We CBD, LLC v. Planet Nine Private Air, LLC

109 F.4th 295

WE CBD, LLC; We C Manage, LLC, Plaintiffs - Appellants, v. PLANET NINE PRIVATE AIR, LLC, Defendant - Appellee, v. Ed Clark; Jet Northwest, LLC; K&R International Services; Kelly McFall, Third Party Defendants.

No. 23-1707

United States Court of Appeals, Fourth Circuit

Argued: May 9, 2024

Decided: July 26, 2024

Appeal from the United States District Court for the Western District of North Carolina, at Charlotte. Frank D. Whitney, District Judge. (3:21-cv-00352-FDW-SCR)

ARGUED: William Robert Terpening, TERPENING LAW PLLC, Charlotte, North Carolina, for Appellants. Kathryn Anne Grace, WILSON ELSER MOSKOWITZ EDELMAN & DICKER, LLP, McLean, Virginia, for Appellee. ON BRIEF: Nicole T. Melvani, WILSON ELSER MOSKOWITZ EDELMAN & DICKER, LLP, McLean, Virginia, for Appellee.

Before KING, GREGORY, and RUSHING, Circuit Judges.

Affirmed by published opinion. Judge King wrote the opinion, in which Judge Gregory and Judge Rushing joined.

KING, Circuit Judge:

Plaintiffs We CBD, LLC, and We C Manage, LLC, (the "Plaintiffs") appeal from the district court's summary judgment award in favor of defendant Planet Nine Private Air, LLC, ("Planet Nine") on the Plaintiffs' state law claims regarding the destruction of their air cargo of alleged hemp. See We CBD, LLC v. Planet Nine Private Air, LLC, No. 3:21-cv-00352-FDW-SCR, 2023 WL 3959925 (W.D.N.C. June 12, 2023), ECF No. 83 (the "Summary Judgment Order"). The Plaintiffs, as distributors of legal hemp, contend on appeal that the court erred in ruling that their state law claims are preempted by the Convention for the Unification of Certain Rules for International Carriage by Air, May 28, 1999, T.I.A.S. No. 13,038 (2000), reprinted in S. Treaty Doc. No. 106-45, 1999 WL 33292734 (2000) (the "Montreal Convention," or simply the "Convention"). As explained herein, we are also satisfied that the Montreal Convention preempts the Plaintiffs' state law claims, and therefore affirm the district court.

I.

We begin by summarizing the facts pertinent to this appeal. Because the Plaintiffs are challenging an adverse award of summary judgment, the facts, including reasonable inferences to be drawn therefrom, are recited in a light most favorable to them. See Aleman v. City of Charlotte, 80 F.4th 264, 270 n.1 (4th Cir. 2023).

A.

1.

The Plaintiffs acquire and distribute legal hemp for profit. In October 2020, they sought to transport hemp by air from Oregon to Switzerland. The Plaintiffs approached Ed Clark, a charter broker and founder of a corporate aircraft management firm named Jet Northwest, LLC. After the Plaintiffs informed Clark of their needs, Clark contacted defendant Planet Nine, which provides charter aircraft for global cargo distribution. Through Clark, Planet Nine was informed that the Plaintiffs' cargo would be legal hemp, with so-called delta-9 THC levels below 0.3 percent.¹ On November 1, 2020, Planet Nine sent a proposed quote for the trip to the Plaintiffs, which was signed and agreed to by them on November 4. That proposal established pricing for the transport — $147,000 — and stated that, on November 5, 2020, Planet Nine would begin to fly the Plaintiffs' hemp from Medford, Oregon, to Zurich, Switzerland, with a refueling stop in Charlotte, North Carolina.

Clark advised the Plaintiffs that Planet Nine would accept responsibility for completing the documentation required by United States Customs and Border Protection — a responsibility Planet Nine would normally undertake and satisfy. See J.A. 808, 818.² As pertinent here, the necessary documentation included three filings with U.S. Customs — (1) a general declaration, (2) an air cargo manifest, and (3) Electronic Export Information (commonly referred to as "EEI"). The departure date was revised to November 8, 2020 and, one day earlier, on November 7, Planet Nine submitted the general declaration for the flight. The general declaration, however, did not either list or identify any cargo that was being transported. The other two required filings — the air cargo manifest and Electronic Export Information — were never submitted to U.S. Customs.

On November 8, 2020, at an airport in Medford, Oregon, the Plaintiffs loaded more than 3,300 pounds of alleged hemp onto Planet Nine's aircraft in 93 bags, which consisted of a mix of both duffle bags and trash bags (the "Cargo"). Law enforcement officials witnessed the Cargo being loaded onto the plane, and they also saw individuals removing seats from the plane. The Cargo and seat removals were both deemed suspicious, and information in that regard was passed along to U.S. Customs authorities in Charlotte, North Carolina.

After departing Oregon, the aircraft landed at the Charlotte-Douglas International Airport in North Carolina, as scheduled. When it landed, U.S. Customs officials noticed that the Cargo was visible from the tarmac, through the plane's windows. The presence of the Cargo was unexpected, because the flight's general declaration identified no cargo, and no Electronic Export Information had been filed. The plane — along with the Cargo — was thus detained and inspected by U.S. Customs. A field test of the Cargo returned a positive result for THC — the active ingredient in marijuana. As a result, the Cargo was detained and removed from the plane for further testing.

2.

The U.S. Customs authorities tested the detained Cargo in San Fransico, California, and those tests determined that eight of nine samples had sufficiently high THC content to constitute marijuana, rather than hemp. The part of the Cargo that tested as marijuana — a little less than 2,800 pounds (the "First Batch") — was destroyed on March 17, 2021.

On March 19, 2021, the Plaintiffs initiated a lawsuit against the United States — in the Western District of North Carolina — alleging wrongful destruction of the First Batch, and seeking the return of the remaining 500 pounds of the Cargo (the "Second Batch"). In that lawsuit, the Plaintiffs alleged that U.S. Customs had improperly destroyed legal hemp, in part by failing to follow proper testing procedures. Their complaint was dismissed for lack of jurisdiction on March 31, 2022. The United States thereafter filed a forfeiture action against the Second Batch, in the Western District of North Carolina, and secured a default judgment. The Second Batch was thereafter also destroyed.

B.

1.

On July 19, 2021, the Plaintiffs filed their operative complaint in the Western District of North Carolina, naming Planet Nine as a defendant and alleging diversity jurisdiction and five North Carolina state law claims. The complaint also alleged, inter alia, that Planet Nine's actions had caused the Plaintiff's "merchandise to be detained, seized, and eventually destroyed," and sought to recover, inter alia, "the loss of . . . merchandise, fees paid to Planet 9, penalties, and other costs." See J.A. 14. Planet Nine lodged counterclaims against the Plaintiffs — one of which sought a declaratory judgment that the Montreal Convention preempted all of the Plaintiffs' claims. Planet Nine also filed a third-party complaint alleging state law claims, and also that several charter brokers — including Clark and his company Jet Northwest — should indemnify Planet Nine for any recovery received by the Plaintiffs.³

After discovery, Planet Nine moved for summary judgment maintaining, inter alia, that the Plaintiffs' state law claims were preempted by the Montreal Convention. On June 12, 2023, the district court agreed and entered a partial summary judgment, i.e., the Summary Judgment Order, in Planet Nine's favor. On June 23, 2023, the Plaintiffs moved for entry of a final judgment, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, in order to expedite appellate review. A few days later, however, on June 26, 2023, Planet Nine voluntarily dismissed its counterclaims and third-party claims, without prejudice.

Shortly thereafter — in light of the stipulated dismissal resolving the claims that remained after entry of the Summary Judgment Order — the district court entered an order closing the case and denying all pending motions as moot, including the Plaintiffs' motion under Rule 54(b). See We CBD, LLC (June 28, 2023), ECF No. 89 (the "Dismissal Order"). The court did not, however, enter a necessary separate document setting out a judgment. See Fed. R. Civ. P. 58(a) ("[e]very judgment . . . must be set out in a separate document").

2.

On June 30, 2023, the Plaintiffs noted this appeal. In that regard, however, the parties erroneously represented in their various initial appellate submissions that the Summary Judgment Order was a final order. See Porter v. Zook, 803 F.3d 694, 696 (4th Cir. 2015) (clarifying that "a district court order is not 'final' until it has resolved all claims as to all parties"). After conducting oral argument, we thus requested supplemental briefing as to appellate jurisdiction. With the benefit of those supplemental submissions, we are now satisfied that the Dismissal Order is a final and appealable order, and that we possess jurisdiction pursuant to 28 U.S.C. § 1291.

To briefly explain, although the district court dismissed Planet Nine's claims without prejudice, an order is final "when a district court dismisses . . . all claims without providing leave to amend," even if the dismissal is without prejudice. See Britt v. DeJoy, 45 F.4th 790, 796 (4th Cir. 2022). Additionally, the prohibition on using "voluntary dismissal as a subterfuge to manufacture jurisdiction" does not apply in these circumstances, in large part because the voluntary dismissal was by the prevailing defendant — Planet Nine — rather than by the aggrieved plaintiffs-appellants. See Affinity Living Group, LLC v. StarStone Specialty Ins. Co., 959 F.3d 634, 637 (4th Cir. 2020) (alteration omitted); see also Microsoft Corp. v. Baker, 582 U.S. 23, 27, 137 S.Ct. 1702, 198 L.Ed.2d 132 (2017); Keena v. Groupon, Inc., 886 F.3d 360, 362-63 (4th Cir. 2018). Finally, the absence of a separate final...