## Facts

- Motorola hired Kuehne & Nagel, Inc. (K&N), an indirect air carrier/freight forwarder, to transport a cellular telephone base-station system from Dallas, Texas to Tokyo, Japan, valued at nearly $5 million.
- A separate company packaged the shipment into roughly 20 crates; K&N arranged for Federal Express (FedEx) as the direct air carrier to fly the cargo on multiple flights in July 1997.
- K&N issued a single air waybill covering the entire shipment; no damage was noted at origin.
- On arrival in Tokyo, a portion of the cargo was damaged, including a crate containing the system’s “common control frame” with circuit boards and wiring.
- The damaged component was essential; without it, the base-station system could not be installed or operate.
- The damaged portion weighed about 680 kg; the entire shipment weighed 12,204 kg.
- Motorola replaced the damaged equipment at a cost of about $459,330.70 and experienced roughly six weeks of delay.
- Motorola and its insurer sued for contract breach and negligence; the case proceeded under the Warsaw Convention’s cargo liability regime.

## Issues

1. Under Article 22(2) of the Warsaw Convention, when only part of cargo is physically damaged but that damage renders the whole shipment unusable, should the liability limit be calculated using the weight of the damaged package only or the entire shipment covered by a single air waybill?
2. Did the district court clearly err in finding that damage to the common control frame affected the value of the entire shipment?
3. May a court award prejudgment interest in a Warsaw Convention cargo case without violating the Convention’s limitation scheme?

## Decision

- The Ninth Circuit affirmed the district court.
- The court held that Article 22 allows the liability cap to be calculated using the weight of the entire shipment when the damaged portion affects the value of the entire shipment.
- The court found no clear error in the determination that the damaged common control frame rendered the base-station shipment unusable for its intended purpose.
- The court held that prejudgment interest is available under the Warsaw Convention, so long as the total recovery remains within the applicable Convention limit.

## Legal Principles

- For Warsaw Convention cargo claims, Article 22’s “package or packages concerned” may encompass the entire shipment covered by a single air waybill when damage to a part destroys the shipment’s overall commercial/functional value.
- Whether damage to a component affects the value of the entire shipment is a factual question reviewed for clear error; functional indispensability supports treating the shipment as a single affected unit.
- The Warsaw Convention does not categorically bar prejudgment interest; interest may be awarded consistent with the Convention’s limitation framework when the aggregate award does not exceed the properly calculated cap.

## Conclusion

The court upheld a Warsaw Convention limitation calculation based on the entire shipment’s weight because an essential damaged component rendered the whole shipment unusable, and it permitted prejudgment interest as part of the recovery within the Convention’s cap.


Motorola, Inc. v. Fed. Exp. Corp., 308 F.3d 995 (9th Cir. 2002)