Power Standards Lab, Inc. v. Federal Express Corp.

Damage to electronic equipment being shipped by defendant Federal Express Corporation (Federal Express) led to litigation that culminated in a judgment in favor of Plaintiff Power Standards Lab, Inc. (PSL) for $78,000 in compensatory damages and $600,000 in punitive damages. The dispositive question is whether federal law—in the form of a preemption provision in the Airline Deregulation Act of 1978 and a doctrine of federal common law—precludes a state court from awarding any relief greater than was expressly and contractually negotiated between the carrier and the shipper. We answer this question in the affirmative. We hold that once the shipper has paid the contractual limit of its liability, state common law and statutory remedies cannot augment that recovery.

BACKGROUND

Because issues of law resolve this appeal, it is not necessary to recount the evidence introduced at the trial except in the briefest form most favorable to PSL. (Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 787 [ 16 Cal.Rptr.3d 374 , 94 P.3d 513 ].)

PSL shipped a prototype piece of electronic equipment from its Emeryville factory to San Diego, using Federal Express as the shipper. The…