, "the amount which results from multiplying $9.07/lb. by the `deemed weight'" of the lost bag. See 2nd Compl., Wherefore Clause following ¶ 19.

B. Count Two Plaintiffs

Like the Cruz Plaintiffs, Beato Cruz*fn5 and Lawrence and Jo Ann Benken (the "Count Two Plaintiffs") lost property on flights operated by American. After arriving at John F. Kennedy Airport in New York after a January 1997 flight from the Dominican Republic, Beato Cruz discovered that his checked bag had been damaged and that its contents were missing. See Def.'s Stmt. ¶ 6. The day after discovering the loss, Beato Cruz submitted an OP-124 form to American at Washington Reagan National Airport in which he estimated the value of the lost and damaged property at $3,890. See Decl. of Debbie David, Manager for American Airlines' Central Baggage Service [hereinafter "David Dec."], Ex. B at A001021 (OP-124). At the time he submitted the form, American provided Beato Cruz with a $100 travel voucher, and he affixed his signature next to a statement that provided as follows:

Customer Receipt and Release: The above sum [$100 travel voucher] received from American Airlines is in full satisfaction of all claims, liabilities, and demands that I may have against said company.

David Decl., Ex. N (Baggage Report and Release). Subsequently, American sent Beato Cruz a letter explaining that its liability for such losses is limited to $9.07 per pound up to a maximum of seventy pounds under the Warsaw Convention. See Pls.' Consolidated P. & A. in Opp'n to Def.'s Mot. for Summ. J. & in Supp. of Pls.' Cross Mot. for Summ. J. [hereinafter "Pls.' Mem."], Ex. 15 at 32-33 (B. Cruz Depo.); see also id., Ex. 3 (sample letters). In keeping with that representation, American also sent Beato Cruz a check for $634.90 as full compensation for his bag in accordance with the liability limitation. Beato Cruz endorsed the check beneath a statement that, in pertinent part, provided that "[b]y endorsement or deposit of this check I(we) hereby release American Airlines . . . from all claims arising in connections with the loss, damage or delay of my belongings." Id., Ex. O (check and endorsement).*fn6 At the time he endorsed the check, Beato Cruz believed that he could pursue claims against American for additional compensation, notwithstanding American's representations regarding its limited liability. See Decl. of Jonathan K. Tycko [hereinafter "Tycko Decl."], Ex. A. at 43-44 (B. Cruz Depo.).

Lawrence and Jo Ann Benken flew on American Airlines from Buenos Aires, Argentina, to John F. Kennedy Airport on January 15, 1999. See Def.'s Stmt. ¶ 11. In New York, they took a bus to LaGuardia Airport and then flew on to Indianapolis by way of Chicago. See id. The Benkens' four checked bags arrived safely in New York, but they did not arrive in Indianapolis. See id. ¶¶ 11-12. Two of the four bags were delivered to the Benkens' home a day late, and the other two were never recovered. See id. ¶ 12. The Benkens submitted two OP-124 forms in which they asserted that, in aggregate, the lost bags and their contents were worth $7,360. See id. ¶ 12; David Decl., Ex. C at A001033, A001038 (OP-124s).

On April 12, 1999, American sent Lawrence Benken a letter stating that its "liability is limited to $9.07 per pound, up to a maximum allowable weight of 70 pounds, or $634.90 per bag." Pls.' Cross-Mot. for Summ. J., Ex. 3 at 2 (April 12, 1999, letter). At the same time, American issued Lawrence Benken a check for $1269.80, the amount recoverable under the liability cap for two lost bags. See Def.'s Stmt. ¶ 13. With her husband's approval, Jo Ann Benken endorsed the check below a release statement identical to the statement that appeared on the check that Beato Cruz endorsed. See id. ¶¶ 13-14. Prior to Jo Ann Benken's endorsement of the check, Lawrence Benken consulted an attorney and reached the conclusion that the Warsaw Convention did not definitively limit American's liability in these circumstances. See id. ¶ 14; Tycko Decl., Ex. B at 67, 77-78, 80-81 (Lawrence Benken Depo.). Nonetheless, he ultimately decided to allow his wife to endorse the check in order to "get it out of the way" and to avoid the annoyance and "hassle" of bringing suit against the airline. See Def.'s Stmt. ¶ 14; Tycko Decl., Ex. B at 77-78, 80-81.

In Count Two of the Second Amended Complaint, Beato Cruz and the Benkens seek (1) a declaration that American's reliance on liability limitations was unlawful in these circumstances, (2) a declaration of "the lawful measure of [American]'s liability to the class members as compensation," and (3) compensatory damages in an amount equal to the fair value of the lost baggage, less any funds already provided in an effort to settle the claims. See 2nd Compl., Wherefore Clause following ¶ 24.

II. DISCUSSION

A. Sequence of Decision

Three separate motions are currently pending before the Court. First, Plaintiffs have filed a motion for class certification in which they ask the Court to approve two separate plaintiff classes. Second, American has filed a motion for summary judgment with respect to all Plaintiffs and all claims. Third, Plaintiffs have submitted a cross-motion for partial summary judgment on each of their claims.

Faced with this series of motions, the Court's first task is to determine the proper order in which to address them. Observing that Rule 23(c)(1) of the Federal Rule of Civil Procedure directs courts to resolve class certification motions "[a]s soon as practicable after the commencement of an action," Fed.R.Civ.P. 23(c)(1), Plaintiffs urge the Court to consider their certification motion first. See Pls.' Mem at 1-2. In support of this position, Plaintiffs refer the Court to Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974), in which the Supreme Court admonished that "nothing in either the language or history of Rule 23 gives a court any authority to conduct a preliminary hearing on the merits of a suit in order to determine whether it may be maintained as a class action." Id. at 177, 94 S.Ct. 2140.

While the quoted portion of the Eisen decision properly describes a rule of law applicable to many nascent class actions, it does not govern the present situation. Unlike the district court in Eisen, this Court does not propose to investigate the merits of the case merely in order to ascertain the propriety of class certification. Rather, the parties have filed cross motions for summary judgment that require the Court's investigation of the merits irrespective of the separate motion for class certification. In a decision issued more than twenty years after Eisen, the United States Court of Appeals for the Seventh Circuit explained that courts may, in their discretion, assess motions for summary judgment prior to motions for class certification. The Seventh Circuit reasoned as follows:

It is true that Rule 23(c)(1) of the civil rules requires certification as soon as practicable, which will usually be before the case is ripe for summary judgment. . . . But "usually" is not "always," and "practicable" allows for wiggle room. Class actions are expensive to defend. One way to try to knock one off at low cost is to seek summary judgment before the suit is certified as a class action. A decision that the claim of the named plaintiffs lacks merit ordinarily, though not invariably, . . . disqualifies the named plaintiffs as proper class representatives. The effect is to moot the question whether to certify the suit as a class action unless the lawyers for the class manage to find another representative.

Cowen v. Bank United of Texas, 70 F.3d 937, 941 (7th Cir. 1995); see also Christensen v. Kiewit-Murdock Inv. Corp., 815 F.2d 206, 214 (2d Cir. 1987) (holding that a district court has discretion to decide a motion for summary judgment before ruling on a plaintiffs motion to certify a lawsuit as a class action); Hyman v. First Union Corp., 982 F. Supp. 8, 10-11 (D.D.C. 1997) (determining that the language of Rule 23 "give[s] district court judges great discretion in determining the appropriate timing" for ruling on pending motions).

Thus, a district court operates with discretion when determining whether to consider a motion for summary judgment prior to a motion for class certification. If the resolution of the summary judgment motion may eliminate the need to consider the certification motion ab initio, the court's interest in preserving judicial resources, as well as the resources of the litigants, counsels in favor of addressing the summary judgment motion first. In this case, the Court finds that its resolution of the pending cross motions for summary judgment may indeed render the class certification motion moot. Accordingly, the Court turns first to the parties' cross motions for summary judgment.

B. Standard

Rule 56(c) of the Federal Rules of Civil Procedure requires a court to grant judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. show that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c); see also Tao v. Freeh, 27 F.3d 635, 638 (D.C.Cir. 1994). Although the court should draw all inferences from the supporting records submitted by the nonmoving party, the mere existence of a factual dispute, by itself, is not sufficient to bar summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The adverse party's pleadings must evince the existence of a genuine issue of material fact. See id. at 247-48.

To be material, the factual assertion must be capable of affecting the substantive outcome of the litigation; to be genuine, the issue must be supported by sufficient admissible evidence such that a reasonable trier-of-fact could find for the nonmoving party. See id.; Laningham v. United States Navy, 813 F.2d 1236, 1242-43 (D.C.Cir. 1987). Mere allegations or denials in the adverse party's pleadings are insufficient to defeat an otherwise proper motion for summary judgment. Rather, the nonmoving party bears the affirmative duty to present, by affidavits or other means, specific facts showing that there is a genuine issue for trial. See id. at 1248-49. The adverse party must do more than simply ...


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