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MAX GIN and JOHNNIE FONG, as former partners of FONG AND GIN ENTERPRISES, a dissolved Hawaii General Partnership, Plaintiffs, v. THE WACKENHUT CORPORATION, Defendant
Civil No. 89-0097-SPK
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII
741 F. Supp. 1454; 1990 U.S. Dist. LEXIS 8718
May 30, 1990, Decided May 30, 1990, Filed
CASE SUMMARY
PROCEDURAL POSTURE: Plaintiffs, former partners in a general partnership specializing in wholesale jewelry, brought a negligence action against defendant security checkpoint operator to recover the value of jewelry lost during the process of proceeding through a security checkpoint at an international airport. The court issued its findings of fact and conclusions of law after hearing the case.
OVERVIEW: The partners alleged that a piece of luggage was lost at an airport security checkpoint after a woman ahead of one of the partners needed four attempts before being cleared, causing the partner to become separated from a bag containing $ 200,000 in jewelry. The jewelry was not recovered. The partners asserted causes of action based on, inter alia, negligent bailment, and sought punitive damages. The court, applying the law of the State of Florida, where the incident occurred, concluded that a bailment was created. Testimony was adduced indicating that due to the placement of the magnetometer, a passenger could not see his bag for some length of time and thus surrendered control of it. The court concluded that the security checkpoint operator failed to exercise the requisite degree of care. In fact, on average bags were lost twice a week. As an independent contractor, the operator was ordered to pay damages in the amount of $ 140,000, plus prejudgment interest at the statutory rate.
OUTCOME: The court found the security checkpoint operator liable for damages in the amount of $ 140,000 to the partners for negligent bailment of the bag containing the partners' jewelry.
CORE TERMS: bag, passenger, bailment, magnetometer, checkpoint, machine, baggage, airline, tariff, jewelry, contractor, alarm, hand baggage, airport, degree of care, bailee, ticket, theft, metal, woman, choice of law, claimant, flight, gate, departure, safeguard, security services, present case, period of time, luggage
LexisNexis® Headnotes Hide Headnotes
Civil Procedure > Federal & State Interrelationships > Erie Doctrine HN1 (^) Under the Erie case, a federal district court is to apply the substantive law of the state in which it
sits. This ruling was extended to apply to the state's choice of law rules.
Civil Procedure > Federal & State Interrelationships > Choice of Law > General Overview HN2 (^) According to the Hawaii Supreme Court, a fact specific approach to choice of law should be
utilized, one which assesses the interests and policy factors involved with a purpose of arriving at a desirable result in each situation.
Contracts Law > Types of Contracts > Bailments HN3 (^) Under Florida law, it has come to be recognized that a bailee who has the sole, actual, and
exclusive physical possession of the goods is presumed to be negligent if he cannot explain the loss or disappearance of the goods, and the law imposes on him the burden of showing that he exercised the degree of care required by the nature of the bailment.
Contracts Law > Types of Contracts > Bailments Evidence > Inferences & Presumptions > General Overview Torts > Negligence > Proof > General Overview HN4 (^) Under Florida law, once a plaintiff has proven the existence of a bailment, and demonstrated the
failure of the bailee to return the bailed goods, a presumption of negligence on the part of the bailee arises.
COUNSEL: [**1] JOHN RAPP, ESQ., Honolulu, Hawaii.
KEVIN S. W. CHEE, ESQ., GREGORY K. MARKHAM, ESQ., Honolulu, Hawaii.
JUDGES: Samuel P. King, United States District Judge.
OPINION BY: KING
OPINION
[*1455] FINDINGS OF FACT AND CONCLUSIONS OF LAW
SAMUEL P. KING, UNITED STATES DISTRICT JUDGE
This matter came on for trial on April 18, 1990. Having considered all the evidence, memoranda and arguments of the parties, the court hereby makes the following findings of fact and conclusions of law. I. Findings of Fact
Plaintiff, Max Gin ("Gin"), commenced this action seeking to recover the value of certain items of jewelry lost during the process of proceeding through a security checkpoint at Miami International Airport. 1 Gin asserts that the negligence of the defendant, Wackenhut Corporation ("Wackenhut"), which operated the security checkpoint, precipitated the loss of the jewelry.
- - - - - Footnotes - - - - - - - - - - - - - - - 1 Leave was given at trial to amend the complaint to include Gin's former business partner, plaintiff Johnnie Fong ("Fong"), so that all parties in interest would be bound by the outcome of this trial. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
At the time of the [**2] loss, Max Gin was a partner with Johnnie Fong in the firm of Fong & Gin Enterprises, a partnership specializing in wholesale jewelry sales. It was the practice of plaintiffs Gin and Fong to travel, sometimes together and at other times separately, to wholesale jewelry shows throughout the mainland United States where they would ply their
occasion to consider the choice of law issue. In the most significant case, Peters v. Peters, 634 P.2d 586, 63 Haw. 653 (1981), HN2^ the Hawaii Supreme Court settled upon a fact specific approach to choice of law which assessed "the interests and policy factors involved with a purpose of arriving at a desirable result in each situation." Id.^ 634 P.2d at 593.
This court is persuaded that the most desirable and logical approach in the present case is to apply the law of the state where the incident occurred. To hold otherwise is to rule that the level of care security services such as Wackenhut must provide when examining passengers and their packages varies depending upon the traveler's home state. This is an outcome which choice of law will not tolerate. Such an approach would clearly place an impossible burden upon security [**6] companies in large airports, such as Miami, which may serve tens of thousands of passengers annually. Since the loss here occurred in Florida, Florida law shall govern.
[*1457] B. Negligent Bailment
Plaintiff's only remaining count alleges Wackenhut was a negligent bailee of plaintiff's bag. Plaintiff argues that in surrendering his bag for examination by defendant's X-ray machine, a bailment was created. Plaintiff further argues that defendant's failure to return the bag gives rise to a presumption of negligence which defendant must rebut in order to avoid liability.
HN3 (^) Under Florida law, "[i]t has come to be recognized that a bailee who has the sole,
actual, and exclusive physical possession of the goods is presumed to be negligent if he cannot explain the loss or disappearance of the goods, and the law imposes on him the burden of showing that he exercised the degree of care required by the nature of the bailment." Marine Office-Appleton & C. Corp. v. Aqua Dynam., Inc., 295 So. 2d 370, 371 (Fla.App. 1974); Clermont Marine Sales, Inc. v. Harmon, 347 So. 2d 839, 841 (Fla.App. 1977); Aetna Cas. & Sur. v. Pappagallo Rest., 547 So. 2d 243, 244 (Fla.App. 1989). In order for plaintiff [**7] to prevail on the merits, a bailment must have been created and defendant must have failed to exercise the requisite degree of care.
1. Bailment
Although the law of bailments is well settled, the brevity of of the alleged bailment makes this case somewhat novel. The defendant argues that a bailment was not created in this case because defendant did not take possession of plaintiff's bag in the short time that plaintiff and bag were separated. The question of whether the relinquishment of an article of luggage for purposes of a security check constitutes a bailment evidently has not been addressed by a Florida court. There are several Florida cases finding bailments where plaintiff suffered a loss after leaving property in the hands of another for a period of days. In Puritan Insurance Company v. Butler Aviation-Palm Beach, Inc., 715 F.2d 502, 504 (11th Cir. 1983), a bailment was found where the plaintiff left his airplane parked for several days at the defendant's facility. Among other things, the court pointed to the length of time the plane was parked, the fact that the defendant's facility was fenced, that defendant had control of the access gate and that a dispatcher was [**8] on duty, as indicative of plaintiff's surrender of control over the bailed good. Id. , at 504. See also City of Clearwater v. Thomas, 446 So. 2d 1160 (Fla.App. 1984); Empire Tool Company v. Wells, 227 So. 2d 76 (Fla.App. 1969).
In at least two published cases the Florida courts have found bailments were created in instances where the bailee had possession of the bailed goods for a relatively short period of time. In Favors v. Firestone Tire & Rubber Company, 309 So. 2d 69, 72 (Fla.App. 1975), cert. den. sub nom Sansing v. Firestone Tire & Rubber Company, 360 So. 2d 1250 (Fla. 1978), the Florida Appellate Court ruled that delivery of a truck to an automobile repair
station in order to have the tires changed created a bailment. Similarly, in Aetna Cas. & Sur. v. Pappagallo Rest., 547 So. 2d 243, 244 (Fla.App. 1989), a bailment was created where a restaurant customer left his automobile with the restaurant's valet parking service. In both these cases the period of time of the bailment was not a matter of days, but at most a very few hours.
At least one court outside the state of Florida has found a bailment created under factual circumstances similar to the present [**9] case. In Tremaroli v. Delta Airlines, 17 Av. Cas. (CCH) P18,293, 294 (Civ. Ct. N.Y. 1983), the claimant's bag was lost, either as a result of theft or mistaken identity, after passing through the security checkpoint operated by the defendant. Without any discussion, the court held that "[d]efendants had dominion and control of claimant's hand baggage while said baggage went through the security check required by Delta Airlines and operated by its agent Ogden Security, Inc., thereby creating a bailment." Id. at 18,295.
This court is convinced that in the instant case a bailment was created. In proceeding through the security checkpoint, plaintiff placed his bag upon the X-ray conveyor belt. From the moment the bag entered the machine the plaintiff surrendered [1458] control to the defendant. The defendant could stop the bag in the machine for prolonged examination, could run it through the machine a second time, or could order it opened for an examination of its contents. Further, passengers such as the plaintiff have virtually no control over the length of time they will be separated from their bag. This time could vary from a few seconds to several minutes, dependent upon the number [*10] of persons ahead of the passenger in the line for the magnetometer, whether any of those persons triggers the metal detection alarm, and upon the procedure used to search those who do trigger the alarm. 3 It is also noteworthy that plaintiff could not retrieve his bag until the Wackenhut employee operating the magnetometer permitted plaintiff to pass into the concourse area. Testimony was also heard at trial that due to the orientation of the X-ray machine and the magnetometer, it was impossible for a passenger waiting in line for the magnetometer to see his bag after it emerged from the X-ray machine. 4 In short, once the plaintiff's bag entered the X-ray machine, the plaintiff could no longer reach or see it, and had little or no control over the period of time he would be separated from it. Although the period of separation might be brief, the plaintiff had surrendered possession and control of his belongings and a bailment was created.
- - - - - Footnotes - - - - - - - - - - - - - - - 3 Considerable testimony was heard at trial concerning the proper procedure for screening passengers who set off the metal detection alarm. Wackenhut's training tape and manual state that a passenger who triggers the alarm should be asked to empty his pockets onto a tray, and then to pass through the magnetometer a second time. If the alarm sounds again, then the passenger is to be asked to step to one side where he can be scanned with a hand held metal detector. Screening with a hand held detector frees up the magnetometer for processing other passengers, thereby minimizing the time passengers are separated from their hand baggage. It is obvious from the present case, however, that this procedure is not always followed. [**11] 4 Defendant also cites Chafin v. Atlantic Coast Line Railrod Company, 58 So. 2d 185 (Fla. 1952) in support of its argument that a bailment was not created. In Chafin, a porter placed the plaintiff's bags on an open baggage shelf in front of plaintiff's seat. The court held that since the plaintiff was both present and able to observe the bag at all times while the bag was handled, no bailment was created. The present case is distinguishable in that plaintiff could neither observe nor reach his bag after it emerged from the X-ray machine until given permission to pass through the magnetometer by a Wackenhut employee. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - 2. Negligence
HN4 (^) Under Florida law, once a plaintiff has proven the existence of a bailment, and
demonstrated the failure of the bailee to return the bailed goods, a presumption of negligence on the part of the bailee arises. The defendant here does not dispute that the
- - - End Footnotes- - - - - - - - - - - - - -
III. Damages A. Applicability of Tariff
In its brief, defendant argues that if the court should find for plaintiff, the court should also find that the defendant's liability is limited by the "Conditions of Contract" tariff printed on the back of the plaintiff's ticket for carriage on Eastern Airlines. However, inasmuch as the [**16] defendant failed to plead this affirmative defense in its answer, this defense may not properly be considered a part of this case. 8 Even were the defense before the court, the outcome of the trial would be unchanged. The court simply was not persuaded of the merit of the defense, and believes the tariff Wackenhut seeks to use to limit its liability is inapplicable to this case.
- - - - - Footnotes - - - - - - - - - - - - - - - 8 Defendant's untimely request to amend its answer to add this affirmative defense was denied by Magistrate Conklin. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
The [*1460] tariff printed on the back of Gin's ticket specifically refers to "Eastern's liability" for baggage "accepted by Eastern". 9 The tariff makes no mention of Wackenhut, either by name or by function. In order for the plaintiff's lost bag to have been "accepted by Eastern" within the scope of the tariff, Wackenhut would have to be considered an agent of Eastern Airlines. At trial, and in their briefs, both parties submitted evidence on this point.
- - - - - Footnotes - - - - - - - - - - - - - - - 9 The "Condition of Contract" clause reads in full:
Eastern's liability for the loss of, damage to, or the delay in the delivery of any personal property, baggage or goods (whether checked or otherwise delivered into the custody of Eastern) shall be limited to an amount equal to the value of the property (subject to verification) but, in no event, shall exceed $ 1,250.00 for each ticketed passenger. This limitation shall also apply to baggage, personal property or goods accepted by Eastern at a city or airport ticket office or elsewhere before, after or during a passenger's trip.
- - - End Footnotes- - - - - - - - - - - - - -
[**17] Although Wackenhut was hired by Eastern Airlines, the court is convinced Wackenhut was not an agent of Eastern, but an independent contractor. The evidence to this effect is undeniable. Eastern exercised little, if any, control over the everyday activities of Wackenhut and its employees. The contract for provision of security services executed between Eastern and Wackenhut refers to Wackenhut as a "Contractor" and specifically states:
- It is agreed that Contractor exercises exclusive control over its employees and Eastern disclaims any control or right to control said employees. The employees of Contractor in performing the services hereunder shall be considered as employees of Contractor for any and all purposes and shall under no circumstances be deemed to be employees of Eastern.
- Eastern shall have no supervision or control over any such Contractor's employees and any complaint or requested change in procedure shall be transmitted by Eastern to Contractor which shall in turn promptly give any necessary instructions to its own personnel.
Further, testimony given at trial supported the view that Wackenhut is an independent contractor and not an employee. Wackenhut's supervisor [**18] James Sparkman could not recall any instance when Eastern came to the security checkpoint and told "the people what to do."
On a purely pragmatic level, finding the tariff limitation applicable would result in the anomalous situation of limiting the damages recoverable by ticketed passengers passing through the security gate, while permitting unticketed well-wishers unlimited recovery for negligently lost hand bags. Thus the customers whose very patronage supports agencies such as Wackenhut would be limited to the amount of damages recoverable under the tariff, while all others would be under no such restriction. 10
- - - - - Footnotes - - - - - - - - - - - - - - - 10 Further complicating the matter is the fact that several airlines may be served by a single security checkpoint. Under Wackenhut's argument, its liability for lost baggage then would vary depending upon the liability limitations of the particular airline being used by the plaintiff passenger. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
The defendant calls attention to Baker v. Lansdell Protective Agency, Inc., 590 F. Supp. 165, 167 ( [**19] S.D.N.Y. 1984), in which a court ruled that a tariff applicable to international travel under the Warsaw Convention limited the liability of a security agency for losses at a security checkpoint. This case is inapposite. The applicable limiting provision of the Convention specifically encompasses losses sustained not only while "on board the aircraft" but also while "in the course of embarking or disembarking." Warsaw Convention, 49 Stat. 3000 (codified at note to 49 U.S.C.A. § 1502), ch. III, art. 17. The Baker court held the act of embarking to include passing through the security checkpoint, thereby extending the liability limitation to the checkpoint operators. The plaintiff in the pending case was holding a ticket for a wholly domestic flight to which the Warsaw Convention does not apply. Further, the Eastern tariff in question here contains no such language, and could not reasonably be construed to extend to checkpoint operators.
[*1461] B. Amount of Loss
Claimant is awarded damages in the amount of $ 140,000 plus prejudgment interest at the statutory rate from the date of the loss. This figure includes $ 100,000 for the cost of merchandise plus a 40% markup for lost partnership profits [**20] due to the loss of the jewelry. There was some dispute over the documentation provided by plaintiff to support his proof of damages. Plaintiff's original claim was for $ 190,969. The court feels the $ 100, figure is more appropriate considering the documentation. There was substantial testimony at trial that 40% was a reasonable, if not conservative, markup on wholesale jewelry.
The foregoing constitute the findings of fact and conclusions of law required by Rule 52 of the Federal Rules of Civil Procedure.
Let judgments enter accordingly.
