Reefer Madness: Montreal Convention Surprises Distributor by Preempting State Law Claims

We CBD, LLC v. Planet Nine Priv. Air, LLC, 109 F.4th 295 (4th Cir. 2024 King, Cir. J.).

Ratified in 1999, the Montreal Convention (“MC99”) continues to cause unexpected consequences for businesses today.[1] In this case, the U.S. Fourth Circuit of Appeals determined whether or not MC99 preempted the plaintiffs’ state law claims against the defendant.[2] At trial, the plaintiffs, We CBD, LLC, and We C Manage, LLC, (jointly referred to as “We CBD”) were unsuccessful in asserting state law claims against the defendant, Planet Nine Private Air, LLC (“Planet Nine”); the plaintiffs appealed.[3]

       We CBD are legal distributors of industrial hemp[4] which sought to transport their product from Oregon to Switzerland.[5] They chartered Planet Nine, an international aviation cargo distributor, for this purpose with a fuel stop scheduled in North Carolina.[6] Planet Nine was responsible for completing three mandatory forms to clear U.S. Customs, but only partially completed one.[7] As a result, Oregon law enforcement flagged the defendant’s aircraft as suspicious and communicated this information to North Carolina officials.[8] Upon the aircraft’s arrival in North Carolina, U.S. Customs officers detained and inspected We CBD’s cargo and determined that most  of the hemp contained over 0.3% THC content and was thus classifiable as illegal marijuana.[9] The United States destroyed the cargo months later.[10] We CBD brought North Carolina negligence claims against Planet Nine in the U.S. District Court for the Western District of North Carolina.[11] Planet Nine persuaded the district court to grant its Motion for Summary Judgement on the grounds that MC99 preempted the plaintiffs’ state claims.[12]

       MC99 replaced the 1929 Warsaw Convention to “modernize and consolidate” the liability rules governing international carriage by air.[13] Critical to the Fourth Circuit’s discussion were Chapters I and III.[14] Chapter I declares that MC99 “applies to all international carriage of … cargo performed by aircraft for reward” and further defines “international cargo” as “any carriage in which … the place of departure and the place of destination, whether or not there be a break in the carriage or transshipment, are situated … within the territories of two State Parties.”[15] Chapter III outlines liability and can be reduced to three relevant parts: (1) The defendant is liable when the “event” causing damage to the cargo takes place “during the carriage by air”;[16] (2) “carriage by air” is defined as “the period during which the cargo is in the charge of the carrier”;[17] and (3) if the first part is satisfied, then plaintiffs are required to bring their claims under MC99.[18]

        On appeal, We CBD argued that the trial court erred in finding that the event causing the destruction of their cargo occurred during the carriage by air.[19] The plaintiffs asserted that Planet Nine’s negligence in complying with document requirements, which occurred before they possessed the cargo, was the proper event.[20] In the alternative, We CBD asserted that the cargo was outside of the defendant’s charge at the time U.S. Customs destroyed it, the event causing the cargo’s destruction.[21]

       The Fourth Circuit rejected both of these arguments on de novo review.[22] First, the court held that the defendant’s negligence in filling out the appropriate documentation was not the sole event that caused the destruction of the plaintiffs’ cargo.[23] Other events which occurred during the defendant’s charge of the cargo “necessarily and inextricably” contributed to the cargo’s destruction and the plaintiffs’ claims; namely, the arousal of U.S. Customs’ suspicion in Oregon, the detention of Defendant’s aircraft in North Carolina, and U.S. Customs’ testing and ensuing seizure of the cargo.[24] As to We CBD’s second argument, the act of destroying the cargo cannot equate to the event that caused its destruction.[25] Therefore, the cargo’s destruction need not have occurred during the defendant’s charge.[26] Further, Article 18 of MC99 provides that “the carrier is not liable if [they prove] that the destruction … [of] the cargo  resulted from … an act of public authority carried out in connection with the entry, exit or transit of the cargo.”[27] The court determined that the timing of the cargo’s destruction was irrelevant to the application of this “public authority defense” and the preemption of the plaintiffs’ second argument.[28] Thus, MC99 preempted the plaintiffs’ state law claims. Accordingly, the Fourth Circuit affirmed the district court’s decision.

       Analyzing the Fourth Circuit’s reasoning with the provisions of MC99 above confirms that the appellate court was correct. As long as: (1) the place of departure and the place of destination are two distinct state signatories[29] of MC99 and (2) the alleged misconduct occurred at some point between those locations, the provisions of MC99 will exclusively govern any damages claim that the business may bring against their aviation distributor. Not only this, but as the Western District of North Carolina pointed out and the Fourth Circuit agreed, whether or not the aircraft ever left the state of departure to begin with is irrelevant.[30] No event during the carriage by air can refute MC99’s preemption of state law.

       By Noah Thibodeaux, J.D. Candidate 2026 Loyola College of Law. The views herein are the author’s alone.

       See a copy of the opinion attached.

[1] Convention for the Unification of Certain Rules for Int’l Carriage by Air, art. 53(1), May 28, 1999, T.I.A.S. No. 13038 (entered into force Nov. 4, 2003) [hereinafter “Montreal Convention”].

[2] We CBD, 109 F.4th at 301.

[3] Id. at 298.

[4] Brandon R. McFadden & Trey Malone, CBD, marijuana and hemp: What is the difference among these cannabis products, and which are legal?, Michigan State University (Apr. 1, 2021, 1:44 PM), https://theconversation.com/cbd-marijuana-and-hemp-what-is-the-difference-among-these-cannabis-products-and-which-are-legal-154256 (explaining that legal “hemp” is Cannabis sativa with 0.3% or less THC, while “marijuana” is that with above 0.3% THC and is traditionally illegal).

[5] We CBD, 109 F.4th at 298.

[6] Id. at 299.

[7] Id.

[8] Id.

[9] Id.

[10] We CBD, 109 F.4th at 299-300.

[11] Id. at 300.

[12] Id.

[13] Montreal Convention, supra note 1, para. 2–3.

[14] We CBD, 109 F.4th at 301–02.

[15] Montreal Convention, supra note 1, art. 1(1)–(2).

[16] Id. at art. 18(1).

[17] Id. at art. 18(3).

[18] Id. at art. 29.

[19] We CBD, 109 F.4th at 304.

[20] Id.

[21] Id.

[22] Id. at 301, 04–05.

[23] Id. at 304.

[24] We CBD, 109 F.4th at 304–05.

[25] Id. at 306 (citing Air Fr. v. Saks, 470 U.S. 392, 398 (1985)) (explaining that the injury itself must be distinct from the event causing the injury).

[26] Id.

[27] Montreal Convention, supra note 1, at art. 18(2), (2)(d) (emphasis added).

[28] We CBD, 109 F.4th at 306.

[29] Int’l Civil Aviation Org. [ICOA], Convention for the Unification of Certain Rules for Int’l Carriage by Air Done at Montreal on 28 May 1999, at 1–3, ICAO Doc. 9740 (2024), https://www.icao.int/secretariat/legal/list%20of%20parties/mtl99_en.pdf (referencing MC99’s 139 state parties and the European Union as a party).

[30] We CBD, LLC v. Planet Nine Priv. Air, LLC, No. 3:21-CV-00352-FDW-SCR, 2023 WL 3959925, at *5 (W.D.N.C. June 12, 2023); We CBD, 109 F.4th at 303.